M/S MAHENDRA OIL MILLS, AJMER V. INCOME TAX OFFICER, WARD-2-3, AJMER

ITA 751/JPR/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3941 (ITAT-JAIPUR)
• Duration Of Justice: 10 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A S NEHARA
• Keywords: Depreciation; Principle of natural justice; Additional evidence
• Section: 244A; 142(1); 144

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKWY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 751/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 M/S MAHENDRA OIL MILLS, G-48-49, RIICO INDUSTRIAL AREA, JAIPUR ROAD, KEKRI, DISTT-AJMER CUKE VS. THE INCOME TAX OFFICER, WARD-2(3), AJMER LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABFM3810H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA (ADV.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A. S. NEHARA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 09/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 13/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A), AJMER DATED 25.07.2017 FOR ASSESSMENT Y EAR 2014-15 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUND S OF APPEAL:- 1. THE IMPUGNED ORDER U/S 144 DATED 23.11.2016 IS BAD IN LAW AND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND FOR VARIOUS OTHER REASONS AND HENCE, THE SAME MAY KINDLY BE QUASHED A ND IN ANY CASE, THE IMPUGNED ADDITIONS BE DELETED. ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 2 2. THE LD. AO ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN FRAMING THE ASSESSMENT U/S 144 WITHOUT AFFORDING AD EQUATE AND REASONABLE OPPORTUNITY AND EVEN WITHOUT COMPLYING W ITH THE MANDATORY STATUTORY REQUIREMENT OF LAW. THE IMPUGNED ORDER HA VING BEEN FRAMED IN GROSS BREACH OF NATURAL JUSTICE, KINDLY BE QUASH ED. 3. THE LD. CIT(A) SERIOUSLY ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN NOT ADMITTING THE ADDITIONAL EVIDENCES FURN ISHED BY THE APPELLANT DURING THE COURSE OF THE APPELLATE PROCEE DINGS. THE DECISION OF THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVIS IONS OF LAW AND FACTS ON THE RECORD AND HENCE THE SAME KINDLY BE ADMITTED AN D CONSIDERED. 4. RS. 23,69,200/-: THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 23,69,200/- [20% OF RS. 1,18,46,000/-] ON ACCOUNT OF UNEXPLAINED CASH D EPOSIT MADE BY THE AO. THE ADDITION SO MADE AND CONFIRMED BY THE LD. C IT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND HENC EHTE SAME KINDLY BE DELETED IN FULL. 5. RS. 45,95,380/-: THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE ADDITION OF RS. 45,95,380/- [30% OF RS. 1,53,17,932/-] ON ACCOUNT OF UNSECURED LOANS MA DE BY THE AO. THE ADDITION SO MADE AND CONFIRMED BY THE LD. CIT(A) IS TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS ON THE RECORD AND H ENCE THE SAME KINDLY BE DELETED IN FULL. ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 3 6. RS. 11,02,693/-: THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF THE FOLLOWING EXPENSES. S. NO. HEAD OF EXPENSES EXP. CLAIMED DISALLOWED BY AO (30%) CONFIRMED BY THE LD. CIT(A) 6.1 FREIGHT RS. 9,09,302/- RS. 2,72,790/- RS. 2,72, 790/- 6.2 CONSUMPTION OF STORES & SPARE PARTS RS. 3,56,923/- RS. 1,07,077/- RS. 1,07,077/- 6.3 REPAIRS TO MACHINERY RS. 2,96,792/- RS. 89,038/- RS. 89,038/- 6.4 SALARIES & WAGES RS. 13,39,680/- RS. 4,01,904/- RS. 4,01,904/- 6.5 OTHER EXPENSES RS. 5,05,074/- RS. 1,51,522/- R S. 1,51,522/- 6.6 DEPRECIATION RS. 2,67,873/- RS. 80,362/- RS. 80 ,362/- TOTAL RS. 11,02,693/- RS. 11,02,693/- THE DISALLOWANCE SO MADE AND CONFIRMED BY THE LD. C IT(A), BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE DELETED IN FULL. 7. RS. 1,30,036/-: THE LD. CIT(A) ERRED IN LAW AS W ELL AS ON THE FACTS OF THE CASE IN CONFIRMING THE DISALLOWANCE OF THE C LAIM OF BROUGHT FORWARD LOSSES UP TO RS. 1,30,036/- [AS AGAINST CLA IMED BY THE AO OF RS. 1,81,760/-]. THE DISALLOWANCE SO MADE AND CONFIRMED BY THE LD. CIT(A) BEING TOTALLY CONTRARY TO THE PROVISIONS OF LAW AND FACTS OF THE CASE, KINDLY BE ALLOWED IN FULL. 8. THE LD. AO FURTHER ERRED IN LAW AS WELL AS ON TH E FACTS OF THE CASE IN CHARGING INTEREST U/S 234A, 234B, 234C & 234D OF THE ACT AND AS ALSO IN WITHDRAWING INTEREST U/S 244A OF THE ACT. THE AP PELLANT TOTALLY DENIES ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 4 ITS LIABILITY OF CHARGING AND WITHDRAWAL OF ANY SUC H INTEREST. THE INTEREST SO CHARGED/WITHDRAWN, BEING CONTRARY TO THE PROVISI ONS OF LAW AND FACTS, KINDLY BE DELETED IN FULL. 2. GROUND NO. 1 IS GENERAL IN NATURE, DOES NOT REQU IRE ANY SEPARATE ADJUDICATION. HENCE THE SAME IS DISMISSED. 3. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED TH E FRAMING OF ASSESSMENT U/S 144 WITHOUT AFFORDING ADEQUATE AND R EASONABLE OPPORTUNITY TO THE ASSESSEE. WE HAVE GONE THROUGH T HE RECORDS AND FIND THAT NOTICE U/S 143(2) WAS ISSUED ON 31.08.201 5. THEREAFTER, NOTICE U/S 142(1) WAS ISSUED ON 27.06.2016 ASKING THE ASSE SSEE TO FURNISH REQUIRED INFORMATION AND DOCUMENTATION. THEREAFTER, THERE HAVE BEEN NUMBER OF OCCASIONS WHEREIN THE HEARING HAVE BEEN S CHEDULED BY THE ASSESSING OFFICER, HOWEVER, THERE HAS BEEN NO COMPL IANCE ON THE PART OF THE ASSESSEE AND THE ASSESSING OFFICER HAS PROCE EDED AND PASSED THE ORDER U/S 144 OF THE ACT. IN LIGHT OF THE SAME, WE DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE ASSESSING OFFICER WHI CH HAS BEEN PASSED U/S 144 OF THE ACT. IN THE RESULT, GROUND NO. 2 OF THE ASSESSEES APPEAL IS DISMISSED. 4. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN NOT ADMITTING THE ADDITIONAL EVIDENCE S FURNISHED BY THE ASSESSEE IN THE FORM OF BOOKS OF ACCOUNTS I.E. CASH BOOK, BANK BOOK, LEDGER, JOURNAL AND BILLS AND VOUCHERS DURING THE C OURSE OF APPELLATE PROCEEDINGS. ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 5 5. THE LD. AR HAS SUBMITTED THAT THE LD. CIT(A) HAS NOT CONSIDERED THE REMAND REPORT OF THE AO WHEREIN HE HAS NOT OBJE CTED TO THE ADMISSION OF THE ADDITIONAL EVIDENCE AND HAS IN FAC T VERIFIED THE SAME AND THE FOUND THE TRANSACTIONS DULY VERIFIABLE. 6. IN THIS REGARD, THE LD. AR HAS DRAWN OUR REFERE NCE TO THE REMAND REPORT DATED 06.06.2017 CALLED FOR THE LD. CIT(A) F ROM THE AO WHICH READS AS UNDER:- KINDLY REFER TO YOUR OFFICE LETTER NO. CIT(A)/AJM/ 2016-17/5820 DATED 17.03.2017 ON THE ABOVE MENTIONED SUBJECT THROUGH W HICH WRITTEN SUBMISSION FILED BY THE APPELLANT M/S MAHENDRA OIL MILL, KEKRI- AJMER DURING THE COURSE OF APPELLANT PROCEEDINGS WERE FOR WARDED TO THIS OFFICE AND COMMENTS/REMAND REPORT WAS DESIRED BY YOUR HONO UR. SHRI G.M.JAIN, CA AND A/R OF THE ASSESSEE ALONGWIT H SHRI RAMESH CHAND, ACCOUNTANT ATTENDED THE HEARING IN RESPONSE TO THIS OFFICE LETTER DATED 29.06.2017 AND FILED HIS WRITTEN SUBMISSION. BOOKS OF ACCOUNTS VIZ-A-VIZ LEDGER, CASH BOOK, BANK STATEMENTS, PURCH ASE AND SALES REGISTER, BILLS AND VOUCHERS WERE ALSO PRODUCED AND EXAMINED ON TEST CHECK BASIS. THE CASE WAS DISCUSSED WITH THEM. THE PARA WISE REMAND REPORT IS AS UNDER:- 1. ASSESSMENT COMPLETED U/S 144 OF THE I.T. ACT: ON PERUSAL OF RECORD, IT WAS FOUND THAT ENOUGH OPPO RTUNITY OF BEING HEARD WERE PROVIDED TO THE ASSESSEE, BUT THE ASSESSEE NEITHER APPEARED NOR FURNISHED ANY REPLY DURING THE PERIOD OF 5 MONTHS OF PROCEEDING, WHICH SHOWS THAT THE ASSESSEE WAS NOT I N A POSITION TO HAVE ANYTHING TO PRODUCE OR SAY. ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 6 ALL NOTICES/LETTERS WERE ISSUED TO THE ASSESSEE THR OUGH SPEED POST AND SERVED MOSTLY ON VERY NEXT DAY OF THE NOTICE. T HEREFORE, AO HAS NOT OPTION THAN TO MAKE THE ASSESSMENT OF INCOME OF THE ASSESSEE TO THE BEST OF HIS JUDGMENT U/S 144 OF THE INCOME-TAX ACT, 1961. 2. ADDITION ON ACCOUNT OF CASH DEPOSITS OF RS. 23,69,2 00/- THE A/R OF THE ASSESSEE PRODUCED THE COPY OF BANK A CCOUNT AND CASH BOOKS WHICH WAS EXAMINED. FROM THIS CASH DEPOS ITS IN ASSESSEE FIRMS BANK ACCOUNT ARE VERIFIABLE. 3. ADDITION ON ACCOUNT OF UNSECURED LOANS OF RS. 45,95 ,380/- THE A/R OF THE ASSESSEE FIRM PRODUCED THE CONFIRMAT IONS ALONGWITH COPY OF LEDGER ACCOUNT REGARDING UNSECURE D LOANS WHICH ARE VERIFIABLE. 4. DISALLOWANCE OF EXPENSES OF RS. 11,02,693/- THE AO HAS DISALLOWED THE EXPENSES AS UNDER:- S. NO. EXPENSES AMOUNT (RS.) 30% OF SUCH EXPENSES (RS.) 1. FREIGHT 9,09,302/- 2,72,790/- 2. CONSUMPTION OF STORES & SPARE PARTS 3,56,923/- 1,07,077/- 3. REPAIRS TO MACHINERY 2,96,792/- 89,038/- 4. SALARIES & WAGES 13,39,680/- 4,01,904/- 5. OTHER EXPENSES 5,05,074/- 1,51,522/- 6. DEPRECIATION 2,67,873/- 80,362/- ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 7 TOTAL 11,02,693/- A/R OF THE ASSESSEE FIRM PRODUCED THE BOOKS OF ACCO UNTS/BILLS & VOUCHERS OF EXPENSES WHICH WERE EXAMINED ON TEST CH ECK BASIS. ON GOING THROUGH THE DETAILS OF BILLS & VOUCHERS OF AB OVE EXPENSES, IT WAS FOUND THAT SOME OF THE EXPENSES ARE NOT FULLY VOUCH ED. THEREFORE, IN A REASONABLE VIEW 20% OF THESE EXPENSES MAY BE DISALL OWED. IT IS PERTINENT TO MENTION HERE THAT IN AY 2013-14 THE AO HAS ALSO DISALLOWED THE SHOP EXPENSES TO THE EXTENT OF 20% O F THE EXPENSE. 5. DISALLOWANCE OF BROUGHT FORWARD LOSSES OF RS. 1,81, 760/- IN ASSESSMENT FOR AY 2013-14, LOSSES HAVE BEEN DETE RMINED AT RS. 51,724/- AND ALLOWED TO BE CARRIED FORWARD. IN RETURN OF INCOME FOR AY 2014-15, ASSESSEE FIRM HAS SET OFF OF O/F LOSSES AMOUNTING TO RS. 1,81,760/- WHICH IS NOT ALLOWABLE. IT MAY BE ALLOWE D TO THE EXTENT OF RS. 51,724/- ONLY. 7. ON PERUSAL OF THE REMAND REPORT, IT IS OBSERVED THAT THE ASSESSING OFFICER HAS NOT GIVEN ANY ADVERSE COMMENTS REGARDIN G ADMISSION OF THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE. IN F ACT, THE SAME WERE EXAMINED BY THE ASSESSING OFFICER DURING THE COURSE OF REMAND PROCEEDINGS AND THE CASH DEPOSIT IN THE ASSESSEES BACK ACCOUNT WERE HELD VERIFIABLE. SIMILARLY, UNSECURED LOAN WERE HEL D VERIFIABLE. REGARDING DISALLOWANCE OF EXPENSES WHICH WERE ORIGINALLY MADE 30%, THE ASSESSING OFFICER IN THE REMAND REPORT HAS SUGGESTE D DISALLOWANCE OF 20% OF THE SAID EXPENSES. HOWEVER, WE FIND THAT THE RE IS NO FINDING OR DISCUSSION BY THE LD. CIT(A) IN RESPECT OF THE REMA ND REPORT GIVEN BY THE ASSESSING OFFICER DATED 06.06.2017. IT IS THERE FORE A CASE WHERE THE ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 8 LD. CIT(A) HAS CALLED FOR THE REMAND REPORT SEEKING COMMENTS FROM THE AO WITHOUT THE ADMITTING ADDITIONAL EVIDENCES. AT T HE SAME TIME, THE ASSESSING OFFICER HAS NOT OBJECTED TO THE ADMISSION TO THE ADDITIONAL EVIDENCES AND HAS IN FACT GONE AHEAD AND EXAMINED T HOSE ADDITIONAL EVIDENCES AND FOUND THE TRANSACTION UNDERTAKEN BY T HE ASSESSEE VERIFIABLE. IN SUCH CIRCUMSTANCES WHETHER THE REVE NUE HAS NOT OBJECTED TO THE ADMISSION OF THE ADDITIONAL EVIDENC ES, IT WOULD HAVE BEEN BETTER HAD LD. CIT(A) GIVEN HIS FINDING ON MER IT RATHER THAN REJECTING THE ADDITIONAL EVIDENCES ON TECHNICALITY. IN THE RESULT, WE DEEM IT APPROPRIATE TO REMAND THE MATTER TO THE FIL E OF LD. CIT(A) WHO SHALL DECIDE THE SAME AFRESH ON MERITS AFTER TAKING INTO CONSIDERATION THE ADDITIONAL EVIDENCES SO SUBMITTED BY THE ASSESS EE AND REMAND REPORT SO FURNISHED BY THE ASSESSING OFFICER DATED 06.06.2017. IN THE RESULT, GROUND NO. 3 IS ALLOWED FOR STATISTICAL PUR POSES. 8. REGARDING GROUND NO. 4 TO 7 REGARDING MERITS OF THE CASE AND THE GROUND NO. 8 IS ON THE LEVY OF INTEREST U/S 234A, 2 34B, 234C & 234D. SINCE WE HAVE REMANDED THE MATTER TO THE FILE OF TH E LD CIT(A), WE DEEM IT APPROPRIATE TO SET ASIDE THESE GROUNDS TO T HE FILE OF THE LD. CIT(A) AS WELL. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13/08/2018. SD/- SD/- FOT; IKWY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 751/JP/2017 M/S MAHENDRA OIL MILLS, AJMER VS. ITO, AJMER 9 FNUKAD@ DATED:- 13/08/2018 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S MAHENDRA OIL MILLS, AJMER 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-2(3), AJMER 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 751/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR