DCIT CENT. CIR. -5(3) (ERSTWHILE DCIT CENT. CIR. -36), MUMBAI V. KRISHNA KNITWEAR TECHNOLOGY LTD., MUMBAI

ITA 5129/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0191 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHEN
• Keywords: Opportunity of being heard; Principle of natural justice; Corroborative evidences
• Section: 143(3)

Judgement Text

IN THE INC OME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI BEFORE SH. R. C. SHARMA , AM & SH. SANDEEP GOSAIN, JM ./ I.T.A. NO . 5129/MUM/2016 ( / ASSESSMENT YEAR: 2011 - 12 ) DCIT CEN CIR - 5 (3) (ERSTWHILE DCIT CENT CIR - 36) ROOM NO. 1906, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 40002 1 / VS. KRISHNA KNITWEAR TECHNOLOGY LTD. 11/12, RAGHUVANSHI MILL COMPOUND, SENAPATIBAPAT MARG, NEAR MAHALAXMI STATION, MUMBAI - 400013. ./ ./ PAN NO. AA ACK4721H ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI M. C. OMI NINGSHEN / RESPONDENTBY : SHRI SANAT KAPOOR / DATE OF HEARING : 06 .02 .1 8 / DATE OF PRONOUNCEMENT : 21/02/2018 / O R D E R PER SANDEEP GOSAIN, J UDICIAL MEMBER : THE P RESENT APPE AL FILED BY THE REVENUE IS AGAINST THE ORDER OF LD. CIT (APPEAL) 5 3, MUMBAI DATED 23.03.16 F OR AY 20 11 - 12 ON THE GROUNDS MENTIONED HEREIN BELOW: - 2 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIEDIN NOT DECIDING THE ISSUE AND GIVIN G THE DIRECTIONS FOR VERIFICATION OF VOUCHERS AND EVIDENCES MAINTAINED BY THE ASSESSEE OF RS. 2,36,75,192/ - FOR RENT, RATES AND TAXES CLAIMED BY THE ASSESSEE INSTEAD OF DISALLOWING THE SAME WITHOUT TAKING INTO CONSIDERATION THE FACT THAT PRINCIPAL OF NATURAL JUSTICE WAS FOLLOWED BY GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE AT THE TIME OF ASSESSMENT PROCEEDINGS TO FURNISH TH E VOUCHERS, OTHER EVIDENCES ETC?' 2. WITHOUT PREJUDICE TO THE ABOVE GROUND, WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) IS JUSTIFIED IN GIVING THE DIRECTIONS FOR VERIFICATION OF VOUCHERS AND EVIDENCES MAINTAINED BY THE ASSESSEE OF RS. 2,36,75,192/ - FOR RENT, RATES AND TAXES CLAIMED BY THE ASSESSEE INSTEAD OF REMANDING BACK THE ISSUE UNDER CONSIDERATION TO ASSESSING OFFICER FOR VERIFICATION DURING THE APPELLATE PROCEEDING?' 2. THE B RIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF COTTON YEARNS, CIRCULAR 3 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. KNITTED FABRICS, HOSIERY AND PROCESSING CLOTH. THE ASSESSEE FILED E - RETURN DECLARING TOTAL INCOME OF RS.NIL ON 30.09.2011 AND THE SAME WAS PROCESSED U/S. 143(1) OF THE ACT. THE ASSESSEE DECLARED BOOK PROFIT OF RS.275,123/ - U/S..115JB AND PAID TAXES ON IT. THE REAFTER, THE CASE WAS SELECTED FOR SCRUTINY AND AFTER SERVING STATUTORY NOTICES, ORDER OF ASSESSMENT U/S 143(3) W AS COMPLET ED BY THE LD. AO ON 28.03.14AFTER MAKING CERTAIN ADDITIONS/DISALLOWANCE. AGGRIE VED BY THE ORDER OF AO, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE CASE OF BOTH THE PARTIES ALLOWED THE APPEAL OF THE ASSESSEE. NOW BEFORE US, THE REVENUE HAS PREFERRED THE PRESENT APPEAL BY RAISING THE ABOVE GROUNDS. GROUND NO. 1 & 2 . 3. THIS GROUND RAISED BY THE REVENUE ARE INTER CONNECTED AND INTER RELATED AND RELATES TO CHA LLENGING THE ORDER OF LD. CIT(A) IN NOT DECIDING THE ISSUE AND GIVING THE DIRECTI ONS FOR VERIFICATION OF VOUCHERS AND EVIDENCES MAINTAINED BY THE ASSESSEE FOR RENT, RATES 4 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. AND TAXES CLAIMED BY THE ASSESSEE , THEREFORE WE THOUGHT IT FIT TO DISPOSE OF THE SAME BY THIS COMMON ORDER. 4. WE HAVE HEARD COUNSELS FOR BOTH THE PARTIES AT LENGTH AND WE HAVE ALSO PERUSED THE MATERIAL PLACED ON RECORD AS WELL AS THE ORDERS PASSED BY REVENUE AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A). THE LD. CIT(A) HAS DEALT WITH THE ABOVE GROUNDS RAISED BY THE REVENUE IN PARA NO. 4.1 TO 4.3 OF ITS ORDER. THE OPERATIVE PORTION OF THE ORDER OF LD. CIT(A ) IS CONTAINED IN PARA NO. 4.3 OF ITS ORDER AND THE SAME IS REPRODUCED BELOW: - 4.3 I HAVE CONSIDERED THE SUBMISSIONS OF' THE APPELLANT AND PERUSED THE MATERIALS _ AVAILABLE ON RECORD. THE POINT FOR ADJUDICATION IS WHETHER THE A.O. WAS JUSTIFIED ILL MAKI NG DISALLOWANCE OF RS.2,36,75,192/ - OUT OF RENT, RATES AND TAXES. IT IS NOTICED THAT THE A.O. MADE THE AFORESAID DISALLOWANCE IN VIEW OF THE APPELLANT'S FAILURE TO FURNISH THE DETAILS OF NATURE OF PAYMENTS AND OF DEDUCTION OF TAX AT SOURCE ON RENT PAID TO WORKERS/ OTHERS. A PERUSAL OF THE 5 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. ASSESSMENT ORDER REVEALS THAT THE APPELLANT HAS THREE MANUFACTURING DIVISIONS AT SILVASSA AND A PROCESSING DIVISION AT NAVI MUMBAI. THE APPELLANT HAG A TOTAL TURNOVER OF RS.2,307 CRORES DURING THE RELEVANT PERIOD. IT IS CL AIMED THAT DAE APPELLANT HAS MORE THAN 500 WORKERS WHO ARE REIMBURSED MONTHLY RENT AS PER THEIR ENTITLEMENTS ON ACCOUNT OF ACCOMMODATIONHIRED BY THEM. IT IS ALSO CLAIMED THAT DEPENDING ON THE ENTITLEMENT OF WORKERS/EMPLOYEES, THE RENT PAYMENT IN EACH CASE IS RANGING BETWEEN RS.1,000 TO RS.5,000 PER MONTH WHICH IS FAR BELOW THE THRESHOLD LIMIT ON WHICH TDS IS REQUIRED TO BE DEDUCTED. HOWEVER, THE APPELLANT HAS NOT PRODUCED THE RELEVANT DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE ABOVE CLAIMS, THOUGH IT IS STATE D THAT THE PAYMENT OF RENT TO WORKERS/ OTHERS IS .BACKEIL BY VOUCHERS AND SUPPORTING EVIDENCE. IN THESE CIRCUMSTANCES, IT IS CONSIDERED FAIR AND REASONABLE TO DIRECT THE A.O. TO CARRY OUT NECESSARY VERIFICATION OF THE VOUCHERS AND EVIDENCES MAINTAINED BY THE APPELLANT IN THIS REGARD AND ACT ACCORDINGLY. NEEDLESS TO SAY, THE APPELLANT WILL BE AFFORDED REASONABLE. OPPORTUNITY OF BEING HEARD AND PRESENTING THE RELEVANT EVIDENCES AND MATERIALS IN THIS REGARD. IF THE CLAIM OF THE APPELLANT IS FOUND TO BE CORREC T UPON VERIFICATION, THE DISALLOWANCE OF RS.2,36,75,192/ - MADE BY THE A.O. OUT OF RENT, RATES & TAXES WILL STAND DELETED. WITH THIS 6 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. DIRECTION, GROUND RAISED BY THE APPELLANT IS TREATED AS ALLOWED. AFTER HAVING GONE THROUGH THE FACTS OF THE PRESENT CASE AS WELL AS CONSIDERING THE ORDERS PASSED BY REVENUE AUTHORITIES AND SUBMISSIONS MADE BY BOTH THE PARTIES, WE FIND THAT THE POINT FOR ADJUDICATION BEFORE THE LD. CIT(A) WAS AS TO WHETHER THE AO WAS JUSTIFIED IN MAKING DISALLOWANCE OF RS. 2, 36,75,192 OUT OF R ENT, RATES AND TAXES. AS PER FACTUAL POSITION, S INCE THE ASSESSEE HAS FAILED TO FURNISH THE DETAILS OF NATURE OF PAYMENTS AND DEDUCTION OF TAXES AT SOURCE ON RENT PAID TO WORKERS /OTHER S, THEREFORE IN ORDER TO CARRY OUT NECESSARY VERIFICATIONS OF THE VOUC HERS AND EVIDENCES MAINTAINED BY THE ASSESSEE, NECESSARY DIRECTION WER E GIVEN TO THE AO. AGAINST THAT DIRECTIONS, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. AFTER CONSIDERING THE FACTS OF THE PRESENT CASE, WE FIND THAT LD. CIT(A) HAS DIRECTED TH E AO TO CARRY OUT NECESSARY VERIFICATIONS OF THE VOUCHERS AND EVIDENCES MAINTAINED BY THE ASSESSEE. HOWEVER, WE HAVE ALSO NOTICED THAT THE AO WHILE 7 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. PASSING THE ORDER OF ASSESSMENT HAS CATEGORICALLY HELD THAT THE ASSESSEE HAS FAILED TO FURNISH TH E DETAILS OF NATURE OF PAYMENT AND OF DEDUCTION OF TAX AT SOURCE ON RENT PAID TO THE WORKERS /OTHERS. THEREFORE, IN SUCH CIRCUMSTANCES, INSTEAD OF USING THE WORD VOUCHERS AND EVIDENCES MAINTAIN ED BY THE ASSESSEE , LD. CIT (A) OUGHT TO HAVE DIRECTED THE AO TO CARRY OUT NECESSARY VERIFICATIONS OF THE DOCUMENTS OR EVIDENCES SO PRODUCED BY THE ASSESSEE BY FOLLOWING THE PROVISIONS OF THE ACT. IN OUR CONSIDERED VIEW, THE PURPOSE OF INVESTIGATION BY THE AO IS TO FIND THE TRUTH AND THOUGH IN THIS CASE, THE MATTER HAS BEEN REMANDED BACK BY THE LD. CIT(A) TO THE AO FOR CA RRYING OUT NECESSARY VERIFICATIONS. T O OUR MIND, THIS ORDER HAS NOT CAUSED ANY PREJUDICE TO THE RIGHTS OF THE REVENUE. HENCE, WE UPHOLD THE ORDERS PASSED BY LD. CIT(A) WITH A MODIFICATION TO THE EFFECT THAT AO WOULD CARRY OUT NECESSARY VERIFICATIONS OF VOUCHERS AND EVIDENCES SO PRODUCED BY THE ASSESSEE AFTER FOLLOWING THE PROVISIONS OF THE I.T. ACT. WITH THESE OBSERVATIONS AND MODIFICATIONS, WE DISMISS THESE GROUNDS OF APPEAL RAISED BY THE REVENUE. 8 I.T.A. NO. 5 129 /MUM/201 6 KRISHNA KNITWEAR TECHNOLOGY LTD. 5 . IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEB , 2018 SD/ - SD/ - ( R. C. SHARMA ) (SANDEEP GOSAIN) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI ; DATED : 21 . 02 .201 8 SR.PS . DHANANJAY / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F I LE / BY ORDER, . / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI