HAFFKINE AJINTHA PHARMACEUTICALS LTD., MUMBAI V. ITO., CIR.-6(3)(2), MUMBAI

ITA 1450/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6635 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-04-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 15-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 02-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PITAMBER DAS
• Section: 143(3)

Judgement Text

, , ,, , . .. . INCOME TAX APPELLATE TRIBUNAL,MUMBAI - H BENCH. ! ! ! ! , '# '# '# '# . .. . . .. .$% $%$% $%. .. . . .. .& & & &, ,, , '# '# '# '# BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & DR. S.T.M . PAVALAN,JUDICIAL MEMBER /. ITA NO.1450/MUM/2012, & & & & ( ( ( ( / ASSESSMENT YEAR-2007-08 HAFFKINE AJINTHA PHARMACEUTICALS LTD., HAFFKINE INSTITUTE COMPOUND, ACHARYA DHONDE MARG, MUMBAI-400012 VS ITO, CIR-6(3)(2), MUMBAI. PAN:AAACH1385K ( )* / APPELLANT) ( +,)* / RESPONDENT) &-. / 0 / ASSESSEE BY : SHRI MAYUR MAKADIA # / 0 / REVENUE BY : SHRI PITAMBER DAS & & & & / // / .% .% .% .% / DATE OF HEARING : 23-04-2014 12( / .% / DATE OF PRONOUNCEMENT : 23-04-2014 & & & & , 1961 / // / 254 )1( .3. .3. .3. .3. '4 '4 '4 '4 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM '# '# '# '# ! ! ! ! & & & & : CHALLENGING THE ORDER DATED 25.11.2011 OF THE CIT(A )-12, MUMBAI ASSESSEE-COMPANY HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN UPHOLDING THE ADDITION OF RS.61,58,090/- M ADE BY ASSESSING OFFICER ON ACCOUNT OF DIFFERENCE BETWEEN BALANCES AS PER THE APPELLANT AN D HAFFKINE BIO- PHARMACEUTICAL CORPORATION LIMITED BY APPLYING THE PROVISION OF SECTION 4L(1)( A) OF THE I.T.ACT 2APPELLANT RESERVES ITS RIGHT TO ADD, AMEND, ALTER OR DELETE N OF THE GROUNDS OF APPEAL. 2. ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF MANU FACTURING AND TRADING OF PHARMACEUTICAL PRODUCTS AND IS OWNED BY THE GOVT.OF MAHARASHTRA.IT FILED ITS RETURN OF INCOME ON 15.11.2007 DECLARING TOTAL INCOME OF RS.29,24,915/-.ASSESSING OFFICER (AO) FINALISED THE ASSESSMENT ORDER U/S. 143(3) OF THE ACT,ON 29.12.2007,DETERMINING THE TOT AL INCOME AT RS.97,16,775/-. EFFECTIVE GROUND OF APPEAL PERTAINS TO ADDITION OF RS.61,58,090/- MADE U/S.41(1)OF THE ACT. DURING THE ASSESSMENT PROCEEDINGS AO FOUND THAT THE ASSESS EE HAD SHOWN SUNDRY CREDITORS WHICH INCLUDED AN AMOUNT OF RS.2,48,78,661/-PAYABLE TO HAFFKINE BI O-PHARMACEUTICAL CORPORATION LTD.(HBPCL), THAT THE ASSESSEE HAD TO PAY RS.1,87,20,571/- TO HB PCL AS PER THE CONFIRMATION.AO DIRECTED THE ASSESSEE TO FILE EXPLANATION ABOUT THE DIFFERENCE O F BALANCE AMOUNT I.E. RS.61,58,090/-.AS IT WAS NOT ABLE TO RECONCILE THE DIFFERENCE,THE AO PROCEEDED T O ADD THE AMOUNT UNDER SECTION 41 (1) OF THE ACT STATING THERE WAS AN EXCESS AMOUNT SHOWN AS PAY ABLE BY THE ASSESSEE-COMPANY TO THE PARENT COMPANY.HE HELD THAT LIABILITY HAD CEASED TO EXIST. 2.1. AGAINST THE ORDER OF THE AO ASSESSEE PREFERRED AN A PPEAL BEFORE THE FIRST APPEAL AUTHORITY (FAA).IT WAS ARGUED BEFORE HIM THAT THE ASSESSEE AN D THE PARENT COMPANY WERE MANUFACTURING AND DEALING IN PHARMACEUTICAL PRODUCTS AND QUITE OFTEN THERE WAS PURCHASE AND SALE BETWEEN BOTH,THAT THE EMPLOYEES OF THE COMPANY KEEP CHANGING THE RECO NCILIATION AT TIMES WAS NOT POSSIBLE,THAT 2 ITA NOS. 1450/MUM/2012 HAFFKINE AJINTHA PHARMACEUTIC ALS LTD. DIFFERENCE HAD ACCUMULATED OVER A PERIOD OF MORE TH AN 15-20 YEARS. ACCORDINGLY, THE ASSESSEE FILED A RECTIFICATION STATEMENT DURING THE COURSE OF APPE LLATE PROCEEDINGS.AS THE STATEMENT HAD NOT BEEN GIVEN TO THE AO AT THE TIME OF ASSESSMENT PROCEEDIN G, THE SAME WAS FORWARDED TO HIM BY THE FAA FOR HIS COMMENTS.AO SUBMITTED THAT RECONCILIATION W ORK WAS GOING ON SO THE ORIGINAL ASSESSMENT ORDER SHOULD BE UPHELD.AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER HE HELD THAT T HE RECONCILIATION WORKINGS WERE FOR THE PERIOD 2000 TO 2007,THAT THE ASSESSEE HAD GIVEN WORKING OF THE PARENT COMPANY BOTH AS CREDITO R AS WELL AS DEBTOR SEPARATELY,THAT THE PARENT COMPANY WAS A DEBTOR,THAT COMPLETE RECONCILIATION H AS NOT BEEN DONE TILL THE HEARING BEFORE HIM WAS GOING ON,THAT UNTIL COMPLETE RECONCILIATION & D ETAILS WERE PRESENT FOR ALL THE YEARS, CORRECT PICTURE WOULD NOT EMERGE.REFERRING TO THE REPORT OF THE AO,WHERE THERE WAS DETAILS OF NEXT ASSESSMENT YEAR,HE UPHELD THE ORDER OF THE AO. 2.2. BEFORE US,AUTHORISED REPRESENTATIVE(AR) SUBMITTED T HAT ASSESSEE WAS A GOVERNMENT OWNED COMPANY,THAT THE PARENT COMPANY WAS ALSO DEALING IN THE SAME BUSINESS AS THAT OF THE ASSESSEE THAT THERE WAS DIFFERENCE IN THE BOOKS OF ACCOUNTS, AMOU NTING TO RS. 61.08 LAKHS, THAT ASSESSEE HAD FILED RECONCILIATION ABOUT THE DIFFERENCE,THAT THE FAA HA D CALLED FOR A REMAND REPORT FROM THE AO, THAT THERE WAS TYPOGRAPHICAL MISTAKE IN THE FORWARDING L ETTER, THAT INSTEAD OF AY-2007-08,IN THE FORWARDING LETTER AY.WAS MENTIONED AS 2008-09,THAT IN THE RECONCILIATION STATEMENT CORRECT AY.WAS MENTIONED,THAT,THE ADDL.CIT HAD MENTIONED IN HIS FO RWARDING LETTER TO THE FAA THAT THERE WAS TYPOGRAPHICAL ERROR IN THE DATES MENTIONED BY THE A SSESSEE IN ITS SUBMISSIONS,THAT FAA HAD CONFIRMED THE ADDITION ON THE BASIS OF FORWARDING L ETTER,THAT HE IGNORED THE RECONCILIATION STATEMENT GIVING CORRECT DATES OF THE TRANSACTIONS. DEPARTMEN TAL REPRESENTATIVE (DR) LEFT THE MATTER TO THE DISCRETION OF THE BENCH. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ASSESSEE AND THE PARENT COMPANY ARE MANUFACTURING DRUGS, THA T BOTH ARE GOVERNMENT OWNED COMPANIES, THAT THERE WAS DIFFERENCE ABOUT THE CREDITORS IN THE BOO KS OF ACCOUNTS OF THE ASSESSEE, THAT THE ASSESSEE HAD FILED DETAILED RECONCILIATION STATEMENT BEFORE THE FAA. WHILE DECIDING THE ISSUE AGAINST THE ASSESSEE,FAA HAD CONSIDERED ONLY THE FORWARDING LET TER AND HAD IGNORED THE RECONCILIATION STATEMENT.WE ARE OF THE OPINION THAT ONCE THE ADDIT IONAL CIT HAD MENTIONED THAT THERE WAS TYPOGRAPHICAL MISTAKE IN MENTIONING THE ASSESSMENT YEAR ,FAA SHOULD HAVE TAKEN NOTE OF THE MISTAKE AND SHOULD HAVE PASSED ORDER ACCORDINGLY.CO NSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. HE IS DIRECTED TO A FFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AS A RESULT APPEAL FILE D BY THE ASSESSEE STANDS PARTLY ALLOWED. 5.6&-. 7 '8 4.6 4.6 4.6 4.6 9 9 9 9 / . :;. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD APRIL,2014 . '4 / 12( < ='& 23 +; +; +; +; 201 4 2 / 3 > SD/- SD/- ( . .. . . .. .$% $%$% $%. .. . . .. .& & & & /DR. S.T.M.PAVALAN) ( ! ! ! ! /RAJENDRA) '# '# '# '# / JUDICIAL MEMBER '# '# '# '# /ACCOUNTANT MEMBER / MUMBAI, ='& /DATE: 23.04.2014. SK '4 '4 '4 '4 / // / +.? +.? +.? +.? @?(. @?(. @?(. @?(. / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / )* 2. RESPONDENT / +,)* 3. THE CONCERNED CIT(A)/ A B , 4. THE CONCERNED CIT / A B 5. DR H BENCH, ITAT, MUMBAI / ?C3 +.& , ,, , . .. . , . . . 6. GUARD FILE/ 3 5 ,?. ,?. ,?. ,?. +. +.+. +. //TRUE COPY// 3 ITA NOS. 1450/MUM/2012 HAFFKINE AJINTHA PHARMACEUTIC ALS LTD. '4& / BY ORDER, D / : DY./ASST. REGISTRAR , /ITAT, MUMBAI