VINAYAK INDUSTRIES LTD., Jaipur V. ACIT, Alwar

ITA 434/JPR/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5024 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-10-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 1994-1995
• Appeal Filed On: 03-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Principle of natural justice
• Section: 40A(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 434/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 1994-95 M/S. VINAYAK INDUSTRIES LTD. G-282, INDUSTRIAL AREA BHIWADI CUKE VS. THE ACIT CIRCLE- 2 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: V-5/AC/CIRCLE-2/ALWAR VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI MANISH AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA, ADDL. CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 30/08/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 13 /10/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 30-04-2014 FOR THE ASSESSMENT YEAR 19 94-95 WHEREIN THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN NOT PROPER LY FOLLOWING THE DIRECTIONS OF THE HON'BLE ITAT JAIPUR BENCH JAIPUR AND FURTHER ERRED IN IGNORING THE FACT THAT NO PROPER INQUIRES WERE MADE TO FIND OUT ACTUAL STATE WHETHER THE BOOKS OF ACCOUNT OF TH E APPELLANT WERE LYING IN THE BUSINESS PREMISES WHEN THE SAME WAS SE IZED BY ITA NO. 434/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 2 RIICO, THUS THE CONSEQUENT ORDER PASSED DESERVES TO HOLD BAD IN LAW AND THE RESULTANT ADDITION DESERVES TO BE DELET ED. 1.1 THE LD. CIT(A) HAS FURTHER FAILED TO APPRECIATE THE FACT THAT THE BUSINESS PREMISES OF THE APPELLAN T WAS SEIZED BY RIICO ON 23-03-1996 WHERE ALL THE BOOKS OF ACCOUNT AND RELATED VOUCHERS WERE MAINTAINED AND KEPT IN REGULAR COURSE THUS THE SAME COULD NOT BE PRODUCED DURING THE COURSE OF ORIGINAL / SET ASIDE ASSESSMENT PROCEEDINGS COMPLETED THEREFORE, THE ORD ER PASSED BY THE LD. CIT(A) IS WITHOUT PROPERLY APPRECIATING THE FACTS ON RECORD AND IS AGAINST THE PRINCIPAL OF NATURAL JUSTICE AND EQUITY HENCE THE SAME DESERVES TO BE QUASHED. WITHOUT PREJUDICE TO ABOVE AND IN THE ALTERNATIVE 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE AO IN ADOPTING THE PROFIT AS PER PROF IT AND LOSS ACCOUNT AT RS. 54,76,804/- INSTEAD OF RS. 40,22,92 0/- DECLARED BY THE ASSESSEE THEREBY CONFIRMING THE ADD ITION OF RS. 14,53,884/- WITHOUT CONSIDERING THE SUBMISSIONS MADE, HENCE THE AMOUNT SO DECLARED BY THE ASSESSEE DESERV ES TO BE ACCEPTED AND ADDITION SUSTAINED DESERVES TO BE DELE TED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMIN G THE ADDITION OF RS. 1,57,000/- MADE U/S 40A(3) OF THE I .T. ACT, 1961 WITHOUT CONSIDERING THE SUBMISSION MADE AND HA RDSHIP WITH THE ASSESSEE APPELLANT, HENCE THE ADDITION SO MADE DESERVES TO BE DELETED. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,19,985/- CLAIMED ON ACCOUNT O F SALES COMMISSION WHEN IN FACT THE SAID EXPENSE IS RELATED TO THE YEAR UNDER CONSIDERATION AND HAS NOT BEEN CLAIMED B Y THE ASSESSEE IN ANY OF THE ASSESSMENT YEARS. HENCE, THE SAID EXPENSE AS CLAIMED DESERVES TO BE ALLOWED. ITA NO. 434/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 3 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE LUMPSUM ADDITION OF RS. 2,00,000/- MADE BY THE AO W ITHOUT POINTING OUT ANY HEAD UNDER WHICH THE SAME HAS BEEN MADE AND AS SIMPLY CONCLUDED THE SAME BY OBSERVING THAT THE ASSESSEE HAS CLAIMED VARIOUS EXPENSES IN THE PROFIT AND LOSS ACCOUNT AND HAS RAISED THE SHARE CAPITAL. THE SAID ADDITION BEING BASED ON NO ADVERSE MATERIAL ON RECORD DESERV ES TO BE DELETED. 2.1 AT THE OUTSET OF THE HEARING, THE LD. AR OF THE ASSESSEE PRAYED THAT THE BUSINESS PREMISES OF THE ASSESSEE COMPANY WAS S EIZED BY THE RIICO ON 23-03-1996 WHERE ALL THE BOOKS OF ACCOUNT AND RE LATED VOUCHERS WERE STRANDED AND THE ASSESSEE COULD NOT TAKE OUT THOSE PAPERS AND THEREFORE, THEY COULD NOT BE PRODUCED BEFORE THE AO DURING ASS ESSMENT PROCEEDINGS. THE LD. AR OF THE ASSESSEE THEREFORE, SUBMITTED THAT THE ASSESSEE WAS DEPRIVED OFF IN CONTESTING HIS CASE BE FORE THE LOWER AUTHORITIES AND THE ISSUE IN QUESTION MAY KINDLY BE RESTORED TO THE AUTHORITIES BELOW FOR SUBMITTING THE RELEVANT DOCUM ENTS CONCERNING THE CASE. 2.2 THE LD. DR OPPOSED THE CONTENTION OF THE AO AND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW.. 2.3 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED FROM PARA 5.5 FRO M THE ORDER OF THE LD. ITA NO. 434/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 4 CIT(A) IN WHICH THE ASSESSEE SUBMITTED THAT THE ASS ESSEE COULD NOT SUBMIT THE BOOKS OF ACCOUNT BEFORE THE AO AS THE PR EMISES OF THE COMPANY HAD BEEN SEIZED BY THE RIICO. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) AT PARA 5.5 AND 5.6 ARE REPRODUCED AS UN DER:- 5.5 DURING THE COURSE OF APPELLATE PROCEEDINGS, I T IS SUBMITTED THAT BOOKS OF ACCOUNT COULD NOT BE PRODUC ED BEFORE THE AO AS THE PREMISES OF THE COMPANY HAVE B EEN SEIZED BY THE RIICO. THE AO MADE ENQUIRIES WITH THE RIICO AND IT WAS INFORMED THAT NO BOOKS OF ACCOUNT WERE FOUND AT THE TIME OF SEIZURE OF PREMISES. THUS, THE VERSION OF THE APPELLANT COULD NOT BE VERIFIED WITH REFERENCE TO THE ENTRIES IN THE BOOKS OF ACCOUNTS. THE APPELLANT HAS STATED THAT THERE HAS BEEN A TRANSACTION OF SALE AND LEASE BACK OF COMPANY LASTS AND THEREFORE, AN AMOUNT OF RS. 15,23 ,000/- HAS BEEN TRANSFERRED TO SPECIAL RESERVE ACCOUNT. 5.6 IN THE ABSENCE OF ANY CORROBORATIVE EVIDENCE TO SUBSTANTIATE, THE SEQUENCE OF EVENTS STATED BY THE APPELLANT COULD NOT BE ACCEPTED. FURTHER, THE BOOKS OF ACCOUN TS HAVE NOT BEEN PRODUCED BY THE APPELLANT EITHER BEFORE TH E AO OR IN THE COURSE OF APPELLATE PROCEEDINGS AND HENCE TH E CLAIM OF THE APPELLANT COULD NOT BE VERIFIED. THEREFORE, I F IND THAT THE FIGURE OF PROFIT DECLARED BY THE APPELLANT IN THE R ETURN OF INCOME AT RS. 54,76,804/- AS CORRECT AND ACCORDINGL Y CONFIRM THE ADDITION OF RS. 14,53,884/- MADE BY THE AO UNDE R THIS HEAD. IN VIEW OF THE SUBMISSIONS OF THE LD. AR OF THE ASS ESSEE AND THE ORDERS OF THE LOWER AUTHORITIES, IT WILL BE IN THE INTEREST O F JUSTICE AND EQUITY TO RESTORE THE ISSUE RELATING TO GROUND NO. 1 AND 1.1 OF THE ASSESSEE TO THE FILE OF THE AO TO DECIDE IT AFRESH BY PROVIDING ADE QUATE OPPORTUNITY OF ITA NO. 434/JP/2014 M/S. VINAYAK INDUSTRIES LTD. VS. ACIT , CIRCLE- 2, ALWAR . 5 BEING HEARD. THE ASSESSEE IS ALSO DIRECTED TO PRODU CE ALL THE RELEVANT RECORDS BEFORE THE AO CONCERNING THE CASE. SINCE TH E GROUND NOS. 1 AND 1.1 OF THE ASSESSEE HAVE BEEN RESTORED TO THE FILE OF THE AO TO DECIDE IT AFRESH, THEREFORE, THE ALTERNATIVE GROUND NOS. 2, 3 ,4 AND 5 RAISED BY THE ASSESSEE ARE NOT ADJUDICATED UPON. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES ORDER PRONOUNCED IN THE OPEN COURT ON 13 /10/ 2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 13 /10/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. VINAYAK INDUSTRIES LTD. , BHIW ADI 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- 2, ALWAR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 434/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR