DCIT-9(2), MUMBAI V. M/S HAKOBA LIFESTYLE LTD, MUMBAI

ITA 4368/MUM/2013

• Counselvise Citation: 436819914 RSA 2013
• Duration Of Justice: 1 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 08-01-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 31-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDRA KUMAR
• Assessee Lawyers: RAKESH JOSHI
• Keywords: Rejection of books of accounts

Judgement Text

ITA/4368/MUM/2013-AY.09-10,HAKOBA 1 , INCOME TAX APPELLATE TRIBUNAL,MUM BAI - H BENCH. . . , , BEFORE S/SH.I.P.BANSAL, JUDICIAL M EMBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.4368/MUM/2013/, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2009-10 DCIT-9(2), R.NO. 218, 2ND FLOOR, AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020 ! V/S. M/S HAKOBA LIFESTYLE LTD., 101-B, ABHISHEK PREMISES, 1ST FLOOR, PLOT NO. C 5-6, DALIA INDL. ESTATE OFF. NEW LINK ROAD, ANDHERI(W), MUMBAI-400058 # # # # . . . /PAN:AAACM5851C ( #$ / ASSESSEE) ( %&#$ / RESPONDENT) ' ( / REVENUE BY : SHRI JITENDRA KUMAR (DR) !)* !)* !)* !)* ( ( ( ( / ASSESSEE BY : SHRI RAKESH JOSHI ! ! ! ! ' '' ' *+ *+ *+ *+ / DATE OF HEARING : 13-01-2015 ,-' ' *+ / DATE OF PRONOUNCEMENT : 13-01-2015 ! ! ! ! , 1961 ' '' ' 254(1) *.* *.* *.* *.* / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM ! ! ! ! : CHALLENGING THE ORDER DT.08.03.2013 OF THE CIT(A)-2 0,MUMBAI,ASSESSING OFFICER(AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL: WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW, THE LD. CIT(A) IS CORRECT IN ALLOWING THE ASSESSEE'S CLAIM FOR GROSS LOSS OF RS. 75,43,773/- WITHOUT APPRECIATING THAT THE ASSESSEE HAS NOT ESTABLISHED ITS CLAIM OF LOSS EVEN THOUGH THE ONUS OF SAME PRIMARILY LIES ON THE ASSESSEE. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GR OUNDS OR ADD A NEW GROUND WHICH MAY BE NECESSARY. 2. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF TEXTILE AN D RELATED PRODUCTS,FILED ITS RETURN OF INCOME ON 28.09.2009 DECLARING TOTAL INCOME OF RS.(-)11,97 ,87,411/-.INITIALLY THE RETURN WAS PROCESSED U/S/143(1)OF THE ACT.LATER ON THE AO FINALISED THE ASSESSMENT U/S.143(3) OF THE ACT,ON 31.12. 2011,DETERMINING THE TOTAL INCOME AT RS.(-)1.46CROE S. 3. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETION OF ADD TION MADE BY THE AO.DURING THE ASSESSMENT PROCEEDINGS,THE AO FOUND THAT THE ASSESSEE HAD SHOW N NET SALES OF RS.26,57, 49,085/- AND PURCHASE OF RS.20,30,94,227/-, THAT IT HAD CLAIMED LOSS OF RS.75.43 LAKHS.HE DIRECTED THE ASSESSEETO EXPLAIN AS TO WHY THE LOSS CLAIMED BY IT SHOULD NOT BE DISALLOWED. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE,THE AO HELD THAT IT HAD NOT FURNISHED DOCUMENTARY EVIDENCE AS TO HOW THE LOSS OCCURRED,THAT IT IS FOR THE ASSESSEE TO SUBSTANTIATE ITS CLAIM AND PROVE THIS EXTRAORDINARY CLAIM OF GROSS BUSINESS LOSS,THAT IT COULD NOT PROVE THE REASONS FOR THE GROSS LOSS.AS A RESULT,HE DISALLOWED A SUM OF RS. 75,43,773/- AN D ADDED IT TO THE TOTAL INCOME OF THE ASSESSEE. ITA/4368/MUM/2013-AY.09-10,HAKOBA 2 4. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM IT WAS ARGUED THAT DURING THE ASSESSMENT PROCEEDINGS IT HAD PROVIDED THE DETAILS OF SALES, PURCHASES, EXPENSES, CREDITORS, DEBTORS ETC,THAT THE AO HAD VERIFIED THOSE DETAILS,THAT IT HAD ALSO PROVIDED TH E REASON AS TO WHY IT HAD INCURRED THE LOSSES,THAT THE AO IGNORED THE SAME WITHOUT GIVING ANY REASON,THAT IT WAS ENGAGED IN THE RETAIL BUSINESS OF FASHION ORIENTED,THAT THE VALUE OF STOC K WOULD DECREASE OVER THE PERIOD OF TIME,THAT DUE TO FINANCIAL CRICES IT DECIDED TO CLO SE MANY NON VIABLE STORES,THAT IT WAS ALSO FORCED TO CLOSE MANY ON ACCOUNT OF DELAYED/NON PAYMENTS OF RENTALS ETC.,THAT 21 STORES WERE CLOSED,THAT IT RESULTED IN RETURN OF HUGE STOCKS FROM THEM,THAT MAXIMUM STOCKS SO RETURNED WERE OLD AND SLOW MOVING,THAT IT HAD DECIDED TO DISPOSE MAXIMUM STOCKS INCLUDING THOSE OF RETURNED STOCK OF AROUND RS.6 CRORES,THAT IT RESULTED IN REALIZATI ON OF PRICE LOWER THAN THEIR COST AND IT SUFFERED LOSS.IT WAS FURTHER SUBMITTED THAT IT HAD SUBMITTED ALL THE DETAILS DURING THE ASSESSMENT PROCEEDINGS, ALL THE DETAILS WERE ACCEPTED BY THE A O,THAT HE HAD ACCEPTED THE PURCHASE,SALE,DIRECT EXPENSES,DEBTORS, CREDITORS AS GENUINE,THAT HE HAD NOT MADE ADDITION ON ACCOUNT OF THE SAME OR NOT REJECTED ANY CLAIM,TH AT HE HAD ACCEPTED THE BOOKS OF ACCOUNT AND ALL TRANSACTION AS GENUINE,THAT THE BOOKS OF AC COUNTS OF THE ASSESSEE WERE SUBJECT TO AUDIT AND IN THE AUDIT REPORT NO IRREGULARITY WAS REPORTED B Y THE AUDITORS,THAT THE ACCOUNTS WERE COMPLETE AND CORRECTLY MAINTAINED AND THE AO COULD NOT DETEC T ANY DISCREPANCY,THAT WHILE MAKING THE ADDITION ON ACCOUNT OF DISALLOWANCES OF LOSSES THE AO HAD NOT PRODUCED ANY EVIDENCE ON RECORD AS TO WHY HE HAD NOT ACCEPTED THE GROSS LOSS . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE A ND THE ASSESSMENT ORDER,THE FAA HELD THAT THERE WAS NO JUSTIFICATION OF DISALLOWING OF BUSINESS LOSS OF THE ASSESSEE TO THE EXTENT OF RS.75,43,773/-,THAT IT WA S WRONG ON THE PART OF THE AO TO EXPECT DOCUMENTARY EVIDENCE AS TO HOW LOSS WAS I NCURRED WHEREAS ALL THE DETAILS WERE GIVEN TO HIM BY THE ASSESSEE,THAT THE AO HAD DISALL OWED THE LOSS WITHOUT ANY BASIS OR EVIDENCE IN POSSESSION,THAT HE MERELY DISBELIEVED T HE LOSS WITHOUT POINTING OUT ANY VISIBLE DEFECTS IN TRADING ACCOUNT OR IN BOOKS OF ACCOUNT,T HAT THE AO HAD FAILED TO REFER TO ANY EVIDENCE WHICH COULD REVEAL THE FALLACY IN THE CLAI M MADE BY THE ASSESSEE.FINALLY,HE DELETED THE ADDITION MADE BY THE AO. 5. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)SUPPOR TED THE ORDER OF THE AO. AUTHORISED REPRESENTATIVE(AR)STATED THAT THE ASSESS EE HAD FILED ALL THE DETAILS BEFORE THE AO,THAT HE HAD NOT GIVEN ANY REASON FOR REJECTING T HE CLAIM MADE BY THE ASSESSEE. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERAIL BEFORE US.WE FIND THAT THE AO HAD NOT REJECTED THE BOOKS OF ACCOUNTS OR HA S NOT POINTED OUT ANY DEFECT IN SAME.THE ASSESSEE HAD FURNISHED THE REASONS FOR ABN ORMAL LOSS SUFFERED BY IT DURING THE YEAR UNDER APPEAL.WITHOUT COMMENTING UPON THE EXPLA NATION OFFERED BY THE ASSESSEE,THE AO DISALLOWED THE LOSS.IT IS BEYOND ANY LOGIC OR CO MPREHENSION.FOR MAKING AN ADDITION OR DISALLOWING AN ITEM AO.S.ARE REQUIRED TO PASS A REASONED AND SPEAKING ORDER.TAX LIABILITY CANNOT BE FASTENED TO A TAXPAYER AT THE W HIMS AND FANCIES OF THE AO.IN THE CASE UNDER CONSIDERATION THE AO HAS SIMPLY HELD THAT THE EXPLANATION OF THE ASSESSEE NOT ACCEPTABLE.HE HAD NOT DISCUSSED AS TO WHY SAME WAS NOT ACCEPTABLE OR WHAT WERE THE DEFECTS IN THE EXPLANATION.THE FAA HAS RIGHTLY POIN TED OUT THAT THERE WAS NO VALID REASON ITA/4368/MUM/2013-AY.09-10,HAKOBA 3 FOR MAKING DISALLOWANCE OF RS.75.43 LAKHS.WE ARE OF THE OPINION THAT THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY.CONFIRMIN G HIS ORDER,WE DECIDE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT,APPEALS FIELD BY THE ASSESSEE AND THE A O STANDS DISMISSED. 0*1 !)* + 2 3 !4 ' * 56 . ORDER PRONOUNCED IN TH E OPEN COURT ON 13 TH ,JANUARY, 2015 . / ' ,-' 7 8! 13 !+ , 201 5 - ' . < SD/- SD/- ( . . / I.P. BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI, 8! /DATE: 13.01 . 2015. / / / / ' '' ' %*= %*= %*= %*= >='* >='* >='* >='* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT(A)/ ? @ , 4. THE CONCERNED CIT / ? @ 5. DR H BENCH, ITAT, MUMBAI / =A. %*! , . . . 6. GUARD FILE/ . 0 &=* &=* &=* &=* %* %*%* %* //TRUE COPY// /! / BY ORDER, B / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI