M/S Sandeep Intermediates P Ltd, Ahmedabad V. The I T O Wd-8(1), Ahmedabad

MA 47/AHD/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6299 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 2 month(s) 5 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 1992-1993
• Appeal Filed On: 08-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K DHANESTA
• Keywords: Bogus purchase; Unexplained investment; Business expenditure
• Section: 69C; 69; 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI MUKUL SHRAWAT, JUDICIAL MEMBER AND SHRI D.C.AGRAWAL, ACCOUNTANT MEMBER DATE OF HEARING : 08/04/2011 DRAFTED ON: 08/04/2011 MA NOS.47 AND 48/AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASSESSMENT YEARS : 1992-93 &1993-94 RESPECTIVELY SANDEEP INTERMEDIATES PVT.LTD. 204, H.K. HOUSE ASHRAM ROAD AHMEDABAD-380 009 (ORIGINAL APPELLANT) VS. ITO WARD-8(1) AHMEDABAD (ORIGINAL RESPONDENT) PAN/GIR NO. : AADCS 0458 C (APPLICANT) .. (RESPONDENT) APPLICANT BY : SHRI SUNIL TALATI, A.R. RESPONDENT BY: SHRI R.K.DHANESTA, D.R. O R D E R PER SHRI MUKUL SHRAWAT, JUDICIAL MEMBER :- THESE MISCELLANEOUS APPLICATION HAVE BEEN FILED B Y THE ASSESSEE ON 08/03/2010 ARISING FROM A CONSOLIDATED ORDER OF ITAT B BENCH BEARING ITA NOS.3013, 3014 & 3015/AHD/2002 FOR ASSE SSMENT YEARS 1985-86, 1992-93 AND 1993-94 RESPECTIVELY DATED 07/ 06/2007. THE LD. LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE M R.SUNIL TALATI HAS PROCEEDED WITH MA NO.48/AHD/2010 ARISING FROM ITA NO.3015/AHD/2002 FOR A.Y. 1993-94, WHEREIN APPEAL W AS DISMISSED ON ACCOUNT OF NON-PAYMENT OF REQUISITE TRIBUNAL FEES A S FOLLOWS: (A) MA NO.48/AHD/2010 MA NOS.47 & 48 / AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASST.YEARS 1992-93 & 1993-94 RESPECTIVELY - 2 - APPEAL NO.3015/AHD/2002 2. WE FIND THAT TRIBUNAL FEES PAID BY THE ASSESSEE IS SHORT BY 4182/-. ON THIS ISSUE, LEARNED COUNSEL CONTENDS TH AT ASSESSEE IS FINANCIALLY NOT SOUND AND FEE COULD NOT BE PAID. IT WAS INTIMATED TO THE LEARNED COUNSEL THAT IN THIS EVENT UALITY APPEAL WILL BE DISMISSED FOR NON-PAYMENT OF TRIBUNAL, TO W HICH HE AGREES. IN VIEW OF THIS FACT, APPEAL NO.3015/AHD/2 002 IS DISMISSED FOR WANT OF PAYMENT OF REQUISITE TRIBUNAL FEE. 2. NOW BEFORE US, A DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GILBS COMPUTER LTD. VS. INCOME TAX APP ELLATE TRIBUNAL & ORS. REPORTED AT [2009]317 ITR 159(BOM) IS PLACED, WHEREIN IT WAS DECIDED AS UNDER; REPRODUCED FROM HELD PORTION. THE LEGISLATIVE HISTORY INDICATES THAT INITIALLY A FEE AT A FIXED RATE WAS PAYABLE. THEREAFTER A GRADED SYSTEM OF PAYMENT OF FEES WAS INTRODUCED ON THE4 CONCEPT OF ABILITY TO PAY AND, THEREFORE, AN ASSESSEE TO A HIGHER INCOME WAS OBLIGED TO PAY A HI GHER FEE IRRESPECTIVE OF THE QUANTUM INVOLVED IN THE ISSUE R AISED IN THE APPEAL. ON THE PLAIN INTERPRETATION OF S.253(6) T HERE CAN BE DO DOUBT THAT THE PETITIONER WAS NOT OBLIGED TO PAY TH E FEE IN EXCESS OF RS.500. THE WORDS LESS AND MORE MUST BE GIVEN TH E ORDINARY MEANING. IN THE INSTANT CASE, THE PETITIONER HAS B EEN ADMITTEDLY ASSESSED TO LOSS. IN SUCH A CASE, THERE ARE TWO PO SSIBLE WAYS OF DE4TERMINING WHAT IS THE TOTAL INCOME COMPUTED BY T HE AO. THE FIRST IS THAT THE PETITIONER IS ASSESSED TO A NIL I NCOME AND HAS BEEN PERMITTED TO CARRY FORWARD A LOSS THAT IS DETERMINE D OR SECONDLY THAT THE PETITIONER IS ASSESSED TO AN AGGREGATE LOS S OF RS.9,00,97,980. WHICHEVER MAY ONE LOOKS AT IT THE INCOME COMPUTED BY RESPONDENT NO.2 IS LESS THAN RS.ONE HUN DRED THOUSAND AND, THEREFORE, CL.(A) WOULD APPLY. IF, O N THE OTHER HAND, ONE TAKES THE VIEW THAT AS THE PETITIONER IS ASSESS ED AT A LOSS CL.(A) OR (B) OR (C) CANNOT APPLY AS THEY POSTULATE ASSES SMENT OUT OF A POSITIVE FIGURE THAN, IT IS ONLY CL.(D) WHICH APPL IES AND, EVEN SO, MA NOS.47 & 48 / AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASST.YEARS 1992-93 & 1993-94 RESPECTIVELY - 3 - THE FEE PAYABLE WOULD BE RS.500. IN ANY VIEW OF TH E MATTER IT CAN NEVER BE SAID THAT THE PETITIONERS CASE FALL WITHI N CL.(C) AS HELD BY RESPONDENT NO.1. FOR CL. (C) TO APPLY THE TOTAL I NCOME OF THE ASSESSEE COMPUTED BY THE AO HAS TO BE MORE THAN RS . TWO HUNDRED THOUSAND. THE EXPRESSION TOTAL INCOME IS DEFINED IN S. 2 (45) TO MEAN THE TOTAL AMOUNT OF THE INCOME REFER RED TO IN S. 5, COMPUTED IN THE MANNER LAID DOWN IN THE ACT. IT WO ULD THUS BE CLEAR THAT IN ORDER FOR CL.(C) TO APPLY THE TOTAL I NCOME ASSESSED HAS TO BE IN EXCESS OF RS. TWO HUNDRED THOUSAND. THE U SE OF THE WORDS MORE THAN WOULD ALSO INDICATE THAT IT HAS TO BE A POSITIVE FIGURE IN EXCESS OF RS. TWO HUNDRED THOUSAND. CIT VS. HARPRASAD & CO. (P) LTD. 1975 CTR (SC) 65 : (1975) 99 ITR 118 (SC), CIT VS. J.H. GOT1A (1985) 48 CTR (SC) 363 : (1985) 156 ITR 323 (SC) AND CIT VS. P. DORAISWAMY CHETTY (1990) 86 CTR (SC) 102 : (1990) 183 ITR 559(SC) DISTINGUISHED. (PARAS 12 & 15) THE EXPRESSION MORE AND LESS WILL HAVE TO BE GIVE N THE NATURAL MEANING. IT CAN ONLY BE MORE THAN A NEGATIVE INCO ME EVEN IF THE EXPRESSION INCOME IS HELD TO BE BOTH POSITIVE AND NEGATIVE INCOME. NEGATIVE INCOME CANNOT BE MORE. IT WILL ALWAYS BE LESS. IN THAT EVENT THE LANGUAGE OF SUB-S.(6)(A) THAT WOU LD BE ATTRACTED. THE OTHER WAY OF LOOKING AT IT IS IF THE TOTAL INCO ME CAN BE CONSIDERED EVEN TO BE THE LOSS THEN THE ABSENCE OF IT WILL NOT BE COVERED BY EITHER (A), (B) OR (C) OF SUB-S.(6). IT WILL BE CL.(D) OF SUB-S. (6) WHICH WILL APPLY. HOWEVER, CONSIDERING THE ENTIRE SCHEME OF THE ACT AND THE HISTORY OF THE PURPOSE OF THE AMENDMENT, THERE IS NO DIFFICULTY IN HOLDING THAT EITHER CL.(A ) OR (D) OF SUB-S. (6) OF S. (6) OF S. 253 WOULD BE ATTRACTED BUT CONSIDER ING THE EARLIER DISCUSSION REGARDING THAT LOSS WOULD ALSO BE COVERE D BY THE EXPRESSION TOTAL INCOME, IT IS HELD THAT IN SUCH A CASE IT WOULD BE COVERED BY CL.(D). IF THAT BE SO, THE APPELLANTS W ERE RIGHT IN PAYING COURT FEE OF RS.500. IN VIEW OF THAT, ORDER DT. 2 1 ST JAN., 2009 IS SET ASIDE AND APPEAL IS RESTORED TO FILE AS PROPERLY ST AMPED. (PARAS 17 & 18) 3. SINCE THE HON'BLE COURT HAS HELD THAT EVEN IN A CASE AN APPEAL IS IN RESPECT OF AN ASSESSED LOSS, THE APPEAL FEE PAYABLE COULD BE RS.500/- AND MA NOS.47 & 48 / AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASST.YEARS 1992-93 & 1993-94 RESPECTIVELY - 4 - FALLS IN THE CATEGORY OF PROVISION OF SECTION 253(6 )(D) OF THE I.T.ACT. RESPECTFULLY FOLLOWING THE ABOVE DECISION, WE ARE O F THE VIEW THAT THE DISMISSAL IN LIMINE DESERVES TO BE RECALLED AND THIS ASSESSEE IS ENTIT LED FOR RIGHT OF REPRESENTING THE APPEAL. WE, THEREFORE, DIRECT THE REGISTRY TO FIX THE HEARING IN DUE COURSE. THE ORDER OF THE TRIBUN AL IN QUESTION IS HEREBY RECALLED AND THE MISCELLANEOUS APPLICATION IS ALLOW ED. (B)MA NO.47/AHD/2010 (OUT OF ITA NO.3014/AHD/02 FOR A.Y.92-93 4. IN THIS REGARD, OUR ATTENTION HAS BEEN DRAWN ON THE CONCLUDING PARAGRAPH NO.7 OF THE TRIBUNAL FOR THE ORDER PASSED FOR ASSESSMENT YEAR 1992-93 BEARING APPEAL NO.3014/AHD/2002 DATED 07/06 /2007, WHEREIN IT WAS PRONOUNCED AS UNDER:- 7. WE HAVE THROUGH CIT(A)S ORDER FOR A.Y. 1993-94 ALSO, WHEREIN CIT(A) HAS CATEGORICALLY STATED THAT THE AS SESSEE NEITHER PRODUCED ANY EVIDENCE CONTRA ACCOUNTS, PRODUCTION O F PRIMARY PRODUCTION REGISTERS OF THE ASSESSEE AND SISTER CON CERNS AND FINDING THESE DEFICIENCIES AND NON-COMPLIANCE BY TH E ASSESSEE, ADDITION IN A.Y. 1993-94 WAS MADE IN THIS BEHALF IN A.Y. 1992-93 ALSO WE FIND THAT THE SAME STATE OF NON-COMPLIANCE AND NON- PRODUCTION OF RELEVANT RECORD IS THERE. IN VIEW TH EREOF, SINCE ASSESSEE COULD NOT MAKE OUT ITS CASE, DESPITE SEVER AL OPPORTUNITIES, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) CONFIRMI NG ADDITION MADE BY THE A.O. ORDER OF CIT(A) IS UPHELD. 5. THE LEARNED AUTHORISED REPRESENTATIVE OF THE ASS ESSEE MR.SUNIL TALATI HAS VEHEMENTLY CONTESTED THAT THE REQUISITE EVIDENCES WERE PLACED DURING THE COURSE OF HEARING, HOWEVER, AN ALTERNATE PLEA HAS ALSO BEEN PLACED THAT THE DEDUCTION U/S.37 MAY BE ALLOWED IF THE PROVISIONS OF SECTION 69 ARE INVOKED. AS PER THE STATEMENT OF FA CTS PLACED THROUGH A MA NOS.47 & 48 / AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASST.YEARS 1992-93 & 1993-94 RESPECTIVELY - 5 - COMPILATION DATED 12/02/2007, IT WAS PLEADED BEFORE THE TRIBUNAL AS FOLLOWS; RELEVANT PARAGRAPH REPRODUCED: WITHOUT PREJUDICE TO ABOVE YOUR APPELLANT SUBMITS THAT THE APPELLANT IS A BUSINESS MAN. THE ADDITION MADE UND ER SECTION 69C FOR A SUM OF RS.2072892/- TREATED AS BOGUS PURCHASE SHOULD BE ALLOWED AS A DEDUCTION UNDER SECTION 37 AS THE APPE LLANT HAD INCURRED AND RECORDED THE SAID EXPENDITURE IN ITS B OOKS OF ACCOUNTS. THE RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS. (1) ITO VS. SUNSTEEL, ITAT AHMEDABAD (B BENCH) (20 05) 92 TTJ (AHD) 1126, WHEREIN THE HON'BLE HAVE CONFIRMED THE VIEW OF LEARNED CIT(A) THAT IF THE A.O. MAKES AN AD DITION OF UNEXPLAINED EXPENSES OF RS.2739410/- FOR INCURRING SUCH EXPENSE. IN THE RESULT THE FIGURES REQUIRED TO BE ADDED WOULD BE NIL. (2) ACIT VS. NALANDA HOUSING DEV LTD. (RAJKOT), ITA T (RAJKOT BENCH) (2005) 98 TTJ 518 WHEREIN IT WAS HELD THAT DEDUCTION FOR SUCH UNEXPLAINED INVESTMENTS, WHICH H AS BEEN ADDED U/S.69C IS TO BE CONSIDERED AND SHOULD BE DED UCTED FROM TOTAL INCOME. (3) I.T.O. VS. JAGDISHCHANDRA VIRMANI (DEL) ITAT DE LHI B BENCH (2007) 106 TTJ (DEL) 287 WHEREIN IT WAS HELD BY THE HON'BLE TRIBUNAL THAT THE EXPENDITURE INCURRED BY T HE ASSESSEE ON CONSTRUCTION OF THE COMPLEX INCLUDING T HE AMOUNT WHICH HAS BEEN TREATED AS UNEXPLAINED IS HIS BUSINESS EXPENDITURE AND IS ALLOWABLE AS DEDUCTION. 6. FROM THE ORDER OF THE TRIBUNAL, NOW IN QUESTION IT IS EVIDENT THAT THE AFORESAID ALTERNATE PLEA WHICH WAS A LEGAL ARGU MENT WAS NOT ADJUDICATED UPON. MA NOS.47 & 48 / AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASST.YEARS 1992-93 & 1993-94 RESPECTIVELY - 6 - 7. ON HEARING BOTH THE SIDES, WE ARE OF THE VIEW TH AT THIS LEGAL ARGUMENT HAS TO BE DECIDED AFTER CONSIDERING THE MA TERIAL FACTS ON RECORD. IT HAS BEEN PLEADED BEFORE US THAT THE ASSESSEE IS IN A POSITION TO FURNISH THE MATERIAL FACTS WITH EVIDENCES, THEREFORE, THE I NCOME CAN BE RE- ADJUDICATED. IN RESPECT OF THE SAID LEGAL PLEA, C ASE LAW CITED IS CIT VS. HINDUSTAN MARBLE (P) LTD. (2009) 179 TAXMAN 289 (GU J.), RUBY BUILDERS VS. ITO (1999) 102 TAXMAN 114 (AHD) (MAG.), S.F. WA DIA VS. ITO (1986) 19 ITD 306 (AHD.) AND SHRI RAJESH P.SONI VS. ACIT IN ITA NO.898/AHD/1999 (ITAT ABAD BENCH D). 8. SINCE THIS ASPECT HAS NOT BEEN TAKEN INTO ACCOUN T BY THE RESPECTED CO-ORDINATE BENCH, THEREFORE, WE DEEM IT PROPER TO RE-CALL THAT PORTION OF THE ORDER TO BE DECIDED DE NOVO AS PER LAW AS APPLICABLE FOR THE YEAR UNDER CONSIDERATION AND TO DECIDE ACCORDINGLY. SI NCE THE ORDER IS RE-CALLED WITH CERTAIN DIRECTIONS, THEREFORE, THE M A OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, BOTH THE MISCELLANEOUS APPLICATIO NS ARE ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 13 TH MAY, 2011. SD/- SD/- ( D.C.AGRAWAL ) ( MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 13 / 05/2011 T.C. NAIR, SR.PS MA NOS.47 & 48 / AHD/2010 (ARISING OUT OF ITA NOS.3014 & 3015/AHD/2002) ASST.YEARS 1992-93 & 1993-94 RESPECTIVELY - 7 - COPY OF THE ORDER FORWARDED TO : 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-XIV, AHMEDABAD 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT.REGISTRAR), ITAT, AHMEDABAD 1. DATE OF DICTATION..8.4.2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.04.2011 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 13/5/2011 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 13/5/2011 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER