ITO-4(2)(1), MUMBAI V. INDO NIKKO BEARINGS LTD, MUMBAI

ITA 4532/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8308 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 29-10-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K SHUKLA
• Assessee Lawyers: JIGER SAIYA
• Keywords: Business income; Additional evidence
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI N.K. BILLAIYA (A.M.) ITA NO. 4532/MUM /2011 ASSESSMENT YEAR : 2007-08 THE INCOME TAX OFFICER WARD 4(2)(1), ROOM NO. 644, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S INDO NIKKO BEARINGS LTD., NIKKO HOUSE, 399, V.P. ROAD, MUMBAI 400 004. PAN AAACI1410K (APPELLANT) (RESPONDENT) ITA NO. 4584/MUM /2011 ASSESSMENT YEAR : 2007-08 M/S INDO NIKKO BEARINGS LTD., NIKKO HOUSE, 399, V.P. ROAD, MUMBAI 400 004. PAN AAACI1410K VS. THE INCOME TAX OFFICER WARD 4(2)(1), ROOM NO. 644, 6 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI P.K. SHUKLA ASSESSEE BY : SHRI JIGER SAIYA DATE OF HEARING 29-10-2012 DATE OF PRONOUNCEMENT 07-11-2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THESE CROSS APPEALS BY THE REVENUE AND THE ASSESSE E ARE DIRECTED AGAINST THE ORDER DTD. 31-3-2011 PASSED BY THE LD. CIT(A) 10, MUMBAI ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 2 FOR THE A.Y. 2007-08. BOTH THESE APPEALS ARE DISPOS ED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE AS SESSEE COMPANY IS ENGAGED IN THE BUSINESS OF DEALING IN BALL BEARINGS . THE A.O. OBSERVED THAT DURING THE YEAR THE ASSESSEE HAS SHOWN CAPITAL GAIN ON SALE OF BUILDING, PLANT AND MACHINERY AND HAS ALSO SHOWN SA LE AND OTHER INCOME. THE A.O. AFTER PROCESSING OF THE RETURN U/S 143(1) OF THE INCOME TAX ACT, 1961, (THE ACT) SELECTED THE CASE FOR SCRU TINY AND ACCORDINGLY ISSUED NOTICES U/S 143(2) AND 142(1) OF THE ACT. I N RESPONSE THE ASSESSEE ATTENDED AND SUBMITTED SOME DETAILS. IT W AS FURTHER OBSERVED BY THE A.O. THAT VIDE ORDER SHEET NOTING DTD. 26-8- 2009 THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF CONFIRMATION OF SALE S TAX LIABILITY AND DISPOSAL OF STOCK AND THE CASE WAS FIXED FOR HEARIN G ON 9-9-2009. HOWEVER, THE ASSESSEE NEITHER ATTENDED ON THE DATE OF HEARING NOR FILED THE DETAILS AND PRODUCED BOOKS OF ACCOUNTS. THEREA FTER, VARIOUS OPPORTUNITIES WERE GRANTED TO THE ASSESSEE. HOWEVE R, THE ASSESSEE HAS NEITHER SUBMITTED THE REQUISITE DETAILS NOR PRODUCE D THE BOOKS OF ACCOUNTS FOR THE PURPOSE OF VERIFICATION. IT WAS F URTHER OBSERVED BY THE A.O. THAT IN THE ABSENCE THEREOF THERE IS NO OPTION BUT TO REJECT THE BOOKS OF ACCOUNTS AND COMPLETED THE ASSESSMENT U/S 144 OF THE ACT AND ACCORDINGLY THE A.O. COMPLETED THE ASSESSMENT EX-PA RTE U/S 144 AT AN INCOME OF RS. NIL AS UNDER:- ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 3 PARTICULAR AMT. AMT. AMT . I. INCOME FROM HOUSE PROPERTY RENT 9,00,000 LESS:DEDUCTION @ 30% U/S 24 2,70,000 6,30,000 II. BUSINESS INCOME. PROFIT AS PER P&L ACCOUNT (2,05,09,742) LESS : RENT 9,00,000 (2,14,09,742) ADD: (I) VALUE OF DISPOSAL OF STOCK 51,03,322 (II) ADMINISTRATIVE & SELLING EXP. 15,38,838 (III) LOSS ON SALE OF FIXED ASSET 1,20,90,8 73 (IV) FINANCE EXPENSES 36,82,441 (V) DEFERRED TAX LIABILITY 1,14,87 ,507 3,39,02,981 1,24,93,239 III. CAPITAL GAIN STCG 2,30,72,802 GROSS TOTAL INCOME 3,61,96,041 SET-OFF OF BROUGHT FORWARD LOSS 3,61,96,041 TOTAL INCOME NIL_________ 3. ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE HAS FILED VARIOUS DETAILS WITH THE REQUEST TO ADMIT THE SAME AS AN AD DITIONAL EVIDENCE UNDER RULE 46A OF THE INCOME TAX RULES, 1962. THE LD. CIT(A) FORWARDED THE SAME TO THE A.O. AND ASKED TO SUBMIT THE REMAN D REPORT. THE A.O. WHILE OBJECTING TO THE ADMISSION OF THE ADDITIONAL EVIDENCE ON THE GROUND THAT ALL THE INFORMATION SUBMITTED IN THE PAPER BOO K WAS AVAILABLE WITH THE ASSESSEE EVEN AT THE TIME OF ASSESSMENT PROCEED ING AND YET HAD NOT FILED THE SAME, OBSERVED THAT IN THE ABSENCE OF ANY DETAILS, THE A.O. HAS CORRECTLY ADDED THE AMOUNT IN THE ORIGINAL ASSESSME NT. HOWEVER, THE LD. CIT(A) AFTER ADMITTING THE ADDITIONAL EVIDENCE, PAR TLY ALLOWED THE APPEAL. ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 4 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE AND ASSESSEE BOTH ARE IN APPEAL BEFORE US. ITA NO. 4532/MUM/2011 (BY REVENUE) 5. THE GROUNDS TAKEN BY THE REVENUE READ AS UNDER:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION TOWARDS TREAT ING INCOME FROM SALES OF RS.9,07,547/- AS INCOME FROM OTHER SOURCES INS TEAD OF INCOME FROM BUSINESS AND PROFESSION. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN RESTRICTING THE ADDITION TO RS.32,8 3,625/- IN CONSIDERING RS.51,03,322/- AS DISPOSAL IN VALUE OF STOCK. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF DEFERRED SALES TAX LIABILITY AMOUNTING TO RS.1,14,87,597/- 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE IMPUGNED ORDER OF THE LD. CIT(A) IS CONTRARY TO LAW TO BE SE T ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO. 4584/MUM/2011 (BY ASSESSEE) 6. THE GROUNDS RAISED BY THE ASSESSEE READ AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS FACTUALLY ERRED IN CONFIRMING THE ADDITION OF SALES RETURN AMOUNTING TO RS.1,76,603 TO THE INCOME OF THE APPELLANT WITHOUT CONSIDERING THE DETAILS AND DOCUMENTS SUBMITTED AND EXPLANATION PRO VIDED BY THE APPELLANT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS FACTUALLY ERRED IN HOLDING THAT APPELLANT DISPOSED STOCK TO THE TUNE OF RS.32,83,625 WITHOUT DISCLOSING THE SALES FOR THE S AME. THE CIT(A) HAS ERRED IN NOT CONSIDERING THE FACT THAT OUT OF THE O PENING STOCK OF ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 5 RS.51,03,226, APPELLANT COMPANY COULD ONLY SELL STO CK HAVING ASSESSABLE VALUE OF RS.18,19,697 AND THE BALANCE ST OCK WAS NOT SALEABLE AND HENCE VALUED AT ZERO AS AT MARCH 31, 2007. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS FACTUALLY ERRED IN DISALLOWING SETTLEMENT DUES PAID TO EMPLOYEES AMOUNTING TO RS.1,59,757 ON THE GROUND THAT THE SAM E IS NOT SUPPORTED BY NECESSARY EVIDENCE, ON THE BASIS OF REMAND REPOR T SUBMITTED BY THE AO AND WITHOUT CONSIDERING THE DETAILS AND DOCUMENT S SUBMITTED BY THE APPELLANT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS FACTUALLY ERRED IN DISALLOWING COMMISSION EXPENSES AMOUNTING TO RS.1,04,890 ON THE GROUND THAT THE SAME IS NOT SUPP ORTED BY NECESSARY EVIDENCE, ON THE BASIS OF REMAND REPORT SUBMITTED B Y THE AO AND WITHOUT CONSIDERING THE DETAILS AND DOCUMENTS SUBMI TTED BY THE APPELLANT. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS FACTUALLY ERRED IN DISALLOWING THE CONTRIBUTION TO PROVIDENT FEES PAID BY THE APPELLANT AMOUNTING TO RS.2,75,000 ON THE GROUN D THAT THE SAME IS NOT SUPPORTED BY NECESSARY EVIDENCE, ON THE BASIS O F REMAND REPORT SUBMITTED BY THE AO AND WITHOUT CONSIDERING THE DET AILS AND DOCUMENTS SUBMITTED BY THE APPELLANT. 6. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS FACTUALLY ERRED IN DISALLOWING OTHER ADMINISTRATIVE EXPENSES AMOUNTING TO RS.3,34,037 ON THE GROUND THAT THE SAME IS NOT SUPP ORTED BY NECESSARY EVIDENCE, ON THE BASIS OF REMAND REPORT SUBMITTED B Y THE AO AND WITHOUT CONSIDERING THE DETAILS SUBMITTED BY THE AP PELLANT. 7. ON THE FACTS AND CIRCUMSTANCE OF THE CASE, THE L EARNED CIT(A) HAS FACTUALLY ERRED IN DISALLOWING THE INTEREST EXPENDI TURE AMOUNTING TO RS.36,82,441 ON THE GROUND THAT THE SAME IS NOT SUP PORTED BY NECESSARY EVIDENCE, ON THE BASIS OF REMAND REPORT SUBMITTED B Y THE AO AND WITHOUT CONSIDERING THE DETAILS AND DOCUMENTS SUBMI TTED BY THE APPELLANT. ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 6 7. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE WHILE ADMITTING THAT THE PAPER BOOK NO. 1 CONTAINING 171 PAGES WAS FILED BEFORE THE LD. CIT(A) FURTHER SUBMITS THAT THE DOCU MENTS APPEARING AT PAGE 1 TO 14 OF THE ASSESSEES PAPER BOOK NO. 2 ARE THE ADDITIONAL EVIDENCE WHICH WAS NOT SUBMITTED BEFORE THE A.O. AN D LD. CIT(A), THEREFORE, THE SAME MAY BE ADMITTED AS AN ADDITIONA L EVIDENCE. HE FURTHER SUBMITS THAT THE BOOKS OF ACCOUNTS WERE NEI THER EXAMINED BY THE A.O. NOR BY THE LD. CIT(A), THEREFORE, IN THE INTER EST OF JUSTICE, HE HAS NO OBJECTION IF ALL THE ISSUES ARE SET ASIDE TO THE FI LE OF THE A.O. 8. ON THE OTHER HAND, THE LD. D.R. WHILE RELYING ON THE ORDER OF THE A.O. AND LD. CIT(A) SUBMITS THAT HE HAS NO OBJECTIO N IF THE MATTER IS SET ASIDE TO THE FILE OF THE A.O. 9. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FI ND FROM THE ASSESSMENT ORDER THAT THE A.O. HAS REPEATEDLY MENTI ONED THAT THE ASSESSEE HAS NEITHER PRODUCED THE BOOKS OF ACCOUNT NOR FILED THE DETAILS. IN THE ABSENCE THEREOF, THE A.O. HAS MADE EX-PARTE ASSESSMENT U/S 144 OF THE ACT AT AN INCOME OF RS. 36196041/- AND AFTER SET OFF OF BROUGHT FORWARD LOSS BY THE SAME AMOUNT DETERMINED THE TOTA L INCOME AT NIL. ON APPEAL THE LD. CIT(A) WHILE REJECTING THE A.O.S OB JECTION FOR ADMISSION OF THE ADDITIONAL EVIDENCE, ADMITTED THE ADDITIONAL EV IDENCE FILED BY THE ASSESSEE WHICH IS RUNNING INTO 171 PAGES, PARTLY AL LOWED THE APPEAL. ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 7 HOWEVER, THERE IS NO MATERIAL ON RECORD TO SHOW AS TO WHETHER THE ASSESSEE HAS PRODUCED BOOKS OF ACCOUNTS, BILLS AND VOUCHERS EITHER BEFORE THE A.O. OR BEFORE THE LD. CIT(A). EVEN AT THIS STAGE, THE ASSESSEE HAS FAILED TO PRODUCE THE BOOKS OF ACCOUNTS, BILLS AND VOUCHERS. 10. IN GOODYEAR INDIA LTD. VS. CIT (2000) 246 ITR 1 16 (DEL) IT HAS BEEN OBSERVED (PAGE 118) MERELY BECAUSE AN AUDIT REPORT IS AVAILABLE THERE IS NO FETTER ON THE POWER OF THE INCOME-TAX O FFICER TO REQUIRE THE ASSESSEE TO JUSTIFY ITS CLAIM WITH REFERENCE TO THE RECORDS, MATERIALS AND EVIDENCE. SUCH A POWER IS INHERENT IN AN ASSESSING OFFICER IN THE SCHEME OF THE ACT. 11. SINCE THE ASSESSEE HAS FAILED TO DISCHARGE THE PRIMARY ONUS AND KEEPING IN VIEW THAT THE ASSESSEE HAS FILED SOME AD DITIONAL EVIDENCE AT THIS STAGE, THE GROUND 1 TAKEN BY THE REVENUE IS CO NTRARY TO THE ORDER OF THE LD. CIT(A) AND EVEN IN THE REMAND PROCEEDING, T HE A.O. HAS NOT EXAMINED THE BOOKS OF ACCOUNT, WE ARE OF THE VIEW T HAT, IN THE INTEREST OF JUSTICE, THE MATTER SHOULD GO BACK TO THE FILE OF T HE A.O. AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHO RITIES ON THIS ACCOUNT AND RESTORE THE MATTER TO THE FILE OF THE A .O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEA RD TO THE ASSESSEE. ALL THE GROUNDS TAKEN BY THE REVENUE AND ASSESSEE ARE, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 4532/MUM/2011 & ITA NO/ 4584/MUM/2011 8 12. IN THE RESULT, APPEALS FILED BY THE REVENUE AND ASSESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 7-11-2012. SD/- (N.K. BILLAIYA) ACCOUNTANT MEMBER SD/- (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED : RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 10, MUMBA I 4. COMMISSIONER OF INCOME TAX CITY 4, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH I, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI