LINFOX LOGISTICS (INDIA) PVT. LIMITED , MUMBAI V. ASSISTANT COMMISSIONER OF INCOME TAX-CIRCLE (10)(2)(1), MUMBAI

ITA 120/MUM/2023

AI Insights

M/s. Linfox Logistics (India) Pvt. Ltd. appealed against the order of the National Faceless Appeal Centre (NFAC) which upheld the disallowances made by the AO for the assessment year 2017-18. The disallowances included a claim of Rs.57,54,963 for lost stock and Rs.12,89,968 for gratuity payments. The Tribunal found that the assessee had not been given a fair opportunity to present additional evidence that could substantiate their claims. Consequently, the Tribunal admitted the additional evidence and remanded the case back to the AO for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 301079 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 10-07-2023
• Assessment Year: 2017-2018
• Appeal Filed On: 12-01-2023
• Other Referred Cases: Land Acquisition Collector vs. MST Katiji & Others, Prabhavati S. Shah vs. K. Venkataramiah vs. A. Seetharama Reddy
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Bad and doubtful debts; Corroborative evidences; Condonation of delay
• Section: 37; 28; 142(1); 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH “A”, MUMBAI BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No.120/M/2023 Assessment Year: 2017-18 M/s. Linfox Logistics (India) Pvt. Ltd., 603/604, Star Hub Building No.02, Near ITC Maratha Hotel, Sahar Road, Andheri Eeast, Mumbai-400 059 PAN: AABCL1515H Vs. Assistant Commissioner of Income Tax, Circle(10)(2)(1), Aayakar Bhavan, Mumbai- 400 021 (Appellant) (Respondent) Present for: Assessee by : Shri Rajan Vora, A.R. & Shri Lekh Mehta, A.R. Revenue by : Shri Manoj Kumar Sinha, Sr. AR. Date of Hearing : 11 . 07 . 2023 Date of Pronouncement : 29 . 08 . 2023 O R D E R Per : Kuldip Singh, Judicial Member: The appellant, M/s. Linfox Logistics (India) Pvt. Ltd. (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 06.07.2021 passed by the National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 2 referred to as CIT(A)] qua the assessment year 2017-18 on the grounds inter-alia that :- “ On the facts and in the circumstances of the case and in law, the learned CIT(A) has: General 1. erred in not accepting the total returned income of the Appellant. Disallowance of loss of Rs.57,54,963 on account of lost stock 2. erred in upholding the order of the learned AO by confirming the disallowance on account of lost stock of Rs.52,54,963 claimed under section 37 of the Act and disregarding that the lost stock is the realization of a business risk that the Appellant is exposed to which is an integral part of the business operations of the Appellant and hence must be allowed as business loss under section 28 of the Act. 3. erred in alleging that details (ie working, reason, etc.) on account of lost stock was not furnished and thus the claim of the Appellant was premature without appreciating that no such details were ever called for during the course of Appellate proceedings. 4. failed to appreciate the alternate claim made by the Appellant, wherein the above lost stock was claimed as bad debts write-off in the books of accounts under section 36(1)(vii) of the Act. 5. failed to apply on the judgment of the Hon'ble Mumbai Tribunal in the Appellant's own case for AY 2008-09, AY 2009-10, AY 2010-11 and AY 2011-12 and its own order for the AY 2012-13 which are based on similar facts. Disallowance of gratuity payment of Rs.12,89,968 6. erred in upholding the order of the learned AO by confirming the disallowance of gratuity of Rs.12,89,968 and not considering the payment made during the captioned AY of Rs. 12,89,968 in respect of gratuity though the same was apparent in Note 22 of the audited financial statements. Interest under Section 234C of the Act 7. erred in upholding the levy of interest amounting to Rs.2,46,966 under Section 234C of the Act in relation to the aforementioned additions made by the AO. Penalty proceedings 8. erred in upholding the initiation of penalty proceedings under Section 270A of the Act and has held that the appellant under-reported revenues for the captioned AY. The Appellant craves, to consider each of the above grounds of appeal without prejudice to each other and craves leave to add, alter, delete or ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 3 modify all or any of the above grounds of appeal at or before the hearing of the appeal, to decide the appeal according to law.” 2. At the very outset, it is brought to the notice of the Bench by the Ld. A.R. for the assessee that this appeal has been filed late by 495 days and sought to condone the delay on the grounds inter-alia that the impugned order dated 06.07.2021 passed by the Ld. CIT(A) was not served upon the assessee either on e-mail or by post or on the Income Tax Portal; that assessee has come to know about the impugned order on initiation of the penalty proceedings under section 270A of the Act; that despite having access to the Income Tax Portal to get the quantum order the assessee was unable to find the same online and as such the assessee remained unaware about the impugned order. 3. However, on the other hand, the Ld. D.R. for the Revenue opposed the application for condonation of delay on the ground that the late filing of appeals in this case is apparently malafide due to callous attitude of the assessee and prayed for dismissal of the application. 4. We are of the considered view that keeping in view the facts inter-alia that most of the period of delay sought to be condoned by the assessee is covered by the Covid period and due to the shift from physical to digital mode some technical glitches were there in not receiving the impugned order in times, we find sufficient reason to condone the delay of 495 days in view of the law laid down by the Hon’ble Supreme Court in case of Land Acquisition Collector vs. MST Katiji & Others 167 ITR 471 (SC) wherein it is held that “it is on contention of delay that when substantial justice and ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 4 technical considerations are pitted against each other, the case of substantial justice deserves to be preferred, for the other side cannot claim to have a vested right in injustice being done because of a non deliberate delay.” Hence, the delay of 495 days in filing the present appeal is hereby condoned and present appeal is ordered to be registered and heard today by the Bench. 5. Briefly stated facts necessary for consideration and adjudication of the issues at hand are : the assessee company is into supply chain solutions provider which includes warehousing, transportation and related logistic services namely to organize and carry out goods transportation services. The assessee’s return of income filed for the year under consideration declaring nil income was subjected to scrutiny. Necessary notices under section 142(1) of the Income Tax Act, 1961 (for short ‘the Act’) along with questionnaire was issued. During the scrutiny proceedings the Assessing Officer (AO) noticed that the assessee has claimed and debited Rs.57,54,963/- on account of lost stock and assessee was called upon to furnish details of the lost stock and justification for the same. The AO after examining the submissions proceeded to disallow the same and thereby made the addition of Rs.57,54,963/- on the ground that the loss on account of expiry of the product cannot be put on the company entrusted with transporting the goods and that it is not clear whether there is any theft or hijack either in the storage facility or during the delivery which is the real cause for the loss. 6. The AO also noticed from the tax audit report that the assessee had made provisions for the payment of gratuity of ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 5 Rs.72,44,852/-. The AO by invoking the provisions contained under section 40A(7) of the Act disallowed the same on the ground that the assessee has not offered proof for payment of gratuity to the extent of Rs.12,89,968/-, hence the AO disallowed the same to that extent. The AO thereby framed the assessment under section 143(3) of the Act. 7. The assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the disallowance/addition made by the AO by dismissing the appeal. Feeling aggrieved with the impugned order passed by the Ld. CIT(A) the assessee has come up before the Tribunal by way of filing present appeal. 8. We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto. Ground Nos.2 to 5 9. Bare perusal of the order passed by the AO as well as Ld. CIT(A) goes to prove that disallowance of loss of lost stock made/confirmed by the AO/Ld. CIT(A) is on account of want of vital evidence to be produced by the assessee. The Ld. CIT(A) in para 2 of the page 3 of the impugned order has categorically mentioned that the “assessee has not provided any details about what was the contract with the transporter. Whether they were liable to compensate for the lost stock in terms of the agreement and also no details have been furnished of the quantum of loss and the circumstances under which it has taken place.” ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 6 10. The Ld. A.R. for the assessee contended that he intends to bring on file some additional supporting evidence under rule 29 of the Income Tax Appellate Tribunal Rules, 1963 (for short ‘the Rules’) in the form of copy of agreement entered into between the Linfox and its customers namely Hindustan Unilever Ltd., SAB Miller India Ltd. and Asian Paints Limited, available at page 259E to 259F of the paper book, which has been opposed by the Ld. D.R. on the ground that the assessee has been given sufficient opportunities by the AO as well as Ld. CIT(A) to prove its claim. However, we are of the considered view that to impart the justice and to decide the issue once for all, vital evidence necessary to decide the issue in question is required to be brought on record to be examined by the concerned AO in the light of the settled principle of law in cases of Prabhavati S. Shah 231 ITR 1 (Bom.) & K. Venkataramiah vs. A. Seetharama Reddy AIR 1963 (SC) 1526. 11. So we hereby admit the additional evidence sought to be led by the assessee and remanded the matter back to AO to decide afresh after providing opportunity of being heard to the assessee. 12. Accordingly, ground Nos.2 to 5 are decided in favour of the assessee for statistical purposes. Ground No.6 13. The ground No.6 raised by the assessee is as to disallowance of amount of Rs.12,89,968/- on account of gratuity payment. Perusal of the impugned order passed by the Ld. CIT(A) again shows that the AO/ Ld. CIT(A) have disallowed/confirmed the disallowance of Rs.12,89,968/- for the lack of evidence of payment of gratuity to its employees. The assessee has failed to bring on ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 7 record the evidence before the AO as well as the Ld. CIT(A). Now the assessee has again made a request for admitting additional supporting evidence under rule 29 under the Rules in the form of list of employees eligible for gratuity along with gratuity payable to each employee and documents evidencing amount payable to the employees on account of gratuity otherwise available at page 414 to 480 of the paper book. 14. The Ld. D.R. for the Revenue again opposed leading of additional evidence on the ground that sufficient opportunities had already been given to the assessee which it has not availed. 15. Keeping in view the settled principle of law that to decide the issue once for all and to stop the multiplicity of the proceedings additional evidence sought to be laid if necessary to decide the issue in dispute is to be entertained by the Courts/Tribunal liberally, the assessee is allowed to lead the additional evidence. 16. We are of the considered view that since analysis of the additional evidence sought to be led by the assessee is required to be made by the AO the case is required to be remanded back to decide afresh by providing opportunity of being heard to the assessee. So ground No.6 is determined in favour of the assessee for statistical purposes. 17. Since this case belongs to A.Y. 2017-18 the AO in the interest of justice is required to pass the order within three months from the date of appearance of the assessee. ITA No.120/M/2023 Ms. Linfox Logistic Ind.P.Ltd. 8 18. Resultantly, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on 29.08.2023. Sd/- Sd/- (GAGAN GOYAL) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 29.08.2023. * Kishore, Sr. P.S. Copy to: The Appellant The Respondent The CIT, Concerned, Mumbai The DR Concerned Bench //True Copy// By Order Dy/Asstt. Registrar, ITAT, Mumbai.