SANGHAVI REALTY P.LTD, MUMBAI V. DCIT CIR 5(3)(1), MUMBAI

ITA 3021/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9619 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2013-2014
• Appeal Filed On: 27-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Accommodation entries
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI P K BANSAL, VICE PRESIDENT & SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.3021/MUM/2017 ASSESSMENT YEAR : 2013-14 M/S. SANGHAVI REALTY P LTD OFFICE NO.1, 1 ST FLOOR, C WING PURUSHOTTAM BLDG., TRIBHUVAN ROAD MUMBAI 400 004 PAN AAGCS0178J VS. DCIT CIRCLE 5(3)(1) MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : SHRI PURUSHOTTAM KUMAR DATE OF HEARING : 05.09 .2017 DATE OF PRONOUNCEMENT : 05 .0 9 .2017 O R D E R PER P K BANSAL, VICE-PRESIDENT: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A)-10, MUMBAI DATED 16.01.2017, FOR A.Y. 2013-1 4. THE ONLY ISSUE INVOLVED IN THIS APPEAL RELATES TO THE SUSTENANCE O F THE DISALLOWANCE OF INTEREST PAYMENT AMOUNTING TO ` 2,41,500/- MADE BY THE ASSESSING OFFICER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF BUILDERS AND DEVELOPERS. THE RETUR N FOR THE IMPUGNED ASSESSMENT YEAR WAS FILED BY COMPUTING BOOK PROFITS U/S. 115JB(2) AT ` 69,47,820/-. SUBSEQUENTLY, THE ASSESSMENT WAS COM PLETED U/S. 143(3) AT ITA NO.3021/MUM/2017 SANGHAVI REALTY 2 ` 7,189,320/-. THE ASSESSING OFFICER ON THE BASIS OF THE INFORMATION RECEIVED FROM THE INVESTMENT WING OF THE DEPARTMENT NOTED TH AT THE ASSESSEE HAS TAKEN ACCOMMODATION ENTRIES OF BOGUS SALES/PURCHASE S/LOANS & ADVANCES FROM M/S. SANKHALA EXPORTS PVT. LTD. & M/S. SANKHAL A PROPERTIES PVT. LTD., WHICH CONCERNS ARE RUN BY BHANWARLAL JAIN GROUP, IN THE A.YS. 2007-08 AND 2008-09. THERE HAS BEEN A SEARCH AND SEIZURE OPERAT ION IN THE CASE OF BHANWARLAL JAIN GROUP. IN THE STATEMENT RECORDED U /S. 132(4), IT WAS STATED BY THEM THAT THEY ONLY PROVIDED ACCOMMODATION ENTRI ES BUT NEVER SUPPLIED ANY GOODS OR GAVE ANY LOANS TO MAKE INVESTMENT IN A NY CONCERN. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE WAS PAYIN G INTEREST TO THESE CONCERNS ON THE OUTSTANDING AMOUNT. THEREFORE THE ASSESSMENT FOR A.Y. 2010-11 AND 2011-12 WERE RE-OPENED U/S. 147 AND ULT IMATELY ALL THESE ASSESSMENTS ALONG WITH THAT OF THE IMPUGNED ASSESSM ENT YEAR WERE COMPLETED AND THE INTEREST WERE DISALLOWED. THE AS SESSEE WENT IN APPEAL BEFORE THE CIT(A) AND CHALLENGED THE RE-OPENING OF ASSESSMENT FOR A.YS. 2010-11 AND 11-12 AND THE DISALLOWANCE OF INTEREST IN A.YS. 2010-11, 2011- 12, 2013-14. THE CIT(A) DISMISSED THE GROUND REGAR DING THE VALIDITY OF RE- OPENING OF THE ASSESSMENT FOR A.YS. 2010-11 AND 201 1-12. HE ALSO CONFIRMED THE DISALLOWANCE OF INTEREST IN EACH OF THE ASSESSM ENT YEARS BY HIS CONSOLIDATED ORDER DATED 16.01.2017 FOR ALL THE THR EE YEARS. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.3021/MUM/2017 SANGHAVI REALTY 3 3. NONE APPEARED ON BEHALF OF THE ASSESSEE EVEN THO UGH THE NOTICE WAS SERVED. WE, THEREFORE, DECIDE TO DISPOSE OF THE AP PEAL AFTER HEARING THE LEARNED DR AND GOING THROUGH THE ORDERS OF THE AUTH ORITIES BELOW. WE NOTED THAT ASSESSEE HAS TAKEN LOAN FROM M/S. SANKHALA EXP ORTS PVT. LTD. AND SANKHALA PROPERTIES PVT. LTD. OF ` 25 LACS EACH IN A.Y. 2007-08 AND ` 25 LACS MORE FROM SANKHALA EXPORTS PVT. LTD. THE DISALLOWAN CE OF INTEREST HAS BEEN MADE BY THE ASSESSING OFFICER IN EACH OF THE ASSESS MENT YEARS I.E. 2010-11, 2011-12 AND 2013-14. THE ASSESSEE HAS GONE IN APPE AL BEFORE THE CIT(A) ABOUT THE VALIDITY OF RE-OPENING OF ASSESSMENT FOR A.YS 2010-11 AND 2011-12 AND ALSO ON MERIT ABOUT THE DISALLOWANCE OF INTERES T ON THESE LOANS IN EACH OF THE A.YS. 2010-11, 2011-12 AND 2013-14. THE CIT(A) HELD THE REOPENING TO BE VALID FOR A.YS. 2010-11 AND 2011-12 AND, ON MERI T, CONFIRMED THE DISALLOWANCE OF INTEREST IN EACH OF THE ASSESSMENT YEARS. THIS IS A FACT THAT THE LOAN HAS NOT BEEN RECEIVED IN THE IMPUGNED ASSE SSMENT YEAR BUT IN A.Y. 2007-08. THE LEARNED DR EVEN THOUGH VEHEMENTLY REL IED ON THE ORDER OF THE ASSESSING OFFICER, WE WERE NOT MADE AWARE OF WHETHE R ANY APPEAL FILED BY THE ASSESSEE IS PENDING BEFORE THIS TRIBUNAL FOR A. YS 2010-11 AND 2011-12 AND WHAT HAPPENED IN A.YS. 2007-08 AND 2008-09? 4. IN VIEW OF THIS FACT, WE ARE OF THE VIEW THAT IN CASE THE ASSESSEE HAS FILED ANY APPEAL IN A.Y. 2010-11 AND 2011-12, THE O UTCOME OF THE APPEAL WILL HAVE A BEARING ON THE ALLOWANCE OF INTEREST PAID BY THE ASSESSEE. WE, ITA NO.3021/MUM/2017 SANGHAVI REALTY 4 THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE ISSUE TO TH E FILE OF THE ASSESSING OFFICER WITH A DIRECTION THAT HE SHALL RE-DECIDE TH E ISSUE AFRESH IN ACCORDANCE WITH LAW AFTER GIVING SUFFICIENT OPPORTUNITY TO THE ASSESSEE AND ALSO CONSIDER - WHAT HAPPENED IN A.YS 2010-11 AND 2011-12? WHETHER THE ASSESSEE HAS FILED ANY APPEAL AGAINST THE ORDER OF THE CIT(A)? W HETHER THE ASSESSEE HAS CHALLENGED THE VALIDITY OF THE RE-OPENING? AND IN C ASE APPEAL WAS FILED AND DECIDED BY THIS TRIBUNAL IN FAVOUR OF THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE. IN CASE THE AS SESSEE DID NOT FILE ANY APPEAL BEFORE THE TRIBUNAL OR THE TRIBUNAL DID NOT ALLOW THE ASSESSEES APPEAL, THE DISALLOWANCE OF INTEREST SO MADE BY THE ASSESSING OFFICER BE SUSTAINED. WITH THESE DIRECTIONS, THE APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH DAY OF SEPTEMBER, 2017. SD/- SD/- (PAWAN SINGH) (P K BANSAL) JUDICIAL MEMBER VICE-PRESIDENT MUMBAI; DATED: 5 TH SEPTEMBER, 2017 SA ITA NO.3021/MUM/2017 SANGHAVI REALTY 5 COPY OF THE ORDER FORWARDED TO : 1. THE APP ELL ANT. 2. THE RESPONDENT. 3. T HE CIT(A), MUMBAI 4. THE CIT 5. DR, I BENCH, ITAT, MUMBAI BY ORDER, #TRUE COPY # ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI