SANDHYA V. SHETTY, MUMBAI V. ITO WD 18(1)(3), MUMBAI

ITA 3799/MUM/2012

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3154 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-08-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 08-01-2015
• Assessment Year: 1998-1999
• Appeal Filed On: 29-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHUDR
• Assessee Lawyers: M SUBRAMANIAN
• Section: 80HHC

Judgement Text

1 , INCOME-TAX APPELLATE TRIBUNAL -EBENCH MUMBAI , . . , BEFORE S/SHRI RAJENDRA,ACCOUNTANT MEMBER AND C. N. PRASAD,JUDICIAL MEMBER ./ITA/3799/MUM/2012, /ASSESSMENT YEAR: 1998-99 SMT. SANDHYA V. SHETTY M/S. WELLKNOWN APPAREL C-1/23, TEXTILA CO-OP. HOUSING SOCIETY LTD., BOMBAY DYEING COMPUND, PRABHADEVI,MUMBAI-400 025. PAN:ABEPS 6237 J VS. INCOME TAX OFFICER-18(1)(3) MUMBAI. ( /APPELLANT ) ( / RESPONDENT) REVENUE BY: SHRI R.K. SAHU-DR ASSESSEE BY: SHRI M. SUBRAMANIAN / DATE OF HEARING: 25.07.2016 / DATE OF PRONOUNCEMENT: 24.08.2016 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA, AM - CHALLENGING THE ORDER OF THE CIT(A)-29,MUMBAI,DATED 03.02.2012,THE ASSESSEE HAS FILED THE ABOVE APPEAL.DURING THE COURSE OF HEA RING THE AUTHORISED REPRESENTATIVE(AR)STATED THAT THE ASSESSEE IS NOT I NTERESTED IN PURSUING THE FIRST TWO GROUNDS OF APPEAL.HENCE,GOA 1-2 STAN D DISMISSED AS NOT PRESSED. BRIEF FACTS: 2. ASSESSEE AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF M ANUFACTURE AND EXPORT OF READYMADE GARMENTS,IN THE NAME AND STYLE OF M/S. WE LLKNOWN APPARELS,HAD FILED HER ORIGINAL RETURN OF INCOME ON 02.11.1998, DECLARING HER INCOME AT RS. NIL.THE ASSESSING OFFICER (AO) COMPLETED THE ASSESS MENT U/S.144 OF THE ACT ON 09.03.2001,ASSESSING TOTAL INCOME OF THE ASSESSE E AT RS.77,38,900/-.THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLAT E AUTHORITY(FAA),WHO PARTLY ALLOWED THE APPEAL.HOWEVER,HE ENHANCED THE DISALLOW ANCE ON ACCOUNT OF INTEREST PAID.THE ASSESSEE APPROACHED THE TRIBUNAL. VIDE ORDER 20/08/2007,THE TRIBUNAL REMITTED THE MATTER TO THE FILE OF THE AO FOR FRESH ADJUDICATION. 3799/MUM/2012(98-99) 2 3. ONE OF THE ISSUES TO BE THE DECIDED, IN PURSUANCE OF THE ORDER OF THE TRIBUNAL, WAS TO DECIDE THE ISSUE OF INTEREST-FREE LOANS ADVA NCED BY THE ASSESSEE TO HER SISTER CONCERNS. DURING THE ASSESSMENT PROCEEDINGS, THE AO ASKED THE ASSESSEE TO JUSTIFY THE ADVANCING OF LOANS TO SISTER CONCERN AND FRIENDS AND TO SHOW AS TO HOW IT HELPED HER IN CARRYING OUT THE BUSINESS FOR THE YEAR UNDER CONSIDERATION. VIDE HER LETTER DATED, 26.11.2008, THE ASSESSEE STA TED THAT A DECLARATION GIVEN BY THE SISTER CONCERN DURING THE COURSE OF HEARING BEF ORE THE TRIBUNAL GIVES THE JUSTIFICATION FOR ADVANCING LOAN TO THE SISTER CONC ERN, THAT LOANS WERE ADVANCED FOR EXECUTION OF THE ORDERS OF THE ASSESSEE, THAT T HEY HAD DIRECT NEXUS WITH THE HER BUSINESS. HOWEVER, THE AO HELD THAT ASSESSEE HA D NOT PRODUCED ANY SATISFACTORY EVIDENCE LESS EXPLANATION TO PROVE THE LOANS GIVEN WERE ACTUALLY FOR THE PURPOSE OF HER BUSINESS. HE UPHELD THE ADDITION THAT WAS MADE BY HIS PREDECESSOR IN THE ORIGINAL ASSESSMENT. 4. AS PER THE FIRST APPELLATE AUTHORITY (FAA), THE ASS ESSEE DID NOT FILE THE LIST OF THE LOANS.HE HELD THAT SHE HAD FAILED TO PROVE THE CASE AT THE ASSESSMENT AND AT THE APPELLATE STAGE. HE DISMISSED THE APPEAL FILED BY THE ASSESSEE. 5. BEFORE US,THE AUTHORSIED REPRESENTATIVE (AR) CONTEN DED THAT A LOAN OF RS.25 LAKHS WAS GIVEN TO SISTER CONCERN AND OF RS.13 LAKH S TO FRIENDS BY THE ASSESSEE, THAT SHE HAD SUNDRY DEBTORS OF RS.1.63 CRORES, THAT HER CAPITAL ACCOUNT SHOWED THE BALANCE OF RS.35.53 LAKHS,THAT LOAN WAS ADVANCE D BECAUSE OF THE COMMER. - CIAL EXPEDIENCY, THAT THE ARGUMENTS ADVANCED BY HER WERE NOT CONSIDERED BY THE FAA.HE REFERRED TO THE PAGE NUMBER 87-89 OF THE PAP ER BOOK.THE DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTED THE ORDER OF THE FAA AND STATED THAT THE ASSESSEE DID NOT FILE ANY EXPLANATION BEFORE THE AO/FAA. 3799/MUM/2012(98-99) 3 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THA T THE ASSESSEE HAD FILED EXPLANATION ABOUT THE LOANS, THAT HER BALANCE SHEET WAS NOT CONSIDERED BY THE AO OR THE FAA, THAT BUSINESS EXPEDIENCY WAS NOT COM MENTED UPON BY THE OFFICERS. THEREFORE, WE ARE RESTORING THAT THE MATT ER TO THE FILE OF THE FAA FOR FRESH ADJUDICATION. THE ASSESSEE IS DIRECTED TO FIL E ALL THE RELEVANT DOCUMENTS, WHICHEVER SHE WANTS RELIED UPON, BEFORE HIM. WE EXP ECT THE FAA TO DISPOSE THE APPEAL WITHIN A PERIOD OF SIX MONTHS FROM THE DATE OF RECEIPT OF ORDER, AS THE MATTER IS QUITE OLD. ASSESSEE IS DIRECTED TO EXTEND FULL COOPERATION TO THE FAA IN FILING THE DETAILS. GROUND NUMBER THREE IS DECIDED IN FAVOUR OF THE ASSESSEE, IN PART. 7. NEXT EFFECTIVE GROUND IS ABOUT DIRECTION UNDER SECT ION 80 HHC OF THE ACT. WHILE DECIDING THE APPEAL, IN THE FIRST ROUND, THE TRIBUNAL HAD HELD THAT THE ISSUE OF DEDUCTION UNDER SECTION 80HHC HAD TO BE DECIDED IN LIGHT OF THE AMENDED PROVISIONS OF THE SAID SECTION. AS PER THE AO IN TH E SECOND GROUND THE ASSESSEE INFORMED THE AO THAT THE MATTER SHOULD BE KEPT IN A BEYANCE TILL IT PROVIDES RELEVANT DOCUMENTS. AS THE ASSESSEE DID NOT FILE AN Y DOCUMENT IN HER SUPPORT, THE AO DID NOT ALLOW ANY DEDUCTION UNDER SECTION 80 HHC OF THE ACT. 8. BEFORE THE FAA, THE ASSESSEE DID NOT FURNISH ANY EX PLANATION FOR NOT FILING THE PAPERS DURING THE ASSESSMENT PROCEEDINGS. THEREFORE , HE DISMISSED THE APPEAL FILED BY HER. 9. DURING THE COURSE OF HEARING BEFORE US, THE AR REFE R TO THE EARLIER ORDER OF THE TRIBUNAL. THE DR STATED THAT AO AND THE FAA HAD GIV EN SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO JUSTIFY HER CLAIM, THAT EVEN DUR ING THE APPELLATE PROCEEDINGS SHE DID NOT FILE ANY DOCUMENTARY EVIDENCE, THAT THE MATTER WAS PENDING BECAUSE OF THE NON-COOPERATION OF THE ASSESSEE. 3799/MUM/2012(98-99) 4 10. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND THAT I N ITS EARLIER ORDER THE TRIBUNAL HAD HELD THAT THE ISSUE OF DEDUCTION UNDER SECTION 80HHC WAS TO BE DECIDED IN LIGHT OF THE AMENDED PROVISIONS, THAT TI LL DATE THE ASSESSEE HAS NOT PROVED AS TO HOW SHE WAS ENTITLED TO GET THE DEDUCT ION CLAIMED BY HER. IN THE CIRCUMSTANCES, IN OUR OPINION, THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL INFIRMITY. THEREFORE UPHOLDING HIS ORDER,WE D ECIDE GROUND NUMBER FOUR AGAINST THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSEE STANDS PA RTLY ALLOWED. . ORDER PRONOUNCED IN T HE OPEN COURT ON 24 TH AUGUST,2016. 24 , 2016 SD/- SD/- ( . . / C.N. PRASAD ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 24.08.2016. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR K BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.