ITO 5(2)(2), MUMBAI V. JAYANT OIL PRODUCTS PVT. LTD., MUMBAI

ITA 5882/MUM/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5975 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 04-10-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Additional evidence; Set aside
• Section: 271(1)(c); 143(3); 205; 274; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA , AM AND SHRI AMARJIT SINGH, JM / I .T.A. NO. 5882 /MUM/201 6 ( / ASSESSMENT YEAR: 20 09 - 10 ) ITO - 5(2)(2) ROOM NO.567, 5 TH FLOOR, A AYAKAR BHAVAN, M. K. ROAD, MUMBAI - 400020 . / VS. M/S. JAYANT OIL PRODUCTS PVT. LTD. 5A, MANEK, 11 LD, RUPAREL MARG , MUMBAI - 400006. ./ ./ PAN/GIR NO. : AAACJ2717J ( / APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING : 21 / 01 / 20 20 / DATE OF PRONOUNCEMENT : 07 /02 /2020 / O R D E R PER AMARJIT SINGH, J M: THE REVENUE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 26 . 07 .201 6 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 10 , MUMBAI [HEREINAFTE R REFERRED TO AS THE CIT(A)] RELEVANT TO THE A.Y. 20 09 - 1 0 . 2 . THE REVENU E HAS RAISED THE FOLLOWING GROUNDS: - ' 1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE P ENALTY LEVIED U/S 271(1)(C) OF THE I. T. ACT. AMOUNTING TO RS.76,57,156/ - WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT IN WHERE ADDITION WERE MADE WAS CONFIRMED BY CIT(A) AND THE SAME IS STILL PENDING BEFORE THE HONBLE ITAT . REVENUE BY : SHRI KUMAR PADMAPANI BORA (DR) ASSESSEE BY: NONE ITA NO. 5882 /M/201 6 A.Y.20 09 - 10 2 3 . THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSMENT OF THE ASSESSEE WAS COMPLETED ON 29.12.2011 DETERMINING THE TOTA L INCOME TO THE TUNE OF RS.4,45,25,852/ - AGAINST THE RETURNED INCOME IN SUM OF RS.6,91,850/ - U/S 143(3) OF THE ACT. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURING, TRADING A N D EXPORTING OF CASTOR OILS AND DERIVATIVES. THE ASSESSING OFFIC ER HAS COMPLETED THE ASSESSMENT U/S 144 R.W.S. 143(3) OF THE ACT DETERMINING TOTAL INCOME TO THE TUNE OF RS.4,45,25,852/ - ON 29.12.2011 BY MAKING ADDITIONS/DISALLOWANCE OF SUNDRY CREDITORS AND EXPENSES MOSTLY DUE TO NON - ATTENDING THE HEARINGS AND NON - FURNI SHING OF REQUIRED DETAILS TO THE AO. THE CIT(A) HAS ALSO CONFIRMED THE ADDITION DUE TO NON - ATTENDING AND NON - FURNISHING OF REQUIRED DETAILS. THEREAFTER, THE PENALTY PROCEEDING U/S 274 R.W.S. 271(1)(C) DATED 29.12.2011 WAS ISSUED AND SERVED UPON THE ASSESSE E. THEREAFTER, THE PENALTY IN SUM OF RS.76,57,156/ - HAS LEVIED. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO DELETED THE ADDITION, THEREFORE, THE REVENUE HAS FILED THE PRESENT APPEAL BEFORE US. 4 . WE HAVE HEARD THE ARGUMENT ADVANCED BY THE LD. REPRES ENTATIVE OF THE DEPARTMENT AND HAS GONE THROUGH THE CASE CAREFULLY . THE LD. REPRESENTATIVE OF THE REVENUE HAS ARGUED THAT THE CIT(A) HAS WRONGLY DELETED THE PENALTY , THEREFORE, THE FINDING OF THE CIT(A) IS NOT JUSTIFIABLE, HENCE, IS LIABLE TO BE SET ASIDE. IT IS ADMITTED THAT THE HONBLE ITAT WHILE DECIDING THE APPEAL OF THE ASSESSEE ON QUANTUM HAS REMANDED ISSUE BEFORE THE AO, THEREFORE, AT THIS STAGE THERE IS NO DEMAND AGAINST THE ASSESSEE. BEFORE GOING FURTHER, WE DEEM IT NECESSARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD.: - 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS OF THE ID.AR. I HAVE ALSO GONE THROUGH THE DECISIONS RELIED ON BY THE LD.AR. ITA NO. 5882 /M/201 6 A.Y.20 09 - 10 3 IT IS SEEN FROM THE FACTS OF THE CASE THAT THE AO HAS MADE THE DISALLOWANCE OF SUN DRY CREDITORS SINCE THERE WAS AN INCREASE OF SUNDRY CREDITORS DURING THE YEAR WHEN COMPARE TO EARLIER YEARS TO THE EXTENT OF 1.65 CR. AND NO EXPLANATION WAS GIVEN TO HIM AS THERE WAS NO REPRESENTATION BEFORE HIM FROM THE APPELLANT SIDE AND ORDER WAS PASSED U/S 144 READ WITH SECTION 143(3) OF THE ACT. SIMILARLY, THERE WAS HUGE EXPENDITURE DEBITED IN THE P & L A/C BUT THE GENUINENESS OF THE EXPENDITURE WAS NOT SUBMITTED TO THE AG AS THERE WAS NO REPRESENTATION BEFORE HIM AT THE TIME OF ASSESSMENT PROCEEDINGS, AS SUCH THE AG HAS DISALLOWED 25% OF SUCH EXPENDITURE ON AD HOC BASIS. SINCE THERE WAS SIMILAR NON - COMPLIANCE BEFORE THE CIT(A) HE HAS ALSO CONFIRMED THE ADDITIONS MADE BY THE AG BY RELYING ON CERTAIN COURT DECISIONS. IN MY CONSIDERED OPINION THE ABOVE AD DITIONS ON ACCOUNT OF SUNDRY CREDITORS AND AD HOC DISALLOWANCE OF EXPENDITURE WILL NOT ATTRACT PENAL PROVISIONS U/S 271(1)(C) AS THERE WAS NO FURNISHING OF ANY INACCURATE PARTICULAR OF INCOME OR CONCEALMENT OF ANY INCOME. THE CIT(A) HAS CONFIRMED THE ADDIT IONS NOT BECAUSE OF ANY MERIT IN THE ADDITION BUT BECAUSE OF NON - REPRESENTATION FROM ASSESSEE SIDE DURING THE APPELLATE PROCEEDINGS, WHICH FACT IS EVIDENT FROM HIS ORDER. EVEN THOUGH THE ADDITIONS MADE U/S 143(3) AND CONFIRMED BY CIT(A) ARE STILL PENDING T HE BEFORE THE ITAT FOR ADJUDICATION IN MY CONSIDERED OPINION SUCH ADDITIONS CANNOT ATTRACT THE MISCHIEF OF PENALTY U/S 271(1)(C) OF THE ACT. I THEREFORE, DIRECT THE AO TO WITHDRAW THE PENALTY LEVIED. THE GROUND IS ALLOWED. 5 . ON APPRAI SAL OF THE ABOVE MEN TIONED FINDING , WE NOTICED THAT THE CIT(A) HAS DELETED THE PENALTY ON THE BASIS OF THIS FACT THAT THE NO PENALTY IS LEVIABLE ON ADHOC DISALLOWANCE. FURTHER, WE NOTICED THAT THE HONBLE ITAT HAS SET ASIDE THE QUANTUM BEFORE THE AO, THEREFORE, AT THIS STAGE THERE IS NO DEMAND AGAINST THE ASSESSEE, HENCE, THE PENALTY IS NOT LEVIABLE IN VIEW OF THE ORDER DATED 10.03.2017 THE COPY OF THE ORDER IS ALSO ON THE FILE AND THE RELEVANT PARA NO. 5 IS HEREBY REPRODUCED AS UNDER.: - 5. WE HAVE HEARD THE RIVAL SUBMISSIONS , PERUSED THE ORDERS OF THE AUTHORITIES. IN THE COURSE OF ASSESSMENT PROCEEDINGS WHEN THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH VARIOUS DETAILS IT WAS SUBMITTED BY THE ASSESSEE THAT THERE WAS AN INVESTIGATION GOING ON IN THE ASSESSEE COMPANY A S IT WAS AN ASSOCIATE OF BIOTAR INDUSTRIES LTD., WHEREIN, CBI INVESTIGATION AND THE LEGAL PROCEEDINGS FROM STATE BANK OF INDIA AND ITS CONSORTIUM BANKS FOR RECOVERY OF DUES. FOR THE PURPOSE OF INVESTIGATION, CBI HAS TAKEN AWAY MAIN SERVER AND VARIOUS RECOR DS, DOCUMENTS ETC. OF ITA NO. 5882 /M/201 6 A.Y.20 09 - 10 4 BIOTOR INCLUDING ITS GROUP COMPANIES. IT WAS ALSO SUBMITTED BEFORE US THAT THE RECORDS WERE SEIZED BY SALES TAX DEPARTMENT ALSO DUE TO WHICH NECESSARY INFORMATION COULD NOT BE SUBMITTED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THE LD. COUNSEL ALSO BROUGHT OUR NOTICE TO THE ADDITIONAL EVIDENCES AND SUBMITS THAT ASSESSEE MADE SOME EFFORTS AND OBTAINED WHATEVER POSSIBLE RECORDS FROM VARIOUS SOURCES AND THE SAME ARE BEING FURNISHED IN THE FORM OF PAPER BOOK CONTAINING 205 PAGES RELATING TO THE ISSUES IN RESPECT OF THE ADDITIONS/DISALLOWANCES MADE. WE FIND FROM THE LD. CIT (APPEALS) THAT THE ADDITIONAL EVIDENCES WERE NOT ADMITTED MAINLY FOR THE REASON THAT THE LD. CIT (APPEALS) IS OF THE VIEW THAT THE ASSESSE IS PROLONGING THE PROCEEDINGS, N OT COOPERATED, NOT SUBMITTED THE REQUIRED DETAILS ASKED FOR ETC. THEREFORE, THE LD. CIT (APPEALS) CONCLUDED THAT ADMISSION OF ADDITIONAL EVIDENCES IS NOT A MATTER OF RIGHT AND FURTHER IT WAS HELD THAT THERE WAS NO SUFFICIENT CAUSE FOR NOT PRODUCING THE EVI DENCES BEFORE THE ASSESSING OFFICER WHICH IN OUR OPINION IS NOT PROPER AND JUST. NO DOUBT, THE APPELLATE AUTHORITY IS VESTED WITH THE DISCRETION WHETHER TO ADMIT OR REJECT AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCES, BUT THE APPELLATE AUTHORITY SH OULD EXERCISE THE DISCRETION JUDICIOUSLY. IN THIS CASE, THE APPROACH OF THE LD. CIT(APPEALS) IN REJECTING THE PETITION FOR ADMISSION OF ADDITIONAL EVIDENCES IS NOT EXERCISED JUDICIOUSLY. IN THE CIRCUMSTANCES TAKING THE TOTALITY OF THE FACTS INTO CONSIDERAT ION, WE RESTORE THE ISSUE TO THE FILE OF THE LD. CIT (APPEALS) TO CONSIDER THE PETITION FOR ADMISSION OF ADDITIONAL EVIDENCES JUDICIOUSLY AND TO DECIDE THE APPEAL ON MERITS. THE ASSESSEE IS DIRECTED TO COOPERATE WITH THE PROCEEDINGS WITH LD. CIT (APPEALS) AND FURNISH THE NECESSARY INFORMATION AS CALLED FOR. THUS, WE RESTORE THIS APPEAL TO THE FILE OF THE LD. CIT (APPEALS) AND THE SAME BE DISPOSED OFF IN ACCORDANCE WITH LAW AFTER GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 6. SINCE THE QUANTUM HAS BEEN SET A SIDE BY THE HONBLE ITAT AND REMANDED THE ISSUE BEFORE THE AO, THEREFORE, IN THE SAID CIRCUMSTANCES , WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND REMIT THE ISSUE BEFORE THE A.O TO DECIDE AFRESH IN ACCORDANCE WITH LAW. NEEDLESS TO SAY, THAT AN OPPORTUNITY OF BEING HEARD IS REQUIRED TO BE GIVEN IN ACCORDANCE WITH LAW. ITA NO. 5882 /M/201 6 A.Y.20 09 - 10 5 7 . IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS HEREBY ORDERED TO ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON 07 /0 2 /2020 SD/ - SD/ - / - ( SHAMIM YAHYA ) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED : 07 /02 / 2020 V IJAY PAL SINGH /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. / BY ORDER, //TRUE COPY// / /(DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI