SAMETA EXPORTS P. LTD,MUMBAI vs. ACIT CIR 1(3), MUMBAI

During hearing, the crux of argument advanced by Shri K.P. Kapadia, ld. counsel for the assessee is that the predecessors Commissioner of the present Commissioner of Income Tax (Appeal) had already asked for remand report and the necessary details were duly submitted by the assessee in the remand proceedings, but the Ld. First Appellate Authority canceled the said remand on technical grounds. On the other hand, the ld. DR, Ms. Neelima V. Nadkarni, defended the impugned order by contending that necessary details were not furnished by the assessee.

2.1. We have considered the rival submissions and perused the material available on record. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we note that the ld. Assessing Officer made addition of Rs.1,65,57,583/- on account of sundry creditors as unexplained by the Assessing Officer. Without going into much deliberation, we find that the Commissioner of Income Tax (Appeal) has discussed the issue at page-4 (para-4). The addition was made on the plea that the necessary details with respect to sundry creditors were not filed by the assessee. The additional evidence filed by the assessee under Rule-46A was rejected. From para 15 of the impugned order, the contention of the assessee has been noted that huge losses were incurred by the assessee, therefore, addition should not be sustained. On this reasoning, the additional evidence furnished by the assessee, during appellate proceedings, could not be accepted. Without commenting much, we are of the view that no person should be condemned unheard. Even otherwise, the mandate of Article 265 of Constitution of India is to levy and collect due taxes. Considering the totality of facts, we direct the ld. Assessing Officer to examine the claim of the assessee and then decide in accordance with law, thus, the appeal of the assessee is allowed for statistical purpose only. Needless to mention here, the assessee be given opportunity of being heard with further liberty to furnish necessary evidence, if any, to substantiate its claim.

Now, we shall take up the cross appeal of the Revenue (ITA No.4252/Mum/2010) (Assessment year 2004- 05). The crux of arguments on behalf of the Revenue is that the assessee has not proved that strategic investment was made or not, therefore, the stand of the Commissioner of Income Tax (Appeal) may be reversed. The ld. counsel for the assessee defended the conclusion in the impugned order and place reliance upon the decision from Hon’ble Bombay High Court in CIT vs M/s PHIL Corporation Ltd. Goa (2011-TIOL-432-HC-MUM-IT); Tax Appeal no.57 of 2002, order dated 18/06/2011.

Now, we shall take up the appeal of Assessment year 2006-07 (ITA No.4251/Mum/2010), wherein, issue of deleting the disallowance of interest of Rs.1,44,33,383/-, being the interest on borrowed funds advanced to sister concern for acquiring control over corporate entities under the public domain has been challenged. The ld. DR advanced arguments, which is identical to the above ground. Considering the totality of facts, we are of the view, that this issue also require due examination at the level of the Assessing Officer, therefore, we direct the assessee to produce the evidence of claim and the factum that the interest on borrowed funds was advanced to sister concern for commercial expediency, as has been claimed. The ld. Assessing Officer to examine the claim of the assessee and then decide in accordance with law, thus, appeal of the Revenue is allowed for statistical purposes.