DCIT 17(1), MUMBAI V. MAKBOOL H. KHAN, MUMBAI

ITA 3621/MUM/2013

• Counselvise Citation: 362119914 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 18-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 08-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S PHADKAR; KAUMEN ALI AHMED
• Section: 142(1); 144

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NOS.2541 & 2542/MUM/2013 ASSESSMENT YEARS: 2007-08 & 2008-09 DCIT-17(1), 1 ST FLOOR, R. NO.113, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI / VS. SHRI MAKBOOL H. KHAN, PLOT NO.220, KOLSA BUNDER ROAD, DARUKHANA, MUMBAI-400010 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO. AAAPN7862R ITA NO.3621/MUM/2013 ASSESSMENT YEAR: 2007-08 DCIT-17(1), 1 ST FLOOR, R. NO.113, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI / VS. SHRI MAKBOOL H. KHAN, PLOT NO.220, KOLSA BUNDER ROAD, DARUKHANA, MUMBAI-400010 ( / REVENUE) ( !' # /ASSESSEE) P.A. NO.AAAPN7862R !' # / ASSESSEE BY SHRI S.S. PHADKAR AND SHRI KAUMEN ALI AHMED / REVENUE BY MS. RADHA K. NARANG SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 2 $ % & # ' / DATE OF HEARING : 16/06/2015 & # ' / DATE OF ORDER: 01/07/2015 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDERS DA TED 28/01/2013 AND 07/02/2013 OF THE LD. FIRST APPELLAT E AUTHORITY, MUMBAI, FOR ASSESSMENT YEAR 2007-08 AND 2008- 09. IN ITA NO.2541& 2542/MUM/2013, THE REVENUE IS AGGRIEVED IN RESTRICTING THE DISALLOWANCE TO 5% AGA INST 15% MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOADING/UNLOADING AND WAGES OF RS.1,69,17,020/- WIT HOUT APPRECIATING THE FACT THAT THE ASSESSEE HIMSELF OFF ERED ADDITIONAL INCOME OF RS. 15 LAKH TO COVER UP THE DE FICIENCY FOUND IN THE ACCOUNTS OF THE ASSESSEE, WHICH AS PER THE REVENUE, ITSELF PROVES THAT THE ACCOUNTS WERE INCOR RECT, THUS, THE ESTIMATION OF DISALLOWANCE MADE BY THE ASSESSIN G OFFICER WAS REASONABLE AND IDENTICALLY RESTRICTING THE DISA LLOWANCE TO 5% AGAINST 10% MADE OUT OF FREIGHT CHARGES, CONVEYA NCE AND SUNDRY EXPENSES OF RS.81,62,690/- AND FURTHER RESTR ICTING THE DISALLOWANCE TO 5% AGAINST 20% MADE OUT OF MISCELLANEOUS EXPENSES OF RS.5,13,673/-. IDENTICAL GROUNDS HAVE BEEN RAISED IN ITA NO. 2542/MUM/2013. 2. DURING HEARING OF THESE APPEALS, THE LD. DR, MS . RADHA K. NARANG, ADVANCED HER ARGUMENTS, WHICH ARE SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 3 IDENTICAL TO THE GROUND RAISED BY FURTHER SUBMITTIN G THAT THE DISALLOWANCE WAS RESTRICTED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WITHOUT APPRECIATING THE FACTS , THEREFORE, THE CONCLUSION DRAWN IN THE ASSESSMENT O RDERS MAY BE RESTORED. ON THE OTHER HAND, SHRI S.S. PHADK AR ALONG WITH SHRI KAUMEN ALI AHMED, LD. COUNSEL FOR THE ASS ESSEE, DEFENDED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDERS. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S S AHIL STEEL CORPORATION AND M/S M.H. STEEL CORPORATION, TRADIN G IN IRON & STEEL, DECLARED TOTAL INCOME OF RS.30,28,930/- IN HIS RETURN, FILED ON 31/10/2007 (ITA NO.2541/MUM/2013) ALONG WITH AUDIT REPORT U/S 44AB OF THE ACT IN FORM NO. 3 CB, STATEMENT OF ACCOUNT/PROFIT & LOSS ACCOUNT ALONG WI TH BALANCE SHEET. THE CASE OF THE ASSESSEE WAS SELECTE D FOR SCRUTINY, THEREFORE, NOTICES U/S 143(2) AND 142(1) OF THE ACT ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED UPO N THE ASSESSEE IN RESPONSE TO WHICH, THE ASSESSEE ATTENDE D THE PROCEEDINGS FROM TIME TO TIME. AS PER THE ACCOUNT T HE ASSESSEE DECLARED TURNOVER OF RS.49,88,91,198/- IN THE CASE OF M/S SAHIL STEEL CORPORATION AND RS.2,81,15,219/- IN THE CASE OF M/S M.H. STEEL CORPORATION. IN THE CASE OF SAHIL STEEL CORPORATION, THE GP WAS DECLARED AT 6.78%, WHEREAS, THE NP WAS 0.56%. IN THE CASE OF M/S M.H. STEEL CORPORATI ON, THE GP WAS 7.24% WHEREAS, THE NP WAS 0.88%. THE ASSESS EE CLAIMED THE FOLLOWING EXPENSES:- SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 4 M/S SAHIL STEEL CORPORATION M/S M.H. STEEL CORPORATION SALES RS.49,88,91,198/ - RS.2,81,15,219/ - FREIGHT & CARTAGE RS.36,97,124/ - RS.56,846/ - LOADING & UNLOADING RS.89,63,208/ - RS.35,882/ - WAGES TO HELPER RS.78,69,265/ - RS.48,665/ - CONVEYANCE RS.24,30,777/ - RS.29,731/ - THE ASSESSEE WAS ASKED TO EXPLAIN THE NATURE OF EXPENSES. AS PER THE ASSESSING OFFICER, THE ASSESS EE ON LATER DATES, NEITHER APPEARED BEFORE HIM NOR FILED THE NE CESSARY DETAILS, THUS, HE MADE AD-HOC DISALLOWANCES OUT OF THE AFOREMENTIONED CLAIMED EXPENSES. OUT OF THE FREIGHT CHARGES, CONVEYANCE EXPENSES AND SUNDRY EXPENSES, HE DISALLO WED 10% OF THE CLAIMED EXPENSES, WHEREAS, FOR MISCELLANEOUS EXPENSES, THE DISALLOWANCE WAS MADE AT 20%. THUS, THE TOTAL DISALLOWANCE WORKED OUT WAS AT RS.34,56,557/-. HE MADE FURTHER DISALLOWANCE OF RS.19,56,557/- IN ADDITION TO RS.15 LAKHS, OFFERED VOLUNTARILY BY THE ASSESSEE. 2.2. ON APPEAL, BEFORE THE LD. COMMISSIONER OF INC OME TAX (APPEALS), THE DISALLOWANCE WAS RESTRICTED TO 5 % AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL . 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION/DISALLOWANCE MADE, CONCLUSION D RAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, A SSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF KEPT IN JUXT APOSITION AND ANALYZED, WE FIND THAT AT PAGE-1 OF THE RESPECTIVE ASSESSMENT ORDER, THE LD. ASSESSING OFFICER HIMSELF MENTIONED THAT THE ASSESSEE ALONG WITH HIS AUTHORIZED ADVOCATES ATTEND ED THE PROCEEDINGS FROM TIME TO TIME AND FILED REQUIRED DE TAILS AND ON SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 5 THE CONTRARY, ON LATER PAGES HAS MENTIONED THAT SHO W-CAUSE NOTICE WAS ISSUED AND THE ASSESSEE DID NOT FILED TH E NECESSARY DETAILS. THESE ARE CONTRARY FINDING OF THE ASSESSIN G OFFICER ITSELF. EVEN THE ASSESSMENT ORDER WAS PASSED U/S 1 44 OF THE ACT. AS MENTION EARLIER, THE ASSESSING OFFICER MADE AD-HOC DISALLOWANCE WHICH WAS BASED ON ESTIMATION OUT OF T HE VARIOUS EXPENSES CLAIMED BY THE ASSESSEE, TO THE EXTENT OF 10% TO 20%. IN SUCH A SITUATION, IN OUR VIEW, THE RESTRIC TION OF DISALLOWANCE BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CANNOT BE SAID TO BE UNJUSTIFIED. MOREOVER, TO COV ER UP THE LEAKAGE/INFLATED CLAIM OF EXPENSES, THE ASSESSEE VO LUNTARILY PAID RS.15LAKH. THUS, WE FIND NO INFIRMITY IN THE C ONCLUSION DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL S). BEING ON IDENTICAL FACTS, OUR CONCLUSION WILL REMAI N THE SAME FOR ITA NO. 2542/MUM/2013, THUS, BOTH THE APPEALS O F THE REVENUE ARE HAVING NO MERIT, CONSEQUENTLY, DISMISSE D. 3. NOW, WE SHALL TAKE UP THE APPEAL OF THE ASSESSE E (ITA NO.3621/MUM/2013) CANCELLING THE PENALTY IMPOS ED U/S 271(1)(C) OF THE ACT, WHEREIN, DELETING THE PENALTY OF RS.10,36,967/-, LEVIED BY THE ASSESSING OFFICER, HA S BEEN CHALLENGED BY THE REVENUE. THE CONTENTION RAISED BY LD. DR IS THAT OFFERING THE ADDITIONAL INCOME OF RS.15 LAKH T O COVER UP THE DEFICIENCIES ITSELF ESTABLISH THAT THERE WAS IN ACCURACY IN THE ACCOUNTS OF THE ASSESSEE AND THUS, THE ASSESSEE ATTENDED TO REDUCE THE TAXABLE INCOME BY FURNISHING INACCURA TE PARTICULARS OF INCOME. ON THE OTHER HAND, THE LD. C OUNSEL FOR THE ASSESSEE CONTENDED THAT THE DISALLOWANCE WAS AN AD-HOC SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 6 DISALLOWANCE, BASED ON ESTIMATION; THEREFORE, NO PE NALTY IS LEVIABLE. THE IMPUGNED ORDER WAS DEFENDED. 3.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE C ASE OF THE ASSESSEE, THE ASSESSMENT WAS COMPLETED U/S 144 OF T HE ACT ON 07/12/2009 BY MAKING AD-HOC DISALLOWANCES RANGING B ETWEEN 10 TO 20% ON CLAIMED EXPENSES UNDER THE VARIOUS HEA D AMOUNTING TO RS.34,56,557/-. THE STAND OF THE REVE NUE IS THAT THE ASSESSEE FAILED TO PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAME IN SPITE OF SEVERAL OPPORTUN ITIES PROVIDED TO THE ASSESSEE. IN THE SAME BREATH, WHIL E FRAMING THE ASSESSMENT, THE ASSESSING OFFICER AT PAGE MENTI ONS AS UNDER:- THE RETURN OF INCOME WAS FILED BY THE ASSESSEE ON 31.10.2007 DECLARING TOTAL INCOME OF RS.30,28,930/-. IN SUPPO RT OF THE ABOVE DECLARED INCOME, AUDIT REPORT AS REQUIRED U/S 44AB OF THE INCOME TAX ACT, 1961 IN FORM NO. 3CB, STATEMENT OF PARTICULARS IN FROM NO.3CD, TRADING PROFIT & LOSS ACCOUNT AND BALANCE SHEET ARE FILED. THE CASE WAS SELECTED FOR SCRUTINY. THE NOTICES U/ S 143(2) DATED 19/08/2008 WAS ISSUED AND SERVED ON THE ASSESSEE ON 29/08/2008. FURTHER, NOTICE U/S 142(1) DATED 17/06/2009 ALONG WITH QUESTIONNAIRE WERE ISSUED AND SERVED. IN RESPONSE TO THE SAID NOTICES, ASSESSEE HIMSELF ALONG WITH SHRI K. AHMED, ADVOCATE AND SHRI MAQBOOL H. KHAN, ASSESSEE ATTENDED FROM TIME TO TIME AND FILED REQUI RED DETAILS . 3.2. IN THE LIGHT OF THE AFORESAID OBSERVATION OF THE ASSESSING OFFICER ITSELF, ONE FACT IS OOZING OUT TH AT THE OBSERVATION MADE BY THE ASSESSING OFFICER THAT NECE SSARY DETAILS WERE NOT FILED IS CONTRARY TO FACTS. SINCE, THE NECESSARY SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 7 DETAILS WERE FILED BY THE ASSESSEE, IT CANNOT BE CO NCLUDED THAT FILED INCORRECT PARTICULARS OF HIS INCOME OR CONCEA LED INCOME, WHICH ARE THE NECESSARY INGREDIENTS FOR IMPOSING PE NALTY U/S 271(1)(C) OF THE ACT. EVEN OTHERWISE, AD-HOC DISALL OWANCE, WHICH WAS BASED ON ESTIMATION WAS MADE BY THE ASSES SING OFFICER, THEREFORE, THE PENALTY IS NOT LEVIABLE. OU R VIEW FIND SUPPORTS FROM THE DECISION FROM PUNJAB & HARYANA HI GH COURT IN HARI GOPAL SINGH VS CIT 258 ITR 85 (P & H). THE CASE OF THE ASSESSEE IS FURTHER FORTIFIED FROM THE DECISION FRO M THE HONBLE APEX COURT IN CIT VS RELIANCE PETRO PRODUCT PVT. LT D. HOLDING THAT DISALLOWANCE OF EXPENSES WILL NOT PER SAY AMOU NT TO FURNISHING INACCURATE PARTICULARS OF INCOME. THE R ATIO LAID DOWN IN CIT VS AJAIB SINGH & COMPANY 253 ITR 630 ( P &Y H) HOLDING THAT MERELY BECAUSE CERTAIN EXPENSES CLAIME D BY THE ASSESSEE ARE DISALLOWED BY AN AUTHORITY, IT CANNOT MEAN THAT WRONG PARTICULARS WERE FURNISHED BY THE ASSESSEE, T HUS, IN THIS APPEAL ALSO, WE ARE IN AGREEMENT WITH THE CONCLUSIO N DRAWN BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS). IT I S AFFIRMED FINALLY, ALL THE APPEALS OF THE REVENUE ARE DISMISS ED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON16/06/2015. SD/ - (RAJENDRA) SD/ - (JOGINDER SINGH) #$ / ACCOUNTANT MEMBER %$ / JUDICIAL MEMBER $ % MUMBAI; ( DATED : 01/07/2015 F{X~{T? P.S/. . . &%'()*)+' / COPY OF THE ORDER FORWARDED TO : SHRI MAKBOOL H. KHAN ITA NO.2541, 2542 & 3621/MUM/2013 8 1. *+,- / THE APPELLANT 2. ./,- / THE RESPONDENT. 3. 0 0 $ 1# ( *+ ) / THE CIT, MUMBAI. 4. 0 0 $ 1# / CIT(A)- , MUMBAI 5. 34 .# , 0 *+' * 5 , $ % / DR, ITAT, MUMBAI 6. 6! 7% / GUARD FILE. / BY ORDER, /3+# .# //TRUE COPY// / (DY./ASSTT. REGISTRAR) , $ % / ITAT, MUMBAI