MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD, MUMBAI V. ITO 2(2)(1), MUMBAI

ITA 4172/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55519 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 27-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 21-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V V SHASTRI
• Assessee Lawyers: DEEPAK P TIKEKA R
• Keywords: Depreciation; Bad and doubtful debts

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H : MUMBAI BEFORE SHRI B.R. MITTAL, ( JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.4172/MUM/2010 ASSESSMENT YEAR : 2006-07 MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LIMITED KRUPANIDHI, 9 WALCHAND HIRACHAND MARG BALLARD ESTATE MUMBAI-400 001. ..( APPELLANT ) P.A. NO. (AAACM 3863 A) VS. INCOME TAX OFFICER WARD-2(2)(1) ROOM NO.549, AAYAKAR BHAVAN M.K. MARG MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI DEEPAK P. TIKEKAR RESPONDENT BY : SHRI V. V. SHASTRI DATE OF HEARING : 27.9.2011 DATE OF PRONOUNCEMENT : 14 TH OCTOBER, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 10.3.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. T HE DISPUTE RAISED IN THIS APPEAL RELATES TO DISALLOWANCE OF LOSS A S WELL AS ITA NO.4172/M/10 A.Y:06-07 2 DISALLOWANCE OF CLAIM OF DEPRECIATION, BAD DEBTS AND P ROVISION FOR EXPENSES. 2. FACTS IN BRIEF ARE THAT THE ASSESSEE IS A PUBLIC SECTOR UN DERTAKING OF GOVERNMENT OF MAHARASHTRA WITH REGISTERED OFFICE AT MUMBAI. IN THE RELEVANT YEAR, BOOKS OF ACCOUNT OF ASSESSEE HAD NOT BE EN AUDITED UNDER SECTION 44AB. THE ASSESSEE HAD ONLY ENCLOSED A PROVI SIONAL P&L ACCOUNT WITH RETURN OF INCOME SHOWING LOSS AND SUBSEQUENTLY DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FURNISHED DETAILS OF SALES AND PURCHASES ETC. AND THE LOSS WAS REVISED TO RS.37.78 LACS. T HE AO HOWEVER DID NOT TAKE COGNIZANCE OF THE LOSS SINCE BOOKS WE RE NOT AUDITED WHICH WAS A STATUTORY REQUIREMENT UNDER SECTION 44AB. HE, THEREFORE, DISALLOWED CLAIM OF LOSS. IN ADDITION, AO AL SO DISALLOWED CLAIM OF DEPRECIATION (RS.31,00,000/-); CLAIM OF BAD DE BT (RS.5,00,000/-) AND CLAIM OF PROVISION FOR EXPENSES (RS .5,42,206/-) TOTALING RS.41,42,206/- AND THUS ASSESSED TOTAL INCOME A T RS.41,42,210/-. THE ASSESSEE DISPUTED THE DECISION OF AO A ND SUBMITTED BEFORE CIT(A) THAT AO WHILE DISALLOWING THE CLAIM OF LOSS, HAD MADE EFFECTIVE DISALLOWANCE OF EXPENSES TO THE EXTEN T OF LOSS CLAIMED AND THEREAFTER THE DISALLOWANCE OF DEPRECIATION , BAD DEBTS, ETC. WHICH AMOUNTED TO DOUBLE ADDITION. CIT(A) AGREE D WITH THE DECISION OF AO TO DISALLOW LOSS AND TAKE THE NET PROFIT AT NIL. AS REGARDS THE OTHER CLAIMS OF ASSESSEE REGARDING DOUBLE ADDITIONS, THE CIT(A) ITA NO.4172/M/10 A.Y:06-07 3 DIRECTED THE AO TO EXAMINE THE ADDITIONS AND MAKE NECE SSARY MODIFICATIONS OF THE ASSESSMENT ORDER. AGGRIEVED BY SAID DECISION, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 2.1 BEFORE US, THE LD. AR FOR THE ASSESSEE SUBMITTED THA T BOOKS OF ACCOUNT HAVE SINCE BEEN AUDITED COPIES OF WHICH WERE PLACE D ON RECORD WITH REQUEST THAT THE SAME MAY BE ADMITTED AS A DDITIONAL EVIDENCE AND CONSIDERED FOR THE PURPOSE OF ASSESSMENT. FUR THER, IT WAS POINTED OUT THAT AUDIT WAS COMPLETED ONLY ON 22.12 .2010 AND TAX AUDIT ON 12.1.2011 AND THEREFORE, DOCUMENTS WERE NOT AVAILABLE AT THE TIME OF PASSING ORDERS BY THE AUTHORITIES BELOW. IT WA S SUBMITTED THAT SIMILAR SITUATION HAD BEEN CONSIDERED BY THE TRIBUNAL IN ASSESSMENT YEAR 2003-04 TO 2005-05 IN ITA NO.6631 TO 6633/MUM/ 2008 IN WHICH THE TRIBUNAL HAD RESTORED THE ISSUE TO THE FILE OF AO FOR MAKING FRESH ASSESSMENT AFTER CONSIDERING THE AUDITED BOOKS OF ACCOUNT. IT WAS ACCORDINGLY REQUESTED THAT THESE AUDITED ACCOUNTS MAY BE CONSIDERED THIS YEAR ALSO. THE LD. DR PLACED RELIANCE ON THE ORDE R OF AUTHORITIES BELOW. 3. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE RAISED IS REGARDING DISALLOWANCE OF LOSS CLAIMED BY THE ASSESSEE ON THE BASIS OF PROVISIONAL P&L ACCOUNT AND ITA NO.4172/M/10 A.Y:06-07 4 DISALLOWANCE OF OTHER EXPENSES SUCH AS DEPRECIATION, BAD DE BTS AND PROVISION FOR EXPENSES. CIT(A) HAS CONFIRMED THE ORDER OF AO TAKING THE LOSS AT NIL BUT HAS DIRECTED THE AO TO AMEND THE OR DER IN RELATION TO OTHER CLAIMS SUCH AS DEPRECIATION ETC. THE BOOKS OF ACCOUN T HAVE SINCE BEEN AUDITED AND TAX AUDIT HAS ALSO SINCE BEEN DON E AFTER THE ORDER OF CIT(A). THESE DOCUMENTS ARE NECESSARY FOR PROPE R ASSESSMENT OF INCOME IN CASE OF THE ASSESSEE. IN FACT SIMILAR SIT UATION WAS CONSIDERED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ASSESSM ENT YEARS 2003-04 TO 2005-06 IN ITA NO. 6631 TO 6633/MUM /2008 ORDER DATED 31.5.2010 IN WHICH THE TRIBUNAL NOTED THAT DEL AY IN CONDUCTING OF AUDIT HAD ALREADY BEEN ACCEPTED DURING THE PROCEEDI NGS RELATING TO PENALTY UNDER SECTION 271B. IT WAS ALSO OBSERVED BY THE TRIBUNAL THAT INCOME HAD TO BE COMPUTED BASED ON AUDITED ACCOUNTS. ACCOR DINGLY THE TRIBUNAL SET ASIDE THE ORDER OF CIT(A) AND RESTOR ED THE MATTER BACK TO AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMI NATION OF ACCOUNTS AND AFTER HEARING THE ASSESSEE. FACTS, THIS YEAR AR E IDENTICAL. WE THEREFORE SET ASIDE THE ORDER OF CIT(A) THIS YEAR ALSO AND RESTORE THE MATTER BACK TO AO FOR PASSING A FRESH ORDER AFTER T AKING INTO ACCOUNT THE AUDITED ACCOUNTS AND AFTER ALLOWING OPPORTUN ITY OF HEARING TO THE ASSESSEE. ITA NO.4172/M/10 A.Y:06-07 5 4. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14.10.2011. SD/- SD/- (B.R. MITTAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 14.10.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.