TUSHAR J LAKHANI, MUMBAI V. DCIT 12(2), MUMBAI

ITA 1574/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 3890 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 07-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G
• Assessee Lawyers: AJAY RANE
• Keywords: Unexplained cash credit; Depreciation; Principle of natural justice; Earning of tax free income
• Section: 143(3); 14A; 68

Judgement Text

1 ITA 1574/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E, MUMBAI BEFORE SHRI MAHAVIR SINGH(JUDICIAL MEMBER) AND SHRI G MANJUNATHA (ACCOUNTANT MEMBER) I.T.A NO.1574/MUM/2017 (ASSESSMENT YEAR: 2011-12) SHRI TUSHAR J LAKHANI 32/5, SWADHIN SADAN, C- ROAD, CHURCHGATE, MUMBAI- 20 PAN : AAAPL4784A VS ACIT 17(3), MUMBAI APPELLANT RESPONDENT APPELLANT BY SHRI AJAY RANE RESPONDENT BY SHRI DG PANSARI DATE OF HEARING 07 -08-2018 DATE OF PRONOUNCEMENT 07-08-2018 O R D E R PER G MANJUNATHA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGA INST ORDER OF THE CIT(A)-28, MUMBAI DATED 02-12-2016 AND IT PERTAINS TO AY 2011-12. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL:- 1) THE LEARNED CIT(A) ERRED IN CONFIRMING THE DIS ALLOWANCE OF CLAIM FOR DEPRECIATION AT RS.2,29,500/- ON PURCHASE OF NEW MA CHINERY PURELY ON THE BASIS OF INFORMATION PROVIDED BY SALES TAX DEPARTMENT. IT IS PRAYED THAT THE SAID DISALLOWANCE BE DIRECTED TO BE DELETED. ; ' R2) THE LEARNED CIT(A) ERRED IN CONFIRMING AN ADDI TION BY WAY OF CASH CREDITS U/S.68 OF THE ACT AT RS.1,20,00,000=00 (RUPEES ONE CRORE TWENTY LAKHS ONLY). IT IS PRAYED THAT THE SAID ADDITION BE DIRECTED TO BE DELETED. 3) THE LEARNED CIT(A) ERRED IN CONFIRMING A DISALL OWANCE U/S.14A OF THE ACT AT RS.7,276/-. IT IS PRAYED THAT THE SAID ADDIT ION BE DIRECTED TO BE DELETED. 2 ITA 1574/MUM/2017 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING AND EXPORT OF NOTE BOOKS AND PAPER STATIONERY, FILED HIS RETURN OF INCOME FOR AY 2011-12 ON 30-09- 2011 DECLARING TOTAL INCOME OF RS.41,47,060. THE C ASE WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S 143(3) ON 25-03-2014 DETERMINING TOTAL INCOME AT RS.1,64,98,830 BY MAKIN G ADDITION TOWARDS DISALLOWANCE OF DEPRECIATION CLAIMED ON PLANT AND M ACHINERY ON THE GROUND THAT THE ASSESSEE HAS OBTAINED BOGUS PURCHAS E BILLS FROM ACCOMMODATION ENTRY PROVIDERS, ADDITION TOWARDS UNE XPLAINED CASH CREDITS BEING UNSECURED LOANS U/S 68 OF THE INCOME- TAX ACT, 1961 FOR FAILURE TO FILE NECESSARY EVIDENCE TO PROVE IDENTIT Y, GENUINENESS OF TRANSACTION AND CREDITWORTHINESS OF THE PARFTIES AN D ALSO DISALLOWANCE ON EXPENDITURE INCURRED IN RELATION TO EXEMPT INCOME U /S 14A R.W.R. 8D(2)(III) OF I.T. RULES, 1962. 3. AGGRIEVED BY THE ASSESSMENT ORDER, ASSESSEE PREF ERRED APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE , NEITHER APPEARED NOR FILED ANY DETAILS. THEREFORE, THE LD.CIT(A) DI SPOSED OF APPEAL FILED BY THE AASSESSEE EX PARTE ON THE BASIS OF INFORMATI ON AVAILABLE ON RECORD AND CONFIRMED ADDITION MADE BY THE AO TOWARD S DISALLOWANCE OF DEPRECIATION, ADDITION TOWARDS DISALLOWANCE OF DEPR ECIATION, ADDITION TOWARDS UNEXPLAINED CASH CREDIT U/S 68 OF THE INCOM E-TAX ACT, 1961 AND 3 ITA 1574/MUM/2017 ADDITION TOWARDS DISALLOWANCE OF EXPENDITURE INCURR ED IN RELATION TO EXEMPT INCOME. 4. AGGRIEVED BY THE ORDER OF LD.CIT(A), THE ASSESSE E IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE PARTIES AND PERUSED MATER IAL AVAILABLE ON RECORD. THE LD.AR FOR THE ASSESSEE, AT THE TIME OF HEARING SUBMITTED THAT THE LD.CIT(A) HAS DISMISSED APPEAL FILED BY TH E ASSESSEE EXPARTE WITHOUT DISCUSSING ISSUES ON MERITS IN THE LIGHT OF EVIDENCE FILED BY THE ASSESSEE, IN CONTRAVENTION OF PRINCIPLES OF NATURAL JUSTICE. THEREFORE, ONE MORE OPPORTUNITY OF HEARING MAY BE GIVEN BEFORE THE CIT(A) TO FILE NECESSARY EVIDENCE TO JUSTIFY HIS CASE IN RESPECT O F VARIOUS ADDITIONS MADE BY THE AO. WE FIND THAT THE LD.CIT(A) HAS PA SSED EXPARTE ORDER BEHIND THE BACK OF THE ASSESSEE WITHOUT DISCUSSING THE ISSUES ON MERIT. ALTHOUGH, THE LD.CIT(A) HAS STATED THAT VARIOUS DAT ES OF HEARING HAS BEEN GIVEN TO THE ASSESSEE AS PER ORDER SHEET NOTIN GS, STILL DECIDING THE APPEAL EXPARTE BEHIND THE BACK OF THE ASSESSEE, THA T TOO, ON TECHNICAL GROUNDS WITHOUT DISCUSSING THE ISSUES ON MERITS IS A CLEAR CASE OF VIOLATION OF PRINCIPLES OF NATURAL JUSTICE. THEREF ORE, WE ARE OF THE CONSIDERED VIEW THAT THE ISSUE NEEDS TO BE SET ASID E TO THE FILE OF THE LD.CIT(A) TO DECIDE THE ISSUES ON MERITS IN THE LIG HT OF CLAIM OF THE ASSESSEE THAT IT HAS FURNISHED NECESSARY EVIDENCE B EFORE THE LD.CIT(A) 4 ITA 1574/MUM/2017 TO JUSTIFY PURCHASES FROM HAWALA DEALERS AND UNSECU RED LOAN TAKEN FROM M/S SHREE SUNNY TRADING CORPORATION. NEEDLESS TO S AY, THE ASSESSEE IS DIRECTED TO FURNISH NECESSARY EVIDENCE BEFORE TH E LD.CIT(A) WITHOUT SEEKING ANY ADJOURNMENT. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED, FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH AUGUST, 2018. SD/- SD/- (MAHAVIR SINGH) (G MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 07 TH AUGUST, 2018 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER SR.PS, ITAT, MUMBAI