J.N.C. INTERNATIONAL, MUMBAI V. ITO WD 14(3)(3), MUMBAI

ITA 2623/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93244 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 17-04-2014
• Court: TRIBUNAL
• Department Lawyers: NEELIMA V NADKARNI
• Assessee Lawyers: G P MEHTA
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER I.T.A. NO.2623/M/2014 (AY:2005 - 2006 ) M/S. J.N.C. INTERNATIONAL, CHITAMANI BUILDING, RAMWADI, MUMBAI 400 002. / VS. THE INCOME TAX OFFICER, WARD 14(3)(3), MUMBAI. ./ PAN : AACFJ5518Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI G.P. MEHTA, AR / RESPONDENT BY : MS. NEELIMA V. NADKARNI, DR / DATE OF HEARING : 29.06.2015 / DATE OF PRONOUNCEMENT :22 .07.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSE EON 17.4.2014 IS AGAINST THE ORDER OF THE CIT (A) - 25, MUMBAI DATED 6.3.2014 FOR THE ASSESSMENT YEAR 2005 - 06. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. THE ORDERS PASSED BY THE LEARNED LOWER AUTHORITIES ARE BAD IN LAW AND IN FACTS. 2. THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN DISALLOWING AGGREGATED AMOUNT OF EXPENSES AT RS. 9,18,542/ - HOLDING SAME TO BE UNRELATED TO INCOME EARNING ACTIVITIES. THE REASONS ASSIGNED FOR IMPUGNED DISALLOWANCE ARE WRONG AND CONTRARY TO PROVISIONS OF LAW READ WITH JUDICIAL PROPOSITIONS. 3. THE LEARNED LOWER AUTHORITIES HAVE GROSSLY ERRED IN REJECTING APPELLANTS CLAIM OF EXPENSES AT RS. 9,18,542/ - EVEN THOUGH SAID EXPENSES WERE RELATABLE TO MAINTENANCE OF ESTABLISHMENT AND EXISTENCE OF THE APPELLANT. THE IMPUGNED DISALLOWANCE IS WHOLLY UNWA RRANTED. 2. AT THE OUTSET, IN CONNECTION WITH THE DELAY OF 15 DAYS IN FILING THE APPEAL BEFORE THE TRIBUNAL WITHIN THE PRESCRIBED TIME, LD COUNSEL FOR THE ASSESSEE SUBMITTED THE AS PER THE REVISED FORM NO.36, THERE IS NO DELAY IN FILING THE APPEAL. AFTE R HEARING THE LD COUNSEL AND ON PERUSAL OF THE RELEVANT RECORD, I FIND THERE IS NO DELAY IN FILING THE APPEAL AS PER THE REVISED FROM NO.36 AND THEREFORE, THE APPEAL IS TAKEN UP FOR ADJUDICATION ON MERITS. 3. BEFORE ME, LD COUNSEL FOR THE ASSESSEE , BRIEFLY NARRATED THE FACTS OF THE CASE AND SUBMITTED THAT THIS IS THE SECOND ROUND OF PROCEEDINGS BEFORE THE TRIBUNAL. IN 2 THE FIRST ROUND, ON THE FACT OF ASSESSEE RECEIVING CERTAIN RECEIPTS ATTACHED TO THE HOUSE PROPERTY AND CLAIM OF EXPENDITURE, THE TRIBUNAL HEL D VIDE ITA NO.2835/M/2010 (AY 2005 - 2006), DATED 27.4.2011 THAT TAXING THE SAID RECEIPTS OF RS. 11,85,504/ - UNDER THE HEAD INCOME FROM OTHER SOURCES AND REMANDED THE ISSUE TO THE FILE OF THE AO FOR ALLOWING THE RELATED EXPENDITURE U/S 57(III) OF THE ACT A FTER EXAMINING THE FACTS. IN THE REMANDING PROCEEDINGS, ASSESSING OFFICER FOUND THE ASSESSEE CLAIMED EXPENSES AMOUNTING TO RS. 9,18,542/ - AND THE SAME SHOULD BE ALLOWED U/S 57(III) OF THE ACT. HOWEVER, ASSESSEE COULD NOT SUBSTANTIATE THE WHOLE EXPENDITUR E WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING OF THE ABOVE INCOME. FURTHER, ASSESSEE COULD NOT FILE THE EVIDENCES DESPITE THE OPPORTUNITIES GRANTED BY THE ASSESSING OFFICER. ACCORDINGLY, AO DENIED THE CLAIM OF DEDUCTION U/S 57(III) OF THE ACT. IN THE FIRST APPELLATE PROCEEDINGS, ASSESSEE COULD NOT IMPROVE ITS CASE. THE CONTENTS OF PARA 5 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD. ACCORDINGLY, AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, CIT (A) DISMISSED THE APPEAL. A GGRIEVED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4 . DURING THE PROCEEDINGS BEFORE THE TRIBUNAL, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE AUTHORITIES HAVE NOT CONSIDERED THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF EASTERN INVESTMENT LTD VS. CIT (20 ITR 1) (SC) WHILE PASSING THEIR ORDERS AND THEREFORE, THE MATTER MAY BE REMANDED TO THE FILE OF THE AO FOR EXAMINING THE ISSUE AFRESH. FURTHER, LD C OUNSEL FOR THE ASSESSEE ALSO MADE A SUBMISSION AT BAR STATING THAT HE SHALL DEMONSTRATE BEFORE THE AO THAT THE SAID EXPENSES WERE INCURRED FOR THE PURPOSE OF EARNING OF SUCH INCOME. 5 . ON THE OTHER HAND, LD DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES. 6 . AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE RELEVANT MATERIAL PLACED ON TO THE RECORD, I FIND IT RELEVANT TO REMAND THIS ISSUE TO THE FILE OF THE AO FOR LIMITED PURPOSE OF ISSUE RELATING TO THE ADDITION OF RS. 9,18,542/ - . AO IS DI RECTED TO ADJUDICATE THE ISSUE AFRESH AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS TO EXAMINE THE APPLICABILITY OF THE SAID APEX COURT JUDGMENT IN THE CASE OF EASTERN INVESTMENT LTD VS. CIT (SUPRA) AND ANY OTHER PRECEDENTS, IF ANY, AS PER L AW. AO SHALL GRANT A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 3 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2015. SD/ - (D. KARUNAKARA RAO) ACCOUNTANT MEMBER MUMBAI ; 22 .7 .2015 . . ./ OKK , SR. PS / 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 . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI