RISHABH METAL SUPPLY CORPORAITON, MUMBAI V. ACIT CEN CIR 38, MUMBAI

ITA 4105/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0236 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-06-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 31-01-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 15-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B PRUSETH
• Assessee Lawyers: SHAILESH N JOSHI
• Keywords: Depreciation; Search and seizure; Opportunity of being heard; Additional evidence
• Section: 153A; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI RAVISH SOOD , JM ITA NO. 4105 / MUM/20 1 6 ( ASSESSMENT YEAR : 2008 - 09 ) M/S. RISHABH METAL SUPPLY CORPORATION, 45/10, 2 ND FLOOR, 1 ST CARPENTER STREET, CP TANK ROAD , MUMBAI 400 004 VS. ACIT CEN CIR 38, MUMBAI 400 067 PAN/GIR NO. AAAFR2336Q APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI SHAILESH N JOSHI REVENUE BY SHRI B. PRUSETH DATE OF HEARING 04/04 /201 7 DATE OF PRONOUNCEME NT 22 / 06 / 201 7 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) - 52, MUMBAI DATED 22/03/2016 FOR A.Y.2008 - 09 IN THE MATTER OF ORDER PASSED U/S.143(3) R.W.S. 153A OF THE IT ACT. 2. THE FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE ASSESSEE: - 1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS LD. CIT(A)] HAS ERRED IN UPHOLDING THE ORDER OF THE LD. ASSESSING OFFICER AND DISALLOWING INTEREST EXPENSE OF RS.11,00,611/ - AND TAXED ACCORDIN GLY WITHOUT GIVING SUFFICIENT OPPORTUNITY. 2. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN TREATING THE EXPENSES TO THE EXTENT OF RS.61,756/ - AS PERSONAL IN NATURE AND DISALLOWED AND ADDED BACK TO THE TOTAL INCOME TAXED ACCORDINGLY WITHOUT APP RECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE AND WITHOUT GIVING SUFFICIENT OPPORTUNITY. ITA NO. 4105/MUM/2016 M/S. RISHABH METAL SUPPLY CORPORATION 2 3. DURING THE COURSE OF HEARING BEFORE US, THE ASSESSEE HAS TAKEN ADDITIONAL GROUND TO THE FACT THAT THE ASSESSMENT FOR A.Y.2008 - 09 WAS NOT PENDING ON THE DATE OF INITIATION OF SEARCH ON 12.10.2011 AS PER THE SECOND PROVISO TO SECTION 153A (1) AND HENCE THE ASSESSMENT FOR A.Y.2008 - 09 HAS NOT ABATED IN TERMS OF SECTION 153A; AND SINCE THE ISSUES IN RESPECT OF WHICH ADDITION HAS BEEN MADE WAS NOT ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH THE AO HAD LOST JURISDICTION TO MAKE REGULAR ASSESSMENT AND MAKE DISALLOWANCE OF INTEREST EXPENSES, MOTOR CAR EXPENSES AND DEPRECIATION ON MOTOR CAR. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE O RDERS OF THE AUTHORITIES BELOW. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE APPELLANT FILED ITS RETURN OF INCOME ORIGINALLY ON 27/3/2010, DECLARING TOTAL INCOME OF RS.11,01,727/ - . SUBSEQUENTLY, A SEARCH AND SEIZURE ACTION U/S.132( 1) OF THE ACT WAS CONDUCTED IN THE CASE OF M/S. PIPAVAV DEFENCE AND OFFSHORE ENGINEERING CO. LTD., COVERING ITS HEAD OFFICE, ITS BRANCH OFFICES AND SITE OFFICE, OFFICES OF ITS GROUP CONCERNS AS ALSO RESIDENCES AND OFFICE PREMISES OF ITS KEY PERSONS, AND THE PREMISES OF THE ASSESSEE WAS ALSO COVERED BY THE SEARCH. ACCORDINGLY, A NOTICE U/S.153A OF THE ACT WAS ISSUED TO THE A SSESSEE ON 21/8/2012, AND IN RESPONSE THERETO, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30/1/2013, DECLARI N G TOTAL INCOME OF RS. 11 ,01,915/ - . SUBSEQUENT LY, THE ASSESSMENT PROCEEDINGS WERE TAKEN UP BY THE AO, AND THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED INTEREST OF RS.10, 11,322/- ON LOAN AND INTEREST OF RS.89,289/ - ON CAR LOAN, BUT HAD ITA NO. 4105/MUM/2016 M/S. RISHABH METAL SUPPLY CORPORATION 3 PROVIDED INTEREST - FREE L OANS AND THE PARTNERS CAPITAL ACCOUNT WAS S HOWING DEBIT BALANCES OF RS.2,70,36,660/ - AND RS. 1, 85,95,867/ - . ACCORDINGLY, THE AO DISALLOWED THE INTEREST EXPENDITURE OF RS.11,00,611/ - CLAIMED BY THE ASSESSEE. FURTHER, THE AO ALSO DISALLOWED AN AMOUNT OF RS.61,756/ - , BEING 20% OF MOTOR CAR EXPENSES AN D DEPRECIATION ON MOTOR CAR, OBSERVING THAT THE ASSESSEE HAD NOT MAINTAINED PROPER BILLS AND VOUCHERS, AND, THEREFORE, THE ENTIRE EXPENSES CLAIMED UNDER THESE HEADS CANNOT BE SAID TO BE WHOLLY AND EXCLUSIVELY INCURR ED FOR THE PURPOSE OF BUSINESS. THUS, THE ASSESSMENT WAS COMPLETED ON AN INCOM E OF RS.22,64,282/ - , VIDE ORDER DATED 20/3/2014 PASSED U/S.143(3) READ WITH SEC. 153A OF THE AC T. 5. IT WAS SUBMITTED BY THE LD. AR THAT THE ASSESSEE WAS SUPPOSED TO ARGUE AND MAKE WRITTEN SUBMISSIONS BEFORE CIT(A) - 52, MUMBAI IN RESPECT OF APPEALS FOR A.Y.2008 - 09, A.Y.2010 - 11 AND A.Y.2012 - 13 ON 30 TH MARCH, 2016. SURPRISINGLY AND SHOCKINGLY, WHEN THE AUTHORISED REPRESENTATIVE OF THE ASSESSEE CA DLLLP S. SHAH APPEARED BEFORE THE LEARNED CIT (A) WITH PAPER BOOKS FOR ALL TH E THREE APPEALS HE WAS INFORMED BY CIT (A) THAT THE APPEALS FOR A.Y.2008 - 09 AND A.Y. A.Y.2012 - 13 WERE DISPOSED OF BY HIM WITHOUT WAITING FOR THE A.R. AS HE WANTED TO DISPOSE OF CERTAIN APPEALS. THE LEARNED CIT(A) HOWEVER TOOK THE SUBMISSIONS OF AR FOR A.Y. 201 0 - 11 ON THE VERY SAME DAY AND PASSED THE APPELLATE ORDER OF A.Y.2010 - 11 ON 30.03.2016 ON MERITS WHICH IS LARGEL Y IN FAVOUR OF THE ASSESSEE. ITA NO. 4105/MUM/2016 M/S. RISHABH METAL SUPPLY CORPORATION 4 6. AS PER LD AR SINCE THE ASSESSEE WAS DENIED THE REASONABLE AND SUFFICIENT OPPORTUNITY OF BEING HEARD THE ASSE SSEE SEEKS PERMISSION TO FILE BEFORE THE HONOURABLE TRIBUNAL (A) THE PAPER BOOK WHICH IT INTENDED TO FILE BEFORE THE LEARNED CIT (APPEALS) ON 30.03.2016 AND (B) THE APPELLATE ORDER OF VERY SAME CIT (A) FOR A.Y.2010 - 11 TO SUPPORT ITS CLAIM THAT THE AR OF TH E ASSESSEE HAD IN FACT ATTENDED ON 30.03.2016 BEFORE HIM IN RESPECT OF ALL THE THREE APPEALS INCLUDING THE APPEAL FOR PRESENT ASSESSMEN T YEAR. 7. IN THE ADDITIONAL DOCUMENT SO FILED, THE LD. AR INDICATED THAT THE ASSESSEE HAS RECEIVED INTEREST FREE FUNDS (INCLUDING THAT OF CREDIT BALANCE IN ONE PARTNER'S CAPITAL ACCOUNT ON WHICH NO INTEREST IS CHARGED) TO THE TUNE OF RS.4.83 CRORES WHEREAS THE INTEREST FREE LOANS/ADVANCES GIVEN BY THE ASSESSEE IS ONLY TO THE TUNE OF RS.2.92 CRORES. THIS SHOWS THAT THE ASSE SSEE FIRM HAS EXCESS INTEREST FREE FUNDS IN ITS KITTY W HICH ARE MORE THAN INTEREST FREE FUNDS GIVEN BY IT. 8. AS PER LD. AR THE ASSESSEE PAID INTEREST ON INTEREST FREE LOANS TAKEN/ CREDIT BALANCE IN PARTNER'S CAPITAL ACCOUNT IT WOULD HAVE PAID INTEREST OF R S .35,51,825/ - AND HAD THE ASSESSEE CHARGED INTEREST ON INTEREST FREE LOANS GIVEN / DEBIT BAL ANCE IN PARTNER'S CAPITAL ACCOU NT IT WOULD HAVE RECEIVED INTEREST OF RS.32,22,388/ - . THUS BY NOT GIVING INTEREST ON INTEREST FREE LOANS ETC. RECEIVED AND BY NOT CH ARGING INTEREST ON INTEREST FREE LOANS ETC. GIVEN THE ASSESSEE HAS SAVED RS. 329 , 437 / - . THE LD. AR FURTHER CONTENDED THAT THE AO HAS TOTALLY OVERLOOKED THE FACT THAT THE ASSESSEE HAS SHOWN INTEREST RECEIVED OF R S .10,35,519/ - ON THE ITA NO. 4105/MUM/2016 M/S. RISHABH METAL SUPPLY CORPORATION 5 LOAN GIVEN TO A PARTY WHE REAS TILE AO HAS DISALLOWED THE ENTIRE INTEREST EXPENSES OF RS.11,00.611/ - DEBITED TO PROFIT & LOSS ACCOUNT WHICH IS VERY SURPRISING. 9. ADDITI ON A L E VIDENCE SO FILED BY LD. AR GOES TO THE RO OT OF THE ISSUE. WE, THEREFORE, ACCEPT THE ADDITIONAL EVIDENCE A ND RESTORE THE MATTER BACK TO THE FILE OF THE CIT( A) FOR EXAMINING THE SAME AND FOR DECIDING AFRESH AS PER LAW. 10. SIMILARLY WITH REGARD TO THE LEGAL GROUND , ADDITIONAL EVIDENCE WITH REGARD TO DATE OF FILING OF RETURN FOR A.Y. 2008 - 09, ITS PROCESSING ETC. ARE FIRST TIME FILED BEFORE US. THEREFORE, IN THE FITNESS OF THING THE LEGAL ISSUE IS ALSO RESTORED BACK TO THE FILE OF THE LD. CIT(A) FOR DECI DING THE SAME AS PER LAW. 11. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED I N THE OPEN COURT ON THIS 22 / 06 /2017 SD/ - ( RAVISH SOOD ) SD/ - (R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 22 / 06 /201 7 KARUNA 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//