DEVANSH TEXTILES INDUSTRIES LTD ( FORMERLY KNOWN AS SANTOGEN FINANCE LTD), MUMBAI V. ITO 8(1)(3), MUMBAI

ITA 4766/MUM/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55892 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 24-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 17-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHANTAM BOSE
• Keywords: Bogus purchase; Unexplained expenditure; Opportunity of being heard; Additional evidence
• Section: 144

Judgement Text

1 ITA NO. 4766/MUM/2009 M/S DEVANSH TEXTILES INDUSTRIES LTD. IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI D BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI R K PANDA, AM AND SHRI VIJAY PAL RAO, J.M. ITA NO. 4766/MUM/2009 (ASST YEAR 2004-05) DEVANSH TEXTILES INDUSTRIES LTD., (FORMERLY KNOWN AS SANTOGEN FINANCE LTD.), A-69 MIDC INDUSTRIAL ESTATE, ANDHERI (E), MUMBAI 400093. VS ITO 8(1)(3), MUMBAI. (APPELLANT) (RESPONDENT) PAN NO. AAACS7982G APPELLANT BY S HRI BHUPENDRA SHAH RESPONDENT BY SHR I SHANTAM BOSE DATE OF HEARING 24.11.2011 DATE OF PRONOUNCEMENT 30.11.2011 ORDER PER R K PANDA, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 12.05.2009 OF THE COMMISSIONER OF INCOME TAX (A)- V III, MUMBAI RELATING TO ASSESSMENT YEAR 2004-05. 2. THE ASSESSEE IN ITS VARIOUS GROUNDS OF APPEAL HA S CHALLENGED THE ORDER OF THE LD. CIT(A) IN GIVING PART RELIEF OUT OF THE VARIOUS ADDITIONS MADE BY THE A.O. 2.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF TRADING AND MANUFACTURIN G IN FABRICS. THE ASSESSEE FILED ITS RETURN OF INCOME ON 1.11.2004 DE CLARING TOTAL INCOME OF RS. 38740/-. DURING THE SCRUTINY ASSESSMENT PROCEE DINGS, THE A.O. CALLED FOR VARIOUS DETAILS FROM TIME TO TIME. HOWEVER, DU E TO NON-SUBMISSION OF 2 ITA NO. 4766/MUM/2009 M/S DEVANSH TEXTILES INDUSTRIES LTD. VARIOUS DETAILS AS REQUIRED BY HIM, THE A.O. COMPLE TED THE ASSESSMENT U/S 144 OF THE I.T. ACT DETERMINING TOTAL INCOME AT RS. 26,34,000/- BY MAKING THE FOLLOWING ADDITIONS:- 1 . PURCHASES RS.6,35,715/- 2. PROCESSING CHARGES RS.7,60,855 3. BROKERAGE CHARGES RS.1,50,828 4. SALES RS.1,18,850/- 5. SUNDRY CREDITORS RS. 20,792/- 6. SERVICE CHARGES RS.5,40,223/- 7. MUKADAMI EXPENSES RS.1,18,000/- 8. OTHER SELLING EXPENSES RS. 1,111/- 9. TRAVELLING EXPENSES RS. 58,914/- 10. REBATE ON FABRICS RS. 10,000/- 11. RATE DIFFERENCE RS. 4,759/- 12. CASH DISCOUNT RS. 3,432/- 13. TELEPHONE EXPENSES RS. 59,718/- 14. MOTOR CAR EXPENSES RS. 86,091/- 15. MISCELLANEOUS EXPENSES RS. 26,148/- RS. 25,95,256 2.2 IN APPEAL, THE LD. CIT(A) CALLED FOR A REMAND R EPORT FROM THE A.O. ON THE BASIS OF VARIOUS SUBMISSIONS MADE BEFORE HIM BY THE ASSESSEE. AFTER RECEIVING THE REMAND REPORT FROM THE A.O., THE LD. CIT(A) GAVE PART RELIEF TO THE ASSESSEE. AGGRIEVED WITH SUCH ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US BY TAKING THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME LAX ERRED IN CONFIRMING THE ADDITION OF RS. 2,83,392/- ON ACCOUNT OF ALLEGED BOGUS PURCHASES MADE FROM M/S . AURO TEXTILES. 2. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADDITIONS OF RS. 2,107/-, 3 ITA NO. 4766/MUM/2009 M/S DEVANSH TEXTILES INDUSTRIES LTD. RS. 4,523/-, RS. 2,010/-, RS. 3360!- AND RS. 739/- ON ACCOUNT OF ALLEGED DIFFERENCE IN PURCHASES/CLOSING BALANCES OF 5 PARTI ES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADDITION OF RS. 34,406/- ON ACCOUNT OF ALLEGED NON GENUINE BROKERAGE CHARGES PAID TO SEVEN PARTIES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADDITION OF RS. 1,03,461/- ON ACCOUNT OF ALLEGED NON GENUINE BROKERAGE CHARGES PAID TO FOUR PARTIES. 5. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME FAX ERRED IN CONFIRMING THE ADDITION OF RS. 12,961/- ON ACCOUNT OF ALLEGED UNEXPLAINED EXPENDITURE IN RE SPECT OF BROKERAGE PAID TO SHRINATH AGENCY. 6. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADDITION OF RS. 20,792/- U/S. 41(1) IN RESPECT OF CREDIT BALANCE APPEARING I N THE ACCOUNTS OF RONAK TEXTILES AND TUKARAM KAMIK. 7. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME FAX ERRED IN CONFIRMING THE ADDITION OF RS. 5,40,223/- ON ACCOUNT OF ENTIRE SERVICE CHARGES CLAIMED BY THE APPELLANT. 8. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME FAX ERRED IN CONFIRMING THE ADDITION OF MS. 1,1 8,000/- OUT OF MUKADAMI CHARGES. 9. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME FAX ERRED IN CONFIRMING THE ADDITION OF MS. 1,111/- OUT OF SELLING EXPENSES. 10. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANT S CASE AND IN LAW THE COMMISSIONER OF INCOME TAX ERRED IN CONFIRMING THE ADHOC/ESTIMATED DISALLOWANCE MADE BY THE A.O. AMOUNTING TO RS. 58,9 14/-, RS. 10,000/-, RS. 4597/-, RS. 3,432/-, RS. 59,718/-, RS. 86,091/- AND RS. 26,148/- RESPECTIVELY ON ACCOUNT OF TRAVELLING EXPENDITURE, REBATE, RATE DIFFERENCE, CASH DISCOUNT, TELEPHONE EXPENSES, MOTOR CAR EXPENSES AND MISCELLA NEOUS EXPENSES RESPECTIVELY. 4 ITA NO. 4766/MUM/2009 M/S DEVANSH TEXTILES INDUSTRIES LTD. 3. THE LD. COUNSEL FOR THE ASSESSEE AT THE TIME OF HEARING SUBMITTED THAT THE COPY OF THE REMAND REPORT WAS NEVER GIVEN TO TH E ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS SO AS TO COUNTER TH E ALLEGATIONS OF THE A.O. IN THE REMAND REPORT. THE LD. CIT(A) ALSO HAS NOT CONFRONTED THE REMAND REPORT TO THE ASSESSEE. HE SUBMITTED THAT DESPITE DIRECTIONS BY THE BENCH TO THE LD. D.R. IN THE EARLIER DATE OF HEARING TO PROD UCE THE COPY OF THE REMAND REPORT, THE SAME HAS NOT YET BEEN FURNISHED. REFER RING TO VARIOUS PAGES OF THE PAPER BOOK HE SUBMITTED THAT CERTAIN DETAILS AR E NEW EVIDENCES WHICH WERE NEITHER BEFORE THE A.O. NOR BEFORE THE CIT(A) AND ARE BEING PRODUCED BEFORE THE TRIBUNAL FOR THE FIRST TIME. HE REQUEST ED THAT THE ADDITIONAL EVIDENCES MAY BE ADMITTED AND THE MATTER MAY BE RES TORED TO THE FILE OF THE A.O. FOR FRESH ADJUDICATION. 4. THE LD. D.R. WHILE SUPPORTING THE ORDER OF THE L D. CIT(A) STRONGLY OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENC ES. HE SUBMITTED THAT THE ASSESSEE DID NOT FURNISH THE FULL DETAILS DURING TH E COURSE OF ASSESSMENT PROCEEDINGS OR DURING THE REMAND PROCEEDINGS. THERE FORE, THE REVENUE AUTHORITIES ARE JUSTIFIED IN MAKING THE ADDITIONS. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE CONFIRME D. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PURSUED THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. THE ADDITIONA L EVIDENCES FILED IN THE PAPER BOOK WHICH WERE NOT FILED BEFORE THE CIT(A) O R BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR DURING REMA ND PROCEEDINGS ARE ADMITTED. WE FIND AFTER OBTAINING THE REMAND REPOR T, THE SAME WAS NEVER CONFRONTED TO THE ASSESSEE BY THE LD. CIT(A) NOR A COPY OF THE SAME WAS GIVEN TO THE ASSESSEE. WE FURTHER FIND DESPITE THE DIREC TION GIVEN BY THE BENCH ON 5.1.2011, THE LD. D.R. IS YET TO PRODUCE THE REMAND REPORT OF THE A.O. BEFORE THE BENCH. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, CONSIDERING THE 5 ITA NO. 4766/MUM/2009 M/S DEVANSH TEXTILES INDUSTRIES LTD. NON-SUBMISSION OF THE REMAND REPORT TO THE ASSESSEE OR TO THE BENCH AND CONSIDERING THE FRESH EVIDENCES FILED BEFORE THE TR IBUNAL FOR THE FIRST TIME, WE, IN THE INTEREST OF JUSTICE, DEEM IT PROPER TO R ESTORE THE MATTER BACK TO THE FILE OF THE A.O. WITH A DIRECTION TO EXAMINE THE FR ESH EVIDENCES AND DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW AFTER G IVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE HOLD AND DIRECT ACC ORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSE. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 30.11.2011. SD/- ( VIJAY PAL RAO ) JUDICIAL MEMBER SD/- ( R K PANDA ) ACCOUNTANT MEMBER PLACE: MUMBAI : DATED: 30.11.2011. RK COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT - 14, MUMBAI 4 CIT(A) - 25, MUMBAI 5 DR BENCH D 6 MASTER FILE /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI