SUNIL CHIMANLAL SHAH, MUMBAI V. ITO 26(3)(3), MUMBAI

ITA 2391/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 5057 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Assessment Year: 2009-2010
• Appeal Filed On: 05-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Opportunity of being heard; Principle of natural justice
• Section: 142(1)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES G, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.2391/MUM/2017 ASSESSMENT YEAR: 2009-10 SHRI SUNIL CHIMANLAL SHAH, 4/402, ODYSSEY-1, HIRANANDANI GARDEN, POWAI MUMBAI-400076 VS INCOME TAX OFFICER, WARD-26(3)(3), C-11, PRATAYAKSHKAR BHAVAN BANDRA KURLA COMPLEX, BANDRA (EAST), MUMBAI-400051 ( /ASSESSEE) ( / REVENUE) PAN. NO. ABFPS0623M ' #$% / DATE OF HEARING : 11/10/2018 $% / DATE OF ORDER: 11/10/2018 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 28/12/2016 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, / ASSESSEE BY SHRI KETAN L. VAJANI / REVENUE BY CHAUDHARY ARUN KUMAR SINGH- DR ITA NO.2391/MUM/2017 SHRI SUNIL CHIMANLAL SHAH 2 CONFIRMING THE PENALTY OF RS.3,88,000/- IMPOSED UND ER SECTION 271(1)(C) OF THE INCOME TAX ACT, 1961 (HERE INAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI KETAN L. VAJANI, LD. COUNSEL FOR THE ASSESSEE, CLAIMED THAT THE QUANTUM ADDITION WAS SENT BACK TO THE FILE OF THE LD. ASSESSING OFFICER BY THE TRIBUNAL, THE COPY OF THE ORDER DATED 25/09/2018 (ITA NO.59/MUM/2014) WAS FURNISHED THE BY THE ASSESSEE. THE LD DR, DID NOT CONTROVERT THIS FACTUAL MATRIX THAT THE QUANTUM ADDITION WAS REMAND ED BACK. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE AFORESAID ORDER OF THE TRIBUNAL DATED 25/0 9/2018 FOR READY REFERENCE AND ANALYSIS:- THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 03.10.2013 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS)-22, MUMBAI [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO THE A.Y. 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: - ITA NO.2391/MUM/2017 SHRI SUNIL CHIMANLAL SHAH 3 1. THE LD. ASSESSING OFFICER HAS ERRED IN DISALLOWI NG THE COMMISSION PAID OF RS.11,40,008/- & IT'S REASONABLE NESS TO VARIOUS PARTIES ON SALES AND MAKING CHARGES. THE LD . A.O HAS NOT APPRECIATED THE COMMISSION PAID IS VITAL FOR CARRYI NG ON BUSINESS PARTICULARLY IN PROPRIETORSHIP. THE LD. CIT (A), HA S ALSO CONFIRM THE SAME WITHOUT CONSIDERING THE SUBMISSION OF AN A SSESSEE, 2. THE LD. AO AS WELL AS LD. CIT (A), FAILED TO APP RECIATE THE FACT THAT THE COMMISSION AND BROKERAGE IS THE ESSENTIAL ELEMENT OF THE BUSINESS AND IT IS REQUIRED TO PAY MANY TIME ACCORD ING TO MARKET CONDITION. AND THE VOLUME OF PAYMENT IS ALSO REASON ABLE. 3. THE ID. AX) AS WELL AS THE LD. CIT (A), FAILED T O APPRECIATE THE FACT THAT THE COMMISSION PAID US PARTIES ARE LESS T HAN THE G.P. MARGIN OF THE BUSINESS. THE PAYMENT MADE TO THE PAR TIES ARE BY ACCOUNT PAYEE / CROSS CHEQUE AND THE TDS WHERE EVER APPLICABLE WAS PROPERLY DEDUCTED AND PAID TO THE GO VERNMENT TREASURY TIME TO TIME. AND THE TDS RETURN WAS ALSO TILED TIME LO TIME, 4. THE LD. A.O AS WELL AS LD. CIT (A), FAILED TO AP PRECIATE THAT THE DETAILS CALLED FOR WAS SUBMITTED ALONG WITH THE DOCUMENTARY EVIDENCE I,E. SALES INVOICE, MAKING CHARGES VOUCHER , BANK BOOK, LEDGER ACCOUNT OF THE COMMISSION PAID, MORE OVER TH E INFORMATION ASKED FOR U/S.L33(6) DIRECTLY TO THE VA RIOUS PARTIES WERE ALSO PRESENTED. RESPONSE TO THE SUMMONSED THE VARIOUS PARTIES PRESENTED PERSONALLY WITH THEIR RETURN OF I NCOME BANK STATEMENT, COMPUTATION OF INCOME AND IDENTITY PROOF ALSO PROVIDED TO THE LD. A.O. 5. THE LD. INCOME TAX OFFICER HAS ERRED IN DISALLOW ING 1/5TH OF DEPRECIATION ON MOTORCAR RS.16,804/-. THE LD. CIT(A ) HAS ALSO NOT APPRECIATED WITH THE SUBMISSION. 6. THE ORDER OF LD. AO IS EXCESSIVE, ARBITRARY, AND AGAINST THE LAW OF NATURAL JUSTICE AND EQUITY. 7. THE LD. ITO FAILED TO PASS A SPEAKING ORDER AND CONSIDER VARIOUS CITATIONS, WHICH ARE SIMILAR TO THE NATURE OF THE CLAIM OF THE COMMISSION AND BROKERAGE PAYMENT AND DISALLOWAN CE OF DEPRECIATION ON MOTOR CAR. 8. THE LD. AO HAS ERRED IN LEVYING OF INTEREST U/S 234B, 234C AND 234D, AND HAS WRONGLY INITIATED PENALTY PROCEEDINGS U/S 271(1)(C) OF THE I.T. ACT, 1961. 9 YOUR HONOURS APPELLANT PRAYS AS UNDER A) THAT COMMISSION DISALLOWED OF RS.11.40,008/- SHOULD BE DELETED. ITA NO.2391/MUM/2017 SHRI SUNIL CHIMANLAL SHAH 4 B) THAT DEPRECIATION DISALLOWED OF RS.16,804/- ALSO TO BE DELETED. OR SOME OTHER RELIEF MAY BE GIVEN AS YOUR HONOUR THINK MOST PROPER AND APPROPRIATE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED HIS RETURN OF INCOME ON 21.09.2009 DECLARING TOTAL INCO ME TO THE TUNE OF RS.18,97,450/-. THE RETURN WAS PROCESSED U/ S 143(1) OF THE I.T. ACT, 1961. THEREAFTER THE CASE WAS SELECTE D FOR SCRUTINY, HENCE, NOTICE U/S 143(2) OF THE ACT DATED 20.08.201 0 AND NOTICE U/S 142(1) OF THE ACT DATED 24.06.2011 WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESSEE IS THE PROPRIETOR O F M/S. C.M. JEWELLERS AND ENGAGED IN THE BUSINESS OF TRADING AN D GOLD & DIAMOND JEWELLERY AND HAS DECLARED HIS INCOME FROM BUSINESS & OTHER SOURCES. ON VERIFICATION, IT WAS FOUND THAT THE ASSESSEE HAS DEBITED THE COMMISSION TO THE TUNE OF RS.11,40, 008/- IN HIS P&L ACCOUNT. NOTICE WAS GIVEN AND FINDING NO JUSTIF IABLE REASON TO ALLOW THE SAME, THE SAID COMMISSION WAS A DDED TO THE INCOME OF THE ASSESSEE. THE ASSESSEE HAS ALSO CLAIM ED THE DEPRECIATION TO THE EXTENT OF 1/5TH IN MOTOR CAR BU T THE SAME WAS ALSO DISALLOWED AND THE INCOME OF THE ASSESSEE WAS ASSESSED TO THE TUNE OF RS.30,54,260/-. FEELING AGG RIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONF IRMED THE ADDITION RAISED BY THE AO, THEREFORE, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUES NOS. 1 TO 4:- 4. UNDER THESE ISSUES THE ASSESSEE HAS CHALLENGED T HE CONFIRMATION OF THE DISALLOWANCE OF COMMISSION IN S UM OF RS.11,40,008/-. THE CONTENTION OF THE LD. REPRESENT ATIVE OF THE ASSESSEE IS THAT THE CLAIM OF THE ASSESSEE HAS NOT BEEN EXAMINED PROPERLY BECAUSE THE EVIDENCE GIVEN IN SUPPORT OF T HE CLAIM WAS NOT EXAMINED BY THE AO AS WELL AS THE CIT, THEREFOR E, IN THE SAID CIRCUMSTANCES AND IN VIEW OF THE EVIDENCE ADDU CED BEFORE THEM AS WELL AS BEFORE THE ITAT, THE CLAIM OF THE A SSESSEE IS LIABLE TO BE ALLOWED IN THE INTEREST OF JUSTICE. HO WEVER, ON THE OTHER HAND, THE LD. REPRESENTATIVE OF THE DEPARTMEN T HAS REFUTED THE SAID CONTENTION. WE HAVE HEARD ARGUMENT AND ADVANCED BY THE LD. REPRESENTATIVE OF THE PARTIES A ND PERUSED THE RECORD AVAILABLE ON THE FILE IN CONNECTION WITH THE PAYMENT OF COMMISSION. THE ASSESSEE HAS PRODUCED THE DEBIT NOTES BEFORE THE AO WHICH LIES AT PAGE NO. 25 TO 33 OF TH E PAPER BOOK. THE ASSESSEE HAS ALSO PRODUCED THE CONFIRMATION LET TER OF THE ITA NO.2391/MUM/2017 SHRI SUNIL CHIMANLAL SHAH 5 PARTIES WHO RECEIVED THE COMMISSION WHICH LIES AT P AGE NO. 43 TO 53 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO DEDU CTED THE TDS UPON THE PAYMENT AND IN THIS REGARD THE COPY OF FORM NO. 16A HAS BEEN PRODUCED ON RECORD WHICH LIES AT PAGE NO. 34 TO 42 OF THE PAPER BOOK. ON APPRAISAL OF THE ORDER PAS SED BY THE AUTHORITY BELOW, WE NOWHERE FIND ANY DISCUSSION ABO UT THESE DOCUMENTS FOR THE CONSIDERATION OF THE CLAIM OF THE ASSESSEE. FURTHER, WE NOTICED THAT THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED IN THE SUBSEQUENT ASSESSMENT YEAR I.E. 2010 -11. THE EVIDENCE GIVEN BY THE ASSESSEE NOWHERE VERIFIED AND CONSIDERED, THEREFORE, IN THE SAID CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE FINDING OF THE CIT(A) IS NOT JUSTIFIA BLE, THEREFORE, WE SET ASIDE THE SAME AND RESTORE THE ISSUE BEFORE THE AO TO DECIDE THE MATTER AFRESH IN VIEW OF THE EVIDENCE DI SCUSSED ABOVE AND BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, THESE ISSUES ARE DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NO. 5:- 5. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF DISALLOWANCE TO THE EXTENT OF 1/5TH UPON THE DEP RECIATION OF MOTOR CAR OF RS.16,804/-. ON APPRAISAL OF THE RECOR D, WE NOTICED THAT IN THIS REGARD THE AO HAS ALLOWED THE CLAIM OF THE ASSESSEE AGAINST SUBSEQUENT YEAR ALSO AND COPY OF W HICH HAS BEEN LIES AT PAGE NO. 62 OF THE PAPER BOOK. THE CLA IM OF THE ASSESSEE IN THIS REGARD IS ALSO REQUIRED TO BE EXAM INED AT THE END OF AO, THEREFORE, IN THIS REGARD, WE SET ASIDE THE FINDING OF THE CIT(A) ON THIS ISSUE AND RESTORED THE ISSUE BEF ORE THE AO TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW BY G IVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDI NGLY, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AGAINST THE REVENUE. ISSUE NOS. 6 & 7:- 6. ISSUE NOS. 6 & 7 ARE GENERALLY IN NATURE WHICH N OWHERE REQUIRED FOR ANY ADJUDICATION. ISSUE NO. 8:- 7. ISSUE NO. 8 IS CONSEQUENTIAL IN NATURE WHICH NOW HERE REQUIRED FOR ADJUDICATION. ITA NO.2391/MUM/2017 SHRI SUNIL CHIMANLAL SHAH 6 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE ALLOWED FOR STATISTICAL PURPOSE. WE FIND THAT THE TRIBUNAL VIDE AFORESAID ORDER DA TED 25/09/2018 CONSIDERED THE FACTUAL MATRIX AND SET-AS IDE THE ISSUE OF QUANTUM ADDITION TO THE FILE OF THE LD. AS SESSING OFFICER TO DECIDE AFRESH. SINCE, THE PENALTY IS OFF SHOOT OF THE QUANTUM ADDITION, WHICH HAS BEEN REMANDED BACK TO T HE FILE OF THE LD. ASSESSING OFFICER, THEREFORE, THE P ENALTY WILL BE DEPENDENT UPON THE OUTCOME OF THE ORDER OF THE LD. ASSESSING OFFICER, THEREFORE, THIS PENALTY APPEAL I S ALSO SENT TO THE FILE OF THE LD. ASSESSING OFFICER FOR FRESH ADJUDICATION/CONSIDERATION. THUS, THE PENALTY APPEA L IS ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF THE LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 11/10/2018. SD/- SD/- ( RA MIT KOCHAR ) (JOGINDER SINGH) ! ' / ACCOUNTANT MEMBER # ' /JUDICIAL MEMBER ' # MUMBAI; ' DATED : 11/10/2018 F{X~{T? P.S/. . . ITA NO.2391/MUM/2017 SHRI SUNIL CHIMANLAL SHAH 7 $#%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. )*+, / THE APPELLANT 2. -.+, / THE RESPONDENT. 3. // ' 0 ( )* ) / THE CIT, MUMBAI. 4. // ' 0 / CIT(A)- , MUMBAI 5. 2 3- , /)*%)4 , ' # / DR, ITAT, MUMBAI 6. 56# / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , ' # / ITAT, MUMBAI