M/S. ANNA PETROCHEM PVT. LTD, MUMBAI v. THE ITO 15(1)(1), MUMBAI

ITA 4571/MUM/2007 | 2003-2004
Pronouncement Date: 18-11-2011

Appeal Details

RSA Number 457119914 RSA 2007
Assessee PAN AADCA6379A
Bench Mumbai
Appeal Number ITA 4571/MUM/2007
Duration Of Justice 4 year(s) 5 month(s)
Appellant M/S. ANNA PETROCHEM PVT. LTD, MUMBAI
Respondent THE ITO 15(1)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-11-2011
Appeal Filed By Assessee
Bench Allotted H
Tribunal Order Date 18-11-2011
Date Of Final Hearing 15-11-2011
Next Hearing Date 15-11-2011
Assessment Year 2003-2004
Appeal Filed On 18-06-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H BEFORE SHRI D.K. AGARWAL (JM) & SHRI R.K. PANDA (AM ) I.T.A.NO. 4571/MUM/2007 (ASSESSMENT YEAR : 2003-04) ANNA PETROCHEM PVT. LTD. 636 JSS ROAD DHOBI TALAO ROAD MUMBAI-400 002. VS. ITO-15(1)(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. PAN/GIR NO. : AADCA6379A ASSESSEE BY : SHRI K. GOPAL DEPARTMENT BY : SHRI V.V. SHASTRI DATE OF HEARING : 15.11.2011 DATE OF PRONOUNCEMENT : ORDER PER R.K. PANDA (AM) :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER DATED 22.3.2007 OF LEARNED CIT(A)-XV MUMBAI RELATI NG TO A.Y. 2003-04. 2. IN GROUND OF APPEAL NO. 1 THE ASSESSEE HAS CHAL LENGED THE ORDER OF LEARNED CIT(A) IN CONFIRMING THE ORDER OF ASSESS ING OFFICER IN DENYING THE DEDUCTION U/S. 80IB(IV) OF THE ACT. 3. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY INCORPORATED ON 14.6.2002. IT IS ENGAGED IN THE MANUFACTURING ACTIVITY OF INDUSTRIAL OIL. DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED FROM THE REPORT OF THE DIRECTORS THAT THE ASSESSEE-COMPANY HAS COMMENCED ITS ACTIVITIES BY TA KING OVER THE RUNNING BUSINESS OF THE COMPANY KNOWN AS ANNA TRANS TRADE WHOSE DIRECTORS WERE MR. K.T. GEORGE AND MR. BINNY GEORGE . HE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY ITS CLAIM SHOULD NOT BE REJECTED SINCE IT IS AN UNDERTAKING FORMED BY THE TRANSFER TO A BUSINESS MACHINERY OR PLANT PREVIOUSLY USED AND AS SUCH IT HAS VIOLATED THE CON DITION STIPULATED IN CLUASE (II) TO SUB-SECTION (2) OF SECTION 80IB OF T HE I.T. ACT. THE ASSESSING OFFICER FURTHER NOTED THAT THE ASSESSEE COULD NOT J USTIFY CONSUMPTION OF ANNA PETROCHEM PVT. LTD. 2 ELECTRICITY FOR ITS MANUFACTURING PROCESS. IT ALSO COULD NOT SUBSTANTIATE WITH EVIDENCE THAT IT HAS EMPLOYED 20 PERSONS OR MO RE IN THE MANUFACTURING PROCESS. FURTHER THE ASSESSEE ALSO DID NOT PRODUCE ORIGINAL BOOKS OF ACCOUNT ON THE GROUND THAT THEY A RE DESTROYED DUE TO TORRENTIAL RAIN. REJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSING OFFICER HELD THAT THE ASSESSEE DOES NOT FULFILL THE CONDITIONS P RESCRIBED U/S. 80IB(2)(IV) OF THE I.T. ACT. HE THEREFORE REJECTED THE CLAIM OF DEDUCTION U/S. 80IB(4) MADE BY THE ASSESSEE. 4. BEFORE LEARNED CIT(A) THE ASSESSEE MADE DETAILED ARGUMENTS AND FILED CERTAIN OTHER DETAILS. LEARNED CIT(A) CALLED FOR THE REMAND REPORT FROM THE ASSESSING OFFICER. AFTER CONFRONTING THE S AME TO THE ASSESSEE LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING O FFICER BY HOLDING AS UNDER :- I HAVE CONSIDERED THE ARGUMENTS MADE BY THE RIVAL PARTIES. I FIND THAT THERE IS NOT EVIDENCE ON RECORD TO SAY THAT TH E APPELLANT HAD EMPLOYED 20 OR MORE THAN 20 EMPLOYEES IN THE MANUFA CTURING UNIT. HERE IT IS IMPORTANT TO MENTION THAT NO BOOK S OF ACCOUNTS WERE PRODUCED BEFORE THE ASSESSING OFFICER ON THE G ROUND THAT BOOKS OF ACCOUNT WERE DESTROYED DURING THE FLOOD IN AUGUST 2004 DUE TO HEAVY RAINS. THE ASSESSING OFFICER ALSO MENT IONED THAT PRIOR TO THIS CONTENTION THE APPELLANT VIDE LETTER DATED 7.3.2003 SUBMITTED THAT THEY WILL PRODUCE THE BOOKS OF ACCOU NT WITHIN A WEEK WHICH THEY DID NOT. THE ASSESSING OFFICER REMA RKED THAT IT WAS ONLY A PRETEXT FOR NON-PRODUCING OF BOOKS OF AC COUNT. I HAVE CONSIDERED THE ENTIRE FACTS AND CIRCUMSTANCES. THE ASSESSING OFFICER HAD ALSO MENTIONED THAT THE AUDITORS REMAR KS AT SR. NO. 28B OF FORM NO. 3CD WAS NIL WHICH CLEARLY SHOWS THA T THERE WAS NO FINISHED PRODUCT BUT ONLY RAW MATERIAL PURCHASED HAS BEEN SHOWN. IT IS WORTH MENTIONING THAT THE ONUS RESTS O N THE APPELLANT TO PRODUCE NECESSARY EVIDENCE TO SAY THAT HE HAS EM PLOYED 20 OR MORE THAN 20 WORKERS IN THE MANUFACTURING UNIT. THE APPELLANT HAS TO PRODUCED ANY EVIDENCE TO SUBSTANTIATE THIS C LAIM EITHER BEFORE THE ASSESSING OFFICER OR BEFORE LEARNED CIT( A). THE APPELLANT EVEN IN COURSE OF REMAND PROCEEDINGS DI D NOT PRODUCE ANY EVIDENCE TO SUPPORT HIS CLAIM. NO ESTABLISHMENT REGISTER OR ANY VOUCHER RELATING TO SALARY WAS PRODUCED BY THE APPELLANT TO SUPPORT THAT THEY EMPLOYED 20 OR MORE THAN 20 EMPLO YEES WITHOUT AID POWER. IT APPEARS THAT THE SELECTIVE LO SS REGISTERS SUCH AS EMPLOYEE REGISTER WAS ONLY A PRETEXT TO CONSOLID ATE HIS CLAIM OF SECTION 80IB. AT LEAST SOME EVIDENCE SHOULD HAVE BE EN PRODUCED BY THE APPELLANT TO SUPPORT HIS CLAIM. IN ABSENCE O F ANY CREDIBLE EVIDENCE TO SUPPORT THAT THE APPELLANT EMPLOYED 20 OR MORE THAN ANNA PETROCHEM PVT. LTD. 3 20 EMPLOYEES I AM UNABLE TO ACCEPT THE VERSION OF THE APPELLANT. HENCE I CONFIRM THE FINDING OF THE ASSESSING OFFIC ER THAT THE APPELLANT IS NOT ENTITLED FOR DEDUCTION U/S. 80IB A S IT DOES NOT SATISFY THE CONDITION GIVEN U/S. 80IB(IV). 5. AGGRIEVED WITH SUCH ORDER OF LEARNED CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 6. LEARNED COUNSEL FOR THE ASSESSEE REFERRING TO VA RIOUS PAGES OF THE PAPER BOOK SUBMITTED THAT THIS IS THE FIRST YEAR OF CLAIM OF DEDUCTION U/S. 80IB(4). HE SUBMITTED THAT THE ASSESSEE FULFILLS AL L CONDITIONS PRESCRIBED U/S. 80IB(2) OF THE I.T. ACT. REFERRING TO VARIOUS PAGES OF THE PAPER BOOK HE DREW THE ATTENTION OF THE BENCH TO THE SALES TAX REGISTRATION CST REGISTRATION APPLICATION FOR ELECTRICITY CONNECTIO N LETTER ADDRESSED TO THE ELECTRICITY DEPARTMENT FOR NON-RECEIPT OF ELECTRICI TY BILLS ETC. REFERRING TO PAGE NO. 2 OF THE PAPER BOOK HE DREW ATTENTION OF THE BENCH TO THE STATEMENT OF SALARIES AND WAGES PAID ACCORDING TO WHICH THE NUMBER OF PERSONS EMPLOYED IN THE MANUFACTURING PROCESS DURIN G THE PERIOD WAS 21. HE SUBMITTED THAT ALTHOUGH BOOKS OF ACCOUNT WE RE NOT PRODUCED HOWEVER COMPUTER PRINTOUT OF THE CASH BOOK LEDGER ACCOUNT AND OTHER DOCUMENTS WERE PRODUCED BEFORE THE ASSESSING OFFICE R WHICH WAS EXAMINED BY HIM. HOWEVER VARIOUS DOCUMENTS PRODUCE D BEFORE THE ASSESSING OFFICER AND LEARNED CIT(A) WERE NOT EXAMI NED PROPERLY AND THE ASSESSING OFFICER ON THE BASIS OF MERE PRESUMPTION AND SURMISES CAME TO THE CONCLUSION THAT THE ASSESSEE DOES NOT FULFIL L THE CONDITIONS PRESCRIBED U/S. 80IB(2) FOR WHICH HE DENIED THE CLA IM OF DEDUCTION U/S. 80IB(4). FURTHER LEARNED CIT(A) WITHOUT APPRECIATIN G THE FACTS OF THE CASE IN PROPER PERSPECTIVE HAS UPHELD THE ACTION OF THE ASSESSING OFFICER. THEREFORE THE ORDER OF LEARNED CIT(A) SHOULD BE SE T ASIDE. IN HIS ALTERNATE CONTENTION HE SUBMITTED THAT THE MATTER MAY BE RES TORED TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO GIVE ON E MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE S ATISFACTION OF THE ASSESSING OFFICER THAT THE ASSESSEE FULFILLS CONDIT IONS PRESCRIBED U/S. 80IB(2) OF THE I.T. ACT. 7. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF LEARNED CIT(A) SUBMITTED TH AT THE ASSESSEE HAS ANNA PETROCHEM PVT. LTD. 4 MISERABLY FAILED TO DISCHARGE THE ONUS CAST ON IT. THEREFORE ORDER OF LEARNED CIT(A) SHOULD BE UPHELD. 8. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH SIDES PERUSED THE ORDER OF LEARNED CIT(A) AND THE ASSESSI NG OFFICER AND THE PAPER BOOK SUBMITTED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSING OFFICER DENIED THE CLAIM OF DEDUCTION U/S. 80IB(4) ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE WITH SATISFACTORY E VIDENCE THAT IT HAS CONSUMED ELECTRICITY FOR IT MANUFACTURING PROCESS COULD NOT SUBSTANTIATE THAT ITS HAS EMPLOYED 20 OR MORE PERSONS FOR ITS MA NUFACTURING PROCESS AND FURTHER ASSESSEE FAILED TO PRODUCE BOOKS OF ACC OUNT. WE FIND LEARNED CIT(A) UPHELD THE ACTION OF THE ASSESSING OFFICER O N THE GROUND THAT THE ASSESSEE NEITHER PRODUCED BOOKS OF ACCOUNT NOR PROD UCED ANY EVIDENCE TO SUBSTANTIATE THAT IT HAS EMPLOYED 20 OR MORE EMP LOYEES IN THE MANUFACTURING PROCESS WHICH IS RUN WITHOUT POWER. D ETAILED FINDING OF LEARNED CIT(A) HAS ALREADY BEEN REPRODUCED IN THE E ARLIER PARAGRAPH. FROM THE VARIOUS DETAILS FURNISHED IN THE PAPER BOO K WE DO NOT FIND ANY FORCE IN THE SUBMISSION OF LEARNED COUNSEL FOR THE ASSESSEE THAT IT HAD USED ELECTRIC POWER FOR ITS MANUFACTURING PROCESS D URING THE YEAR. HOWEVER WE FIND SOME FORCE IN THE SUBMISSION OF LE ARNED COUNSEL FOR THE ASSESSEE THAT GIVEN AN OPPORTUNITY HE CAN SUBSTANTI ATE WITH EVIDENCE TO THE SATISFACTION OF THE ASSESSING OFFICER THAT IT H AS EMPLOYED 20 OR MORE PERSONS DURING THE YEAR FOR THE MANUFACTURING PROCE SS. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE WE ARE OF THE CONSIDERED OPINION THAT IN THE INTEREST OF JUSTICE THE ASSESSEE MAY BE GIVEN ONE MORE OPPORTUNITY TO SUBSTANTIATE WITH EVI DENCE TO THE SATISFACTION OF THE ASSESSING OFFICER THAT IT HAS E MPLOYED 20 OR MORE PERSONS DURING THE YEAR IN THE MANUFACTURING PROCES S TO MAKE IT ELIGIBLE FOR CLAIM OF DEDUCTION U/S. 80IB(4). ACCORDINGLY WE RESTORE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTIO N TO DECIDE THE ISSUE AFRESH AND IN ACCORDANCE WITH LAW. WE HOLD AND DIR ECT ACCORDINGLY. GROUND OF APPEAL NO. 1 IS ACCORDINGLY ALLOWED FOR S TATISTICAL PURPOSES. ANNA PETROCHEM PVT. LTD. 5 9. IN GROUND OF APPEAL NO. 2 THE ASSESSEE HAS CHALL ENGED THE ORDER OF LEARNED CIT(A) IN CONFIRMING THE ADDITION OF ` 2 LAKHS U/S. 68 OF THE I.T. ACT. 10. FACTS IN BRIEF ARE THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT THE RE ARE CASH DEPOSITS IN THE BANK ACCOUNT ON VARIOUS DATES. HOWEVER NO C ASH-FLOW STATEMENT WAS FURNISHED AND THE ASSESSEE PRODUCED ONLY COMPUT ER PRINTOUT OF THE CASH BOOK. HE ASKED THE ASSESSEE TO EXPLAIN SOURCE OF CASH DEPOSITS IN THE BANK ACCOUNT THE DETAILS OF WHICH ARE AS UNDER :- DATE OF DEPOSIT AMOUNT OF DEPOSIT 27.1.2003 ` 70 000/- 7.2.2003 ` 2 20 000/- 22.2.2003 ` 3 90 000 15.3.2003 ` 99 950/- 29.3.2003 ` 50 000 4.1.2003 ` 2 00 000/- ` 10 29 950/- IT WAS EXPLAINED BY THE ASSESSEE THAT CASH DEPOSITS WERE OUT OF SHARE APPLICATION MONEY RECEIVED IN CASH FROM THE SHAREHO LDERS AND/OR OUT OF DAY-TO-DAY SALES WHICH WAS ALREADY REFLECTED IN THE CASH BOOK. THE ASSESSING OFFICER NOTED THAT THE DEPOSITS MADE IN C ASH ON VARIOUS DATES DID NOT REFLECT IN CASH BOOK ON THE PARTICULAR DATE . SINCE THE ASSESSEE COULD NOT CORRELATE CASH DEPOSITS WITH SUPPORTING E VIDENCE THE ASSESSING OFFICER MADE ADDITION OF ` 10 29 950/- U/S. 69 OF THE I.T. ACT AS UNEXPLAINED INVESTMENT. 11. IN APPEAL LEARNED CIT(A) AFTER OBTAINING REMAND REPORT FROM THE ASSESSING OFFICER SUSTAINED THE ADDITION OF ` 2 LAKHS U/S. 68 OF THE I.T. ACT. 12. AGGRIEVED WITH SUCH ORDER OF LEARNED CIT(A) TH E ASSESSEE IS IN APPEAL BEFORE US. 13. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT DUE TO MISTAKE IN PUTTING THE DATES ADDITION OF ` 2 LAKHS HAS BEEN SUSTAINED BY LEARNED ANNA PETROCHEM PVT. LTD. 6 CIT(A). THEREFORE SAME SHOULD BE DELETED. IN HIS AL TERNATE CONTENTION HE SUBMITTED THAT THE ADDITION OF ` 2 LAKHS MAY BE ALLOWED AS ELIGIBLE FOR DEDUCTION U/S. 80IB(4) OF THE I.T. ACT. 14. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND SUPPORTED THE ORDER OF LEARNED CIT(A). 15. AFTER HEARING BOTH SIDES WE FIND SOME FORCE IN THE ARGUMENTS ADVANCED BY LEARNED COUNSEL FOR THE ASSESSEE THAT A DDITION OF ` 2 LAKHS MAY BE CONSIDERED AS ELIGIBLE FOR DEDUCTION U/S. 80 IB(4) OF THE I.T. ACT. HOWEVER SINCE THE MAIN ISSUE REGARDING ELIGIBILITY FOR DEDUCTION U/S. 80IB(4) HAS BEEN SET ASIDE TO THE FILE OF THE ASSES SING OFFICER FOR FRESH ADJUDICATION AS PER OUR OBSERVATIONS IN THE PRECEDI NG PARAGRAPH THEREFORE WE DEEM IT PROPER TO RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR ADJUDICATION REGARDING ALLOWA BILITY OF THE ADDITION U/S. 80IB(4). WE ACCORDINGLY RESTORE THE ISSUE TO T HE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. GROUND RAISED BY T HE ASSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 16. IN THE RESULT APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BEEN PRONOUNCED ON 18 TH DAY OF NOVEMBER 2011. SD/- (D.K. AGARWAL) JUDICIAL MEMBER SD/- (R.K. PANDA) ACCOUNTANT MEMBER DATED : 18 TH NOVEMBER 2011. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS