JABIL CIRCUIT INDIA P.LTD, MUMBAI V. DCIT (OSD) CIR 3(2), MUMBAI

ITA 438/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 6008 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 19-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIV GUBGOTRA
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 143(3); 133(6); 144C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 438/MUM/2017 ASSESSMENT YEAR: 2010 - 11 JABIL CIRCUIT INDIA PRIVATE LIMITED , ARENA HOUSE, 3 RD FLOOR, PLOT NO. 103 ROAD NO. 12, OPP. TULIP TELECOM, MAROL, MIDC, ANDHERI (E) MUMBAI - 400093 VS. THE DEPUTY COMMISSIONER OF INCOME TAX (OSD), CIRCLE 3(2), ROOM NO. 609, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020. PAN NO. AACCP7114K APPELLANT RESPONDENT ASSESSEE BY : MR. NITESH JOSHI , AR REVENUE BY : MR. RAJIV GUBGOTRA, DR DATE OF HEARING : 23/10/2018 DATE OF PRONOUNCEMENT : 31/12/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2010 - 11 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 56 , MUMBAI [IN SHORT CIT(A)] AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) R.W. S. 144C (1) R.W.S. 92CA(4) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE 1 ST GROUND OF APPEAL IS GENERAL IN NATURE. THE 2 ND AND 3 RD GROUNDS OF APPEAL READ AS UNDER: JABIL CIRCUIT ITA NO. 438/MUM/2017 2 I. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ACTION OF THE ASSESSING OFFICER ('AO') OF DISALLOWING EXPENSES OF RS.1,45,32,380 (RS.87,75,917 ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES AND RS.57,56,463 ON ACCOUNT OF MISCELLANEOUS EXPENSES) ON THE BASIS OF NON - F URNISHING OF EVIDENCE OF INCURRING THE EXPENDITURE FOR BUSINESS PURPOSES WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD SUBMITTED A COPY OF MORE THAN 75% OF THE INVOICES FOR T HE SUBJECT EXPENSES BEFORE THE AO. II. THE LD. CIT(A) HAS ERRED IN SUSTAINING T HE AO'S ACTION OF MAKING ADDITION IN RESPECT OF CREDITORS OF RS.37,94,189 ON THE BASIS THAT CERTAIN EXTERNAL PA R TY CONFIRMATIONS WERE NOT FURNISHED FOR VERIFICATION PURPOSES WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAD SUBMITTED CORROBORATIVE EVIDE NCES (INCLUDING BALANCE CONFIRMATIONS) TO ESTABLISH GENUINENESS OF THE SAME WITH THE LD. CIT( A) AND THE AO. 3. BRIEFLY STATED, THE FACTS ARE THAT THE ASSESSEE HAD CLAIMED RS.3,43,12,134/ - ON ACCOUNT OF TRAVELLING AND CONVEYANCE EXPENSES AND RS.2,90,17,391/ - AS MISCELLANEOUS EXPENSES. THE ASSESSING OFFICER (AO) VIDE ORDER SHEET ENTRY DATED 17.02.2014 ASKED THE ASSESSEE TO GIVE COMPLETE DETAILS WITH INVOICES AND BILLS OF THE ABOVE EXPENSES. IN RESPONSE TO IT THE ASSESSEE FILED BEFORE THE AO BILLS OF EXPENSES AMOUNTING TO RS.4,87,97,145/ - . AS THE ASSESSEE FAILED TO FILE THE BILLS OF THE BALANCE EXPENSES, THE AO MADE AN ADDITION OF RS.1,45,32,380/ - (RS.6,33,29,525/ - MINUS RS.4,87,97,145/ - ). ALSO THE AO ISSUED NOTICE U/S 133(6) TO VARIOUS CREDITORS TO FIND OUT THE GENUINENESS OF TRANSACTION. IN CERTAIN CASES, THE NOTICES ISSUED WERE RETURNED BACK BY THE POSTAL AUTHORITIES. IN CERTAIN CASES, REPLY WAS NOT RECEIVED. THE AO VIDE NOTICE DATED 03.0 3.2014 ASKED THE ASSESSEE TO SUBMIT THE SUPPORTING EVIDENCE IN RESPECT OF (I) AUM ENGINEERING, (II) JABIL CIRCUIT ITA NO. 438/MUM/2017 3 BARTECH DATA SYSTEMS P. LTD., (III) AGILITY LOGISTICS PVT. LTD., (IV) TYCO FIRE & SECURITY INDIA P. LTD., (V) CELETRONIX INDIA PVT. LTD. AND (VI) MITI ASSOC IATES , TO PROVE THE GENUINENESS OF TRANSACTIONS. IN RESPONSE TO IT, THE ASSESSEE VIDE SUBMISSION DATED 11.03.2014 SUBMITTED THE COPIES OF INVOICES AND LEDGER EXTRACTS OF THE ABOVE PARTIES. HOWEVER, THE AO WAS NOT CONVINCED WITH THE ABOVE EXPLANATION OF THE ASSESSEE FOR THE REASON THAT THE ASSESSEE FAILED TO FILE THE IDENTITY, GENUINENESS OF TRANSACTION OF THE PARTIES, EXCEPTING THE CASE OF M/S CELETRONIX AND M/S MITI ASSOCIATES. THE AO CONSIDERED IN THE CASE OF M/S AGILITY, AFTER THE DETAILS WERE RECEIVED B Y HIM. TO SUM UP, THE AO CONSIDERING THE FACT THAT THE TRANSACTIONS WITH (I) M/S AUM ENGINEERS (RS.14,30,250/ - ), (II) M/S TYCO FIRE & SECURITY INDIA PVT. LTD. (RS.8,12,028/ - ) AND (III) BARTECH DATA SYSTEMS PVT. LTD. (RS.15,51,911/ - ) COULD NOT BE VERIFIED, MADE AN ADDITION OF RS.37,94,189/ - . 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). WE FIND THAT THE LD. CIT(A) AGREED WITH THE REASONS GIVEN BY THE AO AND DISMISSED THE APPEAL FILED BY THE ASSESSEE ON THE ABOVE TWO GROUNDS. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE IN ACCORDANCE WITH RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1963 (RULES). IT IS SUBMITTED BY HIM THAT DURING THE COURSE OF ASSESSMENT PROCEE DING, THE ASSESSEE HAD APPRISED THE AO THAT THE DETAILS REQUESTED RELATE TO BALANCES WHICH ARE VOLUMINOUS IN NATURE AND NEVERTHELESS, BEST EFFORTS ARE BEING MADE TO COLLATE ADDITIONAL BACKUPS/OTHER INFORMATION IN RESPECT OF THE JABIL CIRCUIT ITA NO. 438/MUM/2017 4 AFOREMENTIONED BALANCES. HOW EVER, THE AO PASSED A DRAFT ASSESSMENT ORDER DATED 12.03.2014 DISALLOWING THE TOTAL EXPENSES OF RS.2,83,66,234/ - . THE LD. COUNSEL SUBMITS THAT SINCE THE PRIMARY REASON FOR THE AFORESAID DISALLOWANCES BY THE AO WAS NON - SUBMISSION OF THE RELEVANT BREAK - UP / BALANCE CONFIRMATIONS, THE ASSESSEE CONTINUED ITS EFFORTS TO EXTRACT THE RELEVANT DETAILS AND SUBMITTED THE FOLLOWING ADDITIONAL DETAILS VIDE SUBMISSION DATED 11.04.2014: (I) COPIES OF INVOICES IN RESPECT OF A FURTHER AMOUNT OF RS.66,63,111/ - OF TRAVELLI NG CONVEYANCE EXPENSES, (II) COPIES OF INVOICES IN RESPECT OF A FURTHER AMOUNT OF RS.42,81,444/ - OF MISCELLANEOUS EXPENSES, AND (III) BALANCE CONFIRMATION, ALONG WITH STATEMENT OF RECONCILIATION OF THE BALANCES WITH THE ASSESSEES BOOKS OF ACCOUNTS IN RE SPECT OF M/S TYCO FIRE & SECURITY INDIA PVT. LTD. (RS.8,12,208/ - ) AND BARTECH DATA SYSTEMS PVT. LTD. (RS.15,51,911/ - ). THE LD. COUNSEL SUBMITS THAT THE AO IGNORED THE ABOVE DETAILS AND PASSED A FINAL ASSESSMENT ORDER DATED 22.04.2014, CONFIRMING THE DISAL LOWANCE MADE IN THE DRAFT ORDER WITHOUT APPRECIATING THE FACT THAT DESPITE THE VOLUMINOUS AMOUNT OF DATA INVOLVED, THE ASSESSEE WAS ABLE TO SUBSTANTIATE A SIGNIFICANT PORTION OF THE BALANCES WITHIN THE LIMITED TIME FRAME GIVEN TO IT BY THE AO. IT IS FURTHE R STATED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE LD. CIT(A), THE ASSESSEE REITERATED THE SUBMISSION OF ADDITIONAL DETAILS BEFORE THE AO AND JABIL CIRCUIT ITA NO. 438/MUM/2017 5 RESUBMITTED THE SAME BEFORE THE CIT(A). HOWEVER, THE CIT(A) UPHELD THE ACTION OF THE AO. WITH TH E ABOVE SUBMISSIONS, THE LD. COUNSEL SUBMITS THAT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BE ADMITTED. 6. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATE RIALS ON RECORD. HAVING GONE THROUGH THE ADDITIONAL DETAILS FILED BY THE ASSESSEE BEFORE THE AO VIDE LETTER DATED 11.04.2014, WE ARE OF THE CONSIDERED VIEW THAT A PROPER FINDING COULD BE ARRIVED AT BY EXAMINING THE COPIES OF INVOICES AND STATEMENT OF RECON CILIATION OF THE BALANCES WITH THE ASSESSEES BOOKS OF ACCOUNTS. THEREFORE, WE ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE AND REMIT THE MATTER TO THE FILE OF THE AO TO MAKE A DE NOVO ORDER, AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. THUS THE 2 ND AND 3 RD GROUND OF APPEALS ARE ALLOWED FOR STATISTICAL PURPOSES. 8. THE 4 TH GROUND OF APPEAL THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ADDITION IN RESPECT OF CREDITORS OUTSTANDING FOR MORE THAN THREE YEARS OF RS.40,58,713 ALLEGEDLY ON THE GROUND THAT THERE HAS BEEN CESSATION OF LIABILITY UNDER SECTION 41(1) OF THE ACT. 9. IN RESPONSE TO A QUERY RAISED BY THE AO TO FILE THE CONFIRMATION OF SUNDRY CRED ITORS WHICH ARE OUTSTANDING FOR MORE THAN THREE YEARS IN ITS BOOKS OF ACCOUNTS, THE ASSESSEE VIDE ITS LETTER DATED 24.02.2014 FILED JABIL CIRCUIT ITA NO. 438/MUM/2017 6 CONFIRMATION OF PAYMENTS TO GROUP COMPANIES BUT FAILED TO FILE THE CONFIRMATION IN RESPECT OF (I) ABB LIMITED (RS.40,56,813/ - ) AND (II) PARRY ENTERPRISES INDIA LTD. (RS.1,900/ - ). THE AO MADE A DISALLOWANCE OF THE ABOVE SUM OF RS.40,58,713/ - FOR THE REASON THAT NO LITIGATION IS PENDING AGAINST THE ASSESSEE TO RECOVER THESE PAYMENTS; NO PROOF OF CORRESPONDENCE WITH THE CREDITOR S REGARDING AMOUNTS DUE HAD BEEN FURNISHED BY THE ASSESSEE; THE VERY FACT THAT DESPITE LAPSE OF SEVERAL YEARS, THE SAID PARTIES ARE NOT CLAIMING THE SAID AMOUNT PROVES THAT NO LIABILITY EXISTS TO PAY THE AMOUNTS. WITH THE ABOVE REASONS, THE AO MADE AN ADDI TION OF RS.40,58,713/ - U/S 41(1)(A) OF THE ACT. 10. IN APPEAL, THE LD. CIT(A) AGREED WITH THE REASONS GIVEN BY THE AO AND CONFIRMED THE ADDITION OF RS.40,58,713/ - MADE U/S 41(1) OF THE ACT. 11. BEFORE US, THE LD. COUNSEL SUBMITS THAT THE AO ERRED IN FACT S AND IN LAW BY ADDING BALANCES OF CERTAIN CREDITORS TO THE TUNE OF RS.40,58,713/ - WITHOUT REALIZING THAT THE SAME HAVE BEEN ADDED TO ASSESSEES INCOME BY THE PREDECESSOR OF THE AO IN THE ASSESSMENT ORDER FOR THE PRECEDING YEAR I.E. 2010 - 11. IT IS SUBMITTE D THAT THE AO BE DIRECTED TO TREAT THE OUTSTANDING BALANCES OF CREDITORS FOR MORE THAN THREE YEARS AS ON 31.03.2011 AS EXISTING LIABILITY. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER PASSED BY THE LD. CIT(A). 12. WE HAVE HEARD THE RIVAL SUBMISSION AND PERUSED THE RELEVANT MATERIALS ON RECORD. AS PER SECTION 41(1)(A), WHEREIN ALLOWANCE OR JABIL CIRCUIT ITA NO. 438/MUM/2017 7 DEDUCTION HAS BEEN MADE IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF (I) LOSS, (II) EXPENDITURE, OR (III) TRADING LIABILITY INCURRED BY THE ASSESSEE AND SUBSEQUENTL Y, DURING ANY PREVIOUS YEAR, HE (THE SAME ASSESSEE) HAS OBTAINED, WHETHER IN CASH OR IN ANY OTHER MANNER, WHATSOEVER: (I) ANY AMOUNT IN RESPECT OF SUCH LOSS OR EXPENDITURE ; OR (II) SOME BENEFIT IN RESPECT OF SUCH TRADING LIABILITY BY WAY OF REMISSION OR CESSATION THEREOF, THEN, THE AMOUNT OBTAINED BY THE ASSESSEE OR THE AMOUNT OF THE LIABILITY WHICH IS EXTINGUISHED SHALL BE DEEMED TO BE PROFIT AND GAINS OF BUSINESS OR PROFESSION AND ACCORDINGLY CHARGEABLE TO INCOME - TAX AS THE INCOME OF THAT PREVIOUS YEAR . WE ARE OF THE CONSIDERED VIEW THAT WHILE MAKING THE ADDITION OF RS.40,58,713/ - , THE AO HAS NOT KEPT IN MIND THE ABOVE PROVISIONS OF SECTION 41(1) OF THE ACT. AS THE CONDITIONS LAID DOWN IN SECTION 41(1) IS NOT SATISFIED IN THE INSTANT CASE, WE DELE TE THE ADDITION OF RS.40,58,713/ - MADE BY THE AO. THUS THE 4 TH GROUND OF APPEAL IS ALLOWED. 13. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/12/2018. SD/ - SD/ - (C.N. PRASAD) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/12/2018 RAHUL SHARMA, SR. P.S. JABIL CIRCUIT ITA NO. 438/MUM/2017 8 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 . BY ORDER, //TRUE COPY// (SR. PRIVATE SECRETARY) ITAT, MUMBAI