YASH DISTRIBUTORS, THANE V. ITO WD 3(3), KALYAN

ITA 1152/MUM/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9951 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR LD
• Assessee Lawyers: KUMAR KALE LD
• Keywords: Notional interest
• Section: 143(3)

Judgement Text

ITA NO. 1152 /MUM/2016 YASH DISTRIBUTORS ASSESSMENT YEAR 20 11 - 12 IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO. 115 2 / MUM/ 201 6 ( / ASSESSMENT YEAR: 20 11 - 12 ) YASH DISTRIBUTORS 14, NAVKRISHNAKUNJ SOCIETY OPP. SHASTRI HALL DOMBIVALI EAST DISTT. THANE 421 201 / VS. INCOME TAX OFFICER, WARD 3(3) 2 ND FLOOR, RANI MANSION MURB AD ROAD KALYAN (W) ./ ./ PAN/GIR NO. AA A FY - 8106 - F ( / APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : KUMAR KALE, LD. AR REVENUE BY : V. VIDHYADHAR , LD. DR / DATE OF HEARING : 1 5 /03/2018 / DATE OF PRONOUNCEMENT : 15 / 0 3/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE F OR ASSESSMENT YEAR [AY] 20 11 - 12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME - TAX (APPEALS) - 1 [CIT(A)], MU MBAI APPEAL NO. 53/14 - 15 DATED 11/12/2015 QUA ITA NO. 1152/MUM/2016 YASH DISTRIBUTORS ASSESSMENT YEAR 2011 - 12 2 CONFIRMATION OF CERTAIN ADDITION OF RS.30 LACS ON ACCOUNT OF NOTIONAL INTEREST ON SECURITY DEPOSITS. T HE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICE, WARD - 3(3) ON 07/03/2014 U /S 143(3) OF THE INCOME TAX ACT, 1961. 2 . 1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING R ESIDENT FIRM ENGAGED AS DISTRIBUTOR OF MEDICINES & COSMETICS H AS BEEN ASSESSED FOR IMPUGNED AY AT RS. 33.65 LACS AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURNED LO SS OF RS. 1.34 LACS E - FILED BY THE ASSESSEE ON 29/09/2011 . THE ADDITION OF RS.30 LACS ON ACCOUNT OF ACCRUED INTEREST ON SECURITY DEPOSIT IS THE SOLE SUBJECT MATTER OF THIS APPEAL. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE ADVANCED DE POSIT OF RS.2.50 CRORE TO AN ENTITY NAMELY MAC REMEDIES PVT. LTD. PURSUANT TO DISTRIBUTION AGREEMENT DATED 14/04/2009. IT WAS NOTED THAT THE ASSESSEE OFFERED INTEREST INCOME OF RS.27.50 LACS A GAINST THE SAME IN IMMEDIATELY PRECEDING AY BUT DID NOT OFFER AN Y INTEREST INCOME IN THE IMPUGNED AY. UPON PERUSAL OF DOCUMENTS FURNISHED BY MAC REMEDIES PVT. LTD . IN REPLY TO NOTICE U/S 133(6), LD. AO CAME TO CONCLUSION THAT THE SAID PARTY PAID INTEREST OF RS.30 LACS TO THE ASSESSEE ON SECURITY DEPOSIT AND CREDITED NE T AMOUNT OF RS.27 LACS TO THE ASSESSEES ACCOUNT AFTER DEDUCTION OF TDS THEREUPON @10%. THE ASSESSEE MADE AN ATTEMPT TO RECONCILE THE FIGURES WITH FINANCIAL STATEMENTS AND MADE VARIOUS SUBMISSIONS. HOWEVER, NOT CONVINCED, LD. AO REJECTED THE SAME AND MADE THE IMPUGNED ADDITION. THE SAME, UPON CONFIRMATION BY LD. FIRST APPELLATE AUTHORITY, IS BEING CONTESTED BEFORE US. 3. THE LD. AUTHORIZED COUNSEL FOR ASSESSEE [AR], DRAWING OUR ATTENTION TO THE DOCUMENTS PLACED IN THE PAPER BOOK, CONTENDED THAT ITA NO. 1152/MUM/2016 YASH DISTRIBUTORS ASSESSMENT YEAR 2011 - 12 3 THERE WERE G RAVE DISCREPANCIES IN REPLIES FURNISHED BY MAC REMEDIES PVT. LTD. AND THE IMPUGNED INTEREST NEVER ACCRUED TO THE ASSESSEE AND THEREFORE, THE ADDITIONS WERE NOT JUSTIFIED. THE LD. AR ALSO CONTENDED THAT UPON PERUSAL OF FORM 26AS, IT WAS EVIDENT THAT THE SAI D INTEREST WAS NEVER PROVIDED / CREDITED TO THE ASSESSEE WHICH IS FORTIFIED BY THE FACT THAT THE ASSESSEE HAS NOT CLAIMED THE CREDIT OF AFORESAID TDS IN THE RETURN OF INCOME. PER CONTRA, LD. DR SUBMITTED THAT COMPLETE ONUS LIES ON ASSESSEE TO DEFEND ITS ST AND WITH DOCUMENTARY EVIDENCES. 4. UPON CAREFUL CONSIDERATION, WE FIND THAT THE ASSESSEE HAS OFFERED INTEREST INCOME FROM SECURITY DEPOSIT IN IMMEDIATELY PRECEDING YEAR BUT DID NOT OFFER ANY INTEREST INCOME IN THE IMPUGNED AY, WHICH WEAKENS ALL THE ARGUMEN TS ADVANCED B Y THE ASSESSEE. THE COMPLETE ONUS LIES ON ASSESSEE TO RECONCILE THE ACCOUNT AND FURNISH PLAUSIBLE EXPLANATION FOR NOT OFFERING THE INTEREST INCOME TO TAX. SINCE, WE ALSO NOTE DISCREPANCIES IN THE R EPLIES FURNISHED BY MAC REMEDIES PVT. LTD , THE MATTER, IN OUR OPINION, REQUIRES RE - ADJUDICATION IN THE LIGHT OF ARGUMENTS ADVANCED BY LD. AR . THEREFORE, WITHOUT DELVING MUCH DEEPER INTO THE ISSUE, THE MATTER STANDS REMITTED BACK TO THE FILE OF LD. AO FOR RE - ADJUDICATION WITH A DIRECTION TO ASSESSEE TO SUBSTANTIATE HIS STAND IN THIS REGARD AND OFFER PLAUSIBLE EXPLANATION FOR THE SAME. 5. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PR ONOUNCED IN THE OPEN COURT ON 15 TH MARCH , 2018 . SD/ - SD/ - ( C.N.PRASAD ) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 15 . 03.2018 SR.PS: - --- ITA NO. 1152/MUM/2016 YASH DISTRIBUTORS ASSESSMENT YEAR 2011 - 12 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE A PPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI