SIMTO PROEPTY DEVELOPERS LTD, MUMBAI V. ITO WD 5(3)(4), MUMBAI

ITA 3075/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3702 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 06-05-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 20-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit; Depreciation; Corroborative evidences

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI .. , ! ' ##, $ ' , % BEFORE SHRI R.S.SYAL, AM AND SHRI SANJAY GARG, JM ITA NO.3075/MUM/2010 : ASST.YEAR 2006-2007 M/S.SIMTO PROPERTY DEVELOPERS LIMITED C/O.JAIN AMBAVAT & ASSOCIATES 10 CHEMOX HOUSE, 3 RD FLOOR 7 BARRACK ROAD, OPP.BOMBAY HOSPITAL MUMBAI 400 020. PAN : AAACS5299L. THE INCOME TAX OFFICER WARD 5(3)(4) MUMBAI. ( &' / // / APPELLANT) ) ) ) ) / VS. ( *+&'/ RESPONDENT) &' , ,, , - - - - / APPELLANT BY : SHRI C.V.JAIN *+&' , - , - , - , - / RESPONDENT BY : SHRI MOHIT JAIN ) , .! / / / / DATE OF HEARING : 06.05.2013 /01 , .! / DATE OF PRONOUNCEMENT : 08.05.2013 '2 '2 '2 '2 / / / / O R D E R PER R.S.SYAL ( AM) : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 24.0 2.2010 IN RELATION TO THE ASSESSMENT YEAR 2006-2007. IT IS A RECALLED MATTER INASMUCH AS THE EARLIER EX PARTE ORDER PASSED BY THE TRIBUNAL WAS RECALLED VIDE ITS LATER ORDER DATED 10.08.2012. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED ITS RETURN DECLARING NIL INCOME. THE ASSESSEE CLAIMED T O HAVE BEEN ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMENT. ON THE PERUSAL OF THE OBJECT CLAUSE OF MEMORANDUM OF ASSOCIATION OF T HE ASSESSEE- COMPANY, THE A.O. NOTICED THAT THE ASSESSEE WAS INC ORPORATED TO DEVELOP PROPERTY AND CARRY ON THE BUSINESS OF CONST RUCTION AND ITA NO.3075/MUM/2010. M/S.SIMTO PROPERTY DEVELOPERS LTD. 2 SELLING BUILDINGS ETC. AS AGAINST THAT, THE ASSESSE E CLAIMED TO HAVE BEEN ENGAGED IN THE BUSINESS OF SOFTWARE DEVELOPMEN T WITH GROSS INCOME FROM SOFTWARE DEVELOPMENT AT ` 8.30 LAKH. THE ASSESSEE CLAIMED DEDUCTION FOR DEPRECIATION TO THE TUNE OF ` 4.59 LAKH AND EXPENSES OF ` 3.97 LAKH UNDER DIFFERENT HEADS AGAINST THE ABOVE INCOME FROM SOFTWARE DEVELOPMENT RESULTING INTO NET LOSS OF ` 23,730. ON BEING CALLED UPON TO EXPLAIN HOW THE ASSESSEE CO ULD CHANGE ITS MAIN OBJECT OF CARRYING ON THE BUSINESS, THE ASSESS EE SUBMITTED THAT A SPECIAL RESOLUTION WAS PASSED IN EXTRA ORDINARY GEN ERAL MEETING TO CARRY OUT THIS LINE OF BUSINESS. THE ASSESSING OFFI CER DEPUTED INSPECTOR TO VISIT THE FACTORY PREMISES AND TO SUBM IT REPORT ABOUT THE BUSINESS ACTIVITIES OF THE ASSESSEE-COMPANY. ON MAK ING INQUIRIES WITH THE WATCHMAN OF THE PREMISES AND OTHER LOCAL P EOPLE, THE INSPECTOR REPORTED THAT THE UNIT WAS CLOSED DOWN SI NCE LAST 5-6 YEARS AND BEFORE THAT IT WAS ENGAGED IN MANUFACTURING COM PONENTS OF TVS. FROM THE SUBMISSIONS ADVANCED ON BEHALF OF THE ASSE SSEE, THE A.O. OBSERVED THAT THE ASSESSEE-COMPANY HAD STATED THAT IT WAS NOT HAVING ANY BUSINESS PREMISES OTHER THAN THE FACTORY BUILDI NG AT VASAI ROAD, WHICH WAS VISITED BY THE INSPECTOR. IT WAS ALSO NOT ICED FROM ALL THE CORRESPONDENCES / PAPERS ON RECORD THAT THE ASSESSE E GAVE ADDRESSE OF SIMPTO PROPERTY DEVELOPERS LTD. 302, NIRANJAN, 99 M ARINE DRIVE, MUMBAI, WHICH WAS THE ADDRESS OF ITS AUTHORIZED REP RESENTATIVE, NAMELY, M/S.JAIN AMBAVAT & ASSOCIATES, CHARTERED AC COUNTANTS. NO CORRESPONDENCE WAS MADE FROM THE VASAI ROAD ADDRESS . ON BEING CALLED UPON TO PROVIDE SUPPORTING EVIDENCE OF CONSU MPTION OF POWER, ELECTRICITY ETC. AND SALARY REGISTER FOR THE LAST 3 YEARS ALONG WITH ITA NO.3075/MUM/2010. M/S.SIMTO PROPERTY DEVELOPERS LTD. 3 EDUCATIONAL QUALIFICATION OF EMPLOYEES DEVELOPING T HE SOFTWARE, THE ASSESSEE FAILED TO FURNISH ANY SUCH INFORMATION. FU RTHER NO BILLS / VOUCHERS WERE SUBMITTED IN RESPECT OF EXPENSES DEBI TED TO THE PROFIT AND LOSS ACCOUNT. THIS LED TO THE DENIAL OF DEDUCTI ON FOR EXPENSES. THE A.O. FURTHER REFUSED TO GRANT ANY DEPRECIATION BECAUSE THE USER OF ASSET FOR THE BUSINESS PURPOSE WAS NOT PROVED. RESU LTANTLY, RECEIPT OF ` 8.30 LAKH SHOWN TO BE FROM SOFTWARE DEVELOPMENT WAS TAKEN AS UNEXPLAINED CASH CREDIT AND BROUGHT TO TAX WHILE DI SALLOWING THE DEDUCTION ON ACCOUNT OF EXPENSES AND ALLOWANCES. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 3. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE RELEVANT MATERIAL ON RECORD WE FIND THAT THE MAIN QUESTION W HICH FALLS FOR OUR CONSIDERATION IS WHETHER THE ASSESSEE WAS CARRYING ON ANY BUSINESS FROM THE PREMISES DECLARED BY IT AT VASAI ROAD. THE INCOME-TAX INSPECTOR WHO VISITED THE FACTORY PREMISES GAVE THE REPORT THAT NO WORKING UNIT WAS THERE AND PRIOR TO THAT THERE WERE SOME TV MANUFACTURING UNIT WHICH GOT CLOSED 5-6 YEARS AGO. THE LEARNED AR HAS STRONGLY OBJECTED TO THIS REPORT OF THE INSPECT OR WHICH WAS ALLEGEDLY NOT CONFRONTED TO THE ASSESSEE. HE ACCENT UATED ON THE SOFTWARE DEVELOPMENT AGREEMENT BY VIRTUE OF WHICH T HE ASSESSEE RECEIVED GROSS CONSIDERATION OF ` 8.30 LAKH. THE LEARNED AR STATED THAT A COPY OF THE SOFTWARE DEVELOPMENT AGREEMENT W AS PLACED BEFORE THE LEARNED CIT(A), WHO COULD NOT APPRECIATE THE SA ME AND REJECTED THE ASSESSEES CONTENTION. IN OUR CONSIDERED OPINIO N, THE ENTIRE CASE FIRSTLY DEPENDS UPON THE DETERMINATION OF THE FACT AS TO WHETHER OR NOT ITA NO.3075/MUM/2010. M/S.SIMTO PROPERTY DEVELOPERS LTD. 4 THE ASSESSEE WAS CARRYING ON ANY BUSINESS. SINCE TH E A.O. HAS PLACED HIS RELIANCE ON THE INSPECTORS REPORT, WHICH HAS B EEN ALLEGEDLY NOT CONFRONTED TO THE ASSESSEE AND FURTHER THERE IS NO MENTION IN THE ASSESSMENT ORDER THAT THIS REPORT WAS CONFRONTED, I N OUR CONSIDERED OPINION, THE ENDS OF JUSTICE WOULD MEET ADEQUATELY IF THE IMPUGNED ORDER IS SET ASIDE AND THE MATTER IS RESTORED TO TH E FILE OF A.O. WE ORDER ACCORDINGLY AND DIRECT THE A.O. TO CONFRONT T HE ASSESSEE WITH THE INSPECTORS REPORT AND THEREAFTER DECIDE THE QU ESTION OF CARRYING ON THE SOFTWARE DEVELOPMENT BUSINESS FROM WHICH IT SHOWED RECEIPT AND THE CONSEQUENTIAL DEDUCTION OF EXPENSES AND ALL OWANCES AS PER LAW. 4. 3 .4 5 6, 789 : . ; , . <= IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 08 TH DAY OF MAY, 2013. '2 , /01 >')4 0 , # SD/- SD/- (SANJAY GARG) (R.S.SYAL) $ ' $ ' $ ' $ ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; >') DATED : 08 TH MAY, 2013. DEVDAS* ITA NO.3075/MUM/2010. M/S.SIMTO PROPERTY DEVELOPERS LTD. 5 '2 , *$.:? @?1. '2 , *$.:? @?1. '2 , *$.:? @?1. '2 , *$.:? @?1./ COPY OF THE ORDER FORWARDED TO : 1. &' / THE APPELLANT 2. *+&' / THE RESPONDENT. 3. A () / THE CIT, MUMBAI. 4. A / CIT(A)-9 , MUMBAI 5. ?D# *$.$) , , / DR, ITAT, MUMBAI 6. #E F / GUARD FILE. '2) '2) '2) '2) / BY ORDER, +?. *$. //TRUE COPY// 7 7 7 7/ // /< < < < ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI