RISHI DEVKINANNDAN MEHRA, MUMBAI V. ASST CIT 24(3), MUMBAI

ITA 1853/MUM/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 5337 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 16-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J SARAVANAN
• Assessee Lawyers: STANY SALDANHA
• Keywords: Business expenditure; Opportunity of being heard; Earning of tax free income
• Section: 14A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 1853 /MUM/2017 : A.Y : 2012 - 13 RISHI D EVKINANDAN MEHRA UNIT NO. 403/A - 2, C - WING, MORYA HOUSE, VEERA INDUSTRIAL ESTATE, OSHIWARA LINK ROAD, ANDHERI (W), MUMBAI 400 0 53 . PAN : A FUPM7001A (APPELLANT) VS. ACIT - 24(3), MUMBAI. (RESPONDENT) APPELLANT BY : SHRI STANY SALDANHA RESPONDENT BY : SHRI J. SARAVANAN DATE OF HEARING : 03 / 1 0/2018 DATE OF PRONOUNCEMENT : 03 / 1 0/2018 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 36 , MUMBAI DATED 16.12.2016 , PERTAINING TO THE ASSESSMENT YEAR 20 12 - 13 , WHICH IN TURN HAS ARISEN FROM THE ORDER DATED 27.03.2015 PASSED BY THE ASSESSING OFFICER, MUMBAI UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN THE M EMO OF APPEAL, ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEAL, WHICH READ AS U NDER : - 2 ITA NO. 1853/MUM/2017 RISHI DEVKINANDAN MEHRA 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 36, MUMBAI HAS ERRED, IN LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ORDER OF THE LEARNED A.O. THE ASST. COMMISSIONER OF INCOME TAX 24 (3), MUMBAI. 2. THE LD. CIT (A) - 36 , MUMBAI ERRED IN PASSING AN EX - PARTE ORDER AND NOT GRANTING OPPORTUNITY TO THE APPELLANT TO BE HEARD. THE NOTICE ALLEGEDLY SAID TO HAVE BEEN SENT HAD NOT BEEN RECEIVED BY THE APPELLANT. 3. THE LEARNED CIT(A) ERRED IN DISALLOWING A SUM OF RS.20,227/ - U/S 14A OF THE INCOME TAX ACT, 1961 WITHOUT CONSIDERING THE FACTS THAT NO EXPENSES HAD BEEN INCURRED FOR EARNING THE EXEMPT INCOME. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITIONS OF THIS SUM MAY KINDLY BE DELETED. 4. WITHOUT PREJUDICE, IF ADDITION IS MADE THE SAME SHOULD BE RESTRICTED TO EXEMPT INCOME EARNED. 5. THE LEARNED CIT (A) ERRED IN ADDING A SUM OF RS. 60,965/ - TOWARDS DEMAND DRAFT PURCHASED IN CASH. THE APPELLANT HAS PURCHASED DD OUT OF CASH IN HAND AND THE SAME IS REFLECTED IN THE BOOKS OF A CCOUNTS OF THE APPELLANT. THE APPELLANT RESPECTFULLY SUBMIT THAT THE BE DIRECTED TO DELETE THE ADDITION MADE. 6. THE LEARNED CIT(A) ERRED IN CONSIDERING THE HOUSE PROPERTY INCOME AS INCOME FROM OTHER SOURCES AS AGAINST HOUSE PROPERTY INCOME CLAIMED BY THE APPELLANT AND THEREBY DENYING THE CLAIM OF THE APPELLANT UNDER PROVISION OF SECTION 24 OF THE INCOME TAX ACT, 1961.THE ADDITIONS MADE IN EARLIER YEARS HAS BEEN DELETED BY THE ID. CIT (A) AND THE HON. ITAT, MUMBAI UPHOLDING THE CLAIM OF THE APPELLANT. THE APPELLANT RESPECTFULLY SUBMITS THAT THE CLAIM OF THE APPELLANT U/S 24 OF THE INCOME TAX ACT, 1961 MAY KINDLY BE ALLOWED. 7. THE LEARNED CIT (A) ERRED IN MAKING ADDITIONS OF RS.1,41,55,244/ - ON ACCOUNTS OF SECURED LOANS. THE SAME IS CURRENT ACCOUNT OF THE APPELLANT AND REFLECTED IN THE BOOKS OF ACCOUNT AS RUNNING ACCOUNT. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITIONS MADE DELETE. 8. THE LEARNED CIT(A) ERRED IN MAKING ADDITIONS OF RS. 1,88,44,528/ - (RS. 1,60,92,172/ - + RS. 27,52,356/ - ) BEING UNPROVE D AND UNEXPLAINED SUNDRY CREDITORS. THE BALANCES ARE IN THE NORMAL COURSE OF BUSINESS AND DUE TO CUSTOMERS. THE 3 ITA NO. 1853/MUM/2017 RISHI DEVKINANDAN MEHRA APPELLANT RESPECTFULLY SUBMITS THAT THE MAY BE DIRECTED TO DELETE THE ADDITIONS MADE. 9. THE LEARNED CIT(A) ERRED IN MAKING ADDITIONS OF RS. 10 ,38,760/ - (25% OF RS. 41,55,042/ - ) OUT OF LABOUR CHARGES WITHOUT CONSIDERING THAT THE SAID EXPENSES WERE EXPENDED FOR THE BUSINESS AND ARE WHOLLY IN THE NATURE OF BUSINESS EXPENDITURE AND FOR THE BUSINESS. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITI ONS OF THIS SUM MAY KINDLY BE DELETED. 10. THE LEARNED CIT(A) ERRED IN MAKING AN ADDITION OF RS.1,00,000/ - AS INCOME FROM OTHER SOURCES TOWARDS CAPITAL INTRODUCED IN M/S. LINEA LABS. THE SAID COMPANY IS A PROPRIETARY CONCERN OF THE APPELLANT AND SAID SUM HAS BEEN INTRODUCED OUT OF PERSONAL FUNDS. THE APPELLANT RESPECTFULLY SUBMITS THAT THE ADDITIONS OF THIS SUM MAY KINDLY BE DELETED. 11. THE LEARNED CIT(A) ERRED IN DISALLOWING A SUM OF RS.2,60,362/ - BEING 20% OF THE FOLLOWING EXPENSES. BUSINESS PROMOTI ON EXPENSES RS. 84,947/ - SALARY RS.9,68,500/ - TRAVELLING EXPENSES RS.2,48,362/ - ----------------------------------------------------- RS.13,01,809/ - =========== THE SAID EXPENSES HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND HENCE FULLY ALLOWED. HENCE THE APPELLANT SUBMITS THAT THE SAID EXPENSES MAY FULLY BE ALLOWED. 12. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN INITIATING PENALTY UNDER SECTION 271 (1) (C) OF THE INCOME TAX ACT, 1961. 13. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER ERRED IN LEVYING INTEREST UNDER SECTION 234 OF THE INCOME TAX ACT, 1961. 4 ITA NO. 1853/MUM/2017 RISHI DEVKINANDAN MEHRA 3. AT THE TIME OF HEARING, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE RAISED A PRELIMINARY POINT CONTAINED IN GROUND OF APPEAL NO. 2 CONTENDING THAT THE CIT(A) HAD ERRED IN PASSING AN EX PARTE ORDER AND NOT GRANTING APPROPRIATE OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. ELABORATING THIS G ROUND, THE LEARNED REPRESENTATIVE POINTED OUT THAT CIT(A) HAD ALLOWED ONLY ONE HEARING AND, IN FACT, ON THE APPOINTED DATE OF HEARING, THE CONCERNED LEARNED REPRESENTATIVE WAS BUSY WITH HIS DAUGHTERS MARRIAGE WHICH WAS BEI NG SOLEMNISED ON THE SAME DAY. THE LEARNED REPRESENTATIVE POINTED OUT THAT THE STAFF OF THE LEARNED REPRESENTATIVE DID APPROACH THE OFFICE OF THE CIT(A), BUT FOR SOME REASONS THE APP EAL ORDER WAS PASSED EX PARTE THEREBY THE SAY OF THE ASSESSEE COULD NOT B E PRESENTED BEFORE HIM. THE LEARNED REPRESENTATIVE POINTED OUT THAT PRESENTLY, THE ASSESSEE WOULD BE SATISFIED IF THE MATTER IS RESTORED BACK TO THE FILE OF THE CIT(A) FOR HEARING AFRESH AND DECIDING THE ISSUES AS PER LAW AFTER ALLOWING THE ASSESSEE AN OP PORTUNITY OF BEING HEARD. 4. ON THIS ASPECT, THE LD. DR HAS NOT RAISED ANY SERIOUS OBJECTION. 5. HAVING CONSIDERED THE RIVAL STANDS, WE FIND THAT IN THE INTEREST OF JUSTICE AND FAIR PLAY AN OPPORTUNITY OF HEARING DESERVES TO BE ALLOWED TO THE ASSESSEE AT THE LEVEL OF CIT(A). IN FACT, A PERUSAL OF THE IMPUGNED ORDER OF CIT(A) REVEALS THAT THE APPEAL HAS BEEN DISMISSED PRIMARILY NOTICING THE ABSENCE OF THE ASSESSEE WITHOUT GOING INTO THE MERITS OF THE G ROUNDS RAISED BEFORE HIM IN AN APPROPRIATE MANNER. BE THAT AS IT MAY, WE DEEM IT FIT AND PROPER TO RESTORE THE APPEAL BACK TO THE FILE OF THE CIT(A) WHO SHALL ALLOW THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD AND THEREAFTER DECIDE THE VARIOUS G ROUNDS RAISED AS PER LAW. WE MAY CLARIFY HERE THAT OUR DECISION TO 5 ITA NO. 1853/MUM/2017 RISHI DEVKINANDAN MEHRA REMAND THE APPEAL BACK TO THE FILE OF THE CIT(A) IS NO REFLECTION ON THE MERITS OF THE VARIOUS GROUNDS, WHICH THE CIT(A) SHALL BE FREE TO ADJUDICATE IN ACCORDANCE WITH LAW, OF COURSE, AFTER HEARING THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE, AS ABOVE. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARING ON 3 RD OCTOBER , 201 8 . SD/ - SD/ - ( RAM LAL NEGI ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 3 RD OCTOBER , 201 8 *SSL* COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, D BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI