KARUNA CALBES LTD, MUMBAI v. ITO 5(2)(2), MUMBAI

ITA 6166/MUM/2009 | 2006-2007
Pronouncement Date: 14-05-2010 | Result: Partly Allowed

Appeal Details

RSA Number 616619914 RSA 2009
Assessee PAN AAACK8292M
Bench Mumbai
Appeal Number ITA 6166/MUM/2009
Duration Of Justice 5 month(s) 18 day(s)
Appellant KARUNA CALBES LTD, MUMBAI
Respondent ITO 5(2)(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-05-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted A
Tribunal Order Date 14-05-2010
Assessment Year 2006-2007
Appeal Filed On 26-11-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A MUMBAI BEFORE SHRI R V EASWAR SENIOR VICE PRESIDENT AND SHRI J SUDHAKAR REDDY ACCOUNTANT MEMBER I T A NO: 6166/MUM/2009 (ASSESSMENT YEAR: 2006-07) M/S KARUNA CABLES LTD. MUMBAI APPELLANT (PAN: AAACK8292M) VS INCOME TAX OFFICER 5(2)(2) MUMBAI RESPONDENT APPELLANT BY: SHRI VIJAY MEHTA RESPONDENT BY: SHRI DAYA SHANKAR O R D E R R V EASWAR SENIOR VICE PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE RELATES TO THE A SSESSMENT YEAR 2006-07 AND ARISES OUT OF THE ASSESSMENT MADE UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961 ON 29.12.2008. 2. THE ASSESSEE IS A COMPANY ENGAGED IN THE MANUFAC TURE OF CABLES AND TRADING IN ANGLES SHEETS ETC. 3. GROUND NOS: 1 AND 9 ARE GENERAL AND REQUIRE NO D ECISION. 4. GROUND NO: 5 WHICH IS DIRECTED AGAINST CERTAIN A DDITIONS MADE UNDER SECTION 68; WITH GROUND NO: 7 WHICH IS DIRECT ED AGAINST THE DISALLOWANCE OF MISCELLANEOUS EXPENSES TRANSPORT C HARGES AND FACTORY GENERAL EXPENSES ARE DISMISSED AS NOT PRESS ED. 5. GROUND NO: 8 WHICH IS AGAINST THE LEVY OF INTERE ST UNDER SECTIONS 234A TO 234D OF THE ACT IS CONSEQUENTIAL. 6. THE ONLY SUBSTANTIAL GROUNDS WHICH WE HAVE TO CO NSIDER ARE GROUND NOS: 2 TO 4. IN GROUND NO: 2 THE ASSESSEE HAS CHALLENGED 2 THE DECISION OF THE CIT(A) NOT TO ADMIT THE ADDITIO NAL EVIDENCE ADDUCED UNDER RULE 46A OF THE INCOME TAX RULES. THIS GROUN D IS CONNECTED TO GROUND NOS: 3 AND 4. GROUND NO: 3 IS DIRECTED AGAI NST THE DISALLOWANCE OF RS.16 43 65 420/- AS UNPROVED PURCH ASES FROM FIVE PARTIES; AND GROUND NO: 4 IS DIRECTED AGAINST THE D ISALLOWANCE OF RS.4 50 18 217/- AS UNPROVED PURCHASES FROM TWO PAR TIES. 7. THE BRIEF FACTS IN THIS CONNECTION ARE THAT DURI NG THE ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED DETAILS OF SALES PURCHASES LOAN CONFIRMATIONS BANK STATEMENTS ETC. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PURCHASED GOODS FROM SEVEN PA RTIES AND IN AN ATTEMPT TO VERIFY THEM ISSUED LETTERS UNDER SECTION 133(6) TO THE SEVEN PARTIES. THE FIRST FIVE PARTIES WHOSE NAMES ARE M ENTIONED IN GROUND NO: 3 WERE REPORTED TO BE NOT AVAILABLE AT THE ADD RESSES GIVEN. THE WARD INSPECTOR ALSO APPEARS TO HAVE VISITED THE GIV EN ADDRESSES TO FIND OUT THE WHEREABOUTS OF THESE PARTIES BUT WAS N OT SUCCESSFUL. THE OTHER TWO PARTIES WHOSE NAMES ARE MENTIONED IN GRO UND NO: 4 DID NOT SUBMIT ANY DETAILS TO THE ASSESSING OFFICER. T HEREAFTER BY LETTER DATED 10.12.2008 THE ASSESSEE WAS ASKED TO SHOW CA USE WHY THE PURCHASES FROM THE FIRST FIVE PARTIES AGGREGATING T O RS.16 43 65 420/- SHOULD NOT BE DISALLOWED. THE ASSESSEE REPLIED BY LETTER DATED 15.12.2008 AND SUBMITTED THE CONFIRMATIONS FROM THE SE FIVE PARTIES IN WHICH THE NEW ADDRESSES OF THOSE PARTIES WERE ALSO GIVEN. THE ASSESSING OFFICER HOWEVER TOOK THE VIEW THAT NO D OCUMENTARY EVIDENCE WAS SUBMITTED BY THE ASSESSEE TO PROVE THE PURCHASES FROM THESE PARTIES. HE GAVE ANOTHER OPPORTUNITY TO THE ASSESSEE BY LETTER 3 DATED 23.12.2008 TO PRODUCE THE PARTIES FROM WHOM T HE PURCHASES WERE MADE. IN RESPONSE TO THIS LETTER THE ASSESSE E WROTE BACK ON 26.12.2008 AND STATED THAT THE NON-AVAILABILITY OF THE PARTIES AT THE ADDRESSES DOES NOT AUTOMATICALLY MEAN THAT THE PURC HASES WERE NON- GENUINE AND THAT IT WAS POSSIBLE THAT THE PARTIES H AD SHIFTED TO OTHER PLACES. IT WOULD APPEAR THAT THE ASSESSEE HAD FURN ISHED THE DETAILS OF THE PERMANENT ACCOUNT NUMBERS OF THE PARTIES THEIR REGISTRATION DETAILS WITH THE SALES TAX DEPARTMENT OR THE REGIST RAR OF COMPANIES. HOWEVER THE ASSESSING OFFICER WAS NOT INCLINED TO CONSIDER THEM AS PROVING THE GENUINENESS OF THE PURCHASES. HE ACCOR DINGLY DISALLOWED THE PURCHASES OF RS.16 43 65 420/- FROM THE FIRST F IVE PARTIES. 8. AS REGARDS THE OTHER TWO PARTIES FROM WHOM PURCH ASES OF RS.4 50 18 217/- WERE MADE THE ASSESSEE SUBMITTED CONFIRMATIONS FROM THEM BUT THEY WERE NOT ACCEPTED BY THE ASSESSI NG OFFICER ON THE GROUND THAT THEY WERE NOT SUPPORTED BY ANY DOCUMENT ARY EVIDENCE. HE ALSO FOUND THAT THE CONFIRMATIONS WERE NOT ORIGI NALS BUT ZEROX COPIES AND ONE OF THEM WAS NOT PROPERLY STAMPED. A CCORDINGLY THESE PURCHASES WERE ALSO DISALLOWED. 9. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) A ND IN THE COURSE OF THE APPEAL PROCEEDINGS FILED DETAILED WRI TTEN SUBMISSIONS AS ALSO DOCUMENTARY EVIDENCE IN RESPECT OF THE PURCHAS ES FROM ALL THE SEVEN PARTIES AND THESE ARE ALL COMPILED IN THE PAP ER BOOK FILED BEFORE US CONSISTING OF 149 PAGES. DETAILS HAVE BEEN GIV EN PARTY-WISE SHOWING WHICH WERE THE ITEMS OF EVIDENCE WHICH WERE FILED BEFORE THE ASSESSING OFFICER AND WHICH WERE THE ITEMS OF EVIDE NCE WHICH WERE 4 FILED BEFORE THE CIT(A) FOR THE FIRST TIME. IN THE CASE OF M/S SANMAN TRADE IMPEX PRIVATE LIMITED THE DETAILS OF PURCHAS E FROM WHICH THE CORRESPONDING SALES WERE MADE THE PURCHASE AND COR RESPONDING SALE INVOICES ON SAMPLE BASIS THE SALES TAX RETURN OF T HE COMPANY AND THE VAT NUMBER CONFIRMATION TAKEN FROM THE SALES TAX W EBSITE WERE SUBMITTED BEFORE THE CIT(A) AS ADDITIONAL EVIDENCE. IN ADDITION TO THESE THE ASSESSEE HAD ALSO FURNISHED THE DETAILS OF THE COMPANY AS APPEARING IN THE WEBSITE OF THE REGISTRAR OF COMPAN IES AND THE CONFIRMATION OF ACCOUNT BOTH BEFORE THE ASSESSING O FFICER AS WELL AS BEFORE THE CIT(A). IN THE CASE OF M/S NIKHIL ENTER PRISES SIMILAR DETAILS WERE FILED BEFORE THE CIT(A) FOR THE FIRST TIME AS ADDITIONAL EVIDENCE. IN ADDITION AN AFFIDAVIT FROM BHIKHAL M MAKWANA THE PROPRIETOR OF THE FIRM CONFIRMING THE PURCHASES WAS ALSO FILED. SUC H AFFIDAVITS WERE FILED BEFORE THE CIT(A) ALSO FROM M/S NU-TEK ENTERP RISES M/S ACE INTERNATIONAL AND M/S SHAH INDUSTRIES. IN RESPECT OF THESE THREE FIRMS AS ALSO M/S GEETA MERCANTILE PRIVATE LIMITED AND M/ S WESTERN INDIA TRADING CORPORATION THE ASSESSEE HAS ALSO FILED AD DITIONAL EVIDENCE IN THE SAME MANNER BEFORE THE CIT(A); IN ADDITION TO T HE DETAILS FILED BEFORE THE ASSESSING OFFICER. IN SUPPORT OF THE PL EA FOR ADMISSION OF THE ADDITIONAL EVIDENCE THE ASSESSEE SUBMITTED BEF ORE THE CIT(A) THAT THE ASSESSING OFFICER DID NOT ALLOW SUFFICIENT TIME TO THE ASSESSEE TO SUPPORT THE CLAIM OF PURCHASES AND THEREFORE THE EVIDENCE SHOULD BE ADMITTED. IT WAS BROUGHT TO THE NOTICE OF THE CIT( A) THAT THE ASSESSING OFFICER STARTED THE ENQUIRY ONLY ON 10.12.2008 AND THOUGH THE ASSESSEE HAD FURNISHED THE NEW ADDRESSES OF THE PAR TIES BY LETTER 5 DATED 15.12.2008 AS ALSO CONFIRMATIONS FROM FIVE PA RTIES ALONG WITH THE LETTER NO SUMMONS WERE ISSUED TO THE PARTIES AT TH E NEW ADDRESS. HOWEVER ON 23.12.2008 BARELY A WEEK BEFORE THE DA TE ON WHICH THE ASSESSMENT WOULD GET TIME BARRED THE ASSESSEE WAS ASKED TO PRODUCE THE PARTIES. IT WAS SUBMITTED BEFORE THE C IT(A) THAT THE ASSESSEE HARDLY HAD ANY TIME TO PRODUCE THE PARTIES BEFORE THE ASSESSING OFFICER AND THE DIFFICULTY WAS COMPOUNDED BY THE FACT THAT THE ASSESSEE HAD NO POWER TO COMPEL THE ATTENDANCE OF THE PARTIES BEFORE THE ASSESSING OFFICER A PLEA WAS THEREFORE MADE THAT THE ADDITIONAL EVIDENCE SHOULD BE ADMITTED AND A DECISI ON BE TAKEN ON THAT BASIS. THE CIT(A) HOWEVER HELD THAT THE ASSESSEE HAD SUFFICIENT TIME TO ADDUCE THE EVIDENCE BEFORE THE ASSESSING OFFICER AND ACCORDINGLY REFUSED TO ADMIT THE SAME. AS REGARDS THE MERITS O F THE DISALLOWANCE HE AGREED WITH THE ASSESSING OFFICER THAT THE ASSES SEE COULD NOT PRODUCE THE PARTIES BEFORE THE ASSESSING OFFICER AN D PROVE THE PURCHASES. HE ALSO OBSERVED THAT THOUGH THE ASSESS EE HAD CLAIMED TO HAVE MADE HUGE PURCHASES IT DID NOT HAVE ANY GODOWN FOR STORAGE OF THE GOODS AND THE ASSESSEE HAD NOT TAKEN PHYSICAL D ELIVERY OF THE GOODS. HE ALSO FOUND THAT THERE WAS NO CHALLAN NUM BER IN THE BILLS TO SHOW THAT THE ASSESSEE HAD TAKEN DELIVERY OF THE GO ODS. IN THIS VIEW OF THE MATTER HE UPHELD THE DISALLOWANCE. 10. IN THE FURTHER APPEAL BEFORE THE TRIBUNAL THE MAIN ARGUMENT OF THE ASSESSEE IS THAT THE CIT(A) SHOULD HAVE ADMITTE D AND ENTERTAINED THE ADDITIONAL EVIDENCE AND DECIDED THE APPEAL ON T HAT BASIS. ON THE OTHER HAND THIS PRAYER IS OPPOSED ON BEHALF OF THE DEPARTMENT. ON A 6 CAREFUL CONSIDERATION OF THE ISSUE WE ARE OF THE V IEW THAT THE CIT(A) OUGHT TO HAVE ADMITTED THE ADDITIONAL EVIDENCE BECA USE AS RIGHTLY POINTED OUT ON BEHALF OF THE ASSESSEE THE ASSESSEE DID NOT HAVE AN EFFECTIVE OPPORTUNITY TO ADDUCE THE EVIDENCE BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER STARTED THE ENQUIRY ONLY AROUND 10.12.2008 EVEN THOUGH THE DETAILS OF THE PURCHASES WERE FURNISHED BY THE ASSESSEE EARLIER. WHEN THE ASSESSING OFFICER I NFORMED THE ASSESSEE THAT THE PARTIES WERE NOT AVAILABLE AT THE ADDRESSES GIVEN THE ASSESSEE IMMEDIATELY BY LETTER DATED 15.12.2008 FILED FIVE CONFIRMATIONS AND ALSO THE NEW ADDRESSES OF THE PER SONS. NO ENQUIRY WAS MADE AT THESE ADDRESSES NOR WAS ANY SUMMONS ISS UED UNDER SECTION 131 TO THE PARTIES; BUT ON 23.12.2008 WHIC H LEFT ONLY EIGHT DAYS FOR THE COMPLETION OF THE ASSESSMENT THE ASSESSING OFFICER AGAIN ASKED THE ASSESSEE TO PRODUCE THE PARTIES. WHILE E XPRESSING ITS INABILITY TO COMPEL THE ATTENDANCE OF THE PARTIES THE ASSESSEE FURNISHED DETAILS OF PERMANENT ACCOUNT NUMBERS REG ISTRATION NUMBERS WITH SALES TAX DEPARTMENT AND PARTICULARS O F REGISTRATION OF THE PARTIES WITH REGISTRAR OF COMPANIES ETC. CONF IRMATIONS WERE ALSO FILED FROM THE OTHER TWO PARTIES; BUT ALL THE EVIDE NCE WAS REJECTED BY THE ASSESSING OFFICER. THE ADDITIONAL EVIDENCE FIL ED BEFORE THE CIT(A) COULD NOT IN THE ABOVE CIRCUMSTANCES BE ADDUCED BEF ORE THE ASSESSING OFFICER. WE ARE THEREFORE OF THE VIEW TH AT THE CIT(A) WAS NOT JUSTIFIED IN REFUSING TO ADMIT THE ADDITIONAL E VIDENCE. WE ACCORDINGLY SET ASIDE THE FINDINGS OF THE INCOME TA X AUTHORITIES ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSES SING OFFICER WITH THE 7 DIRECTION TO HIM TO EXAMINE THE EVIDENCE AND TAKE A DECISION AFRESH IN ACCORDANCE WITH LAW AND AFTER GIVING DUE OPPORTUNIT Y TO THE ASSESSEE. THE GROUNDS ARE THUS ALLOWED IN THESE TERMS. 11. GROUND NO: 6 IS THAT THE CIT(A) ERRED IN NOT AD JUDICATING THE SPECIFIC GROUND AGAINST NON-ALLOWANCE OF SET OFF OF UNABSORBED DEPRECIATION AND UNABSORBED BUSINESS LOSS. THIS IS SUE WILL NOW BE EXAMINED BY THE ASSESSING OFFICER AND A FRESH DECIS ION IS TO BE TAKEN BY HIM IN ACCORDANCE WITH LAW AFTER GIVING DUE OPPO RTUNITY TO THE ASSESSEE. 12. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED WITH NO ORDER AS TO COSTS. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH MAY 2010. SD/- SD/- (J SUDHAKAR REDDY) (R V EASWAR) ACCOUNTANT MEMBER SENIOR VICE PRESI DENT MUMBAI DATED 14 TH MAY 2010 SALDANHA COPY TO: 1. M/S KARUNA CABLES LTD. 102 SANJAY CHAMBERS CHOUBAL LANE OPERA HOUSE MUMBAI 400 004 2. ITO 5(2)(2) 3. CIT-5 4. CIT(A)-9 5. DR A BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI