DCIT 22(2), NAVI MUMBAI V. SUNRAJ PLASTIC, MUMBAI

ITA 7893/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84480 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 11-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 22-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIPDR
• Assessee Lawyers: LALCHAND CHOUDHARY
• Keywords: Opportunity of being heard; Additional evidence
• Section: 143(3)

Judgement Text

, , ,, , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E MUMBAI , .. , ! BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI B.R.BASKARAN, ACCOUNTANT MEMBER . / ITA NO.466/MUM/2011 ' ' ' ' #' #' #' #' / ASSESSMENT YEAR: 2006-07 M/S SUNRAJ PLASTICS, 326, BHAVESHWAR ARCADE, LBS MARG, GHATKOPER WEST, MUMBAI-400086 VS. THE ACIT, RANGE-22(2), 4 TH FLOOR, VASHI RLY, STATION BLDG, TOWER NO.6 VASHI, NAVI MUMBAI-400703 ( '$% / ASSESSEE) ( & / REVENUE) P.A. NUMBER : AAAFS7122D . / ITA NO.864/MUM/2011 ' ' ' ' #' #' #' #' / ASSESSMENT YEAR: 2006-07 THE ACIT, RANGE-22(2), 4 TH FLOOR, VASHI RLY, STATION BLDG, TOWER NO.6 VASHI, NAVI MUMBAI-400703 VS. M/S SUNRAJ PLASTICS, 326, BHAVESHWAR ARCADE, LBS MARG, GHATKOPER WEST, MUMBAI-400086 ( & / REVENUE) ( ' $% / ASSESSEE) P.A. NUMBER : AAAFS7122D . / ITA NO.7893/MUM/2011 ' ' ' ' #' #' #' #' / ASSESSMENT YEAR: 2007-08 THE ACIT, RANGE-22(2), 4 TH FLOOR, VASHI RLY, STATION BLDG, TOWER NO.6 VASHI, NAVI MUMBAI-400703 VS. M/S SUNRAJ PLASTICS, 326, BHAVESHWAR ARCADE, LBS MARG, GHATKOPER WEST, MUMBAI-400086 ( & / REVENUE) ( '$% / ASSESSEE) P.A. NUMBER : AAAFS7122D 2 M/S SUNRAJ PLASTICS . C.O. NO.213/MUM/2012 (ARISING OUT OF . / ITA NO.7893/MUM/2011) ' ' ' ' #' #' #' #' / ASSESSMENT YEAR: 2007-08 M/S SUNRAJ PLASTICS, 326, BHAVESHWAR ARCADE, LBS MARG, GHATKOPER WEST, MUMBAI-400086 VS. THE ACIT, RANGE-22(2), 4 TH FLOOR, VASHI RLY, STATION BLDG, TOWER NO.6 VASHI, NAVI MUMBAI-400703 ( '$% / ASSESSEE) ( & / REVENUE) P.A. NUMBER : AAAFS7122D . / ITA NO.7894/MUM/2011 ' ' ' ' #' #' #' #' / ASSESSMENT YEAR: 2008-09 THE ACIT, RANGE-22(2), 4 TH FLOOR, VASHI RLY, STATION BLDG, TOWER NO.6 VASHI, NAVI MUMBAI-400703 VS. M/S SUNRAJ PLASTICS, 326, BHAVESHWAR ARCADE, LBS MARG, GHATKOPER WEST, MUMBAI-400086 ( & / REVENUE) ( '$% / ASSESSEE) P.A. NUMBER : AAAFS7122D ( '$% ' '' ' ( ( ( ( / ASSESSEE BY SHRI LALCHAND CHOUDHARY & ' '' ' ( ( ( ( /REVENUE BY : SHRI NEIL PHILIP-DR ' %) / DATE OF HEARING : 11/12/2014 *+# ' %) / DATE OF PRONOUNCEMENT : 11/12/2014 O R D E R PER JOGINDER SINGH, JM: THE ASSESSEE AS WELL AS THE REVENUE ARE IN APPEAL B EFORE THIS TRIBUNAL AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX 3 M/S SUNRAJ PLASTICS . (APPEALS). FOR ASSESSMENT YEAR 2006-07 BOTH ARE IN CROSS APPEALS AGAINST THE ORDER DATED 22/10/2010. FOR A.Y. 2007-08, THE REVENUE IS IN APPEAL AND THE ASSESSEE HAS PREFERRED CROSS O BJECTION AGAINST ORDER DATED 09/09/2011. FOR A.Y. 2008-09 (ITA NO. 7894/MUM/2011) THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 09/09/2011 OF THE LD. FIRST APPELLATE AUTHORITY. 2. FIRST WE SHALL TAKE UP CROSS APPEALS FOR A.Y. 2006 -07 (ITA NO.466 & 864/MUM/2011). IN THE APPEAL OF THE ASSES SEE GROUNDS NO. 1 AND 2 PERTAINS TO DISALLOWANCE OF EXPENDITURE INC URRED FOR PAYMENT OF BROKERAGE AND COMMISSION AMOUNTING TO RS.11,59,1 44/- PAID BY THE ASSESSEE. THE CRUX OF ARGUMENTS ADVANCED BY SH RI LALCHAND CHOUDHARY, LD. COUNSEL FOR THE ASSESSEE IS THAT THE PAYMENT WAS ACTUALLY PAID TO THE BROKER FOR FACILITATING PURCHA SING OF GOODS, TDS WAS DEDUCTED ON SUCH BROKERAGE AND THE PAYMENT WAS MADE TO THE BROKER BY CHEQUE. FOR WHICH, AFFIDAVIT WAS ALSO FIL ED BEFORE THE ASSESSING OFFICER AS WELL AS THE LD. COMMISSIONER O F INCOME TAX (APPEALS). IT WAS EXPLAINED THAT SERVICES WERE ACT UALLY RENDERED BY THE BROKER, PLEA WAS ALSO RAISED THAT IN SUBSEQUENT ASSESSMENT YEAR BROKERAGE WAS ALLOWED TO THE SAME BROKER BY THE DEP ARTMENT BY PASSING AN ORDER U/S 143(3) OF THE ACT. 2.1. ON THE OTHER HAND, THE LD. DR. SHRI NEIL PHILI P, DEFENDED THE CONCLUSION ARRIVED AT IN THE ASSESSMENT ORDER AS WE LL AS IN THE IMPUGNED ORDER BY TAKING THE SAME STAND AS MENTIONE D IN THE ORDERS BY SUBMITTING THAT ACTUALLY NO SERVICE WAS RENDERED BY THE BROKER. THEREFORE, IT WAS PLEADED THAT THE ADDITION WAS RIG HTLY MADE. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE, A PARTNERSHIP FIRM, ENGAGED IN THE BUSINESS OF MANU FACTURING AND 4 M/S SUNRAJ PLASTICS . TRADING OF BRIGHT STEEL BARS, IS HAVING ITS MANUFAC TURING UNIT AT TALOJA, DISTRICT RAIGARH (MAHARASHTRA). WHILE FRAM ING THE ASSESSMENT, THE ASSESSING OFFICER DISALLOWED THE BROKERAGE/COMMISSION PAYMENT OF RS.11,59,144/- AND ALSO BY MAKING ADDITION OF RS.21,63,545/- BY MAKING AN ADJU STMENT IN THE VALUE OF CLOSING STOCK. ON APPEAL, THE LD. COMMISS IONER OF INCOME TAX (APPEALS) AFFIRMED THE ADDITION ON ACCOUNT OF BROKE RAGE/COMMISSION AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. WITH REGARD TO ADDITION OF RS.21,63,545/- MADE U/S 145A OF THE ACT, THE TRIBUNAL, ALLOWED THE APPEAL FOR STATISTICAL PURPOS ES AGAINST WHICH THE REVENUE IS IN APPEAL. 2.3 FIRST WE SHALL DEAL WITH THE PAYMENT OF BROKERAG E/COMMISSION AMOUNTING TO RS.11,59,144/-PAID BY THE ASSESSEE TO THE BROKER. THE PAYMENT WAS PAID BY THE ASSESSEE TO THE BROKER TO P RANAV MARITIME SERVICES PVT. LTD. FOR PROCURING GOODS FROM SUNFLAG IRON AND STEEL COMP. LTD. AND R.L. STEELS LTD. THE ASSESSING OFFI CER MADE ENQUIRIES FROM THE CONCERNED PARTIES. AS PER THE REVENUE, SU NFLAG IRON AND STEEL COMP. LTD. VIDE THEIR LETTER DATED 05/12/2008 CLAIMED THAT THEY MADE THE SALES DIRECTLY TO THE ASSESSEE AND R.L. ST EELS NEITHER CONFIRMED NOR DENIED THE EXISTENCE OF ANY BROKER. A QUERY WAS RAISED BY THE BENCH TO THE LD COUNSEL FOR THE ASSESSEE REG ARDING THESE REPLIES. IT WAS EXPLAINED THAT DUE TO BUSINESS EXI GENCIES SOMETIMES IT IS NOT TOLD TO THE PARTY AS TO FOR WHOM THE BROKERS WERE WORKING AND SUCH BROKERS ARE PROVIDING THE GOODS AND AT COMPETI TIVE RATES. WHAT IT MAY BE, WE FIND THAT PAYMENTS WERE MADE BY THE ASSE SSEE TO THE BROKER AND DEDUCTED TAX AT SOURCE ON SUCH PAYMENTS WHICH WERE MADE THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSEE DU LY FILED THE AFFIDAVIT OF THE BROKER RIGHT FROM ASSESSMENT STAGE AND LATER STAGES 5 M/S SUNRAJ PLASTICS . ALSO CONFIRMING THE PAYMENT/RECEIPT OF BROKERAGE. THE CLAIM WAS DENIED BY THE ASSESSING OFFICER ON THE PLEA THAT TH ERE WAS NO EVIDENCE OF RENDERING OF SERVICES. BROADLY, WE ARE OF THE V IEW, IT IS ALWAYS NOT POSSIBLE TO PRODUCE EVIDENCE OF RENDERING OF SERVIC ES AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS MERELY END ORSED THE STAND OF THE ASSESSING OFFICER WITHOUT MAKING AN ELABORAT E ENQUIRY. THE ASSESSEE ALSO PRODUCED AGREEMENT DATED 05/04/2005 B ETWEEN THE ASSESSEE AND SHRI MANISH SHAWANT, DIRECTOR OF M/S P RANAV MARITIME SERVICES PVT. LTD. SUPPORTED BY AN AFFIDAVIT REGARD ING RENDERING OF SERVICES. THE LD. CIT (A) DISCARDED THE AGREEMENT DATED 05/04/2005 WHICH WAS FILED AS ADDITIONAL EVIDENCE MERELY ON TH E GROUND THAT IT WAS NOT FILED BEFORE THE ASSESSING OFFICER. ANOTHE R FACT TO BE NOTED HERE IS THAT IN THE SUBSEQUENT ASSESSMENT YEAR, THE DEPARTMENT ACCEPTED THE PAYMENT OF BROKERAGE TO THE SAME BROKE R WHILE PASSING ORDER U/S 143(3) OF THE ACT FOR A.Y. 2007-08. AS CA NVASSED BY THE LD. COUNSEL FOR THE ASSESSEE, SHRI MANISH SHAWANT, PURS UANT TO ENQUIRY BY THE ASSESSING OFFICER, VIDE REPLY DATED 08/10/20 09 CATEGORICALLY TOLD THAT HE RECEIVED THE COMMISSION FROM THE ASSES SEE (PAGE-64 OF THE PAPER BOOK), WHEREIN, THE BANK STATEMENT, RECEIVING THE PAYMENT THROUGH CHEQUE BY THE ASSESSEE WAS ALSO ANNEXED ALO NGWITH THE LEDGER ACCOUNT FOR THE PERIOD FROM 01/04/2006 TO 31 /03/2007. IT IS ALSO NOTED THAT THE BROKER ALSO CLAIMED SUCH BROKER AGE INCOME BY FILING A RETURN ALONGWITH COMPUTATION OF INCOME WHI CH WAS ALSO MADE AVAILABLE TO THE ASSESSING OFFICER. IT SEEMS THAT DENIAL OF RELIEF TO THE ASSESSEE IS BASED UPON PRESUMPTION. IN SUCH A SITU ATION, WE ARE OF THE VIEW, PRESUMPTION CANNOT TAKE THE SHAPE OF EVID ENCE, HOWEVER STRONG IT MAY BE, MORE SPECIFICALLY WHEN ENOUGH MAT ERIAL IS AVAILABLE ON RECORD EVIDENCING THE BROKERAGE PAYMENT. THE RE PLY OF THE BROKER 6 M/S SUNRAJ PLASTICS . WAS IN RESPONSE TO LETTER DATED 01/10/2009 WRITTEN TO HIM (PAGE -65 OF THE PAPER BOOK) BY THE DCIT. THE ASSESSEE HAS A LSO DULY SHOWN THE AMOUNT BY WAY OF CREDIT NOTE (PAGE-66 OF THE PAPER BOOK) AND LEDGER ACCOUNT (PAGE-67 OF THE PAPER BOOK). IN VIEW OF TH ESE FACTS, WE ARE OF THE OPINION THAT THE ADDITION WAS WRONGLY MADE, THU S THIS GROUND OF THE ASSESSEE IS ALLOWED. 3. SO FAR AS, CONFIRMING THE ADDITION OF RS.21,63,5 45/- MADE U/S 145A OF THE ACT IN THE VALUE OF CLOSING STOCK OF RA W MATERIALS AND WORN IN PROCESS IS CONCERNED. THE LD. COUNSEL FOR THE A SSESSEE CONTENDED THAT FOR ASSESSMENT YEAR 2008-09 IDENTICAL CLAIM WAS DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL. ON THE OTH ER HAND, THE LD. DR DEFENDED THE CONCLUSION ARRIVED AT BY THE LD. COMMI SSIONER OF INCOME TAX (APPEALS). 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE TRI BUNAL FOR A.Y. 2008- 09 (ITA NO. 8211/MUM/2011) CONSIDERED VARIOUS DECIS IONS AS DETAILED IN PARA -4 OF THE ORDER DATED 30/11/2012 S ET ASIDE THESE GROUNDS TO THE FILE OF THE ASSESSING OFFICER TO DEC IDE THE ISSUE AFRESH IN THE LIGHT OF THE DECISIONS CITED. THE PROVISION S OF SECTION 145A OF THE ACT MANDATES THAT THE VALUATION OF PURCHASES AN D SALE OF GOODS AND INVENTORY SHALL BE ADJUSTED TO INCLUDE THE AMOU NT OF ANY TAX, DUTY, CESS OR FEE ACTUALLY PAID OR INCURRED BY THE ASSESSEE TO BRING THE GOODS TO ITS DESTINATION/LOCATION AND THE CONDITION AS ON THE DATE OF VALUATION. THUS, GROUNDS NO. 3 AND 4 BEFORE US ARE REMITTED TO THE FILE OF THE ASSESSING OFFICER IN THE LIGHT OF THE AFORES AID DECISION DATED 30/11/2012, CONSEQUENTLY, THIS GROUND IS ALLOWED FO R STATISTICAL PURPOSES. 7 M/S SUNRAJ PLASTICS . 3.2. SO FAR AS, NOT ADJUDICATING (GROUND NO. 5) WIT H RESPECT TO CHARGING OF INTEREST U/S 234C IS CONCERNED, THE LD . COUNSEL CONTENDED THAT ADVANCE TAX PAYMENT WAS MADE ON 14/0 9/ AND 14/12/ THROUGH CHEQUE WHICH CLEARED AFTER TWO DAYS, THEREFORE, THE INTEREST WAS WRONGLY CHARGED. WE ARE OF THE VIEW T HAT THE DATE OF PAYMENT OF CHEQUE, DEPOSITED WITH THE DEPARTMENT OR ANY AUTHORITY/INSTITUTION IS TO BE CONSIDERED AS THE DA TE OF PAYMENT, THUS IN OUR VIEW, THE INTEREST OF TWO DAYS WAS WRONGLY C HARGED. IT IS DIRECTED TO BE DELETED, MORE SPECIFICALLY WHEN IN T HE LATER YEARS, IDENTICALLY, IT WAS DECIDED IN FAVOUR OF THE ASSESS EE. THIS GROUND IS ALLOWED. RESULTANTLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. 4. SO FAR AS, THE APPEAL OF THE REVENUE FOR A.Y. 200 6-07 (ITA NO. 864/MUM/2011) IS CONCERNED IN THE LIGHT OF OUR DECI SION IN THE AFORESAID APPEAL OF THE ASSESSEE, WE FIND NO INFIRM ITY IN CONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL S), THUS THIS APPEAL OF THE REVENUE IS DISMISSED. SO FAR AS, THE CASE RELIED UPON BY THE LD. DR IS CONCERNED, THESE ARE NOT APPLICABLE T O THE FACTS OF THE PRESENT APPEAL. RESULTANTLY, THE APPEAL OF THE REVENUE IS DISMISSED . FINALLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FO R STATISTICAL PURPOSES WHEREAS THE APPEAL OF THE REVENUE IS DISMI SSED. 5. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2007- 08 (ITA NO.7893/MUM/2011). THE STAND OF THE LD. DR IS IDENTICAL TO THE GROUND RAISED, WHEREAS THE LD. COUNSEL FOR THE ASSESSEE CONTENDED 8 M/S SUNRAJ PLASTICS . THAT THE FACTS ARE IDENTICAL TO THE APPEAL IN 2006- 07, FILED BY THE REVENUE. WE NOTE THAT VIDE PARA NO.4, HEREINABOVE, WE HAVE AFFIRMED THE STAND OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS) BY DISMISSING THE APPEAL OF THE REVENUE, THEREFORE, SI NCE THE FACTS AND THE ISSUES ARE IDENTICAL IN THIS APPEAL ALSO, THERE FORE, WE FIND NO MERIT IN THE APPEAL OF THE REVENUE, CONSEQUENTLY, DISMISS ED. 5.2. SO FAR AS, CROSS OBJECTION (CO NO. 213/MUM/201 2) RAISED BY THE ASSESSEE (ARISING OUT OF ITA NO. 7893/MUM/2011) ARE CONCERNED THE GROUND RAISED PERTAINS TO CONFIRMING THE ADDITION O F RS.19,10,179/- MADE U/S 145A OF THE ACT WITHOUT APPRECIATING THE F ACT THAT THE ASSESSEE HAS NOT DEBITED THE EXCISE DUTY PAID WHILE PURCHASING THE GOODS IN ITS PROFIT & LOSS ACCOUNTS. KEEPING IN VI EW, THE TOTALITY OF FACTS, THE GROUND RAISED IN THE CROSS OBJECTION ARE SET ASIDE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CLAIM OF TH E ASSESSEE AFRESH AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE, THUS, IT IS ALLOWED FOR STATISTICAL PURPOSES. 6. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE FOR A.Y. 2008- 09 (ITA NO. 7894/MUM/2011). AFTER HEARING THE RIVA L SUBMISSIONS, WE FIND THAT THE GROUND RAISED IN THIS APPEAL IS ID ENTICAL TO ITA NO.864/MUM/2011 WHICH HAS BEEN ADJUDICATED UPON IN EARLIER PARA OF THIS ORDER, THEREFORE, THE APPEAL OF THE REVENUE IS HAVING NO MERIT, CONSEQUENTLY, DISMISSED. FINALLY, (A) APPEAL IN ITA NO. 466/MUM/2011(A.Y. 200 6-07) IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (B) APPEAL IN ITA NO. 864/MUM/2011 (A.Y. 2006-07) IS DISMISSED. 9 M/S SUNRAJ PLASTICS . (C) APPEAL IN ITA NO. 7893/MUM/2011 (A.Y. 2007-08) IS DISMISSED. (D). C.O. NO.213/MUM/2012 (ARISING OUT OF ITA NO. 7893/MUM/2011) IS ALLOWED FOR STATISTICAL PURPOSES. (E) APPEAL IN ITA NO. 7894/MUM/2011 (A.Y. 2008-09) I S DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCL USION OF THE HEARING ON 11/12/2014. SD/- SD/- (B.R. BASKARAN) (JOGINDER S INGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED -11/12/2014 F{X~{T? P.S/. . . , , , , ' '' ' -%. -%. -%. -%. /.#% /.#% /.#% /.#% / COPY OF THE ORDER FORWARDED TO : 1. 01 / THE APPELLANT 2. -201 / THE RESPONDENT. 3. 3 ( ) / THE CIT(A)- 4. 3 / CIT 5. .4 -% , , / DR, ITAT, MUMBAI 6. 45' 6 / GUARD FILE. , , , , / BY ORDER, 2.% -% //TRUE COPY// 7 77 7 / 8 8 8 8 & & & & (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI