J.P Tobaco Producta Pvt. Ltd., V. Asst. Commissioner of Income tax Circle - Sagar,

ITA 186/JAB/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8344 (ITAT-JABALPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2003-2004
• Appeal Filed On: 08-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: AGITATING
• Keywords: Gift; Opportunity of being heard; Onus to prove; Set aside
• Section: 143(3); 191

Judgement Text

I.T.A. NO.186/JAB/2016 ASSESSMENT YEAR:2003-04 1 IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.186/JAB/2016 ASSESSMENT YEAR: 2003-04 J.P. TOBACCO PRODUCTS PVT. LTD., PATHARIYA PHATAK, DAMOH [PAN:AAACJ 7141G] VS. ASST. COMMISSIONER OF INCOME TAX, CIRCLE- SAGAR (APPELLANT) (RESPONDENT) O R D E R PER SANJAY ARORA, A.M. THIS IS AN APPEAL BY THE ASSESSEE AGITATING THE O RDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-1, JABALPUR ( CITA) FOR SHORT) DATED 16.3.2016, DISMISSING THE ASSESSEES APPEAL CONTEST ING ITS ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T HEREINAFTER) DATED 30.01.2006 FOR ASSESSMENT YEAR (A.Y.) 2003-04. 2. THE APPEAL RAISES THE FOLLOWING GROUNDS: 1. THE LD. CIT (A) ERRED IN NOT DECIDING THE GROUND NO. 1 AND 2 REGARDING ADDITION OF RS.40,44,451/- IN RESPECT OF CLAIM OF D EDUCTION U/S. 80 1A, WHICH WAS UNJUSTIFIED, UNCALLED FOR AND EXCESSIVE. 2. THE FOLLOWING EXPENSES TREATED AS CAPITAL EXPEND ITURE WERE ALSO UNJUSTIFIED, UNCALLED AND BAD IN LAW. APPELLANT BY SHRI G.N. PUROHIT, SR. ADV. RESPONDENT BY SHRI I.B. KHANDEL, SR. DR DATE OF HEARING 09/12/2019 DATE OF PRONOUNCEMENT 20/01/2020 I.T.A. NO.186/JAB/2016 ASSESSMENT YEAR:2003-04 2 (A) RTO PENALTY: RS. 7300/- (B) PENALTY EXPENSES: RS. 7500/- (C) VCD/TV/AC & FRIDGE PURCHASED: R S. 5,73,375/- (D) COOLER, MIXER GRINDER PURCHASED: RS. 1,10,340/- (E) TERRITORY DEVELOPMENT EXPENSES: RS. 16,514/- TOTAL RS. 7,00,229/- 3. LEVY OF INTEREST U/S. 234 B RS. 7,41,069/- AS AG AINST RS.2,87,166/- SHOWN IN THE COMPUTATION OF INCOME RETURNED PAID IS ARBIT RARY, UNJUSTIFIED AND UNCALLED FOR. 3. VIDE GROUND NO.1, AS FINALLY ARGUED BEFORE US, T HE ASSESSEE CLAIMS NON- ADJUDICATION OF ITS CLAIM QUA DEDUCTION U/S. 80IA, DISALLOWED IN ASSESSMENT, BY THE LD. CIT(A), WHICH WAS AGITATED BEFORE HIM. T HE SAME WAS CONFIRMED AS A FACT UPON PURSUING THE IMPUGNED ORDER, AND NEITHE R DOES THE SAME RECORD NON-PRESSING THEREOF BY THE ASSESSEE DURING HEARING BEFORE HIM. THE ISSUE THEREFORE IS RESTORED BACK TO THE FILE OF THE LD. C IT(A) FOR ADJUDICATION OF THE ASSESSEES GDS. 1& 2 BEFORE HIM AFTER ALLOWING IT A REASONABLE OPPORTUNITY OF BEING HEARD IN THE MATTER, PER A SPEAKING ORDER, IN A TIME BOUND MANNER. HE WOULD, HOWEVER, IN DOING SO, BE BOUND AND GOVERNED BY THE DIRECTIONS AND THE TERMS OF THE SET ASIDE TO HIM BY THE TRIBUNAL. AS I T APPEARS, THOUGH, THE SAID ISSUE ARISES OUT OF THE ASSESSMENT U/S. 143(3) R/W S. 263, WHICH WAS NOT CARRIED BY THE ASSESSE BEYOND THE FIRST APPELLATE AUTHORITY (REFER PAGES 5-6 OF THE IMPUGNED ORDER). THE PARTIES UNFORTUNATELY DID NOT THROW ANY LIGHT ON THIS ASPECT/S OF THE MATTER, WITH THE ASSESSE, RATHER, R AISING THE ISSUE BEFORE US ON MERITS, EVEN AS, ON BEING POINTED OUT DURING HEARIN G, ADMITTED TO THERE BEING NO ADJUDICATION ON MERITS PER THE IMPUGNED ORDER. W E DECIDE ACCORDINGLY. 4. THE ASSESSEES SECOND GROUND IS IN RESPECT OF EX PENSES, DETAILED THEREIN, AGGREGATING TO RS.7 LACS. THE SAME WERE DI SALLOWED BY THE ASSESSING OFFICER (AO) IN ASSESSMENT IN VIEW OF THE NON-SUBST ANTIATION OF ITS CLAIMS I.T.A. NO.186/JAB/2016 ASSESSMENT YEAR:2003-04 3 BEFORE HIM BY THE ASSESSEE-COMPANY. THE DISALLOWANC E WAS CONFIRMED IN FIRST APPEAL FOR THE SAME REASON; THE ASSESSEE EVEN FAILI NG TO FURNISH THE DETAILS OF THE CUSTOMERS TO WHOM THE CONSUMER DURABLES PURCHAS ED WHICH COMPRISES THE BULK OF THE IMPUGNED EXPENDITURE, AND CLAIMED T O HAVE BEEN GIFTED THERETO FOR BUSINESS CONSIDERATION/S, EVEN IN THE APPELLATE PROCEEDINGS. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 5. BEFORE US, THE ASSESSEE REITERATED ITS STAND, S TATING THAT THERE WAS NO QUESTION OF THE GOODS PURCHASED HAVING BEEN FOR OTH ER THAN BUSINESS PURPOSES, VIZ. FOR THE PERSONAL PURPOSES OF THE DIRECTORS OF THE ASSESSEE-COMPANY. THE SAME WERE GIVEN TO THE CUSTOMERS IN PURSUANCE OF TH E VARIOUS SALES PROMOTION SCHEMES LAUNCHED BY IT. THE LD. SR. DR, WOULD, ON T HE OTHER HAND, PLACE RELIANCE ON THE ORDERS BY THE AUTHORITIES BELOW. 6.1 WE HAVE HEARD THE PARTIES, AND PERUSED THE MATE RIAL ON RECORD. THE IMPUGNED DISALLOWANCE COMPRISES IN THE MAIN, I. E., RS.6.84 LACS, EXPENDITURE ON CONSUMER DURABLES, STATED TO BE GIVE N TO THE CUSTOMERS IN SALES PROMOTION. A COPY OF THE VARIOUS BILLS AND VOUCHERS TOWARD THEIR PURCHASE STAND COMPILED IN THE PAPER-BOOK (PB PGS. 1 TO 32). THIS IS THE SECOND ROUND BEFORE THE TRIBUNAL; IT DIRECTING RECONSIDERATION O F THE MATERIAL ON RECORD BY THE REVENUE AFTER HEARING THE ASSESSEE. THE RELEVAN T PART OF THE ORDER IS EXTRACTED AT PAGES 2 TO 5 OF THE IMPUGNED ORDER. TH E FIRST THING, THEREFORE, THAT THE ASSESSEE OUGHT TO HAVE DONE WAS TO PLACE ON REC ORD THE MATERIAL ON RECORD, CONSIDERATION OF WHICH WAS SOUGHT, AND DIRECTED BY THE TRIBUNAL, FOLLOWED BY SHOWING THAT THE SAME PROVED ITS CLAIM/S. IT HAS, HOWEVER, DONE NEITHER. THE RELEVANT PART OF THE IMPUGNED ORDER IS AS UNDER: COMING TO THE ASPECT OF PURCHASE OF VCD/TV/AC AND FRIDGE AMOUNTING TO RS. 5.73 LAKHS AND COOLER AS WELL AS MIXER GRINDER AMOUNTING TO RS. 1.10 LAKHS AND ALSO AS REFERRED TO THE REPLY DATED 18.01 .2006, IN WHICH IT HAS BEEN MENTIONED THAT THESE ARE GIVEN TO CUSTOMERS, FLOATE D MERCHANTS FOR INCREASE I.T.A. NO.186/JAB/2016 ASSESSMENT YEAR:2003-04 4 IN SALES. HOWEVER, THE EVIDENCE THEREOF SHOULD HAVE BEEN AT LEAST BEEN FURNISHED AS TO WHO ARE THE CUSTOMERS TO WHOM THESE INCENTIVES HAVE BEEN PROVIDED WITH VERIFICATION THERE OF. IT HAS BEEN REFERRED BY HON'BLE ITAT IN ITS SET ASIDE DIRECTION THAT THERE IS EVIDENCE F ILED FROM PAGE 17 TO 38 OF THE PAPER BOOK FILED BEFORE IT, BUT WHETHER IT WAS IN THE NOTICE OF LOWER AUTHORITIES OR NOT IS NOT CLEAR. IT HAS BEEN FURTHER STATED BY THE HON'BLE ITAT THAT SINCE THE CUSTOMERS HAVE NOT BEEN DULY EX AMINED BY THE LOWER AUTHORITIES, THE EVIDENCE TO BE FILED BY THE ASSESS EE IS TO BE DULY CONSIDERED. SINCE THE MATTER ON RECORD IS EXTREMELY OLD, TWO OP PORTUNITIES HAVE BEEN SEPARATELY PROVIDED, AS IS CLEAR FROM ORDER-SHEET N -L AND N-2. HOWEVER, IT WAS CLEARLY MENTIONED AND CONCEDED BY AR IN THE ORDER-SHEET, NOTING OF WHICH WAS MADE ON 08.03.2016, THAT NO OTHER EVID ENCE IS AVAILABLE, MATTER BEING VERY OLD. ACCORDINGLY, IN VIEW OF THE COMPLETE INABILITY OF THE AR TO FURNISH THE REQUISITE INFORMATION TO SUBS TANTIATE THE CLAIM, I AM UNABLE TO INTERFERE IN THE ADDITIONS MADE. IT IS FURTHER HELD THAT THESE EXPENSES ARE PRIMA-FACIE CAPITAL IN NATURE. HENCE THE TWO FURTHER ADDITIONS ARE ALSO CONFIRMED. 6.2 THE BASIS OF THE DISALLOWANCE, AS WELL AS ITS C ONFIRMATION IN FIRST APPEAL, IS, AS APPARENT, THE FAILURE OF THE ASSESSEE TO SUB STANTIATE ITS CASE OF THE RELEVANT GOODS HAVING BEEN GIVEN TO ITS CUSTOMERS, EVEN THE NAMES OF WHOM HAVE NOT BEEN FURNISHED AT ANY STAGE (REFER PARA 4) . NO IMPROVEMENT IN ITS CASE HAS BEEN EFFECTED BY THE ASSESSEE EVEN IN THE SECOND ROUND; IT RATHER ADMITTING THEREIN TO ITS INABILITY TO PRODUCE THE RELEVANT EVIDENCE/S. IT IS NOBODYS CASE THAT THE RELEVANT GOODS WERE NOT PURC HASED, TOWARD WHICH SEVERAL BILLS AND RECEIPTS HAVE BEEN PLACED ON RECO RD. THE ISSUE, WHICH CONTINUES TO BE UNADDRESSED, IS ESTABLISHING THE BU SINESS PURPOSE OF THE SAID PURCHASE/S. THE VARIOUS VOUCHERS PLACED ON RECORD, RATHER, EXHIBIT PROPER MAINTENANCE OF THE RECORD BY THE ASSESSEE AND, THER EBY, THE UNTENABILITY OF ITS PLEA OF BEING NOT ABLE TO PROVIDE THE REQUISITE DET AILS AS THE MATTER IS VERY OLD. THE SAME IS THEREFORE TO BE DISCOUNTED EVEN AS THE PLEA IS EVEN OTHERWISE NOT MAINTAINABLE AS THE PRIMARY BURDEN TO PROVE ITS RE TURN, AND THE CLAIMS PREFERRED THEREBY, IS ONLY ON THE ASSESSEE [SEE, IN TER ALIA, CIT VS. CALCUTTA AGENCY LTD . [1951] 19 ITR 191 (SC); CIT VS. R. VENKTASWAMY NAIDU [1956] 29 ITR 529 (SC)]. WHY, THE ASSESSEE ITSELF IS RESPO NSIBLE FOR THE DELAY, HAVING I.T.A. NO.186/JAB/2016 ASSESSMENT YEAR:2003-04 5 BEEN CAUSED ON ACCOUNT OF THE NON-EVIDENCING OF ITS CLAIM/S BY IT. FURTHER ON, WHAT WAS THE RELEVANT SCHEME/S ? THERE IS NOTHING TO EXHIBIT THE SAME. ARE THEY A REGULAR PART OF THE ASSESSEES BUSINESS, OR WERE UNIQUE TO THE CURRENT YEAR ONLY ? WHAT, WHERE SO, WAS THE EXPENDITURE INCURRED, SIMIL ARLY, ON SUCH SCHEMES DURING THE OTHER PREVIOUS YEARS ? WHY ARE DETAILS IN ITS RESPECT, WHICH SHOULD NORMALLY BE BORNE OUT BY ITS RECORD, NOT BE ING ABLE TO BE PRODUCED? THESE AND LIKE QUESTIONS ARISE IN THE MATTER, AND W HICH HAVE NOT BEEN ADDRESSED AT ALL, MUCH LESS MET. THE TRIBUNAL OR AN Y APPELLATE AUTHORITY COULD DECIDE ONLY ON THE BASIS OF FINDINGS OF FACT ISSUED ON THE BASIS OF EVIDENCE OR THE MATERIAL ON RECORD. THE ASSESSEE HAS SINGULARLY FAILED TO DISCHARGE THE BURDEN OF PROOF ON IT. THE BALANCE AMOUNT OF RS.16, 514/- IS, EVEN AS STATED BY THE REVENUE, AGAIN A BALD CLAIM, AND TOWARD WHICH T HERE IS NEITHER ANY MATERIAL ON RECORD NOR, IN FACT, ANY SUBMISSION MAD E DURING HEARING. THE PENALTY AMOUNT OF RS.14,800/- HAS BEEN WRONGLY INCL UDED (IN THE DETAIL STATED IN THE RELEVANT GROUND) IN-AS-MUCH AS THE IMPUGNED DISALLOWANCE OF RS.7,00,229/- IS EXCLUSIVE OF THE SAID AMOUNT. THE LD. CIT(A) HAS IN FACT CLARIFIED THE PENALTY AMOUNTS TO BE NOT PART OF THE SET ASIDE BY THE TRIBUNAL. WE ARE ACCORDINGLY NOT MOVED TO INTERFERE WITH THE IMPUGNED DISALLOWANCE. WE DECIDE ACCORDINGLY. 7. THE LAST AND THE THIRD GROUND RAISES THE ISSUE O F LEVY OF INTEREST U/S. 234B, DIRECTION FOR WHICH HAS BEEN ISSUED BY THE AO IN THE ASSESSMENT ORDER. IN FACT, INASMUCH AS THE SAME WAS NOT A PART OF THE REMAND BY THE TRIBUNAL, THE SAME COULD NOT BE RAISED IN THE SECOND ROUND. T HE SAID LEVY IS EVEN OTHERWISE MANDATORY AND CONSEQUENTIAL IN NATURE. IT S ASSAILING BY THE ASSESSEE IS ACCORDINGLY WITHOUT MERIT. WE DECIDE AC CORDINGLY. I.T.A. NO.186/JAB/2016 ASSESSMENT YEAR:2003-04 6 8. IN THE RESULT, THE INSTANT APPEAL BY THE ASSESSE E IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 20/01/2020 SD/- SD/- (BHAVNESH SAINI) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 20/01/2020 AKS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: J.P. TOBACCO PRODUCTS PVT. LTD., PATHARIYA PHATAK, DAMOH 2. THE RESPONDENT: ASST. COMMISSIONER OF INCOME TAX , CIRCLE - SAGAR 3. THE CIT CONCERNED 4. THE CIT(A)-1, JABALPUR 5. THE SR. D.R., I.T.A.T.