A.C.I.T.15(2), MUMBAI V. SHREE CHAMUNDA BUILDERS, MUMBAI

ITA 2694/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 72017 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 20-11-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 07-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: VIPUL M SHAH
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E , MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 2694/M/2011 ASSESSMENT YEAR: 2007 - 08 ASST. COMMISSIONER OF INCOME - TAX 15(2), MATRU MANDIR, RO OM NO:113, TARDEO MUMBAI 400 00 8 VS. M/S. SHREE CHAMUNDA BUILDERS, SHOP NO.1, GOMANTAK KUTIR SOCIETY, RAM KUMAR THAKUR ROAD, DAHISAR (EAST) , MUMBAI 400 068 PAN: AAXFS1910L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIPUL M. SHAH, A.R. REVENUE BY : SHRI M.L. PERUMAL, D.R. DATE OF HEARING : 2 0 . 11 . 2013 DATE OF PRONOUNCEMENT : 31.12.2013 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAIN ST THE ORDER OF THE CIT(A) DATED 27.01.11 RELEVANT TO ASSESSMENT YEAR 2007 - 08. THE GROUNDS OF APPEAL READ AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.16,04,0 00/ - MADE ON ACCOUNT OF ESTIMATION OF INCOME @ 10% OF TOTAL SALE CONSIDERATION IGNORING THE FACT THAT ASSESSEE FAILED TO PRODUCE THE DETAILS OF EXPENSES CLAIMED. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRE D IN LAW BY DELETING THE ADDITION OF RS. 19,67,000/ - MADE U/S. 40(A)(IA) OF THE INCOME TAX ACT, 1961 IN RESPECT OF EXPENSES OF BROKERAGE AND LEGAL AND PROFESSIONAL FEES ON WHICH NO ITA NO.2694/M/2011 M/S. SHREE CH AMUNDA BUILDERS 2 TDS WAS MADE, IGNORING THE FACTS THAT ASSESSEE FAILED TO PRODUCE ANY PROOF O F TDS MADE. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) HAS ERRED IN LAW BY DELETING THE ADDITION OF RS.7,67,249/ - MADE IN RESPECT OF PROPERTY TAX PAID, IGNORING THE FACTS THAT THESE EXPENSES WERE COVERED U/S.43B(A) OF THE INCOME TAX ACT, 1961. 2. THE ADDITIONS RELATING TO THE FIRST ISSUE WERE MADE BY THE AO UNDER SECTION 144 OF THE INCOME TAX ACT ON ESTIMATION BASIS. ACCORDING TO THE AO THE ASSESSEE HAD NOT COMPLIED WITH THE SHOW CAUSE NOTICE DATED 13.11.09. IN T HE ABSENCE OF ANY EXPLANATION , THE AO OBSERVED THAT THE ASSESSEE DURING THE RELEVANT FINANCIAL YEAR HAD SOLD FLATS FOR TOTAL CONSIDERATION OF RS. 1,60,49,000/ - . THE ASSESSEE HAD CLAIMED EXPENSES AGAINST THE SAME BUT SINCE NO DETAILS WERE SUBMITTED IN RESP ONSE TO NOTICE DATED 13.11.09, HE THEREFORE ESTIMATED THE INCOME OF THE ASSESSEE @ 10% OF THE TOTAL SALE CONSIDERATION AMOUNTING TO RS.1,60,49,000/ - . 3. IN FIRST APPEAL BEFORE THE LD. CIT(A) , IT WAS SUBMITTED BY THE ASSESSEE THAT NO SUCH SHOW CAUSE NOTI CE DATED 13.11.09 WAS EVER SERVED UPON THE ASSESSEE AND THERE WAS NO FAILURE ON THE PART OF THE ASSESSEE IN ATTENDING THE PROCEEDINGS. THE ESTIMATION OF INCOME MADE BY THE AO UNDER SECTION 144 OF THE ACT WAS BAD IN LAW. ON MERITS IT WAS CONTENDED THAT IN THE PRECEDING YEAR , THE INCOME TAX OFFICER HAD PASSED THE ASSESSMENT ORDER ACCEPTING THE GROSS PROFIT AND NET PROFIT RATIO OF THE ASSESSEE. THE AO , EVEN WITHOUT POINTING OUT ANY DEFECT IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE WHICH WERE DULY AUDITED , WR ONGLY MADE THE ADDITION. 4. THE LD. CIT(A) AFTER TAKING INTO CONSIDERATION OF THE SUBMISSIONS OF THE ASSESSEE AND GOING THROUGH THE RECORDS OBSERVED THAT THERE WAS NO EVIDENCE TO ITA NO.2694/M/2011 M/S. SHREE CH AMUNDA BUILDERS 3 SHOW THAT THE NOTICE DATED 13.11.09 WAS EVER SERVED BY THE AO UPON THE ASS ESSEE. HE FURTHER OBSERVED THAT THE AO ESTIMATED THE 10% PROFIT ON THE SALE CONSIDERATION WITHOUT ANY VALID BASIS. HE FURTHER OBSERVED THAT THE AO HAD NOT INDICATED IN THE ASSESSMENT ORDER ANYTHING , AS TO WHY , THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE NO T RELIABLE OR THAT THERE WAS ANY DEFECT IN THE BOOKS OF ACCOUNTS , WHICH WERE WELL AUDITED AND THE AUDIT REPORT WAS SUBMITTED ALONG WITH THE RETURN OF INCOME. THE ONUS WAS ON THE AO TO PROVE THAT THE ASSESSEE HAD EARNED MORE INCOME THAN THAT WAS SHOWN IN T HE BOOKS OF ACCOUNTS. RELYING UPON VARIOUS CASE LAWS OF THE HONBLE HIGH COURTS AND HONBLE SUPREME COURT , HE DELETED THE ADDITIONS SO MADE BY THE AO. 5. THE LD. D.R. BEFORE US COULD NOT POINT OUT AS TO WHY THE WELL REASONED ORDER OF THE CIT(A) SHOULD BE SET ASIDE. THE POWERS OF THE LD. CIT(A) ARE COEXTENSIVE WITH THAT OF AO. THE LD. CIT(A) AFTER GOING THROUGH THE RECORDS HAS PASSED A WELL REASONED ORDER OBSERVING THAT IN THE ABSENCE OF ANY EVIDENCE TO SHOW THAT THE ASSESSEE HAD EARNED MORE INCOME TH AN THAT HAD BEEN SHOWN IN THE BOOKS OF ACCOUNT AND WITHOUT ANY DEFECT BEING POINTED OUT BY THE AO IN THE BOOKS OF ACCOUNT , THERE WAS NO REASON FOR THE AO TO MAKE SUCH ADDITIONS. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) AND AS SUCH THE F INDING S OF THE LD. CIT(A) ON THIS ISSUE ARE UPHELD. 6. THE NEXT ISSUE IS RELATING TO THE DELETION OF ADDITION OF RS.19,67,000/ - MADE BY THE AO UNDER SECTION 40(A)(IA) OF THE INCOME TAX ACT. THE AO DISALLOWED THE EXPENDITURE OF BROKERAGE AND LEGAL PROF ESSIONAL FEES AMOUNTING TO RS.19,67,000/ - OBSERVING THAT NO TDS WAS DEDUCTED/PAID BY THE ASSESSEE. IN APPEAL BEFORE THE LD. CIT(A) , THE ASSESSEE FROM THE RECORDS PROVED THAT DUE TDS WAS MADE ON BROKERAGE AND THE SAME WAS CLARIFIED TO THE AO BY LETTER DATE D 09.12.09 BUT T HE AO FAILED TO TAKE NOTICE OF THE SAME. AS ITA NO.2694/M/2011 M/S. SHREE CH AMUNDA BUILDERS 4 REGARDS THE PROFESSIONAL FEES , IT WAS SUBMITTED THAT THE SAME WAS PAID TO TWO PERSONS AND THE AMOUNT PAID WAS MUCH BELOW THE LIMIT PRESCRIBED FOR DEDUCTION OF TDS AND HENCE NO TDS WAS DEDUCTED ON THE PROFESSIONAL FEES PAID. THE LD. CIT(A) , AFTER GOING THROUGH THE RECORDS , OBSERVED THAT THE TDS WAS DULY MADE BY THE ASSESSEE RELATING TO BROKERAGE FEES AND NO TDS WAS DEDUCTABLE ON THE AMOUNT PAID AS PROFESSIONAL FEES. HE THEREFORE DELETED THE ADDIT IONS SO MADE BY THE AO. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS RESPECT ALSO. 7. THE NEXT ISSUE IS RELATING TO THE DELETION OF THE ADDITION OF RS.7,67,249/ - WHICH WAS MADE BY THE AO IN RESPECT OF PROPERTY TAX PAID , OBSERVING THAT THE SAID EXPENSES WERE COVERED UNDER SECTION 43 B (A) OF THE INCOME TAX ACT . THE AO IN THE ASSESSMENT ORDER OBSERVED THAT THE APPELLANT HAD PAID THE PROPERTY TAX BUT NO PROOF REGARDING THE SAME WAS SUBMITTED. HE THEREFORE DISALLOWED THE AMOUNT PAID AS PROPERTY TAX AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. IN FIRST APPEAL , THE LD. CIT(A) OBSERVED THAT THE AO HAD WRONGLY DISALLOWED THE GENUINE EXPENDITURE I.E. PROPERTY TAX OF RS.7,67,249/ - WHICH WAS DULY PAID BY THE ASSESSEE TO THE LOC AL AUTHORITY. THE SAME WAS PAID THROUGH ACCOUNT PAYEE CHEQUES AND FURTHER IT WAS REFLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. HE THEREFORE DELETED THE ADDITIONS SO MADE BY THE AO IN THIS RESPECT. 8 . THE LD. CIT(A) , AFTER PROPER APPRECIATION OF T HE RECORDS , OBSERVED THAT THE PROPERTY TAX WAS DULY PAID BY THE ASSESSEE THROUGH BANKING CHANNEL/ACCOUNT PAYEE CHEQUES AND THE SAME WAS DULY REFLECTED IN THE BOOKS OF ACCOUNT OF ASSESSEE AND THERE WAS NO REASON TO DISBELIE VE THE SAME. THE LD. ITA NO.2694/M/2011 M/S. SHREE CH AMUNDA BUILDERS 5 D.R. COULD N OT BRING OUT ANY POINT WHICH MAY JUSTIFY DEPARTURE FROM THE WELL REASONED OBSERVATIONS MADE BY THE LD. CIT(A). ACCORDINGLY THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE ARE ALSO HEREBY UPHELD. 9. IN THE RESULT , APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.12 .2013. SD/ - SD/ - ( D. KARUNAKARA RAO ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 31.12. 2013. * KISHOR E COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.