DCIT CEN CIR 1(1), MUMBAI V. TILAKNAGAR INDUSTRIES LTD, MUMBAI

ITA 2505/MUM/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0272 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 01-05-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Additional evidence; Bad and doubtful debts
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI D.T. GARASIA, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.2505/M/2015 ASSESSMENT YEAR: 2007-08 DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(1), ROOM NO.903, 9 TH FLOOR, OLD CGO BUILDING, M.K. ROAD, CHURCH GATE, MUMBAI - 400020 VS. M/S. TILAKNAGAR INDUSTRIES LTD., 3 RD FLOOR, INDL. ASSURANCE BLDG., J.D. TATA MARG, CHURCHGATE, MUMBAI 400 020 PAN: AAACT6047R (APPELLANT) (RESPONDENT) PRESENT FOR: ASSESSEE BY : DR. K. SHIVARAM, A.R. & SHRI RAHUL HAKANI, A.R. REVENUE BY : SHRI R.P. MEENA, D.R. DATE OF HEARING : 09.01.2018 DATE OF PRONOUNCEMENT : 14.02.2018 O R D E R PER D.T. GARASIA , JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 02.02.2015 OF THE COMMISSIONER OF I NCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO ASSESSMENT YEAR 2007-08. 2. THE SHORT FACTS OF THE CASE ARE AS UNDER: ITA NO.2505/M/2015 M/S. TILAKNAGAR INDUSTRIES LTD. 2 THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN MANUF ACTURING AND SELLING OF INDUSTRIAL ALCOHOL, INDIAN MADE FORE IGN LIQUOR, CHEMICALS AND SUGAR CUBES. THE ASSESSING OFFICER ( HEREINAFTER REFERRED TO AS THE AO) HAS ASSESSED THE INCOME OF R S.30,30,16,074/- BY MAKING ADDITIONS AND DISALLOWANCES AMOUNTING TO RS.18,90,51,561/- WHICH READS AS UNDER: PAYMENTS MADE TO ANUPAMA DISTRIBUTORS 8,12,03,893 UN-RECONCILED BALANCES SELLING & DISTRIBUTION EXPENSES 4,23,66,809 LEGAL AND CONSULTANCY CHARGES 66,58,056 BAD DEBTS 4,10,42,642 MASTER TVC EXPENSES TREATED AS CAPITAL IN NATURE 17,28,496 DISALLOWANCE U/S. 145A 86,10,081 PAYMENT TO RAMNATH GLASS 23,90,000 COMPUTER EXPENSES 19,46,305 DISALLOWANCE U/S. 14A 20,56,110 PF DUES DELAYED PAYMENT 10,49,169 TOTAL ADDITIONS/DISALLOWANCES 18,90,51,561/- 3. MATTER CARRIED TO THE LD. CIT(A) AND THE LD. CIT (A) HAS ALLOWED THE CLAIM. THEREFORE, DEPARTMENT IS IN APP EAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. D.R. HAS R AISED THE OBJECTIONS THAT THE ASSESSEE HAS SUBMITTED THE PAPE R BOOK WHEREIN THE ASSESSEE HAS GIVEN THE CERTIFICATE BEFORE THE TRIBU NAL THAT THE SL. NO.52929 WHICH IS FILED IN PAPER BOOK NO.1 VOLUME B . ALL THE DOCUMENTS WERE FILED BEFORE THE AO AND THE LD. CIT( A). THE ASSESSEE HAS ALSO GIVEN CERTIFICATE IN PAPER BOOK N O.1 VOLUME C. THE DOCUMENTS AT SL. NO.30 TO 50 WERE FILED BEFORE THE AO AND THE ITA NO.2505/M/2015 M/S. TILAKNAGAR INDUSTRIES LTD. 3 LD. CIT(A). THEREAFTER, ASSESSEE HAS FILED THE REV ISED INDEX OF PAPER BOOK IN PART ON 26.05.17 AND RECTIFIED THE MISTAKE IN GIVING THE CERTIFICATE AND THE CERTIFICATE AT SL. NO.32 TO 34, 35, 49 AND 50 WERE FILED BEFORE THE AO AND THE LD. CIT(A) AS PER HIS D IRECTION DURING THE APPELLATE PROCEEDING. 5. THE LD. D.R. OBJECTED THAT HE HAS VERIFIED THE R ECORD AND FOUND THAT THIS KIND OF DOCUMENTS WERE NOT FILED BEFORE T HE LD. CIT(A). THEREFORE, DEPARTMENT HAS TAKEN THE GROUND BEFORE T HE TRIBUNAL THAT THE LD. CIT(A) HAS DELETED ALL THE ADDITIONS WITHOU T VERIFYING DISTRIBUTION EXPENSES BEING UN-RECONCILED, LEGAL AN D PROFESSIONAL FEE WITHOUT ANY REASON. MOREOVER, CLAIM OF BAD DEBT WA S ALLOWED. SIMILARLY, TV PRODUCTION WAS ALLOWED WITHOUT ANY PR OOF AND WHATEVER THE EVIDENCE FILED BEFORE THE LD. CIT(A) W AS ALLOWED BY THE LD. CIT(A) WITHOUT BEING VERIFIED. THE LD. CIT (A), MERELY RELYING UPON THE STATEMENT OF THE LD. A.R., HAS DEL ETED ALL THESE ADDITIONS. THEREFORE, WHEN ALL THE DOCUMENTS WERE FILED BEFORE THE LD. CIT(A), THE LD. CIT(A) SHOULD HAVE CALLED FOR T HE REMAND REPORT FROM AO AND IF LD. CIT(A) HAS NOT CALLED FOR THE RE MAND REPORT THE LD. CIT(A) SHOULD HAVE MADE ENQUIRY HIMSELF TO THE DOCUMENT FILED BEFORE THE LD. CIT(A) BUT MERELY RELYING UPON THE D OCUMENTS HE HAS DELETED ALL THESE ADDITIONS WHICH IS CONTRARY TO TH E LAW. MOREOVER, THE LD. CIT(A) HAS EXCEEDED HIS JURISDICTION. THER EFORE, APPEAL MAY BE ALLOWED. ITA NO.2505/M/2015 M/S. TILAKNAGAR INDUSTRIES LTD. 4 6. ON THE OTHER HAND, DURING THE COURSE OF HEARING, THE ENQUIRY WAS MADE FROM THE LD. A.R. WHETHER THERE WAS ANY MI STAKE ON THE PART OF THE A.R. WHO WAS REPRESENTING BEFORE THE LD . CIT(A). THE LD. A.R. SUBMITTED THAT ASSESSEE HAS SUBMITTED ADDI TIONAL EVIDENCE BEFORE THE LD. CIT(A) BUT THE ASSESSEE HAS SUBMITTE D ALL THESE ADDITIONAL EVIDENCES AS PER THE DIRECTION OF LD. CI T(A) AND AS PER RULE 46A READ WITH SECTION 254 OF THE ACT, THE LD. CIT(A) ON HIS OWN DIRECTION CAN ASK THE ASSESSEE TO PRODUCE THE DOCUM ENT OR EVIDENCE. THEREFORE, THE LD. A.R. RELYING UPON THE DECISION O F MUMBAI TRIBUNAL IN THE CASE OF ITO VS. INDUSTRIAL ROADWAYS 112 ITD 293 MUMBAI SUBMITTED THAT THERE IS NO REQUIREMENT IN LA W THAT COMMISSIONER SHOULD CONSULT AND CONFRONT AO ON EVER Y ADDITIONAL EVIDENCE. THE LD. A.R. ALSO SUBMITTED THAT ASSESSE E HAS RECEIVED ALL THESE PAYMENTS THROUGH GOVERNMENT AGENCY ONLY. THE REFORE, THERE IS NO REASON TO RESTORE THIS MATTER BACK TO THE FILE O F AO. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE P ARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT ASSESSEE IS ENGAGED IN BUSINESS OF MANUFACTURING AN D SELLING OF INDUSTRIAL ALCOHOL, INDIAN MADE FOREIGN LIQUOR, CHE MICALS AND SUGAR CUBES. THE ASSESSEE DID NOT SUBMIT ANY DOCUMENT BE FORE THE AO BUT SOME OF THE DOCUMENTS WERE SUBMITTED BEFORE THE LD. CIT(A) AND THE LD. CIT(A) RELYING UPON THOSE DOCUMENTS HAS DEL ETED THE ADDITION. WE HAVE ALSO GONE THROUGH THE ORDER OF TH E LD. CIT(A) AND THE LD. CIT(A) NOWHERE STATES THAT HE HIMSELF H AS MADE THE ENQUIRY IN RESPECT OF THE EXPENDITURE OR PAYMENT. THE LD. CIT(A) ITA NO.2505/M/2015 M/S. TILAKNAGAR INDUSTRIES LTD. 5 HAS COTERMINOUS POWER WITH THE AO BUT AT THE SAME T IME THE LD. CIT(A) SHOULD HAVE MADE AN ENQUIRY HIMSELF OR HE SH OULD HAVE DIRECTED THE AO TO MAKE THE ENQUIRY OR HE MAY CALL FOR THE REMAND REPORT. IN THIS CASE, THE LD. CIT(A) HAS NOT FOLLO WED ANY PROCEDURE AND WITHOUT FOLLOWING ANY PROCEDURE HE HAS DELETED THE ADDITION WHICH IS NOT AS PER LAW. AS PER THE DECISION OF HO NBLE SUPREME COURT IN THE CASE OF CIT VS. VALIMOHMED AHMEDBHAI 1 34 ITR 214 (GUJ) WHEREIN IT IS HELD THAT WHERE THE ASSESSEE PR ODUCED THE ADDITIONAL EVIDENCE IN HIS APPEAL THE ITO MUST BE O FFERED OPPORTUNITY TO OPPOSE IT AND TEST THE ADDITIONAL EV IDENCE AND COUNTERING THE EFFECT THEREOF TO PRODUCE THE EVIDEN CE IN REBUTTAL. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION, WE ARE OF THE OPINION THAT LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE SA ME. THEREFORE, WE REVERSE THE FINDING OF THE LD. CIT(A) AND RESTORE T HIS MATTER BACK TO THE FILE OF AO. DURING THE HEARING, THE LD. A.R. S UBMITTED THAT ALL THE PAYMENTS WERE MADE FROM GOVERNMENT ONLY. THERE FORE, NECESSARY ENQUIRY MAY BE MADE AT THE END OF AO. AO IS DIRECTED TO DECIDE THE APPEAL AFTER GIVING OPPORTUNITY OF HEARI NG TO THE ASSESSEE. ACCORDINGLY, WE RESTORE THIS ISSUE BACK TO THE FILE OF AO. 8. IN THE RESULT, DEPARTMENTAL APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14.02.2018. SD/- SD/- (RAJESH KUMAR) (D.T. GARASIA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 14.02.2018. * KISHORE, SR. P.S. ITA NO.2505/M/2015 M/S. TILAKNAGAR INDUSTRIES LTD. 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.