Curewel (India) Ltd., Faridabad v. ITO, New Delhi

ITA 4/DEL/2011 | 2002-2003
Pronouncement Date: 10-03-2011 | Result: Allowed

Appeal Details

RSA Number 420114 RSA 2011
Assessee PAN AAACC1208P
Bench Delhi
Appeal Number ITA 4/DEL/2011
Duration Of Justice 2 month(s) 6 day(s)
Appellant Curewel (India) Ltd., Faridabad
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 10-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 10-03-2011
Assessment Year 2002-2003
Appeal Filed On 03-01-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI K. D. RANJAN ITA NO. 04/DEL/11 ASSTT. YR: 2002-03 CUREWEL (INDIA) LTD. VS. INCOME TAX OFFICER PLOT NO. 2 SECTOR-6 WARD-3(4) NEW DELHI. FARIDABAD. PAN/ GIR NO. AAACC1208P ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI G.N. GUPTA ADV. RESPONDENT BY : SHRI STEPHEN GEORGE CIT DR O R D E R PER R.P. TOLANI J.M: : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF CIT( A) DATED 20-10- 2010 RELATING TO A.Y. 2002-03. FOLLOWING GROUNDS AR E RAISED: 1. THAT ON FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)-VI N EW DELHI (HEREINAFTER CALLED CIT(A) FOR SHORT) HAS ERR ED IN CONFIRMING THE ASSESSMENT ORDER FRAMED U/S 143(3) O F THE INCOME TAX ACT 1961 WITHOUT CONSIDERING THE VARIOU S DETAILS/ CONFIRMATIONS/ DOCUMENTS FILED DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS. 2. THAT WITHOUT PREJUDICE TO THE GENERALITY OF THE GROUNDS OF APPEAL NO. 1 ABOVE THE LEARNED CIT(A) HAS ERRED IN UPHOLDING THE ACTION OF THE INCOME TAX OFFICER WARD 3(4) NEW DELHI IN INCLUDING THE FOLLOWING SUMS IN THE TOTAL INCOME. I) MANUFACTURING EXPENSES 10 82 855.00 II) SHARE CAPITAL 76 64 220.00 III) UNSECURED LOANS 1 45 97 008.00 IV) CURRENT LIABILITIES 80 25 039.00 2 V) PERSONAL EXPENSES 26 70 748.00 VI) FINANCE CHARGES 8 11 706.00 VII) ADMINISTRATIVE SELLING & 26 94 150.00 DISTRIBUTION EXPENSES VIII) ADDITIONS IN FIXED ASSETS 73 795.00 2.2. THAT WITHOUT PREJUDICE TO THE GROUND OF APPEAL NO. 2.1. ABOVE THE AFORESAID ADDITIONS MADE BY THE INCOME T AX OFFICER AND CONFIRMED BY CIT(A) ARE ARBITRARY CAPRICIOUS A ND EXCESSIVE. 2. BRIEF FACTS ARE THAT THE ASSESSEE COMPANY IS ENG AGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF DRUGS AND PHARMACEUTIC ALS. FOR A.Y. 2003-04 ASSESSEE FILED ITS RETURN ON 31-10-2002 DECLARING LOSS OF RS. 2 08 07 690/-. THE RETURN WAS PROCESSED U/S 143(1) ON 22-2-2003. T HE CASE WAS THEN PICKED UP FOR SCRUTINY AND WAS COMPLETED U/S 144 ON 30-03-2005 AT AN INCOME OF RS. 1 66 12 011/- AS THE ASSESSEE COMPANY DID NOT COOPERATE IN FILING OF THE DETAILS AS REQUIRED BY THE AO. THE AS SESSEE PREFERRED AN APPEAL AGAINST THE ORDER OF AO BEFORE THE CIT(A) AND THE C IT(A) VIDE ORDER DATED 19-2-2007 IN APPEAL NO. 149/05-06 PARTLY ALLOWED TH E APPEAL OF THE ASSESSEE COMPANY. STILL FEELING AGGRIEVED THE ASSESSEE FILE D SECOND APPEAL BEFORE THE ITAT. THE ITAT VIDE ORDER DATED 7-1-2009 IN ITA NO. 2603/DEL/07 SET ASIDE THE ASSESSMENT ORDER AS ALSO THE ORDER OF THE CIT(A) AND RESTORED THE ISSUE FOR ADJUDICATION TO THE FILE OF THE AO AFTER AFFORDING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 2.1. CONSEQUENT TO SETTING ASIDE BY THE ITAT AO PR OCEEDED TO REFRAME THE ASSESSMENT. ACCORDING TO AO BOOKS OF ACCOUNT A ND EVIDENCE WAS NOT PRODUCED AND AS A RESULT MANUFACTURING EXPENSES; SH ARE CAPITAL; UNSECURED LOANS; CURRENT LIABILITIES; PERSONAL EXPENSES; FINA NCE CHARGES; ADMINISTRATIVE 3 SELLING & DISTRIBUTION EXPENSES; AND ADDITIONS IN F IXED ASSETS WERE ADDED BACK TO THE LOSS DECLARED. AS A RESULT THE LOSS DE CLARED BY THE ASSESSEE WAS TAXED AT AN INCOME OF RS. 1 66 12 001/-. 2.2. AGAINST THE AFORESAID ORDER ASSESSEE PREFERRE D APPEAL BEFORE THE CIT(A) WHERE IT WAS CONTENDED THAT ASSESSEE WAS HAV ING BOOKS OF ACCOUNT AND RECORD WHICH WERE PRODUCED BEFORE AO AND THERE WAS NO JUSTIFICATION IN DISALLOWING ALL THE EXPENSES ADDING SHARE CAPITAL AND VARIOUS OTHER HEADS TO THE INCOME OF THE ASSESSEE ON AN ARBITRARY AND AD H OC BASIS. THE CIT(A) VIDE IMPUGNED ORDER ALLOWED PART RELIEF. AGAINST THE S USTENANCE OF ADDITIONS AS AFORESAID THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 3. LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET CONTENDS THAT THE ASSESSEE COMPANY IS REGULARLY ASSESSED TO TAX PRIOR TO THIS YEAR AND SUBSEQUENT TO THIS YEAR. ALL THE RECORDS ARE MAINTA INED AND LOWER AUTHORITIES HAVE FAILED TO TAKE INTO CONSIDERATION THIS FACT. E VEN ASSUMING THAT THE AUTHORITIES WANTED TO PROCEED BY WAY OF BEST JUDGME NT ASSESSMENT IT DOES NOT CONFER UNFETTERED POWER ON AO TO ADD ALL THESE ITEMS AND DISALLOW ENTIRE MANUFACTURING EXPENDITURE. EVEN A BEST JUDGMENT ASS ESSMENT IS TO BE FAIR REASONABLE AND BASED ON MATERIAL AVAILABLE ON RECOR D. IT HAS NOT BEEN DISPUTED THAT THE ASSESSEES EARLIER AND SUBSEQUENT RECORD WAS BEFORE AO AND ARBITRARY APPROACH HAS BEEN ADOPTED BY MAKING H UGE UNCALLED FOR ADDITIONS WHICH ARE NOT EVEN PRIMA FACIE INCLUDIBLE IN INCOME. IT IS PLEADED THAT THE ASSESSEE IS IN POSSESSION OF BOOKS OF ACCO UNT. BEFORE CIT(A) ASSESSEE CATEGORICALLY STATED THAT ONE SHRI ADARSH GUPTA CARRIED THE BOOKS OF ACCOUNT ON EVERY HEARING BUT AO DID NOT BOTHER TO LOOK INTO THEM. IT IS PLEADED THAT THE ASSESSMENT BE SET ASIDE AND RESTO RED BACK TO THE FILE OF AO 4 TO REFRAME THE SAME IN ACCORDANCE WITH LAW AND AFTE R GIVING THE ASSESSEE A PROPER OPPORTUNITY OF BEING HEARD. 4. LEARNED DR SUPPORTED THE ORDERS OF LOWER AUTHORI TIES. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND HAVE GONE TH ROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. AS THE FACTS EMERGE ASSESSEE STIPULATES THAT THE FINDING OF LOWER AUTHORITIES THAT BOOKS OF ACCOUNT WERE NOT MAINTAINED IS NOT CORRECT AS ASSESSEE IS WILLING TO PRODUCE THE BOOKS OF ACCOUNT BEFORE ITAT ALSO. FURTHER WE FIND MERIT IN THE ARGUMENT O F LEARNED COUNSEL THAT EVEN IN A CASE OF BEST JUDGMENT ASSESSMENT IN ABSE NCE OF ACCOUNTS AND RECORD THE AO CANNOT ADOPT AN ARBITRARY AND AD HOC APPROACH. THE ASSESSEE BEING REGULARLY ASSESSED TO TAX ITS EARLIER AND SU BSEQUENT RECORD WILL BE THERE AND A BEST JUDGMENT ASSESSMENT COULD HAVE BEE N PROPERLY MADE ON THAT BASIS. WE SEE NO JUSTIFICATION IN SUMMARILY DISALLO WING THE ENTIRE MANUFACTURING ADMINISTRATIVE SELLING & FINANCE CH ARGES AND FURTHER ADDING BACK SHARE CAPITAL UNSECURED LOANS CURRENT LIABIL ITIES AND ADDITION TO FIXED ASSETS. THE APPROACH ADOPTED BY LOWER AUTHORITIES IN MAKING THESE ADDITIONS IS HIGHLY UNJUSTIFIED AND REGRETTABLE. THE LOWER AU THORITIES BEING QUASI JUDICIAL AUTHORITIES ARE UNDER OBLIGATION TO BE FAIR AND JUDICIOUS. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE ARE OF THE VIEW T HAT THE PRESENT ASSESSMENT BEING EXCESSIVE HARSH AND ARBITRARY DESERVES TO B E SET ASIDE RESTORED BACK TO THE FILE OF AO TO REFRAME THE SAME AFRESH. ASSES SEE IS WILLING TO PRODUCE THE BOOKS OF ACCOUNT WHICH ARE TO BE CONSIDERED AFT ER AFFORDING AN OPPORTUNITY TO THE ASSESSEE. IN AN EVENTUALITY WHER E BEST JUDGMENT ASSESSMENT IS INEVITABLE THEN FAIR AND REASONABLE APPROACH AS WARRANTED BY 5 LAW HAS TO BE ADOPTED BY LOWER AUTHORITIES WHICH T HE AO WILL KEEP IN MIND WHILE REFRAMING THE ASSESSMENT. WE ORDER ACCORDINGL Y. 6. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 10-3-2011. SD/- SD/- ( K.D. RANJAN ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 10-03-2011. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR