BLUE STAR CONSTRUCTION COMPANY, RAIGAD V. DCIT PANVEL, RAIGAD

ITA 3186/MUM/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7321 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 02-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMAR
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER ITA NO. 3186/MUM/2017 (ASSESSMENT YEAR: 2012-13) M/S. BLUE STAR CONSTRUCTION CO. NR. SHANKAR MANDIR, OPP. SHRIKE PLANT, URAN PANVEL ROAD SH 54, POST JASAI, TAL. URAN DIST. RAIGAD 400702 VS. DEPUTY COMMISSIONER OF INCOME TAX PANVEL PAN AAIFB3087E APPELLANT RESPONDENT APPELLANT BY: SHRI PRAKASH PANDIT RESPONDENT BY: SHRI SUMAN KUMAR DATE OF HEARING: 02.05.2018 DATE OF PRONOUNCEMENT: 11.05.2018 O R D E R PER R.C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT(A), AURANGABAD-1, DATED 23.03.2017 FOR A.Y. 2012-13 IN THE MATTER OF ORDER PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT ( HEREINAFTER THE ACT). 2. THE GRIEVANCE OF THE ASSESSEE RELATES TO THE ADDITI ON MADE BY REJECTING THE BOOKS OF ACCOUNT AND ALSO DISALLOWANC E OF INTEREST EXPENDITURE. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CARRYING ON THE BUSINESS OF ROAD ASPHALTING, CIVIL CONSTRUCTIONS AND ALSO DERIVES RENTAL INCOME FROM CONTAINER YARD. FOR THE ASSESSMENT YEAR UNDER APPEAL, THE INCOME DECLARED BY THE ASSESSEE IS ` 3,20,86,560/-. IN THE ASSESSMENT PROCEEDINGS, THE ASSESSEE INFORMED THE AO THAT THE ASSESSEE'S BOOKS OF ACCOUNTS AND RELATED DOCUMENTS HAVE BEEN IMPOUNDED BY VAT DEPARTMENT HAVING ITS OFFICE AT CB D BELAPUR, NAVI MUMBAI. THE ASSESSEE ALSO GAVE THE COPY OF PANCHNAM A TO THE AO. THE ITA NO. 3186/MUM/2017 M/S. BLUE STAR CONSTRUCTION CO. 2 ASSESSEE ON THE BASIS OF AVAILABLE COPIES OF THE BO OKS OF ACCOUNTS GAVE SUBMISSION FROM TIME TO TIME, WHICH ACCORDING TO TH E AO WAS SKETCHY AND NOT SUFFICIENT. THE AO INVOKED PROVISIONS OF SECTIO N 145(3) OF THE ACT AND REJECTED ASSESSEE'S BOOKS OF ACCOUNTS ONLY ON THE G ROUND THAT THE ASSESSEE FAILED TO PRODUCE BOOKS OF ACCOUNTS AND ES TIMATED THE INCOME AT 10% OF THE GROSS RECEIPTS OF ` 36,11,63,384/- I.E. ` 3,61,16,338/-. BY THE IMPUGNED ORDER THE CIT(A) CONFIRMED THE ACTION OF T HE AO. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULLY GONE THROUGH THE ORDER OF THE AUTHORITIES BELOW AND FOUND THAT AT TH E TIME OF ASSESSMENT PROCEEDINGS THE BOOKS OF ACCOUNT WERE IMPUGNED BY T HE VAT DEPARTMENT. THE ASSESSEE HAS ALSO GIVEN COPY OF PANCHANAMA TO T HE AO. HOWEVER, THE AO DID NOT AGREE WITH THE ASSESSEES CONTENTION AND REJECTED THE BOOK RESULTS BY INVOKING PROVISIONS OF SECTION 145(3) AN D ESTIMATED THE INCOME AT 10% OF GROSS RECEIPTS. WE FIND THAT NOW THE ASSE SSEE IS IN POSSESSIONS OF REGULAR BOOKS OF ACCOUNTS, THEREFORE, IN THE INTERE ST OF JUSTICE WE RESTORE THE MATTER BACK TO THE FILE OF THE AO TO VERIFY THE RELEVANT BOOKS OF ACCOUNT AND FOR DECIDING THE ISSUE AFRESH AS PER LAW. 5. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO DISA LLOWANCE OF INTEREST OF ` 3,85,41,830/- BEING INTEREST PAID ON LAND TAKEN AND UTILISED FOR BUSINESS PURPOSES. 6. AT THE OUTSET THE LEARNED A.R. PLACED ON RECORD THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y. 2010-11 DA TED 28.03.2017, WHEREIN EXACTLY SIMILAR ISSUE WAS DEALT WITH BY THE TRIBUNAL AND THE MATTER WAS RESTORED BACK TO THE FILE OF THE AO. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL, WHEREIN THE TRIB UNAL HAD RESTORED THE MATTER WITH REGARD TO DISALLOWANCE OF INTEREST AFTE R HAVING THE FOLLOWING OBSERVATION: - 7. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE DISPUTE BETWE EN THE PARTIES IS LIMITED TO THE ISSUE WHETHER THE INTEREST EXPENDITU RE OF ` 3,77,80,167 IS DIRECTLY RELATED TO THE EARNING OF RENTAL INCOME FROM LETTING OUT THE CONTAINER YARD. IT IS THE CLAIM OF THE ASSESSEE THA T INTEREST BEARING ITA NO. 3186/MUM/2017 M/S. BLUE STAR CONSTRUCTION CO. 3 BANK LOAN IS TAKEN FOR DEVELOPMENT OF CONTAINER YAR D FOR MAKING IT VIABLE FOR COMMERCIAL USE. HOWEVER, THE DEPARTMENTA L AUTHORITIES HAVE REFUSED TO ACCEPT ASSESSEE'S CLAIM PRIMARILY F OR THE REASON THAT THE ASSESSEE WAS UNABLE TO PRODUCE EVIDENCE TO ESTA BLISH THE FACT THAT THE BANK LOAN WAS UTILISED FOR DEVELOPMENT OF THE LAND. IN THIS CONTEXT, WE HAVE NOTED THAT THE LEARNED COMMISSIONE R (APPEALS) HAS REFERRED TO CERTAIN TRIPARTITE AGREEMENT BETWEEN TH E ASSESSEE, BANK AND LESSEE WITH REGARD TO AVAILING OF LOAN AGAINST RENTAL INCOME. SIMILARLY, HE HAS REFERRED TO MEMORANDUM OF UNDERST ANDING ENTERED INTO BETWEEN THE ASSESSEE AND ITS PARTNERS. HOWEVER , ULTIMATELY, THE LEARNED COMMISSIONER (APPEALS) HAS SUSTAINED THE DI SALLOWANCE ON THE REASONING THAT THE ASSESSEE HAD NOT FURNISHED T HE ENTIRE LOAN DOCUMENTS BEFORE HIM. HE HAS OBSERVED THAT OUT OF T HREE TRIPARTITE AGREEMENTS, THE ASSESSEE HAS SUBMITTED TWO AND ASSE SSEE HAS NOT PROVIDED THE TERMS AND CONDITIONS OF TERM LOAN CUM HYPOTHECATION AGREEMENT DATED 20 TH OCTOBER 2006 AND 24 TH MARCH 2007. HE HAS ALSO OBSERVED, THE ASSESSEE HAD NOT PROVIDED COPY O F AGREEMENT BETWEEN THE ASSESSEE AND THE LESSEE. HOWEVER, THE L EARNED AUTHORISED REPRESENTATIVE HAD SUBMITTED BEFORE US T HAT ALL NECESSARY AND RELEVANT DOCUMENTS TO PROVE THE FACT THAT THE L OAN WAS TAKEN FOR DEVELOPMENT OF LAND WAS SUBMITTED BEFORE THE LEARNE D COMMISSIONER (APPEALS). WHEREAS, THE LEARNED COMMISSIONER (APPEA LS) HAS NOT PROPERLY CONSIDERED THEM. THUS, AS COULD BE SEEN FR OM THE AFORESAID FACTS, THE DISALLOWANCE OF EXPENDITURE IS PRIMARILY DUE TO LACK OF DOCUMENTARY EVIDENCES. THEREFORE, CONSIDERING THE S UBMISSIONS OF THE LEARNED AUTHORISED REPRESENTATIVE THAT ALL RELEVANT AND NECESSARY DOCUMENTS WERE AVAILABLE WITH THE ASSESSEE TO PROVE THE UTILISATION OF BANK LOAN IN DEVELOPMENT OF CONTAINER YARD WHICH, A CCORDING TO THE LEARNED AUTHORISED REPRESENTATIVE, WERE PRODUCED BE FORE THE DEPARTMENTAL AUTHORITIES BUT NOT CONSIDERED, FOR TH E INTEREST OF JUSTICE, WE CONSIDER IT APPROPRIATE TO RESTORE THE MATTER BA CK TO THE ASSESSING OFFICER FOR DENOVO ASSESSMENT AFTER CONSIDERING ALL THE DOCUMENTARY EVIDENCES PRODUCED BY THE ASSESSEE, THE SUBMISSIONS TO BE MADE AND THE DECISIONS TO BE RELIED UPON BY THE ASSESSEE IN SUPPORT OF ITS CLAIM. WE MAKE IT CLEAR THAT NOT ONLY THE ASSESSING OFFICE R MUST AFFORD REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESS EE BUT HE MUST PASS A REASONED ORDER DEALING WITH ALL THE SUBMISSI ONS OF THE ASSESSEE KEEPING IN VIEW THE DOCUMENTARY EVIDENCE A S WELL AS THE DECISIONS TO BE RELIED UPON. ACCORDINGLY, THE GROUN DS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDE R CONSIDERATION ARE EXACTLY SAME, WE RESTORE THIS MATTER BACK TO TH E FILE OF THE AO FOR DECIDING AFRESH AS PER LAW. ITA NO. 3186/MUM/2017 M/S. BLUE STAR CONSTRUCTION CO. 4 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH MAY, 2018. SD/ - SD/ - (RAVISH SOOD) (R.C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 11 TH MAY, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -1, AURANGABAD 4. THE CIT - 2, THANE 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.