Vilas Prabhakar Mungi, Pune V. Income-tax Officer, Pune

ITA 130/PUN/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1869 (ITAT-PUNE)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-06-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 03-04-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 27-01-2016
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI D. KARUNAKARA RAO, AM . / ITA NOS.126 & 127/PUN/2016 / ASSESSMENT YEARS : 2008-09 & 2009-10 MAHALAXMI WAREHOUSING COMPANY, C/O. SHRI VILAS P. MUNGI, FLAT NO.A-2, SHRIRAM RESIDENCY, SURANA BAUG COLONY, BEHIND MIRCH MASALA HOTEL, KOTHRUD, PUNE-411009. PAN : AAIFM1000C . /APPELLANT VS. ITO, WARD-2, AHMEDNAGAR. . / RESPONDENT . / ITA NOS.129 & 130/PUN/2016 / ASSESSMENT YEARS : 2008-09 & 2009-10 VILAS PRABHAKAR MUNGI, FLAT NO.A-2, SHRIRAM RESIDENCY, SURANA BAUG COLONY, BEHIND MIRCH MASALA HOTEL, KOTHRUD, PUNE-411009. PAN : AAIFM1000C . /APPELLANT VS. ITO, WARD-2, AHMEDNAGAR. . / RESPONDENT ASSESSEE BY : SHRI KISHOR PHADKE REVENUE BY : MS. SHABANA PARVEEN / DATE OF HEARING : 03.04.2019 / DATE OF PRONOUNCEMENT: 20.06.2019 / ORDER PER D. KARUNAKARA RAO, AM : THERE ARE FOUR APPEALS UNDER CONSIDERATION INVOLVING TWO DIFFERENT ASSESSEES RELATING TO TWO DIFFERENT ASSESSMENT YEARS 2008-09 AND 2009-10. ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 2 PRELIMINARY ISSUE - CONDONATION OF DELAY 2. BEFORE US, AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ALL THE APPEALS COULD NOT BE FILED IN TIME AND THE SAID APPEALS ARE FILED WITH THE DELAY OF 236 DAYS . IN THIS REGARD, LD. COUNSEL FOR THE ASSESSEE FILED AN AFFIDAVIT STATING THE REASONS FOR NON-FILING THE APPEALS OF THE ASSESSEE IN TIME. FOR THE SAKE OF COMPLETENESS, THE RELEVANT PARAS OF THE SAID AFFIDAVIT ARE EXTRACTED HEREUNDER :- I CARRY ON BUSINESS BY THE NAME M/S SHRI. MAHALAXMI WAREHOUSING COMPANY WHICH IS ENGAGED IN CARRYING A BUSINESS OF RENTING OUT WAREHOUSES SITUATED IN AHMEDNAGAR. THE WAREHOUSES WERE LET-OUT TO THE FOOD CORPORATION OF INDIA (FCI). EARLIER THE FIRM HAD FOUR (4) PARTNERS INCLUDING ME. THE FIRM DISSOLVED FROM 01/04/2007 AND I CONTINUED THE SAME BUSINESS AS A PROPRIETARY CONCERN AND OFFERED THE SAID RENTAL INCOME IN MY INDIVIDUAL RETURN OF INCOME. THE I-T PROCEEDINGS FOR A.Y. 2007-08 TO 2009-10 WERE ONGOING BEFORE THE LEARNED INCOME-TAX OFFICER (AO) IN PUNE. THE AO MADE CERTAIN ADDITIONS AS UNEXPLAINED AMOUNTS, ADHOC DISALLOWANCE ETC. ASSESSMENT ORDER RECEIVED FROM THE LEANED AO WAS OBJECTED BEFORE THE LEARNED CIT(A). THE LEARNED CIT(A) ALLOWED PARTIAL RELIEF VIDE HIS APPELLATE ORDERS DATED 10/11/2014 FOR A.Y. 2007-08 TO A.Y. 2009-10. I RECEIVED THE SAID APPELLATE ORDERS OF THE LEARNED CIT(A) ON 06/04/2015. SIMULTANEOUSLY, THE ID. AO TOOK A VIEW THAT FIRM IS NOT DISSOLVED AND TAXED ENTIRE RENTAL INCOME IN THE FIRMS HANDS. AS SUCH, HUGE TAX DEMAND RAISED IN TOTAL SIX (6) ASSESSMENTS. AS SUCH, THERE WERE TOTAL FIVE (5) APPEALS TO BE FILED BEFORE HONBLE INCOME TAX APPELLATE TRIBUNAL, PUNE. THE FILING FEES TO BE PAID WAS RS. 50,000/-. MEANTIME, DUE TO DISPUTE WITH THE ERSTWHILE PARTNERS AND RECOVERY PROCEEDINGS INTIMATED BY I- T AUTHORITIES, FCI OPENED A SEPARATE BANK ACCOUNT AND STARTED DEPOSITING MONTHLY RENT IN THAT ACCOUNT. I DID NOT HAVE ACCESS TO THE SAID ACCOUNT. AS SUCH, MY PRIMARY SOURCE OF EARNING INCOME WAS BLOCKED. THERE WAS HARDLY BALANCE OF RS. 4,000 TO RS. 5,000 (APPROX) IN MY SAVINGS ACCOUNT. DUE TO INSUFFICIENT FUNDS FOR FILING APPEALS BEFORE HONBLE INCOME TAX APPELLATE TRIBUNAL, APPEAL COULD NOT BE FILED WITHIN THE PRESCRIBED TIME LIMIT OF 60 DAYS. I HAD TO WAIT AND MAKE ARRANGEMENTS FOR MONEY FROM FRIENDS / RELATIVES. IN THE MEAN TIME, PRECIOUS TIME TO PREFER APPEAL WAS LOST. IN ALL THIS PROCESS, DELAY OF ABOUT 220 DAYS HAS CREPT INTO UNFORTUNATELY. THE SAID DELAY WAS NON-INTENTIONAL. I HAVE REQUESTED FOR CONDONATION OF THE DELAY BY MAKING A SEPARATE DELAY CONDONATION PETITION DT. 22-01-2016. 3. DISPUTES AMONG THE PARTNERS, RELEVANT LITIGATION PENDING IN THE CIVIL COURT, FINANCIAL ISSUES, INACCESSIBILITY TO THE BANK ACCOUNT OF THE FIRM FOR ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 3 PAYING THE APPEAL FEE TO FILE THESE APPEALS ETC ARE SOME OF THE REASONS WHICH LED TO THE ABOVE SAID DELAY IN FILING THE APPEALS UNDER CONSIDERATION. CONSIDERING THE ABOVE REASONS GIVEN BY THE ASSESSEE IN THE AFFIDAVIT, WE FIND THESE ARE THE FIT CASES FOR CONDONING THE DELAY IN FILING THE APPEALS BY THE ASSESSEE. THEREFORE, WE CONDONE THE DELAY AND PROCEED TO ADJUDICATE ALL THE APPEALS OF THE ASSESSEE IN THE FOLLOWING PARAGRAPHS. ITA NO.126/PUN/2016 (A.Y. 2008-09) (MAHALAXMI WAREHOUSING COMPANY) 4. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED CIT(A)-I, PUNE ERRED IN LAW AND ON FACTS IN UPHOLDING JURISDICTION ASSUMED BY THE LEARNED AO U/S 147 OF THE ITA, 1961; IGNORING THE FACT THAT APPELLANT FIRM WAS DISSOLVED W.E.F. 01-04-2007. 2. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN NOT APPRECIATING THAT THE APPELLANT FIRM WAS A 'PARTNERSHIP AT WILL' AND CONSIDERING THE DECISION OF THREE OUT OF FOUR PARTNERS TO RETIRE FROM THE FIRM AND TO DISSOLVE THE PARTNERSHIP, THE APPELLANT FIRM STOOD DISSOLVED WITH EFFECT FROM 1/4/2007. 3. THE LEARNED CIT(A)-I, PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING ADDITION MADE BY THE AO IN THE HANDS OF THE APPELLANT FIRM , RELATING TO RENTAL INCOME RECEIVED BY MR. VILAS MUNGI IN HIS INDIVIDUAL CAPACITY FROM FOOD CORPORATION OF INDIA (FCI) AMOUNTING TO RS. 21,36,930/- (NET OFF OF 30% MAINTENANCE ALLOWANCE). 4. THE APPELLANT CRAVES TO ADD/ MODIFY/ ALTER/ DELETE ALL/ ANY OF THE GROUNDS OF APPEAL. 5. BRIEFLY STATED THE RELEVANT FACTS INCLUDE THAT THE ASSESSEE IS A FIRM AND RECEIVED GROSS RENTAL INCOME OF RS.30,52,759/- (I.E. RS.21,36,930/- IS THE RENTAL INCOME NET OF THE DEDUCTIONS) FROM FOOD CORPORATION OF INDIA (FCI) FROM THE LETTING OUT OF ITS WAREHOUSES. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ADDED THE RENT RECEIVED BY THE ASSESSEE IN THE HANDS OF THE FIRM ON SUBSTANTIVE BASIS. THE SAME IS CONFIRMED BY THE CIT(A). ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 4 6. AGGRIEVED WITH THE SAME, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL WITH THE ABOVE EXTRACTED GROUNDS. 7. TAXATION OF THE RENTAL RECEIPTS, ACTUALLY RECEIVED BY THE PARTNER, IN THE HANDS OF THE DISSOLVED FIRM ON SUBSTANTIAL BASIS, IS THE CORE ISSUE. CERTAIN EVIDENCES RELATING TO THE QUESTIONABLE DISSOLUTION OF THE FIRM WERE FILED BEFORE US AS ADDITIONAL EVIDENCES FOR ADMISSION AND ADJUDICATION OF THE ISSUES RAISED IN THE GROUNDS. 8. WITHOUT GOING INTO THE LEGAL ISSUES RELATING TO THE VALIDITY OF THE REASSESSMENT, REFERRING TO THE SAID ADDITIONAL EVIDENCES, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE RAISED BY THE ASSESSEE ON MERITS ARE REQUIRED TO BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION CONSIDERING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE THE TRIBUNAL. BRINGING OUR ATTENTION TO THE PAPER BOOK, LD. COUNSEL SUBMITTED THAT THE ISSUE INVOLVING IN THIS CASE RELATING TO THE TAXABILITY OF THE LEASE RENT EARNED BY THE ASSESSEE FROM THE FCI FOR WAREHOUSES PURPOSES. STATING THAT THERE IS DISPUTE ABOUT THE DISSOLUTION OF THE FIRM QUA THE PARTNERS OF THE FIRM, LD. COUNSEL SUBMITTED THAT COUPLE OF PARTNERS DID NOT AGREE WITH THE TERMS AND CONDITIONS OF THE DISSOLUTION DEED THEREBY THEY FILED THE CIVIL SUIT IN CIVIL COURT, AHMEDNAGAR. REFERRING TO THE VARIOUS PAGES OF THE PAPER BOOK, LD. COUNSEL SUBMITTED THAT THE ORDERS OF THE CIVIL COURT, AHMEDNAGAR CORRESPONDENCE AMONG THE PARTNERS OF THE FIRM ARE RELEVANT AND THEY GO TO THE ROOT OF THE MATTER I.E. WHETHER THE RENT ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 5 PAID BY FCI IS TAXABLE IN THE HANDS OF THE DISSOLVED FIRM OR IN THE HANDS OF THE PARTNER(S). 9. ON HEARING BOTH THE SIDES, WE FIND THE PARTNERSHIP DEED DATED 17.12.2016 WAS SIGNED BY FOUR PARTNERS I.E. (I) SHRI RESAL SHRIKANT GANESH, (II) SHRI KUTE CHANDRAKANT TRIMBAK, (III) SHRI MHASKE BHASKAR KISAN AND (IV) SHRI MUNGI VILAS PRABHAKAR AND THE SAID DEED WAS AMENDED FROM TIME TO TIME I.E. 17.09.1985 AND 01.04.1992. ON 23.05.2007 AND 05.06.2007, SHRI SHRIKANT RASAL AND SHRI B.K. MHASKE AGREED TO RETIRE. SUBSEQUENTLY, SHRI C.T. KUTE ALSO AGREED TO RETIRE SUBJECT TO FULFILMENT OF CERTAIN CONDITIONS. SUBSEQUENTLY, A DISPUTE BROKE OUT AND SHRI C.T. KUTE FILED A CIVIL SUIT BEFORE THE CIVIL COURT, AHMEDNAGAR QUESTIONING THE DECISION ON THE DISSOLUTION OF THE ASSESSEES FIRM. ON 10.01.1990, THE CIVIL COURT, AHMEDNAGAR PASSED AN ORDER, COPY OF WHICH IS PLACED AT PAGE 105 OF THE PAPER BOOK. 10. IN EFFECT, THE QUESTION OF TAXABILITY OF THE RENT IN THE HANDS OF THE FIRM OR THE PARTNER IS THE BONE OF CONTENTION. SO FAR AS THE TAXATION OF THE RENTAL INCOME UNDER INCOME TAX ACT ARE CONCERNED, WE OBSERVE THAT, IF THE DISSOLUTION OF THE FIRM IS FINAL, THE RENT BECOMES TAXABLE IN THE HANDS OF THE APPROPRIATE PARTNER OR PARTNERS AS PER THE TERMS OF THE DISSOLUTION DEED. HOWEVER, IF THE DISSOLUTION IS NOT APPROVED BY THE COURTS FOR ANY REASON THE RENTAL RECEIPTS BECOMES SUBSTANTIALLY TAXABLE IN THE HANDS OF THE ASSESSEES FIRM ONLY, AS IT CONTINUE TO HOLD THE WAREHOUSES. FROM THIS PERSPECTIVE, IN THE LIGHT OF THE ADDITIONAL EVIDENCES, AS REQUESTED BY THE LD. COUNSEL FOR THE ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 6 ASSESSEE, THE REMANDING THE ISSUE TO THE FILE OF THE ASSESSING OFFICER IS AN APPROPRIATE DECISION FROM US. 11. IN THE ASSESSMENT, ASSESSING OFFICER TAXED THE RENTALS PAID BY THE FCI IN THE HANDS OF THE FIRM. CIT(A) CONFIRMED THE SAME. OTHERWISE, RENTAL RECEIPTS ARE DEPOSITED BY THE FCI IN THE BANK ACCOUNT OF MR. MANGE, THE PARTNER OF THE DISSOLVED FIRM. THE BANK ACCOUNT OF THE FIRM WAS IN OPERATIVE DUE TO THE STATED DISSOLUTION OF THE FIRM. THE ASSESSING OFFICER IGNORED THE FACT THAT THERE EXISTS A LITIGATION ON THE SAID DISSOLUTION OF THE FIRM. THE SAID ADDITIONAL EVIDENCES RELATE TO THE SAID LITIGATION ONLY. CONSIDERING THE SAME, WE FIND IT MORE APPROPRIATE TO ADMIT THE ADDITIONAL EVIDENCES, WHICH GOES TO THE ROOT OF THE MATTER, AND REMAND THE SAME TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER IS DIRECTED TO PASS A FRESH ASSESSMENT ORDER ON THE ISSUE RAISED BY THE ASSESSEE BEFORE US. ACCORDINGLY, ALL THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.126/PUN/2016 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.127/PUN/2016 (A.Y. 2009-10) (MAHALAXMI WAREHOUSING COMPANY) 13. THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE IDENTICAL TO THE GROUNDS RAISED BY THE ASSESSEE IN ITA NO.126/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09. WE HAVE ALREADY ADJUDICATED THE SAID GROUNDS ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 7 WHILE DECIDING THE APPEAL OF THE ASSESSEE IN ITA NO.126/PUN/2016 IN THE PRECEDING PARAGRAPHS OF THIS ORDER AND REMANDED ALL THE ISSUES TO THE FILE OF THE ASSESSING OFFICER FOR PASSING A FRESH ASSESSMENT. THUS, OUR DECISION IN ITA NO.126/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09 SHALL APPLY MUTATIS MUTANDIS IN THIS APPEAL ALSO. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE IN THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.127/PUN/2016 IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.129/PUN/2016 (A.Y. 2008-09) (VILAS PRABHAKAR MUNGI PARTNER IN MAHALAXMI WAREHOUSING COMPANY) 15. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED CIT(A)-I, PUNE ERRED IN LAW AND ON FACTS IN PARTIALLY SUSTAINING THE ADDITION MADE BY THE LEARNED AO ON ACCOUNT OF ALLEGED UNEXPLAINED DIFFERENCE BETWEEN OPENING AND CLOSING BALANCE OF CAPITAL A/C IN M/S MAHALAXMI WAREHOUSING COMPANY AMOUNTING TO RS. 17,72,000/- (RS. 27,39,013 LESS RS. 967,013) DESPITE THE FACT THAT ALL ENTRIES IN THE CAPITAL ACCOUNT WERE CONSEQUENTIAL TO THE DISSOLUTION OF M/S MAHALAXMI WAREHOUSING COMPANY (THE FIRM) AND WERE DULY EXPLAINED. 2. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING THE ADDITION MADE BY THE LEARNED AO ON ACCOUNT OF ADHOC DISALLOWANCE OF RS. 1,95,330/- BEING 30% OF THE TOTAL EXPENSES DEBITED IN M/S POOJA AGENCIES. 3. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING THE ADDITION MADE BY THE LEARNED AO OF RS. 2,61,354/- ON ACCOUNT OF RENTAL INCOME TREATING IT IS UNEXPLAINED AND TAXING IT UNDER THE HEAD 'INCOME FROM OTHER SOURCES '. 4. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN TAXING THE GODOWN RENTAL INCOME OF RS. 30,52,759/- FROM THE FOOD CORPORATION OF INDIA (FCI) IN THE HANDS OF M/S MAHALAXMI WAREHOUSING COMPANY, THE FIRM WHICH WAS DISSOLVED W.E.F. 01/04/2007 INSTEAD OF TAXING IT IN THE APPELLANT'S HANDS. 5. ALTERNATIVELY AND WITHOUT PREJUDICE, GODOWN RENTAL INCOME OUGHT TO BE TAXED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF 'INCOME FROM BUSINESS OR PROFESSION' AND APPELLANT BE ENTITLED FOR STANDARD DEDUCTION OF 30% AS PER SECTION 24 OF THE ITA, 1961. 6. THE APPELLANT CRAVES TO ADD/ MODIFY/ ALTER/ DELETE ALL/ ANY OF THE GROUNDS OF APPEAL. ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 8 16. GROUND NOS.1, 3, 4 AND 5 REVOLVE AROUND THE RECONCILIATION OF CAPITAL ACCOUNT OF THE PARTNERS QUA THE DIFFERENCE BETWEEN OPENING AND CLOSING BALANCES OF CAPITAL ACCOUNT AND THE TAXATION OF RENTAL RECEIPTS IN THE HANDS OF THE FIRM - MAHALAXMI WAREHOUSING COMPANY. GROUND NO.2 RELATES TO THE AD-HOC DISALLOWANCE INVOLVING M/S POOJA AGENCIES. GROUND NO.6 IS GENERAL IN NATURE. 17. REFERRING TO GROUND NO.1, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS CONNECTED TO VARIOUS CONCERNS, NAMELY, (I) M/S MAHALAXMI WAREHOUSING COMPANY, (II) M/S POOJA AGENCY AND (III) M/S KALPANA AGENCY. THESE CONCERNS GENERATE PROFIT TO THE ASSESSEE WHICH CONSTITUTES THE SOURCES FOR THEIR NEW CAPITAL INTRODUCTION IN THE CAPITAL ACCOUNT OF THE PARTNERS IN THE FIRM. IGNORING THE ABOVE EXPLANATION OF THE ASSESSEE, THE ASSESSING OFFICER PROCEEDED TO MAKE ADDITION FOR WANT OF EXPLANATION ON THE ADDITIONAL CAPITAL CONTRIBUTION. REFERRING TO THE ASSESSMENT ORDER AND THE ORDER OF THE CIT(A), LD. COUNSEL SUBMITTED THAT THERE IS NO PROPER REPRESENTATION QUA THE ISSUE UNDER CONSIDERATION AND, THEREFORE, GRANT OF ONE MORE OPPORTUNITY FOR FURNISHING NECESSARY MATERIAL AND DETAILS REGARDING THE SOURCES OF CAPITAL INTRODUCED BY THE ASSESSEE IS PRAYED FOR. THE LD. COUNSEL FURTHER SUBMITTED THAT THE ADDITION OF RS.17,72,000/- IS NOT APPROPRIATE AND UNSUSTAINABLE IN LAW. 18. THE LD. DR FOR THE REVENUE, ON THE OTHER HAND, RELIED HEAVILY ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A). ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 9 19. AFTER HEARING BOTH THE SIDES ON THIS ISSUE, WE FIND THE ASSESSING OFFICER MADE ADDITION OF RS.17,72,000/- ON ACCOUNT DIFFERENCE BETWEEN THE OPENING BALANCE AND CLOSING BALANCE OF THE CAPITAL ACCOUNT OF M/S MAHALAXMI WAREHOUSING COMPANY. ON CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE, WE FIND, IN THE INTEREST OF JUSTICE, THE ASSESSEE SHOULD BE ALLOWED TO FILE THE DETAILS OF RECONCILIATION EXPLAINING THE SOURCES OF CAPITAL INTRODUCTION IN THE ISSUE UNDER CONSIDERATION. THE ASSESSING OFFICER, IN THE REMAND PROCEEDINGS, SHALL EXAMINE THE EXPLANATION OF THE ASSESSEE AND DECIDE THE ISSUE AFRESH AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NO.1 IS ALLOWED FOR STATISTICAL PURPOSES. 20. REFERRING TO GROUND NOS.3, 4 AND 5, LD. COUNSEL SUBMITTED THAT THE ISSUES RAISED IN THESE GROUNDS RELATE TO THE ISSUE RAISED IN GROUNDS OF APPEAL IN ITA NO.126/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09 IN THE CASE OF MAHALAXMI WAREHOUSING COMPANY. WHILE ADJUDICATING THE ISSUE IN THAT APPEAL, WE ORDERED FOR REMANDING THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION CONSIDERING THE ADDITIONAL EVIDENCES FURNISHED BY THE ASSESSEE BY VIRTUE OF COURT PROCEEDINGS BEFORE THE CIVIL COURT, AHMEDNAGAR. 21. CONSIDERING THE FACTS, THE ISSUES ARE CONNECTED TO THAT OF THE GROUNDS RAISED IN THE CASE OF MAHALAXMI WAREHOUSING COMPANY IN ITA NO.126/PUN/2016, WE ARE OF THE OPINION ALL THE GROUNDS NO.3, 4 AND 5 ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 10 SHOULD ALSO BE REMANDED TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS NO.3, 4, AND 5 ARE ALLOWED FOR STATISTICAL PURPOSES. 22. GROUND NO.2 RELATES TO AD-HOC DISALLOWANCE OF RS.1,95,330/- BEING 30% OF THE TOTAL EXPENSES DEBITED IN M/S POOJA AGENCIES. 23. ON THIS ISSUE, LD. COUNSEL BROUGHT OUR ATTENTION TO THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE VIDE ITA NO.128/PUN/2016 FOR THE ASSESSMENT YEAR 2007-08 DATED 26.03.2018 AND SUBMITTED THAT, ON IDENTICAL FACTS, THE TRIBUNAL DID NOT APPRECIATE THE DISALLOWANCE AT THE RATE OF 30% OF THE TOTAL EXPENSES DEBITED TO M/S POOJA AGENCIES. FURTHER, IN THIS REGARD, HE READ OUT THE CONTENTS OF PARA 12 AND 13 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) AND SUBMITTED THAT THE TRIBUNAL HAS RESTRICTED TO THE 10% OF THE ENTIRE EXPENDITURE DEBITED TO THE POOJA AGENCIES. FOR THE PARITY OF REASONING, LD. COUNSEL SOUGHT SIMILAR DIRECTION FOR THIS ASSESSMENT YEAR ALSO. 24. ON HEARING BOTH THE SIDES ON THIS ISSUE, WE FIND IT RELEVANT TO EXTRACT THE CONTENTS OF PARA 12 AND 13 OF THE SAID ORDER OF THE TRIBUNAL (SUPRA) AND THE SAME ARE EXTRACTED ASUNDER :- 12. THE GROUND NO. 3 RELATES TO AD-HOC DISALLOWANCE OF RS.1,96,190/- BEING 30% OF THE TOTAL EXPENSES DEBITED IN M/S. POOJA AGENCIES , ANOTHER PROPRIETARY CONCERN OF ASSESSEE. REASONS FOR DISALLOWANCE ARE SIMILAR TO THE ONE AT GROUND NO. 2 MENTIONED ABOVE. ARGUMENTS OF THE PARTIES ARE ALSO THE SAME. IT IS A CASE OF ASSESSEES FAILURE TO FURNISH THIRD PARTYS EVIDENCES. ASSESSING OFFICER NEVER DOUBTED THE GENUINENESS OF EXPENDITURE. ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 11 13. ON HEARING BOTH THE PARTIES, ON THIS AD-HOC DISALLOWANCES, WE ARE OF THE VIEW THAT MAKING DISALLOWANCE AT 10% ON ENTIRE EXPENDITURE , IN THE PLACE OF 30%, SHOULD MEET THE ENDS OF JUSTICE . WE DIRECT THE ASSESSING OFFICER ACCORDINGLY. HENCE, GROUND NO. 3 RAISED BY ASSESSEE IS PARTLY ALLOWED. 25. CONSIDERING THE ABOVE, WE ARE OF THE OPINION THAT MAKING DISALLOWANCE AT THE RATE OF 10% ON ENTIRE EXPENDITURE, IN PLACE OF 30%, SHOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, WE DIRECT THE ASSESSING OFFICER. THUS, THE GROUND NO.2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 26. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2008-09 IN ITA NO.129/PUN/2016 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO.130/PUN/2016 (A.Y. 2009-10) (VILAS PRABHAKAR MUNGI) 27. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER :- 1. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN SUSTAINING THE ADDITION MADE BY THE LEARNED AO ON ACCOUNT OF PAYMENTS TO THE RETIRING PARTNERS OF RS. 15,00,000/- TREATING IT AS UNEXPLAINED. 2. THE LEARNED CIT(A) ERRED IN LAW IN NOT CONSIDERING THE EXPLANATION GIVEN BY THE APPELLANT WITH RESPECT TO THE AMOUNTS PAID TO THE RETIRING PARTNERS WHILE SUSTAINING THE ABOVE ADDITION. 3. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN AFFIRMING THE ADDITION MADE BY THE LEARNED AO ON ACCOUNT OF ADHOC DISALLOWANCE OF RS. 2,59,084/- (BEING 30% OF THE TOTAL EXPENSES AND 100% OF COMMISSION) DEBITED IN M/S POOJA AGENCIES . 4. THE LEARNED CIT(A), PUNE ERRED IN LAW AND ON FACTS IN TAXING THE GODOWN RENTAL INCOME OF RS. 21,07,198/- FROM THE FOOD CORPORATION OF INDIA (FCI) IN THE HANDS OF M/S MAHALAXMI WAREHOUSING COMPANY, THE FIRM WHICH WAS DISSOLVED W.E.F. 01/04/2007 INSTEAD OF TAXING IT IN THE APPELLANT'S HANDS. 5. ALTERNATIVELY AND WITHOUT PREJUDICE, GODOWN RENTAL INCOME OUGHT TO BE TAXED UNDER THE HEAD 'INCOME FROM HOUSE PROPERTY' INSTEAD OF 'INCOME FROM BUSINESS OR PROFESSION' AND APPELLANT BE ENTITLED FOR STANDARD DEDUCTION OF 30% AS PER SECTION 24 OF THE ITA, 1961. 6. THE APPELLANT CRAVES TO ADD/ MODIFY/ ALTER/ DELETE ALL/ ANY OF THE GROUNDS OF APPEAL. ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 12 28. THE GROUNDS NOS.1 AND 2 REVOLVE AROUND THE ADDITION OF RS.15,00,000/- MADE BY THE ASSESSING OFFICER AND IT WAS PAID TO THE RETIRED PARTNERS. THE ASSESSING OFFICER TREATED THE SAME AS UNEXPLAINED IGNORING THE FACT THAT THE ASSESSEE HAS VARIOUS PROPRIETORSHIP CONCERNS, THEY ARE PROFIT MAKING CONCERNS AND THEY CONSTITUTE THE SOURCE OF THE SAID SUM OF RS.15 LAKHS. THE SUFFICIENT FUNDS ARE AVAILABLE FOR MAKING THE PAYMENTS TO THE RETIRING PARTNERS AS DISCUSSED IN THE PRECEDING PARAGRAPHS. THESE GROUNDS ARE IDENTICAL TO THE GROUND NO.1 OF THE APPEAL IN ITA NO.129/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09. WE HAVE ALREADY ADJUDICATED THE SAID GROUND IN THE PRECEDING PARAGRAPHS OF THIS ORDER AND REMANDED THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION. ACCORDINGLY, THE GROUND NOS.1 AND 2 OF THIS APPEAL ARE ALLOWED FOR STATISTICAL PURPOSES. 29. GROUND NO.3 IS IDENTICAL TO GROUND NO.2 OF APPEAL OF THE ASSESSEE IN ITA NO.129/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09. WE HAVE ALREADY DECIDED THE SAID GROUND IN THE PRECEDING PARAGRAPHS OF THIS ORDER AND RESTRICTED THE DISALLOWANCE AT THE RATE OF 10% ON THE ENTIRE EXPENDITURE , IN PLACE OF 30%. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO FOLLOW THE DIRECTIONS FOR THIS YEAR TOO. HENCE, THIS GROUND NO.3 IS PARTLY ALLOWED. 30. GROUND NO.4 AND 5 ARE IDENTICAL TO THE GROUND NO.4 AND 5 OF THE APPEAL OF THE ASSESSEE IN ITA NO.129/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09. THIS ISSUE RAISED IN THIS APPEAL RELATES TO THE TAXATION OF RENTAL RECEIPTS RECEIVED FROM FCI IN CORRECT HANDS. WE HAVE ALREADY DECIDED THE ITA NOS.126 & 127/PUN/2016 ITA NOS.129 & 130/PUN/2016 13 ISSUE IN THE PRECEDING PARAGRAPHS OF THIS ORDER AND, CONSIDERING THE ADDITIONAL EVIDENCES, WE REMAND THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER GRANTING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THUS, OUR DECISION IN GROUND NO.4 AND 5 IN ITA NO.129/PUN/2016 FOR THE ASSESSMENT YEAR 2008-09 SHALL APPLY TO THESE GROUNDS NO.4 AND 5 ALSO OF THIS APPEAL. ACCORDINGLY, THE GROUNDS NO.4 AND 5 ARE ALLOWED FOR STATISTICAL PURPOSES ALSO. 31. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2009-10 IN ITA NO.130/PUN/2016 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 32. TO SUM UP, ALL THE APPEALS OF THE ASSESSEE ARE DISPOSED OF AS INDICATED ABOVE. ORDER PRONOUNCED ON 20 TH DAY OF JUNE, 2019. SD/- SD/- (SUSHMA CHOWLA) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / PUNE; DATED : 20 TH JUNE, 2019. SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT; 2. / THE RESPONDENT; 3. THE CIT(A)-1, PUNE; 4. THE PR. CCIT, PUNE; 5. , , / DR A, ITAT, PUNE; 6. / GUARD FILE. / BY ORDER, //TRUE COPY// SENIOR PRIVATE SECRETARY , / ITAT, PUNE