KEJRIWAL PAPER LTD, MUMBAI V. DCIT 3(2), MUMBAI

ITA 509/MUM/2013

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0358 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 17-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Capital asset; Business expenditure; Revenue expenditure
• Section: 143(3); 142(1); 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H , MUMBAI BEFORE S HRI R.C. SHARMA (AM) AND SHRI RAM LAL NEGI (JM) ITA NO. 509/MUM/2013 ASSESSMENT YEAR: 2007 - 08 M/S KEJRIWAL PAPER LTD., C/O. MANGALDAS D. SHAH & CO., 506, LOTUS HOUSE, 33 - A, NEW MARI NE LINES, MUMBAI - 400020 PAN: AABCK2284Q VS. THE DY. COMMISSIONER OF INCOME TAX 3(2), AAYKAR BHAVA, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI M.C. OMI NINGSHEN (DR) DATE OF HEARING: 0 7 /11 /201 7 DATE OF PRONOUNCEMENT: 05 / 02 /201 8 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 23/10/2012 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 4 , MUMBAI , FOR THE A S S ESSMENT YEAR 2007 - 08 , WHEREBY THE LD. CIT (A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT THE A CT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE COMPANY ENGAGED IN THE BUSINESS OF TRADING IN DIFFERENT VARIETY OF PAPERS, MANUFACTURING AND EXPORT OF NOTE BOOKS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING THE TOTAL INCOME OF RS. 2,62,13,799/ - . THE RETU RN WAS PROCESSED U/S 143(1) OF THE ACT AND NOTICES U/S 143(2) AND 142(1) WERE ISSUED TO THE ASSESSEE. IN RESPONSE TO THE SAID NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED BEFORE THE AO AND FURNISHED THE DETAILS CALLED FOR BY 2 ITA NO. 509 / MUM/2013 ASSESSMENT YEAR: 2007 - 08 THE AO. IT W AS NOTICED THAT AN AMOUNT OF RS. 2,01,69,622/ - WAS RECEIVABLE TO THE ASSESSEE TOWARDS EXPORT INCENTIVES AND THE ASSESSEE HAD CLAIMED CENVAT AND ADJUSTED FROM PURCHASE OF RAW MATERIAL AMOUNTING TO RS. 51,86,174/ - AND PROFESSIONAL FEE PAID FOR VERIFICATION A ND GETTING LICENSE AMOUNTING TO RS. 13,19,312/ - AND ACCORDINGLY THE ASSESSEE MADE A CLAIM OF RS. 65,05,486/ - FOR REDUCING THE SAID AMOUNT FROM EXPORT INCENTIVE, WHEREAS NO SUCH CLAIM HAD BEEN MADE OR MENTIONED IN THE RETURN OF INCOME OR IN THE AUDIT REPORT . SINCE THE ASSESSEE HAD CLAIMED THE SAID AMOUNT ON THE BASIS OF RE - CASTED PROFIT AND LOSS ACCOUNT THE AO REJECTED THE SAME. IT WAS FURTHER NOTICED THAT THE ASSESSEE HAD CLAIMED MISCELLANEOUS EXPENSES AMOUNTING TO RS. 49,60,566/ - ON ACCOUNT OF ANTI DUMPING EXPENSES. THE AO REJECTED THE CLAIM HOLDING THAT THE ASSESSEE HAS NOT FILED BILLS AND VOUCHERS AND FURTHER NO TAX AT SOURCE WERE DEDUCTED. FURTHER, THE ASSESSEE HAD DEBITED AN AMOUNT OF RS. 12,42,309/ - ON ACCOUNT OF CONSULTANCY CHARGES PAID TO MM NISSIM A ND COMPANY. THE AO REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THE COMPANY HAS NOT EXPLAINED AS TO WHETHER THE LOAN IS REQUIRED FOR PRESENT BUSINESS FOR ACQUISITION OF CAPITAL ASSETS OR FOR ANY OTHER BUSINESS ACTIVITIES. ACCORDINGLY, THE AO DETER MINED THE TOTAL INCOME OF THE ASSESSEE AT RS. 3,17,34,420/ - . 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE CHALLENGED THE SAME BEFORE THE LD. CIT (A). THE LD. CIT (A) ISSUED NOTICES TO THE ASSESSEE AND THE CASE WAS FIXED FOR HEARING FOR MORE THAN SI X DATES, HOWEVER, THE ASSESSEE EITHER DID NOT APPEAR OR SOUGHT ADJOURNMENT. ULTIMATELY, THE LD. CIT (A) HAD TO PROCEED EX - PARTE AND PASSED THE APPELLATE ORDER ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 4 . T HE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUND S : - 1. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN PASSING ORDER EX - PARTE WHICH BE CANCELLED. 3 ITA NO. 509 / MUM/2013 ASSESSMENT YEAR: 2007 - 08 (B) THE LEARNED CIT (A) ERRED IN NOT CONSIDERING THE DETAILS FILED IN PAPER BOOK AND WRITTEN SUBMISSIONS MADE. 2. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN CONFIRMING THE ADDITION OF RS. 65,05,486/ - BEING EXPORT INCENTIVE RECEIVABLE, WHICH ADDITION BE DELET ED. (B) THE LEARNED OFFICER HAD ERRED IN REJECTING THE EXPLANATION, WITHOUT APPRECIATING THE SAME. (C) THE LEARNED CIT (A) AND THE OFFICER FAILED TO APPRECIATE THAT THE AFORESAID AMOUNTS RS. 65,05,486/ - (RS. 51,86,174+13,19,312) IS CORRECTLY ACC OUNTED AND RECORDED IN THE BOOKS OF ACCOUNTS. THE SAME IS ADJUSTED FROM COST OF RAW MATERIAL, AND TO THAT EXTENT COST OF RAW MATERIAL IS REDUCED. (D) THE APPELLANT PRAYS THAT IF THIS IS ADDED AS INCOME, THEN THE SAME BE ALLOWED AS DEDUCTION ON ACCOUNT OF COST OF RAW MATERIAL. (E) THE LEARNED ASSESSING OFFICER ERRED IN OBSERVING THE DETAILS ARE NOT CORRECT WHEN THE SAME ARE DULY VERIFIED, SUPPORTED BY THE DETAILS AND BOOKS OF ACCOUNTS AND ARE REFLECTED IN THE BOOKS OF ACCOUNTS. (F) THE LEARNED OFFICER ER RED IN REJECTING THE ACCOUNTS U/S 145 OF THE ACT, WHICH IS BAD IN LAW AND CONTRARY TO THE FACTS. (G) THE LEARNED OFFICER ERRED IN STATING THAT THE DETAILS OF EXPENSES AND ITS NATURE IS NOT FILED AND THE SAME IS NON BUSINESS EXPENDITURE. THE APPELLANT PRAY S THAT EXPENDITURE BEING BUSINESS EXPENDITURE IT BE ALLOWED IN FULL AND ADDITION BE DELETED. 3. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN CONFIRMING ADDITION OF PAYMENT OF RS. 49,60,566/ - MADE ON ACCOUNT OF ANTI DU MPING DUTY, WHICH EXPENDITURE BE ALLOWED IN FULL AND ADDITION MADE BE DELETED. (B) THE OFFICER ERRED IN STATING THAT, THESE ARE NON BUSINESS EXPENDITURE. 4 ITA NO. 509 / MUM/2013 ASSESSMENT YEAR: 2007 - 08 (C) THE OFFICER ERRED IN STATING THAT, THE EXPENDITURE ARE DISALLOWABLE U/S 40(A)(IA) OF THE ACT. (D ) THE LEARNED ASSESSING OFFICER ERRED IN OBSERVING THAT EXPENDITURE INCURRED IN PROCEEDING FOR INFRACTION OF THE LAW, WHICH IS CONTRARY TO THE FACTS. THE OFFICER ERRED IN STATING THAT THE EXPENDITURE INCURRED FOR CONTRAVENTION OF STATUTORY PROVISION. (E) THE LEARNED OFFICER FAILED TO APPRECIATE THAT EXPENDITURE INCURRED IN TO ENABLE TO CARRY ON THE EXPORT TRADE. (F) THE APPELLANT PRAYS THAT THESE ARE BUSINESS EXPENDITURE IT BE ALLOWED IN FULL. WITHOUT PREJUDICE, THE DISALLOWANCE OF THE WHOLE OF THE EXPE NSES BEING ON HIGHER SIDE IT BE REDUCED. 4. (A) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED ASSESSING OFFICER ERRED IN MAKING ADDITION OF RS. 12,34,640/ - BEING PA YMENT MADE TO M.M. NISSIM & CO., WHICH ADDITION BE DELETED. (B) THE LEARN ED ASSESSING OFFICER FAILED TO APPRECIATE THAT, THE PROFESSIONAL CHARGES PAID TO M.M. NISSIM & CO., ARE IN COURSE OF THE BUSINESS AND FOR THE BENEFIT OF THE BUSINESS, THE SAME BEING REVENUE EXPENDITURE IT SHOULD ALLOWED IN FULL ACCORDINGLY. (C) THE LEARNE D ASSESSING OFFICER ERRED IN OBSERVING THAT, THE FEES ARE PAID FOR ACQUISITION OF WORKING CAPITAL WHICH IS CAPITAL IN NATURE, WHICH IS CONTRARY TO THE FACTS AND EVIDENCE ON RECORD, THE AMOUNT PAID IS FOR AVAILING THE WORKING CAPITAL FOR DAY TO DAY BUSINESS OF THE COMPANY. 5. THIS CASE WAS FIXED FOR HEARING ON 07.11.2018. HOWEVER, WHEN THE CASE WAS CALLED FOR HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE AND EVEN NO APPLICATION FOR ADJOURNMENT WAS RECEIVED. WE NOTICE THAT THE ASSESSEE HAD SO UGHT ADJOURN MENT ON 25.01.2017, ACCORDINGLY THE CASE WAS ADJOURNED TO 27.02.2017. T HERE AFTER THE CASE WAS POSTED FOR HEARING ON 03.04.17, 14.06.17, 5 ITA NO. 509 / MUM/2013 ASSESSMENT YEAR: 2007 - 08 22.08.17, 11.10.17 AND 7.11.17 BUT THE ASSESSEE DID NOT APPEAR ON ANY OF THE SAID DATES. FROM THE CONDUCT OF THE ASSESS EE, WE ARE CONVINCED THAT THE ASSESSEE IS NO LONGER INTERESTED IN PURSUING ITS APPEAL. WE ACCORDINGLY DECIDED TO DISPOSE OF THE CASE ON THE BASIS OF MATERIAL ON RECORD AFTER HEARING THE DEPARTMENTAL REPRESENTATIVE (DR). 6. BEFORE US, THE LD. DR RELYING ON THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO PRODUCE COGENT EVIDENCE TO SUBSTANTIATE ITS CLAIMS DESPITE SUFFICIENT OPPORTUNITIES PR OVIDED BY THE AUTHORITIES BELOW , THE LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITIONS MA DE BY THE AO. HENCE, THE APPEAL OF THE ASSESSEE HAS NO MERITS AND THE SAME IS LIABLE TO BE DISMISSED . 7. WE HAVE CAREFULLY GONE THROUGH THE ORDERS PAS SED BY THE AUTHORITIES BELOW. WE NOTICE THAT THE ASSESSEE HAS FAILED TO ESTABLISH ITS CLAIM DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY ADDUCING RELEVANT AND SUFFICIENT EVIDENCE. AS POINTED OUT BY THE LD. CIT(A), D URING THE APPELLATE PROCEEDINGS, THE ASSESSEE EITHER DID NOT APPEAR OR SOUGHT ADJOURNMENTS. ULTIMATELY, THE LD. CIT(A) DECIDED THE CASE EX - PA RTE ON THE BASIS OF MATERIAL PLACED ON THE RECORD. THE LD. CIT(A) CONFIRMED THE FINDINGS OF THE AO. THE LD. CIT(A) HAS AFFIRMED THE ADDITION OF RS 65,05,486/ - THE EXPENDITURE FOR THE REASON THAT THE ASSESSEE HAS NOT PRODUCE D ANY EVIDENCE IN SUPPORT OF ITS C LAIM DURING THE ASSESSMENT PROCEEDINGS AS WELL AS DURING THE APPELLATE PROCEEDINGS. SIMILARLY THE LD. CIT(A) HAS CONFIRMED THE ADDITION OF RS.49,60,566/ - CLAIMED BY THE ASSESSEE TOWARDS MISCELLANEOUS EXPENSES /ANTI DUMPING EXPENSES ON THE GROUND THAT THE ASS ESSEE HAS NOT PRODUCED BILL AND VOUCHERS. SO FAR AS THE ADDITIONAL GROUND PERTAINING TO THE ADDITION OF RS. 12,34,660/ - IS CONCERNED, THE LD. CIT (A) HAS HELD THAT THE CLAIM OF THE ASSESSEE THAT HE HAD PAID RS. 12,34,640/ - ON ACCOUNT OF CONSULTANCY CHARGES TO MM NISSIM & COMPANY FOR PREPARATION AND 6 ITA NO. 509 / MUM/2013 ASSESSMENT YEAR: 2007 - 08 FINANCIAL DATA AND REVIEW APPLICATION FOR OBTAINING LOAN FROM THE BANK . HOWEVER, THE ASSESSEE HAS NEITHER PRODUCED PROPER BILLS NOR PROVED ANY RELATION OF SUCH PAYMENT WITH THE BUSINESS OF THE ASSESSEE BY ADDUCIN G EVIDENCE. 8. HE NCE, IN OUR CONSIDERED OPINION THE FINDINGS OF THE LOWER AUTHORITIES ARE BASED ON THE EVIDENCE ON RECORD. THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE SAME. ACCORDINGLY, WE UPHELD THE FINDINGS OF THE LD. CIT (A) AND DIS MISS ALL THE GROUNDS OF APPEAL OF THE ASSESSEE. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR A SSESSMENT YEAR 2007 - 2008 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH FEBRUARY, 2018 . SD/ - SD/ - ( R.C. SHARMA ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 05 / 02 / 201 8 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . 7 ITA NO. 509 / MUM/2013 ASSESSMENT YEAR: 2007 - 08 / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI