ASIA PACIFIC MARBLES P.LTD, MUMBAI V. ACIT 8(1), MUMBAI

ITA 1893/MUM/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9240 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 18-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 20-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Keywords: Principle of natural justice; Additional evidence
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 1893/MUM/2012 ( / ASSESSMENT YEAR: 2006-07) ASIA PACIFIC MARBLES PVT. LTD. CTS 1971/72, NEAR LAXMI NARAYAN TEMPLE, AIRPORT SIDE, SERVICE ROAD, WESTERN EXPRESS HIGHWAY, VILE PARLE (E), MUMBAI-400 099 VS. ASST. CIT-8(1), MUMBAI ! ' ./PAN/GIR NO. AACCA 2066 R ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : NONE $%!#&' / RESPONDENT BY : SHRI ASGHAR ZAIN ( )*&+, / DATE OF HEARING : 18.03.2015 -./&+, / DATE OF PRONOUNCEMENT : 27.03.2015 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-16, MUMBAI (CIT(A) FOR SH ORT) DATED 23.02.2012, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT FOR THE ASSESSMENT YEAR (A.Y.) 2006-07 VIDE ORDER U/S. 143(3) OF THE INCOME TAX AC T, 1961 (THE ACT HEREINAFTER) DATED 21.11.2008. 2 ITA NO. 1893/MUM/2012 (A.Y. 2006-07) ASIA PACIFIC MARBLES PVT. LTD. VS. ASST. CIT 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE- APPELLANT WHEN ITS APPEAL WAS CALLED OUT FOR HEARING, DESPITE SERVICE OF NOTICE O F HEARING THROUGH RPAD. EVEN NO ADJOURNMENT MOTION STANDS MOVED BY THE ASSESSEE. IN FACT, WE OBSERVE NON- REPRESENTATION BY AND ON BEHALF OF THE ASSESSEE THR OUGHOUT THE COURSE OF ITS APPEAL BEFORE THE TRIBUNAL. EVEN NO AUTHORITY/POWER OF ATTORNEY I S ON RECORD. UNDER THE CIRCUMSTANCES, IT WAS ONLY CONSIDERED FIT AND PROPER TO PROCEED WI TH THE HEARING, AND DECIDE THE APPEAL AFTER HEARING THE PARTY BEFORE US AFTER CONSIDERING THE MATERIAL ON RECORD. 3. THE ASSESSEE IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF PROCESS ING OF MARBLES. FOR THE A.Y. 2006-07, IT FILED ITS RETURN OF INCOME ON 30.11.2006 THROUGH TH E ELECTRONIC MODE, DECLARING A TOTAL INCOME OF RS.24,13,007/-. THE SAME WAS SUBSEQUENTLY SELECTED FOR SCRUTINY UNDER THE VERIFICATION PROCEDURE UNDER THE ACT, AND ASSESSMEN T FRAMED U/S. 143(3) BY THE ASSESSING OFFICER (A.O.) VIDE ORDER DATED 21.11.2008 AT A TOT AL INCOME OF RS.37,74,570/-. THE VARIATION BETWEEN THE RETURNED AND ASSESSED INCOME IS ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED UNDER THE SECTION 80-IB, AT RS.10 ,34,146/-; INTEREST OF RS.3,12,509/-; AND ADDITION OF UNDISCLOSED CONTRACT RECEIPTS AT RS .14,907/-. THE PRESENT APPEAL THOUGH AGITATES ONLY THE DISALLOWANCE OF THE DEDUCTION CLA IMED U/S.80-IB, WHICH WAS PRINCIPALLY FOR THE REASON OF NON-FURNISHING THE PRESCRIBED AUD IT REPORT IN FORM NO. 10CCB. THE ASSESSMENT HAVING BEEN CONFIRMED BY THE FIRST APPEL LATE AUTHORITY AS SUCH; AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL, RAISING THE FOLLOWING GROUNDS: 1. DISALLOWANCE OF INTEREST U/S. 80LB - RS. 10,34,146/ - I) A) THE LD. CIT(A) ERRED IN DENYING THE CLAIM U/ S. 80IB INSPITE OF THE FACT THAT AFTER HAVING ACCEPTED THE BELATEDLY FILED AUDIT REPORT U/R. 46A AND CALLING FOR REMAND REPORT, HE HAS GROSSLY FAILED TO CONSIDER THAT WHILE APPRECIATING AN INCENTIVE PROVISION, TECHNICAL INFI RMITIES NEED TO BE DISCOUNTED. THEREFORE, DENYING A GENUINE CLAIM ON T ECHNICAL GROUND IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE WHEN IN EA RLIER YEARS AND IN LATER YEARS, THE SAME HAD BEEN ALLOWED TO YOUR APPELLANT. 3 ITA NO. 1893/MUM/2012 (A.Y. 2006-07) ASIA PACIFIC MARBLES PVT. LTD. VS. ASST. CIT B) THE LD. CIT(A) OUGHT TO HAVE APPRECIATED THAT T HE APPELLANT'S ACCOUNTS WERE AUDITED BY AN ACCOUNTANT AS PRESCRIBE D U/S. 288(2) AND AS PER THE REQUIREMENT OF SEC. 80IA(7). C) WITHOUT PREJUDICE TO ABOVE, REMOVING TECHNICAL DEFICIENCY WHETHER AT ASSESSMENT STAGE OR AT REMAND STAGE, THE ASSESSI NG OFFICER OUGHT TO HAVE APPRECIATED THE MERITS WHICH WAS ALSO IGNORED BY TH E CIT(A). D) WITHOUT PREJUDICE TO ABOVE, THE LD. CIT(A) ERRE D IN NOT CONSIDERING THE FACT THAT THE REQUIREMENT OF FILING AUDIT REPOR T ALONG WITH RETURN IS NOT MANDATORY AND SINCE NOT FILING AUDIT REPORT IS A CU RABLE DEFECT, THE LD. CIT(A) IS NOT JUSTIFIED TO DISALLOWS THE CLAIM. 2. LEVY OF PENAL INTEREST THE APPELLANT, ON MERITS, DENIES ITS LIABILITY TO P ENAL INTEREST. 3. WE HAVE HEARD THE PARTY BEFORE US, AND PERUSED T HE MATERIAL ON RECORD. 3.1 AS AFORE-NOTED, THE PRINCIPAL REASON FOR THE IM PUGNED DISALLOWANCE WAS THE NON- FURNISHING OF THE AUDIT REPORT, AS REQUIRED BY THE PROVISION ITSELF (S. 80-IB(13) R/W S. 80- IA(7)). THE SAME WAS THOUGH FURNISHED BY THE ASSESS EE IN THE APPELLATE PROCEEDINGS, WITH THE LD. CIT(A) CALLING FOR A REMAND REPORT FROM THE A.O. IN ITS RESPECT. THE A.O., RELYING ON THE DECISION IN THE CASE OF CIT VS. UNNIKRISHNAN VS. CIT [1998] 233 ITR 485 (KER), OBJECTED TO THE SAME IN-AS-MUCH AS SUFFICIENT OPPOR TUNITY HAD BEEN GRANTED TO THE ASSESSEE AT THE ASSESSMENT STAGE TO PRESENT ITS CAS E AND, TWO, NO REASON/S FOR NON- FURNISHING THE SAID REPORT BEFORE THE ASSESSING AUT HORITY IN THE ASSESSMENT PROCEEDINGS HAD BEEN STATED BY THE ASSESSEE. THE LD. CIT(A), HO WEVER, CONFIRMED THE ASSESSMENT, I.E., AFTER REPRODUCING THE REMAND REPORT DATED 02.02.201 2 BY THE A.O., HOLDING AS UNDER: 4.3.1 I FIND THAT THE SIMILAR ISSUE AROSE T O MY CONSIDERATION IN THE EARLIER YEARS AND I HAVE DISMISSED THE APPEA L OF THE APPELLANT FOR THE REASONS CONTAINED THEREIN. ACCORDINGLY, FOLLOWING M Y EARLIER DECISION THE APPEAL OF THE APPELLANT IS ACCORDINGLY DISMISSED. 3.2 WE, FIRSTLY, OBSERVE THAT THE IMPUGNED ORDER IS A NON-SPEAKING ORDER IN-AS-MUCH AS IT DOES NOT CONVEY THE REASON/S INFORMING THE DECIS ION. IT IS ONLY WHEN A JUDICIAL ORDER BEARS THE REASON/S LEADING TO THE DECISION, THAT IT CAN BE SAID TO BE VALID AND, FURTHER, 4 ITA NO. 1893/MUM/2012 (A.Y. 2006-07) ASIA PACIFIC MARBLES PVT. LTD. VS. ASST. CIT ENABLE ITS REVIEW, TO WHICH IT IS SUBJECT, I.E., UP ON EITHER PARTY TAKING IT BEFORE A HIGHER APPELLATE FORUM, AS HAS BEEN. EVEN IF THE LD. CIT(A ) WERE TO MERELY FOLLOW HIS ORDER/S FOR THE EARLIER YEARS, WHICH ARE NOT ON RECORD, THE REL EVANT PART/S THEREOF OUGHT TO HAVE BEEN REPRODUCED BY HIM, SO AS TO CONVEY THE SAID REASONS , WHICH WOULD THEN BY INCORPORATION FORM THE REASONS INFORMING HIS ORDER OR DECISION, B ESIDES CONSTITUTING A SELF-CONTAINED ORDER, WHILE IN THE PRESENT CASE IT DOES NOT STATE, EVEN BROADLY, THE BASIS FOR THE CONFIRMATION OF THE DISALLOWANCE, I.E., FOR THE EAR LIER YEARS. AGAIN, IT WOULD ALSO ENABLE THE READER TO SEE IF THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE ARE OR ARE NOT, IDENTICAL OR SIMILAR, AS THE CASE MAY BE, FOR THE SAID DECISI ON TO APPLY FOR THE CURRENT YEAR. FURTHER STILL, IT WAS ALSO INCUMBENT ON THE LD. CIT(A) TO S TATE AS TO WHY THE DECISION/S BY THE TRIBUNAL, CONFIRMING THE DEDUCTION U/S.80-IB FOR TH E EARLIER YEARS IN THE ASSESSEES OWN CASE, BINDING UPON HIM, WAS NOT FOLLOWED, AS JUDICI AL DISCIPLINE WOULD DICTATE. HIS ORDER, ACCORDINGLY, DOES NOT SATISFY THE MANDATE OF SECTIO N 250(6), AND IS ACCORDINGLY TO BE SET ASIDE FOR PASSING A FRESH, SPEAKING ORDER IN ACCORD ANCE WITH THE LAW. 3.3 WE FURTHER OBSERVE THAT THOUGH THE A.O. HAS RAI SED OBJECTIONS TO THE ADMISSION OF THE AUDIT REPORT PER HIS REMAND REPORT DATED 02.02. 2012, THE LD. CIT(A) HAD ALREADY CALLED FOR A REMAND REPORT (SUPRA) THEREON FROM HIM. AS, P ER RULE 46A (OF THE INCOME TAX RULES, 1962), THE A.O.S COMMENTS, I.E., AN OPPORTU NITY THERETO TO EXAMINE THE ADDITIONAL EVIDENCE/S PRODUCED BY THE ASSESSEE OR TO PRODUCE A NY EVIDENCE/S IN REBUTTAL, COULD ONLY BE UPON ADMITTING THE SAME. THE LD. CIT(A) HAS ALSO NOT RECORDED ANY REASONS FOR ADMISSION, AS MANDATED BY RULE 46A(2) R/W R. 46A(1) . SO, HOWEVER, THE SAME HAS NOT BEEN IMPUGNED BY THE REVENUE, EITHER BY FILING AN A PPEAL OR A CROSS OBJECTION (CO), SO THAT ITS ADMISSION ATTAINS FINALITY. FURTHER, THE A .O. DID NOT EXAMINE THE SAID AUDIT REPORT, WHICH WAS INCUMBENT UPON HIM TO, EVEN IF WITHOUT PR EJUDICE TO HIS OBJECTION TO ITS ADMISSION, WHICH HE WAS IN LAW ENTITLED TO. TRUE, F URNISHING OF THE AUDIT REPORT IS A STATUTORY CONDITION, AND BEING UNCOMPLIED WITH, FOR MED THE PRINCIPAL GROUND FOR THE DISALLOWANCE OF DEDUCTION U/S.80-IB. ITS EXAMINATIO N, HOWEVER AND, RATHER, THEREFORE, COULD NOT BE CIRCUMVENTED. AS SUCH, ITS BELATED FI LING APART, WHICH THE A.O. OBJECTS FOR 5 ITA NO. 1893/MUM/2012 (A.Y. 2006-07) ASIA PACIFIC MARBLES PVT. LTD. VS. ASST. CIT ADMISSION IN-AS-MUCH AS THE SAME WAS NOT FILED DESP ITE ADEQUATE OPPORTUNITY DURING THE ASSESSMENT PROCEEDINGS, THE SAME WAS REQUIRED TO BE EXAMINED BY HIM, I.E., ON MERITS, AND WHICH HE DID NOT. HIS FAILURE TO DO SO WOULD NO T AUTOMATICALLY IMPLY THE SAID REPORT AS HAVING BEEN EXAMINED BY HIM AS TO ITS CORRECTNES S. THE LD. CIT(A), ACCORDINGLY, OUGHT TO HAVE CAUSED THE NECESSARY VERIFICATION OF THE SA ID AUDIT REPORT BY THE ASSESSING AUTHORITY. RATHER, R. 46A PRECLUDES THE PLACING OF RELIANCE BY THE FIRST APPELLATE AUTHORITY ON ANY ADDITIONAL EVIDENCE WHICH HAS NOT BEEN EXAMI NED APRIORI BY THE ASSESSING AUTHORITY, WHO, AS IT APPEARS, CONSTRUED THE REMAND REPORT TO ONLY IMPLY A STATEMENT OF THE OBJECTIONS, IF ANY, TO ITS ADMISSION. THIS IS ALL T HE MORE SO IN THE PRESENT CASE AS THE SAME HAS ALSO NOT BEEN EXAMINED BY THE LD. CIT(A), WHOSE PURVIEW AS AN APPELLATE AUTHORITY IS TO ENABLE DETERMINATION OF THE INCOME RIGHTLY CHARG EABLE TO TAX AND, CONSEQUENTLY, THE ASSESSEES CORRECT TAX LIABILITY. REFERENCE IN THIS CONTEXT MAY ALSO BE USEFULLY MADE TO THE DECISION IN THE CASE OF KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC). THIS CONSTITUTES THE SECOND ASPECT ON WHICH THE IMPUGNED ORDER IS DEFICIENT. FINALLY, THE A.O. HAS, WITHOUT PREJUDICE TO HIS OTH ER CLAIMS, STATED THAT THE ASSESSEE IS IN ANY CASE NOT ENTITLED TO DEDUCTION U/S.80-IB ON THE FOLLOWING INCOMES IN-AS-MUCH AS THEY ARE NOT DERIVED FROM THE ASSESSEES ELIGIBLE U NDERTAKING/BUSINESS (REFER PARA 4.6 OF THE ASSESSMENT ORDER): INTEREST ON BANK FDRS RS.1,37,762/- RENT RS.90,000/- INTEREST INCOME RS.9,07,685/- FOREIGN EXCHANGE RATE DIFFERENCE RS.12,227/- WE OBSERVE NO FINDING BY THE LD. CIT(A) QUA THE ASSESSEES CLAIM FOR DEDUCTION ON THESE INCOMES, ONLY VALIDATING OUR FINDING, RECO RDED AT THE BEGINNING OF OUR DISCUSSION, OF THE IMPUGNED ORDER AS NOT BEING A SP EAKING ORDER, ALSO EXHIBITING A LACK OF APPLICATION OF MIND. HIS ORDER BEING APPEALABLE, WH ICH COULD BE ON MORE THAN ONE GROUNDS, THE LD. CIT(A) SHALL DECIDE THIS ISSUE, I. E., INDEPENDENT OF THE OTHER CLAIMS OF BOTH THE SIDES, AS WELL. 6 ITA NO. 1893/MUM/2012 (A.Y. 2006-07) ASIA PACIFIC MARBLES PVT. LTD. VS. ASST. CIT 4. THE IMPUGNED ORDER IS ACCORDINGLY SET ASIDE, FOR BEING PASSED AFRESH IN ACCORDANCE WITH LAW, INCLUDING AS TO PROCEDURE, ALL OWING REASONABLE OPPORTUNITY OF HEARING TO BOTH THE SIDES. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 27, 201 5 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 1* MUMBAI; 2 DATED : 27.03.2015 )3 ROSHANI , SR. PS ! ' #$%& ' &$ COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 4+ 5 6 / THE CIT(A) 4. ( 4+ / CIT CONCERNED 5. 7)89$3+3:; ,:;/ ( 1* / DR, ITAT, MUMBAI 6. 9<=* GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ( 1* / ITAT, MUMBAI