DCIT 2(2), MUMBAI V. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD, MUMBAI

ITA 3257/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88219 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 05-02-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 26-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Keywords: Additional evidence; Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 3257/MUM/2013 ( / ASSESSMENT YEAR: 2003-04) DY. CIT-2(2), ROOM NO. 545, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI-40020 VS. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED, KRUPANIDHI, 9, WALCHAND HIRACHAND MARG, BALLARD ESTATE, MUMBAI-400 001 ! ./PAN/GIR NO. AAACM 3863 A ( ' /APPELLANT ) : ( #$ ' / RESPONDENT ) '%& / APPELLANT BY : SHRI LOVE KUMAR #$ '%& / RESPONDENT BY : NONE ' ()%*+ / DATE OF HEARING : 05.02.2015 ,-.%*+ / DATE OF PRONOUNCEMENT : 10.02.2015 /0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE DIRECTED AGAINST T HE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-5, MUMBAI (CIT(A) FOR SHO RT) DATED 31.01.2013, PARTLY ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSES SMENT U/S.143(3) R/W S. 254 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR TH E ASSESSMENT YEAR (A.Y.) 2003-04 VIDE ORDER DATED 29.12.2011. 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE -RESPONDENT WHEN THE APPEAL WAS CALLED OUT FOR HEARING, NOR IS THERE ANY ADJOURNMEN T MOTION. THIS WAS DESPITE THE NOTICE 2 ITA NO. 3257/MUM/2013 (A.Y.2003-04) DY. CIT VS. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED OF HEARING HAVING BEEN COMMUNICATED TO THE ASSESSEE THROUGH THE NOTICE BOARD OF THE TRIBUNAL. THE SAME, ALONG WITH THE LISTING OF THE C ASES, IN THE FORM OF THE CAUSE LIST POSTED ON THE WEBSITE OF THE TRIBUNAL, WOULD IN OUR VIEW B E AN ADEQUATE NOTICE, PARTICULARLY WHERE, AS IN THE INSTANT CASE, THE NOTICE FOR THE F IRST HEARING, WHEREAT THOUGH THE BENCH DID NOT FUNCTION, I.E., ON 31.07.2014, WAS SENT PER REGISTERED POST, ACKNOWLEDGEMENT OF WHICH, PROVING ITS SERVICE, IS ON RECORD. EVEN NO POWER OF ATTORNEY OR LETTER OF AUTHORITY IN FAVOUR OF ANY COUNSEL IS ON RECORD. WE, UNDER TH E CIRCUMSTANCES, PROCEED TO DECIDE THE APPEAL AFTER HEARING THE PARTY BEFORE US. 3. THE APPEAL RAISES TWO ISSUES WHICH, BEING PARI MATERIA , WE TAKE UP TOGETHER. IT WOULD BE RELEVANT TO, HOWEVER, BEFORE WE PROCEED WI TH THE MATTER, DELINEATE THE BACKGROUND FACTS OF THE CASE. THE ASSESSEE WAS FOUN D TO HAVE CLAIMED LIABILITIES IN ITS ACCOUNTS AT A TOTAL OF RS.6,10,65,189/-, BY WAY OF PROVISIONS, WHICH THE ASSESSEE IN VIEW OF THE ASSESSING OFFICER (A.O.) COULD NOT SUBSTANTI ATE, SO THAT THE SAME WERE CONTINGENT IN NATURE, AND THUS NOT ADMISSIBLE IN LAW. ACCORDIN GLY, PLACING RELIANCE ON THE DECISION IN THE CASE OF BHARAT EARTH MOVERS VS. CIT [2000] 245 ITR 428 (SC), HE DISALLOWED THE SAME. IN APPEAL, IT WAS CLARIFIED BEFORE THE LD. CI T(A) THAT THE ENTIRE OF IT DOES NOT RELATE TO THE ADDITIONAL RENT PAYABLE TO THE BOMBAY PORT T RUST, MUMBAI (BPT), AS STATED BY THE A.O. IN HIS ORDER, BUT ONLY A SUM OF RS.4,80,50,463 /-. IN FACT, OF THIS SUM ONLY RS.45,87,863/- RELATES TO THE CURRENT YEAR; THE BAL ANCE BEING IN RELATION TO THE EARLIER YEARS, I.E., FROM F.Y. 1980-81 TO 2001-02, SO THAT THE A.O. HAD DISALLOWED BROUGHT FORWARD OUTSTANDING LIABILITIES, BOOKED AND CLAIMED FOR THE PRECEDING YEARS, AS WELL. THE LD. CIT(A), ACCORDINGLY, DELETED THE DISALLOWANCE QUA ADDITIONAL RENT TO BPT WITH REFERENCE TO THE LIABILITIES BOOKED IN AND CLAIMED FOR THE EA RLIER YEARS. AS REGARDS THE CLAIM FOR THE CURRENT YEAR; IT BEING BROUGHT TO HIS NOTICE THAT T HE DISPUTE WITH BPT, I.E., QUA THE ADDITIONAL RENT CHARGED BY THE SAID ENTITY, HAVING BEEN SINCE RESOLVED BY THE APEX COURT, HE ALLOWED THE ASSESSEES CLAIM WITH REFERENCE TO T HE RENT PAYABLE AS PER THE DECISION OF THE HONBLE SUPREME COURT, I.E., AS COMMUNICATED TO HIM, BEING AT RS.1,42,947/- PER MONTH (I.E., AT RS.17.15 LACS FOR THE YEAR), ALSO I NCLUDING ALONG WITH INTEREST @ 6% P.A., 3 ITA NO. 3257/MUM/2013 (A.Y.2003-04) DY. CIT VS. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED I.E., AS FURTHER ALLOWED ON THE ARREARS BY THE HON BLE APEX COURT. AS REGARDS THE BALANCE LIABILITIES, AMOUNTING TO RS.51,26,727/-, I.E., PAY ABLE TO OTHERS, CLAIMED TO HAVE BEEN SINCE PAID, HE DIRECTED FOR THEIR DELETION, I.E., S AVE A SUM OF RS.16,532/-, SUBJECT TO THE VERIFICATION OF THE FACTS BY THE A.O., IN-AS-MUCH A S THE SUBSEQUENT PAYMENT/S VALIDATED THE PROVISION QUA A SUBSISTING LIABILITY. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US, RAISING THE FOLLOWING GROUNDS: 1) THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE CASE. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOU NT OF EXPENSES FOR A SUBSTANTIALLY LONG PERIOD OVERLOOKING THE FACT THAT SAME IS TAXABLE U/S.41(1) OF THE I. T. ACT, 1961. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN ISSUING THE DIRECTION TO AO TO VERI FY WHETHER THE PROVISION FOR OTHER LIABILITIES AS PER PARAGRAPH 5. 5 OF THE ORDER, OVERLOOKING THE CRUCIAL FACT THAT WITH EFFECT FROM 01.06.2001, SETTING ASIDE ON ISSUE OR THE ORDER IS NOT PERMISSIBLE AS P ER THE AMENDED PROVISIONS. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) ERRED IN SETTING ASIDE THE ISSUE OF PROVISIO N FOR OTHER LIABILITIES AND WHETHER THE SAME HAVE BEEN WRITTEN OFF THEREBY IGNORING THE PROVISION OF SECTION 250(A)(*) EMPOWERING HIM TO MA KE FURTHER ENQUIRIES BEFORE DISPOSAL OF APPEAL. [(*) TO BE READ AS SECTION 250(4)] 4. WE HAVE HEARD THE PARTY BEFORE US, AND PERUSED T HE MATERIAL ON RECORD. WE FIND LITTLE MERIT IN THE REVENUES CASE. FIRSTLY , NO ADDITION HAS BEEN MADE BY THE A.O. U/S.41(1) OF THE ACT, I.E., ON ACCOUNT OF CESSATION OR REMISSION OF A LIABILITY, NOR IS ONE SO EXIGIBLE IN THE FACTS AND CIRCUMSTANCES O F THE CASE. THE REVENUES CASE AS MADE BY THE A.O. WAS TOWARD THE LIABILITIES BEING CONTIN GENT IN NATURE, AND WHICH WERE IN FACT DISPUTED. RATHER, IN-AS-MUCH AS THE A.O. HAD ALSO D ISALLOWED THE LIABILITIES BOOKED IN AND CLAIMED BY THE ASSESSEE FOR THE EARLIER YEARS, HIS ACTION WARRANTS IMPOSITION OF COST, WHICH WE THOUGH REFRAIN FROM; HE BEING NOT BEFORE US TO S TATE HIS CASE. QUA THE OTHER LIABILITIES CLAIMED FOR THE CURRENT YEAR (AT RS.51.27 LACS), TH E VALIDITY OF THE PROVISION MADE STANDS 4 ITA NO. 3257/MUM/2013 (A.Y.2003-04) DY. CIT VS. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED SUBSTANTIATED WITH REFERENCE TO THE PAYMENT ACTUALL Y MADE SUBSEQUENTLY. IN FACT, IN-AS- MUCH AS THE PROVISION IS MADE ON THE BASIS OF THE B EST AVAILABLE INFORMATION, ANY SHORTFALL OR EXCESS THEREIN BEING FOUND IN EXCESS BY RS.16, 532/-, SHOULD NOT HAVE WARRANTED THE CONFIRMATION OF THE DISALLOWANCE TO THAT EXTENT IN- AS-MUCH AS ANY PROVISION IS, BY DEFINITION, ONLY AN ESTIMATE, AND AS LONG AS THE SA ME IS REASONABLE AND BASED ON THE BEST INFORMATION AVAILABLE, IS TO BE HONORED; THE DIFFER ENCE BEING LIABLE TO BE ADJUSTED IN THE ACCOUNTS FOR THE YEAR ON THE BASIS OF THE AMOUNT/S AS FINALLY SETTLED. WITH REGARD TO THE ADDITIONAL RENT PAYABLE TO BPT, WE FIND THE IMPUGNE D ORDER AS ONLY CORRECT. THE ASSESSEE HAS NOT SHOWN ANY BASIS FOR BOOKING AND CLAIMING A MUCH HIGHER FIGURE OF RS.47.88 LACS, I.E., FOR THE CURRENT YEAR. WE ARE IN ANY CASE DECI DING THE REVENUES APPEAL. WE ARE CONSCIOUS THAT THE ASSESSEES CLAIM, AS MADE, DID N OT INCLUDE INTEREST ON ARREARS, WHICH STANDS ALSO ALLOWED BY THE LD. CIT(A). SO, HOWEVER, THE SAME IS IN RELATION TO THE SAME, PRINCIPAL LIABILITY AND, FURTHER, CAN ONLY BE CONSI DERED AS HAVING ACCRUED FOR THE RELEVANT YEAR. TO THE EXTENT THEREFORE THE TOTAL ALLOWANCE D OES NOT EXCEED THE AMOUNT CLAIMED IN ITS RESPECT, I.E., THE ADDITIONAL RENT PAYABLE TO B PT, ITS ALLOWANCE IS VALID IN LAW IN THE FACTS AND CIRCUMSTANCES OF THE CASE. FINALLY, THE REVENUES GROUND NO. 4 WITH REFERENCE TO SECTION 250(4) IS ALSO IN OUR VIEW MISPLACED. THE DISALLOWANCE BEING QUA A PROVISION TOWARDS AN ACCRUED LIABILITY, THE ISSUE IS ESSENTIALLY ONE OF ITS VALIDITY, WHICH HA S BOTH QUALITATIVE AND QUANTITATIVE ASPECTS THERETO. ITS CONTOURS, WHICH MAY KEEP CONTINUALLY C HANGING, ARE TO BE SEEN IN LIGHT OF THE INFORMATION CURRENTLY AVAILABLE. THE PROVISION OF S ECTION 250(4) DOES NOT EXCLUDE THE ADMISSION OF AND ADJUDICATION WITH REFERENCE TO THE ADDITIONAL EVIDENCE, I.E., THAT PRODUCED BEFORE THE FIRST APPELLATE AUTHORITY FOR T HE FIRST TIME. THE LD. CIT(A) HAS INSTEAD OF CALLING FOR A REMAND REPORT FROM THE A.O., CONSI DERED IT FIT TO DECIDE THE ISSUE IN PRINCIPLE, MAKING HIS ORDER SUBJECT TO THE VERIFICA TION OF PRIMARY FACTS BY THE ASSESSING AUTHORITY. THOUGH, THEREFORE, NOT STRICTLY OBSERVIN G THE PROCEDURE LAID DOWN U/R.46A, WHICH THOUGH HAS NOT BEEN IMPUGNED BY THE REVENUE, THE SAME WOULD NOT VITIATE HIS ORDER IN-AS-MUCH AS NO PREJUDICE STANDS THUS CAUSED TO THE REVENUE. REFERENCE IN THIS 5 ITA NO. 3257/MUM/2013 (A.Y.2003-04) DY. CIT VS. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED CONTEXT MAY BE PROFITABLY MADE TO THE DECISION IN T HE CASE OF PRABHAVATI S. SHAH VS. CIT [1998] 231 ITR 1 (BOM). THE ONUS TO PROVE ITS CLAIM , I.E., AS MADE BEFORE THE LD. CIT(A), IT MAY BE APPRECIATED, WOULD ONLY BE ON THE ASSESS EE. WE DECIDE ACCORDINGLY, CONFIRMING THE IMPUGNED ORDER. 5. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON FEBRUARY 10, 2015 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / / ACCOUNTANT MEMBER ' 1) MUMBAI; 2/ DATED : 10.02.2015 (3 ROSHANI , SR. PS ! ' #$%& ' &$ COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #$ ' / THE RESPONDENT 3. ' 4* 5 6 / THE CIT(A) 4. ' 4* / CIT CONCERNED 5. 7(89#3*3:; +:;. ' 1) / DR, ITAT, MUMBAI 6. 9<=) GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , ' 1) / ITAT, MUMBAI