SABERO ORGANICS GUJARAT LTD, MUMBAI v. ITO 7(2)(4), MUMBAI

ITA 2463/MUM/2011 | 2004-2005
Pronouncement Date: 19-11-2014

Appeal Details

RSA Number 246319914 RSA 2011
Assessee PAN AABCS5313C
Bench Mumbai
Appeal Number ITA 2463/MUM/2011
Duration Of Justice 3 year(s) 7 month(s) 21 day(s)
Appellant SABERO ORGANICS GUJARAT LTD, MUMBAI
Respondent ITO 7(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-11-2014
Appeal Filed By Assessee
Bench Allotted E
Tribunal Order Date 19-11-2014
Date Of Final Hearing 12-11-2014
Next Hearing Date 12-11-2014
Assessment Year 2004-2005
Appeal Filed On 29-03-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH MUMBAI JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; JH FOT; IKY JKO] U;KF;D LNL; OA OA OA OA JH CH JH CH JH CH JH CH- -- - VKJ VKJVKJ VKJ- -- - CKLDJ.K] YS[KK LNL; CKLDJ.K] YS[KK LNL; CKLDJ.K] YS[KK LNL; CKLDJ.K] YS[KK LNL; DS LE{K DS LE{K DS LE{K DS LE{K BEFORE SHRI VIJAY PAL RAO JUDICIAL MEMBER AND SHRI B.R. BASKARAN ACCOUNTANT MEMBER ITA NO.2463/MUM/2011 ASSESSMENT YEAR: - 2004-05 SABERO ORGANICS GUJARAT LTD A-302 PHOENIX HOUSE 3 RD FLOOR 462 SENAPATI BAGPAT MARG WORLI (E) MUMBAI 400 013. V S. ` THE INCOME TAX OFFICER WARD 7(20(4). AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020. PAN: AABCS5313C APPELLANT RESPONDENT ORDER PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE OR DER DATED 13.12.2010 OF CIT(A) ARISING FROM PENALTY ORDER PASSED U/S 271( 1)(C) OF INCOME TAX ACT FOR THE A.Y. 2004-05. THE ASSESSEE HAS RAISED FOLLOWIN G GROUNDS IN THIS APPEAL:- 1. THE CIT (A) ERRED IN CONFIRMING THE ACTION OF T HE ASSESSING OFFICER (AO) IN IMPOSING PENALTY OF RS.68 OO 000/- ON THE A PPELLANT UNDER SECTION 271 (1 )(C) OF THE ACT. 2. THE CIT(A) ERRED IN CONFIRMING THE SAID PENALTY IMPOSED WITHOUT CONSIDERING THE WRITTEN SUBMISSIONS AND EVIDENCE FI LED BEFORE HIM IN THE COURSE OF THE APPELLATE PROCEEDINGS. ASSESSEE BY VASANTI PATEL REVENUE BY SHRI NEIL PHILLIP DATE OF HEARING 12.11.2014 DATE OF PRONOUNCEMENT 19-11-2014 SABERO ORGANICS GUJARAT LTD 2 | P A G E 3. THE CIT(A) ERRED IN CONFIRMING THE PENALTY IMPOS ED IN RESPECT OF BAD DEBTS WRITTEN OFF BY OBSERVING IN HIS ORDER THAT EV EN DURING PENALTY PROCEEDINGS THE APPELLANT HAS FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE TO SHOW THAT THE DEBTS HAD BECOME BAD. 4. THE CIT(A) ERRED IN FAILING TO APPRECIATE THAT C OMPLETE DETAILS IN RESPECT OF BAD DEBTS WRITTEN OFF WERE FILED BEFORE HIM IN THE COURSE OF THE APPELLATE PROCEEDINGS. 5. THE CIT(A) ERRED IN NOT FOLLOWING THE RATIO OF T HE JUDGMENT OF THE HON'BLE SUPREME COURT IN T.R.F. LTD REPORTED IN 190 TAXMAN 391 (SC). 6. THE CIT(A) ERRED IN CONFIRMING THE PENALTY IMPOS ED IN RESPECT OF DEFERRED REVENUE EXPENDITURE CLAIMED AS REVENUE EXP ENSES BY OBSERVING THAT CAPITAL EXPENDITURE WAS CLAIMED BY T HE APPELLANT AS REVENUE EXPENDITURE. 7. THE CIT(A) ERRED IN FAILING TO APPRECIATE THAT T HE EXPENDITURE TREATED AS DEFERRED REVENUE EXPENDITURE FOR ACCOUNTING PURP OSE WAS ON ACCOUNT OF VARIOUS REVENUE EXPENSES WHICH WERE INCU RRED IN THE NORMAL COURSE OF CONDUCT OF BUSINESS ACTIVITY AND HENCE RI GHTLY CLAIMED AS REVENUE EXPENDITURE IN THE COMPUTATION OF TOTAL INC OME. 2. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONS IDERED THE RELEVANT MATERIAL ON RECORD. THE PENALTY U/S 271(1)(C) HAS BEE N LEVIED BY THE ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF CLAIM OF BAD DEBS AS WELL AS DEFERRED REVENUE EXPENDITURE. THE LD. AUTHORIZED REPRESENTATIV E OF THE ASSESSEE HAS POINTED OUT THAT IN THE QUANTUM APPEALS THE TRIBUNAL HAS SET ASIDE BOTH THESE ISSUES TO THE RECORD OF ASSESSING OFFICER FOR DECIDIN G AFRESH AS PER DIRECTIONS GIVEN IN THE ORDER DATED 31.07.2013 IN ITA NO. 5151/M UM/2011. 3. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD AT THE OUTSET WE NOTE THAT IN THE QUANTUM APPE AL THE ISSUE OF DISALLOWANCE OF BAD DEBTS WRITTEN OFF AS WELL AS THE DISALLOWANCE OF EXPENSES BEING CLAIMED AS REVENUE EXPENDITURE WHICH WAS TREAT ED AS DEFERRED REVENUE SABERO ORGANICS GUJARAT LTD 3 | P A G E EXPENDITURE IN THE ACCOUNTS HAS BEEN SET ASIDE TO TH E RECORD OF ASSESSING OFFICER IN PARA 7 TO 10 AS UNDER:- 7. THE FIRST ISSUE INVOLVED IN BOTH THE APPEALS OF THE ASSESSEE RELATE TO NOT ALLOWING THE BAD DEBTS WRITTEN OFF AT RS. 10 06 000/- AND RS. 40 10 011/- FOR BOTH OF THE YEARS. 8. IT WAS STATED THAT THE ISSUE IS COVERED BY THE H ON'BLE SUPREME COURT IN THE CASE OF T.R.F. LMITED VS.CIT. THE AO A S WELL AS LEARNED CIT(A) DID NOT ALLOW THE ISSUE IN RESPECT OF BAD DE BTS WRITTEN OFF BY VALUING VARIOUS DECISION OF THE VARIOUS HIGH COURTS . HOWEVER NOW THE HON'BLE SUPREME COURT IN THE CASE OF T.R.F. LIMITED (SUPRA).WHEREIN IT HAS BEEN HELD THAT IF THE CONDITIONS ARE SATISFIED THAT THE ASSESSEE HAS WRITTEN OFF THE AMOUNT IN THE BOOKS OF ACCOUNTS AND OTHER CONDITIONS ARE SATISFIED THEN OF COURSE BAD DEBTS ARE TO BE AL LOWED. IN VIEW OF THESE FACTS AND CIRCUMSTANCES OF THE CASE. WE SET ASIDE T HE ORDERS OF THE AUTHORITIES BELOW AND REMAND THE MATTER BACK TO THE FI1E OF THE AO TO PASS A FRESH ORDER IN THE LIGHT OF THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF T.R.F. LIMITED (SUPRA) WE ORD ER ACCORDINGLY. 9. THE SECOND ISSUE RELATES TO DISALLOWANCE .OF EXP ENSES OF RS.1 96 53 OOO/- AND RS.2 03 15 681/- RESPECTIVELY BEING CLAIMED FOR REVENUE EXPENDITURE INCURRED WHICH WAS TREATED AS DEFERRED REVENUE EXPENDITURE IN THE ACCOUNTS. 10. THIS VERY ISSUE WAS INVOLVED IN EARLIER YEAR AL SO. THE TRIBUNAL HAS SET ASIDE THIS ISSUE TO THE FILE OF THE ASSESSI NG OFFICER WHILE DECIDING THE APPEAL FOR ASSESSMENT YEAR 2001-02 IN ITA NO. 3 940/M/2005 VIDE ORDER DATED 16-7-2010 COPY OF WHICH IS PLACED ON R ECORD. THEREFORE IN VIEW OF THE DECISION OF THE TRIBUNAL FOR EARLIER YE AR WE SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER TO PASS AFRESH ORDER ON THE BASIS OF DIRECTION GIVEN BY THE TRIBUNAL FOR A.Y. 2 001-02. WE ORDER ACCORDINGLY. 4. SINCE THE ADDITION/DISALLOWANCE IS NO MORE IN EXI STENCE THEREFORE THE PENALTY LEVIED U/S 271(1)(C) IN RESPECT OF THOSE DI SALLOWANCES WOULD NOT SURVIVE. ACCORDINGLY WE DELETE THE PENALTY LEVIED U/S 271(1)(C) AS THE ISSUE IN QUANTUM APPEAL HAS BEEN SET ASIDE BY THE TRIBUNAL TO THE RECORD OF ASSESSING SABERO ORGANICS GUJARAT LTD 4 | P A G E OFFICER. HOWEVER THE ASSESSING OFFICER IS AT LIBERTY TO TAKE AN APPROPRIATE ACTION AS PER THE OUTCOME OF THE SET ASIDE PROCEEDIN GS. 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH DAY OF NOVEMBER 2014 SD/- SD/- ( B.R.BASKARAN ) (VIJAY PAL RAO) (ACCOUNTANT MEMBER/ YS[KK LNL; YS[KK LNL; YS[KK LNL; YS[KK LNL; ) (JUDICIAL MEMBER/ U;KF;D U;KF;D U;KF;D U;KF;D LNL; LNL; LNL; LNL; ) MUMBAI DATED 19-11 -2014 SKS SR. P.S COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR E BENCH ITAT MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI