M/s. Residency Foods & Beverages Ltd., Mumbai V. DCIT, New Delhi

ITA 815/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5450 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 20-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard; Principle of natural justice; Earning of tax free income; Additional evidence; Non compliance
• Section: 14A; 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI) BEFORE SHRI U. B. S. BEDI, JUDICIAL MEMBER AND SHRI J. S. REDDY, ACCOUNTANT MEMBER I.T.A. NO. 815 /DEL/2013 (ASSESSMENT YEAR 2009-10) M/S. RESIDENCY FOODS & BEVERAGES LTD., VS DCIT, CI RCLE 15(1), MANDLIK HOUSE, MANDLIK ROAD, NEW DELHI COLABA, MUMBAI - 400001 PAN/GIR NO.: AAACR4113J (APPELLANTS) (RESPONDENTS) ASSESSEE BY : SHRI AJAY VOHRA, ADV. DEPARTMENT BY: MS. MEENAKSHI VOHRA, SR. DR ORDER PER U B S BEDI, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER PASSED BY LD. CIT(A) - XVIII, NEW DELHI DATED 16.11.2012 RELEVANT TO THE ASSESSMENT YEAR 2009-10 WHEREIN FOLLOWING EFFECTIVE GROUNDS HA VE BEEN RAISED: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN FRAMING BEST JUDGEMENT ASSESSMENT UNDER SECTION 144, AFTER REJECTING BOOKS OF ACCOUNTS UNDER SECTION 145 OF THE INCOME-TAX ACT, 1 961 ('THE ACT') ON THE GROUND THAT THE APPELLANT FAILED TO FURNISH COM PLETE DETAILS/ INFORMATIONS AS CALLED FOR. 1.1 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN REJECTING THE APPLICATION FILED BY TH E APPELLANT UNDER RULE-46A OF THE INCOME TAX RULES,1962 SEEKING ADMIS SION OF ADDITIONAL EVIDENCE. 1.2 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSMENT FRAMED WAS IN I.T.A. NO. 815/DEL/2013 2 VIOLATION OF PRINCIPLES OF NATURAL JUSTICE INASMUCH AS SUFFICIENT OPPORTUNITY OF BEING HEARD WAS NOT PROVIDED TO THE APPELLANT. 1.3 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE REASON FOR NON COMPLIANCE ON THE PART OF THE APPELLANT WITH SOME OF THE NOTICES ISSUED BY THE ASSESSING OFFICER WAS OWING TO THE FACT THAT THE PR INCIPAL PLACE OF BUSINESS WAS SHIFTED FROM NEW DELHI TO MUMBAI. 1.4 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ACTION OF T HE ASSESSING OFFICER IN REJECTING THE BOOKS OF ACCOUNTS OF THE APPELLANT WAS ARBITRARY AND WITHOUT CONSIDERING THE DETAILS/INFORMATION PLACED ON RECORD. 2. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF ASSESSING OFF ICER IN MAKING ADDITION OF RS.2,40,97,079/- ON ACCOUNT OF SUNDRY C REDITORS OUTSTANDING AS AT THE END OF THE RELEVANT YEAR ON T HE ALLEGED GROUND THAT THE APPELLANT FAILED TO FURNISH THE NAME AND A DDRESSES OF SUCH CREDITORS. 3. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF ASSESSING OFF ICER IN DISALLOWING RS. 84,46,498/- UNDER SECTION 14A OF THE ACT. 3.1 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE AFORESAID D ISALLOWANCE WAS MADE BY THE ASSESSING MERELY BY APPLYING RULE 8D OF THE INCOME-TAX RULES, 1962 ('THE RULES') WITHOUT RECORDING PRIMARY SATISFACTION ABOUT SOME EXPENDITURE HAVING BEEN ACTUALLY INCURRED IN R ELATION TO EXEMPT INCOME, WHICH IS A CONDITION PRECEDENT FOR MAKING D ISALLOWANCE UNDER SECTION 14A OF THE ACT. 3.2 THAT THE COMMISSIONER OF INCOME TAX (APPEALS) E RRED ON FACTS AND IN LAW IN NOT APPRECIATING THAT THE ASSESSING O FFICER HAD PROPORTIONATELY DISALLOWED INTEREST EXPENDITURE WHI LE APPLYING RULE 8D OF THE RULES IGNORING THAT THERE WAS NO NEXUS BE TWEEN BORROWED FUNDS AND THE INVESTMENTS MADE BY THE APPELLANT. 4. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF ASSESSING OFF ICER IN MAKING AD- HOC DISALLOWANCE @ 20% OF MANUFACTURING, ADMINISTRA TIVE AND OTHER EXPENSES AMOUNTING TO RS. 6,36,16,400/- ON THE GROU ND THAT THE APPELLANT FAILED TO FURNISH NECESSARY DOCUMENTARY E VIDENCES. 5. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED ON FACTS AND IN LAW IN NOT ADJUDICATING GROUND OF APPEAL NO. 5 CHALLENGING THE I.T.A. NO. 815/DEL/2013 3 ACTION OF ASSESSING OFFICER IN NOT ALLOWING SET OFF OF BROUGHT FORWARD LOSSES AGAINST THE INCOME ASSESSED. 2. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBM ITTED THAT THE ASSESSMENT IN THIS CASE WAS FRAMED U/S 144 WITHOUT SPECIFICALLY PINPOINTING ANY NON-COMPLIANCE WHEN JUST AND APPROPRIATE OPPORT UNITY WAS NOT ALLOWED TO THE ASSESSEE WHO NOT ONLY FILED ADDITIONAL EVIDE NCE UNDER RULE 46A OF I T RULES 1962, REMAND WAS SOUGHT BY LD. CIT(A) AND AFT ER GIVING OPPORTUNITY TO THE ASSESSEE AND CONSIDERING THE OBJECTIONS TO R EMAND REPORT, HAS CONCLUDED TO JUST GIVE PART RELIEF WITHOUT APPROPRI ATELY COMPLYING WITH THE PROVISIONS OF RULE 46A OR CONSIDERING THE ISSUE INV OLVED IN DETAIL. IT WAS THUS PLEADED THAT IN THE INTEREST OF JUSTICE, IT WO ULD BE APPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE T HE MATTER BACK ON THE FILE OF THE A.O. FOR RECONSIDERATION OF THE ISSUE AFRESH . 3. LD. D.R. WHILE STRONGLY RELYING UPON THE ORDERS OF AUTHORITIES BELOW, HAS PLEADED FOR CONFIRMATION OF THE IMPUGNED ORDER OF LD. CIT(A) TAKING THE PLEA THAT THE ASSESSEE HAS DEFAULTED IN COMPLIANCE WITH ALL THE TERMS OF NOTICES ISSUED FROM TIME TO TIME AND ADDITIONAL DOC UMENTS FURNISHED BEFORE FIRST APPELLATE AUTHORITY WERE DULY SENT TO THE A.O . FOR HIS OBJECTION AND COMMENTS WHICH WERE RECEIVED AND THE SAME WERE SUPP LIED TO THE ASSESSEE WHO FILED HIS REJOINDER TO SUCH REMAND REPORT. LD. CIT(A) AFTER CAREFULLY CONSIDERING SUCH REMAND REPORT, OBJECTION OF THE AS SESSEE AND FACTS AND CIRCUMSTANCES OF THE CASE, UPHELD SUCH PART OF THE ORDER WHICH WAS PASSED IN ACCORDANCE WITH LAW AND WHERE THERE WAS SCOPE FOR R ELIEF, CIT(A) HAS GIVEN THEM. THEREFORE, IT WAS PLEADED FOR CONFIRMATION O F THE IMPUGNED ORDER. AT THIS STAGE, LD. D.R. WAS APPRISED THE RELEVANT PORT ION OF THE ORDER OF THE A.O. AND LD. CIT(A) TO SEEK HER COMMENTS AS TO WHET HER THERE WAS I.T.A. NO. 815/DEL/2013 4 SUFFICIENT CAUSE FOR THE ASSESSEE WHICH PREVENTED I T FROM FURNISHING ALL THE DETAILS WHICH WERE EITHER NOT ASKED FOR OR FOR WHIC H TIME WAS NOT GIVEN, SHE RELIED UPON THE ORDER OF THE A.O. AS WELL AS LD. CI T(A) TO PLEAD FOR TAKING APPROPRIATE DECISION IN THE MATTER. 4. WE HAVE HEARD BOTH THE SIDES AND CONSIDERED THE MATERIAL ON RECORD AS WELL AS ORDERS OF AUTHORITIES BELOW AND NATURE OF D OCUMENTS FURNISHED BEFORE THE A.O. AND LD. CIT(A) COPY OF WHICH HAVE BEEN PLA CED BY THE ASSESSEE IN THE PAPER BOOK FILED RUNNING INTO 192 PAGES. IT IS FOUND FROM THE MATERIAL ON RECORD THAT JUST AND APPROPRIATE OPPORTUNITY HAVE N OT BEEN GRANTED TO THE ASSESSEE AND LD. CIT(A) HAS ALSO NOT APPROPRIATELY DEALT WITH THE ISSUE TO DECIDE THE APPEAL OF THE ASSESSEE. THEREFORE, IN T HE INTEREST OF JUSTICE AND TO HAVE FAIR PLAY IN THE MATTER, WE FIND IT JUST AND A PPROPRIATE TO SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND RESTORE THE MATTER BACK ON THE FILE OF THE A.O. WITH THE DIRECTION TO RECONSIDER THE ISSUE INV OLVED IN THIS APPEAL AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. WE H OLD AND DIRECT ACCORDINGLY. 5. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST FEB., 2014. SD./- SD./- (J. S. REDDY) (U.B.S.BEDI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATE: 21 ST FEB,. 2014. SP. COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A)-XXV, NEW DELHI AR, ITAT, 5. CIT(ITAT), NEW DELHI NEW DELHI