PAREKH BRIGHT BARS P. LTD, MUMBAI v. ACIT 5(2), MUMBAI

ITA 2975/MUM/2009 | 2003-2004
Pronouncement Date: 28-09-2011 | Result: Allowed

Appeal Details

RSA Number 297519914 RSA 2009
Assessee PAN AABCP4117F
Bench Mumbai
Appeal Number ITA 2975/MUM/2009
Duration Of Justice 2 year(s) 4 month(s) 20 day(s)
Appellant PAREKH BRIGHT BARS P. LTD, MUMBAI
Respondent ACIT 5(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted C
Tribunal Order Date 28-09-2011
Date Of Final Hearing 15-09-2011
Next Hearing Date 15-09-2011
Assessment Year 2003-2004
Appeal Filed On 08-05-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL 'C' BENCH MUMBAI BEFORE SHRI B.R. MITTAL JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA NO. 2975/MUM/2009 (ASSESSMENT YEAR: 2003-04) M/S. PAREKH BRIGHT BARS P. LTD. A C I T - 5(2) 37 KHETWADI 7TH LANE AAYAKAR BHAVAN M.K. ROAD S.V.P. ROAD MUMBAI 400004 VS. MUMBAI 400020 PAN - AABCP 4117 F APPELLANT RESPONDENT APPELLANT BY: NONE RESPONDENT BY: SHRI SHANTAM BOSE DATE OF HEARING: 15.09.2011 DATE OF PRONOUNCEMENT: 28.09.2011 O R D E R PER B. RAMAKOTAIAH A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF THE CIT(A)-V DATED 030.03.2009 IN WHICH ASSESSEE HAS RAISED THREE GROU NDS ON VARIOUS ISSUES. IN SPITE OF ISSUANCE OF VARIOUS NOTICES ASSESSEE H AD NOT APPEARED NOR FILED ANY APPLICATION FOR ADJOURNMENT. IN VIEW OF THIS T HE APPEAL WAS DISPOSED OFF EXPARTE ASSESSEE AFTER HEARING THE LEARNED D.R. 2. GROUND NO. 1 RAISED BY ASSESSEE IS WITH REFERENCE T O REJECTION OF DEDUCTION U/S 80HHC WITH REFERENCE TO DEPB AND ALSO TURNOVER BEING ABOVE ` 10 CRORE. THE LEARNED D.R. FAIRLY ADMITTED THAT THE ISSUE IN A.Y. 2001-02 I.E. IN EARLIER YEAR WAS RESTORED TO THE FILE OF TH E A.O. VIDE ORDERS OF THE ITAT IN ASSESSEES OWN CASE IN ITA NO. 8621/MUM/2004 DAT ED 3 RD MAY 2007 AND CROSS OBJECTION NO. 231/MUM/2005 DATED 4 TH JUNE 2007. HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE A.O. FOR NECESSARY EXAMINATION IN LINE WITH A.Y. 2001-02. 3. AFTER CONSIDERING THE GROUNDS AND SUBMISSIONS AND T HE ORDER OF THE CIT(A) WE ARE OF THE OPINION THAT THE MATTE REQUIR E RE-EXAMINATION. IT WAS THE CONTENTION OF THE ASSESSEE THAT ASSESSEE HAD NO OPTION BUT ENTITLED TO ITA NO. 2975/MUM/2009 M/S. PAREKH BRIGHT BARS P. LTD. 2 CHOOSE THE CLAIM OF DEPB AND THE CONDITION OF THIRD PROVISO TO SECTION 80HHC(3) BECOME INAPPLICABLE AND IN SUCH CASE DEDUC TION UNDER SECTION 80HHC IS TO BE ALLOWED ON THE BASIS OF DEPB ENTITLE MENT. KEEPING IN VIEW THE RECENT JUDGEMENT OF THE HON'BLE BOMBAY HIGH COU RT IN THE CASE OF CIT VS. KALPATARU COLOURS AND CHEMICALS 328 ITR 451 WE ARE OF THE OPINION THAT THIS MATTER REQUIRES RE-EXAMINATION BY THE A.O . KEEPING IN VIEW THE PROVISIONS OF THE ACT AND THE JUDGEMENTS OF THE HON 'BLE JURISDICTIONAL HIGH COURT. THEREFORE KEEPING IN LINE WITH THE ORDERS I SSUED IN A.Y. 2001-02 WHERE THE MATTER WAS RESTORED BACK TO THE FILE OF T HE A.O. THIS ISSUE IS ALSO RESTORED TO THE FILE OF THE A.O. FOR FRESH CONSIDER ATION AND PASS ORDER ACCORDINGLY. GROUND IS TREATED AS ALLOWED FOR STATI STICAL PURPOSE. 4. GROUND NO. 2 PERTAINS TO DISALLOWANCE OF AN AMOUNT OF ` 4 801/- AS ALLEGED CONTRIBUTION TO POLITICAL PARTIES. IN THE A UDIT REPORT THIS AMOUNT WAS WRONGLY CATEGORISED AS CONTRIBUTION TO POLITICAL PA RTIES WHEREAS THE AMOUNTS WERE CONTRIBUTED TO THE LOCAL MANDALS ON FESTIVALS THE DETAILS OF THE PAYMENTS BEING STATED TO BE: - NAYYOVAK MITRA MANDAL ` 500/- GANESH FESTIVAL ` 800 + 2 500 ` 3 300/- MISCELLANEOUS ` 1 801/- 5. IT WAS THE SUBMISSION THAT THESE ARE NOT POLITICAL CONTRIBUTIONS BUT EXPENDITURE FOR ORGANISING LOCAL EVENTS WHICH ARE IN THE NATURE OF BUSINESS EXPENDITURE BEING COMMERCIAL EXPEDIENCY TO AVOID NU ISANCE AND TO KEEP GOOD GESTURE WITH THE LOCAL MANDALS. THE A.O. AND T HE CIT(A) DISALLOWED THE AMOUNT ON THE REASON THAT THESE PAYMENTS ARE STATED TO BE POLITICAL CONTRIBUTIONS. 6. ON SEEING THE NATURE OF THE EXPENDITURE WE ARE OF THE VIEW THAT THERE IS NO NEED FOR DISALLOWANCE ON THE ALLEGED CONTRIBU TION TO POLITICAL PARTIES WHEN THE EXPENDITURE WAS TOWARDS CONTRIBUTION TO LO CAL MANDALS ON FESTIVAL OCCASIONS. THESE EXPENSES ARE BUSINESS IN NATURE. T HEREFORE THE A.O. IS DIRECTED TO ALLOW THE AMOUNT. GROUND IS CONSIDERED ALLOWED. 7. GROUND NO. 3 PERTAINS TO ADDITION ON ACCOUNT OF UNS ECURED LOANS AMOUNTING TO ` 56 08 691/-. IN THE ASSESSMENT ORDER THE A.O. FOUND THAT THE ITA NO. 2975/MUM/2009 M/S. PAREKH BRIGHT BARS P. LTD. 3 CLOSING BALANCE OF UNSECURED LOAN WAS ` 68 53 351/- AND ASSESSEE RECEIVED FRESH UNSECURED LOANS OF ` 56 08 691/- AND ASSESSEE FAILED TO FURNISH NECESSARY DETAILS. THE ENTIRE AMOUNT IS TREATED AS CASH CREDITS DURING THE YEAR AND ADDED AS INCOME. BEFORE THE CIT(A) ASSESSE E SUBMITTED NECESSARY DETAILS AND THE CIT(A) HAS GIVEN THE FOLLOWING FIND ING: - 6.3 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT. IT IS FOUND THAT APPELLANT CLAIMED THAT IN FIVE CASES THE APPEL LANT TRANSFERRED RS.53 00 000/- FROM SUNDRY CREDITORS ACCOUNT TO THE LOAN ACCOUNT. THESE ARE MERELY TRANSFER ENTRIES IN THE BOOKS OF A CCOUNT OF THE APPELLANT. NO FRESH FUNDS WERE INTRODUCED N THE BOO KS OF ACCOUNTS. THE APPELLANT HAS SUBMITTED THAT THE PROVISIONS OF SECTION 68 OF THE INCOME TAX ACT CAN NOT BE INVOKED TO THE TRANSFER E NTRIES. HOWEVER NO CONFIRMATION OF THESE PARTIES WAS FILED EITHER BEFO RE THE ASSESSING OFFICER OR BEFORE ME IN THE APPELLATE PROCEEDINGS. THE APPELLANT HAS ALSO NOT DISCLOSED THE FACT OF PASSING TRANSFER ENT RIES BEFORE THE ASSESSING OFFICER. IN VIEW OF THIS THE ACTION OF T HE ASSESSING OFFICER IN HOLDING THAT THE APPELLANT HAS NOT PROVED THE CR EDITWORTHINESS OF THESE PARTIES IS UPHELD. AS REGARDS LOAN OF RS.3 00 000/- TAKEN FROM SHRI H.D. PAREKH IT IS FOUND THAT SHRI H.D. PAREKH IS A DIRECTOR OF THE APPELLANT COMPANY HAVING PERMANENT ACCOUNT NUMBER A ABPP 5647 B. FURTHER IT IS FOUND THAT TIN ASSESSMENT YEAR 200 5-06 THE ASSESSING OFFICER HAS ACCEPTED THE LOAN OF THIS PER SON AS GENUINE LOAN. THEREFORE IF THE LOAN FROM A PERSON IS GENUI NE LOAN IN ONE YEAR IT CAN NOT BE TREATED AS NOT GENUINE LOAN IN ANOTHE R YEAR. ACCORDINGLY ADDITION OF RS.3 00 000/- MADE BY THE ASSESSING OFF ICER IS DELETED. THE BALANCE ACCRETION TO UNSECURED LOAN IS STATED T O BE ON ACCOUNT OF TDS DEDUCTED FROM INTEREST AMOUNTING TO RS.8691/-. THE ASSESSING OFFICER HAS DISALLOWED THIS AMOUNT BY TREATING THE SAME AS UNEXPLAINED CASH CREDITS. THE ASSESSING OFFICER IS DIRECTED TO VERIFY THIS FACT AND ALLOW THE RELIEF IF THE SAME REPRESEN TS TDS AMOUNT DEDUCTED OUT OF INTEREST PAID BY THE APPELLANT. THI S GROUND OF APPEAL IS PARTLY ALLOWED. 8. IT WAS THE CONTENTION OF THE ASSESSEE THAT THEY HAV E GIVEN CONFIRMATIONS AND ALL THE CREDIT ENTRIES HAVE BEEN CONVERTED INTO LOAN ENTRIES IN ORDER TO SUBMIT TO THE BANK ON THEIR ADVICE AND AT THAT POIN T OF TIME THE FATHER OF THE DIRECTOR SHRI HITESH PATIL WAS SUFFERING FROM PARA LYSIS AND WAS NOT ATTENDING TO OFFICE AND THE ACCOUNTANT TOOK HIS OWN CALL AND TRANSFERRED THE ABOVE AMOUNTS TO LOAN ACCOUNTS WITHOUT CONSULTING THE DIR ECTOR. EVEN THOUGH THE CIT(A) ACCEPTED THAT THESE ARE TRANSFER ENTRIES AND NO FRESH LOANS WERE INTRODUCED HE DECLINED TO DELETE THE SAME ON THE R EASON THAT ASSESSEE HAS NOT DISCLOSED THE FACT OF PASSING TRANSFER ENTRIES BEFO RE THE A.O. ITA NO. 2975/MUM/2009 M/S. PAREKH BRIGHT BARS P. LTD. 4 9. AFTER CONSIDERING ASSESSEES SUBMISSIONS IN THE GRO UNDS RAISED AND THE LEARNED D.R. AND PERUSING THE ORDER OF THE CIT( A) WE ARE OF THE OPINION THAT THIS MATTER ALSO REQUIRE EXAMINATION BY THE A. O. AFRESH. IT WAS THE CONTENTION OF THE ASSESSEE THAT THE CREDITORS WERE TRANSFERRED TO LOAN ACCOUNTS AND THESE ARE TRANSFER ENTRIES ONLY. THERE IS NOTHING ON RECORD TO EXAMINE WHETHER THESE CREDIT ENTRIES PERTAIN TO THE YEAR UNDER CONSIDERATION OR OF EARLIER YEARS. NOT ONLY THAT IT WAS THE SUBMI SSION THAT CONFIRMATION FROM THE PARTIES DETAILS OF WHICH WERE EXTRACTED I N CIT(A)S ORDER WAS FILED BEFORE HIM BUT HAS NOT CONSIDERED. FOR THESE REASON S WE ARE OF THE OPINION THAT THE A.O. CAN RE-EXAMINE THE ISSUE AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. ASSESSEE IS DIRECTED TO FURNISH NECESSARY DETAILS AND CONFIRMATIONS AS REQUIRED TO THE AO JUSTIFYING THE CONTENTIONS. FOR THESE REASONS THE ISSUE IN GROUND NO. 3 IS RESTORED TO TH E FILE OF THE A.O. FOR FRESH CONSIDERATION. 10. IN THE RESULT APPEAL IS CONSIDERED ALLOWED FOR STA TISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2011. SD/- SD/- (B.R. MITTAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DATED: 28 TH SEPTEMBER 2011 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) V MUMBAI 4. THE CIT V MUMBAI CITY 5. THE DR C BENCH ITAT MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT MUMBAI BENCHES MUMBAI N.P.