CHANDRAIAH BALNAA KALAL, MUMBAI V. ITO 32(1)(2), MUMBAI

ITA 1495/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1469 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 03-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHI RAM KARTIKEYAN LD
• Assessee Lawyers: M SUBRAMANIAN LD
• Keywords: Bogus purchase; Depreciation; Opportunity of being heard; Additional evidence
• Section: 43B; 143(3)

Judgement Text

ITA NO.1495/MUM/2017 MR. CHANDRAIAH BALANNA KALAL ASSESSMENT YEAR :2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.1495/MUM/2017 ( / ASSESSMENT YEAR:2012-13) MR.CHANDRAIAH BALANNA KA LAL PLOT NO.7, D-1 MANDAR CHS LTD., RSC 21, GORAI-1, BORIVALI (W) MUMBAI-400 092. / VS. INCOME TAX OF FICER - 32(1)(2) MUMBAI. ./ ./PAN/GIR NO. AABPK-8755-H ( ! /APPELLANT ) : ( '#! / RESPONDENT ) APPELLANT BY : M. SUBRAMANIAN- LD. AR RESPONDENT BY : ABHI RAM KARTIKEYAN - LD.DR / DATE OF HEARING : 14/03/2019 / DATE OF PRONOUNCEMENT : 19/03/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2012-13 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-44, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-44/ITO 32(1)(2)/ITA-496/15-16 DATED 30/01/2017 QUA CONFIRMATION OF CERTAIN ADDITION ON ACCOUNT OF RECO NCILIATION OF FORM 26AS AND ADDITION U/S 43B. THE ASSESSEE HAS RAISED ADDITIONAL GROUNDS ITA NO.1495/MUM/2017 MR. CHANDRAIAH BALANNA KALAL ASSESSMENT YEAR :2012-13 2 OF APPEAL ON 02/05/2018 WHICH DO NOT REQUIRE APPREC IATION OF NEW FACTS AND HENCE, TAKEN ON RECORD. THESE GROUNDS CONTEST A DDITION OF DEEMED RENTAL VALUE AND ADDITION OF ACCOUNT OF ALLEGED BOGUS PURCHASES. 2. THE ASSESSMENT FOR IMPUGNED AY WAS FRAMED BY LD. INCOME TAX OFFICER-32(1)(2), MUMBAI [AO] U/S 143(3) ON 30/03/2 015 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED AT RS.218.99 LACS AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURNED INCOM E OF RS.10.89 LACS FILED BY THE ASSESSEE ON 30/09/2012. THE ASSESSEE B EING RESIDENT INDIVIDUAL CARRIED ON BUSINESS DURING IMPUGNED AY UNDER PROPRI ETORSHIP CONCERN NAMELY C.B.& SONS. OUR GROUND WISE ADJUDICATION IS GIVEN IN THE SUCCEEDING PARAGRAPHS. 3. GROUND NO.1 IS RELATED WITH ADDITION OF RS.31.90 LACS ON ACCOUNT OF NON-RECONCILIATION OF FORM 26AS, WHICH HAS BEEN MADE BY LD. AO FOR WANT OF PROPER EXPLANATION DURING ASSESSMENT PROCEE DINGS. THE LD. FIRST APPELLATE AUTHORITY DECLINED TO ACCEPT THE ADDITION AL EVIDENCES FILED DURING APPELLATE PROCEEDINGS. UPON CAREFUL CONSIDER ATION, WE FIND THAT THE ADDITION IS MERELY A MATTER OF RECONCILIATION. THEREFORE, IN THE INTEREST OF JUSTICE, THIS ISSUE STANDS REMITTED BACK TO THE FILE OF LD. AO WITH A DIRECTION TO THE ASSESSEE TO RECONCILE THE DIFFEREN CE TO THE SATISFACTION OF LD. AO. THE GROUND STANDS ALLOWED FOR STATISTICAL P URPOSES. 4. THE SECOND GROUND CONTESTING ADDITION U/S 43B ST EM FROM THE FACT THAT DURING ASSESSMENT PROCEEDINGS, THE ASSESSEE FA ILED TO DEMONSTRATE THE PAYMENT OF OUTSTANDING LIABILITIES FOR RS.150.7 8 LACS BEFORE DUE DATE OF FILING OF RETURN OF INCOME. THE LD. FIRST APPELL ATE AUTHORITY REFUSED TO APPRECIATE THE ADDITIONAL EVIDENCES SUBMITTED BY TH E ASSESSEE DURING APPELLATE PROCEEDINGS. THEREFORE, IN THE INTEREST O F JUSTICE, THE MATTER ITA NO.1495/MUM/2017 MR. CHANDRAIAH BALANNA KALAL ASSESSMENT YEAR :2012-13 3 STANDS REMITTED BACK TO THE FILE OF LD. AO WITH A D IRECTION TO THE ASSESSEE TO DEMONSTRATE THE FULFILMENT OF CONDITIONS OF SECT ION 43B. THE GROUND STANDS ALLOWED FOR STATISTICAL PURPOSES. 5. THE FIRST ADDITIONAL GROUND IS RELATED WITH ESTI MATION OF NOTIONAL RENTAL INCOME FROM FLATS SITUATED AT CHARKOP, MIRA ROAD AND A ROOM AT VILLAGE . THE ASSESSEE CONTENDED THAT BOTH THE FLATS WERE B EING USED FOR BUSINESS PURPOSES AND ROOM AT VILLAGE WAS OCCUPIED BY HIS PARENTS AND THEREFORE, NO NOTIONAL RENTAL INCOME FROM THE SAME WERE TO BE ADDED. HOWEVER, NOTICING THAT THE DEPRECIATION WAS NOT BEI NG CLAIMED BY THE ASSESSEE AGAINST THE TWO FLATS, LD. AO CONCLUDED TH AT THE FLATS WERE NOT BEING USED FOR BUSINESS PURPOSES. ACCORDINGLY, THE NOTIONAL RENT FROM THESE PROPERTIES HAVE BEEN ESTIMATE AT RS.6.60 LACS AGAINST WHICH STATUTORY DEDUCTION OF 30% WAS ALLOWED TO THE ASSES SEE. THE SAME HAS RESULTED INTO AN ADDITION OF RS.4.62 LACS IN THE HA NDS OF THE ASSESSEE. THE SAME, UPON CONFIRMATION BY FIRST APPELLATE AUTH ORITY, IS UNDER APPEAL BEFORE US. THE LD. AR PLEADED THAT THE ESTIMATION M ADE BY LD. AO DOES NOT COMMENSURATE WITH THE FAIR RENTAL VALUE OF THES E PROPERTIES AND THEREFORE, THE MATTER REQUIRE REVISIT AT THE END OF LD. AO. UPON CAREFUL CONSIDERATION OF QUANTUM ORDER, WE FIND THAT THERE IS NO BASIS GIVEN BY LD. AO WHILE ESTIMATING NOTIONAL RENTAL VALUE OF TH ESE PROPERTIES. THEREFORE, KEEPING IN VIEW THE SAME, WE REMIT THE M ATTER BACK TO THE FILE OF LD. AO TO ESTIMATE THE NOTIONAL RENTAL VALUE OF THESE 3 PROPERTIES AS PER STATUTORY PROVISIONS AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUND STANDS ALLOWED FO R STATISTICAL PURPOSES. ITA NO.1495/MUM/2017 MR. CHANDRAIAH BALANNA KALAL ASSESSMENT YEAR :2012-13 4 6.1 THE SECOND ADDITIONAL GROUNDS CONTEST ESTIMATIO N OF INCOME ON ACCOUNT OF ALLEGED BOGUS PURCHASES. PURSUANT TO RECEIPT OF CERTAIN INFORMATION FROM DGIT (INV.), IT TRANSPIRED THAT THE ASSESSEE STOOD BENEFICIARY OF BOGUS PURCHASE BILLS AGGREGATING TO RS.19.22 LACS FROM 11 PARTIES, THE DETAILS OF WHICH HAVE ALREADY BEEN EXTRACTED AT PARA 6.1 OF THE QUANTUM ASSESSMENT ORDER. NOTICES SENT U/S 1 33(6) TO CONFIRM THE TRANSACTIONS ELICITED NO SATISFACTORY RESPONSE. THE ASSESSEE FAILED TO PROVIDE THE LATEST ADDRESSES OF THE SUPPLIERS. AFTE R CAREFUL CONSIDERATION OF FACTUAL MATRIX, THESE PURCHASES WERE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A), KEEPING IN VIEW THE ASSESSEES NATURE OF BUSINESS, RESTRICTED THE ADDITION TO 12.5 % OF ALLEGED BOGUS PURCHASES. STILL AGGRIEVED, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. THE LD. AR PLEADED THAT THE ESTIMATION WAS ON HIGHE R SIDE. 6.2 UPON CAREFUL CONSIDERATION, WE FIND THAT THE AS SESSEE WAS ENGAGED AS CONTRACTOR WHICH COULD NOT BE CARRIED OU T WITHOUT ACTUAL PURCHASE OF MATERIAL. THE SALES TURNOVER HAS NOT BE EN DISPUTED BY THE REVENUE. AT THE SAME TIME, THE ASSESSEE FAILED TO C ONCLUSIVELY SUBSTANTIATE THESE TRANSACTIONS. KEEPING IN VIEW TH E TOTALITY OF FACTORS, WHILE UPHOLDING THE REASONING OF FIRST APPELLATE AU THORITY, WE REDUCE THE ESTIMATION TO 8% WHICH WORKS OUT TO RS.1,53,832/-. THE GROUND STANDS PARTLY ALLOWED. 7. RESULTANTLY, THE APPEAL STANDS PARTLY ALLOWED FO R STATISTICAL PURPOSES IN TERMS OF OUR ABOVE ORDER. ITA NO.1495/MUM/2017 MR. CHANDRAIAH BALANNA KALAL ASSESSMENT YEAR :2012-13 5 ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH MARCH, 2019. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 19/03/2019 SR.PS, JAISY VARGHESE !'#$ # / COPY OF THE ORDER FORWARDED TO : 1. ! / THE APPELLANT 2. '#! / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. +, '%- , - , / DR, ITAT, MUMBAI 6. ,./0 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.