Heritage Foods (India) Ltd., Hyd, Hyderabad v. ACIT, Circle-2(2), Hyderabad, Hyderabad

ITA 509/HYD/2016 | 2010-2011
Pronouncement Date: 30-11-2017 | Result: Allowed

Appeal Details

RSA Number 50922514 RSA 2016
Assessee PAN AAACH2778K
Bench Hyderabad
Appeal Number ITA 509/HYD/2016
Duration Of Justice 1 year(s) 7 month(s) 18 day(s)
Appellant Heritage Foods (India) Ltd., Hyd, Hyderabad
Respondent ACIT, Circle-2(2), Hyderabad, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-11-2017
Last Hearing Date 29-11-2017
First Hearing Date 29-11-2017
Assessment Year 2010-2011
Appeal Filed On 12-04-2016
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SMT P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN ACCOUNTANT MEMBER ITA NO. 509/HYD/2016 ASSESSMENT YEAR: 2010-11 HERITAGE FOODS (INDIA) LTD. HYDERABAD. PAN AAACH 2778 K VS. ASST. COMMISSIONER OF INCOME-TAX CIRCLE 2(2) HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI A.V. RAGHURAM REVENUE BY : SHRI RAMAKRISHNA BANDI DATE OF HEARING 29-11-2017 DATE OF PRONOUNCEMENT 30-11-2017 O R D E R PER S. RIFAUR RAHMAN A.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST THE ORDER OF CIT(A) 11 HYDERABAD DATED 23/12/2015 RELATIN G TO AY 2010-11. 2. BRIEF FACTS OF THE CASE ARE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROCESSING/MANUFACTURING OF MILK AND MILK PRODUC TS AND RUNNING CHAIN OF RETAIL STORES. RETURN OF INCOME WAS FILED ON 28/09/2010 DECLARING RETURNED INCOME AS NIL AFTER ADJUSTING BROUGHT FORWARD LOSS OF RS. 8 18 62 184/- AND THE INCOME COMPUTED U NDER MAT PROVISIONS WAS RS. 11 32 00 915/-. ASSESSMENT U/S 1 43(3) WAS COMPLETED AND AO DISALLOWED ADDITIONAL DEPRECIATION AND BAD DEBTS. 3. IN THIS APPEAL ASSESSEE IS SEEKING RELIEF OF BA D DEBTS NOT CLAIMED IN THE RETURN OF INCOME FILED BY IT FOR THE VALUE OF RS. 37 50 825/- AS THE ASSESSEE COULD NOT RECTIFY BY F ILING REVISED RETURN 2 ITA NOS. 509 /HYD/2016 HERITAGE FOODS (INDIA) LTD. OF INCOME WHILE ASSESSEE HAS PREFERRED TO FILE A LETTER BEFORE THE AO REQUESTING TO ALLOW THE CLAIM OF BAD DEBTS WHICH WA S NOT CLAIMED IN THE RETURN OF INCOME VIDE LETTER DATED 06/03/2013. AO HAS NOT CONSIDERED THE SUBMISSION OF THE ASSESSEE AND REJEC TED THE CLAIM BY FOLLOWING THE DECISION OF HONBLE APEX COURT IN THE CASE OF GOETZ INDIA LTD. 284 ITR 323. FURTHER AO HAS NOT DISCUS SED ON THIS ASPECT IN HIS ORDER. AGGRIEVED BY THE ABOVE ORDER ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE CIT(A) HAS NOT ENT ERTAINED THE PLEA OF THE ASSESSEE BY OBSERVING AS UNDER: 9.1 ON A PERUSAL OF THE RECORD IT IS SEEN THIS IS SUE CAN NEITHER BE CONSIDERED AN ADDITION NOR A DISALLOWANC E. APPARENTLY THERE WAS NO CLAIM IN THE RETURN OF INC OME THAT WAS THE SUBJECT OF SCRUTINY. AS A RESULT THERE IS NO RE FERENCE TO THIS AMOUNT IN THE ORDER OF ASSESSMENT DATED 19.3.2013. IT IS STATED IN THE WRITTEN SUBMISSIONS FILED ON 3.11 2014 THAT THIS AMOUNT HAS BEEN DEBITED AGAINST PROVISION FOR DOUBTFUL DEB TS CREATED IN THE EARLIER YEARS. IT IS CLAIMED THAT IN THESE EARL IER YEARS WHENEVER THE PROVISION WAS CREATED IT WAS ADDED BAC K TO THE INCOME AND THUS SUBJECTED TO TAX. IT IS NOW STATED THAT THIS AMOUNT WAS NOT CLAIMED AS EXPENDITURE IN THE RETURN OF INCOME ON ACCOUNT OF OVERSIGHT. THE CLAIM WAS THEREFORE IN TRODUCED FOR THE FIRST TIME BEFORE THE ASSESSING OFFICER BY WAY OF A LETTER DATED 06/03/2013. IT IS NOT CLEAR AS TO HOW A RETUR N OF INCOME WHICH IS FILED ON THE BASIS OF BOOKS OF ACCOUNTS RE GULARLY MAINTAINED AND WOULD FALL TO CAPTURE THE FACT OF AMOUNTS WRITTEN OFF IN THE ACCOUNTS. IT IS NOT KNOWN WHETHE R THE AO WAS AWARE OF THE LETTER DATED 06/03/2013 BUT THE FACT R EMAINED THAT THERE IS NO DISCUSSION OF THE ISSUE IN THE ASSESSME NT ORDER DATED 19/03/2013. IT WOULD ALSO BE APPARENT THAT TH E ASSESSING OFFICER WOULD NOT HAVE BEEN ABLE TO ADMIT SUCH A CL AIM INTRODUCED BY A LETTER IN THE LIGHT OF THE SUPREME COURT'S DECISION IN THE CASE OF GOETZ INDIA LTD. VS. CIT (2 84 ITR 323). GROUND NO. 6 IS THEREFORE DISMISSED BECAUSE THE I SSUE IN DISPUTE CANNOT BE SEEN AS EMERGING FROM THE IMPUGNE D ASSESSMENT ORDER. 4. AGGRIEVED BY THE ORDER OF CIT(A) ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-11 HYDERABAD ALLOWING THE APPEAL ONLY IN PART IS ERRO NEOUS ILLEGAL AND UNSUSTAINABLE IN LAW. THE LD. COMMISSIONER (APP EALS) OUGHT TO HAVE ALLOWED THE APPEAL IN ENTIRETY. 3 ITA NOS. 509 /HYD/2016 HERITAGE FOODS (INDIA) LTD. 2. THE COMMISSIONER (APPEALS) ERRED IN NOT CONSIDER ING THE GROUND RAISED BY THE APPELLANT IN RESPECT OF BAD DE BTS OF RS.37 50 825/- ON THE ALLEGED GROUND THAT THERE IS NO DISCUSSION ABOUT THE SAME IN THE ASSESSMENT ORDER. THE COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATED TH AT THE APPELLANT HAS RAISED THIS ISSUE BEFORE THE ASSESSIN G OFFICER BUT WAS NOT CONSIDERED BY THE ASSESSING OFFICER. 3. THE COMMISSIONER (APPEALS) ERRED IN REJECTING TH E CLAIM OF THE APPELLANT ON THE PRESUMPTION THAT THE ASSESSING OFFICER HAD NOT CONSIDERED THE SAME RELYING ON THE JUDGMENT OF HON'BLE SUPREME COURT IN GOETZ INDIA LIMITED VS. CIT. THE COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATED TH AT ASSUMING (WITHOUT ADMITTING) THAT ASSESSING OFFICER REJECTED THE CLAIM BY PLACING RELIANCE ON THE JUDGMENT OF HON'BL E SUPREME COURT; THE COMMISSIONER (APPEALS) IS NOT BOUND BY S UCH PRINCIPLE AND SHOULD HAVE ADJUDICATED THE CLAIM OF THE BAD DEBTS OF THE APPELLANT. 4. WITHOUT PREJUDICE TO ABOVE GROUNDS THE COMMISSI ONER (APPEALS) ERRED IN NOT ALLOWING THE 'BAD DEBTS' OF RS.37 50 825/- CHARGED BY THE APPELLANT TO THE 'PROVISION FOR BAD DEBTS' WHICH AMOUNT HAS BECOME BAD AND HAD TO BE WRITTEN OFF. TH E COMMISSIONER (APPEALS) FAILED TO APPRECIATE THAT TH E APPELLANT HAS OFFERED THE AMOUNTS REALIZABLE AS INCOME IN THE EARLIER YEARS AND SINCE THEY HAVE BECOME UNRECOVERABLE WRI TING OFF OF THE SAME AS BAD DEBTS BY THE APPELLANT IS WELL WITH IN LAW AND PERMISSIBLE. 5. BEFORE US LD. AR SUBMITTED THAT AS A REGULAR AC COUNTING PRACTICE ASSESSEE CREATES PROVISION FOR BAD AND DO UBTFUL DEBTS IN ITS BOOKS OF ACCOUNT AND CREATES PROVISION FOR RELEVANT YEAR IN THE COMPUTATION IT REVERSES THE PROVISION CREATED FOR THE YEAR AND CHARGES ACTUAL BAD DEBTS WRITTEN OFF BY THE ASSESSE E DURING THE YEAR. HE SUBMITTED THAT IT WAS A REGULAR PRACTICE FOLLOWE D BY THE ASSESSEE HOWEVER IN THIS AY UNDER CONSIDERATION ASSESSEE F AILED TO CLAIM ACTUAL BAD DEBTS WRITTEN OFF BY OVERSIGHT. HOWEVER IT WAS BROUGHT TO THE KNOWLEDGE OF THE AO VIDE LETTER DATED 06/03/201 3 TO CONSIDER THE ABOVE BAD DEBTS WHICH WAS NOT CLAIMED IN RETURN OF INCOME BUT THE AO REFUSED TO CONSIDER THE SAME BY RELYING ON THE D ECISION OF GOETZ INDIA LTD. (SUPRA). THE SAME WAS ALSO REJECTED BY C IT(A) WITHOUT CONSIDERING THE GENUINE PLEA OF THE ASSESSEE. HE SU BMITTED THAT THE AO MAY NOT BE ABLE TO CONSIDER THE PLEA OF THE ASSE SSEE SINCE THE 4 ITA NOS. 509 /HYD/2016 HERITAGE FOODS (INDIA) LTD. ASSESSEE HAS NOT FILED REVISED RETURN OF INCOME. HO WEVER THE CIT(A) AND ITAT HAVE POWER TO DIRECT THE AO TO CONSIDER GE NUINE PLEA OF THE ASSESSEE AND AT THE SAME TIME THE RELEVANT INFORMA TION IS AVAILABLE ON RECORD. HE RELIED ON THE DECISION IN THE CASE OF TRANSPORT CORPORATION OF INDIA LTD. IN ITA NO. 117/HYD/2016 DATED 21 ST SEPTEMBER 2016 OF THIS TRIBUNAL. 6. THE LD. DR ON THE OTHER HAND SUBMITTED THAT AS SESSEE SHOULD HAVE FILED REVISED RETURN OF INCOME AS PER THE PROV ISIONS OF THE ACT. SINCE THIS INFORMATION IS NOT PART OF THE RECORD BE FORE THE AO AO HAS NO POWER TO ENTERTAIN THE PLEA OF THE ASSESSEE AS P ER THE APEX COURT DECISION IN THE CASE OF GOETZ INDIA LTD. (SUPRA) AN D HE RELIED ON THE ORDERS OF REVENUE AUTHORITIES. 7. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL FACTS ON RECORD. DURING THIS AY ASSESSEE HAS CLAIMED TO HAVE INCURRED BAD DEBTS TO THE EXTENT OF RS. 37 50 825/- AND SINCE TH E ASSESSEE HAS NOT CLAIMED THE BAD DEBTS IN ITS RETURN OF INCOME THE SAME WAS BROUGHT TO THE KNOWLEDGE OF AO VIDE LETTER DATED 06/03/2013 . HOWEVER LD. CIT(A) EXPRESSED DOUBT THAT WHETHER THE AO WAS AWAR E OF THE LETTER DATED 06/03/2013 AS THE FACT THERE IS NO DISCUSSION ON THE ISSUE IN THE ASSESSMENT ORDER DATED 19/03/2013. ON CAREFUL R EADING OF THE LETTER FILED BY THE ASSESSEE ON 06/03/2013 AND THE ASSESSMENT ORDER IT IS EVIDENT THAT ASSESSEE HAS RAISED THE OTHER IS SUES ALONG WITH BAD DEBTS I.E. ADDITIONAL DEPRECIATION CLAIMED DETAI LS OF CAPITAL GAINS ADMITTED BY THE ASSESSEE AND DETAILS OF FOREIGN EXC HANGE GIVEN. AO HAS CONSIDERED OTHER INFORMATION AND NOT DISCUSSED ANYTHING ABOUT BAD DEBTS CLAIMED BY THE ASSESSEE. HOWEVER AO MAY NOT HAVE POWER TO CONSIDER THE PLEA OF THE ASSESSEE WHICH W AS NOT PART OF THE RETURN OF INCOME FILED BY THE ASSESSEE BUT AS PER THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF PR. CIT VS. WESTERN INDIA SHIPYARD LTD. [2015] 379 ITR 285 WHEREIN IT WAS H ELD AS UNDER: 'THE SAID DECISION IN GOETZE (INDIA) LTD. IS IN THE CONTEXT OF THE LACK OF THE POWER OF THE AO TO ENTERTAIN A CLAIM FO R DEDUCTION 5 ITA NOS. 509 /HYD/2016 HERITAGE FOODS (INDIA) LTD. DURING ASSESSMENT PROCEEDINGS OTHERWISE THAN BY A REVISED RETURN. THE ITAT IS RIGHT IN HOLDING THAT WHILE THE RE WAS A BAR ON THE AO ENTERTAINING SUCH CLAIM WITHOUT A REVISED RE TURN BEING FILED BY THE ASSESSEE THERE WAS NO SUCH RESTRAINT ON THE CIT (A) DURING THE APPELLATE PROCEEDINGS. HOWEVER WHIL E PERMITTING SUCH A CLAIM THE CIT(A) OUGHT TO HAVE EXAMINED WHET HER IN FACT THE BAD DEBTS WERE WRITTEN OFF BY THE ASSESSEE IN T HE FIRST INSTANCE IN THE ACCOUNTS AND THEN TAKEN INTO CONSID ERATION WHILE COMPUTING THE INCOME. THE REMAND OF THE MATTER TO T HE AO FOR THAT PURPOSE WAS THEREFORE JUSTIFIED.' FROM THE ABOVE DISCUSSION IT IS CLEAR THAT ASSESSE E HAS NOT FILED REVISED RETURN OF INCOME TO CLAIM THE ABOVE BAD DEB TS AND AS PER THE ABOVE DECISION AND THE FACTS ARE SIMILAR THIS ISS UE CAN BE REMITTED BACK TO THE FILE OF THE AO FOR VERIFICATION OF THE CLAIM OF THE ASSESSEE. ACCORDINGLY WE DIRECT THE AO TO CONSIDER THE CLAIM OF THE ASSESSEE AND DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER P ROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE. ACCORDINGLY GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STAT ISTICAL PURPOSES. 8. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOW ED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 30 TH NOVEMBER 2017. SD/- SD/- (P. MADHAVI DEVI) (S. RIFAUR RAH MAN) JUDICIAL MEMBER A CCOUNTANT MEMBER HYDERABAD DATED: 30 TH NOVEMBER 2017 KV COPY TO:- 1) HERITAGE FOODS (INDIA) LTD. C/O RAJU & PRASAD CAS. 401 DIAMOND HOUSE AD. AMRUTHA HILLS PUNJAGUTTA HYDERABAD 500 082 2) ACIT CIRCLE 2(2) HYD. 3) CIT(A) 11 HYDERABAD 4) PR. CIT 2 HYD. 5) THE DEPARTMENTAL REPRESENTATIVE I.T.A.T. HYDE RABAD. 6) GUARD FILE 6 ITA NOS. 509 /HYD/2016 HERITAGE FOODS (INDIA) LTD. S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR SR.P.S/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.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER