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Income Tax Appellate Tribunal, MUMBAI BENCH “A”, MUMBAI
Before: SHRI D.T. GARASIA & SHRI RAJESH KUMAR
Per D.T. GARASIA, Judicial Member:
The present appeal has been preferred by the Revenue against the order dated 02.02.2015 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2007-08.
The short facts of the case are as under:
2 M/s. Tilaknagar Industries Ltd. The assessee is a limited company engaged in manufacturing and selling of industrial alcohol, Indian made foreign liquor, chemicals and sugar cubes. The Assessing Officer (hereinafter referred to as the AO) has assessed the income of Rs.30,30,16,074/- by making additions and disallowances amounting to Rs.18,90,51,561/- which reads as under: Payments made to Anupama 8,12,03,893 Distributors Un-reconciled balances – Selling & 4,23,66,809 Distribution expenses Legal and consultancy charges 66,58,056 Bad debts 4,10,42,642 Master TVC expenses treated as 17,28,496 capital in nature Disallowance u/s. 145A 86,10,081 Payment to Ramnath Glass 23,90,000 Computer Expenses 19,46,305 Disallowance u/s. 14A 20,56,110 PF dues – delayed payment 10,49,169 TOTAL 18,90,51,561/- ADDITIONS/DISALLOWANCES
Matter carried to the Ld. CIT(A) and the Ld. CIT(A) has allowed the claim. Therefore, department is in appeal before us.
During the course of hearing, the Ld. D.R. has raised the objections that the assessee has submitted the paper book wherein the assessee has given the certificate before the Tribunal that the Sl. No.52929 which is filed in paper book No.1 volume B. All the documents were filed before the AO and the Ld. CIT(A). The assessee has also given certificate in paper book No.1 volume ‘C’. The documents at Sl. No.30 to 50 were filed before the AO and the 3 M/s. Tilaknagar Industries Ltd. Ld. CIT(A). Thereafter, assessee has filed the revised index of paper book in part on 26.05.17 and rectified the mistake in giving the certificate and the certificate at Sl. No.32 to 34, 35, 49 and 50 were filed before the AO and the Ld. CIT(A) as per his direction during the appellate proceeding.
The Ld. D.R. objected that he has verified the record and found that this kind of documents were not filed before the Ld. CIT(A). Therefore, Department has taken the ground before the Tribunal that the Ld. CIT(A) has deleted all the additions without verifying distribution expenses being un-reconciled, legal and professional fee without any reason. Moreover, claim of bad debt was allowed. Similarly, TV production was allowed without any proof and whatever the evidence filed before the Ld. CIT(A) was allowed by the Ld. CIT(A) without being verified. The Ld. CIT(A), merely relying upon the statement of the Ld. A.R., has deleted all these additions. Therefore, when all the documents were filed before the Ld. CIT(A), the Ld. CIT(A) should have called for the remand report from AO and if Ld. CIT(A) has not called for the remand report the Ld. CIT(A) should have made enquiry himself to the document filed before the Ld. CIT(A) but merely relying upon the documents he has deleted all these additions which is contrary to the law. Moreover, the Ld. CIT(A) has exceeded his jurisdiction. Therefore, appeal may be allowed.
4 M/s. Tilaknagar Industries Ltd.
On the other hand, during the course of hearing, the enquiry was made from the Ld. A.R. whether there was any mistake on the part of the A.R. who was representing before the Ld. CIT(A). The Ld. A.R. submitted that assessee has submitted additional evidence before the Ld. CIT(A) but the assessee has submitted all these additional evidences as per the direction of Ld. CIT(A) and as per rule 46A read with section 254 of the Act, the Ld. CIT(A) on his own direction can ask the assessee to produce the document or evidence. Therefore, the Ld. A.R. relying upon the decision of Mumbai Tribunal in the case of ITO vs. Industrial Roadways 112 ITD 293 Mumbai submitted that there is no requirement in law that Commissioner should consult and confront AO on every additional evidence. The Ld. A.R. also submitted that assessee has received all these payments through government agency only. Therefore, there is no reason to restore this matter back to the file of AO.
We have heard the rival contentions of both the parties. Looking to the facts and circumstances of the case, we find that assessee is engaged in business of manufacturing and selling of industrial alcohol, Indian made foreign liquor, chemicals and sugar cubes. The assessee did not submit any document before the AO but some of the documents were submitted before the Ld. CIT(A) and the Ld. CIT(A) relying upon those documents has deleted the addition. We have also gone through the order of the Ld. CIT(A) and the Ld. CIT(A) nowhere states that he himself has made the enquiry in respect of the expenditure or payment. The Ld. CIT(A)
5 M/s. Tilaknagar Industries Ltd. has coterminous power with the AO but at the same time the Ld. CIT(A) should have made an enquiry himself or he should have directed the AO to make the enquiry or he may call for the remand report. In this case, the Ld. CIT(A) has not followed any procedure and without following any procedure he has deleted the addition which is not as per law. As per the decision of Hon’ble Supreme Court in the case of CIT vs. Valimohmed Ahmedbhai 134 ITR 214 (Guj) wherein it is held that where the assessee produced the additional evidence in his appeal the ITO must be offered opportunity to oppose it and test the additional evidence and countering the effect thereof to produce the evidence in rebuttal. Therefore, respectfully following the decision, we are of the opinion that Ld. CIT(A) is not justified in deleting the same. Therefore, we reverse the finding of the Ld. CIT(A) and restore this matter back to the file of AO. During the hearing, the Ld. A.R. submitted that all the payments were made from government only. Therefore, necessary enquiry may be made at the end of AO. AO is directed to decide the appeal after giving opportunity of hearing to the assessee. Accordingly, we restore this issue back to the file of AO.
In the result, Departmental appeal is allowed.
Order pronounced in the open court on 14.02.2018.