NEC Engineers (P) Ltd, V. ACIT CC-18,

ITA 1295/DEL/2008

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5570 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 04-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J D JANGIAL
• Assessee Lawyers: RATTAN GOYAL
• Keywords: Business expenditure; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E: NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER & SHRI K.D. RANJAN, ACCOUNTANT MEMBER ITA NO. 1295/DEL/2008 ASSESSMENT YEAR: 2004-05 NEC ENGINEERS PVT. LTD. MANISH BUILDING, 3 RD FLOOR, 95-96, NEHRU PLACE, NEW DELHI VS. ASST. COMMISSIONER OF INCOME TAX, CC 18, NEW DELHI PAN: AAACN 0754 F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RATTAN GO YAL, ADVOCATE RESPONDENT BY : SHRI J.D. JANGIAL, SR. DR O R D E R PER: C.L. SETHI, J.M. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 04.01.2008 PASSED BY THE LD. CIT(A) IN THE MATTER OF AN ASSESSMENT MADE U/S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) BY THE AO FOR THE A.Y. 20 04-05. 2. THE ASSESSEE HAS TAKEN A GROUND BY ALLEGING THAT THE CIT(A) WAS NOT JUSTIFIED IN ALLOWING ONLY RS. 1 LAC TOWARDS BUSINE SS EXPENSES OUT OF TOTAL EXPENSES INCURRED BY THE ASSESSEE DURING THE YEAR F OR THE PURPOSE OF BUSINESS. 3. IN THE ASSESSMENT, THE WHOLE OF THE BUSINESS EXP ENSES CLAIMED BY THE ASSESSEE AT RS. 99,84,346/- HAVE BEEN DISALLOWED BY THE AO BY OBSERVING AND HOLDING THAT SINCE THERE WAS NO SALE OR PURCHASE MA DE BY THE ASSESSEE, AND 2 SINCE NO BUSINESS ACTIVITY WERE CARRIED OUT BY THE ASSESSEE COMPANY, THESE EXPENSES COULD NOT BE ALLOWED AS DEDUCTION WHILE CO MPUTING ASSESSEES TOTAL INCOME UNDER THE INCOME TAX ACT. THE AO STATED THA T THE ASSESSEE HAD SHOWN INCOME ONLY FROM HOUSE PROPERTY AND OTHER SOU RCES, AND HAS NOT UNDERTAKEN ANY BUSINESS ACTIVITY DURING THE YEAR. AS AGAINST THIS, THE ASSESSEE SUBMITTED BEFORE THE AO THAT THERE WAS NO SALE AND PURCHASE DURING THE YEAR DUE TO UNAVOIDABLE CIRCUMSTANCES (GULF WAR ) IN THE MIDDLE EAST, BUT CERTAIN BUSINESS ACTIVITIES WERE CARRIED OUT TO FIN D OTHER CUSTOMERS IN OTHER PARTS OF INDIA. THE ASSESSEE ALSO STATED THAT THE ASSESSEE HAS NOT CLOSED ITS BUSINESS, BUT IT WAS THE LULL PERIOD OF BUSINESS DU RING WHICH THE ASSESSEE COULD NOT EFFECT ANY PURCHASES OR SALES DURING THE YEAR. THE ASSESSEE CLAIMED BEFORE THE AO THAT ALL THE EXPENSES WERE INCURRED F OR THE PURPOSE BUSINESS, WHICH WAS BEING CARRIED OUT SINCE LONG, AND, THEREF ORE, ALL THE BUSINESS EXPENDITURE INCURRED BY THE ASSESSEE DURING THE YEA R ARE ALLOWABLE AS BUSINESS DEDUCTION. 4. ON AN APPEAL, THE CIT(A) ALLOWED THE SUM OF RS. 1 LAC BEING EXPENDITURE INCURRED BY THE ASSESSEE IN CONNECTION WITH CERTAIN OTHER INCOME IN THE NATURE OF INCOME FROM SALE OF OLD BATTERIES AND FURNITURE AND INCOME BY WAY OF FOREIGN EXCHANGE FLUCTUATION. THE BALANCE S UM OF RS. 98,84,346/- HAS BEEN SUSTAINED BY THE CIT(A). 5. HENCE, THE ASSESSEE IS IN APPEAL BEFORE US. 3 6. IN THE COURSE OF HEARING OF THIS APPEAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED AN APPLICATION UNDER RULE 29 OF INCOM E TAX APPELLATE TRIBUNAL RULES, 1963 STATING AS UNDER:- IT IS RESPECTFULLY SUBMITTED THAT WE FILED PAPER B OOK IN THE ABOVE SAID CASE ON 24 TH FEB. 2010. IN THIS PAPER BOOK WE HAVE FILED SOME DOCUMENTS SUCH AS COPY OF BALANCE SHEETS AS ON 31.03.2008 & 2009 AND COPY OF SOME OTHER INVOICES FOR THE F.Y. 2007-08. ALTHOUGH THES E DOCUMENTS WERE NOT FILED BEFORE THE I ST APPELLATE AUTHORITY AND THE ASSESSING AUTHORITY. BUT DUE TO INADVERTEN CE WE HAVE CERTIFIED THAT ALL THESE DOCUMENTS WERE ALSO F ILED BEFORE THE LOWER AUTHORITIES. HONBLE SIR, IT IS H UMBLY PRAYED BEFORE YOUR HONOUR THAT THESE DOCUMENTS MAY BE ACCEPTED AS ADDITIONAL EVIDENCE AS THIS IS THE IMPO RTANCE EVIDENCE TO DECIDE THE MATTER THAT THE ASSESSEE COM PANY HAS RESTARTED ITS BUSINESS WHICH WAS TEMPORARILY SUSPEN DED DUE TO UNAVOIDABLE CIRCUMSTANCES. YOUR KIND CONSIDERAT ION WILL BE HIGHLY APPRECIATED. 7. THE ASSESSEE HAS SUBMITTED THESE ADDITIONAL EVID ENCES TO SUPPORT THE ASSESSEES CASE THAT THE ASSESSEE DID NOT CLOSE DOW N ITS BUSINESS FOR ALL TIMES TO COME, BUT IT WAS TEMPORARILY SUSPENDED DUE TO UN AVOIDABLE CIRCUMSTANCES, AND, THE ASSESSEE WAS READY TO RESTART ITS BUSINESS WHICH WAS TEMPORARILY SUSPENDED DUE TO UNAVOIDABLE CIRCUMSTANCES, AND IN FACT THE ASSESSEE CARRIED OUT ITS ACTIVITIES OF PURCHASE AND SALE AS WOULD BE CLEAR FROM THE STATEMENT OF ACCOUNT FOR THE YEAR ENDED ON 31.03.2008 AND 31.03. 2009. 8. WE HAVE HEARD BOTH THE PARTIES ON THIS LIMITED I SSUE ABOUT THE ADMISSION OF ADDITIONAL EVIDENCES. ON PERUSAL OF T HE APPLICATION, WE FIND THAT THE ASSESSEE HAS FILED CERTAIN ADDITIONAL EVIDENCES IN THE FORM OF BALANCE 4 SHEET OR STATEMENT OF ACCOUNT AS ON 31.03.2008 AND 31.03.2009 ALONGWITH SOME SALE INVOICES FOR THE F.Y. 2007-08 TO SUPPORT THE ASSESSEES STAND THAT THE ASSESSEE REVIVED ITS BUSINESS IN THE SUBSEQUENT YEARS AND THERE WAS NO CLOSURE OF BUSINESS IN THE YEAR UNDER CONSIDERATION . THESE DOCUMENTS GOES TO THE ROOT OF THE MATTER TO DECIDE AS TO WHETHER THE ASSESSEE CLOSED ITS BUSINESS FOR GOOD OR WHETHER IT WAS A LULL PERIOD OR TEMPORA RY SUSPENSION OF THE BUSINESS IN THE YEAR UNDER CONSIDERATION. IT IS AL SO CLEAR THAT EVIDENCES INDICATING THAT THE PURCHASE AND SALE ACTIVITIES WE RE CARRIED OUT IN SUBSEQUENT ASSESSMENT YEARS COULD NOT BE AVAILABLE AT THE TIME WHEN THE ASSESSMENT WAS MADE AND EVEN AT THE TIME WHEN THE IMPUGNED ORDER O F THE CIT(A) WAS PASSED ON 04.01.2008. THEREFORE, FOR THE ENDS OF J USTICE AND PROPER ADJUDICATION OF THE MATTER, WE ALLOW THE ASSESSEES APPLICATION AND ADMIT THESE DOCUMENTS FOR CONSIDERATION. HOWEVER, AS THE SE DOCUMENTS WERE NOT AVAILABLE EITHER BEFORE THE AO OR BEFORE THE CIT(A) NOR THE AO HAD ANY OCCASION OR OPPORTUNITY TO EXAMINE AND CONSIDER THE M WHILE PASSING THE ASSESSMENT ORDER, IT WOULD BE FIT AND PROPER FOR TH E ENDS OF JUSTICE TO RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR HIS FRESH ADJUDICATION AFTER CONSIDERING ALL THE EVIDENCES AND PARTICULARS THAT MAY BE PRODUCED BY THE ASSESSEE BEFORE HIM AND AFTER CONSIDERING ALL THE C ONTENTIONS AND THE SUBMISSIONS THAT MAY BE RAISED BY THE ASSESSEE BEFO RE HIM DURING THE COURSE OF FRESH ASSESSMENT PROCEEDINGS. THE AO SHALL CONS IDER ALL THE DOCUMENTS 5 AND SUBMISSIONS THAT MAY BE PLACED BEFORE HIM BY TH E ASSESSEE AND THEN DECIDE THE ISSUE BY PASSING A SPEAKING AND REASONED ORDER. THE ASSESSEE SHALL FURNISH ALL THE RELEVANT DETAILS AND PAPERS BEFORE THE AO IN SUPPORT OF HIS CASE, AND THE ASSESSEE SHALL ALSO BE AT LIBERTY TO MAKE HIS SUBMISSIONS AND CONTENTIONS AS ASSESSEE MAY SO ADVISED, WHICH WOULD BE CONSIDERED BY THE AO. THE AO SHALL THEN DECIDE THE MATTER AS PER PRO VISIONS OF LAW, ON THE BASIS OF EVIDENCES AND MATERIAL AVAILABLE ON RECORD . WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOWED FOR STATISTICAL PURPOSE. 10 . THIS DECISION IS PRONOUNCED IN THE OPEN COURT IMM EDIATELY AFTER THE HEARING WAS OVER ON 04 TH MARCH, 2010. SD/- (K.D. RANJAN) ACCOUNTANT MEMBER SD/- (C.L. SETHI) JUDICIAL MEMBER DATED: 04 TH MARCH, 2010. *NITASHA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. BY ORDER DEPUTY REGISTRAR