DCIT 4(1), MUMBAI V. DOUBLE DOT FINANACE LTD, MUMBAI

ITA 3136/MUM/2009

• Counselvise Citation: 313619914 RSA 2009
• Duration Of Justice: 4 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 18-03-2014
• Assessment Year: 2000-2001
• Appeal Filed On: 13-05-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SANJEEV JAIN
• Assessee Lawyers: SALIL KAPOOR
• Keywords: Reopening of assessment; Additional evidence; Commercial expediency
• Section: 43B; 143(3); 14A

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI . . , / BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND . , SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER . / ITA NO.3136/MUM/2009 ! ! ! ! / ASSESSMENT YEAR 2000-01 DY.COMMISSIONER OF INCOME TAX 4(1), 6 TH FLOOR, ROOM NO.640, AAYKAR BHAVAN, M.K.ROAD, MUMBAI 400020 / VS. DOUBLE DOT FINANCE LTD., KANTA TERRACE, 1 ST FLOOR, 533, KALBADEVI ROAD, MUMBAI 400002 ' ./ #$ ./ PAN/GIR NO. : AABCD 5429J ( '% / APPELLANT ) .. ( &''% / RESPONDENT ) '% ( / APPELLANT BY: SHRI SANJEEV JAIN &''% ) ( / RESPONDENT BY : SHRI SALIL KAPOOR ) * / DATE OF HEARING : 18/03/2014 +,! ) * / DATE OF PRONOUNCEMENT : 18/03/2014 - / O R D E R PER I.P.BANSAL, J.M: THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST ORDER PASSED BY LD. CIT(A)-IV, MUMBAI DATED 12/02/2009 F OR THE ASSESSMENT YEAR 2000-01. THE GROUNDS OF APPEAL READ AS UNDER: 1. A. ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD.CIT(A) ERRED IN ACCEPTING THE ADDITIONAL EVIDENCES, DESPITE OBJE CTIONS FROM THE A.O. VIDE HIS REMAND REPORT. ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 2 B. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE ADDITION OF RS.2,08,13,021/- WAS M ADE ON CONJUNCTURES AND SURMISES WITHOUT APPRECIATING THE FACT THAT THOUGH SUFFICIENT OPPORTUNITY WAS GIVEN TO THE ASSESSEE DURING THE ASSESSMENT PROCEED INGS, THE ASSESSEE DID NOT SUBMIT DETAILS AND DETAILS SUBMITTED BEFORE LD.CIT( A) WERE NOT SUPPORTED BY EVIDENCES. 2. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER AN Y GROUND OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. THE IMPUGNED ASSESSMENT ORDER IS DATED 26/01/200 4 PASSED UNDER SECTION 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (THE ACT). THE REASON TO REOPEN THE ASSESSMENT WAS DISALLOWANCES TO BE MADE UNDER SECTI ON 43B OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 36(1)(V)(A) FOR WHICH ADDITIO N WAS MADE IN THE ASSESSMENT ORDER ALONGWITH OTHER ADDITIONS MADE UNDER SECTION 14A OF THE ACT; WRITING OFF OF FINISHED GOODS AND FOREIGN TRAVEL EXPENSES. BEFORE LD. CIT (A) ASSESSEE HAS CHALLENGED THE ADDITIONS AS WELL AS INITIATION OF RE-ASSESSMENT PR OCEEDINGS. THE INITIATION OF RE- ASSESSMENT PROCEEDINGS HAS BEEN UPHELD BY LD. CIT(A ) AGAINST WHICH ASSESSEE DID NOT FILE ANY APPEAL. THE REVENUE IN ITS APPEAL IS AGGRIEVED BY THE DELETION OF THIS ADDITION MADE ON ACCOUNT OF WRITE OFF OF FINISHED GOODS. 3. IT MAY BE MENTIONED HERE THAT AT THE OUTSET IT W AS SUBMITTED BY LD. AR THAT ASSESSEE UNDER THE PROVISIONS OF RULE-27 OF INCOME TAX APPELLATE TRIBUNAL RULES, 1962 WANT TO SUPPORT THE ORDER OF LD. CIT(A) ON TH E BASIS OF INVALIDITY OF INITIATION OF RE-ASSESSMENT PROCEEDINGS. HOWEVER, DURING THE CO URSE OF HEARING OF THE APPEAL IT WAS SUBMITTED BY LD. AR THAT HE DOES NOT WANT TO P RESS SUCH REQUEST AND THE APPEAL OF DEPARTMENT MAY BE DECIDED ON MERITS. IN THESE CIRCUMSTANCES THE APPEAL FILED BY THE REVENUE WAS HEARD ON MERITS. 4. THE A.O HAS MADE THE DISALLOWANCE AS PER PARA -8 OF THE ASSESSMENT ORDER WHICH READ AS UNDER: 8 WRITTING OFF OF FINISHED GOODS 8.1 FROM THE VERIFICATION OF RECORDS IT IS NOTICED THAT THE ASSESSEE HAS WRITTEN OFF FINISHED GOODS WORTH RS.2,08,13,021 IN THE P & L AC COUNT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS GIVEN AN O PPORTUNITY TO EXPLAIN THE REASONS :AND EVIDENCE IN SUPPORT OF CLAIM OF WRITTE N OFF THE FINISHED GOODS. IN RESPONSE TO THIS, THE ASSESSEES SUBMISSIONS IS AS UNDER: ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 3 DURING THE A.Y 1999-2000, WE HAD WRITTEN OFF FINISH ED GOODS WORTH RS.2,08,13,021. THE ABOVE STOCK WAS LYING WITH VARI OUS PLANT LOCATIONS AND WITH VARIOUS CONSIGNMENT AGENTS. WE HAD SOLD OU R SALT PLANTS AT MADRAS AND PALGHAR TO M/S. GUJRAT HEAVY CHEMICALS LTD. AND GANDHIDHAM PLANT AND BRAND TO INTERNATIONAL BEST FO ODS LTD. THERE WAS HUGE PILE OF STOCKS OF FINISHED GOODS WAS LYING AT THE PLANT LOCATIONS AND THE SAME WAS NOT TAKEN OVER BY INTERN ATIONAL BEST FOODS LTD. WHO HAD TAKEN OVER THE BRAND NAME. AFTER THE S ALE OF BRAND NAME, DOUBLEDOT FINANCE LTD. (DCW HOME PRODUCTS LTD) COLD NOT USE THE CAPTAIN COOK BRAND IN THEIR SALES AND ALL THE STOCKS BEARS THE LOGO OF CAPTAIN COOK WAS NOT TAKEN OVER BY THE BRAND OWNERS OF CAPTAIN C OOK. HENCE THERE WAS NO ALTERNATE AND WE HAD WRITTEN OFF THE STOCK. COMP LETELY. WE ARE NOT AWARE PF THE; FATE OF THAT STOCKS LYING AT THE VARI OUS PLANT LOCATIONS AND CONSIGNMENT AGENTS SINCE THEY ARE NO MORE WITH US. 8.2 THE ABOVE CONTENTION OF THE ASSESSEE HAS BEEN C ONSIDERED. THE ASSESSEE HAS MERELY SUBMITTED A NOTE WITHOUT ADDUCING ANY EVIDEN CE IN SUPPORT OF THE CONTENTION. THE ASSESSEE HAS FAILED TO BRING ON REC ORD ANY CONVINCING REASONS WITH REGARD TO WRITE OFF OF FINISHED GOODS. NO EVID ENCE OR REASONING HAS BEEN ADDUCED TO PROVE THAT NO RECOVERY COULD HAVE BEEN M ADE OUT OF THIS STOCK. ASSESSEE COULD HAVE SOLD TO OTHER MANUFACTURERS OR WHOLESALERS SUCH QUANTITIES AND RECOVERED THE. VALUE OF STOCK. SUCH UNUSUAL HUG E CLAIM OF FINISHED GOODS BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS IS WITHOUT JU STIFIABLE REASONS. THEREFORE, THE CLAIM OF THE ASSESSEE IS NOT FOUND ACCEPTABLE A ND THE AMOUNT OF WRITE OFF OF FINISHED GOODS OF RS..2,08,13,021 IS BEING ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 5. IN THE APPEAL FILED BEFORE LD. CIT(A) THE ASSESS EE SUBMITTED THE FOLLOWING ADDITIONAL EVIDENCES TO CONTEND THAT THE IMPUGNED A DDITION OF RS.2,08,13,021/- WAS NOT WARRANTED: I)SALE AGREEMENT DATED 15.12.1998 BETWEEN THE ASSES SEE AND M/S. INTERNATIONAL BESTFOODS LTD. II) LETTER DATED 05.02.1999 FROM M/S. INTERNATIONA L .BESTFOODS LTD. III)LETTER DATED 09.02.1999 FROM M/S. INTERNATIONAL BESTFOODS LTD. IV) LETTER DATED 18.05.1999 FROM M/S. SOMANI & SON S (CONSIGNMENT AGENT). V) LETTER DATED 0102.2000 FROM THE ASSESSEE TO M/S. INTERNATIONAL BESTFOODS LTD. VI)LETTER DATED 21.02.2000 FROM M/S. INTERNATIONAL BESTFOODS LTD. 5.1 LD. CIT(A) VIDE LETTER DATED 16/9/2004 FORWARDE D THE AFOREMENTIONED ADDITIONAL EVIDENCES TO THE FILE OF AO FOR SEEKI NG HIS REPORT. VIDE LETTER DATED 11/11/2005 REMAND REPORT WAS SENT BY THE AO, WHICH HAS BEEN REPRODUCED ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 4 BY THE LD. CIT(A) IN HIS ORDER IN PARA 6.1. FOR TH E SAKE OF BREVITY THE SAME IS NOT REPRODUCED BELOW. IN SUM AND SUBSTANCE IT WAS THE CONTENTION OF THE LD. AO THAT DESPITE OPPORTUNITY GIVEN DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT FURNISH EVIDENCES , THEREFORE, DISALLOWANCES WAS MADE. SINCE THE OPPORTUNITY WAS GIVEN TO THE A SSESSEE AND IT WAS NOT AVAILED, THE ASSESSEE IS NOT ENTITLED TO FILE ADDIT IONAL EVIDENCES. HOWEVER, AFTER CONSIDERING THE ADDITIONAL EVIDENCES FILED BY THE A SSESSEE THE AO HAS OBSERVED THAT THE EVIDENCE FILED BY THE ASSESSEE ONLY PERTAI NS TO A TOTAL SUM OF RS.19,38,795/- OUT OF THE TOTAL CLAIM OF RS.2,08,1 3,021/- AND EVEN FOR THAT AMOUNT THE ASSESSEE COULD NOT PROVE ITS CASE OF WR ITE OFF OF FINISHED GOODS. THE ASSESSEE OBJECTED TO SUCH OBSERVATIONS OF AO I N THE SUBMISSIONS MADE BEFORE LD. CIT(A). IT WAS THE SUBMISSION OF THE A SSESSEE THAT THE ADDITIONAL EVIDENCE HAS BEEN CONSIDERED BY THE AO WITHOUT REQ UIRING THE ASSESSEE TO FILE FURTHER REQUIREMENTS. IT WAS REQUIRED BY THE LD. C IT(A) THAT THE AO WAS TO CARRY OUT SUCH ENQUIRIES WHICH WERE NECESSARY FOR T HE IMPUGNED ADDITION. SINCE LD. CIT(A) HAS DIRECTED TO THE AO TO CARRY O UT NECESSARY VERIFICATION AS HE MAY DEEM FIT FOR THE PURPOSE OF PREPARATION OF T HE REPORT AND THE AO WAS BOUND TO RAISE FURTHER QUERIES IF HE WAS NOT SATISF IED WITH THE EVIDENCE FILED BY THE ASSESSEE. IN OTHER WORDS, IT WAS THE CASE OF THE ASSESSEE THAT IN ABSENCE OF FURTHER REQUIREMENTS PUT FORTH BY THE AO, IT W AS IMPROPER TO SAY THAT AS ASSESSEE DID NOT FURNISH FURTHER EVIDENCE, THE ADDI TION WAS LIABLE TO BE SUSTAINED. IT WAS ALSO THE CASE OF THE ASSESSEE TH AT THE FINISHED GOODS MOSTLY CONSISTED OF SALT WHICH WAS A PERISHABLE ITEM. THE ASSESSEE SOLD ITS BUSINESS OF MANUFACTURING OF SALT TO INTERNATIONAL BEST FOO DS LTD. (IBF), WHO DID NOT TAKE FINISHED GOODS BECAUSE OF ITS BEING OF INFERI OR QUALITY. THEREFORE , THE ASSESSEE WAS REQUIRED TO WRITE OFF THE ENTIRE STOC K. IT IS THE CASE OF THE ASSESSEE THAT IT HAD SUBMITTED SUFFICIENT EVIDENCE TO PROVE THAT THE ACTION OF THE ASSESSEE IN WRITING OFF OF THE FINISHED GOODS STOCK WAS APPROPRIATE IN THE EYES OF LAW. THE DETAILS WHICH WERE SUBMITTED TO T HE AO WERE SUFFICIENT TO DISCHARGE THE OBLIGATION CAST UPON THE ASSESSEE AN D THESE DETAILS CONTAINED ZONE WISE DETAILS OF WRITE OFF OF FINISHED GOODS. LD.CIT(A) AFTER CONSIDERING ITSELF ALL ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 5 THESE SUBMISSIONS OF THE ASSESSEE HAS DELETED THE A DDITION WITH THE FOLLOWING OBSERVATIONS: 6.4 I HAVE GONE THROUGH THE ORDER OF THE A.O., SUBM ISSION OF THE APPELLANT AND REMAND REPORT OF A.O. AND THE COMMENTS ON THE REMAN D REPORT OF THE APPELLANT. THE A.O., IN PAN 8.2 OF THE ASSESSMENT ORDER HAS DI SALLOWED THE CLAIM OF THE APPELLANT OF RS.2,08,13,021/- BY STATING THAT THE A SSESSEE HAS FAILED TO BRING ON RECORD ANY CONVINCING REASON WITH REGARD TO WRITE O FF OF FINISHED GOODS AND NO EVIDENCE OR REASONING HAS BEEN ADDUCED TO PROVE THA T NO RECOVERY COULD HAVE BEEN MADE OUT OF THIS STOCK AND THE ASSESSEE COULD HAVE SOLD THE STOCK TO OTHER MANUFACTURERS OR WHOLESALERS AND RECOVERED THE VALU E OF STOCK, AND SUCH UNUSUAL HUGE CLAIM OF WRITE OFF FINISHED GOODS BY A SSESSEE IN THE BOOKS IS WITHOUT JUSTIFIABLE REASONS. 6.5. THE PAPER BOOK 2, FILED ON 6-9-04 CONTAINING A DDITIONAL EVIDENCE, WAS SENT TO .&Q. VIDE THIS OFFICE LETTER DATED 16-09-04 AND THE A.O. WAS REQUESTED TO GIVE COMMENTS ON THE ADDITIONAL EVIDENCE FILED BY THE AP PELLANT ON OR BEFORE 27-09-04. THE SAID LETTER ALSO STATED THAT THE A.O MAY CARRY OUT NECESSARY VERIFICATION AS HE MAY DEEM FIT FOR PURPOSE OF PREPARATION OF THE REPO RT. REMINDERS DATED 13-01- 2005, 2 1-02-2005 AND 09-11-2005 WERE SENT. THE A.O S REMAND REPORT WAS SENT ON 11-11-05, OBJECTING TO THE ADMISSION OF ADD ITIONAL EVIDENCE AND HIS OBSERVATIONS ON THE DOCUMENTS. FOR THE SAKE OF CLAR ITY, THE REMAND REPORT OF THE A.O. IS QUOTED AT PARA 6.1 OF THIS ORDER. THE A.O. HAS OBSERVED THAT SUFFICIENT OPPORTUNITY FOR SUBMISSION OF DETAILS DURING ASSESS MENT PROCEEDINGS WAS GIVEN BUT THE ASSESSEE DID NOT AVAIL SAID OPPORTUNITY AND THE ADMISSION OF ADDITIONAL EVIDENCE IS VEHEMENTLY OPPOSED BY A.Q.. THE APPELLA NTS STATE THAT THE CASE WAS REOPENED U/S. 147 ONLY IN RESPECT OF DISALLOWANCE U /S,43B OF THE ACT IN RESPECT OF PS AS CAN BE SEEN FROM THE REASONS FOR REOPENING OF ASSESSMENT HAD GIVEN AT PAGE 2 OF THE ASSESSMENT ORDER. THE APPELLANT FURTH ER STATED THAT WHATEVER EXPLANATION OR INFORMATION WAS SOUGHT BY THE A.O. W ERE MADE AVAILABLE AND THE A.O. NEVER INFORMED THE APPELLANT THAT HE WAS NOT S ATISFIED WITH THE SAME, AS THEY WOULD HAVE FURNISHED THE DETAILS, AND IN THE A BSENCE OF ANYTHING TO THE CONTRARY, THE APPELLANT REASONABLY BELIEVED THAT TH E A.O. WAS SATISFIED ABOUT THE SUBMISSIONS AND EVIDENCES FILED. IT WAS FURTHER STA TED BY THE APPELLANT THAT THE EVIDENCES FURNISHED BY THE APPELLANT UNDER RULE 46A , GOES INTO THE ROOT OF THE MATTER AND MERIT ADMISSION. 6.5 AS MAY BE SEEN FROM THE FINDINGS OF THE A.O. A T PARA 8.2 OF THE ASSESSMENT ORDER QUOTED AT PARA 6 OF THIS ORDER, THERE IS NOT HING TO SUGGEST THAT A.O. WENT THE DETAILS OF THE ISSUE BUT MADE THE ADDITION BY S AYING THAT NO EVIDENCE OR REASONING WAS ADDUCED TO PROVE THAT NO RECOVERY COU LD HAVE BEEN MADE OUT OF THE SAID STOCK, AND THE APPELLANT COULD HAVE SOLD T HE STOCK TO OTHER MANUFACTURERS OR WHOLESALERS AND RECOVER THE VALUE OF STOCK. THE EVIDENCES PRODUCED BY THE APPELLANT GOES INTO THE ROOT OF THE MATTER AND ARE, THEREFORE, REQUIRE TO BE ADMITTED AND ARE ADMITTED. 6.5.2. THE APPELLANT HAD SOLD ITS BRAND CAPTAIN COO K SALT TO M/S. INTERNATIONAL BEST FOODS LTD. THE INTERNATIONAL BEST FOODS LTD DI D NOT TAKE OVER THE GOODS ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 6 WHICH WERE LYING AT APPELLANTS GANDHI OHAM PLANT O R WITH THE CONSIGNMENT AGENTS AT VARIOUS PARTS OF INDIA. IN THE REMAND REP ORT, THE A.Q. LIMITED HIMSELF TO ANALYZING STOCK AT ONLY ONE CONSIGNMENT AGENT M/S. SOMANY & SONS, A RANCHI AND HAS GONE ON TO MAKE COMMENTS LIKE SALT BEING A CHEMICAL SUBSTANCE AND THE SAME IF NOT USED AS FOOD PRODUCT COULD ATLEAST HAVE BEEN SOLD TO CHEMICAL INDUSTRY OR SOME OTHER PURPOSES AND AS THE ASSESSE E HAS FAILED TO FURNISH THE DETAILS, THE ASSESSEES CLAIM OF WRITE OFF OF ENTIR E VALUE OF STOCK IS WITHOUT ANY BASIS. 6.6. THE FACT OF THE MATTER IS THAT THE STOCK OUT O F THE CLOSING STOCK OF SALT, ATTA, BESAN, AS ON 31-03-99, PART OF THE STOCK WAS SOLD, AND WHAT COULD NOT BE SOLD WERE WRITTEN OFF. WHY THE STOCK COULD NOT BE SOLD? WHAT COULD HAVE BEEN DONE ABOUT THE STOCK? ON SUCH HYPOTHETICAL QUESTION, THE SE CAN ONLY BE THE ARGUMENT OR A COUNTER ARGUMENTS. THE APPELLANT WAS ABLE TO T RANSFER SOME GOODS TO INTERNATIONAL BEST FOODS LTD. AND RECOVERED SOME PA RT OF VALUE OF STOCK, WHATEVER STOCK WAS SALEABLE WAS SOLD TO WHOLESALERS AND THE STOCK WHICH COULD NOT BE SOLD WERE WRITTEN OFF. THE A.O. SAYS THAT SALT COUL D HAVE BEEN SOLD TO A CHEMICAL INDUSTRY BUT THE APPELLANT SAYS THAT THOUGH SALT IS A CHEMICAL, FOOD SALT IS DIFFERENT FROM THE CHEMICAL SALT. ATTA & BASEN ARE PERISHABLE. WHAT NEEDS TO BE EXAMINED IS WHAT HAS HAPPENED AND NOT WHAT COULD HA VE HAPPENED. FOR WHATEVER REASON, THE GOODS COULD NOT BE SOLD, THE F ACT IS THAT THE GOODS WERE NOT SOLD AND REMAINED UNSALEABLE, AFTER THE APPELLANT S OLD THE 4CAPTAIN COOK BRAND UNDER WHICH THEY USED THE SALE THE ITEM LIKE SALT, ATTA AND BESAN. 6.7 THE APPELLANT HAS SHOWN SALE OF 87 1.495 M. T. OF SALT, 177.69 M.T OF ATTA AND 1.36 M.T OF BASEN AND HAS WRITTEN OFF 6378.344 M.T. OF SALT, 266.78 M.T OF ATTA AND 16.63 M.T. OF BASEN, WHICH IS REFLECTED IN THE AUDITED ACCOUNTS OF THE APPELLANT. IN THE PAPER BOOK, AT PARA 28 TO 38, THE APPELLANT HAS ELABORATELY EXPLAINED THE ENTIRE SEQUENCE LEADING TO WRITE OFF OF THE STOCK OF SALT, ATTA AND BASEN. AT PARA 28, IT HAS GIVEN THE DETAILS OF STOC K AS UNDER: PARTICULARS QUANTITY(MT) RATE (RS.) VALUE (RS.) SALT FREE FLOW SUPER WHILE CANSTAR INSTITUTIONAL TOTAL ATTA BESAN TOTAL GRAND TOTAL 2525.923 2252.635 88.266 1511.525 6378.349 266.776 16.63 283,406 6,661.755 2902.04 2713.66 10313.27 2066.27 10,930.19 25,266,53 73,30,330 61,12,885 9,10,311 31,23,400 1,74,76,926 29,15,912 4,20,182 33,36,094 2,08,13,020 6.8. THE APPELLANT HAS MENTIONED THAT IT HAS SOLD T HE SALT PLANTS OF MADRAS AND PALGHAR TO GUJARAT HEAVY CHEMICALS AND GANDHIDHAM P LANT AND BRAND TO M/S. ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 7 INTERNATIONAL BEST FOODS LTD., IT HAS QUOTED THE ME THODOLOGY OF STOCK WITH RESPECT TO THE SALE AGREEMENT, SHOWN IN SCHEDULE OF THE AGR EEMENT, NARRATED THE FACT WHY IBFL EXPRESSED ITS INABILITY TO TAKE OVER THE S TOCK, REFERRED TO THE LETTER OF M/S. SOMANY & SONS, CONSIGNMENT AGENT OF RANCHI WHI CH INDICATED THAT THE STOCK WERE IN BAD SHAPE, REFERRED TO TURNOVER FROM 96-97 TO 99-00 BEING AT RS.347.46 CRORES AND THE LOSS OF STOCK WRITTEN OFF BEING MERELY RS.2.08 CRORES AND ALSO THE FACT THAT THE CARRIED FORWARD LOSS BEI NG RS.18.67 CRORES, HENCE THE APPELLANT COULD NOT HAVE ANY INTENTION TO REDUCE IT S INCOME AND THAT THE DECISION TO WRITE OFF WAS TAKEN OUT OF COMMERCIAL EXPEDIENCY . AS AGAINST THESE OVERWHELMING FACTS, THE A.O. HAS MADE ADDITION ON T HE BASIS OF SUMMARIES AND CONJECTURE AND SUCH ADDITION IS NOT SUSTAINABLE. AD DITION OF RS.2,08,13,021/- IS THEREFORE DELETED. GROUND 9 IS ALLOWED. THE DEPARTMENT IS AGGRIEVED WITH THE AFOREMENTIONE D FINDINGS OF LD. CIT(A) AND HAS FILED THE IMPUGNED APPEAL. 6. AFTER NARRATING THE FACTS IT WAS SUBMITTED BY LD . DR THAT ASSESSEE DID NOT FILE ANY EVIDENCE BEFORE AO DURING THE COURSE OF RE-ASSESSMENT PROCEEDINGS. ONLY A NOTE WAS FILED WITHOUT ANY EV IDENCES. THEREFORE, IT WAS PLEADED BY LD. DR THAT LD. CIT(A) HAS WRONGLY ADMIT TED THE ADDITIONAL EVIDENCES. IT WAS FURTHER SUBMITTED BY HIM THAT EV EN ON MERITS ASSESSEE DID NOT FILE COMPLETE EVIDENCE COVERING THE ENTIRE AMO UNT OF WRITE OFF OF FINISHED GOODS. HE SUBMITTED THAT EVEN ACCORDING TO REMAND REPORT THE EVIDENCE WAS ONLY FOR AN AMOUNT OF RS.19,38,795/- WHICH IS SMAL L PART OF THE TOTAL ADDITION. HE SUBMITTED THAT ACCORDING TO THE WELL ESTABLISHE D PRINCIPLES OF LAW WHENEVER SUCH CLAIM IS MADE BY THE ASSESSEE, ONUS IS ON THE ASSESSEE TO PRODUCE SUFFICIENT EVIDENCE TO PROVE ITS CLAIM. IN ABSENCE OF SUCH EVIDENCE, THE CLAIM MADE BY THE ASSESSEE CANNOT BE ACCEPTED. HE SUBMIT TED THAT LD. CIT(A) HAS COMMITTED AN ERROR IN DELETING THE ADDITION IN ABSE NCE OF ANY EVIDENCE FILED BY THE ASSESSEE. HE SUBMITTED THAT EVEN THE EVIDENCE FURNISHED BY THE ASSESSEE RELATES TO FINANCIAL YEAR 1998-99. HE SUBMITTED T HAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE DID NOT MANUFACTURE SAL T. THE ADDITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE ONLY PERTAINING TO SALT A ND NO EVIDENCE WAS SUBMITTED WITH REGARD TO OTHER ITEMS OF FINISHED G OOD. LD. CIT(A) WITHOUT APPRECIATING THESE FACTS HAS DELETED THE ADDITION. HE FURTHER SUBMITTED THAT LD. CIT(A) IS ALSO WRONG IN DELETING THE ADDITION ON THE BASIS THAT ASSESSEE DID ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 8 NOT HAVE INTENTION TO REDUCE ITS INCOME IN VIEW O F HEAVY CARRY FORWARD OF LOSS OF 18.67 CRORES . IT WAS FURTHER SUBMITTED BY LD. DR THAT EVERY CLAIM HAS TO BE EXAMINED ON THE BASIS OF THE EVIDENCE SUBMITTED BY THE ASSESSEE AND HUGE CARRY FORWARD LOSSES WILL NOT HAVE ANY BEARING ON THE ISSUE THAT WHETHER OR NOT SUCH ADDITION WAS LIABLE TO BE CONFIRMED OR DELETED . THUS, IT WAS SUBMITTED BY LD. DR THAT ADDITION HAS WRONGLY BEEN DELETED BY LD . CIT(A) AND HIS ORDER SHOULD BE SET ASIDE AND THAT OF AO BE RESTORED. 7. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. AR TH AT ASSESSEE HAD SUBMITTED APPROPRIATE EVIDENCE BEFORE LD. CIT(A) TO SHOW THAT IMPUGNED ADDITION WAS LIABLE TO BE DELETED. HE SUBMITTED THA T SALT IS A PERISHABLE ITEM WHICH DOES NOT REMAIN CONSUMABLE BY THE HUMAN AFTER THREE MONTHS. THE ASSESSEE HAD SOLD ITS BUSINESS OF PRODUCTION OF SA LT TO M/S. IBF ALONGWITH THE CLOSING STOCK. M/S. IBF DID NOT ACCEPT CLOSING STO CK ON ACCOUNT OF IT BEING EITHER OF INFERIOR QUALITY OR IT WAS PACKED UNDER T HE BRAND NAME OF THE ASSESSEE NAMELY CAPTAIN COOK . HE SUBMITTED THAT EVIDE NCE WAS FILED BEFORE LD. CIT(A) THAT IT WAS MENTIONED BY M/S. IBF THAT SINC E THE PACKING IS IN THE NAME OF CAPTAIN COOK THE SAME CANNOT BE SOLD. IT WAS FURTHER SUBMITTED BY LD. AR THAT THE FINISHED GOODS HAD LOST ITS PROP RIETARY VALUE AS IT HAD LOST ITS FREE FLOWING PROPERTY. THUS, IT WAS CONTENDED BY LD. AR THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION. IT WAS FURTHER SUBM ITTED BY LD. AR THAT THE DETAILS FILED BY THE ASSESSEE WERE SUFFICIENT TO C OME TO A CONCLUSION THAT THE LOSS SHOWN BY THE ASSESSEE WAS A GENUINE LOSS. H E SUBMITTED THAT NOT ONLY QUANTITATIVE DETAILS WERE GIVEN IN RESPECT OF EACH ITEM OF THE FINISHED GOODS BUT ZONE WISE DETAILS WERE ALSO SUBMITTED. HE SUBMITTE D THAT DESPITE ALL THE PREVALENT ADVERSITIES THE ASSESSEE WAS ABLE TO SE LL THE STOCK TO THE EXTENT OF 56% OF THE QUANTITY BROUGHT FORWARD AS ON 1/4/199 9 AND THE REMAINING STOCK WAS WRITTEN OFF. HE SUBMITTED THAT DURING THE COUR SE OF REMAND PROCEEDINGS THE AO DID NOT REQUIRE THE ASSESSEE TO SUBMIT FUR THER DETAILS. HE SUBMITTED THAT THE ASSESSEE HAS ALL THE DETAILS FROM WHERE I T CAN BE ASCERTAINED THAT THE LOSS CLAIMED BY THE ASSESSEE IS GENUINE AND IF GIVE N OPPORTUNITY, THE ASSESSEE ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 9 CAN PRODUCE ALL THE EVIDENCES TO PROVE THE SAME. T HUS, IT WAS SUBMITTED BY LD. AR THAT LD. CIT(A) HAS RIGHTLY DELETED THE ADDI TION AND HIS ORDER SHOULD BE UPHELD. 8. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTEN TIONS HAVE CAREFULLY BEEN CONSIDERED. DURING THE COURSE OF ASSESSMENT P ROCEEDINGS THE ASSESSEE DID NOT FILE ANY EVIDENCE AS IT IS CLEAR FROM THE OBSERVATIONS OF AO IN THE ASSESSMENT ORDER WHICH HAVE BEEN REPRODUCED IN EARL IER PART OF THIS ORDER. THE SCOPE OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE TO ASSAIL THE IMPUGNED ADDITION IS ALSO LIMITED. WE HAVE GONE THROUGH THIS ADDITIONAL EVIDENCE AND WE FOUND THAT THE EVIDENCE FILED BY THE ASSESSEE DO ES NOT COVER ENTIRE CONTROVERSY, MUCH LESS IT COVERS ONLY AN AMOUNT OF RS.19,39,795/- WHICH IS A VERY SMALL PORTION OF THE TOTAL ADDITION. MOREOV ER, THE ADDITIONAL EVIDENCE ITSELF DOES NOT CONCRETELY ESTABLISH THE CLAIM OF T HE ASSESSEE AS THE SAME PERTAINS TO F.Y. 1998-99 AND NOT TO F.Y.1999-2000. HERE IT IS THE CASE OF THE ASSESSEE THAT AO DID NOT REQUIRE THE ASSESSEE TO FU RNISH FURTHER EVIDENCE. IT IS ALSO THE CASE OF THE ASSESSEE THAT WHILE FORWARDI NG ADDITIONAL EVIDENCE BY THE LD. CIT(A) TO THE AO IT WAS DIRECTED THAT AO MAY C ARRY OUT NECESSARY VERIFICATION AS MAY BE DEEMED FIT FOR THE PURPOSE O F PREPARATION OF THE REPORT THAT IS NOT DONE BY THE AO. THEREFORE, THE ENT IRE ADDITION WAS LIABLE TO BE DELETED. WE DO NOT FIND MUCH FORCE IN SUCH ARGUMENT S RAISED BY LD. AR. WE OBSERVE THAT THE REMAND REPORT WAS SUBMITTED BY TH E AO VIDE LETTER DATED 11/11/2005 AND THE ORDER HAS BEEN PASSED BY LD. CIT (A) ON 12/2/2009 I.E. AFTER A GAP OF 3 YEARS. EVEN DURING THE COURSE OF FURTHER HEARING I.E. AFTER THE REMAND REPORT SUBMITTED BY THE AO, THE ASSESS EE HAD MADE VARIOUS SUBMISSIONS TO THE LD. CIT(A) TO SUBSTANTIATE ITS C ASE WHICH ARE IN THE SHAPE OF LETTERS FURNISHED TO LD. CIT(A) 15/2/2007, 17/5/20 07, 24/4/2008 AND 1/12/2008, COPIES OF THESE LETTERS ARE FILED IN TH E PAPER BOOK FROM PAGES 23 TO 43. IT IS ALSO OBSERVED THAT IN THESE LETTERS T HE ASSESSEE HAD SUBMITTED VARIOUS FURTHER DETAILS OF THE STOCK WHICH WERE NE VER SUBMITTED TO THE AO AND THESE VERY DETAILS CONTAIN ZONE WISE DETAILS. EVEN IN ZONE WISE DETAILS THE ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 10 ASSESSEE HAD NOT SPECIFIED THE NAME OF THE PARTIE S WITH WHOM SUCH STOCK WAS LYING. THEREFORE, THE DETAILS FILED BY THE ASS ESSEE EVEN BEFORE LD. CIT(A) SUBSEQUENT TO SUBMISSION OF REMAND REPORT BY THE A. O ARE NOT SUFFICIENT TO SAY THAT ASSESSEE HAS DISCHARGED ITS OBLIGATION TO PRO VE ITS CLAIM. HOWEVER, KEEPING IN VIEW THE SUBMISSION OF THE ASSESSEE THAT AS AO DID NOT ASK THE ASSESSEE TO SUBMIT FURTHER DETAILS, THE ASSESSEE W AS UNABLE TO FILE NECESSARY DETAILS, AND ALSO KEEPING IN VIEW THE SUBMISSI ONS OF THE LD. AR THAT THE ASSESSEE HAS ALL DETAILS AND IS IN A POSITION TO SU BMIT ALL DETAILS BEFORE A.O, WE ARE OF THE VIEW THAT IT WILL SERVE THE INTEREST OF JUSTICE IF THE MATTER IS RESTORED BACK TO THE FILE OF AO WITH A DIRECTION T O RE-ADJUDICATE THIS ISSUE AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEA RING AND PLACING ALL THE EVIDENCES ON RECORD TO SUPPORT ITS CASE. AFTER GIV ING SUCH OPPORTUNITY THE AO WILL RE-ADJUDICATE THIS ISSUE AS PER THE PROVISION S OF LAW. WE DIRECT ACCORDINGLY. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, APPEAL FILED BY THE REVENUE IS CONSIDERED TO BE ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 18/03/201 4 - ) +,! . / 0 18/03/2014 , ) 1 2 SD/- SD/- ( . / D.KARUNAKARA RAO ) ( . . / I.P. BANSAL ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; / DATED 18/03/2014 ITA NO.3136/MUM/2009 ASSESSMENT YEAR 2000-01 11 - - - - ) )) ) &*3 &*3 &*3 &*3 43!* 43!* 43!* 43!* / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT. 3. 5 ( ) / THE CIT(A)- 4. 5 / CIT 5. 361 &* , , / DR, ITAT, MUMBAI 6. 1 7 / GUARD FILE. - - - - / BY ORDER, '3* &* //TRUE COPY// 8 88 8 / 9 9 9 9 # # # # (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS