Satish Sudhakar Mandaokar, V. Deputy Commissioner of Income tax,

ITA 232/PUN/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 0768 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-06-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 30-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VITTHAL BHOSALE
• Assessee Lawyers: HARI KRISHAN
• Keywords: Principle of natural justice; Additional evidence; Set aside
• Section: 64; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE (THROUGH VIRTUAL COURT) BEFORE SHRI INTURI RAMA RAO , AM AND SHRI PARTHA SARATHI CHAUDHURY , JM . / ITA NO . 232 /PUN/20 1 7 / ASSESSMENT YEAR : 20 1 2 - 1 3 SHRI SATISH SUDHAKAR MANDAOKAR 608, PHASE II, ANANT REGENCY, RAMBAUG LANE, NEAR SARVESH CABLE, KALYAN (W) 421301 PAN: A BRPM9456E ....... / APPELLANT / V/S. THE DY . COMMISSIONER OF INCOME - TAX, PANVEL CIRCLE, PANVEL . / RESPONDENT ASSESSEE BY : SHRI HARI KRISHAN REVENUE BY : SHRI VITTHAL BHOSALE / DATE OF HEARING : 1 5 - 0 7 - 20 2 1 / DATE OF PRONOUNCEMENT : 15 - 0 7 - 202 1 / ORDER PER PARTHA SARATHI CHAUDHURY : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT ( A ) - 2 , THANE FOR ASSESSMENT YEAR 2012 - 13, DATED 25 . 1 1 .201 6 AS PER THE FOLLOWING GROUNDS OF APPEAL ON RECORD . 1 . THE CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS.57,00,000/ - UNSECURED LOAN / DEPOSIT MADE BY THE ASSESSING OFFICER U/S 68, IN WANT OF FILING DETAIL. WHEREAS ALL DETAILS AS REQUIRED BY LAW AND DESIRED BY CIT - A WERE FILED AND ACCEPTED BY HIM IN HIS ORDER. 2 . CIT - A ERRED IN ORDER BY MENTIONING THAT ASSESSEE FAILED TO OFFER ANY LOGICAL / CREDIBLE EXPLANATION ABOUT NATURE OF SAID TRANSACTION, IN SPITE OF TRUE EXPLANATION OFFERED BY ASSESSEE INCLUDING TRUE NATURE AND SOURCE OF TRANSACTION AND ALSO SOURCE OF SOURCE CREDIT RECEIVED BY ACCOUNT PAYING CHEQUES CREDITED IN BANK. 2 ITA NO.232/PUN/2017 3 . CIT - A, ALSO ERRED IN REJECTING EXPLANATION OFFERED BY ASSESSEE, BY SIMPLY STATING THAT SAME IS NOT SAT ISFACTORY IN HIS OPINION WITHOUT ASSIGNING PROPER REASONS AND JUSTIFICATION IN HIS ORDER, INCLUDING THAT OF CASH CREDIT IS BOGUS IN ANY MANNER. 4 . THE CIT(A) FAILED TO APPRECIATE THAT THE NON CONSIDERATION OF THE DECISIONS QUOTED (2015) 64 TAXMANN.COM 329 (DE LHI) HIGH COURT OF DELHI IN THE MATTER COMMISSIONER OF INCOME - TAX V. SHIV DHOOTI PEARLS & INVESTMENT LTD BY ASSESSEE WITHOUT ASSIGNING ANY REASON IN HIS ORDER IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE INCLUDING TO VIOLATING THE PRINCIPLES OF JUDICIAL D ISCIPLINE, SMACKING THE JUDICIAL HIERARCHY ENVISAGED UNDER THE ACT. 5 . THE CIT(A) FAILED TO APPRECIATE LENDERS ARE SUB - CONTRACTORS AND HAVE DEALING WITH ASSESSEE IN THE PAST, PRESENT AND FUTURE AS PER RELEVANT LEDGER ACCOUNTS SUBMITTED IN COURSE OF HEARING. 6 . T HE CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE / ADDITION OF RS.13,31,116/ - , BEING 20% OF EXPENSES I.E. SITE EXPENSES RS.3002733/ - , LABOUR CHARGES RS 29,46,547/ - AND TRAVELLING & CONVEYANCE EXPENSES RS. 706299/ - , WITHOUT CONSIDERING THE FACTS THAT A.O. MAD E THIS DISALLOWANCE ON AD - HOC BASIS WITHOUT ANY SPECIFIC FINDING IN HIS ORDER. 2. THAT, AS PER THE GROUNDS OF APPEAL, THE ASSESSEE IS AGGRIEVED WITH THE SUSTAINING OF THE ADDITION OF RS.57,00,000/ - AS UNSECURED LOANS/DEPOSITS AS MADE BY THE ASSESSING OFFI CER U/S 68 OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). THAT, ON PERUSING THE ASSESSMENT ORDER, IT IS STATED THEREIN THAT THE ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCES IN SUPPORT OF THE UNSECURED LOANS SHOWN BY THE ASSESSEE . THE IDENTITY OF THE CREDITORS AND CREDITWORTHINESS OF THE CREDITORS AND ALSO THE GENUINENESS OF THE UNSECURED LOANS OF RS.57,00,000/ - WAS THEREFORE, NOT ESTABLISHED AND BY VIRTUE OF SECTION 68 OF THE ACT, THE SAME WAS TREATED AS INCOME OF THE ASSESSEE. THAT, AS EVIDENT FROM THE ORDER OF LD. CIT(A), BEFORE HIM THE ASSESSEE HAD SUBMITTED CERTAIN DETAILS / EVIDENCES I.E. NAME AND ADDRESSES OF CREDITORS, COPY OF ITRS, BALANCE SHEET, LEDGER ACCOUNTS, ETC. THAT, AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE S UBMITTED BEFORE US THAT THERE ARE ADDITIONAL EVIDENCES WHICH THEY WISH TO BRING ON RECORD AND PRAYED FOR ADMISSION OF THE SAME BEFORE US. HIS SUBMISSION WAS THAT THESE EVIDENCES ARE RELEVANT IN DETERMINING WHETHER THE ADDITION S MADE U/S 68 OF THE ACT IS WARRANTED OR NOT AND THEY WANTED TO PLACE THEM BEFORE THE LD. CIT(A). HOWEVER, SUFFICIENT OPPORTUNITY WAS NOT PROVIDED TO THEM BY 3 ITA NO.232/PUN/2017 THE FIRST APPELLATE AUTHORITY. WE FURTHER NOTICE AT PARA 5.3 OF LD. CIT(A)S ORDER, HE HAS FORMED OPINION ONLY WITH RESPE CT TO THE EVIDENCES SUBMITTED BEFORE HIM. HE HAS GIVEN A FINDING THAT THERE IS MEAGRE OPENING AND CLOSING BALANCES IN THE BANKS OF THESE CREDITORS. THE FINDINGS ARRIVED AT AND REASONS GIVEN THEREIN BY THE LD. CIT(A) ARE NOT COMPLETE ENOUGH AND THE REASON S GOVERNING THE SAID FINDINGS ARE NOT COMING OUT FROM THE ORDER OF LD. CIT(A). THE LD. DR ALSO COULD NOT BRING ON RECORD ANY SUBMISSIONS OR MATERIALS / EVIDENCES TO SHOW THAT THE ADDITIONAL EVIDENCES WHICH THE ASSESSEE NOW WANTS TO FILE WERE ALREADY ON RE CORD BEFORE THE DEPARTMENT. THE INCOME TAX ACT, BEING A WELFARE LEGISLATION, WE ARE OF THE CONSIDERED VIEW THAT ONE MORE OPPORTUNITY SHOULD BE PROVIDED TO THE ASSESSEE AND THAT THE LD. CIT(A) MAY CONSIDER THE ADDITIONAL EVIDENCES WHICH THE ASSESSEE WANTS TO FILE IN SUPPORT OF HIS CLAIM U/S 68 OF THE ACT AND TO REPRESENT HIS CASE ON MERITS. IN VIEW THEREOF, WE SET ASIDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND REMAND THE SAME BACK TO HIS FILE TO RE - ADJUDICATE AS PER LAW CONSIDERING THE ADDITIONAL EVIDENCE S THAT WOULD BE FILED BY THE ASSESSEE. THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 3. THE OTHER GRIEVANCE OF THE ASSESSEE AS PER GROUNDS OF APPEAL IS WITH REGARD TO THE DISALLOWANCE MADE OF RS.13,31,116/ - @ 20% OUT OF SITE EXPENSES (RS.30,02,733/ - ), LABOUR EXPENSES (RS.29,46,547/ - ) AND TRAVELLING & CONVEYANCE EXPENSES (RS.7,06,299/ - ) AS MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). THAT, AS PER THE ASSESSMENT ORDER, THE ASSESSEE COULD NOT FURNISH VERIFIABLE VOUCHERS IN RESPECT OF ALLOWABILITY OF T HE EXPENSES. THE ASSESSEE MAINTAINED A PLEA BEFORE THE AO THAT IT WAS NOT POSSIBLE TO MAINTAIN VERIFIABLE VOUCHERS IN RESPECT OF PETTY EXPENSES AND THEREAFTER, THE AO HAD RESORTED TO DISALLOW 20% OF THESE EXPENSES AND 4 ITA NO.232/PUN/2017 ADDED THE SAME TO THE INCOME OF ASSES SEE. THAT, BEFORE THE LD. CIT(A) IT WAS CONTENDED BY THE ASSESSEE THAT THE AO DISALLOWED 20% OF SUCH EXPENSES ON ADHOC BASIS ONLY WITHOUT BRINING ANY MATERIAL ON RECORD OR POINTING ANY SPECIFIC DEFECT IN THE ACCOUNTS OF ASSESSEE. THE LD. CIT(A) IN HIS OR DER AT PARA 6.2 OBSERVED THAT BEFORE HIM ALSO THE ASSESSEE COULD NOT FURNISH VARIOUS REQUIRED DETAILS / EVIDENCES. THE LD. CIT(A) UPHELD THE ADDITION MADE BY THE AO AS BEING REASONABLE AND JUSTIFI ED. BEFORE US, THE LD. AR MADE A PRAYER THAT SINCE THE ISS UE ON UNSECURED LOANS ADDITION HAS BEEN REMANDED TO THE FILE OF LD. CIT(A) FOR FRESH ADJUDICATION, THEREFORE, FOR THE SAKE OF COMPLETENESS OF THE ENTIRE MATTER, LET THIS ISSUE BE RE - ADJUDICATED BY HIM AND THE MATTER MAY BE RESTORED BACK TO HIS FILE. THE L D. DR ACCEPTED THE PROPOSITION PUT FORTH BY THE LD. AR OF THE ASSESSEE. AFTER HEARING THE PARTIES, IN THE INTEREST OF JUSTICE, WE AGREE WITH THE SUBMISSIONS MADE BY THE LD. AR AND IN VIEW THEREOF, THE ORDER OF LD. CIT(A) IS SET ASIDE ON THIS ISSUE ALSO AN D THE MATTER IS REMANDED BACK TO HIS FILE FOR RE - ADJUDICATION AS PER LAW. THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 4 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 15 TH JU LY , 20 2 1 . SD/ - SD/ - ( INTURI RAMA RAO ) ( PARTHA SARATHI CHAUDHURY ) ACCOUNTANT MEMBER JUDICIAL MEMBER / PUNE; / DATED : 15 TH JULY , 20 2 1 GCVSR 5 ITA NO.232/PUN/2017 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT 3. THE CIT (APPEALS) - 2 , THANE . 4. THE PR. CIT - 2 , THANE . 5. DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. // // TRUE COPY// / BY ORDER, / SR. PRIVATE SECRETARY , / ITAT, PUNE