DCIT CIR 6(1), MUMBAI V. INTERNATIONAL HOMETEX LTD, MUMBAI

ITA 3547/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8419 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-03-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 21-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 19-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Additional evidence; Bad and doubtful debts; Corroborative evidences
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I, MU MBAI BEFORE SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3547/MUM/2014 FOR (ASSESSMENT YEAR : 2007-08 ) DCIT , CIR 6(1), ROOM NO. 506, 5 TH FLOOR, AAYAKAR BHAVAN , M.K. ROAD, MUMBAI -20 VS. M/S INTERNATIONAL HOMETEX LTD. 401, SUMER KENDRA , P.B. MARG WORLI, MUMBAI-25 PAN:AABCT1906G (APPELLANT) (RESPONDENT) REVENUE BY : SAURABH KUMAR RAI -DR ASSESSEE BY : NONE DATE OF HEARING : 21.02.2017 DATE OF PRONOUNCEMENT : 01.03.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY REVENUE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF COMMISSIONER (APPEALS) DATED 1 8.03.014 FOR ASSESSMENT YEAR 2007-08. THE REVENUE HAS RAISED FOLLOWING GROU NDS OF APPEAL: (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND IN LAW, THE LEARNED CIT(A) WAS RIGHT IN DELETING THE DISALLOWANCE OF EX PENSES TO THE EXTENT OF RS.69,92,000/- WITHOUT APPRECIATING THE FACT, THAT NO DETAILS FURNISHED BY THE ASSESSEE BEFORE AO TO PROVE THE GENUINENESS OF THE EXPENSES DURING THE COURSE OF ASSESSMENT PROCEEDINGS. WITHOUT PREJUDICE TO THE ABOVE, IF ANY FRESH EVIDENCE HAS BEEN FURNISHED DURING APPEAL PROCEEDING FOR THE FIRST TIME WITHOUT GIVING A OPPORTUNITY OF EXAMINING THE SAME TO THE AO, THE SAME HAS BEEN ADMITTED IN C ONTRAVENTION OF RULE 46A OF IT RULES. (II) ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE AND I N LAW, THE LEARNED CIT(A) ERRED IN GIVING RELIEF ON ACCOUNT OF BAD DEBTS OF RS. 1,81,8 0,000/-TO THE ASSESSEE WITHOUT APPRECIATING THAT THE FACT THAT ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS OR PROVING THAT AMOUNT HAS ACTUALLY BEEN WRITTEN OFF AGAINST A S NO SUPPORTING EVIDENCE OR DOCUMENTS SUPPORTING THE CLAIM OF BAD DEBTS WAS PRO DUCED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING. (III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE L AW, THE LEARNED CIT(A) ERRED IN GIVING RELIEF TO THE ASSESSEE WITHOUT BRINGING ANYT HING ON RECORD IN SUPPORT OF THE FACT THAT AMOUNT HAD ACTUALLY BECAME BAD AND CONSEQUENT LY WRITTEN OFF IN THE ACCOUNTS OF THE ASSESSEE. WITHOUT PREJUDICE TO THE ABOVE, IF ANY FRESH EVIDENCE HAS BEEN ITA NO. 3547 /M/2014 INTERNATIONAL HOMETEX LTD 2 FURNISHED DURING APPEAL PROCEEDING FOR THE FIRST TI ME WITHOUT GIVING OPPORTUNITY OF EXAMINING TO THE SAME TO THE AO, THE SAME HAS BEEN ADMITTED IN VIOLATION OF RULE 46A OF IT RULES. (IV) THE APPELLANT PRAYS THAT THE ORDER OF COMMISSIONER (APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE TO THE FILE OF AO OR CONFIRM THE ORDER OF AO. 2. THE BRIEF FACTS OF THE CASE ARE THAT FOR THE RELEVA NT ASSESSMENT YEAR, THE ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SEC TION 147 WAS PASSED ON 10 DECEMBER 2010. THE ASSESSING OFFICER WHILE PASSING ASSESSMENT ORDER BESIDES THE OTHER DISALLOWANCE, DISALLOWED PROVISIONS FOR BAD DEBTS OF RS.1,82,80,000/-, DISALLOWED THE LOSS ACCOUNT SALE OF MOTOR CAR OF RS. 5,73,000/- AND FURTHER DISALLOWED THE EXPENSES OF RS. 76,00,000/-. ON APPEAL BEFORE COMMISSIONER (APPEALS) THE ALL THESE DISALLO WANCES WERE DELETED. THUS, AGGRIEVED BY THE ORDER OF COMMISSIONER (APPEALS) TH E REVENUE HAS FILED PRESENT APPEAL BEFORE US. 3. THIS APPEAL CAME UP FOR HEARING ON 21 ST FEBRUARY 2017. NONE APPEARED ON BEHALF OF ASSESSEE DESPITE WAITING FOR SUFFICIENT T IME. WE HAVE NOTICED THAT ALL NOTICES SENT TO THE ASSESSEE WERE RETURNED BACK UNS ERVED. ON 05.01.2017 IT WAS DIRECTED THAT THE ASSESSEE BE SERVED THROUGH DR. TH E LD DR SUBMITS THAT THE NOTICE FOR THE HEARING OF THE APPEAL FOR 21.02.2017 HAS BEEN DULY SERVED ON THE RESPONDENT /ASSESSEE. AS NONE APPEARED ON BEHALF OF ASSESSEE, WE PROCEEDED TO HEAR THE LD DR FOR REVENUE AND TO DECIDE THE APPEAL ON THE BASIS OF THE MATERIAL AVAILABLE ON RECORD. WE HAVE HEARD LEONARD AR FURTH ER REVENUE AND THE LEARNED AND AR FOR ASSESSEE AND PERUSED THE MATERIA L AVAILABLE ON RECORD. THE LEARNED DR FOR THE REVENUE ARGUED THAT THE LEARNED COMMISSIONER (APPEALS) DURING THE FIRST APPELLATE PROCEEDING ACCEPTED THE ADDITIONAL EVIDENCE FILED BY ASSESSEE IN SUPPORT OF EXPENSES WITHOUT GIVING OPPO RTUNITY TO THE AO TO MAKE HIS COMMENT. THE LD CIT (A) ALLOWED THE CLAIM OF EX PANSES ON THE BASIS OF THE ADDITIONAL EVIDENCE. THE LD DR FOR THE REVENUE FURT HER ARGUED THAT OTHER DISALLOWANCE OF BED DEBT WAS ALSO DELETED BY THE LD COMMISSIONER (APPEALS) ON THE BASIS OF DETAILS FILED DURING THE APPELLATE PROCEEDING ONLY, WITHOUT GIVING THE OPPORTUNITY TO THE ASSESSING OFFICER. TH E LEARNED DR FOR REVENUE ARGUED THAT THE ORDER PASSED BY LD COMMISSIONER (AP PEALS) MAY BE SET ASIDE ITA NO. 3547 /M/2014 INTERNATIONAL HOMETEX LTD 3 ON ALL THE GROUNDS OF APPEAL OR IT MAY BE RESTORED TO THE FILE OF AO FOR CONSIDERATION AFRESH. 4. WE HAVE CONSIDERED THE CONTENTION OF LEARNED AND TH EREFORE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE GROUN D NO.1 RELATES TO THE DELETING THE DISALLOWANCE OF EXPENSES OF RS. 69,92, 000/-. THE LD DR FOR THE REVENUE ARGUED THAT LD CIT(A) ALLOWED THE RELIEF TO THE ASSESSEE ON FURNISHING ADDITIONAL EVIDENCE DURING THE FIRST APPELLATE PROC EEDINGS. THE LD CIT(A) ALLOWED THE ADDITIONAL EVIDENCE IN DEFIANCE OF RULE 46A OF INCOME TAX RULES. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD DR FOR THE REVENUE AND PERUSED THE ORDER OF LD CIT(A). WE HAVE SEEN THAT DURING T HE FIRST APPELLATE STAGE LD CIT(A) ASKED THE ASSESSEE TO FILE DETAILS OF EXPENS ES ( PER PARA 4.3). AFTER EXAMINING THE DETAILS OF EXPENSES, THE DISALLOWANCE ON ACCOUNT OF LOSS ON SALE OF MOTOR CAR WAS CONFIRMED. OUT OF OTHER REMAINING DISALLOWANCE ON ACCOUNT OF EXPENSES LD CIT(A) CONCLUDED THAT RS. 50.00 EXPE NSES IS INCURRED IN CASH, WHICH CANNOT BE VERIFIED BY CORROBORATING EVIDENCE AND SUSTAINED THE DISALLOWANCE OF RS. 5.00 LAKHS ON ESTIMATE BASIS. W E HAVE NOTICED THAT THE LD CIT(A) NOT REFERRED THE DETAILS OF EXPENSES TO TH E ASSESSING OFFICER FOR HIS COMMENTS. THE EVIDENCE FILED BY ASSESSEE WAS RELIED BY LD CIT(A) WITHOUT BRINGING THE SAME IN THE NOTICE OF ASSESSING OFFICE R. THUS THE LD CIT(A) VIOLATED THE PROVISIONS OF RULE 46A OF INCOME TAX R ULES 1963. THUS, CONSIDERING THAT THE LD CIT(A) CONSIDERED THE ADDIT IONAL EVIDENCE IN VIOLATION OF RULE 46A, HENCE WE SET-ASIDE THE ORDER FOR SUSTA INING THE PARTIAL DISALLOWANCE OF EXPENSES AND RESTORE THE GROUND OF APPEAL TO THE FILE OF ASSESSING OFFICER TO CONSIDER THE ADDITIONAL EVIDEN CE AFRESH AND DECIDE THE CLAIM OF EXPENSES IN ACCORDANCE WITH LAW. NEEDLESS TO ORDER THAT ASSESSING OFFICER SHALL PROVIDE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 6. THE GROUND NO.2 RELATES TO THE DISALLOWANCE OF BED DEBTS. THE ASSESSING OFFICER WHILE FRAMING ASSESSMENT ORDER UNDER SECTION 143(3) READ WITH SECTION 147 MADE THE DISALLOWANCE OF BED DEBTS OF RS. 1,82,80,0 00/- HOLDING THAT DURING THE ASSESSMENT PROCEEDING THE ASSESSEE HAS NEITHER PROD UCE THE DOCUMENTARY ITA NO. 3547 /M/2014 INTERNATIONAL HOMETEX LTD 4 EVIDENCE NOT BROUGHT THE RELEVANT SUBMISSION IN SUP PORT OF CLAIM. DURING THE FIRST APPELLATE STAGE THE ASSESSEE CONTENDED THAT T HE DEBTORS RELATES TO THE FINANCIAL YEAR 2004 -05. THE ASSESSEE FURTHER SUBMI TTED THAT ONCE IT WAS REALISED THAT THIS MONEY IS NOT LIKELY TO BE PAID BY THE FIVE COMPANIES NAMELY; M/S KOMAL COMMERCIAL LTD, M/S CHS INDUSTR IES LTD, M/S CREATIVE SYNERGY (I) PRIVATE LIMITED, M/S TERRYGOLD (I) LTD AND M/S HOLY FAMILY HOSPITAL. THE DETAILS OF SALES WERE ALSO PROVIDED B Y THE ASSESSEE WHICH HAS BEEN REFERRED BY LD CIT(A) IN PARA 5.2 OF HIS ORDER . THE ASSESSEE CONTENDED THAT THREE YEARS HAD ALREADY PASSED AND THE AMOUNT WAS WRITTEN OFF AS BAD DEBTS IN ASSESSMENT YEAR 2007 -08. THE BED DEBTS WERE THE NORMAL BUSINESS LOSS AND HAVE BEEN SHOWN IN THE ACCOUNT FOR ASSESSMENT YEAR 2007-08. THE LEARNED CIT(APPEALS) AFTER CONSIDERING THE ACCOUNTS AND SUB MISSION AND RELYING UPON THE DECISION OF HONBLE SUPREME COURT IN CASE OF M/S TRF LTD REPORTED VIDE 323 ITR 397 GRANTED RELIEF TO THE ASSESSEE. CONSIDE RING THE DECISION OF HONBLE SUPREME COURT IN TRF LTD (SUPRA) WE DO NOT FIND ANY FORCE IN THE GROUND OF APPEAL RAISED BY THE REVENUE. THUS, THE GROUND NO.2 RAISED BY THE REVENUE IS DISMISSED. THE GROUND NO.3&4 ARE GENERAL AND NEEDS NO ADJUDICATION. 7. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 1 ST MARCH 2017. SD/- SD/- (D.KARUNAKARA RAO) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 01/03/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/