The DCIT, Circle-2(1)., Vijayawada V. M/s Emvee Plastics P Ltd., Vijayawada

ITA 249/VIZ/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7194 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 13-01-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 12-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Assessee Lawyers: Y SURYACHANDRA RAO
• Keywords: Audit objection
• Section: 142(1); 147; 148

Judgement Text

ITA 316/V/07,249/V/08 EMVEE PLASTICS P LTD VJA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO. 316 /VIZAG/ 20 07 ASSESSMENT YEAR : 1998 - 99 ITO WARD - 2(1) VIJA YAWADA EMVEE PLASTICS (P) LTD VIJAYAWADA (APPELLANT) VS. (RESPONDENT) PAN NO. AAACE4844R ITA NO.249/VIZAG/2008 ASSESSMENT YEAR : 2004 - 05 DCIT, CIRCLE - 2(1) VIJAYAWADA EMVEE PLASTICS (P) LTD VIJAYAWADA (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI R.K. SINGH, DR RESPONDENT BY: SHRI Y. SURYACHANDRA RAO, CA ORDER PER SHRI S.K. YADAV, JUDICIAL MEMBER : - THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1. THE ORDER OF THE LEARNED CIT(A ) IS ERRONEOUS BOTH ON THE FACTS AND IN APPLICATION OF PROVISIONS OF LAW. 2. THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE NOTICE U/S 148 WAS ISSUED ABIDING THE PROVISIONS OF LAW. HE OUGHT TO HAVE NOTICED THAT THE ASSESSING OFFICER IS RIGHT IN REOPENING THE ASSESSMENT AS PER THE EXPLANATION 2(C)(I) OF SECTION 147 OF THE I.T. ACT. AS THERE WAS AN AMPLE EVIDENCE THAT THE INCOME OF THE ASSESSEE HAS BEEN UNDER ASSESSED AND AS THE ASSESSING OFFICER HAS RIGHTLY INVOKED THE PROVISIONS OF SECTION 151(1) BY OBTAININ G PRIOR APPROVAL OF THE CIT TO REOPEN THE ASSESSMENT, THE CIT(A) WOULD HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 3. THE CIT(A) IS NOT CORRECT IN HOLDING THAT THE INSURANCE RECEIPT ON THE GOODS DAMAGED IS A RECEIPT FROM BUSINESS UNDERTAKING. IN FACT AS THE INSURANCE CLAIM WAS MADE ON THE SEMI FINISHED GOODS, IT CANNOT BE SAID THAT THEY COME UNDER AMBIT OF MANUFACTURING PROCESS AND HENCE ARE NOT ELIGIBLE FOR DEDUCTION U/S 80IA. FURTHER THE CIT(A) OUGHT TO HAVE NOTICED THAT THE ASSESSEE HIMSELF ITA 316/V/07,249/V/08 EMVEE PLASTICS P LTD VJA 2 ADMITTED THE AMOUNT RECEIVED ON INSURANCE CLAIM UNDER THE HEAD `OTHER INCOME, WHICH CLEARLY DECLARES THE MIND OF THE ASSESSEE THAT IT IS NOT A PROFIT DERIVED FROM INDUSTRIAL UNDERTAKING. 4. THE CIT(A) OUGHT TO HAVE CONSIDERED THAT THERE WAS AN AUDIT OBJECTION WHICH WAS ACCEPTED BY THE DEPARTMENT AND REMEDIAL ACTION HAS BEEN TAKEN. PARA 3(I) OF INSTRUCTION NO.1979, DATED 27.3.2000 IS APPLICABLE. 5. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. THOUGH VARIOUS GROUNDS ARE RAISED BUT THEY ALL RELATE TO THE VALIDITY OF THE RE - OPENING OF THE ASSESSMENT. DURING THE COURSE OF HEARING OUR ATTENTION WAS INVITED THAT THIS ASSESSMENT WAS REOPENED AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. IT WAS CANDIDLY ADMITTED BY BOTH THE PART IES THAT ASSESSEE HAS FURNISHED ALL THE INFORMATION RELATING TO ITS CLAIM OF DEDUCTION U/S 80IA ALONG WITH RETURN OF INCOME. THE ASSESSMENT WAS RE - OPENED AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT YEARS WITHOUT BRINGING ANYTHING ON RECORD BY THE ASSESSING OFFICER THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR THE ASSESSMENT. THE LD. COUNSEL FOR THE ASSESSEE EMPHATICALLY ARGUED THAT SINCE ALL RELEVANT INFORMATION WITH REGARD TO THE CLAIM OF DEDUCTION U/S 80IA WERE FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME AND THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON RECORD THAT ON ACCOUNT OF FAILURE OF A PARTICULA R INFORMATION INCOME HAS ESCAPED ASSESSMENT, THE RE - OPENING WAS RIGHTLY HELD TO BE NOT VALID BY THE CIT(A). 3. HAVING CAREFULLY EXAMINED THE ORDER OF THE LOWER AUTHORITIES WE FIND THAT UNDISPUTEDLY THE ASSESSMENT WAS RE - OPENED AFTER THE EXPIRY OF THE 4 YE ARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR. BOTH THE PARTIES HAVE CANDIDLY ACCEPTED DURING THE COURSE OF HEARING THAT ASSESSEE HAS FURNISHED AL L INFORMATION AND THE RECEIPT ON WHICH CLAIM OF DEDUCTION U/S 80IA WAS RAISED. IT IS ALSO EVIDENT FROM THE RECORD THAT W HILE RE - OPENING THE ASSESSMENT, THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANYTHING ON RECORD THAT THE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF ASSESSEE FROM DISCLOSING A PARTICULAR FACT. IN THE LIGHT OF THESE FACTS, W E ARE ITA 316/V/07,249/V/08 EMVEE PLASTICS P LTD VJA 3 OF THE CONSIDERED VIEW THAT FOR RE - OPENING THE ASSESSMENT AFTER THE EXPIRY OF 4 YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, IT IS A CONDITION PRECEDENT FOR THE REVENUE TO MAKE OUT A CASE THAT THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMEN T ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE FROM DISCLOSING A PARTICULAR FACT. IF THE ASSESSING OFFICER FAILED TO DO SO, THE RE - OPENING IS NOT VALID AS PER THE PROVISIONS OF LAW. IN THE INSTANT CASE, NOTHING IS BROUGHT ON RECORD THAT THE INCOME H AS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE ON THE PART OF THE ASSESSEE. THEREFORE, THE CIT(A) HAS RIGHTLY KNOCKED DOWN THE RE - OPENING OF THE ASSESSMENT. SINCE HE HAS EXAMINED THE ISSUE IN THE LIGHT OF RELEVANT PROVISIONS OF LAW, WE FIND NO INFIRMITY THE REIN AND WE CONFIRM HIS ORDER. 4. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ITA NO.249 OF 2008: 5. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) ON VARIOUS GROUNDS WHICH ARE AS UNDER: 1) THE LD. CIT(A) HAS ERRED IN D ELETING THE ADDITION MADE BY THE ASSESSING OFFICER AMOUNTING TO RS.28,00,000 AND RS.16,49,460 BEING UNEXPLAINED SUNDRY CREDITS AND PURCHASES RESPECTIVELY. 2) THE HONBLE CIT(A) ERRONEOUSLY DELETED THE ADDITION OF RS.18 LAKHS MADE THE ASSESSING OFFICER BEING PROVISIONAL AND UNASCERTAINED LIABILITY TOWARDS CHITS. 3) THE LD. CIT(A) OUGHT NOT HAVE ALLOWED THE FRESH EVIDENCES FURNISHED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS AS THE SAME WERE NOT FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSES SMENT PROCEEDINGS EVEN AFTER GIVING SUFFICIENT TIME AND OPPORTUNITY. 4) THE HONBLE CIT(A) IGNORED THE FACT THAT THE A.O. HAS MADE THE ADDITION WHEN THE ASSESSEE FAILED TO COMPLY WITH THE NOTICE U/S 142(1) THAT REQUIRED THE ASSESSEE TO GET THE CONFIRMATION O F THE BALANCE FROM THE CREDITORS. 5) THE LD. CIT(A) ERRED IN HOLDING THAT THE A.O. HAD NOT DENIED THE USE OF BID AMOUNTS IN THE BUSINESS. THERE WAS NO MATERIAL BEFORE THE A.O. TO EXAMINE WHETHER THE BID AMOUNTS WERE UTILIZED IN THE BUSINESS. HENCE, THE QUE STION OF ACCEPTANCE OR DENYING DOES NOT ARISE. ITA 316/V/07,249/V/08 EMVEE PLASTICS P LTD VJA 4 6) THE LD. CIT(A) IGNORED THE FACT THAT THE ASSESSEE FAILED TO DISCHARGE THE ONUS ON IT IN PROVING THE CLAIMS SUCH AS CREDITS, PURCHASES AND CHIT LOSS. 7) ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 6. THOUGH VARIOUS GROUNDS ARE RAISED BUT THEY ALL RELATE TO THE ADDITIONS MADE ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITS AND PURCHASE. IN THIS REGARD, OUR ATTENTION WAS INVITED BY THE PARTIES THAT THESE ARE THE TRADE CREDITS AND NOT THE CASH CREDITS. DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESS EE COULD NOT PRODUCE THE CREDITORS AND THEREFORE, THE ASSESSING OFFICER HAS TREATED THE CREDIT AS UNEXPLAINED. BUT BEFORE THE CIT(A) ASSESSEE HAS FILED THE CONFIRMATIONS WHICH WERE CONFRONTED TO THE ASSE SSING OFFICER. HE HAS ALSO PRODUCED THE CREDITORS BEFORE THE CIT(A) AND CIT(A) EXAMINED THE CREDITORS AND DURING THE COURSE OF EXAMINATION, THE CREDITORS HAVE ACCEPTED THE CREDITS SHOWN IN THE BOOKS OF ACCOUNTS OF THE ASSESSEES. SINCE THE CIT(A) IS ALSO ARMED WITH CO - TERMINUS POWERS OF THAT THE A.O., HE IS QUITE COMPETENT TO EXAMINE THE WITNESS/PARTIES INSTEAD OF CALLING A REMAND REPORT FROM THE ASSESSING OFFICER. IN THE INSTANT CASE, THE CIT(A) HAS EXERCISED HIS JURISDICTION TO EXAMINE THE EVIDENCE AND THE WITNESSES PRODUCED BEFORE HIM AFTER AFFORDING OPPORTUNIT Y TO THE ASSESSING OFFICER . T HEREFORE, WE DO NOT FIND ANY ERROR IN THE ACTION OF THE CIT(A). SINCE THE CIT(A) HAS ACCEPTED THE CLAIM AFTER MAKING A DUE VERIFICATION WE FIND NO INFIRMITY IN HIS O RDER. ACCORDINGLY, WE CONFIRM THE SAME. 7. IN THE RESULT, THE APPEAL S OF THE REVENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 10.2 .20 1 1 SD/ - SD/ - (BR BASKARAN) (SUNIL KUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 10 TH FEBRUARY , 20 1 1 ITA 316/V/07,249/V/08 EMVEE PLASTICS P LTD VJA 5 COPY TO 1 ITO WARD - 2(1), VIJAYAWADA 2 DCIT, CIRCLE - 2(1), VIJAYAWADA 3 M/S. EMVEE PLASTICS (P) LTD., VIJAYAWADA 4 THE CI T, VIJAYAWADA 5 THE CIT (A) , VIJAYAWADA 6 THE DR, ITAT , VISAKHAPATNAM. 7 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM