Adani Energy Ltd, Ahmedabad V. The Dy.CIT.,Circle-1, Ahmedabad

ITA 3130/AHD/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 6020 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 27-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 31-12-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA WITH SHRI G M THAKOR
• Keywords: Initiation of penalty proceedings; Revised return
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ADANI ENERGY LTD, AHMEDABAD PAN: AABCG5533E (APPELLANT) VS THE DCIT, CIRCLE - 1, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI RAJDEEP SINGH , SR. D . R. ASSESSEE BY: SHRI P.M. MEHTA WITH SHRI G.M. THAKOR DATE OF HEARING : 09 - 01 - 2 018 DATE OF PRONOUNCEMENT : 01 - 03 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , AR ISES FROM ORDER OF THE CIT(A) - VI, AHMEDABAD DATED 25 - 11 - 2013 , IN P ROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT 2. THE ASSESSEE RAISED FOLLOWING GROUNDS OF APPEAL: - 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE DISALLOWANCE OF TRAVELLING EXPENSES OF RS. 16,33,000 AND THAT TOO, IN THE FOLLOWING ENTIRELY UNWARRANTED/UNJUSTIFIED TERMS(EMPHASIS SUPPLIED) : '3.3 THE CONTENTIO NS OF THE APPELLANT AS REPRODUCED ABOVE ARE NOT EVIDENCED AND DO NOT CONTROVERT THE OBSERVATIONS MADE BY THE A.O. NO I T A NO . 3130 / A HD/20 13 A SSE SSMENT YEAR 2009 - 10 I.T.A NO. 3130 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ADANI ENERGY LTD. VS. DCIT 2 INTERFERENCE IS CALLED FOR. IMPUGNED DISALLOWANCE IS UPHELD. THIS GROUND OF APPEAL IS DISMISSED.' 2. IN LAW AND IN THE FACTS AND CIRCUMSTAN CES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 2 OF THE APPELLANT'S APPEAL BEFORE HIM CHALLENGING LEVY OF INTEREST U/SS. 234A, 234B, 234C AND 234D. 3. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN DISMISSING GROUND NO. 3 OF THE APPELLANT'S APPEAL CHALLENGING THE INITIATION OF PENALTY PROCEEDINGS U/S. 271(1)(C). 3. THE BRIEF FACTS OF THE CASE PERTAINING TO GROUND NO. 1 IS THAT T HE ASSESSEE HAS FILED RE TURN OF INCOME DECLARING LOSS OF RS. 3 , 44 , 21 , 600/ - ON 25 TH SEPTEMBER . 2009. SUBSEQUENTLY, THE ASSESSEE FILED REVISED RETURN OF INCOME ON 10 TH SEPTEMBER , 2009 AND DECLARED TOTAL LOSS AT RS. - 4 , 17 , 19 , 717/ - . DURING THE COURSE ASSESSMENT PROCEEDINGS, THE AS SESSING OFFICER NOTICED T HAT HON BLE GUJARAT HIGH COURT VIDE ITS ORDER DA T ED 19 TH NOV , 20 0 9 HAS SANCTIONED THE SCHEME OF ARRANGEMENT U/S. 391 AND 394 R.W.S. 100 TO 104 OF T HE COMPANY ACT, 19 5 6 IN THE MATTER OF THE ASSESSEE BEING DEMERGER AND TRANSFER TO A DANI ENERGY (UP) PVT. LTD. THE APPROVED SCHEME WAS FILED WITH RO C ON 10 TH DECEMBER, 2009. FROM PERUSAL OF THE REVISED P & L A/C AFTER DEMERGER THE ASSESSING OFFICER NOTICED THAT ASSESSEE HAS DE BITED AN AMOUNT OF RS. 16,33,000/ - UNDER THE HEAD TRAVELLING EXPENSES. THE ASSESSING OFFICER FURTHER NOTICED THAT ALL OTHER ITEMS OF INCOME AND EXPENDITURE OF THE ASSESSEE COMPANY HAS BEEN SHOWN IN THE RETURN OF INCOME OF M/S. ADANI GAS LTD WHICH WAS EARLIER KNOWN AS ADANI ENERGY (UP) PVT. LTD. T HE ASSESSING OFFI CER STATED THAT THE ASSESSEE FAILED TO SUBSTANTIATE WITH EVIDENCE THE BUSINESS NEXUS FOR CLAIMING THE AFORESAID TRAVELLING EXPENDITURE CONSEQUENTLY HE HAS DISALLOWED THE CLAIM OF TRAVELLING EXPENSES. 4 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT (A). THE LD. CIT(A) SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER: - I.T.A NO. 3130 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ADANI ENERGY LTD. VS. DCIT 3 3.2. IN THE ASSESSMENT ORDER, A.O. OBSERVED THAT THE GUJARAT HIGH COURT HAD SANCTIONED DEMERGER OF THE GAS DISTRIBUTION DIVISION OF THE APPELLANT COMPANY WITH ADAM ENERGY (UP) PVT. LTD., WHICH WAS RE - NAMED AS M/S. ADANI GAS LTD., THE RESULTING COMPANY; IN THE REVISED RETURN FILED BY THE APPELLANT CONSEQUENT TO DE MERGER, APPELLANT COMPANY HAD DE BITED TRAVELLING EXPENSES OF RS. 16.33 LAKHS TO PROFIT & LOSS A CCOUNT; ALL THE OTHER ITEMS OF INCOME AND EXPENDITURE OF THE APPELLANT COMPANY REFLECTED IN THE ORIGINAL RETURN HAD BEEN TRANSFERRED TO M/S. ADANI GAS LTD.; APPELLANT EXPRESSED ITS INABILITY TO SUBSTANTIATE THE CLAIM OF ONLY TRAVELLING EXPENDITURE; NO NEXU S BETWEEN THE TRAVELLING EXPENSES AND APPELLANT'S BUSINESS WAS DEMONSTRATED AND THEREFORE IMPUGNED AMOUNT WAS BEING DISALLOWED. 5 . DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING CONCISE GROUNDS O F APPEAL, DETAILS OF SUBMISSION MADE BEFORE THE LD.CIT(A), COPY OF AGREEMENT, COPY OF INVOICES AND COPY OF LEDGER ACCOUNT OF TRAVELLING EXPENSES ETC. T HE LD. COUNSEL CONTENDED THAT LD. CIT(A) IS NOT CORRECT IN DISALLOWING THE TRAVELLING EXPENSES AS ALL EXPE NSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. HE HAS FURNISHED A PAPER BOOK CONTAINING DETAIL OF LEGAL & PROFESSIONAL FEES, COPIES OF DOCUMENTS RELATING TO ARBITRATION, COPIES OF LEDGER ACCOUNT AND VOUCHERS ETC. ON THE OTHER HAND, L D. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF LD. CIT(A) 6 . WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE - COMPANY AND ASIAN LNG TRADING COMPANY HAD ENTERED INTO AN AGREEMENT ON AUGUST, 2006 FOR SALE AND PU RCHASE OF LNG CARGO. UNFORTUN AT ELY DUE TO NON - AVAILABILITY OF RECEIVING AND RE - GASIFICATION FACILITIES THE AFORESAID AGREEMENT COULD NOT BE IMPLEMENTED AND T HE THE MATTER WAS REFERRED FOR ARBITRATION BY ALTC IN LONDON COURT OF INTERNATIONAL A RBITRATION. A DETAILED EXERCISE WAS UNDERTAKEN TO IDENTIFY THE EXPENSES SPECIFICALLY PERTAINING TO THE ASSESSEE COMPANY AND THE RESULTING COMPANY AND I T WAS STATED THAT THE TRAVELING EXPENSES HA S A DIRECT NEX U S WITH THE BUSINESS OF THE ASSESSEE COMPANY. THEREFORE THE TRAVELING EXPENSES WERE DEBITED TO THE PROFIT AND LOSS ACCOUNT OF THE I.T.A NO. 3130 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ADANI ENERGY LTD. VS. DCIT 4 ASSESSEE COMPANY AS ALL THE PROFESSIONALS WERE REQUIRED TO TRAVEL TO LONDON FOR THE ARBITRATION PROCEEDINGS . DURING THE COURSE OF APPELLANT PROCEEDINGS BEFORE US THE LD. COUNCIL HAS CONT ENDED THAT ALL THE EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES . HE HAS SUBMITTED A PAPER BOOK CONTAINING DETAILS REGARDING LEGAL AND PROFESSIONAL FEES PAID F OR ARBITRATION PROCEEDINGS, COP IES OF DOCUMENTS , LEDGER ACCOUNT OF TRA VELING EXPENSES , V O UC HERS F O R TRAVELING EXPENSES ETC. WE HAVE GONE THROUGH THE BILLS, VOUCHERS AND OTHER MATERIAL PERTAINING TO THE CLAIM OF IMPUGNED EXPENSES WHICH HAS NOT BEEN COMMENTED OR REFERRED BY THE LOWER AUTHORITY IN THEIR FINDINGS. IN VIEW OF ABO VE FACTS WE CONSIDER IT APPROPRIATE TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO DECIDE THE SAME BY SPEAKING ORDER AFTER EXAMINATION OF THE SUPPORTING BILLS/VOUCHERS AND MATERIAL SUBMITTED BY THE ASSESSEE AS PER THE PAPER BOOK . ACCORDINGLY , THE ISSUE IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO PASS A SPEAKING ORDER A FTER AFFORDING ADEQUATE OPPORTUNI TIES TO THE ASSESSEE AS DIRECTED ABOVE. THEREFORE , THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STAT I STICAL PURPOSES. 7. GROUND NO. 2 REG ARDING LEVY OF INTEREST U/S. 234A, 234B, 234C AND 234D ARE NOT REQUIRE D ANY ADJUDICATION AS THE SAME HAVE TO BE CHARGED MANDATORY AS PER THE PROVISION OF LAW. 8. G ROUND NO. 3 REGARDING INITIATI NG OF PENALTY PROCEEDINGS U/S. 271(1) ( C) IS PREMATURE THEREF ORE THE SAME IS NOT REQUIRED ANY ADJUDICATION AT THIS STAGE. THEREFORE G ROUND NO.2 AND G ROUND NO. 3 OF APPEAL OF THE ASSESSEE STAND DISMISSED. I.T.A NO. 3130 /AHD/20 13 A.Y. 2009 - 10 PAGE NO ADANI ENERGY LTD. VS. DCIT 5 9 . IN T HE RESULT THE GROUND NO.1 OF APPEAL OF T HE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND GROUND NO. 2 & 3 ARE DI S M I SSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 01 - 03 - 201 8 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 01 /03 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,