The ACIT, Circle-4, Baroda V. M/s. Motorol Speciality Oil Ltd., Baroda

ITA 735/AHD/2009

• Counselvise Citation: 73520514 RSA 2009
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 24-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 05-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Keywords: Gross profit estimation; Opportunity of being heard; Additional evidence; Corroborative evidences; Assessment record; Documents seized
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, D BENCH, AHMEDABAD BEFORE SHRI D. K. TYAGI, JUDICIAL MEMBER AND SHRI A. K. GARODIA, ACCOUNTANT MEMBER I.T.A. NO.319, 320 & 735/AHD/2009 (ASSESSMENT YEARS 2002-03, 2003-04 & 2004-05) DCIT, CIRCLE 4, BARODA VS. M/S. MOTOROL SPECIALITY OIL LTD., (FORMERLY RINKI HYDROCARBON LTD.), MOTOROL HOUSE RACE COURSE CIRCLE, BARODA PAN/GIR NO. : AAACR8989G (APPELLANT) .. (RESPONDENT) REVENUE BY: SHRI B. L. YADAV, DR ASSESSEE BY: NONE DATE OF HEARING: 24.11.2011 DATE OF PRONOUNCEMENT: 30.11.2011 O R D E R PER SHRI D. K. TYAGI, J.M:- THESE ARE REVENUES APPEALS DIRECTED AGAINST SEPAR ATE ORDERS OF LD. CIT(A) III, BARODA DATED 14.11.2008 FOR THE ASSESSM ENT YEAR 2002-03 AND 2003-04 AND DATED 02.12.2008 FOR THE ASSESSMENT YEA R 2004-05. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE OR ON BE HALF OF OFFICIAL LIQUIDATOR. ON EARLIER OCCASIONS ALSO, NONE APPEAR ED ON BEHALF OF THE ASSESSEE ON 29.09.2011 AND ALSO ON 27.07.2011 AND H ENCE, WE PROCEED TO DECIDE THESE APPEALS OF THE REVENUE EX PARTE QUA TH E ASSESSEE. 3. LD. D.R. SUPPORTED THE ASSESSMENT ORDER IN ALL T HE THREE YEARS. IT WAS ALSO SUBMITTED BY HIM THAT RELIEF WAS ALLOWED B Y LD. CIT(A) WITHOUT ANY BASIS AND HENCE, ORDER OF LD. CIT(A) SHOULD BE REVERSED AND THAT OF THE A.O. SHOULD BE RESTORED. I.T.A.NO.319,320,735 /AHD/2009 2 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D. R. OF THE REVENUE AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BEL OW. IN ASSESSMENT YEAR 2002-03, ADDITION OF RS.63,08,808/- WAS MADE B Y THE A.O. ON ACCOUNT OF LOW GROSS PROFIT AND VARIOUS OTHER DISAL LOWANCES WERE MADE BY HIM OUT OF VARIOUS OTHER EXPENSES. OTHER DISALL OWANCES WERE ALSO CONFIRMED BY LD. CIT(A) AND OUT OF THE ADDITION MAD E BY THE A.O. ON ACCOUNT OF LOW GROSS PROFIT AT RS.103.08 LACS, LD. CIT(A) ALLOWED RELIEF TO THE ASSESSEE BY CONFIRMING THE ADDITION TO THE EXTE NT OF RS.40 LACS ONLY. WE FIND THAT THE LD. CIT(A) HAD MERELY STATED THAT IF GROSS PROFIT ADDITION IS RESTRICTED TO RS.40 LACS THEN INTEREST OF JUSTICE WILL BE MET WITHOUT GIVING ANY BASIS AND HENCE, WE FEEL THAT T HIS ORDER OF LD. CIT(A) IS NOT SUSTAINABLE AND HE SHOULD DECIDE THE ISSUE A FRESH AND PASS REASONED AND SPEAKING ORDER. WE, THEREFORE, SET ASIDE THE E RODE OF LD. CIT(A) AND RESTORE THE MATTER BACK TO HIS FILE FOR A FRESH DEC ISION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SID ES AND HE SHOULD PASS A WELL REASONED AND SPEAKING ORDER. 5. IN THE RESULT, THIS APPEAL OF THE REVENUE FOR TH E ASSESSMENT YEAR 2002-03 STANDS ALLOWED FOR STATISTICAL PURPOSE. 6. IN ASSESSMENT YEAR 2003-04, WE FIND THAT THE A.O . HAS MADE ADDITION OF RS.1,10,48,136/- OUT OF MANUFACTURING A ND OTHER EXPENSES WHICH IS 50% OF THE TOTAL EXPENSE CLAIMED BY THE AS SESSEE. THE ASSESSMENT WAS COMPLETED BY THE A.O. U/S 144. BEFO RE LD. CIT(A), ADDITIONAL EVIDENCE WERE SUBMITTED BY THE ASSESSEE AND THE LD. CIT(A) HAS OBTAINED REMAND REPORT ALSO FROM THE A.O. BUT I N THE REMAND REPORT, THE A.O. STATED THAT THE ASSESSEE COULD NOT SUBMIT ANY SUPPORTING EVIDENCE AND, THEREFORE, ADDITION MADE BY THE A.O. SHOULD BE CONFIRMED. LD. CIT(A) HAS ALSO STATED IN PARA 4.4 OF HIS ORDER THAT IN THE ABSENCE OF ANY SUPPORTING MATERIAL, IT CAN NOT BE SAID THAT TH E ENTIRE EXPENSES HAD I.T.A.NO.319,320,735 /AHD/2009 3 BEEN INCURRED ONLY FOR THE PURPOSE OF BUSINESS AND ACCORDINGLY, PART DISALLOWANCE FOR WANT OF VERIFICATION IS JUSTIFIED BUT 50% DISALLOWANCE MADE BY THE A.O. IS ON HIGHER SIDE AND ON THIS BASI S, HE HAS CONFIRMED THE DISALLOWANCE OF 20% BUT THERE IS NO BASIS GIVEN BY HIM AS TO HOW, THE EXPENSES INCURRED IN THE PRESENT YEAR ARE COMPARABL E WITH THE EXPENSES INCURRED IN THE PRECEDING AND SUCCEEDING YEARS AND, THEREFORE, WE FEEL THAT IN THIS YEAR ALSO, THE MATTER SHOULD GO BACK T O THE FILE OF LD. CIT(A) FOR A FRESH DECISION AND HENCE, WE SET ASIDE THE OR DER OF LD. CIT(A) IN THIS YEAR ALSO AND RESTORE THE MATTER BACK TO HIS F ILE FOR A FRESH DECISION AFTER ASCERTAINING THE COMPARABILITY OF EXPENSES IN CURRED DURING THIS YEAR WITH THE EXPENSE INCURRED IN THE PRECEDING YEAR AND SUCCEEDING YEAR AND AFTER ALLOWING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. WE HAVE ALSO NOTED THAT IT IS STATED BY THE LD. CIT(A) IN PARA 4.2 OF HIS ORDER THAT BEFORE HIM, IT WAS SUBMITTED THAT THE REASONS FOR NON PRODUCTION OF VOUCHERS ARE ATTACHMENT BY COURT RECEIVER, EXCISE S EARCH AND SEIZURE OF VARIOUS ACCOUNTING RECORDS. NOW, THE COURT RECEIVE R HAS TO APPEAR BEFORE HIM AND BY NOW, DOCUMENTS SEIZED IN EXCISE SEARCH A ND OTHER SEIZURE SHOULD HAVE BEEN RELEASED AND HENCE, NOW, THE ASSES SEE SHOULD PRODUCE ALL THESE VOUCHERS FOR VERIFICATION. 7. IN THE RESULT, THIS APPEAL OF THE REVENUE IS ALS O ALLOWED FOR STATISTICAL PURPOSES. 8. IN ASSESSMENT YEAR 2004-05, THE ONLY ADDITION MA DE BY THE A.O. IS OF RS.29.30 LACS U/S 68 ON ACCOUNT OF UNSECURED LOA NS RECEIVED BY THE ASSESSEE DURING THIS YEAR BECAUSE THE ASSESSEE COUL D NOT FURNISH CONFIRMATION AND CREDITWORTHINESS OF THE DEPOSITORS . BEFORE CIT(A), THE ASSESSEE FURNISHED CONFIRMATION OF M/S. APURTI PVT. LTD. WITH PAN OF THIS PARTY AND LD. CIT(A) ADMITTED THE SAME AS ADDITIONA L EVIDENCE UNDER RULE 46A AND OBTAINED REMAND REPORT OF THE A.O. ALS O AND IN THE REMAND I.T.A.NO.319,320,735 /AHD/2009 4 REPORT, IT WAS STATED BY THE A.O. THAT THE E ASSESS EE HAS FILED CONFIRMATION BUT DETAILS OF FILING OF INCOME TAX RETURNS AND SOU RCE OF INVESTMENT ETC. WERE NOT FILED AND, THEREFORE, THE ONUS CAST UPON T HE ASSESSEE U/S 68 WAS NOT DISCHARGED. THEREAFTER, LD. CIT(A) HAD DELETED THE ADDITION ON THIS BASIS THAT SINCE THE CONFIRMATION HAS BEEN FURNISHE D BY THE ASSESSEE OF THE LOAN CREDITOR AS WELL AS HIS PAN, THE ONUS CASTED O N THE ASSESSEE HAS BEEN DISCHARGED BY HIM AND NOW, THE A.O. CANNOT ASK THE ASSESSEE TO SUBMIT FURTHER EVIDENCE AND MAKE ADDITION ON NON COMPLIANC E AND FOR TAKING THIS VIEW, LD. CIT(A) HAS FOLLOWED THE JUDGMENT OF HONB LE APEX COURT RENDERED IN THE CASE OF CIT VS ORISSA CORPORATION PVT. LTD. AS REPORTED IN 159 ITR 78(SC). IN OUR CONSIDERED OPINION, BY WAY OF FILING CONFIRMATION ALONG WITH PAN OF THE LOAN CREDITOR, I DENTITY ASPECT IS COMPLIED WITH BUT THERE ARE TWO MORE ASPECTS I.E. C REDITWORTHINESS OF THE LOAN CREDITOR AND GENUINENESS OF TRANSACTION. REGAR DING THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF ORISSA CORPORATION PVT. LTD. (SUPRA), WE FIND THAT ON PAGE 84 OF 159 ITR, IT IS NOTED BY THE HONBLE APEX COURT THAT IN THAT CASE IT WAS IN THE KNOWLEDG E OF THE REVENUE THAT THE SAID CREDITOR WAS THE INCOME TAX ASSESSEE. IN T HE PRESENT CASE, IT IS CLEARLY STATED BY THE A.O. IN THE REMAND REPORT THA T DETAILS OF FILING INCOME TAX RETURN WERE NOT FILED. IN THE ABSENCE O F THIS INFORMATION, AS TO WHERE THESE LOAN CREDITORS ARE BEING ASSESSED, THE A.O. CANNOT EXAMINE THE ASSESSMENT RECORD OF THOSE LOAN CREDITORS TO FI ND OUT THEIR CREDITWORTHINESS ETC. AND HENCE, WE FEEL THAT ON TH IS ISSUE, THE ORDER OF LD. CIT(A) IS NOT SUSTAINABLE AND IT REQUIRES FRESH DECISION AFTER EXAMINING THIS ASPECT I.E. CREDITWORTHINESS OF THE LOAN CREDITORS AND HENCE, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO HIS FILE FOR A FRESH DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. I.T.A.NO.319,320,735 /AHD/2009 5 9. IN THE RESULT THIS APPEAL OF THE REVENUE IS ALLO WED FOR STATISTICAL PURPOSE. 10. IN THE COMBINED RESULT, ALL THE THREE APPEALS OF TH E REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 11. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED HEREINABOVE. SD/- SD/- (A. K. GARODIA) (D. K. TYAGI) ACCOUNTANT MEMBER JUIDICIAL MEMBER SP/*DKP /TRUE COPY/ COPY OF THE ORDER FORWARDED TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT (APPEALS) 5. THE DR, AHMEDABAD BY ORDER 6. THE GUARD FILE AR,ITAT,AHMEDABAD 1. DATE OF DICTATION 24/11 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 25/11.OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P .S./P.S. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S. 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK .. 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER . 9. DATE OF DESPATCH OF THE ORDER. ..