SHRENIK PACKAGING SYSTEMS P.LTD, MUMBAI V. ITO 8(3)(1), MUMBAI

ITA 6378/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9790 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: K
• Next Hearing Date: 29-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 14-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V JANARDHAN
• Assessee Lawyers: SACHIN ROMANI
• Keywords: Transfer pricing; Principle of natural justice; International transaction; Reasonable cause
• Section: 143(3)

Judgement Text

K IN THE INCOME TAX APPELLATE TRIBUNAL K BENCH, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 6378/ MUM/2014 ( / ASSESSMENT YEAR : 2010-11) SHRINK PACKAGING SYSTEMS PRIVATE LIMITED PLOT NO. A-7, SHRENJI HOUSE, ROAD NO. 5, MIDC, ANDHERI (EAST), MUMBAI-400093 / V. INCOME TAX OFFICER 8(3)(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. ./ PAN : AADCS9220N ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY : SHRI SACHIN ROMANI REVENUE BY : SHRI V. JANARDHAN (DR) / DATE OF HEARING : 23.08.2017 / DATE OF PRONOUNCEMENT : 23.08.2017 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 6378/MUM/2014, IS DIRECTED AGAINST THE APPELLATE ORDER DATED 31.07.20 14 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 15, MUMBAI (H EREINAFTER CALLED THE CIT(A)), FOR ASSESSMENT YEAR 2010-11, APPELLATE PR OCEEDINGS BEFORE LEARNED CIT(A) HAS ARISEN FROM THE ASSESSMENT ORDER DATED 2 8.03.2013 PASSED BY THE LEARNED ASSESSING OFFICER (HEREINAFTER CALLED THE AO ) U/S 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) . 2. THE ASSESSEE HAS RAISED AS MANY AS EIGHT GROUNDS OF APPEAL IN MEMO OF APPEAL FILED WITH THE INCOME-TAX APPELLATE TRIBU NAL(HEREINAFTER CALLED THE ITA 6378/MUM/2014 2 TRIBUNAL). AT THE OUTSET LEARNED COUNSEL FOR THE A SSESSEE PRAYED FOR DISMISSAL OF GROUND NO 1 TO 5 ON THE GROUNDS THAT GROUND NO 1 IS GENERAL IN NATURE AND GROUND NO 2 TO 5 ARE NOT BEING PRESSED. THE LEA RNED DR HAS NOT OBJECTED TO DISMISSAL OF GROUND NO 1 TO 5. AFTER HEARING BOT H THE PARTIES, WE DISMISS GROUND NO1 AS BEING GENERAL IN NATURE WHILE GROUND TO 2 TO 5 ARE DISMISSED AS NOT BEING PRESSED. 3. GROUND NO 6 TO 8 RAISED BY THE ASSESSEE ARE CONC ERNING ONLY ONE ISSUE WHICH IS W.R.T. ADJUSTMENT MADE BY THE AO OF RS. 17 ,00,221/- ON ACCOUNT OF INTERNATIONAL TRANSACTION ENTERED INTO BY THE APPEL LANT WITH ITS ASSOCIATED ENTERPRISES(AE), WHICH ADDITION WAS LATER CONFIRME D BY LEARNED CIT(A). IT IS THE SHORT CONTENTION OF THE ASSESSEE THAT ADJUSTMEN TS WERE MADE TO ALP @10% OF ACTUAL AMOUNT OF RS.1,70,02,212/- PAID TO A ES BY THE ASSESSEE FOR INTERNATIONAL TRANSACTIONS WITH AES AND MAIN REAS ON FOR THE SAID ADDITION BY THE AO IS NON SUBMISSION OF TP STUDY REPORT BY THE ASSESSEE. IT IS SUBMITTED THAT THE SAID TP STUDY REPORT WAS DULY SUBMITTED BE FORE LEARNED CIT(A) WHO REFUSED TO ADMIT THE SAME AS IN VIEW OF LEARNED CIT (A) NO REASONABLE CAUSE IS FURNISHED BY THE ASSESSEE FOR NON SUBMISSION OF TP STUDY REPORT BEFORE THE AO. IT IS SUBMITTED BY LEARNED COUNSEL FOR THE ASS ESSEE THAT THE ENTIRE DETAILS OF TRANSACTIONS UNDERTAKEN WITH AE WERE SUBMITTED B EFORE THE AO AND ALSO FORM NO 3CEB WAS SUBMITTED BEFORE THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS SUBMITTED THAT WHEN THE ASSESSM ENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE 1961 ACT WERE IN PROGRE SS BEFORE THE AO , THERE WAS A MAJOR CHANGE IN FINANCE TEAM OF THE ASSESSEE COMP ANY IN MAY 2012 WHEREIN TWO KEY EMPLOYEES LOOKING AFTER TAX MATTERS LEFT THE ASSESSEE COMPANY AND WHICH LED TO THE CONFUSION WITH THE NEW TEAM NOT KNOWING THE THINGS ABOUT THE SAID ASSESSMENT . IT IS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE THAT IN ANY CASE THE LEARNED CIT(A) SHOULD HAVE ADMITTED THE SAID TP STUDY REPORT IN THE INTEREST OF JUSTICE, AS THE SAI D TP STUDY REPORT WAS DULY SUBMITTED BEFORE THE LEARNED CIT(A) IN THE COURSE O F APPELLATE PROCEEDINGS ITA 6378/MUM/2014 3 BEFORE THE LEARNED CIT(A). IT WAS SUBMITTED THAT IN THE INTEREST OF JUSTICE, THE LEARNED CIT(A) SHOULD HAVE ADMITTED SAID TP STUDY R EPORT AND FORWARDED THE SAME TO AO FOR REMAND REPORT. IT IS BROUGHT TO OUR NOTICE BY LEARNED COUNSEL FOR THE ASSESSEE THAT THE SAID TP STUDY REPORT W.R. T. INTERNATIONAL TRANSACTIONS CONDUCTED BY THE ASSESSEE WITH AES FOR THE FINANCI AL YEAR 2009-10 IS PLACED IN PAPER BOOK FILED WITH THE TRIBUNAL/PAGE 23-77 . WE HAVE GONE THROUGH PAGE 23-77 OF THE PAPER BOOK WHICH IS TP STUDY REPORT FO R THE FINANCIAL YEAR 2009- 10 ISSUED BY A FIRM OF CHARTERED ACCOUNTANTS CKM & ASSOCIATES WITH A FORWARDING LETTER DATED 15-09-2010. WE HAVE ALSO OB SERVED THAT THE ADDITIONS HAVE BEEN MADE BY AO MAINLY ON THE GROUNDS THAT TP STUDY REPORT IS NOT SUBMITTED BY THE ASSESSEE. THE LEARNED DR HAS NOT O BJECTED TO THE SETTING ASIDE OF THE ISSUE TO THE FILE OF THE AO FOR DENOVO DETERMINATION OF THE ISSUE . KEEPING IN VIEW FACTUAL MATRIX OF THE ENTIRE CASE A S BROUGHT IN ON RECORD BEFORE US, WE ARE INCLINED TO SET ASIDE AND RESTORE THE ISSUE BEFORE THE AO FOR DE-NOVO DETERMINATION OF THE ISSUE IN ACCORDANCE WI TH LAW. THE ASSESSEE IS FREE TO FILE ALL CONTENTIONS , EXPLANATIONS, EVIDEN CES INCLUDING TP STUDY REPORT BEFORE THE AO WHICH SHALL BE DEALT WITHIN BY THE AO IN ACCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUNITY TO THE ASSESSEE IN ACCORDANCE WITH PRINCIPLES OF NATURAL JUSTICE IN ACCORDANCE WITH LAW. WE ORDER ACCORDINGLY. 4. IN THE RESULT, APPEAL OF THE ASSESSEE IN ITA NO. 6378/MUM/2014 FOR ASSESSMENT YEAR 2010-11 IS PARTLY ALLOWED FOR STATI STICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD AUGUST 2017 IN THE PRESENCE OF BOTH THE PARTIES. SD/- SD/- (C.N. PRASAD) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 3 DATED 23-08-2017 ITA 6378/MUM/2014 4 [ !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. 4 ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. 4 / CIT- CONCERNED, MUMBAI 5. 789 ::;< , ;< , / DR, ITAT, MUMBAI G BENCH 6. 9>? @ / GUARD FILE. / BY ORDER, 7 : //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI