M/s. Milan Gems, Surat V. The ACIT.,Circle-9, Surat

ITA 1786/AHD/2009

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0290 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2009
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 28-08-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 28-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C K MISHRA
• Assessee Lawyers: D K PARIKH
• Keywords: Business expenditure; Additional evidence; Corroborative evidences; Reassessment proceedings
• Section: 80HHC; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.1786/AHD/2009 ASSESSMENT YEAR: 2003-04 DATE OF HEARING:28.8.09 DRAFTED:16.9.09 M/S. MILAN GEMS, 738, BELGIUM TOWER, OPP. LINEAR BUS STAND, DELHI GATE, SURAT PAN NO.AAAFN1878L V/S . ACIT, CIRCLE-9, SURAT (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI D.K. PARIKH, AR RESPONDENT BY:- SHRI C.K. MISHRA, SR. DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, SURAT IN APPEAL NO. CAS-V/2 68/08-09 DATED 11-05-2009. THE ASSESSMENT WAS FRAMED BY THE ACIT, CIRCLE-9, SU RAT U/S. 144 R.W.S. 147 OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) VIDE HIS ORDER DATED 10-12- 2008 FOR THE ASSESSMENT YEAR 2003-04. 2. THE FIRST FOUR INTER-CONNECTED GROUNDS IN THIS A PPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE RE-OPENING OF AS SESSMENT PROCEEDINGS AFTER THE END OF FOUR YEARS. FOR THIS, THE ASSESSEE HAS RAISE D THE FOLLOWING EFFECTIVE ISSUES:- 1. THAT THE CIT(A) ERRED IN CONFIRMING THE REOPENI NG OF THE ASSESSMENT AFTER HE END OF FOUR YEARS FROM THE END OF RELEVANT ASSES SMENT YEAR. ITA NO.1786/AHD/2009 A.Y. 2003-04 M/. MILAN GEMS V. ACIT, CIR-9 SURAT PAGE 2 THERE IS NO FACTUAL ERROR IN THE RETURN OF INCOME S UBMITTED BY THE ASSESSEE. THE ASSESSEE HAS DISCLOSED FULLY & TRULY ALL MATERI AL FACTS NECESSARY FOR HIS ASSESSMENT FOR THE RELEVANT ASSESSMENT YEAR. 2. THAT THE CIT(A) ERRED IN NOT DECIDING THE ISSUE ON NON-FURNISHING COPY OF REASONS RECORDED. 3. THAT THE CIT(A) ERRED IN NOT PASSING SPEAKING OR DER ON GROUNDS OF APPEAL RAISED VIDE POINT 1 TO 5 TO FORM NO.35. 4. THAT THE CIT(A) ERRED IN CONFIRMING THE EX PARTE ASSESSMENT U/S.144. THE NOTICE ISSUED & SERVED ARE NOT PROPERLY SERVED. FUR THER THERE IS CHANGE OF ADDRESS. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE HAS N OT PRESSED FOUR INTER- CONNECTED GROUNDS. HENCE, WE DISMISS THE SAME AS NO T PRESSED. 4. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE THAT C IT(A) NOT DECIDING THE CLAIM U/S.80HHC OF THE ACT ON MERIT. FOR THIS, THE ASSES SEE HAS RAISED THE FOLLOWING EFFECTIVE GROUND NO.5 :- THAT THE CIT(A) ERRED IN NOT DECIDING THE CLAIM U/ S.80HHC ON MERIT. THE ASSESSEE REALIZED THE SALE PROCEEDS INTO CONVERTIBL E FOREIGN EXCHANGE WITHIN THE TIME LIMIT PRESCRIBED U/S.80HHC(2A) OF THE ACT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS RELATIN G TO THIS ISSUE ARE THAT THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM BY OBSER VING THAT IT IS NOT POSSIBLE TO VERIFY WHETHER THE CONVERTIBLE EXCHANGE WAS RECEIVE D WITHIN THE TIME ALLOWED OR NOT, AND IT WAS STATED THAT THE AUDITOR IN HIS CERTIFICA TED IN FORM 10CCA HAS MENTIONED THAT THE DEDUCTION U/S.80HHC FOR THE YEAR UNDER CON SIDERATION WAS DETERMINED ON THE BASIS OF SALE OF PROCEEDS RECEIVED BY THE ASSES SEE IN CONVERTIBLE FOREIGN EXCHANGE. ACCORDING TO THE AO THE AUDITOR IS SUPPOS ED TO VERIFY THE FACT THAT THE CONVERTIBLE FOREIGN EXCHANGE WAS RECEIVED WITHIN TH E TIME PRESCRIBED OR WITHIN SUCH EXTENDED PERIOD BEFORE ISSUING HIS CERTIFICATE IN F ORM 10CCAC AND ACTUALLY THE SALE PROCEEDS OF RS.4,00,99,910/- WAS NOT RECEIVED BEFOR E THE EXTENDED TIME UP TO 20- 10-2003 AS ENVISAGED IN SECTION 80HHC[2][A] OF THE ACT. ACCORDINGLY, THE AO REDUCED THE EXPORT TURNOVER BY RS.4,00,99,910/- AND CONSEQUENTLY REDUCED THE ITA NO.1786/AHD/2009 A.Y. 2003-04 M/. MILAN GEMS V. ACIT, CIR-9 SURAT PAGE 3 DEDUCTION U/S. 80HHC OF THE ACT. AGGRIEVED, THE AS SESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF THE AO BY GIVING FOLLOWING FINDINGS IN HIS APPELLATE ORDER:- NEXT TWO EFFECTIVE GROUNDS ARISE OUT OF AOS ACTIO N AS DISCUSSED IN PARA 5 AND 6. THE APPELLANT HAS TRIED TO SUBMIT CERTAIN FR ESH EVIDENCE, WHICH CAN NOT BE ENTERTAINED AS THE REASON ADVANCED THAT IS CLAIM ED TO HAVE PREVENTED THE APPELLANT FROM COMPLIANCE BEFORE THE A.O. THAT PART NERS ARE STAYING BOMBAY IS NOT SATISFACTORY. IF THE ORIGINAL RETURN COULD B E FILED FROM SURAT OFFICE, IF BUSINESS IS CONDUCTED AND ACCOUNTS MAINTAINED IN SU AT OFFICE AND IF APPEAL CAN BE FILED FROM SURAT OFFICE, SURELY THE DETAILS THAT WERE SOUGHT BY THE AO DURING THE REASSESSMENT PROCEEDINGS COULD HAVE BEEN FILED FROM SURAT OFFICE. THE A.O NEVER INSISTED ON PERSONAL PRESENCE OF PART NERS. SECONDLY THE APPELLANT HAD VOLUNTARILY FILED ITS RETURN OF INCOM E IN SUAT AND THUS HAD TAKEN UPON HIMSELF THE RESPONSIBILITY OF FURNISHING THE D ETAILS AND THUS ENABLE THE A.O TO SCRUTINIZE ITS CLAIMS MADE RELATED TO ASSESS MENT OF INCOME. THIS WAS NO DONE AND THUS THE APPELLANTS REASON THAT PARTNE RS WERE BASED IN BOMBAY CAN ONLY BE TREATED AS AN EYE WAS AND A PURE AFTER THROUGH. TAKING A CUE FROM RULE 46A, THE ADDITIONAL EVIDENCE PRODUCED NOW DURING THE APPELLATE PROCEEDINGS, CAN NOT BE ADMITTED. IT IS ALSO PERTAI NED TO NOTE THAT THE APPELLANT EVEN DID NOT COMPLY WITH THE NOTICE U/S.1 48. THUS THE GROUND NO. 6 & 8 RELATING TO DISALLOWANCE OF DEDUCTION U/S.80HHC AND FOREIGN TRAVEL EXPENSES ARE DISMISSED. 6. AGGRIEVED, THE ASSESSEE PREFERRED SECOND APPEAL BEFORE TRIBUNAL. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE FIRST OF ALL F ILED A STATEMENT SHOWING THE DETAILS OF PAYMENT RECEIVED FROM THE DEBTORS OUTSTANDING AS ON 31-03-2003 SR. NO. NAME OF THE PARTY DATE ON WHICH PAYMENT IS RECEIVED AMT. (RS) PAPER BOOK PAGE NO. 1. ASTHA INTERNATIONAL 13/06/2003 403549 51 & 53 2. ALMA DIAMONDS 04/08/2003 3315878 56 3. DIA DEB INTERNATIONAL 26/08/2003 1497129 59 4. DIAMOND TREASURE CO. 9/04/2003 & 17/04/2003 3652262 63 5. DIAMOND TREASURE CO. 16/4/2003, 10/092003 & 11/09/2003 7426134 67 & 68 6. GREENET LTD. 8/5/2003 & 1/7/2003 5572525 71 ITA NO.1786/AHD/2009 A.Y. 2003-04 M/. MILAN GEMS V. ACIT, CIR-9 SURAT PAGE 4 7. GEMS TRADIG CO. 25/4/2003 1699515 74 8. MOHIT GEMS 29/5/2003 3569547 77 9. TERAMOND PTE LTD. 08/04/2003 & 20/6/2003 7137112 81 & 83 10. ANDEL JEWELLERY CORP. 09/05/2003 1994739 81 & 83 11. YAIR BEN-AMI DIAMONDS 29/4/2003, 13/6/2003, 20/6/2003 & 24/7/2003 3653064 85 THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE AS SESSING OFFICER HAS WRONGLY CONSIDERED RS.4,00,99,910/- AS NOT REALIZED AS PER PAGE NO.36 OF THE BALANCE-SHEET AND STATEMENT OF DEBTORS AS ON 31-03-2003. HE FURTH ER STATED THAT RS.1,78,456/- IS OF LOCAL PARTIES AND RS.3,99,21,454/- HAS ALREADY BEEN RECEIVED ON OR BEFORE 30-09- 2003 AND ACCORDINGLY DEDUCTION U/S.80HHC OF THE ACT IS ALLOWABLE TO THE ASSESSEE. ON THE OTHER HAND, THE LD. DR HEAVILY RELIED ON THE ORDERS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HAVE ALSO PERUSED TH E CASE RECORDS INCLUDING THE ASSESSMENT ORDER AS WELL AS THE ORDER OF CIT(A) AND ASSESSEES PAPER BOOK CONSISTING OF PAGES 1 TO 120. WE FIND THAT THE ASS ESSING OFFICER HAS NOT ALLOWED THE DEDUCTION ONLY ON ONE PREMISE THAT IT IS NOT POSSIB LE TO VERIFY WHETHER THE CONVERTIBLE EXCHANGE WAS RECEIVED WITHIN THE TIME ALLOWED OR NO T AND ALSO STATED THAT THE AUDITOR HAS CERTIFIED IN FORM NO.10CCAC THAT THE DE DUCTION U/S.80HHC OF THE ACT FOR THE YEAR UNDER CONSIDERATION WAS DETERMINED ON THE BASIS OF SALE PROCEEDS RECEIVED BY THE ASSESSEE IN CONVERTIBLE FOREIGN EXC HANGE. ACCORDING TO HIM, THE AUDITOR IS SUPPOSED TO VERIFY THE FACT THAT THE CON VERTIBLE FOREIGN EXCHANGE IS RECEIVED WITHIN THE TIME PRESCRIBED OR WITHIN SUCH EXTENDED PERIOD BEFORE ISSUING CERTIFICATE IN FORM 10CCAC. ACCORDINGLY, WE DISALL OW SECTION 80HHC DEDUCTION BY STATING THE REASON THAT THE SALE PROCEEDS WAS NOT R ECEIVED BEFORE THE EXTENDED TIME UPTOO20-10-2003. THE CIT(A) ALSO CONFIRMED THE SAME ON EXACTLY ON DOTED LINES. WE FIND FROM THE RECORDS, THAT THE ASSESSEE BEFORE BOTH THE LOWER AUTHORITIES HAS SUBMITTED THAT THE SALE PROCEEDS IN CONVERTIBLE FOR EIGN EXCHANGE ARE NOT REALIZED WITHIN THE TIME ALLOWED BUT WAS REALIZED WITHIN THE EXTENDED TIME U/S.80HHC(2A) OF THE ACT UPTO 30-09-2003, BY WHICH DATE THE OUTSTAND ING DEBTOR WAS REALIZED. WE ITA NO.1786/AHD/2009 A.Y. 2003-04 M/. MILAN GEMS V. ACIT, CIR-9 SURAT PAGE 5 FIND THAT THE CLAIM OF THE ASSESSEE IS CORRECT IN V IEW OF THE FACT THAT THE ASSESSEE HAS RECEIVED THE CONVERTIBLE FOREIGN EXCHANGE ON ACCOUN T OF SALE PROCEEDS WITHIN THE EXTENDED TIME, I.E. ON OR BEFORE 30-09-2003. ACCOR DINGLY, WE DIRECT THE ASSESSING OFFICER TO VERIFY FROM THE DOCUMENTS, WHICH ARE ALR EADY FILED BEFORE US, THE DATES OF RECEIPTS AS MENTIONED IN THE ABOVE CHART AND ALLOW THE CLAIM. THIS IS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED IN TERMS OF THE ABOVE. 8. THE NEXT ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE MADE BY ASSESSING OFFI CER ON ACCOUNT OF FOREIGN TRAVELING EXPENSES. FOR THIS, THE ASSESSEE HAS RAIS ED THE FOLLOWING GROUND NO. 6:- 6. THAT THE CIT(A) ERRED IN CONFIRMING THE DISALLO WANCE OF RS.6,24,699/- ON ACCOUNT OF FOREIGN TRAVEL EXPENSES 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THR OUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE FACTS ARE THAT THE A SSESSING OFFICER ON VERIFICATION OF TRAVELING EXPENSES STATED THAT THE ASSESSEE HAS NOT ENCLOSED ANY PROOF FOR CLAIM OF FOREIGN TRAVEL EXPENSES OF RS.6,94,110/- AND THE BI LL FURNISHED IN THIS REGARD DOES NOT SHOW THE DETAILS SUCH AS NAME OF THE PERSONS WHO TR AVELED, PLACE OF JOURNEY ETC. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE E NTIRE FOREIGN TRAVEL EXPENSES AS NON-GENUINE. AGGRIEVED, THE ASSESSEE PREFERRED APP EAL BEFORE CIT(A) BUT THE CIT(A) WITHOUT SPEAKING ANYTHING ON THIS ISSUE, CON FIRMED THE DISALLOWANCE BY STATING THAT, THUS, THE GROUND NO. 6 & 8 RELATING TO DISALLOWANC E OF DEDUCTION U/S.80HHC AND FOREIGN TRAVEL EXPENSES ARE DISMISSED . AGGRIEVED, THE ASSESSEE CAME IN SECOND APPEAL BEFORE US. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE DISALLOWANCE OF FOREIGN TRAVELING EXPENSES OF RS.6,24,699/- REQUIRES TO BE CANCELLED AS FROM THE DOCUMENTS AND EVIDENCES PRODU CED VIDE ANNEXURE-D BEFORE THE LOWER AUTHORITIES, IT IS QUITE CLEAR THAT THE F OREIGN TRAVEL IS UNDERTAKEN ONLY WITH AN OBJECT OF PROMOTION OF EXPORT BUSINESS OF ASSESSEE. THUS, BEING WHOLLY AND EXCLUSIVELY INCURRED FOR BUSINESS PURPOSES, THE EXP ENDITURE REQUIRES TO BE ALLOWED. WE FIND FROM THE PAPER BOOK OF THE ASSESSEE PAGES-104 TO 115 , WHERE THE COMPLETE DETAILS OF BUSINESS EXPENSES INCLUDING THE PURPOSES IS ALSO STATED. EVEN THE CURRENCY OBTAINED IS ON ACCOUNT OF BUSINESS PURPOSE . WE FURTHER FIND FROM THE ITA NO.1786/AHD/2009 A.Y. 2003-04 M/. MILAN GEMS V. ACIT, CIR-9 SURAT PAGE 6 SUPPORTING EVIDENCES, THE PURPOSE OF FOREIGN TRAVEL WAS PROMOTION OF EXPORT BUSINESS ONLY. ACCORDINGLY, WE ALLOW THE CLAIM OF THE ASSESSEE AND THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 10. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED . ORDER PRONOUNCED IN OPEN COURT ON 16/10/2009 SD/- SD/- (D.C.AGRAWAL) (MAHAVI R SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED :16/10/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-V, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD