Panda Medical (P) Ltd, Cuttack V. DCIT, Cuttack

ITA 198/CTK/2011

• Counselvise Citation: 19822114 RSA 2011
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 20-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 18-04-2011
• Court: TRIBUNAL
• Department Lawyers: A BHATTACHARJEE
• Assessee Lawyers: G NAIKR KAR ARS
• Keywords: Depreciation; Opportunity of being heard; Corroborative evidences; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 198/CTK/2011 (ASSESSMENT YEAR 2006 - 07) PANDA MEDICAL (P) LTD., TELENGAPENTHA, CUTTACK 753 051 PAN: AACCP 8877 B VERSUS DY.C OMMISSIONER OF INCOME TAX, CIRCLE 2(1), CUTTACK. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.NAIK/R.KAR, ARS FOR THE RESPONDENT SHRI A.BHATTACHARJEE, DR DATE OF HEARING : 20.09.2011 DATE OF PRONOUNCEMENT : 23.09.2011 ORDER SHRI K.K.GUPTA, AM : THIS APPEAL BY THE ASSESSEE AGITATES THE ORDER OF THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) NOT ADMITTING THE APPEAL FOR HEARING FILED BEFORE HIM ON THE ASSESSING OFFICER HAVING COMPUTED THE INCOME UNDER THE PROVISIONS OF SECTIO N 143(3) WHICH ADDITIONS OTHERWISE DO NOT HAVE ANY MERIT TILL SUCH TIME THE ASSESSING OFFICER OUGHT TO HAVE GIVEN REASONS AND BASIS FOR HOLDING THE SAME AS TAXABLE INCOME IN THE HANDS OF THE ASSESSEE. 2. THE LEARNED COUNSEL FOR THE ASSESSEE INITIATING HIS ARGUMENTS CONTENDED THAT THE LEARNED CIT(A) IS NOT JUSTIFIED IN NOT CONDONING THE DELAY OF TEN DAYS IN FILING THE APPEAL BEFORE HIM AS THE ASSESSEE HAD TO ENGAGE A SENIOR COUNSEL IN VIEW OF THE FACT THAT THE ASSESSMENT WAS MADE ON THE ARS INABILITY TO EXP LAIN TO THE ASSESSING OFFICER THE BASIC FUNDAMENTALS OF COMPUTING INCOME IN ITS ENTIRETY WHICH WILL BE SUBMITTED HERE IN AFTER. HE PRAYED THAT THE ORDER OF THE LEARNED CIT(A) BE SET ASIDE AND THE ISSUES BE CONSIDERED BY THE TRIBUNAL ON MERITS. 3. HE SUBMIT TED THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT FILED ITS RETURN FOR THE IMPUGNED ASSESSMENT YEAR DECLARI NG INCOME AT 87,047 ACCOMPANIED WITH THE AUDITED ACCOUNTS AND AUDIT REPORT U/S.44AB. THE ITA NO.198/CTK/2011 2 ASSESSING OFFICER ON IRRELEVANT CONSIDERATION AND WITH OUT APPRECIATING THE NATURE OF THE ASSESSEES BUSINESS, COMPUTED THE GROSS RECEIPTS AT 93,93,900 AS AGAINST INSCRIBED IN THE P &L ACCOUNT AT 92,75,800 AND THEREBY CONSIDERING THE SUM OF 1,18,100 AS UNDISCLOSED GROSS RECEIPTS. HE POINTED OUT THAT A SURVE Y U/S.133A WAS CONDUCTED ON 21.2 .2006 I.E., APPROXIMATELY 40 DAYS BEFORE THE CLOSING OF THE FY RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION WHEN THE BOOKS OF ACCOUNT WERE IMPOUNDED AND WHICH REMAINED IMPOUNDED EVEN NOW BY THE ASSESSING OFFICER. THE ASSESSEE HAD TO FILE THE RETURN ON THE BASIS OF ENTRIES IN THE RE - CASTED BOOKS OF ACCOUNT ALONG WITH THE 40 DAYS TRANSACTIONS OF THE FY WHEN THE ASSESSING OFFICER CHOSE TO BELIEVE THAT THE ASSESSEE HAS NOT DISCLOSED THE GROSS RECEIPTS AFTER 21.2.2006. HE A LSO CHOSE TO BRING TO TAX CURRENT LIABILITY A MOUNTING TO 14,98,090 WHEN HE HELD THAT THE ASSESSEE COULD NOT FURNISH THE DETAILS OF SUPPORTING EVIDENCES AS TO WHETHER THESE LIABILITIES WERE GENUINE. HE ALSO DISALLOWED DEPRECIATION AMOUNTING TO 26,20,918 FROM THE INCOME AND EXPENDITURE ACCOUNT FILED ALONG WITH THE RETURN BY INDICATING THAT THE ASSESSEE SHOULD HAVE PRODUCED THE BOOKS OF ACCOUNT AND VOUCHERS N RESPECT OF THE ASSETS ACQUIRED BY THE ASSESSEE THEREFORE DID NOT ENTITLE THE ASSESSEE TO CLAIM DEPRECIATION. THE FATE OF THE APPEAL BEFORE THE L EARNED CIT(A) HAS ALREADY BEEN MENTIONED ABOVE AND THEREFORE, HE PRAYED THAT THE ISSUES WHICH HAVE BEEN PUT FORTH BEFORE THE TRIBUNAL MAY KINDLY BE CONSIDERED FOR RECONSIDERATION BY THE ASSESSING OFFICER IN VIEW OF THE FACT THAT THE SE ADDITIONS /DISALLWOANC ES COULD NOT BE CONSIDERED FOR TAXATION IS APPARENT. 4. THE LEARNED DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE POINTED OUT THAT THE LEARNED CIT(A) WAS WITHIN HIS RIGHT TO REJECT THE CONDONATION OF DELAY IN FILING THE APPEAL BEFORE HIM WHICH HE SUPPORTED. IN SO FAR AS THE MERITS OF THE ADDITIONS WHICH ARE BEING PUT FORTH BY THE LEARNED ITA NO.198/CTK/2011 3 COUNSEL FOR THE ASSESSEE, HE RELIED ON THE ORDER OF THE ASSESSING OFFICER AGAINST WHICH NO APPARENT MISTAKE HAS BEEN POINTED OUT BY THE ASSESSEE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. ON OUR CAREFUL CONSIDERATION OF THE FACTS, WE ARE INCLINED TO FIND FORCE IN THE PRAYER OF THE LEARNED COUNSEL FOR THE ASSESSEE. 10DAYS DELAY IN FILING THE APPEAL BEFORE THE LEARNED CIT(A) WAS FOR THE REASON THAT THE APPEAL WAS TO BE PREFERRED BEFORE THE LEARNED CIT(A) WAS TO BE FILED BY AN EXPERT COUNSEL WHO WOULD BE ABLE TO FORMULATE GROUND S IN THE MANNER SO THAT THE ASSESSING OFFICERS MISDIRECTED AND MISINTERPRETED ADDITIONS AND DISALLOW ANCE COULD BE PROPERLY ADDRESSED. IN OUR VIEW, THE LEARNED CIT(A) CONSIDERING THE UN REASONABLE DELAY SHOULD HAVE CONDONED THE SHORT DELAY IN FILING THE APPEAL AND DISPOSE OF THE APPEAL ON MERITS. 6. ON MERITS, WE HAVE HEARD THE LEARNED COUNSEL FOR THE ASS ESSEE AT LENGTH THAT THE ADDITIONS SO MADE BY THE LEARNED ASSESSING OFFICER DO NOT REQUIRE DELIBERATION ON THE BASIS OF ASSESSEE NOT RETURNING TRUE AND CORRECT INCOME FOR THE IMPUGNED ASSESSMENT YEAR. THE BOOKS OF ACCOUNT REMAINED IMPOUNDED BY HIM WAS NO R EASON FOR THE ASSESSING OFFICER TO COMPUTE THE INCOME ON DAILY BASIS WHEN THE ASSESSEE AGREE D TO THE PROPOSITION THAT THE ASSESSEE IS A NURSING HOME AND CANNOT CONFIRM TO PATIENTS BEING TEREATED IN A ROUTINE MANNER AS ATTENDING TO THEM ONLY AFTER THE SURV EY OPERATION WAS CARRIED OUT. THE ADDITION THEREFORE AS AN ARITHMETICAL COMPUTATION DOES NOT HAVE LEGS TO STAND ON. THE ADDITION OF 1,18,100 THEREFORE IS DIRECTED TO BE DELETED AS IT DOES NOT CORRESPOND TO THE NATURE OF INCOME WHICH THE ASSESSING OFFICER DEEMED AS UNINCORPORATED OF HIS OWN ACTION HAVING IMPOUNDED THE BOOKS OF ACCOUNT. HOWEVER ON THE ISSUE OF CURRENT LIABILITIES DISALL OWED AND THE DEPRECIATION DISALLOWED, WE ARE INCLINED TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERATION AFRESH IN VIEW OF THE ITA NO.198/CTK/2011 4 FACT THAT THE ASSESSEE BEING A PRIVATE LIMITED COMPANY WAS OBLIGED TO GET THE BOOKS OF ACCOUNT AUDITED U NDER THE COMPANIES ACT. ALL THE REQUIREMENTS FOR THE PURPOSE OF ASSESSMENT HELD AS WE RE NOT AVAILABLE , ARE INTEGRAL DIS CLOSURE TO BE MADE BY THE ASSESSEE IN SCHEDULE VI, PART I AND II TO THE COMPANIES ACT, WHICH THE ASSESSING OFFICER FAILED TO INTERLINK FOR THE PURPOSE OF ESTABLISHING FIXED ASSETS UTILISED FOR THE PURPOSE OF THE ASSESSEES BUSINESS REQUIRE D DEPRECIATION IN ACCORDANCE WITH THE I.T.ACT. SIMILARLY, THE CURRENT LIABILITEIS ARE FOR THE EXPENSES CLAIMED IN THE P & L ACCOUNT WHICH HE HAD ALREADY VERIFIED BY COMPUTING CONCEALMENT OF INCOME OF GROSS RECEIPTS. IN OTHER WORDS, HE ALREADY CONSIDERED THE EXPENSES ALLOWABLE TO THE ASSESSEE WHICH REMAINED PAYABLE ON THE LAST DAY OF THE CLOSE OF THE FY WHE N THE BOOKS OF ACCOUNT STOOD IMPOUNDED WITH HIM. HE IS DIRECTED TO VERIFY THE NATURE OF EXPENSES REMAINING PAYABLE AS HAVING BEEN CLAIMED IN THE P & L ACCOUNT TO CONSIDER THE DISALLOWANCE IN ACCORDANCE WITH LAW. BOTH THE ISSUES ARE THEREFORE TO BE CONSIDE RED BY THE ASSESSING OFFICER AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. SD/ - SD/ - (K.S.S.PRASAD RAO) JUDICIAL MEMBER (K.K.GUPTA) ACCOUNTANT MEMBER DATE: 23 RD SEPTEMBER, 2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: PANDA MEDICAL (P) LTD., TELENGAPENTHA, CUTTACK 753 051 2. THE RESPONDENT: DY.C OMMISSIONER OF INCOME TAX, CIRCLE 2(1), CUTTACK. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER,