M/s. BRAUN TEXTILE PROCESSORS, KOLKATA V. ITO - 12(2)(1), MUMBAI

ITA 7329/MUM/2007

• Counselvise Citation: 732919914 RSA 2007
• Duration Of Justice: 4 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 14-12-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 07-12-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAVIN VARMA
• Assessee Lawyers: V K TULSIAN
• Keywords: Opportunity of being heard
• Section: 144; 143(3); 142(1); 80HHC

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES, B, MUMBAI BEFORE SHRI R.S. SYAL (A.M.) AND SHRI D.K.AGARWAL (J M) ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) M/S BRAUN TEXTILE PROCESSORS 56/1 CUNNING STREET KOLKATA, PAN:AAEFB4314J THE INCOME TAX OFFICER, 12(2)(1), ROOM NO.137. 1 ST FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 APPELLANT V/S RESPONDENT DATE OF HEARING : 14.12.2011 DATE OF PRONOUNCEMENT : 16.12.2011 APPELLANT BY : SHRI V.K.TULSIAN RESPONDENT BY : SHRI PRAVIN VARMA O R D E R PER D.K.AGARWAL (JM) THIS APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 24.9.2007 PASSED BY THE LD.CIT(A) FOR THE ASSESSMENT YEAR 2004-05. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM IS A TRADER AND EXPORTER OF HOSIERY GOODS AND WOOLEN ITEMS. IT FILED RETURN DECLARING TOTAL INCOME AT RS.NIL AFTER CLAIMING DEDUCTION U/S 80HHC. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 2 THE AO ISSUED VARIOUS STATUTORY NOTICES U/S 143(2) AND 142(1) OF THE INCOME TAX ACT, 1961 (IN SHORT T HE ACT) FOLLOWED BY LETTER DATED 15.12.2006 INFORMING THE ASSESSEE AS TO WHY THE PROPOSED ADDITION SHOULD NO T BE MADE IN CASE OF FAILURE TO COMPLY WITH THE NOTIC ES. THE ASSESSEE VIDE LETTER DATED 12.12.2006 FURNISHED CERTAIN DETAILS WITHOUT ANY EVIDENCE. IN THE ABSEN CE OF ANY BOOKS OF ACCOUNTS, BILL, VOUCHERS ETC., THE AO AFTER DISALLOWING VARIOUS EXPENSES INCLUDING DISALLOWANCE OF DEDUCTION U/S 80HHC COMPLETED THE ASSESSMENT AT AN INCOME OF RS.2,60,23,830/- VIDE ORDER DATED 21.12.2006 PASSED U/S 143(3) READ WITH SECTION 144 OF THE ACT. ON APPEAL, THE LD. CIT(A) WHILE ENHANCING THE INCOME IN RESPECT OF CLAIM OF BROKERAGE AND COMMISSION EXPENSE, PARTLY ALLOWED TH E APPEAL ON OTHER ISSUES. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. GROUND NO.1 OF CONCISE GROUNDS OF APPEAL READS AS UNDER : WHETHER THE LD. CIT(A) WAS JUSTIFIED BY CONFIRMING 50% ON AD-HOC BASIS DISALLOWANCE OF ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 3 DELHI OFFICE BUSINESS LOSS AMOUNTING TO RS.11,479/- AND RS.13,33,347/- IMPORT EXPENSES. 5. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS DEBITED A LOSS OF RS.11,479/- UNDER THE HEAD DELHI BRANCH OFFICE AND HAS ALSO DEBITED A SUM OF RS.13,33,647/- UNDER THE HEAD IMPORT EXPENSES. IN THE ABSENCE OF ANY DETAI LS AND GENUINENESS OF THE EXPENSES, THE AO DISALLOWED RS.13,33,347/- AND RS.11,479/- AGGREGATING TO RS.13,44,826/-. ON APPEAL, THE LD.CIT(A) WHILE OBSERVING THAT IT WILL BE FAIR AND REASONABLE IF T HE DISALLOWANCE IS REDUCED TO 50% OF THE TOTAL CLAIM , SUSTAINED THE DISALLOWANCE AT 50% AND DELETED THE BALANCE 50% OF THE DISALLOWANCE. 6. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS FILED DETAILS OF ALL THE RELEVANT EXPENSES APPEARING AT P AGES 56 TO 72 OF THE ASSESSEES PAPER BOOK, THEREFORE, T HE LD.CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE TO 50% OF SUCH EXPENSES. 7. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDE R OF THE AO AND THE LD. CIT(A). ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 4 8. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED VARIOUS DETAILS VIDE LETTER DATE D 12.12.2006 APPEARING AT PAGES 56 TO 72 OF THE ASSESSEES PAPER BOOK. THE AO WITHOUT ASKING FURTHER DETAILS OR SUPPORTING MATERIAL MADE THE ENT IRE DISALLOWANCE OF EXPENSES CLAIMED BY THE ASSESSEE. WE FURTHER FIND THAT BEFORE THE LD. CIT(A), THE ASSESSEE HAS AGAIN FILED SUCH DETAILS ALONG WITH DE TAILS OF IMPORT-EXPENSES APPEARING AT PAGES 74 TO 117 OF THE ASSESSEES PAPER BOOK. THE LD. CIT(A), IN THE INTERESTS OF JUSTICE, REDUCED THE DISALLOWANCE T O 50%. SINCE THE DETAILS FILED BY THE ASSESSEE HAVE NOT BEEN EXAMINED PROPERLY BY THE AO AND THE LD. CIT(A ) AND THE ASSESSEE HAS NOT PRODUCED THE BOOKS OF ACCOUNTS, BILL, VOUCHERS ETC. OF THE EXPENSES CLAIM ED, THEREFORE, IN THE INTEREST OF JUSTICE, WE CONSIDER IT FAIR AND REASONABLE THAT THE MATTER SHOULD GO BACK TO TH E FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE OR DERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT A ND SEND BACK THE MATTER TO THE FILE OF THE AO TO DECI DE THE ISSUE OF SUSTENANCE OF DISALLOWANCE OF 50% OF ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 5 EXPENSES AFRESH AND ACCORDING TO LAW AFTER PROVIDIN G THE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.1 IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NO.2 READS AS UNDER : WHETHER THE LD. CIT(A) WAS JUSTIFIED BY NOT ONLY UPHOLDING THE 10% DISALLOWANCE OF CONTRACTUAL BROKERAGE AND COMMISSION BUT ALSO BY ENHANCING THE DISALLOWANCE OF ENTIRE CLAIM OF BROKERAGE AND COMMISSION TO THE TUNE OF RS.1,46,59,261/-JUST ON THE BASIS THAT IT WAS NOT PAID DURING THE YEAR. 10. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.1,46,59,261/- UNDER THE HEAD BROKERAGE AND COMMISSION. IN THE ABSENCE OF ANY BASIS, NATURE OF SERVICES RENDERED, CONTRACT AGREEMENTS, NAME AND ADDRESSES OF THE PERSONS TO WHOM THE COMMISSION AND BROKERAGE WAS PAID, MODE OF PAYMENT, DETAILS OF TDS ETC., THE AO DISALLOWED RS.14,66,000/- BEING 10% OF SUCH EXPENSES CLAIMED. ON APPEAL, THE LD. CIT(A) OBSERVED THAT DURING THE LAST ASSESSMENT YEA R I.E. A.Y.2003-04 THE ENTIRE 100% OF SUCH CLAIM WAS DISALLOWED BY THE AO. HE, THEREFORE, ISSUED A NOTI CE OF ENHANCEMENT TO THE ASSESSEE. THE LD. CIT(A) AF TER ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 6 CONSIDERING THE ASSESSEES REPLY THAT UNDER MERCANT ILE SYSTEM OF ACCOUNTING SUCH EXPENSES ARE DULY ALLOWABLE, HELD THAT IN THE ABSENCE OF ANY EVIDENCE IN SUPPORT OF SUCH CLAIM, THE EXPENSES CLAIMED BY THE ASSESSEE SHOULD NOT BE ALLOWED AND ACCORDINGLY HE ENHANCED THE ASSESSEES INCOME BY RS.1,31,93,261/- . 11. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT THE ASSESSEE HAS FILED DETAILED SUBMISSIONS BEFORE THE AO AND THE LD. CIT(A) APPEARING AT PAGES 56 TO 72, 125 TO 129 AND 130 TO 134 OF THE ASSESSEES PAPER BOOK, THEREFORE, THE AO AND LD.CIT(A) WERE NOT JUSTIFIED IN DISALLOW ING THE CLAIM OF THE ASSESSEE. 12. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORD ER OF THE AO AND THE LD. CIT(A). 13. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED CERTAIN DETAILS BEFORE THE AO A ND THE LD. CIT(A). HOWEVER, THE AO AND THE LD. CIT(A) WITHOUT EXAMINING THE SAME HAVE REJECTED THE CLAIM ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 7 OF THE ASSESSEE. THIS BEING SO AND KEEPING IN VIEW THAT THE ASSESSEE HAS FAILED TO PRODUCE BOOKS OF ACCOUNT AND RELEVANT VOUCHERS BEFORE THE AO, WE I N THE INTERESTS OF JUSTICE CONSIDER IT FAIR AND REASO NABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY T HE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK T HE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE O F DISALLOWANCE OF BROKERAGE AND COMMISSION EXPENSES AFRESH AND ACCORDING TO LAW AFTER PROVIDING THE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. GROUND NO.2 IS, THEREFORE, PARTLY ALLOWED FOR STATI STICAL PURPOSES. 14. GROUND NO.3 READS AS UNDER : WHETHER THE LD. CIT(A) WAS JUSTIFIED BY UPHOLDING DISALLOWANCE OF RS1379597/- PROPORTIONATE TO THE TOTAL INTEREST OF RS.5682167/- PAID TO THE BANK HOLDING THAT OUT OF THE TOTAL CREDIT FACILITIES AVAILED FROM BANK RS.2178502/- ADVANCES WERE GIVEN BY THE APPELLANT INTEREST FREE. 15. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT THE ASSESSEE HAS DEBITED A SUM OF RS.56,82,167/- AS BANK INTEREST ON THE LOANS TAKEN AND ON THE OTHER HAND IT HAS ADVANCED INTEREST FREE ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 8 ADVANCES OF RS.89,70,630/-. IN THE ABSENCE OF ANY DETAILS THE AO DISALLOWED THE ENTIRE CLAIM OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) AFTER CONSIDER ING THE ASSESSEES EXPLANATION DIRECTED THE AO TO DEL ETE THE DISALLOWANCE OF BANK INTEREST PAYMENT PROPORTIONATELY AND ACCORDINGLY HE ALLOWED PART REL IEF TO THE ASSESSEE. 16. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT IN VIEW OF THE VARIOUS DETAILS FILED BEFORE THE AO, LD.CIT(A) AND THE WRIT TEN SUBMISSIONS FILED BEFORE THE LD.CIT(A), THE DISALLOWANCE SUSTAINED BY THE LD.CIT(A) BE DELETED . 17. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORD ER OF THE AO AND THE LD. CIT(A). 18. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED CERTAIN DETAILS BEFORE THE AO A ND THE LD. CIT(A). HOWEVER, THE AO AND THE LD. CIT(A) WITHOUT CONSIDERING THE SAME HAVE REJECTED THE CLAI M OF THE ASSESSEE. THIS BEING SO AND KEEPING IN VIEW ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 9 THAT THE ASSESSEE HAS ALSO FAILED TO PRODUCE BOOKS OF ACCOUNT AND RELEVANT VOUCHERS BEFORE THE AO, WE, IN THE INTERESTS OF JUSTICE CONSIDER IT FAIR AND REASO NABLE THAT THE MATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY T HE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK T HE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE O F SUSTENANCE OF DISALLOWANCE OF INTEREST EXPENSES AFRESH AND ACCORDING TO LAW AFTER PROVIDING THE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. GROUND NO.3 IS, THEREFORE, PARTLY ALLOWED FOR STATI STICAL PURPOSES. 19. GROUND NO.4 READS AS UNDER : WHETHER THE LD.CIT(A) WAS JUSTIFIED BY DISALLOWING RS.7858850/- BEING 5% OF TOTAL PURCHASE AMOUNT. 20. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT THE AO NOTED THAT IN THE PRECEDING ASSESSMENT YEAR I.E. AY 2003-04, THE ASSESSEE FAILED TO PROVE THE GENUINENE SS OF EXPENSES DEBITED UNDER THE HEAD MANUFACTURING EXPENSES. IN THE ABSENCE OF ANY DETAILS FURNISHED B Y THE ASSESSEE, THE AO DISALLOWED A SUM OF RS.78,58,850/- BEING 5% OF THE TOTAL PURCHASES OF ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 10 RS.15,71,77,005/- AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE LD. CIT(A) WHILE AGREEING WITH THE VIEWS OF THE AO CONFIRMED THE DISALLOWANCE MADE BY THE AO. 21. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITS THAT IN VIEW OF THE VARIOUS DETAILS FILED BEFORE THE AO, LD. CIT(A) AND THE WR ITTEN SUBMISSIONS FILED BEFORE THE LD.CIT(A), THE DISALLOWANCE SUSTAINED BY THE LD.CIT(A) BE DELETED . 22. ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORD ER OF THE AO AND THE LD. CIT(A). 23. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABL E ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED CERTAIN DETAILS BEFORE THE AO A ND THE LD. CIT(A). HOWEVER, THE AO AND THE LD. CIT(A) WITHOUT EXAMINING THE SAME HAVE REJECTED THE CLAIM OF THE ASSESSEE. THIS BEING SO AND KEEPING IN VIEW THAT THE ASSESSEE HAS ALSO FAILED TO PRODUCE BOOKS OF ACCOUNT AND RELEVANT MATERIAL BEFORE THE AO, WE, I N THE INTERESTS OF JUSTICE CONSIDER THAT THE MATTER S HOULD ITA NO.7329/MUM/2007 (ASSESSMENT YEAR: 2004-05) 11 GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE S ET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTER TO THE FILE O F THE AO TO DECIDE THE ISSUE OF DISALLOWANCE OF EXPENSES AFRESH AND ACCORDING TO LAW AFTER PROVIDIN G THE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NO.4 IS, THEREFORE, PARTLY ALLOWED FOR STATISTICAL PURPOSES. 24. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH DEC.,2011. SD SD ( R.S. SYAL) (D.K.AGARWAL) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, 16TH DECEMBER, 2011 SRL: COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH 6. GUARD FILE. BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMB AI