M/s Saifco Cements Pvt. Ltd., Kashmir V. The Assistant Commissioner of Income Tax, Kashmir

ITA 541/ASR/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3804 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 29-01-2019
• Assessment Year: 2011-2012
• Appeal Filed On: 26-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUNIL BHATT
• Keywords: Onus to prove
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER AND SH. N. K. CHOUDHRY, JUDICIAL MEMBER I.T.A. NO. 541/ASR/2016 ASSESSMENT YEAR: 2011-12 SAIFCO CEMENTS PVT. LTD., OPPOSITE POST OFFICE, BATWARA, SRINAGAR, KASHMIR [PAN: AAECS 8832M] VS. ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-3, SRINAGAR, KASHMIR (APPELLANT) (RESPONDENT) APPELLANT BY : SH. SUNIL BHATT (C.A.) RESPONDENT BY: SH. CHARAN DASS (D.R.) DATE OF HEARING: 29.01.2019 DATE OF PRONOUNCEMENT: 31.01.201 9 ORDER PER SANJAY ARORA, AM: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), JAMMU (CIT(A ) FOR SHORT) DATED 27.05.2016, DISMISSING THE ASSESSEES APPEAL CONTES TING ITS ASSESSMENT UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (THE AC T HEREINAFTER) DATED 28.03.2014 FOR ASSESSMENT YEAR (A.Y.) 2011-12. 2. THE APPEAL IS DELAYED BY A PERIOD OF 78 DAYS, HA VING BEEN FILED ON 26.10.2016, AS AGAINST THE SERVICE OF THE IMPUGNED ORDER ON 10.06.2016, I.E., AS PER THE COMMUNICATION RECEIVED FROM THE OFFICE OF THE L D. CIT(A), WHICH IS AS A MATTER OF PRACTICE SOUGHT BY THE REGISTRY OF THE TRIBUNAL WHERE THERE IS A LONG TIME DIFFERENCE BETWEEN THE DATE OF THE STATED SERVICE 01.09.2016 IN THE PRESENT CASE, AND THE DATE OF THE IMPUGNED ORDER (27.05.2016). FU RTHER, THERE BEING NO ITA NO. 541/ASR/2016 (AY: 2011-12) SAIFCO CEMENTS PVT. LTD . V. ASSTT. CIT 2 CONDONATION PETITION ACCOMPANYING THE MEMORANDUM OF APPEAL (FORM 36), THE ASSESSEE WAS ACCORDINGLY SHOW CAUSED IN THE MATTER VIDE NOTICE DATED 05.04.2017. THE ASSESSEE HAS SINCE FILED A CONDONATION PETITION (DATED 29/9/2018) AVERRING THE SERVICE TO BE ONLY ON 19.09.2016, IN EVIDENCE WHERE OF IT HAS FILED A TRACKING REPORT OF THE RELEVANT SPEED POST FROM THE WEBSITE OF INDI A POST (MINISTRY OF COMMUNICATIONS) REFLECTING THE DATE OF BOOKING OF T HE RELEVANT COMMUNICATION ONLY ON 22.07.2016. THE SAME DOES NOT CLARIFY THE D ATE OF SERVICE, THOUGH WITHOUT DOUBT THE SAME COULD NOT BE, AS CONVEYED BY THE REV ENUE, ON 10.06.2016. WITH A VIEW TO RESOLVE THE CONTINUING DIFFERENCE IN THE DA TE OF SERVICE, CLARIFICATION WAS SOUGHT FROM BOTH THE PARTIES, BESIDES CALLING FOR T HE RECORD OF THE OFFICE OF THE FIRST APPELLATE AUTHORITY VIDE ORDER-SHEET ENTRY DATED 28 .03.2018. THE SAID OFFICE HAS SINCE, VIDE ITS LETTER DATED 24.04.2018, CLARIFIED THE DATE OF SERVICE TO BE 19.07.2016, WHICH AGAIN DOES NOT, AT LEAST PRIMA FACIE , APPEAR TO BE CORRECT IN VIEW OF THE TRACKING REPORT FURNISHED BY THE ASSESSEE, W HO THOUGH HAS BEEN UNABLE TO SUBSTANTIATE ITS CLAIM OF THE SERVICE HAVING BEEN EFFECTED ON 19.09.2016. THE LD. DR, SH. CHARAN DASS, ON BEING QUESTIONED IN THE MAT TER, ADMITTED TO THERE BEING NO PROOF OF SERVICE (OF THE IMPUGNED ORDER) ON RECORD. WE ARE UNDER THE CIRCUMSTANCES INCLINED TO ACCEPT THE ASSESSEES STA TEMENT. THIS IS AS, AS EXPLAINED, THEY WERE CONTINUING DISTURBANCES IN THE VALLEY AT THE TIME (REFER ASSESSEES REPLY DATED 02.05.2017 TO THE SHOW CAUSE). THIS, AS THE L D. COUNSEL, SH. SUNIL BHATT, WOULD SUBMIT, IS ALSO BORNE OUT BY THE FACT THAT TH E ORDER WAS POSTED BY THE DEPARTMENT ONLY ON 22.07.2016, I.E., TWO MONTHS AFT ER ITS PASSING. AS STATED IN THE REPLIES FURNISHED BY THE ASSESSEE, WHICH WE HAVE NO REASON TO DISBELIEVE, THE LARGE SCALE DISTURBANCES CONTINUED FOR A PERIOD OF FOUR M ONTHS COMMENCING JULY 5, 2016, WANING ONLY IN THE SEPTEMBER, 2016. IN FACT, THE TR IBUNAL HAS ALSO CONDONED THE DELAY, WHICH ITSELF IS NOT PROVED IN THE INSTANT CA SE, ARISING DURING THE RELEVANT TIME, IN OTHER CASES, AS IN THE ITA NO. 568/ASR/201 6 AND ITA NO. 540/ASR/2016. ITA NO. 541/ASR/2016 (AY: 2011-12) SAIFCO CEMENTS PVT. LTD . V. ASSTT. CIT 3 THE ASSESSEE HAS ALSO REMOVED THE STATED DEFECT IN THE CONDONATION PETITION AS FILED, I.E., OF IT BEING NOT SIGNED BY ITS PRINCIP AL OFFICER, BY FILING A FRESH PETITION DATED 29.09.2018, ACCOMPANIED BY AN AFFIDAVIT OF EV EN DATE, BY SH. ALTAF AHMED GUNA, DIRECTOR. WITH REGARD TO THE RELIANCE BY THE REVENUE ON THE DECISION IN PASCHIM GUJARAT VIJ CO. LTD. V. KHEMCHAND NATHAHHAI GADHAVI (IN CA NO. 11518 OF 2010 (IN FIRST APPEAL (STAMP NO.) 2411 OF 2009, DATED 31/3/2014), RENDERED RELYING ON THE DECISION BY THE APEX COURT IN NOHARLAL VERMA V. DISTT. COOPERATIVE CENTRAL BANK LTD., JAGDALPUR [2008] 14 SCC 45, THAT A CONDONATION PETITION FILE D SUBSEQUENTLY WOULD NOT CURE THE DEFECT OF IT BEING TIME-BARRED AT THE TIME OF ITS FILING, SO THAT THE CONDONATION APPLICATION SUPPORT ED BY AN AFFIDAVIT, FILED LATER, IS NOT MAINTAINABLE, THE SAME IS NOT APPLICABLE IN THE INSTANT CASE IN-AS-MUCH AS WE HAVE FOUND THAT NO DELAY HAS BEEN CONCLUSIVELY PROV ED. AS PER THE ASSESSEE THE IMPUGNED ORDER STANDS RECEIVED ONLY ON 19.09.2016, SO THAT THE APPEAL PRESENTED ON 26.10.2016 IS WITHIN TIME, AND THAT, THEREFORE T HERE WAS NO OCCASION FOR IT TO FILE A CONDONATION PETITION. THE SUBSEQUENT FILING OF TH E SAME IS ONLY IN RESPONSE TO THE SHOW CAUSE NOTICE BY THE REGISTRY AS WELL AS THE DI RECTION BY THE BENCH (VIDE ORDER-SHEET ENTRY DATED 28.03.2018 (SUPRA)). THE AP PEAL IS ACCORDINGLY ADMITTED, AND THE HEARING IN THE MATTER WAS ACCORDINGLY PROCE EDED WITH. 3. COMING TO THE MERITS OF THE CASE, THE SOLE ISSUE ARISING IN APPEAL IS IN RESPECT OF TWO DISALLOWANCES, AGGREGATING TO RS. 11,37,635, MADE ON ACCOUNT OF THE ASSESSEES CLAIM FOR THE RELEVANT EXPENDITURE, DETA ILED AS UNDER, BEING UNVERIFIABLE: (AMT. IN RS.) EXPENDITURE/AMOUNT CLAIM DISALLOWED @ -- REPAIR & MAINTENANCE OF 59,24,330 5,92,433 10 % PLANT AND MACHINERY/BUILDING -- TELEPHONE/VEHICLES REPAIR AND 36,34,680 5,45,20 2 15% MAINTENANCE/TRAVELING ITA NO. 541/ASR/2016 (AY: 2011-12) SAIFCO CEMENTS PVT. LTD . V. ASSTT. CIT 4 THE BASIS OF THE DISALLOWANCE, AS STATED IN THE ASS ESSMENT ORDER, IS THE ABSENCE OF BILLS/VOUCHERS, I.E., FOR THE ENTIRE EXPENDITURE. T HE SAME STOOD CONFIRMED IN APPEAL ON THE SAME BASIS, SO THAT, AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE MAY AT THE OUTSET CLARIFY THAT THIS IS NOT A CA SE OF THE ASSESSING OFFICER (AO) HAVING NOT POINTED OUT ANY SPECIFIC DEFECT IN THE VOUCHERS, OR SUBSTANTIALLY SO, AS SH. BHATT WOULD ARGUE BEFORE US. THE AO HAS CLEARLY STATED THAT THE ASSESSEE HAS NOT PRODUCED BILLS FOR THE ENTIRE EXPENDITURE ( UNDER THE RELEVANT ACCOUNT HEADS), DEBITED IN ACCOUNTS AND CLAIMED PER THE RET URN OF INCOME, THE BURDEN TO PROVE WHICH, AND THE CLAIMS PREFERRED THEREBY, IS O NLY ON THE ASSESSEE ( CIT V. CALCUTTA AGENCY LTD . [1951] 19 ITR 191 (SC); CIT V. R. VENKATASWAMY NAIDU [1956] 29 ITR 529 (SC). ESTIMATION BEING A PROCESS KNOWN TO LAW FOR FRAMING AN ASSESSMENT, THE DISALLOWANCE OF THE CLAIM TO THE EX TENT CONSIDERED UNSUBSTANTIATED OR NOT PROPERLY SUBSTANTIATED, COULD BE DISALLOWED ( CIT V. MD. WARASAT HUSSAIN [1988] 171 ITR 405 (PATNA) AND CHETAN DASS LACHHMAN DASS V. CIT [2002] 255 ITR 197 (DELHI)). THERE IS, THEREFORE, IN LAW NOTHI NG WRONG IN WHAT THE AO HAS DONE IN THE INSTANT CASE. THE ASSESSEE, HOWEVER, CLAIMS BEFORE US THAT IT HAS COMPLETE BILLS/VOUCHERS IN SUPPORT OF ITS CLAIMS FOR EXPENSES, WHICH WERE IN FACT PRODUCED BEFORE THE AO, WHO ALSO TEST CHECKED AND VERIFIED THE SAME, THOUGH EFFECTED THE DISALLOWANCE WITHOUT PROPERLY SHOW CAUSING/PROVIDING OPPORTUNITY TO THE ASSESSEE, I.E., AT ITS BACK. THOUGH WE OBSERVE NO CLAIM OF LACK OF PROPER OPPORTUNITY RAISED BEFORE THE FIRST APPELLATE AUTHORITY, THE ASSESSEE HAS MADE CA TEGORICAL SUBMISSIONS BEFORE HIM WITH REGARD TO THE PRODUCTION OF THE VOUCHERS ( QUA BOTH THE CLAIMS) BEFORE THE AO, WHO ALSO TEST CHECKED THEM. REFERENCE IN THIS REGAR D MAY BE MADE TO PARAS 3 AND 4 OF THE ASSESSEES WRITTEN SUBMISSIONS, REPRODUCED A T PGS. 3-14 OF THE IMPUGNED ITA NO. 541/ASR/2016 (AY: 2011-12) SAIFCO CEMENTS PVT. LTD . V. ASSTT. CIT 5 ORDER, THE RELEVANT PART OF WHICH WAS ALSO READ OUT DURING HEARING. WE ARE THEREFORE UNABLE TO UNDERSTAND THE BASIS OF THE FINDING BY TH E LD. CIT(A) TO THE EFFECT THAT THE ASSESSEE DID NOT PRODUCE BILLS AND VOUCHERS IN SUPP ORT OF ITS CLAIM FOR THE IMPUGNED EXPENDITURE BEFORE THE AO? THE LD. CIT(A), IF NOT SATISFIED WITH THE ASSESSEES SUBMISSIONS BEFORE HIM, COULD HAVE REQUI RED THE ASSESSEE TO PRODUCE SOME VOUCHERS, AS FOR A PARTICULAR PERIOD, OR FOR S PECIFIED AMOUNTS, OR AN EXPENSE TYPE, OR EVEN AT RANDOM (FROM THE COPY OF THE LEDGE R ACCOUNT). HE COULD ALSO CALL FOR A REMAND REPORT FROM THE AO TO ASCERTAIN THE TR UTH OF THE MATTER OR, IN ANY CASE, REQUIRE HIM, IN VIEW OF THE ASSESSEES SUBMISSIONS, TO CAUSE DUE VERIFICATION AND FURNISH A SPECIFIC REPORT TO HIM. HE DOES NEITHER O F THIS, EXPECTED OF HIM (REFER KAPURCHAND SHRIMAL V. CIT [1981] 131 ITR 451 (SC)), AND PROCEEDS TO DECIDE T HE MATTER BY ISSUING A FINDING FOR WHICH WE SEE NO BAS IS, NOR IS ANY SHOWN TO US BY THE LD. DR. THERE IS THEREFORE NO MATERIAL ON RECOR D TO REBUT THE ASSESSEES ON WHOM THE BURDEN TO PROVE ITS RETURN NO DOUBT LIES, CLAIMS. THE AO HAS ALSO NOT HELPED MATTERS BY WRITING A CRYPTIC ORDER. HIS ORDE R SHOULD HAVE BEEN MORE EXPLICIT, STATING THE VOUCHERS CALLED FOR, PRODUCED , TEST CHECKED, NOT FOUND, ETC., AS ALSO THE NATURE OF THE DEFECT LEADING TO THE INFERE NCE OF THE SAME BEING UNVERIFIABLE OR UNRELIABLE, WHERE SO. THE SAME, BESIDES SUPPORTI NG THE REVENUES CASE, WOULD ALSO GIVE THE REVIEWING AUTHORITY A FAIR IDEA AS RE GARDS THE QUANTUM OF THE DISALLOWANCE, I.E., THE EXTENT TO WHICH THE ASSESSE ES CLAIM IS, WHERE SO, UNVERIFIABLE, AN ASPECT WHICH WAS ALSO ASSAILED BEF ORE US. WE DO NOT, WE MAY CLARIFY, MEAN TO SUGGEST OR IMPLY THAT WHAT THE ASS ESSEE STATES IS SACROSANCT OR GOSPEL TRUTH. AT THE SAME TIME, WHAT HE STATES CANN OT BE DISMISSED AS PLAIN UNTRUTH, AS IT APPEARS TO US ON READING THE IMPUGNED ORDER W HEREIN NO CREDENCE STANDS GIVEN BY THE LD. CIT(A) TO WHAT THE ASSESSEE STATES BEFORE HIM; THERE BEING NO REFERENCE TO THE ASSERTION/CLAIM OF PRODUCTION OF B ILLS/VOUCHERS BEFORE THE AO IN THE OPERATIVE PART OF HIS ORDER, SO THAT THE SAME R EMAINS UNADDRESSED. IT IS IN THIS ITA NO. 541/ASR/2016 (AY: 2011-12) SAIFCO CEMENTS PVT. LTD . V. ASSTT. CIT 6 CONTEXT THAT THE MANNER IN WHICH THE ASSESSMENT ORD ER IS DRAFTED ALSO ASSUMES SIGNIFICANCE, MAKING IT ALL THE MORE INCUMBENT ON T HE FIRST APPELLATE AUTHORITY TO CLARIFY MATTERS, REMOVING WHATEVER DEFICIENCIES THA T MAY HAVE OBTAINED TILL THEN, AND DECIDE ISSUING DEFINITE FINDINGS OF FACT BASED ON THE MATERIAL ON RECORD AND PROVEN CONDUCT. WE ARE, UNDER THE CIRCUMSTANCES, THEREFORE, UNABL E TO SUSTAIN THE IMPUGNED DISALLOWANCES. THE SAME ARE ACCORDINGLY DIRECTED FO R DELETION. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 31, 2 019 SD/- SD/- (N. K. CHOUDHRY) (SANJAY ARORA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31.01.2019 /GP/SR PS. COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: SAIFCO CEMENTS PVT. LTD., OP POSITE POST OFFICE, BATWARA, SRINAGAR, KASHMIR (2) THE RESPONDENT: ASSTT. COMMISSIONER OF INCO ME TAX, CIRCLE-3, SRINAGAR, KASHMIR (3) THE CIT(APPEALS), JAMMU (4) THE CIT CONCERNED (5) THE SR. DR, I.T.A.T. TRUE COPY BY ORDER