Yeast Alco Enzymes Pvt.Ltd., Ahmedabad V. The Income tax Officer, Ward-8(4), Ahmedabad

ITA 975/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 1822 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 06-11-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 05-03-2007
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, C-BENCH, AHMEDABAD. BEFORE: SHRI T K SHARMA, JUDICIAL MEMBER, AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER. 1. ITA NO.748/AHD/2007 2. ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) 1.THE ITO, WARD-8(4) AHMEDABAD 2. YEAST ALCO ENZYMES LTD. AHMEDABAD 1.YEAST ALCO ENZYMES PVT.LTD. 1 ST FLOOR, DIVYA APTS NR.MITHAKALI UNDER BRIDGE NAVRANGPURA, AHMEDABAD 2. THE ITO, WARD-8(4) AHMEDABAD (APPELLANTS) VERSUS (RESPONDENTS) PAN: AAACY 0844 K FOR THE ASSESSEE SHRI A.P. NANAVATY FOR THE REVENUE SHRI SHRI SHELLEY JINDAL, CIT-DR ORDER PER D C AGRAWAL (ACCOUNTANT MEMBER) : THESE ARE THE CROSS APPEALS; ONE BY THE REVENUE AND THE OTHER BY THE ASSESSEE AG AINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-XIV, AHMEDABAD DATED 03-11-2006 FOR THE ASSESSMENT YEAR 2003-2004. SINC E COMMON ISSUES INVOLVED IN THESE APPEALS, THEY ARE DISPOSED OF TOG ETHER BY THIS COMMON/CONSOLIDATED ORDER. 2. IN ITA NO. 975/AHD/2005, THE REGISTRY POINTED O UT THAT THE TRIBUNAL FEE OF RS.4,905/- AND THE COUNSEL OF THE A SSESSEE SUBMITTED THAT THE INCOME ASSESSED IS LOSS OF RS.5,40,524/- THEREF ORE, THE REQUIRED AMOUNT OF FEE OF RS.500/- WHICH HAS BEEN FULLY DEPO SITED. AS PER THE JUDGMENT OF BOMBAY HIGH COURT, IN CASE, WHETHER THE FINAL ASSESSED FIGURE IS AT LOSS, TRIBUNAL FEE REQUIRED TO BE DEPO SITED IS RS.500/-. IN 2 ITA NO.748/AHD/2007 ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) VIEW OF THIS, APPEAL FILED BY THE ASSESSEE IS ADMIT TED ALSO. GILBS COMPUTERS LIMITED VS. ITAT WP NO. 1021/09 (DATED 29 -07-2009) IT IS HELD THAT IN CASE WHETHER THE ASSESSED INCOME IS AT LOSS, THE CASE WOULD FALL IN CLAUSE-C OF SECTION 256 OF THE I.T. ACT, 19 61 AND, ACCORDINGLY, THE FEE OF RS.500/- WOULD BE PAYABLE. IN THIS REGARD, WE REFER TO PARAGRAPH NO.18 AND THE SAME IS REPRODUCED HEREUNDER: 18. HOWEVER, CONSIDERING THE ENTIRE SCHEME OF THE ACT AND THE HISTORY OF THE PURPOSE OF THE AMENDMENT, WE HAVE NO DIFFICULTY IN HOLDING THAT EITHER CLAUSE (A) OR (D) OF SUB SECTION (6) OF SECTION 253 WOULD BE ATTRACTED BUT CONSIDERING THE EARLIER DISCUSSION REGARDING THAT LOSS WOULD ALSO BE COVERED BY THE EXPRESSION TOTAL INCOME , WE WOULD HOLD THA T IN SUCH A CASE IT WOULD BE COVERED BY CLAUSE (D). IF T HAT BE SO, THE APPELLANTS WERE RIGHT IN PAYING COURT F EE OF RS.500-/. IN VIEW OF THAT, ORDER DATED 21ST JANUARY 20 09 IS SET ASIDE AND APPEAL IS RESTORED TO FILE AS PR OPERLY STAMPED. 3. ACCORDINGLY, AFTER ADMITTING THE APPEAL, WE DIS POSE OF IT AS UNDER:- 3.1. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE HAS MAINLY CHALLENGED THE CONFIRMING OF THE ORDER OF THE ASSES SING OFFICER PASSED UNDER SECTION 144 OF THE I.T. ACT, 1961. NO ONE WA S PRESENT ON BEHALF OF THE ASSESSEE BEFORE THE LD. COMMISSIONER OF INCOME TAX(APPEALS). THERE WAS NON COMPLIANCE OF THE NOTICE BEFORE THE A SSESSING OFFICER AS WELL AS BEFORE THE LD. COMMISSIONER OF INCOME TAX(A PPEALS) AS MENTIONED BY THEM IN THEIR ORDERS. IT WAS EXPLAINE D BEFORE US BY THE DIRECTOR SHRI. RAMKUMAR THROUGH HIS AFFIDAVIT AS UN DER: I, UNDERSIGNED, SHRI RAMKUMAR SON OF PRAVINSINGHJI JADEJA ADULT AND DIRECTOR OF M/S. YEAST ALCO ENZYMES LTD. SINCE 1981 HAVING ITS OFFICE AT 1 ST FLOOR, DIVYA APARTMENT, NEAR MITHAKHALI GARNALA, NAVRANGPURA, AHMEDABAD - 380009. I, IN MY CAPACITY AS DIRECTOR 3 ITA NO.748/AHD/2007 ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) OF SAID M/S. YEAST ALCO ENZYMES LTD., AM LOOKING AF TER RAW- MATERIALS PROCUREMENT; FUEL SUPPLIES, PRODUCTION, D ISPATCH, FINANCE AND ALL FINANCE RELATED ISSUES AND I AM AWARE OF AL L MATTERS PERTAINING TO SAID M/S. YEAST ALCO ENZYMES LTD. OUR AUDIT AND TAXATION AFFAIRS WERE BEING LOOKED AF TER BY M/S. HARISH S. PATEL & CO. C.A. WHICH IS SOLE PROPRIETOR Y FIRM SINCE ITS INCEPTION HEADED BY SHRI HARISH S. PATEL C.A. SINCE LAST 4 (FOUR ) YEARS SAID HARISH S. PATEL C.A. AS UNDERGOING ORDEA L BECAUSE HE LOST HIS WIFE IN ACCIDENT. THEREAFTER SAID HARISH S . PATEL HAS REMAINED BED RIDDEN DUE TO PARALYTIC ATTACK. THEREA FTER DAUGHTER OF SAID HARISH S. PATEL FACED DIVORCE PROCEEDINGS. SAID HARISH S. PATEL ALSO FACED MOTOR ACCIDENT AND FORTUNATELY SAI D HARISH S. PATEL SURVIVED AND STILL HE IS PRACTICING ON FULL T IME BASIS AT THE AGE OF 64(SIXTY FOUR) YEARS. OUR ASSOCIATION WITH SAID HARISH S. PATEL IS SINCE 1973 AND DURING ALL THESE CIRCUMSTANCES SAID HARISH S. PATEL HAS NEVER NEGLECTED HOWEVER HE HAS NOT BEEN ABLE TO ATTEND INCOME TAX OFFICE DUE TO HIGHLY INDIFFERENT CIRCUMSTANCES BEYOND HIS CONTROL HENCE IT IS NOT CASE THAT M/S. YEAST ALCO E NZYMES LTD OR ITS REPRESENTATIVE WERE NEGLIGENT OR NON COOPERATIVE WI TH INCOME TAX DEPARTMENT. WE ARE UNABLE TO COMMENT UPON REASON AB OUT NON PLACING OF FACTS OF PERSONAL CALAMITIES OF SHRI HAR ISH S. PATEL C.A. M/S. YEAST ALCO ENZYMES LTD. WAS SICK COMPANY AND W E TOOK OVER IN THE COURSE OF SCHEME BEFORE HIGH COURT U.S. 391 OF THE COMPANIES ACT, 1956. IN SPITE OF VARIOUS DIRECTIONS IN SCHEME BY HIGH COURT; CREDITORS LIKE GSFC, GIIC AND OTHERS CO NTINUE TO INTERPRET TERMS OF SCHEME IN THE MANNER MOST SUITAB LE TO THEM AND UNFAIRLY TO US. SUCH INTERPRETATION HAS RESULTED IN TO VARIOUS LITIGATION LEADING TO FINANCIAL LOSS AND INVOLVING US INTO UNPRODUCTIVE LOSS OF TIME AND ATTENTION. OUR COMPAN Y ALSO AVAILED SALES TAX DEFERMENT SCHEME AND INITIALLY GOVERNMENT HAS NOT FIXED DEFERMENT AMOUNT IN CONSONANCE WITH SPIRIT OF SCHEM E AND SAID DEFERMENT WAS FIXED IN CONSONANCE WITH SCHEME IN 19 98. HENCE AS SPIRIT OF MAKING OUR COMPANY FINANCIALLY VIABLE LOS T ON VARIOUS UNPRODUCTIVE LITIGATIONS. HENCE OUR SICKNESS HAS CO NTINUED IN ONE FORM OR OTHER AND FINANCIALLY OUR COMPANY CAN NOT B ECOME HEALTHY. IT IS SIGNIFICANT TO NOTE THAT OUR COMPANY COULD NOT CARRY ON PRODUCTION CONTINUOUSLY DUE TO FINANCIAL STRINGE NCY FOR SOME TIMES IN SOME OF THE YEARS . THUS OUR CONTINUED FIN ANCIAL WEAKNESS COUPLED WITH INABILITY OF OUR CHARTERED ACCOUNTANT HAS RESULTED INTO NON APPEARANCE. SUCH NON APPEARANCE IS NOT DUE TO NON 4 ITA NO.748/AHD/2007 ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) COOPERATION OR ABDICATION OF OUR OBLIGATION TO INCO ME TAX DEPARTMENT. OUR ACCOUNTS ARE AUDITED. THERE IS NO ADVERSE COMME NT IN AUDITORS REPORT UPON ACCOUNTS. MAJORITY OF EXPENSES FOR WHIC H DETAILS ARE CALLED ARE REQUIRED TO PAID BY ACCOUNT PAYEE CHEQUE AND IN FACT OUR MAJORITY PAYMENTS ARE MADE BY CHEQUES. WE ARE R EGULAR IN TAX DEDUCTION AT SOURCE. WE ARE ONLY COMPANY ENGAGED IN PRODUCTION OF INDUSTRIAL ALCOHOL IN GUJARAT. OUR RAW-MATERIALS IS MOLLASSES. OUR FINISHED PRODUCT IS SUBJECT TO EXCISE. OUR FINI SHED PRODUCT AS WELL AS RAW-MATERIALS BEING INTOXICANT IS STRICTLY REGULATED BY GOVERNMENT UNDER PROHIBITION ACT. WE PROCURE FUEL B EING LIGNITE FROM GUJARAT MINERAL DEVELOPMENT CORPORATION, GOVER NMENT OF GUJARAT ENTERPRISE AND ALSO RECEIVE POWER FROM GUJA RAT ELECTRICITY BOARD. THUS OUR APPROXIMATELY 80% OF EX PENDITURE LIKE RAW-MATERIALS, FUEL, POWER ARE PAID TO GOVERNMENT A ND ARE HIGHLY REGULATED AND OTHER PAYMENTS ARE PAID BY ACCOUNT PA YEE CHEQUES. UNDER THE CIRCUMSTANCES, IT IS SUBMITTED THAT ALL P ENALTIES ARE WITHOUT REASONABLE CAUSE AND DISPROPORTIONATE TO PU RPOSE AND EXCESSIVE BECAUSE THOUGH FACTS RECORD NON APPEARANC E AND FACTS OF REASONS AND GENERAL KNOWLEDGE ABOUT FUNCTIONING IS IGNORED WITHOUT ANY REASON AND JUSTIFICATION. DATE: PLACE: AHMEDABAD DEPONENT 4. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN ITS APPEAL. 1. THE LEARNED COMMISSIONER OF INCOME-TAX [APPEALS] -XI V, AHMEDABAD GROSSLY ERRED IN FACTS AND IN LAW BY CONF IRMING THE EX-PARTY ASSESSMENT ORDER PASSED U/S. 143[3] R.W.S. 144 OF THE INCOME TAX ACT, 1961 WITHOUT TAKING INTO ACCOUNT TH E FACTS AND THE CIRCUMSTANCES WITH WHICH THE APPELLANT WAS SADD LED WITH AND THEREFORE IT IS PRAYED THAT THE IMPUGNED ORDER MAY KINDLY BE REVERTED TO THE ASSESSING OFFICER TO RE-DO THE ASSE SSMENT. 2. THE LEARNED COMMISSIONER OF INCOME TAX [APPEALS] -XI V, AHMEDABAD GROSSLY ERRED IN DISALLOWING THE CLAIM OF TOTAL EXPENSES OF RS.24,29,799/- @25% OF THE EXPENSES BY ARRIVING AT RS.6,07,450/- AND DISALLOWED THE SAME FULLY ONLY ON THE GROUND THAT THE APPELLANT DID NOT PRODUCED THE DETAILS CAL LED FOR. THE APPELLANT PRAYS THAT THE EXPENSES ARE WHOLLY EXCLUS IVELY AND NECESSARILY FOR THE COMMERCIAL EXPEDIENCY AND THERE FORE THE 5 ITA NO.748/AHD/2007 ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) ASSESSING OFFICER SHOULD HAVE ALLOWED THE EXPENDITU RE AS CLAIMED. THE APPELLANT PRAYS THAT THE CLAIM OF EXPE NSES OF RS.6,07,450/- MAY KINDLY BE ALLOWED IN FULL AS CLA IMED. 3. THE APPELLANT SUBMITS THAT ALL THE CLAIMS MADE I N THE RETURN OF INCOME ARE WELL WITHIN THE PROVISION OF THE INCOME TAX ACT AND THEREFORE THE SAME SHOULD BE ALLOWED AND ORIGINAL P OSITION MAY KINDLY BE RESTORED. 4. THE APPELLANT RESERVES ITS RIGHT TO ADD AMEND AL TER MODIFY OR CANCEL ANY ONE OR MORE GROUNDS OF APPEAL BEFORE THE FINALISATION OF THE APPEAL. 4.1. THE REVENUE HAS RAISED FOLLOWING GROUNDS IN I TS APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.7,14,717/- MADE BY THE AO ON ACCOUN T OF UNEXPLAINED INVESTMENT. 2. THE LD. CIT(A) HAS FURTHER ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE CARRY FORWARD OF DEPRECIATION AMOUNTING TO RS.14,25,620/- AS PER I.T. ACT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFF ICER. 4. IT IS THEREFORE, PRAYED THAT THE ORDER OF THE C IT(A) MAY BE SET ASIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICE R BE RESTORED TO THE ABOVE EXTENT. 5. LOOKING TO THE CIRCUMSTANCES UNDER WHICH THE DIR ECTOR HAS PASSED THROUGH, WE FEEL THAT THERE IS A REASONABLE CAUSE F OR NON-COMPLIANCE AND, ACCORDINGLY, RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSE E AND TO DECIDE THE ISSUE AFRESH ACCORDING TO LAW. 6 ITA NO.748/AHD/2007 ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN REVENUES APPEAL, THE TWO ISSUES ARE RAIS ED. THE FIRST ISSUE IS ABOUT UNEXPLAINED INVESTMENT OF RS.7,14,717/-. TH E ASSESSING OFFICER MADE THE ADDITION ON THE GROUND THAT COPY OF THE BI LLS WERE NOT PRODUCED, WHEREAS LEARNED CIT(APPEALS) DELETED THE ADDITION O N THE GROUND THAT NEW ASSETS ARE REFLECTED IN THE BALANCE-SHEET AND, HENCE, ARE EXPLAINED BY INCREASE IN THE LIABILITY SIDE. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS POIN TED OUT THAT ASSESSEE HAS TO EXPLAIN FROM WHERE THE INVESTMENT H AS COME AND MERELY BECAUSE INVESTMENT IS REFLECTED BY THE LIABILITY SI DE WILL NOT TANTAMOUNT TO A SATISFACTORY EXPENSES. 9. AFTER CONSIDERING THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE, WE RESTORE THE MATTER TO THE FILE O F ASSESSING OFFICER FOR GIVING OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE N ECESSARY BILLS AND TO EXPLAIN THE SOURCE OF INVESTMENT IN THE NEW ASSETS. 10. REGARDING SECOND GROUND, WHEREIN THE ASSESSING OFFICER HAD NOT ALLOWED CARRIED FORWARD OF UNABSORBED DEPRECIATION ON THE GROUND THAT RETURN FILED IS LATE. THE LEARNED CIT(APPEALS) AL LOWED THE SAME ON THE GROUND THAT ASSESSING OFFICER HAS NOT PASSED A SPEA KING ORDER. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ORDER OF THE LEARNED CIT(APPEALS) IS ALSO NOT A SPEAKING ORDER. CONSIDERING THESE FACTS, WE RESTORE THE MATTER TO THE FILE OF ASSESSI NG OFFICER TO DECIDE THE ISSUE AFRESH AFTER PROVIDING REASONABLE OPPORTUNIT Y OF BEING HEARD TO THE ASSESSEE. 7 ITA NO.748/AHD/2007 ITA NO. 975/AHD/2007 (ASSESSMENT YEAR 2003-2004) 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREATED ALLOWED FOR STATISTICAL PURPOSES. 12. AS A RESULT, REVENUES APPEAL AS WELL AS ASSESS EES APPEAL BOTH ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 18/12/2009. SD/- SD/- (T.K. SHARMA) (D.C. AGRAWAL) JUDICIAL MEMBER ACCOUNTA NT MEMBER AHMEDABAD; DATED: 18/ 12/2009 TC NAIR COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-XIV, AHMEDABAD 4. THE CIT CONCERNED. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// ASST./ DEPUTY REGISTRAR ITAT, AHMEDABAD