PREMIER LTD, MUMBAI V. DCIT CIR 3(2), MUMBAI

ITA 3097/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87927 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 31-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHLIP
• Assessee Lawyers: JAYESH DODIA
• Keywords: Principle of natural justice

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE HONBLE S/SHRI H.L. KARWA, PRESIDENT AND B. R.BASKARAN (AM) . . , . . , ./ I.T.A. NO.3097/MUM/2012 ( / ASSESSMENT YEAR :2008-09) PREMIER LIMITED, 58 NARIMAN BHAVAN, NARIMAN POINT, MUMBAI-400021 / VS. DY. COMMISSIONER OF INCOME TAX CIRCLE 3(2), MUMBAI. ( / APPELLANT) .. ( ! / RESPONDENT) ./ #$ ./ PAN/GIRNO.:AAACT5523G % / ASSESSEE BY : SHRI JAYESH DODIA ! & % /RESPONDENT BY : SHRI NEIL PHLIP. ' ( & ) * / DATE OF HEARING : 31.12.2014 +, & ) * /DATE OF PRONOUNCEMENT : 07.01.2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 14.03.2012 PASSED BY LD CIT(A)-4, MUMBAI AND IT REL ATES TO THE ASSESSMENT YEAR 2008-09. THE ASSESSEE IS AGGRIEVED BY THE DEC ISION OF LD CIT(A) IN CONFIRMING THE DISALLOWANCE OF PRIOR PERIOD EXPENSE S OF RS.14,15,000/-. 2. THE LD COUNSEL APPEARING FOR THE ASSESSEE SUBMIT TED THAT THE ASSESSEE HAD CLAIMED A SUM OF RS.14,15,000/- AS PRIOR PERIO D EXPENSES IN ITS PROFIT AND LOSS ACCOUNT AND THE SAME RELATED TO THE SERVICES A VAILED BY THE ASSESSEE FROM SOME OF THE PARTIES. HE SUBMITTED THAT THE ASSESSE E HAD, IN FACT, RECEIVED THE BILLS DURING THE YEAR UNDER CONSIDERATION AND HENCE IT CLAIMED THE SAME AS EXPENDITURE OF THE CURRENT YEAR. HOWEVER, SINCE TH E SERVICES WERE AVAILED IN THE IMMEDIATELY PRECEDING YEAR, THE ASSESSEE HAD CATEGO RIZED IT AS PRIOR PERIOD ITA NO.3097/M/12 2 EXPENSES IN THE PROFIT AND LOSS ACCOUNT. HE SUBMI TTED THAT THE ASSESSEE SHOULD BE ALLOWED DEDUCTION, SINCE THE RELEVANT BIL LS WERE RECEIVED DURING THE YEAR UNDER CONSIDERATION AND HENCE IT GOT CRYSTALLI ZED ONLY DURING THE YEAR UNDER CONSIDERATION. 3. THE LD D.R, HOWEVER, SUBMITTED THAT THE ASSESSE E COULD NOT SUBSTANTIATE ITS CLAIM THAT THE RELEVANT BILLS WERE RECEIVED DUR ING THE YEAR UNDER CONSIDERATION ONLY. HE FURTHER SUBMITTED THAT THE ASSESSEE HAD A VAILED THE SERVICES IN THE EARLIER YEARS AND HENCE THIS EXPENDITURE RELATES TO THOSE YEARS ONLY AND NOT TO THE YEAR UNDER CONSIDERATION. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. THE UNDISPUTED FACT REMAINS THAT THE ASSESSEE HAD AVAIL ED SERVICES RELATING TO THE IMPUGNED CLAIM OF RS.14.15 LAKHS IN THE EARLIER YEA RS AND HENCE, IN THE NORMAL COURSE, THE ASSESSEE SHOULD HAVE CLAIMED THE SAME I N THE RELEVANT YEARS. IT IS ALSO QUIET POSSIBLE THAT THE ASSESSEE COULD NOT HAV E RECEIVED THE BILLS AT THAT POINT OF TIME. IN THIS KIND OF SITUATION, THE ACCO UNTING PRUDENCE REQUIRES MAKING OF NECESSARY PROVISIONS FOR KNOWN LIABILITIES. IT APPEARS THAT THE ASSESSEE HAS FAILED TO MAKE PROVISIONS ALSO. NOW THE CLAIM OF T HE LD A.R IS THAT THE ASSESSEE HAD RECEIVED THE RELEVANT BILLS ONLY DURING THE YEA R UNDER CONSIDERATION. IT IS ALSO THE CLAIM OF THE ASSESSEE THAT THE VOLUME OF BUSINE SS OF THE ASSESSEE IS HUGE AND HENCE THE AMOUNT OF RS.14.15 LAKHS TURNS OUT TO BE A VERY SMALL AMOUNT VIS- -VIS ITS MAGNITUDE OF EXPENSES. HENCE, ACCORDING TO LD A.R, THE ASSESSEE HAD ACCOUNTED FOR THE EXPENSES WHENEVER THE BILLS WERE RECEIVED. IN ACCOUNTING PRACTICE THE MATERIALITY CONCEPT IS ALSO ONE OF THE MAIN INGREDIENTS IN MAKING PROVISIONS FOR KNOWN LIABILITIES AND LOSSES. HOWEVE R, WE NOTICE THAT THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM BY FURNISHING COPIES OF BILLS BEFORE THE AO IN ORDER TO SUBSTANTIATE ITS CLAIM THAT THE BILLS WERE RECEIVED BY IT ONLY DURING THE YEAR UNDER CONSIDERATION AND FURTHER THE ABOVE SAID AMOUNT WAS ALSO NOT MATERIAL ENOUGH WARRANTING MAKING OF PROVISIONS. W HEN THESE ASPECTS WERE POINTED OUT, THE LD A.R SUBMITTED THAT THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE THESE POINTS. THE LD D .R DID NOT OBJECT TO THE PLEA MADE BY LD A.R. ITA NO.3097/M/12 3 5. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT THE ASSESSEE MAY BE, IN THE INTEREST OF NATURAL JUSTICE, BE PROVIDED WITH ONE M ORE OPPORTUNITY TO SUBSTANTIATE ITS CLAIM. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO WITH THE D IRECTION TO EXAMINE THE CLAIM AFRESH BY DULY CONSIDERING THE INFORMATION AND EXPL ANATIONS THAT MAY BE FURNISHED BY THE ASSESSEE AND TAKE APPROPRIATE DECI SION IN ACCORDANCE WITH THE LAW. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OP EN COURT ON 7TH JAN,2015 . +, ' - ./ 0 1 7TH JAN 2015 , & 2( 3 SD SD ( . . / H.L. KARWA) ( . . , / B.R. BASKARAN ) / PRESIDENT / ACCOUNTANT MEMBER . ' ( MUMBAI: 7TH JAN, 2015. . . ./ SRL , SR. PS ! ' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. ! / THE RESPONDENT. 3. ' 5) ( ) / THE CIT(A)- CONCERNED 4. ' 5) / CIT CONCERNED 5. 6. 67 2 )8 , * 8 , . ' ( / DR, ITAT, MUMBAI CONCERNED 2 9 : ( / GUARD FILE. ; ' / BY ORDER, TRUE COPY < # (ASSTT. REGISTRAR) * 8 , . ' ( /ITAT, MUMBAI