ACIT, New Delhi V. M/s. National Industrial Corpn. Ltd., New Delhi

ITA 2771/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 97611 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 05-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B D MISHRA
• Keywords: Opportunity of being heard; Additional evidence
• Section: 143(3); 80IB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : E : NEW DELHI BEFORE SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA , JUDICIAL MEMBER ITA NO . 2771 /DEL/201 2 ASSESSMENT YEAR: 2006 - 07 ASSTT. COMMISSIONER OF INCOME VS. M/S NATIONAL INDUSTRIAL CORP. LTD. CENTRAL CIRCLE - 19, ROOM NO. 319, 801 - 803, ASHOK BHAWAN, 93, ARA CENTRE, E - 2, JHANDEWALAN NEHRU PLACE, NEW DELHI EXTN . , NEW DELHI. (PAN: AAACN0628E ) (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. G.N. GUPTA, ADV. DEPARTMENT BY : SH. B.D. MISHRA, (CIT) DR DATE OF HEARING: 05.10.2015 DATE OF PRONOUNCEMENT: 28.10.2015 ORDER PER INTURI RAMA RAO, A.M. : THIS APPEAL FILED BY THE REVENUE IS DIREC TED AGAINST THE ORDER OF CIT(A), DATED 29.03.2012 PASSED FOR THE ASSESSMENT YEAR 2006 - 07. THE REVENUE RAISED THE FOLLOWING GROUNDS OF APPEAL: I. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, CIT(A) HAS ER RED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS. 4,33,89,059/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALES AND BUSINESS PROMOTION AND COMMISSION EXPENSES. II. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE CIT(A) HAS ERRED IN LAW AN D ON FACTS IN ALLOWING DEDUCTION OF R S. 23,00,976/ - U/S 80IB OF THE INCOME TAX ACT, 1961. III. THE ORDER OF CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. IV. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RESPONDENT ASSESSEE COMPANY IS COMPANY INCORPORA TED UNDER THE PROVISION OF COMPANIES ACT, 1956. IT IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF SPIRIT, EX TRACT NEUTRAL ALCOHOL, INDIAN MADE FOREIGN LIQUOR AND COUNTRY LIQUOR. THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006 - 07 WAS FILED ON 27.11.2006, DECLARING INCOME OF RS. 1,21,27,989/ - . AGAINST THE SAID RETURN OF INCOME, THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) VIDE ORDER DATED 28 TH DECEMBER, 2007 AT A TOTAL INCOME OF RS. 9,16,90,524/ - . WHILE DOING SO, THE ASSESSING OFFICER DISALLOWED THE EXPENDITURE ON SALES AND BUSINESS PROMOTION EXPENDITURE OF RS. 4,33,89,059/ - AND DISALLOWED THE DEDUCTION UNDER SECTION 80IB OF RS. 23,00,976/ - AND FURTHER MADE DISALLOWANCE OF R S. 3,38,72,500/ - ON THE GROUND PAYMENTS MADE TO UPDA. BEING AGGRIEVED BY THIS ASSESSMENT ORD ER, AN APPEAL WAS FILED BEFORE THE LEARNED CIT(A) WHO VIDE ORDER DATED 29 TH MARCH, 2012, PARTLY ALLOWED THE APPEAL. THE LEARNED CIT(A) WHILE CONFIRMING THE ADDITION OF PAYMENT MADE TO UPDA, ALLOWED THE DEDUCTION UNDER SECTION 80IB AND BUSINESS PROMOTION E XPENDITURE OF RS. 4,33,89,059/ - . BEING AGGRIEVED BY THIS ORDER OF CIT(A), THE REVENUE IS BEFORE US WITH THE PRESENT APPEAL. 3. THE LD. CIT(DR) VEHEMENTLY ARGUED THAT THE CIT(A) HAD ADMITTED THE ADDITIONAL EVIDENCE IN VIOLATION OF THE PROVISIONS OF SECTIO N 46A OF THE INCOME TAX RULES, 1962. HE FURTHER SUBMITTED THAT THE CIT(A) OUGHT NOT HAVE ALLOWED THE SALES AND BUSINESS PROMOTION EXPENDITURE OF RS. 4,33,89,059/ - , INASMUCH AS, THE ASSESSEE COMPANY HAD FAILED TO FURNISH THE EVIDENCE IN SUPPORT OF THE 3 SERV ICES RENDERED FOR WHICH SALES AND BUSINESS PROMOTION EXPENDITURE HAS BEEN INCURRED. THEREFORE, HE PRAYED THAT THE ORDER OF CIT(A) MAY BE CANCELLED. 4. ON THE OTHER HAND, THE LD. AUTHORIZED REPRESE NTATIVE HAD RELIED ON THE ORDER OF CIT(A). 5. WE HEARD TH E RIVAL SUBMISSION AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM THE ORDER OF CIT(A) THAT THE RESPONDENT ASSESSEE COMPANY FILED AN APPLICATION FOR ADMISSION OF THE ADDITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962. THE APPLICATION WAS FOR WARDED TO THE ASSESSING OFFICER FOR HIS COMMENTS. THE ASSESSING OFFICER VIDE HIS REMAND REPORT DATED 21 ST MARCH, 2012 , WHILE ADMITTING THAT THE SALES & BUSINESS PROMOTION EXPENSES AND COMMISSION EXPENSES WERE NOT PAID TO SISTER CONCERN, NAMELY, M/S NICOL M ARKETING PVT. LTD., EXPRESSED THE VIEW THAT THE EXPENDITURE INCURRED ON THIS HEAD NEEDED TO BE PROBED . DESPITE THIS, THE LEARNED CIT(A) ALLOWED THIS EXPENDITURE FOLLOWING THE PRINCIPLE OF CONSISTENCIES , AS THE SIMILAR EXPENDITURE WAS ALLOWED IN THE EARLIER YEARS. IN OUR CONSIDERED OPINION, THE LEARNED CIT(A) OUGHT NOT HAVE DIRECTED THE ASSESSING OFFICER TO ALLOW THIS EXPENDITURE WHEN THE ASSESSING OFFICER EXPRESSED THE VIEW THAT THE EXPENDITURE NEED ED TO BE PROBED SIMPLY BECAUSE THE SIMILAR EXPENDITURE WAS ALLOWED IN THE EARLIER YEARS CANNOT DEBAR THE ASSESSING OFFICER FROM MAKING FRESH INVESTIGATION INTO THE CLAIM OF EXPENDITURE AS EACH ASSESSMENT YEAR IS SEPARATE AND DISTINCT AND THE PRINCIPLE OF RES JUDICATA DO NOT APPLY TO THE INCOME TAX PROCEEDINGS. THA T APART IN TERMS OF SUB - RULE ( 3 ) OF THE INCOME TAX RULES, 1962, IT IS MANDATORY THAT THE LEARNED CIT(A) SHOULD CONFRONT THE ADDITIONAL EVIDENCE PRODUCED BEFORE HIM FOR THE FIRST 4 TIME WITH THE ASSESSING OFFICER AND REASONABLE OPPORTUNITY OF BEING HEARD TO BE GIVEN TO THE ASSESSING OFFICER FOR EXAMINING THE EVIDENCE AND REBUT THE SAME. IN THE PRESENT CASE, THOUGH THE ASSESSING OFFICER HAD AGREED WITH THE ADMISSION OF ADDITIONAL EVIDENCE BUT HE EXPRESSED THE VIEW THAT THE ADDITIONAL EVIDENCE NEEDS TO BE PROBE D . THIS REQUIREMENT HAD NOT BEEN COMPLIED WITH BY THE LEARNED CIT(A). THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. MANISH BUILD WELL PVT. LTD., 204 TAXMAN 106, HELD AS FOLLOWS: THERE IS NOTHING IN THE ORDER OF THE CIT( A) TO SHOW THAT THE ASSESSING OFFICER WAS CONFRONTED WITH THE CONFIRMATION LETTERS RECEIVED BY THE ASSESSEE FROM THE CUSTOMERS WHO PAID THE AMOUNTS BY CHEQUES AND ASKED FOR COMMENTS. THUS, THE END RESULT HAS BEEN THAT ADDITIONAL EVIDENCE WAS ADMITTED AND A CCEPTED AS GENUINE WITHOUT THE ASSESSING OFFICER FURNISHING HIS COMMENTS AND WITHOUT VERIFICATION. SINCE THIS IS AN INDISPENSABLE REQUIREMENT, WE ARE OF THE VIEW THAT THE TRIBUNAL OUGHT TO HAVE RESTORED THE MATTER TO THE CIT(A) WITH THE DIRECTION TO HIM TO COMPLY WITH SUB - RULE (3) OF THE RULE 46A .. 6. RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE ABOVE CASE, WE RESTORE THE GROUNDS OF APPEAL TO THE FILE OF THE ASSESSING OFFICER WHO WILL EXAMINE THE CLAIM OF THE ASS ESSEE FOR DEDUCTION WITH REFERENCE TO THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A) AFTER AFFORDING SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE COMPANY. THIS GROUND OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 7. THE NEXT GROUND OF APPEAL RE LATES TO THE ALLOWANCE OF DEDUCTION UNDER SECTION 80IB OF THE ACT. THE LEARNED CIT(A) VIDE PARA 6.3 OF HIS ORDER ALLOWED THIS GROUND BY HOLDING AS UNDER: 6.3 I HAVE CAREFULLY CONSIDERED THE VIEWS OF THE ASSESSING OFFICER AND THE SUBMISSIONS MADE BY THE APPELLANT ON THIS ISSUE. I FIND THAT THE APPELLANT HAD BEEN ALLOWED DEDUCTION U/S 80IB ON PROFITS OF GOA UNIT BY 5 THE CIT(A) IN EARLIER YEARS AND IN A.Y. 2001 - 02, THE REVENUE S APPEAL AGAINST THE ORDER OF CIT(A) WAS REJECTED BY THE ITAT VIDE THEIR ORDER DATED 19.01.2007. I FIND THAT THIS ISSUE HAS BEEN DISCUSSED BY MY PREDECESSOR ALSO IN PARA 11 OF HIS ORDER DATED 20.04.2011 IN APPEAL NO. 335/07 - 08 FOR A.Y. 2005 - 06 WHEREIN HE HAS ALLOWED THE SAID GROUND OF APPEAL. I ALSO FIND THAT THE ORDER OF CIT(A) DATED 15.11.2006 FOR A.Y. 2003 - 04 ALLOWING THE SAID DEDUCTION U/S 80IB WAS ACCEPTED BY THE DEPARTMENT AND NO APPEAL WAS FILED BY IT BEFORE THE ITAT. THESE FACTS ARE NOT ED IN PARA 11 OF THE APPELLATE ORDER FOR A.Y. 2005 - 06. CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES AND THE JUDICIAL PRECEDENCE IN APPELLANT S OWN CASE, IT IS HELD THAT THE DISALLOWANCE OF RS. 23,00,976/ - WAS NOT CORRECT. GROUNDS NO. 5.1 AND 5.2 ARE, ACCO RDINGLY, ALLOWED. 8. FROM THE PERUSAL OF THE ABOVE, IT IS CLEAR THAT THE LEARNED CIT(A) ALLOWED THE DEDUCTION UNDER SECTION 80IB FOLLOWING HIS PREDECESSOR S ORDERS WHICH WAS UPHELD BY THE TRIBUNAL. IT APPEARS FROM THE ORDER OF THE ASSESSMENT YEAR 2003 - 04 , THE MATTER WAS NOT CHALLENGED BY THE REVENUE BEFORE THE TRIBUNAL. THEREFOR E, THE ISSUE HAD ATTAINED THE FINALITY. HENCE, WE DO NOT SE E ANY REASON TO INTERFERE WITH THE ORDER OF LEARNED CIT(A) ON THIS GROUND. ACCORDINGLY, THIS GROUND OF APPEAL FILED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 2 8 T H OCTOBER , 2015. S D / - S D / - ( SUDHANSHU SRIVASTAVA ) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 8 T H OCTOBER , 2015. RK/ - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI