CHANDRIKA INVESTMENT LTD, KOLKATTA V. DCIT CEN CIR 1(2), MUMBAI

ITA 1737/MUM/2015

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2624 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 25-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: CHETAN A KARIA
• Keywords: Unexplained cash credit; Depreciation; Business expenditure
• Section: 143(3); 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO. 1737/MUM/2015 (ASSESSMENT YEAR : 2010-11) M/S. CHANDRIKA INVESTMENT LTD., CENTRAL CIRCLE 1(2), OLD CGO BUILDING ANNEXE, M.K.ROAD, MUMBAI 400020 PAN: AABCC 0669D ... APPELLANT VS. DY .COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE -1 (2), MUMBAI 400 051 .... RESPONDENT APPELLANT BY : SHRI CHETAN A. KARIA RESPONDENT BY : SHRI SUNIL KUMAR AGA RWAL DATE OF HEARING : 20/10/2015 DATE OF PRONOUNCEMENT : 20/10/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS PREFERRED BY THE ASSES SEE AND IS DIRECTED AGAINST THE IMPUGNED ORDER DATED 13/12/ 2013 OF CIT(A)-36, MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2010-11 W HICH IN TURN HAS ARISEN FROM AN ORDER PASSED BY THE ASSESSING OFFICE R DATED 24/12/2012 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961( I N SHORT THE ACT). 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLL OWING GROUNDS OF APPEAL:- 2 ITA NO. 1737/MUM/2015 (ASSESSMENT YEAR : 2010-11) 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED U/S. 143(3) DETERMINING TOT AL INCOME AT RS.1,01,185/-. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,00,000/- ON ACCOUNT OF UNEXPLA INED INVESTMENT U/S.69 OF THE INCOME TAX ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THE FACT THAT THE ADVANCES WERE GIVEN BY THE APPELL ANT COMPANY TO ITS ASSOCIATE CONCERN M/S. R.M.INVESTMENT TRADING CO. P VT. LTD. IN WHICH THE DIRECTOR OF THE APPELLANT COMPANY IS DIRECTOR. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF A FOLLOWING BUSINESS EXPENDITURE OF RS.4,092/- SR.NO. NATURE OF EXPENDITURE AMOUNT (RS.) 1. RENT OF OFFICE PREMISES 1,200 2. AUDIT FEES 2,400 3. DEPRECIATION 52 TOTAL 4,092 3. THE APPELLANT IS A COMPANY INCORPORATED UNDER TH E PROVISIONS OF THE COMPANIES ACT, 1956 AND FOR THE YEAR UNDER CONS IDERATION IT FILED A RETURN OF INCOME DECLARING NIL INCOME. IN THE COUR SE OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER NOTICED THAT THE ADVANCES RECOVERABLE SHOWN IN THE BALANCE SHEET AS ON 31/3/ 2010 HAS INCREASED BY RS.1.00 LAC AND IN THE ABSENCE OF PRODUCTION OF BOOKS OF ACCOUNT, THE SOURCE OF THE SAME COULD NOT BE ESTABLISHED CONCLUS IVELY. THEREFORE, INCREASE IN THE BALANCE OF ADVANCE RECOVERABLE BY RS.1.00 LAC WAS TREATED AS INVESTMENT OUT OF UNVERIFIABLE AND UNEXP LAINED SOURCES AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE UNDER SEC TION 69 OF THE ACT. THE SAID ADDITION HAS SINCE BEEN AFFIRMED BY CIT(A) ALSO AND ACCORDINGLY, ASSESSEE IS IN FURTHER APPEAL BEFORE T HE TRIBUNAL. 4. IN THE COURSE OF HEARING, THE LD. REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT IN THE REPLY FURNISHED DURING THE ASSESSMENT 3 ITA NO. 1737/MUM/2015 (ASSESSMENT YEAR : 2010-11) PROCEEDINGS, A COPY OF WHICH HAS BEEN PLACED AT PAG E -13 OF THE PAPER BOOK, ASSESSEE HAD EXPLAINED THAT DURING THE YEAR U NDER CONSIDERATION FIVE LOANS OF RS.20,000/- EACH, TOTALING TO RS.1.00 LAC WERE ADVANCED IN CASH TO M/S. R.M. INVESTMENTS & TRADING PVT. LTD. ON THIS BASIS THE LD. REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE INCREASE IN THE ADVANCES RECOVERABLE SHOWN IN THE BALANCE SHEET VIS --VIS THE EARLIER YEAR WAS CLEARLY EXPLAINED. BY REFERRING TO THE C OPY OF THE REPLY FILED TO THE ASSESSING OFFICER DATED 23/11/2012, IT HAS ALSO BEEN EXPLAINED THAT THE RELEVANT EXTRACT OF THE CASH BOOK FOR THE PERI OD UNDER CONSIDERATION WAS ALSO FURNISHED, COPY OF WHICH HAS BEEN PLACED IN THE PAPER BOOK AT PAGE-30. LD. REPRESENTATIVE FOR THE ASSESSEE EXPLAINED THAT THE ENTRIES OF THE CASH BOOK WOULD SHOW THAT F IVE LOANS OF RS.20,000/- EACH TOTALLING TO RS.1.00 LAC HAS BEEN ADVANCED OUT OF THE AVAILABLE CASH IN HAND, THEREFORE, IT COULD NOT BE CONSTRUED AS UNVERIFIABLE OR UNEXPLAINED. LD. REPRESENTATIVE FO R THE ASSESSEE ALSO ASSAILED THE FINDING OF THE CIT(A). 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATI VE APPEARING FOR THE REVENUE CONTENDED THAT THE ADDITION WAS MAD E ON ACCOUNT OF NON-PRODUCTION OF RELEVANT RECORDS AND ALSO FOR THE REASON THAT IN THE CASE OF THE RECIPIENT, M/S. R.M. INVESTMENTS & TRAD ING PVT. LTD., THE SAME HAS BEEN ADDED AS UNEXPLAINED CREDIT WITHIN TH E MEANING OF SECTION 68 OF THE ACT. 6. I HAVE CONSIDERED THE RIVAL SUBMISSIONS. WITH REGARD TO THE ADDITION MADE UNDER SECTION 68 OF THE ACT IN THE HA NDS OF THE RECIPIENT OF LOAN I.E. M/S. R.M. INVESTMENTS & TRADING PVT. L TD., IS CONCERNED, THE LD. REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT SUCH PROCEEDINGS 4 ITA NO. 1737/MUM/2015 (ASSESSMENT YEAR : 2010-11) CANNOT IPSO-FACTO MEAN THAT THE IMPUGNED ADVANCES MADE BY THE ASSESSEE WERE UNVERIFIABLE OR FROM UNEXPLAINED SOUR CES. LD. REPRESENTATIVE FOR THE ASSESSEE CONTENDED THAT THE CASH BOOK, WHICH WAS PRODUCED BEFORE LOWER AUTHORITIES AND A COPY OF WHICH IS PLACED IN THE PAPER BOOK CLEARLY ESTABLISHES THAT THE AMOUNTS HAVE BEEN ADVANCED OUT OF AVAILABLE CASH IN HAND. THE AFOR ESAID FACTUAL ASSERTIONS OF THE ASSESSEE ARE BORNE OUT OF RECORD AND, THEREFORE, I AM UNABLE TO UPHOLD THE FINDING OF THE AUTHORITIES BEL OW THAT THE ADVANCES OF RS.1.00 LAC MADE DURING THE YEAR ARE UNVERIFIABL E OR ARE OUT OF UNEXPLAINED SOURCES. THUS, ON FACTS AS THEY APPEAR ON RECORD, I FIND NO REASON TO UPHOLD THE ADDITION OF RS.1.00 LAC MADE U NDER SECTION 69 OF THE ACT. THUS, IN SO FAR AS GROUND OF APPEAL NO.2 IS CONCERNED, THE SAME IS ALLOWED. 7. THE NEXT SUBSTANTIVE GROUND IS BY WAY OF GROUND NO.4, WHEREIN ASSESSEE HAS CHALLENGED THE ORDER OF CIT(A) CONFIRM ING THE DISALLOWANCE OF RS.4,092/- REPRESENTING EXPENDITURE ON ACCOUNT O F RENT/AUDIT FEE AND DEPRECIATION. THE LD. REPRESENTATIVE FOR THE ASSES SEE SUBMITTED THAT IT WAS A CASE OF DOUBLE ADDITION BECAUSE THE LOSS AS P ER P&L ACCOUNT WAS RS.4,092/- BUT IN THE COMPUTATION OF INCOME ASSESSE E HAD DECLARED NIL INCOME. IN SUPPORT, REFERENCE HAS BEEN MADE TO PAG ES 3&4 OF THE PAPER BOOK TO SHOW THAT ASSESSEE HAD FILED A RETURN OF INCOME AT NIL. THEREFORE, UNDER THESE CIRCUMSTANCES, FURTHER ADDIT ION OF RS.4,092/- WAS NOT MERITED. THE AFORESAID FACTUAL MATRIX IS B ORNE OUT OF RECORD AND IS ALSO NOT DISPUTED BY THE LD. DEPARTMENTAL RE PRESENTATIVE IN THE COURSE OF HEARING BEFORE ME. AS A CONSEQUENCE, THE ADDITION OF RS.4,092/- MADE BY THE ASSESSING OFFICER IS HEREBY DELETED. 5 ITA NO. 1737/MUM/2015 (ASSESSMENT YEAR : 2010-11) 8. IN SO FAR AS GROUND OF APPEAL NOS. 1 & 3 ARE CON CERNED, NO SPECIFIC ARGUMENTS HAVE BEEN MADE BY THE APPELLANT, ACCORDINGLY, THE SAME ARE DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT AT THE CONCLUSION OF THE HEARING ON 20/10/2015. SD/- (G.S. PANNU) ACCOUN TANT MEMBER MUMBAI, DATED 20/10/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI VM , SR. PS