DCIT, New Delhi V. M/s Indo European Breweries Ltd., New Delhi

ITA 2860/DEL/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 74271 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 27-02-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Keywords: Depreciation; Principle of natural justice
• Section: 142(1)

Judgement Text

ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `C NEW DELHI BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER I.T.A.NO.2860/DEL/2013 ASSESSMENT YEAR : 2009-10 DY.COMMISSIONER OF INCOME TAX, VS INDO EUROPEAN BREWERIES LTD., CIRCLE 11(1), 15, SRIRAM ROAD, NEW DELHI. CIVIL LINES, NEW DELHI. (PIN: AACI5228H) C.O. NO. 167/DEL/2013 (IN I.T.A.NO.2860/DEL/2013) ASSESSMENT YEAR : 2009-10 INDO EUROPEAN BREWERIES LTD., VS DY.COMMISSIO NER OF INCOME TAX, NEW DELHI. NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SATPAL SINGH, SR.DR RESPONDENT BY : SHRI ASHWANI TANEJA SHRI SOMIL AGARWAL O R D E R PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THE ABOVE CAPTIONED APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTION OF THE ASSESSEE HAVE BEEN FILED AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX(A)-XV, NEW DELHI DATED 28.3.2013 IN APPEAL NO. 82/12-13/C.I.T.(A)- XV FOR AY 2009-10. 2. THE SOLE GROUND RAISED BY THE REVENUE IN THIS AP PEAL READS AS UNDER:- ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,12,16,582/- MADE ON ESTIMATED BASIS, IGNORING THE FACTS THAT THE ASSESSEE HAS FAILED TO PRODUCE THE D OCUMENTS AT THE TIME OF ASSESSMENT PROCEEDINGS. 3. BRIEFLY STATED THE FACTS GIVING RISE TO THESE CA SES ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.52,03,727/- AND PAID TAX THEREON. SUBSEQUENTLY, THE CASE WAS SELECTED F OR SCRUTINY ASSESSMENT AND A NOTICE U/S 143(2) OF THE INCOME TAX ACT WAS SERVE D ON THE ASSESSEE. FURTHER, ANOTHER NOTICE U/S 142(1) OF THE ACT WAS A LSO SERVED ON THE ASSESSEE TO SUBMIT A COPY OF E-FILE RETURN OF INCOME ALONG W ITH COPY OF ITR, TAX AUDIT REPORT U/S 44AB OF THE ACT, AUDITED ACCOUNTS AND BANK STATEMENTS FOR THE RELEVANT FINANCIAL YEAR. 4. ON 07.07.2011, THE ASSESSEE REQUIRED DOCUMENTS A ND ON 13.07.2011, THE ASSESSEE SUBMITTED THE REQUISITE LETTER TO COMM ISSIONER OF INCOME TAX(A), MUMBAI FOR TRANSFER OF THE CASES TO DELHI A S THE REGISTERED OFFICE AND THE WORKS OF THE APPELLANT WERE AT AURANGABAD A ND ALL ADMINISTRATIVE WORKS WERE CARRIED OUT AT DELHI. A COPY OF THIS LE TTER WAS ALSO FORWARDED TO THE ITO, WARD 4(2), MUMBAI. THE ASSESSING OFFICER ISSUED VARIOUS NOTICES TO THE ASSESSEE INCLUDING A LETTER DATED 23.09.2011 STATING THAT THE JURISDICTION OVER THE CASE OF THE APPELLANT REMAINS WITH THE ITO, WARD 4(2) TILL ORDER U/S 127 OF THE ACT IS PASSED AND FIXED T HE DATE OF HEARING FOR ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 3 05.10.2011. THE ASSESSEE WROTE ANOTHER LETTER TO C OMMISSIONER OF INCOME TAX(A)-VI, NEW DELHI REQUESTING HIM TO TRANSFER THE JURISDICTION OF THE CASE TO DELHI AND STATED THAT IN CASE THE ORDER U/S 127 IS NOT PASSED WITHIN A PERIOD OF 7 DAYS, THE ASSESSEE WILL SEEK REDRESSAL OF ITS GRIEVANCE IN ACCORDANCE WITH LAW. THE ASSESSEE FILED A WRIT PET ITION OF MANDAMUS IN THE HIGH COURT OF BOMBAY ON 10.10.2011 BEFORE THE HIGH COURT OF BOMBAY AND AGAIN WROTE A DETAILED REPLY TO THE ASSESSING OFFIC ER ON 23.11.2011 REQUESTING TO KEEP THE PROCEEDINGS IN ABEYANCE AS T HE MATTER WAS SUB JUDICE AND THE HONBLE HIGH COURT WAS ALREADY SEIZED WITH THE MATTER AND REQUESTED THAT THE DOCUMENTS AND INFORMATION DESIRE D BY THE ASSESSING OFFICER WOULD BE SUBMITTED ON RECEIPT OF THE DECISI ON BY THE HONBLE HIGH COURT. THE ASSESSING OFFICER ISSUED ANOTHER SHOW C AUSE NOTICE DATED 7.12.2011 STATING THAT IF THE REQUISITE DETAILS ARE NOT SUBMITTED BY THE ASSESSEE, AN EX PARTE ORDER AND ASSESSMENT WILL BE PASSED AND ADVERSE VIEW WILL BE TAKEN ON THE ISSUES OF UNSECURED LOAN, ENTI RE ADDITIONS TO THE FIXED ASSETS, DEPRECIATION CLAIMED AND NET INCOME WILL BE TAKEN AS 5% OF TOTAL TURNOVER IN ABSENCE OF DETAILS/EVIDENCE IN SUPPORT OF FINAL ACCOUNTS. 5. THE ASSESSEE SUBMITTED A REPLY ON 12.12.2011 ALO NG WITH DOCUMENTS INCLUDING THE BALANCE CONFIRMATION IN RESPECT OF UN SECURED LOAN/DETAIL OF ADDITION IN FIXED ASSETS, RESPECTIVE BILLS OF ASSET S, COPIES OF LORRY RECEIPTS, ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 4 GATE REGISTER COPIES AND STORE RECORDS AND THE PROO F OF PUT TO USE OF VARIOUS FIXED ASSETS PURCHASED DURING THE YEAR. THE ASSESS EE ALSO OBJECTED FOR TAKING 5% AS NET PROFIT OF THE TURNOVER AND SUBMITTED THAT SINCE DULY AUDITED ACCOUNTS ARE ALREADY ON RECORD, THEN THERE WAS NO J USTIFICATION FOR TAKING THE NET PROFIT TO BE 5% OF THE TURNOVER. THE ASSESSEE ALSO RAISED OBJECTION ON THE JURISDICTION OF THE ASSESSING OFFICER. THE ASSESSI NG OFFICER PASSED ASSESSMENT ORDER ON 14.12.2011 BY ESTIMATING 5% OF THE TURNOVER AS NET PROFIT. 6. BEING AGGRIEVED BY THE ABOVE ASSESSMENT ORDER, T HE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX(A)- XV, NEW DELHI WHICH WAS PARTLY DISALLOWED ON THE GROUND OF JURISD ICTION AND ON THE GROUND OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE BUT P ARTLY ALLOWED ON THE GROUND OF ESTIMATION OF NET PROFIT. THE COMMISSIONER OF I NCOME TAX(A) OBSERVED THAT IN ABSENCE OF ANY SPECIFIC ADVERSE OBSERVATION WITH REGARD TO ANY CLAIM OF THE EXPENSES BY THE ASSESSEE, THE BOOK RESULTS O F THE ASSESSEE CANNOT BE REJECTED AND ACCORDING TO TOTAL INCOME FILED AS PER RETURN OF INCOME BY THE ASSESSEE WAS DIRECTED TO BE ACCEPTED. NOW, THE AGG RIEVED REVENUE IS BEFORE THIS TRIBUNAL WITH THE SOLE GROUND AS MENTIONED HER EINABOVE. 7. WE HAVE HEARD RIVAL ARGUMENTS OF BOTH THE PARTIE S AND CAREFULLY PERUSED THE RECORD PLACED BEFORE US. FROM THE ASSE SSMENT ORDER, WE OBSERVE ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 5 THAT THE ASSESSING OFFICER ESTIMATED NET PROFIT AT 5% OF THE TURNOVER BY HOLDING THAT THE ATTITUDE OF THE ASSESSEE WAS NON-C OOPERATIVE DURING THE ASSESSMENT PROCEEDINGS. FROM OPERATIVE PARA 11, WE OBSERVE THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY BASIS OF THE ES TIMATION OF NET PROFIT. AT THE SAME TIME, FROM THE IMPUGNED ORDER, WE ALSO OBS ERVE THAT THE COMMISSIONER OF INCOME TAX(A) ACCEPTED THE BOOK RES ULTS OF THE ASSESSEE BY HOLDING AS UNDER:- 6.8 KEEPING IN VIEW THE ABOVE, I AM SATISFIED WITH THE EXPLANATION OF THE APPELLANT REGARDING THE DECLINE IN THE NET PROFIT DURING THE CURRENT YEAR COMPARED TO THE IMMEDIATELY PREVIOUS YEAR. THE GP/ NP SHOWN IN THE CURRENT YEAR IS CERTAINLY LOWER COMPAR ED TO THE LAST 3 YEARS, HOWEVER COMPARED TO THE IMMEDIATE LY SUCCEEDING YEAR AND THE FIFTH YEAR PRECEDING THE CU RRENT YEAR, THE RESULTS ARE BETTER. HOWEVER, IN THE ABSE NCE OF ANY SPECIFIC ADVERSE OBSERVATION WITH REGARD TO ANY CLAIM OF THE EXPENSES BY THE APPELLANT, THE BOOK RE SULTS OF THE APPELLANT CANNOT BE REJECTED AND ACCORDING THE TOTAL INCOME FILED AS PER THE RETURN OF INCOME BY THE APP ALLING IS ACCEPTED AS SUCH. 8. IN VIEW OF ABOVE OBSERVATIONS AND FINDINGS OF TH E AUTHORITIES BELOW, WE CLEARLY OBSERVE THAT THE ASSESSING OFFICER ESTIM ATED 5% OF TURNOVER AS NET PROFIT OF THE ASSESSEE WITHOUT ANY BASIS AND WI THOUT CONSIDERING PREVIOUS YEARS RESULTS OF THE ASSESSEE AND ALSO WITHOUT TAK ING ANY COMPARABLE. THE COMMISSIONER OF INCOME TAX(A) ACCEPTED THE EXPLANAT ION OF THE ASSESSEE REGARDING DECLINE IN THE NET PROFIT DURING THE CURR ENT YEAR COMPARED TO THE ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 6 IMMEDIATELY PREVIOUS YEAR. THE COMMISSIONER OF INC OME TAX(A) ALSO HELD THAT IN ABSENCE OF ANY SPECIFIC ADVERSE OBSERVATION S WITH REGARD TO CLAIM OF EXPENSES OF THE ASSESSEE, THE BOOK RESULTS OF THE A SSESSEE CANNOT BE REJECTED AND HENCE, THE COMMISSIONER OF INCOME TAX(A) ACCEPT ED THE TOTAL INCOME AS PER RETURN OF THE ASSESSEE. 9. ON ABOVE SET OF FACTS AND CIRCUMSTANCES AND CARE FUL PERUSAL OF ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER, WE CLEA RLY OBSERVE THAT THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE NET PRO FIT OF THE ASSESSEE ON THE BASIS OF 5% OF TURNOVER ON ACCOUNT OF NON-SUBMISSIO N OF THE DETAILS CALLED FOR THE EXPENSES INCURRED AND DEDUCTION CLAIMED COU LD NOT BE VERIFIED. AT THE SAME TIME, THE COMMISSIONER OF INCOME TAX(A) OB SERVED THAT THE ASSESSING OFFICER HAD NOT MADE ANY SPECIFIC ADVERSE OBSERVATION WITH REGARD TO ANY CLAIM OF EXPENSES OF THE ASSESSEE. I N THESE CIRCUMSTANCES, WE OBSERVE THAT THE ASSESSEE WAS STRESSING ON THE POIN T OF JURISDICTION WITH A REQUEST TO TRANSFER THE CASE TO DELHI WHICH WAS KEP T PENDING, AWAITING THE ORDER OF SECTION 127 OF THE ACT BUT THE ASSESSING O FFICER PROCEEDED TO COMPLETE ASSESSMENT PROCEEDINGS WHICH WERE ON THE V ERGE OF COMPLETION OF LIMITATION TIME AND THE ASSESSING OFFICER ESTIMATED NET PROFIT @5% OF THE TURNOVER WITHOUT CONSIDERING PREVIOUS YEARS RESULT S OF THE ASSESSEE AND ANY OTHER SUITABLE COMPARABLE CASE. AS THE ASSESSING O FFICER COULD NOT GET AN ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 7 OPPORTUNITY TO EXAMINE THE DETAILS, EVIDENCE AND EX PLANATION ABOUT THE CLAIM OF EXPENSES OF THE ASSESSEE, THE EXPENSES INCURRED ON THE DEDUCTION CLAIMED BY THE ASSESSEE COULD NOT BE VERIFIED AT THE END OF ASSESSING OFFICER. IN THIS SITUATION, THE OBSERVATIONS OF THE COMMISSIONER OF INCOME TAX(A) IN THE IMPUGNED ORDER, THAT IN ABSENCE OF ANY SPECIFIC ADV ERSE OBSERVATION WITH REGARD TO ANY CLAIM OF THE EXPENSES OF THE ASSESSEE , THE BOOK RESULTS OF THE ASSESSEE CANNOT BE REJECTED, ARE PERVERSE, WRONG AN D UNSUSTAINABLE. IN THESE PECULIAR FACTS AND CIRCUMSTANCES OF THE PRESENT CAS E, WE ARE OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW ADOPT ED A WRONG APPROACH IN DECIDING TAXABLE INCOME OF THE ASSESSEE AND WE FIND IT JUST AND PROPER THAT THE ENTIRE ISSUE PERTAINING TO THE ASSESSMENT SHOUL D BE EXAMINED AND ADJUDICATED AT THE END OF ASSESSING OFFICER. THERE FORE, ORDERS OF THE AUTHORITIES BELOW ARE SET ASIDE AND THE CASE IS RES TORED TO THE FILE OF ASSESSING OFFICER WITH A DIRECTION THAT THE ASSESSI NG OFFICER SHALL ADJUDICATE THE CASE AFRESH BY PROVIDING DUE OPPORTUNITY OF HEA RING TO THE ASSESSEE AND WITHOUT BEING PREJUDICED WITH THE OBSERVATIONS AND FINDINGS IN EARLIER ASSESSMENT ORDER AS WELL AS IMPUGNED ORDER OF THE C OMMISSIONER OF INCOME TAX(A). NEEDLESS TO SAY, THE ASSESSEE SHALL COOPER ATE DURING THE ASSESSMENT PROCEEDINGS. WITH THESE OBSERVATIONS, THE SOLE GRO UND OF THE REVENUE IS DECIDED AND DEEMED TO BE TREATED AS ALLOWED FOR STA TISTICAL PURPOSES. ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 8 C.O. OF THE ASSESSEE 10. THE ASSESSEE HAS ALSO RAISED CROSS OBJECTION WH ICH READS AS UNDER:- 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTAN CES OF THE CASE, LD. COMMISSIONER OF INCOME TAX(A) HAS ERR ED IN LAW AND ON FACTS IN NOT QUASHING THE IMPUGNED ASSESSMENT ORDER PASSED BY LD. AO ON THE GROUND THA T JURISDICTION WAS NOT VALIDLY ASSUMED UPON THE ASSES SEE COMPANY AND THE IMPUGNED ASSESSMENT ORDER HAS BEEN PASSED WITHOUT CONSIDERING THE PROVISIONS OF SECTIO N 124 OF THE ACT AND IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE AND CONSEQUENTLY LD. COMMISSIONER OF INCOME TAX(A) HAS DECIDED THE GROUND NO. 1, 2 & 3 AGAINST THE ASSESSEE. 11. SINCE WE HAVE RESTORED MAIN ISSUE TO THE FILE O F ASSESSING OFFICER, THEREFORE, THE LEGAL OBJECTION OF THE ASSESSEE REGA RDING JURISDICTION IS ALSO RESTORED TO THE FILE OF ASSESSING OFFICER WITH A DI RECTION THAT THE ASSESSING OFFICER SHALL DECIDE THE ISSUE OF JURISDICTION IN T HE LIGHT OF DECISION OF HONBLE HIGH COURT OF MUMBAI AND SUBSEQUENT ORDERS OF THE DEPARTMENT, IF ANY, ON THE POINT OF JURISDICTION. WITH THESE DIRE CTIONS TO THE ASSESSING OFFICER, LEGAL OBJECTION OF THE ASSESSEE ON THE ISS UE OF JURISDICTION IS ALSO RESTORED TO THE FILE OF ASSESSING OFFICER. ACCORDI NGLY, SOLE CROSS OBJECTION OF THE ASSESSEE IS DECIDED IN THE MANNER AS INDICAT ED ABOVE AND DEEMED TO BE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS C.O. OF THE ASSESSEE ARE DEEMED TO BE ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 2860 & C.O.167/DEL/2013 ASSTT.YEAR: 2009-10 9 ORDER PRONOUNCED IN THE OPEN COURT ON 28.2.2014. SD/- SD/- (G.D. AGRAWAL) (CHANDRA MOHAN GARG) VICE PRESIDENT JUDICIAL MEMBER DT. 28TH FEBRUARY 2014 GS COPY FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR BY ORDER ASSTT. REGISTRAR