M/S.CONNEXIONS AIR TRAVEL SERVICES PRIVATE LIMITED, MUMBAI V. DCIT CENTRAL CIRCLE 12, MUMBAI

ITA 2491/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5371 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 23-04-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHAITANYA ANJARIA
• Keywords: Search and seizure; Condonation of delay
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA NO. 2491, 2492 & 2493 / MUM . /2018 ( ASSESSMENT YEAR : 20 07 08, 2008 09 & 2009 10 ) CONNEXIONS AIR TRAVEL SERVICES P. LTD. 5, NITYANAND NAGAR 3 SAHAR ROAD, ANDHERI (E) MUMBAI 400 069 PAN AACCC3748C . APPELLANT V/S DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE 12, MUMBAI . RESPONDENT ASSESSEE BY : SHRI DHARAN GANDHI REVENUE BY : SHRI CHAITANYA ANJARIA DATE OF HEARING 16.04.2019 DATE OF ORDER 31.05.2019 O R D E R PER SAKTIJIT DEY. J.M. A FORESAID APPEAL S HA V E BEEN FILED BY THE ASSESSEE CHALLENGING THREE SEPARATE ORDE RS , ALL DATED 7 TH NOVEMBER 2016, PASSED BY THE LEARNED COMMISSIONER (APPEALS) 52, MUMBAI, FOR THE ASSESSMENT YEAR S 20 07 08, 2008 09 AND 2009 10 . 2 . THERE IS DELAY OF 428 DAYS IN FILING THESE APPEALS. THE ASSESSEE HAS FILED APPLICATION S SEEKING CONDONATION OF DELAY ACCOMPANIED BY 2 CONNEXIONS AIR TRAVEL SERVICES P. LTD. AFFIDAVIT S . AFTER CONSIDERING RIVAL SUBMISSIONS AND THE CONTENTS OF THE AFFIDAVIT, WE ARE OF THE VIEW THAT DELAY IN FILING THE APPEALS IS DUE TO GENUINE CAUSE. ACCORDINGLY, WE ARE INCLINED TO CONDONE THE DELAY IN FILING THE APPEALS AND ADMIT THEM FOR ADJUDICATION ON MERIT. 3 . THE ONLY COMMON DISPUTE ARISING IN THE PRESENT APPEALS RELATES TO THE ADDITIONS MADE UNDER SECTION 41(1) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT') ON ACCOUNT OF REMISSION/CESSATION OF LIABILITY. 4 . SINCE THESE APPEALS PERTAIN TO THE SAME ASSESSEE INVOLVING COMMON ISSUES ARISING OUT OF IDENTICAL SET OF FACTS AND CIRCUMSTANCES, THEREFORE, AS A MATTER OF CONVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. HOWEVER, FACTS BEING IDENTICAL IN ALL THESE APPEALS, FOR THE SAKE OF BREVITY, WE WILL DISCUSS THE FACTS INVOLVED IN ITA NO. 2491/MUM./2018 , PERTAINING TO ASSESSMENT YEAR 2007 08. 5 . BRIEF FACTS ARE, THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF T RAVEL AGENCY. A SEARCH AND SEIZURE UNDER SECTION 132 OF THE ACT WAS CONDUCTED IN THE CASE OF ASSESSEE ON 20 TH NOVEMBER 2010 .PURSUANT TO WHICH , PROCEEDINGS UNDER SECTION 153A OF THE ACT WAS INITIATED AGAINST THE ASSESSEE. IN THE COURSE OF ASSESSMENT PROCEED INGS, THE ASSESSING OFFICER ON VERIFYING THE SUBMISSIONS MADE 3 CONNEXIONS AIR TRAVEL SERVICES P. LTD. BY THE ASSESSEE IN THE ASSESSMENT PROCCEDING FOR ASSESSMENT YEAR 2009 10, NOTICED THAT AN AMOUNT OF ` 12,69,925, PAYABLE TO M/S. ON WHEELS RENT A CAR, FOR THREE YEARS I.E., FOR THE ASSESSMENT YEA R 2007 08, 2008 09 AND 2009 10 WAS TRANSFERRED TO THE LOAN ACCOUNT OF ONE OF THE DIRECTORS , SHRI AMAR AINAPURE. THEREFORE, HE CALLED UPON THE ASSESSEE TO EXPLAIN WHY THE CAR RENTAL EXPENDITURE SHOULD NOT BE TREATED AS INCOME OF THE ASSESSEE UNDER SECTION 4 1(1) OF THE ACT ON ACCOUNT OF REMISSION/CESSATION OF LIABILITY. IN RESPONSE TO THE SHOW CAUSE NOTICE ISSUED BY THE ASSESSING OFFICER, IT WAS SUBMITTED BY THE ASSESSEE THAT EARLIER THERE WAS A PARTNERSHIP FIRM IN THE NAME AND STYLE OF M/S. CONNECTIONS WITH TWO PARTNERS VIZ. SHRI AMAR AINAPURE AND SHRI JITENDRA MANJREKAR. IT WAS SUBMITTED , SUBSEQUENTLY THE SAID PARTNERSHIP FIRM WAS CONVERTED TO A PRIVATE LIMITED COMPANY I.E., THE PRESENT ASSESSEE AND AT THE TIME OF SUCH CONVERSION AN AMOUNT OF ` 20,27,370, WA S RECEIVABLE BY SHRI AMAR A I NAPURE FROM SHRI JITENDRA MANJREKAR. IT WAS SUBMITTED , SUBSEQUENTLY, THE ASSESSEE COMPANY USED TO HIRE CARS FROM M/S. ON WH EE LS RENT A CAR , A PROPRIETARY CONCERN OF SHRI JITENDRA MANJREKAR AND THE TOTAL OUTSTANDING PAYABLE TO THE SAID CONCERN WAS ADJUSTED AGAINST THE RECEIVABLES OF THE DIRECTOR AMAR AINAPURE AND THE BALANCE AMOUNT OF ` 12,69,225, WAS TRANSFERRED TO THE LOAN ACCOUNT OF THE DI RECTOR THROUGH JOURNAL ENTRY. IT WAS SUBMITTED , SUBSEQUENTLY THE ASSESSEE HAD ALSO SQUARED OF THE LOAN ACCOUNT BY PAYING THE AMOUNT OF ` 12,69,225, TO THE DIRECTOR 4 CONNEXIONS AIR TRAVEL SERVICES P. LTD. THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSING OFFICER, HOWEVER, WAS NOT CONVINCED WITH THE EXP LANATION OF THE ASSESSEE AND CONCLUDED THAT SINCE , THE ASSESSEE HAD OUTSTANDING LIABILITY OF ` 6,35,904, TOWARDS CAR RENTAL EXPENDITURE WHICH WAS NOT PAI D BY THE ASSESSEE, THEREFORE, THERE IS REMISSION/CESSATION OF LIABILITY TO THAT EXTENT UNDER SECTION 41 (1)(A) OF THE ACT. ACCORDINGLY, HE ADDED BACK THE SAID AMOUNT TO THE INCOME OF THE ASSESSEE. SIMILAR ADDITION S OF DIFFERENT AMOUNTS WERE MADE IN THE ASSESSMENT YEAR 2008 09 AND 2009 10 AS WELL. 6 . THOUGH , THE ASSESSEE CHALLENGED THE AFORESAID ADDITIONS BEFO RE THE FIRST APPELLATE AUTHORITY, HOWEVER, REJECTING THE CONTENTION OF THE ASSESSEE, LEARNED COMMISSIONER (APPEALS) CONFIRMED THE ADDITIONS MADE BY THE ASSESSING OFFICER. 7 . L EARNED AUTHORISED REPRESENTATIVE REITERATED THE SUBMISSIONS MADE BEFORE THE DEPARTMENTAL AUTHORITIES. FURTHER, HE SUBMITTED , OUTSTANDING CAR RENTAL EXPENDITURE PAYABLE TO M/S. ON WHEELS RENT A CAR, WAS ACTUALLY ADJUSTED AGAINST THE AMOUNT RECEIVABLE BY THE DIRECTOR FROM SHRI JINTENDRA MANJREKAR AND BALANCE RECEIVABLE WAS TRANSFERR ED TO LOAN ACCOUNT IN THE NAME OF THE SAID DIRECTOR. HE SUBMITTED , SUBSEQUENTLY, THE ASSESSEE HAD PAID THE AMOUNT OF ` 12,69,925, TO THE CONCERNED DIRECTOR THROUGH ACCOUNT PAYEE CHEQUE. THUS, HE SUBMITTED , THERE IS NO REMISSION/CESSATION OF LIABILITY IN TER MS OF SECTION 41(1) OF THE ACT, AS THE ASSESSEE HAS NOT DERIVED ANY 5 CONNEXIONS AIR TRAVEL SERVICES P. LTD. BENEFIT EITHER IN CASH OR KIND. TO BUTTRESS HIS CONTENTION, LEARNED AUTHORISED REPRESENTATIVE DR EW OUR ATTENTION TO THE LEDGER ACCOUNT COPY INDICATING THE PAYMENT OF ` 12,68,945, TO THE DI RECTOR. FURTHER, HE DREW OUR ATTENTION TO THE CONFIRMATION LETTER DATED 21 ST APRIL 2016, ISSUED BY M/S. ON WHEELS RENT A CAR . THUS, THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE ADDITIONS MADE SHOULD BE DELETED. 8 . THE LEARNED DEPARTMENTAL REPRESENTAT IVE RELIED UPON THE OBSERVATIONS OF THE DEPARTMENTAL AUTHORITIES. 9 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS ADMITTED FACTUAL POSITION THAT OUTSTANDING CAR RENTAL EXPENDITURE APPEARING IN THE BOOKS OF ACCOUNT WERE NOT PAID TO THE TRAVEL AGENCY WHO SUPPLIED THE CARS .I N THIS REGARD THE CONTENTION OF THE ASSESSEE THAT THE CAR RENTAL EXPENDITURE W AS ADJUSTED AGAINST THE AMOUNT RECEIVABLE BY ONE OF ITS DIRECTOR S FROM M/S. ON WHEELS RENT A CAR, AND SUBSEQUENTLY, THE SAID AMOU NT WAS PAID BY THE ASSESSEE TO THE CONCERNED DIRECTOR. IN OUR CONSIDERED OPINION, THE AFORESAID CONTENTION OF THE ASSESSEE IS NOT ACCEPTABLE. THE FACTS ON RECORD CLEARLY INDICATE THAT THE ASSESSEE HAS NOT PAID THE OUTSTANDING LIABILITY ON ACCOUNT OF CAR RE NTAL EXPENDITURE TO THE CONCERNED PARTY TO WHOM THE AMOUNT WAS PAYABLE. THEREFORE, TO THAT EXTENT, THERE ISREMISSION/CESSATION OF LIABILITY IN TERMS OF SECTION 41(1)(A) OF THE ACT, AS THE ASSESSEE HAS DERIVED BENEFIT EITHER IN CASH OR IN SOME OTHER 6 CONNEXIONS AIR TRAVEL SERVICES P. LTD. FORM AN D SUCH BENEFIT HAS ACCRUED TO THE ASSESSEE DURING THE YEAR S UNDER CONSIDERATION . IN VIEW OF THE AFORESAID, WE ARE INCLINED TO CONCUR WITH THE DECISION OF THE DEPARTMENTAL AUTHORITIES ON THE ISSUE. ACCORDINGLY, GROUND RAISED IN ALL THESE APPEALS ARE DISMISS ED. 10 . IN THE RESULT, ALL THE APPEALS OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 31.05.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI