Kumaon Mandal Vikas Nigam Ltd., Nainital V. DCIT, Nainital

ITA 3529/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3546 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 12-07-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-08-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANEESH BAHUGUNA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AN D SHRI RAJPAL YADAV, JUDICIAL MEMEBR I.T.A NO. 847,3529/DEL/09 ASSTT. YEAR 2004-05, 2005-06 KUMAON MANDAL VIKAS NIGAM LTD. OAK PARK CAMPUS MALLITAL NAINITAL. VS. DCIT, INCOME TAX OFFICE MALLITAL NAINITAL (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: SHRI MANEESH BAHUGUNA, SR. DR ORDER PER RAJPAL YADAV, JM: THE PRESENT TWO APPEALS ARE DIRECTED AT THE INSTAN CE OF ASSESSEE AGAINST THE ORDERS OF LD. CIT (A) DATED 17.11.2008 AND 17.3.2009 PASSED FOR ASSTT. YEAR 2004-05, 2005-06 RESPECTIVEL Y. 2. IN ASSTT. YEAR 2004-05 ASSESSEE IS IMPUGNING THE ADDITIONS MADE ON ACCOUNT OF DISALLOWANCE OF INTEREST EXPENSES, PR E PAID EXPENSES AND EXPENSES RELATING TO PRIOR PERIOD ITEMS. SIMILARLY IN ASSTT. YEAR 2005-06 IT ITA NO. 847,3529/DEL/2009 ASSTT . YEAR 2004-05, 2005-06 2 IS CHALLENGING DISALLOWANCE OF INTEREST EXPENSES RE LATING TO PRIOR PERIOD ITEMS AND ADDITION IN RESPECT OF EXPENSES PERTAININ G TO GROUP GRATUITY, WELFARE OF EMPLOYEES ETC. THE FACTS IN BOTH THE YEA RS ARE COMMON. THE ASSESSEE IS WHOLLY OWNED COMPANY OF THE GOVT. OF UT TRAKHAND. IT HAS FILED ITS RETURN OF INCOME ON 30 TH MARCH, 2005 DECLARING TOTAL INCOME OF RS. 1,18,78,870/- IN ASSTT. YEAR 2004-05. THE ASSES SEE HAS FILED RETURN FOR ASSTT. YEAR 2005-06 ON 30 TH OCTOBER, 2005 DECLARING AN INCOME OF RS. 1,56,91,966/-. THE ACCOUNTS OF THE ASSESSEE ARE REQ UIRED TO BE AUDITED BY CHARTERED ACCOUNTANT APPOINTED BY THE COMPTROLLE R & AUDITOR GENERAL OF INDIA FROM YEAR TO YEAR. THE APPOINTMENT OF THE AUDITOR IS NORMALLY DELAYED BY THE OFFICE OF THE CAG, HENCE RE TURNS WERE FILED IN BOTH THE ASSESSMENT YEARS ON ESTIMATE BASIS. IT IS EMERGING OUT FROM THE ASSTT. ORDER THAT ASSESSES HAS ANNEXED TENTATIVE PR OFIT AND LOSS ACCOUNT ALONG WITH THE RETURN. THE AO HAS DETERMINED THE I NCOME OF THE ASSESSEE ON AN ESTIMATE BASIS AT RS.2,27,71,660/- I N ASSTT. YEAR 2004- 05 AND AT RS. 3,49,43,508/- IN ASSTT. YEAR 2005-06. ON APPEAL PARTIAL RELIEF HAS BEEN GRANTED TO THE ASSESSEE BY THE LD. CIT(A) IN BOTH THE ASSTT. YEARS. 3. THE LD. COUNSEL FOR THE ASSESSEE SHRI PAWAN KUMA R NATH HAD SENT A LETTER FOR AN ADJOURNMENT ON THE GROUND THAT STATUTORY AUDITOR WAS NOT APPOINTED BY THE COMPTROLLER AND AUDITOR GENER AL OF INDIA WELL IN ITA NO. 847,3529/DEL/2009 ASSTT . YEAR 2004-05, 2005-06 3 TIME, THEREFORE, THE AUDITED ACCOUNTS COULD NOT BE FURNISHED DURING THE ASSESSMENT PROCEEDING AS WELL AS FIRST APPELLATE PR OCEEDING. HE POINTED OUT THAT NOW AUDITOR HAS BEEN APPOINTED WHO WILL T AKE SOME TIME TO COMPLETE THE AUDIT. THEREFORE HEARING BE ADJOURNED IN THE MONTH OF DECEMBER, 2010. FROM OUR RECORD WE FIND THAT SIMIL AR ISSUE CAME UP BEFORE THE TRIBUNAL IN ASSTT. YEAR 2000-02 AND 2002 -03 AND 2003-04. THE TRIBUNAL HAS SET ASIDE THE ORDERS OF REVENUE AU THORITY BELOW AND RESTORE THE ISSUE TO THE FILE OF AO FOR FRESH ADJUD ICATION IN ITA NO. 3898, 4011/DE/06 IN ASSTT. YEAR 2002-03 AND 997/DEL/2005 IN ASSTT. YEAR 2001- 02 AND ITA NO.1880/DEL/2007 IN ASSTT. YEAR 2003-04. 4. WE CONFRONTED THE LD. DR TO THE ABOVE FACTS BUT HE WAS UNABLE TO CONTROVERT THE FACTS AND CIRCUMSTANCES. 5. WITH THE ASSISTANCE OF LD. DR WE HAVE GONE THROU GH THE RECORD CAREFULLY. IN ASSTT. YEAR 2002-03 WHILE CONSIDERIN G THIS ISSUE WE NOTICED THAT ASSESSEE WAS CARRYING OUT MORE THAN 12 BUSINESS ACTIVITIES I.E. RUNNING OF PETROL PUMP, MANUFACTURING OF ROSI N & TURPENTINE, DISTRIBUTION OF GAS, CONSTRUCTION FOR GOVT. DEPARTM ENTS, TOURIST REST HOUSE AND ROPE WAY ETC. THE ADDITIONS HAVE BEEN MAD E BY THE AO UNDER EACH ACTIVITY. THE FINDING OF THE TRIBUNAL IN ASSTT. YEAR 2002-03 READ AS UNDER :- ITA NO. 847,3529/DEL/2009 ASSTT . YEAR 2004-05, 2005-06 4 8.WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORDS CAREFULLY. NO DOUBT, THE ASSESS EE IS A COMPANY WHOLLY OWNED BY THE GOVT. OF UTTRAKHAND. IT S ACCOUNTS ARE TO BE AUDITED BY THE CA APPOINTED BY THE CONTRO LLER & AUDITOR GENERAL OF INDIA FROM YEAR TO YEAR. IT APPEARS THAT AUDITOR HAS NOT BEEN APPOINTED IN DUE TIME WHO COULD HAVE AUDITED T HE ACCOUNTS OF ASSESSEE AND, THEREFORE, IT HAS FILED ITS INCOME -TAX RETURN ON ESTIMATE BASIS. UP TO THE APPELLATE STAGE, ACCOUNTS UPTO ASSESSMENT YEAR 1999-00 HAVE BEEN AUDITED. THE APPE AL WAS DECIDED ON 14 TH SEPTEMBER, 2006. THOUGH NO ONE HAS APPEARED ON BEHALF OF THE ASSESSEE AND THE LEARNED DR IS UNA BLE TO STATE WHETHER ACCOUNTS HAVE BEEN AUDITED OR NOT BUT WE AR E HOPEFUL THAT BY NOW ACCOUNTS HAVE BEEN AUDITED FOR THIS ASSESSME NT YEAR. IN THE ABSENCE OF AUDITED ACCOUNTS, IT WAS DIFFICULT F OR THE ASSESSING OFFICER TO DETERMINE THE TRUE INCOME AND, THEREFORE , HE RESORTED TO ESTIMATE THE INCOME OF THE ASSESSEE. THE ASSESSEE H AS ALREADY SHOWN AN INCOME OF RS. 1,10,75,680/- AND HAD PAID A TAX OF RS. 39,47,592/-. THE ASSESSING OFFICER HAS DETERMINED T HE INCOME ON AN ESTIMATE BASIS AT RS. 1,91,36,910/-. THE ASSESSE E HAS MANY UNITS AND IT HAS A TOTAL TURNOVER OF RS. 9183.43 LA CS AS PER TENTATIVE PROFIT AND LOSS AND ACCOUNT. IN THIS BACKGROUND, WE DEEM IT APPROPRIATE THAT ASSESSING OFFICER SHOULD HAVE THE BENEFIT OF AUDIT REPORT BEFORE DETERMINING TAXABLE INCOME OF THE ASS ESSEE. THEREFORE, WE ALLOW THE FIRST GROUND OF APPEAL OF T HE ASSESSEE, SET ASIDE THE ORDER OF THE REVENUE AUTHORITIES BELOW AN D RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRES H DECISION. THE ASSESSEE IS DIRECTED TO PRODUCE THE AUDITED ACCOUNT S AND OTHER DETAILS IN SUPPORT OF ITS COMPUTATION OF INCOME. 9. AS FAR AS THE APPEAL OF THE REVENUE I S CONCERNED, IT IS IMPUGNING VARIOUS ADDITIONS DELETED BY THE LEARNED CIT(APPEALS). WE FIND THAT THE ASSESSING OFFICER HAS ESTIMATED TH E PROFIT IN DIFFERENT UNITS AND LEARNED CIT(APPEALS) DELETED TH OSE ADDITIONS AFTER TAKING INTO CONSIDERATION THE RESULTS SHOWN I N THE YEAR FOR WHICH THE AUDITED ACCOUNT ARE AVAILABLE. SINCE WE H AVE ALLOWED THE APPEAL OF ASSESSEE AND HOLD THAT INCOME OF THE ASSESSEE DESERVES TO BE REDETERMINED AFTER GETTING ACCOUNTS AUDITED. IN THAT SITUATION, ALL THESE ISSUES AGITATED BY THE REVENUE ARE TO BE LOOKED AFRESH AND, THEREFORE, FOR STATISTICAL PURPOSE THE APPEAL OF THE REVENUE IS ALSO ALLOWED. THE LEARNED ASSESSING OFFI CER SHALL HAVE A LOOK ON ALL ISSUES AFRESH. ITA NO. 847,3529/DEL/2009 ASSTT . YEAR 2004-05, 2005-06 5 6. THERE IS NO DISPARITY ON FACTS. RESPECTFULLY FOL LOWING THE ORDER OF THE ITAT IN ASSTT. YEAR 2002-03 EXTRACTED SUPRA WE ALLOW THE APPEALS OF ASSESSEE FOR STATISTICAL PURPOSE AND SET ASIDE ALL THE ISSUES TO THE FILE OF AO FOR READJUDICATION. THE ASSESSEE WILL BE AT LIBE RTY TO PRODUCE EVIDENCE IN SUPPORT OF ITS EXPLANATION AND THE AO S HALL AFFORD DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 12.7.2010. SD/- [G.E. VEERABHADRAPPA] [RAJPAL YADAV] VICE PRESIDENT JUDICIAL MEMBER DATED: 12.7.2010 VEENA COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT