WIMCO LTD, MUMBAI V. ITO WD 2(3)(4), MUMBAI

ITA 231/MUM/2011

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3887 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 05-07-2016
• Assessment Year: 2003-2004
• Appeal Filed On: 10-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Principle of natural justice; Additional evidence; Bad and doubtful debts

Judgement Text

INCOME TAX APPELLATE TRIBUNAL, MUMBAI- BENCH G BEFORE SH. BR BASKARAN, ACCOUNTANT MEMBER AND SH PA WAN SINGH, JUDICIAL MEMBER ITA NO.231/M/2011 FOR ASSESSMENT YEAR 200304 ITA N0.4297/M/2011 FOR ASSESSMENT YEAR 200405 WIMCO LTD. INDIAN MERCANTILE CHAMBERS KAMANI MARG, BALLARD ESTATE MUMBAI -400020 VERSUS INCOME TAX OFFICER WARD -2(3)(4) MUMBAI AAYAKAR BHAVAN MK ROAD, MUMBAI-400020 APPELLANT RESPONDENT APPELLANT REPRESENTED BY SH. K.R.VASUDEVAN & KK VAI D AR RESPONDENT REPRESENTED BY MISS NILU JAGGI DR ITA N0. 4781/M/2011 FOR ASSESS MENT YEAR 200405 INCOME TAX OFFICER WARD -2(3)(4) MUMBAI AAYAKAR BHAVAN MK ROAD, MUMBAI-400020 VERSUS WIMCO LTD. INDIAN MERCANTILE CHAMBERS KAMANI MARG, BALLARD ESTATE MUMBAI -400020 APPELLANT RESPONDENT APPELLANT REPRESENTED BY MISS NILU JAGGI DR RESPONDENT REPRESENTED BY SH. K.R.VASUDEVAN & KK VE D AR DATE OF HEARING: 09.07.2016 DATE OF PRONOUNCEMENT : 05.08.2016 ORDER PER PAWAN SINGH ,JUDICIAL MEMBER: 1. THESE THREE APPEALS OUT OF WHICH ONE FOR ASSESSMENT YEAR 200304 IS FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOM E TAX APPEALS DATED 26 OCTOBER 2010 AND TWO CROSS APPEALS BY ASSESSEE AS W ELL AS BY REVENUE FOR AY 2004-05 AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX APPEALS DATED 3 MARCH 2011. ALL THREE APPEALS WERE HEARD TOGETHER AS SOM E OF THE COMMON GROUNDS ARE RAISED IN ALL APPEALS, THUS THE SAME ARE DECIDED BY COMMON ORDER. IN APPEAL ITA NO. 231/M/2011, THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL: (1) NOT ADMITTED THE ADDITIONAL EVIDENCE FILED DURING THE COURSE OF FIRST APPELLATE STAGE.. ITA 231,4297,4781/M/2011 FOR AY-2003-4& 2004-05 WIMCO LTD (2) DISALLOWANCE OF RS.88.71 LAKHS BEING WRITE OFF OF BED DEBTS. (3) DISALLOWANCE OF RS. 30.21 LAKHS. THE OLD UNRECONCIL ED BALANCE WRITTEN OFF. (4) DISALLOWANCE OF RS. 4.52 LAKHS BEING SALARY/BONUS/ SALES TAX PAID IN EXCESS. (5) DISALLOWANCE OF RS. 2.58 LAKHS BEEN TEDIOUS ON SALA RY/CONTACTOR/INTEREST CONSULTANCY FEES WRITTEN OFF DURING THE YEAR. (6) DISALLOWANCE OF RS. 2.21 LAKHS IN RESPECT OF INVENT ORIES WRITTEN OFF. (7) SALE TAX PAID IN ADVANCE RS. 13 LAKHS. (8) DISALLOWANCE OF INTEREST RS 229.66 LAKHS. IN APPEAL ITA NO. 4297/M/2011 FOR AY 200405, THE A SSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. & 2. DISALLOWANCE OF ADVANCE SALE TAX OF RS. 60 LAK HS. 3 DISALLOWANCE OF LOANS TO RELATED PARTIES OF RS.217. 32 LAKHS. 4 DISALLOWANCE OF SOFTWARE EXPENSES OF RS. 5000/- 5. & 6. DISALLOWANCE OF SOFTWARE EXPENSES OF RS.3.80 LAKHS 7. DISALLOWANCE OF REPAIR EXPENSES RS. 8.74 LAKHS 8. DISALLOWANCE OF REPAIR EXPENSES OF RS. 24,000/-. 9. DISALLOWANCE OF RS. 2.50 LAKHS FOR REPAIR EXPENSES. 10. FAMILY PENSION PAID AFTER DUE DATE RS. 3.52 LAKHS. 11. BAD DEBTS WRITTEN OFF RS.17.75 LAKHS. 12. CONFIRMING THE ADDITION UNDER SECTION 68 OF RS 14.7 8 LAKHS. IN CROSS APPEAL ITA NO. 4781/M/2011, FOR AY 2004-05 , THE REVENUE HAS RAISED ONLY ONE GROUND AGAINST THE DELETION OF ADDITION UN DER SECTION 68 OF RS. 1,75,81,359/- (DELETED RS.1,61,03,212/-) 2. FIRST WE SHALL TAKE UP APPEAL ITA NO. 231/M/2011, FOR ASSESSMENT YEAR 2003 04. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS EN GAGED IN THE BUSINESS OF MANUFACTURE AND SALES OF SAFETY MATCHES, FILED RETU RN OF INCOME ON 30 OCTOBER 2003 FOR RELEVANT ASSESSMENT YEAR, DECLARING NIL IN COME. SUBSEQUENTLY ASSESSEE FILED, REVISE RETURN ON 18 TH MARCH 2004 WHEREIN THE ASSESSEE OFFERED ADDITIONAL COMPENSATION OF RS 12,13,412/-. THE RETURN OF INCOM E WAS SELECTED FOR SCRUTINY. WHILE FRAMING ASSESSMENT, AO BESIDES THE OTHER ADDITION /DISALLOWANCE OF RS. 88.71 LAKHS BEING WRITE OFF O F BED DEBTS, DISALLOWANCE OF RS. 30.21 LAKHS. THE OLD UNRECONCILED BALANCE WRITT EN OFF, DISALLOWANCE OF RS. 4.52 LAKHS BEING SALARY/BONUS/ SALES TAX PAID IN EX CESS, DISALLOWANCE OF RS. 2.58 LAKHS BEING THE TDS ON SALARY/CONTACTOR/INTER EST CONSULTANCY FEES WRITTEN OFF DURING THE YEAR, DISALLOWANCE OF RS. 2.21 LAKHS IN RESPECT OF INVENTORIES WRITTEN OFF, SALE TAX PAID IN ADVANCE RS. 13 LAKHS, DISALLOWANCE OF INTEREST RS ITA 231,4297,4781/M/2011 FOR AY-2003-4& 2004-05 WIMCO LTD 229.66 LAKHS. AGGRIEVED BY THE ORDER OF AO, ASSESS EE FILED APPEAL BEFORE COMMISSIONER APPEALS, BUT WITHOUT ANY SUCCESS, THUS THE PRESENT SECOND APPEAL IS FILED BEFORE US. 3. WE HAVE HEARD LD AR OF ASSESSEE AND LD D R FOR REVE NUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FIRST AND SECOND GRO UNDS OF PRESENT APPEAL IS WITH REGARD TO NON-ADMISSION OF ADDITIONAL EVIDENCE FILED DURING THE FIRST APPELLATE STAGE BEFORE CIT(A). THE LEARNED AR OF AS SESSEE ARGUED THAT DURING THE FIRST APPEAL STAGE THE ASSESSEE FILED AN APPLIC ATION FOR ADMITTING ADDITIONAL EVIDENCE ON RECORD UNDER RULE 46A OF INCOME TAX RU LES, 1962, HOWEVER, THE LEARNED COMMISSIONER APPEALS DESPITE SHOWING SUFFIC IENT CAUSE NOT ALLOWED THE APPLICATION OF ASSESSEE. THUS, THE ASSESSEE SUF FERED IRREPARABLE LOSS AND INJURY, WHICH RESULTED IN TO DENIAL OF OPPORTUNITY OF AND VIOLATION OF PRINCIPAL OF NATURAL JUSTICE. LD AR FOR ASSESSEE ARGUED THAT DURING THE ASSESSMENT, THE AO AT THE LAST STAGE OF PROCEEDINGS ASKED THE ASSES SEE TO FILE THE CONFIRMATION OF THE CREDITORS AND OTHER EVIDENCE AND NO SUFFICIE NT OPPORTUNITY AND TIME WAS GIVEN TO THE ASSESSEE. LD. AR FOR ASSESSEE ARGUED T HAT THE MATTER MAY BE RESTORED TO THE LOWER AUTHORITY FOR RECONSIDERATION OF THE EVIDENCE FILED BY THE ASSESSEE BEFORE THE LD CIT(A). ON THE OTHER HAND L D DR FOR REVENUE STRONGLY SPORTED THE ORDER OF THE AUTHORITY BELOW AND OPPOSE D FOR REMANDING THE MATTER TO THE LOWER AUTHORITY. 4. WE HAVE CONSIDERED THE RIVAL CONTENTIONS OF THE PAR TIES AND PERUSED THE ORDER OF AUTHORITIES BELOW. DURING THE APPELLATE PROCEEDI NG, ASSESSEE FILED ADDITIONAL EVIDENCE IN THE FORM OF PAPER BOOK BEING LEDGER AC COUNTS OF PARTIES AND PHOTOCOPY OF JOURNAL VOUCHERS, WHICH WERE NOT FURN ISHED BEFORE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDING. WHEN THE FILING OF ADDITIONAL DOCUMENTS WERE OBJECTED BY COMMISSIONER APPEALS. THE ASSESSEE SUBMITTED THAT DETAILS VIS--VIS INVENTORIES WRITTE N OFF WERE NOT AT ALL CALLED FOR BY THE ASSESSING OFFICER, THE ISSUE RAISED IN THE A PPEAL WAS NOT MEANINGFULLY DISCUSSED BY AO, DURING THE COURSE OF ASSESSMENT PR OCEEDING, THE PERSONNEL OF THE ASSESSEE WHO HAD REPRESENTED BEFORE AO HAS LEFT THE ASSESSEE COMPANY AND THE ASSESSEE IS NOT AWARE OF FACTUAL DISCUSSION, WH ICH MAY TOOK PLACE DURING ITA 231,4297,4781/M/2011 FOR AY-2003-4& 2004-05 WIMCO LTD THE ASSESSMENT. IT WAS FURTHER SUBMITTED THAT BALAN CE STANDING ON ACCOUNT OF EXCESS SALARY, BONUS, TDS PAID IN THE EARLIER YEAR S WERE ARISE DUE TO EXCESS PAYMENT, AND NOT FILING OF DOCUMENTS WERE NEITHER C ONTUMACIOUS NOR DELIBERATE. THE LEARNED CIT(A) OBSERVED THAT THE CO NDITIONS MENTIONED IN RULE 46A HAVE NOT BEEN SATISFIED, AO ALLOWED SPECIFIC OP PORTUNITY TO THE ASSESSEE DURING THE ASSESSMENT PROCEEDING TO ESTABLISH THAT INCOME IN RESPECT OF AMOUNTS OF WRITTEN OFF HAD BEEN OFFERED FOR TAX IN EARLIER YEARS. BUT DESPITE THE OPPORTUNITY. AR OF ASSESSEE COULD NOT SATISFY T HE AO OR TO FILE ANY DOCUMENTARY EVIDENCE IN THIS REGARD. LEARNED CIT (A ) CONCLUDED THAT THE CONTENTION OF AR OF ASSESSEE THAT ISSUE WAS NOT MEA NINGFULLY DISCUSSED BY THE AO HAS NO MERIT AND THE ADDITIONAL EVIDENCE FILED B Y AR OF ASSESSEE WAS NOT ADMITTED. WE HAVE SEEN THAT THE LEARNED COMMISSIONE R OF INCOME TAX APPEALS NEITHER CONSIDERED THE ADDITIONAL EVIDENCE FILED BEFORE HIM, NOT SOUGHT ANY REMAND REPORT FROM THE AO NOR DISCUSSED THE RELEVANCY AND ADMISSIBILITY OF THE EVIDENCE FILED BEFORE HIM. CON SIDERING THE FACT AND CIRCUMSTANCES OF THE CASE, WE DEEM IT APPROPRIATE T O RESTORE THE CASE TO THE FILE OF AO TO CONSIDER THE ALL ISSUE RAISED IN THE PRESE NT APPEAL AFRESH, EXCEPT GROUND NO. (6) WITH REGARD TO ADDITION/DISALLOWANC E OF SALE TAX WHICH IS COVERED AGAINST THE ASSESSEE BY THE DECISION OF KE RALA HIGH COURT IN CIT VS KERALA SOLVENT EXTRACTIONS LTD. (2008) 306 ITR 54 (KER). THE ASSESSING OFFICER IS FURTHER DIRECTED TO CONSIDER THE DOCUMENTARY EVI DENCE PLACED BEFORE FIRST APPELLATE AUTHORITY. SINCE THE MATTER IS VERY OLD A ND PERTAINING TO ASSESSMENT YEAR 200304, THE ASSESSEE IS DIRECTED TO FULLY COO PERATE DURING THE FRESS ASSESSMENT PROCEEDING/REMAND PROCEEDING AND NOT TO SEEK ANY ADJOURNMENT WITHOUT ANY BONAFIDE REASONS. HOWEVER, IT IS MADE C LEAR THAT THE ALL ISSUES RAISED BEFORE US (EXCEPT SALES TAX ADDITION) ARE RE MANDED FOR RECONSIDERATION; THE AO SHALL PASS APPROPRIATE ORDER IN ACCORDANCE W ITH LAW. AS THE GROUNDS RAISED EXCEPT SALES TAX ISSUE, IN THE PRESENT APPEA L ARE RESTORED TO THE FILE OF AO, FOR FRESH FINDING, THUS THE PRESENT APPEAL IS A LLOWED FOR STATISTICAL PURPOSE. 5. NOW WE SHALL TAKE UP APPEAL FILED BY BOTH THE PARTI ES FOR ASSESSMENT YEAR 2004 05, BEING ITA NO. 4297/M/2011 AND ITA NO. 4781/M/2011. ITA 231,4297,4781/M/2011 FOR AY-2003-4& 2004-05 WIMCO LTD 6. IN ITA NO 4297/M/2011, DURING THE COURSE OF SUBMISS ION LD AR OF ASSESSEE MADE THE STATEMENT THAT HE IS NOT PRESSING GROUND N O 4, 5 AND 6. THUS, THE GROUND NO. 4, 5 AND 6 ARE DISMISSED AS NOT PRESSED. 7. WITH REGARDS TO OTHER GROUNDS, WE MAY NOTE THAT WE HAVE RESTORED THE APPEAL OF ASSESSEE FOR ASSESSMENT YEAR 2003-04 TO THE FILE OF AO FOR RECONSIDERATION. WE HAVE FURTHER NOTICED THAT THE ADDITIONAL EVIDENC E FILED BY ASSESSEE WAS NOT CONSIDERED BY LD CIT(A), WHICH THE ASSESSEE HAS AG ITATED DURING THE FIRST APPELLATE PROCEEDING. MOREOVER, SOME OF THE GROUND S OF APPEAL ARE COMMON. WE HAVE CONSIDERED THE CONTENTION OF LD AR OF ASSES SEE AND LD DR FOR REVENUE. LD DR FOR REVENUE ARGUED THAT SHE WOULD NO T OPPOSE TO THE REMAND OF CASE, IF ALL GROUNDS OF APPEALS AND REVENUES CR OSS APPEAL ARE RESTORE TO THE FILE OF AO. LD AR FOR ASSESSEE ARGUED THAT IT WOUL D BE THE DISCRETION OF THE TRIBUNAL. CONSIDERING THE PECULIARITY OF THE APPEAL ALL THE GROUNDS (EXCEPT GROUND NO 4TO 6) OF THE APPEALS ARE RESTORE TO THE FILE OF AO FOR FRESH CONSIDERATION IN ACCORDANCE WITH LAW AS PER DIRECTI ON IN PARA 3(SUPA). 8. WITH THE ABOVE OBSERVATION BOTH THE APPEAL FILED BY ASSESSEE AS WELL AS BY REVENUE FOR AY 2004-05 ARE PARTLY ALLOWED FOR STATI STICAL PURPOSE. ANNOUNCED IN OPEN COURT ON 5 TH AUGUST 2016. SD/- SD/- (B.R.BASKARAN) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 05/08/2016 S.K.PS COPY OF THE ORDER FORWARDED TO: BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. E COPY/