Prabhat Hygine Products Pvt. Ltd., RAJKOT-GUJARAT V. The Deputy Commissioner of Income Tax, Circle- 1, RAJKOT-GUJARAT

ITA 338/RJT/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0193 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 24-09-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 08-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANKUR GARG
• Assessee Lawyers: M N MANVAR
• Keywords: Depreciation; Additional evidence; Reasonable cause
• Section: 68; 144

Judgement Text

ITA NO.338/RJT/2011. . 1 , IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , , , , . .. . . .. . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVAST AVA, AM ITA NO.338/RJT/2011. / ASSESSMENT YEAR 2005-06 PRABHAT HYGIENE PRODUCTS PVT.LTD., C/O M.N.MANVAR &CO., CHARTERED ACCOUNTANT 504-STAR PLAZA, PHUCHHAB CHOWK RAJKOT, PAN: AABCP2852M ( * / APPELLANT) VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE-1, RAJKOT. +,* / RESPONDENT -. / ASSESSEE BY SHRI M.N.MANVAR . / REVENUE BY SHRI ANKUR GARG . / DATE OF HEARING 24.9.2012 . / DATE OF PRONOUNCEMENT 28.9.2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.5.2 011 OF CIT(A)- GANDHINAGAR, AHMEDABAD FOR THE ASSESSMENT YEAR 20 05-06. 2. VARIOUS GROUNDS RAISED IN THIS APPEAL ARE AS UN DER : 1. CIT(A), GANDHINAGAR HAS ERRED IN LAW AND ON FAC TS IN ASSESSING THE TOTAL INCOME AT RS. NIL AS AGAINST RE TURNED LOSS OF RS. 10,10,361/- 2. CIT(A),GANDHINAGAR HAS ERRED IN LAW AND ON FACTS IN DISMISSING THE REQUEST TO ADMIT THE ADDITIONAL EVID ENCES FILED ON 20-12-2007 ON THE ALLEGED GROUND THAT THE ASSESSEE WAS NOT ITA NO.338/RJT/2011. . 2 PREVENTED BY ANY REASONABLE CAUSE FOR FILLING THE INFORMATIONS READY WITH THEM ON 29-11-2007. 3. CIT(A). GANDHINAGAR HAS ERRED IN LAW AND ON FACT S IN CONFIRMING THE ADDITION MADE IN ASSESSMENT ORDER U/ S. 144 OF I.T.ACT.1961 BY DY. CIT.CIRCLE - I, RAJKOT. AS UNDE R:- I) ADDITION OF RS. 33,16,000/- ON ACCOUNT OF UNEXPL AINED CASH CREDIT U/S 68 OF THE IT ACT. (II) ADDITION OF RS.45,164/- OUT OF DEPRECIATION CL AIMED ON ADDITION OF FIXED ASSETS DURING THE YEAR. (III) DISALLOWANCE OF BROKERAGE EXPENSES RS.2,16,97 5/-, FREIGHT EXPENSES RS.9,85,833/- MACHINERY MAINTENANC E EXPENSES RS.3,52,616/- AND MAJURI- LOADING, UNLOADI NG EXPENSES RS.5,87,301/- AGGREGATING RS.21,42,725/- O N THE PRESUMPTION THAT THE ASSESSEE COMPANY HAS NOT COMPLIED WITH THE PROVISION OF TAX DEDUCTION AT SOU RCE AND THEREFORE, THE ENTIRE EXPENDITURE IS DISALLOWED U/S 40(IA) OF I.T.ACT.1961. (IV) ADDITIONRS.28,04,135/- ON THE ALLEGED GROUND T HAT GROSS PROFIT PERCENTAGE IS LOWER AS COMPARED TO EAR LIER TWO YEARS AND ESTIMATING THE G.P. PERCENTAGE AT 4.2 9% WITHOUT FINDING ANY DEFECT IN BOOKS OF ACCOUNTS AND OR REJECTING THE BOOK RESULTS. (V) LUMPSUM DISALLOWANCE OF RS.3,00,000/- OUT OF EXPENSES ON THE ALLEGED GROUND THAT THE ASSESSMENT IS NOT FULLY JUSTIFIED IN THE ABSENCE OF DETAILS REQUI RED AND IN THE ABSENCE OF VERIFICATIONS OF BOOKS OF ACCOUNTS, INCOME-EXPENDITURE, SQUARED UP ACCOUNTS, PAYMENT EXCEEDING RS.20,000/- , OTHERWISE THEN BY CROSS CHEQUE OR DD. 3. AT THE TIME OF HEARING BEFORE US ON BEHALF OF TH E ASSESSEE SHRI M.N.MANVAR APPEARED AND POINTED OUT THAT THE AO PAS SED THE ASSESSMENT ORDER U/S 144 ON 17.12.2007. BEFORE THE AO, THE ASSESSEE FURNISHED THE NECESSARY EVIDENCE ON 20.1 2.2007 THROUGH TWO SUBMISSIONS DATED 29.11.2007 AND 20.12.2007. O BVIOUSLY, THESE WERE NOT CONSIDERED BY THE AO IN THE ASSESSMENT FR AMED U/S 144 ON 17.12.2007. THE LD. CIT(A) IN THE IMPUGNED ORDER RE FUSED TO ADMIT THE ITA NO.338/RJT/2011. . 3 ADDITIONAL EVIDENCE ON THE GROUND THAT THERE IS NO REASONABLE CAUSE FOR FILING DETAILS /SUBMISSIONS ON 20.12.2007. THE LD . COUNSEL OF THE ASSESSEE EXPLAINED THAT THOUGH THE COVERING LETTER THROUGH WHICH THE DETAILS WERE SUBMITTED BEFORE THE AO WAS READY B UT THE DETAILS WERE NOT READY. HE FURTHER EXPLAINED THAT ON ACCOUNT OF DISPUTE BETWEEN SHRI JIGNESH H.KOTAK AND OTHER BOARD OF DIRECTORS , HE LEFT THE COMPANY AND FINALLY HE RESIGNED FROM THE DIRECTORSH IP FROM 10.3.2008. HE WAS ON THE BOARD OF DIRECTORS FROM 20.7.2004 TO 10.3.2008. IN SUPPORT OF THIS, THE COPY OF FORM NO.32 FILED FOR RESIGNATION OF SHRI JIGNESH H.KOTAK IS ALSO PRODUCED. HE SUBMITTED TH AT SINCE THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN FURN ISHING THE NECESSARY DETAILS REQUIRED FOR COMPLETION OF ASSESS MENT, THE LD. CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE UNDE R RULE 46A (1)(A). SHRI ANKUR GARG, THE LD.DR APPEARED ON BEHALF OF T HE ASSESSEE AND OBJECTED TO THIS PRAYER OF THE ASSESSEE AND CONTEN DED INSTEAD OF NOW RESTORING THE APPEAL OF THE ASSESSEE TO THE FILE OF THE LD. CIT(A), THE MATTER BE REMANDED TO THE FILE OF THE AO SO THAT H E MAY MAKE NECESSARY VERIFICATION/SCRUTINY AND INVESTIGATION AS IT REQUIRED. 4. HAVING HEARD BOTH THE SIDES, WE HAVE GONE THROU GH THE ORDERS OF AUTHORITIES BELOW. PRIMA FACIE IT APPEARS THAT T HE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN FURNISHING THE DET AILS REQUIRED BY THE AO IN TIME PRESCRIBED FOR FRAMING OF THE ASSESSMEN T. WE, THEREFORE, IN THE INTEREST OF JUSTICE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO VERIFY THE VARI OUS ADDITIONS/DISALLOWANCE MADE IN THE ASSESSMENT ORDER , THE ASSESSEE ITA NO.338/RJT/2011. . 4 SHALL ALSO FURNISH ALL THE REQUIRED DETAILS. THE AO WILL VERIFY THE SAME AND RE-ADJUDICATE THE VARIOUS ADDITIONS/DISALLOWANC E MADE IN THE ASSESSMENT ORDER U/S 144 DATED 17.12.2007 AFRESH. BEFORE PARTING WITH IT, WE MAY OBSERVE THAT THE AO IS ALSO AT LIB ERTY TO CALL FOR FURTHER DETAILS AS HE MAY THINK FIT AND PROPER IN THIS REGA RD. 5.. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE ASSESSEE IS TREATED AS ALLOWED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE D ATE MENTIONED HEREINABOVE. SD/- SD/- ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 28 .09.2012 /RAJKOT SRL . .. . +8 +8 +8 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPELLANT-. 2. +,* / RESPONDENT- 3. < / CONCERNED CIT. 4. <- / CIT (A). 5. 8 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY. SENIOR PRIVATE SECRETAR Y , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.