Nanda Kumari, CHENNAI V. ITO Non Corporate Ward 1(4), CHENNAI

ITA 3063/CHNY/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1544 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 13-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: B RAMAKRISHNANC A
• Section: 143(3); 153A; 234B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , D B ENCH, CHENNAI . , ! ' ! # . $ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.2923 TO 2926, 3063 TO 3065 & 2927/CHNY/20 17 ( / ASSESSMENT YEARS: 2006-07 TO 2013-14) MS. NANDA KUMARI, NEW NO.41, KUTCHERY ROAD, MYLAPORE, CHENNAI 600 004. VS THE INCOME TAX OFFICER, NON-CORPORATE WARD 4(1), CHENNAI 34. PAN: AAEPN4849Q ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI B. RAMAKRISHNAN,CA / RESPONDENT BY : SHRI SRINIVASA RAO, CIT /DATE OF HEARING : 30.08.2018 /DATE OF PRONOUNCEMENT : 14.11.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE COMMON ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-2, CHENNAI, DATED 29.09.2017 IN ITA NOS.50,51,52,53,54,57,58,&59/ CIT(A)-2/2015-16 FOR THE ASSESSMENT YEARS 2006-07 TO 2013-14 PASSED U/S. 250(6) R.W.S. 143(3), 153A & 153C OF THE ACT FOR THE ASSESSMENT YEARS 2006-07 TO 2012-13 & 250(6) R.W.S. 143(3) OF THE ACT FOR THE ASSESSMENT YEAR 2013-14. 2 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 SINCE THE ASSESSEE HAS RAISED IDENTICAL GROUNDS IN ALL HER APPEALS, THEY ARE TAKEN UP FOR HEARING TOGETHER AND DISPOSED OFF BY THIS COMMON ORDER. 2. THE ASSESSEE HAS RAISED SEVERAL IDENTICAL GROU NDS IN HER APPEALS HOWEVER THE CRUXES OF THE ISSUES ARE THAT (I) THE LD.CIT(A) HAS ERRED IN UPHOLDING THE PROCEE DINGS INITIATED U/S.153C R.W.S. 153A OF THE ACT, IN THE A BSENCE OF INCRIMINATING MATERIAL FOR THE ASSESSMENT YEARS 200 6-07 TO 2013-14. (II) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION MADE BY THE LD.AO AMOUNTING TO RS.1,29,451/-, RS.1,06,790/- , RS.1,68,162/-, RS.1,30,980/-, RS.1,13,500/-, RS.1,9 1,555/-, RS.1,90,672/- & RS.66,038/- TOWARDS INTEREST INCOME EARNED FROM PAWN BROKING BUSINESS OVER AND ABOVE THE AMOUN T ADMITTED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2 006-07 TO 2013-14 RESPECTIVELY. (III) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION MADE BY THE LD.AO TOWARDS DISALLOWANCE OF APPRAISER FEE AMO UNTING TO RS.52,000/-, RS.48,000/-, RS.48,000/-, RS.72,00 0/- & 3 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 RS.52,000/- FOR THE ASSESSMENT YEARS 2006-07, 2007- 08, 2008-09, 2009-10 & 2013-14 RESPECTIVELY. (IV) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ORDE R OF LD.AO WHO HAD MADE ADDITION BY ADHOC DISALLOWANCE OF SALA RY EXPENSES @ 20% WHICH WORKS OUT TO RS.30,800/-, RS.26,905/- & RS.15,889/- FOR THE ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09 RESPECTIVELY. (V) THE LD.CIT(A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD.AO WHO HAD LEVIED INTEREST U/S.234A, 234B & 234C OF TH E ACT FOR THE ASSESSMENT YEARS 2006-07 TO 2009-10, 20012-13 & 2013- 14 AND U/S. 234B FOR THE ASSESSMENT YEARS 2010-11 & 2011- 12 RESPECTIVELY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN PAWN BROKING BUSINESS IN THE NAME OF HER PROPRIETARY CONCERN M/S. ABHAYKUMAR. A SEARCH U/S.132 OF THE AC T WAS CONDUCTED IN THE CASE OF S/SHRI CHAMPALAL KISHANLAL AND CHAMPALAL KAMALCHAND ON 04.01.2012. IN THE COURSE OF THE SEAR CH PROCEEDINGS CERTAIN BOOKS RELATING TO M/S. ABHAYKUMAR WERE SE IZED. THEREAFTER NOTICE U/S.153C R.W.S. 153A OF THE ACT, WAS ISSUED TO THE ASSESSEE 4 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 FOR THE ASSESSMENT YEARS 2006-07 TO 2012-13 DATED 0 4/04/2014 AND NOTICE U/S.142(2) OF THE ACT DATED 03/12/2014 FOR T HE ASSESSMENT YEAR 2013-14. CONSEQUENT TO THE ISSUANCE OF THE ABO VE STATED NOTICE, THE ASSESSEE FILED HER RETURN OF INCOME FOR THE ASS ESSMENT YEARS 2006-07 & 2007-08 ON 17.05.2014 & 17.10.2014 RESPEC TIVELY AND FOR THE ASSESSMENT YEARS 2008-09 TO 2013-14 ON 24.09.20 14. THEREAFTER THE ASSESSMENT WAS COMPLETED IN THE CASE OF THE ASS ESSEE FOR THE ASSESSMENT YEAR 2006-07 TO 2013-14 ON 30.03.2015 WH EREIN THE LD.AO MADE THE ABOVE MENTIONED ADDITIONS WHICH WAS SUBSEQUENTLY CONFIRMED BY THE LD.CIT(A). 4. GROUND NO.2(I) : JURISDICTION U/S.153C R.W.S. 15 3A OF THE ACT FOR THE ASSESSMENT YEARS 2006-07 TO 2012-13:- THE LD.AR SUBMITTED BEFORE US THAT IN THE CASE OF THE ASSESSEE, THERE WAS NO INCRIMINATING DOCUMENT FOUND DURING TH E COURSE OF THE SEARCH AND THEREFORE ADDITIONS CANNOT BE MADE U/S.1 53C R.W.S. 153A OF THE ACT. RELIANCE WAS PLACED IN THE DECISION OF THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE M/S. ALL CARGO GLOBAL L OGISTICS LTD., REPORTED IN 137 ITD 237 AND THE DECISION OF THE CHE NNAI BENCH OF THE TRIBUNAL IN THE CASE M/S. OM SHAKTHY AGENCIES (MADR AS) PVT. LTD. AT 5 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 THE OUTSET WE DONT FIND ANY MERIT IN THE SUBMISSIO N OF THE LD.AR. FROM THE FACTS OF THE CASE, IT APPEARS THAT THE ASS ESSEE HAS FILED HER RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEARS ONLY AFTER THE ISSUANCE OF NOTICE U/S.153C R.W.S. 153A OF THE ACT. HENCE ON THE EARLIER OCCASIONS THERE WAS NO ASSESSMENTS U/S.143( 3) OF THE ACT MADE IN THE CASE OF THE ASSESSEE. THEREFORE THE DEC ISION RELIED BY THE ASSESSEE IS OF NO RELEVANCE. FURTHER PROVISIONS OF SECTION 153A(B) OF THE ACT SPECIFICALLY PROVIDES THAT IN TH E CASE OF SEARCH PROCEEDINGS, ASSESSMENT AS WELL AS RE-ASSESSMENT OF THE TOTAL INCOME OF THE ASSESSEE CAN BE MADE FOR SIX ASSESSME NT YEARS IMMEDIATELY PRECEDING THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH SUCH SEARCH IS CONDUCTED. THEREFORE D URING THE COURSE OF REASSESSMENT THE ASSESSEE IS BOUND TO PRODUCE TH E REQUISITE DOCUMENTS TO SUBSTANTIATE HER CLAIM OF DEDUCTION. H ENCE THE GROUND RAISED BY THE ASSESSEE WITH RESPECT TO JURISDICTION U/S.153C R.W.S. 153A OF THE ACT IS DEVOID OF MERITS. ACCORDINGLY TH IS GROUND RAISED BY THE ASSESSEE IS DECIDED AGAINST HER. 5. GROUND NO.2(II) : DISALLOWANCE OF INTEREST EARNE D FROM PAWN BROKING BUSINESS FOR THE ASSESSMENT YEARS 2006-07 T O 2013-14:- 6 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 THE ASSESSEE HAD DISCLOSED INTEREST @ 1.33% PER MO NTH TOWARS THE LOAN EXTENDED TO THE BORROWERS. SHE HAD ALSO DI SCLOSED CERTAIN ADHOC AMOUNT AS INTEREST EARNED FROM THE BORROWERS. ON QUERY IT WAS EXPLAINED THAT AS PER GOVERNMENT NORMS INTEREST MOR E THAN 1.33% PER MONTH CANNOT BE CHARGED FROM THE BORROWERS HENC E, SHE HAS DISCLOSED THE EXCESS AMOUNT OF INTEREST COLLECTED F ROM THE BORROWERS SEPARATELY. HOWEVER THE LD.AO WAS OF THE VIEW THAT NORMALLY IN THIS LINE OF BUSINESS INTEREST IS CHARGED NOT LESS THAN 2% PER MONTH FROM THE BORROWERS. THEREFORE HE COMPUTED THE INTEREST @ 2% AND ADDED TO THE INCOME OF THE ASSESSEE. ON APPEAL, THE LD.CI T(A) WAS ALSO OF THE VIEW THAT THE LD.AO HAS COMPUTED THE INTEREST I NCOME OF THE ASSESSEE FAIRLY AND IN ACCORDANCE WITH THE PREVAILI NG MARKET RATES AND THEREBY UPHELD HIS ORDER. 5.1 BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSE E HAD MAINTAINED PROPER BOOKS OF ACCOUNTS AND RECORDS, AN D THEREFORE IN ABSENCE OF ANY CONTRARY FINDINGS, ADDITIONS CANNOT BE MADE. IT WAS THEREFORE PLEADED THAT THE ADDITIONS MADE BY THE LD .REVENUE AUTHORITIES MAY BE DELETED. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES. 7 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 5.2 WE FIND MERIT IN THE SUBMISSION OF THE LD.AR. FROM THE FACTS OF THE CASE, IT IS EVIDENT THAT THE LD.AO HAD MADE ADDITION BASED ON PRESUMPTIONS. HE HAS NOT MADE ANY INDEPEND ENT ENQUIRIES TO SUBSTANTIATE HIS PRESUMPTIONS. THE LD.CIT(A) HAS ALSO SIMPLY ENDORSED THE VIEW OF THE LD.AO. WE ARE OF THE VIEW THAT THIS NATURE OF ADDITIONS MADE BY THE LD.REVENUE AUTHORITIES CANNOT BE JUSTIFIED. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITIONS MADE TOWARDS EXCESS INTEREST INCOME EARNED IN THE HANDS OF THE ASSESSEE FOR ALL THE RELEVANT ASSESSMENT YEARS IN THESE APPE ALS BEFORE US. 6. GROUND NO.2(III) : ADDITION TOWARDS APPRAISER FE E FOR THE ASSESSMENT YEARS 2006-07, 2007-08, 2008-09, 2009-10 & 2013-14:- DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WA S OBSERVED BY THE LD.AO THAT THE ASSESSEE HAD CLAIMED DEDUCTIO N ON ACCOUNT OF EXPENSE INCURRED TOWARDS APPRAISER FEE. THE LD.AO W AS OF THE VIEW THAT IN THIS LINE OF BUSINESS THE PAWN BROKER HIMSE LF ACTS AS THE APPRAISER AND THEREFORE THERE WAS NO SCOPE FOR INCU RRING EXPENSE TOWARDS APPRAISER FEE. THEREFORE THE LD.AO DISALLOW ED THE EXPENDITURE CLAIMED TOWARDS APPRAISER FEE AND ADDED TO THE INCOME 8 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 OF THE ASSESSEE. ON APPEAL, THE LD.CIT(A) OBSERVED IN THE REMAND REPORT OF THE LD.AO THAT CERTAIN PAN NUMBER STATED BY THE ASSESSEE WITH RESPECT TO CERTAIN APPRAISERS WERE INCORRECT. FURTHER SOME OF THE APPRAISERS FAILED TO APPEAR IN PERSON IN RESPONSE T O THE SUMMONS ISSUED BY THE LD.AO. SINCE THERE WAS LACK OF EVIDEN CE WITH RESPECT TO THE GENUINENESS OF SOME OF THE APPRAISERS THE LD.CI T(A) GRANTED PARTIAL RELIEF TO THE ASSESSEE IN PARITY WITH THE R EMAND REPORT. 6.1 BEFORE US THE LD.AR SUBMITTED THAT THE ASSESSE E HAD GENUINELY INCURRED EXPENDITURE TOWARDS APPRAISER FE E AND THE PAN NUMBERS AND ADDRESS OF THE APPRAISERS WERE PRODUCED BEFORE THE LD.AO. THEREFORE WHATEVER RECORDS THAT COULD BE POS SIBLE OBTAINABLE BY THE ASSESSEE WAS PRODUCED BEFORE THE LD.AO IN OR DER TO EVIDENCE THE EXPENDITURE INCURRED. HENCE IT WAS PLEADED THAT THE ADDITION MADE BY THE LD.AO MAY BE DELETED. THE LD.DR ON THE OTHER HAND RELIED ON THE ORDERS OF THE LD.REVENUE AUTHORITIES. 6.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFU LLY PERUSED THE MATERIALS ON RECORD. FROM THE FACTS OF THE CASE IT IS EVIDENT THAT THE ASSESSEE HERSELF HAD DISCLOSED EXCESS INTEREST RECEIVED WHICH 9 ITA NOS.2923 TO 2927 & 3063 TO 3065/CHNY/2017 SHE COULD NOT DISCLOSE DUE TO THE GOVERNMENT REGULA TIONS. HAD SHE NOT DISCLOSED SUCH INTEREST IN HER BOOKS, HER PROFI T WOULD HAVE BEEN REDUCED AND THERE WOULD HAVE BEEN NO NECESSITY TO C LAIM DEDUCTION TOWARDS APPRAISER FEE. HOWEVER THE ASSESSEE HAS DIS CLOSED THE EXCESS INCOME DILIGENTLY AND ALSO CLAIMED THE EXPEN SE TOWARDS APPRAISER FEE. THE ASSESSEE HAS ALSO FURNISHED THE DETAILS SUBMITTED BY THE APPRAISERS BEFORE THE LD.AO IN HIS REMAND PR OCEEDINGS. FURTHER IT IS APPARENT THAT THE REVENUE HAS COME TO THE CONCLUSION THAT THE PAYMENT MADE BY THE ASSESSEE TOWARDS APPRA ISER FEE IS NOT GENUINE JUST BECAUSE ON THE SUMMONS ISSUED BY THE L D.AO CERTAIN APPRAISERS FAILED TO APPEAR BEFORE HIM. WE ARE NOT AGREEMENT WITH THIS ACTION OF THE LD. REVENUE AUTHORITIES. IT WOUL D HAVE BEEN APPROPRIATE TO CONDUCT FURTHER ENQUIRY ON THE APPRA ISERS BEFORE COMING TO SUCH CONCLUSION. CONSIDERING THE FACTS AN D CIRCUMSTANCE OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE DISALLOWANCE OF APPRAISER FEE BY THE LD.REVENUE AUTHORITIES IS NOT APPROPRIATE. HENCE WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDI TION MADE BY DISALLOWING THE APPRAISER FEE FOR ALL THE RELEVANT ASSESSMENT YEARS IN THESE APPEAL BEFORE US. 10 ITA NOS.2923 TO 292 7 & 3063 TO 3065/CHNY/2017 7. GROUND NO.2(IV) : ADHOC DISALLOWANCE TOWARDS SAL ARY EXPENSE FOR THE ASSESSMENT YEARS 2006-07, 2007-08 & 2008-09: DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE L D.AO DIRECTED THE ASSESSEE TO FURNISH DETAILS WITH RESPE CT TO SALARY PAYMENTS. THE ASSESSEE REQUESTED FOR SOME TIME TO P RODUCE THE VOUCHERS. BUT THE LD.AO REFUSED TO GRANT TIME BECAU SE THE ASSESSMENTS WERE TIME BARRING. THEREAFTER THE LD.AO MADE ADHOC DISALLOWANCE OF 20% OF THE EXPENSES CLAIMED TOWARDS SALARY EXPENDITURE AND MADE ADDITION. ON APPEAL, THE LD.CI T(A) OBTAINED REMAND REPORT FROM THE LD.AO. IN THE REMAND REPORT, THE LD.AO OBSERVED THE SAME DISCREPANCY AS IN THE CLAIM OF EX PENDITURE INCURRED TOWARDS APPRAISER FEE. THEREFORE THE LD.CI T(A) GAVE PARTIAL RELIEF TO THE ASSESSEE IN ACCORDANCE WITH THE REMAN D REPORT OF THE LD.AO. SINCE WE HAVE HELD THE ISSUE WITH RESPECT TO APPRAISER FEE IN FAVOUR OF THE ASSESSEE ON SIMILAR CIRCUMSTANCE, IN THE CASE OF DISALLOWANCE OF SALARY EXPENSE ALSO, WE ARE OF THE CONSIDERED VIEW THAT THE REVENUE WAS NOT JUSTIFIED IN DISALLOWING T HE SALARY EXPENDITURE. THEREFORE WE HEREBY DIRECT THE LD.AO T O DELETE THE 11 ITA NOS.2923 TO 292 7 & 3063 TO 3065/CHNY/2017 ADDITION MADE BY DISALLOWING THE SALARY EXPENSE FOR ALL THE RELEVANT ASSESSMENT YEARS IN THESE APPEALS BEFORE US. 8. GROUND NO.2(V) : LEVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT FOR THE ASSESSMENT YEARS 2006-07 TO 2013-14 :- LEVY OF INTEREST U/S.234A, 234B & 234C OF THE ACT A RE CONSEQUENTIAL IN NATURE. THEREFORE WE DO NOT FIND A NY MERIT IN THIS GROUND RAISED BY THE ASSESSEE. 9. IN THE RESULT THE APPEALS OF THE ASSESSEE ARE PA RTLY ALLOWED. ORDER PRONOUNCED ON THE 14 TH NOVEMBER, 2018 AT CHENNAI. SD/- SD/- ( ! ' ! # . $ ) ( . ) (DUVVURU RL REDDY) (A. MOHAN ALANKAMONY ) # $% /JUDICIAL MEMBER $% / ACCOUNTANT MEMBER &# /CHENNAI, '$ /DATED 14 TH NOVEMBER, 2018 RSR $ )* +* /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. . ( )/CIT(A) 4. . /CIT 5. */0 1 /DR 6. 02 /GF