ALLIED COMPUTERS INTERNATIONAL (ASIA) LTD, MUMBAI V. DCIT CC-2(2), MUMBAI

ITA 3917/MUM/2018

• Counselvise Citation: [2019] 114 COUNSELVISE.COM (IT) 6149 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 01-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AKHTAR HANSARI
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Accommodation entries; Set aside
• Section: 143(3); 244A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC, BENCH MUMBAI BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER & G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO.3917 & 3918/MUM/2018 ( ASSESSMENT YEARS :2013-14 & 2014-15 ) ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. OFFICE NO.8, 5 TH FLOOR, BLOCK-A AIDUN BUILDING 1 ST FLOOR DHOBI TALAO LANE MUMBAI-400 002 VS. DCIT CC-2(2) ROOM NO.802, 8 TH FLOOR PRATHISHTA BHAWAN M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AA DCA4412E APPELLANT ) .. RESPONDENT ) ASSESSEE BY NEERAJ MANGLA REVENUE BY AKHTAR H.ANSARI DATE OF HEARING 14/10 /201 9 DATE OF PRONOUNCEME NT 14 /10 /201 9 / O R D E R PER G.MANJUNATHA (A.M) : THESE TWO APPEALS FILED BY THE ASSESSEE ARE DIRECTE D AGAINST SEPARATE, BUT IDENTICAL ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS) -48, MUMBAI, BOTH DATED 26/03/2018 AND TH EY PERTAINS TO ASSESSMENT YEARS (AY) 2013-14 & 2014-15. SINCE, THE FACTS ARE IDENTICAL AND ISSUES ARE COMMON, FOR THE SAKE OF CO NVENIENCE, THESE APPEALS WERE HEARD TOGETHER AND ARE DISPOSED-OFF BY THIS CONSOLIDATED ORDER. ITA NOS.3917 & 3918/MUM/2018 ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. 2 ITA.NO. 3917/ MUM/ 2018:- 2. THE ASSESSEE HAS, MORE OR LESS FILED COMMON GROU NDS OF APPEAL FOR BOTH ASSESSMENT YEARS. THEREFORE, FOR T HE SAKE OF BREVITY, GROUNDS OF APPEAL FILED FOR AY 2013-14 ARE REPRODUCED AS UNDER:- 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE APPELLATE ORDER PASSED BY THE LD. CIT (A) IS ILLEGAL BEING AGAINST THE PRINCIPLES OF NATURAL JUSTICE AND AGAINST THE PROVISIONS OF IT ACT, 1961 BEING PASSED WITHOUT ALLOWING ANY OPPORTUNITY OF BEING HEARD AND NOT ADJ UDICATING THE WRITTEN SUBMISSIONS OF THE APPELLANT COMPANY IN TRUE SENSE. 2. THAT THE LD. AO GROSSLY ERRED IN FACTS OF THE CA SE IN DISALLOWING BUSINESS LOSS OF RS. 12,21,793/- AND ASSESSING INTEREST INCO ME OF RS. 27,10,450/- AS INCOME FROM OTHER SOURCES. 3. THAT THE LD. CIT(A) GROSSLY ERRED IN FACTS OF TH E CASE IN ENUMERATING AND PRESUMING THE SUBMISSION OF M'S MAHAN INDUSTRIES LI MITED REGARDING MANAGEMENT BY SB. SHIRISH C SHAH DURING A.Y. 2008-0 9 TO 2013-14 TO HAVE BEEN FURNISHED BY THE APPELLANT COMPANY AND HI RELYING UPON THE STATEMENT OF SH. YOGENDRA GUPTA, DIRECTOR OF M/S MA HAN INDUSTRIES LIMITED WHO HAS NOTHING TO DO WITH THE APPELLANT CO MPANY. 4. THAT THE LD. AO GROSSLY ERRED IN MAKING ADDITION OF RS. 41,50,000/- IN THE INCOME OF THE APPELLANT COMPANY USED AS CONDUIT FOR PROVIDING ACCOMMODATION ENTRIES DESPITE THE FACT THAT THE AMO UNT OF CASH DEPOSITS WAS TRANSFERRED TO ULTIMATE BENEFICIARY, M/S EMERAL D DIGITAL MEDIA LIMITED, 5. THAT THE LD, CIT(A) GROSSLY ERRED IN LAW M NOT A DJUDICATING THE LEGAL SUBMISSION OF THE APPELLANT COMPANY THAT SINCE THE CASH OF RS. 4L,50,000/- DEPOSITED IN THE BANK ACCOUNT HAS BEEN REMITTED TO ULTIMATE BENEFICIARY, THE SAME CANNOT BE ASSESSED AS INCOME OF THE APPELLANT COMPANY. 6. THAT THE LD. CIT(A) GROSSLY ERRED IN FACTS OF TH E CASE M ISSUING DIRECTIONS TO VERIFY THE ISSUE OF INTEREST OF RS- 1,20,100/- U/S 244A OF THE ACT TO THE APPELLANT COMPANY DESPITE THE FACT THAT THE APPELLA NT COMPANY HAD ACCEPTED THE ADDITION MADE. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, MODIFY AND WITHDRAW ANY GROUND OF APPEAL BEFORE OR DURING THE APPELLATE PROCEEDING S. ITA NOS.3917 & 3918/MUM/2018 ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. 3 3. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AC TION U/S 132 OF THE I.T.ACT, 1961 CONDUCTED IN THE CASE OF SHRI SHI RISH C SHAH. DURING THE COURSE OF SEARCH, IT WAS NOTICED THAT TH E ASSESEE PROVIDING BOGUS ACCOMMODATION ENTRIES THROUGH VARIO US COMPANIES INCLUDING, THE ASSESEE M/S ALLIED COMPUTER INTERNAT IONAL (ASIA) LTD. PURSUANT TO SEARCH, ASSESSMENT PROCEEDINGS U/S 153C OF THE I.T.ACT, 1961 WAS INITIATED AND THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) R.W.S. 153C OF THE I.T.ACT, 1961 ON 30/0 3/2016 AND DETERMINED TOTAL INCOME AT RS. 32,45,550/-, BY MAKI NG ADDITIONS TOWARDS CASH DEPOSITS IN BANK ACCOUNT RS. 4,15,000/ -, INTEREST INCOME HAS BEEN CONSIDERED UNDER THE HEAD INCOME FR OM OTHER SOURCES AS AGAINST ASSESSEE ADMISSION UNDER THE HEA D INCOME FROM BUSINESS/PROFESSION AMOUNTING TO RS. 27,10,450/- AN D ADDITIONS TOWARDS INTEREST ON INCOME TAX REFUND U/S 244A AMO UNTING TO RS. 1,20,100/-. THE ASSESSEE CARRIED THE MATTER IN APPE AL BEFORE THE FIRST APPELLATE AUTHORITY. THE LD.CIT(A) FOR A DETAILED R EASONS RECORDED IN HIS APPELLATE ORDER, DATED 26/03/2018 PARTLY ALLOWE D APPEAL FILED BY THE ASSESSE, WHERE HE HAD CONFIRMED ADDITIONS MADE TOWARDS UNEXPLAINED CASH CREDITS OF RS. 4,15,000/- AND ALSO ASSESSMENT OF INTEREST INCOME UNDER THE HEAD INCOME FROM OTHER SO URCES, HOWEVER SET ASIDE THE ISSUE OF ADDITIONS TOWARDS INTEREST O N INCOME TAX REFUND AMOUNTING TO RS. 1,20,100 TO THE LD. AO TO A SCERTAIN CERTAIN FACTS. AGGRIEVED TO THE LD.CIT(A) ORDER, THE ASSESS EE IS IN APPEAL BEFORE US. 4. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE L D.CIT(A) HAS EARNED IN CONFIRMING DISALLOWANCES OF BUSINESS LOSS OF RS. 12,21,793/- AND ALSO ASSESSED INTEREST INCOME OF RS . 27,10,450/- UNDER THE HEAD INCOME FROM OTHER SOURCES, IGNORING THE FACT THAT THE ITA NOS.3917 & 3918/MUM/2018 ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. 4 ASSESEE HAS RIGHTLY CONSIDERED INTEREST INCOME UNDE R THE HEAD INCOME FROM BUSINESS /PROFESSION. THE LD. AR, FURTH ER SUBMITTED THAT THE LD.CIT(A) WAS ERRED IN MAKING ADDITIONS OF RS. 41,15,000/- TO THE INCOME OF THE ASSESSEE WITHOUT APPRECIATING THE FACT THAT THE AMOUNT OF CASH DEPOSITS WAS ULTIMATELY TRANSFERRED TO BENEFICIARY M/S EMERALD DIGITAL MEDIA LTD. THEREFORE, THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO TO ASCERTAIN CORRECT FA CTS WITH REGARD TO NATURE OF INTEREST INCOME AND ALSO UNDER WHICH HEAD OF INCOME, IT IS ASSESSABLE AND ALSO TO VERIFY VARIOUS EXPENDITURE D EBITED INTO THE PROFIT AND LOSS ACCOUNT. 5. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTE D ORDER OF THE LD.CIT(A), HOWEVER FAIRLY ACCEPTED THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE AO FOR DENOVO ASSESSMENT ORDER. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. IT IS AN ADMITTED FACT THAT THE ASSESEE IS IN THE ACTIVITY O F PROVIDING BOGUS ACCOMMODATION ENTRIES TO VARIOUS BENEFICIARY, INCLU DING AMONG GROUP COMPANIES. THIS FACT HAS BEEN ADMITTED DURING THE COURSE OF SEARCH BY SHRI SHRISH C SHAH. THE LD. AO HAS DISALL OWED TOTAL BUSINESS LOSS CLAIMED BY THE ASSESSEE, ON THE GROUN D THAT THE ASSESSEE DID NOT HAVE ANY BUSINESS ACTIVITIES, EXCE PT PROVIDING ACCOMMODATION ENTRIES AMONG GROUP COMPANIES, ACCORD INGLY HE HAS DISALLOWED TOTAL LOSS AND ASSESSED INTEREST INC OME UNDER THE HEAD INCOME FROM OTHER SOURCES. LIKEWISE, THE LD. A O HAS MADE ADDITIONS TOWARDS CASH DEPOSITS INTO THE BANK ACCOU NT AS UNEXPLAINED CASH CREDIT, BECAUSE THE ASSESSE COULD NOT EXPLAIN THE SOURCE OF INCOME. THE CLAIM OF THE ASSESSEE IS THAT INTEREST INCOME ITA NOS.3917 & 3918/MUM/2018 ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. 5 IS RIGHTLY ASSESSED UNDER THE HEAD INCOME FROM BUSI NESS, BECAUSE IT IS INVOLVED IN THE ACTIVITY OF PROVIDING SHORT TIME FINANCE AND INVESTMENT ACTIVITY. THE ASSESSEE, FURTHER CLAIMED THAT TOTAL BUSINESS LOSS CLAIMED FOR THE YEAR CANNOT BE DISALLOWED, BEC AUSE EXPENDITURE DEBITED INTO THE PROFIT AND LOSS ACCOUNT INCLUDES V ARIOUS ADMIN AND OTHER EXPENSES, WHICH ARE REQUIRED TO BE INCURRED T O MAINTAIN CORPORATE STATUS OF THE ASSESSEE. THE ASSESSEE HAS ALSO CONTENDED THAT THE LD. AO HAS MADE ADDITIONS OF RS. 41,50,000 /- TOWARDS CASH DEPOSITS INTO BANK ACCOUNT AS UNEXPLAINED CASH CRE DITS WITHOUT CONSIDERING THE EXPLAIN OF THE ASSESSEE THAT SAID C ASH DEPOSIT WAS ULTIMATELY TRANSFERED TO BENEFICIARY M/S. EMERALD DIGITAL MEDIA LTD. WE FIND THAT THE LD. AO HAS DISALLOWED LOSS UNDER T HE HEAD BUSINESS OF PROFESSION, ON THE GROUND THAT THE ASSE SEE WAS NOT HAVING ANY BUSINESS ACTIVITY, EXCEPT PROVIDING ACCO MMODATION ENTRIES, WHEREAS THE ASSESSEE CLAIMS THAT EXPENDITU RE DEBITED INTO PROFIT AND LOSS ACCOUNT, INCLUDES CERTAIN ADMIN AND OTHER EXPENDITURE WHICH ARE REQUIRED TO BE INCURRED FOR M AINTAINING CORPORATE STATUS OF THE ASSESSEE. FACTS ARE CONTRA DICTING EACH OTHER. THEREFORE, WE ARE OF THE CONSIDER VIEW THAT HE ISSUE NEEDS TO BE RE-EXAMINEED BY THE AO IN LIGHT OF VARIOUS EVIDE NCES FILED BY THE ASSESSEE. SIMILARLY, IN RESPECT OF INTEREST INCOME, THE LD. AO WAS ASSESSED INTEREST UNDER THE HEAD INCOME FROM OTHER SOURCES, ON THE GROUND THAT THE ASSESSEE WAS NOT HAVING ANY BUSINES S ACTIVITY, EXCEPT PROVIDING ACCOMMODATION ENTRIES, THEREFORE, THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED THAT INTEREST INCOME IS ASSESSABLE UNDER THE HEAD INCOME FROM BUSINESS /PROFESSION. TH E ASSESEE CLAIMS THAT IT IS INVOLVED IN THE BUSINESS OF SHORT TERM FINANCING AND INVESTMENT ACTIVITY AND INTEREST INCOME IS ASSESSAB LE UNDER THE HEAD INCOME FROM BUSINESS/PROFESSION. FACTS ARE CONTRADI CTING EACH ITA NOS.3917 & 3918/MUM/2018 ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. 6 OTHER. THEREFORE, WE SET ASIDE THIS ISSUE ALSO TO T HE FILE OF THE AO FOR FURTHER VERIFICATION. SIMILARLY, IN RESPECT OF ADDI TIONS TOWARDS UNEXPLAINED CASH CREDIT, EVEN THOUGH TOTAL CASH DEP OSITS INTO THE BANK ACCOUNT IS AT RS. 41,50,000/-, BUT THE LD. AO HAS MADE ADDITIONS OF RS. 4,15000/- ONLY. FURTHER, THE ASSES SEE CLAIMS THAT THE AMOUNT OF CASH DEPOSITS WAS FOUND IN BANK ACCOUNT W AS ULTIMATELY TRANSFERED TO THE BENEFICIARY M/S EMERALD DIGITAL M EDIA LIMITED. THESE FACTS WERE NOT EMANATING FROM THE ORDERS OF T HE LOWER AUTHORITIES. THEREFORE, WE ARE OF THE CONSIDERED VI EW THAT THIS ISSUE ALSO NEEDS TO GO BACK TO THE AO FOR FURTHER VERIFIC ATION. HENCE, WE SET ASIDE ALL THE ISSUES TO THE FILE OF THE AO FOR FRESH ASSESSMENT DENOVO IN ACCORDANCE WITH LAW. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR AY 2013-14 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 3918/MUM/2018:- 8. THE FACTS AND ISSUES INVOLVED IN THIS APPEAL ARE ALSO IDENTICAL TO FACTS AND ISSUES, WHICH WE HAVE ALREADY CONSIDER ED IN ITA NO. 3917/UM/2018. THE REASONS GIVEN BY US IN PRECEDING PARAGRAPH IN RESPECT OF DISALLOWANCE OF BUSINESS LOSS SHALL MUTA TIS MUTANDIS APPLY TO THIS APPEAL ALSO. THEREFORE, FOR SIMILAR R EASONS WE SET ASIDE THIS APPEAL TO THE FILE OF THE AO FOR DENOVO ASSESS MENT. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FOR AY 2014-15 IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ITA NOS.3917 & 3918/MUM/2018 ALLIED COMPUTER INTERNATIONAL (ASIA) LTD. 7 10. AS A RESULT, BOTH APPEALS FILED BY THE ASSESEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 14 /10 /2019 SD/- (MAHAVIR SINGH) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 14/10/2019 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//