SILICON INTERFACES P.LTD, MUMBAI V. ACIT 10(1), MUMBAI

ITA 8624/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2587 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 18-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-12-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J SARAVANAN DR
• Keywords: Additional evidence; Corroborative evidences

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C.N. P RASAD,JUDICIAL MEMBER ./ITA/8624/MUM/2011, /ASSESSMENT YEAR: 2008-09 M/S. SILICON INTERFACES PVT. LTD. 606, NIRMAN KENDRA, DR. E. MOSES ROAD MAHALAXMI,MUMBAI-400 011. PAN:AADCS 5096 G VS. ACIT, CIR. 10(1) MUMBAI. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI J. SARAVANAN-DR ASSESSEE BY: SHRI DHARMESH SHAH / DATE OF HEARING: 04.07.2016 / DATE OF PRONOUNCEMENT: 13.07.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 24.08.2011,OF THE CIT(A )-21,MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.FIRST TWO GROUNDS OF APPEAL WERE NOT PRESSED BY THE AUTHORISED REPRESENTATIVE (AR)DURING THE COURSE OF HEARING BEFORE US.HENCE,BO TH THE(GR.NO.1&2)GROUNDS STAND DISMISSED, AS NOT PRESSED. 2. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS CONSULTANC Y SERVICES IN RELATION TO TECHNICAL SUPPORT FOR DEVELOPMENT OF COMPUTED SOFTWARE FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION,ON 30.09.2008,DECLARING ITS TOTAL INC OME AT (-)RS.52,90,494/-. THE AO COMPLETED THE ASSESSMENT U/S.143(3) OF THE ACT,1961 ON 20.10. 2010, ASSESSING THE TOTAL INCOME OF THE ASSESSEE AT RS.13,84,160/-. 3. GROUND NO.3 IS ABOUT CONFIRMING THE DISALLOWANCE OF RS.9.72 LAKHS ON ACCOUNT OF EXCESS PROVISIONS WRITTEN BACK BY THE ASSESSEE.DURING THE ASSESSMENT PROCEEDINGS IT WAS FOUND BY THE AO THAT THE ASSESSEE HAD CREDITED AN AMOUNT OF RS. 9,72,920/- TO ITS P&L ACCOUNT ON ACCOUNT OF EXCESS PROVISION WRITTEN BACK, THAT THE ASSESSEE H AD CLAIMED THAT THE SAID AMOUNT WAS ON ACCOUNT OF PROVISIONAL LIABILITY AND NOT ACTUALLY A SCERTAINED LIABILITY, THAT SAME WAS TO BE REDUCED WHILE CALCULATING THE TAXABLE INCOME, THAT THE UNAS CERTAINED LIABILITY COULD NOT BE ASSESSED TO TAX, THAT IN THE EARLIER YEARS IT HAD DEBITED THE P&L AC COUNT AND HAD ADDED BACK THE SAID PROVISIONS THOUGH NO DEDUCTION WAS CLAIMED IN RESPECT OF THE L IABILITIES IN THE PAST,THAT THE LIABILITY HAD 8624/MUM/2011SILICON INTERFACES 2 CRYSTALLISED DURING THE YEAR,THAT THE PROVISIONS MA DE IN THE PAST WERE EXCESSIVE AND WERE REQUIRED TO BE WRITTEN BACK.HOWEVER,THE AO DID NOT AGREE WITH THE ASSESSEE AND SAME WAS ADDED TO ITS TOTAL INCOME. HE HELD THAT ASSESSEE HAD NOT FILED ANY JUSTIFICATION FOR THE CLAIM. 3.1. AGGRIEVED BY THE ORDER OF THE AO,THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).HE REFERRED TO THE AUDIT REPORT FIL ED BY THE ASSESSEE.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND ASSESSMENT ORDER,THE FAA HELD THAT THE ASSESSEE HAD NOT FILED ANY DOCUMENTARY EVIDENCE NAMELY BALANCE SHEET, P&L A/C. , RETURNS OF INCOME FOR THE EARLIER YEARS TO JUSTIFY THE CLAIM,THAT THE ASSESSEE HAD NOT SATISFA CTORILY PROVED THAT THE DEDUCTION OF THE LIABILITIE S WERE NOT CLAIMED IN THE EARLIER YEARS.FINALLY,HE UP HELD THE ORDER OF THE AO. 3.2. BEFORE US,THE AR STATED THAT BALANCE SHEET, P&L ACC OUNT OF THE EARLIER YEARS WERE AVAILABLE WITH THE DEPARTMENT,THAT THE AO DID NOT MAKE ANY EN QUIRY IN THAT REGARD, THAT THE ASSESSEE HAD NOT CLAIMED DEDUCTION WITH REGARD TO ABOVE REFERRED LIABILITIES IN THE EARLIER YEAR.DR SUPPORTED THE ORDER OF THE FAA. 3.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE FAA HAD UPHELD THE DISALLOWANCE, MADE BY THE AO, TH AT HE HAD HELD THAT THE ASSESSEE HAD NOT FILED THE RETURNS OF INCOME,P&L A/C.S FOR THE EARL IER YEARS.CONSIDERING THE FACT THAT THESE BASIC DOCUMENTS WERE AVAILABLE TO AO AS WELL AS FAA,WE AR E OF THE OPINION THAT BEFORE TAKING AN ADVERSE VIEW THEY SHOULD HAVE VERIFIED THE FACTS FR OM THE AVAILABLE RECORDS OR SHOULD HAVE DIRECTED THE ASSESSEE TO FILE THE SAME.CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION THAT THE ISSUE NEEDS FUR THER VERIFICATION.SO,IN THE INTEREST OF JUSTICE WE ARE RESTORING BACK THE MATTER TO THE FILE OF THE AO TO DECIDE THE ISSUE AFRESH AFTER GOING THROUGH THE RETURNS OF INCOME, P&L ACCOUNTS, BALANCE SHEET OF THE EARLIER YEARS. ASSESSEE IS DIRECTED TO PROVIDE THESE BASIC DOCUMENTS TO THE AO.THIRD GROUN D IS DECIDED IN FAVOUR OF THE ASSESSEE,IN PART. 4. NEXT GROUND OF APPEAL IS ABOUT CONFIRMING THE DISA LLOWANCE OF RS.65,922/- ON ACCOUNT OF THE LATE PAYMENT OF PF.DURING THE ASSESSMENT PROCEEDING S THE AO FOUND THAT PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESIC WAS NOT MADE WITHIN THE STIPULATED DATE AS PROVIDED IN SECTION 36(1) OF THE ACT. PROVIDENT FUND 8624/MUM/2011SILICON INTERFACES 3 MONTHS EMPLOYEES CONTRIBUTION DUE DATE DATE OF PAYM ENT JULY, 07 35714 20.08.2007 23.08.2007 OCTOBER, 07 302208 20.11.2007 22.11.2007 ESIC JULY, 07 3216 21.08.2007 23.08.2007 OCTOBER, 07 1844 21.11.2007 22.11.2007 THE ABOVE AMOUNT WAS CONSIDERED BY AO AS ASSESSEES INCOME AS PER THE PROVISIONS OF SECTION 2(24)(X) R.W.S.36(1)(VA) OF THE ACT. 4.1. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE ARGUE D THAT IN SOME CASES THE PAYMENT WAS MADE WITH MARGINAL DELAY OF 2-3 DAYS, THAT THE PAYM ENTS WERE MADE BEFORE THE DUE DATE OF FILING OF RETURN, THAT NO DISALLOWANCE COULD BE MADE U/S.4 3B OF THE ACT.AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE THE FAA HELD THAT PAYMEN T MADE AFTER GRACE PERIOD WAS NOT ELIGIBLE FOR DEDUCTION. GIVING PARTIAL RELIEF HE UPHELD THE DISALLOWANCE OF RS.65.922. 4.2. BEFORE US, THE AR RELIED UPON THE CASES OF GHATGE P ATIL TRANSPORTS (368ITR749) AND HINDUSTAN ORGANICS CHEMICALS LTD.(366ITR1) OF THE H ON'BLE JURISDICTIONAL HIGH COURT. THE DR LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. WE FIND THAT IN THE CASE OF GHATGE PATIL TRANSPORTS (SUPRA),THE COURT HAD HELD THAT IF THE PAYMENTS WERE MADE BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME, NO DISALLOWANCE CAN BE MADE AS PER THE PROVISIONS OF SECTION 36(1).RESPECTFULLY,FOLLOW ING THE ABOVE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT,WE DECIDE GROUND NO.4 IN FAVOUR O F THE ASSESSEE. 5. LAST GROUND OF APPEAL DEALS WITH DISALLOWANCE OF EX PENSES CLAIMED UNDER THE HEAD TRAVELLING AND CONVEYANCE EXPENDITURE AMOUNTING TO RS.5.92 LAK HS.DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD DEBITED AN AMOUNT O F RS.27.84 LAKHS TO THE P&L A/C UNDER THE HEAD TRAVELLING AND CONVEYANCE INCLUDING FOREIGN TR AVEL EXEPENSES.HE DIRECTED THE ASSESSEE TO SUBMIT THE DETAILS. AS PER THE AO THE ASSESSEE DID NOT SUBMIT ANY DETAILS SUCH AS BILLS, VOUCHERS, NATURE OF FOREIGN TRAVEL ETC.THEREFORE,IN ABSENCE O F THE DETAILS HE DISALLOWED 1/4 TH OF THE EXPENSES I.E. RS.6.96 LAKHS. 5.1. DURING THE APPELLATE PROCEEDINGS THE ASSESSEE CONTE NDED THAT THE EXPENDITURE WAS INCURRED TOWARDS TRAVELLING OF EMPLOYEES AND THE MANAGEMENT ABROAD, FOR BUSINESS PURPOSES, THAT ALL THE 8624/MUM/2011SILICON INTERFACES 4 DETAILS CALLED FOR BY THE AO WERE SUBMITTED VIDE LE TTER 8.1.2010, 7.5.2010 AND 16.08.2010. BEFORE THE AO,THE ASSESSEE FILED LEDGER ACCOUNT OF THE EXPENSES JUSTIFYING THE CLAIM MADE. IT ALSO FILED COPIES OF SUPPORTING EVIDENCES AND REQUESTED THE FAA TO ADMIT THE SAME AS ADDITIONAL EVIDENCE.HE DIRECTED THE AO TO FILE A REMAND REPORT IN THAT REGARD,BUT,TILL THE PASSING OF THE ORDER BY FAA, THE AO DID NOT SUBMIT ANY REPORT .AFTER CON SIDERING THE AVAILABLE MATERIAL HE HELD THAT FOREIGN TRAVEL EXPENSES WERE INCURRED FOR THE PURPO SE OF BUSINESS, THAT THERE WAS SOME FORCE IN THE SUBMISSION OF THE ASSESSEE, THAT DISALLOWANCE W AS MADE ON ADHOC BASIS. HE FURTHER OBSERVED THAT THE ASSESSEE HAD FILED LEDGER COPIES OF INCURR ING OF EXPENDITURE OF RS.21.92 LAKHS ONLY, WHEREAS IT CLAIMED EXPENDITURE OF RS.27.84 LAKHS.TH EREFORE,HE RESTRICTED THE ADDITION TO RS. 5.92 LAKHS. 5.2. BEFORE US,THE AR CONTENDED THAT THE ASSESSEE HAD FI LED ALL THE NECESSARY DETAILS,THAT THE FAA DID NOT CALL FOR RECONCILIATION OF THE ALLEGED DIFF ERENCE,THAT PROPER VERIFICATION OF THE EXPENDITURE WAS NOT DONE BY EITHER OF THE AUTHORITIES.DR LEFT T HE ISSUE TO THE DISCRETION OF THE BENCH. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD FILED ADDITIONAL EVIDENCE BEFORE THE FAA WHO HAD FORWARDED IT TO THE AO FOR C OMMENTS,THAT THE AO HAD NOT FILED THE REMAND REPORT TILL THE FAA PASSED HIS ORDER.IN OUR OPINION,ISSUE NEEDS FURTHER VERIFICATION.SO,IN THE INTEREST OF JUSTICE, WE ARE RESTORING THE MATTER TO THE FILE OF THE AO. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY O F HEARING TO THE ASSESSEE.LAST GROUND IS PARTIALLY ALLOWED. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PA RTLY ALLOWED. . ORDER PRONOUNCED IN T HE OPEN COURT ON 13 TH JULY,2016. 13 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 13 .07.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.