KORES INDIA LTD, MUMBAI V. ACIT CC 41, MUMBAI

ITA 5238/MUM/2011

• Counselvise Citation: 523819914 RSA 2011
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 08-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: USHA NAIR
• Assessee Lawyers: A K GHOSH
• Keywords: Bogus purchase; Search and seizure; Opportunity of cross examination
• Section: 80IB; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI BEFORE SHRI B.R. MITTAL, J.M. AND SHRI RAJENDRA SI NGH, A.M. ITA NO.5343/MUM/2011 ASSESSMENT YEAR : 2007-08 THE ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-41 ROOM NO.676, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. M/S. KORES (INDIA) LTD. KORES HOUSE PLOT NO.10. OFF DR. E. MOSES ROAD WORLI MUMBAI-400 018. PAN NO. AAACK 5069 Q (APPELLANT) VS. (RESPONDENT) ITA NO.5240/MUM/2011 ASSESSMENT YEAR : 2003-04 ITA NO.5236/MUM/2011 ASSESSMENT YEAR : 2004-05 ITA NO.5237/MUM/2011 ASSESSMENT YEAR : 2005-06 ITA NO.5238/MUM/2011 ASSESSMENT YEAR : 2006-07 ITA NO.5239/MUM/2011 ASSESSMENT YEAR : 2007-08 M/S. KORES (INDIA) LTD. KORES HOUSE PLOT NO.10. OFF DR. E. MOSES ROAD WORLI MUMBAI-400 018. PAN NO. AAACK 5069 Q THE ASSTT. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-41 ROOM NO.676, 6 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI-400 020. (APPELLANT) VS. (RESPONDENT) REVENUE BY : MS. USHA NAIR ASSESSEE BY : SHRI A.K. GHOSH DATE OF HEARING : 1-6-2012 DATE OF PRONOUNCEMENT : 6.6.2012 ITA NOS.5343 +5 APPEALS A.YS.03-04 TO 07 -08 2 O R D E R PER BENCH: THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDE RS OF CIT(A) ALL DATED 17.2.2011 FOR ASSESSMENT YEARS 2003-04 TO 2007-08. IN ASSESSMENT YEAR 2007-08 THE REVENUE IS ALSO IN APPEAL. AS THE DISPUTE RAISED IN ALL THESE APPEALS ARE MOSTLY COMMON AND IN SOME OF THE YEARS CIT(A) HAS PASSED A CONSOLIDATED ORDER, ALL THE SE APPEALS ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FACTS IN BRIEF ARE THAT A SEARCH HAD BEEN CONDUCTED UN DER SECTION 132 OF THE INCOME TAX ACT, 1961 (THE ACT) ON 19. 9.2006 IN CASE OF KORES GROUP WHICH INCLUDED KORES INDUSTRIES LIMITE D AND ITS DIRECTORS. DURING THE SEARCH AND SEIZURE OPERATIONS, SEVER AL INCRIMINATING DOCUMENTS WERE FOUND WHICH WERE SUBJECTED TO FURTHER INVESTIGATION BY THE DEPARTMENT. THE MANAGING DIRECTO R OF M/S. KORES INDIA LIMITED HAD MADE DISCLOSURES OF RS.10.00 CRORES SO AS TO TAKE CARE OF ANY DISCREPANCY IN THE BOOKS OF ACCOUNTS MAINTAINED AND ISSUE RAISED BY THE DEPARTMENT ON THE BASIS OF SEIZED MATERI AL. DURING THE COURSE OF SEARCH AS WELL AS DURING THE COURSE OF PAST SEARCH PROCEEDINGS, THE AUTHORITIES HAD RECORDED STATEMENTS ON OATH OF VARIOUS PERSONS SUCH AS THE ARCHITECTS OF M/S. KORES TOWER, EX ECUTIVES ITA NOS.5343 +5 APPEALS A.YS.03-04 TO 07 -08 3 OF THE COMPANY AS WELL AS PURCHASERS OF APARTMENTS. AFTER CONSIDERING THE MATERIAL FOUND DURING THE SEARCH AND STATEMENTS RECO RDED, THE AO DISALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 80IB(1 0) ON THE GROUND THAT THE PROJECT HAD COMMENCED BEFORE 1.10.1998 , THE AREA OF EACH UNIT EXCEED 1000 SQ.FT. AND AREA OF THE PLOT OF L AND WAS LESS THAT ONE ACRE PER TOWER. THE DISALLOWANCE OF DEDUCTION UNDER SECTION 80IB(10) HAD BEEN MADE FOR ASSESSMENT YEAR 2005-06 TO 2 007-08 WHICH HAD BEEN CONFIRMED BY CIT(A). IN THESE YEARS, TH E ASSESSEE IN ADDITION TO RAISING DISPUTE ON MERIT FOR DISALLOWANCE U NDER SECTION 80IB(10), HAS ALSO RAISED A GROUND THAT THE ASSESSEE HAD N OT BEEN GIVEN OPPORTUNITY TO CROSS EXAMINE THE VARIOUS PERSONS BA SED ON WHOSE STATEMENTS THE CLAIM OF DEDUCTION UNDER SECTION 80IB (10) HAD BEEN MADE. IN ASSESSMENT YEAR 2007-08, THE ASSESSEE HAD AL SO DISPUTED THE ADDITION ON ACCOUNT OF EXCESS/SHORTAGE OF S TOCK ITEMS AND REVENUE HAS RAISED DISPUTE IN THIS YEAR IN RELATION TO THE RELIEF GIVEN BY CIT(A) ON ACCOUNT OF ADDITION MADE BASED ON UNACCOUNTED SALES. IN ASSESSMENT YEAR 2003-04 AND 2004-05, THE ASSESSEE IN ADDITI ON TO RAISING DISPUTE ON MERITS OF VARIOUS DISALLOWANCES ON ACCOUN T OF BOGUS PURCHASES, BOGUS LABOUR CHARGES ETC. HAS ALSO RAISED A GROUND REGARDING NOT ALLOWING OPPORTUNITY TO CROSS EXAMINE TH E VARIOUS PERSONS BASED ON WHOSE STATEMENTS THESE DISALLOWANCES HAD BEE N MADE. ITA NOS.5343 +5 APPEALS A.YS.03-04 TO 07 -08 4 3. WE FIRST TAKE UP THE ISSUE RELATING TO NOT ALLOWING OPPORTUNITY OF CROSS EXAMINATION OF VARIOUS PERSONS BASED WHOSE STATEMENTS THE ADDITIONS HAD BEEN MADE AS THIS IS THE BASIC GROUND WHICH IS RELEVANT TO THE APPEALS FOR ALL THE YEARS. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD NEITHER BEEN GIVEN COPY OF STATEMEN T OF VARIOUS PERSONS BASED ON WHOSE STATEMENTS THE ADDITIONS WERE MADE NOR AN OPPORTUNITY FOR CROSS EXAMINATION WAS PROVIDED. THE ASSE SSEE CAME TO KNOW ABOUT THIS POSITION ONLY AFTER RECEIPT OF ASSESSMENT ORDER DATED 22.12.2008. THE ASSESSEE FILED A LETTER DATED 5.2.2009 A COPY OF WHICH HAS BEEN PLACED IN PAPER BOOK REQUESTING THE AO TO SU PPLY COPY OF STATEMENTS WHICH WAS FOLLOWED BY REMINDERS DATED 8.10.20 09 AND 27.9.2010 COPIES OF WHICH ARE ALSO PLACED ON RECORD. IT W AS ALSO SUBMITTED THAT THE AO VIDE LETTER DATED 8.10.2010 A COPY OF WHICH IS PLACED AT PAGE-11-12 OF THE PAPER BOOK HAD WRITTEN T HAT STATEMENT OF PERSONS MENTIONED AT SL.NO.1,2,3,4,5 AND 7 HAD ALREAD Y BEEN GIVEN TO SHRI MANOJ JOSHI, THE CHARTERED ACCOUNTANT AND THAT THE STATEMENTS OF OTHER PERSONS WERE BEING ENCLOSED. THE ASSESSEE THEREAFTER IMMEDIATELY ISSUED A LETTER DATED 28.12.2010 TO CIT(A ) A COPY OF WHICH IS PLACED AT PAGE-13 OF THE PAPER BOOK IN WHICH I T WAS CLARIFIED THAT THERE WAS NO CHARTERED ACCOUNTANT IN THE OFFICE OF THE ASSESSEE IN THE NAME OF MANOJ JOSHI AND ACKNOWLEDGEMENT WAS NOT SI GNED BY ITA NOS.5343 +5 APPEALS A.YS.03-04 TO 07 -08 5 MANOJ JOSHI. THE STATEMENTS WERE ALSO NOT AVAILABLE IN THE OFFICE OF THE ASSESSEE. 3.1 THE ASSESSEE FURTHER WROTE IN THE SAID LETTER TO CIT (A) THAT SINCE COPY OF STATEMENTS WERE NOT GIVEN TO THE ASSESSEE DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD NO OPPORTUNITY TO CROSS EXAMI NE THOSE PERSONS IN THE MATTER OF DISALLOWANCE OF DEDUCTION UNDE R SECTION 80IB(10) AND OTHER DISALLOWANCES. THE ASSESSEE THEREFORE R EQUESTED CIT(A) TO REMAND THE ISSUES TO THE FILE OF AO TO ENABL E THE ASSESSEE TO OBTAIN ALL RELEVANT STATEMENTS AND TO GET OPPORTUNI TY TO CROSS EXAMINE THE PERSONS. THE LD. AR FURTHER SUBMITTED THAT CIT(A) DID NOT REMAND THE MATTER AND DECIDED THE APPEAL WITHOUT AFFORDING ASSESSEE THE OPPORTUNITY OF CROSS EXAMINATION. IT WAS ACCORDINGLY REQU ESTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF AO OR CIT( A) . IN CASE THE MATTER WAS RESTORED TO CIT(A), A CLEAR DIRECTION MAY BE GIVEN TO CIT(A) TO REMAND THE MATTER TO AO AND OBTAIN THE RE MAND REPORT FROM THE AO IN A TIME BOUND MANNER SO THAT APPEAL IS DECIDE D PROMPTLY. 3.2 THE LD. DR ON THE OTHER HAND SUBMITTED THAT THE MATTER MAY BE REMANDED TO CIT(A) BEFORE WHOM THE PLEA FOR CROSS EXAM INATION HAD BEEN MADE AND THIS WOULD ALSO EXPEDITE THE DISPOSAL OF THE APPEAL. ITA NOS.5343 +5 APPEALS A.YS.03-04 TO 07 -08 6 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING NOT ALLOWING OPP ORTUNITY OF CROSS EXAMINATION TO THE ASSESSEE OF THE PERSONS BASED ON WHOSE STATEMENTS SUBSTANTIAL ADDITION HAD BEEN MADE ON ACCOUNT OF DISALLOWANCE OF DEDUCTION UNDER SECTION 80 IB (10) AND O THER DISALLOWANCES. THE ASSESSEE DISPUTED THE CLAIM OF THE AO T HAT THE COPIES OF MOST OF THE STATEMENTS HAD BEEN GIVEN TO THE A SSESSEE DURING THE ASSESSMENT PROCEEDINGS. HOWEVER THERE IS NO DISPU TE ABOUT THE FACT THAT THE ASSESSEE HAD NOT ASKED FOR THE COPIES OF THE STATEMENTS AS WELL AS THE OPPORTUNITY OF CROSS EXAMINATION DURING THE ASSESSMENT PROCEEDINGS. THE REQUEST FOR CROSS EXAMINATION H AD BEEN MADE ONLY BEFORE CIT(A) VIDE LETTER DATED 28.12.201 0 WHICH HAD NOT BEEN ACCEDED TO BY CIT(A). IN OUR VIEW, ORDER OF CIT (A) CONFIRMING VARIOUS ADDITIONS MADE BY AO WITHOUT ALLOWING THE ASSE SSEE AN OPPORTUNITY OF CROSS EXAMINATION OF THE PARTIES WHOSE ST ATEMENTS HAD BEEN USED AGAINST THE ASSESSEE CANNOT BE SUSTAINED. WE, TH EREFORE, SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTER BACK TO HIM IN ALL THE YEARS WITH A DIRECTION TO ALLOW THE ASSESSEE OPPORTUN ITY OF CROSS EXAMINATION BY REMANDING THE MATTER BACK TO AO. CI T(A) WILL ENSURE THAT REMAND REPORT BY AO AFTER CONSIDERING CROSS EXAMINA TION IS OBTAINED IN A TIME BOUND MANNER FOR EXPEDITIOUS DISP OSAL OF THE APPEAL. NEEDLESS TO MENTION, CIT(A) WILL PASS A REASONED AND SPEAKING ITA NOS.5343 +5 APPEALS A.YS.03-04 TO 07 -08 7 ORDER AFTER CONSIDERING THE REMAND REPORT ON CROSS EXAMI NATION AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE WE HAVE SET ASIDE THE ORDER OF CIT(A) IN ALL THE YEARS AND REM ANDED THE MATTER BACK TO HIM, ALL THE APPEALS OF THE ASSESSEE AND REV ENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE AND TH E APPEAL OF THE REVENUE IN 2007-08 STAND ALLOWED FOR STATISTICAL PU RPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 6.6.2012. SD SD (B.R. MITTAL ) JUDICIAL MEMBER (RAJENDRA SINGH) ACCOUNTANT MEMBER MUMBAI, DATED: 6.6.2012. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.