Smt. Padma V. Samtani, Kolkata V. I.T.O.,Ward- 29(4), Kolkata, Kolkata

ITA 249/KOL/2010

• Counselvise Citation: 24923514 RSA 2010
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 29-04-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 08-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Keywords: Business expenditure; Additional evidence
• Section: 14A; 133(6); 131

Judgement Text

, , , , , , ,, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [ . . . . . . . . , ,, , , ,, , . . . . . .. . ! ! ! ! , ' ' ' ' ] [BEFORE HONBLE SHRI B. R. MITTAL, JM & HONBLE SHRI S.V. MEHROTRA, AM] #$ #$ #$ #$ / I.T.A NO. 249/KOL/2010 %& '() %& '() %& '() %& '()/ // / ASSESSMENT YEAR : 2004-05 SMT. PADMA V. SAMTANI -VS.- INCOME TAX OFFICER/WARD-29(4) KOLKATA [PAN : ASTPS 6053 Q] KOLKATA. [ +, +, +, +, /APPELLANT ] ]] ] [ ./+, ./+, ./+, ./+,/ // / RESPONDENT ] ]] ] +, +, +, +, / FOR THE APPELLANT : SHRI SUBASH AGARWAL ./+, ./+, ./+, ./+, / FOR THE RESPONDENT : SHRI S. K. ROY 0 /ORDER . . . . . .. . ! ! ! ! , ' ' ' ' PER S. V. MEHROTRA, A. M. THE ASSESSEE HAS PREFERRED THIS APPEAL FOR ASSESSM ENT YEAR 2004-05 AGAINST ORDER OF LD. CIT(A)-XVI DATED 17.11.2009. 2. THE ASSESSEE FILED HER RETURN OF INCOME DECLARIN G TOTAL INCOME OF RS.17,89,560/-. THE ASSESSMENT WAS COMPLETED AT TOTAL INCOME OF RS.30,6 4,952/-, INTER ALIA, MAKING FOLLOWING ADDITIONS :- (I) LOSS FROM 1B, MINTO PARK : RS. 42,970/- (II) BUSINESS LOSS DISALLOWED : RS.8,70,679/- LD. CIT(A) WHILE PARTLY ALLOWING THE ASSESSEES APP EAL CONFIRMED THE AFOREMENTIONED DISALLOWANCES. 3. GROUND NOS. 1 & 2 OF THE APPEAL READ AS UNDER :- 1) FOR THAT THE LEARNED COMMISSIONER OF INCOMETAX, (APPEALS), KOLKATA, ERRED IN LAW IN NOT ASSUMING THAT THE PROPERTY SITU ATED AT 1/B, MINTO PARK, KOLKATA-27 WAS OWNED BY THE APPELLANT THUS NO T ACCEPTING ITA NO. 249/KOL/2010 2 EXPENSES VIZ. ELECTRICITY, LIFT AND SECURITY CHARGE S AMOUNTING TO RS.42,970/- INCURRED IN RELATION TO SUCH PROPERTY I N ARRIVING AT INCOME THERE-FROM WHICH IS BAD IN LAW. 2) FOR THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), KOLKATA, WAS ALSO NOT CORRECT IN IGNORING EXPENSES INCURRED VIZ, ELECTRICITY CHARGES. SECURITY, SERVICE CHARGES, ETC. IN CONNECT ION WITH PROPERTY SITUATED AT 1/B, MINTO PARK, KOLKATA OWNED BY THE A PPELLANT IN ARRIVING AT ANNUAL LETTING VALUE FOR PURPOSE OF COMPUTATION OF INCOME THEREFROM. 4. GROUND NO.1 NOT PRESSED, HENCE DISMISSED. 5. BRIEF FACTS APROPOS GROUND NO.2 ARE THAT ASSESSE E HAD DERIVED INCOME FROM HOUSE PROPERTY AT 1B, MINTO PARK, KOLKATA. ASSESSING OFFICER NOTIC ED THAT ASSESSEE HAD DEBITED IN HER PROFIT & LOSS ACCOUNT RS.42,970/- ON ACCOUNT OF MAINTENANCE CHARGES LIKE ELECTRICITY, LIFT, SECURITY CHARGES ETC. WHICH WERE NOT PERMISSIBLE UNDER SECTION 24 OF THE ACT AND, THEREFORE, HE DISALLOWED THE SAME, INTER ALIA, POINTING OUT THAT NOWHERE IN THE COMPUTATION OF INCOME, IT WAS MENTIONED THAT THE RENT RECEIVED BY THE ASSESSEE WAS COMPOSITE RENT. A SSESSEES SHARE BEING 19.7%, HE MADE DISALLOWANCE OF RS.58,905/- WHICH WAS CONFIRMED BY LD. CIT(A). 6. HAVING HEARD BOTH THE PARTIES, WE DO NOT FIND AN Y REASON TO INTERFERE WITH THE FINDINGS OF LD. CIT(A) BECAUSE ADMITTEDLY, THE INCOME WAS ASSES SABLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY AND, THEREFORE, DEDUCTIONS PERMISSIBLE UN DER THE SAID HEAD OF INCOME COULD BE ALLOWED. SECTION 24 OF THE INCOME TAX ACT SPECIFIES SPECIFIC DEDUCTION PERMISSIBLE UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ASSESSEE COULD CLAIM 30% OF THE GROSS RENT BUT SEPARATE DEDUCTION IN RESPECT OF VARIOUS CHARGES COULD NOT BE ALLOWED. WE , THEREFORE, CONFIRM THE ORDER OF LD. CIT(A). 7. GROUND NOS. 5 TO 8 READ AS UNDER :- 5) FOR THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), KOLKATA, FAILED TO REALISE THE IMPACT OF THE APPELLANTS BUS INESS IN THE NATURE OF PURCHASE AND SALE OF CLOTH & SUITING WITHOUT REALIZ ING THE BASIC TRANSACTIONS EFFECTED IN THE HANDS OF THE APPELLANT THUS ACT OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) BE CON SIDERED NOT IN ORDER. 6) FOR THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS), KOLKATA, WAS WRONG IN DECIDING THAT THE TRANSACTIONS EFFECTE D BY THE APPELLANT IN RESPECT OF PURCHASE AND SALE OF CLOTH AND SUITING W ERE NOT GENUINE WITHOUT SPEAKING THE REASONS THEREFOR WHICH NEED BE REVERSED. ITA NO. 249/KOL/2010 3 7) FOR THAT THE LD. CIT(A), KOLKATA, EVEN FINDING N O DEFECT IN THE ACCOUNTS MAINTAINED BY THE APPELLANT AND ITS DEBTORS/CREDITO RS SIMULTANEOUSLY TRANSACTIONS EFFECTED, ON VAGUE IDEA-ASSUMED AND AN TICIPATING SUCH TRANSACTIONS WERE NOT GENUINE THUS DISREGARDING CLA IM OF BUSINESS LOSS AMOUNTING TO RS.8,70,679 WHICH IS BEYOND THE PROVIS IONS OF LAW. 8) FOR THAT THE LD. CIT(A), KOLKATA, ON WRONG IMPRE SSION PROCEEDED TO CONFIRM DISALLOWANCE OF BUSINESS EXPENDITURE VIZ SA LARY RS.83,725/- AND ACCOUNTING CHARGES RS.21,750/- ON GROUNDS OF BUSINE SS OF THE APPELLANT NOT GENUINE WHICH NEED BE REVERSED. 8. BRIEF FACTS APROPOS GROUND NOS.5, 6, 7 & 8 ARE THAT DURING THE PREVIOUS YEAR 2003-04, ASSESSEE CLAIMED TO HAVE STARTED A BUSINESS OF SHIR TING & SUITING MATERIAL. ASSESSING OFFICER HAS GIVEN THE DETAILS OF PURCHASES AND SALES MADE BY TH E ASSESSEE WHICH WERE RS.25,27,150/- AND RS.17,61,946/- RESPECTIVELY. THUS, CLAIMED A NET L OSS OF RS.7,65,204/-. IN ORDER TO VERIFY THE AUTHENTICITY OF TRANSACTIONS, ASSESSING OFFICER ISS UED NOTICE U/S. 133(6) TO M/S. BIMEX EXPORT PVT.LTD. AT 71, B.R.B. BASU ROAD, KOLKATA-700 001 & M/S. KASHMIKAL MERCANTILES PVT. LTD., 156, LENIN SARANI, KOLKATA-700 013. HE ALSO DEPUTED INSP ECTOR TO MAKE ENQUIRIES AT THE GIVEN ADDRESSES AS THE NOTICES WERE RETURNED UNSERVED. AS SESSING OFFICER HAS GIVEN DETAILED ACCOUNT OF ALL THESE ENQUIRIES AT PAGES 4 TO 7 OF HIS ORDER AN D THEREAFTER CONCLUDED THAT ASSESSEE DID NOT INDULGE IN ANY REAL BUSINESS ACTIVITY, RATHER THE S O CLAIMED BUSINESS TRANSACTION WAS A SHAM AND MERE BOOK ENTRIES. HE, THEREFORE, FURTHER DISALLOWE D FOLLOWING EXPENSES IN THIS ACCOUNT :- (I) SALARY PAID : RS.83,725/- (II) ACCOUNTING CHARGES : RS.21,750/- HE, THUS MADE A TOTAL DISALLOWANCE OF RS.8,74,875/- . LD. CIT(A) CONFIRMED THE DISALLOWANCE. 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND HAVE PERUSED THE RECORDS OF THE CASE. WE DO NOT FIND ANY REASON TO INTERFERE WI TH THE ORDER OF LD. CIT(A) AS THE FOLLOWING FACTS HAVE NOT BEEN CONTROVERTED BY THE ASSESSEE :- (I) ASSESSEE WAS A LADY OF 74 YEARS AND SHE CHOSE T O START A NEW VENTURE, TOTALLY ALIEN TO NATURE OF BUSINESS OF HER PARTNERSHIP CONCERN. (II) THE ENTIRE BUSINESS TRANSACTIONS WERE DONE IN THE LAST QUARTER OF THE PREVIOUS YEAR HAVING ONLY THREE PURCHASE AND SALE TRANSACTION AND INVOLVING ONLY ONE PURCHASE PARTY I.E. M/S. BIMEX EXPORT PVT. LTD. AND A SINGLE BUYER PARTY M/S. KASHMIKAL ITA NO. 249/KOL/2010 4 MERCANTILES PVT. LTD. (III) THE ASSESSEE HAS NEITHER MADE PAYMENT FOR THE ALLEG ED PURCHASES NOR RECEIVED THE AMOUNT OF SALE. BOTH THE PARTIES WERE APPEARING IN THE FORM OF SUNDRY CREDITORS AND SUNDRY DEBTORS. (IV) NOTICES ISSUED UNDER SECTION 133(6) OF THE ACT WERE RETURNED UNSERVED WITH THE REMARKS NOT KNOWN. (V) THE INSPECTOR DEPUTED TO SERVE NOTICES REPORTED THA T NONE OF THE PARTIES COULD BE TRACED ON GIVEN ADDRESSES. (VI) THE PERUSAL OF COPIES OF I.T. RETURN OF THESE PARTI ES FOR ASSESSMENT YEAR 2005-06 REVEALED THAT BOTH THE PARTIES HAD FILED THE RETURN OF INCOME FROM THE SAME ADDRESSES. (VII) NONE OF THE PARTIES APPEARED IN RESPONSE TO THE SUM MONS UNDER SECTION 131 OF THE ACT THOUGH THE SUMMONS WERE ACCEPTED BY THE LD. AUT HORISED REPRESENTATIVE OF THE SAID PARTIES. 9.1 FURTHER, BEFORE LD. CIT(A), ASSESSEE HAD INTROD UCED ADDITIONAL EVIDENCES BUT COULD NOT EXPLAIN AS TO WHY THOSE ADDITIONAL EXPENSES COULD N OT BE FILED BEFORE THE ASSESSING OFFICER. THEREFORE, THE SAME WERE NOT RIGHTLY ADMITTED BY LD . CIT(A). IN VIEW OF THE ABOVE, WE CONFIRM THE ORDER OF LD. CIT(A). GROUND NOS.5,6,,7 & 8 ARE DISMISSED. 10. GROUND NOS. 9 & 10 DEALS WITH DISALLOWANCES MAD E UNDER SECTION 14A OF THE ACT. 11. BRIEF FACTS APROPOS THIS ISSUE ARE THAT THE ASS ESSING OFFICER ON EXAMINATION OF DETAILS OF LOANS AND ADVANCES AND INTEREST PAID THEREON OBSERV ED THAT THE LOAN TAKEN FROM SMT. DOLLY MIRPURI WAS INVESTED IN SHARES AND IN THE PARTNERSHIP FIRMS OF THE ASSESSEE. HE MADE A DISALLOWANCE UNDER SECTION 14A OF RS.49,853/-. LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO RECOMPUTE THE DISALLOWANCE AS PER PROVISION OF RULE 8D. 12. HAVING HEARD BOTH THE PARTIES, WE RESTORE THE M ATTER BACK TO THE FILE OF THE LD. CIT(A) IN VIEW OF DECISION OF HONBLE MUMBAI HIGH COURT IN TH E CASE OF GODREJ & BOYCE MFG. CO. LTD. VS. DCIT [2010] 328 ITR 81 (BOM.) WHEREIN IT HAS BEEN H ELD THAT RULE 8D IS APPLICABLE FROM ASSESSMENT YEAR 2008-09 ONWARDS AND, THEREFORE, IT WAS NOT APPLICABLE FOR ASSESSMENT YEAR 004-05. ITA NO. 249/KOL/2010 5 THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 0 0 0 0 '1 '1 '1 '1 2 1% 3 4 2 1% 3 4 2 1% 3 4 2 1% 3 4 5' 5' 5' 5' ORDER PRONOUNCED IN THE COURT ON 19. 08.2011. SD/- SD/- [ . . . . . . . . , ,, , ] [ . . . . . .. . ! ! ! ! , ' ' ' ' ] [ B. R. MITTAL ] [ S.V. MEHROTRA ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( (5' 5' 5' 5') )) ) DATED : 19 TH AUGUST, 2011. 0 8 .9 :9(/ COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT : SMT. PADMA V. SAMTANI, 1/B, MINTO PAR K, KOLKATA-700 027. 2 ./+, / RESPONDENT : INCOME TAX OFFICER/WARD-29(4), 18, RABINDRA SARANI, KOLKATA-700 001 . 3. 0% / CIT, 4. 0% ()/ CIT(A), KOLKATA. 5. '3 .%/ DR, KOLKATA BENCHES, KOLKATA [/9 ./ TRUE COPY] 0%1/ BY ORDER, #A /ASSTT REGISTRAR [KKC 'BC %DA E' /SR.PS]