Shreeji Packaging, Nai Daman v. The Income tax Officer, Ward-4,, Daman

ITA 820/AHD/2007 | 1998-1999
Pronouncement Date: 09-07-2010 | Result: Allowed

Appeal Details

RSA Number 82020514 RSA 2007
Assessee PAN AAJFS8632B
Bench Ahmedabad
Appeal Number ITA 820/AHD/2007
Duration Of Justice 3 year(s) 4 month(s) 17 day(s)
Appellant Shreeji Packaging, Nai Daman
Respondent The Income tax Officer, Ward-4,, Daman
Appeal Type Income Tax Appeal
Pronouncement Date 09-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-07-2010
Date Of Final Hearing 01-07-2010
Next Hearing Date 01-07-2010
Assessment Year 1998-1999
Appeal Filed On 21-02-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A BEFORE SHRI G.D.AGRAWAL VICE-PRESIDENT (AZ) AND SHRI MUKUL SHRAWAT JUDICIAL MEMBER AND DATE OF HEARING :01/07/2010 DRAFTED ON: 02/0 7/2010 1. ITA NO.820/AHD/2007 - A.Y. 1998-1999 2. ITA NO.821/AHD/2007 - A.Y. 1999-2000 3. ITA NO.822/AHD/2007 - A.Y. 2000-2001 1-3. SHREEJI PACKAGING S.NO.339/3 NR.BHARAT INDL. ESTATE BHIMPORE NANI DAMAN VS. 1-3. THE ITO WARD-4 DAMAN PAN/GIR NO. : AAJFS 8632 B ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY: SHRI S.N. DIVATIA REVENUE BY: SHRI SAMIR TEKRIWAL SR. D.R. O R D E R PER SHRI MUKUL SHRAWAT JUDICIAL MEMBER : ALL THESE THREE APPEALS HAVE BEEN FILED BY THE ASS ESSEE AGAINST A COMMON ORDER OF LEARNED CIT(APPEALS)-VALSAD DATE D 15/11/2006 PASSED FOR THE ASSESSMENT YEARS 1998-99 1999-2000 & 2000-01 RESPECTIVELY. 2. IT IS WORTH TO MENTION AT THE OUTSET ITSELF T HAT THE ISSUE OF NOTICE U/S.148 OF THE I.T. ACT 1961 AND CHALLENGE OF JURI SDICTION ON THE GROUND OF NOT DISCLOSING THE REASONS FOR THE ISSUANCE OF T HE SAID NOTICE HAS NOT BEEN CONTESTED BY LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE AS ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 2 - IDENTICALLY RAISED VIDE GROUND NO.5 IN ALL THESE YE ARS THEREFORE WE HEREBY DISMISS THIS GROUND BEING NOT PRESSED. 3. FOR THESE THREE YEARS THE ONLY ISSUE AS RAISED VIDE GROUND NUMBERS 1 TO 4 IN IDENTICAL MANNER WAS THE REJECTION OF CLA IM OF DEDUCTION U/S.80- IA OF THE I.T. ACT 1961 RESPECTIVELY OF RS.10 68 0 36/- FOR ASSESSMENT YEAR 1998-99 RS.11 85 800/- FOR ASSESSMENT YEAR 19 99-2000 AND RS.10 66 243/- FOR ASSESSMENT YEAR 2000-01. 4. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDI NG ASSESSMENT ORDER WERE THAT THE ASSESSEE WAS STATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF CORRUGATED BOXES. IT WAS MENTIONE D BY THE ASSESSING OFFICER THAT THE SAID MANUFACTURING UNIT WAS LOCATE D IN THE UNION TERRITORY OF DAMAN WHICH WAS CLAIMED TO BE A BACKW ARD UNION TERRITORY AS PER THE TERRITORY SPECIFIED IN THE VII ITH SCHEDULE OF THE I.T. ACT. FOR ASSESSMENT YEAR 1998-99 ORIGINALLY NO RET URN OF INCOME WAS FILED HOWEVER THE RETURN WAS FILED ONLY IN PURSUA NCE TO NOTICE U/S.148 OF THE I.T. ACT 1961. FOR ASSESSMENT YEAR 1998-99 THE SAID RETURN WAS FILED ON 28/03/2005 AT RS.NIL AFTER CLAIMING DEDUC TION U/S.80-IA OF THE I.T. ACT 1961. THE SAID RETURN WAS CLAIMED TO BE ACCOMPANIED BY AN AUDIT REPORT ON THE PRESCRIBED FORM NO.10CCB. FOR ASSESSMENT YEAR 1999-2000 THE FACTS IN RESPECT OF CLAIM OF DEDUCTI ON U/S.80-IA WERE THAT ORIGINALLY THE RETURN WAS FILED ON 31/03/2000 AND T HEREIN CLAIMED A DEDUCTION U/S.80-IA OF THE I.T. ACT 1961. THEREAF TER IN PURSUANCE TO SECTION U/S.148 AGAIN RETURN OF INCOME WAS FILED ON 28/03/2005 DECLARING NIL INCOME AND THEREIN AS WELL THE CLAIM OF DEDUCTI ON U/S.80-IA WAS ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 3 - MADE WHICH WAS ACCOMPANIED BY AN AUDIT REPORT ON FO RM NO.10CCB. FOR ASSESSMENT YEAR 2000-01 A NIL RETURN WAS FILED ORIGINALLY ON 31/10/2001. IN THE SAID RETURN THERE WAS A CLAIM OF DEDUCTION U/S.80-IA OF THE I.T. ACT 1961. THE ASSESSING OFFICER HAS A LSO MENTIONED THAT THE SAID ORIGINAL RETURN WAS ACCOMPANIED WITH AN AUDIT REPORT ON FORMS NO.3CB AND 3CD. THEREAFTER IN PURSUANCE TO NOTICE U/.148 OF THE I.T. ACT 1961 AGAIN A NIL RETURN WAS FILED CLAIMING DED UCTION U/S.80-IA WHICH WAS ACCOMPANIED BY AN AUDIT REPORT ON PRESCR IBED FORM NO.10CCB OF THE I.T. ACT 1961. 5. THE DATES FOR FILING OF THE RETURN AS WELL AS TH E FILING OF FORM NO.10CCB OF THE I.T. ACT 1961 HAVE BEEN MENTIONED HEREINABOVE PURPOSELY BECAUSE CERTAIN DATES OF CERTIFICATION BY THE CHARTERED ACCOUNTANT HAVE NOT ONLY BEEN CHALLENGED BUT ALSO DOUBTED BY THE ASSESSING OFFICER. 5.1. ONE MORE FACT HAS ALSO EMERGED FROM THESE CORR ESPONDING ASSESSMENT ORDERS THAT DURING THE COURSE OF ASSESSM ENT PROCEEDINGS FOR ASSESSMENT YEAR 2001-02 THE ASSESSING OFFICER HAD PROCEEDED TO VERIFY ABOUT THE SAID CLAIM OF DEDUCTION AND IN THAT PROCE SS ISSUED LETTER TO THE EXECUTIVE ENGINEER ELECTRICITY DEPARTMENT DAMAN TO ASCERTAIN THE CONSUMPTION OF ELECTRICITY. AS PER THE DETAILS FUR NISHED BY THE ELECTRICITY DEPARTMENT DAMAN IT WAS FOUND THAT THE CONSUMPTION OF ELECTRICITY UNITS HAVE STARTED FROM AGUUST-1997. THE ASSESSING OFFICER HAS REPRODUCED THE MONTH-WISE CONSUMPTION OF UNITS OF THE ELECTRICITY FOR THE PERIOD AUGUST-1997 TO MARCH-1998. ON ACCOU NT OF THE SAID FACT ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 4 - DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR ASS ESSMENT YEAR 2001- 02 IT WAS OBSERVED BY THE ASSESSING OFFICER THAT T HE ASSESSEE HAD COMMENCED ITS MANUFACTURING ACTIVITY FROM THE ACCOU NTING PERIOD RELEVANT TO ASSESSMENT YEAR 1997-98 ITSELF. DUE TO THAT REASON THE OBSERVATION OF THE ASSESSING OFFICER WAS THAT THE A SSESSMENT YEAR 1998- 99 WAS NOT THE FIRST YEAR OF THE CLAIM BUT THE SECO ND YEAR OF THE MANUFACTURING ACTIVITY. 5.2. AN ANOTHER OBJECTION OF THE ASSESSING OFFICER WAS THAT THE IMPUGNED FORM NO.10CCB WAS NOT FILED ALONGWITH THE REGULAR RETURN OF INCOME BUT IT WAS FILED SUBSEQUENTLY ONLY AFTER THE ISSUANCE OF NOTICE U/S.148 OF THE I.T. ACT 1961. THE ASSESSING OFFI CER HAS DOUBTED THE CORRECTNESS OF THE SAID REPORT OF THE CHARTERED ACC OUNTANT. THERE WAS A MENTION IN PARAGRAPH NO.11 OF THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 1998-99 WHICH WAS FOLLOWED IN REST OF THE TWO YEARS THAT THERE WAS SOME DISCREPANCY IN RESPECT OF MENTIONING PAN ON THE FOR M WHICH WAS NOT ALLOTTED UPTO ASSESSMENT YEAR 2000-01 THEN WHAT WA S THE BASIS OF MENTIONING THE PAN BY THE AUDITOR WHILE SUBMITTING REPORT ON FORM NO.10CCB CLAIMED TO BE PREPARED ON 09/09/1998. SIN CE CERTAIN DOUBTS HAVE NOT BEEN PROPERLY CLARIFIED THEREFORE THE AS SESSING OFFICER HAS DISALLOWED THE CLAIM OF DEDUCTION U/S.80-IA OF THE I.T. ACT 1961 FOR ALL THE THREE YEARS. THE MATTER WAS CARRIED BEFORE TH E FIRST APPELLATE AUTHORITY. 6. THE LEARNED CIT(APPEALS) HAS REITERATED ALL THOS E FACTS AND AFFIRMED THE FINDINGS OF THE ASSESSING OFFICER. I N HIS OPINION THE ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 5 - CONDITIONS LAID DOWN AS PRESCRIBED U/S.80-IA(8) HAV E NOT BEEN FULFILLED BY THE ASSESSEE. ACCORDING TO HIM THE ASSESSEE H AS NOT ESTABLISHED HIS BONA FIDE IN RESPECT OF THE AUDITORS REPORT OBTAIN ED ON FORM NO.10CCB OF THE I.T. ACT 1961 WITHIN THE PRESCRIBE D DATES. 7. IN THE LIGHT OF THE ABOVE FACTUAL BACKGROUND WE HAVE HEARD BOTH THE SIDES. WE HAVE ALSO PERUSED THE ORDERS OF THE AUTHORITIES BELOW. BEFORE WE COULD PROCEED TO HEAR THE MERITS OF THE C ASE AN IMPORTANT DEVELOPMENT WAS PLACED FOR OUR CONSIDERATION THAT T HE ENTIRE PROCEEDINGS FOR THESE THREE YEARS WERE THE RESULT OF THE OBSERV ATION OF THE REVENUE DEPARTMENT MADE IN THE ASSESSMENT YEAR 2001-02. T HEREFORE LEARNED AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS PLACE D BEFORE US THAT FOR THE SAID ASSESSMENT YEAR 2001-02 THE MATTER HAD AL READY REACHED UPTO THE STAGE OF THE TRIBUNAL AND THE ITAT AHMEDABAD BE NCH A VIDE ITA NO.3132/AHD/2004 FOR ASSESSMENT YEAR 2001-02 AND VI DE ORDER DATED 03/10/2008 IN ASSESSEES OWN CASE THE HON'BLE BENCH HAD REFERRED THE ISSUE BACK TO THE STAGE OF THE FIRST APPELLATE AUTH ORITY VIDE PARAGARAPH NOS.4 & 5 AND REPRODUCED BELOW FOR READY REFERENCE . 4. BEFORE US NONE APPEARED ON BEHALF OF THE TAXP AYER WHILE THE LD. DR SUPPORTED THE FINDINGS OF THE ORDER OF THE L OWER AUTHORITIES. IN THE GROUNDS OF APPEAL THE TAXPAYER CONTENDED TH AT THE LD. CIT(A) WAS NOT JUSTIFIED IN CONCLUDING THAT THE TAX PAYER DID NOT WANT TO PRESS THE GROUNDS OF APPEAL SINCE THE CA CO ULD NOT FILE THE LETTER OF AUTHORITY OR POWER OF ATTORNEY AT THE FIR ST ATTENDANCE ON 18.06.04. IN FACT THE CORRECT DATE OF HEARING IS 19.08.04 WHILE THE ADJOURNED DATE OF HEARING IS 23.08.04. AS REGARDS ADDITION OF RS.74 595/- IT IS MENTIONED IN THE GROUNDS THAT TH ERE WAS INCREASE IN FIXED ASSETS ON ACCOUNT OF PURCHASE OF COMPUTER SYSTEM THROUGH ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 6 - PAYMENT BY CHEQUES WHILE THE LD. CIT(A) WAS NOT JUS TIFIED IN CONFIRMING THE DISALLOWANCE OF RS.1 80 013/- OUT OF TOTAL INDIRECT EXPENSES OF RS.1 80 302/-. SIMILARLY THE DISALLO WANCE OF CLAIM UNDER SECTION 80IA/80IB HAS BEEN MADE ON THE GROUND THAT THE AUDIT REPORT IN FORM NO.10CCB WAS NOT FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND THE LD. CIT(A) UPHELD TH E FINDINGS OF THE AO WITHOUT GIVING SUFFICIENT OPPORTUNITY TO T HE TAXPAYER. 5. AS IS EVIDENT FROM THE IMPUGNED ORDER THE LD. CIT(A) FIXED THE APPEAL FOR HEARING ON 19.8.2004 AND DUE TO NON-RECE IPT OF POWER OF ATTORNEY FROM THE CONCERNED CA BY 23.8.2004 PAS SED THE IMPUGNED ORDER ON 24.8.2008 ITSELF WITHOUT ALLOWIN G ANY FURTHER OPPORTUNITY TO THE TAXPAYER. WE ARE OF THE OPINION THAT SUFFICIENT OPPORTUNITY HAS NOT BEEN ALLOWED BY THE LD. CIT(A) BEFORE DISPOSING OF THE APPEAL. THE RULES OF NATURAL JUS TICE ARE NOT CODIFIED NOR ARE THEY UNVARYING IN ALL SITUATIONS RATHER THEY ARE FLEXIBLE. THIS MAY HOWEVER BE SUMMARIZED IN ONE WORD FAIRNESS. IN OTHER WORDS WHAT THEY REQUIRE IS FAIRNESS BY TH E AUTHORITY CONCERNED. OF COURSE WHAT IS FAIR WOULD DEPEND O N THE SITUATION AND THE CONTEXT. LORD ESHER M.R. IN VOINET VS. BAR RETT (1885) 55 L.J. QB 39 39 OBSERVED: NATURAL JUSTICE IS THE N ATURAL SENSE OF WHAT IS RIGHT AND WRONG. 6. IN VIEW OF THE FOREGOING AND IN THE LIGHT OF PEC ULIAR FACTS OF THE CASE ESPECIALLY WHEN SUFFICIENT OPPORTUNITY HAS NOT BEEN ALLOWED BY THE LD. CIT(A) TO THE TAXPAYER IN THE I NTEREST OF SUBSTANTIAL JUSTICE THE MATTER IS RESTORED TO THE F ILE OF THE LD. CIT(A) WITH THE DIRECTIONS TO PROVIDE SUFFICIENT OP PORTUNITY TO THE TAXPAYER BEFORE ADJUDICATING THE ISSUES ON MERITS. 7.1. NOT ONLY THE RESPECTED CO-ORDINATE BENCH HAS R ESTORED THE MATTER FOR RE-ADJUDICATION AT THE STAGE OF FIRST APPEAL B UT AN ANOTHER OBSERVATION WAS ALSO MADE THEREIN WHICH HAS AN IMPORTANT SIGNI FICANCE THAT WHETHER THE ASSESSEE WAS UNDER AN OBLIGATION TO PLACE ON RE CORD THE FIRST YEAR OF MANUFACTURING ACTIVITY FOR THE PURPOSE OF CLAIM OF DEDUCTION U/S.80IA OF ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 7 - THE I.T. ACT 1961 IMPUGNED TO BE ASSESSMENT YEAR 1 997-98. THAT OBSERVATION OF THE BENCH IS ALSO WORTH REPRODUCTION . BESIDES THE AFORESAID ELECTRICITY CONSUMPTION WIT H RESPECT TO INDUSTRIAL POWER CONNECTION OF 70HP THE TAXPAYER H AD ALSO GOT A SEPARATE ELECTRIC CONNECTION FOR DOMESTIC CONSUMPTI ON. SINCE THE AFORESAID DETAILS REFLECTED THAT THE TAXPAYER HAD C ONSUMED HEAVY ELECTRIC POWER IN THE FINANCIAL YEAR 1997-98 VIS-- VIS THE YEAR UNDER CONSIDERATION THE AO WAS OF THE OPINION THA T THE FIRST YEAR OF THE MANUFACTURING ACTIVITY OF THE TAXPAYER WAS A Y 1997-98 AND NOT THE AY 1999-2000 AS CLAIMED BY THE TAXPAYER. MOREOVER IN HIS STATEMENT RECORDED ON OATH ON 27.06.03 THE MAN AGING PARTNER OF THE FIRM SHRI MANSUKHBHAI N. DHANANI REPLY TO Q UESTION NO.5 ADMITTED THAT ACTIVITY OF MANUFACTURING OF CORRUGAT ED BOXES WAS STARTED BY THE TAXPAYER IN FINANCIAL YEAR 1997-98. IN THE LIGHT OF THE SAID STATEMENT OF MANAGING PARTNER BILLS FOR P URCHASE OF MACHINERY IN 1995 AND DETAILS OF CONSUMPTION OF ELE CTRICITY THE AO WAS OF THE OPINION THAT THE FIRST YEAR OF COMME NCEMENT OF BUSINESS WAS AY 1997-98 AND NOT THE AY 1999-2000 AS CLAIMED BY THE TAXPAYER. BESIDES THE CHARTERED ACCOUNTANT IN FORM 3CD IN COL.26 RELATING TO SECTION WISE DETAILS OF DEDUCTIO NS IF ADMISSIBLE UNDER CHAPTER VIA REPORTED NA WHILE THE TAXPAYER DID NOT FURNISH PRESCRIBED REPORT IN FORM NO.10CCB REQUIRED FOR CLAIMING DEDUCTION UNDER SECTION 80IA/80IB OF THE A CT DESPITE SPECIFIC OPPORTUNITY ALLOWED BY THE AO VIDE SHOW C AUSE NOTICE DATED 05.09.03 AND ORDER SHEET ENTRIES DATED 13.11. 2003 AND 08.12.03. THE TAXPAYER DID NOT PRODUCE BOOKS OF A CCOUNTS IN ORDER TO ASCERTAIN AS TO WHETHER OR NOT THE TAXPAYE R FULFILLED THE CONDITIONS STIPULATED FOR CLAIMING DEDUCTION U/S.80 IB OF THE ACT. ACCORDINGLY WHILE RELYING UPON THE DECISIONS IN TH E CASE OF CIT V. JAIDEEP INDUSTRIES (1989) 180 ITR 81 (P&H) CIT V. SITARAM BHAGWANDAS (1976) 102 ITR 560 (PAT) CIT V. UNIVERS AL TRADING CO. (1978) 114 ITR 412 (CAL) CIT V. A.N. ARUNACHAL AM (1994) 75 TAXMAN 529 (MAD.) AND CIT V. SHIVANAND ELECTRONICS (1994) 209 ITR 63 (BOM) THE AO DISALLOWED THE CLAIM OF DEDUC TION UNDER SECTION 80IA/80IB OF THE ACT INTER ALIA IN VIEW OF THE ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 8 - OBSERVATIONS OF THE AUDITORS THAT THE DEDUCTION UND ER SECTION 80IA/80IB WAS NOT ADMISSIBLE TO THE TAXPAYER. 7.2. ONCE THE MATTER HAS ALREADY BEEN DISCUSSED ON MERITS BY A CO- ORDINATE BENCH FOR ASSESSMENT YEAR 2001-02 WHICH WA S SAID TO BE THE START POINT OF THIS CONTROVERSY THEREFORE WE ARE OF THE CONSCIENTIOUS VIEW THAT THE ENTIRE CONTROVERSY OF CLAIM OF DEDUCT ION U/S.80IA OF THE I.T. ACT 1961 HAS TO BE RESOLVED IN A CONSOLIDATED MAN NER AND NOT ONLY FOR THESE THREE YEARS NOW BEFORE US BUT ALONGWITH THE A SSESSMENT YEAR 2001-02 WHICH IS STATED TO BE NOW PENDING BEFORE T HE FIRST APPELLATE AUTHORITY IN VIEW OF THE AFORESAID ORDER OF THE TRI BUNAL. IN ALL FAIRNESS BOTH THE PARTIES APPEARING BEFORE US HAVE ALSO SUGG ESTED THE SAME. IN VIEW OF THE SUBMISSIONS AS WELL AS THE BACKGROUND O F THE CASE AS DISCUSSED HEREINABOVE WE ARE RESTORING THIS ISSUE TO LEARNED CIT(APPEALS) TO BE DECIDED DE NOVO AS PER THE DIRECTIONS ALREADY GIVEN NEEDLESS TO SAY AFTER PROVIDING A REASONABLE OPPOR TUNITY OF HEARING TO THE APPELLANT. 8. IN THE RESULT ALL THE THREE APPEALS OF THE ASSE SSEE MAY BE TREATED AS ALLOWED BUT FOR STATISTICAL PURPOSES. ORDER SIGNED DATED AND PRONOUNCED IN THE COURT ON 9 TH JULY 2010. SD/- SD/- ( G.D.AGRAWAL ) ( MUKUL SHRAWAT ) VICE PRESIDENT (AZ) JUDICIAL MEMBER AHMEDABAD; DATED 09 / 07 /2010 T.C. NAIR SR. PS ITA NOS.820 821 & 822/AHD/2 007 SHREEJI PACKAGING VS. ITO ASST.YEARS 1998-99 1999-2000 & 2000-01 - 9 - COPY OF THE ORDER FORWARDED TO : 1. THE ASSESSEE 2. THE DEPARTMENT 3. THE CIT CONCERNED 4. THE LD. CIT(APPEALS)-VALSAD 5. THE DR AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT.REGISTRAR) ITAT AHMEDABAD