ASST CIT 2(2)(2), MUMBAI V. MOBIAPPS (I) P.LTD, MUMBAI

ITA 2392/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1464 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: S K PODAR
• Assessee Lawyers: RA JEEV WAGLAY
• Keywords: Opportunity of being heard; Additional evidence; Corroborative evidences
• Section: 142(1); 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 2392/MUM/2015 (ASSESSMENT YEAR: 2010-11) A C I T 2(2)(2) VS. M/S. MOBIAPPS (INDIA) P. LTD. ROOM NO. 545, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 801, MAHALAXMI CHAMBERS 22 BHULABHAI DESAI ROAD MUMBAI 400026 PAN AACCM3613L APPELLANT RESPONDENT APPELLANT BY: SHRI S.K. PODAR RESPONDENT BY: SHRI RAJEEV WAGLAY DATE OF HEARING: 20.12.2016 DATE OF PRONOUNCEMENT: 23.12.2016 O R D E R PER JASON P. BOAZ, A.M. THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE CIT(A)-5, MUMBAI DATED 29.01.2015 FOR A.Y. 2010-11. 2. THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE, A COMPANY ENGAGED IN SOFTWARE DEV ELOPMENT, I.E. DEVELOPING MOBILE/WIRELESS APPLICATIONS, DID NOT FI LE ITS RETURN FOR A.Y. 2010-11 WITHIN THE DUE DATE SPECIFIED UNDER SECTION 139(1) OR UNDER SECTION 139(4) OF THE INCOME TAX ACT, 1961 (IN SHOR T 'THE ACT'). THE CASE WAS TAKEN UP FOR SCRUTINY AND NOTICES UNDER SECTION 142(1) OF THE ACT ISSUED TO THE ASSESSEE ELICITED NO RESPONSE FROM IT . IN THE COURSE OF HEARINGS FIXED, THE LEARNED A.R. OF THE ASSESSEE VI DE LETTER DATED 17.08.2012 FILED COPIES OF AUDIT REPORT UNDER THE C OMPANIES ACT, 1956 AND AUDITED FINANCIAL STATEMENTS FOR THE YEAR UNDER CONSIDERATION. IT WAS ALSO SUBMITTED THAT OTHER INFORMATION CALLED FOR CO ULD NOT BE SUBMITTED SINCE THE ASSESSEE COMPANY HAD SOLD ITS BUSINESS IN JULY, 2009 AND ITA NO. 2392/MUM/2015 M/S. MOBIAPPS (INDIA) P. LTD. 2 THEREFORE THE SAME COULD NOT BE TRACED. THE AO ISSU ED A FURTHER DETAILED SHOW CAUSE NOTICE ON 22.02.2013 EXTRACTED AT PAGES 2 TO 4 OF THE ORDER OF ASSESSMENT AND REPLY THERETO IS ALSO REPRODUCED AT PAGES 4 AND 5 THEREOF. THE AO OBSERVED THAT THE SUBMISSIONS MADE BY THE LE ARNED A.R. OF THE ASSESSEE ARE GENERAL IN NATURE AND IS WITHOUT FILIN G ANY RETURN OF INCOME OR ANY SUPPORTING EVIDENCES AND THEREFORE NOT ACCEPTAB LE. IN THAT VIEW OF THE MATTER, THE ASSESSING OFFICER (AO) PROCEEDED TO COM PLETE THE ASSESSMENT EX-PARTE UNDER SECTION 144 OF THE ACT VIDE ORDER DA TED 26.03.2013 WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT ` 6,01,32,330/-; MAKING THE FOLLOWING DISALLOWANCES: - (I) DISALLOWANCE OF EXPENDITURE CLAIMED ` 83,76,955/- (II) ADVANCE FROM CUSTOMERS ` 6,54,46,808/- 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR A.Y. 2 010-11 DATED 26.03.2013 THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A)-5, MUMBAI. THE LEARNED CIT(A) DISPOSED OF THE APPEAL VIDE THE IMPUGNED ORDER DATED 29.01.2015 ALLOWING THE ASSESSEE PARTIAL RELIEF BY DELETING THE ADDITION OF ` 6,54,48,808/- TO THE ASSESSEES INCOME MADE BY THE AO ON ACCOUNT OF UNEXPLAINED ADVANCE FROM CUSTOMERS, AS REMISSION OR CESSATION OF LIABILITY UNDER SECTION 41(1) OF THE ACT. 3.1.1 REVENUE, BEING AGGRIEVED BY THE ORDER OF THE CIT(A)-5, MUMBAI DATED 26.03.2013 FOR A.Y. 2010-11, HAS PREFERRED THIS APP EAL, RAISING THE FOLLOWING GROUNDS - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN CORRECT IN DELETING THE ADDITION OF THE ADVANCES RECEIVED BY THE ASSESSEE FROM CUSTOMERS AMOUNTING TO RS.6,54 ,46,808/- BY ADMITTING FRESH EVIDENCE DURING THE APPELLATE PROCE EDINGS, WITHOUT ALLOWING THE ASSESSING OFFICER AN OPPORTUNITY TO EX AMINE THE EVIDENCE, SUBMITTED, IN CONTRAVENTION OF RULE 46A OF THE INCO ME TAX RULES. 3.1.2 THE LEARNED D.R. FOR REVENUE WAS HEARD IN SUP PORT OF THE GROUNDS RAISED AND SUBMITTED THAT A PERUSAL OF THE IMPUGNED ORDER OF THE LEARNED CIT(A) VIS-A-VIS THE EX-PARTE ORDER OF ASSESSMENT F OR A.Y. 2010-11, CLEARLY SHOW THAT THE LEARNED CIT(A) ALLOWED THE ASSESSEE R ELIEF BY DELETING THE ADDITION OF ADVANCES RECEIVED BY THE ASSESSEE FROM CUSTOMERS AMOUNTING ITA NO. 2392/MUM/2015 M/S. MOBIAPPS (INDIA) P. LTD. 3 TO ` 6,54,46,808/- OSTENSIBLY BY ADMITTING FRESH EVIDENC E IN APPELLATE PROCEEDINGS. IT IS CONTENDED THAT WHEN NO RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION NOR ENTIRE DETAILS IN THIS REGA RD CALLED FOR WERE NOT FILED BEFORE THE AO LEADING TO AN ADVERSE FINDING, THE LEARNED CIT(A) HAD GROSSLY ERRED IN NOT GRANTING THE AO ADEQUATE OPPOR TUNITY TO EXAMINE AND REBUT THE ADDITIONAL EVIDENCES FILED, BEFORE ADJUDI CATING AND ALLOWING THE ASSESSEES CLAIM; WHICH IS IN GROSS VIOLATION OF TH E PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962 (IN SHORT THE RULES). IT WAS PRAYED THAT THE IMPUGNED ORDER OF THE LEARNED CIT(A) ON THIS ISSUE BE SET ASIDE AND THE SAME BE RESTORED TO THE FILE OF THE AO FOR FRESH EX AMINATION OF THE ADDITIONAL EVIDENCES FILED AND FRESH ADJUDICATION T HEREON. 3.2 THE LEARNED A.R. OF THE ASSESSEE WAS HEARD IN T HE MATTER AND SUBMITTED THAT THERE WAS NO OBJECTION FOR THIS ISSU E TO BE RESTORED TO THE FILE OF THE AO FOR FRESH EXAMINATION AND ADJUDICATI ON. 3.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUS ED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. ADMITTEDLY, THE ASSESSEE COMPANY DID NOT FILE ITS RETURN OF INCOME FOR A.Y. 2010-11 WITH IN THE TIME LIMIT PRESCRIBED UNDER SECTION 139(1) OR 139(4) OF THE AC T OR IN RESPONSE TO NOTICES ISSUED UNDER SECTION 142(1) OF THE ACT. A P ERUSAL OF THE ORDER ASSESSMENT SHOWS THAT EXCEPT FOR FILING COPIES OF A UDITORS REPORT UNDER THE COMPANIES ACT, 1956 AND FINANCIAL STATEMENTS FO R THE YEAR UNDER CONSIDERATION, AND ADMITTEDLY EXCEPT FOR FURNISHING OF GENERAL EXPLANATIONS, NO DETAILS/EVIDENCE TO ESTABLISH ITS CLAIMS EXPENDITURE INCURRED OR FOR ESTABLISHING OR CONFIRMING THE EXIS TENCE OF THE BALANCES SHOWN AS ADVANCES FROM CUSTOMERS. IN THIS FACTUAL MATRIX, THE AO AFTER AFFORDING THE ASSESSEE A NUMBER OF OPPORTUNITIES TO EXPLAIN ITS CASE WAS, IN OUR VIEW, CONSTRAINED TO COMPLETE THE ASSESSMENT EX PARTE UNDER SECTION 144 OF THE ACT. 3.3.2 ON APPEAL, WE FIND THAT THE LEARNED CIT(A) AL LOWED THE ASSESSEE RELIEF BY DELETING THE ADDITION OF ` 6,54,46,808/- MADE UNDER SECTION 41(1) OF THE ACT OSTENSIBLY ON THE BASIS OF CERTAIN EXPLANATIONS , EVIDENCES/DETAILS PUT FORTH WHICH WERE NOT PLACED BEFORE THE AO. IN ALL F AIRNESS AND IN KEEPING ITA NO. 2392/MUM/2015 M/S. MOBIAPPS (INDIA) P. LTD. 4 WITH THE PROVISIONS OF RULE 46A(3) OF THE RULE, IT WAS INCUMBENT ON THE LEARNED CIT(A), THAT BEFORE TAKING INTO ACCOUNT SUC H EVIDENCES/DETAILS HE OUGHT TO HAVE AFFORDED THE AO REASONABLE OPPORTUNIT Y TO EXAMINE THE SAME AND REBUT IT IF REQUIRED. IN OUR VIEW, FAILURE TO D O SO BY THE LEARNED CIT(A), HAS RESULTED IN VIOLATION/CONTRAVENTION OF THE PROV ISIONS OF RULE 46A(3) OF THE RULES. IN THIS VIEW OF THE MATTER, WE SET ASIDE THE FINDING/ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITION OF ` 6,54,46,808/- UNDER SECTION 41(1) AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR FRESH EXAMINATION AND ADJUDICATION AFTER AFFORDING THE ASSESSEE ADEQUATE OPPORTUNITY OF BEING HEARD AND TO FILE DETAILED EXPLANATION REQUIRED. WE HOLD AND DIRECT ACCORDINGLY. CONSEQUENTLY, REVENUES GROUND IS ALLO WED FOR STATISTICAL PURPOSES. 4. IN THE RESULT, REVENUES APPEAL FOR A.Y. 2010-11 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23 RD DECEMBER, 2016. SD/ - SD/ - (SANDEEP GOSAIN) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 23 RD DECEMBER, 2016 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -5, MUMBAI 4. THE CIT - 2, MUMBAI 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.