S.M. ENTERPRISES, MUMBAI V. ACIT 12(1) (OLD), MUMBAI

ITA 3176/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1529 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2016
• Appeal Filed By: Assessee
• Bench Allotted: I
• Next Hearing Date: 01-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 26-05-2015
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Corroborative evidences
• Section: 143(3)

Judgement Text

3 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO.3176/M/2015 (ASSESSMENT YEAR: 2010 - 2011) M/S. S.M. ENTERPRISES, 901, PENINSULA TOWERS, G.K. MARG, LOWER PAREL, MUMBAI 400 013. / VS. ACIT - 12(1) (OLD), JCIT 17(3) (NEW), AAYAKAR BHAVAN, MUMBAI - 20. ./ PAN :AAAFS6123Q ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI PRAKASH PANDIT / RESPONDENT BY : SHRI T.A. KHAN, CIT - DR / DATE OF HEARING : 01.12.2016 / DATE OF PRONOUNCEMENT : 16 .12.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE ASSESSEE ON 26.5.2015 IS AGAINST THE ORDER OF THE CIT (A) - 28, MUMBAI DATED 31.3.2015 FOR THE ASSESSMENT YEAR 2010 - 2011. IN THIS APPEAL, ASSESSEE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: - 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 6,16,525/ - OUT OF THE TOTAL DISALLOWANCE OF RS. 12,33,049/ - MADE BY THE AO BEING 10% OF THE UNSUPPORTED CASH EXPENSES OF RS. 61,66,052/ - . 2. REASONS GIV EN BY THE LD CIT (A) IN CONFIRMING THE DISALLOWANCE OF RS. 6,16,525/ - OUT OF THE TOTAL DISALLOWANCE OF RS. 12,33,049/ - MADE BY THE AO BEING THE 10% OF THE UNSUPPORTED CASH EXPENSES OF RS. 61,55,052/ - ARE WRONG INSUFFICIENT AND CONTRARY TO THE FACTS AND EVI DENCE ON RECORD. 2. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE, WHO IS A CLEARING AND FORWARDING (C&F) AGENT, FILED THE RETURN OF INCOME DECLARING THE TOTAL INCOME OF RS. 61,55,051/ - . ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS.73,88,100/ - AFTER MAKING ADDITION OF RS. 12,33,049/ - . THE BACKGROUND FACTS OF THIS ADDITION, WHICH IS THE SUBJECT MATTER OF THE PRESENT APPEAL, INCLUDE THAT THE ASSESSEE DEBITED CERTAIN EXPENSES UNDER FOUR 2 HEA DS VIZ (I) COOLY/CAR/ LORRY HIRE (RS. 14,42,845/) ; (II) C/EXANS/PARKING/REPAIRS/SEALING EXP. (RS. 24,49,121/ - ); (III) CE/PE/BL/STAMPS EXPENSES (RS. 17,77,644/ - ); (IV) TRIP EXPENSES (RS. 4,95,635/ - ) AMOUNTING TO RS. 61,65,245/ - . THESE EXPENSES ARE CLAIMED T O BE INCURRED IN CASH. DURING THE SCRUTINY ASSESSMENT, AO MENTIONED THAT NO SUPPORTING EVIDENCES WERE FURNISHED IN RESPECT OF THE ABOVE EXPENDITURE CLAIMED. RESULTANTLY, AO MADE AD - HOC ESTIMATION OF APPLYING THE FLAT RATE OF 20% AND DISALLOWED THE SUM OF RS.12,33,049/ - . AGGRIEVED, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, AFTER HEARING THE ARGUMENTS OF THE ASSESSEE AND CONSIDERING THE WRITTEN SUBMISSIONS FILED BEFORE THE FAA, CIT (A) RESTRICTED THE DISALLOWANCE TO 10% OF THE CASH EXPENSES. WHILE GIVING RELIEF TO THE ASSESSEE, CIT (A) RELIED ON THE FINDINGS IN THE ASSESSEES OWN CASE FOR THE AY 2008 - 2009. THE CONTENTS OF PARA 2.3 OF THE CIT (A)S ORDER ARE RELEVANT IN THIS REGARD. AGGRIEVED AND NOT SATISFIED WITH THE SAID DECISION OF THE CIT (A), ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUNAL BY RAISING THE ABOVE MENTIONED GROUNDS. 4. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN THE CASE OF SISTER CONCERN OF THE ASSESSEE, NAMELY M/S. ASSOCIATED TRANSPORT CO. VS. CIT, WHICH BEARS A COMMON POSTAL ADDRESS OF LOWER PAREL, MUMBAI - 13 WITH THAT OF THE ASSESSEE, AND SUBMITTED THAT AS PER THE DISCUSSION GIVEN IN PARA 6 OF THE SAID TRIBUNALS ORDER IN ITA NO.3177/M/2015 (AY 2010 - 2011), DATED 27.7.2016, RESTRICTING THE 5% IS REASONABLE. 5. ON HEARING BOTH THE PARTIES, WE FIND, WHAT CONSTITUTES A REASONABLE PERCENTAGE IN THIS KIND OF FACTUAL MATRIX IS THE I SSUE FOR ADJUDICATION. ASSESSEE IS AGGRIEVED AGAINST THE CIT (A)S DECISION THAT RESTRICTS THE DISALLOWANCE TO 10%. IT IS LD COUNSELS ARGUMENT THAT 5% SHOULD BE ADOPTED IN T HIS KIND OF ISSUES. ON PERUSAL OF THE SAID PARA 6 OF THE TRIBUNALS ORDER (SUPR A) , WE FIND, THE SAID PARA IS RELEVANT HERE. CONSIDERING THE SIGNIFICANCE OF THE SAID PARA AND FOR THE COMPLETENESS OF THIS ORDER, THE SAID PARA 6 OF THE TRIBUNALS ORDER DATED 27.7.2016 IS EXTRACTED AND THE SAME READS AS UNDER: - 6. I HAVE CONSIDERED THE CONTENTIONS AND FOUND THAT DISALLOWANCE HAS BEEN MADE BY THE AO BY OBSERVING THAT IN RESPECT OF SOME OF THE EXPENSES THIRD PARTY EVIDENCE WERE NOT AVAILABLE. BY THE IMPUGNED ORDER CIT (A) RESTRICTED THE 3 DISALLOWANCE TO 10%. CONSIDERING THE NATURE OF THE BUSINESS VIS - A - VIS SMALLNESS OF EXPENSES INCURRED AND KEEPING IN VIEW THE TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, I RESTRICT THE DISALLOWANCE TO THE EXTENT OF 5%. I DIRECT ACCORDINGLY. 6. CONSIDERING THE ABOVE DECISION OF THE TRIBUNAL ON IDENT ICAL ISSUE , WE FIND, THE DECISION OF THE CIT (A) SHOULD BE AMENDED AND THE AO IS DIRECTED TO RESTRICT THE DISALLOWANCE TO 5% OF THE CASH EXPENSES. WE ORDER ACCORDINGLY. THUS, GROUNDS RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOU NCED IN THE OPEN COURT ON 1 6 T H DECEMBER, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 16.12 .2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI