THE ACIT 20(2), MUMBAI V. M/S. PAL INTERNATIONAL, MUMBAI

ITA 6786/MUM/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1564 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2009
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2003-2004
• Appeal Filed On: 08-11-2007
• Court: TRIBUNAL
• Assessee Lawyers: R K BOTHRA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI R.K. GUPTA, JM & SHRI J. SUDHAKAR RED DY, AM I.T.A. NO. 6786/MUM/2007 ASSESSMENT YEAR : 2003-04. ASSTT. COMMISSIONER OF M/S PAL INTERNATIONAL, INCOME TAX-20(2), VS. PAL HOUSE, 41, MAROL MUMBAI. CO-OP. SOCIETY,ANDHERI (E), MUMBAI : 400 059. PAN : AAAFP6036F (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AARSI PRASAD. RESPONDENT BY : SHRI R.K. BOT HRA. O R D E R PER J. SUDHAKAR REDDY : THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED A GAINST THE ORDER OF THE CIT(APPEALS)-XX, MUMBAI DATED 06-08-20 07 FOR THE ASSESSMENT YEAR 2003-04 ON THE FOLLOWING GROUNDS : 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.29,37,910/- BECAUSE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENCE IN SUPPORT OF COST OF THE CLAIM. MOREOVER, ASSESSEE HAS HIMSELF A CCEPTED THE CLAIM OF INSURANCE COMPANY OF RS.16,77,089/- AS AGA INST THE CLAIM OF RS.46,09,749/-. THUS ASSESSEE HIMSELF IS NOT ABL E TO SUBSTANTIATE HIS CLAIM OF RS.29,37,910/- EVEN BEFORE INSURANCE C OMPANY. 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AND IN THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF RS.40,22,431/- OUT OF PURCHASE OF GREY FABRIC AND PROCESSING CHARG ES U/S 40A(2)(B). IN VIEW OF THE DECISION OF BOMBAY HIGH COURT IN THE CASE OF SHATRUNJAY DIAMONDS 261 ITR 258, ASSESSEE HAS FAIAL ED TO DISCHARGE HIS BURDEN OF PROVING REASONABLENESS OF P RICES PAID TO SPECIFIED PERSONS U/S 40A(2). A.O. HAS RIGHTLY DISA LLOWED THE 2 EXCESSIVE EXPENDITURE IN VIEW OF DECISION OF MADRA HIGH COURT IN MOFUSSIL WAREHOUSE AND TRADING CO. LIMITED VS. CIT 238 ITR 867. 2. WE HAVE HEARD MR. AARSI PRASAD, THE LEARNED DR AND MR. R.K. BOTHRA, THE LEARNED COUNSEL FOR THE ASSESSEE. 3. THE FACTS OF THE CASE IN BRIEF ARE THAT THE AS SESSEE IS IN THE BUSINESS OF EXPORT OF FABRIC. IT CLAIMED CERTAIN L OSS DUE TO FLOODS AMOUNTING TO RS.29,37,910/- DURING THE YEAR. THE AO DISALLOWED THIS CLAIM OF THE ASSESSEE. FURTHER, HE MADE AN ADDITION U/S 40A(2)(B). ON APPEAL, THE FIRST APPELLATE AUTHORITY DELETED THE A DDITION. AGGRIEVED, THE REVENUE FILED THIS APPEAL BEFORE US. 4. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIR CUMSTANCES OF THE CASE AND A PERUSAL OF THE PAPERS ON RECORD A ND THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE CASE LAWS CITED, W E HOLD AS FOLLOWS. 5. ON THE ISSUE OF ALLOWABILITY OF LOSS DUE TO FLO ODS, WE FIND THAT THE ASSESSEE HAS INTIMATED THE INSURANCE COMPA NY OF THE LOSS INCURRED AND HAS ALSO MADE A CLAIM WITH THE INSURAN CE COMPANY. THE INSURANCE COMPANY ASSESSED THE LOSS THROUGH ITS SUR VEYOR AND ULTIMATELY ACCEPTED THE CLAIM OF THE ASSESSEE, THOU GH THE QUANTUM OF CLAIM APPROVED BY THE INSURANCE COMPANY WAS LESSER. THE AO IN THIS CASE DISALLOWED THE CLAIM MAINLY ON THE GROUND THAT , THE ASSESSEE HAD NOT SUBMITTED EVIDENCE AS TO HOW THE TOTAL COST ON FABRIC LOST WAS COMPUTED AND SECONDLY FOR THE REASON THAT THE ASSES SEE HAS NOT INTIMATED ANY GOVERNMENT AGENCY ABOUT THE LOSS. 5.1 THE FIRST APPELLATE AUTHORITY AT PARA 2.3 OF H IS ORDER CONSIDERED THESE OBJECTIONS OF THE AO AND FOUND THA T THE DETAILS OF 3 GOODS DAMAGED WAS SUBMITTED TO THE INSURANCE AUTHOR ITIES AND ALSO THAT THE PARTICULARS OF STOCK INSURED, DESCRIPTION, THE NATURE OF CLOTH, THE QUANTITY IN METERS, AND THE LOT NO. AND THE RATE WA S ALSO AVAILABLE. HE FOUND THAT THE AO HAS NOT POINTED OUT ANY SPECIFIC FAULT WITH ANY OF THESE DETAILS. PARTICULAR OF THE STOCK LYING AT ANY OTHER PLACE WAS NOT COVERED UNDER THE INSURANCE POLICY. THE FIRST APPEL LATE AUTHORITY HAS ALSO RIGHTLY OBSERVED THAT EXCEPT THE INSURANCE COM PANY NO OTHER GOVERNMENT AGENCY NEED BE INTIMATED ABOUT THE LOSS DUE TO FLOODS. HE ALSO FOUND NO INFIRMITY IN THE ACCOUNTING TREATMENT GIVEN TO THE LOSS BY THE ASSESSEE. WE FULLY AGREE WITH THESE FINDINGS. 5.2 THE SUBMISSIONS OF THE LEARNED DR THAT ADDITIO NAL EVIDENCE WAS ADMITTED BY THE CIT(APPEALS) IS NOT CORRECT. TH E REVENUE HAS NOT TAKEN ANY GROUND BY RELYING ON RULE 46A. UNDER THES E CIRCUMSTANCES, WE UPHOLD THE FINDINGS OF THE FIRST APPELLATE AUTHO RITY AND DISMISS GROUND NO. 1 OF THE REVENUE. 6. THE SECOND GROUND PERTAINS TO DISALLOWANCE MADE U/S 40A(2)(B). AFTER CONSIDERING THE RIVAL CONTENTIONS , WE FIND THAT THE FIRST APPELLATE AUTHORITY AT PAGE 11 PARA 3.3 HAS GIVEN A SPECIFIC FINDING THAT THE AO HAS NOT SPECIFIED THAT THE RATES AT WHICH TH E ASSESSEE HAD MADE THE PAYMENTS WERE HIGHER THAN THE MARKET RATES. ON THE OTHER HAND, HE FOUND THAT THE ASSESSEES SUBMISSION CONTAINS SPECI FIC PARTICULARS. ON EXAMINATION OF THESE SPECIFIC PARTICULARS, THE FIRS T APPELLATE AUTHORITY OBSERVED THAT WITH REGARD TO PROCESSING CHARGES PAI D TO M/S ANGAD PAL INDUSTRIES P. LTD., THERE IS NOTHING TO INDICATE TH AT THE RATES CHARGED TO THE ASSESSEE WERE HIGHER THAN THE RATES CHARGED TO OTHER PARTIES. SIMILAR IS HIS FINDING OF FACT ON THE ISSUE OF PURC HASE OF GREY FABRIC. THE LEARNED DR WAS NOT ABLE TO CONTRADICT THESE FACTUAL FINDINGS OF THE FIRST 4 APPELLATE AUTHORITY. THUS, WE UPHOLD THE SAME AND D ISMISS GROUND NO. 2 OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED ON THIS 26 DAY OF NOVEMBER, 2 009. SD/ SD/- (R.K. GUPTA)) (J. SUDHAKAR RE DDY) JUDICIAL MEMBER ACCOUNTANT MEMBE R MUMBAI, DT: 26 TH NOV., 2009 WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR, C-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES