ACIT CEN CIR 17 &28, MUMBAI v. BEAUTIFUL DIAMOND LTD ( NOW KNOWN AS M.S, SPLENDOUR GEMS P. LTD), MUMBAI

ITA 4826/MUM/2009 | 2002-2003
Pronouncement Date: 25-03-2011 | Result: Allowed

Appeal Details

RSA Number 482619914 RSA 2009
Assessee PAN AAACB5355L
Bench Mumbai
Appeal Number ITA 4826/MUM/2009
Duration Of Justice 1 year(s) 7 month(s) 4 day(s)
Appellant ACIT CEN CIR 17 &28, MUMBAI
Respondent BEAUTIFUL DIAMOND LTD ( NOW KNOWN AS M.S, SPLENDOUR GEMS P. LTD), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 25-03-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted H
Tribunal Order Date 25-03-2011
Date Of Final Hearing 21-03-2011
Next Hearing Date 21-03-2011
Assessment Year 2002-2003
Appeal Filed On 20-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES H MUMBAI BEFORE SHRI S V MEHROTRA ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO.4826/MUM/2009 (ASSESSMENT YEAR 2002-03) DCIT CIRCLE 3(1) ROOM NO.607 6 TH FL AAYAKAR BHAVAN MUMBAI-400020 APPELLANT VS M/S BEAUTIFUL DIAMOND LTD (NOW KNOWN AS M/S SPENDOUR GEMS PVT LTD) 9 DIAMOND HOUSE VATCHHA GANDHI ROAD GAMDEVI MUMBAI-400007 PAN: AAACB5355L .. RESPONDENT ITA NO.6421/MUM/2009 (ASSESSMENT YEAR 2002-03) M/S BEAUTIFUL DIAMOND LTD .APPELLANT V/S DCIT CIRCLE 3(1) RESPONDENT ASSESSEE BY : SHRI JITENDRA JAIN RESPONDENT BY : SHRI SATBIR SINGH O R D E R PER VIJAY PAL RAO JM THESE CROSS-APPEALS ARE DIRECTED AGAINST THE ORDER DATED 18.6.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2002-03. ITA NO.4826/MUM/2009 ITA NO.6421/MUM/2009 (ASSESSMENT YEAR 2002-03) 2 2. FACTS AS RECORDED BY THE CIT(A) ARE THAT THE ORI GINAL RETURN OF INCOME WAS FILED ON 31.10.2002 WHICH WAS ACCOMPANIED WITH PROVISIONAL PROFIT AND LOSS ACCOUN T AND PROVISIONAL BALANCE SHEET. THE DOCUMENTS WERE ALS O NOT VERIFIED AND ASSESSING OFFICER TREATED THE RETURN O F INCOME AS AN INVALID RETURN UNDER SECTION 139(9). SUBSEQUENT LY NOTICE UNDER SECTION 148 WAS ISSUED ON MAY 27 TH 2005. THE SAME WAS DULY SERVED UPON THE ASSESSEE. ASSESSEE HOWEVE R DID NOT FILE THE RETURN OF INCOME CORRESPONDING TO THE REOPENING PROCEEDINGS. THE AO THE N PROCEEDED WITH THE ASSESS MENT AND ISSUED NOTICES UNDER SECTION 142(1) DATED JANUA RY 18 2006 AND JANUARY 30 2006 WHICH ALSO WERE NOT COMPL IED WITH BY THE ASSESSEE. THE AO MADE INDEPENDENT ENQUIRY AN D ISSUED A SHOW CAUSE TO THE ASSESSEE ON NOVEMBER 8 2006 WHEREIN SEVERAL ADDITIONS WERE PROPOSED TO BE MADE IN THE ASSESSMENT. ON DECEMBER 13 2006 ASSESSEE FILED ITS RETURN OF INCOME IN RESPONSE TO THE NOTICE UNDER SE CTION 148 DATED MAY 27 TH 2005. WITH ITS RETURN OF INCOME THE PROFIT AND LOSS ACCOUNT BALANCE SHEET AND AUDIT REPORT S WERE FILED. ON DECEMBER 15 2006 ASSESSING OFFICER ISS UED ANOTHER SHOW CAUSE TO THE ASSESSEE IN RESPONSE TO WHICH THE COUNSEL OF ASSESSEE APPEARED BEFORE HIM . HOWEVER AS IS EVIDENT FROM THE VARIOUS ITA NO.4826/MUM/2009 ITA NO.6421/MUM/2009 (ASSESSMENT YEAR 2002-03) 3 ADDITIONS MADE AND THE BASIS OF MAKING THE ADDITI ONS THE DETAILS REQUIRED BY THE AO WERE NOT FILED BEFORE H IM. 3. ON APPEAL THE ASSESSEE REQUESTED FOR ADMISSIO N OF ADDITIONAL EVIDENCE AS WELL AS THE ADMISSION OF ADD ITIONAL GROUND OF APPEAL. THE CIT(A) DECLINE TO ADMIT THE ADDITIONAL EVIDENCE. HOWEVER THE ADDITIONAL GROUND RAISED BY THE ASSESSEE ADMITTED FOR ADJUDICATION AND A PART RELI EF WAS GIVEN IN RESPECT OF THE DISALLOWANCE OF INTEREST PAYMENT U/S 43B. THE CIT(A) HELD THAT THE DISALLOWANCE U/S 43B CAN B E MADE ONLY IN RESPECT OF THE INTEREST PAID TO THE BANK A ND NOT IN RESPECT OF THE INTEREST PAID TO THE OTHER PARTIES. BOTH THE ASSESSEE AS WELL AS THE REVENUE CHALLENGED THE ORDE R OF THE CIT(A). THE ASSESSEE HAS CHALLENGED THE NON-ADMISS ION OF THE ADDITIONAL EVIDENCE AND CONFIRMING THE ADDITION MADE BY THE AO WHEREAS THE REVENUE HAS CHALLENGED THE AD MISSION OF THE ADDITIONAL GROUND AND ALLOWING PART RELIEF I N RESPECT OF THE DISALLOWANCE OF INTEREST U/S 43B. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS : 1.(A) THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ACIT OF LONG TERM CAPITAL LOSS O F RS.1 21 41 856/- ON SALE OF SHARES FOR WAN T OF DOCUMENTARY PROOF B) THE LD. CIT(A) ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED DURING THE APPELLATE PROCEEDINGS. ITA NO.4826/MUM/2009 ITA NO.6421/MUM/2009 (ASSESSMENT YEAR 2002-03) 4 2. A) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3 15 67 426/- AS BEING UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT. B) THE LD. CIT(A) ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED DURING THE APPELLATE PROCEEDINGS. 3. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF EMPLOYEES CONTRIBUTION PF OF RS.6 58 526/- AND EMPLOYEES CONTRIBUTION TO ESIC OF RS.31 144 AS INCOME U/S 36(I)(VA) R.W. SECTION 2(24) OF THE IT ACT. 4. THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.13 13 10 538 BEING REPAYMENT OF INTER-CORPORA TE DEPOSITS. B) THE LD. CIT(A) ERRED IN NOT ADMITTING THE ADDITIONAL EVIDENCE FILED DURING THE APPELLATE PROCEEDINGS. 5. THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF BANK INTEREST O FRS.35 97 07 171 U/ S 43B OF THE ACT. YOUR APPELLANT SUBMIT THAT PAYMENTS OF INTEREST TO BANK FOR THE ASSESSMENT YEAR 2002-03 IS NOT COVERED BY SECTION 43B OF THE ACT AS THE WORD LOANS AND ADVANCES IN THAT SECTION IS SUBSTITUTED IN THE PLA CE OF TERM LOAN W.E.F 1.4.2004 AND THE SAME IS NOT APPLICABLE TO THE YEAR UNDER CONSIDERATION 4. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING T HE DISALLOWANCE OF INTEREST OF RS.46 67 610/- MADE U/ S 43B OF THE IT ACT BY ADMITTING THE ADDITIONAL GROUN D OF APPEAL CONFIRMING THE DISALLOWANCE MADE BY THE ACIT OF ITA NO.4826/MUM/2009 ITA NO.6421/MUM/2009 (ASSESSMENT YEAR 2002-03) 5 5. WE HAVE HEARD BOTH THE PARTIES AND CONSIDERED TH E RELEVANT RECORD. THE ASSESSEE REQUESTED BEFORE THE CIT(A) FOR ADMISSION OF THE ADDITIONAL EVIDENCE AS PER THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES 1962. THE AS SESSEE EXPLAINED THAT THE DIRECTORS OF THE COMPANY REMAINE D OUTSIDE INDIA FROM JANUARY 2001 TO MARCH 2004 DUE TO FINANC IAL AND LEGAL PROBLEMS. THE RESERVE BANK OF INDIA HAD IMP OSED BAN ON EXPORTS OF THE COMPANY AND LEGAL CASE WERE FILED BY THE BANKS AGAINST THE COMPANY. IN VIEW OF THESE CIRCUM STANCES THE RELEVANT DETAILS AND FINANCIAL TRANSACTIONS WER E NOT AVAILABLE AND THEREFORE COULD NOT BE FILED BEFORE T HE AO. IT WAS ALSO PLEADED THAT THERE WAS INSUFFICIENT STAFF AVAILABLE DURING THE SAID PERIOD DUE TO THE PROBLEMS FACED BY THE ASSESSEES COMPANY. THE CIT(A) DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE AND ACCORDINGLY DECLINE D TO ADMIT THE ADDITIONAL EVIDENCE. AS REGARD PART RELIEF GRA NTED U/S 43B THE GRIEVANCE OF THE REVENUE IS THAT THE AO HAS NO T BEEN GIVEN ANY OPPORTUNITY BEFORE ADMITTING THE ADDITIO NAL GROUND ON WHICH THE PARTIAL RELIEF WAS GIVEN BY THE CIT(A ). AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE VIEW THAT THE ASSESSEE HAS EXPLAINED REASO NABLE CAUSE FOR NON-FILING OF THE RELEVANT MATERIAL BEFORE THE REVENUE AUTHORITIES. SINCE THE EVIDENCE AND MATERIAL WHICH ARE ITA NO.4826/MUM/2009 ITA NO.6421/MUM/2009 (ASSESSMENT YEAR 2002-03) 6 ESSENTIAL FOR PROPER ADJUDICATION OF THE ISSUE WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE MAY BE GIVEN O NE MORE OPPORTUNITY FOR PRODUCING ALL THE RELEVANT MATERIAL AND EVIDENCE IN SUPPORT OF ITS CLAIM. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE I SSUE TO THE FILE OF THE AO FOR DENOVO ADJUDICATION ON THE ISSU E INCLUDING THE ISSUE OF DISALLOWANCE U/S 43B. THE AO SHALL PAS S FRESH ORDER IN ACCORDANCE WITH LAW AND THE ASESEEE WILL A LSO CO- OPERATE WITH THE REVENUE FOR SPEEDY DISPOSAL OF THE CASE. 6. IN THE RESULT THE APPEAL OF THE ASSESSEE AS WEL L AS OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 25TH MAR 2011 SD SD (S V MEHROTRA ) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL M EMBER MUMBAI DATED 25TH TH MAR 2011 SRL:23311 COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT CONCERNED 4. CIT(A) CONCERNED 5. DR CONCERNED BENCH BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI