EMERGENT MEDI-TECH (INDIA) P. LTD, MUMBAI V. ITO WD 10(1)(4), MUMBAI

ITA 1207/MUM/2011

• Counselvise Citation: 120719914 RSA 2011
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 09-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G P TRIVEDI
• Keywords: Period of limitation; Source of fund; Additional evidence; Time period of passing order
• Section: 142(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E : MUMBAI BEFORE SHRI R.S. PADVEKAR,(JM) AND SHRI RAJENDRA S INGH ,(AM) ITA NO.1207/MUM/2011 ASSESSMENT YEAR :2006-07 EMERGENT MEDI-TECH (INDIA) PRIVATE LIMITED 118, DAMJI SHAMJI INDL. COMPLEX 9, L.B.S. MARG, KURLA (W) MUMBAI-400 070. ..( APPELLANT ) P.A. NO. (AAACE 8060 B) VS. THE INCOME TAX OFFICER WARD -10(1)(4) MUMBAI-. ..( RESPONDENT ) APPELLANT BY : MS. AARTI VISSANJI RESPONDENT BY : SHRI G .P. TRIVEDI O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 4.1.2011 OF THE CIT(A) FOR THE ASSESSMENT YEAR 2006 -07. THE DISPUTE RAISED BY THE ASSESSEE IN THIS APPEAL RELATES TO ADDITION OF RS.26,27,640/- ON ACCOUNT OF SHARE CAPITAL, RS.69,21,600/- ON ACCOUNT OF UNSECURED LOANS AND RS.7,48,180/- ON ACCOUNT OF DISALLOWANCE OF EXPENSE S I.E., COMMISSION, TRAVELING, MOTOR CAR EXPENSES AND SEMINAR EXPENSES. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE FOR THE RELEVANT YEAR HAD FILED RETURN OF INCOME ON 30.11.2006 DECLA RING TOTAL INCOME OF RS.13,00,523/-. THE ASSESSING OFFICER TOOK UP CASE FOR SCRUTINY AND ISSUED NOTICE UNDER SECTION 143(2) AND FIXED THE CASE FOR HEARING ON 11.10.2007 BUT THERE WAS NO RESPONSE FROM THE ASSESSEE. THE ASSES SING OFFICER THEREAFTER ISSUED NOTICE UNDER SECTION 142(1) FIXING THE CASE FOR HEARING ON 22.2.2008 BUT AGAIN THERE WAS NO RESPONSE. THE CASE WAS FIXE D AGAIN FOR HEARING ON ITA NO.1207/M/11 A.Y:06-07 2 9.9.2008 TO WHICH ALSO THERE WAS NO RESPONSE. THE ASSESSING OFFICER THEREAFTER INITIATED PENALTY PROCEEDINGS UNDER SECT ION 271(1)(B) OF THE ACT BY ISSUING SHOW CAUSE NOTICE AS TO WHY PENALTY SHOULD NOT BE IMPOSED. THEREAFTER AUTHORIZED REPRESENTATIVE OF THE ASSESSE E APPEARED ON 4.12.2008 AND FILED SOME DETAILS. THE ASSESSING OFFICER VIDE ORDER SHEET NOTE DATED 4.12.2008 ASKED THE ASSESSEE TO FILE DETAILS AND EV IDENCE IN ADDITION TO ADDITION TO SHARE CAPITAL, UNSECURED LOANS AND EXPE NSES DEBITED IN P&L ACCOUNT. THE CASE WAS ADJOURNED TO 17.12.2008 WHEN SOMEONE FROM THE OFFICE OF THE LD. AR APPEARED AND FILED SOME DETAIL S WHICH WERE NOT ADEQUATE AS THERE WAS NO EXPLANATION GIVEN IN RESPECT OF ADD ITION TO SHARE CAPITAL, ADDITION OF UNSECURED LOAN, COMMISSION PAYMENT ETC. THE ASSESSING OFFICER THEREFORE, TREATED THE SUM OF RS.26,27,640/- BEING ADDITION TO SHARE CAPITAL AS INCOME OF ASSESSEE UNDER SECTION 68 OF THE ACT. SIMILARLY UNSECURED LOANS AMOUNTING TO RS.69,21,600/- WERE ALSO ADDED U NDER SECTION 68. THE ASSESSING OFFICER ALSO DISALLOWED CLAIM OF COMMISSI ON OF RS.4,98,180/- ON THE GROUND THAT THERE WERE NO EVIDENCES OF SERVICES RENDERED. HE ALSO MADE AN ESTIMATED DISALLOWANCE OF RS.1.00 LACS EACH FROM TRAVELLING EXPENSES AND MOTOR CAR EXPENSES AND RS.50,000/- FROM SEMINAR EXP ENSES. 3. THE ASSESSEE DISPUTED THE DECISION OF THE ASSESS ING OFFICER AND SUBMITTED BEFORE THE CIT(A) THAT DETAILS AND EVIDEN CES COULD NOT BE FILED FULLY BEFORE THE ASSESSING OFFICER AS THESE WERE QUITE EX PENSIVE AND THAT SOME OF THE CREDITORS WERE OUT STATION PARTIES. THE ASSESS EE HAD GATHERED NECESSARY DETAILS AND EVIDENCES AND LD. AR OF THE ASSESSEE AP PEARED BEFORE THE ASSESSING OFFICER ON 26.12.2008 WITH THE SAID DETAI LS AND EVIDENCES BUT THE ASSESSING OFFICER SAID THAT THE ORDER HAD ALREADY B EEN PASSED. THE ASSESSING OFFICER SUBMITTED THE SAID DETAILS AND EV IDENCES IN THE FORM OF ADDITIONAL EVIDENCES BEFORE THE CIT(A) WHICH CONSTI TUTED OF THE FOLLOWING:- I) COPIES OF BANK STATEMENT OF THE ASSESSEE. II) FORM NO.2 SUBMITTED TO ROC FOR ALLOTMENT OF SHARES. ITA NO.1207/M/11 A.Y:06-07 3 III) BANK STATEMENT AND IT RETURN ACKNOWLEDGEMENT AND DE TAILS IN RESPECT OF SOURCE OF FUNDS IN RESPECT OF FOUR MAJOR PARTIES . IV) CONFIRMATION OF PARTIES. V) BANK STATEMENT OF PARTIES EXCEPT FOR TWO PARTIES AN D VI) DETAILS IN RESPECT OF SOURCE EXCEPT FOR TWO PARTIES . 3.1 THE CIT(A) FORWARDED THE ABOVE ADDITIONAL EVIDE NCES TO THE ASSESSING OFFICER FOR EXAMINATION AND REMAND REPORT. THE ASS ESSING OFFICER IN THE REMAND REPORT DATED 12.11.2010 SUBMITTED THAT THE A SSESSEE DURING THE REMAND PROCEEDINGS HAD BEEN GIVEN SUFFICIENT OPPORT UNITIES BUT EVIDENCES HAD NOT BEEN PRODUCED AND, THEREFORE, THE SAME COUL D NOT BE ADMITTED U/R. 46A OF THE IT RULES. IN REPLY THE ASSESSEE STATED THAT THE DETAILS AND EVIDENCES WERE SPECIFICALLY REQUISITIONED BY ASSESS ING OFFICER ONLY ON 4.12.08 AND IT TOOK SOME TIME TO COLLECT THE DETAILS AS MAN Y PARTIES WERE LOCATED OUTSIDE MUMBAI. IT WAS ACCORDINGLY REQUESTED THAT ADDITIONAL EVIDENCE MAY BE ADMITTED. AFTER CONSIDERING THE REPLY OF THE AS SESSEE AND MATERIAL ON RECORD THE CIT(A) OBSERVED THAT PRIMA FACIE ARGUMEN T OF THE ASSESSEE THAT ASSESSING OFFICER HAD ASKED FOR DETAILS ONLY AT THE FAG END OF THE YEAR WAS CORRECT. HOWEVER, HE FURTHER OBSERVED THAT THE ASS ESSEE SHOULD HAVE BEEN AWARE ABOUT THE TYPE OF DETAILS AND EVIDENCES REQUI SITIONED FOR SCRUTINY PROCEEDINGS PARTICULARLY AFTER A DETAILED QUESTIONN AIRE HAD BEEN ISSUED BY THE ASSESSING OFFICER VIDE NOTICE DATED 5.2.2008 UNDER SECTION 142(1). THE CIT(A) ALSO OBSERVED THAT SOME OF THE CREDITORS WER E LOCATED IN MUMBAI, AND THEREFORE, THERE WAS NO REASON TO NOT FILE DETA ILS AND EVIDENCES IN RESPECT OF THESE PARTIES. AS REGARDS DETAILS OF EX PENSES THERE WERE NO DIFFICULTY IN FILING THE SAME AS THESE WERE REQUIRE D WERE TO BE PREPARED FROM THE BOOKS OF ACCOUNT. THE CIT(A), THEREFORE, AGREE D WITH THE ASSESSING OFFICER THAT THE CASE OF THE ASSESSEE WAS NOT COVER ED BY THE EXCEPTIONS PROVIDED IN RULE 46A. HE, THEREFORE, DID NOT ADMIT THE ADDITIONAL EVIDENCES. THE CIT(A) ACCORDINGLY UPHELD THE ADDITION MADE BY THE ASSESSING OFFICER, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE ITA NO.1207/M/11 A.Y:06-07 4 ASSESSEE IN ADDITION TO DISPUTING THE ADDITIONS ON MERITS, HAS ALSO SPECIFICALLY CHALLENGED THE DECISION OF CIT(A) TO NOT ADMIT THE ADDITIONAL EVIDENCES. 4. THE LD. AR FOR THE ASSESSEE ARGUED THAT SPECIFIC DETAILS AND EVIDENCES HAD BEEN FIRST ASKED BY ASSESSING OFFICER ON 4.12.2 008 AND SINCE SOME OF THE PARTIES WERE LOCATED OUTSIDE MUMBAI IT TOOK SOM E TIME. IT WAS ALSO SUBMITTED THAT CIT(A) HIMSELF AGREED THAT ASSESSING OFFICER HAD ASKED FOR THE DETAILS ONLY TOWARDS THE FAG END OF THE YEAR. IT WAS POINTED OUT THAT THE ASSESSEE HAD FILED SOME DETAILS ON 4.12.2008 AN D 10.12.2008. THE LD. AR ALSO REFERRED TO THE AFFIDAVIT OF THE M.D PLACED ON RECORD AT PAGE 270 OF THE PAPER BOOK IN WHICH IT WAS SUBMITTED THAT M.D A LONG WITH K.G. MEGHANANS & COMPANY HAD APPEARED BEFORE ASSESSING O FFICER TO FILE DETAILS VIDE LETTER DATED 24.12.2008 BUT ASSESSING OFFICER REFUSED TO ACCEPT THEM. THE AR FURTHER SUBMITTED THAT THE ASSESSEE HAD FIEL D COMPLETE DETAILS AND EVIDENCES IN RESPECT OF SHARE CAPITAL ADDITION AND OTHER LOAN CREDITORS WHICH WERE AVAILABLE AT PAGE 68 ONWARDS AND AT PAGE 104 I N THE PAPER BOOK. IT WAS REQUESTED THAT ADDITIONAL EVIDENCE MAY BE DIRE CTED TO BE ADMITTED IN THE INTEREST OF JUSTICE AS THESE ARE NECESSARY FOR DECIDING THE ISSUE. 4.1. THE LD. DR APPEARING FOR THE REVENUE FAIRLY AG REED THAT HE HAS NO OBJECTION IF THE ADDITIONAL EVIDENCES ARE ADMITTED AND ISSUE IS RESTORED TO THE ASSESSING OFFICER FOR FRESH EXAMINATION. 5. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE M ATTER CAREFULLY. THE DISPUTE IS REGARDING ADMISSION OF ADDITIONAL EVIDEN CE BEFORE CIT(A). THE ADDITIONAL EVIDENCES WHICH CONTAIN DETAILS SUCH AS NAME AND ADDRESS OF CREDITORS, PA NOS., COPY OF BANK PASS BOOK, ACKNOWL EDGEMENT OF FILING RETURN, ETC., IN RELATION TO SHARE CAPITAL ADDITION AND TH E LOAN CREDITORS HAD BEEN PRODUCED BY THE ASSESSEE BEFORE THE ASSESSING OFFI CER ON 26.12.2008. THIS IS SUPPORTED BY THE AFFIDAVIT OF THE M.D PLACED ON RECORD STATING THAT THE ASSESSING OFFICER HAD REFUSED TO ACCEPT THEM ON THE GROUND THAT ORDER HAD ALREADY BEEN PASSED. THE ASSESSING OFFICER THEREAF TER SUBMITTED THE SAID ITA NO.1207/M/11 A.Y:06-07 5 EVIDENCE BEFORE THE CIT(A) FOR ADMISSION AS FRESH E VIDENCE. THE CIT(A) HOWEVER REJECTED THE SAME. IN OUR VIEW THE ACTION OF THE CIT(A) IS NOT JUSTIFIED. THE CIT(A) HIMSELF IN HIS ORDER ADMITTE D THAT DETAILS AND EVIDENCES WERE REQUISITIONED BY ASSESSING OFFICER ONLY TOWARDS THE FAG END OF THE LIMITATION PERIOD ON 4.12.2008. THEREFORE, NOT ADMITTING THE ADDITIONAL EVIDENCE IS NOT CORRECT PARTICULARLY WHEN THE ASSES SEE HAD EXPLAINED THAT SOME OF THE PARTIES WERE LOCATED OUTSIDE MUMBAI AND THEREFORE, IT WAS TAKING TIME TO GATHER THE NECESSARY EVIDENCES. ADMISSION OF ADDITIONAL EVIDENCE IN OUR VIEW IS NECESSARY FOR ARRIVING AT A PROPER DECI SION IN RELATION TO ADDITION ON ACCOUNT OF SHARE CAPITAL AND LOAN CREDITORS. W E THEREFORE, SET ASIDE THE ORDER OF CIT(A) AND ADMIT THE ADDITIONAL EVIDENCES AND RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR PASSING A FRESH ORDER AFTER EXAMINATION OF ADDITIONAL EVIDENCES FILED BY THE ASSESSEE AND AFTE R ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13.6.2011. SD/- SD/- (R.S. PADVEKAR) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 13.6.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.