Sanket Food Products Private Ltd.,, Jalna v. Commissioner of Income-tax,,

ITA 1032/PUN/2014 | 2009-2010
Pronouncement Date: 07-10-2016 | Result: Dismissed

Appeal Details

RSA Number 103224514 RSA 2014
Assessee PAN AAECS0131P
Bench Pune
Appeal Number ITA 1032/PUN/2014
Duration Of Justice 2 year(s) 4 month(s) 22 day(s)
Appellant Sanket Food Products Private Ltd.,, Jalna
Respondent Commissioner of Income-tax,,
Appeal Type Income Tax Appeal
Pronouncement Date 07-10-2016
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 07-10-2016
Date Of Final Hearing 03-10-2016
Next Hearing Date 03-10-2016
Assessment Year 2009-2010
Appeal Filed On 16-05-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE MS. SUSHMA CHOWLA JM AND SHRI ANIL CHATURVEDI AM . / ITA NO. 1032 /PN/20 1 4 / ASSESSMENT YEAR: 200 9 - 1 0 M/S. SANKET FOOD PRODUCTS PVT. LTD. 4088/6 NATH NAGAR MANTHA ROAD JALNA - 431203 . / APPELLANT PAN: A A ECS0131P VS. THE COMMISSIONER OF INCOME TAX AURANGABAD . / RESPONDENT AURANGABAD . / RESPONDENT / APPELLANT BY : NONE / RESPOND ENT BY : SHRI AJIT KORDE CIT / DATE OF HEARING : 03 . 1 0 .201 6 / DATE OF PRONOUNCEMENT: 07 .1 0 .201 6 / / ORDER PER SUSHMA CHOWLA JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST ORDER OF CIT AURANGABAD DATED 18 . 0 3 .201 4 RELATING TO ASSESSMENT YEAR 200 9 - 1 0 PASSED UNDER SECTION 263 OF THE INCOME TAX ACT 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS RAI SED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO . 1032 /PN/201 4 M/S. SANKET FOOD PRODUCTS PVT. LTD. 2 1. THE ID. COMMISSIONER OF INCOME TAX AURANGABAD ERRED IN PASSING ORDER U/S.263 OF THE INCOME TAX ACT 1961 WHEN THE ORDER PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF THE REVENUE. 2. T HE LD. COMMISSIONER OF INCOME TAX AURANGABAD FURTHER ERRED IN PASSING THE ORDER U/S . 263 OF THE I. T. ACT 1961 AND SETTING ASIDE THE ISSUE OF WRITING OFF THE OUTSTANDING LIABILITY IN THE ACCOUNT OF THE M/S. RAFAT FILMS TO THE FILE OF THE ASSESSING OFFICER . 3. THE LD. COMMISSIONER OF INCOME TAX AURANGABAD FURTHER ERRED IN SETTING ASIDE THE ISSUE OF WRITING OFF THE LIABILITY OF RS.1 39 03 134/ - IN THE ACCOUNT OF M/S. RAFAT FILMS AND ITS TAXABILITY U/S. 41(1) WHEN THIS AMOUNT IS NOT CLAIMED AND ALLOWED AS DEDUCTION IN THE EARLIER YEAR. 4. THE LD. COMMISSIONER OF INCOME TAX AURANGABAD FURTHER ERRED IN PASSING THE ORDER U/S .263 ON ACCOUNT OF WRITING OFF THE OUTSTANDING LIABILITY IN THE ACCOUNT OF THE M/S. RAFAT FILMS WHEN THE SAME IS ALREADY EXAMINED BY TH E AO WHILE PASSING THE ORDER U /S 143(3) OF THE I. T. ACT 1961 . 3. THE APPEAL WAS FIXED FOR HEARING FROM DATE TO DAY. HOWEVER THERE WAS NO REPRESENTATION ON BEHALF OF THE ASSESSEE EXCEPT ON ONE DATE I.E. 04.02.2016. THEREAFTER THE APPEAL WAS FIXED FOR HEARING ON 27.04.2016. HOWEVER NONE APPEARED ON BEHALF OF THE ASSESSEE. THE REGISTRY WAS DIRECTED TO ISSUE NOTICE TO THE ASSESSEE. THE APPEAL WAS LISTED FOR HEARING ON 03.10.2016 ON WHICH DATE NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATI ON WAS MOVED FOR ADJOURNMENT. IN VIEW THEREOF WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 4. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST EXERCISE OF JURISDICTION UNDER SECTION 263 OF THE ACT. 5. BRIEFLY IN THE FACTS OF THE CASE THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING GUTKA AND SCENTED SUPARI ETC. AT JALNA. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD FILED RETURN OF INCOME DECLARING NIL INCOME WHICH WA S PICKED UP FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 14.12.2011 WHEREIN THE RETURN OF INCOME WAS ACCEPTED. ON VERIFICATION OF ASSESSMENT RECORD THE COMMISSIONER NOTED THAT IN THE NOTES TO BALANCE SHE ET AND PROFIT & LOSS ACCOUNT SCHEDULE XIII(K) IT WAS REVEALED THAT THE ASSESSEE HAD WRITTEN BACK BALANCES OF CREDITORS OUTSTANDING IN ITA NO . 1032 /PN/201 4 M/S. SANKET FOOD PRODUCTS PVT. LTD. 3 THE BOOKS FOR MORE THAN THREE YEARS TOTALING RS.9 67 322/ - AND HAD DECLARED THE SAME AS INCOME FROM OTHER SOURCES. THE COMMISSIONER FURTHER OBSERVED THAT THE CREDIT BALANCE OF RS.1 39 03 134/ - IN THE ACCOUNT OF RAFAT FILMS WAS ALSO WRITTEN OFF IN THE BOOKS AND WAS ADJUSTED AGAINST PUBLICITY EXPENSES DEBITED UNDER THE HEAD MISCELLANEOUS EXPENSES . THE COMMISSIONER FURTHE R OBSERVED THAT THE ASSESSEE HAD INCURRED TOTAL EXPENDITURE OF RS.3 26 48 700/ - UNDER THIS HEAD AND TILL 31.03.2006 SUM OF RS.1.30 CRORES HAD BEEN WRITTEN OFF OR ADJUSTED IN THE PROFIT & LOSS ACCOUNT AND FURTHER SUM OF RS.1.39 CRORES WAS WRITTEN OFF IN TH E BOOKS OF & LOSS ACCOUNT AND FURTHER SUM OF RS.1.39 CRORES WAS WRITTEN OFF IN TH E BOOKS OF ACCOUNT WHICH WAS NOT ROUTED THROUGH THE PROFIT & LOSS ACCOUNT AS INCOME OF THE YEAR. THE COMMISSIONER WAS OF THE VIEW THAT THE SAID AMOUNT WAS TAXABLE FOR THE YEAR UNDER CONSIDERATION AS PER PROVISIONS OF SECTION 41(1) OF THE ACT ACCORDING T O HIM WHICH DESERVES TO BE ADDED BACK TO THE TOTAL INCOME. DESPITE SEVERAL OPPORTUNITIES GIVEN BY THE COMMISSIONER NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE COMMISSIONER AND SINCE THE ORDER UNDER SECTION 263 OF THE ASSESSEE BEFORE THE COMMISSIONER AND SINCE THE ORDER UNDER SECTION 263 OF THE ACT COULD NOT BE PASSED AFTER EXPIRY OF TWO YEARS FROM THE END OF FINANCIAL YEAR IN WHICH THE ORDER SOUGHT TO BE REVISED WAS PASSED THE COMMISSIONER COMPLETED THE PROCEEDINGS. THE COMMISSIONER WAS OF THE VIEW THAT IN VIEW OF NOTINGS IN THE SHOW CAUSE NOTICE THE ORDER OF ASSESSING O FFICER WAS PRIMA FACIE FOUND TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. THE COMMISSIONER VIDE PARA 3.3 AT PAGE 3 HAD OBSERVED AS UNDER: - 3.3 AT PAGE 3 HAD OBSERVED AS UNDER: - 3.3 IT APPEARS FROM THE RECORD THAT DURING THE YEAR UNDER CONSIDERATION THE COMPANY HAD WRITTEN BAC K BALANCES OF CERTAIN CREDITORS OUTSTANDING IN THE BOOKS FOR MORE THAN 3 YEARS TOTALLING TO RS.9 67 322/ - AND IS DISCLOSED THE SAME UNDER THE HEAD INCOME FROM OTHER SOURCES. IT IS ALSO NOTICED FRO M SCHEDULE - XII THAT THE ASSESSEE COMPANY HAD ALSO WRITTE N OFF CREDIT BALANCE OF RAFAT FILMS OF RS . 1 39 03 134/ - WITHOUT DISCLOSING IT AS INCOME THE SAME WAS ADJUSTED AGAINST THE TV PUBLICITY EXPENSES OF RS . 1 95 89 220/ - SHOWN UNDER THE HEAD 'MISCELLANEOUS E X PENDITU R E' LEAVING THE BALANCE OF R S . 56 86 086/ - AS ON 3L . 03.2009 . FROM THE RECO R D IT IS ALSO NOTICED THAT THE ASSESSEE COMPANY HAS INCURRED RS . 3 26 48 700/ - I N THE PAST FOR PRODUCTION AND RELEASE OF AD - FILM FOR RELAY THROUGH VARIOUS TV CHANNELS IN THE YEAR . IT IS ALSO SEEN FROM THE DETAILS OF DEFERRED R EVENUE EXPENSES (ADVT) A VA I LABLE ON ALSO SEEN FROM THE DETAILS OF DEFERRED R EVENUE EXPENSES (ADVT) A VA I LABLE ON RECORD THAT THE CO M PANY HAS WRITTEN OFF TWO F I FTH OF THE TOT A L EXPENDITURE I . E . AN AMOUNT OF RS . 1 30 59 480 / - ON MEDIA ADVERTISEMENT TILL THE YEAR E ND E D 31 - 03 - 2006 LEAVING A BA L ANCE OF RS.1 95 89 220/ - . IT IS ALSO SEEN T HAT TH E SAID AMOUNT WAS CARRIED FORWARD BY THE ASSESSEE COMPANY AND THE ENT I R E OUTSTANDING LIABILITY IN THE ACCOUNT OF RAFAT FILMS AT R S . 1 39 03 134/ - IS ITA NO . 1032 /PN/201 4 M/S. SANKET FOOD PRODUCTS PVT. LTD. 4 A PPROPR IAT E D AGAINST THE BAL A NC E IN THE TV PUBLICITY E X PENSES DURING THE YE A R . IN V I EW OF THE FACT THAT THE COMPANY DID NOT FORESEE ANY BUSINESS IDENTICAL TO THE PREVIOUS BUSINESS ACTIVITY IN FUTURE AS PER THE LEDGER A/C OF IDENTICAL TO THE PREVIOUS BUSINESS ACTIVITY IN FUTURE AS PER THE LEDGER A/C OF D E FER RE D REVENUE EXPENSES (ADVT ) IT IS SEEN THAT THE ASSESSEE HAS DEBITED THE ACCOUNT BY RS.3 26 48 700/ - ON ACCOUNT OF AMOUNT O F RAFAT FILMS BILLS FOR THE YEAR ENDING 31 . 03 2005 . THE ASSESSEE HAS CREDITED THE SA I D ACCOUNT BY RS . 65 29 740/ - FOR F . Y. 2004 - 05 AND F .Y. 2005 - 06 AND DEBITED TO P AND L ACCOUNT . T HERE ARE NO ENTR I ES OF CREDIT SEEN FROM F . Y . 2006 - 07 & 2007 - 08 AND DURING THE F .Y. 2008 - 09 THE ASSESSEE HAS CREDITED THE SAID ACCOUNT BY RS . 1 39 03 134/ - LEAVING BALANCE OF RS.57 09 472/ - . I T IS SEEN THAT THE AMOUNT OF RS . 1 30 59 460/ - HAS BEEN WRITTEN OFF OR AD J USTED IN THE P AND L A / C BUT THE CREDIT BALANCE OF RS . 1 39 03 1 34/ - WRITTEN OFF DURING THE YEAR HAS NOT BEEN ROUTED THROUGH THE P AND L ACCOUNT . I N - SPITE OF AMPLE TIME GIVEN THE ASSESSEE HAS NOT ATTENDED BEFORE ME TO EXPLAIN THIS ISSUE . THE ASSESSEE HAS WRITTEN OFF THE CRED I T BALANCE AND IT ADJUSTED IT WITH PUBLICI TY EXPENSES SHOWN UNDER MISCELLANEOUS EXPENDITURE . THIS ISSUE NEEDS VERIFICATION OF BOOKS OF UNDER MISCELLANEOUS EXPENDITURE . THIS ISSUE NEEDS VERIFICATION OF BOOKS OF ACCOUNTS AND ALSO AS TO HOW THE SAID EXPENSES HAVE BEEN TREATED IN THE INCOME TAX RETURNS FILED FROM A . Y . 2006 - 07 ONWARDS . IN THE ABSENCE OF ANY SPECIF I C DETAILS O N RECORD I HAVE NO ALTERNATIVE BUT TO SET - ASIDE THE SAID ISSUE TO THE FILE OF AO FOR RE - VERIFICATION . ACCORDINGLY THE AO IS DIRECTED TO VERIFY THE ISSUE IN DEPTH IN THE LIGHT OF THE ABOVE FACTS AND PASS THE ORDER IN ACCORDANCE WITH LAW . 6. THE CONCL USION OF THE COMMISSIONER WAS THAT SUM OF RS.1.30 CRORES HAD BEEN WRITTEN OFF OR ADJUSTED IN THE PROFIT & LOSS ACCOUNT BUT THE CREDIT BALANCE OF RS.1.39 CRORES I.E. THE ENTIRE OUTSTANDING LIABILITY OF RAFAT FILMS WAS APPROPRIATED RS.1.39 CRORES I.E. THE ENTIRE OUTSTANDING LIABILITY OF RAFAT FILMS WAS APPROPRIATED AGAINST THE BALANCE IN TV PUBLICITY EXPENSES DURING THE YEAR BUT WAS NOT ROUTED THROUGH PROFIT & LOSS ACCOUNT. IN VIEW THEREOF THE ISSUE AS PER THE COMMISSIONER NEEDED VERIFICATION OF BOOKS OF ACCOUNT AND AS TO HOW THE SAID EXPENSES HAD BEEN TREATED IN THE INCOME TAX RETURNS FILE D FOR ASSESSMENT YEARS 2006 - 07 ONWARDS . I N THE ABSENCE OF ANY SPECIFIC DETAILS AVAILABLE ON RECORD THE COMMISSIONER SET ASIDE THE ISSUE TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION AND THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE ISSUE AND HE WA S ASKED TO REFRAME THE ASSESSMENT AS PER PROVISIONS OF LAW AFTER CONSIDERING THE PROPER FACTS AND SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. 7. ON T HE P ERUSAL OF ASSESSMENT ORDER PASSED IN THE CASE WHICH IS DATED 14.12.2011 WE FIND THAT THE ASSESSING OFFICER NOTED THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD NOT CARRIED OUT ANY MANUFACTURING ACTIVITIES. HOWEVER THE ASSESSEE HAD SOLD CERTAIN RAW MATERIALS AND PACKING MATERIALS LYING ITA NO . 1032 /PN/201 4 M/S. SANKET FOOD PRODUCTS PVT. LTD. 5 IN THE FACTORY. AFTER VERIFICATION OF THE DETAILS FILE D THE ASSESSING OFFICER ACCEPTED THE INCOME OF ASSESSEE AT RS. 12 44 852/ - AGAINST WHICH BROUGHT FORWARD LOSSES WERE SET OFF AND THE TOTAL INCOME WAS COMPLETED AT NIL. THE ASSESSEE HA D FAILED TO POINT OUT ANY VERIFICATION EXERCISE CARRIED OUT IN RESPECT OF WRITE OFF OF CREDIT BALANCE OF RAFAT FILMS AT RS. 1 39 03 134/ - . ON THE OTHER HAND THE ASSESSEE HAD ALSO WRITTEN OFF CREDITORS OUTSTANDING FOR MORE THAN FIVE YEARS TOTALING RS. 9 67 322/ - WHICH W ERE DISCLOSED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE COMMISSIONER NOTED THAT THE ASSESSEE HAD ADJUSTED THE CREDIT BALANCE OF RAFAT FILMS AT RS. 1.39 CRORES WITHOUT DISCLOSING IT AS INCOME AGAINST TV PUBLICITY EXPENSES AT RS.1.95 CRORES WHICH WAS SHOWN UNDER THE HEAD MISCELLANEOUS EXPENSES LEAVING THE BALANCE OF RS. 56 86 086/ - AS ON 31.03.2009. THE ASSESSEE IN THE EARLIER YEARS HAD INCURRED EXPENDITURE OF RS.3.26 CRORES FOR PRODUCTION AND RELEASE OF ADV T. FILMS OUT OF WHICH 2/5 TH WAS WRITTEN OFF I.E. AN AMOUNT OF RS.1.30 CRORES ON MEDIA ADVERTISEMENT UP TO 31.03.2006 LEAVING BALANCE OF RS.1.95 CRORES ON MEDIA ADVERTISEMENT UP TO 31.03.2006 LEAVING BALANCE OF RS.1.95 CRORES. THE SAME AMOUNT WAS CARRIED FORWARD AND THE ENTIRE OUTSTANDING LIABILITY IN THE ACCOUNT OF RAFAT FILMS AT RS.1.39 CRORES WAS APPROPRIATED AGAINST THE BALANCE IN TV PUBLICITY EXPENSES DURING THE YEAR. T HE PERUSAL OF RECORDS DID NOT REVEAL ANY ENQUIRY BEING MADE BY THE ASSESSING OFFICER IN THIS REGARD AND AS PER THE COMMISSIONER IT NEEDED VERIFICATION OF BOOKS OF ACCOUNT AND ALSO HOW THE AMOUNT WAS TREATED IN EARLIER YEARS IN THE HANDS OF ASSESSEE. FOR THIS VERIFICATION THE MATTER HAS BEEN SET ASIDE TO THE FILE OF ASSESSING OFFICER AND WE FIND NO ERROR IN EXERCISE OF JURISDICTION BY THE COMMISSIONER UNDER SECTION 263 OF THE ACT. 8. THE COMMISSIONER HAS THE POWER OF REVISION UNDER SECTION 263 OF THE ACT WHERE THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS AND ALSO PREJUDICIAL TO THE INTEREST OF REVENUE. BOTH THE CONDITIONS LAID DOWN IN SECTION 263 OF THE ACT HAVE TO BE COMPLIED WITH BEFORE THE COMMISSIONER CAN EXERCISE HIS JURISDICTI ON. THE COMMISSIONER IN THE PRESENT CASE HAS OBSERVED THAT ITA NO . 1032 /PN/201 4 M/S. SANKET FOOD PRODUCTS PVT. LTD. 6 THE ORDER PASSED BY THE ASSESSING OFFICER IS ERRONEOUS IN NOT CONSIDERING THE WRITE OFF OF THE OUTSTANDING LIABILITY OF RAFAT FILMS WHICH HAS BEEN ADJUSTED THROUGH ENTRIES IN THE BALANCE SHEET AN D HAVE NOT BEEN ROUTED THROUGH THE PROFIT & LOSS ACCOUNT ; OTHERWISE THE SAME WAS TAXABLE UNDER SECTION 41(1) OF THE ACT. IN VIEW THEREOF THE ORDER PASSED BY THE ASSESSING OFFICER IS ALSO PREJUDICIAL TO THE INTEREST OF REVENUE FOR NOT CONSIDERING THE TAX ABILITY AT RS.1.39 CRORES I.E. THE WRITE OFF LIABILITY OF RAFAT FILMS. WHERE THE ASSESSMENT ORDER PASSED IS BOTH ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE THE COMMISSIONER HAS POWER OF EXERCISING REVISION ARY JURISDICTION UNDER SECTION 263 OF T HE ACT. UPHOLDING THE ORDER OF COMMISSIONER WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. 9 . IN THE RESULT APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THIS 7 TH DAY OF OCTO BER 201 6 . SD/ - SD/ - ( ANIL CHATURVEDI ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; D ATED : 7 TH OCTO BER 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. ( ) / THE CIT AURANGABAD ; 4 . / DR B ITAT PUNE ; 5 . / GUARD FILE . / BY ORDER // TRUE COPY // / SR. PRIVATE SECRETARY / ITAT PUNE