CREST TEXTILES, MUMBAI V. A.O.18(1)(1), MUMBAI

ITA 1948/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 101090 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 26-11-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHILANDRA YADAV
• Assessee Lawyers: PANKAJ TOPRANI
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI . , , BEFORE SHRI D. MANMOHAN , VP AND SHRI SANJAY ARORA, AM ./ I.T.A. NO. 1948/MUM/2011 ( / ASSESSMENT YEAR: 2006 - 07 ) CREST TEXTILES 44, KAVI APARTMENTS, WORLI SEA FACE, WORLI, MUMBAI - 400 018 / VS. ITO - 18(1 ) (1), PIRAMAL CHAMBERS, LALBAUG, MUMBAI ./ ./ PAN/GIR NO. AAAFC 3794 M ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : SHRI PANKAJ TOPRANI / RESPONDENT BY : SHRI AKHILANDRA YADAV / DATE OF HEARING : 11 .0 9 .2015 / DATE OF PRONOUN CEMENT : 16 .09 .2015 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS) - 29 , MUMBAI (CIT(A) FOR SHORT) DATED 23.12.2010 , DISMISSING THE A SSESSEES APPEAL CON TESTING ITS ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2006 - 07 VIDE ORDER DATED 29.12.2008. 2 ITA NO. 1948/MUM/201 1 (A.Y. 2006 - 07) CREST TEXTILES VS. ITO 2. THE ONLY ISSUE INVOLVED IN THE INSTANT APPEAL IS THE MAINTAINABILITY OR OTHERWISE IN LAW OF THE D ISALLOWANCE IN THE SUM OF RS.6,35,048/ - MADE BY THE ASSESSING OFFICER (A.O.) IN RESPECT OF SERVICE FEES , CLAIMED AT A TOTAL OF RS.32,07,864/ - BY THE ASSESSEE , FOR A BUSINESS CENTRE BEING RUN BY THE ASSESSEE - FIRM , IN THE BUSINESS OF FRANCHISEE OF HALLMARK CARD S . NOTICING THE SAID CHARGES TO BE PAID TO ONE , M/S. PIRAMAL HOLDING LTD . , THE A.O. DURING THE COURSE OF ASSESSMENT PROCEEDINGS CALLED FOR INFORMATION FROM THE SAID COMPANY U/S.133(6) OF THE ACT, WHO RESPONDED BY SUBMITTING THE DETAILS OF THE SERVICE FEES RECEIVED FOR RELEVANT PREVIOUS YEAR (01.04.2005 TO 31.03.2006) ALONG WITH THE LEDGER ACCOUNT OF THE ASSESSEE AS APPEARING IN I T S BOOKS. ON ITS PERUSAL, IT WAS FOUND BY HIM THAT THOUGH THE SAID COMPANY HAD INITIALLY CHARGED RS.32,13,376/ - BY WAY OF SAL E SERVICE FEES , IT HAD SUBSEQUENTLY REFUNDED RS.6,39,561 , PASSING A JOURNAL ENTRY REVERSING THE CHARGES TO TH AT EXTENT , SO THAT THERE WAS A NET CHARGE OF RS.25,73,815/ - (WRITTEN AS RS.25,72,815/ - IN THE ASSESSMENT ORDER) ON ACCOUNT OF SERVICE FEES FOR TH E SAID PERIOD. THE ASSESSEE, HOWEVER, HAVING CLAIMED A HIGHER SUM AT RS.32.08 LACS , WAS REQUIRED TO EXPLAIN THE BALANCE, APPARENTLY EXCESS CLAIM OF RS.6,35,049/ - (EVEN AS THE CORRECT AMOUNT WOULD WORK TO RS.6,34,049/ - ). THOUGH THE ASSESSEE SUBMITTED BILLS IN RESPECT THERE OF, IT COULD NOT SATISFACTORILY EXPLAIN THE DIFFERENCE, SO THAT IT CAME TO BE DISALLOWED U/S. 37 (1) OF THE ACT. THE SAME STOOD CONFIRMED IN APPEAL IN - AS - MUCH AS THE ASSESSEE COULD NOT IMP ROVE ITS C A S E IN ANY MANNER. IT S CLAIM BEFORE HIM THA T THE AMOUNT CLAIMED INCLUDE D RS.3,96,720/ - PAID TOWARD RENT FOR A PREMISES, WAS NOT CONSIDERED BY THE LD. CIT(A) , AS NO SUCH CLAIM HAD BEEN MADE, MUCH LESS LED BY EVIDENCE IN ITS RESPECT , BEFORE THE A.O., WHO HAD MADE DUE ENQUIRY , BASING THE DISALLOWANCE ON A CONFIRMATION FROM THE CORRESPONDING PARTY, WHICH HAD NOT BEEN REBUTTED BY THE ASSESSEE. 3. BEFORE US, THE LD. AUTHORIZED REPRESENTATIVE (AR) , FIRSTLY, DR E W OUR ATTENTION TO THE A FFIDAVIT DATED 24/3/2015 BY THE PARTNER, SHRI VINEET CHAD H A , EXPLAINING WHY HE COULD NOT APPEAR BEFORE THE LD. CIT(A) ON THE DIFFERENT DATES TO WHICH THE HEARING WAS 3 ITA NO. 1948/MUM/201 1 (A.Y. 2006 - 07) CREST TEXTILES VS. ITO P OSTED BY HIM, RESULTING IN AN EX PARTE ORDER BY HIM (PB PGS. 1 - 2). HE WOULD THEN TAKE US TO THE LEDGER ACCOUNT R ENT, RATES AND TAXES IN THE ASSESSEES BOOKS, R EFLECTING A TOTAL DEBIT AT THE IMPUGNED SUM OF RS.32,07,864/ - (AT PB PGS.3 - 16) , WHICH WAS THUS STATED TO HAVE BEEN CLAIMED AT THE CORRECT AMOUNT THROUGH DEBIT TO THE P ROFIT AND L OSS A CCOUNT. COPY OF THE ACCOUNT OF PIRAMAL HOLDING LTD . (AT PB PGS. 23 - 26) , A S ALSO THE COPY OF THE ASSESSEES ACCOUNT IN THE BOOKS OF ACCOUNT OF THE SAID PARTY (AT PB PGS. 27 - 29) , AS FURNISHED, WERE ALSO ADVERTED TO BY HIM . THE LD. DR WOULD RELY ON THE ORDERS BY THE REVENUE AUTHORITIES. 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATERIAL ON RECORD. THE PAPER - BOOK (PB PGS. 3 - 29) IS CERTIFIED BY THE ASSESSEE TO HAVE BEEN FURNISHED BEFORE THE A.O. THE ASSESSEE HAD THUS SUBMITTED A COPY OF THE RELEVANT EXPENSE ACCOUNT , ACCOMPANIED BY VOUCHERS (PB PGS. 17 - 22), WHICH CLEARLY REVEA L THE RENT ALLOWED TO MAHALAXMI W AREHOUSING A GENCY (AT A TOTAL OF RS.3,96,720/ - ). THE ASSESSEE BEFORE THE LD. CIT(A) HAS AVERRED (THROUGH THE S TATEMENT OF F ACTS ) THAT WHILE THE RENT ALLOWED TO PIRAMAL HOLDING LTD. I S , IN FACT, FOR ITS R ETAIL OUTLET OF I T S FRANCHISEE BUSINESS, THAT PAID TO MAHALAXMI WAREHOUSING AGENCY IS FOR A GODOWN AND ADMINISTRATIVE OFFICE AT MAHALAXMI, MUMBAI. THE ASSESSEE HAS , THUS , MADE A PRIMA FACIE CLAIM FOR RS.3 , 96 ,7 20/ - , BORNE OUT BY ITS REGULAR BOOKS OF ACCOUNT, SO THAT IT COUL D NOT BE SAID TO HAVE BEEN MADE OUT A NEW CASE BEFORE THE FIRST APPELLATE AUTHORITY, AS STATED BY HIM. FURTHER, AS REGARDS THE RENT TO PIRAMAL HOLDING LTD., THE ASSESSEES BOOKS REVEAL A TOTAL CHARGE OF RS.28,78,614/ - , AS AGAINST A NET RECEIPT OF RS.25,7 3 , 815/ - AS PER THE ACCOUNTS OF THE CORRESPONDING PARTY. EITHER OF BOTH OR EVEN BOTH COULD BE (PARTLY) INCORRECT. A DIFFERENCE IN ACCOUNT WOULD NOT AUTOMATICALLY LEAD TO A CONCLUSION O F SUPPRESSION OF INCOME OR OF INFLATION OF EXPENDITURE, WHICH IN FACT STAND S REGULARLY BOOK ED PER ENTRIES PASSED IN THE REGULAR COURSE OF BUSINESS, EACH WITH A CORRESPONDING CREDIT ENTRY. THE ONUS, IN VIEW OF THE DIFFERENCE AS BROUGHT ON RECORD BY THE REVENUE, HOWEVER, TO EXPLAIN THE SAME WOULD BE ON THE ASSESSEE, WHO IS EVEN OTH ERWISE OBLIGED 4 ITA NO. 1948/MUM/201 1 (A.Y. 2006 - 07) CREST TEXTILES VS. ITO BY LAW TO PROVE THE CLAIMS AS PREFERRED PER ITS RETURN OF INCOME. UNDER THE CIRCUMSTANCES , WE ONLY CONSIDER IT FIT AND PROPER TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH BY ISSUING DEFINITE FINDINGS OF FACT , ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY TO PRESENT ITS CASE BEFORE HIM. WE DECIDE ACCORDINGLY. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON SEPTEMBER 16 , 201 5 SD/ - SD/ - (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED : 16 . 0 9 .201 5 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED 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