ITO, New Delhi V. M/s. Ayurvedant Products Pvt. Ltd., New Delhi

ITA 3515/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2885 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 14-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBODH GUPTA
• Assessee Lawyers: S K JAIN
• Keywords: Bad and doubtful debts; Condonation of delay; Revised return
• Section: 115JB; 69

Judgement Text

1 | P A G E IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI B.P.JAIN, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 3242/DEL /2012 ASSTT. YEAR: 2008-09 AYURVEDANT PVT. LTD., B-6/5, SAFDARJUNG ENCLAVE, NEAR HDFC BANK, NEW DELHI. (PAN: AADCA3197Q) VS DCIT, CIRCLE 2(1), NEW DELHI. (APPELLANT) (RESPONDENT) ITA NO. 3515/DEL /2015 ASSTT. YEAR: 2008-09 ITO, WARD 3(4), NEW DELHI. VS AYURVEDANT PVT. LTD., B-6/5, SSAFDARJUNG ENCLAVE, NEAR HDFC BANK, NEW DELHI. (PAN: AADCA3197Q) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUBODH GUPTA, FCA RESPONDENT BY: SHRI S.K. JAIN, SR. DR DATE OF HEARING : 08.11.2017 DATE OF PRONOUNCEMENT: 27.1 2.2017 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THESE APPEALS HAVE BEEN PREFERRED BY THE ASSESSEE A S WELL AS THE REVENUE AGAINST THE ORDER DATED 15.05.2012 PASSED B Y THE LD. 2 | P A G E COMMISSIONER OF INCOME TAX (APPEALS)-V, NEW DELHI F OR ASSESSMENT YEAR 2008-09. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN OF INCOME WAS FILED LEADING NIL INCOME AFTER CLAIMING DEDUCTION UNDER S ECTION 80IC OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) AMOUNTING TO RS. 52,36,748/-. THE RETURN OF INCOME WAS PROCESSED UND ER SECTION 143 (1) OF THE ACT AND, SUBSEQUENTLY, THE ASSESSEE ALSO FIL ED REVISED RETURN OF INCOME AT NIL INCOME CLAIMING THE DEDUCTION UNDER S ECTION 80IC AT RS. 12,29,594/-. SUBSEQUENTLY, THE CASE WAS SELECTE D FOR SCRUTINY AND THE AO PROCEEDED TO DISALLOW THE ASSESSEES CLAIM O F DEDUCTION UNDER SECTION 80 IC ON THE GROUND THAT THE ASSESSEE COULD NOT ESTABLISH DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASS ESSMENT YEAR 07 08 THAT IT WAS CARRYING OUT MANUFACTURING ACTIVITY AND NOT TRADING ACTIVITY. THE AO ALSO ADDED AN AMOUNT OF RS. 41,17, 327/- TOWARDS DISALLOWANCE OUT OF PURCHASES. THE AO ALSO RECOMPUT ED THE BOOK PROFIT OF THE ASSESSEE UNDER SECTION 115JB OF THE A CT BY DISALLOWING PROVISION FOR DOUBTFUL DEBTS AMOUNTING TO RS. 5,17, 038/-. 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. FIRST APPELLATE AUTHORITY. THE LD. CIT (APPEALS), ALLOWED THE ASSESSEES 3 | P A G E CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT BU T CONFIRMED THE DISALLOWANCE OF RS. 41,17,327/- ON ACCOUNT OF PURCH ASES AND ALSO DIRECTED THE AO TO ADD THE DISALLOWANCE OF PURCHASE S TO THE BOOK PROFIT OF THE ASSESSEE COMPANY AND THUS MADE AN ENH ANCEMENT. 2.2 NOW, AGGRIEVED, BOTH THE ASSESSEE AS WELL AS TH E DEPARTMENT HAVE APPROACHED THE ITAT AND HAVE CHALLENGED THE AC TION OF THE LD. CIT (APPEALS).THE FOLLOWING GROUNDS HAVE BEEN RAISE D BY THE ASSESSEE IN ITA 3515/DEL/2015 :- 1. ENHANCEMENT WITHOUT SHOW-CAUSE NOTICE U/S 251( 2) 1. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, WITHOUT PREJUDICE TO GROUNDS NO 6 & 7 BELOW, LEARNE D CIT(A) HAS ERRED AND WAS NOT JUSTIFIED IN ENHANCING THE ASSESSMENT WITHOUT ISSUING MANDATORY SHOW-CAUSE NOTICE TO THE APPELLANT U/S 251(2) OF THE ACT AND T HUS THE ORDER OF LEARNED CIT(A) IS LIABLE TO SET ASIDE. ON MERITS: UNACCOUNTED PURCHASES 2. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN REJECTING THE CLAIM OF THE ASSESSEE FOR UNACCOUNTED PURCHASES OF RS 39,81,087/-, WHICH WERE ACTUALLY SO LD AND INCLUDED TO THE CREDIT OF PROFIT & LOSS ACCOUNT , THEREBY INCREASING THE PROFIT FOR THE YEAR TO THAT EXTENT, WHEN THE SAME ERROR FINDS MENTION THE RECORDS OF SUBSEQUENT YEAR AND IN TOTAL DISREGARD TO THE EVIDENCES OF PURCHASE S AND STOCK RECORDS PRODUCED DURING THE PROCEEDINGS, WITH OUT ANY INVESTIGATION, VERIFICATION AND/ OR APPRAISAL O F RECORDS AND DOCUMENTARY EVIDENCES PRODUCED ON RECOR D 4 | P A G E 3. ON FACTS AND CIRCUMSTANCES OF THE CASE, LOWER AUTHORITIES HAVE ERRED IN IGNORING THE FACTUM OF TH E IMPUGNED SUM OF RS 39,81,087/- WHICH WAS ACCOUNTED FOR IN SUBSEQUENT YEAR AND WAS VOLUNTARILY DISALLOW ED IN THE RETURN SUBMITTED U/S 139(1) AS PRIOR PERIOD A ND THUS FURTHER ADDITION DURING THE YEAR UNDER APPEAL HAS RESULTED IN DOUBLE TAXATION. 4. ON FACTS AND CIRCUMSTANCES OF THE CASE, LOWER AUTHORITIES HAVE ERRED AND WERE NOT JUSTIFIED IN TH E ARBITRARY ADDITION OF RS 1,36,240/- ON ADHOC BASIS WITHOUT FINDING FAULT IN THE BOOKS OF ACCOUNTS OR R EJECTING THE BOOKS OF ACCOUNTS ON AN UNREASONABLE, UNJUSTIFI ED AND ERRONEOUS GROUNDS. 5. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LEARNED CIT(A) HAS ERRED AND WAS NOT JUSTIFIED IN ARBITRARILY CONSIDERING THE IMPUGNED PURCHASES OF R S. 41,17 ,327I- AS UNDISCLOSED INVESTMENT BY INVOKING SECTION 69 OF THE ACT, IN TOTAL DISREGARD TO THE EV IDENCES ON RECORD WITHOUT CARRYING OUT ANY VERIFICATION. 6. ON FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, LEARNED CIT(A) HAS ERRED AND WAS NOT JUSTIFIED IN ENHANCING THE ASSESSMENT OF TOTAL INCOME U/S 115JB OF THE ACT BY INCREASING THE BOOK PROFITS BY THE IMPUG NED SUM OF RS 41,1 7,327L-, BEING UNACCOUNTED PURCHASES, AND RS 517,038/- ON ACCOUNT OF PROVISION FOR DOUBTF UL DEBTS, WHICH ADJUSTMENTS ARE OUTSIDE THE MANDATE OF BOOK PROFIT AS DEFINED U/S 115JB UNDER THE LAW. GENERAL 5. THE ABOVE GROUNDS OF APPEAL ARE INDEPENDENT WITHOU T PREJUDICE TO EACH OTHER. 6. THE APPELLANT CRAVES TO ADD, MODIFY ANY GROUND OF APPEAL OR TO ADDUCE NEW EVIDENCE DURING THE COURSE OF HEARING OF APPEAL, AS MAY BE NECESSARY FOR DISCHARG E OF DUE JUSTICE. 5 | P A G E 2.3 THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE D EPARTMENT IN ITA 3242/DEL/2012 :- ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LD. COMMISSIONER OF INCOME TAX(A) HAS ERRED IN HOLDING THAT CLAIM OF THE ASSESSEE FOR DEDUCTION U/S 80IC IS ALLOWABLE. 3. IN RESPECT OF THE DEPARTMENTS APPEAL, THE LD. D EPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE DEPARTMENTS APPE AL WAS DELAYED BY 1031 DAYS AND PRAYED THAT THE SAME SHOULD BE CON DONED AS THERE WAS AN INADVERTENT OMISSION BY THE DEPARTMENT IN NO T FILING THE APPEAL IN TIME. OUR ATTENTION WAS DRAWN TO THE LETT ER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX, DELHI 1, DA TED 29/05/2015 AND ON RECORD, WHICH NARRATED THE CIRCUMSTANCES AND PRAYED FOR THE CONDONATION OF DELAY . THE LD. AUTHORISED REPRESENT ATIVE OPPOSED THE CONDONATION OF DELAY. AFTER HEARING BOTH THE PARTIE S AND LOOKING INTO THE FACTS OF THE CASE, WE CONDONE THE DELAY AND ADM IT THE APPEAL TO BE HEARD ON MERITS. 4. IN RESPECT OF THE DEPARTMENTS APPEAL CHALLENGIN G THE ACTION OF THE LD. CIT (APPEALS) IN ALLOWING THE DEDUCTION UND ER SECTION 80 IC, 6 | P A G E THE LD. AUTHORISED REPRESENTATIVE PLACED ON RECORD ITAT DELHI BENCHS ORDER IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 07-08 IN ITA NO. 3874/DEL/2012 WHEREIN, VIDE ORDER DATED 04/08/2 017, ITAT HAS DISMISSED THE DEPARTMENTS APPEAL CHALLENGING THE A CTION OF THE LD. CIT (APPEALS) IN ALLOWING THE ASSESSEES CLAIM OF D EDUCTION UNDER SECTION 80IC FOR ASSESSMENT YEAR 07 08. THE LD. A UTHORISED REPRESENTATIVE SUBMITTED THAT THE ITAT HAS HELD THA T THE ASSESSEE WAS ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 8 0IC AND FURTHER SINCE THERE WAS NO CHANGE IN CIRCUMSTANCES DURING T HE YEAR UNDER CONSIDERATION AND THE AO HAS MERELY RELIED ON THE A SSESSMENT ORDER FOR 07 08, THE ASSESSEES CLAIM FOR DEDUCTION WAS ALLOWABLE IN THIS YEAR ALSO. 5. IN RESPONSE, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDER OF THE ASSESSING OFFICER BUT COULD NOT NEGATE THE FACT THAT ITAT DELHI BENCH HAD DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSMENT YEAR 07-08 AND THAT THERE WAS NO CHANGE IN THE CIRCUMSTANCES IN THIS YEAR AS COMPARED TO THE EARLI ER ASSESSMENT YEAR. 6. ON THE ISSUE OF ENHANCEMENT IN THE ASSESSEES AP PEAL, THE LD. AUTHORISED REPRESENTATIVE SUBMITTED THAT THE ENHANC EMENT WAS MADE 7 | P A G E WITHOUT ISSUING SHOW CAUSE NOTICE UNDER SECTION 251 (2) OF THE ACT AND, THUS, THE ORDER OF THE LD. CIT (APPEALS) WAS L IABLE TO BE SET- ASIDE. 7. IN RESPONSE, THE LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDERS OF THE LD. CIT (APPEALS) BUT COULD NOT NEGAT E THE FACT THAT NO SHOW CAUSE NOTICE WAS ISSUED BY THE LD. FIRST APPEL LATE AUTHORITY BEFORE ENHANCEMENT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIAL ON RECORD. AS FAR AS THE ISSUE OF ASSESSEE S CLAIM OF DEDUCTION UNDER SECTION 80IC OF THE ACT IS CONCERNED, IT IS S EEN THAT THE ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE FOR ASSE SSMENT YEAR 2007 08 BY ITAT DELHI BENCH IN ASSESSEES OWN CASE, VIDE ORDER DATED 04/08/2017, WHEREIN THE ITAT HAS APPROVED THE FINDI NGS OF THE LD. CIT (APPEALS) AND HAS NOTED THAT THE ALL THE RELEVA NT RECORDS WERE AVAILABLE WITH THE DEPARTMENT AT THE TIME OF ASSESS MENT PROCEEDINGS BUT THE AO HAD MERELY ACTED ON A PRESUMPTION IN GIV ING THE FINDING THAT THERE WAS NO MANUFACTURING PROCESS INVOLVED IN A SMALL PLACE WHERE THE ASSESSEE WAS BASED. AS THERE HAS BEEN NO CHANGE IN THE FACTUAL CIRCUMSTANCES COMBINED THE FACT THAT THE AO HAS SIMPLY 8 | P A G E RELIED ON THE FINDINGS OF THE AO FOR ASSESSMENT YEA R 0708 WHILE DISALLOWING THE CLAIM OF DEDUCTION UNDER SECTION 80 IC OF THE ACT, WE HOLD THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION UN DER SECTION 80IC OF THE ACT FOR THIS YEAR ALSO. ACCORDINGLY, THE GROUND RAISED BY THE DEPARTMENT AND THE APPEAL OF THE DEPARTMENT STAND D ISMISSED. 8.1 COMING TO THE ISSUE OF ENHANCEMENT MADE BY THE LD. CIT (APPEALS), IT IS VERY MUCH EVIDENT AND AN ADMITTED FACT THAT NO NOTICE OF ENHANCEMENT WAS ISSUED IN TERMS OF SECTION 251 ( 2) OF THE ACT AND THEREFORE, THE ASSESSEE WAS DENIED AN OPPORTUNITY T O PRESENT ITS CASE. ACCORDINGLY, WE DEEM IT FIT, IN THE INTEREST OF JUS TICE, TO RESTORE THE ASSESSEES APPEAL PERTAINING TO ENHANCEMENT TO THE FILE OF LD. CIT (APPEALS) WITH THE DIRECTION TO ADJUDICATE THE ISSU E AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE TO PRESENT ITS CASE. 8.2 ACCORDINGLY THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. 9. IN THE FINAL RESULT, THE DEPARTMENTS APPEAL STA NDS DISMISSED WHEREAS THE ASSESSEES APPEAL STANDS ALLOWED FOR ST ATISTICAL PURPOSES. 9 | P A G E ORDER IS PRONOUNCED IN THE OPEN COURT ON 27 TH DECEMBER, 2017. SD/- SD/- (B.P. JAIN ) (SUDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27 TH DECEMBER, 2017 DRAGON COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER ASSISTANT REGI STRAR