The ACIT, 2(1), Bhopal V. M/S. MICHIGAN RUBBER (INDIA) LTD., Bhopal

ITA 521/IND/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98955 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 08-07-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJIV VARSHNEY
• Assessee Lawyers: T N UNNI
• Keywords: Opportunity of being heard
• Section: 68

Judgement Text

M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 521/IND/2013 A.Y.2007-08 ACIT 2(1) BHOPAL ::: APPELLANT VS M/S MICHIGAN RUBBER (INDIA) LTD. BHOPAL PAN AAACB 6100B ::: RESPONDENT CO NO. 90/IND/2013 ARISING OUT OF ITA NO. 521/IND/2013 M/S MICHIGAN RUBBER (INDIA) LTD. BHOPAL ::: OBJECTOR VS ACIT 2(1) BHOPAL ::: RESPONDENT M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 2 REVENUE BY SHRI RAJIV VARSHNEY RESPONDENT BY SHRI T.N. UNNI DATE OF HEARING 29.7.2015 DATE OF PRONOUNCEMENT 1 8 .8.2015 O R D E R PER SHRI B.C. MEENA, AM THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE EMANATE FROM THE ORDER OF THE LEARNED CIT( A) RAIPUR CAMP BHOPAL DATED 28.3.2013. 2. THE GROUND OF APPEAL OF THE REVENUE ARE AS UNDER :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) HAS ERRED IN 1. DELETING THE ADDITION OF RS.17,93,96,057/- MADE BY THE A.O. ON ACCOUNT OF CONCEALING OF SALES BY REJECTING BOOKS OF ACCOUNTS U/S 145(3) OF THE ILT ACT, 1961. 2. DELETING THE ADDITION OF RS.2,80,394/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE ON ACCOUNT OF DISALLOWANCE OUT OF TELEPHONE AND VEHICLE EXPENSES AND RESTRICTED THE PERCENTAGE OF DISALLOWANCE OF OTHER EXPENSES FROM 20% TO 10%. M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 3 THE GROUNDS OF THE CROSS OBJECTION ARE AS UNDER :- 1.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF THE FOLLOWING AMOUNTS U/SEC. 68 OF THE I.T. ACT, 1961 IN RESPECT OF THE B/R CR BALANCES REPRESENTING SUNDRY CREDITORS AND NET BALANCES (I) RAVI NARAYAN PANDA : RS.2,00,000/- (II) ANUBHAV ENTERPRISES: RS. 9,74,622/- (III) HASAN ALI : RS.5,00,000/- (IV) ROYAL FINANCE SERVICES : RS.10,00,000/- (V) ELECTRA TEK CORPN. :RS.5,84,500/- TOTAL RS.32,59,122/- 3. IN GROUND NO. 1 OF THE REVENUES APPEAL THE ISSUE INVOLVED IS REGARDING DELETION OF ADDITION OF RS.17,93,96,057/- MADE ON ACCOUNT OF SALES BY REJECTI NG THE BOOKS OF ACCOUNTS U/S 145(3) OF THE ACT. THE ASS ESSEE DERIVED INCOME FROM MANUFACTURE OF TYRES. THE ADDITIO N WAS MADE ON ACCOUNT OF UNRECORDED PRODUCTION AND CONCEALMENT OF SALES AS PER THE SHOW CAUSE NOTICE ISSUE D BY CENTRAL EXCISE INTELLIGENCE DEPARTMENT. THE LEARNE D CIT(A) DELETED THE ADDITION ON THE BASIS THAT WITHOUT CONDUCTING ANY INQUIRY FOR EXAMINING THE DETAILS CONTAI NED M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 4 IN THE SHOW CAUSE NOTICE ISSUED BY THE CENTRAL EXCISE DEPARTMENT, THE ADDITION CANNOT BE MADE. WHEN THE OUTCOME OF THE SHOW CAUSE NOTICE ISSUED BY THE CENTR AL EXCISE DEPTT. WAS ASKED FOR BY THE BENCH, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS STILL P ENDING AT THE LEVEL OF THE COMMISSIONER, CENTRAL EXCISE AND HE PLEADED THAT THIS ISSUE MAY BE RESTORED TO THE FILE O F THE ASSESSING OFFICER. THE LEARNED DR DID NOT HAVE ANY S ERIOUS OBJECTION TO THIS PROPOSITION. 4. CONSIDERING ALL THE ASPECTS AND PLEADINGS OF BOTH THE SIDES, WE FIND IT APPROPRIATE TO RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND THE ASSESSING OFFICER MAY ALSO COLLECT INFORMATION FR OM THE CENTRAL EXCISE DEPTT. WITH REGARD TO THE OUTCOME OF T HE SHOW CAUSE NOTICE ISSUED BY THEM WITH REGARD TO SUPPRESSION OF PRODUCTION AND CONCEALMENT OF SALES. TH IS M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 5 GROUND OF THE REVENUE IS, THEREFORE, ALLOWED FOR STAT ISTICAL PURPOSES. 5. GROUND NO. 2 IN THE REVENUES APPEAL IS AGAINST REDUCING THE ADDITION MADE OUT OF TELEPHONE AND VEHI CLE EXPENSES WHEREIN THE LEARNED CIT(A) HAS RESTRICTED T HE DISALLOWANCE TO 10% INSTEAD OF 20%. THE LEARNED CIT(A) HAS GRANTED THE RELIEF BY HOLDING AS UNDER :- 8. I HAVE GONE THROUGH THE OBSERVATIONS OF THE A.O. AND SUBMISSIONS OF THE APPELLANT. PRODUCING OF VOUCHERS BEFORE THE A.O. IS NOT IN DISPUTE. THE DIS PUTE IS ABOUT UNVERIFIABLE NATURE OF EXPENSES, THAT TOO, FEW OF THE VOUCHERS. HOWEVER, AS PER THE DECISION OF HON'B LE GUJARAT HIGH COURT IN THE CASE SAYAJI IRON & ENGG. CO. VS. CIT (2002) 253 ITR 749, NO DISALLOWANCE IS POSS IBLE ON ACCOUNT OF PERSONAL USE OF VEHICLES IN COMPANY CASES. THEREFORE, AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE ABOVE DECISION, T HE M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 6 DISALLOWANCES MADE OUT OF TELEPHONE EXPENSES AND VEHICLE EXPENSES ARE DELETED AND THE DISALLOWANCES MADE OUT OTHER EXPENSES ARE REDUCED TO 10% OF THE CLAIM. THUS, THIS GROUND OF APPEAL IS PARTLY ALLOWE D. 6. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIEW T HAT THE LEARNED CIT(A) HAS RIGHTLY REDUCED THE DISALLOWANCE TO 10% INSTEAD OF 20%. THEREFORE, WE SUSTAIN THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE. 7. IN THE RESULT, THIS GROUND OF THE REVENUES APPEAL STANDS DISMISSED. 8. IN THE ASSESSEES CROSS OBJECTION, THE GROUND REL ATED TO THE ADDITION SUSTAINED BY THE LEARNED CIT(A) WHICH WAS MADE U/S 68 OF THE ACT IN RESPECT OF THE FOLLOWING S UNDRY CREDITORS :- (I) RAVI NARAYAN PANDA : RS.2,00,000/- (II) ANUBHAV ENTERPRISES: RS. 9,74,622/- (III) HASAN ALI : RS.5,00,000/- (IV) ROYAL FINANCE SERVICES : RS.10,00,000/- M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 7 (V) ELECTRA TEK CORPN. :RS.5,84,500/- TOTAL RS.32,59,122/- 9. ON THIS ISSUE ALSO, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THIS ISSUE MAY ALSO BE RESTORE D TO THE FILE OF THE ASSESSING OFFICER. THE LEARNED DR DI D NOT HAVE ANY OBJECTION TO THIS PROPOSAL. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND EQUITY, RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR DECIDING THE SAME AFRESH AFT ER AFFORDING THE ASSESSEE AN ADEQUATE OPPORTUNITY OF BEING HEARD. 10. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTLY ALLOWED WHEREAS THE CROSS OBJECTION OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 18 TH AUGUST, 2015 SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 18 AUGUST, 2015 M/S MICHIGAN RUBBER (INDIA) LTD ITA NO. 521/IND/2013 AND CO 90/IND/2013 8 DN/-