RAJAT R. PATEL, MUMBAI V. DCIT CEN CIR 25, MUMBAI

ITA 3182/MUM/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2244 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 26-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: UDAY BHASKAR JAKKE
• Section: 143(3); 132

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.C. SHARMA(AM) AND SHRI SANDEEP GOSAIN (JM) ITA NO. 3182/MUM/2015 ASSESSMENT YEAR: 2006-07 RAJAT R. PATEL VS. THE DCIT, 6 RAJ HEM, IT OFFICERS NEW 27 VAIKUNTHLAL MEHTA RD. JVPD MARINE LINES SCHEME VILE PARLE (W) MUMBAI - 400020 MUMBAI PAN NO. AAIPP5183F (APPELLANT) (RESPONDENT) APPELLANT BY : NONE RESPONDENT BY : UDAY BHASKAR JAKKE DATE OF HEARING : 20/07/201 6 DATE OF PRONOUNCEMENT : 27/07/2016 O R D ER PER SANDEEP GOSAIN, JM : PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE AGAI NST THE ORDER OF LD. PR. CIT(OSD)[H/C. CIT(A)-51], MUMBAI DT. 04/03/2015, O N THE GROUND MENTIONED HEREIN BELOW : 1. DISALLOWANCE OF EXPENDITURE ON INTEREST, ETC. THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CO NFIRMING THE DISALLOWANCE OF RS. 3,16,481/- OUT OF VARIOUS EXPENSES. RELIEF CLAIMED : EXPENSES OF RS. 3,16,481/- BE ALLO WED. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A DIRECTOR IN M/S. PATEL ENGINEERING LTD. AND PARTNER IN M/S. SIDDHIVINAYAK CONSTRUCTION. A SEARCH OPERATION UNDER SECTION 132 OF THE I.T. ACT, 1961 W AS CONDUCTED ON 16/12/2010 IN THE CASE OF M/S. PATEL ENGINEERING LTD., GROUP O F CASES. SINCE THE ASSESSEE WAS, INTER ALIA, COVERED IN THE SEARCH OPERATION TH EREFORE CASES WERE CENTRALIZED AND AFTER RECORDING SATISFACTION, NOTIC E U/S. 153C OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. AFTER SEEKING REPLY FROM THE ASSESSEE AND WHILE COMPUTING ASSESSMENT, THE ASSESSING OFFICER D ISALLOWED CLAIM OF EXPENSE IN THE NATURE OF INTEREST AND PROFESSIONAL CHARGES AGAINST INTEREST INCOME VIDE ASSESSMENT ORDER DT. 19/03/2013. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED THE APPEAL BEFORE THE LD. CIT(A). AFTER CONSIDERING THE SUBMIS SIONS FILED BY THE ASSESSEE, CIT(A) DISMISSED THE APPEAL VIDE ORDER DT. 23/04/20 13. 4. AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESS EE HAS PREFERRED THE PRESENT APPEAL BEFORE US ON THE GROUND MENTIONED HE REIN ABOVE. 5. AT THE TIME OF HEARING, THE CASE WAS CALLED SEVE RAL TIMES BUT NONE APPEARED ON BEHALF OF THE ASSESSEE. NO APPLICATION FOR ADJOURNMENT WAS MOVED BEFORE US THEREFORE IN OUR CONSIDERED VIEW TH E ASSESSEE IS NOT INTERESTED IN PURSUING THE APPEAL THEREFORE WE HAVE DECIDED TO HEAR THE APPEAL EX-PARTE WITH THE ASSISTANCE OF LD. DR PRESENT IN THE COURT. 6. THE ONLY GROUND RAISED BY THE ASSESSEE BEFORE US IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE DISALLOWANCE OF RS. 3,16,48 1/- OUT OF VARIOUS EXPLANATION. ON THE OTHER HAND LD. DR APPEARING ON BEHALF OF THE REVENUE SUPPORTED AND RELIED UPON THE ORDER PASSED BY LOWER AUTHORITIES. BEFORE WE DECIDE THE MERITS OF THE CASE, IT IS NECESSARY TO EVALUATE THE ORDERS PASSED BY LD. CIT(A) WHILE 3 DEALING WITH THE SAID ISSUE. THE OPERATIVE PARA OF LD. CIT(A) IS REPRODUCED BELOW: 5. GROUND 1 IS WITH REGARD TO DISALLOWANCE OF EXPEN DITURE OF RS. 3,16,481/- CLAIMED AGAINST INTEREST INCOME. 5.1 DURING THE YEAR, THE APPELLANT CLAIMED EXPENDI TURE AGGREGATING RS. 3,16,481/- AGAINST INTEREST INCOME FROM THE PARTNER SHIP FIRM IN WHICH HE IS A PARTNER. STATING THAT NO EXPLANATION WAS PROVIDED B Y THE ASSESSEE FOR CLAIMING THE SAID EXPENDITURE AGAINST INCOME EARNED FROM PAR TNERSHIP FIRM, THE AO HAS DISALLOWED CLAIM OF EXPENDITURE AMOUNTING TO RS. 3, 16,481/-. 5.2 THE APPELLANT HAS BEEN HEARD IN THE MATTER. IT IS SUBMITTED THAT THE APPELLANT HAD EARLIER FILED REGULAR RETURN OF INCOM E UNDER S. 139(1) AND ASSESSMENT HAD BEEN COMPLETED UNDER S. 143(3) AND W HILE COMPLETING THE SAID ASSESSMENT UNDER S. 143(3), NO SUCH DISALLOWANCE HA D BEEN MADE. IT IS POINTED OUT BY THE APPELLANT THAT WHILE COMPLETING THE IMPU GNED ASSESSMENT UNDER S. 143(3) R.W.S. 153C, THE AO HAS OVERLOOKED THE FACT T HAT IN THE ASSESSMENT ORDER UNDER S. 143(3) NO SUCH DISALLOWANCE WAS MADE AND T HEREFORE, SINCE NO INCRIMINATING DOCUMENTS OR ANY OTHER EVIDENCE HAS B EEN BROUGHT ON RECORD, THE AO IS NOT JUSTIFIED IN TAKING A DIFFERENT VIEW. 5.3 ON A CONSIDERATION OF THE MATTER, IT IS HELD TH AT IN PROCEEDINGS INITIATED BY ISSUE OF NOTICE UNDER S. 153C, THE AO HAD SOUGHT FOR EXPLANATION REGARDING THE CLAIMS WHICH WAS NOT DONE WHEN THE REGULAR ASSESSME NT UNDER S. 143(3) WAS MADE. HENCE, NO VIEW HAD BEEN TAKEN ON THE IMPUGNED CLAIMS WHILE MAKING THE REGULAR ASSESSMENT. FURTHER IT IS SEEN THAT THE AO HAD MADE THE DISALLOWANCE IN THE IMPUGNED PROCEEDINGS FOR THE REASON THAT NO EXPLANATION WAS GIVEN. THEREFORE, IT IS HELD THAT THE ADDITION IS JUSTIFIE D. THE DISALLOWANCE IS SUSTAINED. 5.4 GROUND 1 IS DISMISSED 7. WE HAVE CAREFULLY ANALYSED THE ORDER PASSED BY L D. CIT(A), WE HAVE ALSO HEARD LD. DR ON THIS GROUND. WE HAVE NOTED FROM THE RECORD THAT ASSESSEE HAD EARLIER FILED REGULAR RETURN OF INCOME UNDER SECTIO N 139(1) AND ASSESSMENT HAD BEEN COMPLETED UNDER SECTION 143(3) AND WHILE COMPU TING THE SAID ASSESSMENT UNDER SECTION 143(1) R.W.S 143(3), NO SUCH DISALLOW ANCE HAD BEEN MADE AND MOREOVER NO INCRIMINATING MATERIAL OR ANY OTHER EVI DENCES HAS BEEN BROUGHT ON RECORD. 4 LD. CIT HAS CONSIDERED THE SAID FACTUAL POSITION AN D IN THIS RESPECT HAS GIVEN A CATEGORICAL FINDING THAT THE AO WHILE COMPUTING THE ASSESSMENT UNDER SECTION 143(3) HAD NOT SOUGHT THE EXPLANATION REGARDING THE PRESENT CLAIM AND HENCE NO VIEW HAD BEEN TAKEN ON THE IMPUGNED CLAIM BY THE AO WHILE MAKING REGULAR ASSESSMENT AND EVEN THE ASSESSEE HAD NOT PU T FORTH ANY EXPLANATION BEFORE THE AO AT THE TIME OF MAKING ASSESSMENT UNDE R SECTION 143(3) R.W.S 153(C) OF THE INCOME TAX ACT, 1961. 8. BE THAT AS IT MAY, IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS EARNED INTEREST INCOME DURING THE YEAR UNDER CONSIDERATION AND WHILE TAKING INTO CONSIDERATION THE FACTS OF THE PRESENT CASE, IT CAN REASONABLE BE PRESUMED THAT THE ASSESSEE MIGHT HAVE INCURRED SOME REASONABLE EX PENSES TO EARN THE INTEREST INCOME HOWEVER THE AO HAS DISALLOWED THE E NTIRE EXPENSES MERELY ON THE GROUND THAT NO EXPLANATION WAS PUT FORTH BY THE ASSESSEE, HENCE CONSIDERING THE INTEREST ON JUSTICE AND WHILE TAKIN G INTO CONSIDERATION THAT PRACTICALLY SOME REASONABLE EXPENSES MIGHT HAVE BEE N INCURRED BY THE ASSESSEE WHILE EARNING THE INTEREST INCOME, REFUSE THE LUMP SUM AMOUNT OF RS. 50,000/- IS ALLOWED TOWARDS INCURRING OF ALL EXPENS ES AND THE REMAINING AMOUNT OF RS. 2,66,481/- [ 3,16,481 50,000 = 2,66,481] I S DISALLOWED AND AO IS DIRECTED TO COMPUTE THE AMOUNT AS PER THE ABOVE DIRECTION. 9. IN THE ABOVE CIRCUMSTANCES THE APPEAL FILED BY T HE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH JULY, 2016. SD/- SD/- (R.C. SHARMA) (SANDEEP GOSAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER 5 MUMBAI; DATED: 27/07/2016 / 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. & & & & / BY ORDER, & //TRUE COPY// ' '' ' / &( &( &( &( ) ) ) ) (DY./ASSTT. REGISTRAR) !' !' !' !' , / ITAT, MUMBAI AG (ON TOUR)