The ITO, Ward-4(2), Baroda V. M/s. Pan Pipes Resplandents Ltd., Baroda

ITA 2462/AHD/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6414 (ITAT-AHMEDABAD)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2003-2004
• Appeal Filed On: 05-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ALOK JOHRI
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. N. PAHUJA, AM) ITA NO.2462/AHD/2010 A. Y.: 2003-04 THE INCOME TAX OFFICER, WARD 4 (2), BARODA, 4 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CICLE, BARODA VS M/S. PAN PIPES RESPLANDENTS LTD., PADRA JAMBUSAR ROAD, DHUVARAN CROSSING, AT. MAHUVAD, BARODA PA NO. AABCP 2678 K (APPELLANT) (RESPONDENT) APPELLANT BY SHRI ALOK JOHRI, DR RESPONDENT BY NONE O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II I, BARODA DATED 31-05-2010 FOR ASSESSMENT YEAR 2003-04. 2. WE HAVE HEARD THE LEARNED DR AND PERUSED THE FIN DINGS OF THE AUTHORITIES BELOW. NONE APPEARED ON BEHALF OF THE A SSESSEE DESPITE SERVICE OF THE NOTICE. THE ASSESSEE IS, THEREFORE, PROCEEDED EX-PARTE. 3. GROUND NO.1 OF THE APPEAL OF THE REVENUE READS A S UNDER: ITA NO.2462AHD/2010 THE ITO, WARD-4(2), BARODA VS M/S. PAN PIPES RESPLA NDENTS LTD. 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN ALLOWING RELIEF IN RESP ECT OF ADDITION OF RS.29,70,411/- U/S 41 (1) OF THE INCOME TAX ACT WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER FOR EXAMINING THE FRESH DOCUMENTS/DETAILS FURNISHED BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS, AS MANDATED UNDER SUB- RULE (3) OF RULE 46A OF THE INCOME TAX RULES. 4. IT WAS NOTED BY THE AO THAT AS ON 31-03-2002 OUT STANDING LIABILITY AND SUNDRY CREDITORS FOR GOODS WAS SHOWN AT RS.61,80,729/-. HOWEVER, AS ON 31-03-2003, RELEVANT TO THE ASSESSME NT YEAR UNDER APPEAL, THE FIGURE WAS SHOWN AT RS.32,10,318/-. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF PAYMENT OF THESE CREDITS AND ALSO TO PROVIDE EVIDENCES OF ACTUAL PAYMENTS. SINCE NO S UCH DETAILS WERE FURNISHED, THE AO MADE THE DISALLOWANCE BY HOLDING THAT THE ASSESSEE HAD WRITTEN OFF THIS AMOUNT AND, THEREFORE , THE AMOUNT WAS TO BE TAXED U/S 41 (1) OF THE IT ACT. IT WAS SUBMIT TED BEFORE THE LEARNED CIT(A) THAT THE AMOUNT OF RS.32,10,318/- IS AFTER ADJUSTMENT OF VARIOUS BALANCES LYING IN THE CREDITORS ACCOUNT . IT WAS CONTENDED THAT IF SUCH ADJUSTMENT OF DEBIT BALANCES IS NOT CO NSIDERED, THEN THE BALANCE OF SUNDRY CREDITORS WOULD AMOUNT TO RS.70,4 4,345/- WHICH IS COMPARABLE TO THE BALANCE OF SUNDRY CREDITORS OF TH E PREVIOUS YEAR. THE DETAILS OF SUNDRY CREDITORS AS SUBMITTED BEFORE THE AO WAS SUMMARIZED AS FOLLOWS: ITA NO.2462AHD/2010 THE ITO, WARD-4(2), BARODA VS M/S. PAN PIPES RESPLA NDENTS LTD. 3 SR. NO. PARTICULARS AMOUNT (RS.) AMOUNT (RS.) 1 CREDITORS FOR CAPITAL GOODS 2,92,043 2 CREDITORS FOR EXPENSES. LESS. DEBIT BALANCES IN CREDITORS NET BALANCE 1,90,934 25,66,437 (-)23,95,503 3 CREDITORS FOR GOODS 56,17,702 4 CREDITORS FOR IMPORTS 5,00,000 5 CREDITORS FOR SERVICES LESS. DEBIT BALANCES IN CREDITORS NET BALANCE NET BALANCE 4,43,666 3,39,576 1,04,090 TOTAL 41,18,332 LESS: OTHER DEBIT BALANCES 9,08,014 TOTAL SUNDRY CREDITORS 32,10,318 4.1 THE LEARNED CIT(A) CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE FACTS OF THE CASE NOTED THAT THE A O MADE THE DISALLOWANCE AS THE ASSESSEE HAD NOT FURNISHED THE DETAILS ASKED FOR. HOWEVER, THE ASSESSEES CONTENTION WAS THAT IT HAD NOT WRITTEN OFF ANY AMOUNT AND THE REDUCTION IN THE SUNDRY CREDITOR S WAS ONLY BECAUSE OF ADJUSTMENT OF VARIOUS DEBIT BALANCES LYI NG IN THE ACCOUNTS. THE LEARNED CIT(A) ALSO NOTED THAT IT WAS NOT EXPLAINED AS TO WHY THIS WAS NOT BROUGHT TO THE NOTICE OF THE AO AT THE ASSESSMENT STAGE. IT WAS FURTHER NOTED THAT STILL IF THE ASSES SEE HAS NOT WRITTEN OFF THIS AMOUNT, IT WOULD NOT BE PROPER TO MAKE THE ADD ITION U/S 41(1) OF THE IT ACT. THE ASSESSEE WAS, THEREFORE, DIRECTED T O FURNISH COMPLETE DETAILS OF RE-GROUPING OF FIGURES BEFORE THE AO AND SUBJECT TO THIS DIRECTION THIS GROUND OF APPEAL OF THE ASSESSEE WAS ALLOWED. 5. ON CONSIDERATION OF THE SUBMISSION OF THE LEARNE D DR, WE DO NOT FIND ANY JUSTIFICATION FOR INTERFERENCE IN THE MATTER. THE LEARNED DR MAINLY CONTENDED THAT THE DETAILS FURNISHED BEFORE THE LEARNED CIT(A) ITA NO.2462AHD/2010 THE ITO, WARD-4(2), BARODA VS M/S. PAN PIPES RESPLA NDENTS LTD. 4 WERE FILED IN VIOLATION OF RULE 46A OF THE IT RULES . THE FINDINGS OF THE LEARNED CIT(A) WOULD SHOW THAT THE LEARNED CIT(A) C ONSIDERED THE FACT THAT SUCH DETAILS, WHICH ARE NOW STATED TO BE ADDITIONAL EVIDENCES FILED IN VIOLATION OF RULE 46A OF THE IT RULES, WERE NOT FILED BEFORE THE AO. THE ASSESSEE WAS, THEREFORE, DIRECTE D TO FILE THESE DETAILS BEFORE THE AO. IT WOULD MEAN THAT THE AO SH ALL HAVE TO VERIFY THE DETAILS FILED BY THE ASSESSEE IN ORDER TO ADJUD ICATE UPON THE ISSUE. THEREFORE, THERE IS NO VIOLATION OF RULE 46A OF THE IT RULES IN THE MATTER. HOWEVER, CONSIDERING THE ABOVE FACTS, WE DI RECT THE AO TO VERIFY THE DETAILS FURNISHED BY THE ASSESSEE BEFORE HIM AND SHALL PASS A REASONED ORDER ON THE SAME. IN CASE THE CLAIM OF THE ASSESSEE IS CORRECT, THE AO SHALL DELETE THE ADDITION. IN THE R ESULT, DEPARTMENTAL APPEAL ON THIS GROUND IS DISMISSED WITH THESE MODIF ICATIONS IN ORDER. 6. GROUND NO.2 OF THE APPEAL OF THE REVENUE READS A S UNDER: 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O F RS.6,66,555/- ON ACCOUNT OF VARIOUS EXPENSES ALTHOUGH THE ASSESSEE HAS NOT DONE ANY MANUFACTURING OR ANY BUSINESS ACTIVITIES DURING THE PREVIOUS YEAR. 7. THE AO DISALLOWED THE ABOVE EXPENSES ON THE GROU ND THAT THE ASSESSEE COMPANY HAS NOT DONE ANY MANUFACTURING OR BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION. IT WA S EXPLAINED BEFORE THE LEARNED CIT(A) THAT THE ASSESSEE COMPANY HAD IN CURRED VARIOUS EXPENSES LIKE TELEPHONE, TRAVELING EXPENDITURE ETC. IN THE ORDINARY ITA NO.2462AHD/2010 THE ITO, WARD-4(2), BARODA VS M/S. PAN PIPES RESPLA NDENTS LTD. 5 COURSE OF BUSINESS, THEREFORE, THEY ARE ALLOWABLE E XPENDITURE. THE LEARNED CIT(A) FOUND THAT THE ASSESSEE COMPANY WAS IN EXISTENCE AND INCURRED THE NORMAL EXPENSES IN THE COURSE OF T HE BUSINESS ACTIVITIES, THEREFORE, SUCH EXPENDITURE ARE ALLOWAB LE EXPENDITURE. ADDITION WAS ACCORDINGLY DELETED. 7. ON CONSIDERATION OF THE ABOVE FACTS, WE DO NOT F IND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE ASSESSEE COMPANY HAS FILED LOSS RETURN APPROXIMATELY AT RS.1.68 CRORES A ND ULTIMATELY EVEN IF MAKING THE ADDITION AND GIVING SET OFF, THE INCO ME IS AT NIL. MERELY BECAUSE NO MANUFACTURING ACTIVITIES WERE DONE IN TH E YEAR UNDER CONSIDERATION IS NO GROUND TO DISALLOW THE EXPENDIT URE. ACCORDING TO THE ASSESSEE THE ABOVE EXPENDITURE WERE INCURRED IN THE ORDINARY COURSE OF BUSINESS, THEREFORE, THE LEARNED CIT(A) H AS CORRECTLY DELETED THE ADDITION. THIS GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED SUBJECT TO OUR DIRECTIONS IN PARA 5 ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24-05-2011 SD/- SD/- (A. N. PAHUJA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 24-05-2011 LAKSHMIKANT/- ITA NO.2462AHD/2010 THE ITO, WARD-4(2), BARODA VS M/S. PAN PIPES RESPLA NDENTS LTD. 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD