E-CITY ENTERTAINMENT P. LTD, MUMBAI V. ITO 16(1)(2), MUMBAI

ITA 2974/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8338 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 16-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 18-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BEENA SANTOSH
• Keywords: Additional evidence

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI BEFORE SHRI C.N. PRASAD (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.2974/MUM/2015 (ASSESSMENT YEAR 2010-11) E-CITY ENTERTAINMENT PVT LTD, 844/4, SHAH INDUSTRIAL ESTATE, OFF NE LINK ROAD, OPP LAXMI INDUSTRIAL ESTATE, ANDHERI (W), MUMBAI-53 VS INCOME TAX OFFICER, WD.16(1)(2), MUMBAI PAN NO. AAACE5215A ( APPELLANT) (RESPONDENT) APPELLANT BY SHRI JAY BHANSALI RESPONDENT BY SMT. BEENA SANTOSH DATE OF HEARING : 16-02-2017 DATE OF ORDER : 27-02-2017 O R D E R PER ASHWANI TANEJA, AM :- THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-4, MUMBAI [HER EINAFTER CALLED CIT(A)] PASSED AGAINST THE ASSESSMENT ORDER U/S 143 (3) DATED 22-0 3-2013 ON THE FOLLOWING GROUNDS:- 1. THE LD. CIT (A) ERRED IN LAW AND FACTS IN UPHOLDING ADDITION OF RS. 54,40,286/- TO THE TOTAL INCOME OF THE ASSES SEE ON ACCOUNT OF DIFFERENCES BETWEEN RECEIPTS AS PER BOOKS OF ACCOUN TS AND RECEIPTS AS PER THE 26AS. THE REASONS GIVEN BY HIM FOR DOING SO ARE WRONG AND CONTRARY TO THE FACTS OF THE CASE AND AGAINST THE PROVISIONS OF LAW. 2. HAVING ACCEPTED THE FACTS OF THE CASE, ADDITIONAL EVIDENCES AND VARIOUS CONTENTIONS OF THE ASSESSEE, THE LD. CIT 2 ITA 2974/MUM/2015 (A) OUGHT TO HAVE DELETED THE ENTIRE ADDITION MADE BY AO SOLELY ON THE BASIS OF AMOUNTS APPEARING IN 26AS WITHOUT P ROVING RECEIPT/ ACCRUAL OF SUCH INCOME IN THE HANDS OF THE ASSESSEE . 3. THE LD. CIT (A) OUGHT TO HAVE DELETED THE ENTIRE AD DITION MADE BY AO AS IT WAS PROVED WITH EVIDENCES THAT ALL EGED INCOME APPEARING IN 26AS OF THE ASSESSEE HAS BEEN ACCOUNTE D AND OFFERED BY DEMERGED COMPANIES. 4. THE LD. CIT (A) OUGHT TO HAVE ACCEPTED THE FACT THA T HAVING ACCEPTED THE BOOK RESULTS AND IN THE ABSENCE OF ANY DEFECT IN THE BOOKS OF ACCOUNTS, THE ADDITION MADE ' BY THE AO SOLELY ON THE BASIS OF 26AS IS UNWARRANTED, ILLEGAL AND AGAINST THE PROVISIONS OF LAW. 2. IN THIS CASE, THE BRIEF FACTS ARE THAT DURING THE Y EAR ASSESSEE WAS ENGAGED IN THE BUSINESS OF ACQUIRING IMMOVABLE PROPERTIES A ND CONSTRUCTION, DEVELOPMENT AND BUILDING, FAMILY ENTERTAINMENT CENT RES CUM MALLS. ASSESSEE DEMERGED ALL ITS REAL ESTATE DIVISIONS INTO ANOTHER COMPANIES NAMELY E-CITY REAL ESTATE PVT LTD AND E-CITY PROJECTS CONSTRUCTIO NS PVT LTD. BEFORE DEMERGER, THE ASSESSEE HAD ENTERED INTO VARIOUS AGREEMENTS FO R LEASING ITS PREMISES AND FOR CMA CHARGES. VARIOUS AGREEMENTS WERE FOR LONG TERM PERIODS SPREADING TWO YEARS OR MORE AND WERE CONTINUING EVEN AFTER DE MERGER. THE PARTIES WITH WHOM THESE AGREEMENTS WERE ENTERED HAD PAID RENT TO THE DEMERGED COMPANIES BUT CONTINUED DEDUCTING TDS USING PAN OF THE ASSESSEE EVEN AFTER DEMERGER OF BUSINESS. UNDER THESE CIRCUMSTANCES, T HERE WAS MISMATCH IN THE TRANSACTIONS APPEARING IN FORM 26AS OF THE ASSESSEE AGGREGATING TO RS.2,94,73,467/- AND AS RECORDED IN THE PROFIT & LO SS ACCOUNT. UNDER THESE CIRCUMSTANCES, THE AO MADE ADDITION TO THE INCOME O F THE ASSESSEE ON ACCOUNT OF DIFFERENCE BETWEEN RECEIPTS AS PER FORM 26AS AND RECEIPTS AS SHOWN IN THE P & L ACCOUNT. IN APPEAL BEFORE CIT(A), THOUGH ASSES SEE SUBMITTED RECONCILIATION 3 ITA 2974/MUM/2015 STATEMENT, BUT THE CONFUSION STILL CONTINUED. THER EFORE, ADDITION MADE BY THE AO WAS NOT FULLY DELETED. 3. DURING THE COURSE OF HEARING BEFORE US, IT WAS SUBM ITTED BY THE LD. COUNSEL THAT ASSESSEE HAD SUBMITTED ADDITIONAL EVID ENCES AND THESE WERE SENT BY THE LD. CIT(A) TO THE AO FOR SENDING REMAND REPO RT AFTER CARRYING OUT REQUISITE EXAMINATION AND BUT AO DID NOT CONSIDER T HESE EVIDENCES PROPERLY. OUR ATTENTION WAS DRAWN ON THE VARIOUS PAGES OF THE PAPER BOOK SHOWING THAT COMPLETE CHARTS HAVE BEEN SUBMITTED SHOWING THAT EN TIRE INCOME HAS BEEN CREDITED IN THE P & L ACCOUNT BY THE RESPECTIVE COM PANIES. BUT DUE TO INCORRECT RECORDING OF PAN, WRONG ENTRIES HAVE BEEN PUT IN FORM 26AS. IT WAS SUBMITTED THAT IF AN OPPORTUNITY IS GIVEN, ALL THES E ENTRIES CAN BE VERY WELL EXPLAINED TO THE AO AND INCORRECT ADDITION CAN BE R EMOVED. THESE AMOUNTS HAVE ALSO BEEN ASSESSED IN THE HANDS OF OTHER RESPE CTIVE COMPANIES. THEREFORE, ADDITION IN THE HANDS OF ASSESSEE COMPAN Y HAS LED TO DOUBLE ASSESSMENT OF SAME INCOME. 4. PER CONTRA, THE LD. DR SUBMITTED THAT SHE WOULD HAV E NO OBJECTION, IF THIS APPEAL IS SENT BACK TO THE FILE OF THE AO AND THESE EVIDENCES ARE PUT BEFORE THE AO FOR FRESH EXAMINATION. 5. WE HAVE GONE THROUGH THE ENTIRE FACTS AND CIRCUMSTA NCES OF THE CASE AND FIND THAT IN THIS CASE, ADDITION HAS BEEN MADE DUE TO CONFUSION WHICH HAS TAKEN PLACE AFTER THE EXERCISE OF DEMERGER OF THE A SSESSEE COMPANY INTO THREE COMPANIES. THOUGH ASSESSEE MADE AN ATTEMPT TO FURN ISH REQUISITE RECONCILIATION STATEMENT BY WAY OF ADDITIONAL EVIDE NCE BEFORE LD. CIT(A), BUT IT APPEARS THAT THESE HAVE NOT BEEN PROPERLY EXAMINED AND ADDITION MADE IN THE ASSESSMENT ORDER HAS BEEN REPEATED. IN OUR VIEW, J USTICE AND FAIRNESS DEMANDS THAT THIS APPEAL SHOULD GO BACK TO THE FILE OF THE AO WHERE THE AO SHALL HAVE FULL LIBERTY TO EXAMINE ALL THESE EVIDEN CES AS HAVE BEEN SUBMITTED 4 ITA 2974/MUM/2015 BEFORE US SHOWING RECONCILIATION OF VARIOUS AMOUNTS BETWEEN FORM 26AS AND THE AMOUNT CREDITED IN THE P & L ACCOUNT OF ASSESSE E COMPANY AND DEMERGED COMPANIES. IF ENTRIES FOUND IN FORM 26AS HAVE BEEN CREDITED BY ANY OF THESE COMPANIES (I.E. ASSESSEE COMPANY OR DEMERGED COMPAN IES), THEN NO ADDITION SHOULD BE MADE IN THE HANDS OF ASSESSEE COMPANY. I T IS FURTHER CLARIFIED THAT CLAIM OF TDS SHALL BE ALLOWED ONLY IN THE HANDS OF THAT ENTITY WHICH HAS CREDITED RESPECTIVE INCOME IN ITS P & L ACCOUNT. WITH THESE DIRECTIONS, ALL THE GROUNDS RAISED IN THIS APPEAL ARE SENT BACK TO THE FILE OF THE AO. THE AO SHALL PASS FRESH ORDERS ON THESE ISSUES AFTER GIVING ADEQUATE OPPORT UNITY TO THE ASSESSEE AND AFTER CONSIDERING THE ENTIRE MATERIAL AS MAY BE PLA CED ON RECORD BY THE ASSESSEE. 6. AS A RESULT, THIS APPEAL IS TREATED ASS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 27 TH DAY OF FEBRUARY, 2017. SD/- SD/- (C.N. PRASAD) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT : 27 TH FEBRUARY, 2017 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , G-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES