ANIL SAHAJWANI, MUMBAI V. ITO 19(1)(3), MUMBAI

ITA 3462/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92792 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 01-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 16-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: S C TIWARI
• Keywords: Business income; Business expenditure; Additional evidence; Bad and doubtful debts
• Section: 37

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A - BENCH , , BEFORE S/SH. I P BANSAL,JUDICIAL ME MBER & RAJENDRA,ACCOUNTANT MEMBER /. ITA NO. 3462 /MUM/20 1 2 , / ASSESSMENT YEAR - 0 8 - 09 MR. ANIL SAHAJWANI 11/437, TIRUPATI APARTMENTS 14TH ROAD KHAR (W) MUMBAI - 400 054. PAN: AAUPS 1357 E VS INCOME TAX OFFICER - 19(1)(3) MUMBAI . ( / A PPELLANT ) ( / RESPONDENT ) /ASSESSEE BY :SHRI S.C. TIWARI / REVENUE BY :SHRI ASGHAR ZAIN / DATE OF HEARING : 03 - 0 6 - 2015 / DATE OF PRONOUNCEMENT : 03 - 0 6 - 2015 , 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER DT. 29.2.2012 OF CIT(A) - 30 , MUMBAI THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL : THE LD. COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN CONFIRMING THE AD DITION MADE BY THE ASSESSING OFFICER BY DISALLOWING THE CLAIM OF CUSTOM DEPOSIT WRITTEN OFF RS.4,58,000/ - . HE OUGHT TO HAVE APPRECIATED THAT THE SAID SUM WAS EXPENDED IN THE ORDINARY COURSE OF BUSINESS OF YOUR APPELLANT AND HAD BECOME IRRECOVERABLE ONLY IN PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2008 - 09 AND IS ALLOWABLE AS BUSINESS EXPENDITURE U/S. 37 OF THE I.T. ACT, 1961. YOUR APPELLANT HUMBLY PRAYS THAT THE SAID SUM OF RS.4,58,000/ - BE ALLOWED AS BUSINESS EXPENDITURE U/S. 37 OF THE I.T. ACT, 1961 IN COMPUTING THE BUSINESS INCOME FOR THE ASSESSMENT YEAR 2008 - 09. DURING THE COURSE OF HEARING BEFORE US THE AUTHORISED REPRESENTATIVE ( AR ) ,REFERRED TO THE APPLICATION MADE BY THE ASSESSEE FOR ADMITTING ADDITIONAL EVIDENCES. IT WAS STATED THAT THE CHEQUE DR AWN BY THE BUYER OF THE GOODS I.E. M/S. ASHTALAXMI MERCANTILE PVT. LTD.(AMPL) A ND THE LETTER SENT BY AMPL COULD NOT BE FILED BEFORE THE FIRST APPELLATE AUTHORITY (FAA) , THAT THESE WERE VITAL DOCUMENT S FOR DECIDING THE APPEAL.DEPARTMENTAL REPRESENTATIVE ( DR ) LE FT THE ISSUE OF ACCEPTING THE ADDITIONAL EVIDENCES TO THE DISCRETION OF THE BENCH. AFTER GOING THROUGH T HE MATERIAL AVAILABLE ON RECORD, WE ARE OF THE OPINION THAT IN THE INTEREST OF JUSTICE THE ADDITIONAL E VIDENCE PRODUCED BY THE ASSESSEE SHOULD BE ADMITTE D, AS THEY WOULD HAVE SOME BEARING ON OUTCOME OF THE APPEAL. 2. ASSESSEE - AN INDIVIDUAL , DERIVING INCOME FROM BUSINESS AND CAPITAL GAINS FILED HIS RETURN OF INCOME ON,29.9.2008, DECLARING TOTAL IN COME OF RS. 8.26LACS.ASSESSING OFFICER( AO ) COMPLETE D THE ASSESSMENT ON 20.12.2010,U/S.143(3) OF THE ACT, DETERMINING THE INCOME OF THE ASSESSEE , AT RS. 12.84 LACS.DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD DEBITED THE P&L ACCOUNT ON ACCOUNT O F CUSTOM DEPOSIT WRITE OFF FOR A SUM OF RS.4.58 LACS .H E D IRECTED THE ASSESSEE TO EXPLAIN AS HOW THE WRITTEN OFF CUSTOM DEPOSIT WAS ALLOWABLE. IN HIS REPLY, THE ASSESSEE ITA/3462/MUM/2012 - AY - 2008 - 09,AS. 2 STATED THAT CUSTOM D EPOSIT WAS DULY PAID IN FY 20 04 - 05 TOWARDS IMPORT OF MATERIAL, THAT THE SAID DEPOSIT WAS REFUNDABLE, THAT HE TRIED HIS LEVEL BEST TO RECOVER THE SECURITY DEPOSIT, THAT HE COULD NOT RECOVER THE SAME, THAT CONSIDERING THE SAME AMOUNT AS BAD DEBTS , HE WROTE IT OF F DURING THE YEAR UNDER APPEAL. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE , THE AO HELD THAT THE AMOUNT IN DISPUTE WAS NOT A DEBT WHICH WAS NOT WRITTEN OFF, THAT THE DISPUTED AMOUNT WAS NOT INCIDENTAL TO THE BUSINESS OF THE ASSESSEE . FINALLY, HE DISALLOWED THE CLAIM MADE BY THE ASSESSEE . 3. AGGRIEVED BY THE ORDER OF THE AO , THE ASSESSEE PREFERRED AN ORDER BEFORE THE FIR ST APPELLATE AUTHORITY ( FAA ) . BEFORE HIM , IT WAS ARGUED THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF DEALING I N NON - FERROUS METALS AND SCRAP, THAT HE HAD ENTERED INT O A HIGH - SEA SALES TRANSACTION WITH REGULAR CUSTOMER, THAT HE HAD DIRECTLY PAID A SEC URITY DEPOSIT WITH THE CUSTOM DEP AR T MENT FOR ONE OF THE HIGH SEA SALES, THAT REFUND OF THE SAID DEPOSIT WAS TO GO TO THE BUYER, THAT A MEMORANDUM OF UNDERSTANDING WAS ENTERED INTO BY THE ASSESSEE WITH THE BUYER FOR RECOVERY OF THE AMOUNT , THAT THE BUYER HAD ISSUED UNDATED CHEQUES TO THE ASSESSEE AS SECURITY FOR REPAYMENT OF THE DEPOSIT, THAT SUBSEQUENTLY THE BUYER BECAME UNTRACEABLE , THAT THE AMOUNT OF CUSTOM DEPOSIT COULD NOT BE RECOVERED AND HAD TO BE WRITTEN OFF, THAT THE SECURITY DEPOSIT WAS PAID IN THE ORDINARY COURSE OF BUSINESS, THAT THE AMOUNT HAD NOT BEEN RECO VERED TILL FILING OF THE APPEAL. AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT THE CLAIM MADE U/S. 36 (VII) BY THE ASSESSEE WAS NOT ALLOWABLE, THAT T HE ASSESSEE HAD NOT OFFERED CUSTOM DEPOSIT AS INCOME IN ANY OF THE PREVIOUS YEARS, THAT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE TO PROVE THE EFFORTS MADE BY HIM, THE AMOUNT IN QU ES TION WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE ASSE SSEE .FINALLY,CONFIRMING THE ORDER OF THE AO, THE FAA DISMISSED THE APPEAL OF THE ASSESSEE . 4. BEFORE US, THE AUTHORISED REPRESENTATIVE ( AR ) REFERRED TO THE ADD ITIONAL E VIDENCE AND REQUESTED THAT THE MATTER MAY BE RESTORED TO THE FILE OF AO FOR FRESH ADJUDICA TION . DEPARTMENTAL REPRESEN TA - TIVE ( DR ) STATED THAT DEP ARTMENT HAD NO OBJECTION IF MATTER WAS SENT BACK TO THE AO . 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE EARLIER PART OF OUR ORDER,W E HAVE ADMITTED THE ADD ITIO NAL E VIDENCE FILED BY THE ASSESSEE .WE ARE OF THE OPINION,THAT IN THE INT EREST OF JUSTICE WE AR E RESTORING THE MATTER TO THE FILE OF AO FOR FRESH ADJUDICATION. HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND PASS A SPEAKING ORDER AFTER CONSIDERING THE ADDITIONAL EVIDENCE. EFFECTIVE GROUND OF APPEAL FILED BY THE ASSESSEE IS DECIDE D IN HI S F AVOUR , IN PART. AS A RESULT,APPEAL FILED BY THE ASSESSEE STANDS PARTLY ALLOWED. . ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD , JUNE ,2015. 3 , 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI, /DATE: 03 .0 6 .2015 . . . JV . SR.PS. ITA/3462/MUM/2012 - AY - 2008 - 09,AS. 3 / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A B ENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , / ITAT, MUMBAI.