ITO 7(2)-2, MUMBAI V. SAPPHIRE KITCHENWARE P. LTD, MUMBAI

ITA 3088/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 3893 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 08-11-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI J. SUDHAKAR REDDY, A.M. AND SHRI V. DUR GA RAO, J.M. ITA NO. 2696/M/2009 ASSESSMENT YEAR: 2005-06 SAPPHIRE KITCHENWARE PVT. LTD., APPELLANT C/O. D.C. BOTHRA & CO.(CA) 297, TARDEO ROAD, WILLE MANSION, 1 ST FLOOR, OPP BANK OF INDIA, NANA CHOWK, MUMBAI 400 007. (PAN AAHCS8268 A) VS. INCOME TAX OFFICER, RESPONDENT 7(2), (2), 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ITA NO. 3088/M/2009 ASSESSMENT YEAR: 2005-06 INCOME TAX OFFICER, APPELLANT 7(2), (2), 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. SAPPHIRE KITCHENWARE PVT. LTD., RESPOND ENT C/O. D.C. BOTHRA & CO.(CA) 297, TARDEO ROAD, WILLE MANSION, 1 ST FLOOR, OPP BANK OF INDIA, NANA CHOWK, MUMBAI 400 007. (PAN AAHCS8268 A) ASSESSEE BY : MR. RAJKUMAR SINGH REVENUE BY : MR. A.K. NAYAK ORDER PER V. DURGA RAO, J.M.: THESE ARE THE CROSS APPEALS DIRECTED AGAINST THE O RDER OF CIT(A)- VII, MUMBAI, PASSED ON 20/02/2009 FOR THE ASSESSMEN T YEAR 2005- 06. ITA NO. 2696 & 3088/M/09 SAPPHIRE KITCHENWARE PVT. LTD. 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE COMPANY ENGAGED IN THE BUSINESS OF SEMI MANUFACTURING AND F INISHING OF STAINLESS STEEL KITCHENWARE PRODUCTS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 03/10/2005 DECLARING TOTAL INCOME AT ` . 3,26.278/- ALONG WITH COMPUTATION OF INCOME, AUDITED PROFIT & LOSS A CCOUNT, BALANCE SHEET AND TAX AUDIT REPORT U/S 44AB OF THE ACT. TH E ASSESSMENT WAS MADE U/S 143(1) OF THE ACT. THE AO WAS ASKED THE A SSESSEE TO PRODUCE THE BOOKS OF ACCOUNT, BILLS AND VOUCHERS, E TC. BY ISSUING SEVERAL NOTICES BUT THE ASSESSEE NOT COMPLIED WITH THE SAME. SINCE THE ASSESSEE FAILED TO PRODUCE THE REQUIRED DOCUMEN TS, THE AO PROCEEDED TO DISALLOW 20% EXPENSES CLAIMED IN THE P &L A/C. THE TOTAL TURNOVER DECLARED IN THE P&L A/C WAS TO THE EXTENT OF ` . 3,25,99,556/- AND AGAINST THE TURNOVER, THE TOTAL E XPENDITURE CLAIMED IS TO THE EXTENT OF ` . 3,20,29,767/-. THE AO DISALLOWED 20% ON ` . 3,20,29,767/-, WHICH WORKS OUT TO ` . 64,05,953/-AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AND TAXED ACCORDIN GLY. AFTER HEARING THE ASSESSEE AS WELL AS THE AO, THE CIT(A) HELD AS UNDER:- 1.11 THE UNDERSIGNED HAS CAREFULLY PERUSED THROUGH THE RIVAL CONTENTIONS. IN THE REMAND REPORT THE AO IS SILENT WHETHER THE BOOKS OF ACCOUNTS AND ORIGINAL BOOKS WERE PRODUCED BEFORE HIM DURING REMAND PROCEEDINGS OR NOT. THE REMAND REPORT APPEARS TO HAVE BEEN PREPARED IN A HALF HEARTED MANNER. THEREF ORE, THE SAME MAY NOT BE OF MUCH HELP AS FAR AS THIS APPEAL IS CONCERNED. THE AO HAS NOT MENTIONED IN THE REPORT THE TOTAL NU MBER AND NAMES OF THE PARTIES TO WHOM THE NOTICES U/S 133(6 ) WERE SENT AND WHETHER ORIGINAL BILLS AND VOUCHERS WERE CALLED FOR TO BE PRODUCED AND WHETHER THE SAME WERE PRODUCED BEFORE HIM OR NOT. 1.12 IT IS THEREFORE NOTICED THAT THE APPELLANT HAS DEFINITELY NOT DISCHARGED ITS COMPLETE ONUS OF PRODUCING THE BOOKS OF ACCOUNTS AND ORIGINAL VOUCHERS AND BILLS BEFORE THE AO IN SU PPORT OF THE CLAIMS WHETHER RELATING TO THE PURCHASES OF FIXED A SSETS OR TO INCURRING OF EXPENSES UNDER VARIOUS HEADS. THEREFOR E, THE AO HAS RIGHTLY NOT ACCEPTED THE CLAIM FULLY IF THE SAME AR E NOT SUBSTANTIATED WITH PROPER EVIDENCES. AT THE SAME TI ME THE AOS LINE OF ENQUIRY ALSO APPEARS TO BE INCOMPLETE AS AL READY MENTIONED. THIS IS AN OLD HIGH DEMAND TOP PRIORITY APPEAL AND THEREFORE IT IS CONSIDERED FAIR AND REASONABLE TO D IRECT THE AO TO REDUCE THE AD HOC DISALLOWANCES OF 20% OF THE ENTIR E CLAIM OF THE EXPENDITURE AMOUNTING TO ` . 3,20,29,767/- TO ONLY 8% OF SUCH ITA NO. 2696 & 3088/M/09 SAPPHIRE KITCHENWARE PVT. LTD. 3 AMOUNTS OF CLAIM. THUS, THE DISALLOWANCE GETS REDUC ED FROM ` . 64,05,953/- TO ONLY ` . 25,62,381/- AND THEREFORE THE APPELLANT GETS PART RELIEF. THIS RELIEF IS SUPPOSED TO TAKE C ARE OF ALL THE GRIEVANCES OF THE APPELLANT TAKEN IN THE GROUNDS OF APPEAL. 3. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE F ILED APPEAL BEFORE THE ITAT IN SUSTAINING THE DISALLOWANCE OF 8% BY TH E CIT(A) AND THE REVENUE ALSO FILED APPEAL BEFORE THE ITAT IN RESTRI CTING THE DISALLOWANCE TO 8% BY THE CIT(A) AS AGAINST 20% MAD E BY THE ASSESSING OFFICER. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT SINCE THE ASSESSEE HAS NOT PRODUCED THE REQUIRED DETAILS, THE AO MADE AN AD HOC DISALLO WANCE OF 20% ON THE ENTIRE CLAIM OF EXPENDITURE AMOUNTING TO ` . 3,20,29,767/-, WHICH COMES TO ` . 64,05,953/- AND THE CIT(A) RESTRICTED THE DISALLO WANCE TO 8%, WHICH COMES TO ` . 25,62,381/-. THE CIT(A) POINTED OUT IN HIS ORDER THAT THE ASSESSEE HAS NOT DISCHARGED ITS COMP LETE ONUS OF PRODUCING THE BOOKS OF ACCOUNTS AND ORIGINAL VOUCHE RS AND BILLS BEFORE THE AO IN SUPPORT OF ITS CLAIM AS REQUIRED B Y THE AO. WHILE, HE POINTED OUT THAT THE REMAND REPORT SUBMITTED BY THE AO WAS PREPARED IN A HALF HEARTED MANNER AND ALSO THE CIT(A) POINTE D OUT THAT THE AOS LINE OF ENQUIRY ALSO APPEARS TO BE INCOMPLETE. IN T HE LIGHT OF THE FINDINGS OF THE CIT(A) IN THE ASSESSMENT ORDER AS W ELL AS NON- COMPLIANCE BY THE ASSESSEE WITH THE NOTICES ISSUED BY THE AO FOR PRODUCING THE REQUIRED DETAILS, WE ARE OF THE VIEW THAT, IN THE INTEREST OF JUSTICE, WE REMIT THE MATTER BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE ISSUE AFRESH BY MAKING PROP ER ENQUIRIES AND EXAMINING THE FACTS OF THE CASE AS POINTED OUT BY T HE CIT(A) IN HIS ORDER. THE ASSESSEE SHALL PRODUCE THE DETAILS REQUI RED BY THE AO WITHIN THE STIPULATED PERIOD. NEEDLESS TO SAY THE A O SHALL PROVIDE PROPER OPPORTUNITY OF HEARING TO THE ASSESSEE. ITA NO. 2696 & 3088/M/09 SAPPHIRE KITCHENWARE PVT. LTD. 4 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE AND R EVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF NOVEMBER, 2010. SD/- SD/- (J. SUDHAKAR REDDY) (V . DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 12 TH NOVEMBER, 2010 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, E BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV