A-1 FENCE PRODUCTS COMPANY, MUMBAI V. ASST CIT 15(2), MUMBAI

ITA 116/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1635 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-03-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI BEFORE SHRI MAHAVIR SINGH, JM AND SHRI N. K. PRADHA N, AM I.T.A. NO. 116/MUM/2013 ( ASSESSMENT YEAR: 2009-10) A - 1 FENCE PRODUCTS COMPANY 503, GOLDEN HEIGHTS, SHASTRI NAGAR, ANDHERI (W), MUMBAI- 400053 VS. ASST. CIT - 15(2), MUMBAI PAN/GIR NO. AAJFA 6550 G ( APPELLANT ) : ( RESPONDENT ) APPELLA NT : DR. K. SHIVARAM ,AR RESPONDENT BY : SHRI K. RAVI RAMACHANDRAN,DR DATE OF HEARING : 13.10.2016 DATE OF PRONOUNCEMENT : 28 .11.2016 O R D E R PER N. K. PRADHAN, A. M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVA NT ASSESSMENT YEAR IS 2009-10. THE APPEAL IS DIRECTED AGAINST THE ORDE R OF COMMISSIONER OF INCOME TAX (APPEALS)-26, MUMBAI AND ARISES OUT OF T HE ORDER U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT). 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: I. DISALLOWANCE OF LOSS OF RS.2,06,00,981/-: 1. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWA NCE OF THE LOSS OF RS.2,06,00,981/- INCURRED ON ACCOUNT OF WRITE OFF O F UNSOLD STOCK OF MOULDS/DYES WHICH WERE PURCHASED FOR A PRICE OF RS. 2,30,41,800/- WITHOUT APPRECIATING THE FACTS THAT THE SUPPLIER HAS DULY C ONFIRMED THE ACCOUNT, DETAILS OF PAYMENT BY A/C PAYEE CHEQUE IS FURNISHED , INVOICE OF PURCHASE IS FURNISHED, THE SUPPLIER HAS APPEARED AND HIS STATEM ENT IS ALSO RECORDED, PROSPECTIVE CUSTOMERS QUOTATION WAS ALSO PRODUCED T HEREFORE THE DISALLOWANCE MAY BE DELETED. 2 ITA NO. 116/MUM/2013 (A.Y. 2009-10) A-1 FENCE PRODUCTS COMPANY VS. ASST. CIT 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE AS SESSEE HAD VENTURED IN THE TRANSACTION OF TRADING IN MOULD/DYES AS THERE WAS A PROSPECTIVE OVERSEAS CUSTOMER TO PURCHASE THE SAID PRODUCTS. HOWEVER AFT ER THE ASSESSEE MADE THE PURCHASES THE SAID PARTY BACKED OFF AND THEREFO RE THE ASSESSEE HAD TO INCURE THE LOSS. 3. WITHOUT PREJUDICE IF THE LOSS IS DISALLOWED THE CLO SING STOCK MAY BE INCREASED AND CONSEQUENTIAL EFFECT MAY BE GIVEN IN SUBSEQUENT YEAR. II. DISALLOWANCE OF EXPENSES: 4. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWA NCE OF EXPENSES OF RS.2,12,417/- ON THE GROUND THAT THE EXPENSES ARE N OT RELATED, TO THE BUSINESS OF THE ASSESSEE WITHOUT APPRECIATING THE C ORRECT FACTS. III. DISALLOWANCE OF EXPENSES ON AD-HOC BASIS: 5. THE LEARNED CIT(A) ERRED IN UPHOLDING THE DISALLOWA NCE OF EXPENSES OF RS.2,64,135/- (BEING 10% OF 26,41,362/-) ON ADHOC B ASIS WITHOUT APPRECIATING THE EXPENSES ARE INCURRED WHOLLY AND E XCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS. 3. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND PE RUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSESSING OFFI CER (AO) HAS DISALLOWED THE ENTIRE LOSS OF RS. 2,06,00,981/- WITH THE CONCL USION THAT THE HUMAN PROBABILITY INDICATES THAT THE ENTIRE TRADING ACTIV ITY VENTURED BY THE ASSESSEE OF BUYING OLD USED MOULDS/DIES AT A HIGH P RICE AND SUBSEQUENTLY WRITING THEM OFF IMMEDIATELY WAS BOGUS AND A COLOUR ABLE DEVICE MEANT TO CREATE ARTIFICIAL LOSSES AND CONSEQUENTLY REDUCE TA X LIABILITY OF THE ASSESSEE. THE LD. CIT (A) HAS DISMISSED THE PRAYER OF THE ASSESSEE TO ADMIT THE ADDITIONAL EVIDENCE FILED BEFORE HIM. AS THE AD DITIONAL EVIDENCE FILED BY THE ASSESSEE WERE RELEVANT TO DECIDE THE ISSUE I N DISPUTE, WE THINK THE LD. CIT(A) SHOULD HAVE ADMITTED IT. NOW THE ASSESS EE HAS FILED BEFORE THE ITAT AN APPLICATION DATED 25.2.2015 UNDER RULE 29 O F THE ITAT RULES, 1963 TO ADMIT THE ADDITIONAL EVIDENCE BEING SALES B ILLS, LEDGER COPY OF REGAL ENGINEERING CO., ASSESSMENT ORDER, STATEMENT OF TOTAL INCOME FOR 3 ITA NO. 116/MUM/2013 (A.Y. 2009-10) A-1 FENCE PRODUCTS COMPANY VS. ASST. CIT THE AY 2010-11. WE FIND THAT THE ABOVE ADDITIONAL E VIDENCE HAVE A DIRECT BEARING ON THE ASSESSMENT ORDER DATED 30/12/2011 PA SSED BY THE AO AND SUBSEQUENT ORDER DATED 6/11/2012 PASSED BY THE LD. CIT(A). THUS WE ADMIT UNDER RULE 29 OF THE ITAT RULES, 1963 THE ADD ITIONAL EVIDENCE FILED BY THE ASSESSEE ON 25/02/2015 BEFORE THE TRIBUNAL. IN VIEW OF THE ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE CASE TO THE FILE OF THE AO TO CONSIDER THE ADDITIONAL EVIDENCE OF THE ASSES SEE AND MAKE A FRESH ASSESSMENT AS PER THE PROVISIONS OF THE ACT, AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28/11/2016 SD/- SD/- (MAHAVIR SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEM BER MUMBAI; DATED: 28 /11/2016 PRAMILA COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. B Y ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI