The DCIT, Central Circle-2(1), Ahmedabad V. Dolphin Laboratories Ltd.,( Now known as Intas Pharmaceuticals Ltd.,), Ahmedabad

ITA 501/AHD/2014

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8317 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 13-04-2020
• Assessment Year: 1997-1998
• Appeal Filed On: 17-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L P JAIN
• Assessee Lawyers: PARTH CONTRACTOR DATES OF HEAR
• Keywords: Assessment record

Judgement Text

DOLPHIN LABORATORIES LTD . ITA NO . 501 / AHD / 2014 PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL, AHMEDABAD C BENCH, AHMEDABAD [ CORAM : HON BLE JUSTICE P . P BHAT T , PRESIDENT AND PRAMOD KUMAR, VP ] ITA NO . 501 / AHD / 2014 ASSESSMENT YEAR : 1997 - 98 DEPUTY COMMISSIONER OF INCOME TAX CIRCLE - 2 ( 1 ) ............. APPELLANT AHMEDABAD VS DOLPHIN LABORATORIES LTD . ( KNOWN AS INTAS PHRMACEUTICALS LTD ) ....... RESPONDENT 203, CHINUBHAI CENTRE, ASHRAM ROAD, AHMEDABAD 3800009 [ PAN NO . AAACI5120L ] APPEARANCES BY L . P JAIN FOR THE APPELLANT PARTH CONTRACTOR FOR THE RESPONDENT DATES OF HEARING OF THE APPEAL : DECEMBER 20 TH , 2019 DATE OF PRONOUNCING THIS ORDER : MARCH 12 TH , 2020 O R D E R PER BENCH : 1 . BY WAY OF THIS APPEAL, THE ASSESSING OFFICER HAS CHALLENGED CORRECTNESS OF LEARNED CIT ( A ) S ORDER DATED 12 TH NOVEMBER 2013 IN THE MATTER OF ORDER UNDER SECTION 143 ( 3 ) OF THE INCOME TAX ACT 1961, FOR THE ASSESSMENT YEAR 1997 - 98 . 2 . GRIEVANCES RAISED IN THE APPEAL ARE AS FOLLOWS :- 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD . CIT ( A ) HAS ERRED IN LAW AND ON FACTS IN ACCEPTING ASSESSEE S UNSUBSTANTIATED CLAIM FOR LOSS OF DOLPHIN LABORATORIES LTD . ITA NO . 501 / AHD / 2014 PAGE 2 OF 5 RS . 2,32,61,110 /- AND DIRECTING THE A . O TO CARRY FORWARD THE SAME . 2 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD . CIT ( A ) HAS ERRED IN LAW AND ON FA DS IN ALLOWING THE ASSESSEE S CLAIM AS ABOVE IN ( I ) WITHOUT RECORDING HIS OWN SATISFACTION ABOUT THE GENUINENESS OF CLAIMED LOSS AND WITHOUT MAKING ANY FURTHER INQUIRY OR DIRECTING THE AO TO MAKE FURTHER INQUIRY TO ARRIVE AT THE FINDING ABOUT THE GENUINENE SS OF THE CLAIMED LOSS . 3 . TO ADJUDICATE ON THIS APPEAL, ONLY A FEW MATERIAL FACTS NEED TO BE TAKEN NOTE OF . THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF PHARMACEUTICALS . ON 5 TH JANUARY 2000, THE ASSESSEE WAS ISSUED NOTICES UNDER SECTION 142 ( 1 ) AND 143 ( 2 ) IN CONNECTION WITH SCRUTINY ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR 1995 - 1996 . EVEN THOUGH ASSESSEE MADE REASONABLE COMPLIANCES ON 21 . 01 . 2000, 07 . 02 . 2000, 09 . 03 . 2000, 24 . 03 . 2000 AND 28 . 03 . 2000, THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE ENTIRE LOSS OF RS . 2,17,01,530 /- BY OBSERVING AS FOLLOWS :- THIS IS A CASE WHICH IS TO BE BARRED BY LIMITATION ON 31 . 03 . 2000 AND THERE IS NO SCOPE FOR WAITING FOR FURTHER DETAILS WHICH THE ASSESSEE IS IN THE POSITION TO PRODUCE IMMEDIATELY . CONSIDERING THAT PURCHASE, SALES AND EXPENSES CLAIMED BY THE ASSESSEE AND LOAN OBTAINED BY THE ASSESSEE FROM DIFFERENCE PARTIES CANNOT BE VERIFIED . I FIND IT DIFFICULT TO ALLOW ANY PORTION OF LOSS CL AIMED BY THE ASSESSEE . THE CLAIMS OF LOSS AT RS . 2,17,01,527 /- IS THEREFORE DISALLOWED . 4 . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT ( A ) AND MATTER WAS SEND BACK FOR REMANDED PROCEEDINGS WHICH DID NOT YIELD AND RELIEF EITHER . ONCE AG AIN THE ASSESSEE WAS IN APPEAL BEFORE THE CIT ( A ) AND WAS SUCCESSFUL THIS TIME . LEARNED CIT ( A ) WHILE REVERSING THE STAND OF THE ASSESSING OFFICER OBSERVED AS FOLLOWS :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION FORTH ON BEHALF OF THE APPELLANTALONG WITH SUP PORTING DETAILS / DOCUMENTS FURNISHED & CASE LAWS RELIED UPON, PERUSED THEFACTS OF THE CASE INCLUDING THE OBSERVATIONS OF THE AO IN THE IMPUGNED ASSESSMENT ORDER & REMAND REPORT, THE COUNTER REPLY OF THE APPELLANT AND OTHER MATERIALS BROUGHT ON RECORD . I FIND SUBSTANTIAL FORCE IN THE ARGUMENT OF THE APPELLANT . IT IS SEEN THAT THEAPPELLANT HAS COMPLIED WITH ALMOST ALL THE DETAILSOF EXPENSES AS REQUISITIONED EXCEPTDETAILS OF PAYMENT OF GRATUITY AND LOANS . IT WAS SUBMITTED BEFORE THE AO THAT DUE TOSUSPENSION OF WORK AT HEAD OFFICE, THE APPELLANT WAS NOT TO FURNISH THE DETAILS OF DOLPHIN LABORATORIES LTD . ITA NO . 501 / AHD / 2014 PAGE 3 OF 5 LOANS AND FOR WHICH REQUESTED FOR TIME . I AGREE WITH THE CONTENTION OF THE APPELLANT THAT IN SUCH A SITUATION, THE AO AT THE MOST COULD HAVE DISALLOWED EXPENDITURE ON ACCOUNT OF GRATUIT Y AND INTEREST CLAIMED ON LOAN ONLY . THUS , IT IS ARGUED THAT THE DISALLOWANCE OF ENTIRE LOSS WAS IN UTTER DISREGARD OF AUDITED ACCOUNTS AND TAX AUDIT REPORT . THE AR OF THE APPELLANT FURTHER ARGUED BY PLACING RELIANCE ON THE DECISION OF THE HON BLE CALCUTT A HIGH COURT IN THE CASE OF CIT VS . RANICHERRA TEA CO . LTD . ( SUPRA ) WHICH IS AN IDENTICAL CASE THAT IN LIGHT OF THE PAST RECORDS OF THE APPELLANT THERE WAS NO REASON FOR THE AO TO DISALLOW THE CLAIM OF LOSS IN TO WHEN THE AUDITED ACCOUNTS AND VARIOUS OTHER DETAILS AS WERE ALREADY FILED WITH THE RETURN OR FURNISHED AS PER REQUISITION . MY ATTENTION IS DRAWN TO THE OBSERVATION OF THE HON BLE HIGH COURT MADE AT PAGE 983 IN RESPECT TO THE REFERRED CASE WHICH READ AS UNDER : THE INCOME TAX OFFICER DID NOT DISCLOSE ANY BASIS OR REASONS FOR DETERMINING THE QUANTUM OF LOSS AS ' NIL '. HE SHOULD HAVE GIVEN HIS R EASONS FOR ARRIVING AT A PARTICULAR FIGUREOF INCOME SO THAT THE ASSESSEE MAY BE ENABLED TO APPRECIA T E THE MENTAL PROCESS MAY BE LEADING TO THE ASSESSMENT AND THE FIGURE ASSESSED . SUCH ORDER BEING SUBJECT TO APPEAL NEEDS ALSO TO BE A SPEAKING ORDER . THE ASSESSING OFFICER DID NOT AT ALL LOOK INTO THE AUDITED BALANCE - SHEET ACCOMPANYING THE RETURN NOR DID HE REJECT THE ACCOUNTS AS UNRELIABLE . ' IT IS ALSO SEEN THAT AT PAGE 984, THE HON' BLE CALCUTTA HIGH COURT HELD THAT ' THE I NCOME - TAX OFFICER, IN OUR VIEW , WAS NOT JUSTIFIED IN REJECTING THE LOSSRETURN FILED BY THE ASSESSEE - COMPANY IN TOTO WITHOUT EXAMINI NG THE AUDITED PROFIT AND LOSS ACCOUNT BALANCE - SHEET AND OTHER STATEMENTS ACCOMPANYINGTHE RETURN AS WELL AS THE PAST ASSESSMENT RE CORDS OF THE ASSESSEE - COMPANY . ' MY ATTENTION IS ALSO DRAWN TO COMMENTS OF THE AO MADE AT VARIOUS PARAGRAPHS OFTHE REMAND REPORT SUBMITTED WHEN THE MATTER WAS REMANDED TO THE AO . I FIND THAT IN THE 3RD PARA OF REMAND REPORT , IT IS SUBMITTED BY THE AO THAT , ' REGARDING ABOVE DETAILS ( I . E . BALANCE DETAILS ) THE AR SUBMITTED THAT THE SAME WERE READILY AVAILABLE AND SUBMISSION OF TH E SAME WOULD REQUIRE A FEW DAYS TIME AS WORKS ATKOLKA TA FACTORY WAS UNDER SUSPENSION . THE BALANCE DETAILS WERE FILED ALONG LETTER DATED 21 . 01 . 200 0, 07 . 02 . 2000, 09 . 03 . 2000, 24 . 03 . 2000 AND 28 . 03 . 2000 . IN THE 4 TH PARA OF REMAND REPORT, THE AO STATED THAT DOLPHIN LABORATORIES LTD . ITA NO . 501 / AHD / 2014 PAGE 4 OF 5 FURTHER ON PERUSAL OF THE ORDER SHEET ALSO, IT APPEARS THAT THE NATURE OF THE REQUISITION MADE BY THE ASSESSING OFFICER IS NOT CLEAR AT ALL . AGAIN, IN THE 5 TH PARA, THE AO SUBMITTED THAT .. THAT THE ASSESSEE BY LARGE COMPLIED WITH THE ABOVE NOTICE AND NON - SUBMISSION OF FEW DETAILS SHOULD OTHERWISE NOT BE THE REASON FOR DISALLOWANCE OF ENTIRE LOSS CLAIMED TO BE CARRIED FORWARD AS PER THE RETURN OF INCOME . IN THE LIGHT OF THE ABOVE DISCUSSION AND FINDINGS, AFTER CAREFULLY CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, THE REMAND REPORT & COUNTER REPLY AND RESPECTFULLY FOLLOWING THE DECISION OF THE HON BLE CALCUTTA HIGH COURT IN AN IDENTICAL CASE OF CIT VS . RANICHERRA TEA CO . LTD . ( SUPRA ) , I AM OF THE VIEW THAT THE AO WAS NOT JUSTIFIED IN REJECTING THE LOSS RETURN FILED BY THE APPELLANT IN TOTO WITHOUT EXAMINING THE AUDITED PROFIT AND LOSS ACCOUNT BALANCE SHEET AND OTHER STATEMENT ACCOMPANYING THE RETURN, THE VARIOUS DETAILS FURNISHED BY THE APPELLANT AS REQUISITIONED AS WELL AS THE PAST ASSESSMENT RECORDS OF THE APPELLANT COMPANY AND ASSESSING THE INCOME AT NIL FIGURE . THE AO S ACTION ALSO CANNOT BE SUSTAINED SINCE THE ASSESSING OFFICER DID NOT DISCLOSE ANY BASIS OR REASONS FOR DETERMINING THE QUANTUM OF LOSS AS NIL OR THE CIRCUMSTANTIAL MATERIAL EVIDENCES / FINDINGS THAT COULD HAVE SUGGESTED TOWARDS FIRM REASONING FOR ARRIVING AT A PARTICULAR FIGURE OF INCOME . HENCE, THE AO IS DIRECTED TO A LLOW THE APPELLANT TO CARRY FORWARD TO TOTAL LOSS CLAIM OF RS . 2,32,61,110 /-. THUS, THESE GROUNDS OF APPEAL ARE DECIDED IN FAVOUR OF THE APPELLANT . 5 . NOW THE ASSESSING OFFICER IS AGGRIEVED OF THE RELIEF SO GRANTED BY THE CIT ( A ) AND IS IN APPEAL BEFORE US . 6 . WE HAVE HEAR D THE RIVAL CONTENTIONS, PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTS OF THE CASE IN THE LIGHT OF THE APPLICABLE LEGAL POSITION . 7 . WE FIND THAT THE ASSESSING OFFICER HAD INITIATED THE SCRUTINY ASSESSMENT PROCEEDINGS JUST A FEW WEEKS BEFORE TIME LIMIT FOR COMPLETION OF THE SCRUTINY ASSESSMENT . THE ASSESSEE FULLY COOPERATED IN THE PROCEEDINGS AND EVEN AT SHORT NOTICES FURNISHED THE REQUISITE DETAILS . HOWEVER, THE ASSESSING OFFICER PROCEEDED TO DISALLOW THE LOSS CLAIMED ON THE GROUND THAT THE ASSESSEE IS NOT IN A POSITION TO PRODUCE SOME DETAILS IMMEDIATELY WITHOUT EVEN SPECIFYING THE NATURE OF SUCH DETAILS . EVEN IN PROCEEDINGS BEFORE US, LEARNED DEPARTMENTAL REPRESENTATIVES COULD NOT DOLPHIN LABORATORIES LTD . ITA NO . 501 / AHD / 2014 PAGE 5 OF 5 POINT OUT SPECIFIC DEFECTS, SHORTCOMINGS OR LAPSES . IN THESE CIRCUMSTANCES, LEARNED CIT ( A ) WAS QUITE JUSTIFYING IN REVERSING THE ACTION OF THE ASSESSING OFFICER . IN ANY CASE, WE ARE IN CONSIDERED AGREEMENT WITH VERY WELL - REASONED ORDER OF THE LEARNED CIT ( A ). 8 . IN THE LIGHT OF THESE DISCUSSIONS, AND BEARING IN MIND ENTIRETY OF THE CASE, WE APPROVE THE CONCLUSIONS ARRIVED AT BY THE LEARNED CIT ( A ) AND DECLINE TO INTERFERE IN THE MATTER . 9 . IN THE RESULT, APPEAL IS DISMISSED IN THE TERMS INDICATED ABOVE . ORDER PRONOUNCED UNDER RULE 34(4) OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 1962, BY PLACING THE DETAILS ON THE NOTICE BOARD. SD/ - SD/ - JUSTICE P . P BHATT PRAMOD KUMAR ( PRESIDENT ) ( VICE PRESIDENT ) AHMEDABAD DATED THE 12 TH DAY OF MARCH , 2020 COPIES TO : ( 1 ) THE APPELLANT ( 2 ) THE RESPONDENT ( 3 ) CIT ( 4 ) CIT ( A ) ( 5 ) DR ( 6 ) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCHES, AHMEDABAD