M/S SOM DISTILLERIES PVT. LTD., Bhopal V. THE ACIT 1(2), Bhopal

ITA 902/IND/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5788 (ITAT-INDORE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 31-08-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MOHD. JAVED
• Keywords: Unexplained expenditure; Reassessment proceedings
• Section: 32; 147; 131; 68; 246; 69; 145; 27; 148; 54; 37; 6; 56; 263; 63; 132; 12; 28; 144; 10; 90; 154; 2; 69C; 11; 15; 40A(3); 271(1)(b); 139; 92

Judgement Text

M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 1 , , IN THE INCOME TAX APPELLATE TRIB UNAL, INDORE BENCH, INDORE BEFORE SHRI C.M. GARG, JUDICIAL MEMBER AND SHRI O.P. MEENA, ACCOUNTANT MEMBER .../ I.T.A. NO. 902/IND/2016 / ASSESSMENT YEAR: 2006-07 M/S SOM DISTILLERIES PVT. LTD. BHOPAL PAN AACCS-0397P :: / APPELLANT VS. ASSTT. COMMR. OF INCOME TAX 1(2), BHOPAL :: / RESPONDENT ! ' # $ / ASSESSEE BY SHRI SUMIT NEMA %& ' # $ / REVENUE BY SHRI MOHD. JAVED - DR ' ( ' !) DATE OF HEARING 2 3 .2.2017 *+,- ' !) DATE OF PRONOUNCEMENT 2 8 .2.2017 / O R D E R PER SHRI C.M. GARG, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED CIT(A)-31, NEW DELHI, CAMP BHOPAL, HAVI NG CONCURRENT M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 2 JURISDICTION OVER THE CIT(A), BHOPAL, DATED 13.5.20 16 IN FIRST APPEAL NO. 598/11-12 FOR THE ASSESSMENT YEAR 2006-07. 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO. 2 REGARDING ISSUANCE OF NOTICE U/S 148 OF THE ACT. THE SAME IS, THEREFORE, DISMISSED BEING NOT P RESSED. 2. THE SOLE EFFECTIVE GROUND RAISED BY THE ASSESSEEAP PELLANT READS AS FOLLOWS :- THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, IT BE HELD THAT THE ASSESSEE DID NOT INCUR ANY UNEXPLAINED EXPENDITURE AMOUNTING TO RS.1368780/-, HENCE THE AD DITION U/S 69C ON THE BASIS OF ASSUMPTIONS AND PRESUMPTIONS IS WHOLLY UNLAWFUL AND UNJUSTIFIED, THEREFORE, BE DELETED. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURING OF SPIRIT, COUNTRY LIQUOR AND IMFL. THE ASSESSEE F ILED THE RETURN OF INCOME ON 28.11.2006 DECLARING TOTAL LOSS OF RS.(-) 1,21,48,516/-. A NOTICE U/S 148 OF THE ACT WAS ISSUED IN RESPONSE TO WHICH THE ASSESSEE STATED THAT THE ORIGINAL RETURN FILED MAY BE TREATED AS RETURN FILED IN RESPONSE TO NOTICE U/S 148 OF THE A CT. M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 3 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE COMPANY PURCHASED C OAL FROM SHREE COAL INDIA PVT. LTD. OF RS.13.68 LACS AND MADE PAYM ENTS IN CASH IN VIOLATION OF SECTION 40A(3) OF THE INCOME TAX ACT. FROM THE LEDGER ACCOUNT IN THE BOOKS OF SHREE COAL INDIA PVT. LTD. THE ASSESSING OFFICER FOUND THAT THE DURING THE PERIOD FROM 1.4.2 005 TO 31.3.2006 THE ASSESSEE COMPANY HAS MADE CASH PAYMENTS OF RS.1 3,68,780/- TO THIS COMPANY. THE ASSESSING OFFICER, THEREFORE, REQUIRED THE ASSESSEE TO PRODUCE THE BOOKS OF ACCOUNTS ALONG WIT H AUDIT REPORT OF THE CONCERNED PERIOD AS ALSO TO SHOW AS TO WHY T HE TOTAL AMOUNT OF RS. 13,68,780/-MADE IN CASH FOR PURCHASE OF COAL SHOULD NOT BE ADDED TO THE TOTAL INCOME AS PER PROVISIONS OF SECT ION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE. IN RESPONSE, THE ASSES SEE SUBMITTED THAT IT HAS NEVER MADE ANY CASH PAYMENT TO SHREE CO AL INDIA PVT. LTD. HOWEVER, NO BOOKS OF ACCOUNTS OR AUDIT REPORT WERE PRODUCED. THE ASSESSING OFFICER AFFORDED A NUMBER OF OPPORTUN ITIES TO THE ASSESSING OFFICER BUT THE ASSESSEE FAILED TO DO SO. THE ASSESSING OFFICER ALSO SUMMONED SHREE COAL INDIA PVT. LTD. CO MPANY TO PRODUCE ITS BOOKS OF ACCOUNTS BUT NO COMPLIANCE WAS MADE. THE ASSESSING OFFICER, THEREFORE, INFERRED THAT THE NON -COMPLIANCE OF THE M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 4 ASSESSEE SHOWS THAT THE ASSESSEE DID NOT HAVE ANY E VIDENCE IN SUPPORT OF ITS CLAIM OF CASH PAYMENT. THE ASSESSING OFFICER, THEREFORE, DISALLOWED THE CLAIM OF THE ASSESSEE AND ADDED BACK THE TOTAL AMOUNT OF RS. 13,68,780/- TO THE TOTAL INCOME OF THE ASSESSEE U/S 69C OF THE ACT. 5. FELT AGGRIEVED, THE ASSESSEE PREFERRED FIRST APP EAL BEFORE THE LEARNED CIT(A). ON CONSIDERATION OF FACTS OF THE CA SE IN THE LIGHT OF THE SUBMISSIONS OF THE ASSESSEE, THE LEARNED CIT(A) OBSERVED THAT ONLY WHEN INITIALLY THE APPELLANT REBUTS THE ALLEG ATGION, THE ONUS SHIFTS TO THE A.O. BUT IF THE APPELLANT IN THE BEGI NNING ITSELF DOES NOT CONTROVERT THE FINDING WITH NECESSARY DOCUMENTARY E VIDENCE VIZ. BOOKS OF ACCOUNTS ETC. IN THIS CASE, IT CAN BE SAID THAT HE HAS FAILED TO DISCHARGE HIS ONUS . IN THIS VIEW OF THE MATTER, THE LEARNED CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICE R. 6. AGAINST THE ABOVE ORDER OF THE LEARNED CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SID ES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON R ECORD OF THE TRIBUNAL AND THE ORDERS OF THE AUTHORITIES BELOW. M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 5 8. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR AT TENTION TOWARDS REASONS FOR ISSUANCE OF NOTICE U/S 148 OF T HE ACT PLACED AT PAGE 4 OF THE ASSESSEES PAPER BOOK AND SUBMITTED T HAT THE MAIN GRIEVANCE OF THE ASSESSING OFFICER FOR INITIATION O F REASSESSMENT PROCEEDINGS WAS THAT THE ASSESSEE COMPANY HAS PURCH ASED COAL FROM SHREE COAL INDIA PVT. LTD. OF RS. 13.68 LACS A ND MADE PAYMENTS IN CASH IN VIOLATION OF SECTION 40A(3) OF THE ACT. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE TOOK US THROUG H THE LAST PARA OF THE ASSESSMENT ORDER AND SUBMITTED THAT THE ASSE SSING OFFICER HAS MADE THE DISALLOWANCE OF ENTIRE CASH PAYMENT BY INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT AS UNEXPLAINED EXPENDITURE AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSES SEE. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO SUBMITTED THAT THE AU THORITIES BELOW WRONGLY NOTED THAT THE BOOKS OF ACCOUNTS WERE NOT S HOWN TO THEM WHEREAS THE FACTUAL POSITION IS THAT THE ASSESSEE V IDE REPLY DATED 14.12.2011 SUBMITTED ALL THE RELEVANT AUDITED BOOKS OF ACCOUNTS FOR THE PERIOD FROM 1.4.2005 TO 31.3.2006 INCLUDING THE COPY OF LEDGER ACCOUNT OF SHREE COAL INDIA PVT. LTD. THEREFORE, IT IS CLEAR THAT THE AUTHORITIES BELOW HAVE IGNORED THE BOOKS OF ACCOUNT S AND OTHER RELEVANT MATERIAL INCLUDING THE EXPLANATION OF THE ASSESSEE M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 6 PERTAINING TO THIS EXPENDITURE AND WRONGLY INFERRED THAT THE ASSESSEE HAS NOT SUBMITTED THE BOOKS OF ACCOUNTS AN D OTHER RELEVANT MATERIAL. WE MAY POINT OUT THAT DURING THE COURSE OF ARGUMENTS, THE LEARNED DR SUBMITTED THAT IF IT IS F OUND JUST, PROPER AND NECESSARY, THEN THE DEPARTMENT HAS NO OBJECTION IF THE ISSUE IS RESTORED TO THE FILE OF THE LEARNED CIT(A) OR THE A SSESSING OFFICER FOR FRESH ADJUDICATION AFTER CONSIDERING THE ENTIRE ASS ESSMENT RECORD AND DOCUMENTS SUPPORTING THE CLAIM OF THE ASSESSEE. 9. ON CAREFUL CONSIDERATION OF THE ABOVE SUBMISSION S IN VIEW OF THE SUBMISSIONS AND THE DOCUMENTS PLACED BY THE ASS ESSEE BEFORE THE AUTHORITIES BELOW, IT CANNOT BE INFERRED THAT T HE ASSESSEE HAS NOT PLACED ANY BOOKS OF ACCOUNTS OR OTHER MATERIAL BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS . HOWEVER, THE ADDITION HAS BEEN MADE BY ALLEGING THAT THE ASS ESSEE COULD NOT EXPLAIN THE CAUSE OF CASH PAYMENTS AND BOOKS OF ACC OUNTS AND AUDITED REPORT WAS NOT PRODUCED EVEN AFTER GIVING S EVERAL OPPORTUNITIES. WE ARE, THEREFORE, OF THE OPINION TH AT THE ISSUE REQUIRES A FRESH ADJUDICATION AT THE END OF THE ASS ESSING OFFICER. THUS, THE CASE IS RESTORED TO THE FILE OF THE ASSES SING OFFICER FOR M/S SOM DISTILLERIES PVT. LTD ITA NO. 902/IND/2016 7 FRESH ADJUDICATION OF THE ISSUE AFTER AFFORDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. WE ALSO DIRECT THE ASSESSI NG OFFICER THAT HE WILL DECIDE THE ISSUE AFRESH WITHOUT BEING PREJUDIC ED FROM THE EARLIER ASSESSMENT ORDER AND THE FIRST APPELLATE OR DER. ACCORDINGLY, THE SOLE GROUND OF THE ASSESSEE IS RESTORED TO THE FILE OF THE ASSESSING OFFICER AND THE SAME IS ALLOWED IN THE MA NNER AS INDICATED ABOVE. 10. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIS TICAL PURPOSES. THE ORDER HAS BEEN PRONOUNCED IN OPEN COURT ON 28 TH FEBRUARY, 2017. SD/- SD/- $) & & (O.P.MEENA) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER FEBRUARY 28 TH , 2017. DN/