DCIT 22(3), NAVI MUMBAI V. ASHTAVINAYAK CONSTRUCITON, NAVI MUMBAI

ITA 4206/MUM/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4280 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 10 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-04-2016
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 09-03-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-05-2011
• Court: TRIBUNAL
• Department Lawyers: RADHA KATYAL NARAN G
• Keywords: Unexplained cash credit
• Section: 133(6); 144; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.4206/MUM/2011 ASSESSMENT YEAR-2007-08 DCIT - 22(3), 3 RD FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI / VS. M/S. ASTAVINAYAK CONSTRUCTION, ROW HOUSE B-17, AIROLI, SECTOR-4, NAVI MUMBAI PAN NO.AADFA1724G ( / REVENUE) ( /ASSESSEE) ITA NO.4406/MUM/2011 ASSESSMENT YEAR-2007-08 M/S. ASTAVINAYAK CONSTRUCTION, R-478, TTC INDUSTRIAL AREA, MIDC RABALE, NAVI MUMBAI-400701 / VS. DCIT - 22(3), 3 RD FLOOR, TOWER NO.6, VASHI RLY. STATION COMPLEX, VASHI, NAVI MUMBAI PAN NO.AADFA1724G ( /ASSESSEE) ( / REVENUE) ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 2 / ASSESSEE BY SHRI DEVENDRA JAIN / REVENUE BY MS. RADHA KATYAL NARANG - DR ! / DATE OF HEA RING : 05/04/2016 ! / DATE OF ORDER: 05/04/2016 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE AS WELL AS ASSESSEE IS IN CROSS APPEAL AGAINST THE IMPUGNED ORDER DATED 18/03/2011 FOR ASSESSMENT YEAR 2007-08, OF THE LD. FIRST APPELLATE AUTHORITY, MUMBAI. FIRST, WE SHALL TAKE UP THE APPE AL OF THE ASSESSEE (ITA NO.4406/MUM/2011), WHEREIN, FIRST GROUND RAISED PERTAINS TO CONFIRMING THE ADHOC DISALLOWANCE OF RS.42,51,479/-, OUT OF PURCHASES. 2. DURING HEARING, THE CRUX OF ARGUMENT ADVANCED BY SHRI DEVENDRA JAIN, LD. COUNSEL FOR THE ASSESSEE, I S IDENTICAL TO THE GROUND RAISED BY INVITING OUR ATTE NTION TO PAGE-4, PARA 7 OF THE IMPUGNED ORDER. THE CRUX OF ARGUMENT IS THAT THE LD. ASSESSING OFFICER MADE ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 3 DISALLOWANCE AT THE RATE OF 25% OF THE PURCHASES MA DE AMOUNTING TO RS.3,78,57,101/-, RESULTING INTO DISAL LOWANCE OF RS.94,64,275/-, WHICH WAS ARGUED TO BE HIGHLY EXCESSIVE. IT WAS EXPLAINED THAT THE COMMISSIONER O F INCOME TAX (APPEAL) REDUCED THE DISALLOWANCE TO RS.42,51,479/-. ON THE OTHER HAND, THE LD. DR, MS. RADHA KATYAL NARANG, DEFENDED THE CONCLUSION ARRIVED AT I N THE IMPUGNED ORDER BY CONTENDING THAT THE ASSESSEE DID NOT RECONCILE THE DIFFERENCE AND EVEN ARGUED THAT THE COMMISSIONER OF INCOME TAX (APPEAL) GRANTED EXCESS IVE RELIEF TO THE ASSESSEE. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS , IN BRIEF, ARE THAT THE ASSESSMENT WAS FRAMED U/S 144 OF THE A CT ON 29/12/2007 AS IN SPITE OF PROVIDING SUFFICIENT OPPO RTUNITY TO THE ASSESSEE, THERE WAS NO COMPLIANCE ON BEHALF OF THE ASSESSEE. NOTICE ISSUED U/S 143(2) WAS RETURNED BAC K BY THE POSTAL AUTHORITIES ADDRESSEE LEFT. THE ASSESS EE MADE PURCHASES AND DID NOT PRODUCE PURCHASE BILLS FOR RS.3,78,57,101/- AND EVEN THE BASIC DETAILS AND ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 4 GENUINENESS OF PURCHASES WERE NOT PROVED BEFORE THE ASSESSING OFFICER, THEREFORE, HE MADE ADHOC DISALLO WANCE TO THE TUNE OF 25% OF THE PURCHASES, RESULTING INTO DISALLOWANCE OF RS.94,64,275/-. 2.2. ON APPEAL, BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), THE ASSESSEE FURNISHED WRITTEN SUBM ISSIONS TO WHICH REMAND REPORT WAS SOUGHT FROM THE LD. ASSE SSING OFFICER. PURSUANT TO THE DIRECTION OF THE COMMISSI ONER OF INCOME TAX (APPEAL) NOTICES U/S 133(6) OF THE ACT W ERE ISSUED AT THE VARIOUS ADDRESS SUBMITTED BY THE ASSE SSEE. THE DETAILS OF PURCHASES AND THEIR REPLIES HAVE BEE N DULY MENTIONED AT PAGE-5 ONWARDS OF THE IMPUGNED ORDER. THE ASSESSEE WAS ASKED TO OFFER HIS EXPLANATION WITH RE SPECT THE REMAND REPORT AND ON SOME OF THE PARTIES EITHER THE NOTICES WOULD NOT BE SERVED NO REPLY WAS RECEIVED. THE CONFIRMATIONS FILED BY THE ASSESSEE WERE ALSO DULY CONSIDERED AND FINALLY IT WAS FOUND THAT THE ASSESS EE COULD NOT PARTLY PROVE THE GENUINENESS OF THE PURCHASES E ITHER DURING ASSESSMENT PROCEEDINGS OR DURING REMAND PROCEEDINGS. THE COMMISSIONER OF INCOME TAX (APPEAL ) ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 5 FINALLY FOUND THAT THE ASSESSEE COULD NOT RECONCILE THE UNDER HAND PURCHASES MADE BY IT AND THUS HE AFFIRME D THE DISALLOWANCE TO THE TUNE OF RS.42,51,479/- OUT OF RS.94,64,275/- WORKED OUT BY THE LD. ASSESSING OFFI CER. THE ASSESSEE IS IN FURTHER APPEAL BEFORE THIS TRIBU NAL. 2.3. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT IN SPITE OF PROVIDING SUFFICIENT OPPORTUNITIES TO THE ASSESSEE, THE ASSESSEE NEITHER RESPONDED TO THE NOT ICES ISSUED TO IT ON VARIOUS DATES NOR FURNISHED REQUISI TE DETAILS, THEREFORE, THE ASSESSMENT WAS FRAMED U/S 144 OF THE ACT. BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL), TH E ASSESSEE FILED WRITTEN SUBMISSIONS, WHERE WERE FORW ARDED TO THE LD. ASSESSING OFFICER, REMAND REPORT WAS SOU GHT AND AFTER CONSIDERING THE FACTUAL MATRIX, CONTENTION OF THE ASSESSEE AND FINALLY, IT WAS FOUND THAT THE ASSESSE E COULD NOT RECONCILED THE DIFFERENCE OF RS.42,51,479/-. BE FORE THIS ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 6 TRIBUNAL, THE ASSESSEE HAS NOT PROVED ANY EVIDENCE CONTRADICTING THE FACTUAL FINDING RECORDED IN THE I MPUGNED ORDER EXCEPT TO TAKE A ARGUMENT WHICH WAS TAKEN BEF ORE THE COMMISSIONER OF INCOME TAX (APPEAL). BEFORE US, THE ASSESSEE HAS CONTENDED THAT THERE IS FACTUAL MISTAK E IN THE FIGURES CONTAINED IN THE IMPUGNED ORDER. HOWEVER, T HE ASSESSEE NEITHER FILED ANY APPLICATION U/S 154 EVEN AFTER RECEIPT OF THE ORDER FROM THE COMMISSIONER OF INCOM E TAX (APPEAL) AND EVEN TILL DATE. NO FURTHER DETAILS, C ONTRADICTING THE FINDING OF THE COMMISSIONER OF INCOME TAX (APPE AL) WERE FILED BEFORE US. SO FAR AS, THE CONTENTION OF THE ASSESSEE THAT ADHOC DISALLOWANCE WAS MADE BY THE ASSESSING OFFICER IS NOT CONCLUSIVELY PROVED MORE S O, WHEREVER, THE COMMISSIONER OF INCOME TAX (APPEAL) F OUND THE EXPLANATION OF THE ASSESSEE TO BE REASONABLE, THEREFORE, HE SUBSTANTIALLY REDUCED THE DISALLOWANCE, CONSEQUE NTLY, IT CANNOT BE SAID TO BE ADHOC DISALLOWANCE AT THIS STA GE, THUS, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE COMMISSIONER OF INCOME TAX (APPEAL). THUS, THIS GRO UND OF THE ASSESSEE IS HAVING NO MERIT, THEREFORE, DISMISS ED. ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 7 3. SO FAR AS, CONFIRMING THE DISALLOWANCE OF RS.27,10,669/- OUT OF SITE EXPENSES IS CONCERNED, IDENTICALLY REMAND REPORT WAS SOUGHT FROM THE ASSES SING OFFICER AND IT WAS FOUND THAT EXPENSES WERE INCURRE D IN CASH LIKE ON COLD DRINKS, PETROL AND DIESEL, MISCEL LANEOUS EXPENSES. THE EXPLANATION OF THE ASSESSEE WAS THAT THESE EXPENSES WERE INCURRED BY SITE SUPERVISOR BUT NO EXPLANATION WAS SATISFACTORILY MADE. THE TOTAL DISA LLOWANCE ON SITE EXPENSES WAS TO THE TUNE OF RS.33,88,336/- WHICH WAS REDUCED TO RS.27,10,669/- BY THE COMMISSIONER O F INCOME TAX (APPEAL). IT IS NOTICED THAT WHILE COMIN G TO A PARTICULAR CONCLUSION, THE LD. FIRST APPELLATE AUTH ORITY DULY CONSIDERED THE EXPLANATION OF THE ASSESSEE AND THE FACTUAL MATRIX. IT IS NOTICED THAT NO APPLICATION U/S 154 OF THE ACT WAS MADE BY THE ASSESSEE, IF THERE WAS ANY ERROR IN THE ORDER, THUS, THOUGH THERE IS NO MERIT IN THE CO NTENTION OF THE ASSESSEE STILL BY TAKING A LENIENT VIEW, WE REDUCE THE DISALLOWANCE TO RS.25 LAKHS AGAINST RS.27,10,669/- SUSTAINED BY THE COMMISSIONER OF INCOME TAX (APPEAL ), THUS, THIS GROUND OF THE ASSESSEE IS PARTLY ALLOWED . ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 8 4. NEXT GROUND PERTAINS TO CONFIRMING THE ADDITION OF RS.23,24,800/- AS UNEXPLAINED CASH CREDITS. THE CRU X OF ARGUMENT IS THAT UNSECURED LOANS WERE TAKEN BY THE ASSESSEE TO THE TUNE OF RS.23,24,800/- WHICH WERE UNJUSTIFIABLY TREATED AS UNEXPLAINED CASH CREDIT. T HE COMMISSIONER OF INCOME TAX (APPEAL) DULY CONSIDERED THE REMAND REPORT, WHEREIN, IT WAS FOUND THAT SHRI PRAV IN PANDYA, ONE OF THE LOAN CREDITORS, WAS NOT EVEN FIL ING HIS INCOME TAX RETURN AND HIS CREDITWORTHINESS WAS NOT PROVED, LIKEWISE, THE PAN NUMBER OF SHRI ASHOK PARANDIWAR W AS NOT TALLYING. WITHOUT GOING INTO MUCH DELIBERATION, THERE IS UNCONTROVERTED FINDING IN THE IMPUGNED ORDER, NEITH ER THE LOANS WERE PROVED SATISFACTORY NOR THE GENUINENESS AND CREDITWORTHINESS BY THE ASSESSEE. BEFORE US, ALSO, THE ASSESSEE HAS NOT PROVED THE CREDITWORTHINESS. IF T HE CREDITOR IS NOT EVEN FILING HIS INCOME TAX RETURN, HOW A LOAN CAN BE EXTENDED TO ANY PERSON, MEANING THEREBY, THE CREDITWORTHINESS OF THE CREDITOR IS NOT PROVED, THU S, WE AFFIRM THE CONCLUSION DRAWN IN THE IMPUGNED ORDER O N THE ISSUE IN HAND. ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 9 5. THE NEXT GROUND PERTAINS TO CONFIRMING THE DISALLOWANCE OF RS.8,36,266/-, OUT OF VARIOUS EXPEN SES, DEBITED TO PROFIT & LOSS ACCOUNT. THE CRUX OF ARGUM ENT ON BEHALF OF THE ASSESSEE IS THAT PAYMENTS WERE MADE T O VARIOUS PARTIES. THE DISALLOWANCE WAS MADE BY THE L D. ASSESSING OFFICER ON THE GROUND THAT THERE WAS NO CORRELATION BETWEEN THE LEDGER ACCOUNTS AND THE BIL LS FILED BY THE ASSESSEE. BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL) BIFURCATION OF THE EXPENSES WERE OBTAINED AND WHEREVER THE PAYMENT WAS MADE THROUGH CHEQUE WAS AL LOW TO THE TUNE OF RS.40,98,217/- AND THE CASH COMPONEN T TO THE EXTENT OF RS.41,81,334/-, WHEREIN, THE SAME WER E NOT SUPPORTED BY PROPER BILLS, THE DISALLOWANCE WAS SUS TAINED TO THE EXTENT OF 20% ONLY. CONSIDERING THE TOTALITY OF FACTS AND BY TAKING A LENIENT VIEW, WE REDUCE THE DISALLO WANCE TO RS.7,36,266/- AGAINST SUSTAINING RS.8,36,266/- BY T HE COMMISSIONER OF INCOME TAX (APPEAL), THUS, THIS GRO UND OF THE ASSESSEE IS PARTLY ALLOWED. 6. THE LAST GROUND RAISED BY THE ASSESSEE IS SUSTA INING THE ADDITION OF RS.4,04,852/- AS INCOME FROM OTHER ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 10 SOURCES. THE CRUX OF ARGUMENT OF THE LD. COUNSEL IS THAT THERE IS WRONG FINDING BY THE COMMISSIONER OF INCOM E TAX (APPEAL) THAT THIS GROUND WAS NOT PRESSED BY THE AS SESSEE BEFORE HIM. WE ARE NOT SATISFIED WITH THIS EXPLANAT ION OF THE ASSESSEE BECAUSE, FIRSTLY, NEITHER ANY PROOF WAS FI LED AND SECONDLY, EVEN AFTER RECEIPT OF IMPUGNED ORDER, THE ASSESSEE NEVER FILED ANY APPLICATION BEFORE THE COMMISSIONER OF INCOME TAX (APPEAL) U/S 154 CLAIMING THAT THIS GROU ND WAS ACTUALLY PRESSED. MERE CLAIM IS NOT ENOUGH, THUS, W E FIND NO MERIT IN THE GROUNDS OF THE ASSESSEE. APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 7. NOW, WE SHALL TAKE UP THE APPEAL OF THE REVENUE (ITA NO.4206/MUM/2011), WHEREIN, FIRST GROUND RAISE D PERTAINS TO GRANTING RELIEF OF RS.52,12,796/- OUT O F THE ADDITION OF RS.94,64,275/- MADE ON ACCOUNT OF UNPRO VED PURCHASES. THE LD. DR ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUND RAISED, WHEREAS, THE LD. CO UNSEL FOR THE ASSESSEE, DEFENDED THE CONCLUSION IN THE IMPUGN ED ORDER. WE HAVE DISCUSSED THIS ISSUE WHILE DELIBERA TING UPON GROUND NUMBER -1 OF THE APPEAL OF THE ASSESSEE AND ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 11 FINALLY FOUND THAT THE COMMISSIONER OF INCOME TAX ( APPEAL) DULY CONSIDERED THE FACTUAL MATRIX, REPLY OF THE AS SESSEE, OBSERVATION MADE IN THE ASSESSMENT ORDER AND ON EXAMINATION OF FACTS REACHED TO A PARTICULAR CONCLU SION. THUS, WE FIND NO MERIT IN THE GROUND OF THE REVENUE , THEREFORE, DISMISSED. 8. THE NEXT GROUND RAISED PERTAINS TO GRANTING REL IEF OF RS.61,26,391/- OUT OF CONTRACT EXPENSES ON WHICH TD S WAS DEDUCTED. THE LD. DR ADVANCED ARGUMENT, WHICH IS IDENTICAL TO THE GROUND RAISED. IT WAS ALSO CONTEN DED THAT THERE IS CONTRAVENTION OF RULE 46A OF THE RULES. O N THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE, DEFEN DED THE CONCLUSION ARRIVED AT IN THE IMPUGNED ORDER. 8.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT ICED THAT THE COMMISSIONER OF INCOME TAX (APPEAL) GRANTED RE LIEF TO THE ASSESSEE CONSIDERING THE TOTALITY OF FACTS AND THE ATTENDANT CIRCUMSTANCE THAT TDS WAS DEDUCTED ON THE EXPENSES AND EVEN OPPORTUNITY WAS GRANTED TO THE ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 12 ASSESSING OFFICER. THUS, THERE IS NO VIOLATION OF R ULE-46A OF THE RULES. THE COMMISSIONER OF INCOME TAX (APPEAL) IS DULY EMPOWERED TO EXAMINE THE EVIDENCES, IF ANY, FI LED BY THE ASSESSEE. THE RELIEF WAS GRANTED JUSTIFIABLY, T HEREFORE, THERE IS NO MERIT IN THE CONTENTION OF THE REVENUE. THIS GROUND IS, THEREFORE, DISMISSED. 9. THE NEXT GROUND PERTAINS TO GRANTING RELIEF OF RS.6,77,667/- OUT OF DISALLOWANCE OF RS.33,88,336/- MADE ON ACCOUNT OF SITE EXPENSES. CONSIDERING THE TOTALI TY OF FACTS AND THE CIRCUMSTANCE AVAILABLE ON RECORD, WE FIND NO INFIRMITY IN THE CONCLUSION DRAWN BY THE COMMISSION ER OF INCOME TAX (APPEAL) AND EVEN WE HAVE GRANTED A FURT HER PART RELIEF TO THE ASSESSEE, BY TAKING A LENIENT VI EW, BUT WE FIND NO INFIRMITY IN THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL). 10. THE LAST GROUND PERTAINS TO GRANTING RELIEF OF RS.12,33,622/-, OUT OF ADDITION OF RS.20,69,888/-, (VARIOUS EXPENSES CLAIMED BY THE ASSESSEE) AND SUSTAINING TH E ADDITION TO THE TUNE OF RS.8,36,266/-, BEING 20% OF THE ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 13 EXPENSES INCURRED IN CASH. CONSIDERING THE ARGUMENT S FROM BOTH SIDES, WE ARE IN AGREEMENT WITH THE CONCLUSION OF THE COMMISSIONER OF INCOME TAX (APPEAL) AS THE SAME WA S ARRIVED AT ON EXAMINATION OF FACTS AND THE GROUND R EALTIES, THEREFORE, WE AFFIRM THE STAND OF THE COMMISSIONER OF INCOME TAX (APPEAL). FINALLY, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED AND THAT OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 05/04/2016. SD/- SD/- (RAJENDRA) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER MUMBAI; $ DATED : 05/04/2016 F{X~{T? P.S/. . . %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. &' () / THE APPELLANT (RESPECTIVE ASSESSEE) 2. *+() / THE RESPONDENT. 3. , , - ( &' ) / THE CIT, MUMBAI. ITA NO.4206 & 4406/MUM/2011 M/S ASHTAVINAYAKA CONSTRUCTION 14 4. , , - / CIT(A)- , MUMBAI, 5. /01 * 2 , , &' ! &23 , / DR, ITAT, MUMBAI 6. 14 5 / GUARD FILE. / BY ORDER, +/' * //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI