Global Green Compnay Ltd., New Delhi V. DCIT, New Delhi

ITA 1186/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52801 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 03-10-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 04-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MONGA
• Assessee Lawyers: REENA LAMBA
• Keywords: Opportunity of being heard
• Section: 143(3); 115JB; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C NEW DELHI BEFORE SHRI C.L. SETHI AND SHRI SHAMIM YAHYA ITA NO. 1186/DEL/2011 ASSTT. YR: 2004-05 GLOBAL GREEN COMPANY LTD. VS. DCIT, CIRCLE-12(1), THAPAR HOUSE, 124 JANPATH, NEW DELHI. NEW DELHI-110001. PAN/GIR NO. AAACR0635H ]APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI P.C. YADAV ADV. & MS.REENA LAMBA CA RESPONDENT BY : SHRI A.K. MONGA SR. DR O R D E R PER C.L. SETHI, J.M : THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 2 1-12-2010 PASSED BY THE LEARNED CIT(APPEALS) IN THE MATTER OF AN ASS ESSMENT MADE BY THE ASSESSING OFFICER U/S 143(3)/263 OF THE INCOME-TAX ACT, 1961 FOR THE ASSESSMENT YEAR 2004-05. 2. VARIOUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE REVOLVE AROUND THE ISSUE AS TO WHETHER THE FOLLOWING AMOUNTS WERE RIGH TLY ADDED BACK TO THE BOOK PROFIT WHILE COMPUTING THE ASSESSEES INCOME U /S 115JB OF THE ACT. PROVISION FOR FARMER ADVANCES RS. 3933577/- PROVISION FOR DEBTORS RS. 2297280/- PROVISION FOR ADVANCES RS. 5940393/- DIMINUTION IN VALUE OF LEASEHOLD IMPROVEMENTS RS. 1 350000/- TOTAL: RS. 13521240/- 3. IN THIS CASE, THE ORIGINAL ASSESSMENT U/S 143(3) WAS MADE BY THE ASSESSING OFFICER ON 29-12-2006 BY DETERMINING THE ASSESSED LOSS AT RS. ITA 1186/DEL/11 GLOBAL GREEN CO. LTD. VS. DCIT 2 9,58,24,405/- AND BOOK PROFIT AT RS. 25,44,189/- U /S 115JB OF THE ACT. THEREAFTER, THE LEARNED COMMISSIONER OF INCOME-TAX VIDE ORDER DATED 13-3- 2009 PASSED U/S 263 OF THE ACT, DIRECTED THE ASSESS ING OFFICER TO MAKE NECESSARY VERIFICATION AND CROSS INQUIRY TO DETERMI NE TRUE NATURE, CORRECTNESS AND ALLOWABILITY OF THE FOLLOWING ITEMS: - MISTAKE IN CARRY FORWARD OF LOSS - WRONG CALCULATION OF BOOK PROFIT U/S 115JB 4. IN PURSUANCE TO THE CITS ORDER PASSED U/S 263 O F THE ACT, THE ASSESSING OFFICER COMPLETED THE FRESH ASSESSMENT U/ S 143(3)/263 OF THE ACT ON 17-9-2009, WHERE THE PROVISIONS OF THE AFORESAID LIABILITIES AGGREGATING TO RS. 1,35,21,240/- WERE ADDED BACK TO THE BOOK PROFI T U/S 115JB OF THE ACT. IT WAS STATED BY THE ASSESSING OFFICER THAT TO ARRI VE AT THE BOOK PROFIT U/S 115JB, AN ADJUSTMENT ON ACCOUNT OF UNASCERTAINED LI ABILITY DEBITED IN THE P&L A/C WAS REQUIRED TO BE MADE. HE TREATED THE AFO RESAID LIABILITY TO BE IN THE NATURE OF UNASCERTAINED LIABILITY AND ADDED BAC K THE SUM OF RS. 1,35,21,240/- TO THE BOOK PROFIT AND DETERMINED THE BOOK PROFIT U/S 115JB AT RS. 1,60,65,429/- AS AGAINST RS. 25,44,189/- DETERM INED IN THE ORIGINAL ASSESSMENT MADE U/S 143(3) OF THE ACT. 5. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(APPEALS). IN THE LIGHT OF THE PROVISIONS CONTAI NED IN SECTION 115JB(2), THE LEARNED CIT(A) HELD THAT THE PROVISION FOR UNAS CERTAINED LIABILITY AND DIMINUTION IN THE VALUE OF ASSETS DEBITED IN THE P &L A/C ARE REQUIRED TO BE ADDED BACK TO THE NET PROFIT FOR THE PURPOSE OF COM PUTING BOOK PROFIT U/S 115JA/JB OF THE ACT. LEARNED CIT(A) WAS OF THE OPIN ION THAT THE PROVISIONS ITA 1186/DEL/11 GLOBAL GREEN CO. LTD. VS. DCIT 3 MADE BY THE ASSESSEE WERE IN RESPECT OF UNASCERTAIN ED LIABILITY. HE, THEREFORE, UPHELD THE ORDER OF LEARNED AO. 6. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFOR E US. 7. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF THE AUTHORITIES BELOW. 8. IN THE COURSE OF HEARING OF THIS APPEAL, IT WAS FAIRLY CONCEDED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT THE PROVISION MADE FOR DIMINUTION IN VALUE OF LEASE-HOLD IMPROVEMENTS AMOUNTING TO RS. 1 3,50,000/- HAS BEEN RIGHTLY ADDED BACK TO THE NET PROFIT FOR THE PURPOS E OF DETERMINING BOOK PROFIT U/S 115JB OF THE ACT INASMUCH AS THIS PROVIS ION WAS RELATED TO UNASCERTAINED LIABILITY. IN THE LIGHT OF THE ASSESS EES SUBMISSION, THEREFORE, WE DO NOT FIND ANY IRREGULARITY IN THE ORDER OF LEA RNED CIT(A) IN SUSTAINING THE AOS ACTION IN ADDING BACK THE SUM OF RS. 13,50 ,000/- TO THE NET PROFIT ON ACCOUNT OF DIMINUTION IN VALUE OF LEASE-HOLD IM PROVEMENTS. THEREFORE, CIT(A)S ACTION ON THIS ACCOUNT IS UPHELD. 9. THIS LEAVE US NOW TO CONSIDER THE FOLLOWING THRE E ITEMS: PROVISION FOR FARMER ADVANCES RS. 3933577/- PROVISION FOR DEBTORS RS. 2297280/- PROVISION FOR ADVANCES RS. 5940393/- 10. DURING THE COURSE OF HEARING OF THIS APPEAL, TH E LEARNED COUNSEL SUBMITTED THAT THE AFORESAID THREE ITEMS WERE ACTUA LLY WRITTEN OFF IN THE BOOKS OF ACCOUNT AS WOULD BE CLEAR FROM THE BALANCE SHEET AND OTHER STATEMENT OF ACCOUNT PLACED IN THE PAPER BOOK AND T HEREFORE THESE ITEMS ARE NOT LIABLE TO BE ADDED BACK TO THE NET PROFIT FOR T HE PURPOSE OF DETERMINING NET PROFIT U/S 115JB OF THE ACT. ITA 1186/DEL/11 GLOBAL GREEN CO. LTD. VS. DCIT 4 11. LEARNED DR, ON THE OTHER HAND, SUPPORTED THE OR DERS OF THE AUTHORITIES BELOW. 12. ON GOING THROUGH THE ASSESSING OFFICERS AS WEL L AS CIT(A)S ORDER, WE FIND THAT BOTH THE AUTHORITIES HAVE PROCEEDED ON A FOOTING THAT ALL THESE PROVISIONS WERE MADE FOR UNASCERTAINED LIABILITY WI THOUT EXAMINING THE NECESSARY ENTRIES RECORDED BY THE ASSESSEE IN THE B OOKS OF ACCOUNT THE LEARNED COUNSEL SUBMITTED THAT CORRESPONDING AMOUNT S OF FARMER ADVANCES, DEBTORS AND ADVANCES WERE ACTUALLY REDUCED IN THE B ALANCE-SHEET AND THEREFORE, THESE AMOUNTS WERE ACTUALLY WRITTEN OFF DURING THE YEAR UNDER CONSIDERATION ITSELF. HOWEVER, THESE PARTICULAR ASP ECTS OF THE MATTER HAVE NOT BEEN EXAMINED EITHER BY THE AO OR BY THE LEARNED CI T(A), NOR ASSESSEE HAS PLACED ALL THESE DETAILS BEFORE THE AO PROPERLY. WE ARE, THEREFORE, OF THE CONSIDERED VIEW THAT THESE ITEMS NEED TO BE RESTOR ED BACK TO THE FILE OF THE AO FOR HIS FRESH EXAMINATION AND VERIFICATION TO AS CERTAIN AS TO WHETHER THESE THREE ITEMS WERE ACTUALLY MADE TOWARDS A PRO VISION FOR UNASCERTAINED LIABILITY OR WHETHER THESE AMOUNTS WERE ACTUALLY WR ITTEN OFF IN THE BOOKS OF ACCOUNT DURING THE YEAR UNDER CONSIDERATION, AND TH EN TO DECIDE THE ISSUE AS PER PROVISIONS CONTAINED IN SEC. 115JB OF THE ACT. 13. THE AO SHALL PROVIDE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE ASSESSEE SHALL BE UNDER AN OBLIGATION TO PLACE AND FURNISH ALL EVIDENCES, DETAILS, BOOKS OF ACCOUNT BEFORE THE AO FOR HIS VERIFICATION SO AS TO ASCERTAIN AS TO WHETHER THE AFORESAID PROVISIONS WERE MADE FOR UNASCERTAINED LIABILITY OR THEY WERE ACTUALLY WRITT EN OFF IN THE BOOKS OF ACCOUNT. ASSESSEE SHALL BE AT LIBERTY TO MAKE ALL S UCH CONTENTIONS AND ITA 1186/DEL/11 GLOBAL GREEN CO. LTD. VS. DCIT 5 SUBMISSIONS BEFORE THE AO AS IT MAY DEEM FIT AND P ROPER. AO SHALL BE AT LIBERTY TO EXAMINE THE ISSUE AS PER PROVISIONS OF L AW. WE ORDER ACCORDINGLY. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 07-10-2011. SD/- SD/- (SHAMIM YAHYA ) ( C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 07-10-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR