MAN GLAM DRUGS & ORGANIS LTD, MUMBAI V. DCIT CIR 4(2), MUMBAI

ITA 5034/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8786 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 13-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Assessee Lawyers: V K TULSIAN
• Keywords: Depreciation; Opportunity of being heard; Accommodation entries
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY , JUDICIAL MEMBER ITA N O. 5034 / MUM/2015 ( ASSESSMENT YEAR : 2011 1 2 ) M/S. MANGLAM DRUGS & ORGANICS LTD. 3 RD FLOOR, RUPAM BUILDING 239, P.D . MELLO ROAD, NEAR G.P.O. MUMBAI 400001 PAN AAACM7880P . APPELLANT V/S DCIT, CIRCLE 4 (2) MUMBAI . RESPONDENT APPELLANT BY : SHR I V.K. TULSIAN RESPONDENT BY : S HRI V. VIDHYADHAR DATE OF HEARING 24 . 08 .201 7 DATE OF ORDER 01.11.2017 O R D E R PER SAKTIJIT DEY, J.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 27.08.2015 OF LEARNED COMMISSIONER (A PPEALS ) 9, MUMBAI FOR A SSESSMENT Y EAR 2011 12. 2 . THE ONLY ISSUE IN DISPUTE IN THE PRESENT APPEAL IS DISALLOWANCE OF DEPRECIATION CLAIMED OF ` 51,80,357/ . 2 M/S. MANGLAM DRUGS & ORGANICS LTD. 3 . BRIEFLY THE FACTS RELATING TO THE ISSUE IN DISPUTE ARE, THE ASSESSEE, A COMPANY, IS ENGAGED IN MANUFACTURE AND TRADING OF BULK DRUGS, DYES AND INTERMEDIATE S , ETC. FOR THE ASSESSMENT YEAR UNDER DISPUTE ASSESSEE FILED ITS RETURN OF INCOME ON 28.09.2011 DECLARING TOTAL INCOME OF ` 56,14,086/ . IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT DURING A SURVEY UNDER SECTION 133A CARR IED OUT IN THE BUSINESS PREMISES OF THE ASSESSEE IT WAS FOUND THAT CERTAIN PURCHASES CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE ARE NOT GENUINE AND MERELY ACCOMMODATION ENTRIES OBTAINED BY THE ASSESSEE. DURING THE POST SURVEY PROCEEDINGS THE INFORMATION OBT AINED IN COURSE OF SURVEY WAS CONFRONTED TO ONE OF THE DIRECTORS OF THE COMPANY AND A STATEMENT WAS RECORDED , WHEREIN , IT WAS STATED THAT THE THREE PARTIES AGAINST WHOM THE EXPENDITURE ON ACCOUNT OF REPAIR AND MAINTENANCE WAS CLAIMED WERE NOT DIRECTLY KNOW N TO THE ASSESSEE BUT WERE INTRODUCED THROUGH A BROKER. FURTHER , T HE ASSESSING OFFICER FOUND , DURING THE SURVEY PROCEEDINGS THE ASSESSEE VIDE LETTER DATED 27.12.2013 SUBMITTED BEFORE THE DDIT , (INV) UNIT I(3) , MUMBAI HAS FURNISHED A WORKING OF EXCESSIVE DE PRECIATION CLAIMED BY IT WHICH WORK ED OUT TO ` 51,80,357/ . ON THE BASIS OF THE AFORESAID WORKING SUBMITTED BY THE ASSESSEE , THE ASSESSING OFFICER ADDED BACK THE AMOUNT OF ` 51,80,357/ ON ACCOUNT OF EXCESSIVE DEPRECIATION CLAIMED BY THE ASSESSEE. THOUGH , TH E ASSESSEE CHALLENGED THE AFORESAID 3 M/S. MANGLAM DRUGS & ORGANICS LTD. DISALLOWANCE BEFORE THE FIRST APPELLATE AUTHORITY, HE ALSO SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 4 . THE LEARNED A UTHORISED R EPRESENTATIVE SUBMITTED, THE ADDITION ON ACCOUNT OF EXCESS DEPRECIATION CLAIME D IS ONLY ON THE BASIS OF A STATEMENT RECORDED FROM ONE OF THE DIRECTORS OF THE COMPANY. HE SUBMITTED, THE ASSETS ON WHICH THE ASSESSEE HAS CLAIMED THE AFORESAID DEPRECIATION WERE CAPITALISED IN THE FINANCIAL YEAR 2006 07, 2007 08 AND 2008 09. HE SUBMITTED , IN THE PRECEDING ASSESSMENT YEARS ASSESSEES CLAIM OF DEPRECIATION ON THE VERY SAME ASSETS HAVE BEEN ALLOWED BY THE FIRST APPELLATE AUTHORITY. HE SUBMITTED , WITHOUT PROPERLY EXAMINING THE FACTS AND ALSO WITHOUT TAKING NOTE OF THE FACT THAT DEPRECIATION CLAIMED ON THESE ASSETS IN THE PRECEDING ASSESSMENT YEARS HAVE BEEN ALLOWED , THE DEPARTMENTAL AUTHORITIES HAVE ARBITRARILY DISALLOWED ASSESSEES CLAIM OF DEPRECIATION IN THE IMPUGNED ASSESSMENT YEAR. HE SUBMITTED, WITHOUT ANY OTHER CORR OBORATIVE EVIDENCE , BY MERELY RELYING UPON A STATEMENT RECORDED DURING SURVEY WHICH HAS NO EVIDENTIARY VALUE , DEPRECIATION CLAIMED BY THE ASSESSEE CANNOT BE DISALLOWED. 5 . THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSERVATIONS OF THE COMMISSION ER (A PPEALS ) AND ASSESSING OFFICER. 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIALS ON RECORD. FROM THE IMPUGNED ASSESSMENT ORDER IT IS EVIDENT THAT ON 4 M/S. MANGLAM DRUGS & ORGANICS LTD. THE BASIS OF CERTAIN INFORMATION FOUND DURING SURVEY CONDUCTED ON THE ASSESSEE REVEALING THAT PURCHASES MADE BY THE ASSESSEE FROM SOME OF THE PARTIES ARE NOT GENUINE , A STATEMENT WAS RECORDED FROM ONE OF THE DIRECTORS OF THE ASSESSEE , WHEREIN , IT WAS STATED THAT THE PARTIES IN WHOSE NAME THE EXPENDITURES WERE DEBITED WERE DIRECTLY NOT KNOWN T O THE ASSESSEE BUT WERE INTRODUCED THROUGH A BROKER. FURTHER, AS IT APPEARS , DURING THE SURVEY PROCEEDINGS THE ASSESSEE FURNISHED A WORKING OF EXCESSIVE DEPRECIATION CLAIMED. ON THE BASIS OF THE AFORESAID WORKING FURNISHED BY THE ASSESSEE , THE ASSESSING OF FICER DISALLOWED PART OF THE DEPRECIATION CLAIMED AMOUNTING TO ` 51,80,357. IT ALSO APPEARS , SUCH DISALLOWANCE IS BASICALLY FOR THE REASON THAT PURCHASES OF ASSET S ON WHICH DEPRECIATION WAS CLAIMED WERE NOT GENUINE. THUS , AS COULD BE SEEN , THE BASIS FOR DIS ALLOWANCE OF DEPRECIATION IS THE STATEMENT RECORDED FROM ONE OF THE DIRECTORS OF THE ASSESSEE AND THE WORKING OF EXCESSIVE DEPRECIATION SUBMITTED BY THE ASSESSEE DURING SURVEY OPERATION. TO COUNTER THE REASONS FOR DISALLOWANCE OF DEPRECIATION, THE LEARNED A UTHORISED REPRESENTATIVES SUBMISSION BEFORE US IS T WO FOLD. FIRSTLY, ONLY ON THE BASIS OF A STATEMENT RECORDED DURING SURVEY, THE ASSESSING OFFICER HAS MADE THE DISALLOWANCE AND SECONDLY, ASSESSEES CLAIM OF DEPRECIATION ON THE ASSETS IN PRECEDING ASSESSME NT YEAR WAS ALLOWED BY THE LEARNED COMMISSIONER (APPEALS). 5 M/S. MANGLAM DRUGS & ORGANICS LTD. 7 . UNDISPUTEDLY, DURING SURVEY UNDER SECTION 133A, THE ASSESSEE ITSELF HAS FURNISHED A WORKING OF EXCESSIVE DEPRECIATION CLAIMED BY IT. THEREFORE, HEAVY BURDEN LIES ON THE ASSESSEE TO ESTABLISH WITH S UPPORTING EVIDENCE THE FACT THAT IT HAS NOT CLAIMED EXCESSIVE DEPRECIATION. THE ASSESSEE MUST BRING ON RECORD COGENT EVIDENCE TO DEMONSTRATE THAT THE ASSETS ON WHICH IT HAD CLAIMED DEPRECIATION ARE IN EXISTENCE AND USED IN ASSESSEES BUSINESS. UNLESS, ASSESSEE ES TABLISHES ITS CLAIM OF DEPRECIATION WITH PROPER EVIDENCE, IT CANNOT BE ALLOWED. THEREFORE, KEEPING IN VIEW THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE INCLINED TO GRANT AN OPPORTUNITY TO THE ASSESSEE TO ESTABLISH ITS CLAIM OF DEPRECIATION BY FURNISHING COGENT EVIDENCE. ACCORDINGLY, WE REMIT THE ISSUE BACK TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE IT AFRESH AFTER EXAMINING THE EVIDENCES BROUGHT ON RECORD AND IN ACCORDANCE WITH LAW. NEEDLESS TO MENTION, THE ASSESSING OFFICER MUST AFFORD A REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 8 . IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01.11.2017 SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 01.11.2017 6 M/S. MANGLAM DRUGS & ORGANICS LTD. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER N. PANICKER SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI