R.K.4CES Security & Man Power Services Pvt. Ltd., Hyderabad V. ITO, Hyderabad

ITA 868/HYD/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 66351 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 26-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M H NAIK
• Assessee Lawyers: T CHAITANYA KUMAR
• Keywords: Depreciation; Principle of natural justice; Additional evidence; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER I.T.A. NO. 868/HYD/2010 ASSESSMENT YEAR 2006-07 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LTD., HYDERABAD; PAN: AABCR8955M V . THE INCOME TAX OFFICER WARD-3(2) HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SRI T. CHAITANYA KUMAR RESPONDENT BY: SRI M.H. NAIK DATE OF HEARING: 04 . 1 0.2012 DATE OF PRONOUNCEMENT: 04 . 1 0.2012 O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), GUNTUR DATED 26.3.2010 FOR ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED CIT(A) INSOFAR AGAINST THE APPELLANT IS CONTRARY TO THE FACTS AND CIRCUMSTANCE S OF THE CASE. 2. THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE OF THE APPELLAN T. 3. THE ORDER OF THE LEARNED CIT(A) INSOFAR AGAINST THE ASSESSEE IS ERRONEOUS AND BAD IN LAW. 4. THE LEARNED CIT(A) IS NOT JUSTIFIED IN CONFIRMING T HE ADDITIONS MADE BY THE ASSESSING OFFICER AT VARYING RATES RANGING FROM 20% TO 100% OF THE EXPENSES, WITHOUT VERIFYING THE NATURE, REASONABILITY OF THE EXPENSES. 5. THE LEARNED CIT(A) WAS NOT JUSTIFIED IN REJECTING EVIDENCES AND EXPLANATIONS OF THE ASSESSEE UNDER TH E FACTS AND CIRCUMSTANCES OF THE CASE. 6. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL, THE APPELLANT HUMBLY PRAYS FOR RELIEF AND ACCORD JUSTICE. 2 ITA NO. 868/HYD/2010 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LT D. ==================================== 7. THE APPELLANT CRAVES LEAVE TO ADD, AMEND, ALTER AND/OR DELETE ANY OF THE ABOVE GROUNDS AT THE TIME OF HEARING THE APPEAL. 3. HOWEVER, THE ASSESSEE'S COUNSEL ARGUED ONLY GROUND NO. 5 WITH REGARD TO REJECTION OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A). HE PRAYED THAT IN THE INTEREST OF JUST ICE, THE CIT(A) MAY BE DIRECTED TO ADMIT THE ADDITIONAL EVIDENCE AND DECID E THEREUPON. 4. THE LEARNED DR SUBMITTED THAT SUFFICIENT OPPORTUNIT Y HAD BEEN GIVEN TO THE ASSESSEE BY THE LOWER AUTHORITIES. SP ECIFICALLY HE SUBMITTED THAT EVEN THE FINAL SHOW CAUSE LETTER DATED 11.12.2 008 WAS RECEIVED BY THE ASSESSEE ON 12.12.2008 AND THE ASSESSEE WAS ASK ED TO PRODUCE EVIDENCE BY 22.12.2008. INSTEAD, THE ASSESSEE CHOSE TO SEND A LETTER DATED 22.12.008 BY SPEED POST SO AS TO REACH THE OF FICER ON 29.12.2008, I.E., JUST BEFORE THE TIME BARRING DATE. THE DR SUB MITTED THAT THIS CLEARLY SHOWS THAT THE ASSESSEE HAD DELIBERATELY CH OSEN NOT TO FURNISH DETAILS BEFORE THE ASSESSING OFFICER. IT WAS OBSERV ED BY THE ASSESSING OFFICER THAT THE BILLS AND VOUCHERS NOW AVAILABLE W ITH THE ASSESSEE COMPANY NEED NOT BE GIVEN ANY CREDENCE AT THIS STAG E, AS THE INTENTIONS OF THE ASSESSEE COULD BE CLEARLY SEEN FROM ITS BEHA VIOUR WHICH IS RECORDED IN THE ORDER SHEET. THE ASSESSING OFFICER OBSERVED THAT THESE RECORDINGS SHOWED THAT THE ASSESSEE HAD DISPLAYED D ELIBERATE AND WELL ORCHESTRATED BEHAVIOUR INTENDED NOT TO PRODUCE THE DETAILS IN TIME BEFORE THE HIM. THE ASSESSING OFFICER ALSO PLACED O N RECORD A COPY OF THE ORDER SHEET NOTINGS MADE DURING THE COURSE OF T HE ASSESSMENT PROCEEDINGS. IN ORDER TO CONSIDER WHETHER THE EVIDE NCE NOW SOUGHT TO BE FILED BY THE AR IS TO BE ADMITTED AS ADDITIONAL EVIDENCE, IT IS NECESSARY TO CONSIDER THE RECORDINGS MADE BY THE AS SESSING OFFICER ON THE ORDER SHEET. THE ORDER SHEET RECORDS THAT NOTIC E U/S. 143(2) WAS FIRST ISSUED POSTING THE CASE FOR HEARING ON 4.2.2008. SI NCE THERE WAS NO RESPONSE, THE CASE WAS DIRECTED TO BE REPOSTED TO A FRESH DATE. ACCORDINGLY, THE CASE WAS RE-FIXED TO 10.2.2008. T HE DR SUBMITTED THAT VIDE ORDER SHEET NOTING DATED 11.3.2008 IT CAN BE SEEN THAT A HEARING WAS HELD AND THE ASSESSEE'S AR WAS ASKED TO FURNISH AMONG 3 ITA NO. 868/HYD/2010 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LT D. ==================================== OTHER THINGS, CONFIRMATION LETTERS WITH SUPPORTING EVIDENCES FOR SHARE CAPITAL, SHARE APPLICATION MONEY AND EVIDENCES FOR SECURED LOAN. THE ASSESSEE WAS ALSO ASKED TO PRODUCE THE BOOKS OF ACC OUNTS FOR VERIFICATION. THE CASE WAS ADJOURNED TO 26.3 .2006. 5. THE DR SUBMITTED THAT THE NOTINGS OF THE ORDER SHEE T SHOW THAT THERE WAS NO FURTHER RESPONSE FROM THE ASSESSEE AFT ER 11.3.2008. THEREFORE, A FRESH NOTICE IS SEEN TO HAVE BEEN ISSU ED 29.7.2008 FIXING THE CASE FOR HEARING ON 27.8.2008. VIDE ORDER SHEET NOTING DATED 5.9.2008, THE ASSESSING OFFICER RECORDED THAT THE A SSESSEE'S AR ATTENDED. HE WAS AGAIN ASKED TO PRODUCE THE DETAILS THAT WERE CALLED FOR VIDE ORDER SHEET NOTING DATED 11.3.2008 AND PRODUCE THE BOOKS OF ACCOUNT. THE CASE WAS ADJOURNED TO 8.9.2008. THE NE XT NOTING MADE ON 8.9.2008 SHOWS THAT THE AR APPEARED BUT REQUESTED T HAT THE CASE BE REPOSTED TO 9.9.2008 FOR PRODUCTION OF BOOKS OF ACC OUNTS AND OTHER INFORMATION CALLED FOR VIDE ORDER SHEET NOTICE 11.3 .2008. THE NEXT NOTING IS DATED 15.9.2008, ON WHICH DATE IT IS RECO RDED THAT THE AR ATTENDED. THE ASSESSING OFFICER THEN ADJOURNED THE CASE TO 16.9.2008. ON THIS DAY, THE ASSESSING OFFICER FURTHER EXAMINED THE INFORMATION PRODUCED BY THE ASSESSEE AND MADE RECORDINGS IN THE ORDER SHEET. AGAIN THE CASE WAS ADJOURNED TO BE HEARD ON 22.9.20 08. IT IS SEEN THAT ON 22.9.2008 THE ACCOUNTANT OF THE COMPANY ATTENDED AND REQUESTED FOR AN ADJOURNMENT, ON THE BASIS OF WHICH THE CASE WAS RE-FIXED ON 24.9.2008. THE ORDER SHEET RECORDING MADE ON 24.9.2 008 SHOWS THAT THE CASE WAS ONCE AGAIN ADJOURNED AT THE REQUEST OF THE ASSESSEE TO 15.10.2008. THE ASSESSING OFFICER CLEARLY RECORDED IN THE ORDER SHEET ON THAT DATE 'AS REQUESTED CASE IS ADJOURNED TO 15. 10.2008 FOR FINAL HEARING. THE ASSESSEE IS INFORMED THAT NO FURTHER A DJOURNMENT IS POSSIBLE.' THIS IS ALSO SIGNED BY THE ASSESSEE'S AR AS IN THE CASE OF EVERY OTHER NOTING MADE IN THE ORDER SHEET. 6. THE DR SUBMITTED THAT AFTER THIS DATE, THERE WAS NO RESPONSE ON THE PART OF THE ASSESSEE EITHER ON 15.10.2008 OR EV EN THEREAFTER. THE 4 ITA NO. 868/HYD/2010 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LT D. ==================================== RECORDING IN THE ORDER SHEET SHOWS THAT ON 7.11.200 8 A FRESH NOTICE U/S. 143(2) WAS ISSUED AND THE CASE WAS ONCE AGAINST POS TED TO 19.11.2008. IT COMPLIANCE TO THIS NOTICE, THE ASSESSEE'S AR ATT ENDED ON 11.12.2008, ON WHICH DATE THE ASSESSING OFFICER RECORDED THE FO LLOWING IN THE ORDER SHEET: 'SRI NARAYANA MURTHY, CA, APPEARED. HE FURNISHED PROOF- 1. OFFICE EQUIPMENT - ADDITION FOR RS. 94,0811-. CONSIDERING BILLS FOR RS. 87,104 IS FURNISHED, NO DISALLOWANCE OF DEPRECIATION IS CONSIDERED. 2. FURNITURE ADDITION OF RS. 35,780 FURNISHED. 3. COMPUTER ADDITIONS FOR RS. 1,52,325 AND RS. 12,17,095 TOTALLING TO RS. 13,69,420 IS FURNISHED. 4. PROOF FOR PAYMENT OF GRATUITY OF RS. 1,36,140 IS FURNISHED. 5. PROOF FOR PAYMENT OF INSURANCE BY FURNISHING STATEMENT SHOWING PAYMENTS BY CHEQUES FURNISHED FOR RS. 5,06,030. 6. PROOF FOR PAYMENT OF TERMINAL AND SETTLEMENT EXPENSES OF RS. 7,30,450 AND EX-GRATIA OF RS. 3,60,680 CASE FURNISHED BY WAY OF AQUITTANCE.' 7. THE DR SUBMITTED THAT ON THE SAME DATE, THE ASSESSI NG OFFICER ISSUED A SHOW CAUSE LETTER TO THE ASSESSEE GIVING T HE ASSESSEE TIME TILL 2.12.2008. THUS IT IS SEEN THAT OPPORTUNITIES WERE GRANTED TO THE ASSESSEE FROM THE MONTH OF MARCH, 2008 TILL 22.12.2 008. IN SPITE OF THIS, THE ASSESSEE SUBMITTED THAT NOT ENOUGH OPPORT UNITIES HAD BEEN GRANTED FOR SUBMISSIONS OF THE EVIDENCE CALLED FOR. DESPITE THE FACT THAT THE ASSESSEE WAS GIVEN TIME OF 9 MONTHS TO SUBMIT S PECIFIC INFORMATION RECORDED IN THE ORDER SHEET AND NOTED BY THE AR, TH E ASSESSEE SUBMITTED THAT NATURAL JUSTICE WAS DENIED TO IT. TH E ASSESSEE SUBMITTED THAT THE ASSESSING OFFICER PASSED THE ORDER ON 24.1 2.2008 INSTEAD OF WAITING TILL 31.12.2008 WHICH IS THE DATE BY WHICH ASSESSMENTS FOR THE RELEVANT ASSESSMENT YEAR TIME BARRING DATE FOR THE ORDER TO BE PASSED WITH A PRE-JUDGED MIND. IF IT IS ACCEPTED THAT THE ASSESSEE HAD WITH IT THE REQUIRED INFORMATION AS CALLED FOR BY THE ASSES SING OFFICER, THEN 5 ITA NO. 868/HYD/2010 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LT D. ==================================== ONE CAN ONLY CONCLUDE THAT THE REASONS FOR NOT PROD UCING IT ON THE DATES SPECIFIED BY THE ASSESSING OFFICER, WAS THAT THE AS SESSEE COMPANY WANTED TO ENSURE THAT THE ASSESSING OFFICER WAS NOT LEFT WITH SUFFICIENT TIME TO EXAMINE THE DETAILS THAT WERE PRODUCED. FRO M THE RECORDINGS IN THE ORDER SHEET ONE CAN ONLY CONCLUDE THAT THE ASSE SSEE DELIBERATELY DELAYED THE FILING OF SUCH INFORMATION IN ORDER TO ENSURE THAT IT WAS FILED AT THE VERY LAST MOMENT SO THAT THE ASSESSING OFFICER COULD NOT CARRY OUT ANY FURTHER VERIFICATIONS. ON THE OTHER H AND, IF THE ASSESSEE DID NOT HAVE WITH IT THE INFORMATION CALLED FOR ON THE SPECIFIC DATES, THEN THE EXPENDITURE IS IN ANY CASE DISALLOWABLE, S INCE ALL THE EVIDENCES THAT WERE SOUGHT BY THE ASSESSING OFFICER WERE SUCH THAT THEY SHOULD HAVE BEEN AVAILABLE WITH THE ASSESSEE AND WERE NOT SUCH THAT THEY HAD TO BE OBTAINED FROM ANY THIRD PARTY. 8. THE DR SUBMITTED THAT ADMISSION OF ADDITIONAL EVIDE NCE IS NOT A MATTER OF RIGHT THAT IS AVAILABLE TO THE ASSESSEE. IN FACT, THE ADMISSION OF ANY ADDITIONAL EVIDENCE IS NOT PERMITTED, EXCEPT UN DER THE SPECIFIC CIRCUMSTANCES CONSIDERED BY RULE 46 A OF INCOME-TAX RULES. IN THE CASE OF FAIRDEAL FILAMENTS LTD. VS CIT (302 ITR 1), THE GUJARAT HIGH COURT GAVE THE FOLLOWING FINDINGS, WHICH ARE RELEVA NT TO THE ASSESSEE'S CASE. THE COURT, CONSIDERED THE FINDINGS OF THE TRI BUNAL WHILE REJECTING THE ADDITIONAL EVIDENCE SOUGHT TO BE FILED BEFORE T HE CIT (A) WHERE IT WAS HELD, 'WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE FACTS ON RECORD. A PERUSAL OF THE ASSESSMENT ORDER REVEALS THAT THE ASSESSING OFFICER GAVE ADEQUATE OPPORTUNITY FROM TI ME TO TIME AND ASKED THE ASSESSEE TO FURNISH THE DETAILS ... , BU T THE ASSESSEE TOOK IT VERY LIGHTLY AND MADE NO COMPLIANCE. THE ASSESSEE T HUS SHOWED NO RESPECT FOR LAW ... A DETAILED CHART IS SUBMITTED T O SHOW WHAT HAPPENED ON VARIOUS DATES AND THE ASSESSEE REMAINED UNDER TH E IMPRESSION THAT SINCE IT WAS NOT A TIME BARRING ASSESSMENT, THE ASS ESSMENT WOULD NOT BE FINALIZED. THIS SHOWS THAT THE ASSESSEE TOOK THE WHOLE THING VERY LIGHTLY AND RATHER DICTATED TO THE ASSESSING OFFICE R TO TAKE UP ASSESSMENT PROCEEDINGS AT THEIR CONVENIENCE AS IT W AS NOT GETTING TIME 6 ITA NO. 868/HYD/2010 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LT D. ==================================== BARRED. THE FACT OF THE MATTER IS, THAT THE ASSESSI NG OFFICER GAVE A NUMBER OF OPPORTUNITIES TO THE ASSESSEE AND THE ASS ESSEE NOT ONLY NOT AVAILED OF THE OPPORTUNITIES, BUT SHOWED GREAT DISR ESPECT TO THE PROCESS OF LAW.' THE TRIBUNAL REJECTED THE ASSESSEE'S PLEA TO ADMIT ADDITIONAL EVIDENCE BEFORE IT, HOLDING THAT, 'THE BENEDICTION OF RULE 29 CANNOT BE BESTOWED ON ANY PARTY WHO IS NEGLIGENT, NON-COOPERA TIVE AND RECALCITRANT, NOR SHOULD THE TRIBUNAL GIVE ANOTHER CHANCE OR OPPORTUNITY TO ANY PARTY TO COVER UP LACUNAE, LACHE S AND LAPSES.' 9. THE DR SUBMITTED THAT IN THE ASSESSEE'S CASE, THE A SSESSEE CHOSE NOT TO FILE THE DETAILS SPECIFICALLY CALLED FOR BY THE ASSESSING OFFICER FROM TIME TO TIME. THE ASSESSEE WAS FULLY AWARE THA T THE ASSESSMENT WAS TO GET BARRED BY LIMITATION ON 31.12.2008. THE ASSESSEE SHOWED NO URGENCY IN FILING THE INFORMATION, IN SPITE OF THIS . THE ACTIONS OF THE ASSESSEE LEAD ONE TO THE CONCLUSION THAT THE INFORM ATION WAS DELIBERATELY NOT FILED TO AVOID VERIFICATION. THE C ONTENTION THAT THE INFORMATION WAS SOUGHT TO BE FILED BEFORE THE ASSES SING OFFICER ON 22.12.2008 AND ALSO THROUGH THE INWARD ON THE SAME DATE CANNOT BE SUBSTANTIATED IN ANY MANNER. THE ASSESSMENT ORDER W AS PASSED ONLY ON 24.12.2008. THE ASSESSEE COULD HAVE TAKEN RECOURSE TO THE ADMINISTRATIVE HIERARCHY ABOVE THE ITO, IN CASE THE ASSESSING OFFICER WILFULLY CHOSE TO NOT ACCEPT THE EVIDENCES SOUGHT T O BE FILED. THE ASSESSEE HAS IN FACT NOT MADE ANY SUCH CONTENTION. 10. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. ADMITTEDLY THE ASSESSEE HAS FILED CERTAIN ADDITIONAL EVIDENCE BEFORE THE CIT(A) SEEKING ADMISSION AND THE SAME WA S REJECTED BY THE CIT(A) ON THE REASON THAT EFFECTIVE OPPORTUNITY HAS BEEN GIVEN TO THE ASSESSEE AND THE ASSESSEE HAS NOT USED THE OPPORTUN ITY GIVEN TO IT BEFORE THE ASSESSING OFFICER. THERE MAY BE VARIOUS REASONS FOR THE ASSESSEE IN NOT AVAILING THE OPPORTUNITY GIVEN TO I T. WHEN THE ASSESSEE IS INTERESTED TO PURSUE ITS CASE AND FILED ADDITION AL EVIDENCE, IT IS APPROPRIATE TO ADMIT THE SAME WITH AN INTENTION TO RENDER JUSTICE AND 7 ITA NO. 868/HYD/2010 M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LT D. ==================================== TECHNICALITIES SHOULD BE IGNORED. ACCORDINGLY, THE MATTER IS REMITTED BACK TO THE FILE OF THE CIT(A) AND WE DIRECT THE CI T(A) TO ADMIT THE ADDITIONAL EVIDENCE AND GIVE ONE MORE OPPORTUNITY O F HEARING TO THE ASSESSEE TO PRESENT ITS CASE. IF THE ASSESSEE IS N OT COOPERATIVE, AT THAT POINT OF TIME, THE CIT(A) MAY DRAW ADVERSE INFERENC E AND DECIDE ACCORDINGLY. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH OCTOBER, 2012. SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 4 TH OCTOBER, 2012 TPRAO COPY FORWARDED TO: 1. M/S. R.K. 4CES SECURITY & MANPOWER SERVICES PVT. LTD ., C/O. SRI C. KAMESWARA RAO, CHARTERED ACCOUNTANT, D. NO. 1-90 -17, LIG- 52, SECTOR-5, MVP COLONY, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD - 3(2), HYDERABAD. 3. THE CIT(A), GUNTUR 4 . THE CIT - III, HYDERABAD. 5 . THE DR A BENCH, ITAT, HYDERABAD