ACIT-25(1), MUMBAI V. VEVEK S HEGDE, MUMBAI

ITA 1041/MUM/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4558 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI SR
• Keywords: Depreciation; Additional evidence
• Section: 143(3); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.1041/M/2019 ASSESSMENT YEAR: 2009-10 ACIT 25(1), ROOM NO.402, C-10, BKC, BANDRA (E), MUMBAI 400 051 VS. MR. VIVEK SADANAND HEGDE, UNIT NO.6, OLUMPUS INDUSTRIAL ESTATE, OFF MAHAKALI CAVES ROAD, ANDHERI (E), MUMBAI 400 093 PAN: ABUPH3357C (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : NONE REVENUE BY : SHRI R. BHOOPATHI, SR. A.R. DATE OF HEARING : 10.02.2020 DATE OF PRONOUNCEMENT : 18.02.2020 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVEN UE AGAINST THE ORDER DATED 22.12.2018 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2009-10. 2. DURING THE COURSE OF HEARING, NEITHER ASSESSEE N OR HIS AUTHORIZED REPRESENTATIVE APPEARED TO ATTEND THE HE ARING NOR ANY APPLICATION SEEKING ADJOURNMENT WAS FILED. THER EFORE , WE ARE DISPOSING OFF THE APPEAL AFTER HEARING THE LD. D.R. AND GOING THROUGH THE FACTS OF THE CASE. ITA NO.1041/M/2019 MR. VIVEK SADANAND HEGDE 2 3. THE ONLY ISSUE RAISED BY THE REVENUE IN VARIOUS GROUNDS OF APPEAL IS AGAINST THE DELETION OF DISALLOWANCE OF R S.1,15,396/- MADE BY THE AO BEING 10% OF TOTAL EXPENSES OF RS.11 ,53,965/- ON THE GROUND THAT THE MOST OF THE VOUCHERS WERE SE LF MADE AND PAID IN CASH. 4. THE FACTS IN BRIEF ARE THAT THE ASSESSEE FILED T HE RETURN OF INCOME ON 29.09.2009 DECLARING AN INCOME OF RS.29,0 8,500/- WHICH WAS PROCESSED UNDER SECTION 143(1) OF THE ACT . THEREAFTER THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE DULY ISSUED AND SERVED UPON THE ASSESS EE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERV ED THAT ASSESSEE HAS CLAIMED VARIOUS EXPENSES SUCH AS CONVE YANCE OF RS.4,45,569/-, SALES PROMOTION OF RS.48,924/-, STAF F WELFARE OF RS.2,13,560/-, TELEPHONE EXPENSES OF RS.97,308/- AN D DEPRECIATION ON MOTOR CAR OF RS.1,86,209/-. THE AO NOTED THAT MOST OF THE EXPENSES WERE EITHER WITHOUT VOUCHERS O R THERE WERE SELF MADE VOUCHERS AND THUS CAME TO CONCLUSION THAT THERE IS A POSSIBILITY OF PERSONAL ELEMENT. ACCORDINGLY, 10% OF THE TOTAL EXPENSES WERE DISALOWED BY FRAMING ASSESSMENT UNDER SECTION 143(3) OF THE ACT DATED 28.12.2011. 5. LD. CIT(A) DELETED THE DISALLOWANCE AFTER TAKIN G INTO CONSIDERATION THE ASSESSEES SUBMISSION BY OBSERVIN G AS UNDER: I HAVE GONE THROUGH THE ASSESSMENT ORDER AND THE AP PELLANTS SUBMISSION AS WELL AS THE REMAND SUBMITTED BY THE AO. THE ASSESSMENT WAS RE-OPENED AS THE ALLEGATION WAS THE ASSESSEE HAS ENTERED INTO HAWALA TRANSACTIONS FOR PURCHASES AMOUNTING TO RS. 59,45,946/- FROM THE PARTIES NAMEL Y PARADISE CORPORATION, APSARA ENTERPRISES AND RANAKPUR SALES CORPORATION. AT THE ASSESSMENT STAGE, THE APPELLANT STATED THAT THEY HAVE NOT MADE ANY TRANSACTIONS WIT H THE SAID THREE PARTIES BUT IT WAS NOT ACCEPTED BY THE AO WITHOUT GIVING ANY REASO N. ITA NO.1041/M/2019 MR. VIVEK SADANAND HEGDE 3 AT THE APPELLATE STAGE, THE ASSESSEE SUBMITTED THE ENTIRE EVIDENCES ALONG WITH THE CONTENTION FOR VERIFICATION WHICH WAS SENT TO THE A SSESSING OFFICE FOR VERIFICATION. THE AO HAS SUBMITTED HIS REMAND REPORT ON 05/03/201 8 STATING THAT: 'AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE VERIFICATION CONDUCTED BY THIS OFFICE, THE REMAND REPORT IS HEREBY SUBMITTED AS UNDER: A) THE ASSESSEE HAS SUBMITTED THE COPY OF RETURN OF INCOME FOR AY 2009-10, COMPUTATION OF INCOME, BALANCE SHEET, TRADING, PROF IT & LOSS A/C, LIST OF PURCHASES, LIST OF CREDITORS, AND AUDIT REPORT, AS ADDITIONAL EVIDENCE, WITH A SPECIFIC COMMENT THAT THESE WERE SUBMITTED AT THE T IME OF ASSESSMENT PROCEEDINGS. B) THE ASSESSEE WAS REQUESTED TO SUBSTANTIATE HIS SUBMISSION, VIDE LETTER DATED 30/05/2017. THE ASSESSEE, VIDE HIS REPLY DATE D 31/08/2017, SUBMITTED THE FOLLOWING: LETTER OF AUTHORITY, ITR V, COMPUTAT ION, BALANCE SHEET, P&L, TAX AUDIT REPORT, DETAILS OF PURCHASES, LETTERS FIL ED TO ACIT DURING ASSESSMENT PROCEEDINGS FOR DENYING THE PURCHASES DA TED 28/01/2015 & 26/04/2017, ORIGINAL ORDER U/S. 143(3), NOTICE OF D EMAND AND FORM NO. 35. 1. IT IS SEEN FROM THE SUBMISSIONS THAT THE ASSES SEE HAS DENIED THE TRANSACTIONS WITH M/S. RANAKPUR SLAES CORPORATION, M/S. APSARA ENTERPRISES AND M/S. PARADISE CORPORATION, BOTH DUR ING THE RE- ASSESSMENT PROCEEDINGS AS WELL AS REMAND PROCEEDING S. 2. THE DETAILS OF PURCHASES AND CREDITORS DO NOT CONTAIN THE NAMES OF M/S. RANAKPUR SALES CORPORATION, M/S. APSARA ENT ERPRISES AND M/S. PARADISE CORPORATION. 3. THE ADDITIONAL EVIDENCES DO NOT CONCLUSIVELY P ROVE THAT THE PURCHASES WERE NOT MADE FROM M/S. RANAKPUR SALES CO RPORATION, M/S. APSARA ENTERPRISES AND M/S. PARADISE CORPORATI ON. C) THE ASSESSEE WAS THEN ASKED TO FILE COPIES OF ANNEXURE J- SECTION I AND SECTION 2 TO SUBSTANTIATE HIS CLAIM, THE DY. COMMIS SIONER OF SALES TAX (E 635) WAS ALSO REQUESTED TO PROVIDE THE COPIES OF OR IGINAL AND REVISED, IF ANY J1 AND J2 , FOR THE RELEVANT PERIOD. THE ASSESSEE HAS SUBMITTED ANNEXURE J SECTION I AND SECTION 2. THIS OFFICE IS ALSO IN RECEIPT OF THE REPLY FROM THE DY. COMMISSIO NER OF SALES TAX ON 28/02/2018 (COPY ENCLOSED). 1. ANNEXURE J-SECTION I AND SECTION 2 SUBMITTED B Y THE ASSESSEE AND THE COPIES OF J1 AND J2 SUBMITTED BY THE DY. COMMISSION ER OF SALES TAX, APPEAR TO TALLY. D) THEREFORE, IT MAY BE CONCLUDED THAT WHILE THE AD DITIONAL EVIDENCE SUBMITTED BY THE ASSESSEE DO NOT CONCLUSIVELY ELIMI NATE THE PURCHASES OF THE ASSESSEE FROM M/S. RANAKPUR SALES CORPORATION, M/S. APSARA ENTERPRISES AND M/S. PARADISE CORPORATION, IT IS ALSO SEEN THAT THE ANNEXURE J1 & J2 ITA NO.1041/M/2019 MR. VIVEK SADANAND HEGDE 4 FORWARDED BY THE DY. COMMISSIONER OF SALES TAX DON NOT CONTAIN THE TIN OF M/S. RANAKPUR SALES CORPORATION, M/S. APSARA ENTERP RISES AND M/S. PARADISE CORPORATION. IN CASE, YOUR HONOUR DECIDES TO ADMIT THE ADDITIONA L EVIDENCES FILED BY THE ASSESSEE, THE CASE MAY BE DECIDED ON MERTIES. AFTER CONSIDERING THE REMAND REPORT OF THE AO, WHER E HE HAS SPECIFICALLY MENTIONED THAT THE ANNEXURE J1 AND J2 FORWARDED BY THE DY COMMISSIONER OF SALES TAX DO NOT CONTAIN THE TIN OF M/S. RANAKPUR SALES C ORPORATION, M/S. APSARA ENTERPRISES AND M/S. PARADISE CORPORATION, IT IS EV IDENT THAT THE APPELLANT'S CONTENTION IS CORRECT AND IN ABSENCE OF ANY CORROBO RATIVE EVIDENCE, THE ADDITION CANNOT BE SUSTAINED. HENCE, THE APPEAL IS ALLOWED. IN SUM, THE APPEAL IS ALLOWED. 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT LD. CIT(A) HAS PASSED A VER Y SPEAKING AND BALANCED ORDER AFTER CONSIDERING THE SUBMISSION S OF THE ASSESSEE AND AFTER CALLING FOR A REMAND REPORT WHI CH WAS FILED BY THE AO ON 05.03.2018 WHEREIN THE AO HAS CLEARLY STATED THAT THE ASSESSEE HAS NOT MADE PURCHASE FROM THREE PARTI ES NAMELY RANAKPUR SALES CORPORATION AND APSARA ENTERPRISES A ND PARADISE CORPORATION. THEREFORE , WE DO NOT FIND AN Y INFIRMITY IN THE ORDER OF LD. CIT(A) AND UPHOLD THE SAME BY DISM ISSING THE APPEAL OF THE REVENUE. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.02.2020. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 18.02.2020. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI ITA NO.1041/M/2019 MR. VIVEK SADANAND HEGDE 5 THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.