ITO WD 21(1)(3), MUMBAI V. MAHENDRAKUMAR D PALEJA, MUMBAI

ITA 2628/MUM/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88214 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 08-07-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: PRAKASH L PATHODE
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE SHRI JOGINDER SINGH , JM AND SHRI SANJAY ARORA , AM ./ I. T.A. NO. 2628/MUM/2013 ( / ASSESSMENT YEAR: 2006 - 07 ) ITO, WARD 21 (1)(3), ROOM NO. 605, 6 TH FLOOR, C - 10, PRATYAKSHAKAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI / VS. MAHENDRAKUMAR D . PALEJA PROP: MAHESH EXPORTS, 63/4, BRIJ KAMAL, SWASTIK CHS, N. S. ROAD NO. 4, JUHU SCHEME, VILE PARLE (W), MUMBAI - 400 056 ./ ./ PAN/GIR NO. ACVPP 5926 B ( / APPELLANT ) : ( / RESPONDENT ) / APPELLANT BY : NONE / RESPONDENT BY : SHRI PRAKASH L. PATHODE / DATE OF HEARING : 15.02.2016 DATE OF ORDER : 19 .02.2016 / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN A PPEAL BY THE REVENUE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOM E TAX (APPEALS) - 32 , MUMBAI (CIT(A) FOR SHORT) DATED 03.1.2013 , PARTLY ALLOWING THE A SSESSEES , AN INDIVIDUAL, APPEAL CONTESTING ITS ASSESSMENT U/S.14 4 OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 2006 - 07 VIDE ORDER D ATED 18.12.2008 . 2. NONE APPEARED FOR AND ON BEHALF OF THE ASSESSEE - RESPONDENT WHEN THE APPEAL WAS CALLED OUT FOR HEARING , NOR ANY ADJOURNMENT APPLICATION STANDS RECEIVED. EVEN ON 2 ITA NO. 2628/MUM/2013 (A.Y. 2006 - 07) ITO VS. MAHENDRAKUMAR D. PALEJA AN EARLIER OCCASION (08.7.2015), THERE HAD BEEN NO APPEARANCE ON THE ASSESS EES BEHALF, EVEN AS THE ASSESSEE HAS APPOINTED A COUNSEL TO REPRESENT HIM (LETTER OF AUTHORITY ON RECORD). THE APPEAL IS OUTSTANDING SINCE LONG. IT WAS UNDER THE SE CIRCUMSTANCES CONSIDERED FIT AND PROPER TO PROCEED WITH THE HEARING AND DECIDE THE APPEAL A FTER HEARING THE PARTY BEFORE US AND CONSIDER ING THE MATERIAL ON RECORD. 3. THE PRINCIPAL ISSUE, AGITATE D PER ITS G ROUNDS 1 TO 4 BY THE REVENUE , IS TOWARD THE RESTRICTION OF THE DISALLOWANCE ON ACCOUNT OF EXPENDITURE CLAIMED BY THE ASSESSEE IN THE COMPUT ATION OF HIS BUSINESS INCOME FOR THE YEAR, FROM 50% TO 10% THEREOF, I.E., FROM RS.172.15 LACS TO RS.1,63,486/ - . 4. WE HAVE HEARD THE PART Y BEFORE US , AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT WHILE THE A SSESSING OFFICER (A .O. ) HAS MADE A DISALLOWA NCE AT 50% OF THE EXPENDITURE CLAIMED , IN THE ABSENCE OF THE ASSESSEE FURNISHING ANY EXPLANATION IN FACT MAKING NO REPRESENTATI ON BEFORE HIM IN THE ASSESSMENT PROCEEDINGS , RESULTING IN HIS FRAMING THE ASSESSMENT U/S. 144, THE LD. CIT(A) HAS, IN ARRIVING AT HIS ESTIMATE, CONSIDERED THE PAST HISTORY OF THE CASE AS WELL AS THE MATERIALS/EVIDENCE S ADDUCED BY THE ASSESSEE IN THE REMAND PROCEEDINGS THE ASSESSMENT BEING AN EX PARTE ASSESSMENT. THE ASSESSEE, AS STATED BY THE LD. CIT(A) , HAD REPORTED AN ENHANCED EARNING (IN TERMS OF GROSS PROFIT ) , I.E., AT 5.08% AS AGAINST 4.15 % FOR THE IMMEDIATELY PRECEDING YEAR , DESPITE AN INCREASE IN THE TURNOVER BY 300% VIS - - VIS THE SAID YEAR . NO DISALLOWANCE ON ACCOUNT OF PURCHASE S WAS, ACCORDINGLY , WARRANTED IN THE FACTS A ND CIRCUMSTANCES OF THE CASE. WITH REGARD TO THE MISCELLANEOUS ADMINISTRATIVE EXPENDITURE, VIZ. BROKERAGE, TRANSPORTATION, SELLING AND ADMINISTRATIVE, TOTALING TO RS.16.35 LACS, HE RESTRICTED THE DISALLOWANCE TO 10% OF THE EXPENSES, I.E., AT RS.1,63,486/ - , N OTING A JUSTIFICATION FOR A SUBSTANTIAL INCREASE THEREIN WITH REFERENCE TO THE P RECEDING YEAR S ON ACCOUNT OF A QUANTUM JUMP IN THE TURNOVER. EVEN IN THE CASE OF A BEST JUDGMENT ASSESSMENT, AS IN THE INSTANT CASE, THE ASSESSEE AUTHORITY IS REQUIRED TO MAK E AN OBJECTI VE ASSESSMENT, TAKING INTO ACCOUNT ALL THE RELEVANT FACT AND CIRCUMSTANCES. FURTHER, SOME GUESS WORK, 3 ITA NO. 2628/MUM/2013 (A.Y. 2006 - 07) ITO VS. MAHENDRAKUMAR D. PALEJA IT MAY BE APPRECIATED, IS INT RINSIC TO ASSESSMENT . WHAT , THEREFORE , IS TO BE SEEN IS THE REASONABILITY , IN THE GIVEN FACTS AND CIRCUMSTANCES, OF THE ESTIMATE BEING IMPUGNED. THE SAME , IN THE PRESENT CASE, HA S BEEN REPLENISHED BY THE MATERIAL ADDUCED IN THE REMAND PROCEEDINGS. NO CASE FOR HIGHER DISALLOWANCE HAS BEEN MADE BEFORE US. WE, UNDER THE CIRCUMSTANCES, HAVE NO HESITATION TO DECLINE INTER FERENCE . THE RELIANCE BY THE REVENUE ON THE DECISION IN VIJAY PROTEINS LTD. VS. ASST. CIT [1 9 96 ] 58 ITD 428 (AHD. ) ; THE MATTER BEING FACTUAL , WOULD BE OF NO ASSISTANCE TO THE ASSESSEE. W E DECIDE ACCORDINGLY. 5. THE SECOND ISSUE , RAISED PER G ROUND # 5, A GITATES THE DEL ETION O F AN ADDITION QUA CASH DEPOSITS (AT RS.10,51,500) IN THE ASSESSEES SAVING S BANK ACCOUNT DURING THE YEAR . THE SAME WAS EXPLAINED IN THE APPELLATE PROCEEDINGS TO BE OUT OF THE SALE PROCEEDS (RS.274.77 LACS), ALSO FURNISHING A CASH FLOW STATEMENT, WHICH FOUND ACCEPTANCE BY THE LD. C IT(A) , FURTHER NOTING THAT T HE SAID ISSUE , ALSO REMAND ED BACK, HAD NOT BEEN ADVERSELY COMMENTED UPON BY THE A.O. , EVEN AS THE ASSESSEES BOOKS WERE BEFORE HIM (REFER PARA 3.5 OF THE IMPUGNED ORDER). AGGRIEVED, THE REVENUE IS IN APPEAL. 6. WE HAVE HEARD THE PARTY BEFORE US, AND PERUSED THE MATERIAL ON RECORD. THE REALIZATION OF THE SALE PROCEEDS, ORDINARILY THROUGH THE BANK ACCOUNT/S, WOULD ONLY BE IN THE BOOKS OF ACCOUNT OF THE ASSESSEES BUSINESS. THEIR UTI LIZATION , THEREFORE, FOR THE PURPOSE S OF DEPOSIT IN HIS SAVING BANK ACCOUNT, NOT F OR MING PART OF THE SAID BOOKS, COULD ONLY BE THROUGH PERSONAL WITHDRAWALS . THE ADEQUACY OF SUCH WITHDRAWALS, WHICH ARE PRIMARILY FOR PERSONAL PURPOSES, HAS NOWHERE BEEN EXAMI NED. THE LD. CIT(A) STATING OF THE ASSESSEES BOOKS OF ACCOUNT AND THE SAID BANK ACCOUNT BEING BEFORE THE A.O. IN THE REMAND PROCEEDINGS , WOULD THEREFORE BE OF LITTLE CONSEQUENCE. DEPOSIT OF CASH IN THE ASSESSEES SAVING S BANK (S /B) ACCOUNT , ON SPECIFIED D ATES , IS ADMITTED. THE SAME IS TO BE EXPLAINED AS TO IT S SOURCE . A CASH FLOW STATEMENT IS ONLY A N AGGREGATE STATEMENT OF FUNDS, ARISING FROM DIFFERENT SOURCES, DURING THE STATEMENT 4 ITA NO. 2628/MUM/2013 (A.Y. 2006 - 07) ITO VS. MAHENDRAKUMAR D. PALEJA PERIOD (YEAR), WITH THE CORRESPONDING AVENUES WHERE AT THE SAME STAND APPLI ED DURING THE SAID PERIOD. THE SAME IS USUALLY DRAWN FROM THE RECORDED, PRIMARY DATA, AS (SAY) TH E CASH AND BANK BOOK S OF THE ASSESSEES BUSINESS IN THE INSTANT CASE. THE ASSESSEES S/B ACCOUNT DOES NOT FORM PART OF THE ASSESSEES ACCOUNTS - IN WHICH CASE THE DEPOSIT, WHERE DISCLOSED, WOULD FIND REFLECTION IN THE ASSESSEES CASH - BOOK ITSELF, SO THAT THE SAID DEPOSIT / S ON DEFINED DATE/S, COULD ONLY BE EXPLAINED FROM THE CASH WITHDRAWN FOR PERSONAL PURPOSES FROM THE SAID BOOK. R ELIEF CANNOT BE ALLOWED ONLY ON THE BASIS OF PRESUMPTION/S OR IN THE ABSENCE OF A DEFINITE FINDING/S , AS ALLOWED B Y THE LD. CIT(A) . W E, ACCORDINGLY, ONLY CONSIDER IT PROPER TO SET - ASIDE THE IMPUGNED ORDER QUA THIS ADDITION, RESTORING THE MATTER BACK T O THE A.O. FOR FRESH ASSESSMENT IN ACCORDANCE WITH LAW, ISSUING DEFINITE FINDINGS , AND AFTER ALLOWING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING . WE DECIDE ACCORDINGLY. 7. IN THE RESULT, THE R EVENUE S APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPE N COURT ON FEBRUAR Y 15, 201 6 SD/ - SD/ - ( JOGINDER SINGH ) (S ANJAY ARORA) / J UDICIAL MEMBER / A CCOUNTANT MEMBER MUMBAI ; DATED : 19 . 02 .201 6 . . ./ ROSHANI , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT - CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE 5 ITA NO. 2628/MUM/2013 (A.Y. 2006 - 07) ITO VS. MAHENDRAKUMAR D. PALEJA / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI