JHANKAR MECHANICAL WORKS, MUMBAI V. ITO 15(2)3, MUMBAI

ITA 635/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79059 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 21-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JITENDRA SINGH
• Keywords: Business income; Depreciation; Period of limitation; Additional evidence; Condonation of delay
• Section: 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BEN CH, MUMBAI JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; ,OA JH JKTSUNZZ JH JKTSUNZZ JH JKTSUNZZ JH JKTSUNZZ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K ] YS[KK LNL; DS LE{K BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER VK;DJ VIHY LA[;K / ITA NO.635/MUM/2011 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2007-08 VK;DJ VIHY LA[;K / ITA NO.3424/MUM/2012 FU/KKZJ.K O'KZ @ ASSESSMENT YEAR: - 2008-09 JHANKAR MECHANICAL WORKS 203, JAGRUTI APARTMENT, SAINATH ROAD, MALAD (WEST) MUMBAI 400064. VS. THE INCOME TAX OFFICER, WARD 15(2)(3) PAN:-AAEFJ8456F APPELLANT RESPONDENT ASSESSEE BY / FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS FU/KKZFJRH DH VKSJ LS SHRI K. GOPAL & SHRI JITENDRA SINGH REVENUE BY/ JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS JKTLO DH VKSJ LS SHRI MAURYA PRATAP ORDER PER VIJAY PAL RAO, JM THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAI NST TWO SEPARATE ORDERS OF CIT(A) DATED 16.11.2010 AND 16.09.2011 FOR A.Y. 2007-08 AND 2008-09 RESPECTIVELY. THERE IS A DELAY OF 95 DAYS IN FILING THE APPEAL FOR A.Y. 2008-09 IN ITA DATE OF HEARING 03.06.2014 DATE OF PRONOUNCEMENT 03.06.2014 JHANKAR MECHANICAL WORKS 2 | P A G E NO. 3424/MUM/2012, THE ASSESSEE HAS FILED AN APPLIC ATION/AFFIDAVIT FOR CONDONATION OF DELAY AND STATED THE REASONS FOR NOT FILING THE APPEAL WITHIN THE PERIOD OF LIMITATION IS THAT MR. RAJESH VADGAMA, MANAGING PAR TNER OF THE ASSESSEE WAS HOSPITALIZED DURING THE PERIOD. 2. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE AS WELL AS LD. DR AND CONSIDERED THE RECORD FOR CONDONATION OF DELAY. THE ASSESSEE HAS EXPLAINED THE REASONS FOR DELAY AS HOSPITALIZATION OF THE MANAGIN G PARTNER. FURTHER THE ISSUES INVOLVED FOR THE A.Y. 2008-09 AND 2007-08 ARE COMMO N. APPEAL FOR A.Y. 2007-08 WAS FILED BY THE ASSESSEE WITHIN THE TIME AND, THER EFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE SATISFIED THAT TH E ASSESSEE WAS HAVING SUFFICIENT CASUE FOR NON FILING OF APPEAL FOR THE A.Y. 2008-09 WITHIN THE PERIOD OF LIMITATION. ACCORDINGLY IN THE INTEREST OF JUSTICE, WE CONDONE THE DELAY OF 95 DAYS IN FILING THE APPEAL FOR A.Y. 2008-09. 3. THE ASSESSEE HAS RAISED COMMON GROUNDS IN BOTH T HE APPEALS. THE GROUND RAISED FOR A.Y. 2007-08 IS AS UNDER:- BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) XXVI, MUMBAI, THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING GROUND: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (CIT(A)) ERRED IN NOT SETTING ASIDE ASSESSMENT COMPLETED U/S 144 OF THE ACT. 2. ON THE FACTS OF THE CASE THE LEARNED CIT(A) ERRED I N CONFIRMING INCOME FROM RENTAL BUSINESS FROM LEASED PREMISES AS 'INCOM E FROM HOUSE PROPERTY'. JHANKAR MECHANICAL WORKS 3 | P A G E 3. ON THE FACTS OF THE CASE THE CIT(A) ERRED IN UNFAIR LY SUSTAINING SUNDRY CREDITORS OF RS. 37,26,971 UNDER SECTION 68 OF THE I.T. ACT, 1961. THE LEARNED CIT (A) HAS ERRED IN SUSTAINING THE ADDITIO N MADE UNDER SECTION 68 OF THE ACT, WITHOUT MAKING ANY INQUIRIES WHATSOEVER AND SIMPLY BY RELYING ON THE ORDER OF THE LAO, WHO HAD MADE THE ADDITION U/S 41(1) OF THE ACT. 4. UNDER THE CIRCUMSTANCES THE LAO HAS NOT GIVEN THE A PPELLANT, REASONABLE OPPORTUNITY TO PRESENT THE CASE. 4. THE GROUND RAISED BY THE ASSESSEE FOR A.Y. 2008 -09 IS AS UNDER:- BEING AGGRIEVED BY THE ORDER OF THE LEARNED COMMISS IONER OF INCOME TAX (APPEALS) XXVI, MUMBAI, THIS APPEAL PETITION IS SUBMITTED ON THE FOLLOWING GROUNDS:: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LAO ERRED IN COMPLETING ASSESSMENT U/S 144 OF THE ACT. 2. ON THE FACTS OF THE CASE THE LAO ERRED IN ASSESSING INCOME FROM RENTAL BUSINESS FROM LEASED PREMISES AS 'INCOME FROM HOUSE PROPERTY'. 3. ON THE FACTS OF THE CASE THE LAO ERRED IN UNFAIRLY ADDING SUNDRY CREDITORS OF RS. 37,26,971/- UNDER SECTION 41(1) OF THE LT. A CT, 1961. 5. THE ASSESSMENT ORDERS FOR BOTH THE ASSESSMENT YE ARS WERE PASSED U/S 144 OF THE INCOME TAX ACT AS NOBODY APPEARED BEFORE THE ASSESSING OFFICER. FOR THE A.Y. 2007-08, NONE HAS APPEARED ON BEHALF OF THE AS SESSEE EVEN BEFORE THE CIT(A) AND, THEREFORE, THE APPEAL OF THE ASSESSEE W AS DECIDED EX PARTE . FOR THE A.Y. 2008-09 THOUGH THE REPRESENTATIVE OF THE ASSES SEE APPEARED BEFORE THE CIT(A) HOWEVER, THE CIT(A) HAS DECIDED THE APPEAL O F THE ASSESSEE BY FOLLOWING THE ORDER FOR THE A.Y. 2007-08. JHANKAR MECHANICAL WORKS 4 | P A G E 6. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE OF THE ASSESSEE HAS SUBMITTED THAT THE NON APPEARANCE ON BEHALF OF THE ASSESSEE B EFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT(A) IS DUE TO THE LAPSE ON T HE PART OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WHO DID NOT APPEAR B EFORE THE AUTHORITIES BELOW WITHOUT INTIMATION TO THE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE HAS FILED THE PETITION UNDER RULE 29 OF THE INCOME RULE S FOR ADMISSION OF ADDITIONAL EVIDENCES WHICH COULD NOT BE FILED BEFORE THE AUTHO RITIES BELOW DUE TO NON REPRESENTATION ON BEHALF OF THE ASSESSEE. THE LD. A UTHORIZED REPRESENTATIVE HAS REFERRED THE INTENDED ADDITIONAL EVIDENCES AND SUBM ITTED THAT THE MAIN ISSUE IN THE APPEAL IS THE TREATMENT OF LICENSE FEE OF THE FACTO RY BUILDING BY THE ASSESSING OFFICER AS INCOME FROM HOUSE PROPERTY BY REJECTIN G THE CLAIM OF ASSESSEE AS BUSINESS INCOME. HE HAS REFERRED THE REGISTRATION CERTIFICATE OF THE ASSESSEE BEING SMALL SCALE INDUSTRY AS WELL AS BUSINESS CONDUCTING AGREEMENT UNDER WHICH THE FACTORY PREMISES OF THE ASSESSEE WAS GIVEN TO M/S P AM GLATT PHARMA TECHNOLOGIES PVT. LTD. FOR CARRYING OUT THE BUSINESS. HE HAS ALS O REFERRED THE DETAILS OF ASSET GIVEN ON THE LICENSE AND DEPRECIATION CLAIMED BY TH E ASSESSEE ON THE SAME WHICH WAS DISALLOWED BY THE ASSESSING OFFICER ON THE GROU ND THAT THE ASSESSEE HAS NOT CARRIED OUT ANY BUSINESS AND THE INCOME HAS BEEN AS SESSED AS INCOME FROM HOUSE PROPERTY. THE LD. AUTHORIZED REPRESENTATIVE HAS SUB MITTED THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE IS RELE VANT TO DETERMINE THE REAL NATURE OF THE INCOME AND THE AUTHORITIES BELOW HAVE DECIDE D THE SAME WITHOUT CONSIDERING THE RELEVANT EVIDENCE. SINCE THE ADDITIONAL EVIDENC E GOES TO THE ROOT OF THE ISSUE, THEREFORE, IT IS PLEADED THAT THE ADDITIONAL EVIDEN CE MAY BE ADMITTED IN THE INTEREST OF JUSTICE. HE HAS RELIED UPON THE DECISION OF HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SMT. PRABHAVATI S. SHAH VS. CIT ( 231 I TR 1). JHANKAR MECHANICAL WORKS 5 | P A G E 7. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT WHEN THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED AT THIS STAGE WAS AVAI LABLE WITH THE ASSESSEE THEN THE ASSESSEE SHOULD HAVE FILED THE SAME IN THE ASSESSEE PROCEEDINGS. THE ASSESSEE HAS NOT EXPLAINED THE COGENT REASONS AS TO WHY THE ADDITIONAL EVIDENCE COULD NOT BE FILED BEFORE THE AUTHORITIES BELOW. THE LD. DR H AS THUS VEHEMENTLY OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCE AND SUBMITTED THAT THE BUSINESS CONDUCTING AGREEMENT NOW FILED BY THE ASSESSEE IS AN AFTERTHOU GHT CREATED EVIDENCE AND SHOULD NOT BE ALLOWED WHEN THE ASSESSEE HAS NOT EXP LAINED THE SUFFICIENT REASON FOR NOT FILING THE SAME BEFORE THE AUTHORITIES BELO W. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E CAREFULLY PERUSED THE RELEVANT MATERIAL ON RECORD. FOR THE A.Y. 2007-08, THE ASSESSMENT ORDER AS WELL AS THE IMPUGNED ORDER OF CIT(A) ARE PASSED EX PARTE FOR WANT OF ANY REPRESENTATION FROM THE SIDE OF THE ASSESSEE. THE ASSESSEE HAS EXP LAINED THE REASONS FOR NON APPEARANCE AS FAULT ON THE PART OF THE AUTHORIZED R EPRESENTATIVE MR. R. M. PATIL, WHO DID NOT APPEAR BEFORE THE AUTHORITIES BELOW AND THE ASSESSEE WAS KEPT IN DARK. THOUGH THE SAID EXPLANATION OF THE ASSESSEE HAS NOT BEEN SUPPORTED BY ANY MATERIAL, HOWEVER, THE ADDITIONAL EVIDENCE INTENDED TO BE FILED BY THE ASSESSEE IS RELEVANT FOR THE PURPOSE OF DETERMINING THE NATURE OF INCOME RECEIVED FOR THE FACTORY BUILDING GIVEN ON LICENSE FOR CONDUCT OF BUSINESS. WE FURTHER NOTE THAT THE ASSESSEE HAS ALSO SOUGHT TO FILE THE ADDITIONAL EVIDENCE IN THE SHAPE OF DETAILS OF ASSET AND MACHINERY IN THE FACTORY PREMISES WHICH WAS GIVEN O N LICENSE, THEREFORE, WE ARE OF THE VIEW THAT THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BY THE ASSESSEE REQUIRES A PROPER VERIFICATION AND EXAMINATION AT THE LEVEL OF ASSESSING OFFICER. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE ALLOW THE ADDITIONAL EVIDENCE TO BE FILED BY THE ASSESSEE AND CONSEQUENTLY SET ASIDE THE MATTER FOR BOTH THE ASSESSMENT YEARS TO THE RECORD OF ASSESSING OFFICER SUBJECT OF JHANKAR MECHANICAL WORKS 6 | P A G E COST OF RS. 5,000/- FOR EACH A.Y. TOTAL AMOUNTING T O RS. 10,000/-. THE ASSESSING OFFICER IS DIRECTED TO DECIDE THE ISSUE AFTER VERIF ICATION AND EXAMINATION OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. FURTHER THE CLAIM OF DEPRECIATION IS ALSO REQUIRED TO BE EXAMINED BY THE ASSESSING OFFICER IF THE INCOME RECEIVED BY THE ASSESSEE IS TREATED AS BUSINESS INCOME. IT APPEARS THAT THE ASSESSEE HAS CLAIMED DEPRECIATION INCLUDING LAND AND BUILDING WHICH REQU IRES A PROPER VERIFICATION. THE ASSESSEE HAS TO PRODUCE THE PROOF OF PAYMENT OF COS T BEFORE THE ASSESSING OFFICER. 8. IN THE RESULT APPEALS OF THE ASSESSEE ARE ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT TODAY I.E 3 -06-2014 SD/- SD/- ( RAJENDRA ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; ) MUMBAI DATED 3 -06-2014 SKS SR. P.S, COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI