ITO, Ward-12(3), Kolkata, Kolkata V. M/s Hanuman Tea Company Ltd., Kolkata

ITA 2263/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4196 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 30-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Assessee Lawyers: VIKASH SURANA
• Keywords: Bad and doubtful debts
• Section: 143(3)

Judgement Text

I.T.A. NO 2263/KOL/2016 ASSESS MENT YEAR: 2004-2005 PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) & SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 2263/KOL/2016 ASSESSMENT YEAR: 2004-2005 INCOME TAX OFFICER,................................ .........................APPELLANT WARD-12(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 -VS.- M/S. HANUMAN TEA COMPANY LIMITED,.................. .........RESPONDENT FMC FORTUNA, 234/3A, A.J.C. BOSE ROAD, KOLKATA-700 020 [PAN: AAACH 6868 G] APPEARANCES BY: SHRI ROBIN CHOUDHURY, ADDL. CIT, SR. D.R. , FOR THE DEPARTMENT SHRI VIKASH SURANA, FCA, FOR THE ASSESSEE DATE OF CONCLUDING THE HEARING : OCTOBER 29, 2018 DATE OF PRONOUNCING THE ORDER : OCTOBER 31, 2018 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) :- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-8, KOLKATA DAT ED 01.09.2016 AND THE GROUNDS RAISED BY THE REVENUE THEREIN READ AS U NDER:- (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN LAW AS WELL AS IN THE FACTS IN DELETING THE DISALLOWANCE MADE BY THE AO OF RS.1,78,86,327/- OUT OF GARDEN EXPENSES. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A) ERRED IN LAW AS WELL AS IN THE FACTS IN DELETING THE DISALLOWANCE MADE BY THE AO OF RS.1,22,406/- ON ACCOUNT OF BAD DEBT WRITTEN OFF WITHOUT CONSIDERING THE PROVISIONS AS LAID DOWN U/S 36(2) OF THE I.T. ACT, 1961. I.T.A. NO 2263/KOL/2016 ASSESS MENT YEAR: 2004-2005 PAGE 2 OF 4 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY, W HICH IS ENGAGED IN THE BUSINESS OF MANUFACTURING TEA. IT WAS HAVING TH REE TEA GARDENS, OUT OF WHICH ONE WAS SOLD DURING THE YEAR UNDER CONSIDE RATION. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y THE ASSESSEE- COMPANY ON 29.10.2004 DECLARING A LOSS OF RS.1,23,9 0,790/-. IN THE PROFIT & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, TE A GARDEN EXPENSES OF RS.908.86 LAKHS WERE DEBITED BY THE ASSESSEE. DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE-COMPANY WAS RE QUIRED BY THE ASSESSING OFFICER TO PRODUCE THE RELEVANT BOOKS OF ACCOUNT AS WELL AS OTHER DOCUMENTARY EVIDENCE TO SUPPORT AND SUBSTANTI ATE ITS CLAIM FOR THE TEA GARDEN EXPENSES. THE ASSESSEE-COMPANY, HOWEVER, FAILED TO COMPLY WITH THE SAID REQUIREMENT. THE ASSESSING OFFICER AL SO NOTED THAT THERE WAS A SIMILAR NON-COMPLIANCE ON THE PART OF THE ASS ESSEE-COMPANY EVEN DURING THE IMMEDIATELY PRECEDING YEAR RESULTING INT O A DISALLOWANCE OF TEA GARDEN EXPENSES TO THE EXTENT OF 19.68%. ACCORD INGLY, THE ASSESSING OFFICER APPLIED THE SAME RATIO AND MADE A DISALLOWA NCE OF RS.1,78,86,327/- OUT OF TEA GARDEN EXPENSES. HE ALS O MADE A FURTHER DISALLOWANCE OF RS.1,22,408/- ON ACCOUNT OF BAD DEB TS AND ADVANCES WRITTEN OFF AS DEBITED BY THE ASSESSEE-COMPANY IN T HE PROFIT & LOSS ACCOUNT FOR THE FAILURE OF THE ASSESSEE-COMPANY TO ESTABLISH THAT THE CONDITIONS STIPULATED IN SECTION 36(2) WERE DULY SA TISFIED. ACCORDINGLY IN THE ASSESSMENT COMPLETED UNDER SECTION 143(3) VIDE AN ORDER DATED 22.12.2006, THE TOTAL INCOME OF THE ASSESSEE WAS DE TERMINED BY THE ASSESSING OFFICER AT RS.71,03,555/- AFTER MAKING, INTER ALIA, TWO ADDITIONS ON ACCOUNT OF DISALLOWANCE OF TEA GARDEN EXPENSES A ND BAD DEBTS AND ADVANCES WRITTEN OFF. 3. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, THE LD. CIT(APPEALS) DELETED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER OUT OF TEA GARDEN EXPENSES ON THE GROUND THAT THE MERE INABILITY OF THE ASSESSEE-COMPANY TO PRODUCE THE RE LEVANT BOOKS OF I.T.A. NO 2263/KOL/2016 ASSESS MENT YEAR: 2004-2005 PAGE 3 OF 4 ACCOUNT AND OTHER DOCUMENTARY EVIDENCE WAS NOT SUFF ICIENT TO JUSTIFY THE SAID DISALLOWANCE WHEN THE ACCOUNTS MAINTAINED BY T HE ASSESSEE REGULARLY WERE DULY AUDITED. HE ALSO DELETED THE DI SALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEBTS AND A DVANCES WRITTEN OFF BY ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE R ELEVANT DEBTS WOULD ARISE ONLY CONSEQUENT TO THE INCOME HAVING BEEN REC OGNIZED. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE H AS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS RIGHT LY CONTENDED BY THE LD. D.R., THE ONUS TO SUPPORT AND SUBSTANTIATE ITS CLAI M FOR THE SUBSTANTIAL TEA GARDEN EXPENSES BY PRODUCING THE RELEVANT BOOKS OF ACCOUNT AND OTHER DOCUMENTARY EVIDENCE WAS ON THE ASSESSEE AND WHEN T HERE WAS A TOTAL FAILURE ON THE PART OF THE ASSESSEE TO DISCHARGE TH E SAID ONUS DURING THE COURSE OF ASSESSMENT PROCEEDINGS DESPITE SPECIFIC O PPORTUNITY AFFORDED BY THE ASSESSING OFFICER, THE LD. CIT(APPEALS) SHOU LD HAVE EITHER VERIFIED HIMSELF THE CLAIM OF THE ASSESSEE FOR THE TEA GARDE N EXPENSES FROM THE RELEVANT DOCUMENTARY EVIDENCE OR REMAND THE MATTER TO THE ASSESSING OFFICER FOR SUCH VERIFICATION. SINCE THE LD. CIT(AP PEALS) HAS FAILED TO DO SO, WE FIND IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE HIS IMPUGNED ORDER ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER IN ORDER TO GIVE ONE MORE OPPORTU NITY TO THE ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR THE TEA GARD EN EXPENSES BY PRODUCING THE RELEVANT BOOKS OF ACCOUNT AND OTHER D OCUMENTARY EVIDENCE FOR VERIFICATION. GROUND NO. 1 OF THE REVENUES APP EAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. AS REGARDS THE ISSUE INVOLVED IN GROUND NO. 2 RE LATING TO THE DELETION BY THE LD. CIT(APPEALS) OF THE DISALLOWANC E OF RS.1,22,406/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF BAD DEB TS AND OTHER ADVANCES WRITTEN OFF, THE LD. COUNSEL FOR THE ASSESSEE HAS P OINTED OUT FROM THE RELEVANT PROFIT & LOSS ACCOUNT OF THE ASSESSEE-COMP ANY THAT A SUM OF I.T.A. NO 2263/KOL/2016 ASSESS MENT YEAR: 2004-2005 PAGE 4 OF 4 RS.1,22,406/- ACTUALLY REPRESENTED DISCOUNT ALLOWED BY THE ASSESSEE AND NOT BAD DEBTS AND ADVANCES WRITTEN OFF AS WRONGLY T AKEN BY THE ASSESSING OFFICER. SINCE THIS ASPECT ALSO REQUIRES VERIFICATI ON BY THE ASSESSING OFFICER AS CONTENDED BY THE LD. D.R., WE SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR VERIFYING THE CLAIM OF THE LD . COUNSEL FOR THE ASSESSEE THAT THE AMOUNT IN QUESTION REPRESENTED DI SCOUNT ALLOWED AND DECIDED THE SAME IN ACCORDANCE WITH LAW. GROUND NO. 2 OF THE REVENUES APPEAL IS ACCORDINGLY TREATED AS ALLOWED FOR STATIS TICAL PURPOSES. 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON OCTOBER 31, 2 018. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT (KZ) KOLKATA, THE 31 ST DAY OF OCTOBER, 2018 COPIES TO : (1) INCOME TAX OFFICER, WARD-12(3), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700 069 (2) M/S. HANUMAN TEA COMPANY LIMITED, FMC FORTUNA, 234/3A, A.J.C. BOSE ROAD, KOLKATA-700 020 (3) COMMISSIONER OF INCOME TAX (APPEALS-8, KOLKAT A, (4) COMMISSIONER OF INCOME TAX- , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.