ACIT 2(3), MUMBAI V. REGENT PLAST P. LTD, MUMBAI

ITA 5979/MUM/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0615 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2007-2008
• Appeal Filed On: 09-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO S . 5979 &7381 /MUM/2013 (ASSESSMENT YEARS: 2007 - 08 & 2010 - 11 ) A C I T - 2(3) VS. M/S. REGENT PLAST PVT. LTD. ROOM NO. 552, 5TH FLOOR AYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 807, RAHEJA CENTRE 214, FREE PRESS JOURNAL MARG NARIMAN POINT, MUMBAI 400021 PAN - AABCR3050K APPELLANT RESPONDENT APPELLANT BY: SHRI SANJAY PUNGLIA RESPONDENT BY: SHRI HARIDAS BHAT DATE OF HEARING: 19.05. 2015 DATE OF PRONOUNCEMENT: 19.05.2015 O R D E R PER D. MANMOHAN, V.P. THESE TWO APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE ORDERS PASSED BY CIT(A) - 6, MUMBAI AND THEY PERTAIN TO A.Y. 2007 - 08 AND 2010 - 11. ONE OF THE ISSUE S BEING COMMON IN BOTH THE YEARS , WE PROCEED TO DISPOSE OF THESE APPEAL BY A COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. IN RESPECT OF A.Y. 2007 - 08, VIDE GROUND NOS. 1,2 & 3 , REVENUE SUBMITS THAT THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF FR E IGHT AND FORWARDING CHARGES PAID TO M/S. SHREE AMBIKA TRANSPORT SERVICES . ACCORDING TO THE AO , SMT. SUSHILA GIRI , THE PROPRIETOR OF M/S. SHREE AMBIKA TRA NSPORT SERVICES ACCEPTED THAT SHE HAD NO KNOWLEDGE OF THE TRANSACTIONS WITH THE ASSESSEE AND HENCE THE PAYMENT OF FREIGHT AND FORWARDING CHARGES TO M/S. SHREE AMBIKA TRANSPORT SERVICES SHOULD NOT HAVE BEEN CONSIDERED AS GENUINE EXPENDITURE. IN RESPECT OF A .Y. 2010 - 11 ALSO GROUND NOS. 1 & 2 PERTAIN TO SIMILAR ADDITION MADE BY THE AO, WHICH WAS CANCELLED BY THE CIT(A). ITA NO. 5979/MUM/2013 M/S. REGENT PLAST PVT. LTD. 2 3. ASSESSEE - COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING PLASTIC ARTICLES. IN RESPECT OF PREVIOUS YEAR RELEVANT TO A.Y. 2007 - 08 THE INCOME DECLARED BY ASSESSEE WAS ORIGINALLY PROCESSE D UNDER SECTION 143(1) OF THE ACT. THEREAFTER IT WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED. IT WAS NOTICED THAT ASSESSEE CLAIMED TO HAVE PAID A SUM OF ` 11,97,883/ - TOWARDS F REIGHT AND FORWARDING CHARGES TO M/S. SHREE AMBIKA TRANSPORT SERVICES , MALAD, MUMBAI. AO ISSUED NOTICE UNDER SECTION 133(6) OF THE ACT TO THE ABOVE MENTIONED PARTY WHICH WAS RETURNED UNSERVED. WHEN THE SAME WAS BROUGHT TO THE NOTICE OF THE ASSESSEE, DURING THE COURSE OF ASSESSMENT PROCEEDINGS , IT WAS STATED THAT APPROPRIATE TAX HAS BEEN DEDUCTED AT SOURCE AND THE SAME WAS REFLECTED IN THE ANNEXURE TO LETTER DATED 8 TH DECEMBER, 2009. SINCE THE ASSESSEE HAS NOT GIVEN ANY OTHER DETAILS TO PROVE GENUINENESS OF THE SAID EXPENDITURE, AO CONCLUDED THAT MERE DEDUCTION OF TAX AT SOURCE DO NOT MAKE THE EXPENDITURE GENUINE AND THEREFORE THE FREIGHT AND FORWARDING CHARGES PAID TO M/S. SHREE AMBIKA TRANSPORT SERVICES WAS DISALLOWED. IN THE ASSESSM ENT ORDER FOR A.Y. 2010 - 11 ASSESSEE CLAIMED A SUM OF ` 28,21,024/ - TOWARDS FREIGHT AND FORWARDING CHARGES PAID TO M/S. SHREE AMBIKA TRANSPORT SERVICES . IN THIS REGARD THE AO OBSERVED THAT DURING A.Y. 2007 - 08 THE TRANSACTION WITH M/S. SHREE AMBIKA TRANSPORT SERVICES WAS NOT PROVED BY THE ASSESSEE AND EVEN DURING THE REMAND PROCEEDINGS FOR A.Y. 2007 - 08 SMT. SUSHILA GIRI , PROPRIETOR OF M/S. SHREE AMBIKA TRANSPORT SERVICES , STATED ON OATH THAT SHE IS NOT AWARE OF ANY TRANSACTION OF THE ASSESSEE AND HENCE IT CANN OT BE CONSIDERED AS A GENUINE EXPENDITURE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASSESSEE FURNISHED DETAILED PAPER BOOK RUNNING INTO 78 PAGES TO HIGHLIGHT THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC CONTAINERS WHICH ARE LIABL E TO EXCISE DUTY. EACH DELIVERY IS SUPPORTED BY DELIVERY CHALLAN ON WHICH THE CUSTOMER HAS TO ACKNOWLEDGE RECEIPT OF THE GOODS. THE TRUCK NUMBER IS MENTIONED IN THE EXCISE BILL AND DELIVERY CHALLANS AND M/S. SHREE AMBIKA TRANSPORT SERVICES HAS RAISED THEIR BILLS ACCORDINGLY. SINCE THE GOODS ARE TRANSPORTED, AS PROVED BY THE EXCISE INVOICE, IT CANNOT BE SAID THAT THEY ARE TRANSPORTED WITHOUT VEHICLE. IT WAS, THEREFORE, CONTENDED THAT TRANSPORTATION WAS DONE BY M/S. SHREE AMBIKA TRANSPORT SERVICES AND ITA NO. 5979/MUM/2013 M/S. REGENT PLAST PVT. LTD. 3 HENCE TH E FREIGHT AND FORWARDING CHARGES ARE ALLOWABLE AS DEDUCTION. AO OBSERVED THAT MERE PAYMENT OF EXCISE DUTY CANNOT PROVE THAT THE AMOUNTS WERE PAID TO M/S. SHREE AMBIKA TRANSPORT SERVICES BY ASSESSEE. IN FACT THE PROPRIETOR OF M/S. SHREE AMBIKA TRANSPORT SER VICES STATED ON OATH THAT THERE WAS NO TRANSACTION WITH THE ASSESSEE. AO FURTHER OBSERVED THAT THE TRANSPORTATION CHARGES MIGHT HAVE BEEN PAID BY THE PURCHASER OF GOODS AND NOT BY THE ASSESSEE. HE ACCORDINGLY REJECTED THE CLAIM OF DEDUCTION. 4. AGGRIEVED, ASS ESSEE PREFERRED APPEALS BEFORE THE LEARNED CIT(A). ADDITIONAL EVIDENCE WAS ALSO FILED BEFORE THE CIT(A) TO HIGHLIGHT THAT AO HAD OBTAINED THE STATEMENT OF SMT. SUSHILA GIRI WITHOUT ASSESSEES KNOWLEDGE AND ASSESSEE WAS NOT GIVEN A CHANCE TO CROSS EXAMINE. IN THE LIGHT OF THE CONTENTIONS OF THE ASSESSEE THE LEARNED CIT(A) FORWARDED THE ADDITIONAL EVIDENCE TO THE AO FOR EXAMINATION OF THE SAME ON MERITS AND FURNISHING A REPORT THEREON. ASSESSEE WAS ALSO ALLOWED TO CROSS EXAMINE SMT. SUSHILA GIRI . ACCORDINGLY, AO CARRIED OUT FURTHER ENQUIRIES AND FURNISHED A SECOND REMAND REPORT VIDE LETTER DATED 05.06.2013. HE NOTICED THAT THE BILLS HAVE CONTINUOUS SERIAL NUMBERS THOUGH THEY HAVE BEEN ISSUED ON DIFFERENT DATES. FURTHER, HE WAS OF THE OPINION THAT THE BILLS MIG HT HAVE BEEN PREPARED BY THE ASSESSEE SO AS TO PRODUCE THE SAME AT THE APPELLATE PROCEEDINGS , SINCE THEY WERE WRITTEN IN SINGLE HANDWRITING. IN SUPPORT OF HIS INFERENCE AO OBSERVED THAT ASSESSEE MAY NOT BE THE ONLY CUSTOMER OF M/S. SHREE AMBIKA TRANSPORT S ERVICES AND HENCE IT IS DIFFICULT TO FATHOM AS TO HOW CONTINUOUS INVOICE NUMBERS WERE GIVEN. WITH REGARD TO CROSS EXAMINATION OF SMT. SUSHILA GIRI , SHE ADMITTED THAT SHE DO NOT KNOW ANYTHING ABOUT THE ASSESSEE BECAUSE THE BUSINE SS TRANSACTIONS ARE HANDLED BY HER HUSBAND, SHRI JAGDHARI GIRI, WHO IN TURN STATED THAT ASSESSEE HAS OBTAINED SERVICES FROM M/S. SHREE AMBIKA TRANSPORT SERVICES AND PAID FOR SUCH SERVICES. AO WAS OF THE OPINION THAT THE STATEMENT OF SHRI JAGDHARI GIRI IS N OT RELIABLE AS THE SAME PERSON HAS COUNTERSIGNED/CONFIRMED THE ORIGINAL STATEMENT MADE BY SMT. SUSHILA GIRI BEFORE THE AO THAT THE ASSESSEE WAS NOT KNOWN TO M/S. SHREE AMBIKA TRANSPORT SERVICES . 5. THE LEARNED CIT(A) CONSIDERED THE CASE OF THE ASSESSEE IN THE BACKDROP OF THE DETAILED STATEMENT MADE AND MATERIAL PAPERS FILED BEFORE ITA NO. 5979/MUM/2013 M/S. REGENT PLAST PVT. LTD. 4 HIM. HE OBSERVED THAT THE MAIN CONTENTION OF THE AO WAS THAT THE ASSESSEE DID NOT FURNISH RELEVANT DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDINGS BUT ADDITIONAL EVIDENCE WAS FUR NISHED DURING THE APPELLATE PROCEEDINGS WHICH PROVE THAT THE ASSESSEE INCURRED EXPENDITURE IN THE NATURE OF PAYMENT OF FREIGHT AND FORWARDING CHARGES. THOUGH SMT. SUSHILA GIRI EXPRESSED HER IGNORANCE REGARDING TRANSACTIONS WITH ASSESSEE, IT WAS ALSO STATED BY HER THAT HER HUSBAND, MR. JAGDHARI GIRI , LOOKS AFTER THE BUSINESS AND HENCE HE MAY BE KNOWING T HE FACTS BUT NO STATEMENT OF SHRI JAGDHARI GIRI WAS RECORDED BY THE AO ALTHOUGH HE WAS PRESENT DURING RECORDING OF STATEMENT OF SMT. SUSHILA GIRI . THE LEARNED CIT(A) OBSERVED THAT DURING THE SECOND REMAND PROCEEDINGS ASSESSEE WAS GIVEN OPPORTUNITY TO CROSS EXAMINE SMT. SUSHILA GIRI AND THE STATEMENT OF SHRI JAGDHARI GIRI WAS ALSO RECORDED WHEREFROM IT CAN BE SEEN THAT M/S. SHREE AMBIKA TRANSPORT SERVICES WAS RE NDERING TRANSPORTATION SERVICES TO THE ASSESSEE IN THE PAST AS WELL AS IN THE SUBSEQUENT YEARS AND SUCH CHARGES WERE ALLOWED IN PREVIOUS YEARS AS WELL AS IN SUBSEQUENT YEARS (EVEN IN THE SCRUTINY PROCEEDINGS). THE GOODS TRANSPORTED BEING EXCISABLE AND SUPP LIED TO A MULTINATIONAL COMPANY, M/S. CASTROL INDIA LTD. SINCE THE INVOICE S RAISED UPON MN C CONTAIN TRUCK NUMBER AND AMOUNT OF FREIGHT PAID , IT CONFIRMS THAT TRUCK CHARGES WERE PAID BY ASSESSEE AND NOT BY M/S. CASTROL INDIA LTD. IN ADDITION THERETO IT IS ADMITTED BY THE AO THAT ASSESSEE DEDUCTED TAX AT SOURCE FROM THE AMOUNT PAID TO M/S. SHREE AMBIKA TRANSPORT SERVICES . THE PAYMENTS WERE MADE IN CASH ( SUNDRY EXPENSES) AND BY ACCOUNT PAYEE CHEQUES AND CREDITED TO THE BANK ACCOUNT OF M/S. SHREE AMBIKA TR ANSPORT SERVICES . THESE TRANSACTIONS APPEARED IN THE BOOKS OF THE ASSESSEE AS WELL AS THAT OF M/S. SHREE AMBIKA TRANSPORT SERVICES . TAKING A HOLISTIC VIEW OF THE MATTER THE LEARNED CIT(A) CONCLUDED THAT THE EXPENDITURE INCURRED BY THE ASSESSEE IS GENUINE A ND IN FACT IT WAS ALLOWED BY THE AO PRIOR T O 2007 - 08 AND SUBSEQUENT LY UPTO 2009 - 10. ACCORDINGLY THE AO WAS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION. FOR THE SAME REASONS , ADDITION MADE BY THE AO FOR A.Y. 2010 - 11 WAS SET ASIDE BY THE LEARNED CIT(A). 6. AGGRIEVED , REVENUE IS IN APPEAL BEFORE US. THE FACTS ELABORATED BY THE CIT(A) ARE NOT CONTROVERTED BY THE LEARNED D.R. HAVING REGARD TO THE ITA NO. 5979/MUM/2013 M/S. REGENT PLAST PVT. LTD. 5 CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE ORDERS OF THE LEARNED CIT(A), FOR THE YEARS UNDER CONSIDERATION, DO NO T CALL FOR ANY INTERFERENCE SINCE THERE IS SUFFICIENT PROOF TO INDICATE THAT ASSESSEE INCURRED EXPENDITURE TOWARDS FREIGHT AND FORWARDING CHARGES AND THE SAME WAS PAID TO M/S. SHREE AMBIKA TRANSPORT SERVICES . IN THE RESULT, GROUND NOS. 1, 2 & 3 IN THE APPE AL FOR A.Y. 2007 - 08 AND GROUND NOS. 1 & 2 IN THE APPEAL FOR A.Y. 2010 - 11 OF THE REVENUE ARE HEREBY REJECTED. 7. IN RESPECT OF A.Y. 2007 - 08 THE REVENUE CONTENDED, VIDE GROUND NO. 4, THAT THE LEARNED CIT(A) ERRED IN GRANTING RELIEF BY ADMITTING ADDITIONAL EVIDE NCE. HOWEVER, WHEN IT WAS POINTED OUT THAT THE AO WAS GIVEN SUFFICIENT OPPORTUNITY TO GO THROUGH THE ADDITIONAL EVIDENCE AND THE LEARNED CIT(A) HAS TAKEN INTO CONSIDERATION THE CIRCUMSTANCES OF THE CASE TO ADMIT ADDITIONAL EVIDENCE, THE LEARNED D.R. DID NO T SERIOUSLY PRESS GROUND NO. 4. ACCORDINGLY GROUND NO. 4 IS HEREBY REJECTED. 8. GROUND NO. 3 IN THE APPEAL FOR A.Y. 2010 - 11 READS AS UNDER: - 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT CONTRIBUTION MADE BY THE ASSESSEE TO LIFE INSURANCE CORPORATION OF INDIA IS AN APPROVED GROUP GRATUITY FUND WITHOUT APPRECIATING TH E FACT THAT THE ASSESSEE HAS FAILED TO PRODUCE THE APPROVAL LETTER OF THE GRATUITY SCHEME BEFORE THE ASSESSING OFFICER AT ANY STAGE OF THE CURRENT YEAR PROCEEDINGS AS WELL AS IN PROCEEDINGS FOR THE AY 2005 - 06, WHEN THE HON. TRIBUNAL HAS SPECIFICALLY ASKED THE ASSESSEE TO DO SO. 9. THE ISSUE PERTAINS TO DISALLOWANCE OF ` 14,910/ - UNDER SECTION 40A(7)(B) OF THE INCOME TAX ACT, 1961. THE CASE OF THE AO IS THAT ASSESSEE COULD NOT PROVE THAT THE PAYMENT WAS TOWARDS AN APPROVED GRATUITY FUND. THE CIT(A), ON THE OTHE R HAND, OBSERVED THAT IT WAS A CONTRIBUTION TO APPROVED GRATUITY FUND, I.E. LIC OF INDIA. HE HAS ALSO QUOTED THE POLICY NUMBER FROM LIC OF INDIA TO HIGHLIGHT THAT IT WAS AN APPROVED GRATUITY FUND AND ASSESSEE HAVING CONTRIBUTED TO SUCH GRATUITY FUND IT IS NOT A FIT CASE FOR INVOKING PROVISIONS OF SECTION 40A(7) OF THE ACT. THOUGH THE REVENUE RAISED THE GROUND CHALLENGING THE ORDER OF THE CIT(A), NO EVIDENCE, WHATSOEVER, WAS ITA NO. 5979/MUM/2013 M/S. REGENT PLAST PVT. LTD. 6 PLACED TO CONTRADICT THE FINDINGS OF THE CIT(A). UNDER THESE CIRCUMSTANCES WE UPHOLD THE ORDER OF THE CIT(A) AND REJECT GROUND NO. 3 OF THE APPEAL. 10. IN THE RESULT, APPEALS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MAY, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 19 TH MAY, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 6 , MUMBAI 4. THE CIT II , MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.