Excel Stationeries Ltd, Hyderabad V. DCIT, Hyderabad

ITA 1168/HYD/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7181 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-02-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 03-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K MYTHILI RANI
• Assessee Lawyers: P MURALI MOHAN RAO
• Keywords: Depreciation; Additional evidence
• Section: 142(1); 115JB; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER ITA NO.136/HYD/2011 ASSESSMENT YEAR 2007-0 8 ITA NO.1168/HYD/2010 ASSESSMENT YEAR 2006- 07 ITA NO.564/HYD/2010 ASSESSMENT YEAR 2005-0 6 M/S EXCEL STATIONERIES LTD., HYDERABAD. (PAN AABCE 1366 R) VS THE DCIT, CIRCLE 2(2), HYDERABAD APPELLANT RESPONDENT APPELLANT BY : SHRI P. MURALI MOHAN RAO RESPONDENT BY : SMT. K. MYTHILI RANI DATE OF HEARING : 28.11.2011 DATE OF PRONOUNCEMENT : 9.12.2011 ORDER PER BENCH: THESE THREE APPEALS PREFERRED BY THE ASSESSEE ARE D IRECTED AGAINST THE DIFFERENT ORDERS PASSED BY THE CIT(A) III DATED 24.12.2010, 13.8.2010 & 30.10.2009 RESPECTIVELY AND THEY PERTAIN TO THE ASSESSMENT YEARS 2007-08, 2006-07 AND 2005-0 6. SINCE ISSUES INVOLVED IN THESE THREE APPEALS ARE COMMON I N NATURE, THEY ARE CLUBBED, HEARD AND DISPOSED OFF TOGETHER FOR TH E SAKE OF CONVENIENCE. 2. THE COMMON GROUNDS RAISED BY THE ASSESSEE IN ALL ITS THREE APPEALS ARE AS FOLLOWS: 3. THE CIT(A) ERRED WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHEREIN AN ADDITION OF RS.3,36,66,300/- (EQ UITY RS.2,78,00,000/- AND SHARE APPLICATION MONEY OF RS. 58,66,300/- ) HAS BEEN MADE TOWARDS UNEXPLAINED INCOME U/S 68 OF THE ACT ON THE CONTENTION THAT THE CONFIRMATION LETTERS FROM THE S HARE HOLDERS WERE NOT HAVING COMPLETE ADDRESS WHICH IS NOT CORRECT AN D NOT JUSTIFIED. ITA NOS.136, 1168 &564/HYD/2011 M/S EXCEL STATIONERIES LTD., HYDERABAD 2 3. THE ASSESSEE HAS ALREADY FURNISHED THE DETAILS OF SHARE HOLDERS TO THE ASSESSING OFFICER DURING THE SCRUTINY PROC EEDINGS. SINCE THE DETAILS OF SHARE HOLDERS WERE SUBMITTED TO THE ASSE SSING OFFICER, IT MAY NOT BE CONSIDERED AS UNDISCLOSED INCOME AND HEN CE THE ADDITION MADE TOWARDS INCREASE IN SHARE CAPITAL MAY PLEASE B E DELETED. 4. THE ASSESSEE PLACED RELIANCE ON THE CASE LAW OF CIT VS. LOVELY EXPORTS (P) LTD. (2008) 216 CTR (SC) 195: WHEREIN T HE SUPREME COURT HELD THAT IF THE SHARE APPLICATION MONEY IS RECEIVE D BY THE ASSESSEE COMPANY FROM ALLEGED BOGUS SHAREHOLDERS, WHOSE NAME S ARE GIVEN TO THE ASSESSING OFFICER, THEN THE DEPARTMENT IS FREE TO PRODUCE TO REOPEN THEIR INDIVIDUAL ASSESSMENTS IN ACCORDANCE W ITH LAW, BUT IT CANNOT BE REGARDED AS UNDISCLOSED INCOME OF THE ASS ESSEE COMPANY. 5. THE CIT(A) ERRED WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHEREIN THE DEPRECIATION CLAIMED BY THE ASS ESSEE COMPANY OF RS.62,86,900/- ON THE ADDITION OF PLANT AND MACHINE RY WORTH RS.6,20,10,001/- WHICH IS NOT CORRECT AND NOT JUSTI FIED. 6. THE ASSESSEE COMPANY HAS PURCHASED TWO CUT SIZE SHEETER MACHINES AMOUNTING RS.3,64,67,600/- AND RS.2,52,42 ,400/- RESPECTIVELY. THE CORRESPONDING PURCHASE INVOICES AND RESPECTIVE DETAILS OF BANK PAYMENTS ALONG WITH THEIR CHEQUE NO S. HAVE ALREADY BEEN SUBMITTED TO THE ASSESSING OFFICER WHICH ARE N OT CONSIDERED BY THE ASSESSING OFFICER AND THE DEPRECIATION HAS BEEN DISALLOWED WHICH IS NOT CORRECT AND NOT JUSTIFIED. HENCE THE DEPRECIATION CLAIMED BY THE ASSESSEE COMPANY OF RS.62,86,900/- MAY BE AL LOWED. 7. THE CIT(A) ERRED WHILE CONFIRMING THE ORDER OF THE ASSESSING OFFICER WHEREIN AN AMOUNT OF RS.16,49,000/- (RS.15,64,500+RS.40,000/- + 45,000/-) RELATING TO T HE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS RENT, PROFESSIONAL CHARGES AND AUDITOR FEE HAS BEEN DISALLOWED ON THE GROUND THAT THE TDS WAS NOT DEDUCTED ON THE SAID AMOUNT AS PER PROVISIONS UNDER CHAPTER XVIIB WHICH IS NOT CORRECT AND NOT JUSTIFIED. 8. THE PROVISIONS OF SECTION 40(A)(IA) APPLIES ONL Y IN RESPECT OF THE EXPENDITURE PAYABLE BUT NOT IN RESPECT OF THE EXPEN SES PAID. HENCE REQUEST TO DELETE THE ADDITION MADE TOWARDS RENT, P ROFESSIONAL CHARGES AND AUDITOR FEE PAID. 9. THE ASSESSEE PLACED RELIANCE ON THE FOLLOWING C ASE LAWS AND CBDT CIRCULAR: A) M/S TEJA CONSTRUCTIONS VS. ACIT ITA NOS.136, 1168 &564/HYD/2011 M/S EXCEL STATIONERIES LTD., HYDERABAD 3 B) JAIPUR VIDYUT VITRAN NIGAM LTD. VS. DCIT C) THE CBDT CIRCLE NO.5 OF 2005 DATED 25 TH JULY, 2005 10. THE ASSESSEE MAY ADD, ALTER, OR MODIFY OR SUBS TITUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE OR AT THE TIME OF HEARING THE CASE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN TRADING IN STATIONARY AND ALLIED ITEMS I N WHICH PUBLIC ARE NOT SUBSTANTIALLY INTERESTED. FOR THE ASSESSMENT Y EAR 2007-08, THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSM ENT YEAR IN DISPUTE ADMITTING AN INCOME OF RS.2,37,962/- UNDER THE NORMAL PROVISIONS AND RS.52,79,011 U/S 115JB OF THE IT ACT ON 31.10.2007. THE ASSESSING OFFICER PROCESSED THE SA ME U/S 143(1) OF THE ACT ON 26.2.2009. THE CASE WAS SELECTED FOR SC RUTINY AND A NOTICE U/S 143(2) WAS ISSUED ON 26.9.2008. SUBSEQU ENTLY, THE ASSESSING OFFICER ALSO ISSUED NOTICES U/S 143(2) & 142(1) AND THE DETAILS OF THE SAME WERE GIVEN AT PAGE 2 OF THE ASS ESSMENT ORDER. IN SPITE OF VARIOUS NOTICES ISSUED AND SERVED ON THE A SSESSEE, THE ASSESSEE REMAINED NON-COOPERATIVE IN THE ASSESSMENT PROCEEDINGS AND HAS NOT FILED THE NECESSARY DOCUMENTARY EVIDENC E AS REQUIRED BY THE ASSESSING OFFICER. NO DOUBT, THE LEARNED AU THORIZED REPRESENTATIVE FOR THE ASSESSEE APPEARED SOMETIME I N THE ASSESSMENT PROCEEDINGS, AND ALSO FILED PART OF EVID ENCE BUT THE ASSESSEE HAS NOT FILED THE EVIDENCE WHICH CAN PROVE THE CASE. THE ASSESSEE SOUGHT SEVERAL ADJOURNMENTS ON ONE PRETEXT OR ANOTHER. FINALLY, THE ASSESSING OFFICER ISSUED NOTICE U/S 14 4 ON 29.10.2009 FIXING THE DATE FOR HEARING ON 9.11.2009. IN RESPO NSE TO THE SAME, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSES SEE APPEARED AND FILED CONFIRMATION LETTERS FROM SOME OF THE INV ESTORS INVESTED IN SHARE CAPITAL/SHARE APPLICATION MONEY AND COPIES OF ADDITIONS TO MACHINERY. HE WAS ASKED TO PRODUCE FULL INVESTORS AND DIRECTORS ALONG WITH THEIR BANK STATEMENTS AND THE ASSESSING OFFICER ITA NOS.136, 1168 &564/HYD/2011 M/S EXCEL STATIONERIES LTD., HYDERABAD 4 ADJOURNED THE CASE TO 11.11.2009. ON 11.11.2009, T HE ASSESSEE FILED AN APPLICATION FOR ADJOURNMENT AND THE ASSESS ING OFFICER ADJOURNED THE CASE TO 16.11.2009. ON THE DATE OF H EARING I.E. ON 16.11.2009 NONE APPEARED ON BEHALF OF THE ASSESSEE. KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, THE A SSESSING OFFICER COMPLETED THE ASSESSMENT EX-PARTE U/S 144 OF THE AC T ON 31.12.2009 MAKING VARIOUS ADDITIONS IN DISPUTE IN T HESE APPEALS. 4. FACTS ARE SIMILAR FOR OTHER ASSESSMENT YEARS UN DER CONSIDERATION. 4. AGGRIEVED BY THE EX-PARTE ASSESSMENTS MADE U/S 144 OF THE ACT, THE ASSESSEE FILED APPEALS BEFORE THE CIT(A). THE CIT(A) DISMISSED THE APPEALS OF THE ASSESSEE BY UPHOLDING THE ORDERS OF THE ASSESSING OFFICER. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSES SEE PREFERRED THE PRESENT APPEALS BEFORE US. 6. AT THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE STATED THAT THE CIT(A) HAD DISMISS ED THE APPEAL FILED BY THE ASSESSEE WITHOUT GIVING SUFFICIENT OPP ORTUNITY FOR SUBSTANTIATING THE CLAIM OF THE ASSESSEE. HE FURTH ER STATED THAT THE ASSESSING OFFICER HAS WRONGLY APPLIED THE PROVISION S OF SECTION 144 WHICH HAS WRONGLY BEEN UPHELD BY THE FIRST APPELLAT E AUTHORITY. HE STATED THAT THE ASSESSEE HAS FILED APPLICATION FOR FURNISHING ADDITIONAL EVIDENCE UNDER RULE 46(1)(C) OF THE IT R ULES 1962 WHICH HAS WRONGLY BEEN REJECTED BY THE LEARNED FIRST APPE LLATE AUTHORITY. HE REQUESTED THE ASSESSEE IS HAVING ALL THE NECESSA RY EVIDENCES ALTHOUGH THE SAME HAS NOT BEEN FILED BEFORE THE ASS ESSING OFFICER AS WELL AS BEFORE THE 1 ST APPELLATE AUTHORITY, AS SUFFICIENT OPPORTUNITY HAS NOT BEEN GRANTED TO THE ASSESSEE BY THOSE AUTHO RITIES. ITA NOS.136, 1168 &564/HYD/2011 M/S EXCEL STATIONERIES LTD., HYDERABAD 5 THEREFORE, THE ISSUE IN DISPUTE MAY BE SET ASIDE TO THE ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCORDANCE WIT H LAW AFTER APPRECIATING THE ADDITIONAL EVIDENCE FILED BY THE A SSESSEE. 7. ON THE CONTRARY, THE LEARNED DR RELIED ON THE O RDERS PASSED BY THE REVENUE AUTHORITIES ESPECIALLY THE IMPUGNED ORDERS AND STATED THAT SUFFICIENT OPPORTUNITIES HAVE BEEN PROV IDED TO THE ASSESSEE BY THE ASSESSING OFFICER TO PRODUCE NECESS ARY EVIDENCE FOR PROVING ITS CLAIM, BUT THE ASSESSEE REMAINED NON CO OPERATIVE BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE LEARNED 1 ST APPELLATE AUTHORITY. THEREFORE, THE DR OPPOSED THE PLEA OF T HE ASSESSEE FOR SETTING ASIDE THE ISSUE IN DISPUTE TO THE FILE OF A SSESSING OFFICER AND REQUESTED FOR DISMISSAL OF THE PRESENT APPEALS. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIALS AVAILABLE ON RECORD, INCLUDING THE ORDERS PASSED BY THE REVENUE AUTHORITIES. KEEPING IN VIEW OF THE FACTS AND CIRC UMSTANCES OF THE PRESENT CASE, WE ARE OF THE CONSIDERED OPINION THAT THE ADDITIONAL EVIDENCE FIELD BY THE ASSESSEE IS VERY MUCH ESSENTI AL FOR DETERMINING THE ISSUES IN DISPUTE IN THE PRESENT APPEALS, MORE PARTICULARLY IN VIEW OF THE FACT THAT THE IMPUGNED ASSESSMENTS HAVE BEEN FRAMED EX-PARTE UNDER S.144 OF THE INCOME-TAX ACT. WE ACCO RDINGLY, SET ASIDE THE IMPUGNED ORDERS OF THE CIT(A), AND RESTOR E THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDIC ATION ON THE ISSUES IN DISPUTE, AFRESH IN ACCORDANCE WITH LAW, AFTER GI VING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE DIRECT ACCORDINGLY. 9. IN THE RESULT, THE APPEALS FILED BY THE ASSESSE E ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON: 9.12.2011 SD/- SD/- (CHANDRA POOJARI) ( H.S. SIDHU ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 9 TH DECEMBER, 2011 ITA NOS.136, 1168 &564/HYD/2011 M/S EXCEL STATIONERIES LTD., HYDERABAD 6 COPY FORWARDED TO: 1. SHRI P. MURALI & CO., CHARTERED ACCOUNTANTS, 6-3-6 55/2/3, 1 ST FLOOR, SOMAJIGUDA, HYDERABAD-82. 2. THE DCIT, CIRCLE 2(2), HYDERABAD 3. THE CIT(A) III, HYDERABAD 4. THE CIT, HYDERABAD 5. THE DR, ITAT, HYDERABAD NP/