M/S. TAVOY WORKWEAR PVT. LTD, MUMBAI v. THE DCIT 8(3), MUMBAI

ITA 1663/MUM/2008 | 2003-2004
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 166319914 RSA 2008
Bench Mumbai
Appeal Number ITA 1663/MUM/2008
Duration Of Justice 2 year(s) 10 month(s) 22 day(s)
Appellant M/S. TAVOY WORKWEAR PVT. LTD, MUMBAI
Respondent THE DCIT 8(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted E
Tribunal Order Date 28-01-2011
Date Of Final Hearing 10-01-2011
Next Hearing Date 10-01-2011
Assessment Year 2003-2004
Appeal Filed On 07-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI S.V. MEHROTRA (AM) AND SMT ASHA VIJAYAR AGHAVAN (JM) ITA NO. 1663/MUM/2008) (ASSESSMENT YEAR-2003-04) M/S. TAVOY WORKWEAR PVT. LTD. 139-G(A) AGARWAL INDUSTRIAL ESTATE S.V. ROAD JOGESHWARI (E) MUMBAI-400 102 PAN-AAACT 6554B VS. THE DY. CIT-8(3) AAYAKAR BHAVAN MUMBAI-400 020 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI B.V. JHAVERI RESPONDENT BY: SHRI D. SONGATE O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-XXIX MUMBAI DATED 7.01.2008 FOR THE A.Y. 2003-04. 2. THE GROUNDS RAISED BY THE ASSESSEE READ AS FOLLO WS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION MAD E BY AO BY WAY OF NOT ALLOWING THE DEDUCTION ON ACCOUNT OF WRITTEN OFF STOCK OF RS. 62 77 061/-. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE FACTS THAT THE APPELLANT HAD RIGHTLY WRITTEN OFF STOCK OF RAW MATERIALS OF RS. 62 77 061 ON ACCOUNT OF BECOMING OBSOLETE AND MARKET VALUE WAS REDUCED DUE TO PASSAG E OF TIME AND GOING OUT OF FASHION AND MANY OTHER REA SONS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION MAD E BY ITA NO. 1663/M/08 2 AO BY WAY OF NOT ALLOWING THE DEDUCTION ON ACCOUNT OF WRITTEN OFF FINISHED GOODS STOCK OF RS. 13 75 439/- . 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN NOT ACCEPTING THE FACTS THAT THE APPELLANT HAD RIGHTLY WRITTEN OFF STOCK OF FINI SHED GOODS OF RS. 13 75 439/- ON ACCOUNT OF BECOMING OBS OLETE AND NOT SALEABLE IN THE MARKET. 3. THE FACTS OF THE CASE IS THAT THE ASSESSEE COMPA NY HAD FILE ITS RETURN OF INCOME ON 1.12.2003 DECLARING LOSS AT RS. 1 12 0 2 530/-. THE RETURN WAS PROCESSED U/S. 143(1) ACCEPTING THE RETURNED LOSS A ND ASSESSMENT HAS BEEN COMPLETED U/S. 143(3) DETERMINING LOSS AT RS. 28 00 930/-. THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF MANUFACTURIN G AND EXPORT OF READYMADE GARMENTS WORKWEAR INDUSTRIAL AND INSTIT UTIONAL GARMENTS. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS REDUCED THE VALUE OF STOCK TO THE EXTENT OF RS. 76 52 490/- WHICH INCLUDES RS. 62 77 061/- ON A CCOUNT OF RAW MATERIALS. THE ASSESSEE HAS SHOWN OPENING STOCK AT RS. 1 57 99 833/- AND RAW MATERIALS AT RS. 1 25 54 121/-. THE ASSESSEE H AS GIVEN EXPLANATION THAT THE VALUATION OF CLOSING STOCK WAS DONE AT HIG HER VALUE IN ORDER TO SATISFY BANK REQUIREMENT FOR SAFETY ADEQUACY AND DE CIDED TO VALUE THE STOCK AT COST OR MARKET VALUE WHICHEVER IS LESS AS PER AC COUNTING STANDARD. THE ASSESSEE HAD ALSO GIVEN THE WORKING OF VALUE AS ON 31.3.2003 WHICH IS IN THE ASSESSMENT ORDER. THE AO DID NOT ACCEPT THE CONTEN TION OF THE ASSESSEE AND ACCORDINGLY ADDED BACK RS. 62 77 061/- TO THE TOTAL INCOME OF THE ASSESSEE. 5. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD. CIT(A). 6. DURING THE COURSE OF APPELLATE PROCEEDINGS THE A SSESSEE HAS FURNISHED WRITTEN SUBMISSION IN RESPECT OF RAW MATERIAL OF RS . 62 77 061 WRITTEN OFF. THE RELEVANT PART OF THE SAME IS REPRODUCED AS UNDE R: THE APPELLANT IS MANUFACTURER CUM EXPORTER OF GARM ENTS MAINLY IN INDUSTRIAL GARMENTS. THE COMPANY WAS MANUFACTUR ING ITA NO. 1663/M/08 3 INDUSTRIAL GARMENTS VIZ. THE SUITS FOR THE WORKERS WORKING ON MACHINES AND/OR FACTORY. THERE WERE MANY FACTORS WHICH LEAD TO THE ACCUMULAT ION OF RAW MATERIALS AND WHICH REMAINED IN STOCK FOR NUMBER OF YEARS. THE SAID STOCK HAD TO BE ULTIMATELY WRITTEN OFF BEING N ON USABLE DUE TO DAMAGE CONDITION OF THE STOCK OUT OF FASHION OF THE DESIGN AND COLOUR OF THE MATERIAL AND CUTTINGS CANNOT BE USED FOR ANY OTHER FINAL PRODUCTS. SOME OF THE FACTORS ARE AS UNDER:- DUE TO RECESSION IN THE INDUSTRY. THE PROBLEMS REGARDING NON ACCEPTANCE OF THE GOODS BY THE BUYERS LEAD TO MANY OTHER PROBLEMS. THE COMPANY HAS BECOME NPA (NON PERFORMING ASSETS) COMPANY SINCE THE COMPANY COULD NOT PAY THE DUES OF THE BAN K IN TIME. DUE TO THIS REASON THE BANK FACILITIES SUCH AS LC FACILITY PACKING CREDIT ETC. WERE NOT ALLOWED TO BE USED ON THE COMP ANY BECOMING NPA. AS PER THE GUIDENCE OF RESERVE BANK OF INDIA THE BANK WHO IS HOLDING THE ACCOUNT OF THE COMPANY WHICH HAS BECOME NPA ALL THE FACILITIES ARE SUSPENDED. ALL THESE PROBLEMS LEAD TO NON SELLING OF THE GOODS AND HAD TO CARRY ON LOT OF OLD STOCK WHICH WERE MANUFACTURED SPECIFICALLY FOR PARTICULAR CLIENT STATIONED AT PARTICULAR PLACE CON SIDERING THE CLIMATIC CONDITIONS OF THE AREA FOR EXPORTS. IT MAY BE STATED THAT THE COMPANY HAD RECEIVED BIG ORDER FROM BHATIA TRADING (L.L.C) DUBAI ORDER WORTH $5 41 75 0 FOR READY MADE GOODS. THE SAID COMPANY HAD CANCELLED THE ORD ER WORTH $1 86 110 THOUGH THE GOODS IN RESPECT OF THE SAME W ERE READY. THE STOCK WAS LYING WITH THE STATE BANK OF SAURASHT RA UNDER HYPOTHECATION. THE SAID COMPANY ALSO DID NOT MAKE THE PAYMENT IN RESPECT OF TWO BILLS OF $99 135 EACH AND FOR WHI CH THE STATE BANK OF SAURASHTRA TIME AND AGAIN REMINDED THE COMP ANY TO REPAY THE SAME. A LETTER DT. 10 TH FEB. 2000 OF STATE BANK OF SAURASHTRA IS ATTACHED HEREWITH FOR YOUR READY REFE RENCE. THE SAID STOCK HAS BEEN LYING WITH THE COMPANY AND WHIC H HAS BEEN WRITTEN OFF DURING THE YEAR. SIMILARLY ANOTHER COMPANY VIZ. RG HOLDING HAD GIVE N ORDER OF ABOUT 1 MILLION DOLLOR. THE 50% OF THE GOODS WAS S END. HOWEVER THE SAID COMPANY CANCELLED THE ORDER AND A LSO CANCELLED THE LC OPENED. THE MATTER ID BEFORE THE COURT OF LAW AT FRANCE AND OUR ADVOCATES IS LOOKING AFTER THE SA ID MATTER. HOWEVER WE WERE ABLE TO PROCURE A NEW ORDER FOR IN DUSTRIAL GOWNS FROM A COMPANY CALLED HOPPE AND WHICH HELPED COMPANY ITA NO. 1663/M/08 4 TO UTILISE PART OF THE STOCK. THE APPELLANT UTILIS ED THE CERTAIN MATERIAL OUT OF THE READY MADE GOODS WHICH WERE AVA ILABLE AND THE BALANCE MATERIAL HAD TO BE SCRAPPED. THE APPELLANT WAS HAVING OLD AND DAMAGED STOCK OF G OODS WHICH WAS LYING FOR NUMBER OF YEARS AS STATED IN TH E EARLIER PARAGRAPH. THE SAID STOCK OF RAW MATERIAL WAS PURC HASED FOR MANUFACTURING OF GARMENTS FOR THESE PARTIES. THE A PPELLANT WAS GENERALLY DEALING IN GOODS WHICH ARE USED FOR INDU STRIAL USE ONLY. HENCE THE MATERIALS WERE ALSO PURCHASED AS P ER THE SPECIFIC REQUIREMENT OF THAT INDUSTRY. HOWEVER DUE TO NON RECEIPT OF FURTHER ORDERS THE M ATERIALS WERE LYING AS IT IS FOR NUMBER OF YEARS. THE SAID STOC K OF MATERIALS ALSO GOT DAMAGED DUE TO CLIMATIC CONDITION AND LYIN G IN WAREHOUSE FOR MORE THAN TWO YEARS. SOME OF THE MAT ERIALS HAVE BECOME OUT DATED AND THE VALUE HAS SUBSTANTIALLY RE DUCED. DUE TO ACCOUNT BECOMING NPA THERE WAS NO POSSIBILI TY OF ACCEPTING ORDER THROUGH LC AND COULD ACCEPT THE ORD ER ONLY ON GIVING CREDIT FACILITY OR AGAINST SIGHT WHICH IS A VERY RISKY BUSINESS. THE COMPANY WORKED OUT THE STOCK AS ON 31 ST MARCH 2003 ON THE BASIS OF THE COST OR MARKET VALUE WHICHEVER IS LESS . SINCE THE STOCK WAS VERY OLD MOST OF THEM WAS UNUSABLE DUE T O CHANGE OF FASHION AND THE NEW ITEMS WHICH WERE INTRODUCED IN THE MARKET AND SOME OF THE STOCKS WERE ALSO WERE CUT TO THE SI ZE FOR MANUFACTURING FACILITIES. CONSIDERING THESE FACTS AND FOLLOWING THE ACCOUNTING PRINCIPLE OF VALUING THE STOCK AT COST OR MARKET VALUE WHICHEVER IS LESS THE RAW MATERIAL STOCK WAS VALUED AT CORRECT PRICE I.E. BY REDUCING THE VALUE OF RAW MATERIAL BY RS. 62 77 061/-. CONSIDERING THE ABOVE FACTS THE STOCK WAS VALUED A T CORRECT PRICE AS ON 31 ST MARCH 2003. IT MAY FURTHER BE STATED THAT THE APPELLANT HAS NOT RECEIVED ANY EXTRA VALUE IN RESPE CT OF THE SAID STOCK UP TO TODAY. THAT SHOWS THAT THE VALUATION O F THE STOCK CARRIED OUT BY THE APPELLANT WAS CORRECT. IN VIEW OF THE ABOVE FACTS THE APPELLANT REQUEST Y OUR HONOUR TO DELETE THE ADDITI9ON ON ACCOUNT OF REVALUATION OF STOCK OF RS. 62 77 061/- 7. IN RESPECT OF FINISHED GOODS WRITTEN OFF OF RS. 13 75 429/- THE APPELLANT HAS FURNISHED WRITTEN SUBMISSION. THE RE LEVANT PART OF THE SAME IS REPRODUCED AS UNDER: ITA NO. 1663/M/08 5 DISALLOWANCE OF WRITTEN OFF OF FINISH GOODS OF RS. 13 75 429/- THE COMPANY HAD RECEIVED TWO ORDERS FROM M/S. BHATI A TRADING (LLC) DUBAI AND RG HOLDINGS IN THE EARLIER YEARS. HOWEVER THESE TWO ORDERS WERE CANCELLED ABRUPTLY BY THESE COMPANI ES. THE COMPANY HAD IN HOPE OF SENDING THESE GOODS MAN UFACTURED CERTAIN STOCK OF GOODS WHICH WAS LYING IN THE STOCK FOR LAST TWO YEARS AND THE ENTIRE READYMADE INDUSTRIAL GARMENTS AMOUNTING TO RS. 32 45 712/- WHICH WAS LYING AS A FINISHED ST OCK BECAME USELESS. THE COMPANY ALSO CANNOT SALE THE SAME IN OPEN MARKET AS THERE WAS NO MARKET FOR THESE ITEMS. THE SAID S TOCK WAS NOT SALEABLE AS IT WAS SPECIFICALLY MADE AS PER SPECIFI CATION OF THE FOREIGN BUYERS. THE INDUSTRIAL SUITS MANUFACTURED FOR PARTICULAR COMPANY CANNOT BE USED FOR OTHERS. HOWEVER OUT OF THESE OLD STOCK USABLE PARTS WERE TAKEN OUT WHOSE COST WAS AROUND RS. 15 45 712/- AND USED FOR NEW PRODUCTION. THE ITEMS SUCH AS BUTTONS BACK PORTIO N OF THE SUITS ETC. WERE USED IN THE GOODS MANUFACTURED DURING THE YEAR. AS SUBMITTED BEFORE THE AO THE STOCK WHICH WAS WRITTE N OFF HAS BEEN WORKED OUT AS UNDER: OLD STOCK (OPENING) RS. 32 45 712/- LESS: USED FOR PRODUCTION RS. 15 45 715/- RS. 16 99 997 LESS: VALUE AS ON 31.3.03 RS. 3 24 571/- STOCK WRITTEN OFF RS. 13 75 429/- THE STOCK WHICH WAS USED FOR PRODUCTION OF THE NEW PRODUCTS IS REQUIRED TO BE WRITTEN OFF DURING THE YEAR. THE SA ID AMOUNT HAS BEEN CONSIDERED SEPARATELY BY WAY OF USE FOR PRODUC TION OF THE PARTS OF THE GOODS AND THE BALANCE UNUSABLE PARTS ( CHINDIS) HAVE BEEN REDUCED FROM THE CLOSING STOCK. IN VIEW OF THE ABOVE THE BALANCE AMOUNT WAS WRITTE N OFF IN THE BOOKS OF ACCOUNT. 8. HOWEVER THE LD. CIT(A) AFTER CONSIDERING THE FAC TS OF THE CASE AND SUBMISSIONS MADE BY THE ASSESSEE AT PAGES 4 TO 7 D ISCUSSED THE ISSUE AND HELD AS FOLLOWS: ITA NO. 1663/M/08 6 IN VIEW OF THE ABOVE NOTED FACTS IT HAS TO BE HELD THAT APPELLANT HAS FAILED TO SUBSTANTIATE EITHER BEFORE AO OR BEFO RE THE UNDERSIGNED THAT THE STOCK OF FINISHED GOODS OR RAW MATERIAL AS STATED HAS BECOME OBSOLETE. THE CONTENTION OF THE APPELLANT IS NEITHER SUPPORTED BY THE GENERAL BUSINESS PRACTICE IN THIS LINE OF BUSINESS NOR BY ANY EVIDENCE. CONSIDERING THE ABOV E FACTS IT IS HELD THAT THERE IS NO ERROR IN THE FINDING OF AO IN RESPECT OF DISALLOWANCE OF CLAIM OF WRITE OFF OF STOCK BOTH IN RESPECT OF FINISHED GOODS AND RAW MATERIALS AND THEREFORE BOTH THE GROUNDS ARE REJECTED. 9. THE LD. COUNSEL FOR THE ASSESSEE WANTED TO SUBMI T THE ADDITIONAL EVIDENCE BEFORE US. HE SUBMITTED AN AFFIDAVIT SWOR N BY SHRI BIPIN BHOGILAL KHOKHANI I.T.P. WHO IS AN ASSOCIATE OF M/S. R.R. S HAH & ASSOCIATES C.A WHO HAD ATTENDED THE ASSESSMENT PROCEEDINGS OF M/S . TAVOY WORKWEAR PVT. LTD FOR THE A.Y. 2003-04 BEFORE SHRI P.C. MAURYA D CIT RANGE 8(3) MUMBAI DURING THE CALENDAR YEAR 2005 THE CONTENTS OF THE AFFIDAVIT ARE AS FOLLOWS: I SAY THAT ON 16 TH DECEMBER 2005 I APPEARED BEFORE THE AO AND FILED CERTAIN DETAILS VIDE LETTER DT. 16.12.2005. I FURTHER SAY THAT IN THE COURSE OF HEARING THE AO CALLED FOR EXPLANAT ION IN RESPECT OF WRITE OFF OF STOCK OF RAW MATERIALS AND FINISHED GA RMENTS ON THE VARY NEXT DAY. I FURTHER SAY THAT ACCORDINGLY THE DETAILS WERE PRE PARED ON THE VARY SAME DAY AND A LETTER WAS PREPARED ON THE VARY SAME DAY I.E. ON 16 TH DEC. 2005. I APPEARED BEFORE THE AO ON MONDAY 19 TH DEC. 2005 ALONGWITH THE LETTER DT. 16 TH DEC. 2005. HOWEVER I WAS INFORMED BY SHRI P.C. MAURYA DY. C.I.T. THAT H E WAS VERY BUSY AS HE WAS ON LEAVE IN THE MONTH OF NOVEMBER 2 005 AND THEREFORE I WAS ASKED TO ATTEND BEFORE HIM ON 26 TH DEC. 2005. I THEREFORE ATTENDED ON 26 TH DEC. 2005 BEFORE SHRI P.C. MAURYA DY. C.I.T. AND PERSONALLY HANDED OVER THE LETTER DT . 16 TH DEC. 2005 TO HIM. I FURTHER SAY THAT TO MY UTTER SURPRISE THE ORDER W AS DT. 19 TH DEC. 2005 WHICH WAS RECEIVED BY THE ASSESSEE COMPANY ON 8 TH FEB. 2006. I FURTHER SAY THAT IN THE SAID ORDER THE DY. C.I.T. HAS NOT MADE ANY REFERENCE TO THE SUBMISSIONS MADE VIDE LET TER DT. 16.12.2005 BUT FILED PERSONALLY BE ME ON 26.12.2005 . I AM MAKING THIS AFFIDAVIT TO PUT THE TRUE FACTS O N RECORD AND THEREFORE WHAT IS STATED HEREINABOVE IS TRUE TO TH E BEST OF MY KNOWLEDGE AND BELIEF AND I BELIEVE THE SAME TO BE T RUE. ITA NO. 1663/M/08 7 10. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMIT TED AS FOLLOWS: THE APPELLANT COMPANY HAD FILED CERTAIN DETAILS IN RESPECT OF WRITTEN OFF OF STOCK OF RAW MATERIALS AND FINISHED GOODS DURING THE ASSESSMENT PROCEEDINGS ON 16.12.2005. THE AO A SKED THE REPRESENTATIVE TO FURNISH FURTHER DETAILS IN RESPEC T OF CLAIM OF WRITTEN OFF OF STOCK. THE APPELLANT HAD ACCORDINGL Y PREPARED THE DETAILS ON THE VARY SAME DAY AND WERE TO BE FILED O N 19 TH DEC. 2005. HOWEVER ON THE APPOINTED DAY SINCE THE AO W AS BUSY HE ASKED THE REPRESENTATIVE TO ATTEND ON 26 TH DEC. 2005. ACCORDINGLY THE REPRESENTATIVE ATTENDED BEFORE THE AO AND FILED THE DETAILS WHICH WERE CALLED FOR. HOWEVER THESE DETAILS WERE NOT CONSIDERED BY THE AO WHICH CAN BE SEEN FROM THE ORDER AS THE ASSESSMENT ORDER WAS PASSED BEFORE THE SAID DAT E. NO DETAILS IN RESPECT OF ORDER ON HAND CANCELLATIO N OF THE ORDERS EXPORT INVOICES ETC. WERE CALLED FOR BY THE AO. DURING THE APPELLATE PROCEEDINGS BEFORE CIT(A) AS P ER THE INQUIRY MADE BY THE CIT(A) THE APPELLANT FOR THE FIRST TIM E ADDUCED THE EVIDENCES IN RESPECT OF THE ORDERS ON HAND CANCELL ATION OF THE ORDERS LETTER DT. 16 TH DEC 2005 DETAILS OF PAYMENTS RECEIVED ETC. THE APPELLANT HAD ALSO MADE AN ORDER REQUEST BEFORE THE CIT(A) FOR ADMISSION OF THE NEW EVIDENCES UNDER RULE 46A O F THE RULES. THE APPELLANT THEREFORE REQUEST YOUR HONOUR TO ADMI T THE NEW EVIDENCES. THE NEW EVIDENCES ARE IN THE FORM OF PUR CHASE AND CANCELLATION ORDER OF BHATIA TRADING & R.G. HOLDING S CHART SHOWING THE ORDERS RECEIVED FROM BUYERS SALES PUR CHASES AND CLOSING STOCK FOR THE PERIOD FROM A.Y. 1999-2000 TO 2002-03 AND LETTER DT. 16.12.2005 FILED ON 26.12.2005. STOCK S TATEMENTS WHICH ARE PREPARED ON THE BASIS OF ACCOUNTS ALREADY ON RECORD WITH THE AO. IT MAY ALSO BE STATED THAT THE CIT(A) HAS PARTLY RE LIED ON THE NEW EVIDENCES IN RESPECT OF DISPUTES WITH RG HOLDINGS A ND HAS ALLOWED LEGAL EXPENSES IN RESPECT OF THE SAME. THE APPELLANT PRAYS THAT :- A) NO SPECIFIC DETAILS WERE ASKED BY THE AO DURING THE ASSESSMENT PROCEEDINGS. B) THOUGH CERTAIN DETAILS WERE FILED ON 26.12.2005 AND WERE ACCEPTED BY THE AO. HOWEVER THEY WERE NOT CONSIDE RED AS THE ORDER WAS PASSED ON 19.12.2005. C) NO OPPORTUNITY WAS GIVEN BY THE AO AS NO SPECIFIC Q UESTIONS WERE RAISED DURING THE ASSESSMENT PROCEEDINGS. D) THE VITAL AND ESSENTIAL DOCUMENTS BE BROUGHT ON REC ORD SO AS TO RENDERED THE JUSTICE TO THE CASE AND FOR DECIDIN G THE APPEAL. ITA NO. 1663/M/08 8 E) IT IS IN THE INTEREST OF THE JUSTICE THAT THE APPEL LANT SHOULD BE ALLOWED THE OPPORTUNITY TO FILE EVIDENCES IN SUPPOR T OF ITS PLEA IN RESPECT OF CLAIMS OF HAVING RECEIVED THE ORDERS PURCHASE OF MATERIALS FOR THE BUYERS AND CANCELLATION OF ORDERS ETC. THEREFORE THE APPELLANT PRAYS THAT THE ADMISSION O F THE NEW EVIDENCE WILL BE IN THE INTEREST OF SUBSTANTIAL JUS TICE. 11. THE LEARNED COUNSEL FOR THE ASSESSEE ALSO POINT ED OUT THAT THE NOTICE U/S. 142(1) DOES NOT CALL FOR ANY STOCK DETA ILS AND SUBMITTED THE COPY OF THE SAME. 12. THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONGLY OBJECTED TO THE ADMISSION OF ADDITIONAL EV IDENCE AND SUBMITTED THAT THE AO AND CIT(A) HAS APPLIED THEIR MIND AND WRITTEN AN ELABORATE ORDER AFTER GOING THROUGH THE FACTS OF THE CASE. 13. WE ARE INCLINED TO ADMIT THE ADDITIONAL EVIDENC E AS IT GOES TO THE VERY ROOT OF THE MATTER. 14. WITH REGARD TO ADMISSIBILITY OF ADDITIONAL EVID ENCE WE ARE OF THE OPINION THAT THE SAME CAN BE ADMITTED PLACING RELIA NCE ON THE DECISIONS IN THE CASE OF RAJNISH INDUSTRIES VS. ITO AND PATNA BE NCH OF ITAT IN THE CASE OF ABHAY KUMAR SHROFF. IN THE CASE OF ABHAY KUMAR S HROFF 63 ITD 144 WHEREIN IT HAS BEEN HELD AS FOLLOWS: IT WAS THAT THE ASSESSEE AS A MATTER OF RIGHT COUL D NOT FILE OR FILED THEM BEFORE THE TRIBUNAL AS A MATTER OF COURS E. IF THE ASSESSEE PRODUCES SOME DOCUMENTS AT THE APPROPRIATE TIME THEY HAVE TO BE TAKEN INTO CONSIDERATION SUBJECT OF COUR SE TO ALL JUST EXCEPTIONS SUCH AS THEIR RELEVANCE ETC. IF NOT DO NE AT THE ASSESSMENT STAGE THE ADMISSION OF DOCUMENTS HAS TO BE GOVERNED BY RULE 46A OF THE I.T. RULES 1962 IF PR ODUCED FOR THE FIRST TIME BEFORE THE FIRST APPELLATE AUTHORITY. HA VING MISSED THE BUS AND THE MATTER HAVING TRAVELLED TO THE TRIBUNAL THE ADMISSION OF DOCUMENTS IS TO BE GOVERNED BYRULE 29 OF THE APPELLATE TRIBUNAL RULES. HENCE IF THE DOCUMENTS S OUGHT TO BE ADMITTED EVEN AT THE SECOND APPELLATE STAGE ARE OF A NATURE AND QUANTITATIVELY SUCH THAT THEY RENDERASSISTANCE TO T HE TRIBUNAL IN PASSING ORDERS OR ARE REQUIRED TO BE ADMITTED FOR A NY OTHER SUBSTANTIAL CAUSE IT WOULD RATHER BE THE DUTY OF THE TRIBUNAL TO ITA NO. 1663/M/08 9 ADMIT THEM. THEREFORE IF THE RECEIPT OR ADMISSION OF ADDITIONAL EVIDENCE IS VITAL AND ESSENTIAL FOR THE PURPOSE OF CONSIDERATION OF THE SUBJECT MATTER OF APPEAL AND TO ARRIVE AT A FIN AL AND ULTIMATE DECISION THE TRIBUNAL IS AMPLY EMPOWERED TO ADMIT ADDITIONAL EVIDENCE UNDER RULE 29. THEREFORE THE TRIBUNAL HAD TO ADMIT ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE SINCE THAT WAS VITAL AND ESSENTIAL FOR RENDERING JUSTICE AND IN DE CIDING APPEALS. HOWEVER IT WAS NECESSARY TO GIVE THE DEPARTMENT A REASONABLE OPPORTUNITY OF REBUTTING IT ACCORDING TO THE PRINCI PLE OF NATURAL JUSTICE AND FOR THAT PURPOSE THE MATTER WAS RESTORE D TO THE FILE OF THE AO. FOLLOWING THE RATIO OF THE ABOVE SAID DECISION WE REMIT THE ISSUE BACK TO THE FILE OF THE AO FOR GIVING A REASONABLE OPPOR TUNITY TO THE ASSESSEE TO PRODUCE BEFORE THE AO ALL THE EVIDENCES AND THEREAF TER THE AO SHALL DECIDE THE ISSUE IN ACCORDANCE WITH LAW. 15. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 28 TH DAY OF JANUARY 2011 SD/- SD/- (S.V. MEHROTRA) ( ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 28 TH JANUARY 2011. RJ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CENTRAL - I CONCERNED 5. THE DR E BENCH TRUE COPY BY ORDER ASST. REGISTRAR I.T.A.T MUMBAI ITA NO. 1663/M/08 10 DATE INITIALS 1 DRAFT DICTATED ON: 17. 01. 201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 18. 01 .201 1 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/ PS 6. KEPT FOR PRONOUNCEMENT ON: ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: ______ 9 DATE ON WHICH FILE GOES TO THE AR 10 . DATE OF DISPATCH OF ORDER: ______