Wardex Pharmaceuticals Pvt Ltd., CHENNAI V. JCIT, CHENNAI

ITA 1205/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7727 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 02-02-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: J CHANDRASEKARAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.1205/MDS/2015 ( )( / ASSESSMENT YEAR : 2010-11 M/S WARDEX PHARMACEUTICALS PVT. LTD., 55, NELSON MANICKAM ROAD, AMINJIKARAI, CHENNAI - 600 029. PAN : AAACW 1036 D V. THE JOINT COMMISSIONER OF INCOME TAX, COMPANY RANGE III, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI J. CHANDRASEKARAN, CA -.+, / 0 / RESPONDENT BY : DR. B. NISCHAL, JCIT 1 / 2% / DATE OF HEARING : 02.02.2016 3') / 2% / DATE OF PRONOUNCEMENT : 18.03.2016 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 11, CHEN NAI, DATED 27.01.2015 AND PERTAINS TO ASSESSMENT YEAR 2010-11. 2 I.T.A. NO.1205/MDS/15 2. THE FIRST GROUND OF APPEAL IS WITH REGARD TO DIS ALLOWANCE OF FINANCIAL ASSISTANCE SAID TO BE RECEIVED FROM GOVER NMENT OF WEST BENGAL. 3. WE HAVE HEARD SHRI J. CHANDRASEKARAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE AND DR. B. NISCHAL, THE LD. DEPARTMENTAL REPRESENTATIVE. THE ASSESSEE-COMPANY IS ADMITTEDLY ENGAGED IN MANUFACTURING AND TRADING OF DRUGS AND PHARMACEUTICAL PRODUCTS. THE ASSESSEE RECEIVED ASS ISTANCE UNDER WEST BENGAL INDUSTRIAL PROMOTION (ASSISTANCE TO IND USTRIAL UNITS) FROM GOVERNMENT OF WEST BENGAL TO THE EXTENT OF ` 10,51,900/-. THE CIT(APPEALS) FOUND THAT IN THE ASSESSEE'S OWN CASE FOR ASSESSMENT YEAR 2001-02, THE MADRAS HIGH COURT CONFIRMED A SIM ILAR DISALLOWANCE. THE JUDGMENT OF MADRAS HIGH COURT IS REPORTED IN (2008) 307 ITR 387. THE CIT(APPEALS) HAS FOLLOWED THE JUDGMENT OF MADRAS HIGH COURT AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. SINCE A SIMILAR CASH ASSISTANCE FOR THE A SSESSMENT YEAR 2001-02 WAS DISALLOWED BY THE ASSESSING OFFICER AND THE SAME WAS CONFIRMED BY THE CIT(APPEALS) BY FOLLOWING THE JUDG MENT OF MADRAS HIGH COURT, THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION THAT THE CIT(APPEALS) HAS RIGHTLY CONFIRMED THE DISALLOWANCE MADE BY THE 3 I.T.A. NO.1205/MDS/15 ASSESSING OFFICER. THEREFORE, THIS TRIBUNAL HAS NO REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. A CCORDINGLY, THE ORDER OF THE CIT(APPEALS) IS CONFIRMED. 4. THE NEXT GROUND OF APPEAL IS WITH REGARD TO DISA LLOWANCE OF ` 74,44,944/- MADE ON ACCOUNT OF UNEXPLAINED PURCHASE S. 5. SHRI J. CHANDRASEKARAN, THE LD. REPRESENTATIVE F OR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE HAS PURCHASED TURKEY TOWELS AND UMBRELLAS IN THE COURSE OF BUSINESS ACTI VITY AND THE SAME WERE GIVEN TO THE DISTRIBUTORS/DEALERS TOWARDS SALES PROMOTION. THE ASSESSING OFFICER FOUND THAT THE CO MPANIES FROM WHICH THE ASSESSEE PURCHASED THE TURKEY TOWELS AND UMBRELLAS, WERE IDENTIFIED AS SUSPICIOUS HAWALA DEALERS. THER EFORE, THE ASSESSING OFFICER WITHOUT FURTHER INVESTIGATION DIS ALLOWED THE CLAIM OF THE ASSESSEE BY DOUBTING THE PURCHASES MADE BY T HE ASSESSEE. ACCORDING TO THE LD. REPRESENTATIVE, THE EXISTENCE OF SUBHIKSHA ENTERPRISES AND MIHIR ENTERPRISES IS NOT DOUBTED. THE SALES TAX AUTHORITIES OF MAHARASHTRA GOVERNMENT ALLOTTED TIN (TAX IDENTIFICATION NUMBER) TO THE ABOVE PARTIES. MEREL Y BECAUSE THE ABOVE PARTIES WERE SHOWN AS SUSPICIOUS HAWALA DEALE RS IN THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT THAT DO ES NOT MEAN 4 I.T.A. NO.1205/MDS/15 THAT THE ASSESSEE HAS NOT PURCHASED TURKEY TOWELS A ND UMBRELLAS FROM THE ABOVE SAID PARTIES. IT IS FOR THE ASSESSI NG OFFICER TO EXAMINE THOSE PARTIES AND FIND OUT WHETHER THE ASSE SSEE HAS ACTUALLY PURCHASED THE TURKEY TOWELS AND UMBRELLAS. IN THE ABSENCE OF ANY SUCH INVESTIGATION, THE CIT(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSIN G OFFICER. 6. ON THE CONTRARY, DR. B. NISCHAL, THE LD. DEPARTM ENTAL REPRESENTATIVE, SUBMITTED THAT THE ASSESSEE CLAIMS THAT TURKEY TOWELS AND UMBRELLAS WERE PURCHASED TO THE EXTENT O F ` 74,44,944/- FROM SUBHIKSHA ENTERPRISES AND MIHIR ENTERPRISES. THE ASSESSING OFFICER FOUND THAT SUBHIKSHA ENTERPRISES AND MIHIR ENTERPRISES ARE SUSPICIOUS HAWALA DEALERS AND THE SAME WAS DISCLOSE D IN THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT. THERE FORE, ACCORDING TO THE LD. D.R., THE ASSESSEE COULD NOT H AVE PURCHASED THE TURKEY TOWELS AND UMBRELLAS FROM THOSE PARTIES. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMS THAT TURKEY TOWELS AND UMBRELLAS WERE PURCHA SED TO THE EXTENT OF ` 74,44,944/-. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE MAHARASHTRA SALES TAX 5 I.T.A. NO.1205/MDS/15 DEPARTMENT IDENTIFIED SUBHIKSHA ENTERPRISES AND MIH IR ENTERPRISES AS SUSPICIOUS HAWALA DEALERS. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT WHAT WAS DISCLOSED IN THE WEBSITE IS T HAT SUBHIKSHA ENTERPRISES AND MIHIR ENTERPRISES ARE SUSPICIOUS HA WALA DEALERS. THERE IS NO INDICATION IN THE WEBSITE THAT THEY ARE NOT DEALING IN TURKEY TOWEL AND UMBRELLA. THEREFORE, IT IS FOR TH E ASSESSING OFFICER TO VERIFY FURTHER WHETHER SUBHIKSHA ENTERPRISES AND MIHIR ENTERPRISES ARE IN FACT DEALING IN TURKEY TOWEL AND UMBRELLA. SINCE SUCH AN EXERCISE WAS NOT DONE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE VERIFIED. ACCO RDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSU E OF PURCHASE OF TURKEY TOWEL AND UMBRELLA IS REMITTED BACK TO THE F ILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER AFRESH IN THE LIGHT OF THE MATERIALS AVAILAB LE ON RECORD INCLUDING THE INFORMATION AVAILABLE IN THE WEBSITE OF MAHARASHTRA SALES TAX DEPARTMENT WITH REGARD TO SUBHIKSHA ENTER PRISES AND MIHIR ENTERPRISES AND EXAMINE ALL THE CONCERNED PER SONS INCLUDING A RESPONSIBLE OFFICER OF SALES TAX DEPARTMENT OF MA HARASHTRA GOVERNMENT, WHO IS DEALING WITH SUBHIKSHA ENTERPRIS ES AND MIHIR ENTERPRISES AND THEREAFTER DECIDE THE MATTER IN ACC ORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESS EE. 6 I.T.A. NO.1205/MDS/15 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 18 TH MARCH, 2016 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 18 TH MARCH, 2016. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-11, CHENNAI-34 4. 1 92 /CIT, CHENNAI-3, CHENNAI 5. 7: -2 /DR 6. ( ; /GF.