Income Tax Officer Ward-4(3)(1), Bangalore V. Shri.Rajesh Boda , Bangalore

ITA 508/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3465 (ITAT-BANGALORE)
• Duration Of Justice: 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 22-02-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M NARASIMHA RAJU JT BENGALURU
• Assessee Lawyers: H GURUSWAMY ITP
• Keywords: Opportunity of being heard; Additional evidence
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER AND SHRI A.K. GARODIA , ACCOUNTANT MEMBER I TA NO. 508/BANG/2018 ASSESSMENT YEAR : 2013 - 14 THE INCOME TAX OFFICER, WARD 4(3)(1), BANGALORE. VS. SHRI RAJESH BODA, NO.123/A, 4 TH CROSS, 27 TH MAIN, SECTOR-1, HSR LAYOUT, BANGALORE 560 102. PAN: AIIPB 6255G APPELLANT RESPONDENT APPELLANT BY : SHRI M. NARASIMHA RAJU, JT.CIT(DR)(ITAT), BENGALURU. RE SPONDENT BY : SHRI H. GURUSWAMY, ITP. DA TE OF HEARING : 01 .0 8 .201 8 DATE OF PRONOUNCEMENT : 24 .08.2018 O R D E R PER N.V. VASUDEVAN, JUDICIAL MEMBER THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORD ER DATED 30.11.2017 OF THE CIT(APPEALS)-4, BANGALORE RELATIN G TO ASSESSMENT YEAR 2013-14. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ S AS FOLLOWS: 1. THE ORDER OF THE LD. CIT (A), IN SO FAR AS IT I S PREJUDICIAL TO THE INTEREST OF THE REVENUE, IS OPPOSED TO LAW A ND THE FACT AND CIRCUMSTANCES OF THE CASE. ITA NO. 508/BANG/2018 PAGE 2 OF 8 2. ON FACTS OF THE CASE, WHETHER THE LD CIT(A) IS R IGHT IN ALLOWING THE APPEAL OF THE ASSESSEE ON DISALLOWANCE U/S 80IC BASED ON THE EVIDENCES PRODUCED BEFORE THE LD. CIT(A), WHICH WAS NOT PRODUCED BEFORE THE AO. IN TH E CIRCUMSTANCES, THE LD CIT(A) OUGHT TO HAVE GIVEN TH E OPPORTUNITY TO THE AO BEFORE GIVING THE DECISION. 3. ON FACTS OF THE CASE, THE LD CIT (A) HAS FAILED TO APPRECIATE THAT BY NOT GIVING OPPORTUNITY TO THE AO HAS VIOLATED THE PROVISION OF RULE 46A OF THE I T RULE. 4. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE CIT (A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVER SED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND / OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED. 3. THE ASSESSEE IS AN INDIVIDUAL. THE ASSESSEE CLA IMED DEDUCTION OF A SUM OF RS.65,93,769/- U/S.80IC OF THE INCOME TAX ACT, 1961 (ACT) WHILE COMPUTING TOTAL INCOME. THE CLAIM OF THE ASSESSEE FOR DEDUCTION WAS MADE U/S.80IC(2) OF THE ACT WHICH IS AS UNDER:- (2) THIS SECTION APPLIES TO ANY UNDERTAKING OR ENT ERPRISE, ( A ) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PROD UCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SP ECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR P RODUCES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THIN G SPECIFIED IN THE THIRTEENTH SCHEDULE AND UNDERTAKES SUBSTANTI AL EXPANSION DURING THE PERIOD BEGINNING ( I ) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING B EFORE THE 1ST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZO NE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR IND USTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PA RK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEM E PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH T HE ITA NO. 508/BANG/2018 PAGE 3 OF 8 SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T IN THIS REGARD, IN THE STATE OF SIKKIM; OR ( II ) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BEFOR E THE 1ST DAY OF APRIL, 2012, IN ANY EXPORT PROCESSING ZONE O R INTE- GRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTR IAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PA RK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEM E PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH T HE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T IN THIS REGARD, IN THE STATE OF HIMACHAL PRADESH OR TH E STATE OF UTTARANCHAL; OR ( III ) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2007, IN ANY EXPORT PROCESSING ZO NE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR IND USTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PA RK OR SOFTWARE TECHNO-LOGY PARK OR INDUSTRIAL AREA OR THE ME PARK, AS NOTIFIED BY THE BOARD IN ACCORDANCE WITH T HE SCHEME FRAMED AND NOTIFIED BY THE CENTRAL GOVERNMEN T IN THIS REGARD, IN ANY OF THE NORTH-EASTERN STATES; ( B ) WHICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRO DUCE ANY ARTICLE OR THING, SPECIFIED IN THE FOURTEENTH SCHED ULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANUFACTURES OR PRODUCES ANY ARTICLE OR THING , SPECIFIED IN THE FOURTEENTH SCHEDULE OR COMMENCES A NY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD BEGINNING ( I ) ON THE 23RD DAY OF DECEMBER, 2002 AND ENDING BEF ORE THE 1ST DAY OF APRIL, 2012, IN THE STATE OF SIKKIM; OR ( II ) ON THE 7TH DAY OF JANUARY, 2003 AND ENDING BEFO RE THE 1ST DAY OF APRIL, 2012, IN THE STATE OF HIMACHAL PRADES H OR THE STATE OF UTTARANCHAL; OR ( III ) ON THE 24TH DAY OF DECEMBER, 1997 AND ENDING BE FORE THE 1ST DAY OF APRIL, 2007, IN ANY OF THE NORTH-EASTERN STATES. ITA NO. 508/BANG/2018 PAGE 4 OF 8 4. THE ASSESSEES CLAIM WAS THAT IT MANUFACTURED AN ARTICLE OR THING SPECIFIED IN 14 TH SCHEDULE TO THE ACT. THE AO REJECTED THE CLAIM OF THE ASSESSEE FOR THE REASON THAT THE PRODUCT MANUFACTUR ED BY THE ASSESSEE WAS IN THE 13 TH SCHEDULE TO THE ACT AND NOT 14 TH SCHEDULE. THE FOLLOWING WERE THE RELEVANT OBSERVATIONS OF THE AO:- 5. ACCORDING TO SECTION 80IC(2)(A), ANY UNDERTAKIN G OR ENTERPRISE WHICH HAS BEGUN OR BEINGS TO MANUFACTURE OR PRODUCE ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THIN G SPECIFIED IN THE THIRTEENTH SCHEDULE, OR WHICH MANUFACTURES OR PRODU CES ANY ARTICLE OR THING, NOT BEING ANY ARTICLE OR THING SP ECIFIED IN THE THIRTEENTH SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPA NSION DURING THE PERIOD BEGINNING ON THE 7TH DAY OF JANUARY 2003 AND ENDING BEFORE THE LST DAY OF APRIL 2012, IN ANY EXPORT PRO CESSING ZONE OR INTEGRATED INFRASTRUCTURE DEVELOPMENT CENTRE OR INDUSTRIAL GROWTH CENTRE OR INDUSTRIAL ESTATE OR INDUSTRIAL PA RK OR SOFTWARE TECHNOLOGY PARK OR INDUSTRIAL AREA OR THEME PARK, A S NOTIFIED BY THE CENTRAL BOARD IN ACCORDANCE WITH THE SCHEME FRA MED AND NOTIFIED BY THE CENTRAL GOVERNMENT IN THIS REGARD, IN THE.. STATE OF HIMACHAL PRADESH OR THE STATE OF UTTARANCHAL, (H) W HICH HAS BEGUN OR BEGINS TO MANUFACTURE OR PRODUCE ANY ARTIC LE OR THING, SPECIFIED IN THE FOURTEENTH SCHEDULE OR COMMENCES A NY OPERATION SPECIFIED IN THAT SCHEDULE, OR WHICH MANUFACTURES O R PRODUCES ANY ARTICLES OR THING, SPECIFIED IN THE-FOURTEENTH SCHEDULE OR COMMENCES ANY OPERATION SPECIFIED IN THAT SCHEDULE AND UNDERTAKES SUBSTANTIAL EXPANSION DURING THE PERIOD .. SHALL BE ELIGIBLE FOR DEDUCTION U/S 801C(3). 6. IT IS SEEN THAT THE ASSESSEE'S PRODUCT IS NOT C OVERED IN THE FOURTEENTH SCHEDULE BUT IS COVERED IN THIRTEENTH SC HEDULE, UNDER THE HEAD INSECTIDES, FUNGICIDES, HERBICIDES AND PES TICIDES (BASIC MANUFACTURE AND. FORMULATION) SINCE THE ASSESSEE IS INTO THE BUSINESS OF MANUFACTURE OF MANURE EVEN THOUGH HE CL AIMS THAT HIS PRODUCT IS ORGANIC MANURE. THE ASSESSEE HAS NOT BROUGHT ON RECORD ANYTHING TO PROVE THAT HIS PRODUCT FALLS UND ER MEDICINAL HERBS AND AROMATIC HERBS ETC THUS BECOMES INELIGIBL E FOR ITA NO. 508/BANG/2018 PAGE 5 OF 8 DEDUCTION U/S 801C. IN VIEW OF THE ABOVE, ASSESSEE' S CLAIM OF DEDUCTION U/S 80IC IS DISALLOWED AND AN AMOUNT OF R S. 65,93,769 IS ADDED BACK TO THE TOTAL INCOME. 5. BEFORE CIT(A), THE ASSESSEE CLAIMED THAT HE WAS MANUFACTURING ORGANIC MANURE IN THE STATE OF HIMACHAL PRADESH AND THE SAID ARTICLE FELL WITHIN THE CATEGORY OF MEDICINAL HERBS AND AROMATI C HERBS, ETC., PROCESSING BEING ITEM NO.2 OF 14 TH SCHEDULE TO THE ACT. THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE WITH THE FOLLOWIN G OBSERVATIONS:- THE ASSESSEE HAS SUBMITTED CERTAIN ADDITIONAL DETA ILS IN SUPPORT OF ITS CONTENTION THAT ITS PRODUCT HAS BEEN TESTED BY THE DEPARTMENT OF AGRICULTURE, FOR PESTICIDE RESIDU ES, BY THE PESTICIDE RESIDUE TESTING LABORATORY, PUNE. IT IS STATED THAT ITS SAMPLES WERE TESTED FOR 96 BROAD GROUP PES TICIDES / INSECTICIDES AND THE PRODUCT WAS CERTIFIED TO REPRE SENT 'NO- RESIDUES'. IT IS FURTHER SUBMITTED THAT, THE HERBS (PRODUCED BY THE APPELLANT) ARE UTILIZED IN MEDICINAL PLANT E XTRACTS AS RAW-MATERIAL AND ONLY ORGANIC PRODUCTS ARE MADE, WH ICH ARE FREE FROM CHEMICALS. THE APPELLANT IS STATED TO BE USING FOLIAGE, HARK, ROOT AND TUBERS ETC. OF VARIOUS MEDI CAL PLANTS / HERBS OBTAINED FROM DIFFERENT LOCATIONS WHICH ARE OF END- USE IN AYURVEDA, UNANI, HOMOEOPATHY, SIDDHA ETC. IT IS THEREFORE THE ASSESSEE'S CONTENTION THAT, IT'S PROC ESSES AND PRODUCTION IS SUCH THAT ITS CASE IS SQUARELY COVERE D UNDER THE SCHEDULE-FOURTEENTH AND NOT SCHEDULE-THIRTEENTH OF THE SECTION 80IC OF THE I.T. ACT. THE AO'S IMPUGNED-ORDER DOES NOT CONTAIN ANY SUBSTA NTIAL FINDING OF FACT TO REFUTE THE ASSESSEE'S AFORESAID CONTENTION BASED ON EXTENSIVE DETAILS SUBMITTED DURING THE APP EAL PROCEEDINGS. IN BACKGROUND OF THE ABOVE DETAILED DISCUSSION, F ACTS AND DETAILS PLACED ON RECORD BY THE APPELLANT AND IN AB SENCE OF ANY EVIDENCIARY-JUSTIFICATION IN THE AO'S ORDER, THE DI SALLOWANCE MADE IN THE IMPUGNED-ORDER CANNOT BE SUSTAINED. THE ASSESSEE'S GROUND OF APPEAL IS THEREFORE ALLOWED. ITA NO. 508/BANG/2018 PAGE 6 OF 8 6. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENUE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE MAIN GRIEVANCE OF THE REVENUE IS THAT THE CIT(A ) ADMITTED ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF THE INCOME TAX RULES, 1962 (RULES). RULE 46A OF THE RULES READS THUS:- PRODUCTION OF ADDITIONAL EVIDENCE BEFORE THE DEPUT Y COMMISSIONER (APPEALS)AND COMMISSIONER (APPEALS). 46A. (1) THE APPELLANT SHALL NOT BE ENTITLED TO PRO DUCE BEFORE THE DEPUTY COMMISSIONER (APPEALS) OR, AS THE CASE MAY B E, THE COMMISSIONER (APPEALS), ANY EVIDENCE, WHETHER ORAL OR DOCUMENTARY, OTHER THAN THE EVIDENCE PRODUCED BY HIM DURING THE COURSE OF PROCEEDINGS BEFORE THE ASSESSING OFFICER, EXCEPT IN THE FOLLOWING CIRCUMSTANCES, NAMELY : (A) WHERE THE ASSESSING OFFICER HAS REFUSED TO ADMI T EVIDENCE WHICH OUGHT TO HAVE BEEN ADMITTED ; OR (B) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING THE EVIDENCE WHICH HE WAS CALLED UPON TO PRODUCE BY THE ASSESSING OFFICER ; OR (C) WHERE THE APPELLANT WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE ASSESSING OFFICER ANY EVIDENCE WHICH IS RELEVANT TO ANY GROUND OF APPEAL ; OR (D) WHERE THE ASSESSING OFFICER HAS MADE THE ORDER APPEALED AGAINST WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELL ANT TO ADDUCE EVIDENCE RELEVANT TO ANY GROUND OF APPEAL. (2) NO EVIDENCE SHALL BE ADMITTED UNDER SUB-RULE ( 1) UNLESS THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CAS E MAY BE, THE COMMISSIONER (APPEALS)] RECORDS IN WRITING THE REASONS FOR ITS ADMISSION. (3) THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS TH E CASE MAY BE, THE COMMISSIONER (APPEALS)] SHALL NOT TAKE INTO ACCOUNT ITA NO. 508/BANG/2018 PAGE 7 OF 8 ANY EVIDENCE PRODUCED UNDER SUB-RULE (1) UNLESS THE ASSESSING OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY (A) TO EXAMINE THE EVIDENCE OR DOCUMENT OR TO CROSS -EXAMINE THE WITNESS PRODUCED BY THE APPELLANT, OR (B) TO PRODUCE ANY EVIDENCE OR DOCUMENT OR ANY WITN ESS IN REBUTTAL OF THE ADDITIONAL EVIDENCE PRODUCED BY THE APPELLANT. (4) NOTHING CONTAINED IN THIS RULE SHALL AFFECT TH E POWER OF THE [DEPUTY COMMISSIONER (APPEALS)] [OR, AS THE CASE MA Y BE, THE COMMISSIONER (APPEALS)] TO DIRECT THE PRODUCTION OF ANY DOCUMENT, OR THE EXAMINATION OF ANY WITNESS, TO ENA BLE HIM TO DISPOSE OF THE APPEAL, OR FOR ANY OTHER SUBSTANTIAL CAUSE INCLUDING THE ENHANCEMENT OF THE ASSESSMENT OR PENALTY (WHETH ER ON HIS OWN MOTION OR ON THE REQUEST OF THE [ASSESSING OFFI CER]) UNDER CLAUSE ( A ) OF SUB-SECTION (1) OF SECTION 251 OR THE IMPOSITI ON OF PENALTY UNDER SECTION 271. 7. IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THE RE WAS NO ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE CIT(A), BUT T HIS CONTENTION IS CONTRARY TO THE CONCLUSIONS OF THE CIT(A) THAT ADDI TIONAL DETAILS WERE FILED BEFORE HIM AND BASED ON THOSE DETAILS, HE WAS SATIS FIED THAT THE ASSESSEE WAS MANUFACTURING ARTICLE SPECIFIED IN SCHEDULE 14 OF THE ACT. ADMITTEDLY, THESE ADDITIONAL DETAILS BEING THE BASIS OF THE CON CLUSION OF THE CIT(A) THAT THE ASSESSEE WAS MANUFACTURING AN ARTICLE SPECIFIED IN SCHEDULE 14 OF THE ACT, THE CIT(A) WAS DUTY BOUND TO AFFORD OPPORTUNIT Y TO THE AO TO EXAMINE THESE DETAILS AND OBTAIN EVIDENCE CONTRARY TO THE C LAIM OF THE ASSESSEE OR TO SUBSTANTIATE THE CLAIM OF THE ASSESSEE AS NOT CO RRECT. THE LEARNED ARS ARGUMENT THAT UNDER RULE 46A(4) OF THE RULES, THE C IT(A) HAS INHERENT POWERS TO EXAMINE EVIDENCE INDEPENDENTLY WITHOUT CO NFRONTING THE SAME TO THE AO, CANNOT BE ACCEPTED ON THE FACTS OF THE PRES ENT CASE, BECAUSE THE REQUIRED DETAILS WERE NOT PRODUCED AT THE DIRECTION OF THE CIT(A). FOR RULE 46A(4) OF THE RULES TO APPLY, THE ADDITIONAL EVIDEN CE OUGHT TO BE CALLED FOR ITA NO. 508/BANG/2018 PAGE 8 OF 8 BY THE CIT(A). EVEN IN SUCH CIRCUMSTANCES IT IS DE SIRABLE THAT THE CIT(A) CONFRONTS THE AO WITH THE ADDITIONAL EVIDENCE PRODU CED BEFORE HIM. THE AO BEING A PARTY TO THE PROCEEDINGS SHOULD NOT BE D ENIED THE OPPORTUNITY OF BEING HEARD. WE THEREFORE ACCEPT THE PRAYER OF THE REVENUE FOR REMANDING THE ISSUE FOR FRESH CONSIDERATION BY THE CIT(A) AFTER CONFRONTING THE ADDITIONAL EVIDENCE OR DETAILS FILED BY THE ASS ESSEE BEFORE CIT(A). 8. FOR STATISTICAL PURPOSE, THE APPEAL OF THE REVEN UE IS TREATED AS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 24 TH DAY OF AUGUST, 2018. SD/- SD/- ( A.K. GARODIA ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 24 TH AUGUST, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.