Tropical Stones Private Limited, CHENNAI V. ACIT, CHENNAI

ITA 1214/CHNY/2014

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8770 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-02-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 27-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 06-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GURU BHASHYAM
• Assessee Lawyers: ANAND DEVKUMAR
• Keywords: Additional evidence; Non compliance
• Section: 43B; 143(3); 142(1); 68

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . , . . , !' [BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER] ./ I.T.A.NO.1214/MDS/2014 / ASSESSMENT YEAR : 2008-09 M/S TROPICAL STONES PVT. LTD NO.2-A, 2 ND FLOOR NE SAGAS KALYANI ARCADE CENOTAPH ROAD TEYNAMPET CHENNAI 600 018 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX COMPANY CIRCLE III(2) CHENNAI [PAN AACCT 3737A ] ( #$ / APPELLANT) ( %&#$ /RESPONDENT) / APPELLANT BY : SHRI ANAND DEV KUMAR, CA /RESPONDENT BY : SHRI GURU BHASHYAM, JCIT / DATE OF HEARING : 27-01-2015 / DATE OF PRONOUNCEMENT : 4-02-2015 ' / O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 20 08-09, IS DIRECTED AGAINST ORDER OF THE COMMISSIONER OF INC OME-TAX (APPEALS)- III, CHENNAI DATED 28.2.2014, PASSED IN APPEAL NO .1380/2013-14, I.T.A.NO.1214/14 :- 2 -: UPHOLDING DISALLOWANCES/ADDITIONS U/S 43B AND SECT ION 68 OF ` 58,420/-, ` 22,53,443/-, ` 48.70 LAKHS, ` 96.25 LAKHS AND ` 6,96,952/-, IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ASSESSEES PLEADINGS IN THE APPEAL CHALLENGE T HE LOWER APPELLATE ORDER AFFIRMING THE AFORESAID DISALLOWANC ES/ADDITIONS FOR WANT OF ACCEPTANCE OF ADDITIONAL EVIDENCE AS WELL A S ON MERITS. 3. THE ASSESSEE-COMPANY MANUFACTURES/SELLS MARBLE AND GRANITE. IT HAD FILED ITS RETURN ADMITTING LOSS OF ` 70,72,760/-. THE ASSESSING OFFICER TOOK UP SCRUTINY. HE APPEARS T O HAVE ISSUED VARIOUS NOTICES U/S 142(1) R.W.S 143(2) DATED 31.5.2010, 2 3.8.2010 AND 31.8.2010 AND ALSO SECTION 271(1)(B) DATED 23.11.2 010 AND FIXED VARIOUS DATES OF HEARING. THE ASSESSEE APPEARED O NLY ON 30.11.2010. THE ASSESSING OFFICER FIXED THE NEXT DATE TO 8.12.2 010. AGAIN THE ASSESSEE DID NOT APPEAR. THE ASSESSING OFFICER FRA MED A REGULAR ASSESSMENT ON 30.12.2010 INTER ALIA DISALLOWING DED UCTION U/S 43B VAT PAYABLE OF ` 58,420/-, MANUFACTURING/POOJA/ ADVERTISEMENT EXPENSES OF ` 22,53,443/-, UNSECURED LOANS OF ` 48.70 LAKHS, SECURED LOAN OF ` 96.25 LAKHS AND INTEREST EXPENDITURE OF ` 6,96,952/- FOR WANT I.T.A.NO.1214/14 :- 3 -: OF NECESSARY DETAILS BY INVOKING SECTION 68 OF THE ACT. THE ASSESSEES TOTAL TAXABLE INCOME STOOD ASSESSED AT ` 1,04,31,055/- AS AGAINST THE LOSS DECLARED OF ` 70,72,760/- (SUPRA). 4. THE ASSESSEE HAS FILED AN APPEAL. IT SOUGHT TO PR ODUCE ADDITIONAL DETAILS. MORE PARTICULARLY, IN VIEW OF THE FACT THAT NO EVIDENCE/SUPPORTIVE MATERIAL HAD BEEN FILED BEFORE THE ASSESSING OFFICER. THE CIT(A) SOUGHT A REMAND REPORT. THE A SSESSING OFFICER FILED THE SAME ON 29.10.2013. THE CIT(A) HAS FURNI SHED ITS COPY. THE ASSESSEE FILED DETAILED OBJECTIONS. THE CIT(A) HAS REJECTED ALL OF THEM AS UNDER: 6.1 THE REMAND REPORT OF THE AO IS REPRODUCED BELO W: THE FACTS OF THE CASE LEADING TO PASSING OF THE ORD ER U/S 143(3) OF THE ACT ARE AS UNDER: (I) NOTICE UNDER SECTION 143(2) OF THE INCOME TAX ACT, 1961 WAS ISSUED BY THE THEN A.O. ON 3110812009 ASKING THE ASSESSEE TO SUBMIT THE DETAILS TO SUBSTANTIATE ITS CLAIM IN THE RETURN OF INCOME. THE ASSESSEE WAS REQUESTED TO ATTEND ON 18/09/2009 AT 02.00 P.M. THE RECORDS INDICATE THAT THE ASSESSEE DID NOT RESPOND TO THIS NOTICE. THE ASSESSEE COMPLIANCE, AS PER RECORDS IS ONLY ON 30/1 1/2010 I.E 14 MONTHS AFTER RECEIPT OF THE NOTICE ISSUED. (II) NOTICE U/S 142(1) CALLING FOR INFORMATION ALONG WITH A QUESTIONNAIRE WAS ISSUED ON 31-05-2010 POSTING THE CASE FOR HEARING O N 15-06-2010 AT 02.30 PM FOR WHICH THERE WAS NO RESPONSE FROM THE A SSESSEE. (III) AGAIN ANOTHER NOTICE U/S. 143(2) R. W.S 129 WAS ISSUED TO THE ASSESSEE ON 20-08- 2010 POSTING THE CASE FOR HEARING ON 15-09-2 010 AT 11.30 AM AND ASSESSEE FAILED TO RESPOND TO THE SAID NOTICE ALSO. (IV) AGAIN ANOTHER NOTICE USL 142(1) R.W.S. 129 WAS ISSUED ON 31-08-2010 ALONG WITH A QUESTIONNAIRE POSTING THE CASE FOR HEA RING ON 15-09-2010 AT 11.30 AM FOR WHICH TOO THERE IS NO RESPONSE FROM TH E ASSESSEE. COPIES I.T.A.NO.1214/14 :- 4 -: OF THE SAID NOTICES WERE SENT TO ALL THE DIRECTORS ALSO. (V) FINAL OPPORTUNITY WAS GIVEN TO THE ASSESSEE VI DE A LETTER DT. 08-11-2010 TO APPEAR ON 19-11-2010 AT 03.30 PM FOR WHICH TOO ASSE SSEE FAILED TO RESPOND. (VI) FINALLY THE AO, ON 23-11-2010 HAS ISSUED A NO TICE U/S 274 R.W.S 271 REQUIRING THE ASSESSEE TO APPEAR ON 30-11-2010 AT 1 1.00 AM AND TO SHOW CAUSE WHY AN ORDER IMPOSING PENALTY SHOULD NOT BE M ADE U/S 271 (1) (B) FOR FAILURE TO COMPLY WITH THE NOTICES SERVED U/S 142(1) AND 143(2) EARLIER. (VII) MR. A. SEKAR, CA, AUTHORISED REPRESENTATIVE O F THE ASSESSEE APPEARED ON 30-11- 2010 AND HE WAS ASKED TO FURNISH DETAILS LIS TED BY THE AO ON 08- 12-2010. THE ASSESSEE HAS NEITHER FURNISHED ANY DET AILS NOR OFFERED ANY EXPLANATION FOR NON SUBMISSION. (VIII) THE ASSESSMENT ORDER WAS PASSED ON 3011212010, WHIC H WAS AFTER GIVING THE ASSESSEE OPPORTUNITIES OF BEING HEARD AN D SUBMIT DETAILS. 7.3 AS ALREADY REPRODUCED ABOVE FROM THE REMAND REP ORT OF THE AO, THE AO HAS POSTED THE CASE ON VARIOUS DATES, FO R WHICH THERE WAS NO COMPLIANCE. 7.4 DURING THE APPEAL PROCEEDINGS, THE AR OF THE AP PELLANT, VIDE LETTER DATED 18.02.2004, HAS MADE SUBMISSIONS IN RE PLY TO THE REMAND REPORT OF THE AO, WHEREIN HE HAS STATED AS U NDER: A. PARA 2: RULE 46AA(1) IS REPRODUCED BY ASSESSING OFFICER. AS THE APPELLANT HAS ALREADY FILED MANAGING DIRECTOR'S AFFIDAVIT AND DOCUMENTARY EVIDENCES EXPLAINING THE FAILURE OF THE CHARTERED ACCOUNTANT AGED ABOUT 74 YEARS TO FURNISH THE DETAILS CALLED FOR DUE TO HIS OLD AGE, DIABETICS, LIVER CAN CER, LOSS OF MEMORY (ALZHEIMER) AND SUBSEQUENT DEMISE, WHICH THE ASSESS EE CAME TO KNOW AFTER RECEIPT OF ASSESSMENT ORDER. FURTHER, WE ENCLOSE LE TTER DATED 17.02.2014 FROM AUDIT FIRM CONFIRMING THE ILLNESS OF THE SENIOR PAR TNER DURING THE RELEVANT TIME CORROBORATING THE AFFIDAVIT FILED' 7.5 THE GIST OF THE A.RS SUBMISSION, THE REASON F OR NON COMPLIANCE BEFORE THE AO WAS THAT AUDITOR HAD SUFFE RED LOSS OF MEMORY AND AT THE SAME PERIOD IN TIME THE MANAGING DIRECTOR OF THE COMPANY WAS ALSO ILL. 7.6 UNDER RULE 46A OF THE INCOME-TAX RULES, 1962, A N APPELLANT SHALL NOT BE ENTITLED TO PRODUCE ANY EVIDENCE OTHER THAN THE EVIDENCE PRODUCED BEFORE HIM DURING THE COURSE OF PROCEEDING S BEFORE THE ASSESSING OFFICER EXCEPT IN THE CIRCUMSTANCES (A) W HERE THE ASSESSING OFFICER HAS REFUSED TO ADMIT EVIDENCE WHI CH OUGHT TO HAVE BEEN ADMITTED BY HIM; OR (B) WHERE THE APPELLANT W AS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING EVIDENCE WHICH HE W AS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER; OR (C) WHERE THE APPELLANT WAS I.T.A.NO.1214/14 :- 5 -: PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL; OR (D) WHERE THE ASSESSING OFFICER HAS MAD E AN ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUN ITY TO THE APPELLANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL . 7.7 WHERE AN APPELLANT PRODUCES EVIDENCE THAT WAS N OT PRODUCED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF A SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS TO BE ALLOWE D A REASONABLE OPPORTUNITY TO EXAMINE THE EVIDENCE AND TO PRODUCE ANY EVIDENCE IN REBUTTAL TO THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. 7.8 THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLA NT ALONG WITH THE REASONS FOR NOT PRODUCING IT BEFORE THE ASSESSING O FFICER DURING THE ASSESSMENT PROCEEDINGS WAS FORWARDED TO THE ASSESS ING OFFICER FOR HIS EXAMINATION AND REPORT. IN THE REPORT SUBMITTED , THE ASSESSING OFFICER HAS STATED THAT THE APPELLANT WAS GIVEN ADE QUATE OPPORTUNITIES TO FURNISH EVIDENCE DURING THE ASSESS MENT PROCEEDINGS. IT WAS SUBMITTED THAT IN SPITE OF MANY OPPORTUNITIE S DURING THE ASSESSMENT PROCEEDINGS. THE APPELLANT DID NOT PRODU CE THE EVIDENCE WHICH HE IS PRODUCING NOW IN THE APPELLATE PROCEEDI NGS. THE ASSESSING OFFICER SUBMITTED THAT THE CASE OF THE AP PELLANT IS NOT CONVERED BY ANY OF THE EXCEPTIONS GIVEN IN RULE 46A AND REQUESTED THAT THE ADDITIONAL EVIDENCE FURNISHED BY THE APPEL LANT SHOULD NOT BE ADMITTED. 7.9 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPELL ANT AND THE REPORT OF THE ASSESSING OFFICER ON THE ADDITIONAL E VIDENCE PRODUCED AND ALSO PERUSED THE RECORD. 7.10 I FIND THAT THE REASONS FOR PRODUCING ADDITION AL EVIDENCE DURING THE APPELLATE PROCEEDINGS ARE NOT COVERED IN THE EXCEPTIONS PROVIDED UNDER RULE 46A, AS SUBMITTED BY THE AO. FURTHER, REASONS FURNISHED FOR SUCH NON-COMPLIANCE IS NOT ACCEPTED. ACCORDINGLY THE ADDITIONAL EVIDENCE PRODU CED BY THE APPELLANT IS NOT ADMITTED AND THE ADDITIONS MAD E BY THE ASSESSING OFFICER IS UPHELD. THE GROUNDS ARE DISMISSED. THEREFORE, THE ASSESSEE IS AGGRIEVED. 5. WE HAVE HEARD BOTH PARTIES AND GONE THROUGH THE CAS E FILE. THE PRESENT IS A CASE WHERE ALL THE DISALLOWANCES/A DDITIONS HAVE BEEN I.T.A.NO.1214/14 :- 6 -: MADE ON ACCOUNT OF NON-FURNISHING OF THE RELEVANT D ETAILS. THE ASSESSEES ADDITIONAL EVIDENCE/PLEA STANDS REJECTED IN THE LOWER APPELLATE PROCEEDINGS. THE ASSESSEE ATTRIBUTES RE ASON OF ITS NON- COOPERATION WITH THE ASSESSING OFFICER TO THE FACT THAT ITS AUDITOR SHRI B. SURENDER SUFFERED FROM LOSS OF MEMORY/ILLNESS. WE FIND THAT THE SAID AUDITOR HAS EXPIRED ON 4.3.2012 AFTER FRAMING OF THE ASSESSMENT ON 30.12.2010 AND DURING THE PENDENCY OF THE LOWER APPELLATE PROCEEDINGS. NECESSAARY CERTIFICATE IS AT PAGE 95 OF THE CASE FILE. NEITHER THE REMAND REPORT NOR THE LOWER APPELLATE O RDER HAVE SPECIFICALLY CONTROVERTED THIS PLEA. IT IS ALSO TO BE SEEN THAT THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF VE NTURE METAL PRODUCTS P. LTD VS DY. CIT [2014] 362 ITR 122(MAD) HAS ALLOW ED ADDITIONAL EVIDENCE UNDER RULE 46A IN CASE OF A BEREAVEMENT I N COUNSELS FAMILY. WE TAKE CUE THEREFROM AND FEEL THAT THE ASSESSEE DESERVES ANOTHER INNINGS AS ITS AUDITOR SUFFERED FROM ILL HEALTH IN THE COURSE OF ASSESSMENT AND DIED DURING THE PENDENCY OF LOWER AP PELLATE PROCEEDINGS. WE ORDER ACCORDINGLY AND SET ASIDE TH E ASSESSEES GROUNDS BACK TO THE FILE OF ASSESSING OFFICER FOR D ECISION AFRESH AS PER LAW. THE ASSESSEE WOULD BE AT LIBERTY TO PLACE ON RECORD ALL ITS EVIDENCE/ADDITIONAL EVIDENCE IN SUPPORT OF THE CLAI MS RAISED. I.T.A.NO.1214/14 :- 7 -: 6. THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL P URPOSES. ORDER PRONOUNCED ON WEDNESDAY, 4 TH OF FEBRUARY, 2015, AT CHENNAI. SD/- SD/- ( . . ) (B.R. BASKARAN) / ACCOUNTANT MEMBER ( . . ) (S. S. GODARA) ! '# / JUDICIAL MEMBER $! / CHENNAI %' / DATED: 4 TH FEBRUARY, 2015 RD '&'' ()'*) / COPY TO: ' 1 . / APPELLANT 4. ' + / CIT 2. / RESPONDENT 5. ),-' . / DR 3. ' +'/0 / CIT(A) 6. -1'2 / GF