DCIT CC 39, MUMBAI V. MANSUKHBHAI B THUMAR, NAVI MUMBAI

ITA 191/MUM/2012

• Counselvise Citation: 19119914 RSA 2012
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-11-2013
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A C TEJPAL
• Assessee Lawyers: MAYUR R MAKADIA
• Keywords: Presumptive income; Unexplained expenditure; Business income; Search and seizure; Source of fund; Deemed to accrue or arise in india
• Section: 131; 132; 44AD; 69C; 11; 153A

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - B BENCH. . , ! ! ! ! ' ' ' ' #$%& #$%& #$%& #$%& , $ $ $ $ '( '( '( '( BEFORE S/SH.D.MANMOHAN,VICE-PRESIDENT AND RAJENDRA, ACCOUNTANT MEMBER ./ ITA NO.191/MUM/2012 , ) ) ) ) / ASSESSMENT YEARS-2008-09 DCIT CC 39 R.NO. 32)1) GROUND FLOOR, AAYAKAR BHAVAN, M.K.ROAD MUMBAI - 4000 20 VS. MANSUKHBHAI B. THUMAR 4 ALOK CHS PLOT NO. 128 TO 131 SECTOR 21, NERUL. NAVI MUMBAI - 400706 PAN:ABBPT1291L ./ ITA NO.190/MUM/2012 , ) ) ) ) / ASSESSMENT YEARS-2009-10 DCIT CC 39 R.NO. 32)1) GROUND FLOOR, AAYAKAR BHAVAN, M.K.ROAD MUMBAI - 400020 VS. MANSUKHBHAI B. THUMAR 4 ALOK CHS PLOT NO. 128 TO 131 SECTOR 21, NERUL. NAVI MUMBAI - 400706 PAN: ABBPT1291L ( *+ / APPELLANT) ( ,-*+ / RESPONDENT) *+ . $ *+ . $ *+ . $ *+ . $ / / / / APPELLANT BY :SHRI A.C.TEJPAL ,-*+ 0 . $ / RESPONDENT BY :SHRI MAYUR R. MAKADIA 0 1 0 1 0 1 0 1 / // / DATE OF HEARING : 19/11/2013 2) 0 1 / DATE OF PRONOUNCEMENT : 27/11/2013 PER RAJENDRA, A.M. CHALLENGING THE ORDERS DATED 24.10.2011 OF THE CIT( A)-36,MUMBAI ASSESSING OFFICER (AO) HAS FILED ALMOST IDENTICAL GROUNDS OF APPEAL FOR THE BOTH ASS ESSMENT YEARS.GROUNDS OF APPEAL FOR AY. 2008-09 READ AS UNDER: 1.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT THE INCOME HAS BEEN OFFERED PRESUMP TIVELY UNDER SECTION 44AD WHEREAS THE ASSESSEE HAD NOT COMPUTED AND OFFERED ITS INCOME U/S. 44AD. 2.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF DEEMED INCOME U/S. 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE BY CHANGING THE HEAD OF INCOME WHERE THE DEEMED INCOME WAS TAXE D AS INCOME FROM OTHER SOURCES BUT THE CIT(A) HAS CONSIDERED IT AS BUSINESS INCOME. 3.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF DEEMED INCOME U/S. 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE WHEN THE ASSESSEE HAD FAILED TO EXPLAIN THE SOURCE OF SUCH E XPENSES ON THE BASIS OF ITS DISCLOSED SOURCES OF INCOME. 4.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT NO OTHER ADDITION CAN BE MADE WHEN THE INCOME IS BEING OFFERED PRESUMPTIVELY UNDER SECTION 44AD RELYING ON DECISIONS IN THE CASES OF A BHJ DEVELOPERS VS. ITO (2007) 12 SOT 444 (AHD) AND KANGIRI CONTRACTOR VS. ITO (2010) 134 TTJ 95 (J DPR) (UO) WHEN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE ARE TOTALLY DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THESE CASES, AND IN THES E 2 ITA NO. 191 & 190/MUM/2012 MANSUKHBHAI B. THUMAR CASES THERE WAS NO SEARCH ACTION U/S. 132 AND NO SU CH SPECIFIC DOCUMENTS CONTAINING DETAILS OF UNEXPLAINED EXPENDITURE WERE THERE. THE APPELLANT PRAYS THAT THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEAL) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESS ARY . GROUNDS OF APPEAL FOR THE AY.2009-10 READ AS UNDER: 1.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT THE INCOME HAS BEEN OFFERED PRESUMP TIVELY UNDER SECTION 44AD WHEREAS THE ASSESSEE HAD NOT COMPUTED AND OFFERED ITS INCOME U/S. 44AD. 2.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF DEEMED INCOME U/S.69C ON A CCOUNT OF UNEXPLAINED EXPENDITURE BY CHANGING THE HEAD OF INCOME WHERE THE DEEMED INCOME WAS TAXE D AS INCOME FROM OTHER SOURCES BUT THE CIT(A) HAS CONSIDERED IT AS BUSINESS INCOME. 3.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN DELETING THE ADDITION OF DEEMED INCOME U/S. 69C ON ACCOUNT OF UNEXPLAINED EXPENDITURE WHEN THE ASSESSEE HAD FAILED TO EXPLAIN THE SOURCE OF SUCH E XPENSES ON THE BASIS OF ITS DISCLOSED SOURCES OF INCOME. 4.WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS CORRECT IN HOLDING THAT NO OTHER ADDITION CAN BE MADE WHEN THE INCOME IS BEING OFFERED PRESUMPTIVELY UNDER SECTION 44AD RELYING ON DECISIONS IN THE CASES OF A BHJ DEVELOPERS VS. ITO (2007) 12 SOT 444 (AHD) AND KANGIRI CONTRACTOR VS. ITO (2010) 134 TTJ 95 (J DPR) (UO) WHEN THE FACTS AND CIRCUMSTANCES OF THE ASSESSEES CASE ARE TOTALLY DIFFERENT FROM THE FACTS AND CIRCUMSTANCES OF THESE CASES, AND IN THES E CASES THERE WAS NO SEARCH ACTION U/S. 132 AND NO SU CH SPECIFIC DOCUMENTS CONTAINING DETAILS OF UNEXPLAINED EXPENDITURE WERE THERE. THE APPELLANT PRAYS THAT THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEAL) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE REST ORED. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER ANY GROUNDS OR ADD A NEW GROUND WHICH MAY BE NECESS ARY . ITA NO.191/MUM/2012 ASSESSMENT YEAR 2008-09. 2. ASSESSEE,AN INDIVIDUAL,FILED HIS ORIGINAL RETURN OF INCOME ON19.03.2009 DECLARING TOTAL INCOME AT RS.3.6 LAKHS, IN THE CASE OF THE ASSESSEE,A SEARCH AND SEIZURE AC TION U/S.132(1)OF THE ACT WAS CARRIED OUT ON 18.02. 2009.A NOTICE U/S. 153A OF THE ACT WAS ISSUED TO HI M ON 30.11.2009,REQUIRING HIM TO FILE RETURN OF INCOME.DURING THE COURSE OF SEARCH AND SEIZURE ACTI ON CERTAIN DOCUMENTS WERE SEIZED FROM THE PREMISES OF THE ASSESSEE.ONE OF THE NOTE BOOK SEIZE D BY THE DEPARTMENT CONTAINED 69 PAGES IN RESPECT OF EXPENDITURE INCURRED AS PETTY CASH DURIN G THE YEAR UNDER CONSIDERATION. AO,VIDE HIS SHOW CAUSE NOTICE DATED 15.10.2010,ASKED THE ASSESSEE TO EXPLAIN AS TO WHETHER EXPENSES AMOUNTING TO RS.13,51,493/-(AS FOUND IN THE SEIZED NOTE BOOK)WER E ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS.VIDE HIS LETTER DATED 01.11.2010 ASSESSEE SUBMITTED THAT SUCH EXPENSES WERE INCURRED ON ACCOUNT OF LABOUR CHARGES,THAT ALL THE ENTRIES OF THE NOTE BOOK DID N OT BELONG TO HIM ALONE.AS PER THE AO, ASSESSEE DID NOT SUBMIT ANY DOCUMENTARY EVIDENCES TO SHOW WHETHE R THE SAME WERE ACCOUNTED FOR OR NOT IN THE REGULAR BOOKS OF ACCOUNTS, THAT HE FAILED THE EXPLA IN THE SOURCES OF THE EXPENSES INCURRED IN CASH. HE HELD THAT EXPENDITURE AMOUNTING TO RS.13.15 LAKHS W AS UN-EXPENDITURE OF THE ASSESSEE.FINALLY,AO MADE AN ADDITION OF RS.13.15 LAKHS U/S.69C(DEEMED I NCOME ON ACCOUNT OF THE UN-EXPLAINED EXPENDITURE)TO THE TOTAL INCOME OF THE ASSESSEE. ASSESSEE PREFERRED BEFORE THE FIRST APPELLATE AUTHO RITY (FAA).AFTER CONSIDERING SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER,FAA HELD THAT THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION U/S.44AD OF THE ACT,THAT T HERE WAS NO DOUBT THAT THE INCOME WAS OFFERED UNDER THE SCHEME OF PRESUMPTIVE INCOME AS PER THE P ROVISIONS OF SECTION 44AD WHEREIN IT IS NECESSARY TO MAINTAIN THE BOOKS OF ACCOUNTS, THAT N O OTHER ADDITION SHOULD BE MADE WHEN INCOME WAS OFFERED PRESUMPTIVELY U/S.44AD. HENCE, THE ADDI TION MADE BY THE AO U/S.69C OF THE ACT COULD NOT BE SUSTAINED, THAT AS PER THE PROVISIONS OF 44A D 92% OF THE CONTRACT RECEIPTS SHOULD BE ALLOWED AS EXPENDITURE AND BALANCE 8% SHOULD BE TAXED. 3 ITA NO. 191 & 190/MUM/2012 MANSUKHBHAI B. THUMAR 3. BEFORE US,DEPARTMENTAL REPRESENTATIVE(DR) SUBMITTED THAT AO HAD RIGHTLY INVOKE PROVISIONS OF SEC.69C OF THE ACT,THAT ASSESSEE HAD NOT EXPLAINED THE SOURCE OF INVESTMENT, THAT FAA HAD APPLIED THE PROVISIONS OF SEC.44AD WITH REGARD TO EXPENSES FOR COMPUTING INCOME.HE REFERRED TO PAGE NO.74,75AND79 OF THE PAPER BOOK(PB).AUTHORIZED REPR ESENTATIVE (AR) SUBMITTED THAT PROVISIONS OF SECTION 44AD WERE APPLICABLE IN THE CASE UNDER CONS IDERATION,THAT EXPENDITURE MENTIONED IN THE NOTE-BOOK WAS NOT INCURRED BY THE ASSESSEE ALOSNE,T HAT TDS WAS PAID WITH REGARD TO THE PAYMENTS MADE. 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERI AL BEFORE US.AFTER CONSIDERING WE FIND THAT THE ASSESSEE HAD SHOWN GROSS RECEIPTS OF RS.6.12 LAKHS (PAGE 79 OF PB),WHEREAS EXPENDITURE INCURRED BY HIM HAS BEEN DETERMINED BY THE AO AT RS. 13.15 LAKH S.WE FURTHER FIND THAT ASSESSEE HAD CLAIMED THAT EXPENDITURE WAS NOT INCURRED BY HIM ALONEBUT IT WAS INCURRED BY M.B. THUMAR, K.M.THUMAR,VIMLABEN THUMAR,MAYUR THUMAR,NIDHEE CONS TRUCTION(PAGE 5 OF THE PB).WE FIND THAT WHILE FINALISING THE ASSESSMENT OR DECIDING THE APP EA,FILED BY THE ASSESSEE,AO/FAA HAS NOT CONSIDERED THESE IMPORTANT ISSUES.IN OUR OPINION MA TTER NEEDS FURTHER INVESTIGATION.THEREFORE, IN THE INTEREST OF JUSTICE,WE ARE RESTORING BACK THE MATTE R TO THE FILE OF THE AO FOR AFRESH ADJUDICA -TION.H E IS DIRECTED TO AFFORD REASONABLE OPPORTUNITY OF HEARIN G TO THE ASSESSEE.APPEAL FILED BY THE ASSESSEE IS ALLOWED IN PART. ITA NO.190/MUM/2012 ASSESSMENT YEAR 2009-10. 5. AS STATE EARLIER,GROUND OF APPEAL FILED BY THE AO F OR THE YEAR UNDER CONSIDERATION ARE ALMOST IDENTICAL TO THE GROUNDS FILED FOR THE PREVIOUS ASS ESSMENT YEAR. 5.1. WE FIND THAT ASSESSMENT ORDER AND THE APPELLATE ORD ER ARE SIMILAR EXCEPT THE FACT THAT THE AO HAD MADE AN ADDITION OF RS. 9.95 LAKHS,U/S.69C OF THE A CT,FOR THE ASSESSMENT YEAR 2009-10. WHILE DECIDING THE APPEAL FOR THE EARLIER ASSESSMENT ORDE R,WE HAVE RESTORED BACK THE MATTER TO THE FILE OF T HE AO FOR AFRESH ADJUDICATION.FOLLOWING THE SAME, PART LY ALLOWING THE APPEAL OF THE ASSESSEE,WE ARE DIRECTING THE AO TO PASS A FRESH ORDER AFTER HEARIN G THE ASSESSEE. AS A RESULT,APPEALS FILED BY THE A.O FOR B OTH THE ASSESSMENT YEARS STAND PARTLY ALLOWED. 3 14 31 VF/KDKJH 5 '6 0 7 '8 )9 0 : ;< = $ #> 0 #1 ?. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH NOVEMBER,2013 . '$< 0 2) $ % : A' 27 , 2013 0 7 B SD/- SD/- . / D. MANMOHAN ) ( #$%& #$%& #$%& #$%& / RAJENDRA ) ! ! ! ! / VICE-PRESIDENT $ $ $ $ '( '( '( '( /ACCOUNTANT MEMBER / MUMBAI, A' /DATE: 27. 11 .2013 SK '$< '$< '$< '$< 0 00 0 ,1C ,1C ,1C ,1C D$C)1 D$C)1 D$C)1 D$C)1 / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / *+ 2. RESPONDENT / ,-*+ 3. THE CONCERNED CIT(A)/ E F , 4. THE CONCERNED CIT / E F 5. DR B BENCH, ITAT, MUMBAI / CG7 ,1 , . . % . 6. GUARD FILE/ 7 H -C1 ,1 //TRUE COPY// '$< / BY ORDER, / # DY./ASST. REGISTRAR , /ITAT, MUMBAI