DCIT 3(1), MUMBAI V. THE BARODA RAYON CORPORATION LTD, MUMBAI

ITA 2060/MUM/2012

• Counselvise Citation: 206019914 RSA 2012
• Duration Of Justice: 3 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AKSHAY J SHAH AR
• Assessee Lawyers: J K GARG
• Keywords: Principle of natural justice
• Section: 133(6); 68

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.2060/MUM/2012 ASSESSMENT YEAR: 2006-07 DCIT 3(1), R.NO.607 AAYAKAR BHAVAN, MUMBAI-400020 / VS. THE BARODA RAYON CORPORATION LTD., 193 HOECHST HOUSE, BACKBAY RECLAMATION, NARIMAN POINT MUMBAI-400 021 (REVENUE) (RESPONDENT) P.A. NO.AAACT2647M !'# / ASSESSEE BY SHRI J.K. GARG (DR) / REVENUE BY SHRI AKSHAY J. SHAH (AR) $ % & ' / DATE OF HEARING : 29/08/2015 ! & ' / DATE OF ORDER: 11/09/2015 ! / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-7 DATED BARODA RAYON CO. LTD. . 2 21.12.2011 FOR THE ASSESSMENT YEAR 2006-07. THE ONL Y GROUND RAISED BY THE REVENUE IS REPRODUCED HEREUNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.4,28,63,920/- MADE U/S 68 OF THE ACT IN RESPECT OF ADVANCE RECEIVED FROM M/S SHRI LAXMINARAYAN INDUSTRIAL CO-O P. SERVICE SOCIETY LTD., HOLDING THAT PROFIT ON THIS TRANSACTI ON IS BOOKED BY THE ASSESSEE IN SUBSEQUENT YEAR I.E. A.Y. 2007-08, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAS FAILED TO RECONCILE THE SALE PROCEEDS RECEIVED ON SALE OF FIXED ASSETS WITH THE AMOUNT SHOWN AS ADVANCE AGAINST SALE OF ASSETS IN I TS BOOKS OF ACCOUNT. 2. THE ONLY DISPUTE RAISED BY THE REVENUE IS WITH R EGARD TO DELETION BY LD CIT(A) OF AN ADDITION OF RS.4,28,63, 920/- WHICH WAS MADE BY THE AO U/S 68 OF THE INCOME TAX ACT 19 61 ON ACCOUNT OF ADVANCE RECEIVED FROM M/S SHRI LAXMINARA YAN INDUSTRIAL CO-OP. SERVICE SOCIETY LTD. 3. IN THE ASSESSMENT PROCEEDINGS, THE ADDITION WAS MADE BY THE LD. AO ON THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO DISCHARGE ITS BURDEN IN TERMS OF SECTION 68 OF THE ACT. ON THE OTHER HAND, IN THE APPEAL BEFORE THE LD CIT(A), THE ADDITION WAS DELETED BY THE LD. CIT(A) ON THE GROUND THAT TH E ASSESSEE WAS ABLE TO DISCHARGE IT IS BURDEN U/S 68 OF THE AC T AND THEREFORE, THE ADDITION MADE BY THE AO WAS ILLEGAL AND SAME WAS DELETED. 4. BEFORE US, LD. DR HAS ARGUED THE MATTER SUPPORTI NG ORDER OF AO AND HAS FURTHER SUBMITTED THAT LD. CIT(A) HAS CONSIDERED FRESH EVIDENCES WHICH WERE NOT BEFORE TH E AO AT BARODA RAYON CO. LTD. . 3 THE TIME OF PASSING OF THE ASSESSMENT ORDER AND THE REFORE, THIS ISSUE SHOULD BE SENT BACK TO THE FILE OF THE AO IN VIEW OF THE PRINCIPLES OF NATURAL JUSTICE. ON THE OTHER HAND, T HE LD. COUNSEL APPEARING ON BEHALF OF THE ASSESSEE HAS REL IED UPON THE ORDER OF LD. CIT(A). HE WAS FAIR ENOUGH TO ACCE PT THAT REPLY RECEIVED FROM THE AFORESAID PARTY, IN RESPONSE TO T HE NOTICE SENT BY THE AO, WAS NOT AVAILABLE AT THE TIME OF FR AMING OF ASSESSMENT ORDER BY THE AO. 5. WE HAVE HEARD BOTH THE SIDES. THE BRIEF FACTS AR E THAT THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING RAYON FILAMENT YARN, NYLON FILAMENT Y ARN, POLYESTER YARN. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, THE AO REQUIRED THE ASSESSEE TO SUBSTANTIATE THE AM OUNT OF ADVANCE RECEIVED FROM M/S. SHRI LAXMINARAYAN INDUST RIAL CO- OP. SERVICE SOCIETY LTD., AMOUNTING TO RS.4,28,63,0 00/- THE AO ASKED THE ASSESSEE TO PRODUCE THE SAID PARTY FOR VERIFICATION AND PRODUCE THE DOCUMENTARY EVIDENCES IN THE FORM OF CONFIRMATION AND TO FILE RECONCILIATION STA TEMENT FOR RECONCILING THE BALANCE WITH THE SAID PARTY. IT WAS OBSERVED BY THE AO IN THE ASSESSMENT ORDER THAT THE ASSESSSEE C OMPANY COULD NOT RECONCILE THE DIFFERENCE IN THE AMOUNT OF ADVANCE RECEIVED ON ACCOUNT OF SALE OF FIXED ASSETS SHOWN I N ITS BOOKS OF ACCOUNT AND AMOUNT SHOWN IN BOOKS OF ACCOUNTS OF AFORESAID PARTY, AND ALSO COULD NOT PRODUCE THE SAI D PARTY FOR VERIFICATION. THE AO CLAIMED TO HAVE GIVEN NUMEROU S OPPORTUNITIES IN THIS REGARD. THEREFORE, BEING DISS ATISFIED WITH THE RESPONSE OF THE ASSESSEE, ADDITION WAS MADE BY THE AO BARODA RAYON CO. LTD. . 4 U/S 68 OF THE ACT. BEFORE THE LD. CIT(A), THE ASSES SEE SUBMITTED THAT THE ADVANCE WAS RECEIVED FROM THE SA ID PARTY AGAINST SALE OF FIXED ASSETS AND ASSESSEE COMPANY H AS SHOWN THE AFORESAID AMOUNTS IN ITS BOOKS OF ACCOUNTS AS A DVANCE RECEIVED. IT WAS OBSERVED BY THE LD. CIT(A) IN THE APPELLATE ORDER THAT AO HAD ISSUED NOTICE U/S 133(6) AT THE F AG END I.E. ON 22.12.2008 AND COULD NOT GET CONFIRMATION AS THE REPLY FROM THE AFORESAID PARTY GIVING CONFIRMATION WAS RE CEIVED FROM THE SAID PARTY, ONLY ON 05.01.2009, WHEREAS ASSES SMENT ORDER WAS FRAMED ON 31.12.2008. IT WAS FURTHER OBSE RVED BY THE LD. CIT(A) IN THE APPELLATE ORDER THAT THE ASSE SSEE HAS ALREADY BOOKED PROFIT IN THE SUBSEQUENT YEAR ON THI S TRANSACTION AND OFFERED CAPITAL GAIN IN THE COMPUTA TION OF INCOME FOR A.Y. 2007-08. KEEPING IN VIEW ALL THESE FACTS AND CIRCUMSTANCES, ADDITION MADE BY THE AO WAS DELETED BY LD CIT(A). 6. BOTH THE PARTIES FAIRLY STATED THAT MAIN EVIDENC ES CONSIDERED BY THE LD CIT(A) WAS NOT EXAMINED BY TH E AO. IN THE BACKDROP OF THESE CIRCUMSTANCES, LD DR VEHEMENT LY REQUESTED FOR SENDING THIS ISSUE BACK TO THE FILE O F AO. IT IS OBSERVED BY US, THAT THE EVIDENCES RELIED UPON BY T HE LD. CIT(A) IN THE FORM OF REPLY FROM THE SAID PARTY WAS NOT BEFORE THE AO AND WAS EXAMINED BY THE LD. CIT(A) FOR THE F IRST TIME WITHOUT CONFRONTING THE SAME TO THE AO AND THEREFOR E, IN OUR CONSIDERED VIEW THIS MATTER NEEDS TO GO BACK TO THE AO. THE AO SHALL TAKE INTO ACCOUNT ALL THE EVIDENCES ALREAD Y ON RECORD AND FURTHER FACTS AND EVIDENCES AS THE ASSESSEE MAY FIND BARODA RAYON CO. LTD. . 5 APPROPRIATE TO PLACE ON RECORD. THE AO SHALL ADJUDI CATE THIS ISSUE, KEEPING IN VIEW ALL THE FACTS AND CIRCUMSTAN CES OF THE CASE. THE AO SHALL GIVE ADEQUATE OPPORTUNITY OF HEA RING TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOW ED FOR STATISTICAL PURPOSES. SD/- (JOGINDER SINGH ) SD/- (ASHWANI TANEJA) ' # / JUDICIAL MEMBER $ # / ACCOUNTANT MEMBER $ % MUMBAI; ( DATED : 11/09/2015 CTX? P.S/. . . ! %'&'( )(*& / COPY OF THE ORDER FORWARDED TO : 1. *+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. / / $ 0 ( * ) / THE CIT, MUMBAI. 4. / / $ 0 / CIT(A)- , MUMBAI 5. 34 -! , / *' ! 5 , $ % / DR, ITAT, MUMBAI 6. 6' 7% / GUARD FILE. ! / BY ORDER, .3* - //TRUE COPY// +/, - (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI