PRATIBHA PIPES AND STRUCTURAL CONSORTIUM, MUMBAI V. DY.C.I.T. 22(2), NAVI MUMBAI

ITA 6940/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1457 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-03-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 16-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C,MUM BAI BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6940/MUM/2012 FOR (ASSESSMENT YEAR : 2009-10 ) M/S PRATIBHA PIPES AND STRUCTURAL CONSORTIUM, C/O. JAYESH SANGHRAJKA & CO. CHARTERED ACCOUNTANTS, UNIT NO. 405, HIND RAJASTHAN CENTRE, D.S. ROAD, DADAR (E), MUMBAI-400014 PAN: AAJFP4822E VS. DY. CIT-22(2), TOWER NO.6, 4 TH FLOOR VASHI ABOVE VASHI RAILWAY STATION BUILDING COMPLEX, NAVI MUMBAI-400020 (APPELLANT) (RESPONDENT) ITA NO.7240/MUM/2012 FOR (ASSESSMENT YEAR : 2009-10 ) DY. CIT-22(2), TOWER NO.6, 4 TH FLOORVASHI ABOVE VASHI RAILWAY STATION BUILDING COMPLEX, NAVI MUMBAI- 400020 VS. M/S PRATIBHA PIPES AND STRUCTURAL CONSORTIUM, C/O. JAYESH SANGHRAJKA & CO. CHARTERED ACCOUNTANTS, UNIT NO. 405, HIND RAJASTHAN CENTRE, D.S. ROAD, DADAR (E), MUMBAI-400014 PAN: AAJFP4822E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MARGAV SHUKL A (AR) REVENUE BY : MS. MAHUVA SARKAR (DR) DATE OF HEARING : 20.12.2016 DATE OF PRONOUNCEMENT : 23.12.2016 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THESE TWO CROSS APPEAL U/S 253 OF THE INCOME-TAX A CT (ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS) [ FOR SHORT THE CIT(A)] 33, MUMBAI DATED 28.09.2012 FOR ASSESSMENT YEARS (AYS) 2009-10. AS BOTH THE APPEALS ARE FILED AGAINST THE SAME ORDER BY BOTH TH E PARTIES. THUS, BOTH THE APPEALS 2 ITA NOS. 6940 & 7240/M/2012 M/S PRATIBHA PIPES AND STRUCTURAL CONSORTIUM. WERE HEARD TOGETHER AND ARE BEING DECIDED BY A CONS OLIDATED ORDER TO AVOID THE CONFLICTING DECISION. ITA NO. 6940/MUM/2012 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT (A) ERRED IN DECIDING THE APPEAL WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD TO ASSESSEE; SUCH ORDER IS ERRONEOUS IN FACTS AND BAD IN LAW AND LIABLE TO BE QUASHED. 2. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. AS SESSING OFFICER ON ACCOUNT OF TREATING DIFFERENCE BETWEEN SALES AND PU RCHASES UNDER HEAD INCOME FROM OTHER SOURCES; SUCH ADDITION IS BAD IN LAW AND LIABLE TO BE DELETED. 3. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD ASS ESSING OFFICER ON ACCOUNT OF HOLDING THE PURCHASE AND SALE TRANSACTIO N AS SHAM CUM PAPER TRANSACTION; WHICH IS BAD IN LAW AND ERRONEOUS IN F ACTS AND LIABLE TO BE REVERSED. 4. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE INTEREST ON BILL DISCOUN TING FACILITY WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 5. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE BANK CHARGES AND COMMISS ION WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 6. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE BANK COMMISSION WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 7. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE AUDITOR'S REMUNERATION W HICH IS BAD IN LAW AND LIABLE TO BE DELETED. 8. ON THE GIVEN FACTS, CIRCUMSTANCES AND JUDICIAL P RONOUNCEMENTS; HON. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY LD ASSESSING OFFICER ON ACCOUNT OF DISALLOWING THE PRINTING AND STATIONERY WHICH IS BAD IN LAW AND LIABLE TO BE DELETED. 9. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND J UDICIAL PROPOSITION, LD. CIT (APPEALS) ERRED IN TREATING THE BENEFIT OF SALE S TAX SET OFF TAKEN BY ASSESSEE AS INCOME AND TAX IT UNDER THE HEAD 'INCOM E FROM OTHER SOURCES' WITHOUT GIVING ANY NOTICE UNDER SECTION 251 WHICH I S BAD IN LAW AND ERRONEOUS IN FACTS AND LIABLE TO BE QUASHED. ITA NO. 7240/MUM/2012 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 3 ITA NOS. 6940 & 7240/M/2012 M/S PRATIBHA PIPES AND STRUCTURAL CONSORTIUM. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) HAS ERRED IN ALLOWING RELIEF TO THE ASSESSEE TO THE EXTENT IMPUGNED IN THE GROUNDS ENUMERATED BELOW: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) ERRED IN DIRECTING THE AO TO VERIFY THE S ALES TAX SET-OFF AVAILED BY THE ASSESSEE BY LOOKING INTO THE RETURNS FILED W ITH THE SALES TAX DEPARTMENT, THUS SETTING ASIDE THE ASSESSMENT ORDER WITHOUT EXPLICITLY MENTIONING THE SAME. 2 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE GROUND NO 1 AS ALL OWED IN CONTRARY TO THE DISCUSSION IN THE APPELLATE ORDER THAT THE WHOL E TRANSACTION OF THE ASSESSEE IS SHAM AND FRAUDULENT. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD.CIT(A) ERRED IN NOT DISMISSING THE ASSESSEE'S APPEAL. 4. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE REVERSED AND THAT OF THE ASSESSING OFFICER BE RE STORED. 4. FIRST WE ARE TAKING ITA NO 6940/M/2012 APPEAL FILED BY THE ASSESSEE. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED RETURN OF INCO ME FOR RELEVANT AY ON 12.09.2009 DECLARING TOTAL LOSS OF RS. 68,02,570/-. THE ASSESS MENT COMPLETED ON 16.12.2011 U/S. 143(3) OF THE ACT. THE ASSESSING OFFICER (AO) WHILE MAKING THE ASSESSMENT, DISALLOWED VARIOUS EXPENSES CLAIMED BY ASSESSEE AS REFERRED IN PARAGRAPH NOS. 3 & 4 HOLDING THAT THE SAME ARE NOT RELATED WITH BUSINESS . THE AO FURTHER TREATED THE DIFFERENCE BETWEEN SALE AND PURCHASE OF RS. 64,15,2 83/- AS INCOME FROM OTHER SOURCES. ON APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) CONCLUDED THAT THE TRANSACTION SHOWN BY ASSESSEE ARE COLORABLE. THERE IS NO PROFIT OR LOSS ACTUALLY AROSE FROM SUCH SALE AND PURCHASE. IT WAS FURTHER CONCLUD ED THAT THE ONLY BENEFIT, THE ASSESSEE DERIVED IS SET OFF OF THE SALE TAX WHICH A MOUNT CANNOT BE ASCERTAINED IN THE ABSENCE OF SALES TAX RETURN OF THE ASSESSEE. THE LD CIT(A)DIRECTED THE AO TO DETERMINE THE SET OFF OF SALE TAX, IF AVAILED BY TH E ASSESSEE BY LOOKING INTO THE RETURNS WITH THE SALES TAX DEPARTMENT. THUS, BEING AGGRIEVE D BY THE DIRECTION OF LD. CIT (A), THE ASSESSEE HAS FILED THE APPEAL. THE REVENUE HAS ALSO FILED CROSS APPEAL AGAINST THE DIRECTION TO VERIFY THE SALE TAX SET OF F. 5. WE HAVE HEARD LD. AUTHORIZED REPRESENTATIVE (AR) FO R ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AN D PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE ARG UED THAT LD. CIT(A) ERRED IN TREATING THE BENEFIT OF SALE TAX SET OFF TAKEN BY A SSESSEE AS INCOME AND TAX IT UNDER THE HEAD INCOME FROM OTHER SOURCES WITHOUT GIVING ANY NOTICE OF ENHANCEMENT AS PROVIDED U/S 251 WHICH IS AGAINST THE SET JUDICIAL PROPOSITION OF LAW. ON THE OTHER 4 ITA NOS. 6940 & 7240/M/2012 M/S PRATIBHA PIPES AND STRUCTURAL CONSORTIUM. HAND, LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AO AND ARGUED THAT THE WHOLE TRANSACTIONS SHOWN BY ASSESSEE ARE SAME AND FRAUDUL ENT AND SUPPORTED THE ORDER OF AO. 6. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE LD. CIT(A) IN PARAGRAPH N O. 5.1 DIRECTED THE AO TO DETERMINE/EXAMINE, IF THE ASSESSEE AVAILED SALES TA X SET OFF. THE ONLY GRIEVANCE OF LD. AR OF THE ASSESSEE IS THAT THE LD. CIT (A) HAS NOT GIVEN ANY SHOW CAUSE NOTICE OR OPPORTUNITY BEFORE PASSING SUCH ORDER AS PROVIDED U /S 251 OF THE ACT. THE PERUSAL OF THE ORDER OF LD CIT(A) REVEALS THAT NO SUCH SHOW NO TICE WAS GIVEN BY LD CIT(A) BEFORE TREATING THE BENEFIT OF SALES TAX SET OFF TAKEN BY ASSESSEE AS INCOME AND TAX IT UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. CONSIDE RING THE PECULIARITY OF THE FACTS AND RIVAL CONTENTION OF THE PARTIES, WE DEEM IT APP ROPRIATE TO RESTORE ALL THE GROUNDS THE APPEAL TO THE FILE OF LD. CIT (A) TO DECIDE THE MATTER AFRESH. NEEDLESS TO SAY THAT THE LD. CIT (A) WILL BE ADEQUATE AND SUFFICIENT OPP ORTUNITY TO THE ASSESSEE AS WELL AS TO THE AO BEFORE DECIDING THE ISSUE. ITA NO. 7240/MUM/2012 7. AS WE HAVE ALREADY RESTORED THE APPEAL TO THE FILE OF LD. CIT(A). THUS, THE GROUND OF APPEAL RAISED BY REVENUE IS ALSO COVERED BY OUR ORD ER. 8. IN THE RESULT, BOTH THE APPEALS ARE ALLOWED FOR STA TISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DECEMBER, 2016. SD/- SD/- (P.K.BANSAL) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 23/12/2016 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/