M/s Nissin Foods India Limited , Bangalore V. The Income TAx Officer Ward-5(!)(1), Bangalore

ITA 808/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4216 (ITAT-BANGALORE)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 15-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DAS J
• Assessee Lawyers: Y SURYANARAYANA
• Keywords: Opportunity of being heard; Principle of natural justice; Period of limitation; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, B ENGALURU BEFORE S HRI N.V.VASUDEVAN , JUDICIAL MEMBER AND SHRI JASON P BOAZ , ACCOUNTANT MEMBER I TA NO. 808 / BANG/2 0 1 8 (ASSESSMENT YEAR: 2013 - 14 ) M/S.NISSIN FOODS INDIA LTD. 3 RD FLOOR, CENTENARY BUILDING, 28 M G ROAD, BENGALURU - 560001. PAN: AACCN 9583 A VS. APPELLANT INCOME - TAX OFFICER, WARD 5(1)(1), BENGALURU. RESPONDENT APPELLANT BY : SHRI Y.SURYANARAYANA, ADVOCATE. RESPONDENT BY : SMT. SWAP N A DAS, JCIT(DR) DATE OF HEARING : 26/06 /2018 DATE OF PRONOUNCEMENT : 17 /08/2018 O R D E R PER JASON P BOAZ , AM : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) - 5, BENGALURU, DATED 24/11/2017 FOR ASSESSMENT YEAR 2013 - 14. 2. BR IEFLY STATED, THE FACTS OF THE CASE ARE AS UNDER: 2.1 THE ASSESSEE, A COMPANY ENGAGED IN TRADING ACTIVITY OF SELLING NOODLES, FILED IS RETURN OF INCOME FOR ASSESSMENT YEAR 2013 - 14 ON 28/09/2013 DECLARING TOTAL INCOME OF RS.17,15,770/ - . THE CASE WAS TAKEN UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE INCOME - TAX ACT,1961 (IN SHORT THE ACT ) VIDE ORDER DATED 30/03/2016, WHEREIN THE ASSESSEE S INCOME WAS DETERMINED AT RS.16,29,76,291/ - IN VIEW OF THE FOLLOWING DISALLOWANCES/ADDITIO NS: - ITA NO . 808 /BANG/20 18 PAGE 2 OF 10 I) DISALLOWANCE OF PROVISION FOR EXPENSES FOR WANT OF DETAILS ... RS.2,43,58,700/ - II) ADDITION OF AMOUNT NOT CREDITED TO PROFIT & LOSS ACCOUNT AS UNEXPLAINED INCOME ... RS.13,69,01,801/ - 2.2. AGGRIEVED BY THE ORDER OF ASSESSMENT DATED 30/3/2016 FOR ASSESSMENT YEAR 2013 - 14, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) - 5, BENGALURU, CHALLENGING BOTH THE ABOVE ADDITIONS/DISALLOWANCES. THE CIT(A) DISMISSED THE ASSESSEE S APPEAL VIDE THE IMPUGNED ORDER DATED 24/11/2017. 3.1 THE ASSESSEE, BEING AGGRIEVED BY THE ORDER OF THE CIT(A) - 5, BENGALURU, DATED 24/11/2017 FOR ASSESSMENT YEAR 2013 - 14 HAS FILED THIS APPEAL BEFORE THE TRIBUNAL WHEREIN, IT HAS RAISED THE FOLLOWING GROUNDS: - ITA NO . 808 /BANG/20 18 PAGE 3 OF 10 3.2 THE GROUNDS RAISED (SUPRA) ISSUE - WISE ARE AS UNDER: - I. GROUNDS 1 TO 3 - DISALLOWANCE OF PROVISION FOR EXPENSES RS.2,43,58,700/ - ; II. GROUNDS 4 & 5 - ADDITION OF REIMBURSEMENT OF INC OME RS.13,69,01,801/ - ; III. GROUND NO.6 - VIOLATION OF PRINCIPLES OF NATURAL JUSTICE ADEQUATE OPPORTUNITY OF BEING HEARD NOT PROVIDED. 4.1.1 AT THE OUTSET, THE LD.AR FOR THE ASSESSEE SUBMITTED THAT IN TERMS OF GROUND NO.6 (SUPRA) , THE ORDERS OF BOTH THE AUTHORITIES BELOW OUGHT TO BE SET ASIDE IN TOTO FOR FAILURE ON THEIR PART TO PROVIDE THE ASSESSEE WITH ADEQUATE OPPORTUNITY OF BEING HEARD AND TO PRESENT ITS CASE/DETAILS/SUBMISSIONS BEFORE PASSING THE IMPUGNED ORDERS. ACCORDING TO THE LD.AR , THIS FACT WILL BE EVIDENT FROM CHRONOLOGY OF EVENTS THAT HAD TAKEN PLACE IN THE COURSE OF BOTH ASSESSMENT AND APPELLATE PROCEEDINGS. 4.1.2 IT WAS SUBMITTED BY THE LD. AR THAT AFTER THE CASE FOR ASSESSMENT YEAR 2013 - 14 WAS TAKEN UP FOR SCRUTINY BY ISSUE OF NOTICE U/S 143(2) OF THE ACT, HEARINGS IN THE CASE WERE FIXED AND TAKEN UP ONLY FROM 03/02/2016, AT THE FAG END OF THE TIME - BARRING DATE OF 31/03/2016. A SHOW CAUSE NOTICE DATED 07/03/2016 WAS ISSUED TO THE ASSESSEE REQUIRING IT TO FURNISH DE TAILS WHICH HAD TO BE COLLATED/COLLECTED FROM ITS 22 WAREHOUSES SPREAD ACROSS THE COUNTRY AND REPLY BY 15/03/2016. WRITTEN SUBMISSIONS WERE FILED ALONG WITH SAMPLE EVIDENCES. HOWEVER, THE SAME WERE BRUSHED ASIDE BY THE ASSESSING OFFICER (AO) WHO PROCEEDED TO MAKE (I) AN UNSUSTAINABLE DISALLOWANCE OF PROVISION FOR EXPENSES IN SPITE OF IT BEING POINTED OUT THAT THE SAME CANNOT BE DONE AS THESE PROVIS I ONS FOR EXPENSES OF RS.2,43, 58,700/ - ARE NOT DEBITED/CLAIMED IN THE ASSESSEE S OF PROFIT AND LOSS ACCOUNT AND (II) AN UNSUSTAINABLE ADDITION OF ITA NO . 808 /BANG/20 18 PAGE 4 OF 10 RS.13,69,01,801/ - ON ACCOUNT OF REIMBURSEMENT OF EXPENSES AS THERE IS NO INCOME ELEMENT EMBEDDED THEREIN. 4.1.2 THE LD.AR SUBMITS THAT A PERUSAL OF THE IMPUGNED ORDER OF THE LD.CIT(A) AND SPECIFICALLY PARAS 5 AND 6 T HEREOF, WOULD GO TO SHOW THAT THE LD. CIT(A) , IN A VERY FLIPPANT AND CURSORY MANNER AND BY WAY OF A NON - SPEAKING ORDER , HAS UPHELD THE AFORESAID TWO ADDITIONS/DISALLOWANCES MADE BY THE AO, SOLELY ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE ITS C LAIM THAT THE PROVISION FOR EXPENSES AND REIMBURSEMENT OF EXPENSES HAD NO IMPACT ON THE PROFIT AND LOSS ACCOUNT AND PROFITABILITY OF THE ASSESSEE. IT IS ARGUED THAT AS THE LD.CIT(A) EXPRESSED THAT HE WAS NOT SATISFIED WITH THE SUBMISSIONS MADE, THE ASSESS EE MADE A PLEA TO THE CIT(A) VIDE LETTER DATED 19/12/2017 SEEKING PERMISSION AND TIME TO SUBMIT ADDITIONAL EVIDENCE IN THE MA T TER AND ALSO FOR AN OPPORTUNITY OF BEING HEARD AS THE COMPANY HAS CHANGED ITS TAX CONSULTANTS. (COPY OF THIS LETTER DATED 19/12/20 17, DULY ACKNOWLEDGED TO HAVE BEEN RECEIVED BY OFFICE OF CIT(A) - 5, BENGALURU ON 19/12/2017, PLACED AT PAGE 247 OF PAPER BOOK). ACCORDING TO LD. AR , AT THIS STAGE THE ASSESSEE WAS NOT MADE AWARE THAT THE IMPUGNED ORDER DATED 24/11/2017 , HAD BEEN PASSED BY THE LD.CIT(A) AND WERE SURPRISED WHEN AN UNSIGNED COPY OF THE IMPUGNED ORDER DATED 24/11/2017 WAS RECEIVED ON ALMOST 2 MONTHS LATER, ON 17/01/2018 BY E - MAIL. THE SIGNED COPY OF THE IMPUGNED ORDER DATED 24/ 1 1/2017 WAS FINALLY RECEIVED ON 20/01/2018. ENQUI RIES WITH THE POSTAL DEPARTMENT REVEAL THAT AS PER POSTAL TRACKING, THE IMPUGNED ORDER WAS RECEIVED FROM THE OFFICE OF THE LD.CIT(A) BY THE POSTAL DEPARTMENT ONLY ON 18/01/2018 (COPIES PLACED AT PAGE 254 AND 255 OF PAPER BOOK). IT IS CONTENDED BY THE ASSE SSEE THAT AS PER THE EVIDENCE ABOVE, IT IS CLEAR THAT THE IMPUGNED ORDER OF THE LD.CIT(A) WAS PASSED NOT ON 24/11/2017 BUT SOMETIME IN JANUARY, 2018 ONLY AND THAT ALL THIS BACK DATING OF ORDERS ETC., BY THE LD.CIT(A) WAS DONE ONLY WITH A VIEW TO DENY THE A SSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD; TO FILE ADDITIONAL EVIDENCE AND SUBMISSIONS IN SUPPORT OF AND TO SUBSTANTIATE ITS CLAIM WHICH ACT IS IN GROSS VIOLATION OF THE ITA NO . 808 /BANG/20 18 PAGE 5 OF 10 PRINCIPLES OF NATURAL JUSTICE. IT IS THEREFORE, PLEADED THAT IN THE MURKY SITUATION PREVAILING, IT IS IMPERATIVE IN THE INTEREST OF JUSTICE AND EQUITY FOR THE ORDERS OF BOTH THE AUTHORITIES BELOW TO BE SET ASIDE BY THE TRIBUNAL AND THE AUTHORITIES BELOW BE DIRECTED TO MAKE THE ASSESSMENT DE NOVO AFTER CONSIDERING THE ADDITIONAL EVIDENCE THE ASSESSEE SEEKS TO FILE IN RESPECT OF BOTH ISSUES ON WHICH ADDITIONS/DISALLOWANCES HAVE BEEN MADE. 4.2 BEFORE US, THE ASSESSEE HAS ALSO FILED AN APPLICAT I ON DATED 14/06/2018 UNDER RULE 29 OF THE IT(AT) RULES, 1963, 1963 SEEKING PERMISSION TO F ILE ADDITIONAL EVIDENCE IN SUPPORT OF BOTH THE SUBSTANTIVE ISSUE S AGITATED BEFORE THE TRIBUNAL IN ITS APPEAL FOR ASSESSMENT YEAR 2013 - 14 IN PAPER BOOK (PAGES 1 TO 614) AND PAPER BOOK 2 (PAGES 615 TO 1057). IN ITS APPLICATION, THE ASSESSEE SUBMITS AS UNDE R: - ITA NO . 808 /BANG/20 18 PAGE 6 OF 10 ITA NO . 808 /BANG/20 18 PAGE 7 OF 10 THE LD. AR WAS HEARD IN SUPPORT ON THE ISSUE OF ADMISSION OF ADDITIONAL EVIDENCE. 4.3 THE LD. DR ON HIS PART SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW EMPHATICALLY ; SUBMITTING THAT THE ASSESSEE WAS PROVIDED OPPORTUNITIES OF BE ING HEARD BY BOTH THE AUTHORITIES BELOW AND THE PRESENT SITUATION IS A RESULT OF THE ASSESSEE S FAULT IN NOT FURNISHING THE REQUIRED DETAILS TO SUBSTANTIATE ITS CLAIMS. THEREFORE, IT CANNOT BE SAID THAT THERE WAS VIOLATION OF THE PRINCIPLES OF NATURAL JUS TICE. THE LD. DR OPPOSED THE ASSESSEE S PLEA FOR ADMISSION OF ADDITIONAL EVIDENCE. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. A LOT OF AVERMENTS HAVE BEEN BAND I ED ABOUT BY BOTH THE SIDES. BE THAT AS IT MAY, FROM A PERUSAL OF THE IMPUGNED ORDERS O F ASSESSMENT FOR ASSESSMENT YEAR 2013 - 14, WE FIND THAT AFTER ISSUE OF NOTICE U/S 143(2) OF THE ACT, ON 2/9/2014, THE AO TOOK UP HEARINGS IN ASSESSMENT PROCEEDINGS ABOUT A YEAR AND HALF LATER IN FEBR UARY AND MARCH 2016 AND COMPLETED THE ASSESSMENT IN HASTE BY ORDER DATED 30/03/2016, JUST ONE DAY BEFORE THE PERIOD OF LIMITATION ENDED ON 31/03/2016 AND THAT TOO WITHOUT AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD. 4.4.2 THE FINDING RENDERED BY THE LD.CIT(A) IN THE IMPUGNED ORDER, WHILE DISMISSING THE ASSESSEE S APPEAL IS AT PARAS 5 AND 6 THEREOF AND READ S AS UNDER: - ITA NO . 808 /BANG/20 18 PAGE 8 OF 10 4.4.3 A PERUSAL THEREOF (SUPRA) SHOWS THAT THE LD.CIT(A) MERELY BRUSHED OFF THE ASSESSEE S CLAIMS WITH NO GOOD REASON EXCEPT TO SAY THAT THE ASSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE OR ESTABLISH ITS CLAIMS (I) THAT PROVISION FOR EXPENSES AMOUNTING TO RS.2,43,58,700/ - , WHICH WAS NOT DEBITED TO THE ASSESSEE S PROFIT AND LOSS ACCOUNT, HAD NOT IMPACTED ITS PROFI TABILITY AND (II) THAT REIMBURSEMENT OF EXPENSES AMOUNTING TO RS.13,69,01,801/ - VIS - - VIS ITS PARENT COMPANY M/S NISSIN FOODS INDIA LTD. WOULD NOT HAVE ANY IMPACT ON THE PROFIT AND LOSS ACCOUNT. WE RESTRAIN OURSELVES FROM GOING INTO THE VERACITY OF THE AS SESSEE S AVERMENTS THAT THE IMPUGNED ORDER OF THE LD.CIT(A) WAS NOT PASSED ON 24/11/2017 BUT SOMEWHERE IN JANUARY 2018 AS IT WAS NOT MADE AWARE BY THE OFFICE OF THE CIT(A) OF THE FACT THAT THE IMPUGNED ORDER WAS ALREADY ITA NO . 808 /BANG/20 18 PAGE 9 OF 10 PASSED WHEN IT MADE ITS REQUEST FOR FURNISHING OF ADDITIONAL EVIDENCE VIDE LETTER DATED 19/12/2017. WHATEVER MAY BE THE ACTUAL POSITION IN THIS REGARD, WE WOULD NOT LIKE TO SPECULATE THEREON BUT ON A PERUSAL AND APPRAISAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE ARE OF THE CONSIDERED VIEW THAT TH E ORDERS OF THE AUTHORITIES BELOW , BOTH AO AND CIT(A) , HAVE BEEN PASSED IN HASTE AND IN A CRYPTIC, SUMMARY AND NON - SPEAKING MANNER, WITHOUT AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS, SUBMISSIONS EVIDENCES TO SUBSTANTIATE ITS CLAIM S . IN THIS VIEW OF THE MATTER, WE ARE OF THE O P INION THAT SINCE THE ULTIMATE OBJECT OF ASSESSMENT IS THAT THE TRUE AND CORRECT INCOME OF AN ASSESSEE ALONE HAS TO BE BROUGHT TO TAX, AND THE AUTHORITIES BELOW IN THE CASE ON HAND, HAV ING BOTH FAILED TO AFFORD THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD, THE ORDERS OF THE AUTHORITIES BELOW ARE LIABLE TO BE SET ASIDE FOR VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE IN THE CASE ON HAND AND WE DO SO. WE ACCORDINGLY, REMAND THE ADJUDICATION OF THE TWO ISSUES AGITATED BY THE ASSESSEE ON MERITS IN THIS APPEAL, (I) AT GROUNDS 1 TO 3 ON PROVISION FOR EXPENSES AND (II) AT GROUNDS 4 AND 5 ON REIMBURSEMENT OF EXPENSES; TO THE FILE OF THE AO FOR DE - NOVO CONSIDERATION AND ADJUDICATION THEREON. ON A CAREFUL CONSIDERATION OF THE ASSESSEE S APPLICATION FOR ADMISSIO N OF ADDITIONAL EVIDENCE UNDER R ULE 29 OF THE IT(AT) RULES 1963, AT PAPER BOOK 1 (PAGES 1 TO 614) AND PAPER BOOK 2 (PAGES 615 TO 1057), WE ARE OF THE VIEW THAT, SINCE THE SAME PERTAIN TO AND GO TO T HE ROOT OF THE MATTER FOR FACTUALLY DECIDING THE ALLOWABILITY OR OTHERWISE OF THE ASSESSEE S CLAIMS ON THE AFORESAID TWO ISSUES OF DISPUTE IN THIS APPEAL, THE SAME IS TO BE ADMITTED FOR CONSIDERATION. THE AO IS ACCORDINGLY DIRECTED TO EXAMINE AND VERIFY TH E AFORESAID ADDITIONAL EVIDENCE WHILE CONSIDERING THE TWO ISSUES RESTORED TO HIS FILE. NEEDLESS TO ADD, THE ASSESSEE MAY BE AFFORDED ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILS/SUBMISSIONS/EVIDENCES IN REGARD TO ITS CLAIMS, WHICH SHALL ALSO BE CONSIDERED BEFORE DECIDING THE SAID TWO ISSUES AFRESH. GROUND NO.6 OF THE ASSESSEE S APPEAL IS ALLOWED. ITA NO . 808 /BANG/20 18 PAGE 10 OF 10 5. GROUNDS 1 TO 5 5.1 IN VIEW OF OUR DECISION IN TERMS OF GROUND NO.6, IN SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW ON GROU NDS OF VIOLATION OF THE PRINCIPLES OF NATURAL JUSTICE , THE GROUNDS 1 TO 5 (SUPRA) RAISED ON MERITS ON THE ISSUES (I) OF THE DISALLOWANCE OF PROVISION FOR EXPENSES AND (II) ADDITION OF REIMBURSEMENT OF INCOME AS INCOME , ARE RENDERED ACADEMIC IN NATURE AND AR E NOT REQUIRED TO BE ADJUDICATED AT THIS JUNCTURE. 6. IN THE RESULT, THE ASSESSEE S APPEAL FOR ASSESSMENT YEAR 2013 - 14 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2018 S D/ - SD/ - ( N.V.VASUDEVAN ) ( JASON P BO AZ ) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE : BENGALURU. D A T E D : 17 / 0 8 /201 8 SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE