DCIT, CC-6(2), MUMBAI V. M/s BHALCHANDRA TRADING PVT. LTD., MUMBAI

ITA 2896/MUM/2019

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7910 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 06-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: THARIAN OOMMEN
• Keywords: Business income; Loose papers
• Section: 143(3); 142(1); 153A; 143(2); 13; 68; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B MUMBAI BEFORE SHRI MAHAVIR SINGH (VICE PRESIDENT) AND SHRI S. RIFAUR RAHMAN (ACCOUNTANT MEMBER) ITA NO. 2896/MUM/2019 ASSESSMENT YEAR: 2014-15 DY. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE-6(2), ROOM NO. 1903, 19 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI-400021. VS. M/S BHALCHANDRA TRADING PVT. LTD., A/201, RAJPIPLA, OPP. STANDARD CHARTERED BANK, SANTACRUZ (W), MUMBAI-400054. PAN NO. AAECA 4138 L APPELLANT RESPONDENT REVENUE BY : MR. THARIAN OOMMEN, DR ASSESSEE BY : MR. VIJAY MEHTA, AR DATE OF HEARING : 29/04/2021 DATE OF PRONOUNCEMENT : 21/06/2021 ORDER PER S. RIFAUR RAHMAN, A.M. THE PRESENT APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-54, MUMBAI [IN SHORT CIT(A)] FOR THE ASSESSMENT YEAR 2014-15 DATED 27.12.2017 AND ARISES OUT OF ASSESSMENT COMPLETED U/S 143(3) R.W.S. 153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE BRIEF FACTS OF THE CASE ARE, THE ASSESSEE FI LED ITS RETURN OF INCOME ON 29.11.2014 DECLARING TOTAL INCOME OF RS.(17,99,09,3 37/-). A SEARCH OPERATION U/S 132 WAS CONDUCTED IN THE AHUJA GROUP OF CASES O N 25.06.2015 AND INCRIMINATING DATA IN THE FORM OF LOOSE PAPERS AND DIGITAL FORM RELATING TO TAX M/S BHALCHNDRA TRADING ITA NO 2896/M/2019 EVASION WERE FOUND AND SEIZED. ACCORDINGLY, NOTICE U/S 153A WAS ISSUED FOR THE AY 2014-15 ON 24.08.2016 AFTER RECORDING SATISFACTI ON NOTE IN THE CASE OF THE ASSESSEE AND DULY SERVED UPON THE ASSESSEE. IN RESP ONSE, ASSESSEE FILED RETURN OF INCOME TO THE NOTICE U/S 153A ON 29.12.2016 DECL ARING SAME INCOME AS PER ORIGINAL RETURN OF INCOME. SUBSEQUENTLY, THE NOTICE S U/S 143(2) AND 142(1) WERE DULY SERVED UPON THE ASSESSEE. IN RESPONSE, THE AR OF THE ASSESSEE ATTENDED AND SUBMITTED RELEVANT INFORMATION AS CALLED FOR. FACTS RELATING TO THIS ASSESSMENT YEAR AS EMANATIN G FROM THE ASSESSMENT ORDER THAT THE AO HAD MENTIONED IN THE ASSESSMENT O RDER THAT PARALLEL BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE EVIDENCED BOOKI NG OF EXPENSES IN THE FORM OF CHEQUE PAYMENT AND RECEIVING BACK CASH FROM THE SAME. THE ASSESSING OFFICER TABULATED YEAR WISE INFLATION OF EXPENSES WHERE CHE QUE PAYMENTS WERE MADE AND CASH WAS RECEIVED BACK AS UNDER : SR. NO. AY AMOUNT (IN RS.) 1. 2011 - 12 14,51,660/ - 2. 2012 - 13 8,00,000/ - 3. 2013-14 21,39,275/ - 4. 2014-15 79,37,000/ - THE INFLATION OF EXPENSES FOR EACH OF THESE YEARS IN THE ABOVE TABLE WAS ACCEPTED BY THE ASSESSEE GROUP AND THE GROUP CONCER NS HAD APPROACHED THE INCOME TAX SETTLEMENT COMMISSION WHEREIN 12% OF THE EXPENDITURE WAS OFFERED BY THEM AS INCOME. HOWEVER, ASSESSING OFFIC ER PROCEEDED TO MAKE ADDITION AT RS.79,37,000/- TOWARDS INFLATION OF EXP ENSES MADE DURING THIS ASSESSMENT YEAR. M/S BHALCHNDRA TRADING ITA NO 2896/M/2019 3. AGGRIEVED WITH THE ABOVE ASSESSMENT ORDER, ASSES SEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE SUSTAINED THE AD-HOC DISALLOWANCE @ 25% OF THE INFLATED EXPENSES. 4. AGGRIEVED WITH THE ABOVE ORDER, REVENUE PREFERRE D AN APPEAL BEFORE US RAISING FOLLOWING GROUNDS OF APPEAL : 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN HOLDING THAT THE CASH RECEIVED BY THE ASSESSEE WAS IN THE NATURE OF BUSINESS RECEIPT AND COULD NOT BE TREATED AS INCOME U/S. 68 WHEN THE ASSESSEE DID NOT DISCHARGE ITS ONUS AND THE IDENTITY, GENUINENESS OF THE TRANSACTI ON AND CREDIT WORTHINESS OF THE PARTIES HAVE REMAINED UNEXPLAINED? 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE @ 25% OF THE CASH RECE IVED WHEN NO EVIDENCE OF EXPENDITURE OF BALANCE 75% OF THE CASH WAS PRODUCED BY THE ASSESSEE AND THEREFORE GENUINENESS AND ALLOWABILITY OF THE SAME COULD NOT BE EXAMINED? 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN RESTRICTING THE DISALLOWANCE @ 25% OF INFLATED EXPE NSES WHEN NO EVIDENCE OF EXPENDITURE OF BALANCE 75% OF THE CASH WAS PRODUCED BY THE ASSESSEE AND THEREFORE GENUINENESS AND ALLOWABILITY OF THE SAME COULD NOT BE EXAMINED? 4. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE CIT(A) ERRED IN HOLDING THAT PROVISO TO SEC.115BBE CAME INTO EFFECT FROM 01.04.2017, THEREFORE, BROUGHT FORWARD BUSINESS LOSS WAS ALLOWABLE WHEN TH E WORDS 'OR SET OFF OF ANY TOSS' INSERTED IN SEC. 115BBE BY THE FINANCE ACT, 2016 W. E.F. 01.04.2017 WERE CLARIFICATORY IN NATURE AS APPARENT FROM THE EXPLANATORY NOTES TO FINANCE BILL, 2016? 5. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AT THE TIME OF HEARING, IT IS BROUGHT TO OUR NOTICE TH AT IN THE CASE OF ASSESSEES APPEAL FOR THE SAME ASSESSMENT YEAR 2014-15 WHEREIN CO-ORD INATE BENCH HAS DECIDED THE ISSUE IN ITA NO. 2978/M/2019 DATED 25.02.2021. IN THE ABOVE SAID APPEAL, M/S BHALCHNDRA TRADING ITA NO 2896/M/2019 THE CO-ORDINATE BENCH HAS SUSTAINED THE ADDITION @ 12% BASED ON THE SUBMISSIONS OF THE ASSESSEE BEFORE THE INCOME TAX S ETTLEMENT COMMISSION. SINCE, THE CO-ORDINATE BENCH HAS ALREADY CONSIDERED THE SIMILAR ISSUE AND ADJUDICATED THE ISSUE BY PARTLY ALLOWING GROUNDS RA ISED BY THE ASSESSEE. AS THE SAME ISSUE INVOLVED IN THE DEPARTMENT APPEAL AND TH E CO-ORDINATE BENCH HAS ALREADY CONSIDERED THE FACTS ON RECORD AND DEEM IT FIT TO REDUCE THE ADDITION BASED ON THE INFORMATION DECLARED BEFORE INCOME TAX SETTLEMENT COMMISSION. ACCORDINGLY, THE APPEAL FILED BY THE REVENUE BECOME S INFRUCTUOUS. 6. THEREFORE, THE GROUND NO. 1 TO 3 RAISED BY THE R EVENUE ARE HEREWITH DISMISSED. WITH REGARD TO GROUND NO. 4, WE NOTICE THAT THE CO- ORDINATE BENCH AND LD. CIT(A) HAS TREATED THE ON MONEY INCOME AND INFLATIO N OF EXPENSES AS PART OF BUSINESS INCOME. THEREFORE, THE MUTE QUESTION IS WH ETHER THE INCOME FOUND DURING SEARCH SHOULD BE CHARGED TO TAX U/S 68 OR PA RT OF BUSINESS INCOME. THE CO-ORDINATE BENCH HAS ALREADY CONSIDERED THE ISSUE AND CAME TO CONCLUSION THAT 12% OF THE ON MONEY RECEIPT TO BE CONSIDERED AS T HE INCOME OF THE ASSESSEE THAT MEANS IT IS PART OF BUSINESS INCOME. HENCE, TH ERE IS NO INVOCATION OF SECTION 68 BY THE LD. CIT(A) OR BY ITAT. THEREFORE, THE PRO VISION OF SECTION 115BBE HAS NO APPLICATION. ACCORDINGLY, THIS GROUND IS DISMISS ED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/06/2021. SD/- SD/- ( MAHAVIR SINGH ) ( S. RIFAUR RAHMAN ) VICE PRESIDENT ACCOUNTANT MEMBER M/S BHALCHNDRA TRADING ITA NO 2896/M/2019 MUMBAI; DATED: 21/06/2021 RAHUL SHARMA, SR. P.S. 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. BY ORDER, //TRUE COPY// (DY./ASSISTANT REGISTRAR) ITAT, MUMBAI