MAHARASHTRA SMALL SCALE INDUSTRIES DEVP. CORPN. LTD., MUMBAI v. ITO 2(2)(1), MUMBAI

ITA 6633/MUM/2008 | 2005-2006
Pronouncement Date: 31-05-2010 | Result: Allowed

Appeal Details

RSA Number 663319914 RSA 2008
Assessee PAN AAACM3863A
Bench Mumbai
Appeal Number ITA 6633/MUM/2008
Duration Of Justice 1 year(s) 6 month(s) 13 day(s)
Appellant MAHARASHTRA SMALL SCALE INDUSTRIES DEVP. CORPN. LTD., MUMBAI
Respondent ITO 2(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 31-05-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 31-05-2010
Date Of Final Hearing 26-05-2010
Next Hearing Date 26-05-2010
Assessment Year 2005-2006
Appeal Filed On 17-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO JUDICIAL MEMBER ITA NO. 6631 TO 6633/MUM/2008 (ASSESSMENT YEARS: 2003-04 TO 2005-06) MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD. KRUPANIDHI 9 WALCHAND HIRACHAND MARG BALLARD ESTATE MUMBAI-400001 PAN: AAACM3863A APPELLANT V/S INCOME TAX OFFICER WARD 2(2)(1) AAYAKAR BHAVAN M K ROAD MUMBAI-400020. RESPONDENT APPELLANT BY : SHRI DEEPAK P.TIKEKA R RESPONDENT BY : S/SHRI S S RANA AND L K AGRAWAL O R D E R PER VIJAY PAL RAO JM THESE THREE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE THREE DIFFERENT ORDERS OF CIT(A) DATED 15.09.2008 FOR THE ASSESSMENT YEAR 2003-04 AND TWO SEPARATE O RDERS DATED 8.09.2008 FOR THE ASSESSMENT YEARS 2004-05 A ND 2005- 06 RESPECTIVELY. ITA NO. 6631 TO 6633/MUM/2008 (ASSESSMENT YEARS: 2003-04 TO 2005-06) 2 2 THE ONLY COMMON ISSUE ARISES IN THESE APPEALS FOR OUR CONSIDERATION AND ADJUDICATION IS WHETHER IN THE FA CTS AND CIRCUMSTANCES OF THE CASE THE CIT(A) IS JUSTIFI ED IN NOT ADMITTING THE ADDITIONAL EVIDENCE IN THE NATURE OF AUDITED ACCOUNTS TAX AUDIT REPORT AND STATEMENT OF INCOME AND NOT DIRECTING THE AO TO ASSESS THE INCOME ON THE BASIS OF AUDITED ACCOUNTS TAX AUDIT REPORT AND STATEMENT OF INCOME . 3. THE ASSESSEE IS A WHOLLY STATE GOVERNMENT OWNE D CORPORATION. THE ASSESSMENT IN ALL THESE ASSESSM ENT YEARS WERE FRAMED BY THE AO WITHOUT CONSIDERING THE AUDI TED ACCOUNTS TAX AUDIT REPORT AND STATEMENT OF INCOME BASED ON AUDITED ACCOUNTS. SINCE THE ASSESSEE COULD NOT GET THE STATUTORY AUDIT REPORT IN TIME AND THE TAX AUDIT W AS ALSO NOT COMPLETED BEFORE THE FILING OF THE RETURN OF INCOM E THE SAME COULD NOT PRODUCE BEFORE THE AO. 4. THE MATTER WAS CARRIED TO CIT(A) WHO DECLINED TO ADMIT THE ADDITIONAL EVIDENCE SOUGHT TO BE PRODUCED BY THE ASSESSEE IN THE FORM OF AUDIT REPORT AND AUDITED ACCOUNTS AND TAX AUDIT REPORT. 5. BEFORE US THE LEARNED AR OF THE ASSESSEE HAS SU BMITTED THAT IN ORDER TO MINIMIZE THE LOSS THE ASSESSEE-CO MPANY FRAMED A VOLUNTARY RETIREMENT SCHEME. UNDER THE S AID ITA NO. 6631 TO 6633/MUM/2008 (ASSESSMENT YEARS: 2003-04 TO 2005-06) 3 SCHEME THE ACCOUNTANT WHO WAS HANDLING THE TAX A UDIT TAX RETURN ALSO OPTED FOR THE VRS WHICH RESULTED INTO DELAY IN FINALIZING THE ACCOUNT AND TAX AUDIT REPORT. SUBS EQUENT TO DELAY IN FINALIZING THE ACCOUNT THE SOFTWARE PROG RAMME PURCHASED BY THE ASSESSEE COMPANY FOR ACCOUNTING PURPOSES WAS NOT FUNCTIONING PROPERLY. THE LEARNED AR EXPLA INED THAT DUE TO VARIOUS DIFFICULTIES IN THE FINALIZING THE ACCOUNT AUDIT OF THE ACCOUNT AND TAX AUDIT COULD NOT BE COMPLET ED IN TIME. THEREFORE AUDITED ACCOUNTS TAX AUDIT REPORT AND S TATEMENT OF INCOME BASED ON AUDITED ACCOUNTS COULD NOT BE P RODUCED BEFORE THE AO IN TIME. THE ASSESSEE WANTED TO PRO DUCE THESE STATUTORY DOCUMENTS BEFORE THE CIT(A) AS AN ADDITIONAL EVIDENCE BUT THE CIT(A) HAS DECLINED TO ADMIT THE ADDITIONAL EVIDENCE TO BE PRODUCED BY THE ASSESSEE. HE HAS POINTED OUT THAT WHILE DECIDING THE APPEAL AGAINST THE PENA LTY ORDER PASSED U/S 271B THE CIT(A) VIDE HIS ORDER DATED 2 9.11.2004 FOR THE ASSESSMENT YEAR 2003-04 HAS ACCEPTED THE RE ASONS AND EXPLANATIONS GIVEN BY THE ASSESSEE FOR NON COMP LETING THE TAX AUDIT IN TIME AND FURNISHING THE TAX AUDIT RE PORT ALONG WITH THE RETURN OF INCOME. HE HAS REFERRED LAST PARAGRAPH OF THE CIT(A)S ORDER DATED 29.11.2004 AGAINST THE OR DER PASSED UNDER SECTION 271B AT PAGES 147 TO 157 OF THE PAPER BOOK. 6. THE LEARNED AR HAS URGED THAT THE ASSESSMENT SHA LL BE BASED ON THE AUDITED ACCOUNTS AND SINCE THE ASSESSE E HAS ITA NO. 6631 TO 6633/MUM/2008 (ASSESSMENT YEARS: 2003-04 TO 2005-06) 4 ALREADY COMPLETED TAX AUDIT THE SAME MAY BE CONSID ERED BY THIS TRIBUNAL. HE HAS ALSO POINTED OUT THAT THE IN COME ASSESSED BY THE AO FOR THE ASSESSMENT YEARS 2003-0 4 AND 2004-05 IS NIL WHEREAS THE INCOME ASSESSED FOR THE ASSESSMENT YEAR 2005-06 IS AT RS.1 19 66 160/-.. B UT AS PER THE AUDITED ACCOUNT OF THE ASSESSEE THE INCOME FO R THE ASSESSMENT YEAR 2003-04 IS LOSS AT RS.19 768 730/- FOR THE ASSESSMENT YEAR 2004-05 IS AT RS.25 29 710/- AND F OR THE ASSESSMENT YEAR 2005-06 IS AT RS.2 51 47 228/-. THUS AS PER THE AUDITED ACCOUNT THE TOTAL INCOME WOULD BE MORE THAN THE ASSESSED INCOME FOR THESE ASSESSMENTS YEARS. 7. ON THE OTHER HAND THE LEARNED DR HAS RELIED UP ON THE ORDERS OF AUTHORITIES BELOW. 8. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND REL EVANT RECORD. WE NOTE THAT WHILE DECIDING THE APPEAL AGA INST THE PENALTY ORDER U/S 271B THE CIT(A) VIDE ITS ORDER DATED 29.04.2004 FOR THE ASSESSMENT YEAR 2003-04 ACCEPT ED THE EXPLANATION OF THE ASSESSEE FOR THE DELAY IN COMPLE TION OF AUDIT AND TAX AUDIT REPORT. THE RELEVANT PORTION OF THE ORDER OF CIT(A) DATED 29.4.2004 IS REPRODUCED BELOW: 4IN MY CONSIDERED OPINION THE SHORTAGE OF ACCOUNTING STAFF AND PARTICULARLY INITIAL PROBLEM IN IMPLEMENTING THE COMPUTER SOFTWARE CAN BE ITA NO. 6631 TO 6633/MUM/2008 (ASSESSMENT YEARS: 2003-04 TO 2005-06) 5 CONSIDERED AS POSSIBLE CAUSE FOR NON COMPLETION OF AUDIT AND FURNISHING OF TAX AUDIT REPORT ALONG WITH THE RETURN OF INCOME. IN FACT THE APPELLANTS STATUTORY AUDIT AS PR COMPANIES ACT HAS ALSO NOT BEEN COMPLETED AND ONLY THE PROVISIONAL ACCOUNTS WERE SUBMITTED ALONG WITH THE RETURN OF INCOME. NON-COMPLETION OF REGULAR AUDIT IS A REASONABLE CAUSE FOR DELAY IN FURNISHING THE TAX AUDIT REPORT IN TIME 9. MOREOVER WHEN THE TOTAL INCOME WOULD BE MORE I F IT IS ASSESSED AS PER THE AUDITED ACCOUNT THEN IN THE INTEREST OF JUSTICE IT WOULD BE PROPER THAT THE ASSESSEE BE AL LOWED TO FILE AUDITED ACCOUNTS TAX AUDIT REPORT AND STATEMENT OF INCOME FOR CONSIDERATION OF TAX AUTHORITIES. WE ARE SATIS FIED WITH THE EXPLANATION AND REASONS OFFERED BY THE ASSESSEE FOR DELAY IN GETTING THE STATUTORY AUDIT REPORT AS PER THE COM PANIES ACT 1956 AND CONSEQUENTLY TAX AUDIT AND FURNISHING OF T AX AUDIT REPORT. ACCORDINGLY WE SET ASIDE THE ORDERS OF TH E LOWER AUTHORITIES AND REMIT THE MATTER TO THE RECORD OF T HE AO FOR CONSIDERATION AND VERIFICATION OF THE AUDITED ACC OUNTS TAX AUDIT REPORT AND STATEMENT OF INCOME BASED ON THE A UDITED ACCOUNTS AND THEREAFTER PASS A FRESH ORDER AS PER LAW. NEEDLESS TO SAY THE ASSESSEE BE GIVEN A FAIR AND R EASONABLE OPPORTUNITY OF BEING HEARD BEFORE PASSING THE ORDER DE-NOVO. ITA NO. 6631 TO 6633/MUM/2008 (ASSESSMENT YEARS: 2003-04 TO 2005-06) 6 10. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31.5.2010 SD SD (P.M.JAGTAP) (VIJAY PAL RAO) ACCOUNTANT MEMBER JUDICIAL MEMB ER MUMBAI DATED 31ST MAY 2010 SRL:25510 COPY TO: 1. MAHARASHTRA SMALL SCALE INDUSTRIES DEVELOPMENT CORPORATION LTD. KRUPANIDHI 9 WALCHAND HIRACHAND MARG BALLARD ESTATE MUMBAI-400001 2.INCOME TAX OFFICER WARD 2(2)(1) AAYAKAR BHAVAN M K ROAD MUMBAI-400020 3 CIT MUMBAI CITY-II MUMBAI. 4.CIT(A)-II MUMBAI. 5. DR B BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR ITAT MUMBAI