WASP MOTORS P. LTD, MUMBAI v. ITO WD 9(3)(3), MUMBAI

ITA 464/MUM/2009 | 1997-1998
Pronouncement Date: 19-04-2010 | Result: Partly Allowed

Appeal Details

RSA Number 46419914 RSA 2009
Assessee PAN AAACW0455A
Bench Mumbai
Appeal Number ITA 464/MUM/2009
Duration Of Justice 1 year(s) 2 month(s) 29 day(s)
Appellant WASP MOTORS P. LTD, MUMBAI
Respondent ITO WD 9(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 19-04-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted G
Tribunal Order Date 19-04-2010
Date Of Final Hearing 09-03-2010
Next Hearing Date 09-03-2010
Assessment Year 1997-1998
Appeal Filed On 21-01-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI J. SUDHAKAR REDDY & SHRI R.S. PADVEKAR I.T.A.NO.464/MUM/09 (A.Y. 1997-98) M/S. WASP MOTORS PVT.LTD. 601 BAKHTAVAR OPP. COLABA POST OFFICE COLABA MUMBAI-400 005. PAN: AAACW0455A VS. INCOME-TAX OFFICER WARD 9(3)(3) MUMBAI. APPELLANT RESPONDENT APPELLANT BY SHR I MILIND KOTHARI. RESPONDENT BY SHRI MOHD. USMAN O R D E R PER J. SUDHAKAR REDDY AM : THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF CIT(A) CENTRAL-1 MUMBAI DATED 12-11-2008 FOR THE ASSTT. YEAR 1997-98. FACTS IN BRIEF : 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY AND IT IS ENGAGED IN THE MANUFACTURE OF MOTORS WHICH HAVE APPLICATION IN PUM PS. THE RETURN OF INCOME WAS FILED ON 28-11-1997 DECLARING A TOTAL LOSS OF R S.90 64 345/-. THE RETURN OF INCOME WAS ACCOMPANIED WITH THE STATEMENT OF COMPUT ATION OF INCOME AUDITED P & L A/C. AND BALANCE-SHEET. THE ASSESSMENT IN THI S CASE WAS COMPLETED U/S. 143(3) ON 29-02-2000 AND THE PAYMENTS MADE BY THE A SSESSEE ON ACCOUNT OF PF/EPF/ESIC WHICH WERE BEYOND DUE DATES WERE DISA LLOWED. THE A.O. HAD ALSO DISALLOWED DEFERRED REVENUE EXPENDITURE AMOUNTING T O RS.1 92 050/- AND UNPROVED LOANS AMOUNTING TO RS.20 50 000/- U/S. 68. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). THE CIT(A) VIDE HIS ORDER DATED 26-03-2002 ITA NO.464/MUM/09 WASP MOTORS P.LTD. 2 ALLOWED THE CLAIM OF THE ASSESSEE. THE DEPARTMENT P REFERRED FURTHER APPEAL TO THE HONBLE ITAT AGAINST THE ORDER OF CIT(A). 3. THE HONBLE ITAT VIDE ITS ORDER DATED 11-11-200 5 HAS SET ASIDE THE MATTER BACK TO THE FILE OF THE A.O. WITH DIRECTIONS THAT THE ISSUE MAY BE CONSIDERED AFRESH AFTER GIVING THE ASSESSEE MEANING FUL OPPORTUNITY. NOTICE U/S. 142(1) AND 143(2) DATED 7-6-2006 WAS THEREFORE ISSU ED ON THE ADDRESS AVAILABLE ON THE RECORDS. THE SAME WAS HOWEVER RETURNED BY POSTAL AUTHORITIES WITH THE REMARKS LEFT. THE ASSESSEES AUDITORS WERE THERE AFTER CONTACTED TELEPHONICALLY AND THE NEW ADDRESS OF THE ASSESSEE WAS OBTAINED. NOTICE U/S. 142(1) DATED 14-11-2006 ALONG WITH A QUESTIONNAIRE WAS ISSUED AND SERVED CALLING FOR CONFIRMATIONS IN RESPECT OF LOANS AMOUN TING TO RS.20 50 000/-. THE HEARING IN THIS REGARD WAS FIXED ON 22-11-2006. THE RE WAS NO ATTENDANCE ON THE APPOINTED DATE. A FRESH NOTICE WAS ISSUED VIDE LET TER DATED 12-12-2006. 4. IN RESPONSE THERETO SHRI MILIND KOTHARI CA AT TENDED AND FILED LETTER DATED 15-12-06 ALONG WITH COPIES OF LOAN CONFIRMATIONS OF VARIOUS PARTIES. IT WAS ALSO SUBMITTED THAT THESE CONFIRMATIONS ARE PHOTO COPIES OF THE CONFIRMATIONS WHICH WERE FURNISHED BEFORE THE LD. CIT(A) DURING THE COU RSE OF THE FIRST APPELLATE PROCEEDINGS. THE ASSESSEES ATTENTION WAS SPECIFICA LLY DRAWN TO THE LETTER DATED 14-11-2006 WHICH HAD REQUESTED FOR FILING THE CONFI RMATIONS ALONG WITH THE CURRENT ADDRESS OF THE LOAN PARTIES. THE ASSESSEE W AS ONCE AGAIN REQUESTED VIDE ORDER SHEET DATED 15-12-2006 TO FURNISH FRESH CONFI RMATIONS WITH CURRENT POSTAL ADDRESSES. IN RESPONSE THERETO THE ASSESSEE HAS FI LED LETTER DATED 20.12.2006 SUBMITTING THAT DUE TO LONG LAPSE OF TIME OF NEARLY 9 YEARS THE DEPOSITORS WOULD NOT BE WILLING TO PROVIDE FRESH CONFIRMATIONS AND A S SUCH THE CONFIRMATIONS FURNISHED ON RECORD OUGHT TO SUFFICE THE REQUIREMEN TS. FURTHER ON 23.12.2006 ITA NO.464/MUM/09 WASP MOTORS P.LTD. 3 THE ASSESSEE HAS FURNISHED A LIST OF 29 LENDERS WIT H NEW PAN NUMBERS. THE CURRENT ADDRESSES HAVE NOT BEEN FURNISHED. 5. THE A.O. CONSIDERED THE SUBMISSIONS OF THE ASSES SEE AND ON THE GROUND THAT THE ASSESSEE HAS FAILED TO DISCHARGE ITS ONUS REPEATED THE ADDITION. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEA L TO THE FIRST APPELLATE AUTHORITY WHO CONFIRMED THE ORDER OF THE AO BY HOLD ING THAT THE CREDITORS WHO WERE SUBJECT MATTER OF DISPUTE REMAINED UNVERIFIED AND ACCORDINGLY THE AO WAS JUSTIFIED IN HIS ACTION FOR MAKING ADDITION OF RS.2 0 50 000/-U/S.68 OF THE ACT. 6. FURTHER AGGRIEVED THE ASSESSEE IS IN APPEAL BEF ORE US ON THE FOLLOWING GROUNDS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS LEGALLY ERRED IN CONFIRMING THE ADDITION ON ACC OUNT OF UNSECURED LOANS RECEIVED FROM DEPOSITORS AMOUNTING TO RS.20 5 0 000 DISREGARDING THE CONFIRMATION OF LOANS SUPPORTING E VIDENCE SUCH AS COPIES OF BANK PASS BOOK ACKNOWLEDGEMENT OF RETURN OF INCOME FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) HAS LEGALLY ERRED IN CONFIRMING ADDITIONS OF RS.1 9 1 860 AS PROPORTIONATE INTEREST ON UNSECURED LOANS DISALLOWE D AMOUNTING TO RS.20 50 000/- ON ESTIMATED BASIS WITHOUT VERIFICAT ION OF FACTS AND CIRCUMSTANCES. 7. WE HAVE HEARD MR. MILIND KOTHARI LD. COUNSEL FO R THE ASSESSEE AND MR. MOHD. USMAN LD. DEPARTMENTAL REPRESENTATIVE. ON A CAREFUL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE AND ON A PERUSA L OF THE PAPERS ON RECORD AND THE ORDERS OF THE AUTHORITIES BELOW WE HOLD AS FOL LOWS. 8. THE TRIBUNAL IN THE FIRST ROUND OF APPELLATE PR OCEEDINGS HELD IN PARA-7 OF ITS ORDER IN ITA NO.3181/MUM/02 DATED 11-11-2005 AS FOLLOWS : 7. WE HAVE HEARD THE LEARNED DR AND HAVE GONE THROUGH THE ORDERS OF THE LOWER AUTHORITIES. NO DOUBT THE CONFI RMATION LETTERS FILED BY THE ASSESSEE HAD SOME DEFICIENCIES BUT AT THE SAME TIME THE ASSESSING OFFICER DID NOT MAKE ANY FURTHER ENQUIRIE S TO VERIFY THE GENUINENESS OF THE SAID CONFIRMATORY LETTERS. WE AR E OF THE VIEW THAT THE MATTER HAS TO BE RESTORED BACK TO THE FILE OF THE ASSESSING ITA NO.464/MUM/09 WASP MOTORS P.LTD. 4 OFFICER TO BE DECIDED AFRESH AFTER GIVING THE ASSE SSEE MEANINGFUL OPPORTUNITY. UNDOUBTEDLY THE ONUS IS ON THE ASSESS EE TO PROVE THE IDENTITY OF THE PARTIES GENUINENESS OF THE TRANSAC TIONS AND CREDITWORTHINESS OF EACH AND EVERY PARTY. THE ASSES SING OFFICER IS REQUIRED TO VERIFY EACH AND EVERY LOAN FOLLOWING TH E SAID TEST.THE ASSESSEE SHALL BE AT LIBERTY TO FILE ANY EVIDENCE I N SUPPORT OF HIS CLAIM. THE ASSESSEE HAS PROVIDED THE NEW PAN NUMBERS OF 2 9 OUT OF 47 LENDERS. THE AO HAS NOT MADE ANY EFFORT TO INVESTIGATE OR VERIF Y THE ABOVE TRANSACTIONS WITH EACH PARTY. WE FIND CONSIDERABLE FORCE IN THE SUBMI SSION OF THE ASSESSEE THAT THESE ARE VERY OLD TRANSACTIONS AND AFTER A LONG LA PSE OF NEARLY 9 YEARS THE CREDITORS ARE NOT WILLING TO PROVIDE FRESH CONFIRMA TIONS. THE ASSESSEE HAD FILED CERTAIN CONFIRMATIONS WHICH IN OUR HUMBLE OPINION SHOULD HAVE BEEN INVESTIGATED BY THE AO SPECIFICALLY WHEN THE PAN N UMBERS OF THESE PERSONS HAVE BEEN FURNISHED. ONCE PAN NUMBERS ARE GIVEN THE AO SHOULD MAKE EVERY EFFORT TO FIND OUT THE CURRENT ADDRESS AS AVAILABLE IN REC ORDS OF THE DEPARTMENT AND ISSUE SUMMONS TO THOSE PARTICULAR PARTIES OR IN TH E ALTERNATIVE CONDUCT SUCH ENQUIRY WHICH HE THINKS NECESSARY FOR VERIFYING THE CLAIMS OF THE ASSESSEE. MERELY REJECTING THE CONFIRMATION LETTERS AND NOT D OING ANYTHING MORE DOES NOT WARRANT SUCH HUGE ADDITION ESPECIALLY WHEN THE ASS ESSEE IS EXPRESSING GENUINE DIFFICULTIES DUE TO LAPSE OF TIME. THUS UNDER THES E CIRCUMSTANCES WE SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICAT ION WITH A DIRECTION THAT HE SHALL WITH THE HELP OF PAN NUMBERS FURNISHED BY THE ASSES SEE CONDUCT INVESTIGATION TO VERIFY THE GENUINENESS OF THE CLAIMS OF THE ASSESSE E. WITH THESE OBSERVATIONS WE SET ASIDE THE MATTER TO THE FILE OF AO. 9. IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ITA NO.464/MUM/09 WASP MOTORS P.LTD. 5 ORDER PRONOUNCED ON THE 19TH DAY OF APRIL 2010 . SD/- SD/- (R S PADVEKAR) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 19TH APRIL 2010. COPY TO : 1. ASSESSEE. 2.DEPARTMENT. 3 CIT(A) CENTRAL-I MUMBAI. 4 CIT(CENTRAL)-I MUMBAI. 5.DR G BENCH MUMBAI. 6.GUARD FILE. (TRUE COPY) BY ORDER NG: ASST.REGISTRAR ITAT MUMBAI. ITA NO.464/MUM/09 WASP MOTORS P.LTD. 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 7-4-10 SR.PS/ 2 DRAFT PLACED BEFORE AUTHOR 8-4-10 SR.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/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER