HEM BHATTAD, MUMBAI V. DCIT, CIRCLE-3(3)(1), MUMBAI

ITA 1934/MUM/2023

• Counselvise Citation: [2023] 102 COUNSELVISE.COM (IT) 0872 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: E
• Next Hearing Date: 03-10-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 24-05-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Rejection of books of accounts; Opportunity of being heard; Additional evidence; Fair market value; TDS; Set aside
• Section: 37; 271(1)(c); 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” MUMBAI BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER) AND SHRI RAHUL CHAUDHARY (JUDICIAL MEMBER) ITA No. 1934/MUM/2023 Assessment Year: 2018-19 HEM Bhattad, 104, Bajaj Bhavan, Nariman Point, Churchgate, Mumbai-400021. Vs. National Faceless Appeal Centre (NFAC), Mumbai. PAN No. AAAAH 2399 L Appellant Respondent ITA No. 2314/MUM/2023 Assessment Year: 2018-19 DCIT Circle-3(3)(1), Room No. 609, Aayakar Bhavan, M.K. Road, Churchgate, Mumbai-400020. Vs. HEM Bhattad, 104, Bajaj Bhavan, Nariman Point, Churchgate, Mumbai-400021. PAN No. AAAAH 2399 L Appellant Respondent Assessee by : Mr. Vimal Punmiya Revenue by : Mr. P.D. Chogule, CIT-DR Date of Hearing : 04/10/2023 Date of pronouncement : 10/10/2023 ORDER PER OM PRAKASH KANT, AM These cross appeals by the Revenue and the assessee are directed against order dated 29.04.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018 19. 2. The grounds raised by the Revenue are reproduced as under: 1. The CIT(A) erred in granting credit for TDS of Rs.93,97,430/ without appreciating that the corresponding income is not assessable for this year and also without ascertaining as to when this income was offered to tax. 2. The CIT(A) erred in deleting various disallowances made u/s 37 and u/s 40(a)(ia) which were made on account of non the assessee to the notices of the AO for showing business expediency of the expenses and for producing deduction and depositing of the tax, by merely relying on the submissions of the assessee and not subjecting them to cross verification by the AO. The CIT(A) ought to have called for a remand report and allowed the AO to cross verify t reference to evidences towards payment of tax etc. 3. The CIT(A) erred in deleting payments made to MCGM as FSI premium, development, cess, property tax etc. totalling to Rs.25,23,91, 144/ proof of payments during assessment proceedings, by merely relying on the documents produced during the appellate proceedings which constitute additional evidence. The CIT(A) erred in admitting these evidences without affording a reasonable opportunity to examination of the evidences as per sub rule 3 of Rule 46A of the Income Tax Rules and passed this appellate order in violation of Rule 46A of the Income Tax Rules. 4. The CIT(A) erred in deleting the payments made to tenants and stamp duty / Rs.23,70,602/- evidences produced during appellate proceedings C I and accordingly passed appellate order in violation of Rule 46A of the Income Tax Rules. 5. The CIT(A) erred in deleting the additions of Rs.49,88,18,107/ and Rs.8,52,71,486/ identity, creditworthiness and genuineness of the parties to whom the assessee had purportedly given loans by not appreciating tha these are the ingredients to be proved in respect of loan taken. The CIT(A) ought to have remanded this matter for further examination as to whether these are interest any interest disallowance is called for. 6. The CIT(A) erred in deleting disallowance of Rs.2,87,05,900/ being 20% of payment made to the associate concern M/s Peninsula ITA Nos. 1934 & 2314/Mum/2023 Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018 grounds raised by the Revenue are reproduced as under: The CIT(A) erred in granting credit for TDS of Rs.93,97,430/ without appreciating that the corresponding income is not assessable for this year and also without ascertaining as to when this income was offered to tax. The CIT(A) erred in deleting various disallowances made u/s 37 and u/s 40(a)(ia) which were made on account of non-compliance of the assessee to the notices of the AO for showing business expediency of the expenses and for producing necessary proof of deduction and depositing of the tax, by merely relying on the submissions of the assessee and not subjecting them to cross verification by the AO. The CIT(A) ought to have called for a remand report and allowed the AO to cross verify the submissions with reference to evidences towards payment of tax etc. 3. The CIT(A) erred in deleting payments made to MCGM as FSI premium, development, cess, property tax etc. totalling to Rs.25,23,91, 144/ - despite the assessee's failure to produce the proof of payments during assessment proceedings, by merely relying on the documents produced during the appellate proceedings which constitute additional evidence. The CIT(A) erred in admitting these evidences without affording a reasonable opportunity to the AO for examination of the evidences as per sub rule 3 of Rule 46A of the Income Tax Rules and passed this appellate order in violation of Rule 46A of the Income Tax Rules. 4. The CIT(A) erred in deleting the payments made to tenants and stamp duty / registration expenses of Rs. 90,60,260/ - respectively without allowing the AO to examine the evidences produced during appellate proceedings C I and accordingly passed appellate order in violation of Rule 46A of the Tax Rules. The CIT(A) erred in deleting the additions of Rs.49,88,18,107/ and Rs.8,52,71,486/- by holding that the appellant proved the identity, creditworthiness and genuineness of the parties to whom the assessee had purportedly given loans by not appreciating tha these are the ingredients to be proved in respect of loan taken. The CIT(A) ought to have remanded this matter for further examination as to whether these are interest-free loans borrowed or advances and any interest disallowance is called for. T(A) erred in deleting disallowance of Rs.2,87,05,900/ being 20% of payment made to the associate concern M/s Peninsula HEM Bhattad 2 ITA Nos. 1934 & 2314/Mum/2023 Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018- grounds raised by the Revenue are reproduced as under: The CIT(A) erred in granting credit for TDS of Rs.93,97,430/- without appreciating that the corresponding income is not assessable for this year and also without ascertaining as to when this income The CIT(A) erred in deleting various disallowances made u/s 37 compliance of the assessee to the notices of the AO for showing business necessary proof of deduction and depositing of the tax, by merely relying on the submissions of the assessee and not subjecting them to cross- verification by the AO. The CIT(A) ought to have called for a remand he submissions with 3. The CIT(A) erred in deleting payments made to MCGM as FSI premium, development, cess, property tax etc. totalling to despite the assessee's failure to produce the proof of payments during assessment proceedings, by merely relying on the documents produced during the appellate proceedings which constitute additional evidence. The CIT(A) erred in admitting these the AO for examination of the evidences as per sub rule 3 of Rule 46A of the Income Tax Rules and passed this appellate order in violation of Rule 4. The CIT(A) erred in deleting the payments made to tenants and registration expenses of Rs. 90,60,260/- and respectively without allowing the AO to examine the evidences produced during appellate proceedings C I and accordingly passed appellate order in violation of Rule 46A of the The CIT(A) erred in deleting the additions of Rs.49,88,18,107/- by holding that the appellant proved the identity, creditworthiness and genuineness of the parties to whom the assessee had purportedly given loans by not appreciating that these are the ingredients to be proved in respect of loan taken. The CIT(A) ought to have remanded this matter for further examination as free loans borrowed or advances and T(A) erred in deleting disallowance of Rs.2,87,05,900/- being 20% of payment made to the associate concern M/s Peninsula Land Ltd. without affording an opportunity to the AO to examine the fair market value of the transaction and whether the said party is related party. 2.1 The grounds raised by the assessee are reproduced as under: 1. The Ld CIT(A) erred in confirming the addition of Rs.27,00.000/ being the legal and professional fee payment at the rate of 30 per cent on Rs.9000000 i.e. Rs.2700000 and ad income of the assessee in view of section 40 a ia of the IT Act 1961. 2. The Ld CIT(A) erred in confirming the addition of Rs. 1,58,61,967/ being 30 per cent of the payments made to IHFL of Rs.46128174 and to India Bulls of Rs.674 15861967 and added the same to the total income of the view of section 40 a ia of the IT Act 1961. 3. The Ld CIT(A) erred in confirming the addition of Rs.26,400/ being g 30 percent of the Finance charges i.e. Rs.26400 and added the same to the total income of the assessee in in view of section 40 a ia of the IT Act 1961. 4. The Ld CIT(A) erred in confirming the addition of Rs.40,968/ being 30 percent of the marketing expenses paid Pvt Ltd of Rs. 136550 i.e.Rs.40968 and added the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. 3. Briefly stated facts of the case are that the assessee, Association of Person (AO estate development during relevant year a joint development agreement dated 27.09.2012 with and Co. Ltd’. being a confirming party and ‘P being the developer. In view of t been allotted specified area of duly constructed apartment. Out of the area allotted, the assessee had sold under construction apartment to various buyers since financial year 2013 the year under consideration the from the various buyers to whom the apartments were sold and as ITA Nos. 1934 & 2314/Mum/2023 Land Ltd. without affording an opportunity to the AO to examine the fair market value of the transaction and whether the said party is raised by the assessee are reproduced as under: The Ld CIT(A) erred in confirming the addition of Rs.27,00.000/ being the legal and professional fee payment at the rate of 30 per cent on Rs.9000000 i.e. Rs.2700000 and added the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. The Ld CIT(A) erred in confirming the addition of Rs. 1,58,61,967/ being 30 per cent of the payments made to IHFL of Rs.46128174 and to India Bulls of Rs.6745050 totaling to Rs.52873224 15861967 and added the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. The Ld CIT(A) erred in confirming the addition of Rs.26,400/ being g 30 percent of the Finance charges payment to IHFL of 88000 Rs.26400 and added the same to the total income of the in view of section 40 a ia of the IT Act 1961. The Ld CIT(A) erred in confirming the addition of Rs.40,968/ being 30 percent of the marketing expenses paid to Regenti Media Pvt Ltd of Rs. 136550 i.e.Rs.40968 and added the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. Briefly stated facts of the case are that the assessee, Association of Person (AOP), was engaged in the business of real during relevant year. The assessee entered a joint development agreement dated 27.09.2012 with ’. being a confirming party and ‘Peninsula land ltd . In view of the agreement, the assessee had been allotted specified area of duly constructed apartment. Out of the area allotted, the assessee had sold under construction apartment to various buyers since financial year 2013 the year under consideration the assessee received the various buyers to whom the apartments were sold and as HEM Bhattad 3 ITA Nos. 1934 & 2314/Mum/2023 Land Ltd. without affording an opportunity to the AO to examine the fair market value of the transaction and whether the said party is a raised by the assessee are reproduced as under: The Ld CIT(A) erred in confirming the addition of Rs.27,00.000/- being the legal and professional fee payment at the rate of 30 per ded the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. The Ld CIT(A) erred in confirming the addition of Rs. 1,58,61,967/- being 30 per cent of the payments made to IHFL of Rs.46128174 5050 totaling to Rs.52873224 i.e. Rs. assessee in The Ld CIT(A) erred in confirming the addition of Rs.26,400/- payment to IHFL of 88000 Rs.26400 and added the same to the total income of the The Ld CIT(A) erred in confirming the addition of Rs.40,968/- to Regenti Media Pvt Ltd of Rs. 136550 i.e.Rs.40968 and added the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. Briefly stated facts of the case are that the assessee, an d in the business of real . The assessee entered into a joint development agreement dated 27.09.2012 with ‘R M Bhutter eninsula land ltd’. he agreement, the assessee had been allotted specified area of duly constructed apartment. Out of the area allotted, the assessee had sold under construction apartment to various buyers since financial year 2013-14. During assessee received sale proceeds the various buyers to whom the apartments were sold and as per the provisions of section 194IA of the short the Act), the buyers had deducted TDS @ 1% on the payments made to the assessee. It was following project completion method therefore, revenue was to be the project and till the completion of the project the expenditure was to be carried forward as For the year under consideration the assessee filed return of income on 31.10.2018. The return of income filed by the assessee was selected for complete scrutiny and statutory notices under the Act were issued. The Assessing Officer issu 142(1) of the Act but there was no compliance on the part of the assessee. The Ld. Assessing Officer has referred various date of the such notices issued as 28.10.2019 ; 08.12.2020 ; 06.01.2021. Thereafter the assessee responded part 28.02.2021, 06.02.2021 and 19.03.2021. But in view of the part compliance the Assessing Officer rejected the claim of TDS credit of Rs.93,97,430/-. The Assessing Officer also disallowed the percentage of various expenses. the Assessing Officer and ‘consultancy charge payment “2) Assessee was requested to provide details of mis.legal (MBDC exp.)/service tax payment of Rs. 1663 payee/pan/address, date, amount, mode of payment, bank name & a/c no. and reflection of aforesaid payments in it's bank statement unless it was requested to show cause why 20% of Rs.166366 ITA Nos. 1934 & 2314/Mum/2023 per the provisions of section 194IA of the Income-tax the buyers had deducted TDS @ 1% on the payments made to the assessee. It is claimed by the assessee that it project completion method of accounting and was to be recognized only on the completion of the project and till the completion of the project the expenditure carried forward as work-in-progress. For the year under consideration the assessee filed return of income on 31.10.2018. The return of income filed by the assessee was selected for complete scrutiny and statutory notices under the Act were issued. The Assessing Officer issued various notices u/s 142(1) of the Act but there was no compliance on the part of the assessee. The Ld. Assessing Officer has referred various date of the such notices issued as 28.10.2019 ; 08.12.2020 ; 06.01.2021. Thereafter the assessee responded partly to the notices issued on 28.02.2021, 06.02.2021 and 19.03.2021. But in view of the part compliance the Assessing Officer rejected the claim of TDS credit of . The Assessing Officer also disallowed the percentage of various expenses. For ready reference, t the Assessing Officer in respect of ‘miscellaneous legal expenses consultancy charge payment’ is reproduced as under: 2) Assessee was requested to provide details of mis.legal (MBDC exp.)/service tax payment of Rs. 166366 i.e. name of payee/pan/address, date, amount, mode of payment, bank name & a/c no. and reflection of aforesaid payments in it's bank statement unless it was requested to show cause why 20% of Rs.166366 HEM Bhattad 4 ITA Nos. 1934 & 2314/Mum/2023 tax Act, 1961 ( in the buyers had deducted TDS @ 1% on the is claimed by the assessee that it of accounting and recognized only on the completion of the project and till the completion of the project the expenditure For the year under consideration the assessee filed return of income on 31.10.2018. The return of income filed by the assessee was selected for complete scrutiny and statutory notices under the Act ed various notices u/s 142(1) of the Act but there was no compliance on the part of the assessee. The Ld. Assessing Officer has referred various date of the such notices issued as 28.10.2019 ; 08.12.2020 ; 06.01.2021. ly to the notices issued on 28.02.2021, 06.02.2021 and 19.03.2021. But in view of the part compliance the Assessing Officer rejected the claim of TDS credit of . The Assessing Officer also disallowed the ady reference, the finding of miscellaneous legal expenses’ is reproduced as under: 2) Assessee was requested to provide details of mis.legal (MBDC- 66 i.e. name of payee/pan/address, date, amount, mode of payment, bank name & a/c no. and reflection of aforesaid payments in it's bank statement unless it was requested to show cause why 20% of Rs.166366 should not be added to it's total income and penal be initiated; In response, there was non date and time. Therefore, 20% of Rs. 166366 i.e. rs.33273 is added to it's total income u/s 37 and penalty proceeding u/s 271(1)(c) is initiated separatel 3)regarding consultancy charges payment, assessee did not deduct and pay tds on payments made to Architect Hafeez contractor (Rs.5000000) & MB development corporation (Rs.2225000), therefore, it was requested to show cause with proper supporting documents why 30% of aforesaid expenses should not be added to it's total income and penal action should not be initiated; In response, there was non date and time. Therefore, 30% of Rs.7225000(5000000+2225000) i.e. rs.2167500 is added to it's total income u/s 40(a)(ia) and penalty proceeding u/s 271(1)(c) is initiated separately. 3.1 The Assessing Officer has similarly made disallowance for other items of the expenses. A detailed chart of the addition made by the assessee while computing the total income is reproduced as under: Income Declared by the assessee in the ITR for AY 2018 Para No. Particulars 1. TDS claim for AY of Rs.9397430 2. 20% of mbdc exp. 3. Consultancy charges 4(a) Legal & prof. fee 4(b) Legal & prof. fee to Kotak Hahindra inv. Ltd. 5. Interest payment 6. Finance charges 7(a). Rent development cess etc. 7(b) Rent rates taxes rent 8. Loan given 9. Stamping charge 10. Regent media 11(a) Transit premises accommodation 11(b) Arihant corpn. 12. Security charge 13. Development exp. ITA Nos. 1934 & 2314/Mum/2023 should not be added to it's total income and penal action should not In response, there was non-compliance from it's end on or before due date and time. Therefore, 20% of Rs. 166366 i.e. rs.33273 is added to it's total income u/s 37 and penalty proceeding u/s 271(1)(c) is initiated separately. 3)regarding consultancy charges payment, assessee did not deduct and pay tds on payments made to Architect Hafeez contractor (Rs.5000000) & MB development corporation (Rs.2225000), therefore, it was requested to show cause with proper supporting ts why 30% of aforesaid expenses should not be added to it's total income and penal action should not be initiated; In response, there was non-compliance from it's end on or before due date and time. Therefore, 30% of Rs.7225000(5000000+2225000) 67500 is added to it's total income u/s 40(a)(ia) and penalty proceeding u/s 271(1)(c) is initiated separately.” The Assessing Officer has similarly made disallowance for of the expenses. A detailed chart of the addition made by the assessee while computing the total income is reproduced as Income Declared by the assessee in the ITR for AY 2018-19 Particulars Addition (Rs.) TDS claim for AY 2018-19 of Rs.9397430 20% of mbdc exp. 33270 Consultancy charges 2167500 Legal & prof. fee 21529425 Legal & prof. fee to Kotak Hahindra inv. Ltd. 2700000 Interest payment 15861967 Finance charges-ihfl 26400 Rent rates taxes mcgm development cess etc. 252391144 Rent rates taxes rent 9060263 Loan given 498818107 Stamping charge 2370602 Regent media 40968 Transit premises accommodation 27000 Arihant corpn. 21645 Security charge 99534 Development exp. 225832 HEM Bhattad 5 ITA Nos. 1934 & 2314/Mum/2023 action should not compliance from it's end on or before due date and time. Therefore, 20% of Rs. 166366 i.e. rs.33273 is added to it's total income u/s 37 and penalty proceeding u/s 271(1)(c) is 3)regarding consultancy charges payment, assessee did not deduct and pay tds on payments made to Architect Hafeez contractor (Rs.5000000) & MB development corporation (Rs.2225000), therefore, it was requested to show cause with proper supporting ts why 30% of aforesaid expenses should not be added to compliance from it's end on or before due date and time. Therefore, 30% of Rs.7225000(5000000+2225000) 67500 is added to it's total income u/s 40(a)(ia) and penalty The Assessing Officer has similarly made disallowance for of the expenses. A detailed chart of the addition made by the assessee while computing the total income is reproduced as 19 Rs. Nil Rs. 14. Sundry creditor 15. Admn. Exp. 16. Peninsula land 17. Bhattad bros. etc. 4. On further appeal, the assessee filed various documents and evidences before the Ld. CIT(A). After considering those evidences the Ld. CIT(A) deleted the additions partly. 5. Aggrieved, both the assessee and the Revenue are before the Tribunal by way of raising respective grounds. 6. As far as the ground No. 1 of the appeal of the Revenue is concerned we find that the Ld. CIT(A) has directed the Assessing Officer to allow the benefit of the TDS credit in the assessment in which income is offe Officer. The relevant finding of the Ld. CIT(A) is reproduced as under: “4.2 GROUND NO 10 The Ld. A.O. has erred in disallowing the claim of TDS of Rs.93,97, 430/- of the assessee and thereby erred in stating th has not sold any property. AO in assessment order has stated that TDS amount of Rs.93,97,430/- 194IA of the Act on advances payments of Rs.93974300 to assesse. AO has given inference that as th not assessee's income during the year, assesse is not eligible to claim TDS deduction of Rs.9397430 during the year. The appellant in the submission above has quoted section 198 & 199 of the Income Tax Act. The appellant has sections, the TDS provision are not charging sections and have no impact on computation of total income of the appellant. ITA Nos. 1934 & 2314/Mum/2023 Sundry creditor 422579 Admn. Exp. 1391560 Peninsula land 28705900 Bhattad bros. etc. 85271486 Assessed total Income Assessed total income r/o to On further appeal, the assessee filed various documents and evidences before the Ld. CIT(A). After considering those evidences the Ld. CIT(A) deleted the additions partly. both the assessee and the Revenue are before the al by way of raising respective grounds. As far as the ground No. 1 of the appeal of the Revenue is concerned we find that the Ld. CIT(A) has directed the Assessing Officer to allow the benefit of the TDS credit in the assessment in which income is offered subject to verification by the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as “4.2 GROUND NO 10 The Ld. A.O. has erred in disallowing the claim of TDS of Rs.93,97, of the assessee and thereby erred in stating that the assessee has not sold any property. AO in assessment order has stated that TDS amount of - have been deducted by property buyers @ 1% u/s 194IA of the Act on advances payments of Rs.93974300 to assesse. AO has given inference that as the advances of Rs. 93974300 are not assessee's income during the year, assesse is not eligible to claim TDS deduction of Rs.9397430 during the year. The appellant in the submission above has quoted section 198 & 199 of the Income Tax Act. The appellant has stated that as per these sections, the TDS provision are not charging sections and have no impact on computation of total income of the appellant. HEM Bhattad 6 ITA Nos. 1934 & 2314/Mum/2023 921165182 Assessed total Income 921165182 Assessed total income r/o 921165180 On further appeal, the assessee filed various documents and evidences before the Ld. CIT(A). After considering those evidences both the assessee and the Revenue are before the As far as the ground No. 1 of the appeal of the Revenue is concerned we find that the Ld. CIT(A) has directed the Assessing Officer to allow the benefit of the TDS credit in the assessment in red subject to verification by the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as The Ld. A.O. has erred in disallowing the claim of TDS of Rs.93,97, at the assessee AO in assessment order has stated that TDS amount of have been deducted by property buyers @ 1% u/s 194IA of the Act on advances payments of Rs.93974300 to assesse. e advances of Rs. 93974300 are not assessee's income during the year, assesse is not eligible to The appellant in the submission above has quoted section 198 & 199 stated that as per these sections, the TDS provision are not charging sections and have no There is no dispute to the fact that the appellant has shown advance of Rs.Rs.9,39,74,300/ deducted by the purchasing party. The issue is whether the appellant can claim the benefit of TDS i.e. in A.Y. 2018 under consideration or the year in which it offers corresponding income in the income tax return. In t (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides that Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. A appellant should be allowed the benefit of TDS credit in the AY in which income is offered, subject to the verification. Hence, the ground of appeal of the appellant is allowed in the terms of the above direction. Ground No. 10 is allowed. 7. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In our opinion, the Ld. CIT(A) has adjudicated the issue following the relevant rules of the Income and directed the Assessing O credit in the assessment year in which income could be offered by the assessee. In our opinion, there is no infirmity in the finding of the Ld. CIT(A) on the issue i the ground No. 1 of the appeal of the Revenue. 8. As far as to ground no are concerned, the grounds revolves mainly around the issue of not providing opportunity of being heard to respect of the additional evidence filed before the Ld. CIT(A) under the procedure laid down in Rule 46 of the Rules. ITA Nos. 1934 & 2314/Mum/2023 There is no dispute to the fact that the appellant has shown advance of Rs.Rs.9,39,74,300/- in the year in respect of which TDS was deducted by the purchasing party. The issue is whether the appellant can claim the benefit of TDS i.e. in A.Y. 2018-19 i.e. year under consideration or the year in which it offers corresponding income in the income tax return. In this regard, I note that sub (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides that Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. Accordingly, I am of the view that the appellant should be allowed the benefit of TDS credit in the AY in which income is offered, subject to the verification. Hence, the ground of appeal of the appellant is allowed in the terms of the above direction. nd No. 10 is allowed.” We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In our opinion, the Ld. CIT(A) has adjudicated the issue following the relevant rules of the Income-tax Rules, 1962 (in short ‘the Rules’) and directed the Assessing Officer to allow the benefit of the TDS credit in the assessment year in which income could be offered by the assessee. In our opinion, there is no infirmity in the finding of the Ld. CIT(A) on the issue in dispute and accordingly the ground No. 1 of the appeal of the Revenue. As far as to ground nos. 2 to 6 of the appeal of the Revenue concerned, the grounds revolves mainly around the issue of not providing opportunity of being heard to the Assessing Officer in respect of the additional evidence filed before the Ld. CIT(A) under the procedure laid down in Rule 46 of the Rules. HEM Bhattad 7 ITA Nos. 1934 & 2314/Mum/2023 There is no dispute to the fact that the appellant has shown advance respect of which TDS was deducted by the purchasing party. The issue is whether the 19 i.e. year under consideration or the year in which it offers corresponding his regard, I note that sub-rule (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides that Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such ccordingly, I am of the view that the appellant should be allowed the benefit of TDS credit in the AY in Hence, the ground of appeal of the appellant is allowed in the terms We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In our opinion, the Ld. CIT(A) has adjudicated the issue following the (in short ‘the Rules’) fficer to allow the benefit of the TDS credit in the assessment year in which income could be offered by the assessee. In our opinion, there is no infirmity in the finding of n dispute and accordingly, we dismiss . 2 to 6 of the appeal of the Revenue concerned, the grounds revolves mainly around the issue of not the Assessing Officer in respect of the additional evidence filed before the Ld. CIT(A) under 8.1 We find that the Ld. CIT(A) has mainly assessee, in view of the various submissions a produced before him but the Ld. CIT(A) has not followed the procedure laid down under Rule 46A of the Rules and did not provide any opportunity to the Assessing Officer those additional evidence Ld. CIT(A) in respect of disallowance of legal expenses permit expenses etc. is reproduced as under: “GROUND NO 27 The Ld. A.O. erred in disallowing the 20 percent of the Administrative expenses of Rs.69,57,798/ and added the same t section 37 of the IT Act 1961. The grounds of appeal and submission of the appellant has been perused. AO has disallowed 20% of the miscellaneous legal expenses, transit premises expenses, payment made to Corporation, payment made to Sundry Creditor Sh. Dinanath Gupta and Administrative expenses as no reply to final show cause notice has been given. The appellant has stated that AO has neither pointed out any defect in books of accounts nor has rejected the books of accounts. During the appellate proceedings, the appellant has furnished ledger, cash book, bank statement and party wise details of these expenses. There is no rationale given by AO for adhoc 20% disallowance of such expenses in the asses not given any evidence or basis for considering 20% expenses as non-genuine. Hence, the adhoc disallowance of 20% as mentioned in above grounds of appeal is deleted. 8.2 The Ld. CIT(A) has allowed relief in respect of other grounds also in similar manner. In our opinion the action of the Ld. CIT(A) is in violation of the Rules 46A of the Rules and therefore, we feel it appropriate to set aside the finding of the Ld. CIT(A) in respect of ITA Nos. 1934 & 2314/Mum/2023 We find that the Ld. CIT(A) has mainly allowed relief to the n view of the various submissions a produced before him but the Ld. CIT(A) has not followed the procedure laid down under Rule 46A of the Rules and did not provide any opportunity to the Assessing Officer for those additional evidences. For ready reference, the finding of the ) in respect of disallowance of legal expenses permit expenses etc. is reproduced as under: “GROUND NO 27 The Ld. A.O. erred in disallowing the 20 percent of the Administrative expenses of Rs.69,57,798/- that is Rs.13,91,560/ and added the same to the total income of the assessee in view of section 37 of the IT Act 1961. The grounds of appeal and submission of the appellant has been perused. AO has disallowed 20% of the miscellaneous legal expenses, transit premises expenses, payment made to Corporation, payment made to Sundry Creditor Sh. Dinanath Gupta and Administrative expenses as no reply to final show cause notice has been given. The appellant has stated that AO has neither pointed out any defect in books of accounts nor has cted the books of accounts. During the appellate proceedings, the appellant has furnished ledger, cash book, bank statement and party wise details of these expenses. There is no rationale given by AO for adhoc 20% disallowance of such expenses in the assessment order. The AO has not given any evidence or basis for considering 20% expenses as genuine. Hence, the adhoc disallowance of 20% as mentioned in above grounds of appeal is deleted.” The Ld. CIT(A) has allowed relief in respect of other grounds also in similar manner. In our opinion the action of the Ld. CIT(A) is in violation of the Rules 46A of the Rules and therefore, we feel it appropriate to set aside the finding of the Ld. CIT(A) in respect of HEM Bhattad 8 ITA Nos. 1934 & 2314/Mum/2023 allowed relief to the n view of the various submissions and documents produced before him but the Ld. CIT(A) has not followed the procedure laid down under Rule 46A of the Rules and did not commenting on he finding of the ) in respect of disallowance of legal expenses, transit The Ld. A.O. erred in disallowing the 20 percent of the that is Rs.13,91,560/- o the total income of the assessee in view of The grounds of appeal and submission of the appellant has been perused. AO has disallowed 20% of the miscellaneous legal expenses, transit premises expenses, payment made to Arihant Dinanath Gupta and Administrative expenses as no reply to final show cause notice has been given. The appellant has stated that AO has neither pointed out any defect in books of accounts nor has During the appellate proceedings, the appellant has furnished ledger, cash book, bank statement and party wise details of these expenses. There is no rationale given by AO for adhoc 20% sment order. The AO has not given any evidence or basis for considering 20% expenses as genuine. Hence, the adhoc disallowance of 20% as mentioned in The Ld. CIT(A) has allowed relief in respect of other grounds also in similar manner. In our opinion the action of the Ld. CIT(A) is in violation of the Rules 46A of the Rules and therefore, we feel it appropriate to set aside the finding of the Ld. CIT(A) in respect of issues raised in ground No matter back to the file of the AO for deciding afresh after considering the submission of evidence in support of claim by the assessee. It is needless to mention that the assessee shall be afforded adequate op being heard. The ground No statistical purposes. 9. In ground Nos. 1 to 4 of the appeal of the assessee Counsel of the assessee submitted that the Ld. CIT(A) has confirmed the expenses without documentary evidence of the assessee and therefore, same also might be sent back to the Ld. Assessing Officer for deciding afresh. The Ld. Departmental Representative (DR) fairly accepted the proposition of the Ld. Counsel of that the Ld. CIT(A) has not considered the documentary evidence in respect of additions made by the Assessing Officer set aside the finding of the Ld. CIT(A) on the issues raised in ground Nos. 1 to 4 of the appeal and restore the issues to the file of the Assessing Officer for deciding afresh after considering the submission of the assessee assessee. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The ground No 4 of the assessee are accordingly allowed for statistical purposes. ITA Nos. 1934 & 2314/Mum/2023 ground Nos. 2 to 6 of the appeal and restore matter back to the file of the AO for deciding afresh after considering the submission of asessee and the documentary evidence in support of claim by the assessee. It is needless to mention that the assessee shall be afforded adequate op being heard. The ground Nos. 2 to 6 of the Revenue are allowed for . 1 to 4 of the appeal of the assessee Counsel of the assessee submitted that the Ld. CIT(A) has confirmed the expenses without taking into consideration the documentary evidence of the assessee and therefore, same also might be sent back to the Ld. Assessing Officer for deciding afresh. Departmental Representative (DR) fairly accepted the proposition of the Ld. Counsel of the assessee. In view of the facts that the Ld. CIT(A) has not considered the documentary evidence in respect of additions made by the Assessing Officer set aside the finding of the Ld. CIT(A) on the issues raised in ground he appeal and restore the issues to the file of the Assessing Officer for deciding afresh after considering the submission of the assessee and documentary evidence filed by the assessee. It is needless to mention that the assessee shall be e opportunity of being heard. The ground No 4 of the assessee are accordingly allowed for statistical purposes. HEM Bhattad 9 ITA Nos. 1934 & 2314/Mum/2023 al and restore the matter back to the file of the AO for deciding afresh after and the documentary evidence in support of claim by the assessee. It is needless to mention that the assessee shall be afforded adequate opportunity of . 2 to 6 of the Revenue are allowed for . 1 to 4 of the appeal of the assessee, the Ld. Counsel of the assessee submitted that the Ld. CIT(A) has taking into consideration the documentary evidence of the assessee and therefore, same also might be sent back to the Ld. Assessing Officer for deciding afresh. Departmental Representative (DR) fairly accepted the the assessee. In view of the facts that the Ld. CIT(A) has not considered the documentary evidences in respect of additions made by the Assessing Officer ,therefore, we set aside the finding of the Ld. CIT(A) on the issues raised in ground he appeal and restore the issues to the file of the Assessing Officer for deciding afresh after considering the documentary evidence filed by the assessee. It is needless to mention that the assessee shall be e opportunity of being heard. The ground Nos. 1 to 4 of the assessee are accordingly allowed for statistical purposes. 10. In the result, the appeal of the Revenue is partly allowed for statistical purposes whereas the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open Court on Sd/ (RAHUL CHAUDHARY JUDICIAL MEMBER Mumbai; Dated: 10/10/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy// ITA Nos. 1934 & 2314/Mum/2023 In the result, the appeal of the Revenue is partly allowed for statistical purposes whereas the appeal of the assessee is allowed r statistical purposes. nounced in the open Court on 10/10/2023. Sd/- Sd/ RAHUL CHAUDHARY) (OM PRAKASH KANT JUDICIAL MEMBER ACCOUNTANT MEMBER Copy of the Order forwarded to : BY ORDER, (Assistant Registrar) ITAT, Mumbai HEM Bhattad 10 ITA Nos. 1934 & 2314/Mum/2023 In the result, the appeal of the Revenue is partly allowed for statistical purposes whereas the appeal of the assessee is allowed /10/2023. Sd/- OM PRAKASH KANT) ACCOUNTANT MEMBER BY ORDER, (Assistant Registrar) ITAT, Mumbai