TOTAL PROJECTS INDIA PVT. LTD., MUMBAI V. DCIT- RG. 5(3), MUMBAI

ITA 3742/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7016 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 29-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: HIRAL SHAH
• Keywords: Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E, BENCH M UMBAI BEFORE SHRI PAWAN SINGH, JM & SHRI G. MANJUNATHA, AM ITA NO.3742/MUM/2018 ( ASSESSMENT YEAR :2011-12 ) TOTAL PROJECTS INDIA PVT.LTD. C/O TOTAL OIL INDIA PVT.LTD 3 RD FLOOR, THE LEELA GALLERIA, ANDHERI KURLA ROAD ANDHERI-EAST, MUMBAI-400 059 VS. DCIT RG 5(3), AAYKAR BHAVAN, MUMBAI NOW ASSESSED WITH AO/ACIT/DCIT WARD/RANGE/CIRCLE-5(3)(2) MUMBAI 400 020 PAN/GIR NO. AA BCT3798A APPELLANT ) RESPONDENT ) ASSESSEE BY SHRI HIRAL SHAH REVENUE BY SHRI MANOJ KUMAR SINGH DATE OF HEARING 10/07/2019 DATE OF PRONOUNCEME NT 31 /07/2019 / O R D E R PER G.MANJUNATHA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST ORDER OF THE COMMISSIONER OF INCOME TAX APPEALS10, MUMBAI D ATED 27/03/2018 AND IT PERTAINS TO THE ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISED FOLLOWING THE GROUNDS OF APPEAL:- I. CONFIRMING CASH EXPENDITURE TO THE EXTENT OF RS. 5,10,000/- AS NON GENUINE OUT OF ADHOC DISALLOWANCE MADE BY AO OF RS. 10,00,000/- FOR CASH EXPENSES. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING CASH EXPE NDITURE TO THE EXTENT OF RS. 5,10,000/- AS NON GENUINE OUT OF ADHO C DISALLOWANCE MADE BY AO OF RS. 10,00,000/- FOR CASH EXPENSES. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THE FACT THAT THE TOTAL CASH WITHDRAWAL MADE DURING THE YEAR ARE RS. 7,60,000/- WHICH IS DULY DEPICTED IN THE BANK STATEMENTS & NOT RS. 2,50,000/ - AS UNDERSTOOD. ITA NO.3742/MUM/2018 TOTAL PROJECTS INDIA PVT.LTD. 2 3. THE DISALLOWANCE OF RS. 5,10,000/- FOR CASH EXPE NDITURE REQUIRES TO BE DELETED. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF PROJECT SERVICES FOR OI L, GAS AND POWER INCLUDING LNG AND LPG FILED ITS RETURN OF INCOME FO R AY 2011-12 ON 20/09/2011 DECLARING TOTAL LOSS OF RS. 7,62,30,388/ -. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T. ACT, 1961 ON 26/02/2014, DETERMINING TOTAL LOSS OF RS. 7,52,30,390/- BY MAKI NG ADHOC DISALLOWANCE OF RS. 10 LACS IN RESPECT OF VARIOUS EXPENDITURE D EBITED INTO THE PROFIT AND LOSS ACCOUNT INCLUDING EMPLOYEE COST, ADMINISTR ATIVE AND OTHER EXPENSES. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE CIT(A). BEFORE, THE LD. CIT(A), THE A SSESSEE SUBMITTED THAT THE AO WAS INCORRECT IN ADHOC DISALLOWANCE OF A SUM OF RS. 10 LACS IN RESPECT OF VARIOUS EXPENSES, IGNORING THE FACT THAT OUT OF TOTAL EXPENSES OF RS. 10,97,31,961/-, EXPENSES TO THE EXTENT OF RS. 7 ,84,850/- WAS INCURRED IN CASH FOR WHICH CASH HAS BEEN DRAWN FROM BANK TO THE EXTENT OF RS. 7,60,000/- ON VARIOUS DATES AND THE REMAINING AMOUN T HAS BEEN SPENT OUT OF OPENING CASH BALANCE FOR WHICH NECESSARY DETAIL S HAS BEEN FILED. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS O F THE ASSESSEE PARTLY ALLOWED RELIEF IN RESPECT OF ADHOC DISALLOWANCE OF EXPENSES, WHERE HE HAS DELETED ADDITIONS MADE BY THE AO TO THE EXTENT OF R S. 4,90,000/- AND BALANCE AMOUNT OF RS. 5,10,000/- HAS BEEN SUSTAINED ON THE GROUND THAT ITA NO.3742/MUM/2018 TOTAL PROJECTS INDIA PVT.LTD. 3 ALTHOUGH ASSESSEE CLAIMS TO HAVE WITHDRAWN A SUM OF RS. 7,60,000/- FROM BANK, BUT ON APPRAISAL OF BANK STATEMENTS IT APPEAR S THAT THE ASSESSEE HAS WITHDRAWN A SUM OF RS. 2,60,000/- ONLY. THEREFO RE, IT APPEARS THAT THE EXPENSES TO THE EXTENT OF RS. 5,10,000/- ARE NON GE NUINE AND HENCE SUSTAINED ADDITIONS TO THAT EXTENT. AGGRIEVED BY TH E CIT(A) ORDER, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D. CIT(A) WAS ERRED IN NOT CONSIDERING CASH WITHDRAWALS FROM BANK S ON VARIOUS DATES FROM BNP PARIBAS CURRENT ACCOUNT AMOUNTING TO RS. 7 ,60,000/- FOR WHICH NECESSARY EVIDENCES HAS BEEN PLACED BEFORE THE AO. THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE HAD OPENING CASH BALANC E OF RS. 59,960/- AND CASH WITHDRAWAL OF RS. 7,60,000/- WHICH COMES T O RS. 8,19,960/-. FURTHER, IT HAS INCURRED CASH EXPENSES OF RS. 7,84, 858/-. IF WE COMPARE CASH BALANCE AVAILABILITY AND CASH EXPENSES, THE CA SH AVAILABLE WITH THE ASSESSEE IS MORE THAN THE AMOUNT OF EXPENSES, THERE FORE THERE IS NO MERIT IN THE FINDINGS OF THE LD. CIT(A) THAT THERE IS NO CASH WITHDRAWALS FROM THE BANK. THE LD. AR, IN RESPECT OF FURTHER QU ERY FROM THE BENCH REGARDING OBSERVATIONS OF THE AO WITH REGARD TO CAS H EXPENSES OF RS. 7,40,54,320/- SUBMITTED THAT THE AO HAS APPRAISED I NCORRECT FACTS IN LIGHT OF LOSSES DECLAREDG BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION TO COME TO CONCLUSION THAT ASSESEE INCURRED CASH EXPEN SES OF RS. 7,40,54,320/-, BUT FACT REMAINS THAT OUT OF TOTAL E XPENSES, EXPENSES TO THE EXTENT OF RS. 7,84,858/- WAS ONLY INCURRED IN CASH. ITA NO.3742/MUM/2018 TOTAL PROJECTS INDIA PVT.LTD. 4 5. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTI NG ORDER OF THE CIT(A) SUBMITTED THAT THERE IS NO CLARITY IN FACTS BROUGHT OUT BY THE AO AS WELL AS LD. CIT(A) AND ARGUMENTS ADVANCED BY THE LD . AR FOR THE ASSESSEE. THEREFORE, THE MATTER MAY BE SET ASIDE TO THE FILE OF THE AO FOR VERIFICATION. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ELEVANT MATERIAL AVAILABLE ON RECORD. THE ONLY DISPUTE IS WITH REGAR D TO ADHOC DISALLOWANCE OF A SUM OF RS. 10 LACS, IN RESPECT OF VARIOUS EXPE NDITURES DEBITED INTO THE PROFIT AND LOSS ACCOUNT. THE AO HAS DISALLOWED A SUM OF RS. 10 LACS ON THE GROUND THAT THE ASSESSEE HAS INCURRED MAJORI TY OF EXPENSES IN CASH. ALTHOUGH, THE LD. CIT(A) HAS ALLOWED PARTIAL RELIEF OF RS. 4,90,000/- ON THE BASIS OF SUBMISSIONS OF THE ASSESSEE, BUT CO NFIRMED BALANCE AMOUNT OF RS. 5,10,000/- ON THE GROUND THAT THERE I S NO PROOF OF CASH WITHDRAWAL FROM BANK. IT IS CLAIM OF THE ASSESSEE T HAT OUT OF TOTAL EXPENSES OF RS. 10,97,31,961/-, A SUM OF RS. 7,84,8 58/- WAS INCURRED IN CASH AND THE REMAINING EXPENDITURE HAS BEEN INCURRE D BY CHEQUE. IN THIS REGARD, THE ASSESSEE HAS FILED A DETAILED CHART SHO WING TOTAL EXPENSES, EXPENSES INCURRED BY CHEQUE AND EXPENSES INCURRED B Y THE CASH. THE ASSESSEE HAS ALSO FILED CASH ACCOUNTS SUMMARY AS PER WHICH THE TOTAL CASH AVAILABLE FOR THE YEAR WAS AT RS. 8,19,960/-, AS AGAINST THIS TOTAL CASH EXPENDITURE OF RS. 7,84,858/- WAS INCURRED. TH E FACTS ARE CONTRADICTORY EACH OTHER. THE AO AS WELL AS THE CIT (A) CLAIMS THAT THERE IS NO CASH WITHDRAWALS FROM THE BANK TO SUPPORT CAS H EXPENDITURE, ITA NO.3742/MUM/2018 TOTAL PROJECTS INDIA PVT.LTD. 5 WHEREAS THE ASSESSEE CLAIM THAT IT HAS WITHDRAWN A SUM OF RS. 7,60,000/- FROM BNP PARIBAS CURRENT ACCOUNT ON VARIOUS DATES. THEREFORE, WE ARE OF THE CONSIDER THAT THE ISSUE NEEDS TO BE SET ASIDE T O THE FILE OF THE AO TO VERIFY THE FACTS IN LIGHT OF CLAIM OF THE ASSESSEE THAT IT HAS WITHDRAWN A SUM OF RS. 7,60,000/- FROM BANK ON VARIOUS OCCASION S OUT OF WHICH CASH EXPENDITURE OF RS. 7,84,858/- WAS INCURRED. HENCE W E SET ASIDE THE ISSUE TO THE FILE OF THE AO AND DIRECT HIM TO VERIFY CASH WITHDRAWALS FROM BANKS. IN CASE, THE AO FOUND THAT THE ASSESEE EXPLAINS CAS H AVAILABILITY IN RESPECT OF EXPENDITURE INCURRED IN CASH, THEN THE A O IS DIRECT TO DELETE ADDITIONS MADE TOWARDS ADHOC DISALLOWANCES WERE EXP ENSES. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 /07/ 2019 SD/- (PAWAN SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; DATED 31 /07/2019 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT . REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//