CLASSY CONTAINERS, MUMBAI V. ASST CIT 21(1), MUMBAI

ITA 275/MUM/2017

• Counselvise Citation: [2018] 122 COUNSELVISE.COM (IT) 4072 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 13-01-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ABI RAMA KARTIKEYAN
• Assessee Lawyers: NAVEEN KUMAR MISHRA
• Keywords: Principle of natural justice
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 275 / MUM/20 17 ( ASSESSMENT YEAR : 2011 - 12 ) M/S. CLASSY CONTAINERS 62/63, RATAN JYOT INDUSTRIAL ESTATE, IRLA GAOTHON LANE VILE PARLE (W) MUMBAI VS. ASST. CIT 25(2) MUMBAI PAN/GIR NO. AABFC2548Q ( APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY SHRI NAVEEN KUMAR MISHRA REVENUE BY SHRI ABI RAMA KARTIKEYAN DATE OF HEARING 04 / 10 /201 8 DATE OF PRONOUNCEMENT 10 / 10 /201 8 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 37, MUMBAI DATED 20/10/2016 FOR A.Y.2011 - 12 IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 2. FIRST GRIEVANCE OF ASSESSEE RELATES TO ADD ITION OF RS.7,88,545/ - ON ACCOUNT OF DISCREPANCY IN CREDITORS BALANCE. 3. RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. 4. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED THE RETURN FOR A.Y. 2011 - 12 DECLARING TOTAL INCOME AT RS.39,69,1 91 / - . THE RETURN WAS ITA NO. 275/MUM/2017 M/S. CLASSY CONTAINERS 2 PROCESSED U/S 143(1) OF THE IT. ACT. THEREAFTER, THE CASE WAS SELECTED FOR SCRUTINY BY ISSUE OF NOTICE U/S. 143(2) OF THE INCOME TAX ACT. IN RESPONSE, THE ASSESSEE ATTENDED THE ASSESSMENT PROCEEDINGS AND FURNISHED THE DETAILS. THE ASSE SSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF MANUFACTURING OF PLASTIC PACKAGING MATERIAL AND INCOME FROM OTHER SOURCES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT IS. SEEN BY A.O. THAT THE ASSESSEE HAS SHOWN SUNDRY CREDITORS AT RS.2,23,86,232 /. THE A.O. HAS ISSUED NOTICE U/S.1 33(6) OF THE I.T. ACT, 1961 FOR VERIFICATION OF THE SAID CLAIM. ON PERUSAL OF THE REPLIES FROM THE ASSESSEE, IT WAS OBSERVED BY THE A.O. THAT SUNDRY CREDITOR IN THE CASE M/S. PUJA ROADLINES IS REFLECTED AT RS.5,41,200/ - W HEREAS THE AMOUNT DECLARED BY THE AS SESSEE IN HIS RETURN OF INCOME WAS RS.13,27,745/ - . THUS, THERE WA S DISCREPANCY IN RESPECT OF SUNDRY CREDITOR SHOWN BY THE ASSESSEE. HENCE, THE DIFFERENCE OF RS.7,88,545/ - ON ACCOUNT OF SUNDRY CREDITOR WAS DISALLOWED BY T HE A.O. AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESS E E. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ADDITION. ASSESSEE IS IN FURTHER APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. AS PER CONTEN TION OF LEARNED AR, M/S. POOJA ROAD LINES HAD CHARGE D EXCESS AMOUNT AGAINST AGREED BETWEEN ASSESSEE AND THE SAID POOJA ROAD LINES. WHEN THIS FACT WAS BROUGHT TO NOTICE OF SAID M/S. POOJA ROAD LINES THEY SHOWN DISPLEASURE AND REFUSED TO EITHER GIVE CREDIT O R SETTLE THE MATTER. THE MATTER KEPT ON PROLONGING. THEREFORE AS ITA NO. 275/MUM/2017 M/S. CLASSY CONTAINERS 3 ON 31/3/11 THE ASSESSEE SHOWN A SUM OF RS.13,27,745/ - WHICH IS PAYABLE AS PER BILLS TO THE SAID M/S. POOJA ROAD LINES. SINCE THE ASSESSEE WAS GIVE N THE COPY OF FINANCIAL STATEMENTS TO BANKERS AND TO THE PROSPECTIVE CUSTOMERS ASSESSEE HAD SHOWN THE SAID AMOUNT OF RS.13,27,745/ - AS PAYABLE. ULTIMATELY THE MATTER GOT SETTLED IN THE MID MONTH OF JUNE, WHEREBY THE A SSESSEE ARRIVED AT A SETTLEMENT AND THE SAID M/S. POOJA ROADLINES AGREED TO GIVE CRE DIT BY REDUCING THE AMOUNT BY RS.7,86,545/ - FROM THE AMOUNT RECEIVABLE. IT WAS FURTHER CONTENDED BY LEARNED AR THAT B ECAUSE OF THE AFORESAID DISPUTE ASSESSEE NOT ONLY STOPPED MAKING PAYMENT BUT ALSO AVAILING SERVICES, FROM SAID M/S. POOJA ROAD LINES. THERE FORE AFTER SETTLEMENT THE ASSESSEE DEBITED THE SUM OF RS.7, 86 ,545 / - TO M/S. POOJA ROAD LINES BY PASSING NECESSARY JOURNAL ENTRY ON 15/06/2011 . BECAUSE OF THE SAID REASON THERE REMAINED DIFFERENCE BETWEEN THE AMOUNT PAYABLE. SINCE ASSESSEE HAD GIVEN THE COP Y OF FINANCIAL STATEMENTS TO BANKERS IT WAS NOT CORRECT TO CHANGE THE FIGURE ON 15/6/2011 I.E. IN THE FY 2011 - 12 RELEVANT TO AY 2012 - 13. SINCE ASSESSEE HAD GIVEN THE EFFECT OF SAID AMOUNT IN NEXT ASSESSMENT YEAR TAXATION OF THE SAME IN THE IMPUGNED ASSESSM ENT YEAR WILL AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME TWICE, WHICH IS AGAINST THE PRINCIPLE OF NATURAL JUST ICE AND LAW . IN THE INTEREST OF NATURAL JUSTICE AND TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE, WE RESTORE THE MATTER BACK TO THE FILE OF THE AO FOR VERIFICATION AND FOR DECIDING THE ISSUE AFRESH AS PER LAW. ITA NO. 275/MUM/2017 M/S. CLASSY CONTAINERS 4 6. NEXT GRIEVANCE OF ASSESSEE RELATES TO ADHOC DISALLOWANCE OF 15% OF THE EXPENDITURE INCURRED ON TELEPHONE, CONVEYANCE AND TRAVELLING ETC., KEEPING IN VIEW THE NATURE OF ASSESSEES BUSINESS VIS - - VIS EXPENDITURE INCURRED ON THESE HEADS, WE DIRECT THE AO TO RESTRICT THE DISALLOWANCE TO THE EXTENT OF 10%. WE DIRECT ACCORDINGLY. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 / 10 /201 8 SD/ - ( SANDEEP GOSAIN ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 10 / 10 /201 8 KARUNA SR. PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ( ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//