B.P. CHEMICALS, MUMBAI V. ADDL CIT 13(2), MUMBAI

ITA 8481/MUM/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 8374 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2014
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 27-11-2014
• Assessment Year: 2005-2006
• Appeal Filed On: 14-12-2011
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV SR
• Keywords: Opportunity of being heard; Additional evidence; Reason to believe
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ./I.T.A. NO. 8481/M/2011 ( AY: 2005 - 2006 ) ./I.T.A. NO. 8482/M/2011 ( AY: 2006 - 2007 ) ./I.T.A. NO. 8492/M/2011 ( AY: 2008 - 2009 ) B.P. CHEMICALS, 3, 1 ST FLOOR, VIHAL CHAMBERS, 65, KAZI SAYED ST, MUMBAI 400 003. / VS. ADDL. CIT - 13(2), MUMBAI. ./ PAN : AAAFB 0982 G ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HARESH P. SHAH / RESPONDENT BY : SHRI AKHILENDRA YADAV, SR. AR / DATE OF HEARING : 2 7 .11.2014 / DATE OF PRONOUNCEMENT : 27 .11.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE THREE APPEALS UNDER CONSIDERATION. ALL THESE APPEALS FILED BY THE ASSESSEE INVOLVING THE ASSESSMENT YEARS 2005 - 06, 2006 - 07 AND 2008 - 09. SINCE, THE ISSUES RAISED IN THESE THREE APPEALS ARE IDENTICAL AND THE ONLY DIFFERENCE IS IN THE FIGURES, THEREFORE, FOR THE SAKE OF CONVENIENCE, THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLLOWING PARAGRAPHS OF THIS ORDER. 2. FIRSTLY, WE SHALL TAKE UP THE APPEAL ITA NO.8481/M/2011 FOR THE ASSESSMENT YEAR 2005 - 2006. THIS APPEAL FILED BY THE ASSESSEE ON 14.12.2011 IS AGAINST THE ORDER OF THE CIT (A) - 24, MUMBAI DATED 2.9.2011. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUND S WHICH READ AS UNDER: 2 I. ON REOPENING U/S 147 : (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) ERRED IN CONFIRMING REOPENING WITHOUT APPRECIATING THAT THERE WAS NO REASON TO BELIEVE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 147(1) OF THE ACT. (II) ON THE FACTS AND CIRCUMSTANCES IN LAW, THE LD CIT (A) ERRED IN NOT APPRECIATING THAT THE IMPUGNED REASSESSMENT WAS PURELY BASED UPON THE APPELLATE ORDER OF THE APPELLANT FOR EARLIER ASSESSMENT YEAR I.E., AY 2004 - 05 AND NOT BASED UPON ANY MATERIAL ON RECORD RELEVANT ON THE ISSUE OF THE ALLEGED DISALLOWANCE OF INTEREST U/S 40A(2)(B) OF THE ACT. II. ON NOT ADMITTING FRESH EVIDENCES : - (I) THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 17,12,073/ - OUT OF INTEREST PAYMENT UNDER THE PROV ISIONS OF SECTION 40A(2)(B) OF THE ACT WITHOUT ADMITTING FRESH EVIDENCES IN SUPPORT OF THE CLAIM MERELY ON THE GROUND THAT THEY WERE NOT PRODUCED BEFORE THE LD ASSESSING OFFICER AND ON THE GROUND THAT NONE OF THE CONDITIONS ENSHRINED IN RULE 46A(1) WERE SA TISFIED. (II) THE LD CIT (A) FAILED TO APPRECIATE THAT CONTENTION OF YOUR APPELLANT, THAT ALL THE PAYEE RELATIVES WERE HIGH TAX PAYERS AND THERE WAS NO CASE OF ANY TAX EVASION THROUGH SUCH PAYMENTS, WAS ALREADY MADE BEFORE THE LD ASSESSING OFFICER BUT THERE WAS NO FINDING AND THEREFORE, THE FRESH EVIDENCE IN THAT REGARD WERE SOUGHT TO BE FILED AND TO BE CONSIDERED BY THE LD CIT (A). III. ON DISALLOWANCE OF INTEREST U/S 40A(2)(B) RS. 17,12,073 / - . (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 17,12,073/ - OUT OF THE INTEREST PAYMENT UNDER THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT MERELY FOLLOWING EARLIER YEARS I.E., AY 2004 - 05, ITAT ORDER WITHOUT APPRECIATING THAT THERE WAS NO FINDING ON THE MAIN CONTENTION WITH REGARD TO PROVISIONS OF SECTION 40A(2) OF THE ACT AS TO HOW THE ALLEGED PAYMENT WAS UNREASONABLE OR EXCESSIVE ETC. (II) ON THE FACTS AND IN THE CIRCUMSTANCES THE LD CIT (A) ALSO FAILED TO APPRECIATE THAT THERE WAS NO FINDING ON THE S UBMISSIONS MADE IN VIEW OF THE CBDT CIRCULAR NO.6P(LXXVI - 66) AND THE JUDGMENT OF THE HIGH COURT IN THE CASE OF CIT VS. INDO SAUDI SERVICES (TREND) P. LTD [310 ITR 306 (BOM)]. (III) ON THE FACTS AND IN THE CIRCUMSTANCES THE LD CIT (A) OUGHT TO HAVE APPRECIATED TH AT THE LD ASSESSING OFFICER FAILED TO EXAMINE THE ISSUE IN THE LIGHT OF THE ABOVE REFERRED CBDT CIRCULAR AND THE JUDGMENT. 3. AT THE VERY OUTSET, SHRI HARESH P SHAH, LD COUNSEL FOR THE ASSESSEE BROUGHT OUR ATTENTION TO THE ABOVE GROUNDS AND MENTIONED THAT GROUND NO.1 RELATING TO REOPENING OF THE ASSESSMENT U/S 147 IS NOT PRESSED. AFTER HEARING THE LD DR, THE SAID GROUND NO.1 IS DISMISSED AS NOT PRESSED. 4. GROUND NO.2 RELATES TO ADMITTING OF THE ADDITIONAL EVIDENCES. IN THIS REGARD, LD COUNSEL FOR THE ASSE SSEE BROUGHT OUR ATTENTION TO THE PAPER BOOK FILED BEFORE US AND DEMONSTRATED THAT THE SAID PAPER BOOK , RUNNING INTO 121 PAGES , CONSTI TUTE ADDITIONAL EVIDENCES AND PRAYED FOR ADMITTING THE SAME REMANDING THE MATTER WITH A 3 VIEW TO SHOW THAT THERE WAS NO TAX EVASION IN VIEW OF THE CBDT CIRCULAR NO.6P(LXXVI) - 66), DATED 6.7.1968. 5. AFTER HEARING THE LD DR AND ON PERUSAL OF THE SAID PAPER BOOK, WE FIND THE REQUEST OF THE LD COUNSEL IS FAIR AND REASONABLE. CONSIDERING THE SAME , WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE, THE ADDITIONAL EVIDENCES SHOULD BE ADMITTED AND THE ISSUES SHOULD BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE AS SESSEE. ACCORDINGLY, GROUND NO . 2 IS ALLOWED FOR STATISTICAL PURPOSES. 6. GROUND NO.3, WHICH RELATES TO THE DISALLOWANCE OF INTEREST U/S 40A(2)(B) OF THE ACT. THIS GROUND IS CONSEQUENTIAL IN NATURE TO THE GROUND NO.2. WHILE ADJUDICATING THE SAID GROUND NO.2 IN THE ABOVE PARAGRAPHS, WE REMAND THE GROUND TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. ACCORDINGLY, THE INSTANT GROUND NO.3 IS ALSO REMANDED TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE SAME ALONG WITH THE GROUND NO.2. ACCORDINGLY, GROUND NO.3 RAISED B Y THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.8482/M/2011 (AY 2006 - 2007) (BY ASSESSEE) 8. THIS APPEAL FILED BY THE ASSESSEE ON 14.12.2011 IS AGAI NST THE ORDER OF THE CIT (A) - 24, MUMBAI DATED 2.9.2011 FOR THE ASSESSMENT YEAR 2006 - 2007. 9. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: I. ON REOPENING U/S 147 : (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LD CIT (A) ERRED IN CONFIRMING REOPENING WITHOUT APPRECIATING THAT THERE WAS NO REASON TO BELIEVE WITHIN THE MEANING OF THE PROVISIONS OF SECTION 147(1) OF THE ACT. (II) ON THE FACTS AND CIRCUMSTANCES IN LAW, THE LD CIT (A) ERRED IN NOT APPRECIATING THAT THE IMP UGNED REASSESSMENT WAS PURELY BASED UPON THE APPELLATE ORDER OF THE APPELLANT FOR EARLIER ASSESSMENT YEAR I.E., AY 2004 - 05 AND NOT BASED UPON ANY MATERIAL ON RECORD RELEVANT ON THE ISSUE OF THE ALLEGED DISALLOWANCE OF INTEREST U/S 40A(2)(B) OF THE ACT. II. ON NOT ADMITTING FRESH EVIDENCES : - (I) THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 19,92,376/ - OUT OF INTEREST PAYMENT UNDER THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT WITHOUT ADMITTING FRESH EVIDENCES IN SUPPORT OF THE CLAIM MERELY ON THE GROUND THAT THEY WERE NOT PRODUCED BEFORE THE LD 4 ASSESSING OFFICER AND ON THE GROUND THAT NONE OF THE CONDITIONS ENSHRINED IN RULE 46A(1) WERE SATISFIED. (II) THE LD CIT (A) FAILED TO APPRECIATE THAT CONTENTION OF YOUR APPELLANT, THAT ALL THE PAYEE RELATIVES WE RE HIGH TAX PAYERS AND THERE WAS NO CASE OF ANY TAX EVASION THROUGH SUCH PAYMENTS, WAS ALREADY MADE BEFORE THE LD ASSESSING OFFICER BUT THERE WAS NO FINDING AND THEREFORE, THE FRESH EVIDENCE IN THAT REGARD WERE SOUGHT TO BE FILED AND TO BE CONSIDERED BY TH E LD CIT (A). III. ON DISALLOWANCE OF INTEREST U/S 40A(2)(B) RS. 19,92,376/ - (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 19,92,376/ - OUT OF THE INTEREST PAYMENT UNDER THE PROVISION S OF SECTION 40A(2)(B) OF THE ACT MERELY FOLLOWING EARLIER YEARS I.E., AY 2004 - 05, ITAT ORDER WITHOUT APPRECIATING THAT THERE WAS NO FINDING ON THE MAIN CONTENTION WITH REGARD TO PROVISIONS OF SECTION 40A(2) OF THE ACT AS TO HOW THE ALLEGED PAYMENT WAS UN REASONABLE OR EXCESSIVE ETC. (II) ON THE FACTS AND IN THE CIRCUMSTANCES THE LD CIT (A) ALSO FAILED TO APPRECIATE THAT THERE WAS NO FINDING ON THE SUBMISSIONS MADE IN VIEW OF THE CBDT CIRCULAR NO.6P(LXXVI - 66) AND THE JUDGMENT OF THE HIGH COURT IN THE CASE OF CIT VS. INDO SAUDI SERVICES (TREND) P. LTD [310 ITR 306 (BOM)]. (III) ON THE FACTS AND IN THE CIRCUMSTANCES THE LD CIT (A) OUGHT TO HAVE APPRECIATED THAT THE LD ASSESSING OFFICER FAILED TO EXAMINE THE ISSUE IN THE LIGHT OF THE ABOVE REFERRED CBDT CIRCULAR AND THE J UDGMENT. 10. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE EXACTLY IDENTICAL TO THAT OF THE GROUNDS RAISED IN APPEAL ITA NO.8481/M/2011 FOR THE AY 2005 - 06. SINCE, THE GROUNDS RAISED IN THIS APPEAL ARE EXACTLY IDENTICAL TO THAT OF THE GROUNDS RAISED FOR THE AY 2005 - 06, THEREFORE, THE DECISION GIVEN BY US IN THAT APPEAL SQUARELY APPLIES TO THE PRESENT APPEAL ALSO. CONSIDERING THE SAME, GROUND NO.1 IS DISMISSED AS NOT PRESSED; GROUND NOS. 2 AND 3 ARE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING ISSUES AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.8492/M/2011 (AY 2008 - 2009) (BY ASSESSEE) 12. THIS APPEAL FILED BY THE ASSESSEE ON 14.12.2011 IS AGAINST THE ORDER OF THE CIT (A) - 2.9.2011 FOR THE ASSESSMENT YEAR 2008 - 2009. 13. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GRO UNDS WHICH READ AS UNDER: I . ON NOT ADMITTING FRESH EVIDENCES : - (I) THE LD CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 22,97,722/ - OUT OF INTEREST PAYMENT UNDER THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT WITHOUT ADMITTING FRESH EVIDENCES IN SUPPORT OF THE CLAIM 5 MERELY ON THE GROUND THAT THEY WERE NOT PRODUCED BEFORE THE LD ASSESSING OFFICER AND ON THE GROUND THAT NONE OF THE COND ITIONS ENSHRINED IN RULE 46A(1) WERE SATISFIED. (II) THE LD CIT (A) FAILED TO APPRECIATE THAT CONTENTION OF YOUR APPELLANT, THAT ALL THE PAYEE RELATIVES WERE HIGH TAX PAYERS AND THERE WAS NO CASE OF ANY TAX EVASION THROUGH SUCH PAYMENTS, WAS ALREADY MADE BEFORE THE LD ASSESSING OFFICER BUT THERE WAS NO FINDING AND THEREFORE, THE FRESH EVIDENCE IN THAT REGARD WERE SOUGHT TO BE FILED AND TO BE CONSIDERED BY THE LD CIT (A). II . ON DISALLOWANCE OF INTEREST U/S 40A(2)(B) RS. 22,97,722/ - (I) ON THE FACTS AND IN THE CIR CUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CONFIRMING DISALLOWANCE OF RS. 22,97,722/ - OUT OF THE INTEREST PAYMENT UNDER THE PROVISIONS OF SECTION 40A(2)(B) OF THE ACT MERELY FOLLOWING EARLIER YEARS I.E., AY 2004 - 05, ITAT ORDER WITHOUT APPR ECIATING THAT THERE WAS NO FINDING ON THE MAIN CONTENTION WITH REGARD TO PROVISIONS OF SECTION 40A(2) OF THE ACT AS TO HOW THE ALLEGED PAYMENT WAS UNREASONABLE OR EXCESSIVE ETC. (II) ON THE FACTS AND IN THE CIRCUMSTANCES THE LD CIT (A) ALSO FAILED TO APPRECIATE THAT THERE WAS NO FINDING ON THE SUBMISSIONS MADE IN VIEW OF THE CBDT CIRCULAR NO.6P(LXXVI - 66) AND THE JUDGMENT OF THE HIGH COURT IN THE CASE OF CIT VS. INDO SAUDI SERVICES (TREND) P. LTD [310 ITR 306 (BOM)]. (III) ON THE FACTS AND IN THE CIRCUMSTANCES THE LD C IT (A) OUGHT TO HAVE APPRECIATED THAT THE LD ASSESSING OFFICER FAILED TO EXAMINE THE ISSUE IN THE LIGHT OF THE ABOVE REFERRED CBDT CIRCULAR AND THE JUDGMENT. 14. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE EXACTLY IDENTICAL TO THAT OF THE GROUNDS 2 AND 3 RAISED IN APPEAL ITA NO.8481/M/2011 FOR THE AY 2005 - 06. SINCE, THE GROUNDS RAISED IN THIS APPEAL ARE EXACTLY IDENTICAL TO THAT OF THE GROUNDS (2 AND 3) RAISED FOR THE AY 2005 - 06, THEREFORE, THE DECISION GIVEN BY US IN THAT APPEAL SQUARELY APPLIES TO THE PRESENT APPEAL ALSO. CONSIDERING THE SAME, GROUND NO.1 AND 2 OF THE PRESENT APPEAL ARE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATING ISSUES AFRESH AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDIN GLY, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOU NCED IN THE OPEN COURT ON 2 7 T H NOVEMBER, 2014. S D / - S D / - ( AMIT SHUKLA ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 2 7 /11/2014 . . ./ OKK , SR. PS 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI