Avasarala Technologies Limited, Bangalore v. DCIT, Bangalore

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY ACCOUNTANT MEMBER S.P. NO.15/BANG/2011 (ARISING OUT OF ITA NO. 1523/BANG/2010) ASSESSMENT YEAR : 2007 - 08 & ITA NO. 1523/BANG/2010 ASSESSMENT YEAR : 2007 - 08 AVASARALA TECHNOLOGIES LTD. 47 36 TH MAIN ROAD BTM IST STAGE DOLLARS SCHEME BANGALORE 560 068. : APP LICANT / APPELLANT VS. THE DEPUTY COMMISSIONER OF INCOME TAX CIRCLE 11(1) BANGA LORE. : RESPONDENT APPLIC A NT /APPELLANT BY : SHRI B.N. SUDARSHAN C.A. RESPONDENT BY : SHRI G.V. GOPALA RAO CIT - I(DR) O R D E R PER A. MOHAN ALANKAMONY ACCOUNTANT MEMBER THIS STAY PETITION IS FILED BY THE ASSESSEE SEEKING STAY OF OUTSTANDING D EMAND OF RS.4 54 71 996 FOR THE ASSESSMENT YEAR 2007 - 08. SP NO.15/BANG/11 PAGE 2 OF 4 2. THE ASSESSEE IS A LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE OF ENGINEERING EQUIPMENTS USED IN NUCLEAR POWER PROJECTS AND FACTORY AUTOMATION. IT ALSO MANUFACTURE HEALTHCARE PRODUCTS AND SPACE PRODUCTS USED IN SATELLITES. AT THE TIME OF HEARING IT WAS SUBMITTED THAT THE ASSESSEE S CASE WAS ENTRUSTED TO M/S. K.P. RAO C.AS. TO REPRESENT ITS CASE BEFORE THE REVENUE BUT IT WAS NOT PROPERLY REPRESENTED BEFORE THE ASSESSING OFFICER AND THE LD. CIT(A) PASSED EX PARTE ORDER SINCE NONE APPEARED ON BEHALF OF THE ASSESSEE. IT IS SUBMITTED THAT NOW THE ASSESSEE HAS APPOINTED M/S. B.N. SUDARSHAN C.A. TO REPRESENT THE CASE. THE ISSUES INVOLVED IN THE APPEAL RELATES TO BAD DEBTS A ND CAPITAL EXPENDIT URE ON R&D AND IF PROPERLY PRESENTED THE ASSESSEE HAS A FAIR CHANCE OF SUCCESS IN THE APPEAL. THE LD. AR SUBMITTED THAT THE SUPPLIES FROM THE ASSESSEE COMPANY ARE MADE TO GOVERNMENT ORGANIZATIONS WHEREIN THE CREDIT REALIZATION PERIOD IS LONGER AND FURTHE R THE PROJECTS EXTEND BEYOND 1 YEAR AND THERE IS HUGE REQUIREMENT OF INVENTORY. DUE TO THESE REASONS THE CASH CREDIT LIMITS ARE FULLY UTILIZED AGAINST DEBT OR S AND INVENTORY AND THERE IS NO SURPLUS FUND TO MEET THE DEMAND. HENCE THE LD. AR PRAYED FOR GR ANT OF STAY. 3. THE LD. DR OBJECTED TO GRANT OF STAY IN THIS CASE. 4. HAVING HEARD BOTH THE PARTIES AND HAVING CONSIDERED THE RIVAL CONTENTIONS AND MATERIAL ON RECORD WE FIND THAT THE ASSESSEE HAS RAISED AS MANY AS NINE GROUNDS OF APPEAL IN THE INCOME - TAX APPEAL AND THE FIRST THREE GROUNDS ARE AGAINST THE ORDER OF CIT(A) PASSING THE ORDER EX PARTE WITHOUT GOING INTO THE MERITS OF THE CASE. THE OTHER GROUNDS RELATE TO CLAIM SP NO.15/BANG/11 PAGE 3 OF 4 OF BAD DEBTS DISALLOWANCE OF EXPENDITURE ON R&D AND INTEREST LEVIED U/S. 234A 234B & 234C OF THE ACT. 5. ON GOING THROUGH THE ORDER OF THE LD. CIT(A) WE FIND THAT THE CIT(A) HAS GIVEN NUMBER OF OPPORTUNITIES TO THE ASSESSEE BUT HOWEVER THE ASSESSEE FAILED TO REPRESENT THE SAME AND SUBSTANTIATE ITS CLAIM. THE LD. COUNSEL FOR THE ASS ESSEE HAD SUBMITTED THAT THE ASSESSEE COMPANY HAD INITIALLY ENGAGED M/S. K.P. RAO CHARTERED ACCOUNTANTS BUT THEY DID NOT PROPERLY REPRESENT BEFORE THE AO DUE TO WHICH EX PARTE ORDER WAS PASSED. HE SUBMITTED THAT THE ASSESSEE HAS NOW ENGAGED M/S. B.N. SU DARSHAN & CO. CHARTERED ACCOUNTANTS FOR REPRESENTING ITS CASE AND THE ASSESSEE MAY BE PROVIDED ONE MORE OPPORTUNITY TO REPRESENT ITS CASE BEFORE THE CIT( APPEALS ). 6. THE LD. DR SUBMITTED THAT THE ASSESSEE HAD NOT COOPERATED WITH THE CIT(APPEALS) AND THEREFOR E A FRESH OPPORTUNITY NEED NOT BE GIVEN. HOWEVER WE FIND THAT THE CIT(A) HAS NOT DECIDED THE ASSESSEE S APPEAL ON MERITS AND HAS ONLY CONFIRMED THE ADDITIONS EX PARTE. IN VIEW OF THE SAME AND IN THE INTEREST OF JUSTICE WE DEEM IT FIT AND PROPER TO SET ASIDE THE ORDER OF CIT(APPEALS) AND REMAND THE ISSUE TO THE FILE OF CIT(APPEALS) TO DECIDE THE ISSUES AFRESH AFTER GIVING A FAIR OPPORTUNITY OF BEING HEARD. SINCE THE ASSESSEE S APPEAL ITSELF HAS BEEN DECIDED AND ALLOWED FOR STATISTICAL PURPOSES THE STAY PETITION BECOMES INFRUCTUOUS AND IS THEREFORE DISMISSED. 7. IN THE RESULT THE ASSESSEE S APPEAL IS ALLOWED FOR STATISTICAL PURPOSES AND THE STAY PETITION IS DISMISSED. SP NO.15/BANG/11 PAGE 4 OF 4 PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DAY OF FEBR UARY 2011 . SD/ - SD/ - ( SMT. P. MADHAVI DEVI ) ( A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE DATED THE 9 TH FEBRU ARY 2011 . DS/ - COPY TO: BY ORDER ASSISTANT REGISTRAR ITAT BANGALORE. 1. APPLICANT /APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT BANGALORE. 6. GUARD F ILE