DCIT,Circle-11, Kolkata, Kolkata V. M/s. Kalamkari Designs Ltd, Kolkata

ITA 1305/KOL/2012

• Counselvise Citation: 130523514 RSA 2012
• Duration Of Justice: 1 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 11-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SADHAN BHATTACHARYA
• Assessee Lawyers: D S DAMLE
• Keywords: Depreciation; Additional evidence

Judgement Text

I.T.A. NO.: 1305/KOL./2012 AS SESSMENT YEAR : 2003-04 PAGE 1 TO 5 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA CORAM : SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI ABRAHAM P. GEORGE (ACCOUNTANT MEMBER) I.T.A. NO.: 1305/KOL./ 2012 ASSESSMENT YEAR : 2003-2004 DEPUTY COMMISSIONER OF INCOME TAX,........... .APPELLANT CIRCLE-11, KOLKATA, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. KALAMKARI DESIGN LTD.,........................ ..............RESPONDENT 138, BELIAGHATA ROAD, KOLKATA-700 015 [PAN : AABCK 2117 N] APPEARANCES BY: SHRI SADHAN BHATTACHARYA, JCIT, SR. D.R., FOR THE D EPARTMENT SHRI D.S. DAMLE, C.A., FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : JANUARY 07, 2013 DATE OF PRONOUNCING THE ORDER : JANUARY 08, 2014 O R D E R PER ABRAHAM P. GEROGE: 1. IN THIS APPEAL REVENUE IS AGGRIEVED THAT COMMISS IONER OF INCOME TAX (APPEALS)-XXIV, KOLKATA ADMITTED AND RELIED ON FRESH EVIDENCE, WHILE DELETING A DISALLOWANCE OF RS.36,750/- ON DEPRECIAT ION AND AN ADDITION OF RS.47,74,977/-, THEREBY VIOLATING RULE 46A OF INCOM E TAX RULES 1962 (IN SHORT THE RULES). 2. FACTS APROPOS ARE THAT ASSESSEE A MANUFACTURER A ND EXPORTER OF GARMENTS HAD FILED ITS RETURN FOR THE IMPUGNED ASSE SSMENT YEAR, DECLARING AN INCOME OF RS.48,77,750/-. DURING THE COURSE OF T HE ASSESSMENT PROCEEDING, ASSESSING OFFICER SOUGHT CLARIFICATION ON ITS CLAIM OF DEPRECIATION ON SPLIT AIR-CONDITIONERS COSTING AS R S.2,94,000/- AND SUNDRY DEBTORS BALANCE OF RS.3,82,46,693/-. AS PER THE ASSESSING OFFICER NOTHING WAS FORTHCOMING FROM THE ASSESSEE TO SHOW T HAT THE SPLIT AC WAS I.T.A. NO.: 1305/KOL./2012 AS SESSMENT YEAR : 2003-04 PAGE 1 TO 5 2 INSTALLED DURING THE RELEVANT PREVIOUS YEAR. HE THE REFORE DISALLOWED CLAIM OF DEPRECIATION AMOUNTING TO RS.36,750/- ON THIS. 3. BASED ON THE DETAILS OF SUNDRY DEBTORS FILED BY THE ASSESSEE, ASSESSING OFFICER REACHED A CONCLUSION THAT SALES T O FOUR PARTIES, CREDITED IN THE PROFIT & LOSS ACCOUNT TOTALLED TO RS.14,42,3 6,169/- WHEREAS CORRESPONDING DEBTORS ACCOUNTS REFLECTED SALES OF RS.14,90,11,146/-. ASSESSEES EXPLANATION THAT DIFFERENCE WAS ON ACCOU NT OF COST OF SAMPLES WAS NOT ACCEPTED BY THE ASSESSING OFFICER. AN ADDIT ION OF RS.47,74,977/- FOR THE DIFFERENCE WAS MADE CONSIDERING IT AS BUSIN ESS INCOME. 4. AGAINST BOTH THE ABOVE ASSESSEE MOVED IN APPEAL BEFORE THE LD. CIT(APPEALS). 5. AS PER THE ASSESSEE, INVOICE-CUM-DELIVERY CHALLA N ISSUED BY THE SUPPLIER OF THE AIR-CONDITIONER WOULD ITSELF SHOW T HAT THE MACHINE WAS USED IMMEDIATELY ON DELIVERY. AS PER THE ASSESSEE, SPLIT AIR-CONDITIONER DID NOT REQUIRE SUBSTANTIAL LEAD TIME FOR INSTALLAT ION AND COMMISSIONING. 6. IN SO FAR AS THE ISSUE OF SUNDRY DEBTORS WAS CON CERNED, ARGUMENT OF THE ASSESSEE WAS THAT WHAT WAS CREDITED AS SALES IN THE PROFIT & LOSS ACCOUNT WAS FOB VALUE OF THE EXPORT SALES, WHEREAS THE CUSTOMERS WERE CHARGED NOT ONLY FOR FOB VALUE BUT ALSO FOR THE FRE IGHT, SINCE THEY WERE TO PAY FOR THE ITEMS OF CIF BASIS. ASSESSEE POINTED OU T THAT THE SCHEDULE J TO THE PROFIT & LOSS ACCOUNT ALONGWITH NOTE NO. 9 OF S CHEDULE P CLEARLY SHOWED THAT SALES SHOWN IN THE PROFIT & LOSS ACCOUN T WAS ON FOB BASIS WHEREAS WHAT WAS CHARGED TO THE PARTYS ACCOUNT WAS ON CIF BASIS. ASSESSEE ALSO POINTED OUT THAT AGGREGATE FREIGHT CH ARGES OF RS.63,72,790/- WAS NETTED FOR A SUM OF RS.52,17,110 /- BEING THE SHIPPING & FORWARDING EXPENSES RECEIVED FROM THE CLIENTS, BE FORE CHARGING SUCH SUM TO THE P&L ACCOUNT. I.T.A. NO.: 1305/KOL./2012 AS SESSMENT YEAR : 2003-04 PAGE 1 TO 5 3 7. LD. CIT(APPEALS) WAS APPRECIATIVE OF THE ABOVE C ONTENTION. ACCORDING TO HIM, THE INVOICE FOR THE SPLIT AC BY I TSELF WAS GOOD ENOUGH EVIDENCE FOR CONSIDERING IT AS INSTALLED AND, THERE FORE, CLAIM OF DEPRECIATION HAD TO BE DISALLOWED. VIS-A-VIS THE DI FFERENCE IN SUNDRY DEBTORS LD. CIT(APPEALS) NOTED THAT ASSESSEE HAD FI LED AUDITED ACCOUNTS STATEMENTS ALONG WITH ITS RETURN WHICH CLEARLY BRO UGHT OUT THE FACT THAT THE DIFFERENCE AROSE ONLY FOR A REASON THAT SALES W ERE EXPRESSED IN FOB VALUE WHEREAS CUSTOMERS WERE CHARGED ON CIF VALUE. RECOVERY OF FREIGHT FROM THE CUSTOMERS WENT TO REDUCE THE TOTAL FREIGHT CHARGES. ASSESSEE HAD ONLY CLAIMED NET FREIGHT CHARGES IN ITS PROFIT & L OSS ACCOUNT. TAKING THIS VIEW OF THE MATTER, HE DELETED THE ADDITION MADE FO R THE DIFFERENCE IN DEBTORS ACCOUNT AS WELL. 8. NOW BEFORE US LD. D.R. SUBMITTED THAT LD. CIT(AP PEALS) HAD ADMITTED ADDITIONAL EVIDENCE IN THE FORM OF INVOICE FOR SPLI T AC AND EXPLANATIONS FOR THE DIFFERENCE IN THE DEBTORS ACCOUNT. ASSESSIN G OFFICER WAS NOT GIVEN A CHANCE TO EXAMINE SUCH RECORDS. THEREFORE, AS PER LD. D.R., THERE WAS VIOLATION OF RULE 46A. 9. PER CONTRA LD. A.R. SUPPORTED THE ORDER OF LD. C IT(APPEALS). 10. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ASSESSMENT ORDER NOWHERE STATE S THAT ASSESSEE HAD FAILED TO PRODUCE THE EVIDENCE IN THE NATURE OF INV OICE FOR THE SPLIT AC. IN FACT, ASSESSING OFFICER HAS HIMSELF NOTED THAT THE AIR-CONDITIONER WAS PURCHASED ON 31.03.2003 BASED ON EVIDENCE PRODUCED BY THE ASSESSEE. FOR INSTALLATION OF SPLIT AC, NOT MUCH TIME IS REQU IRED AND ASSESSEE COULD NOT HAVE BEEN CALLED UPON TO PRODUCE AN INSTALLATIO N CERTIFICATE, AS IN THE CASE OF A MAJOR MACHINERY. WE ARE, THEREFORE, OF TH E OPINION THAT LD. CIT(APPEALS) WAS JUSTIFIED IN CONSIDERING THE INVOI CE TO BE SUFFICIENT EVIDENCE FOR PROVING THE INSTALLATION AND ALLOWING THE CLAIM. NO NEW OR FRESH EVIDENCE IN THIS REGARD WAS BROUGHT BY THE AS SESSEE BEFORE LD. CIT(APPEALS). I.T.A. NO.: 1305/KOL./2012 AS SESSMENT YEAR : 2003-04 PAGE 1 TO 5 4 11. COMING TO THE ADDITION FOR THE DEBTORS, NO DOUB T THE EXPLANATION GIVEN BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS) W AS DIFFERENT FROM WHAT WAS GIVEN BY IT BEFORE THE ASSESSING OFFICER. HOWEV ER, THERE WAS NO FRESH EVIDENCE FILED BY THE ASSESSEE. ASSESSEE HAD ONLY R ELIED ON THE AUDITED FINAL ACCOUNTS STATEMENT AND SCHEDULES THERETO, ALL OF WHICH WERE PART OF THE RETURN OF INCOME FILED BY IT. IT HAD SHOWN THER EFROM THAT THE DIFFERENCE BETWEEN THE DEBTORS ACCOUNT AND THE SAL ES VALUE CREDITED IN THE PROFIT & LOSS ACCOUNT WAS ONLY DUE TO THE FREIG HT ELEMENT AND RECOVERY OF THE FREIGHT AMOUNT FROM THE DEBTORS WER E NETTED AGAINST THE FREIGHT COST. ONLY THE NET FREIGHT WAS CHARGED TO T HE PROFIT & LOSS ACCOUNT. IN OUR OPINION, EXPLANATION GIVEN BY THE A SSESSEE BASED ON RECORDS ALREADY FILED BEFORE THE ASSESSING OFFICER CANNOT BE CONSIDERED AS FRESH EVIDENCE. PROCEDURE TO BE FOLLOWED IN AN APPE AL BEFORE CIT(APPEALS) IS SET OUT IN SECTION 250(1) OF THE AC T AND IT SAYS THAT CIT(APPEALS) SHALL GIVE NOTICE NOT ONLY TO THE ASSE SSEE BUT ALSO TO THE ASSESSING OFFICER AND BOTH WERE HAVING A RIGHT TO B E HEARD. THERE IS NO CASE FOR THE REVENUE THAT THE ASSESSING OFFICER WAS NOT GIVEN SUCH A NOTICE. IN FACT, HEARING OF THE CASE BEFORE THE LD. CIT(APPEALS) TOOK PLACE OVER A PERIOD OF SEVEN DIFFERENT DAYS. IF THE ASSES SING OFFICER CHOSE HIMSELF NOT TO BE PRESENT AT THE TIME OF SUCH HEARI NG, IN OUR OPINION, HE CANNOT BE HEARD TO SAY THAT EXPLANATIONS GIVEN BY T HE ASSESSEE WERE NOT PUT BEFORE HIM. THERE IS NO CASE FOR THE REVENUE TH AT PROCEDURE MENTIONED IN SECTION 250 WAS NOT FOLLOWED BY THE LD . CIT(APPEALS). WE, THEREFORE, DO NOT FIND ANY VIOLATION OF RULE 46A. N O NEW ORAL OR DOCUMENTARY EVIDENCE WERE PRODUCED BY THE ASSESSEE BEFORE THE LD. CIT(APPEALS). WE THUS DO NOT FIND ANY REASON TO INT ERFERE WITH THE ORDER OF LD. CIT(APPEALS). 12. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH DAY OF JANUARY, 2014. SD/- SD/- MAHAVIR SINGH ABRAHAM P. GEORGE (JUDICIAL MEMBER) (ACC OUNTANT MEMBER) KOLKATA, THE 8 TH DAY OF JANUARY, 2014 I.T.A. NO.: 1305/KOL./2012 AS SESSMENT YEAR : 2003-04 PAGE 1 TO 5 5 COPIES TO : (1) THE APPELLANT (2) THE RESPONDENT (3) CIT (4) CIT(A) (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ETC ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.