COL AMARJIT D NAGI, MUMBAI V. ASST CIT CEN CIR 20,

ITA 1051/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7960 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 14-02-2014
• Court: TRIBUNAL
• Department Lawyers: SAVI TA BUNDAS
• Assessee Lawyers: D A SHETTY
• Keywords: Search and seizure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH , JM ITA NO. 1050 / MUM/20 1 4 & 1051/MUM/2014 ( ASSESSMENT YEAR : 2005 - 06 & 2007 - 2008 ) COL.AMARJIT D. NAGI 5A SANGAM BUILDING, NEAR HDFC BANK, JUHU, VERSOVA, LINK ROAD, ANDHERI (W), MUMBAI VS. ACIT CC - 2 0, MUMBAI PAN/GIR NO. AAMPN1956A APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI D.A. SHETTY REVENUE BY MS. SAVITA BUNDAS DATE OF HEARING 29/12/2016 DATE OF PRONOUNCEME NT 21 / 03 /201 7 / O R D E R PER R.C.SHARMA (A.M) : THESE ARE THE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2005 - 2006 & 2007 - 2008 IN THE MATTER OF ORDER PASSED U/S. 143(3)/153A OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - A.Y.2005 - 2006 1. THE VERY ASSUMPTION THAT THE ASSESSEE IS A PART OF THE NAGI GROUP AND CARRYING OUT SEA RCH AND SEIZURE ACTION BY THE INCOME TAX DEPARTMENT IS NOT JUSTIFIED. 2. THE ASSESSEE HAD DISCLOSED AS MUCH EVIDENCE AS POSSIBLE TO HIS COMPLETE KNOWLEDGE AND IN GOOD FAITH. 3. THE HON. CIT (APPEALS) DISMISSED THE CLAIM OF THE ASSESSEE WITH RESPECT TO CREDIT OF RS. 15,07,761/ - IN THE BANK STATEMENT OF ITA NO. 1050/MUM/2014 & 1051/MUM/2014 COL. AMARJIT D. NAGI 2 THE ASSESSEE THAT IT WAS PART SALES PROCEED DESPITE CLEAR EXPLANATION BEING PROVIDED. A.Y.2007 - 08 1. THE V E RY ASSUMPTION THAT THE ASSESSEE IS A PART OF THE NAGI GROUP AND CARRYING OUT SEARCH AND SEIZURE ACTION BY THE I NCOME TAX DEPARTMENT IS NOT JUST IFIED. 2. THE ORDER PASSED BY THE LD. ACLT MR. R. P. RASTO GI AND HON. CIT (APPEALS) - 39T6 IS INCONSIDERATE BECAUSE THE ASSESSEE HAD, TIME AND AGAIN MENTIONED THAT ALL THE DOCUMENTARY EVIDENCES PERTAINING TO VOUCHERS AND BILLS COULD NOT BE PRODUCED AS THEY HAD BEEN MISPLACED DUE TO CONSTANT SHIFTING RENTED PREMISE S AND COULD NOT BE TRACED. 3. THE ASSESSEE HAD DISCLOSED AS MUCH EVIDENCE AS POSSIBLE TO HIS COMPLETE KNOWLEDGE AND IN GOOD FAITH. 4. THE HON CIT (APPEALS) IS NOT JUSTIFIED IN DISALLOWING OF RS. 4,76 ,184/ - @ 25% OF EXPENSES OF RS.1 9,04,737/ - . 5. TH E HON CIT (APPEALS) IS NOT JUSTIFIED IN DISALLOWING 25 % OF UNSECURED LOANS OF RS 532,880/ AND SUNDRY CREDITORS OF RS 6,29,985/ - 6. THE HON. CIT (APPEALS) ERRED IN CONFIRMING THE CREDIT ENTRIES IN THE BANK STATEMENT RS. 22,61,891/ - WHICH HAS ALREADY DECL ARED BY THE ASSESSEE IN HIS RETURN OF INCOME AS IT WAS PART SALES PROCEED (RS. 1 5,21,090/ - ) AND THE BALANCE AMOUN T OF RS. 7,40,802/ - WAS REFLECTED IN THE ASSESSEE'S WIFE'S (MRS. CHANDRA NAGI) RET URN OF INCOME AS IT PERTAINS TO HER. THE APPELLANTS CRAVE LEAVE TO ADD AND OR AMEND THE GROUNDS OF APPEAL, IF THE FACTS AND CIRCUMSTANCE OF THE CASE SO REQUIRE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. FACTS IN BRIEF ARE THAT T HE ASSESSEE IS AN OFFICER FROM THE INDIAN ARMY, WHO HAS RETIRED AF TER 30 YEARS OF SERVICE. IN 30.05.2008, THERE WAS SEARCH AND SEIZURE ACTION U/S 132(1) CARRI ED OUT BY THE DDIT (INV) UNIT - II. THE ASSESSEE DERIVES INCOME FROM PENSION & INCOME FROM OTHER SOURCES AND FILED THE RETURN OF INCOME ON 30.08.2010 DECLARING THE I NCOME OF RS ITA NO. 1050/MUM/2014 & 1051/MUM/2014 COL. AMARJIT D. NAGI 3 1,30,77 4. IN THE A.Y.2005 - 06, ADDITIONS MADE ON ACCOUNT OF UNACCOUNTED SALES STAND DELETED BY THE HON. COMMISSIONER OF INCOME TAX APPEALS 39 - VIDE ORDER DATED 07.11. 2013 . HOWEVER, REVENUE IS NOT IN APPEAL BEFORE US AGAINST THE SAID DELETION. 5. THE LD. ASST. CORN OF INCOME TAX ADDED A SUM OF RS . 15, 07,761/ OF CREDITS FOUND IN THE BANK STATEMENTS AS FOLLOWS: - A. GLOBAL TRUST BANK (ORIENTAL BANK OF COMMERCE) RS 3,56,969/ - B. CENTRAL BANK OF INDIA - OVERDRAFT. AGAINST FIXED DEPOSIT RS 11,50,792/ - 6 . ADDITION WAS CONFIRMED BY CIT(A) AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FROM RECORD THAT T HE ACCOUNT WAS JOINTLY HELD BY ASSESSEE WITH HIS WIFE MRS . CHANDRA NAGI. CREDIT AMOUNT PERTAINS TO THE SALES/RECEIPT OF HIRING AND OTHER RECEIPTS. COPY OF BANK ACCOUNT SUMMARY AND BANK STATEMENT WAS FILED WITH LOWER AUTHORITIES. CENTRAL BANK OF IND IA OVERDRAFT ACCOUNT NO 303766 RS.11,50,576/ - IS AN OVE RDRAFT ACCOUNT AGAINST THE FIXED DEPOSITS. THE FIXE D DEPOSITS WERE HELD IN THE NAME OF COL AMARJIT NAGI AND MRS. CHANDRA NAGI . THE FIXED DEPOSITS WERE MADE OUT OF THE RETIREMENT BENEFITS RECEIVED AT THE TIME OF RETIREMENT. SINCE MRS. CHANDRA NAGI WAS CARRYING OUT HER BUSINESS IN HER PERSONAL NAME, IN ORDER TO SUSTAIN HER BUSINESS, THE OVERDRAFT HAS BEEN AVAILED AGAINST THE DEPOSIT TO SUPPORT HE R. T HE OVERDRAFT AGAINST DEPOSIT HAS BEEN AVAILED BY THE ASSESSEE. HOWEVER, THE ACCOUNT HAS BEEN JOINTLY HELD BY COL AMARJIT NAGI AND MRS. CHANDRA NAGI. THE OPERATION IN THE ACCOUNTS PERTAINS TO MRS. CHANDRA NAGI AND SHE HAS DECLARED THE AMOUNT ITA NO. 1050/MUM/2014 & 1051/MUM/2014 COL. AMARJIT D. NAGI 4 DEPOSITED IN THE ACCOUNT AS HER JOB WORK/ CONTRACT RECEIPT IS HER PROFIT AND LOSS ACCOUNT AND ALSO THE EXPENSES INCURRED BY HER IN THIS ACCOUNT . IT APPEARS THAT LOWER AUTHORITIE S HAVE NOT PROPERLY APPRECIATED THE DOCUMENTARY EVIDENCES AS DISCUSSED ABOVE WITH REGARD TO THE FIXED DEPOSIT MADE WITH THE BANK OUT OF THE RETIREMENT BENEFITS. IN THE FITNESS OF THINGS, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH. WE DIRECT ACCORDINGLY. 8. DURING THE ASSESSMENT YEAR 2007 - 08, THE AO FOUND THAT T HE ASSESSEE HAD DEBITED EXPENSES AGGREGATING TO RS. 29,88,615/ - TO THE PROFIT & LOSS A/C FOR THE RELEVANT ASSESSMENT YEAR, HOWEVER THE ID. ACLT DISALLOWED 25% OF THE CLAIMS A MOUNTING TO RS. 7,47,153/ - . IN AN APPEAL FILED BEFORE CIT(A), T HE HON. CIT (APPEA LS) ON PERUSAL OF EVIDENCES G AVE A RELIEF IN THE CASE OF DIRECT EXPENSES - ARTISTS AND ARTISANS RS 10,87,777/ - AND THE RELIEF @' 25 % I.E RS. 2,70,970/ - WERE ALLOWED. H OWEVER, PAYMENTS MADE FOR PURCHASE OF MATERIALS OF RS . 9,31,920/ - AND INDIRECT EXPENSES RS 9,72,817/ - WERE DISALLOWED ON THE GROUND THAT THE APPELLANT COULD NOT SUBSTANTIATE THE CLA IM AND ADHOC DISALLOWANCE OF RS. 4 76,184/ - ~25 % IN RESPECT OF EXPENSES OF RS 19,04,7 37/ - ' WAS CONFIRMED. 9 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT WITH REGARD TO DISALLO WANCE OF 25% OF EXPENSES OF RS. 29,88,615/ - CLAIMED BY THE ASSESSEE IN THE P&L ACCOUNT , T HE EVIDENCES FURNISHED BY THE ASSESSEE BEFORE LOWER AUTHORITIES WERE AS FOLLOWS: THE ASSESSEE GAVE THE BREAKUP OF EXPENSES AS PURCHASE OF MATERIALS RS.9,31,920/ - ITA NO. 1050/MUM/2014 & 1051/MUM/2014 COL. AMARJIT D. NAGI 5 DIRECT EXPENSES - ARTISTS & ARTISANS RS.10,87,777/- INDIRECT EXPENSES RS.9,72,817/ - 10 . ADHOC DISALLOWANCE OF RS 6,29,618 / - BEING 25% OF THE TOTAL LIAB ILITIES (LOAN & CURRENT LIABILITIES) OF RS. 25,18,473/ - SHOWN IN THE BALANC E SHEET WAS MADE. WE FOUND THAT BEFORE THE LOWER AUTHORITIES ASSESSEE SUBMITTED THE FOLLOWING BREAKUP; UNSECURED LOANS - RS. 5, 70,380/- SUNDRY CREDITORS - RS. 6,29,985/- PROVISIONS - RS. 13, 18,108/ - THE ASSESSEE FURTHER GAVE A BREAKUP OF RS. 5, 70,380/ - AS; A. UNSECURED LOAN RS 5, 70,380/ - ARE AS FOLLOWS: METRO CINEMA RS. 37,500/ - MRS. CHANDRA NAGI RS . 5, 32,880/ - 11 . AMOUNT FROM METRO CINEMA OF RS 37500/ - . W AS AN ADVANCE RECEIVED FOR THEIR WORK. HO W EVER, THE WORK COULD NOT BE COMPLETED AND THE SAME IS PENDING IN THIS YEAR. CONFIRMATION OF LOAN AMOUNT FROM MRS. CHANDRA NAGI WAS FILED. 12 . THE HON. CIT (A PPEALS) CONFIRMED ADDITION IN RESPECT OF SUNDRY CREDITOR S B Y OBSERVING THAT ASSESSEE COULD NOT PRODUCE INFORMATION W. R. T. SUNDRY CREDITORS AND AMOUNT RECEIVED FROM METRO CINEM A. 1 3 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ADDITIONS OF RS 22,61,891/ - WAS MADE UNDER SECTION 68 OF THE INCOME TAX AC T, 1961 IN RESPECT OF CREDIT ENTRIES FOUND IN THE ASSESSES BANK ACCOUNT STATEMENTS. THE ASSESSEE GAVE THE BREAKUP AS UNDER: - ITA NO. 1050/MUM/2014 & 1051/MUM/2014 COL. AMARJIT D. NAGI 6 (BANK STATEMENT - ENCLOSED) CURRENT ACCOUNT 01012880880 (SAI SOHAM) RS. 15,21,090/ - 0/ D ACCOUNT N O. 303766 RS.7,40,802/ - 1 3 .1 WITH REGARDS TO RS. 15,21,090/ - THE ASSESSEE CLAIMED THAT HE HAD SHOWED SAL E OF RS. 32,58,000 OF WHICH RS.1 5,21,090 / - IS RECEIVED IN THE CURRENT YEAR AND BALANCE IN THE NEXT YEAR. IN RESPECT TO AMOUNT OF RS.7,40,802/ - , IT PERTAINS TO MRS. CHANDRA NAGI AND IS REFLECTED IN HER INCOME TAX RETURN. 12. IN VIEW OF THE ABOVE DISCUSSION, WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR DECIDING AFRESH IN RESPECT OF DISALLOWANCE OF RS. 4,76,184/ - , RS.5,32,880/ - , RS.22,61,891 AND RS.7,40,802/ - . IT APPEARS THAT LO WER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE EVIDENCED FILED BEFORE THEM. ACCORDINGLY, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER CONSIDERING THE ABOVE DOCUMENTS. 14 . THE LEGAL GROUND TAKEN BY ASSESSEE TO THE EFFECT TH AT ASSESSEE BEING PART OF NAGI GROUP WAS NOT PRESSED BY LEARNED AR, THE SAME IS THEREFORE DISMISSED IN LIMINI AS NOT PRESSED. 14. IN THE RESULT, APPEALS ARE ALLOWED IN PART FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 2 1 / 0 3 /2017 SD/ - ( AMARJIT SINGH ) SD/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 2 1 / 03 /201 7 KARUNA SR. PS ITA NO. 1050/MUM/2014 & 1051/MUM/2014 COL. AMARJIT D. NAGI 7 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELL ANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//