ITO 8(3)(4), MUMBAI V. VISHAL INFORMATION TECHNOLOGY LTD, MUMBAI

ITA 6749/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8774 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 17-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 23-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P SINGH
• Keywords: Business income; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH F, MUMBAI BEFORE SHRI I.P.BANSAL,JUDICIAL MEMBER & SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. 6749/MUM/2010(A.Y. 2007-08) THE ITO 8(3)(4), ROOM NO.202, 2 ND FLOOR, AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 (APPELLANT) VS. VISHAL INFORMATION TECHNOLOGY LTD., SOLARIS, 1, C-409, OPP.L&T GATE NO.6, SAKIVIHAR ROAD, POWAI, MUMBAI - 400 072. PAN: AAACS 7326Q (RESPONDENT) APPELLANT BY : SHRI A.P.SINGH RESPONDENT BY : NONE DATE OF HEARING : 17/09/2012 DATE OF PRONOUNCEMENT : 2 6/09/2012 ORDER PER I.P.BANSAL, J.M THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DI RECTED AGAINST THE ORDER DATED 27/07/2010 PASSED BY CIT(A)-18, MUMBAI FOR THE ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL RAISED BY THE REVEN UE READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE I N CONTRAVENTION OF RULE - 46AOF THE I.T. RULES. 2.ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S. 10A OF RS.2.27 CRORES HOLDING THAT SUNDRY BEBTORS FOR A.Y 2006-07 AS ON 3 1/03/2007 WERE RS. 10,71,45,492/- THOUGH THE ASSESSEE COMPANY ITSE LF IN THE BALANCESHEET AS AT 31/03/2007 HAS SHOWN SUNDRY DEB TORS OF RS. 18,68,75,243/-. 2. THIS APPEAL WAS EARLIER FIXED ON 13/03/2012 AN D IT WAS FOUND THAT DEPARTMENT DID NOT FILE GROUNDS OF APPEAL SIGNED B Y THE A.O. TO ENABLE THE ITA NO. 6749/MUM/2010(A.Y. 2007-08) 2 DEPARTMENT TO FILE THE GROUNDS, THE MATTER WAS ADJO URNED TO 15/05/2012. ON 15/05/2012, THE BENCH DID NOT FUNCTION AND THE MATTER WAS REFIXED TO 9/07/2012, WHEN NONE APPEARED ON BEHALF OF THE ASSE SSEE. DIRECTION WAS GIVEN TO SERVE NOTICE THROUGH DR AND THE MATTER WAS ADJOURNED TO 17/09/2012. ON 17/09/2012 LD. DR DID NOT PLACE O N RECORD THE PROOF OF SERVICE. HOWEVER, WE PROCEED TO DECIDE THE PRESE NT APPEAL EX-PARTE QUA THE ASSESSEE AFTER HEARING LD. D.R AND AFTER CONSIDERIN G THE MATERIAL AVAILABLE ON RECORD. 3. THE IMPUGNED ASSESSMENT ORDER IS FRAMED VIDE ORD ER DATED 9/12/2009 UNDER THE PROVISIONS OF SECTION 143(3) OF THE INCOME TAX ACT 1961(THE ACT). THE ASSESSEE CLAIMED DEDUCTION UNDE R SECTION 10A OF RS. 10.65 CRORES. IT WAS NOTICED BY THE AO THAT ASSESS EE HAD SHOWN DEBTORS TO THE TUNE OF RS. 24,34,42,858/- AS PER BALANCE SHEET AS ON 31/03/2007. THE DETAILS OF WHICH AS PER SCHEDULE -8 OF THE BALANCE SHEET WAS AS UNDER: -DEBTORS OUTSTANDING FOR A PERIOD EXCEEDING 6 MONTHS RS. 5,65,67,615/- - OTHER DEBTS RS. 18,68,75,243/- RS. 24,34,42,858/- ================ 3.1 LD. A.O REQUIRE THE ASSESSEE TO PROVIDE INVOI CE WISE REALIZATION DETAILS. THE ASSESSEE FURNISHED THE DETAILS FOR S UBSEQUENT REALIZATION TO THE TUNE OF RS. 17,80,28,461/-. THE AO ON REFERRING TO THE DEFINITION OF EXPORT TURNOVER IN SECTION 10A OBSERVED THAT THE ASSESSEE COULD NOT EXPLAIN THE REALIZATION OF BALANCE DEBTORS OF RS.6,54,14,397/- (24,34,42,858 - 17,80,28,461), THEREFORE, APPLYING THE FORMULA LAID DOWN IN SECTION 10A DEDUCTION AT A SUM OF RS. 8,38,12,385/- WAS ALLOWED , WHICH IS CALCULATED AS UNDER: = 10,65,99,700 X (30,60,10,383 - 6,54,14,397) 30,60,10,3 82 = RS. 8,38,12,385/-. 3.2 IN THE ABOVE MANNER AO RESTRICTED THE DEDUCTIO N UNDER SECTION 10A TO A SUM OF RS. 8,38,12,385/- AGAINST THE CLAIM OF THE ASSESSEE OF RS. 10.65 ITA NO. 6749/MUM/2010(A.Y. 2007-08) 3 LACS. AGGRIEVED, ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A). IT WAS SUBMITTED THAT ENTIRE DEBTORS SHOWN IN THE BALANCE SHEET DID NOT BELONG TO THE YEAR UNDER CONSIDERATION ALONE. IT WAS SUBMITT ED THAT THOSE DEBTORS WERE ALSO IN RESPECT OF EARLIER YEARS AND THE BIFU RCATION, YEAR WISE WAS SUBMITTED AS UNDER: - DEBTORS AS ON 31/03/2003 2, 69,33,387/- - DEBTORS AS ON 31/03/2006 10,9 3,58,979/- - DEBTORS AS ON 31/03/2007 10,7 1,45,492/- TOTAL : 24,34,42,858/- 3.3 IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD SUBMITTED COMPLETE LIST OF DATE OF SALE, DATE REALIZATION AND THE PARTY FRO M WHOM SUCH AMOUNTS WERE RECEIVED PERTAINING TO FINANCIAL YEAR UNDER CONSID ERATION AND THOSE DETAILS WERE RECONCILED AS UNDER: THE TOTAL SALES MADE RS. 30,60,10,382/- LESS: ONSITE EXPENSES RS. 12,79,81,821/- BALA NCE RS. 17,80,28,461/- AMOUNT REALIZED BEFORE MARCH 07 RS. 7,08,82,969/- AMOUNT REALIZED FROM 1/4/07 TO 31/3/08 RS. 10,71, 45,492/- 3.4 ON THESE FACTS LD. CIT(A) OBSERVED THAT AS PER CIRCULAR NO.25 DATED 1/11/2004 ISSUE BY RESERVE BANK OF INDIA AS REFERR ED TO IN THE ORDER OF ITAT DATED 7/05/2009 FOR ASSESSMENT YEAR 2005-06, T HE REALIZATION OUT OF EXPORTS WITHIN A PERIOD OF 12 MONTHS FROM THE END O F THE PREVIOUS YEAR SHOULD BE TREATED AS FOREIGN EXCHANGE BROUGHT INTO INDIA, ELIGIBLE FOR 10A DEDUCTION. HE FOUND THAT AS PER DETAILS SUBMITTED BY THE ASSESSEE, OUT OF RS.30.60 CRORES ON EXPORT SALES MADE, ONSITE EXPEN SES OF RS.10.79 CRORES WERE INCURRED LEAVING THE BALANCE OF RS. 17.80 CROR ES TO BE RECEIVED BY THE ASSESSEE AND SUCH AMOUNT WAS EITHER RECEIVED BY THE ASSESSEE DURING THE PREVIOUS YEAR OR WITHIN 12 MONTHS FROM THE END OF T HE PREVIOUS YEAR. THEREFORE, LD. CIT(A) HAS DIRECTED THE AO TO ALLOW THE DEDUCTION AS CLAIMED BY THE ASSESSEE OF RS.10.65 CRORES. ITA NO. 6749/MUM/2010(A.Y. 2007-08) 4 4. DEPARTMENT IS AGGRIEVED WITH THE AFOREMENTIONED DECISION OF LD. CIT(A) AND HAS RAISED THE AFOREMENTIONED GROUNDS OF APPEAL . 5. LD. D.R AFTER NARRATING THE FACTS, REFERRING TO THE GROUNDS OF APPEAL SUBMITTED THAT ASSESSEE HAS FILED ADDITIONAL EVIDEN CE BEFORE THE LD. CIT(A) AND LD. CIT(A) HAS ACCEPTED THE SAME IN CONTRAVENTI ON OF RULE 46A OF THE INCOME TAX RULE,1962, HENCE, HIS ORDER SHOULD BE SE T ASIDE AND THAT OF AO BE RESTORED. HOWEVER, LD. D.R COULD NOT SPECIFY TH AT WHICH WAS THE PARTICULAR DOCUMENT WHICH WAS NOT SUBMITTED BY THE ASSESSEE TO THE AO AND WAS SUBMITTED TO LD. CIT(A) FOR THE FIRST TIME. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD. D.R. WE HAVE ALSO GONE THROUGH THE ASSESSMENT ORDER AS WELL THE ORDER PASSED BY LD. CIT(A). THE AO HAS CLEARLY MENTIONED IN THE ASSESS MENT ORDER THAT ASSESSEE HAD SUBMITTED COMPLETE DETAILS IN RESPECT OF AMOUN T OF RS.17,80,28,461/-. ACCORDING TO AO THE ASSESSEE SHOULD HAVE SUBMITTED THE COMPLETE DETAILS REGARDING RS.24,34,42,858/-. FROM THE FORMULA ADOP TED BY THE AO IT CAN BE SEEN THAT HE WAS AWARE OF THE TOTAL SALES MADE BY T HE ASSESSEE AS HE HAS STATED THE SUM IN THE FORMULA WHILE COMPUTING THE DEDUCTION. IT CANNOT BE ASSUMED THAT AO DID NOT HAVE DETAILS OF SUNDRY DEB TORS PERTAINING TO EARLIER YEARS. IT WAS SUBMITTED BY THE ASSESSEE THAT THE TOTAL SUNDRY DEBTORS SHOWN AT THE END OF THE YEAR WERE NOT ENTIRELY PER TAINED TO THE FINANCIAL YEAR UNDER CONSIDERATION. WHAT WAS EXPLAINED BY THE A SSESSEE BEFORE LD. CIT(A) WAS ONLY THAT RECEIPTS DURING THE YEAR UNDER CONSI DERATION AS WELL AS THE RECEIPTS WITHIN 12 MONTHS FROM THE END OF THE PREVI OUS YEAR THE DETAILS OF WHICH WERE DULY SUBMITTED BY THE ASSESSEE TO THE AO . THEREFORE, WE COULD NOT FIND ANY MATERIAL WHICH COULD BE TERMED AS FRES H MATERIAL SUBMITTED BY THE ASSESSEE FOR THE FIRST TIME BEFORE LD. CIT(A). MOREOVER, DEPARTMENT COULD NOT FURNISH ANY MATERIAL ON RECORD TO NEGAT E THE CLAIM OF THE ASSESSEE THAT FACTUALLY THE ASSESSEE WAS ELIGIBLE FOR THE D EDUCTION AS CLAIMED BY IT. ITA NO. 6749/MUM/2010(A.Y. 2007-08) 5 UNLESS SUCH MATERIAL HAS BEEN BROUGHT ON RECORD AND THERE IS NO SPECIFIC EVIDENCE WHICH CAN BE TERMED AS FRESH EVIDENCE FILE D BEFORE LD. CIT(A), WE DECLINE TO INTERFERE IN THE ORDER PASSED BY LD. CI T(A). THEREFORE, THE APPEAL FILED BY THE DEPARTMENT IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 26 TH DAY OF SEPT. 2012 SD/- SD/- (B.RAMAKOTAIAH ) (I.P.BANSAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 26 TH SEPT. 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.R F BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM.