ITO WD 21(1)(1), MUMBAI V. DIVYA YOGENDRA RAJPURIA, MUMBAI

ITA 191/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100992 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 68

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN ,AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 191 / MUM/20 1 1 ( / ASSESSMENT YEA R : 20 0 7 - 08 ) INCOME TAX OFFIC ER 21 ( 1 )( 1 ), ROOM NO. 603,6 TH FLOOR, PRATYAKSHAKAR BHAVAN, BANDRA CURLA COMPLEX, BANDRA, MUMBAI . / VS. MS.DIV YA YOGENDRA RAJPURIA, RAJPURIA BHAVAN, 69, NEHRU ROAD, VILE PARLE (E), MUMBAI - 400057. ( / APPELLANT ) .. ( / RESPO NDENT ) ./ ./PAN. : AADP R3360D / APPELLANT BY SHRI S K MISHRA / RSPONDENT BY SHRI VIJAY KOTHARI / DATE OF HEARING : 0 9 .9 . 201 5 / DATE OF PRONOUNCEMENT: 9 . 9. 201 5 / O R D E R P ER B .R.BASKARAN : THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 04 - 10 - 2010 PASSED BY LD CIT(A) - 32, MUMBAI FOR ASSESSMENT YEAR 2007 - 08 ON THE FOLLOWING ISSUES: - ( A ) DISALLOWANC E OF MOTOR CAR EXPENSES ( B ) ASSESSMENT OF CASH CREDIT OF RS.25.26 LAKHS. ( C ) ADDITION MADE U/S 41(1) OF THE ACT. ( D ) DISALLOWANCE OF BROKERAGE EXPENSES. 2. THE FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S NIRAJ TEXTILES, WHICH IS EN GAGED IN THE TEXTILE BUSINESS. THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION WAS COMPLETED BY THE AO BY MAKING VARIOUS TYPES OF ADDITIONS. THE LD CIT(A) GRANTED RELIEF IN RESPECT ITA NO. 191 / MUM/20 1 1 2 OF THE ADDITIONS LISTED IN THE PRECEDING PARAGRAPH AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 3. THE FIRST ISSUE RELATES TO THE ADHOC DISALLOWANCE MADE OUT OF EXPENSES. THE AO DISALLOWED 20% OF MOTOR CAR EXPENSES, TRAVELLING EXPENSES, CONVEYANCE EXPENSES AND FREIGHT & TRANSPORT EXPENSES, SINCE THE ASSESSEE FAILE D TO SUBMIT THE VOUCHERS/BILLS FOR VERIFICATION. THE LD CIT(A) DELETED THE ADDITION ON THE REASONING THAT THE AO FAILED TO AFFORD OPPORTUNITY TO THE ASSESSEE. 4. WE HEARD THE PARTIES ON THIS ISSUE. ADMITTEDLY, THE ASSESSEE HAS FAILED TO FURNISH VOUCH ERS/BILLS FOR VERIFICATION. HENCE, WE ARE OF THE VIEW THAT THE AO WAS JUSTIFIED IN DISALLOWING PART OF EXPENSES TO COVER UP DEFICIENCIES, IF ANY. HENCE, WE ARE OF THE VIEW THAT THE LD CIT(A) WAS NOT JUSTIFIED IN DELETING THE DISALLOWANCE FULLY. HOWEVER , CONSIDERING THE LEVEL OF EXPENSES, WE ARE OF THE VIEW THAT THE DISALLOWANCE OF 20% APPEARS TO BE ON THE HIGHER SIDE. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND DIRECT THE AO TO SUSTAIN DISALLOWANCE AT 10% OF EXPENSES REFERRED ABO VE. 5. THE NEXT ISSUE RELATES TO THE ASSESSMENT OF CASH CREDIT OF RS.25.26 LAKHS. THE AO NOTICED THAT THE ASSESSEE HAS INVESTED IN SHARES OF M/S GREMAC INFRASTRUCTURE PROJECT LTD. WHEN QUESTIONED ABOUT THE SOURCES, THE ASSESSEE SUBMITTED THAT HE HAD BORROWED LOAN OF RS.25.00 LAKHS FROM M/S SAURASHTRA PROJECTS LTD. THE AO NOTICED THAT THE ASSESSEE HAS INVESTED A SUM OF RS.25.00 LAKHS IN BUYING SHARES OF M/S GREMAC INFRASTRUCTURE PROJECT LTD FROM THE FUNDS TRANSFERRED FROM M/S NIRAJ TEXTILES TO THE TU NE OF RS.25.26 LAKHS. IN VIEW OF THE DISCREPANCY IN THE NAME OF THE LENDER, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO ITA NO. 191 / MUM/20 1 1 3 SUBSTANTIATE HIS CLAIM AND ACCORDINGLY ASSESSED THE ABOVE SAID SUM OF RS.25.26 LAKHS AS INCOME OF THE ASSESSEE U/S 68 OF THE A CT. 6. IT WAS SUBMITTED BEFORE THE LD CIT(A) THAT THE LOAN RECEIVED FROM M/S SAURASHTRA PROJECTS LTD WAS DEPOSITED IN THE PROPRIETARY CONCERNS BANK ACCOUNT (NIRAJ TEXTILES LTD ACCOUNT) AND FROM THERE THE FUND OF RS.25.26 LAKHS WAS TRANSFERRED TO THE PERSONAL ACCOUNT OF THE ASSESSEE, THE LD CIT(A) TOOK THE VIEW THAT THE ASSESSEE HAS PROVED THE LOAN OBTAINED FROM M/S SAURASHTRA PROJECTS LTD AND ACCORDINGLY DELETED THE ADDITION. 7. WE HEARD THE PARTIES ON THIS ISSUE. WE NOTICE THAT THE LD CIT(A) H AS TAKEN THE VIEW THAT THE CREDIT WORTHINESS OF M/S SAURASHTRA PROJECTS LTD IS AUTOMATICALLY ESTABLISHED, SINCE IT IS A LIMITED COMPANY. WE ARE UNABLE TO AGREE WITH THE SAID VIEW. IN OUR VIEW, THE ASSESSEE IS REQUIRED TO ESTABLISH THE CREDIT WORTHINESS O F M/S SAURASHTRA PROJECTS LTD, EVEN IF IT IS A LIMITED COMPANY. ADMITTEDLY, THE ASSESSEE HAS NOT PROVED THE CREDIT WORTHINESS OF M/S SAURASHTRA PROJECTS LTD IN SUPPORT OF THE LOAN OF RS.25.00 LAKHS RECEIVED FROM IT. WHEN IT WAS POINTED OUT, THE LD A.R PR AYED THAT THE ASSESSEE MAY BE PROVIDED WITH AN OPPORTUNITY TO PROVE THE CREDIT WORTHINESS. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR FRESH EXAMINATION. 8. THE NEXT ISSUE RELATES TO T HE ASSESSMENT OF PART OF SUNDRY CREDITORS U/S 41(1) OF THE ACT. THE AO ASSESSED 20% OF THE SUNDRY CREDITORS BALANCE, WHICH WORKED OUT TO RS.7,86,542/ - , U/S 41(1) OF THE ACT, SINCE THE ASSESSEE HAS FAILED TO FURNISH DETAILS OR CONFIRMATION FROM SUNDRY CRE DITORS. THE LD CIT(A) DELETED THE SAME FOR THE REASON THAT THE AO HAS MADE THIS ADDITION WITHOUT BRINGING ANY MATERIAL AND ONLY ON A GENERAL STATEMENT. ITA NO. 191 / MUM/20 1 1 4 9. WE HEARD THE PARTIES ON THIS ISSUE. AS NOTICED EARLIER, THE ASSESSING OFFICER HAS ASSESSED 20% OF THE OUTSTANDING BALANCE OF SUNDRY CREDITORS ON AD - HOC BASIS U/S 41(1) OF THE ACT, I.E., THE ASSESSING OFFICER HAS FAILED TO SHOW THAT THE CONDITIONS SPECIFIED IN SEC. 41(1) WAS SATISFIED WITH RESPECT TO THIS ADDITION, I.E., THE AO HAS FAILED TO SHOW THAT T HE SAID SUNDRY CREDITORS BALANCE IS NO LONGER PAYABLE.. IN THE ABSENCE OF ANY MATERIAL TO SHOW THAT THE CONDITIONS SPECIFIED IN SEC. 41(1) OF THE ACT ARE SATISFIED, IN OUR VIEW ALSO, THE AO WAS NOT JUSTIFIED IN MAKING ADDITION OF 20% OF SUNDRY CREDITORS B ALANCE. HENCE, WE ARE OF THE VIEW THAT THE AO WAS JUSTIFIED IN DELETING THIS ADDITION. 10. THE LAST ISSUE RELATES TO THE DISALLOWANCE OF RS.12,200/ - OUT OF BROKERAGE EXPENSES. THE AO DISALLOWED THE ABOVE SAID AMOUNT ON THE REASONING THAT THE ASSESSEE HAS FAILED TO FURNISH RELEVANT DETAILS. HOWEVER, THE LD CIT(A) NOTICED THAT THE ASSESSEE HAS FURNISHED RELEVANT DETAILS BEFORE THE AO AND HENCE DELETED THE DISALLOWANCE. WE NOTICE THAT THE LD CIT(A) HAS GIVEN A CLEAR FINDING THAT THE ASSESSEE HAS FURNIS HED RELEVANT DETAILS BEFORE THE AO. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) IN DELETING THIS DISALLOWANCE. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCE D ACCORDINGLY ON 9TH SEPT, 2015. 9TH SEPT , 2015 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 9TH SEPT , 2015 . . . ./ SRL , SR. PS ITA NO. 191 / MUM/20 1 1 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE R ESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR ) , /ITAT, MUMBAI