LAKOZY MOTORS P.LTD, MUMBAI V. ITO -10(2)(2) ERSTWHILE-9(2)(2), MUMBAI

ITA 338/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6961 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 15-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: SATYAPARAKASH SINGH
• Keywords: Principle of natural justice; Corroborative evidences; Onus to prove
• Section: 133(6); 37(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI PAWAN SINGH (JM) I.T.A. NO. 338 /MUM/20 18 (ASSESSMENT YEAR 20 11 - 12 ) I.T.A. NO. 339/MUM/2018 (ASSESSMENT YEAR 2012 - 13) LAKOZY MOTORS PVT. LTD. 8, SHAH INDUSTRIAL ESTATE OFF VERA DESAI ROAD ANDHERI WEST MUMBAI - 400 058. PAN : AAACL1889K V S . ITO 10(2)(2) ERSTWHILE 9(2)(2) AAYAKAR BHAVAN M.K. ROAD MUMBAI - 400 020. ( APPELLANT ) ( RESPONDENT ) A SSESSEE BY SHRI SATYAPARAKASH SINGH DEPARTMENT BY S HRI SAURABH DESH PANDE DATE OF HEARING 1 4 . 0 5 . 201 8 DATE OF PRONOUNCEMENT 23 . 0 5 . 201 8 O R D E R PER B.R. BASKARAN (AM) : - THE ASSESSEE HAS FILED THESE APPEALS CHALLENGING THE ORDERS PASSED BY LD CIT(A) - 17, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEARS 2011 - 12 AND 2012 - 13. 2. THE ASSESSEE COMPANY IS A DEALER OF AUTOMOBILE PRODUCTS AND ALSO RUNS PETROL PUMP AT URAN AND SERVICE CENTRES AT MUMBAI AND DELHI. WE SHALL TAKE UP THE APPEAL FILED BY THE ASSESSEE FOR AY 2011 - 12. 3. THE FIRST ISSUE RELATES TO THE ADDITION OF RS.1.00 CRORE MADE BY THE AO U/S 68 OF THE ACT. THE LD A.R SUBMITTED THAT THE ASSESSEE HAD RECEIVED SHARE CAPITAL & SHARE PREMIUM FROM A COMPANY NAMED M/S AADYA MOTOR CAR CO. P LTD. THE ASSESSEE FURNISHED ALL THE DETAILS TO PROVE THE CASH CR EDIT. THE SHARE SUBSCRIBER ALSO CONFIRMED THE SAME BY DULY RESPONDING TO THE NOTICE ISSUED BY THE AO U/S 133(6) OF THE ACT. THE AO NOTICED THAT THE SHARE SUBSCRIBER HAS ACCOUNTED THE SAME AS DEPOSITS IN THE BOOKS OF ACCOUNT AND NOT AS SHARE INVESTMENT . THE AO CALLED FOR EXPLANATIONS IN THIS REGARD AT THE FAG END OF LAKOZY MOTORS PVT. LTD. 2 PROCEEDINGS AND HENCE THE ASSESSEE COULD NOT GIVE REPLY. THE LD CIT(A) ALSO CONFIRMED THE SAME. HE SUBMITTED THAT THE SOURCE OF MONEY WAS DOUBTED BY TAX AUTHORITIES. ACCORDINGLY HE SUBMI TTED THAT THE ASSESSEE MAY BE GIVEN AN OPPORTUNITY TO EXPLAIN THE ABOVE SAID AMOUNT AGAIN. 4. WE HEARD LD D.R AND PERUSED THE RECORD. WE NOTICE THAT THE ASSESSING OFFICER HAS ISSUED NOTICES U/S 133(6) OF THE ACT TO M/S AADYA MOTOR CAR CO. P LTD AND T HE SAID PARTY HAS ALSO RESPONDED. THE ONLY CONTRADICTION IS THAT THE ASSESSEE HAS SHOWN THE AMOUNT OF RS.1.00 CRORE RECEIVED BY IT AS SHARE CAPITAL AND SHARE PREMIUM, WHILE THE OTHER PARTY HAS SHOWN IT AS DEPOSITS. HENCE THIS IS A MATTER REQUIRING CL ARIFICATION ONLY. WE ALSO NOTICE THAT THE AO HAS CALLED FOR EXPLANATIONS ON 27 - 03 - 2014 AND THE ASSESSMENT ORDER HAS BEEN PASSED ON 31.03.2014. HENCE WE ARE OF THE VIEW THAT THE ASSESSEE MAY BE PROVIDED WITH ONE MORE OPPORTUNITY TO PROVE THE CASH CREDITS. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING IT AFRESH. 5. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS.31.43 LAKHS FOR NON - DEDUCTION OF TDS. THE AO DISALLOWED A SUM OF RS.6.57 LAKHS AS HE FELT THAT THE SAME REPRESENTS EXPENDITURE WHICH IS PROHIBITED BY LAW. HE ALSO DISALLOWED A SUM OF RS.22.22 LAKHS FOR NON - DEDUCTION OF TAX AT SOURCE BY INVOKING PROVISIONS OF SEC. 40(A)(IA) OF THE ACT. WITH REGARD TO THE ISSUE OF NON - DEDUCTION OF TAX AT SOURCE, WE NOTICE THAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE CO - ORDINATE BENCH IN THE ASSESSEES OWN CASE IN ITA NO.7004/M/2015 & 7087/M/2014 RELATING TO AY 2010 - 11 AND THE MATTER HAS BEEN RESTORED TO THE FILE OF THE AO, SINCE THE ASSESSEE CLAIMED THAT IT HAS DEDUCTED TDS. THE LD A.R SUBMITTED THAT THE ASSESSEE HAS DEDUCTED TAX AT SOURCE IN THIS YEAR ALSO, WHICH FACTS NEED VERIFICATION. 6. THE LD D.R SUBMITTED THAT THE AMOUNT OF RS.6.57 LAKHS C ANNOT BE ALLOWED EVEN IF TDS WAS DEDUCTED, IF THE EXPENDITURE IS HIT BY EXPLANATION TO SEC. 37(1) OF THE ACT. WE FIND MERIT IN THE SUBMISSIONS OF LD D.R. WITH REGARD LAKOZY MOTORS PVT. LTD. 3 TO THE DISALLOWANCE OF RS.6.57 LAKHS IS CONCERNED, WE NOTICE THAT THE AO DID NOT FURNIS H THE DETAILS OF THOSE EXPENSES AND DID NOT ALSO MENTION AS TO HOW THOSE EXPENSES WERE HIT BY THE EXPLANATION GIVEN U/S 37(1) OF THE ACT. WE NOTICE THAT THE AO HAS MADE ONLY GENERAL OBSERVATIONS. WE NOTICE THAT THE LD CIT(A) HAS CONFIRMED THE DISALLOWANC E WITH GENERAL OBSERVATIONS. HENCE BOTH THE DISALLOWANCES REQUIRE FRESH EXAMINATION AT THE END OF AO. AS SUBMITTED BY LD D.R, THE AMOUNT OF RS.6.57 LAKHS CANNOT BE ALLOWED EVEN IF TDS WAS DEDUCTED IF THE EXPENDITURE IS HIT BY EXPLANATION TO SEC. 37(1) OF THE ACT. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING IT AFRESH. 7. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF WORKSHOP EXPENSES OF RS.39.00 LAKHS. THE AO NOTICED THA T THE ASSESSEE HAS PAID A SUM OF RS.39.00 LAKHS TOWARDS LABOUR CHARGES FOR CARRYING OUT REPAIRS AND MAINTENANCE. SINCE THE ASSESSEE DID NOT PRODUCE SUPPORTING EVIDENCES, THE AO DISALLOWED THE SAME. BEFORE LD CIT(A), THE ASSESSEE PRODUCED ONLY LEDGER ACCOU NT AND HENCE THE LD CIT(A) CONFIRMED THE ADDITION. 8. BEFORE US, THE LD A.R PRAYED FOR ONE MORE OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE THE CLAIM OF EXPENDITURE OF RS.39.00 LAKHS ON THE GROUND THAT THE ASSESSEE HAS DEDUCTED TDS FROM THE ABOVE SAID PAYMENT. WE ALSO HEARD LD D.R, WHO SUPPORTED THE ORDER PASSED BY LD CIT(A). 9. THERE SHOULD NOT BE ANY DOUBT THAT THE BURDEN TO PROVE THE CLAIM IS PLACED UPON THE ASSESSEE. HOWEVER IN THE INSTANT CASE, WE NOTICE THAT THE ASSESSEE HAS FAILED TO FURNIS H THE EVIDENCES TO PROVE THE GENUINENESS OF CLAIM. BEFORE LD CIT(A) ALSO, THE ASSESSEE HAS FURNISHED LEDGER ACCOUNT COPIES ONLY. THESE ARE NOT SUFFICIENT TO PROVE THE GENUINENESS OF CLAIM. THOUGH THE LD A.R HAS CONTENDED THAT TDS HAS BEEN DEDUCTED FROM THE ABOVE SAID PAYMENT, YET WE ARE OF THE VIEW THAT IT IS THE DUTY OF THE ASSESSEE TO EXPLAIN THE NATURE OF SERVICES OFFERED BY SHRI SARDAR SINGH KATTAR SINGH TOWARDS THE PAYMENT OF RS.39.00 LAKHS AND GENUINENESS OF EXPENSES. ACCORDINGLY, IN THE INTEREST OF LAKOZY MOTORS PVT. LTD. 4 NATURAL JUSTICE, WE RESTORE THIS ISSUE TO THE FILE OF THE AO FOR EXAMINING THIS ISSUE AFRESH AND ACCORDINGLY THE ORDER PASSED BY LD CIT(A) IS SET ASIDE. THE AO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW AFTER EXAMINING THE EVIDENCES THAT MAY BE FURNISHED BY THE ASSESSEE. 10. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF SUNDRY BALANCES OF RS.23.87 LAKHS WRITTEN OFF BY THE ASSESSEE. SINCE THE ASSESSEE DID NOT PROVE THAT THE ABOVE SAID AMOUNT WAS OFFERED AS INCOME IN THE EARLIER YEARS, THE A O DISALLOWED THE CLAIM. THE LD CIT(A) ALSO CONFIRMED THE SAME. BEFORE US, THE LD A.R SUBMITTED THAT ALL THE ABOVE SAID AMOUNT HAS BEEN OFFERED AS INCOME IN THE EARLIER YEARS AND IN SUPPORT OF THE SAME, HE INVITED OUR ATTENTION TO THE COPIES OF LEDGER ACC OUNTS PLACED IN THE PAPER BOOK. ACCORDINGLY HE PRAYED FOR AN OPPORTUNITY TO DEMONSTRATE THE SAME BEFORE THE AO. 11. WE HEARD LD D.R AND PERUSED THE RECORD. HAVING REGARD TO THE SUBMISSIONS MADE BY LD A.R, WE ARE OF THE VIEW THAT THERE IS MERIT IN HIS SUBMISSIONS. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING THIS ISSUE AFRESH. THE AO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH LAW AFTER EXAMINING THE EVIDENCES THAT MA Y BE FURNISHED BY THE ASSESSEE. 12. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF PRELIMINARY EXPENSES OF RS.4.30 LAKHS. THE ASSESSEE CLAIMED PRELIMINARY EXPENSES OF RS.5.40 LAKHS U/S 35D OF THE ACT. THE AO NOTICED THAT PROVISIONS OF SEC. 35D LIMITS THE DEDUCTION TO 5% OF THE PAID UP CAPITAL. ACCORDINGLY THE AO RESTRICTED THE CLAIM TO RS.1.10 LAKHS AND DISALLOWED THE REMAINING AMOUNT OF RS.4.30 LAKHS. BEFORE LD CIT(A), THE ASSESSEE SUBMITTED THAT THE ABOVE SAID CLAIM WAS ACTUALLY RELATED TO TRAININ G AND DEVELOPMENT EXPENSES INCURRED IN 2007 - 08. SINCE THE ASSESSEE TOOK A DIFFERENT STAND AND SINCE THE SAID EXPENDITURE WAS CLAIMED TO RELATE TO THE FY 2007 - 08, THE AO CONFIRMED THE DISALLOWANCE. 13. THE PLEA OF THE LD A.R IS THAT THE EXPENDITURE RE LATED TO TRAINING AND DEVELOPMENT AND THE SAID CLAIM HAS NOT BEEN EXAMINED BY THE AO. WE FIND LAKOZY MOTORS PVT. LTD. 5 MERIT IN THE SAID ARGUMENT. HENCE THIS ASPECT REQUIRES EXAMINATION AT THE END OF AO. THE LD D.R POINTED OUT THE OBSERVATIONS OF LD CIT(A) THAT THE TRAINING AND DEVELOPMENT EXPENSES RELATE TO FY 2007 - 08 ALSO AND SUBMITTED THAT IF IT IS NOT RELATED TO THE YEAR UNDER CONSIDERATION, THE SAME SHOULD BE DISALLOWED. THERE IS MERIT IN THIS CONTENTION OF LD D.R ALSO. ACCORDINGLY WE SET ASIDE THE ORDER PASSED BY LD CIT (A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING THIS ISSUE AFRESH. 14. WE SHALL NOW TAKE UP THE APPEAL FILED FOR AY 2012 - 13. THE FIRST ISSUE RELATE TO THE DISALLOWANCE OF RS.3,22,618/ - RELATING TO UNDISCLOSED IN COME. THE LD A.R DID NOT PRESS THE SAME AND HENCE THE SAID GROUND IS DISMISSED AS NOT PRESSED. 15. THE NEXT ISSUE RELATES TO DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS.32.33 LAKHS. THE AO DISALLOWED A SUM OF RS.26.00 LAKHS FOR ABSENCE OF EVIDENCES AND ALSO FOR NON - DEDUCTION OF TAX AT SOURCE U/S 40(A)(IA) OF THE ACT. REMAINING AMOUNTS WERE DISALLOWED FOR WANT OF EVIDENCES. THE LD CIT(A) ALSO CONFIRMED THE SAME. 16. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE LD A.R SUBMITTED THA T THE ASSESSEE HAS DEDUCTED TDS AND HENCE DISALLOWANCE U/S 40(A)(IA) IS NOT CALLED FOR. THIS CLAIM OF THE ASSESSEE REQUIRES VERIFICATION. IN ANY CASE, IT IS THE RESPONSIBILITY OF THE ASSESSEE TO PROVE THE GENUINENESS OF EXPENSES BY ADDUCING EVIDENCES. AC CORDINGLY, FOLLOWING THE DECISION TAKEN ON AN IDENTICAL ISSUE IN THE PRECEDING YEAR, WE SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF AO FOR EXAMINING IT AFRESH. LAKOZY MOTORS PVT. LTD. 6 17. IN THE RESULT, THE APPEAL FILED BY T HE ASSESSEE FOR AY 2011 - 12 IS TREATED AS ALLOWED AND THE APPEAL OF THE ASSESSEE FILED FOR AY 2012 - 13 IS TREATED AS PARTLY ALLOWED. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 23 . 0 5 .201 8 . SD/ - SD/ - (PAWAN SINGH ) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 23 / 0 5 / 20 1 8 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// SENIOR P RIVATE S ECRETARY PS ITAT, MUMBAI