N.H.HARSORA PVT.LTD., MUMBAI V. ITO 5(2)(1), MUMBAI

ITA 3995/MUM/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8666 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 01-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVITA P KAUSHIKLD
• Assessee Lawyers: SANJAY R PARIKHLD
• Keywords: Earning of tax free income; Rule 8D
• Section: 143(3); 14A

Judgement Text

ITA NO.3995/MUM/2017 M/S. N.H. HARSORA PRIVATE LIMITED ASSESSMENT YEAR :2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI , , BEFORE HONBLE SHRI MAHAVIR SINGH, JM AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.3995/MUM/2017 ( / ASSESSMENT YEAR : 2012-13 ) M/S. N.H. HARSORA PRIVATE LIMITED 1-D, HARSORA CENTRE DR. HAKIM WADI BESIDES SUPER CINEMA, GRANT ROAD, MUMBAI-400 007 . / VS. INCOME TAX OFFICER - 5(2)(1 ) AAYKAR BHAVAN, 5 TH FLOOR M.K. ROAD MUMBAI- 400 020. $% ./ ./PAN/GIR NO. AAACN-1875-B ( %' /APPELLANT ) : ( ()%' / RESPONDENT ) ASSESSEE BY : SHRI SANJAY R. PARIKH-LD. AR REVENUE BY : MS. KAVITA P. KAUSHIK-LD.DR / DATE OF HEARING : 14/01/2020 / DATE OF PRONOUNCEMENT : 14/01/2020 / O R D E R MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [IN SHORT REFERRED TO AS AY] 2012-13 CONTEST THE ORDER OF L D. COMMISSIONER OF INCOME-TAX (APPEALS)-10, MUMBAI, [IN SHORT REFERRED TO AS CIT(A)], APPEAL NO. CIT(A)-10/ITO-5(2)(1)/324/2015-16 DATED 17/02/2017 ON FOLLOWING GROUNDS OF APPEAL: - ITA NO.3995/MUM/2017 M/S. N.H. HARSORA PRIVATE LIMITED ASSESSMENT YEAR :2012-13 2 A) ADDITION ON ACCOUNT OF CASH DEPOSIT - RS. 12,92, 200/- 1) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 10 (MUMBAI) [CIT-(A)] ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER O F THE INCOME TAX OFFICER 5(2)(1), MUMBAI (AO) MAKING AN ADDITION OF RS. 12,92,200/- O N ACCOUNT OF CASH DEPOSITED TOWARDS TENANTED BUILDING SCRAP SALE, IN THE HANDS OF THE APPELLANT. 2) THE APPELLANT PRAYS THAT THE ADDITION OF RS. 12, 92,200/- MADE BY THE AO ON ACCOUNT OF CASH DEPOSITED TOWARDS TENANTED BUILDING SCRAP SALE AND AS CONFIRMED BY THE CIT(A), MAY BE DELETED. B) DISALLOWANCE U/S. 14A-RS. 97,470/- 3) THE LEARNED CIT(A) ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER OF THE AO MAKING A DISALLOWANCE U/S. 14A READ WITH RULE 8D(2) (III) OF RS. 97,470/-. 4) THE APPELLANT PRAYS THAT THE ADDITION OF RS. 97, 470/- U/S, 14A READ WITH RULE 8D(2)(III) MADE BY THE AO AND AS CONFIRMED BY THE C IT(A), MAY BE DELETED. 2.1 FACTS ON RECORD WOULD REVEAL THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE STATED TO BE ENGAGED IN MANUFACT URING WAS ASSESSED FOR YEAR UNDER CONSIDERATION U/S. 143(3) O N 26/03/2015 WHEREIN THE INCOME OF THE ASSESSEE WAS DETERMINED A T RS.119.94 LACS, AFTER CERTAIN ADDITIONS / ADJUSTMENTS AS AGAINST RE TURNED INCOME OF RS.11.57 LACS FILED BY THE ASSESSEE ON 17/05/2013. AS EVIDENT FROM GROUNDS OF APPEAL, THE ISSUES THAT ARISES FOR OUR C ONSIDERATION ARE I) ADDITION ON ACCOUNT OF CASH DEPOSIT; (II) DISALLOWA NCE U/S 14A. 2.2 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD. OUR ADJUDICATION TO BO TH THE ISSUES WOULD BE AS GIVEN IN SUCCEEDING PARAGRAPHS. 3. ADDITION ON ACCOUNT OF CASH DEPOSIT AS PER INFORMATION RECEIVED BY THE DEPARTMENT, IT T RANSPIRED THAT THE ASSESSEE DEPOSITED AGGREGATE SUM OF RS.86.31 LACS I N TWO BANK ACCOUNTS MAINTAINED WITH BANK OF INDIA AND HDFC BAN K. UPON VERIFICATION OF CASH BOOK, THE ACTUAL CASH DEPOSIT WORKED OUT TO BE RS.74.26 LACS. THE ASSESSEE SUBMITTED THAT IT RECEI VED CASH ON VARIOUS DATES FROM VARIOUS PARTIES AND ACCORDINGLY, THE ASS ESSEE WAS DIRECTED TO ITA NO.3995/MUM/2017 M/S. N.H. HARSORA PRIVATE LIMITED ASSESSMENT YEAR :2012-13 3 EXPLAIN THE NATURE OF TRANSACTIONS, IDENTITY AND CR EDITWORTHINESS OF THESE PARTIES. HOWEVER, IN THE ABSENCE OF SUFFICIENT DOCU MENTARY EVIDENCES, LD. AO ADDED THE AMOUNT OF RS.74.26 LACS TO THE INC OME OF THE ASSESSEE. UPON FURTHER APPEAL, LD. CIT(A) ELIMINATED AMOUNT A LREADY OFFERED BY ASSESSEE AS INCOME AS PER SCHEDULE-22, DOUBLE ENTRI ES, ADVANCES RECOVERED IN CASH AND CASH RECEIVED ON SALE OF VEHI CLE AND GENERATOR. HOWEVER, THE AMOUNT OF RS.12,92,200/- STATED TO BE RECEIVED ON SALE OF TENANTED BUILDING SCRAP WAS NOT ACCEPTED SINCE THE ASSESSEE CHANGED ITS STAND WHILE EXPLAINING THE SAID ITEM AND THE AS SESSEE ALSO FAILED TO SUBSTANTIATE THE SAME WITH ANY EVIDENCES. AGGRIEVED , THE ASSESSEE IS UNDER FURTHER APPEAL BEFORE US. BEFORE US, LD. AR PLACED ON RECORD LEDGER EXTRACTS & COPY OF INVOICES RAISED ON ACCOUNT OF SCARP SALE TO SUBMIT THAT THE SAID CASH WAS RECEIVED AS ADVANCE FROM VARIOUS PARTIES ON ACCOUNT OF SALE OF SCRAP IN SUBSEQUENT YEARS. ON THE STRENGTH OF THESE DOCUMENT S, LD. AR PLEADED FOR ACCEPTANCE OF RECEIPTS AS ARISING OUT OF SALE O F SCRAP IN SUBSEQUENT PERIODS. AU CONTRAIRE, LD. DR SUBMITTED THAT THE ASSESSEE CHANGED VERSION BEFORE LD. AO AND LD. CIT(A) AND FURTHER, T HESE DOCUMENTS / EXPLANATIONS WERE WITHOUT ANY VERIFICATION. UPON DUE CONSIDERATION, THE BENCH FORMED AN OPINION THAT IN THE INTEREST OF JUSTICE AND IN THE LIGHT OF DOCUMENTARY EVIDENCE S AS PLACED ON RECORD, THE ASSESSEE DESERVE ANOTHER OPPORTUNITY TO EXPLAIN THE SOURCE OF STATED CASH DEPOSIT. THEREFORE, THIS ISSUE STAND REMITTED BACK TO THE FILE OF LD.AO FOR RE-ADJUDICATION IN THE LIGHT OF ASSESSEE S SUBMISSIONS AS WELL AS DOCUMENTARY EVIDENCES WITH A DIRECTION TO THE AS SESSEE TO ITA NO.3995/MUM/2017 M/S. N.H. HARSORA PRIVATE LIMITED ASSESSMENT YEAR :2012-13 4 SUBSTANTIATE THE SAID CASH DEPOSIT. THIS GROUND STA ND ALLOWED FOR STATISTICAL PURPOSES. 4. DISALLOWANCE U/S 14A THE ASSESSEE EARNED EXEMPT DIVIDEND INCOME OF RS.1, 925/- BUT DID NOT OFFER ANY SUO-MOTO DISALLOWANCE AGAINST THE SAME. T HE LD. AO, APPLYING RULE 8D, COMPUTED AGGREGATE DISALLOWANCE OF RS.3.37 LACS WHICH COMPRISED-OFF OF INTEREST DISALLOWANCE U/R 8D(2)(II ) FOR RS.2.39 LACS AND EXPENSE DISALLOWANCE U/R 8D(2)(III) FOR RS.0.97 LAC S. THE LD. CIT(A) DELETED INTEREST DISALLOWANCE SINCE OWN FUNDS WERE USED TO MAKE THE SAID INVESTMENTS. HOWEVER, EXPENSE DISA LLOWANCE OF RS.0.97 LACS WAS CONFIRMED, AGAINST WHICH THE ASSES SEE IS UNDER FURTHER APPEAL BEFORE US. IT IS ADMITTED POSITION THAT THE ASSESSEE HAS EARNE D EXEMPT INCOME OF RS.1,925/- ONLY AND THEREFORE, WE DIRECT LD.AO TO R ESTRICT THE DISALLOWANCE TO THAT EXTENT SINCE EXPENSES DISALLOW ANCE, IN OUR CONSIDERED OPINION, COULD NOT EXCEED EXEMPT INCOME EARNED BY THE ASSESSEE DURING THE YEAR. THIS GROUND STAND PARTLY ALLOWED. 5. THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH JANUARY, 2020. SD/- SD/- (MAHAVIR SINGH) (MA NOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 14/01/2020 SR.PS, JAISY VARGHESE ITA NO.3995/MUM/2017 M/S. N.H. HARSORA PRIVATE LIMITED ASSESSMENT YEAR :2012-13 5 !'! / COPY OF THE ORDER FORWARDED TO : 1. %' / THE APPELLANT 2. ()%' / THE RESPONDENT 3. 0 ( ) / THE CIT(A) 4. 0 / CIT CONCERNED 5. 12(+3 , 3 , / DR, ITAT, MUMBAI 6. 2456 / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI.