Adani Energy Ltd, Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 1382/AHD/2011

• Counselvise Citation: 138220514 RSA 2011
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-11-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 13-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH SR DR
• Assessee Lawyers: P M MEHTA
• Keywords: Additional evidence

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R. MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.1382/AHD/2011 ( & ' & ' & ' & ' / / / / ASSESSMENT YEAR : 2007-08) ADANI ENERGY LTD. NR.MITHAKHALI SIX ROAD NAVRANGPURA AHMEDABAD & & & & / VS. DY.CIT CIRCLE-1 AHMEDABAD ( '# ./)* ./ PAN/GIR NO. : AABCG 5533 E ( (+ / // / APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . ' / APPELLANT BY : SHRI P.M.MEHTA ,-(+ / . ' / RESPONDENT BY : SHRI D.K.SINGH, SR.D.R. &0 / # / / / / DATE OF HEARING : 22/11/2012 12' / # / DATE OF PRONOUNCEMENT : 23/11/12 '3/ O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL AT THE BEHEST OF THE ASSESSEE WHICH HAS EMANATED FROM THE ORDER OF LEARNED CIT(APPEALS)-VI, AHMEDABAD DATED 01/03/2011 PASSED FOR A.Y. 2007-08 AND THE SUBSTA NTIVE GROUND WHICH ARGUED BEFORE US IS GROUND NO.1; REPRODUCED BELOW : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN REJECTING THE ASSESSEES CLAIM THAT IT WAS NOT AT ALL A FIT CASE FOR MAKING ANY DISALLOWANCE FOR THE ALLE GED PRIOR PERIOD EXPENSES AND HAS FURTHER ERRED IN ADOPTING T HE FIGURE OF RS.9,51,794 FOR SUCH EXPENSES. ITA NO. 1382/AHD/2011 ADANI ENERGY LTD. VS. DY.CIT ASST.YEAR 2007-08 - 2 - 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) OF THE I.T. ACT, 1961 DATED 4.1 2.2009 WERE THAT THE ASSESSEE-COMPANY IS IN THE BUSINESS OF MANUFACTURIN G, TRANSPORTATION AND SALE OF NATURAL GAS AND COMPRESSED NATURAL GAS (CNG ). IT WAS NOTICED BY THE AO THAT THERE WERE PRIOR PERIOD EXPENSES TO THE TUNE OF RS.9,51,794/-. THE NATURE OF THE EXPENDITURE WAS EXPLAINED BY THE ASSESSEE AS FOLLOWS:- I) OPERATION & MAINTENANCE EXP.:- EXP. RELATING TO PRIOR PERIOD OF OPERATION & MAINTENANCE DEPARTMENT. ARE D EBITED IN PRIOR PERIOD EXP. II) AIR CONDITIONER (AMC):- THESE EXP. REFERS TO PRIOR PERIOD MAINTENANCE CONTRACT. III) ASTHETIX :- THIS AMOUNT SHOWN AS ADVANCE TO A PARTY BEING PAINTING DONE FOR FARIDABAD BUILDING FOR THE YEAR 2 005-06. NOW EXPENSED OFF AS PRIOR PERIOD EXPENSES. IV) HCL INFOSYSTEM :- EXPENSE PERTAINS TO PURCHAS E OF INFORMATION SYSTEM DURING THE YEAR 2005-06. V) SAMANTAR SALES:- EXPENSES PERTAINS TO THE YEAR 2005-06. VI) BUSINESS PROMOTION EXPENSES :- EXPENSE PERTAINS TO PREVIOUS PERIODS. VII) INTEREST INCOME :- INCOME PERTAINS TO PREVIOUS PERIOD. 2. ACCORDING TO AO, THE EXPENDITURE IS ALLOWABLE IN RESPECT OF THE YEAR TO WHICH THEY PERTAINED EXCEPT IN A SITUATION WHEN THE EXPENSES HAD ACTUALLY CRYSTALLIZED DURING THE YEAR. THE AO HAS THEREFORE HELD THAT NO ITA NO. 1382/AHD/2011 ADANI ENERGY LTD. VS. DY.CIT ASST.YEAR 2007-08 - 3 - PROOF IN RESPECT OF CRYSTALLIZATION OF THE EXPENDIT URE OR THE SUPPORTING BILLS AND VOUCHERS WERE FILED BY THE ASSESSEE, THER EFORE DISALLOWED THE SAME. THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY. 3. BEFORE LD.CIT(A), THE ASSESSEE HAS FURNISHED A D ETAILED REPLY AND FURNISHED THE BIFURCATION OF THE EXPENSES AS FOLLOW S:- PARTICULARS AMOUNT RS. OPERATION & MAINTENANCE EXPENSES 4,61,931 AIR CONDITIONER [AMC] 26,741 ASTHETIX 6,199 HCL INFOR SYSTEMS 20,559 SAMANTAR SALES 2204 BUSINESS PROMOTION EXPENSES 4,34,160 TOTAL 9,51,794 4. THE ASSESSEE HAS ALSO PLACED RELIANCE ON CER TAIN CASE LAWS IN SUPPORT OF THE CLAIM THAT THE MERCANTILE SYSTEM OF ACCOUN T WAS ADOPTED BY THE AO AND THE EXPENDITURE IN QUESTION WERE CRYSTALLIZE D DURING THE YEAR UNDER CONSIDERATION. HOWEVER, LD.CIT(A) HAS EXPRES SED THAT ONCE THE AUDITOR HAS CERTIFIED THAT THOSE EXPENDITURE WERE R ELATED TO PRIOR PERIOD, THEREFORE THE ONUS WAS ON THE ASSESSEE TO ESTABLISH THAT THE EXPENDITURE WERE ACTUALLY CRYSTALLIZED DURING THE YEAR. SINCE THE ACTION OF THE AO WAS CONFIRMED, HENCE BEING AGGRIEVED NOW THE ASSESS EE IS BEFORE US. 5. WE HAVE HEARD BOTH THE SIDES. WE HAVE PERUSED T HE ORDERS OF THE AUTHORITIES BELOW AND THE COMPILATION CONTAINING DE TAILS OF THE PRIOR PERIOD EXPENSES AND VARIOUS EXPLANATIONS IN THIS RE GARD ALONG WITH TAX AUDIT REPORT HAS ALSO BEEN PERUSED. AT THE OUTSE T, LD.AR MR.P.M.MEHTA ITA NO. 1382/AHD/2011 ADANI ENERGY LTD. VS. DY.CIT ASST.YEAR 2007-08 - 4 - HAS EXPRESSED THAT THE RELEVANT BILLS AND VOUCHERS WERE VERY MUCH BEFORE THE AUDITOR WHO HAS EXAMINED THE CORRECTNESS OF THE CLAIM, HOWEVER, IT WAS FOUND THAT THOSE EXPENDITURE PERTAINED TO EARLI ER YEARS, HENCE COMMENTED ACCORDINGLY. LD.AR HAS ALSO STATED THA T THE ASSESSEE IS IN POSSESSION OF THE RELEVANT EVIDENCE AS ALSO CERTAIN DOCUMENT PROOF TO ESTABLISH THAT THE EXPENDITURE IN QUESTION HAVE ACT UALLY BEEN CRYSTALLISED DURING THE YEAR UNDER CONSIDERATION. AT THIS JUNC TURE, WE HAVE ENQUIRED THAT WHY THOSE ALL EVIDENCES WHICH ARE DIRECTLY CON NECTED WITH THE ISSUE IN HAND HAVE NOT BEEN PLACED BEFORE THE REVENUE AUT HORITIES. IN REPLY, LD.AR HAS EXPRESSED HIS DESIRE TO FURNISH THOSE EVI DENCES AS AN ADDITIONAL EVIDENCE TO RESOLVE THE ISSUE BEING DIRECTLY CONNEC TED WITH THE DISALLOWANCE MADE BY THE AO. THIS SUGGESTION OF L D.AR WAS OPPOSED FROM THE SIDE OF THE REVENUE BY STATING THAT A FRES H OR ADDITIONAL EVIDENCE SHOULD NOT BE FILED AT THIS STAGE OF APPEA L. CONSIDERING THE ENTIRETY OF THE CIRCUMSTANCES AND THE NATURE OF THE DISALLOWANCE, WE DEEM IT PROPER THAT THE PROOF IN RESPECT OF CRYSTAL LIZATION OF EXPENDITURE DURING THE YEAR UNDER CONSIDERATION IS A VITAL EVID ENCE TO RESOLVE THE ISSUE BUT ONLY AFTER PROPER EXAMINATION. AT THIS SECOND STAGE OF APPEAL, WE ARE NOT SUPPOSED TO INVESTIGATE THE VERACITY OF FRESH EVIDENCES. WE, THEREFORE, DEEM IT PROPER TO RESTORE THIS ISSUE BAC K TO THE STAGE OF THE FIRST APPELLATE AUTHORITY TO RE-ADJUDICATE AFTER ALLOWING THE ASSESSEE TO FURNISH THOSE EVIDENCES. IT IS ALSO WORTH TO MENTION THA T LD.CIT(A) IS EMPOWERED TO CALL FOR A REMAND REPORT FROM THE CONC ERNED AO. WE DIRECT THE ASSESSEE TO CO-OPERATE WITH THE PROCEEDI NGS BY FURNISHING ALL THE NECESSARY EVIDENCES WITHIN 30 DAYS ON RECEIPT O F THIS ORDER TO THE FIRST APPELLATE AUTHORITY, SO THAT THIS ISSUE CAN BE DECI DED AT AN EARLY DATE. ITA NO. 1382/AHD/2011 ADANI ENERGY LTD. VS. DY.CIT ASST.YEAR 2007-08 - 5 - RESULTANTLY, THIS GROUND MAY BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES ONLY. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. SD/- SD/- ( .. ) ( ) '# ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL ME MBER AHMEDABAD; DATED 23/ 11 /2012 ..&, .&../ T.C. NAIR, SR. PS '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4' '3 / ,4 5'4'/ COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. 6 / CONCERNED CIT 4. 6() / THE CIT(A)-VI, AHMEDABAD 5. 49: ,& , , / LEARNED DEPARTMENTAL REPRESENTATIVE, ITAT, AHMEDABAD 6. :; <0 / GUARD FILE. '3& '3& '3& '3& / BY ORDER, -4 , //TRUE COPY// = == =/ // / ) ) ) ) ( DY./ASSTT.REGISTRAR) , , , , / ITAT, AHMEDABAD 1. DATE OF DIRECT DICTATION ON COMPUTER.. 22.11.12 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 22.11.12 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S23.11.12 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.11.12 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER