EDICON PNEUMATIC TOOLS CO. P.LTD, MUMBAI V. ASST CIT CIR 10(3), MUMBAI

ITA 3185/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1813 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: E
• Next Hearing Date: 09-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 08-05-2012
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Assessee Lawyers: BRIJMOHAN P AGARWAL
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI C.N. PRASAD, JUDICIAL MEMBER I.T.A. NO.3185/M/2012 (ASSESSMENT YEAR: 2009 - 2010) M/S. EDICON PNEUMATIC TOOLS CO. PVT LTD., 203, MAYFAIR, ST DOMNIC ROAD, BANDRA (W), MUMBAI 400050. / VS. ACIT, CIRCLE 10(3), R. NO. 473, 4 TH FLOOR, AAYAKAR BHAVAN, MUMBAI 400 020. ./ PAN : AABCE3179L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI BRIJMOHAN P. AGARWAL / RESPONDENT BY : SHRI AKHILENDRA YADAV, DR / DATE OF HEARING : 09.11.2016 / DATE OF PRONOUNCEMENT : 18 .11.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 8.5.2012 IS AGAINST THE ORDER OF THE CIT (A) - 22, MUMBAI DATED 24.2.2012 FOR THE ASSESSMENT YEAR 2009 - 2010. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUND WHICH READS AS UNDER: - THE LD AO HAS ERRED IN DISALLOWING AN AMOUNT OF RS. 1,24,14,863/ - OUT OF THE TOTAL NET PROFIT OF RS. 3,34,57,037/ - FROM DEDUCTION/S 10B AND TAXING AS INCOME FROM OTHER SOURCES AND FURTHER LD CIT (A) HAS ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE AO. 2. AT THE OUTSET, NARRATING THE ABOVE FACTS LEADING TO THE ABOVE GROUND OF THE PRESENT APPEAL, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF MINING TOOLS AND REGISTERED SUBSTANTIAL TURNOVER AND PROFITS UNUSUALLY TO THE PROFITS AND TURNOVER OF THE EARLIER ASSESSMENT YEARS. ASSESSEE CLAIMED EXEMPTION U/S 10B OF THE ACT ON THESE PROFITS. SUSPECTING THE INFLATION OF EXEMPT PROFITS OF THE ASSESSEES PROJECT, AO CALLED FOR VARIOUS DETAILS AS PER THE DATES ME NTIONED IN PARA 4 OF THE AO AND NOTED THAT THE ASSESSEE WAS DEEPLY RELUCTANT TO FILE THE DETAILS CONSISTENTLY. AO CALLED FOR JUSTIFYING THE SUBSTANTIAL INCREASE IN PROFITS AND THE SPECIFIC REASONS IN THE SAME . AO WAS NOT SATISFIED WITH 2 THE GENERAL INFORM ATION ATTEMPTED TO BE FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. CONSEQUENTLY, ASSESSING OFFICER REJECTED THE CLAIM OF DEDUCTION U/S 10B OF THE ACT AND PROCEEDED TO RE - WORKOUT THE ELIGIBLE PROFITS BY APPLYING THE PREVIOUS YEARS NET PROFI T RATIO OF 20% AND THE CLAIM U/S 10B IS RESTRICTED TO SUCH PROFITS. THE BALANCE INCOME WAS TAXED AS INCOME FROM OTHER SOURCES. AN AMOUNT OF RS. 1,24,14,863/ - IS DISALLOWED AND THE SAME IS TAXED AS INCOME FROM OTHER SOURCES. CIT (A) DISCUSSED THE ABO VE CONCLUSIONS AND THE SUBMISSIONS OF THE ASSESSEE IN PARAS 2.2. AND 2.3 OF THE IMPUGNED ORDER AND FOR WANT OF ASSESSEES COOPERATION AND FURNISHING OF SPECIFIC DETAILS, THE CONCLUSIONS OF THE AO WERE EVENTUALLY CONFIRMED. AGGRIEVED, ASSESSEE IS IN FURTHE R APPEAL BEFORE THE TRIBUNAL. 3. DURING THE PROCEEDINGS BEFORE US, IN THE LIGHT OF THE ABOVE FACTUAL POSITION AND THE DEVELOPMENTS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE MAY BE REMANDED TO THE FILE OF THE AO FOR FRESH ADJUDICATION. FURTHER , LD COUNSEL FOR THE ASSESSEE MADE A STATEMENT AT BAR MENTIONING THAT HE SHALL FILE RELEVANT DETAILS IN SUPPORT OF THE EXEMPT PROFITS AND PROVE BEFORE THE AO THAT THERE IS NO INFLATION OF THE PROFITS OF THE UNDERTAKING. 4. ON THE OTHER HAND, LD DR FOR TH E REVENUE RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSAL THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE RELE VANT MATERIAL PLACED BEFORE US. CONSIDERING THE REQUIREMENT OF THE RELEVANT DETAILS IN SUPPOR T OF THE ASSESSEES CLAIM FOR HIGHER PROFITABILITY AS WELL AS THE STATEMENT OF LD AR BEFORE US, WE ARE OF THE OPINION, THE REQUEST OF THE ASSESSEE SHOULD BE CONSIDERED. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE REMANDED TO THE FILE OF THE AO FOR FRE SH ADJUDICATION . AO IS DIRECTED TO CONSIDER THE SUBMISSIONS OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTICE. ACCORDINGLY, GROUNDS RAISED BY T HE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3 ORDER PRONOUNCED IN THE OPEN COURT ON 1 8 T H NOVEMBER, 2016. S D / - S D / - ( C.N. PRASAD ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 18.11 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI