DCIT, New Delhi V. M/s TSL Defence Technologies (P) Ltd., New Delhi

ITA 2056/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3684 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2011
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Assessment Year: 2004-2005
• Appeal Filed On: 25-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MONA MOHANTY
• Keywords: Additional evidence

Judgement Text

ITA NO. 2056/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2056/DEL/2011 A.Y. : 2004-05 DY. COMMISSIONER OF INCOME TAX, CIRCLE 16(1), NEW DELHI VS. M/S TSL DEFENCE TECHNOLOGIES PVT. LTD., 208-216, AUROBINDO PLACE, HAUZ KHAS, DDA COMMERCIAL COMPLEX, NEW DELHI 110 016 (PAN : AABCT 5355R) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. KAPIL GOEL, CA DEPARTMENT BY : MS. MONA MOHANTY, D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 23.12. 2010 PERTAINING TO ASSESSMENT YEAR 2004-05. 2. THE ISSUE RAISED IS THAT LD. COMMISSIONER OF INC OME TAX (APPEALS) ERRED IN DELETING DISALLOWANCE OF ` 15,0 5,178/- MADE OUT OF CLAIMS OF CONSULTANCY CHARGES PAYMENTS ON THE BASIS O F ADDITIONAL EVIDENCE FURNISHED DURING THE APPELLATE PROCEEDING S. ITA NO. 2056/DEL/2011 2 3. ON THIS ISSUE ASSESSING OFFICER HAD MADE THE DIS ALLOWANCE OBSERVING AS UNDER:- VIDE THIS OFFICE SHOW CAUSE DATED 22.12.2006 THE ASSESSEE WAS ASKED TO FURNISH THE PROOF OF PAYMENT OF CONSULTANC Y FEES ALONG WITH WHAT SORT OF SERVICES HAVE BEEN TAKEN FROM THO SE PERSONS AND THEIR RELEVANCE WITH THE BUSINESS OF THE ASSESS EE. IN RESPONSE TO THE SAME THE ASSESSEES COUNSEL VIDE ITS LETTER DATED 28.12.2006 HAS FURNISH A COPY OF THE LEDGER ACCOUNT AND VOUCHERS OF PAYMENT BUT NO INFORMATION AS TO WHAT SO RT OF SERVICES / CONSULTANCY WAS GIVEN BY THESE PERSONS A ND THEIR RELEVANCE WITH BUSINESS ACTIVITIES OF THE ASSESSEE COMPANY. IN VIEW OF THE SAME CONSULTANCY CHARGES OF ` 15,05,178 /- ARE DISALLOWED AND ADDED BACK TO THE INCOME AS THE SAME DOES NOT RELATE TO THE BUSINESS OF THE ASSESSEE. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) REPRODUCED THE SUBMISSIONS OF THE ASSESSEE AND CONCLUDED AS UNDER:- THE ASSESSING OFFICER HAS NOT EXAMINED THE DETAILS IN PROPER PROSPECTIVE AND IN A CASUAL MANNER DISALLOWED THE ENTIRE EXPENDITURE WITHOUT LOOKING INTO THE NATURE OF EXPE NDITURE AND ITA NO. 2056/DEL/2011 3 DISREGARDING THE CLAIM OF THE ASSESSEE. AFTER GOIN G THROUGH THE DETAILS OF EXPENDITURE, THE CONTENTIONS OF THE A.R. ARE TENABLE AND DISALLOWANCE OF EXPENDITURE IS NOT APPROVED. 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEFO RE US. 6. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. WE FIND THAT IT IS THE CONTENTION OF THE ASSESSING OFF ICER THAT THE DETAILS REGARDING THE NATURE OF EXPENDITURE WAS NOT PROVIDE D TO HIM. ON THE OTHER HAND, LD. COMMISSIONER OF INCOME TAX (APPEALS) H AS REPRODUCED THE SUBMISSIONS OF THE ASSESSEE AND HELD THAT ON GO ING THROUGH THE DETAIL, THE DISALLOWANCE WAS NOT REQUIRED. IN OU R CONSIDERED OPINION, AND IN THE INTEREST OF JUSTICE, THE MATTER NEEDS TO BE REMITTED TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH, IN LIGHT OF THE SUBMISSIONS MADE BEFORE THE LD. COMMISSIONER OF I NCOME TAX (APPEALS). ACCORDINGLY, THE ISSUE STANDS REMITTED TO THE FILES OF THE ASSESSING OFFICER TO CONSIDER THE SAME AFRESH. NE EDLESS TO ADD THAT THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY O F BEING HEARD. 7. THE NEXT ISSUE RAISED IS THAT LD. COMMISSIONER O F INCOME TAX (APPEALS) HAS ERRED IN RESTORING THE ISSUE OF VERI FICATION OF BOOKS OF ACCOUNTS TO THE DESK OF THE ASSESSING OFFICER TO DECIDE AFRESH THE ISSUE OF DISALLOWANCE OF EXPENSES. ITA NO. 2056/DEL/2011 4 8. ON THIS ISSUE ASSESSING OFFICER HAD MADE THE DI SALLOWANCE BY HOLDING AS UNDER:- DURING THE COURSE OF HEARING THE ASSESSEE WAS TIME AND AGAIN ASKED TO PRODUCE BOOKS OF ACCOUNTS ALONG WITH THE SUPPORTING BILLS AND VOUCHERS, BUT THE SAME WERE NEVER PRODUCED BY THE ASSESSEE. IN THE ABSENCE OF SAME IT IS DIFFICULT T O EXAMINE THE GENUINENESS OF THE EXPENSES CLAIMED BY THE ASSESSE E WHICH ARE VERY EXCESSIVE AS COMPARE TO THE IMMEDIATELY PRECEDIN G YEAR. UNDER THE CIRCUMSTANCES, I AM COMPEL TO DISALLOW 50% OF ` 1,93,56,266/- WHICH COMES TO ` 96,78,133/-. 9. BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ASSESSEE SUBMITTED THAT THE BOOKS OF ACCOUNTS WERE PRODUCE D FOR VERIFICATION. CONSIDERING THE SAME, LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT ASSESSING OFFICER HAD MADE CONTRADIC TORY OBSERVATION. HE NOTED THAT THE ASSESSEE HAS STATED THAT HE IS R EADY TO PRODUCE THE BOOKS OF ACCOUNT BEFORE THE ASSESSING OFFICER. I N VIEW OF THE ABOVE SUBMISSIONS OF THE ASSESSEE, LD. COMMISSIONER OF INC OME TAX (APPEALS) HELD THAT IT IS DESIRABLE IN THE INTEREST OF JUSTICE AND FAIR PLAY TO REMIT THE ISSUE FOR LIMITED VERIFICATION OF THE B OOKS OF ACCOUNT BY THE ASSESSING OFFICER. ITA NO. 2056/DEL/2011 5 10. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 11. WE FIND THAT THE ASSESSING OFFICER HAS MADE TH E DISALLOWANCE AMOUNTING TO ` 9678133/- ON ACCOUNT OF GROUND THAT N O BOOKS OF ACCOUNT AND VOUCHERS ARE PRODUCED AND THE EXPENDITU RE ARE EXCESSIVE COMPARED TO PRECEDING ASSESSMENT YEAR. LD. COMMISSI ONER OF INCOME TAX (APPEALS) HAS REMITTED THE MATTER TO THE FILES O F THE ASSESSING OFFICER TO CONSIDER THE SAME IN LIGHT OF THE BOOKS OF ACCOUNTS THAT ASSESSEE HAS PRODUCED BEFORE HIM. IN THIS REGARD, REVENUE IS AGGRIEVED THAT LD. COMMISSIONER OF INCOME TAX (APPEA LS) HAS NO SUCH POWERS W.E.F. 1.6.2001. IN THIS REGARD, LD. COUNSEL OF THE ASSESSEE HAS REFERRED THE COORDINATE BENCH DECISION IN ITA N O. 4604/DEL/2010 FOR A.Y. 2007-08 WHEREIN VIDE ORDER DATED 30.12.201 0 THE TRIBUNAL HAD CONCLUDED AS UNDER:- WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. IN OUR OPINION, LD. FIRST APPE LLATE AUTHORITY HAS NOT REMANDED ANY ISSUE FOR ADJUDICATION TO THE ASSESS ING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN PRIN CIPLE AGREED THAT EXEMPTION U/S 10(34) IS AVAILABLE TO TH E ASSESSEE ON THE DIVIDEND INCOME. HE FELT A LITTLE HANDICAP WITH REGARD TO VERIFICATION OF A FACT, WHETHER THE COMPANY WHO HAD GIVEN DIVIDEND HAS PAID THE TAX ON DISTRIBUTED PROFITS O R NOT. FOR THIS LIMITED PURPOSE, HE DIRECTED THE ASSESSING OFFICER TO VERIFY THIS CLAIM. IN OUR OPINION, LD. COMMISSIONER OF INCOME T AX (APPEALS) HAS NOT EXCEEDED TO HIS JURISDICTION. WE DO NOT FIN D ANY ERROR IN THE ORDER OF THE LD. FIRST APPELLATE AUTHORITY. 12. IN LIGHT OF THE ABOVE, LD. COUNSEL OF THE ASSE SSEE HAD CLAIMED THAT THE MATTER HAS BEEN REMITTED FOR THE LIMITED PU RPOSE OF ITA NO. 2056/DEL/2011 6 VERIFICATION OF BOOKS OF ACCOUNTS AND THE SAME SHOU LD NOT BE FAULTED WITH. 13. UPON CAREFUL CONSIDERATION, WE FIND THAT LD. CO MMISSIONER OF INCOME TAX (APPEALS) HAS REMITTED THE MATTER TO THE F ILES OF THE ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH BY RE FERRING TO THE BOOKS OF ACCOUNT TO BE PRODUCED BY THE ASSESSEE. IN OUR CONSIDERED OPINION, THE REVENUE S INTEREST IS FULLY PROTECTED IN THIS REGARD AS THE ASSESSING OFFICER HAS BEEN GRANTED PERMISSION TO EX AMINE THE BOOKS OF ACCOUNTS AFRESH. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY OR ILLEGALITY IN THE ORDER OF THE LD. COMMISSIONER OF IN COME TAX (APPEALS) ON THIS ISSUE. HENCE, WE UPHOLD THE SAME. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 24/6/2011. SD/- SD/- [ [[ [A.D. JAIN A.D. JAIN A.D. JAIN A.D. JAIN] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 24/6/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES