ACIT CEN CIR 41, MUMBAI V. SOLAR PACKAGING P.TLD, MUMBAI

ITA 3640/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2589 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 16-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J SARAVANAN DR
• Section: 143(3); 153A; 260A; 145

Judgement Text

1 - , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/3640/MUM/2012, /ASSESSMENT YEAR: 2008-09 ACIT, CENTRAL CIRCLE-41 ROOM NO.655, 6 TH FLOOR AAYAKAR BHAVAN,M.K. ROAD MAHIM (W),MUMBAI-400 020. VS. M/S. SOLAR PACKAGING PVT. LTD. 301-302, ASHFORD CHAMBERS LADY JAMSHEDJI ROAD, MAHIM (W) MUMBAI-400 016. PAN:AAACS 7342 G ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI J. SARAVANAN-DR ASSESSEE BY: NONE / DATE OF HEARING: 05.07.2016 / DATE OF PRONOUNCEMENT: 13.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 24/02/2012, OF THE CIT (A)-38,MUMBAI, THE ASSESSING OFFICER (AO)HAS FILED THE PRESENT APPEAL.ASSESSEE-COMPANY,E NGAGED IN THE BUSINESS OF MANUFACTUR - ING OF TW CARBON,FILED ITS RETURN OF INCOME ON 29/0 9/2008,DECLARING TOTAL INCOME AT RS. 2.18 LAKHS.THE AO COMPLETED THE ASSESSMENT,UNDER SECTION 143 (3) OF THE ACT,ON 31/12/ 2010, DETERMINING THE INCOME OF THE ASSESSEE AT RS.30,22, 378/-. 2. THE SOLITARY GROUND OF APPEAL, RAISED BY THE AO, IS ABOUT DELETING THE ADDITION OF INTEREST INCOME OF RS. 25.22 LAKHS ON THE INTER CORPORATE DE POSITS (ICD). DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT IN THE NOTES ON ACCOU NTS OF THE AUDIT REPORT,THE ASSESSEE HAD MENTIONED THAT ICD.S.,AMOUNTING TO RS.111. 07 LAKHS HAD BEEN GIVEN TO CERTAIN BODIES CORPORATES,THAT THEY HAD FAILED TO HONOUR THE CHECK S ON DUE DATES, THAT THE COMPANY HAD FILED WINDING UP PETITIONS BEFORE THE COURT,THAT INTEREST THEREON SINCE 1997-98 ONWARDS WOULD BE ACCOUNTED FOR ON RECEIPT BASIS,THAT FOR THE YEAR UN DER APPEAL AMOUNT IN QUESTION WAS RS. 25, 22,160/-.THE AO OBSERVED THAT THE ASSESSEE HAD NOT SHOWN THE SAID INTEREST THOUGH IT WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THAT IT HAD SHOWN RECEIPT OF INTEREST OF RS. 1.2 LAKHS ON ICD IN SCHEDULE FEE OF THE BALANCE SHEET, THAT INCOME ACCRUED ON ICD OF RS. 25.22 LAKHS HAD NOT BEEN MADE PART OF IT.RELYING UPON THE DECISIONS OF TAMIL NADU SMALL INDUSTRIES DEVELOPMENT CORPORATION(242 ITR 122), ST ATE BANK OF TRAVANCORE (158 ITR 102) AND KERALA FINANCIAL CORPORATION(210ITR129),HE HELD THAT INTEREST AMOUNT OF RS. 25.22 3640/MUM/2012(08-09)SOLARPACKAGING 2 LAKHS, ACCRUED ON ICD, HAD TO BE ADDED TO THE INCOM E OF THE ASSESSEE. INVOKING THE PROVISIONS OF SECTION 145 (3) OF THE ACT HE HELD THAT BOOKS OF ACCOUNTS, MAINTAINED BY THE ASSESSEE, WERE NOT RELIABLE. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA). BEFORE HIM, IT WAS ARGUE D THAT ICD.S GIVEN TO CERTAIN PARTIES HAD BECOME DOUBTFUL, THAT THE PARTIES TO WHOM THE DEPOS ITS WERE GIVEN HAD FAILED TO HONOUR THE CHEQUES, THAT THE ASSESSEE WAS NOT RECOGNIZING INTE REST INCOME ON THOSE DEPOSITS FROM 1997- 98 ONWARDS,THAT SIMILAR ADDITION ON ACCRUED INTERES T WAS ON ICD.S WAS MADE IN THE AY.S 1997-98, 1998-99 AND 2002-03, THAT THE FAA DELETED THE ADDITION AND THE TRIBUNAL UPHELD THE ORDER OF THE FAA FOR THOSE YEARS, THAT WHILE CO MPLETING THE ASSESSMENT ORDERS U/S. 143(3) R.W.S.153(3) OF THE ACT FOR THE AY.2001-02 TO 2007- 08 THE AO HAD ONCE AGAIN MADE THE SIMILAR ADDITIONS,THAT THE FAA FOLLOWING THE ORDERS OF THE TRIBUNAL FOR THE AY.S 1997-98 AND OTHER TWO ASSESSMENT YEARS DELETED THE ADDITION, TH AT THE APPEAL FILED BY THE DEPARTMENT WAS DISMISSED BY THE TRIBUNAL, THAT ON 8.12.2011 THE HO N'BLE BOMBAY HIGH COURT HAD DISMISSED THE APPEAL FILED U/S. 260A AGAINST THE ORDER OF THE TRIBUNAL. 3.1 AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AN D THE ASSESSMENT ORDER THE FAA HELD THAT IT WAS A RECURRING ISSUE WHICH HAD BEEN DEALT WITH DURING THE ASSESSMENT PROCEEDINGS DURING 143(3)AS WELL AS IN THE ASSESSMENT PROCEEDIN GS U/S. 153A R.W.S. 143(3) OF THE ACT IN RESPECT OF AY.S 2001-02 TO 2007-08, THAT THE ASSESS EE HAD FILED WINDING UP PETITION BEFORE THE COURT, THAT IN THE NOTES ON ACCOUNT YEAR AFTER YEAR THE ASSESSEE HAD MENTIONED THAT THE INTEREST RECEIVABLE ON ICD.S WOULD BE ACCOUNTED FOR ON RECEIPT BASIS,THAT THE AO HAD BEEN IGNORING THE STAND TAKEN BY THE ASSESSEE, THAT THE FAA AND THE TRIBUNAL HAD DELETED THE ADDITIONS MADE BY THE AO,THAT THE HON'BLE HIGH COUR T HAD DISMISSED THE 260A APPLICATION FILED BY THE DEPARTMENT. FINALLY,HE ALLOWED THE APP EAL FILED BY THE ASSESSEE. 4. BEFORE US, THE DR STATED THAT THE MATTER IS TO BE D ECIDED ON MERITS. AS STATED EARLIER NONE APPEARED FOR THE ASSESSEE. 4.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT WHILE DECIDING THE APPEAL FOR THE EARLIER YEARS THE TRIBUNAL HAD DECIDED THE ISSUE AGAINST THE AO AND THE HON'BLE HIGH COURT HAD DISMISSED THE 260 A APPLICATION FILED BY THE DEPARTMENT. RESPECTFULLY,FOLLOWING THE JUDGMENT OF HON'BLE BOMB AY HIGH COURT EFFECTIVE GROUND OF APPEAL IS DECIDED AGAINST THE AO. 3640/MUM/2012(08-09)SOLARPACKAGING 3 AS A RESULT APPEAL FILED BY THE AO IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JULY,2016. 13 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13.07.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.