SWAPNIL ENTERPRISES, MUMBAI V. JCIT (OSD) CIR 15(1), MUMBAI

CO 73/MUM/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7697 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-08-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T D SINGH
• Assessee Lawyers: C V DHARKAR
• Keywords: Unexplained cash credit; Principle of natural justice; Additional evidence
• Section: 68; 144

Judgement Text

ITA NO.5166 OF 2011 & CO 73 OF 2012 SWAPNIL ENTERPR ISES MUMBAI A BENCH PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL 'A' BENCH, MUMBAI BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.5166/MUM/2011 (ASSESSMENT YEAR: 2008-09) ACIT, CENTRAL CIRCLE 15(1), ROOM NO. 104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI 400007 VS. SWAPNIL ENTERPRISES, B-104 HARSHAD APARTMENTS, BEHIND EVARAD NAGAR, E.E. HIGHWAY, SION (EAST), MUMBAI 400 022 PAN: ABDFS 2484 B (APPELLANT) (RESPONDENT) C.O. NO.73/MUM/2012 (ARISING OUT OF ITA NO.5166/MUM/2011) (ASSESSMENT YEAR: 2008-09) SWAPNIL ENTERPRISES, B-104 HARSHAD APARTMENTS, BEHIND EVARAD NAGAR, E.E. HIGHWAY, SION (EAST), MUMBAI 400 022 PAN: ABDFS 2484 B VS. ACIT, CENTRAL CIRCLE 15(1), ROOM NO. 104, MATRU MANDIR, 1 ST FLOOR, TARDEO ROAD, MUMBAI 400007 (CROSS OBJECTOR) (RESPONDENT) DEPARTMENT BY: SHRI T.D. SINGH, DR ASSESSEE BY: SHRI C.V. DHARKAR DATE OF HEARING: 23/8/2012 DATE OF PRONOUNCEMENT: 31/8/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THE REVENUE APPEAL PREFERRED AGAINST THE RODER OF T HE CIT (A)- 26 MUMBAI, DATED 29.04.2011 AND ASSESSEE PREFERRED CROSS OBJECTION. 2. BRIEFLY STATED, ASSESSEE IS A REGISTERED FIRM ENGAG ED IN THE BUSINESS OF TRANSPORTATION OF DEBRIS AND OTHER MATE RIALS ARISING OF DEMOLISHED STRUCTURES. SINCE DETAILS CALLED FOR ARE NOT FILED BY ITA NO.5166 OF 2011 & CO 73 OF 2012 SWAPNIL ENTERPR ISES MUMBAI A BENCH PAGE 2 OF 4 ASSESSEE, AO REJECTED THE BOOKS OF ACCOUNT AND DISA LLOWED 25% OF THE EXPENDITURE CLAIMED IN THE BOOKS OF ACCOUNT IN AN ORDER U/S 144. FURTHER SINCE ASSESSEE HAS NOT FURNISHED ANY D ETAILS, AN AMOUNT OF ` 32,43,130/- WAS ALSO ADDED AS INCOME UNDER SECTION 68 HAS INCREASED IN CURRENT LIABILITY AND FURTHER AN A MOUNT OF ` 37,40,960/- AGAIN UNDER SECTION 68 IN UNSECURED LOA NS SHOWN DURING THE YEAR. 3. BEFORE THE CIT (A) ASSESSEE SUBMITTED THAT OUT OF T HE EXPENDITURE CLAIM, DISALLOWANCE WAS OF ` 85,28,956/- I.E. 25% OF THE TOTAL EXPENSES AGGREGATING TO ` 3,41,15,825/-. IT WAS SUBMITTED THAT MAJOR EXPENDITURE PERTAIN TO THE PAYMENTS TOWARDS W ORK TO A SINGLE PARTY OFFBEAT DEVELOPERS PVT. LTD AND BALANCE OF EX PENDITURE WAS TOWARDS DAY-TO-DAY MAINTENANCE. IT WAS ALSO FURTHER SUBMITTED THAT EXPENSES ON OIL, DIESEL AND PAYMENTS TO OTHER TRANS PORT SHOWN AS PURCHASES ON WHICH TDS WAS MADE. THEREFORE, AS AGAI NST ` 85,28,956/- DISALLOWED BY AO, THE CIT (A) SUSTAINED 10% OF THE DISALLOWANCES OF OTHER EXPENSES AT ` .1,37,140/-. AFTER CONSIDERING THE SUBMISSIONS INCLUDING THAT AMOUNT OF UNSECURED LOAN OF ` 45,67,250/- FROM ICICI BANK WAS ALSO DISALLOWED, TH E CIT (A) DELETED THE ADDITION UNDER SECTION 68. THEREFORE, T HE REVENUE IS AGGRIEVED. NO OPPORTUNITY WAS GIVEN TO AO AND NO DE TAILS WERE FURNISHED IN THE COURSE OF ASSESSMENT. THE REVENUE HAS RAISED FOUR GROUNDS IN THIS REGARD. 4. IN THE CROSS OBJECTION, ASSESSEE CONTENDS THAT AO W AS NOT CORRECT IN COMPLETING THE ASSESSMENT UNDER SECTION 144 WHICH WAS BAD IN LAW SUFFERING FROM LEGAL INFIRMITIES. 5. WE HAVE HEARD THE LEARNED DR AND THE LEARNED COUNSE L. AT THE OUTSET IT WAS NOTICED THAT IN THE ASSESSMENT PR OCEEDINGS THERE WAS NON FURNISHING OF INFORMATION WHICH LEAD TO AO FOR DISALLOWANCE OF 25% OF THE EXPENSES AND ALSO MAKING ADDITION AS UNEXPLAINED CASH CREDITS AND LOANS UNDER SECTION 68 . EVEN THOUGH ITA NO.5166 OF 2011 & CO 73 OF 2012 SWAPNIL ENTERPR ISES MUMBAI A BENCH PAGE 3 OF 4 THE ESTIMATION WAS LITTLE HIGH PITCHED WHICH IS NOT ACCORDING TO THE SPIRIT OF THE PROVISION OF SECTION 144, WE ARE OF T HE OPINION THAT THE CIT (A) ALSO EQUALLY ERRED IN DELETING THE AMOUNTS. FIRST OF ALL THERE WAS NO ADDITIONAL INFORMATION BEFORE THE CIT (A) AS THERE IS NO ADMISSION OF ANY ADDITIONAL EVIDENCE. NOT ONLY THAT ON THE BASIS OF THE STATEMENTS MADE BY ASSESSEE, SUBSTANTIAL AMOUNT S WERE DELETED WITHOUT SUBJECTING THEM TO VERIFICATION BY AO IN RE MAND PROCEEDINGS. CIT (A) SHOULD HAVE FOLLOWED THE PRINC IPLES OF NATURAL JUSTICE AND SHOULD NOT HAVE PUT THE ONUS ON AO AS S EEN FROM THE TENOR OF THE ORDER WHILE DELETING THE AMOUNTS. IT I S ALSO SURPRISINGLY SEEN THAT ASSESSEE HAS PAID THE ENTIRE AMOUNT TO WO RK DONE TO A SINGLE PARTY OFFBEAT DEVELOPERS PVT. LTD. ON THE RE ASON THAT THIS PAYMENT CANNOT LEAVE ANY SCOPE FOR IMPROPER WORK DO NE BY ASSESSEE, THE CIT(A) DELETED THE SAME WITHOUT VERIF ICATION. THIS REASONING IN OUR VIEW IS NOT CORRECT SINCE ANY EXPE NDITURE CLAIM HAS TO BE VERIFIED WHETHER THE EXPENDITURE HAS BEEN SPE NT WHOLLY OR EXCLUSIVELY FOR THE PURPOSE OF BUSINESS UNDER THE P ROVISIONS OF SECTION 37(1). SINCE THE ASSESSMENT WAS COMPLETED EX-PARTE FOR FAILURE TO FURNISH DETAILS AS CALLED FOR AND SINCE THE CIT (A) ALSO DID NOT HAVE ANY ADDITIONAL EVIDENCE TO DELETE THE ADDI TION, WE ARE OF THE OPINION THAT THE MATTER REQUIRES RE-EXAMINATION BY AO. ACCORDINGLY THE ORDERS OF AO AND CIT (A) ARE SET AS IDE AND ASSESSMENT PROCEEDINGS FOR THE ASSESSMENT YEAR IS R ESTORED TO THE FILE OF AO. AO SHOULD GIVE DUE OPPORTUNITY TO ASSES SEE TO EXPLAIN VARIOUS CLAIMS. AO SHOULD ALSO KEEP IN MIND THAT AS SESSEE HAS NOT COME UP IN APPEAL ON THE 10% OF THE EXPENDITURE DIS ALLOWED AND CONFIRMED BY THE CIT (A). TO THAT EXTENT IF THE OTH ER EXPENDITURES ARE FOUND GENUINE, THE ADDITION HAS TO BE SUSTAINED . WITH THESE DIRECTIONS, THE REVENUE APPEAL IS CONSIDERED ALLOWE D FOR STATISTICAL PURPOSES. ITA NO.5166 OF 2011 & CO 73 OF 2012 SWAPNIL ENTERPR ISES MUMBAI A BENCH PAGE 4 OF 4 6. IN A WAY ASSESSEES OBJECTION WITH REFERENCE TO THE PROCEEDINGS UNDER SECTION 144 RAISED IN THE CROSS O BJECTION WERE ALSO COVERED BY THIS DECISION. 7. IN THE RESULT BOTH THE APPEAL OF REVENUE AND CROSS OBJECTION FILED BY ASSESSEE ARE CONSIDERED AS ALLOWED FOR STA TISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2012. SD/- SD/- (B.R. MITTAL) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED 31 ST AUGUST, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, A BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI