GROWMORE EXPORTS LTD, MUMBAI V. ACCC-31, MUMBAI

ITA 5203/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84532 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Assessee
• Bench Allotted: G
• Next Hearing Date: 09-12-2014
• Assessment Year: 2003-2004
• Appeal Filed On: 22-07-2013
• Court: TRIBUNAL
• Department Lawyers: P DANIEL SPECIAL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Principle of natural justice; Reasonable cause
• Section: 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 5203/M/2013 ( AY: 200 3 - 2004 ) ./I.T.A. NO. 5204/M/2013 ( AY: 200 4 - 2005 ) M/S. GROWMORE EXPORTS LTD., 32, MADHULI, 3 RD FLOOR, DR. ANNIE BESANT ROAD, NEHRU CENTRE, WORLI, MUMBAI 400 018. / VS. ACIT, CC - 31, R.NO.409, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 20. ./ PAN : AAACG4939P ( / APPELLANT) .. ( / RESPONDENT ) / ASSESSEE BY : SHRI DHARMESH SHAH / REVENUE BY : SHRI P. DANIEL, SPECIAL COUNSEL / DATE OF HEARING :09.12.2014 / DATE OF PRONOUNCEMENT : 18 .12.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION. BOTH THE APPEALS ARE FILED BY THE BY THE ASSESSEE INVOLVING AYS 2003 - 2004 AND 2004 - 2005. SINCE, THE ISSUE RAISED IN THESE APPEALS ARE CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF THIS CONSOLIDATED ORDER. APPEAL WISE AND GROUND WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. ./I.T.A. NO. 5203/M/2013 ( AY: 200 3 - 2004 ) 2. THIS APPEAL FILED BY THE ASSESSEE ON 22.7.2013 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 20.02.2013 FOR THE ASSESSMENT YEAR 2003 - 2004. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1 . THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING THE ORDER U/S 250 OF THE ACT. 2 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE. 3. THE LD CIT (A) HAS ERRED IN LAW AND IN FAC TS AND IN NOT APPRECIATING THAT NO INCOME FROM ATTACHED ASSETS CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE. 4. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN NOT GRANTING RELIEF OF LIABILITY AMOUNTING TO RS. 2,50,18,362/ - TOWARDS INTEREST EXPENDITURE CLAIMED BY THE APPELLANT. THE CIT (A) OUGHT TO HAVE HELD THAT THE INTEREST EXPENSES TO THE EXTENT OF RS. 86,05,786/ - NEED TO BE ALLOWED WHILE CALCULATING INCOME OF THE APPELLANT. 5 . THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN CONFIRMING THE LEVY OF I NTEREST U/S 234A AND 234B OF THE ACT. 3. AT THE OUTSET, SHRI DHARMESH SHAH , LD COUNSEL FOR THE ASSESSEE MENTIONED THAT THERE IS A DELAY OF 6 3 DAYS IN FILING THE APPEALS BEFORE THE ITAT FOR THE AY 2003 - 04 AND DELAY OF 38 DAYS FOR THE AY 2004 - 05 . IN THIS REGARD HE BROUGHT OUR ATTENTION TO THE AFFIDAVITS FILED BY THE ASSESSEES DATED 30.10.2014 EXPLAINING THE REASONS FOR NOT FILING THE SAID APPEALS IN TIME BEFORE THE ITAT AND PRAYING FOR CONDONATION OF DELAY. IN THIS REGARD, HE READ OUT THE RELEVA NT ITEM NO. 2 OF THE SAID AFFIDAVITS, CO NTENTS OF WHICH IS COMMON IN THE TWO AFFIDAVITS, WHICH READS AS UNDER: 2. I SAY THAT MOREOVER, THE APPEAL FEES RELEASED BY THE CUSTODIAN WAS RECEIVED ON 16.7.2013 . YOUR HONOURS WOULD OBSERVE THAT THE APPELLANT TOOK THE INITIATIVE TO ADDRESS LETTERS AND REMINDERS TO THE CUSTODIAN FOR THE RELEASE OF THE APPEAL FEES FOR FILING THE APPEAL; AND THAT IMMEDIATELY UPON RECEIPT OF THE COUNTERFOIL OF THE PAID CHALLAN, THE APPEAL WAS SUBMITTED BEFORE YOUR HONOURS. THUS, SO FA R AS THE APPLICANT WAS CONCERNED, WE WERE VERY MUCH DILIGENT AND ANXIOUS ABOUT OUR OBLIGATION . THE DELAY WAS ONLY FOR THE REASONS WHICH WERE BEYOND THE CONTROL OF THE APPLICANT . AS A RESULT OF THE ABOVE, THE APPEAL WAS FILED ON 22.7.2013 , I.E., LATE BY 6 3 DAYS FOR AY 2003 - 2004 ; (38 DAYS FOR THE AY 2004 - 2005 ) 4 . CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT THERE IS A REASONABLE CAUSE THAT PREVENTED THE ASSESSEE TO FILE THE AFOREMENTIONED APPEALS BEFORE THE ITAT WITHIN THE PRESCRIBED TIME AND WITH A DELAY OF 6 3 DAYS FOR THE AY 2003 - 04 (38 DAYS FOR THE AY 2004 - 05 ) . CONSIDERING THE SAME , WE CONDONE THE DELAY FOR THE TWO AYS UNDER CONSIDERATION AND PROCEED TO ADJUDICATE THE SAID APPEALS ON MERITS . 5 . AT THE OUTSET, SHRI DHARMESH SHAH, LD COUNSEL FOR THE ASSESSEE MENTIONED THAT GROUND NOS. 1, 2 & 3 ARE NOT PRESSED . AFTER HEARING THE LD SPECIAL COUNSEL, THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 3 6 . GROUND NO.4 RELATES TO THE DISALLOWANCE OF INTEREST EXPENDITURE OF RS. 2,50,18,362/ - . IN THIS REGARD, AT THE OUTSET, LD COUNSEL MENTIONED THAT AN IDENTICAL ISSUE CAME UP FOR ADJUDICATION BEFORE THE ITAT, MUMBAI IN THE CASE OF HITESH S. MEHTA VS. DCIT VIDE ITA NO.7726 & 7727/M/2010 DATED 26.4.2013, WHEREIN THE TRIBUNAL SET ASIDE THE ISSUE TO THE FILES OF CIT (A) FOR ADJUDICATION OF THE ISSUE AFRESH BY ADJUDICATING THE RESPECTIVE GROUND RELATING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNT. PARA 5 FROM THE SAID ORDER OF THE TRIBUNAL (SUPRA) IS RELEVANT IN THIS REGARD AND THE SAME READS AS UNDER: 5. GROUND NO.4 RELATES TO THE ACTION OF THE LD CIT (A) IN CONFIRMING THE LIABILITIES AMOUNTING TO RS. 11,24,99,052/ - AND RS. 12,61,36,245/ - RESPECTIVELY FOR THE AYS 2005 - 06 AND 2006 - 07 TOWARDS INTEREST EXPENDITURE CLAIMED BY THE ASSESSEE . IT IS PERTINENT TO NOTE THAT THE FINDINGS GIVEN IN PARA 3.3 ABOVE IN RESPECT OF REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS AND THE PROPOSED ADJUDICATION OF THE LD CIT (A) IN VIEW OF THE SAID DIRECTION MAY HAVE DIRECT IMPACT ON THE ISSUE OF THE IMPUGN ED LIABILITY, WE SET ASIDE THIS ISSUE TO THE FILES OF THE CIT (A) TO ADJUDICATE AFRESH ALONG WITH THE ADJUDICATION OF THE RESPECTIVE GROUND PERTAINING TO THE REJECTION / RELIABILITY OF THE BOOKS OF ACCOUNTS. 7 . ON THE OTHER HAND, LD SPECIAL COUNSEL FOR T HE REVENUE DUTIFULLY RELIED ON THE ORDER OF THE AO/CIT (A). 8 . WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS THE ORDER OF THE TRIBUNAL IN THE CASE OF HITESH S. MEHTA (SUPRA). WHETHER THE INTEREST LIABILITIES O F RS. 2,50,18,362/ - CONSTITUTES ASCERTAINED ONE OR NOT IS ALSO LINKED TO THE ISSUE OF REJECTION OF BOOKS OF ACCOUNTS AS THE BOOKS OF ACCOUNT IS THE BASIS FOR COMPUTATION OF BOOK PROFITS U/S 115JA OF THE ACT. THIS IS COMMON ISSUE QUA THE ISSUE ADJUDICATED IN THE CASE OF THE HITESH S. MEHTA ( SUPRA) AND MATTER WAS SET ASIDE. RESPECTFULLY FOLLOWING THE SAID ORDER OF THE TRIBUNAL, WE ARE OF THE CONSIDERED OPINION THAT THE ISSUE RAISED IN GROUND NO.4 SHOULD BE SET ASIDE TO THE FILES OF THE CIT (A) FOR FRESH ADJUDICATION OF THE ISSUE AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE DECISION IF ANY SHOULD BE TAKEN ONLY AFTER CONSIDERING THE DECISION IN THE CASE OF HITESH S MEHTA, ( SUPRA). ACCORDINGLY, GROUND NOS. 4 I S SET ASIDE . 9 . GROUND NO. 5 RELATES TO CHARGING OF INTEREST U/S 234A & 234B OF THE ACT. IN CONNECTION WITH THE CHARGE OF INTEREST U/S 234B OF THE ACT, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE BEING A NOTIFIED PERSON, THERE IS NO CHANGE 4 OF INTEREST. IT IS HIS FURTHER SUBMISSION THAT THE RECEIPTS OF THE ASSESSEE ARE SUBJECTED TO TDS. ON THE CONTRARY, SPECIAL COUNSEL FOR THE REVENUE FILED VARIOUS DECISIONS OF THE TRIBUNAL IN SUPPORT OF THE CHANGE OF INTEREST. THE JUDGMENT OF THE JURISDICTI ONAL HIGH COURT IN THE CASE OF CIT VS. DEVINE HOLDINGS PVT LTD WAS RELIED ON BY THE SPL. COUNSEL FOR THE REVENUE. DURING THE REBUTTAL TIME, LD COUNSEL SUBMITTED THAT THIS ISSUE SHOULD ALSO REVISIT THE FILE OF THE AO FOR REMOVAL OF CERTAIN INACCURACIES IN CALCULATING THE INTEREST. WE ORDER ACCORDINGLY. THUS, GROUND NO.6 IS ALLOWED FOR STATISTICAL PURPOSES. 10 . IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ./I.T.A. NO. 5204/M/2013 ( AY: 200 4 - 2005 ) 11 . THIS APPEAL FILED BY THE ASSESSEE ON 22.7.2013 IS AGAINST THE ORDER OF THE CIT (A) - 37, MUMBAI DATED 5.3.2013 FOR THE AY 2004 - 2005. 12 . IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE LD CIT (A) HAS ERRED IN LAW AND IN FAC TS IN PASSING THE ORDER U/S 250 OF THE ACT. 2. THE LD CIT (A) HAS ERRED IN LAW AND IN FACTS IN PASSING ORDER WITHOUT COMPLYING WITH THE PRINCIPLES OF NATURAL JUSTICE. 3. THE LD CIT (A) HAS ERRED IN LAWS AND IN FACTS IN LEVYING PENALTY OF RS. 45,37,626/ - U/S 271(1)(C) OF THE ACT. 1 3 . AT THE OUTSET, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT GROUND NO.1 AND 2 ARE NOT PRESSED. AFTER HEARING BOTH THE PARTIES, THE SAID GROUND NOS.1 AND 2 ARE DISMISSED AS NOT PR ESSED. 1 4 . GROUND NO.3 RELATES TO THE LEVY OF PENALTY OF RS. 45,37,626/ - U/S 271(1)(C) OF THE ACT. IN THIS REGARD, AT THE OUTSET, LD COUNSEL FOR A THE ASSESSEE BROUGHT OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN QUANTUM APPEAL VIDE ITA NO.4629/M/2011, D ATED 6.11.2013 AND MENTIONED THAT THE TRIBUNAL (SUPRA) HAS SET ASIDE THE ISSUE TO THE FILE OF THE CIT (A) FOR FRESH ADJUDICATION. THEREFORE, THE PENALTY LEVIED U/S 271(1)(C) SHOULD ALSO BE SET ASIDE TO THE FILE OF THE CIT (A) IN LIEU OF THE SAID QUANTUM A PPEAL. ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE SAID ORDER OF THE TRIBUNAL DATED 6.11.2013 (SUPRA), WE FIND THE QUANTUM APPEAL WAS SET ASIDE BY THE TRIBUNAL TO FILE OF THE CIT (A). CONSIDERING THE SAME, THE WE SET ASIDE THE INSTANT 5 GROUND NO.3 ALSO TO THE FILE OF THE CIT (A) TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW. ACCORDINGLY, GROUND NO.3 RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 1 5 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRON OUNCE D IN THE OPEN COURT ON 1 8 T H DECEMBER, 2014. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 8 . 12 .2014 . . ./ OKK , SR. 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI