DCIT 2(1)(1), MUMBAI V. CHITRA REALTY LTD, MUMBAI

ITA 1066/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1688 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 02-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABDUL HAKEEM M
• Assessee Lawyers: VIRAL DOSHI
• Keywords: Unexplained expenditure; Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAM LAL NEGI , JM ITA NO. 1066 / MUM/20 16 ( ASSESSMENT YEAR : 2010 - 11 ) DCIT 2(1)(1), R.NO.561, 5 TH FLOOR, AAYAKAR BHAVAN M.K. ROAD, MUMBAI 400 020 VS. M/S. CHAITRA REALTY LTD., 3 RD FLOOR, RAHEJA CHAMBERS CHS, FREE PRESS MARG NARIMAN POINT, MUMBAI - 400 021 PAN/GIR NO. AAACC3612P APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI ABDUL HAKEEM M ASSESSEE BY SHRI VIRAL DOSHI DATE OF HEARIN G 31/08/ 201 8 DATE OF PRONOUNCEMENT 31 / 08 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A) - 4, MUMBAI DATED 16/12/2015 FOR A.Y.2010 - 11 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE: - 1. THE ORDER OF THE CIT(A) IS OPPOSED TO LAW AND FACTS OF THE EASE. 2. ON THE FACTS AND IN THE CIRCUMSTANC ES OF THE CASE AND IN THE LAW, THE CIT(A) HAS ERRED IN DIRECTING T HE DIS ALLOWANCE OF RS. 13,75,16,759/ - BY ADMITTING ADDITIONAL EVIDENCES, IN CONTRAVENTION OF PROVISIONS OF RULE 46A & WITHOUT CALLING FOR REMAND REPORT. ITA NO. 1066/MUM/2016 M/S. CHITRA REALTY LTD., 2 3. WE HAVE HEARD RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT AO HAS DISALLOWED EXPENDITURE OF RS.13,75,16,759/ - BY OBSERVING AS UNDER: - 3. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY WAS ENGAGED IN THE BUSINESS OF PROPERTY DEVELOPERS. 4.1 IT IS SEEN FROM THE PROFIT & LOSS ACCOUNT, TH E ASSESSEE HAS DEBITED AN AMOUNT OF RS.34,44,13,707/ - TOWARDS CONSTRUCTION COST INCURRED DURING THE YEAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO SUBMIT THE DETAILS OF THE EXPENSES AND ALSO SU BMIT THE BANK STATEMENT IN RESPECT OF THESE PAYMENTS. \ THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE VIDE LETTER DATED 07.12.2002 SUBMITTED THE DETAILS IN RESPECT OF EXPENSES INCURRED AMOUNTING TO RS.20.68,96,948 / - A ND EXPRESSED THEIR INABILITY TO P RODUCE REMAINING DETAILS STATING THAT DUE TO A MAJOR FIRE AT THE COMPANIES PREMISES SUBSTANTIAL ORIGINAL CHALLANS AND RECEIPTS HAVE BEEN DESTROYED. DURING THE COURSE OF HEARING ON 25.02.2013, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS SPECIFICALLY ASKED T O PRODUCE BANK STATEMENTS SHOWING EXPENSES. HOWEVER, IN SPITE OF SUFFICIENT TIME AND OPPORTUNITY GIVEN, THE ASSESSEE HAS FAILED TO REMAINING DETAILS OF EXPENSES AMOUNTING TO RS.13,75,16,759/ - . THE CONTENTION OF THE ASSESSEE THAT THEY WERE UNABLE TO PRODUCE REMAINING DETAILS DUE TO FIRE IS NOT ACCEPTABLE BECAUSE DURING THE COURSE OF HEARING ON 25.02.2013, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE WAS ASKED TO SUBMIT THE COPIE S OF THE BANK ACCOUNTS. SINCE AL L THE EXPENSES ARE INCURRED BY THE ASSESSEE THRO UGH BANK, THE ASSESSEE CAN VERY WELL SHOW THEIR EXPENSES IN BANK ACCOUNTS. THE ASSESSEE EVEN FAILED TO SUBMIT THE BANK STATEMENT. 4.2 IN VIEW OF THE ABOVE, THE EXPENSES MADE TOWARDS COST OF CONSTRUCTION AS BOGUS AND UNEXPLAINED EXPENDITURE AND THE SAM E IS HEREBY HELD TO BE NOT LIABLE FO R ANY SORT OF DEDUCTION. AS THESE EXPENSES ARE INCLUDED BY THE, STOCK, THE CLOSING STOCK FOR F.Y. 2009 - 10 IS RE - WORKED OUT AS UNDER: OPENING INVENTORY 29,19,28,018 ADD: COST OF CONSTRUCTION CLAIMED BY THE ASSES SEE 53,51,24,450 LESS: EXPENSES DISALLOWED AS DISCUSSED ABOVE 13,75,16,759 39,76,07,691 ITA NO. 1066/MUM/2016 M/S. CHITRA REALTY LTD., 3 REVISED CLOSING INVENTORY 68,95,35,709 4.3 HAVING ARRIVED AT THE REVISED CLOSING INVENTORY IN RESPECT OF THE ASSESSEE'S PROJECT AT RS. 68,95,35,709 / - , THE SAME SHALL BE CARRIED FORWARD TO SUBSEQUENT YEAR AND THE INCOME IN THE YEAR OF COMPLETION OF THE SAID PROJECT SHALL BE CALCULATED BASED ON THIS REVISED CLOSING INVENTORY. 4. THE CIT(A) DELETED THE SAME BY OBSERVING THAT AS PER THE BANK STATEMENT, THE ASSESSEE HAS PROVED THE INCURRING OF EXPENDITURE. HOWEVER, FROM THE PAPER BOOK, WE FOUND THAT NO SUCH BANK STATEMENT WAS FILED BEFORE THE AO NOR THE CIT(A) HAS GIVEN ANY OPPORTUNITY TO THE AO WHICH IS IN CONTRAVENTION OF RULE 46A. FURTHERMORE, EVEN THO UGH CIT(A) HAS SPOKEN REGARDING BANK STATEMENT, HE HAS NOT GIVEN ANY POSITIVE FINDING WITH REGARD TO THE GENUINENESS OF EXPENDITURE HAVING BEEN INCURRED AND SHOWN IN THE BANK STATEMENT. IN ALL FAIRNESS WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE MATTE R BACK TO THE FILE OF THE AO FOR DECIDING AFRESH. NEEDLESS TO SAY THAT ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY BEFORE DECIDING ISSUE. 5. IN THE RESULT, APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 31 / 08 /201 8 SD/ - ( RAM LAL NEGI ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 31 / 08 /201 8 KARUNA SR. PS ITA NO. 1066/MUM/2016 M/S. CHITRA REALTY LTD., 4 COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//