PETER PLAST SYNTHETICS PVT. LTD., V. THE ACIT, BARODA CIRCLE -4.,

ITA 2116/AHD/2003

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1714 (ITAT-AHMEDABAD)
• Duration Of Justice: 12 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 07-04-2016
• Assessment Year: 1996-1997
• Appeal Filed On: 19-05-2003
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Assessee Lawyers: M J SHAH
• Keywords: Additional evidence; Reassessment proceedings
• Section: 68; 148; 144

Judgement Text

ITA NO . 2116 / AH D/ 20 03 A.Y. 1996 - 97 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S.S. GODARA , JUDICIAL MEMBER ITA NO. 2116 / AHD /20 0 3 ASSESSMENT YEAR: 1996 - 97 PETERPLAST SYNTHETICS PVT. LTD., VS. ASST. COMMISSI ONER OF INCOME TAX , A - 1 /901 - 7, GIDC ESTATE, CIRCLE - 4, BARODA. MAKARPURA, BARODA 390 010. [PAN A A BCP 1858 P ] (APPELLANT ) (RESPONDENT) A PPELLANT BY : SHRI M.J. SHAH, A.R. RE SPONDENT BY : S HRI NAREND RA SINGH , SR. D.R. DATE O F HEARING : 0 7 .04 . 20 16 DATE OF PRONOUNCEMENT : 02 .0 5 .2016 O R D E R PER S.S. GODARA , J.M. TH IS ASSESSEE S APPEAL FOR ASSESSMENT YEAR 1996 - 97 , ARISE FROM THE ORDER OF THE C I T(A) - III , BARODA DATED 20.01.2003 PASSED IN CASE NO.C AB/III - 62/20 02 - 2003 IN PROCEEDINGS UNDER SECTION 144 R.W.S. 147 OF THE INCOME T AX ACT, 196 1; IN SHORT THE ACT . 2. THE ASSESSEE S SUBSTANTIVE GROUND READ AS UNDER : - (1)(A) THAT THE LEARNED C.I.T.(A) - LII, BARODA HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESS ING OFFICER IN TREATING THE AMOUNTS OF (1) RS . 40,00,000/ - COLLECTED BY THE APPELLANTS AS SHARE CAPITAL AND (2) RS . 21,84,660/ - RAISED BY THEM AS UNSECURED LOANS, AS CASH CREDITS AND ADDING THE AMOUNT OF RS.61,84,660/ - (4000000+2184660) AS INCOME OF THE APPELLANT U/S. 68 OF THE I.T. ACT. B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS.61,84,660/ - MADE U/S.68 OUGHT TO BE DELETED . ITA NO . 2116 / AH D/ 20 03 A.Y. 1996 - 97 PAGE 2 OF 5 (2) (A) THAT THE LEARNED C.I.T.(A) - LII, BARODA HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,18,862/ - BEING 1/10 TH OF ADMINISTRATIVE & OVERHEAD EXPENSES OF RS.11,88,617/ - . ( B ) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE ADDITION OF RS .1,18,862/ - OUGHT TO BE DELETED. (3) (A) THAT THE LEARNED C.I.T . (A) - III , BAROD A HAS ERRED I N CONFIRMING THE DISALLOWANCE OF INTEREST OF RS .3,83,704/ - PAID ON OTHER LOANS, AS EXCESS OV ER SIMILAR INTEREST PAID IN THE PRECEDING YEAR. INTEREST PAID DURING THE YEAR RS .1 911156 INTEREST PAID IN EARLIER YEAR RS . 1527452 EXCESS DISALLOW ED RS. 38370 4 (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF CASE SUCH DISALLOWANCE MADE ON ERRONEOUS AND ADHOC BASIS OUGHT TO BE DELETED. 3 . A PERUSAL OF THE CASE FILE REVEALS THAT BOTH THE LOWER AUTHORITIES HAVE PASSED THEIR BEST JUDGEMENT ASSESSMENT AND EX - P ARTE LOWER APPELLATE ORDER; RESPECTIVELY RESULTING IN THE IMPUGNED DISALLOWANCES/ADDITIONS. 4 . THE ASSESSEE IS A PRIVATE LIMITED COMPANY MANUFACTURING OF HDP C WOMAN BAGS. IT FILED ITS RETURN ON 30.11.1996 DECLARING LOSS OF RS.15,68,000/ - ALONG WITH AUD ITED COPIES OF P&L ACCOUNTS, BALANCE SHEET AND TAX AUDIT REPORT. THE ASSESSING OFFICER FOUND THE SAME TO BE EFFECTIVE. HE ACCORDINGLY APPEARS TO HAVE DECLARED THE SAME AS INVALID UNDER SECTION 139(9) OF THE ACT. THIS FOLLOWED ISSUANCE OF A SECTION 148 N OTICE ON 07.02.2000 SERVED ON 16.02.2000 ASKING THE ASSESSEE TO FILE A RETURN. ASSESSEE FILED THE SAME ON 21.03.2000 REITERATING THE LOSS ALREADY DECLARED. THE ASSESSING OFFICER THEREAFTER APPEARS TO HAVE ISSUED SCRUTINY NOTICES. THE ASSESSEE S AUTHORI SED REPRESENTATIVE SEEMS TO HAVE REQUESTED FOR ADJOURNMENTS FOR 18.02.2002 AND 26.03.2002. THE ASSESSEE THEREAFTER FILED IT S REPLY CITING ABSENCE OF IT S ACCOUNTANT AND ITA NO . 2116 / AH D/ 20 03 A.Y. 1996 - 97 PAGE 3 OF 5 STAFF MEMBERS THEREBY EXPRESSING ITS INABILITY TO PRODUCE THE RELEVANT DETAILS. THIS MADE THE ASSESSING OFFICER TO PROCEED UNDER SECTION 144 OF THE ACT. HE FRAMED REASSESSMENT ON 27.03.2002 MAKING THE THREE IMPUGNED DISALLOWANCES/ADDITIONS UNDER CHALLENGE. 5. THE ASSESSEE PREFERRED APPEAL. CIT(A) ALSO APPEARS TO HAVE ISSUED NOTICES THR OUGH RPAD. THE SAME WAS SERVED ON THE APPELLANT. IT STILL DID NOT COME PRESENT. THIS MAKES THE CIT(A) TO PASS THE IMPUGNED EX - PARTE ORDER AFFIRMING THE ASSESSING OFFICER S FINDINGS FORMING SUBJECT MATTER OF THE SUBSTANTIVE GROUND REPRODUCED HEREINABOVE. 6. LEARNED AUTHORISED REPRESENTATIVE APPEARING AT ASSESSEE S BEHEST INVITES OUR ATTENTION TO ASSESSEE S PETITION AND AFFIDAVIT DATED 05.03.2016 INTER ALIA PLEADING THAT IT S CHARTERED ACCOUNTANT SHRI MUKESH DESAI DID NOT PRODUCE THE RELEVANT DETAILS. H E IS ALSO STATED TO HAVE PERMANENTLY MIGRATED TO CANADA. THE RELEVANT AFFIDAVIT IN SUPPORT READS AS UNDER : - 2. IN FEBRUARY AND MARCH 2002, WHEN THE ASSESSING OFFICER HAD TAKEN THE REASSESSMENT PROCEEDINGS, THERE WERE LARGE SCALE DISTURBANCES IN GUJARA T, DUE TO WHICH I PRESUMED THAT THE NOTICES WHICH WERE RECEIVED BY OUR CHARTERED ACCOUNTANT, SHRI MUKESH DESAI WERE NOT RESPONDED TO BY HIM. WE HAD VERY METICULOUSLY SENT ALL THE NOTICES THAT WERE RECEIVED BY US TO OUR CHARTERED ACCOUNTANT AND LATER ON THE NOTICES WERE SERVED ON HIM DIRECTLY BY THE DEPARTMENT. WE WERE UNDER A BONA FIDE IMPRESSION THAT HE WOULD HAVE DONE THE NEEDFUL AS ALL THE DETAILS WHICH WERE REQUIRED, WERE VERY MUCH AVAILABLE ON RECORD AND IN FACT OURS WAS A CASE WHERE AUDIT HAS BEEN UND ERTAKEN U/S.44AB OF THE I.T. ACT, 1961 AND IN FACT THE AUDITOR HAS NOT FOUND ANY DEFECT WITH THE DETAILS AND ACCOUNTS MAINTAINED BY US, AND HENCE, THERE WAS NO QUALIFICATION IN THE SAID AUDIT REPORT. 3. UNFORTUNATELY, THE BEST JUDGMENT ASSESSMENT U/S.14 4 R.W.S. 147 WAS PASSED CONFIRMING THE ADDITIONS TOTALLING TO RS.74,14,0697 - . THE APPEAL AGAINST THE SAID ASSESSMENT ORDER WAS PREFERRED BEFORE THE C.IT.(APPEALS) BUT ONCE AGAIN OUR BONA FIDE BELIEF THAT OUR CHARTERED ACCOUNTANT WOULD NOW BE TAKING CARE OF APPEARING BEFORE THE HON'BLE C.I.T.( APPEALS ) DID NOT COME TRUE AND THE PROCEEDINGS BEFORE THE HON'BLE C.I.T.(APPEALS) WAS ALSO CONCLUDED WITHOUT ANY ITA NO . 2116 / AH D/ 20 03 A.Y. 1996 - 97 PAGE 4 OF 5 REPRESENTATION FROM OUR END. AN APPEAL AGAINST THE ORDER OF THE HON'BLE C. I. T. (APPEALS) WAS FILED BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD. THE NOTICE OF HEARING FROM THE HON'BLE REGISTRY OF THE INCOME TAX APPELLATE TRIBUNAL WAS SERVED ON THE ADDRESS OF THE FACTORY, WHICH WAS ALREADY SOLD AT THAT TIME, AND THEREFORE, THE MATTER WAS DISPO SED OFF AS BEING DISMISSED FOR NON - PROSECUTION. A MISCELLANEOUS APPLICATION WAS FILED EXPLAINING THE REASONS FOR NON - APPEARANCE AND THE HON'BLE INCOME TAX APPELLATE TRIBUNAL WAS KIND ENOUGH TO RECALL AND RE - FIX THE APPEAL OF THE HEARING. 4. ALL THE ABO VE MENTIONED FACTS ARE TRUE TO THE BEST OF MY KNOWLEDGE AND BELIEF. THE ABOVE MENTIONED SEQUENCE OF EVENTS DEMONSTRATES THE FACT THAT, OUR, THE THEN CHARTERED ACCOUNTANT, SHRI MUKESH DESAI DID NOT APPEAR HI RESPONSE TO THE NOTICES AND WE WERE UNDER A BONA FIDE BELIEF THAT HE HAVING ALL THE DETAILS WOULD HAVE DONE THE NEEDFUL. IN FACT, THE DETAILS, WHICH ARE PRODUCED NOW BEFORE THE HON'BLE INCOME TAX APPELLATE TRIBUNAL CLEARLY DEMONSTRATE THAT THE ADDITIONS WHICH WERE MADE COULD NOT HAVE BEEN SUSTAINED IF TH ESE DETAILS WHICH WERE VERY MUCH AVAILABLE WOULD HAVE BEEN PRODUCED AT THE RELEVANT TIME. IN FACT, WE HAVE SUFFERED A LOT OF FINANCIAL PRESSURE BECAUSE OF THIS UNEXPECTED ADDITIONS, WHICH COULD VERY EASILY BE EXPLAINED BY THE DETAILS NOW BEING PRODUCED AND WHICH WERE VERY MUCH AVAILABLE AT THAT RELEVANT TIME AS WELL. BE THAT AS IT MAY, OUR OLD CHARTERED ACCOUNTANT, SHRI MUKESH DESAI HAS LATER ON MIGRATED TO C ANADA FOR GOOD AND IS NOT AVAILABLE TO EXPLAIN AS TO WHY HE DID NOT APPEAR AT THE RELEVANT TIME. IT IS IN THESE CIRCUMSTANCES THAT I AM PRAYING OF YOUR GOODSELF TO ADMIT THIS CONTEMPORANEOUS EVIDENCE IN THE FORM OF BANK DETAILS, INCOME TAX TDS CHALLANS, CONFIRMATIONS ETC. TO PROVE THAT WE DID HAVE ALL THE DETAILS WHICH WERE CALLED FOR AND WHICH COULD HAV E BEEN VERY EASILY PRODUCED BEFORE THE AUTHORITIES. I PERSONALLY AS A DIRECTOR OF THE COMPANY SINCERELY APOLOGIES TO YOUR HONOUR FOR THIS PECULIAR SITUATION, WHICH HAS BEEN CREATED, WHICH WAS UNFORTUNATELY NOT FORESEEN BY US AND BECAUSE OF WHICH WE HAVE SU FFERED BIG TIME FINANCIALLY. 5. THIS AFFIDAVIT IS ALSO BEING SWORN BY ME FOR REQUESTING YOUR GOODSELF TO ADMIT THE ADDITIONAL EVIDENCE, WHICH WOULD BE REQUIRED TO BE CONSIDERED IN THE INTEREST OF JUSTICE AND WHICH, HAD REMAINED TO BE FILED AT THE ORIGINAL STAGE AND IS NOW BEING FILED SO THAT THE ISSUE CAN BE DECIDED MORE SATISFACTORILY AND JUDICIOUSLY. WE HAVE LATER CHANGED OUR CHARTERED ACCOUNTANTS AND HENCEFORTH PROMISE THAT THIS KIND OF SITUATION WILL NOT BE REPEATED EVER IN THE FUTURE. OUR ATTENTI ON IS INVITED TO THE ACCOMPANYING PAPER BOOK CONTAINING 207 PAGES INCLUDING STATEMENT OF THE UNSECURED LOAN FOLLOWED BY IDENTITY AND CONFIRMATION DETAILS OF THE RELEVANT CREDITORS. ITA NO . 2116 / AH D/ 20 03 A.Y. 1996 - 97 PAGE 5 OF 5 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO REBUT ASSESSEE S SOL EMN AVERMENT IN ADDITIONAL EVIDENCE AFFIDAVIT AS WELL AS THE RELIANCE OF THE ABOVE STATED DOCUMENTS FORMING PART OF THE PAPER BOOK. WE TAKE INTO ACCOUNT ALL THESE PECULIAR FACTS AND CIRCUMSTANCES TO OBSERVE THAT THE ASSESSEE HAS BEEN ABLE TO PROVE ITS REA SONABLE CAUSE IN NOT BEING ABLE TO LEAD ALL THESE EVIDENCE IN EX - PARTE PROCEEDINGS BEFORE BOTH THE LOWER AUTHORITIES. THE SAME IS FOUND TO BE IN CONSONANCE TO ITS STAND THROUGHOUT CITING ABSENCE OF CHARTERED ACCOUNTANT (SUPRA). WE FEEL THAT LARGER INTERE ST OF JUSTICE IN THESE FACTS AND CIRCUMSTANCES WOULD BE MET IN CASE THE LEARNED CIT(A) RE - DECIDES THE ASSESSEE S THREE GROUNDS IN QUESTION AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSESSEE. ALL THE SUBSTANTIVE GROUNDS REPRODUCED HEREI NABOVE ARE SET ASIDE TO THE FILE OF CIT(A). 8 . THIS ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT TODAY ON TH E 2 ND DAY OF MAY , 201 6 . SD/ - SD/ - PRAMOD KUMAR S .S. GODARA (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, THE 2 ND DAY OF MAY , 2016 PBN/* COPIES TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD