MEDREL PHARMACEUTICALS (P) LTD., MUMBAI V. I.T.O. WD 5(2)(3), MUMBAI

ITA 4480/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88655 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 26-03-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 02-07-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: BEHARILAL
• Keywords: Opportunity of being heard; Additional evidence

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - F BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL ME MBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO.4480/MUM/2012, ! ! ! ! ' ' ' ' / ASSESSMENT YEAR-2008-09 M/S MEDREL PHARMACEUTICALS (P) LTD. 54-B, DRUG HOUSE, PROCTER ROAD, MUMBAI-400007 PAN:AACCM5972A VS ITO WARD 5(2)(3), AAYKAR BHAVAN, MUMBAI-20 ( #$ / ASSESSEE) ( %&#$ / RESPONDENT) !'( !'( !'( !'( ) ) ) ) /ASSESSEE BY :SHRI BEHARILAL * ) / REVENUE BY :SHRI PAWAN KUMAR BEERLA ! ! ! ! * ** * (+ (+ (+ (+ / DATE OF HEARING : 26 - 03 -2015 ,-' * (+ / DATE OF PRONOUNCEMENT : 26 -03-2015 ! ! ! ! , 1961 * ** * 254(1) (.( (.( (.( (.( / / / / ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) ! ! ! ! ,PER RAJENDRA,AM: CHALLENGING THE ORDER DT.19.03.2012 OF THE CIT(A)-9 ,MUMBAI,ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT GIVING PROPER HEARING TO THE APPELLANT. 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT EXERCISING POWERS VESTED IN HIM UNDER RULE 46A OF THE INCOME TAX RULE S 1962 BY NOT PERMITTING THE APPELLANT TO ADDUCE ADDITIONAL EVIDENCE BEFORE HIM EVEN THOUGH T HE ASSESSING OFFICER DID NOT ALLOW THE APPELLANT AN ADEQUATE OPPORTUNITY OF BEING HEARD. 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE ASSESSMENT ORDER DATED 31/12/2010 PASSED BY THE ASSESSING OFFICER WHICH WA S IN TOTAL VIOLATION OF THE PRINCIPLES OF NATURE JUSTICE AS ONLY MAKE BELIEVE OPPORTUNITY WAS GIVEN TO THE APPELLANT. 4. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT CONSIDERING THE FACT THAT THE ASSESSING OFFICER HAS IN EFFECT PASSED BEST JUDGMENT ASSESSME NT ORDER THOUGH HE HAS NOT STATED THIS FACT IN HIS ORDER. 5. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING DISALLOWANCE OF RS. 1,16,34,530/- IN RESPECT OF PURCHASES FROM THE APPELLANT'S HOLDING C OMPANY M/S MISSION PHARMACEUTICAL LTD. UNDER SECTION 40A(2)(B) OF THE INCOME TAX ACT. 6. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 12,28,922/- IN RESPECT OF PAYMENT OF PROCESSING CHARGES MADE TO THE APPELLANT'S HOLDING COMPANY M/S MISSION PHARMACEUTICALS LTD. UNDER SECTION 40A(2)(B) OF THE INCOME TAX ACT. 7. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 98,52,448/- UNDER SECTION 40(A)(IA) OF THE ACT IN RESPECT OF FR EIGHT, CLEARING AND FORWARDING EXPENSES WITHOUT APPRECIATING THAT NO TAX WAS DEDUCTED AT SOURCE IN VIEW OF NO IDS CERTIFICATES ISSUED BY PAYERS/PAYEES WERE NOT RESIDENTS WHOSE INCOME DID N OT ACCRUE OR ARISE IN INDIA. 8. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF RS. 1,17,72,477/- IN RESPECT OF PACKING MATERIALS 2.ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF MANUF ACTURING AND EXPORTING PHARMACEUTICAL PRODUCTS,FILED ITS RETURN OF INCOME ON 27.09.2008 D ECLARING TOTAL INCOME OF RS.2,50,487/-.THE ASSESSING OFFICER(AO)COMPLETED THE ASSESSMENT U/S.1 43(3) OF THE ACT,ON 21.12.10 DETERMINI -NG THE INCOME OF THE ASSESSEE AT RS.3.52 CRORES. AS PER THE AO,DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE DID NOT FILE THE DETAILS CALLED FOR EVEN AFTER A SPECIFIC SHOW CAUSE NOTICE TO MAKE ADDITION TO ITS INCOME WAS ISSUED.AS A 2 ITA NO.4480/M/12 M/S MEDREL PHARMACEUTICALS (P) LTD . RESULT,HE COMPUTED THE INCOME OF THE ASSESSEE AT RS .3,52,00,692/- BY MAKING ADDITIONS UNDER NINE HEADS. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA).BEFORE HIM,THE ASSESSEE MA DE DETAILED SUBMISSIONS ABOUT EACH AND EVERY ADDITION.BESIDES,IT FILED ADDITIONAL EVID ENCES,VIDE ITS LETTER DATED 22.09.2011. THE FAA FORWARDED THE ADDITIONAL EVIDENCES TO THE AO FO R EXAMINING THE ADMISSIBILITY OF THE SAME UNDER RULE 46A OF THE IT RULES,1962(RULES).AFT ER RECEIVING A REMAND REPORT,THE FAA FORWARDED THE COPY OF THE REPORT TO THE ASSESSEE FO R COUNTER SUBMISSION AND REJOINDER. IT WAS CONTENDED BEFORE HIM THAT THE AO HAD NOT GIVEN REAL EFFECTIVE AND REASONABLE TIME TO SUBMIT THE EVIDENCES.AFTER CONSIDERING THE MATERIAL,THE FA A HELD THAT THE ASSESSEE HAD NOT LED THE EVIDENCE TO PROVE THAT IT WAS PREVENTED BY SUFFICIE NT CAUSE FOR NOT PRODUCING RELEVANT DOCUMENTS BEFORE THE AO.FINALLY,HE HELD THAT ADDITI ONAL EVIDENCES COULD NOT BE ADMITTED. 4. DURING THE COURSE OF HEARING BEFORE US,AUTHORISED R EPRESENTATIVE (AR) CONTENDED THAT THE FAA HAD DECIDED THE ISSUE WITHOUT CONSIDERING THE M ATERIAL THAT WAS VITAL TO DECIDE THE ISSUE, THAT THE PROVISIONS OF SECTION 40A(2)(B) WERE NOT A PPLICABLE IN CASE THE SUBSIDIARY COMPANY THAT WAS MAKING PURCHASE FROM ITS HOLDING COMPANY,T HAT THE SUBSIDIARY COMPANY WAS NOT A RELATED PERSON OF THE HOLDING COMPANY,AS HELD BY TH E HONBLE BOMBAY HIGH COURT IN THE CASE OF V.S.DEMPO & CO. PVT. LTD.(336 ITR209).HE FU RTHER STATED THAT ADDITIONAL EVIDENCES, IF CONSIDERED,WOULD PROVE THAT THERE WAS NO BASIS F OR MAKING SUCH HUGE ADDITIONS,THAT DUE TO PRESSURE OF TIME BARRING ASSESSMENT,THE AO HAD PASS ED THE ORDER IN A HURRY.DEPARTMENTAL REPRESENTATIVE(DR)SUPPORTED THE ORDER OF THE FAA. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT ASSESSEE HAD FILED THE ADDITIONAL EVIDENCES BEFORE THE FAA,THAT THE DOCUMENTS SUBMITTED BY IT DIRECTLY DEAL WITH THE ISSUES RAISED BY THE COMP ANY BEFORE THE FAA.IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT FAA SHOULD NOT HAVE DECI DED THE APPEAL WITHOUT CONSIDERING THE DOCUMENTS.IT IS SAID THAT APPELLATE PROCEEDINGS UND ER THE ACT ARE NOT ADVERSARIAL IN NATURE AND THE OFFICERS OF THE DEPARTMENT HAS TO TAX THE REAL INCOME.IN OUR OPINION TO DETERMINE THE REAL INCOME AND TO COLLECT ONLY THE DUE TAXES,ALL THE DO CUMENTS NECESSARY TO DECIDE THE ISSUES BEFORE THE FAA SHOULD HAVE BEEN CONSIDERED.THEREFOR E,IN THE INTEREST OF JUSTICE,WE ARE REMITTING BACK THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION.HE IS DIRECTED TO DECIDE THE ISSUES RAISED BY THE ASSESSEE BEFORE US,AFTER A FFORDING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. AS A RESULT,APPEAL FILED BY TH E ASSESSEE STANDS PARTLY ALLOWED. (1 !'( 2 3 * . /(1 4 * ( 56 . ORDER PRONOUNCED IN THE OPEN COURT ON 26TH,MARCH, 2015. / * ,-' 7 8! 26 9 ,2015 - * . : SD/- SD/- ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, 8! /DATE:26.03.2015 SK / / / / * ** * %(; %(; %(; %(; <;'( <;'( <;'( <;'( / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / #$ 2. RESPONDENT / %&#$ 3. THE CONCERNED CIT(A)/ = > , 4. THE CONCERNED CIT / = > 5. DR F BENCH, ITAT, MUMBAI / ;?. %(! , , . . . 6. GUARD FILE/ . 3 ITA NO.4480/M/12 M/S MEDREL PHARMACEUTICALS (P) LTD . &;( %( //TRUE COPY// /! / BY ORDER, @ / 5 DY./ASST. REGISTRAR , /ITAT, MUMBAI.