ITO 29(1)(2), MUMBAI V. BHAGWATI ABHILASHA CONVENTURE, MUMBAI

ITA 1835/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1930 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSHIL KUMAR PODDAR
• Assessee Lawyers: M SUBRAMANIAN
• Keywords: Unexplained expenditure; Additional evidence
• Section: 44AD; 69C; 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI . , , BEFORE SHRI C. N. PRASAD , JM AND SHRI MANOJ KUMAR AGGARWAL , AM ./ I.T.A. NO. 1 8 35/MUM/2015 ( / ASSESSMENT YEAR: 2011 - 12 ) INCOME TAX OFFICER - 29 (1) (2) , C - 10, PRATYAKSHAKAR BHAWAN, ROOM NO.103, 1 ST FLOOR, BKC BANDRA (E), MUMBAI 400 051 / VS. M/S . BHAGWATI ABHILASHA CONVENTURE A - 36, PATIL BHUVAN, N. S. B. ROAD, MULUND (W), MUMBAI 400 080 ./ ./ PAN/GIR NO. AA HFB9198D ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI SUSHIL KUMAR PODDAR, DR / RESPONDENT BY : SHRI M. SUBRAMANIAN, AR / DATE OF HEARING : 21 /11 /2016 / DATE OF PRONOUNCEMENT : 25 /1 1 /2016 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY THE REVENUE FOR A SSESSMENT Y EAR [AY] 2011 - 12 ASSAILS THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 40 [CIT(A)], MUMBAI DATED 16/01/2015 ON BEING AGGRIEVED BY DELETION OF VARIOUS ADDITIONS MADE BY THE AO . 2 ITA NO. 1 8 35 /MUM / 2015 M/S. BHAGWATI ABHILASHA CONVENTURE ASSESSMENT YEAR 2011 - 12 2 . FACTS QU A THE DISPUTE ARE THAT THE ASSESSEE WAS A RESIDENT FIRM E NGA GED IN CONSTRUCTION BUSINESS WHO F ILED ITS RET URN OF INCOME FOR THE IMPUGNED ASSESSMENT Y EAR [AY] DECLARING TOTAL INCOME AT RS.17,54,580/ - . THE SAME WAS TAKEN UP FOR SCRUTINY ASSESSMENT WHEREIN TOTAL INCOME WAS COMPUTED AT RS.2,83,48,080/ - AFTER MAKING CER TAIN ADDITIONS OF UNEXPLAINED EXPENDITURE AMOUNTING IN ALL TO RS.2,65,93.498/ - V IDE ORDER DATED 03/02/2014. THE ASSESSEE FOLLOWED PERCENTAGE OF COMPLETION METHOD AND OFFERED NOTIONAL PROFIT OF 10% OF TURNOVER TO TAX. IT INCURRED EXPENDITURE FOR PURCHASE OF MATERIAL FOR RS.3,82,67,368/ - AND LABOUR PAYMENT FOR RS.1,02,26,796/ - . TO CONFIRM THE S A ME, NOTICES U/S 133(6) WERE SENT BY AO BUT NO DETAILS WERE RECEIVED FROM THESE PARTIES AND AO CONCLUDED THE SAME TO BE UNEXPLAINED EXPENDITURE U/S 69C AND MADE ADDITIO N OF RS.1,44,62,390/ - AGAINST MATERIAL PURCHASE AND RS.37,88,871/ - AGAINST LABOUR PAYMENT. F URTHER, ADHOC DISALLOWANCE OF VARIOUS EXPENSES WAS MADE TO THE EXTENT OF RS.25,81,958/ - . SIMILARLY, INTEREST ON LOANS AMOUNTING TO RS.57,60,279/ - WAS ADDED TO THE I NCOME OF THE ASSESSEE ON THE G R OUND THAT THE SAME REMAINED UNPAID AT THE END OF THE YEAR. THE APPEAL OF THE ASSESSEE WAS PARTLY ALLOWED BY FIRST APPELLATE AUTHORITY VIDE ORDER DATED 16/01/2015 AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. BEFORE CIT(A) , THE ASSESSEE CONTENDED THAT 69C HAS NO APPLICATION TO THE CASE OF THE ASSESSEE AND HUGE ADDITIONS HAVE BEEN MADE SOLELY ON THE BASIS OF NON - COMPLIANCE OF NOTICES U/S 133(6) BY VARIOUS PARTIES. THE AO DID NOT CONFRONT THE ASSESSEE WITH THE FACT OF NON COM PLIANCE OF NOTICES U/S 133(6) ISSUED TO THE PARTIES AND SIMPLY PROCEEDED TO MAKE THE ADDITIONS WHEREAS COMPLETE DETAILS WITH RESPECT TO EXPENDITURE WAS FILED BEFORE AO. T HE ASSESSEE SUBMITTED SUMMARY OF PURCHASE / EXPENSES TRANSACTIONS AND CONFIRMATION FRO M SUPPLIER AND CONTRACTORS BEFORE CIT(A). MOREOVER, AS ASSESSEE FOLLOW ED PERCENTAGE OF COMPLETION METHOD AND OFFER NOTIONAL PROFIT ON TURNOVER , ADDITION IN THIS MANNER COULD NOT BE MADE BY AO. FURTHER, AO NOWHERE DOUBTED THE GENUINENESS OF LOANS AND ACCEPT ED THE FACT THAT FUNDS HAVE BEEN BORROWED AND USED FOR THE PURPOSE OF BUSINESS AND HENCE NO DISALLOWANCE QUA INTEREST IS CALLED FOR. CIT(A) CONCURRED WITH THE CONTENTIONS OF THE ASSESSEE AND NOTED THAT THE INCOME OFFERED BY THE ASSESSEE WAS MORE THAN 8% AS STIPULATED U/S 44AD AND 69C DID NOT APPLY TO THE CASE OF ASSESSEE AT ALL AS ALL THE TRANSACTIONS WERE RECORDED IN THE BOOKS OF ACCOUNTS. WITH THESE OBSERVATIONS, HE DELETED 3 ITA NO. 1 8 35 /MUM / 2015 M/S. BHAGWATI ABHILASHA CONVENTURE ASSESSMENT YEAR 2011 - 12 IMPUGNED ADDITIONS EXCEPT A DHOC DISALLOWANCE OF 10% OF VARIOUS EXPENSES WHICH CAME TO RS.6,44,428/ - . THE REVENUE IS AGGRIEVED BY THESE DELETIONS AND CONTENDED THAT CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCES UNDER RULE 46A WITHOUT CONFRONTING THE SAME TO AO. THE LD. COUNSEL FOR ASSESSEE, ON THE OTHER HAND, HAS SUPPORTED THE STAND TAK EN BY CIT(A) AND STATED THAT ASSESSEE WAS NEVER ASKED TO FURNISH ANY DETAILS / DOCUMENTS DESPITE BEING REPEATEDLY ASKED FOR BY THE ASSESSEE . 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. WE NOTICE THAT INCOME HAS BEEN OFFERED BY AS SESSEE ON NOTIONAL BASIS @10% OF TURNOVER AND ALL EXPENSES HAVE BEEN DEBITED TO WORK - IN - PROGRESS ACCOUNT AND THEREFORE, WHATEVER, EXPENDITURE WERE DISALLOWED / ADDED BY AO, THE SAME SHOULD HAVE BEEN DONE UNDER THAT HEAD ONLY AND ADDITION COULD NOT BE MADE IN THIS MANNER. FURTHER, THE SOLE BASIS OF MAKING HUGE ADDITIONS IS NON - COMPLIANCE OF 133(6) NOTICES WHICH WERE N EVER C ONFRONTED TO THE ASSESSEE. THE ASSESSEE HAD FILED THE REQUISITE DETAILS ALONG - WITH CONFIRMATION OF THE PARTIES AND THUS, HAD DISCHARGED I NITIAL ONUS OF PROVING ITS CLAIM. THE UNSECURED LOANS WERE NOWHERE DOUBTED BY THE REVENUE AND INTEREST THEREUPON WAS DULY CREDITED TO THE ACCOUNTS OF THE LENDER AFTER DEDUCTING TDS AS PER NORMAL ACCOUNTING PRACTICES. IT WAS NOWHERE IN DISPUTE THAT LOAN FUN DS WERE NOT USED FOR BUSINESS. THE ASSESSEE FILED CONFIRMATIONS OF THE PARTIES BEFORE CIT(A) WHICH SHOULD HAVE BEEN DEMANDED AND VERIFIED BY THE AO. THEREFORE, WE FIND THAT REVENUES APPEAL IS DEVOID OF ANY MERIT AND WE ARE INCLINED TO UPHOLD THE STAND TAK EN BY CIT(A). ALL THE GROUNDS OF THE APPEAL FILED BY REVENUE ARE DISMISSED. 4. IN NUTSHELL, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH NOVEMBER , 201 6 SD/ - SD/ - ( C. N. PRASAD ) ( MANOJ KUMAR AGGARWAL ) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 25 .1 1 .201 6 LAXMIKANT DEKA, SR. PS 4 ITA NO. 1 8 35 /MUM / 2015 M/S. BHAGWATI ABHILASHA CONVENTURE ASSESSMENT YEAR 2011 - 12 / COPY OF THE ORDER F ORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI SR. NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATION SHEETS ARE ATTACHED SR.PS/PS 2 DRAFT DICTATED ON 21.11.16 SR.PS/PS 3 DRAFT PLACED BEFORE AUTHOR 2 2 .11.16 SR.PS/PS 4 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 5 DRAFT DISCUSSED/AP PROVED BY SECOND MEMBER JM/AM 6 APPROVED DRAFT COMES TO THE SR.PS/PS 24.11.16 SR.PS/PS 7 ORDER PRONOUNCEMENT ON 25.11.16 SR.PS/PS 8 FILE SENT TO THE BENCH CLERK 25.11.16 SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE AR 11 DATE OF DISPATCH OF ORDER