BALKRISHNA ASHOL DHADAM, MUMBAI V. DCIT - 15(3), MUMBAI

ITA 3083/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7781 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M C OMI NINGSHENDR
• Assessee Lawyers: DEVDATTA MAINKARAR
• Keywords: Principle of natural justice; Additional evidence; Reasonable cause

Judgement Text

, , , , INCOME-TAX APPELLATE TRIBUNAL -HBENCH MUMBAI , , , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND RAM LAL NEGI,JUDICIAL MEMBER ./I.T.A./3083/MUM/2015 , /ASSESSMENT YEAR: 2010-11 SHRI BALKRISHNA ASHOK DHADAM A/5, JAI NARAYAN BUILDING, DAFTARY ROAD PUSHPA PARK, MALAD (E) MUMBAI-400 097. PAN:AJAPD 5109 Q VS. DCIT, RANGE-15(3) MATRU MANDIR, TARDEO ROAD, GRANT ROAD MUMBAI-400 007. ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI M.C. OMI NINGSHEN-DR ASSESSEE BY: SHRI DEVDATTA MAINKAR-AR / DATE OF HEARING: 21.02.2017 / DATE OF PRONOUNCEMENT:17.03.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 30/02/2015,OF THE CIT ( A )-17 MUMBAI,THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE,AN INDIVIDUAL,FILED HIS RET URN OF INCOME ON 14/10/2010, DECLARING INCOME OF RS. 32.98 LAKHS.THE ASSESSING OFFICER (AO ) COMPLETED THE ASSESSMENT, U/S.143 (3) OF THE ACT,ON 18/02/2013,DETERMINING HIS INCOME AT RS. 54.05 LAKHS. DURING THE COURSE OF HEARING BEFORE US, THE AUTHORI SED REPRESENTATIVE (AR) STATED THAT THE ASSESSEE WAS NOT INTERESTED IN PRESSING 2 ND AND 4 TH GROUND.HENCE,BOTH THE GROUNDS STANDS DISMISSED AS NOT PRESSED. 2. FIRST GROUND OF APPEAL IS ABOUT CONFIRMING THE LIAB ILITY ON ACCOUNT OF OUTSTANDING CREDITORS, AMOUNTING RS.4.43LAKHS.DURING THE ASSESSMENT PROCEE DINGS,THE AO FOUND THAT IN MANY INSTANCES THE OPENING BALANCE HAD NOT BEEN PAID TIL L THE END OF THE YEAR. HE ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE SAME SHOULD NOT BE ADDE D TO HIS TOTAL INCOME AS CEASED LIABILITY. AS PER THE AO,THE ASSESSEE DID NOT FURNISH ANY EXPL ANATION IN THAT REGARD. HE OBSERVED THAT IN THE CASE OF KA TRADERS OUTSTANDING BALANCE WAS OF R S.1.13 LAKHS. HE WORKED OUT SUCH OUTSTANDING BALANCES TO RS.4,43,111/-AND ADDED THAT THE AMOUNT IN QUESTION TO THE INCOME OF THE ASSESSEE HOLDING IT TO BE CEASED LIABILITY. 2.1. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM,IT WAS ARGUED THAT LIABILITY HAD NOT CEASED, THAT CREDITORS HAD TO BE PAID, THAT DURING THE YEAR UNDE R CONSIDERATION NOTHING HAD HAPPENED TO PROVE THAT THE ASSESSEE HAD NOT TO PAY THE SAID AMO UNTS TO THE CREDITORS.THE FAA,AFTER 3083/M/15(10-11) SH.BALKRISHNA ASHOK 2 CONSIDERING THE AVAILABLE MATERIAL,HELD THAT IN THE WINE BUSINESS IT WAS A TRADE PRACTICE TO SQUARE UP THE BALANCES OF PREVIOUS PARTIES AT THE E ND OF THE FINANCIAL YEAR, THAT THE AO HAD RIGHTLY INVOKED THE PROVISIONS OF SECTION 41 OF THE ACT. 2.2. DURING THE COURSE OF HEARING BEFORE US, THE AR STAT ED THAT LIABILITY HAD NOT CEASED, THAT SAME WAS EXISTING, THAT NONE OF THE CONDITIONS,ENVI SAGED BY SECTION 41 WERE PRESENT.HE REFERRED TO THE CASE OF SM ENERGY TEKNIK AND ELECTR ONICS LTD. (ITA/1859 AND 1495/ MUM/ 2008-AY.2003-04,DATED 11/03/2015). THE DEPARTMENTAL REPRESENTATIVE(DR) SUPPORTED THE ORDER OF THE FAA. 2.3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE AO AND THE FAA MADE/UPHELD THE ADDITION AS CERTAIN SUMS WERE OUTSTANDING ON THE LAST DAY OF THE YEAR UNDER APPEAL.BUT,BOTH OF THEM HAVE NOT PROVED THAT LIABILITY HAD CEASED.THE OTHER CONDITION FOR INVOKING THE PROVISIONS OF SECTION 41 (1)IS THAT AN ALLOWANCE OR DEDUCTION SHOULD HAVE BEEN IN THE ASSESSMENT FOR ANY YEAR IN RESPECT OF LOSS,EXPENDITURE OR TRADING LIABILITY INCURRED BY THE ASSESSEE.BOTH THE AUTHORITIES HAVE NOT DISCUSSED AS TO WHEN THE DEDUCTION WAS ALLOWED.IN ABSENCE OF FULFILLMENT OF THE SAID PRECO NDITION THE FAA WAS NOT JUSTIFIED IN CONFIRMING THE ORDER OF THE AO.SO,REVERSING HIS ORD ER,WE DELETE THE ADDITION MADE BY THE AO.FIRST GROUND OF APPEAL IS DECIDED IN FAVOUR OF T HE ASSESSEE. 3. SECOND EFFECTIVE GROUND OF APPEAL(GOA-3)IS ABOUT CO NFIRMING THE ADDITION TO THE TUNE OF RS.13.60 LAKHS AS UNACCOUNTED/INFLATED PURCHASES. D URING THE ASSESSMENT PROCEEDINGS,THE AO ISSUED NOTICES U/S.133 (6) TO SOME PARTIES APPEARIN G IN THE LIST OF PURCHASERS. HE FOUND THAT THERE WAS DIFFERENCE IN THE PURCHASE FIGURES REGARD ED BY THOSE PARTIES IN THEIR BOOKS OF ACCOUNTS VIS A VIS THE FIGURES REPORTED BY THE ASSE SSEE. AS PER THE AO HE HAD DIRECTED THE ASSESSEE TO RECONCILE THE DIFFERENCE,BUT,HE DID NOT COMPLY WITH THE DIRECTIONS. HE WORKED OUT THE DIFFERENCE AT RS.13, 60,372/-AND HELD THAT SAME WAS TO BE ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE AS UNACCOUNTED PURCHASED/INFLATED P URCHASE. 3.1. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE RAIS ED ADDITIONAL GROUND IN THAT REGARD AND FILED ADDITIONAL EVIDENCES BEFORE THE FAA. HE FILED RE-CONCILIATION STATEMENT OF THE ALLEGED DIFFERENCE.HOWEVER, THE FAA DID NOT ADMIT ADDITIONA L EVIDENCES HOLDING THAT LEDGER COPIES OF THE SUPPLIERS HAD NO EVIDENTIARY VALUE, THAT THE AUTHENTICITY OF SUCH DOCUMENTS COULD NOT BE VOUCHED FOR, THAT THE ASSESSEE HAD NOT MADE A RE QUEST FOR ADMISSION OF ADDITIONAL EVIDENCES. FINALLY,HE UPHELD THE ORDER OF THE AO. 3.2. BEFORE US, THE AR STATED THAT THE ASSESSEE HAD RAIS ED SPECIFIC ADDITIONAL GROUND WITH REGARD TO VIOLATION OF PRINCIPLE OF NATURAL JUSTICE ABOUT USING THE INFORMATION COLLECTED FROM 3083/M/15(10-11) SH.BALKRISHNA ASHOK 3 THE SUPPLIER OF THE GOODS, THAT THE FAA HAD NOT ADJ UDICATED THE ISSUE,THAT ADDITIONAL EVIDENCES WERE REJECTED WITHOUT ANY REASONABLE CAUSE. THE DEP ARTMENTAL REPRESENTATIVE LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. 3.3. WE FIND THAT THE AO HAD COLLECTED INFORMATION INDEP ENDENTLY AND HAD NOT AFFORD IT/ ASSESSEE A REASONABLE OPPORTUNITY OF CROSS-EXAMINAT ION ABOUT THE MATERIAL COLLECTED BEHIND HIS BACK, THAT HE HAD RAISED A SPECIFIC GROUND ABOU T NOT ADHERING TO THE PRINCIPLES OF NATURAL JUSTICE, THAT THE FAA WAS NOT SURE ABOUT THE AUTHEN TICITY OF THE DOCUMENT PRODUCED. IN OUR OPINION, HE SHOULD HAVE CALLED FOR REMAND REPORT FR OM THE AO IN THAT REGARD AND SHOULD HAVE DECIDED THE ISSUE. CONSIDERING THE PECULIAR FACTS A ND CIRCUMSTANCES OF THE CASE,WE ARE OF THE OPINION, THAT IN THE INTEREST OF JUSTICE, THE MATTE R SHOULD BE RESTORED BACK TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. HE IS DIRECTED TO CONSI DER THE ADDITIONAL EVIDENCES PRODUCED BY THE ASSESSEE AND TO DECIDE THE ADDITIONAL GROUND RA ISED BY HIM BEFORE HIM.HE SHOULD AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, BEFORE DECIDING THE ISSUE. THIRD GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE, IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PAR TLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH MARCH, 2017. , 2017 SD/- SD/- ( / RAM LAL NEGI ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 17 .03 .2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.