The ITO, Ward 7(4), Ahmedabad V. Shri Sanjay Popatlal Mehta, Ahmedabad

ITA 921/AHD/2009

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67541 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-08-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2013
• Assessment Year: 1999-2000
• Appeal Filed On: 25-03-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Keywords: Unexplained cash credit; Depreciation; Business expenditure; Bad and doubtful debts
• Section: 143(3); 80HHC; 148; 28; 68

Judgement Text

ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD (BEFORE SHRI MUKUL KR. SHRAWAT, J.M. & SHRI ANIL CH ATURVEDI, A.M.) I.T. A. NO. 921/AHD/2009 & CO.NO. 90/AHD/2009 (ASSESSMENT YEAR: 1999-2000) THE ITO, WARD-7(4), AHMEDABAD (APPELLANT) VS. SHRI, SANJAY POPATLAL MEHTA, PROP: M/S. ANMOL EXPORTS, ASHIRVAD APARTMENTS, MIRAMBICA SCHOOL ROAD, NARANPURA, AHMEDABAD (RESPONDENT) SHRI, SANJAY POPATLAL MEHTA, PROP: M/S. ANMOL EXPORTS, ASHIRVAD APARTMENTS, MIRAMBICA SCHOOL ROAD, NARANPURA, AHMEDABAD (APPELLANT) VS. THE ITO, WARD-7(4), AHMEDABAD (RESPONDENT) APPELLANT BY : SHRI P.L. KUREEL, SR. D.R. RESPONDENT BY : SHRI TUSHAR HEMANI ( )/ ORDER DATE OF HEARING : 04-07-201 3 DATE OF PRONOUNCEMENT : 08 -08-2013 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL IS FILED BY THE REVENUE AND THE CO OF A SSESSEE ARE AGAINST THE ORDER OF CIT(A)-XI, AHMEDABAD DATED 27.01.2009 FOR ASSESSMENT YEAR 1999-2000. ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 2 2. FACTS AS CULLED OUT FROM THE ORDERS ARE AS UNDER: 3. ASSESSEE IS AN INDIVIDUAL PROPRIETOR OF 'ANMOL EXPO RTS. ASSESSEE ORIGINALLY FILED RETURN OF INCOME FOR AY 1999-2000 ON 31.5.2000 DECLARING TOTAL INCOME OF RS 1,79,567/-. THEREAFTER THE CASE WAS REOPENED AND IN RESPONSE TO NOTICE U/S 148, ASSESSEE FILED R ETURN OF INCOME ON 8.6.2005 SHOWING THE SAME INCOME AS FILED ORIGINALL Y. THE ASSESSMENT WAS THEREAFTER FRAMED U/S 143(3) RWS 148 OF THE ACT VIDE ORDER DATED 27.12.2006 AND THE TOTAL INCOME WAS DETERMINED AT R S 95,09,512/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VIDE ORDER DATED 27.1.2009 GRANTED P ARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE AFORESAID ORDER OF CIT(A ), REVENUE IS NOW IN APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED CROSS OBJECTIONS (CO). THE EFFECTIVE GROUNDS RAISED BY THE REVENUE READ AS UND ER: 1. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DIRECTING TO ALLOW THE CLAIM OF DEDUCTION U/S. 80HHC OF THE ACT. 2. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN RESTRICTING THE ADDITION MAD E ON ACCOUNT OF DISALLOWANCE OF EXPENDITURE NOT RELATED TO BUSINESS FROM RS. 3,31,365/- TO RS. 1,50,000/-. 3. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS. 49,00,000/- U/S. 68 OF THE ACT. 4. THE LD. COMMISSIONER OF INCOME TAX (A)-XI, AHMEDABA D HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION MADE O F RS. 7,18,004/- ON ACCOUNT OF EXPORT INCENTIVE. ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 3 4. GROUND NO 1, 3 AND 4 ARE INTER-CONNECTED AND THEREF ORE CONSIDERED TOGETHER: 5. ASSESSING OFFICER NOTICED THAT ASSESSEE HAS CLAIMED TO HAVE MADE TOTAL EXPORTS OF RS 1,52,04,902/- ON WHICH HE CLAIMED DED UCTION OF RS 33,69,958/- U/S 80HHC. HE ALSO NOTICED THAT ASSESSE E HAS SHOWN PURCHASES OF RS 86,85,000/- (FROM DEEP ENTERPRISES, GEETA HOSIERY, SWAMI HOSIERY AND RAJ AGENCY) AND PAYMENT OF JOB CH ARGES OF RS 39,16,200/- (TO GEETA HOSIERY AND RAJ AGENCY). THE AFORESAID PARTIES WERE ASKED TO PRODUCE THE COPY OF THE ACCOUNT, DETA ILS OF TRANSACTIONS WITH ASSESSEE, SALES BILLS, DELIVERY CHALLANS AND D ETAILS OF PAYMENTS RECEIVED BY THEM. ALL THE LETTERS AND REMINDERS SEN T AT THE ADDRESS GIVEN BY THE ASSESSEE WERE RETURNED BY POSTAL AUTHORITIE S FOR THE REASON THAT NO SUCH PARTIES EXIST. AO ALSO NOTICED THAT IN THE BAL ANCE SHEET, THE AFORESAID PARTIES WERE SHOWN AS CREDITORS MEANING T HEREBY THAT THE PARTIES WERE UNPAID. ASSESSING OFFICER THEREFORE ASKED THE ASSESSEE TO PRODUCE THE PARTIES FOR VERIFICATION BUT NONE OF THE PARTIE S APPEARED BEFORE ASSESSING OFFICER. ASSESSING OFFICER THEN DEPUTED I NSPECTOR TO INQUIRE ABOUT THE WHEREABOUTS OF PARTIES INSPECTOR REPORTED NON EXISTENCE OF PARTIES. AO ALSO NOTICED THAT STATEMENT OF ASSESS EE WAS RECORDED BY DRI AHMEDABAD ON 17.12.2003 WHEREIN THE ASSESSEE HA S STATED THAT HE HAD UNDERTAKEN EXPORT OF ONE CONSIGNMENT OF MEN'S T ROUSERS TO RUSSIA THROUGH ANANT TIMBADIA, THE ORIGINAL EXPORT ORDER O F WHICH WAS RECEIVED BY KUNAL OVERSEAS LTD. IT WAS FURTHER STATED THAT THE ASSESSEE HAD NOT PURCHASED THE FABRICS REQUIRED FOR MANUFACTURING TH E TROUSERS FOR EXPORT, AND THE TROUSERS MANUFACTURED AND EXPORTED WERE NOT MANUFACTURED ON HIS DIRECTION. ASSESSEE ALSO DID NOT KNEW AS TO WHE THER THE GOODS WERE ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 4 SUPPLIED BY RAJ AGENCY OR NOT. ALL THE LEGWORK FOR DOCUMENTATION WERE DONE BY MR. TIMADIA. AO ALSO NOTICED THAT THE CHART ERED ACCOUNTANT IN HIS REPORT DATED 6.12.99 HAD TREATED THE SALE OF RS 4999800 AS NOT A SALE FOR THE PURPOSE OF DEDUCTION U/S 80HHC. FURTHER FRO M THE ACCOUNTS FOR AY 2000-01 OF DEEP ENTERPRISE, SWAMI ENTERPRISE AND GEETA HOSIERY, AO NOTICED THAT THEIR ACCOUNTS HAS BEEN ADJUSTED BY SHOWING SALES TO THEM. HE FURTHER NOTICED THAT THOUGH THE PURCHASES FROM SWAMI HOSIERY WAS SHOWN TO BE RS 38,25,000 BUT WAS PAID RS 49,00, 000 AND THE SOURCE OF WHICH WAS NOT EXPLAINED BY THE ASSESSEE AND THE REFORE RS 49 LACS WAS LIABLE TO BE TAXED AS INCOME FROM UNDISCLOSED SOURC ES AND ADDITION WAS MADE U/S 68.HE THUS CONCLUDED THAT SALE OF RS 1,52, 04,902 AS SHOWN BY ASSESSEE AS NOT TO BE SALE PROCEEDS BUT FRAUDULENTL Y OBTAINED REMITTANCES AND THE ASSESSEE WAS THEREFORE NOT ENTITLED TO DEDU CTION U/S 80HHC. FURTHER FROM THE LEDGER ACCOUNT OF 'DUTY DRAWBACK' ACCOUNT HE NOTICED THAT THE DUTY DRAWBACK ACCOUNT SHOWED GROSS CREDIT BALANCE OF RS. 20,72,574/- AND THE NET AMOUNT CREDITED TO PROFIT A ND LOSS ACCOUNT WAS RS. 13,54,570/- AFTER DEBITING RS. 7,18,004/-. HE ALSO NOTICED THAT IN THE TAX AUDIT REPORT DATED 6.12.2009, ASSESSEE HAD SHOW N EXPORT INCENTIVES OF RS. 18,89,280/- BUT ONLY RS. 13,54,570/- WAS OFF ERED TO TAX. IN THE ABSENCE OF ANY EXPLANATION WITH RESPECT TO DEBIT OF RS. 718004/- THE SAME WAS ADDED THE SAME AS EXPORT INCENTIVE. THUS WITH R ESPECT TO THE EXPORTS, AO CONSIDERED THE ENTIRE SALES TO BE BOGUS AND NOT ENTITLED FOR DEDUCTION U/S 80HHC, PAYMENT OF RS 49,00,000 TO SWAMI HOSIERY FROM UNEXPLAINED SOURCES AND EXPORT INCENTIVES OF RS 7,1 8,004/- TO BE UNEXPLAINABLE AND DISALLOWED THE SAME. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) G RANTED RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 5 4.2 THE SUBMISSIONS MADE BY THE A.R. HAS BEEN CONSIDERE D. IT IS SEEN THAT OUT OF THE EXPORTS MADE BY THE APPELLANT ONLY ONE CONSIGNMENT VALUED AT RS. 49,00,000/- WENT THROUGH CERTAIN DIFF ICULTIES AS THE SAID CONSIGNMENT DID NOT REACH THE DESTINATION FOR WHICH IT WAS EXPORTED INSTEAD OF IT WENT TO DUBAI AND THEREAFTER THERE WERE CERTAIN INQUIRIES FROM THE DIRECTORATE OF ENFORCEME NT DEPARTMENT WHO HAVE LATER ON CLEARED THE OBJECTIONS RAISED AND EXONERATED THE APPELLANT. HOWEVER, THE APPELLANT DID NOT GET THE VALUE OF THE SAID CONSIGNMENT AND THEREFORE, NO CLAIM WAS MADE ON THA T COUNT U/S. 80HHC OF THE I.T. ACT. THEREFORE, HAVING PERUSED T HE DETAILS FURNISHED BY THE A.R. I AM OF THE VIEW THAT THE APP ELLANT HAD FULFILLED THE REQUIRED CONDITIONS FOR CLAIMING THE DEDUCTION U/S. 80HHC OF THE I.T. ACT TOWARDS EXPORTS MADE AND FORE IGN EXCHANGE REALIZED THEREON. THEREFORE, I AM OF THE VIEW THAT THE ASSESSING OFFICER IS NOT JUSTIFIED TO DENY THE DEDUCTION AS C LAIMED BY THE APPELLANT. HENCE, THE ASSESSING OFFICER. IS DIRECTE D TO ALLOW THE APPELLANTS CLAIM U/S. 80HHC OF THE I.T. ACT. HENC E THIS GROUND OF APPEAL IS ALLOWED. WITH RESPECT TO ADDITION OF RS. 49 LACS MADE U/S 68 , CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- 6.6.1 THE SUBMISSIONS MADE BY THE A.R. HAVE BEEN PE RUSED. IT IS SEEN THAT THE ASSESSING OFFICER HAS TREATED THE PAY MENTS MADE TO THE APPELLANTS SUPPLIER AS UNEXPLAINED CASH CREDIT . HAVING PERUSED THE DETAILS IN THIS REGARD, I FIND THAT THE ASSESSING OFFICER HAD NO VALID REASON TO PRESUME THE PAYMENTS MADE TO WARDS PURCHASES AS UNEXPLAINED CASH CREDIT. THEREFORE, A DDITION MADE BY THE ASSESSING OFFICER IS DELETED. WITH RESPECT TO ADDITION OF RS. 7,18,004/- ON ACCO UNT OF DUTY DRAWBACK, CIT(A) DELETED THE ADDITION BY HOLDING AS UNDER:- 7. WITH REGARD TO THE NEXT GROUND OF APPEAL IT IS A RGUED BY THE A.R. THAT THE A.O. HAS WRONGLY MADE AN ADDITION OF RS. 7 ,18,004/- TOWARDS DUTY DRAW BACK ACCOUNT. IT IS FURTHER ELABO RATED THAT THE APPELLANT BOOKED THE ENTIRE DUTY DRAW ORIGINALLY ON MERCANTILE BASIS AND SHOWN THE SAME AS RECEIPT. HOWEVER, WHEN THE DUTY DRAW BACK WAS ACTUALLY RECEIVED THE SUM OF RS.7,18, 004/- WAS. ONCE AGAIN CREDITED TO DUTY DRAW BACK ACCOUNT. HOWE VER, AT THE ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 6 YEAR END, THE APPELLANT HAD PASSED JOURNAL ENTRIES TO REVERSE ONE CREDIT. THEREFORE, ULTIMATELY THE APPELLANT HAD OFF ERED RS.7,18,004/- WHICH IS THE ACTUAL RECEIPT OF THE DU TY DRAW BACK AMOUNT. 7.1 THE EXPLANATION GIVEN BY THE A.R. WITH REGARD T O THE ABOVE RECEIPTS HAVE BEEN VERIFIED. IT IS SEEN FROM THE DU TY DRAW BACK ACCOUNT THE APPELLANT HAD ORIGINALLY CREDITED DUTY DRAW BACK RECEIVABLE AND THEREAFTER RECEIPT OF THE SAME WAS A GAIN GIVEN AS CREDIT WITH THE SIMILAR AMOUNT THEREBY WHAT IS SHOW N IN THE DUTY DRAW BACK ACCOUNT IS TWICE OF THE DUTY DRAW BACK VA LUE. THEREFORE, THE APPELLANT HAS DEBITED RS.7,18,004/- TO THE DUTY DRAW BACK ACCOUNT AND ULTIMATELY THIS IS DONE ONLY TO SHOW TH E CORRECT RECEIPTS OF THE DUTY DRAW BACK AMOUNT. THEREFORE, I AM INCLINED TO ACCEPT THE EXPLANATION GIVEN BY THE A.R. IN THIS RE GARD. HENCE, THIS GROUND OF APPEAL IS ALLOWED. 6. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, THE LD. D.R. SUBMITTED THAT THE AO AFTER VERIFICATION OF THE RECORDS AND EVIDENCES BEFORE HIM HAD COME TO THE CO NCLUSION THAT THE AMOUNTS RECEIVED BY THE ASSESSEE WERE NOT SALE PROC EEDS BUT FRAUDULENTLY OBTAINED REMITTANCES. HE FURTHER POINT ED OUT TO THE FACT THAT ASSESSEE WAS NOWHERE INVOLVED IN THE PURCHASE OF GO ODS NOR WERE THE TROUSERS MANUFACTURED AND EXPORTED ON HIS DIRECTION S. HE FURTHER SUBMITTED THAT THE ACCOUNTS OF THE PARTIES FROM WHO M THE GOODS WERE PURCHASED WERE SQUARED UP WITHOUT MAKING THE PAYMEN TS. HE FURTHER SUBMITTED THAT ID.CIT(A) HAS NOT APPRECIATED THE FA CTS IN PROPER PERSPECTIVE AND CIT(A) HAS PASSED A CRYPTIC ORDER. FURTHER HE HAS NOT MET WITH THE FINDINGS OF ASSESSING OFFICER BEFORE D ELETING THE ADDITION. HE POINTED OUT TO THE VARIOUS FINDINGS OF AO AND TH US SUPPORTED THE ORDER OF ASSESSING OFFICER AND URGED THAT THE ORDER OF ASSESSING OFFICER BE UPHELD. ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 7 8. THE LD A.R. ON THE OTHER HAND SUBMITTED THAT AO HAD NOT ALLOWED THE BENEFIT OF DEDUCTION U/S 80HHC FOR THE REASON THAT THE DRI AHMEDABAD HAD INITIATED THE PROCEEDINGS AGAINST THE ASSESSEE IN RESPECT OF ONE OF THE EXPORT TRANSACTIONS BUT AO HELD THE ENTIRE EXPORTS MADE BY THE ASSESSEE TO BE NON GENUINE. HE FURTHER SUBMITTED THAT DRI HA S GIVEN A CLEAN CHIT TO THE ASSESSEE AND IN SUPPORT HE PLACED ON RECORD THE COPY OF THE ORDER PASSED BY DY. DIRECTOR OF DIRECTORATE OF ENFORCEMEN T. HE FURTHER SUBMITTED THAT ASSESSEE HAS FULFILLED ALL THE CONDI TIONS STIPULATED FOR AVAILING DEDUCTION U/S 80HHC AND THEREFORE CIT(A) H AS RIGHTLY ALLOWED THE BENEFIT OF DEDUCTION U/S 80HHC. HE THUS SUPPORT ED THE ORDER OF CIT(A). 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE MAIN DISPUTE IN THE PRESENT CASE IS DISALLOWANC E OF THE BENEFIT OF DEDUCTION U/S 80HHC. WE FIND THAT AO IN THE ORDER F OR THE VARIOUS REASONS SPECIFIED IN THE ORDER HAS HELD THE ENTIRE EXPORT TRANSACTION TO BE BOGUS AND DISALLOWED THE CLAIM OF ASSESSEE. WE HOWE VER FIND THAT THE CIT(A) BY A VERY CRYPTIC ORDER HAS DECIDED THE ISSU E IN FAVOUR OF ASSESSEE. WE FURTHER FIND THAT CIT(A) HAS NOT GIVEN ANY FINDING ON THE OBSERVATIONS OF THE AO. ON THE DELETION OF ADDITION OF RS 49 LACS MADE U/S 68, CIT(A) AGAIN BY A VERY CRYPTIC OBSERVATION MADE A REMARK THAT THE AO HAD NO VALID REASON TO PRESUME THE PAYMENTS MADE TOWARDS PURCHASES UNEXPLAINED CREDITS AND THEREFORE THE ADD ITION IS DELETED. WE FURTHER FIND THAT CIT(A) HAS NOT GIVEN ANY DETAILED FINDINGS AND REASONS FOR DELETING THE ADDITION MADE BY AO. FURTHER ON OU R QUERY DURING THE COURSE OF HEARING, WE WERE INFORMED BY THE LD.A. R. THAT THE YEAR UNDER ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 8 APPEAL, WAS THE FIRST YEAR OF EXPORTS AND THEREAFTE R THE ASSESSEE HAS STOPPED THE BUSINESS OF EXPORTS. CONSIDERING THE TO TALITY OF THE AFORESAID FACTS, WE ARE OF THE VIEW THAT THE MATTER NEEDS TO BE EXAMINED AFRESH BY CIT(A). WE THEREFORE RESTORE THE MATTER BACK TO THE FILE OF CIT(A) WITH DIRECTIONS TO DECIDE THE ISSUE AFRESH AS PER LAW BY PASSING A SPEAKING ORDER AND AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THUS THESE GROUNDS OF THE REVENUE ARE ALLO WED FOR STATISTICAL PURPOSES. 10. 2 ND GROUND IS WITH RESPECT TO DISALLOWANCE OF BUSINESS EXPENDITURE: 11. AO NOTICED THAT ASSESSEE HAD DEBITED VARIOUS EXPENS ES LIKE FOREIGN TRAVEL, PETROL EXPENSES AND DEPRECIATION ON MOTOR C AR. AO WAS OF THE VIEW THAT THE EXPENSES ARE NOT ALLOWABLE AS THEY AR E NOT RELATED TO BUSINESS AND FURTHER THE EXPENDITURE HAS BEEN INCUR RED BY 'SANJAY SALES CORPORATION'. HE ACCORDINGLY DISALLOWED RS 3,31,365 /-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFORE CIT (A). CIT(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE BY HOLDING AS UNDER: 5. THE NEXT GROUND OF APPEAL IS WITH REGARD TO THE DISALLOWANCE OF EXPENSES OF RS. 3,31,365/- ON THE GROUND THAT THE S AID EXPENDITURE IS NOT RELATED TO THE BUSINESS OF THE APPELLANT. IT IS THE CONTENTION OF THE A.R. THAT THE APPELLANT HAD INCURRED THE ABOVE SAID EXPE NDITURE FOR THE APPELLANT AND ON BEHALF OF HIS BUSINESS. THEREFORE, THE A.O. CANNOT TREAT THE ENTIRE EXPENDITURE AS A PERSONAL_EXPENDITURE. I HAVE CONSIDERED THE SUBMISSIONS OF THE A.R. IT IS SEEN THAT THE APPELLA NT APPEARS TO HAVE INCURRED THE SAID EXPENSES FOR THE BUSINESS PURPOSE EVEN THOUGH SOME EXPENDITURE IS SEEN TO HAVE BEEN SPENT FOR THE APPE LLANT. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE , I AM INCLINED TO RETAIN SOME DISALLOWANCES OUT OF THE DISALLOWANCES MADE BY THE ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 9 ASSESSING OFFICER. THEREFORE, RS. 1,50,000/- IS CON FIRMED AND THE BALANCE DISALLOWANCE IS DELETED. 12. AGGRIEVED BY THE ORDER OF CIT(A), REVENUE IS NOW IN APPEAL BEFORE US. 13. BEFORE US, THE LD D.R. SUBMITTED THAT AO HAD RIGHTL Y DISALLOWED THE EXPENSES AS THEY WERE INCURRED BY 'SANJAY SALES COR PORATION'. HE FURTHER SUBMITTED THAT CIT(A) HAS RESTRICTED THE DISALLOWAN CE TO RS 1,50,000. HE FURTHER SUBMITTED THAT C1T(A) HAS NOT APPRECIATED T HE FACTS AND HAS NOT GIVEN ANY FINDING AS TO WHY THE ASSESSEE SHOULD BE ALLOWED PARTIAL RELIEF. HE THUS SUPPORTED THE ORDER OF ASSESSING OFFICER. 14. THE LD. A.R. ON THE OTHER HAND SUBMITTED THAT THE A O HAS DISALLOWED THE ENTIRE EXPENSES AS NOT RELATED TO THE RUNNING OF BU SINESS. HE FURTHER SUBMITTED THAT THE COMPLETE DETAILS WERE SUBMITTED BEFORE AO. HE FURTHER SUBMITTED THAT THOUGH CERTAIN EXPENSES HAVE BEEN IN CURRED BY SANJAY SALES CORPORATION BUT THEY HAVE BEEN INCURRED FOR AND ON BEHALF OF THE ASSESSEE AND ARE FOR THE PURPOSE OF BUSINESS OF ASS ESSEE. HE THEREFORE URGED THAT THE ENTIRE EXPENSES BE ALLOWED AS THEY A RE INCURRED FOR THE PURPOSE OF BUSINESS. 15. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT AO HAS NOTED THAT CERTAIN EXPENSES HAV E BEEN INCURRED BY SANJAY SALES CORPORATION. HE HAS HELD THE EXPENSES TO BE NOT FOR THE PURPOSE OF BUSINESS. CIT(A) ON THE OTHER HAND HAS N OTED THAT THE EXPENSES APPEARS TO HAVE BEEN INCURRED FOR THE PURP OSE OF BUSINESS AND THEREFORE GRANTED PARTIAL RELIEF. HE HAS NOT GIVEN A DEFINITE FINDING AS TO ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 10 WHICH OF THE EXPENSES ARE FOR THE PURPOSE OF BUSINE SS AND WHICH ARE NOT FOR THE PURPOSE OF THE BUSINESS. FURTHER, THERE IS NO FINDING WITH RESPECT TO THE EXPENDITURE INCURRED BY SANJAY SALES CORPORA TION AS TO HOW THE EXPENSES INCURRED BY IT ARE FOR THE PURPOSE OF BUSI NESS OF THE ASSESSEE. CONSIDERING THE TOTALITY OF FACTS, WE ARE OF THE VI EW THAT THE MATTER NEEDS TO BE EXAMINED AFRESH BY CIT(A). WE THEREFORE RESTO RE THE MATTER BACK TO THE FILE OF CIT(A) WITH DIRECTIONS TO DECIDE THE IS SUE AFRESH AS PER LAW BY PASSING A SPEAKING ORDER AND AFTER GIVING A REASONA BLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THUS THIS GROUND OF TH E REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 17. THE GROUNDS RAISED BY THE ASSESSEE IN CO READ AS UN DER: 1. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LEARNED AO IN REOPENING THE ASSESSMENT PROCEEDINGS U/S. 147 OF THE I.T. ACT. UN DER THE FACTS AND CIRCUMSTANCES OF THE CASE THE ACTION OF REOPENING IS WITHOUT JURISDICTION AND NOT PERMISS IBLE EITHER IN LAW OR ON FACT. THE PRESENT PROCEEDINGS, THEREFORE, ARE REQUIRE TO BE Q UASHED. 2. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LEARNED AO IN DISALLOWING THE CLAIM OF DEDUCTION U/S 80HHC OF THE ACT ON EXPO RTS OF RS.49,00,000/-. 3. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE ACTION OF LEARNED AO IN DISALLOWING EXPENSES OF RS. 1,50,000/ - DEBITED TO THE PROFIT & LOSS ACCOUNT. 4. LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF LEARNED AO IN NOT ALLOWING THE LOSS OF RS.49,99,800/- BEING FOB VALUE OF THE G OODS EXPORTED THROUGH M/S KUNAL OVERLEAS LTD. AS TRADING / BUSINESS LOSS U/S 28 OF THE ACT. 5. ALTERNATIVE AND WITHOUT PREJUDICE, ID. CIT(A) HAS E RRED IN LAW AND ON FACTS IN NOT AILING THE SAID LOSS OF RS.49,99,800 AS BAD DEBT U/S 36(1)(VII) OF THE ACT. FIRST GROUND IS WITH RESPECT TO REOPENING THE ASSES SMENT PROCEEDINGS. SINCE THIS GROUND WAS NOT ARGUED THE SAME IS DISMIS SED. ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 11 18. THE ISSUE RAISED IN GROUND NO. 2 AND 3 RAISED ARE I NTER-CONNECTED WITH THE ISSUE RAISED IN GROUNDS OF REVENUE IN ITA NO. 921/A HD/2009. SINCE THE GROUNDS RAISED BY REVENUE HAVE BEEN RESTORED TO TH E FILE OF CIT(A) FOR DECIDING IT AFRESH BY THE AFORESAID ORDER, THE PRES ENT GROUNDS RAISED IN CO ARE ALSO RESTORED TO THE FILE OF CIT(A) TO DECID E IT AFRESH AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PAR TIES. THUS THIS GROUND OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. GROUND NO. 4 IS WITH RESPECT TO CLAIM TO ALLOW THE LOSS. 19. BEFORE US THE LD. A.R. SUBMITTED THAT THE SUM OF RS . 49,99,800/- HAS BEEN BROUGHT IN INDIA WITHIN THE STATUTORY PERIOD B Y KUNAL OVERSEAS AND THEREFORE DEDUCTION U/S 80HHC IS AVAILABLE TO ASSES SEE. IN THE ALTERNATIVE HE SUBMITTED THAT THE AMOUNT SHOULD BE ALLOWED AS B AD DEBT OR BUSINESS LOSS AS THE AMOUNT WAS NOT RECEIVED BY ASSESSEE. IN SUPPORT, HE RELIED ON THE ORDER OF APEX COURT IN THE CASE OF TRF LTD. VS. CIT(323 ITR 397 (SC) AND VIJAYA BANK VS. CIT 323 ITR 166 (SC). THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT SINCE THE ENTIRE REMITTAN CE HAS BEEN CONSIDERED TO BE BOGUS BY ASSESSING OFFICER, THE CLAIM OF ASSE SSEE AS BAD DEBTS CANNOT ALLOWED. 20. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE OF BAD DEBTS/TRADING LOSS HA S NOT BEEN EXAMINED BY THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEED INGS. CIT(A) WHILE DELETING THE ADDITION HAS HELD THAT THE TRANSACTION HAS TAKEN PLACE DURING THE YEAR AND THE ASSESSEES CLAIM IN THE CURRENT YE AR ITSELF IS TOO EARLY. WE FIND THAT CIT(A) HAS ALSO NOT EXAMINED THE ISSUE BY CALLING FOR ANY ITA NO 921/AHD/2009 & CO . NO. 90/A/2009 . A.Y. 1999- 2000 12 REPORT FROM ASSESSING OFFICER NOR HAS HE DECIDED IT IN THE LIGHT OF DECISION OF TRF LTD. (SUPRA). WE THEREFORE REMIT T HIS ISSUE TO THE FILE OF CIT(A) TO DECIDE IT AFRESH AFTER CALLING FOR REMAND REPORT FROM ASSESSING OFFICER AND THEREAFTER DECIDE AS PER LAW. NEEDLESS TO STATE THAT CIT(A) SHALL GRANT A REASONABLE OPPORTUNITY OF HEARING TO BOTH THE PARTIES. THUS THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 21. IN THE RESULT THE APPEAL OF THE REVENUE AND CO OF A SSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 08 - 08- 2013. SD- SD/- (MUKUL KR. SHRAWAT) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AH MEDABAD