M/s. Rana Castings Ltd., Muzaffarnagar V. JCIT, Muzaffarnagar

ITA 2947/DEL/2015

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 4332 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 13-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Keywords: Opportunity of being heard; Principle of natural justice; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES: F , NEW DELHI BEFORE SMT. BEENA A PILLAI, JUDICIAL MEMBER AND SHRI MAHARISHI PRASHANT, ACCOUNTANT MEMBER ITA NO. 2947 /DEL/201 5 AY: 20 10 - 11 M/S RANA CASTINGS LTD. 4 TH KM STONE, MEERUT ROAD MUZAFFARNAGAR PAN:AACCM0301K VS . J CIT, RANGE 1 MUZAFFARNAGAR (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. ANKIT GUPTA, ADV. DEPARTMENT BY : SH. SURENDER PAL, SR. D.R. DATE OF HEARING : 30.10.2018 DATE OF PRONOUNCEMENT : 31.10.2018 ORDER PER BEENA A PILLAI, JUDICIAL MEMBER PRESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER OF LD.CIT(APPEALS) , MUZAFFARNAGAR DATED 13.02.2015 FOR A.Y 20 10 - 11 ON FOLLOWING GROUNDS OF APPEAL: I) THAT, IN VIEW OF THE FACTS AND CIRCUMSTANCES, THE ASSESSMENT ORDER PASSED U / S 143(3) BY THE ASSESSING OFFICER AND THE ADDITIONS MADE IS ILLEGAL, BAD IN LAW AND WITHOUT JURISDICTION. 2) THAT, IN VIEW OF THE FACTS AND CIRCUMSTANCES, THE ASSESSING OFFICER HAS ERRED IN LAW AND ON FACTS IN COMPLETING THE ASSESSMENT AT LOSS OF ITA NO. 2947/DEL/2015 A.Y.2010 - 11 M/S RANA CASTINGS LTD. VS. JCIT 2 RS.26,69 ,717.00 AGAINST THE RETURNED INCOME AT LOSS OF RS.30,40,297.00. THE CIT(A) HAS ALSO ERRED IN UPHOLDING THE ADDITIONS MADE. 3) THAT, THE ASSESSING OFFICER HAS DISALLOWED THE EXPENSES OF FINANCE CHARGES AT RS.I,65,861.00 , WHICH IS HIGHLY ARBITRARY, UNJUSTI FIED AND AGAINST THE FACTS OF THE CASE & THE LEARNED CIT A) HAS ALSO ERRED IN UPHOLDING THE SAME. 4) THAT, THE ASSESSING OFFICER HAS MADE SEPARATE ADDITION AT RS.2,04,719.00 ON ACCOUNT OF INTEREST INCOME, INCOME FROM OTHER SOURCES, WHICH IS HIGHLY ARBITRA RY, UNJUSTIFIED AND AGAINST THE FACTS OF THE CASE. THE INCOME HAS BEEN WRONGLY ASSESSED AS INCOME FROM OTHER SOURCES, SINCE, IT WAS ADJUSTED AGAINST INTEREST PAYABLE TO BANK. THE ASSESSEE APPELLANT HAS ALREADY CREDITED THIS INCOME TO INTEREST ACCOUNT. THE CIT (A) HAS ALSO ERRED IN UPHOLDING THE SAME. 5) THAT THE ASSESSING OFFICER, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE ERRED ON FACTS AND IN LAW IN MAKING THE AD - HOC ADDITIONAL DISALLOWANCE ON ESTIMATED BASIS, WHICH IS UNJUST, ARBITRARY, UNLAWFUL , HIGHLY EXCESSIVE, BASED ON SURMISES AND CONJECTURES AND CANNOT BE JUSTIFIED BY ANY MATERIAL ON RECORD. 6) THE ADDITIONS MADE AND THE OBSERVATIONS MADE ARE UNJUST, UNLAWFUL AND BASED ON MERE SURMISES AND CONJUNCTURES. THE ADDITIONS MADE CANNOT BE JUSTIFI ED BY ANY MATERIAL ON RECORD. 7) THAT THE EXPLANATION GIVEN EVIDENCE PRODUCED, MATERIAL PLACED AND AVAILABLE ON RECORD HAS NOT BEEN PROPERLY CONSIDERED AND JUDICIALLY INTERPRETED AND THE SAME DO NOT JUSTIFY THE ADDITIONAL ALLOWANCES MADE. 8) THAT THE IM PUGNED ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER AND ORDER PASSED BY CIT(A) ARE AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND THE SAME HAS BEEN PASSED WITHOUT AFFORDING REASONABLE AND ADEQUATE OPPORTUNITY OF BEING HEARD. 9) THE APPELLANT CRAVES LEA VE TO ADD, AMEND, ALTER AND OR MODIFY THE GROUNDS OF APPEAL OF THE SAID APPEAL. ALL OF THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDICE AND ARE MUTUALLY EXCLUSIVE TO EACH OTHER. ITA NO. 2947/DEL/2015 A.Y.2010 - 11 M/S RANA CASTINGS LTD. VS. JCIT 3 2. BRIEF FACTS OF THE CASE ARE AS UNDER: ASSESSEE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION ON 14/10/10 DECLARING TOTAL INCOME OF RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND ACCORDINGLY NOTICE UNDER SECTION 143 (2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) WAS ISSUED, ALONG W ITH NOTICE UNDER SECTION 142 (1). IN RESPONSE TO THE STATUTORY NOTICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD. AO AND ATTENDED THE PROCEEDINGS FROM TIME TO TIME. 2.1 . LD. AO OBSERVED THAT ASSESSEE IS A LIMITED COMPANY AND THAT DURING THE YEAR UNDER CONSIDERATION THERE WAS NO BUSINESS OR MANUFACTURING ACTIVITY UNDERTAKEN BY ASSESSEE. IT WAS SUBMITTED BEFORE LD.AO THAT THE ONLY SOURCE OF INCOME WAS INTEREST FROM FDR S WITH ORIENTAL BANK OF C OMMERCE AND ALL THE LIABILITIES AND ASSETS OF THE COMPANY WER E OLD. ASSESSEE SUBMITTED BEFORE LD.AO THAT BUSINESS OF THE COMPANY HAD TOTALLY SHUT SINCE A SSESSMENT Y EAR 2005 - 06 AND THAT THERE IS NO CHANGE OR INCREASE IN THE PAID UP SHARE CAPITAL WITH NO FRESH UNSECURED LOANS DURING THE YEAR UNDER CONSIDERATION. IT WAS ALSO SUBMITTED THAT ASSESSEE HAS NOT RECEIVED ANY FRESH LIABILITIES AND HAS NOT MADE ANY FRESH INVESTMENT. 2.2. LD.AO SHOW CAUSE D ASSESSEE V IDE QUESTIONNAIRE DATED 15/11/12 REGARDING THE INTEREST WHICH HAS BEEN SHOWN TO HAVE ACCRUED TO ASSESSEE WHEREA S THE FDR S WERE STILL OUTSTANDING WITH ASSESSEE. IN REPLY TO THE SHOW CAUSE NOTICE ASSESSEE SUBMITTED THAT THE INTEREST ON FDRS HAVE FULLY BEEN CREDITED IN INTEREST FROM BANK ACCOUNT IN THE FDR S. ASSESSEE ALSO SUBMITTED ITA NO. 2947/DEL/2015 A.Y.2010 - 11 M/S RANA CASTINGS LTD. VS. JCIT 4 THAT IT GOT PRE - MATURITY OF THE FD RS BEFORE THE DUE DATE AND BECAUSE OF THAT AN AMOUNT OF RS.3,45, 9 3 5/ - HAS BEEN DEBITED FROM BANK ACCOUNT ON ACCOUNT OF REVERSE OF INTEREST BECAUSE OF EARLY PAYMENT. IT WAS SUBMITTED THAT THE ALLEGED AMOUNT OF RS.1,58,794/ - HAS DULY BEEN SHOWN AS INCOME IN I NTEREST. ASSESSEE FURTHER SUBMITTED THAT IT HAD OBTAINED LOAN AGAINST FDR AND LOAN INTEREST HAS BEEN DEBITED AGAINST THE ASSESSEE AND AFTER ADJUSTMENT OF DEBIT AND CREDIT ENTRY IT WAS LOSS IN INTEREST FROM BANK ACCOUNT BUT THE BANK HAS DEDUCTED TD S ON ACCO UNT OF INTEREST AND CREDITED AS SUCH A SUM OF RS. 2,00,191/ - WAS DUE TO OBC WHICH HAS BEEN DULY CONSIDERED IN INTEREST FROM BANK ACCOUNT. LD. AO REJECTED THE SUBMISSIONS ADVANCED BY ASSESSEE AND MADE AN ADDITION OF RS.1,65,861/ - BEING DISALLOWANCE OF EXPENSE S DEBITED UNDER THE HEAD FINANCE CHARGES . 3 . AGGRIEVED BY THE ADDITION MADE BY LD.AO ASSESSEE PREFERRED APPEAL BEFORE LD.CIT(A). LD.CIT (A) AFTER CONSIDERING THE DETAILED SUBMISSION ADVANCED BY ASSESSEE HELD THAT AS ASSESSEE COULD NOT FURNISH ANY EVIDENCE FROM BANK IN SUPPORT OF ITS CLAIM THE ONUS HA S NOT BEEN DISCHARGED. LD.CIT(A) THUS CONFIRMED THE ADDITION MADE BY LD.AO AND ALSO CONFIRMED THE ADDITION REGARDING INTEREST EARNED FROM FDR AND ASS ESSED D UNDER INCOME FROM OTHER SOURCES AS ASSESSEE FAILED TO ESTABLISH THAT THE INTEREST INCOME EARNED ON FDR WAS CONNECTED WITH THE BUSINESS ACTIVITY OF ASSESSEE. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A) ASSESSEE PREFERRED APPEAL BEFORE THIS T RIBUNAL. ITA NO. 2947/DEL/2015 A.Y.2010 - 11 M/S RANA CASTINGS LTD. VS. JCIT 5 5. AT THE OUTSET LD. C OUNSEL SUBMITTED THAT THE APPEAL HAS BEEN FILED BELATEDLY WITH A DELAY OF ONE DAY. HE HAS ALSO FILED A REQUEST FOR CONDONATION OF DELAY BEFORE US TODAY. LD. C OUNSEL SUBMITTED THAT THE DELAY IN FILING OF APPEAL WAS DUE TO THE ABSENCE OF AUTHORISED SIGNATORY SINCE THE DIRECTOR WAS TRAVELLING OUT OF TOWN DUE TO SOME URGENT REASON. 6. LD. SR. DR T HOUGH OPPOSED THE CONDONATION APPLICATION FILED BY ASSESSEE , HOWEVER , COULD NOT CONTROVERT ANY MALAFIDE INTENTION OF ASSESSEE IN THE DELAY CAUSED TO FILE THE APPEAL. 7. WE HAVE PERUSED THE SUBMISSIONS ADVANCED BY BOTH THE SIDES IN REGARDS TO CONDONATION A PPLICATION FILED BY ASSESSEE. 8. ADMITTEDLY , THERE IS DELAY OF 1 DAY , IN FILING THE PRESENT APPEAL . IT HAS BEEN SUBMITTED THAT ASSESSEE SHOULD HAVE FILED APPEAL BEFORE THIS T RIBUNAL ON OR BEFORE 12/05/15 , WHEREAS IT HAS BEEN FILED ON 13/05/15. FROM THE REASON CITED IN THE APPLICATION , IN THE INTEREST OF NATURAL JUSTICE, WE FIND IT JUST TO CONDONE THE DELAY OF ONE - DAY CAUSED IN FILING THE PRESENT APPEAL BEFORE THIS T RIBUNAL. 9. NOW ADVERTING TO GROUNDS RAISED BY ASSES SEE REGARDING ADDITIONS MADE, LD. C OUNSEL SUBMITTED THAT AN APPLICATION HAS BEEN FILED BEFORE NATIONAL C OMPANY L AW T RIBUNAL AGAINST ASSESSEE FOR APPOINTMENT OF MORAT O RIUM. FURTHER, CLAIM OF ASSESSEE WAS DENIED BECAUSE ASSESSEE COULD NOT FILE CERTIFICATE F ROM BANKER. IT WAS STATED THAT ASSESSEE WOULD BE ABLE TO OBTAIN SUCH CERTIFICATE NOW. ITA NO. 2947/DEL/2015 A.Y.2010 - 11 M/S RANA CASTINGS LTD. VS. JCIT 6 10 . UNDER SUCH CIRCUMSTANCES , WE DEEM IT FIT AND PROPER TO SET ASIDE THIS ISSUE BACK TO LD. AO TO CONSIDER ASSESSEE S CLAIM AFRESH ON ASSESSEE SUBMITTING APPROPRIATE BANK STATEMENT. 11. ACCORDINGLY GROUNDS RAISED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT APPEAL FILED BY ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 31.10.2018. S D / - S D / - (MAHARISHI PR ASHANT) (BEENA A PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DT. 31 ST OCTOBER, 2018 * GMV COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT - TRUE COPY - BY ORDER, ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO. 2947/DEL/2015 A.Y.2010 - 11 M/S RANA CASTINGS LTD. VS. JCIT 7 DATE DRAFT DICTATED ON 30.10.18 DRAFT PLACED BEFORE AUTHOR 31.10.18 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS KEPT FOR PRONOUNCEMENT ON & ORDER UPLOADED ON : FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.