METAL GEMS, AHEMEDABAD V. ASST CIT CIR 15(2), MUMBAI

ITA 3945/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101142 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 07-09-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-05-2013
• Court: TRIBUNAL
• Assessee Lawyers: PRAKASH D SHASH
• Section: 143(3); 147; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, JUDICIAL MEMBER I.T.A. NO. 3945/M/2013 (AY: 2006 - 2007 ) METAL GEMS, MEHTA LODHA & CO, CHARTERED ACCOUNTANTS, 105, SAKAR - 1, ASHRAM ROAD, AHMEDABAD - 380009. / VS. ACIT - CIRCLE 15(2), 113, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI - 400 007. ./ PAN : AADFM0423E ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAKASH D. SHASH / RESPONDENT BY : SHRI AARSI PRASAD / DATE OF HEARING : 7.09.2015 / DATE OF PRONOUNCEMENT : 23 .09.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 17.5.2013 IS AGAINST THE ORDER OF THE CIT (A) - 26, MUMBAI DATED 19.4.2013 FOR THE AY 2006 - 2007. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THAT THE LD CIT (A) HAS ERRED IN LAW AND FACTS BY NOT QUASHING THE ORDER PASSED US 148 R.W.S 143(3) OF THE ACT, AS THE SAME IS WITHOUT JURISDICTION AND THEREFORE, THE ORDER PASSED BY THE LD AO SHOULD BE QUASHED AND ADDITION MADE THEREIN SHOULD BE DELETED IN FULL. 2. THE LD CIT (A) HAS ERRED IN L AW AND FACTS, BY NOT ALLOWING THE EXPENSES OF RS. 2,30,578/ - , DISALLOWED BY THE LD AO ON THE GROUND OF NON - DEDUCTION OF TDS AND THEREFORE, THE LD AO SHOULD BE DIRECTED TO ALLOW THE SAME, WHILE COMPUTING THE TOTAL INCOME. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING & JOB WORK OF NON - FERROUS METAL. ASSESSEE FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 2, 32,34,920/ - . AO COMPLETED THE SCRUTINY ASSESSMENT U/S 143(3) OF THE ACT AND ASSESSED THE INCOME AT RS. 2,60,55,270/ - . AO RE - OPENED THE CASE U/S 147 OF THE ACT AND SUBSEQUENTLY THE 2 NOTICE U/S 148 OF THE ACT, DATED 18.3.2011 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE REASONS RECORDED BY THE AO FOR REOPENING OF THE ASSESSMEN T ARE AS UNDER: ON THE GROUND THAT THE ASSESSEE HAD A PRACTICE OF CHANGING EXCISE DUTY AVAILED ON INPUTS PROCURED IN THE HEAD OF COST OF RAW MATERIAL CONSUMED HAS EXPENDITURE. IT IS SEEN IN THE ANNUAL FINANCIAL REPORT FOR THE FY 2006 - 2007, A BALANCE OF RS. 91,02,172/ - AS A CREDIT IN THEIR BOOKS OF ACCOUNT OF CREDIT OF INPUTS, BALANCE IN PLA 50% BALANCE CREDIT OF CAPITAL GOODS PROCURED IN THE YEAR 2005 - 06 ETC ARE LYING. BUT THE UNIT AS ACCOUNTED RS. 8,88,224/ - ONLY AS ASSET IN THE HEAD OF LOANS AND ADVANCES IN THE BALANCE SHEET. THUS, THE UNIT HAS UNDERVALUED ASSET IN LOAN AND ADVANCES AMOUNTING TO RS. 82,13,948/ - WHICH WOULD BE UTILIZE LATER ON RESULTED INTO DUAL BENEFITS. 3. ACCORDINGLY, AO COMPLETED THE RE - ASSESSMENT U/S 148 R.W.S 143(3) OF T HE ACT AND THE ASSESSED INCOME IS DETERMINED AT 2,63,47,933/ - , WHICH INCLUDES DISALLOWANCES OF RS. 2,30,578/ - AND 62,085/ - U/S 40(A)(IA) OF THE ACT ON ACCOUNT OF NON - DEDUCTION OF TDS. AGGRIEVED WITH THE DECISION OF THE AO, ASSESSEE CARRIED THE MATTER IN A PPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 4. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) CONFIRMED THE DISALLOWANCE MADE BY THE AO TO THE EXTENT OF RS. 2,30,578/ - AND GRANTED REL IEF IN RESPECT OF THE DISALLOWANCE OF RS. 62,085/ - . THUS, THE CIT (A) PARTLY ALLOWED THE APPEAL. AGGRIEVED AND DISSATISFIED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 5. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THE GROUND NO.1 RELATES TO THE LEGAL ISSUE AND THE ADDITION IS LEGALLY UNSUSTAINABLE. BRINGING OUR ATTENTION TO THE FACTS, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS A CAS E OF RE - ASSESSMENT DONE U/S 147 R.W.S 143(3) OF THE ACT. FURTHER, HE BROUGHT OUR ATTENTION TO THE RE - ASSESSMENT ORDER OF THE AO DATED 11.2.2012 AND READ OUT THE ABOVE MENTIONED REASONS RECORDED BEFORE REOPENING THE REGULAR ASSESSMENT MADE ON 26.3.2008. A S PER THE SAID REASONS, THE AO PROPOSED TO REASSESS THE CREDIT BALANCE OF EXCISE DUTY. HOWEVER, NO SUCH ADDITION WAS EVENTUALLY MADE IN THE RE - ASSESSMENT. HOWEVER, AO MADE ADDITION U/S 40(A)(IA) OF THE ACT, WHICH IS NOT PAST OF THE REASONS. ON THESE FAC TS, LD COUNSEL FOR THE ASSESSEE ARGUED THAT THE SAID ADDITION IN THE REASSESSMENT IS UNSUSTAINABLE LEGALLY AS THE AO DID NOT MAKE ANY ADDITION ON ACCOUNT OF EXCISE DUTY CREDIT BALANCE. FOR THIS PROPOSITION, LD COUNSEL 3 RELIED ON THE BINDING JURISDICTIONAL HIGH COURT JUDGMENT IN THE CASE OF JET AIRWAYS (I) LTD [331 ITR 236 (BOM)] APART FROM OTHER DECISIONS. 6. ON THE OTHER HAND, LD DR FOR THE REVENUE RELIED ON THE ORDER OF THE AO. 7. ON HEARING BOTH THE PARTIES, WE FIND THAT THE SAME ARGUMENT WAS MADE BEFORE THE CIT (A), WHO SIMPLY IGNORED THE SAME BEFORE DENYING RELIEF TO THE ASSESSEE. WE HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORITIES ONE SIDE AND THE SAID JUDGMENT OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF JET AIRWAYS (I) LTD (SUPRA) AND F IND THE FACTS OF THE PRESENT CASE STAND COVERED BY THE RATIO LAID DOWN BY THE HONBLE HIGH COURT IN THE SAID CASE (SUPRA). IT IS THE REQUIREMENT OF THE LAW THAT AO IS UNDER OBLIGATION TO MAKE ADDITION FIRSTLY BASED ON THE REASONS RECORDED FOR ASSUMING JUR ISDICTION VALID U/S 148 OF THE ACT. UNLESS THESE CONDITIONS ARE MET, THE OTHER ADDITIONS, IN THIS CASE T H E INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT, ARE UNSUSTAINABLE. ACCORDINGLY, THE LEGAL ISSUE RAISED BY THE ASSESSEE IN GROUND NO.1 IS DECID ED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 8. GROUND NO.2, BEING RELATED TO THE ADDITION, IS DISMISSED AS ACADEMIC IN VIEW OF OUR DECISION ON GROUND NO.1 ABOVE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 3 R D SEPTEMBER, 2015. S D / - S D / - ( SANDEEP GOSAIN ) (D. KARUNAKARA RAO) JUDICIAL MEMBE R ACCOUNTANT MEMBER MUMBAI ; 2 3 .9 .2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 4 //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI