RAJENDER DHONDU MANJREKAR, MUMBAI V. ITO 18(1)(3), MUMBAI

ITA 2384/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1676 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 22-11-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 27-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C S SHARMA
• Assessee Lawyers: SHYAM C AGARWAL
• Keywords: Additional evidence; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 2384 /MUM/ 2015 (ASSESSMENT YEAR 200 9 - 1 0 ) RAJENDER DHONDU MANJREKAR C/O, SHYAM C. AGARWAL & CO. 3/9 - 10 - L, NAVJIVAN SOCIETY LAMINGTON ROAD MUMBAI - 400 008. VS. ITO18(1)(3) 1 ST FLOOR ROOM NO. 106 PIRAMAL CHAMBER PAREL MUMBAI - 400 012. ( APPELLANT ) ( RESPONDENT ) PAN NO . AIXPM1341D ASSESSEE BY SHRI SHYAM C. AGARWAL DEPARTMENT BY SHRI C.S. SHARMA DATE OF HEARING 2 3 .1 1 . 201 6 DATE OF PRONOUNCEMENT 30 . 11 . 201 6 O R D E R PER B.R. BASKARAN (AM) : - THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 21.01.2014 PASSED BY THE LEARNED CIT(A) - 29, MUMBAI AND IT RELATES TO A.Y. 2009 - 10. 2. THE ASSESSEE IS AGGRIEVED B Y THE DECISION OF THE LEARNED CIT(A) IN CONFIRMING THE ADDITION PARTIALLY IN RESPECT OF THE FOLLOWING ITEMS : - ( A ) ADHOC DISALLOWANCE OUT OF EXPENSES ( B ) ASSESSMENT OF ADVANCE OF RS. 3 LAKHS RECEIVED AGAINST SALE OF ASSET 3. THE APPEAL IS BARRED BY LIMITATION B Y 302 DAYS. THE ASSESSEE HAS FILED AN AFFIDAVIT STATING THAT HE HAS SHIFTED HI S RESIDENCE FROM MUMBAI TO PUNE, AS HE HAS CLOSED THE BUSINESS DUE TO HEAVY LOSSES. IT IS STATED THAT HE CAME TO KNOW OF THE ORDER PASSED BY THE LEARNED CIT(A) THROUGH HIS CHARTE RED ACCOUNTANT AND THEREAFTER IMMEDIATELY FILED THE APPEAL BEFORE THE TRIBUNAL. RAJENDER DHONDU MANJREKAR 2 4. THE CHARTERED ACCOUNTANT OF THE ASSESSEE SHRI S.C. AGRAWAL HAS FILED A LETTER WHEREIN HE HAS STATED THAT THE ORDER SERVED BY THE LEARNED CIT(A) TO THE ASSESSEE WAS RETURN ED BACK BY THE POSTAL DEPARTMENT AND HENCE HE WAS ASKED TO COLLECT THE ORDER FROM THE OFFICE OF THE LEARNED CIT(A). ACCORDINGLY HE COLLECTED THE ORDER ON 30.4.2014. SINCE THE ASSESSEE HAD SHIFTED HIS RESIDENCE OUT OF MUMBAI, THE CHARTERED ACCOUNTANT WAS NO T AWARE OF HIS WHEREABOUTS. WHEN HE CAME INTO CONTACT OF THE ASSESSEE , HE TOOK THE STEP AND IMMEDIATELY FILED THE APPEAL ON 27.4.2015. ACCORDINGLY IT WAS PRAYED THAT THE DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL WAS NOT INTENTIONAL , BUT ON ACCOUNT OF THE REASONS BEYOND THE CONTROL OF THE ASSESSEE. ACCORDINGLY IT IS PRAYED THAT THE TRIBUNAL MAY TAKE LIBERAL VIEW IN CONDONING THE DELAY. 5. ON THE CONTRARY, LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY OBJECTED TO THE PETITION FILED BY THE ASSESSEE. 6. HAVING HEARD THE RIVAL CONTENTIONS, WE ARE OF THE VIEW THAT THERE IS REASONABLE CAUSE IN FILING HIS APPEAL BELATEDLY BEFORE THE TRIBUNAL. HOWEVER, WE NOTICED THAT THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER AND HENCE THE ASSESSING OFFICER WAS CONSTRAINED TO PASS THE ORDER EX - PARTE, TO BEST OF HIS JUDGEMENT. T HOUGH THE ASSESSEE HAS ENGAGED A CHARTERED ACCOUNTANT TO APPEAR BEFORE THE LEARNED CIT(A), HE HAS NOT TAKEN ANY STEPS TO ASCERTAIN THE ORDER, IF ANY, PASSED BY THE LEARNED CIT(A). ACCORDI NGLY, WE ARE OF THE VIEW THAT THERE IS SOME LETHARGY ON THE PART OF THE ASSESSEE AND HENCE THE DELAY SHOULD BE CONDONED BY IMPOSING COST ON THE ASSESSEE. ACCORDINGLY, WE IMPOSE A COST OF RS. 5,000/ - UPON THE ASSESSEE AND THE SAME SHALL BE PAID TO THE CREDIT OF THE INCOME TAX DEPARTMENT AS OTHER PAYMENT ON OR BEFORE 30.11.2016. SUBJECT TO THE PAYMENT OF THE ABOVE SAID COST, THE DELAY IS CONDONED. 7. WE NOTICE THAT THE ASSESSEE HAS PAID THE COST OF RS.5,000/ - 25.11.2016 AND HAS FURNISHED A COPY OF CHALLAN, VIDE LETTER DATED 25.11.2016. RAJENDER DHONDU MANJREKAR 3 8 . NOW, WE SHALL PROCEED TO DISPOSE OF THE APPEAL ON MERIT. THE FIRST ISSUE URGED IN THIS APPEAL RELATES TO ADHOC DISALLOWANCE MADE OUT OF EXPENSES. THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS. 36,66,955/ - IN THE PROFIT AND LOSS ACCOUNT. SINCE THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER, HE MADE ADHOC DISALLOWANCE OF 10% OUT OF THE EXPENSES REFERRED ABOVE. THE LEARNED CIT(A) RESTRICTED THE SAME TO 5%. 9. LEARNED AR SUBMITTED THAT THE ASSESSING OFFICER HAD MADE IDENTICAL DISALLOWANCE IN A.Y. 2008 - 09. THE LEARNED CIT(A), HOWEVER, DELETED THE ENTIRE ADDITION IN THAT YEAR. ACCORDINGLY, LEARNED AR SUBMITTED THAT THE SAME VIEW MAY BE TAKEN IN THE YEAR UNDER CONSIDERATION ALSO. 10. ON THE CONTRARY, LEARNED DEPARTMENTA L REPRESENTATIVE SUBMITTED THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF THE EXPENSES CLAIMED BY HIM AND HENCE THE LEARNED CIT(A) WA S JUSTIFIED IN CONFIRMING THE ADDITION TO THE EXTENT OF 5% OF THE EXPENSES. 11. WE HAVE HEARD THE RIVAL CON TENTIONS ON THIS ISSUE AND PERUSED THE RECORD. WE NOTICED THAT THE ASSESSEE DID NOT FURNISH COPY OF PROFIT AND LOSS ACCOUNT BEFORE US AND HENCE WE ARE NOT ABLE TO APPRECIATE THE NATURE OF EXPENSES CLAIMED BY THE ASSESSEE. IN ANY CASE, WE NOTICED THAT THE A SSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS AND HENCE THE ASSESSING OFFICER WAS CONSTRAINED TO DISALLOW 10% OF THE EXPENSES WHICH WAS REDUCED TO 5% BY THE LEARNED CIT(A). WE ALSO NOTICED THAT THE LEARNED CIT(A) HAS DELETED IDENTICAL DISALLOWANCE MADE IN A.Y. 2008 - 09 FULLY. HOWEVER, A PERUSAL OF THE ORDER PASSED BY THE LEARNED CIT(A) IN A.Y. 2008 - 09 WOULD SHOW THAT THE ASSESSEE HAS FILED DETAILS OF EXPENSES AS ADDITIONAL EVIDENCE UNDER RULE 46A AND THE SAME WAS FORWARDED TO THE ASSESSING OFFICER BY THE LEARNED CIT(A). SINCE THE ASSESSING OFFICER DID NOT COMMENT UPON THE ADDITIONAL EVIDENCE, THE LEARNED CIT(A) RAJENDER DHONDU MANJREKAR 4 DELETED ENTIRE ADDITIONAL MADE BY THE ASSESSING OFFICER. WE NOTICED THAT THE LEARNED CIT(A ) HAS NOT RECORDED SUCH KIND OF FACTS IN THE IMPUGNED ORDER, MEANIN G THEREBY ASSESSEE DID NOT FILE DETAILS OF EXPENSES BEFORE THE LEARNED CIT(A) DURING THE YEAR UNDER CONSIDERATION . ACCORDINGLY, WE AR E OF THE VIEW THAT THE ADDITION OF PART OF EXPENSES CLAI MED BY THE ASSESSEE IS JUSTIFIED. HOWEVER, CONSIDERING THE NATURE OF BUSINESS CARRIED ON BY THE ASSESSEE, WE ARE OF THE VIEW THAT THE ADDITION OF 5% OF THE EXPENSES, WHICH APPROXIMATELY WORKS OUT TO RS. 1. 8 0 LAKHS IS ON THE HIGHER SIDE. ACCORDINGLY, WE MOD IFY THE ORDER PASSED BY THE LEARNED CIT(A) AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE ADDITION TO RS. 1 LAKH ONLY. WE ORDER ACCORDINGLY. 12. NEXT ISSUE RELATES TO ASSESSMENT OF RS. 3 LAKHS RECEIVED AS ADVANCE AGAINST SALE OF PROPERTY. 13. FACTS RELA TES THERETO ARE NARRATED BY THE LEARNED CIT(A) AS UNDER : - 14. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE APPELLANT HAS CONTENDED ON THE ISSUE THAT THE PROPERTY IN QUESTION I.E. FLAT NO. 602, 6 TH FLOOR, D WING, BUILDING NO.2, SHREE SAI COMPL EX CO - OPERATIVE HOUSING SOCIETY, SAYANI ROAD, PRABHA DEVI, MUMBAI - 400025, WAS OWNED BY THE APPELLANT AND HIS WIFE MRS. REVATI RAJENDER MANJREKAR, VIDE AGREEMENT TO SELL DATED 13/02/2009, THE APPELLANT AGREED TO SELL THIS FLAT TO SHRI VISHNU VISHWANATHARN FOR A CONSIDERATION OF RS, 43,00,000/ - . THIS AGREEMENT TO SELI WAS REGISTERED ON 13/03/2009 AND THE STAMP VALUATION AUTHORITY ASSESSED THE MARKET VALUE OF THIS PROPERTY AT RS . 44,21,8711 - AND ACCORDINGLY THE AGREEMENT WAS REGISTERED ON THIS VALUE. AN ADVAN CE TOKEN AMOUNT OF RS. 3,00,000/ - WAS GIVEN BY THE PURCHASER OF THE PROPERTY TO THE APPELLANT AND IT WAS AGREED THAT THE BALANCE AMOUNT OF RS.40.00,000/ - WOULD BE HANDED OVER TO THE APPELLANT AFTER THE AVAILING FINANCIAL ASSISTANCE FROM THE BANK BY THE PUR CHASER OF THE PROPERTY. 15 . ACCORDING TO THE AR, LATER ON, THE LOAN OF THE PURCHASER WAS NOT APPROVED BY THE BANK AND THEREFORE TWO PARTIES I.E. THE APPELLANT AND THE PURCHASER OF THE PROPERTY SHRI VISHNU VISHWANATHAM ENTERED INTO ANOTHER DEED OF CANCELLATION , WHICH WAS REGISTERED ON 21/1012010, CANCELLING THE AGREEMENT TO SELL DATED 13 - 02 - 2009 ENTERED INTO BETWEEN THE TWO PARTIES, WHICH WAS REGISTERED ON 13/03/2009. THE REASONS STATED IN THE DEED OF CANCELLATION WAS NON APPROVAL OF THE LOAN BY THE FINANCIAL INSTITUTIONS TO THE PURCHASER OF THE PROPERTY. ACCORDING TO THIS RAJENDER DHONDU MANJREKAR 5 DEED OF THE CANCELLATION, THE AMOUNT OF RS. 3,00.000/ - GIVEN AS A TOKEN BY THE PURCHASER, WAS RETURNED BACK BY THE APPELLANT: ACCORDING TO THE AR, SINCE THE DEAL OF THE SALE OF PROPERTY COULD NOT BE MATERIALIZED AND THE PURCHASER WAS NOT PAYING ANY AMOUNT DUE TO THE NON - APPROVAL OF THE BANK LOAN, THE AGREEMENT TO SELL WAS ULTIMATELY CANCELLED AND THEREFORE THIS TRANSACTION OF SALE OF PROPERTY DID NOT WARRANT ANY REFLECTION IN THE RETURN OF INC OME FILED BY THE APPELLANT FOR THE YEAR UNDER CONSIDERATION. 14. DURING THE COURSE OF APPELLATE PROCEEDINGS, ASSESSEE FURNISHED VARIOUS DOCUMENTS IN SUPPORT OF THE SUBMISSIONS MADE BEFORE THE LEARNED CIT(A) AND HENCE, THE LEARNED CIT(A) FORWARDED THEM TO T HE ASSESSING OFFICER SEEKING HIS COMMENTS. HOWEVER, THE ASSESSING OFFICER EXPRESSED THE VIEW THAT THE ADDITION MADE BY HIM DOES NOT CALL FOR ANY INTERFERENCE. IT IS PERTINENT TO NOTE THAT THE ASSESSING OFFICER HAS ASSESSED ENTIRE AMOUNT OF RS. 44,21,871/ - A S INCOME OF THE ASSESSEE SINCE THE ASSESSEE HAD FAILED TO FURNISH ANY DETAILS. THE LEARNED CIT(A) NOTICED THAT THE ASSESSEE HAS RECEIVED A SUM OF RS. 3 LAKHS ONLY AS ADVANCE DURING THE YEAR UNDER CONSIDERATION , I.E., HE DID NOT RECEIVE AMOUNT OF RS. 44,21,87 1/ - AS PRESUMED BY THE ASSESSING OFFICER. ACCORDINGLY, THE LEARNED CIT(A) DIRECTED THE ASSESSING OFFICER TO ASSESS AN AMOUNT OF RS. 3 LAKHS ONLY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE IS AGGRIEVED BY THE DECISION SO TAKEN BY THE LEARNED CIT(A). 15. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE AMOUNT OF RS. 3 LAKHS RECEIVED BY THE ASSESSEE WAS ADVANCE AMOUNT RECEIVED AGAINST SALE OF PROPERTY. THE ASSESSEE HAS FURNISHED EVIDENCE TO SHOW THAT THE ABOVE SAID ADVANCE AMOUNT OF RS. 3 L AKHS HAS BEEN RETURNED BACK TO THE PARTY IN THE SUBSEQUENT PERIOD. MANNER OF TREATMENT OF ADVANCE MONEY RECEIVED IS PRESCRIBED U/S. 51 OF THE ACT AS PER WHICH, ADVANCE MONEY SHALL BE REDUCED FROM THE COST OF THE ASSET, IF THE SAME HAD BEEN FORFEITED. IN TH E INSTANT CASE, IT IS NOT THE CASE OF THE TAX AUTHORITIES THAT THE ASSESSEE HAD RETAINED THE ADVANCE AMOUNT OF RS. 3 LAKHS. ON THE CONTRARY THE ASSESSEE HAS PROVED THAT THE ABOVE SAID AMOUNT HAD BEEN RETURNED BACK TO THE BUYER IN THE SUBSEQUENT PERIOD. HENC E, WE AR E OF THE VIEW THAT THERE WAS NO SCOPE FOR ASSESSING RAJENDER DHONDU MANJREKAR 6 ADVANCE AMOUNT OF RS. 3 LAKHS AS INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 3 LAKHS THAT WAS CONFIRMED BY THE LEARNED CIT(A). 16. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 30. 1 1 .2016 SD SD (PAWAN SINGH) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 30 / 1 1 / 20 1 6 COPY OF THE ORDER FORWARDED TO : 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) 4 . CIT 5 . DR, ITAT, MUMBAI 6 . GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) ITAT, MUMBAI