SINGHANIA RADHESH R., MUMBAI V. ITO 2(3),

ITA 3532/MUM/2008

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 48896 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 09-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 21-05-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K SINGH
• Assessee Lawyers: SUBODH L RATNAPARKHI
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH J, MUMBAI BEFORE SHRI N.V.VASUDEVAN(J.M) & SHRI J.SUDHAKAR R EDDY (A.M) ITA NO.3532/MUM/08(A.Y. 2005-06) SINGHANIA RADESH R., SHOP NO.03, KITTY KRIPA, OPP. CONG(I) OFFICE, STATION ROAD, BHAYANDER (W), DIST. THANE. PAN:ACEPS 2590P (APPELLANT) VS. THE ITO 2(3), THANE. (RESPONDENT) APPELLANT BY : SHRI SUBODH L. RATNAPARKHI RESPONDENT BY : SHRI S.K.SINGH ORDER PER N.V.VASUDEVAN, J.M, THIS IS ANPPEAL BY THE ASSESSEE AGAINST THE ORDER D ATED 25/3/2008 OF CIT(A) II, THANE RELATING TO ASSESSMENT YEAR 2005-0 6. GROUND NO.1(A) TO 1(D) OF THE REVISED GROUND READ AS FOLLOWS: 1A ON THE FACTS AND IN LAW, THE HONBLE CIT(APPEA LS) ERRED IN CONFIRMING THE ADDITION OF RS.29,61,065/- MADE BY T HE LD. A.O ON ACCOUNT OF THE SAID AMOUNT APPEARING ON THE LIABILI TY SIDE OF THE BALANCE SHEET AS PART OF LOANS & LIABILITIES. 1B ON THE FACTS AND IN LAW, THE STATEMENT OF THE H ONBLE CIT(APPEALS) IN THE APPEAL ORDER THAT HE DIRECTED T HE INCOME TAX INSPECTOR SHRI SHRIKANT DALVI TO CAUSE VERIFICATION OF THE LOAN CREDITORS AND THAT THE SAID INSPECTOR SUBMITTED REPORT DATED 26/08/2007 APPEARS TO BE ERRONEOUS AS THE ASSESSMENT ORDER UND ER APPEAL WAS FRAMED ON 20/12/2007 AND THE HON. CIT(APPEALS) COUL D NOT HAVE DIRECTED ANY VERIFICATION TO BE CARRIED OUT IN ABSE NCE OF ANY APPEAL BEFORE HIM ON 26.08.2007. 1 C. ON THE FACTS AND IN LAW, THE HON. CIT(A) ERRE D IN RELYING UPON THE ALLEGED REPORT OF INCOME TAX INSPECTOR SHRI SHRIKAN T DALVI WITHOUT GRANTING A COPY OF THE SAME TO THE APPELLANT AND AF FORDING YOUR ITA NO.3532/MUM/2008(A.Y. 2005-06) 2 APPELLANT WITH ANY OPPORTUNITY TO ADDRESS THE ADVE RSE INFORMATION ALLEGEDLY CONTAINED THEREIN. 1D. ON THE FACTS AND IN LAW, THE HON.CIT(A) ERRED IN NOT APPRECIATING THAT THE ADDITION MADE IN RESPECT OF LOAN CREDITORS INCLUDED A SUM OF RS.5,91,065.13 WHICH AMOUNT WAS RECEIVED NOT IN THE YEAR UNDER APPEAL BUT IN THE EARLIER YEARS. 2. THE ASSESSEE IS AN INDIVIDUAL CARRYING ON BUSINE SS AS TRANSPORT OPERATOR AND FRANCHISEE IN RELIANCE MOBILE AND ACTI NG AS COMMISSION AGENT. THE AO NOTICED THAT IN THE BALANCE SHEET AS ON 31.3 .05, THE ASSESSEE HAD SHOWN LOANS AND LIABILITIES OF RS. 30,21,065/-. AC CORDING TO THE AO THE ASSESSEE FILED LOAN CONFIRMATION LETTERS. IT HAS T O BE MENTIONED THAT OUT OF THE AFORESAID LOANS AND ADVANCES A SUM OF RS. 72,00 0/- REPRESENTS RECEIPT OF DEPOSIT BY THE ASSESSEE FROM FOUR PERSONS WHO WERE ENGAGED BY HIM AS DRIVERS IN HIS BUSINESS AS TRANSPORT OPERATOR. ACC ORDING TO THE ASSESSEE THIS WAS TAKEN AS SECURITY DEPOSIT FROM THE DRIVERS . A PHOTOCOPY OF THE DRIVING LICENCE OF THE DRIVERS AND PHOTOCOPY OF RA TION CAR(FROM ONE DRIVER) WERE ALSO FIELD. THESE ARE AVAILABLE IN PAGE NO.4 TO 15 OF THE ASSESSEES PAPER BOOK. 3. THE REAMING LOANS AND ADVANCES WERE RECEIVED FRO M 18 DIFFERENT PARTIES. THE ASSESSEE HAD FILED CONFIRMATION FROM ALL THESE PARTIES AND IN MOST CASES PARTICULARS OF INCOME TAX ASSESSMENT, PA N CARD ETC. WERE ALSO FILED. THESE ARE AVAILABLE AT PAGE NO.16 TO 81 OF THE ASSESSEES PAPER BOOK. THE AO WITHOUT CONSIDERING ALL THESE DOCUMENTS HELD THAT THE CAPACITY AND GENUINENESS OF THE LOAN TRANSACTIONS WERE NOT PROVE D BY THE ASSESSEE. IN THIS REGARD THE AO REFERRED TO ONE OF THE LOANS OF RS. 10,00,000/- AVAILED BY THE ASSESSEE FRON MR. ASHOK NAGA KANCHAN AND MADE THE OBSERVATION THAT PRIOR TO THE GIVING OF THE LOAN MONEY HAD BEEN TRAN SFERRED TO HIS BANK ACCOUNT. 4. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. ITA NO.3532/MUM/2008(A.Y. 2005-06) 3 5. AGGRIEVED BY THE ORDER OF THE CIT(A) THE ASSESSE E HAS FILED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 6. IT IS RELEVANT TO NOTE THAT THE CIT(A) WHILE CON FIRMING THE ORDER OF THE AO HAD MADE A REFERENCE TO REPORT OF INCOME TAX INS PECTOR, ONE SHRI SHIVKANT DALVE DATED 26/8/2007, WHEREIN IT HAS BEEN MENTIONED BY THE INSPECTOR THAT ON VERIFICATION OF THE ADDRESS GIVE N IN THE CONFIRMATION IT WAS ASCERTAINED THAT THOSE ADDRESSES WERE BOGUS. IT IS FURTHER NOTICED THAT THE ORDER OF THE AO WAS PASSED ON 20/12/2007 AND THE IN SPECTORS REPORT HAS STATED TO BE DATED 26/8/2007. THUS IT IS CLEAR THA T THE REPORT OF THE INSPECTOR RELIED UPON BY THE CIT(A) WAS NOT FURNISH ED PURSUANT TO THE DIRECTION OF THE CIT(A), SINCE THE INSPECTORS REPO RT IS DATED EVEN PRIOR TO THE PASSING OF THE ORDER OF ASSESSMENT. IT WAS ALSO PO INTED OUT THAT OUT OF THE ADDITION MADE BY THE AO A SUM OF RS. 5,91,065.13 WA S NOT A LOAN RECEIVED DURING THE PREVIOUS YEAR. 7. WE HAVE HEARD THE RIVAL SUBMISSION. IN OUR VIEW THE DOCUMENTS FILED BY THE ASSESSEE TO EXPLAIN THE CREDIT APPEARING IN HIS BOOKS OF ACCOUNT HAS NOT BEEN PROPERLY CONSIDERED BY THE REVENUE AUTHORI TIES. IN OUR VIEW THERE IS SUFFICIENT EVIDENCE TO ESTABLISH THE IDENTITY OF TH E CREDITORS AND PRIMA FACIE CREDITWORTHINESS OF THE CREDITORS ALSO APPEARED TO BE ACCEPTABLE. WE HOWEVER MAKE IT CLEAR THAT THESE OBSERVATIONS ARE O NLY FOR THE PURPOSE OF DISPOSAL OF THIS APPEAL. WE SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE CIT(A) TO CONSIDER THE ISSUE AFRESH IN THE LIGHT OF THE DOCUMENTS FIELD BY THE ASSESSEE. THE AO WILL AFFORD OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE DECIDING THE ISSUE. 8. GROUND NO.2 RAISED BY THE ASSESSEE READS AS FOLL OWS: 2. ON THE FACTS AND IN LAW, THE HON.CIT(APPEALS) E RRED IN CONFIRMING THE ADDITION OF RS.97,000/- MADE BY THE LD. AO ON A DHOC BASIS BY ITA NO.3532/MUM/2008(A.Y. 2005-06) 4 DISALLOWING A PART OF THE EXPENSES INCURRED BY THE APPELLANT FOR HIS BUSINESS. 9. THE AO WAS OF THE VIEW THAT THE EXPENSES DETAILE D BELOW WERE MADE BY THE ASSESSEE IN CASH PAYMENTS(SOME OF THE EXPENSES) AGAINST SELF MADE VOUCHERS. HE WAS OF THE VIEW THAT PERSONAL ELEMEN T CANNOT BE RULED OUT. HE THEREFORE, DISALLOWED THE FOLLOWING EXPENSES. S.NO. HEAD OF EXPENSES AMOUNT DEBITED (IN RS.) EXPENSES DISALLOWED (IN RS.) 1. BROKERAGE & COMMISSIONE 70,638 10,500 2. CONVEYANCE EXP. 30,485/- 4,500 3. REPAIRS & MAINTENANCE 94,211 15,300 4. TELEPHONE CHARGES 36,007 5,000 5. PETROL & DIESEL EXP 7,99,155 54,200 6. SUNDRY EXPENSES 61,969 7,500 TOTAL 10,92,465 97,000 10. ON APPEAL BY THE ASSESSEE THE CIT(A) CONFIRMED THE ORDER OF THE AO. 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN O UR VIEW CONSIDERING THE NATURE OF EXPENSES AND THE NATURE OF BUSINESS C ARRIED ON BY THE ASSESSEE IT WOULD BE REASONABLE TO DISALLOW A SUM OF RS. 50 ,000. WE DIRECT ACCORDINGLY. THUS GROUND NO.2 IS PARTLY ALLOWED. 12. IN THE RESULT, THE APPEAL BY THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON TH E 18 TH DAY OF MAY, 2011. SD/- SD/- (J.SUDHAKAR REDDY ) (N.V.VASUDEVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED. 18TH MAY.2011 ITA NO.3532/MUM/2008(A.Y. 2005-06) 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3 . THE CIT CITY CONCERNED 4. THE CIT(A)- CONCERNED 5. THE D.RJ BENCH. (TRUE COPY) BY ORDER ASST. REGISTRAR, I TAT, MUMBAI BENCHES MUMBAI. VM. ITA NO.3532/MUM/2008(A.Y. 2005-06) 6 DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 9/5/11 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 10/5/11 SR.PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7. FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER