PHARMACIA INDIA P.LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 7416/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3343 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 16-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHARUL TOPRANI
• Assessee Lawyers: PRADEEP KUMAR SINGH
• Keywords: Depreciation; Period of limitation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI PAWAN SINGH , JM ITA NO.7416/MUM/ 2013 (ASSESSMENT YEAR : 2002-03) PHARMACIA INDIA PVT. LTD. (NOW KNOWN AS PFIZER PRODUCT S INDIA PVT. LTD.) 5, PATEL ESTATE, OFF. S.V. ROAD, JOGESHWARI (W), MUMBAI-400102. VS. DCIT 8(2), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020. PAN/GIR NO.: AABCP5129M ( APPELLANT ) .. ( RESPONDENT ) ITA NO.7361/MUM/2013 (ASSESSMENT YEAR : 2002-03) PHARMACIA HEALTHCARE LTD. (NOW MERGED WITH PFIZER. LTD.) 5, PATEL ESTATE, OFF. S.V. ROAD, JOGESHWARI (W), MUMBAI-400102. VS. DCIT 8(2), AAYAKAR BHAVAN, M.K.ROAD, MUMBAI-400020. PAN/GIR NO.: AAACA5994G ( APPELLANT ) .. ( RESPONDENT ) REVENUE BY : SHRI KIRIT KAMDAR & MS. CHARUL TOPR ANI (AR) ASSESSEE BY : SHRI PRADEEP KUMAR SINGH (DR) DATE OF HEARING : 11/08/2016 DATE OF PRONOUNCEMENT: 07/09/2016 O R D E R PER PAWAN SINGH, JM: 1. THESE TWO APPEALS FILED BY TWO DIFFERENT ASSESSEE-C OMPANY AGAINST THE ORDER OF CIT(A)-17, MUMBAI DATED 24.05.2012 & 20.09.2013. T HE ITA NO. 7416/MUM/2013 FILED BY PHARMACIA INDIA PVT. LTD. (P IPL) IS TIME BARRED FOR 493 DAYS. THE APPEAL IS ACCOMPANIED WITH AN AFFIDAVIT O F SHRI V. KUMAR, DIRECTOR OF THE ASSESSEE-COMPANY IN SUPPORT OF APPLICATION FOR CONDONATION OF DELAY. THE CONTENTS OF AFFIDAVIT DISCLOSED THAT ASSESSMENT ORD ER U/S 143(3) WAS PASSED ON 14.03.2005 WHEREIN DISALLOWANCE ON ACCOUNT OF DEPRE CIATION OF FURNITURE AND FIXTURES, DEPRECIATION OF DATA PROCESSING, EQUIPMEN T, DISALLOWANCE OF ESI & PF AND ADHOC DISALLOWANCE ON PROMOTIONAL, MANUFACTURIN G AND OTHER EXPENSES WERE MADE. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) W HEREIN THE ASSESSEE GOT PARTIAL RELIEF. THEREAFTER A NOTICE U/S 274 R.W.S. 271(C) D ATED 04.03.2011 WAS SERVED UPON THE ASSESSEE. THE ASSESSEE SUBMITTED DETAILED REPLY VIDE REPLY DATED 25.03.2011. THE AO PASSED THE ORDER OF PENALTY U/S 271(1)(C) OF THE ACT ON 31.03.2011. WHILE PASSING THE ORDER OF PENALTY, THE AO PASSED ORDER C ONSIDERING THE ITA NOS. 7416 & 7361/M/13 PHARMACIA INDIA PVT. LTD. 2 ADDITION/DISALLOWANCE IN CASE OF A GROUP COMPANIES OF ASSESSEE VIZ. PHARMACIA HEALTHCARE PVT. LTD. (PHPL). FURTHER, AGGRIEVED BY THE ORDER OF PENALTY, THE ASSESSEE FILED APPEAL BEFORE THE CIT(A). THE AO ISS UED A CORRIGENDUM ORDER DATED 18.05.2012 AND ORDERED THAT NOTICE ISSUED TO PIPL M AY BE READ AS ISSUED IN THE NAME OF PHL. CONSIDERING THE FACT, THE APPEAL FILED BY ASSESSEE WAS DISMISSED VIDE ORDER DATED 24.05.2012 OBSERVING THAT THE ASSE SSEE IS ALLOWED TO WITHDRAW THE APPEAL, THUS THE ASSESSEE HAS NOT FILED APPEAL BEFO RE THE TRIBUNAL AGAINST THE ORDER DATED 24.05.2012. HOWEVER, THE ASSESSEE CHALLENGED THE ORDER OF CORRIGENDUM BEFORE THE CIT(A). THE APPEAL OF THE PHL WAS DISMIS SED BY CIT(A) HOLDING THAT NO APPEAL LIES AGAINST THE CORRIGENDUM VIDE ORDER D ATED 20.06.2012, AGAINST WHICH THE APPEAL NO. 7361/MUM/3013 IS FILED BEFORE US. AF TER FILING APPEAL BY PHL, THE PRESENT APPEAL IS ALSO FILED BEFORE THIS TRIBUNAL. AUTHORISED REPRESENTATIVE (AR) OF THE ASSESSEE ARGUED THAT THERE IS SUFFICIENT CAU SE FOR CONDONING THE DELAY IN FILING THE PRESENT APPEAL AS THE CONFUSION OCCURRED BEFORE THE LOWER AUTHORITIES DUE TO SIMILARITIES IN THE NAME OF THE ASSESSEE AND ASS ESSEE IN APPEAL NO. 7361/MUM/2013. AR OF THE ASSESSEE FURTHER ARGUED TH AT HE HAS GOOD CASE ON MERIT AND WOULD SUFFER LOSS IF THE APPEAL IS NOT CONDONED IN FILING THE PRESENT APPEAL, MOREOVER, THE REVENUE WILL NOT PREJUDICE IF THEY HA VE ANY MERIT IN THEIR FAVOUR. DEPARTMENTAL REPRESENTATIVE (DR) FOR REVENUE ARGUED THAT HE LEFT THE ISSUE ON THE DISCRETION OF THE COURT. 2. CONSIDERING THE EXPLANATION OFFERED IN THE AFFIDAVI T WHICH IS SELF-EXPLANATORY AND SUFFICIENT GROUND FOR CONDONATION OF DELAY. HENCE, WE DEEM IT APPROPRIATE TO CONDONE THE DELAY IN THE INTEREST OF JUSTICE INSTEA D OF GOING ON THE MERITS AND DEMERITS OF THE GROUNDS FOR CONDONATION OF DELAY. 3. FIRST WE SHALL DISCUSS THE ITA NO. 7416/MUM/2013, T HE ASSESSEE FILED RETURN OF INCOME FOR RELEVANT AY ON 31.10.2002. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) ON 21.03.2005. WHILE FRAMING THE ASSESSMENT, THE AO MADE THE ADDITION ON ACCOUNT OF EXCESS DEPRECIATION VIDE PARAGRAPH NO. 4, EXCESS DEPRECIATION OF RS. 26,31,7 98/-, DISALLOWANCE ON ACCOUNT OF CONTRIBUTION OF PF OF RS. 22,67,381/- VIDE PARAG RAPH NO.5 OF THE ORDER, ADHOC DISALLOWANCE ON MARKETING EXPENSES OF RS. 1,29,02,8 04/- VIDE PARAGRAPH NO. 6 AND ADHOC DISALLOWANCE OF MANUFACTURING, ADMINISTRATION AND PERSONAL EXPENSES OF RS. 1,40,48,729/- AS PER PARAGRAPH NO.7 OF THE ORDER DA TED 31.03.2002. THE ASSESSEE FILED APPEAL BEFORE THE CIT(A) AGAINST THE QUANTUM ASSESSMENT WHEREIN ALL THE ADDITION WERE UPHELD VIDE ORDER DATED 22.11.2006. A FTER DISMISSAL OF THE APPEAL BY ITA NOS. 7416 & 7361/M/13 PHARMACIA INDIA PVT. LTD. 3 CIT(A), THE AO ISSUED NOTICE OF INITIATION OF PENAL TY ON 04.03.2011. IN RESPONSE TO THE NOTICE ASSESSEE SUBMITTED ITS REPLY VIDE REPLY DATED 25.03.2011. HOWEVER, THE AO CONCLUDED THAT ADDITION HAS BEEN CONFIRMED BY LD . CIT(A), THEREFORE, THE REPLY OF ASSESSEE IS AS GOOD AS NO REPLY AND LEVIED A PEN ALTY OF RS. 52,00,000/- ON ACCOUNT OF CONCEALMENT OF INACCURATE PARTICULARS OF RS. 14,68,000/-. AGGRIEVED BY THE ORDER OF AO, THE ASSESSEE FILED APPEAL BEFOR E THE CIT(A). 4. IN THE MEANTIME, THE ASSESSEE FILED APPEAL AGAINST THE ORDER OF CIT(A) ON QUANTUM ASSESSMENT, BEFORE THE ITAT WHEREIN THE ADDITION RE GARDING EXCESS DEPRECIATION WAS RESTORED TO THE FILE OF AO AND THE DISALLOWANCE ON ACCOUNT OF LATE PAYMENT OF PF AND MARKETING EXPENSES WAS DELETED AND THE ADHOC DISALLOWANCE ON ACCOUNT OF MANUFACTURING, ADMINISTRATION AND PERSONAL EXPENSES WAS REDUCED FROM RS. 1.40 LAKHS TO RS. 70 LAKHS VIDE ITA NO. 817/DEL/2007 DAT ED 28.08.2010. 5. THE ASSESSEE BROUGHT IN THE NOTICE OF AO THAT IN TH E PENALTY ORDER, THE FACTS PERTAINING TO THE DIFFERENT ASSESSEES I.E. PIPL, T HUS THE AO ISSUED CORRIGENDUM VIDE ORDER DATED 18.05.2012. IN THE CORRIGENDUM, TH E AO REPLACE THE NAME OF PIPL TO THE PHL. THE ORDER OF CORRIGENDUM WAS FILED BEFORE THE CIT(A) WHEREIN THE APPEAL OF ASSESSEE WAS PENDING AND CIT(A) AFTER TAKING ON RECORD THE CORRIGENDUM ORDER INSTEAD OF CORRECT THINGS IN A PR OPER MANNER HOLD THAT APPEAL FILED AGAINST THE ORDER OF PHL IS NO LONGER VALID. THE ASSESSEE WAS ALLOWED TO WITHDRAW THE APPEAL AND THE APPEAL OF ASSESSEE WAS DISMISSED, THUS WAS A GLARING EXAMPLE OF TAKING CONFUSION/INCORRECT THINGS ON REC ORD. THE ASSESSEE FILED FURTHER APPEAL AGAINST THE CORRIGENDUM ORDER BEFORE THE CIT (A) AND THE SAME WAS DISMISSED VIDE ORDER DATED 20.06.2012 HOLDING THAT NO APPEAL LIE AGAINST THE CORRIGENDUM ORDER VIDE IMPUGNED ORDER DATED 20.06.2 012 WHICH IS CHALLENGED BEFORE US IN ITA NO. 7361/MUM/2013. SIMILARLY, THE ASSESSEE ALSO FILED THE PRESENT APPEAL BEFORE US ALONG WITH THE APPLICATION FOR CONDONATION OF DELAY. 6. WE HAVE HEARD THE AR OF THE ASSESSEE AND DR FOR REV ENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. LD. AR OF THE ASSESSE E ARGUED THAT AO ABUSE THE PROCESS OF LAW AND PASS ORDER WITHOUT CONSIDERING A ND APPRECIATING THE FACT BEFORE HIM. THE AO WHILE PASSING THE PENALTY ORDER IN CASE OF ASSESSEE (PIPL) CONSIDERED THE ADDITION/DISALLOWANCE IN THE CASE OF DIFFERENT ASSESSEE I.E. PHL. AR OF THE ASSESSEE FURTHER ARGUED THAT EVEN ON MERIT, NO PENALTY IS LEVIABLE EITHER AGAINST THE PIPL OR AGAINST THE PHL. LD. AR OF THE ASSESSEE FURTHER ARGUED THAT SUBSTANTIAL ADDITION MADE AGAINST BOTH THE ASSESSEE WAS DELETED BY THE TRIBUNAL. DR FOR REVENUE ON THE OTHER HAND FAIRLY CONCEDED TH AT THE ORDER OF PENALTY ITA NOS. 7416 & 7361/M/13 PHARMACIA INDIA PVT. LTD. 4 INITIATED AGAINST ONE ASSESSEE AND THE FACT OF THE CASE OF ANOTHER ASSESSEE WAS TAKEN INTO CONSIDERATION BY AO. 7. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PART IES AND GONE THROUGH THE RECORD CAREFULLY. IT IS NOT IN DISPUTE THAT THE SUBSTANTIA L ADDITION MADE IN CASE OF PIPL AND PHL WERE DELETED BY ITAT. INITIALLY, THE ORDER OF P ENALTY WAS PASSED AGAINST THE PIPL AND VIDE CORRIGENDUM DATED 18.05.2012, THE ORD ER WAS CHANGED IN THE NAME OF PHL. THE APPEAL FILED BY PHL WAS HELD TO BE NOT MAINTAINABLE VIDE ORDER DATED 20.09.2012 AND THE APPEAL FILED BY PIPL WAS HELD TO BE NO LONGER VALID AND THE APPEAL WAS DISMISSED AS WITHDRAWN. WE FIND THAT THE ORDERS OF AUTHORITIES BELOW ARE GLARING EXAMPLE OF GROSS NEGLIGENCE. LD. AR OF THE ASSESSEE WHO WERE REPRESENTING BEFORE THE LOWER AUTHORITIES INSTEAD O F ASSISTING THE LOWER AUTHORITIES CREATED MORE CONFUSION FOR APPLYING THE CORRIGENDUM AND IN WITHDRAWING THE APPEAL FILED BY PIPL. WE INSTEAD OF FIXING ANY RESP ONSIBILITY ABOUT THE GROSS NEGLIGENCE OR PROPER REPRESENTATION, WE SET-ASIDE T HE ORDER OF PENALTY DATED 31.03.2011 AND THE ORDER OF CORRIGENDUM DATED 18.05 .2012, ORDER OF CIT(A) DATED 24.05.2012 AND 20.03.2012 AND DIRECT THE AO TO PASS APPROPRIATE ORDER AFTER CONSIDERING THE ORDER OF TRIBUNAL IN QUANTUM ASSESS MENT AGAINST THE PIPL AND PHL DATED 27.08.2010 & 28.09.2011 RESPECTIVELY. THE ASSESSEE WOULD BE AT LIBERTY TO SUBMIT AND AGITATE ALL FACTUAL AND LEGAL GROUNDS BEFORE THE AO INCLUDING THE PERIOD OF LIMITATION FOR INITIATION OF PENALTY PROCEEDING AS PROVIDED U/S 275 OF THE ACT. WITH THESE OBSERVATIONS, BOTH THE APPEAL B EING ITA NO. 7416/MUM/2013 FILED BY PHARMACIA INDIA PVT. LTD. (PIPL) AND ITA N O. 7361/MUM/2013 FILED BY PHARMACIA HEALTHCARE LTD. (PHL) ARE ALLOWED FOR STA TISTICAL PURPOSE. 8. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 07/09 /2016. SD/- SD/- (R.C.SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED : 07/09/2016 SK, PS COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. ITA NOS. 7416 & 7361/M/13 PHARMACIA INDIA PVT. LTD. 5 / BY ORDER, / (ASSTT. REGISTRAR) , / ITAT, MUMBAI //TRUE COPY/