MAHANAGAR GAS LTD, MUMBAI V. ACIT RG 6(3), MUMBAI

ITA 1535/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3619 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-12-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 06-03-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRAVAN KUMAR
• Assessee Lawyers: P P JAYARAMAN
• Keywords: Depreciation; Opportunity of being heard
• Section: 115JB; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B : MUMBAI BEFORE SHRI D.K. AGARWAL, JUDICIAL MEMBER AND SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER ITA. NO. 1535/MUM/2009 ASSESSMENT YEAR 2002-2003 MAHANAGAR GAS LIMITED MUMBAI-050 PAN AABCM4640G VS. THE ACIT, RANGE 6 (3) MUMBAI. (APPELLANT) (RESPONDENT) FOR APPELLANT : SHRI P.P. JAYARAMAN FOR RESPONDENT : SHRI SHRAVAN KUMAR (DR) ORDER PER D.K.AGARWAL, J.M. 1. THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECT ED AGAINST THE ORDER DATED 17-12-2008 PASSED BY THE LEARNED CI T(A) FOR THE ASSESSMENT YEAR 2002-2003. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE A SSESSEE- COMPANY IS ENGAGED IN THE BUSINESS OF SUPPLY OF DIS TRIBUTION OF PIPED NATURAL GAS TO DOMESTIC AND OTHER CONSUMERS AND CNG TO VEHICLES, FILED RETURN DECLARING TOTAL INCOME OF RS.5,61,59,5 60/- UNDER NORMAL PROVISIONS OF THE ACT AND BOOK PROFIT OF RS.46,79,6 7,292/- UNDER SECTION 115JB OF THE ACT. THE RETURN WAS REVISED DE CLARING TOTAL INCOME OF RS.5,62,79,430/- UNDER NORMAL PROVISIONS BY REDUCING THE CLAIM OF DEPRECIATION TO THE EXTENT OF RS.1,19,866/ - DUE TO AVAILING OF CANVAT CREDIT BY THE COMPANY. A SCRUTINY ASSESSMENT UNDER SECTION 143 (3) WAS MADE AND THE TOTAL INCOME WAS DETERMINE D UNDER NORMAL PROVISIONS OF THE ACT AT RS.6,38,53,252/- AND BOOK PROFIT AT RS.46,83,27,024/- UNDER SECTION 115JB OF THE ACT VI DE ORDER DATED 21/2/05. SUBSEQUENTLY, THE CASE WAS REOPENED UNDER SECTION 147 READ WITH SECTION 148 FOR THE REASONS THAT ON PERUS AL OF P & L ACCOUNT IT WAS NOTED BY THE ASSESSING OFFICER THAT THE ASSE SSEE HAS CLAIMED ITA. NO. 1535/MUM/2009 MAHANAGAR GAS LIMITED 2 PRIOR PERIOD EXPENSES OF RS.11,16,753/- EVEN THOUGH THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING RESULTED ESCAPEMENT OF INCOME TO THE SAID EXPENDITURE. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO FILE DETAILS IN THIS REGARD. IN REPLY, THE ASSESSEE FILED DETAILS OF LEDGER ACCOUNT AND INTER ALIA STATED THAT DURING THE YEAR ENDED 31-3-2002 THE TOTAL PRIO R PERIOD EXPENSES DEBITED TO P & L ACCOUNT ARE RS.11,16,753/-. FURTHE R THE MAJOR COMPONENT OF PRIOR PERIOD EXPENSES ARE ON ACCOUNT O F DELAY IN RECEIPT OF BILLS AND ON ACCOUNT OF SOME BILLS WHERE PARTLY THEY PERTAIN TO THE EARLIER YEAR AND A COMBINED BILL IS MADE LIKE THE B ILL IS MADE FOR PREVIOUS YEAR MARCH PART PERIOD AND APRIL AND MAY O F THE RELEVANT YEAR UNDER CONSIDERATION AND THEREFORE, ACCOUNTED A S EXPENSES IN THE CURRENT YEAR. IN CERTAIN CASES DUE TO DELAY IN PASS ING OF THE BILL ON ACCOUNT OF AMENDMENT BEING MADE IN THE WORK ORDER, THE SAME IS CRYSTALIZED ONLY WHEN AMENDMENT IS GIVEN EFFECT TO AND CLEARED BY THE COMPANY. RELIANCE WAS ALSO PLACED ON THE FOLLOWING CASES : (I) WOLKEM (P) LTD. VS. CIT (1996) 54 TTJ (JP-TRIB.) 41 4, (II) KUMAR ACROSOLES (P) LTD. VS. CIT (1996) 55 TTJ (DEL .TRIB) 385 (III) SARVARAJA TEXTILES LTD. VS. CIT (1995) 54 ITD 612 (HYD.TRIB) (IV) PORRITS & SPENCER (ASIA) LTD. VS. CIT (1997) 58 TTJ (DEL.TRIB) 195. (V) CIT VS. AGRAWAL GUDAKA FACTORY (1997) 90 TAXMAN 380 (MP). HOWEVER, THE ASSESSING OFFICER NOTED THAT THERE IS NO PROOF THAT LIABILIES OF ALL THESE EXPENSES CRYSTALISED DURING THE YEAR IN QUESTION. THESE EXPENSES ARE NOT REQUIRED TO BE ALLOWED IN TH IS YEAR. HE FURTHER NOTED THAT THE ASSESSEE HAS NETTED THE PRIOR PERIOD EXPENSES WITH PRIOR PERIOD INCOME. HE ALSO NOTED THAT PRIOR PERIO D EXPENSES RS.26,45,614/- AND PRIOR PERIOD INCOME WAS RS.15,28 ,868/- THEREFORE, HE ADDED AN AMOUNT OF RS.26,45,614/- TO THE TOTAL INCOME ITA. NO. 1535/MUM/2009 MAHANAGAR GAS LIMITED 3 OF THE ASSESSEE AND COMPLETED THE ASSESSMENT ON AN INCOME OF RS.66498870/- AND AT BOOK PROFIT OF RS.46,90,84,292 /- VIDE ORDER DATED 17-12-2007 PASSED UNDER SECTION 143 (3) READ WITH SECTION 147 OF THE ACT. 3. ON AN APPEAL THE CASE WAS FIXED FOR HEARING ON 16-8-2008 WHICH WAS ADJOURNED TO 8-7-2008 AT THE REQUEST OF T HE ASSESSEE. IN THE ABSENCE OF ANY COMPLIANCE, THE CASE WAS AGAIN R E-FIXED ON 16/9/2008 AND THE SAME WAS ADJOURNED AT THE REQUEST OF THE ASSESSEE. THE CASE WAS AGAIN FIXED ON 13-10-2008 ON WHICH NO ONE APPEARED NOR ANY LETTER FOR ADJOURNMENT WAS FILED, THEREFORE, THE LEARNED CIT(A) PASSED EX-PARTE ORDER ON THE BASIS O F THE MATERIAL AVAILABLE ON RECORD AND AFTER CONSIDERING THE SAME, HE FOR THE SAME REASONS CONFIRMED THE ADDITION MADE BY THE ASSESSIN G OFFICER AND DISMISSED THE APPEAL. 4. BEING AGGRIEVED BY THE ORDER OF THE LEARNED CIT (A) THE ASSESSEE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE SUSTENANCE OF ADDITION BY THE LEARNED CIT(A) WITHOU T ALLOWING PROPER AND SUFFICIENT OPPORTUNITY TO THE ASSESSEE. 5. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE-COMPANY IS NOT A PUBLIC SECTO R COMPANY AS MENTIONED U/S. 2 (36A) OF THE ACT OR A GOVERNMENT C OMPANY AS DEFINED UNDER SECTION 617 OF THE COMPANIES ACT, 195 6. HE FURTHER SUBMITS THAT THE CAPITAL STRUCTURE OF THE COMPANY I S THAT (A) GAIL (INDIA) LTD. AND ITS NOMINEES 49.75%, (B) BRITISH G AS CO. AND ITS NOMINEES 49.75% AND (C.) GOVERNMENT OF MAHARASHTRA 0.50% TOTALLING TO 100%. HE FURTHER SUBMITS THAT THE APPEAL WAS FIN ALLY ADJOURNED TO 13-10-2008 AND WHEN OUR REPRESENTATIVE COULD NOT AT TEND ON THAT DAY HE INFORMED THE LEARNED CIT(A) ON TELEPHONE AND ATT ENDED ON THE VERY NEXT DAY, WHEN HE WAS INFORMED THAT THE APPELLANT W OULD GET A FRESH NOTICE AND THAT THERE IS NO NEED FOR A LETTER OF AD JOURNMENT. THEREAFTER, THE APPEAL ORDER HAS BEEN RECEIVED BY T HE APPELLANT, EVEN ITA. NO. 1535/MUM/2009 MAHANAGAR GAS LIMITED 4 THOUGH THE SAME IS NOT A TIME BARRING CASE. HE, THE REFORE, SUBMITS THAT IN THE INTEREST OF JUSTICE, THE ORDER PASSED B Y THE LEARNED CIT(A) BE RESTORED TO HIS FILE TO DECIDE THE CASE AFRESH A FTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. 6. ON THE OTHER HAND, LEARNED DR WHILE RELYING THE ORDER OF THE ASSESSING OFFICER AND THE LEARNED CIT(A) FURTHE R SUBMITS THAT HE HAS NO OBJECTION IF THE MATTER IS SET ASIDE TO THE FILE OF THE LEARNED CIT(A). 7. HAVING CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECO RD WE FIND THAT THERE IS NO DISPUTE THAT APPEAL WAS DECIDED BY THE LEARNED CIT(A) WITHOUT HEARING THE ASSESSEE. IT WAS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE THAT HE WAS INFORMED THAT HE WOULD GET FRESH NOTICE AND THERE IS NO NEED FOR A LETTER OF ADJOURNMENT. IN TH E ABSENCE OF ANY CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE A GAINST THE AFORESAID FACTS AND KEEPING IN VIEW THE INTEREST OF JUSTICE WE CONSIDER IT FAIR AND REASONABLE THAT ONE MORE OPPORTUNITY BE PROVIDED TO THE ASSESSEE AT THE STAGE OF LEARNED CIT(A) AND ACCORDI NGLY WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) AND SEND THE MATTER TO HIS FILE WHO SHALL DECIDE THE SAME AFRESH AND ACCORDING TO L AW AFTER PROVIDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSE SSEE. THE ASSESSEE SHALL ALSO COOPERATE. THE GROUNDS TAKEN BY THE ASSE SSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA. NO. 1535/MUM/2009 MAHANAGAR GAS LIMITED 5 PRONOUNCED IN THE OPEN COURT ON THIS THE 15 TH DAY OF DECEMBER, 2010. SD/- (RAJENDRA SINGH) ACCOUNTANT MEMBER SD/- (D.K. AGARWAL) JUDICIAL MEMBER DATED : 15 TH DECEMBER, 2010 VBP/- COPY TO : 1. MAHANAGAR GAS LIMITED, MGL HOUSE, G-33, BANDRA-K URLA COMPLEX, OPP. ICICI TOWERS, BANDRA-KURLA COMPLEX, BANDRA (EAS T), MUMBAI. PAN AABCM-4640-G 2. THE ACIT, RANGE 6 (3), AAYAKAR BHAVAN, MUMBAI. 3. CIT(A)-VI, MUMBAI 4. CIT, MUMBAI CITY-VI, MUMBAI 5. DR B BENCH 6. GUARD FILE TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI