ACIT, Panipat V. M/s Shivalika Rugs, Panipat

ITA 3072/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65416 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 31-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 10-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH `G : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.3072/DEL./2011 (ASSESSMENT YEAR : 2004-05) ACIT, PANIPAT CIRCLE, VS. M/S SHIVALIKA RUGS, PANIPAT. PALIWAL NAGAR, G.T. ROAD, PANIPAT. (PAN/GIR NO.AAAFT8250D) (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE (APPLICATION RECEIVED BY FAX) REVENUE BY : SMT. SRUJANI MOHANTY, SR.DR ORDER PER U.B.S. BEDI, J.M. THIS APPEAL OF THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT (A)-KARNAL, DATED 15.03.2011, RELEVANT TO ASSESSMENT YEAR 2004- 05, WHEREBY DEPARTMENT HAS RAISED THE FOLLOWING SINGLE EFFECTIVE GROUND: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN ALLOWING VAT LIABILITY OF RS.8,90,946/- IN THE YEAR UNDER CONSID ERATION WITHOUT APPRECIATING THAT THE VAT WAS PAID IN THE NEXT YEAR AND NOT IN THE YEAR U NDER CONSIDERATION AND AS SUCH THE UNPAID LIABILITY WAS RIGHTLY DISALLOWED BY THE ASSE SSING OFFICER. 2. FACTS MENTIONED IN THE ASSESSMENT ORDER ARE REPR ODUCED AS UNDER: IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE FIRM HAS CLAIMED A SUM OF RS.8,90,946/- ON ACCOUNT OF SALES TAX. VIDE SHOW C AUSE NOTICE DATED 27.9.2006, THE ASSESSEE WAS ASKED TO FILE PROOF OF SALES TAX, COPY OF THE SALES TAX ASSESSMENT ORDER AND TO SHOW CAUSE WHY THE ABOVE SUM MAY NOT B E DISALLOWED IN THE ABSENCE OF PROOF OF PAYMENT. THE ASSESSEE FIRM HAS FILED COPY OF VAT ACCOUNT AND HAS CONTENDED THAT THE FIRM HAS PAID VAT TO THE EXTENT OF RS.26,59,783/- BUT HAS RECEIVED REFUND OF VAT TO THE EXTENT OF RS.17,6 8,837/- HENCE THE BALANCE SHORTFALL HAS BEEN DEBITED TO THE PROFIT AND LOSS A CCOUNT. THE ASSESSEE WAS ASKED TO FILE COPY OF SALES TAX ORDER BUT IT IS STATED TH AT THE SALES TAX ASSESSMENT IS STILL PENDING. THE ASSESSEE FIRM HAS ALSO FILED COPY OF NOTICE ISSUED BY EXCISE AND TAXATION OFFICER-CUM-ASSESSING AUTHORITY, PANIPAT D ATED 12.3.2004 IN WHICH THE ASSESSEE FIRM HAS BEEN ASKED TO DEPOSIT THE VAT @ 4 % ON THE SALE AND PURCHASE I.T.A. NO.3072/DEL./2011 (A.Y. : 2004-05) 2 OF DUTY ENTITLEMENT PASS BOOK EFFECTED ON OR BEFORE 31.3.2003 VOLUNTARILY ON ACCOUNT OF SALE OF DEPB LICENSE BY 31.3.2004. ON R ECEIPT OF THIS NOTICE, THE ASSESSEE HAS DEBITED THIS SUM TO THE PROFIT AND LOS S ACCOUNT IN VIEW OF THE HARYANA GOVT.S NOTIFICATION NO.LEG.6/2004 DATED 5. 3.2004. AS THE AMOUNT OF VAT HAS BEEN PAID IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2005-06, THE SUM OF RS.8,90,946/- IS DISALLOWED. 3. THE ASSESSEE TOOK UP THE MATTER IN APPEAL AND IN THE WRITTEN SUBMISSIONS, ASSESSEE SUBMITTED THAT SALES TAX ASSESSMENT WAS PENDING DUR ING THE ASSESSMENT PROCEEDINGS AND HENCE SALES-TAX ORDER COULD NOT BE PROVIDED/FILED BEFORE THE ASSESSING OFFICER, SINCE THE SAME WAS RECEIVED LATER ON, THE ASSESSEE ENCLOSED SUCH ORDER WITH THE WRITTEN SUBMISSION AND REQUESTED THE CIT(A) TO ENTERTAIN THE SAME UNDER RULE 46A OF THE I.T. RULES, 1962. THE REPORT OF THE ASSESSING OFFICER WAS CALLED FOR BY FIRST APPELLATE AUTHORITY , WHO SENT SUCH REPORT WHICH WAS FORWARDED TO THE ASSESSEE. ASSESSEE FILED HIS REJOINDER AND FUR THER CLARIFICATION WAS ALSO SUBMITTED THROUGH LETTER DATED 11.3.2011. 4. CIT(A) WHILE CONSIDERING THE REMAND REPORT OF TH E ASSESSING OFFICER, REJOINDER OF THE ASSESSEE AND FURTHER CLARIFICATION GIVEN HAS CONCLU DED TO DELETE THE IMPUGNED ADDITION AS PER PARA.12.06 OF HIS ORDER AS UNDER: 12.06 THE ISSUE IS CONSIDERED. THE FACTS ARE THAT HE APPELLANT CLAIMED A SUM OF RS.8,90,946/- UNDER THE HEAD VAT/SALES TAX. IT IS SUBMITTED THAT AMOUNT OF VAT PAID IS DEBITED IN A SEPARATE ACCOUNT SINCE THE SAME IS TO BE REFUNDED BY THE STATE GOVT. EXCEPT THE VAT PAID ON SALE OF DEPB WHICH IS NOT REFUNDED BY THE STATE GOVT. TOTAL AMOUNT DEBITED IN THIS ACCOUNT DURING THE YEAR UNDER CONSI DERATION WAS RS.26,59,783/- BUT RECEIVED REFUND TO THE EXTENT OF RS.17,68,837/-. T HE DIFFERENCE OF RS.8,19,946/- WAS ON ACCOUNT OF VAT ON SALE AND PURCHASE OF DUTY ENTITLE MENT LICENSE AND HENCE THE SAME WAS DEBITED IN THE P&L ACCOUNT. THE APPELLANT FURTHER SUBMITTED THAT SINCE THE INFORMATION FROM THE SATES TAX DEPARTMENT WAS RECEIVED DURING T HE YEAR UNDER CONSIDERATION, THOUGH THE SAME WAS PAID IN THE NEXT YEAR, THE SAME IS CLA IMED IN THE YEAR UNDER CONSIDERATION BEING THE LIABILITY TO BE TAKEN AS CRYSTALLIZED DUR ING THE YEAR UNDER CONSIDERATION. THE PLEA OF THE APPELLANT IS TENABLE AND HENCE, CLAIM O F RS.8,90,946/- MADE ON ACCOUNT OF SALE TAX, DURING THE YEAR UNDER CONSIDERATION, IS HEREBY ALLOWED. 5. AGGRIEVED BY THE ORDER OF CIT(A), THE DEPARTMENT HAS COME UP IN APPEAL AND IT WAS SUBMITTED BY THE LD.DR THAT CIT(A) WAS NOT JUSTIFIE D IN ALLOWING VAT LIABILITY OF RS.8,90,946/- IN THE YEAR UNDER CONSIDERATION WITHOUT APPRECIATING T HE FACT THAT VAT WAS PAID IN THE NEXT YEAR AND NOT IN THE YEAR UNDER CONSIDERATION AND AS SUCH THE UNPAID LIABILITY WAS RIGHTLY DISALLOWED BY THE ASSESSING OFFICER. SINCE FROM THE ORDER OF CIT(A), IT IS NOT CLEAR AS TO WHEN ACTUAL PAYMENT HAS BEEN MADE AND IF PAYMENT HAS BEEN MADE WITHIN DUE D ATE FOR FILING OF THE RETURN U/S 139(1) OF THE I.T. ACT, 1961 IN THE YEAR UNDER CONSIDERATION, THE DEDUCTION COULD BE ALLOWED AND NOT OTHERWISE, I.T.A. NO.3072/DEL./2011 (A.Y. : 2004-05) 3 THEREFORE, IN ALL FAIRNESS, IT WOULD BE JUST AND AP PROPRIATE TO SET ASIDE THE ORDERS OF THE AUTHORITIE S BELOW AND RESTORE THE MATTER BACK ON THE FILE OF TH E ASSESSING OFFICER FOR VERIFICATION OF THE DATE OF MAKING OF THE PAYMENT AND THEN TO ALLOW OR DISAL LOW THE CLAIM OF THE ASSESSEE IN THIS REGARD. 6. THE ASSESSEES LD.COUNSEL DID NOT APPEAR, BUT S ENT A COMMUNICATION THROUGH FAX INFORMING THAT HE IS BUSY DUE TO LAST DATE OF FILI NG OF THE RETURN OR IN ALTERNATIVE HIS PAPER BOOK, WRITTEN SUBMISSION BEFORE CIT(A) SHOULD BE CONSIDER ED IN THE LIGHT OF ORDER OF CIT(A) IN THIS REGARD TO DECIDE THE APPEAL. 7. AFTER HAVING HEARD LD.DR AND CONSIDERING THE MAT ERIAL ON RECORD, WE FIND THAT IN PROFIT AND LOSS ACCOUNT, ASSESSEE HAS CLAIMED A SUM OF RS. 8,90,946/- ON ACCOUNT OF SALES TAX AND WHEN ASKED TO FILE THE PROOF OF PAYMENT OF SALES TAX, CO PY OF SALES-TAX ORDER, THE ASSESSEE FILED COPY OF THE VAT ACCOUNT AND SUBMITTED THAT FIRM HAS PAID VA T TO THE EXTENT OF RS.26,59,783/-, BUT HAS RECEIVED REFUND OF VAT TO THE EXTENT OF RS.17,88,83 7/-. HENCE, BALANCE OF SHORTFALL HAS BEEN DEBITED TO P&L A/C. THE ASSESSEE WAS ASKED TO FILE THE COPY OF THE SALES-TAX ORDER WHICH WAS STATED TO BE PENDING. THE ASSESSEE FIRM HAS FILED COPY OF THE NOTICE ISSUE BY THE ETO- CUM/ASSESSING AUTHORITY, PANIPAT DATED 12.3.2004 IN WHICH ASSESSEE HAS BEEN ASKED TO DEPOSIT VAT @ 4% OF SALES AND PURCHASE OF DUTY ENTITLEMENT PASSBOOK EFFECTED ON OR BEFORE 31.3.2003 VOLUNTARILY ON ACCOUNT OF SALE OF DEPB LICENSE BY 3 1.3.2004. ON RECEIPT OF THIS NOTICE, ASSESSEE DEBITED THIS SUM TO THE P&L A/C IN VIEW OF HARYANA GOVT. NOTIFICATION AND STATED TO HAVE PAID THE AMOUNT IN THE NEXT YEAR I.E. ASSESSMENT YEAR 2005-0 6 AND SINCE THIS AMOUNT WAS PAID IN NEXT YEAR, SAME WAS DISALLOWED BY ASSESSING OFFICER. IN APPEA L, THE PLEA OF THE ASSESSEE WAS THAT SINCE THE INFORMATION FROM SALES-TAX DEPARTMENT WAS RECEIVED DURING THE YEAR UNDER CONSIDERATION, THOUGH THE SAME WAS PAID IN THE NEXT YEAR, IT WAS CLAIMED IN THE YEAR UNDER CONSIDERATION BEING LIABILITY TO BE TAKEN AS CRYSTALLIZED DURING THE YEAR UNDER C ONSIDERATION AND CIT(A) FINDING THIS PLEA OF THE ASSESSEE TO BE TENABLE ALLOWED THE CLAIM WITHOUT SP ECIFYING EITHER DATE OF PAYMENT OR OTHER DETAILS. THEREFORE, IN THE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN T HE MATTER, WE FIND IT JUST AND APPROPRIATE TO SET ASIDE THE ORDERS OF THE AUTHORIT IES BELOW AND RESTORE THE MATTER BACK ON THE FILE OF THE ASSESSING OFFICER TO RECONSIDER THE ISSUE AF TER ASCERTAINING RELEVANT DETAILS AND DATE OF PAYMENT ETC. AND DECIDE IT AFRESH IN ACCORDANCE WIT H LAW AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. I.T.A. NO.3072/DEL./2011 (A.Y. : 2004-05) 4 8. AS A RESULT, THE APPEAL OF THE DEPARTMENT STANDS ACCEPTED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 31.08.2012. SD/- SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER (U.B.S. BEDI ) JUDICIAL MEMBER DATED : AUG. 31, 2012 SKB COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A), KARNAL. 5. CIT(ITAT) BY ORDER DEPUTY REGISTRAR, ITAT