IPOG INTERNATIONATIONAL LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 4227/MUM/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88167 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 21-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 18-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY KUMAR BORA
• Assessee Lawyers: S S PHADKAR
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH I, MUMBAI BEFORE SHRI D. KARUNAKAR RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO. 4227/MUM/2012 ASSESSMENT YEAR: 2008-09 M/S. IPOG INTERNATIONAL LTD. 24, ARAM NAGAR NO. 1 J.P. ROAD, PICNIC COTTAGE, VERSOVA, ANDHERI (W) MUMBAI 400 061 PAN:-AABCI 3709 A VS. DCIT 8(2) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.S. PHADKAR REVENUE BY : SHRI VIJAY KUMAR BORA DATE OF HEARING : 21 .01.2015 DATE OF PRONOUNCEMENT : .01.2015 PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST ORDER DATED 05.03.2012, PASSED BY LD. CIT(A)-16, MUMBAI F OR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) FOR THE A.Y. 2008-09, ON THE FOLLOWING GROUNDS, WHICH READS AS UNDER:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S) ERRED IN FACTS AND LAW IN DISALLOWING THE PURCHASE OF RS.54, 99,598/- U/S 69C. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACTS AND LAW IN DISALLOWING EXPENSES OF RS.9,90,12 7/- UNDER SECTION 40(A)(IA). 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN FACTS AND LAW IN DISALLOWING EXPENSES OF RS.2,12,74 9/- U/S 37(1) ITA NO. 4227/MUM/2012 ASSESSMENT YEAR: 2008-09 2 WITHOUT APPRECIATING THE FACT THAT THESE ARE INCURR ED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE TRADING OF VARIOUS ITEMS LIKE, GROUN DNUT, MARBLES, GRAINS, AND DIAMONDS. DURING THE COURSE OF THE ASSESSMENT P ROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS DEBIT ED PURCHASES OF RS.1,03,39,34,415/- UNDER THE HEAD MANUFACTURING AN D OTHER EXPENSES. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURN ISH THE PARTY WISE DETAILS OF THE PURCHASES ALONG WITH THE CURRENT ADD RESS. IN RESPONSE, THE ASSESSEE COULD ONLY SUBMIT THE DETAILS OF PURCHASES TO THE TUNE OF RS.1,02,85,34,817/-, HOWEVER, FOR THE BALANCE PURCH ASE OF RS.54,99,598/-, THE ASSESSEE COULD NOT FURNISHED TH E PURCHASE BILLS OR INVOICES. IN THE ASSESSMENT ORDER, IT HAS BEEN OBSE RVED BY THE AO THAT, ASSESSEE HAS FAILED TO EXPLAIN THE SOURCE OF PURCH ASES OF RS.54,99,598/- AND ACCORDINGLY HE ADDED THE SAID AMOUNT TO THE INC OME OF THE ASSESSEE U/S 69C. FURTHER HE NOTED THAT THE ASSESSE E HAS NOT DEDUCTED TDS IN RESPECT OF THE FOLLOWING EXPENSES:- IN RESPONSE TO THE SHOW CAUSE, THE ASSESSEE COULD N OT FILE ANY DETAILS AND ACCORDINGLY, THE AO ADDED THE SAME U/S 40(A)(IA ) UNDER THE HEAD MANUFACTURING AND OTHER EXPENSES. HE FURTHER NOTED THAT THE ASSESSEE SR. NO HEAD OF EXPENDITURE AMT (RS.) 1 BROKERAGE EXPENSES 3,53,621 2 OFFICE RENT 4,51,747 3 PROFESSIONAL CHARGES 1,21,494 4 CLEARING & FORWARDING CHARGES. 63,265 TOTAL 9,90,127 ITA NO. 4227/MUM/2012 ASSESSMENT YEAR: 2008-09 3 HAD DEBITED CREDIT CARD EXPENSES OF RS.88,409/- AND HAS ALSO DEBITED INTEREST ON HOUSING LOANS OF RS. 1,24,340/- UNDER T HE HEAD INTEREST AND FINANCIAL CHARGES. AGAIN THE ASSESSEE COULD NOT FUR NISH ANY PROPER SUBMISSION OR DETAIL AS NOTED BY THE AO. ACCORDINGL Y, HE DISALLOWED THE EXPENSES AGGREGATING TO RS.2,12,749/-. 3. LD. CIT(A) TOO HAS CONFIRMED THE SAID ADDITIONS AND DISALLOWANCES AFTER REJECTING THE ASSESSEES CONTENTION. 4. BEFORE US, THE ASSESSEE HAS FILED AN AFFIDAVIT S TATING THAT DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, DETAILS O F PURCHASES WERE DULY SUBMITTED AND SUCH DETAILS HAS ALSO BEEN MADE PART OF THE AFFIDAVIT AS ANNEXURES. ON THE ISSUE OF ADDITION ON ACCOUNT O F U/S 40(A)(IA), IT HAS BEEN STATED THAT THE DETAILS OF THESE EXPENSES WERE ALSO FILED BEFORE THE AO WHICH HAS NOT BEEN TAKEN NOTE OF AND IF SUCH DET AILS ARE TO BE TAKEN INTO CONSIDERATION, THEN IT CAN BE SEEN THAT, NO TD S WAS REQUIRED TO BE DEDUCTED. HE FURTHER SUBMITTED THAT SO FAR AS ADDIT ION ON ACCOUNT OF PURCHASE IS CONCERNED, NO ADDITION SHOULD HAVE BEEN MADE, BECAUSE THE ENTIRE QUANTITY OF PURCHASE DURING THE YEAR HAS BEE N SOLD I.E. IT HAS BEEN EXPORTED AND IN THE ACCOUNTS THERE IS NO CLOSI NG STOCK OR SHORTAGE CLAIMED BY THE ASSESSEE. IF THE ASSESSEE IS SHOWING PURCHASES OF MORE THAN 103 CRORES, THEN WHY WOULD ASSESSEE INFLATE TH E PURCHASES OF RS. 54 LAKHS WHICH PERTAINS TO ONLY 4 BILLS. THUS, NO A DDITION IS CALLED FOR. HE ALSO DREW OUR ATTENTION TO THE DETAILS OF PURCHASES MADE FROM THE PARTY WHICH GIVES DETAILS OF BILL NUMBER, DATE, QUANTITY OF PURCHASES MADE AND SOLD. ALTERNATIVELY HE SUBMITTED THAT MATTER CAN BE RESTORED BACK TO THE FILE OF THE AO FOR FURTHER VERIFICATION. REGARDING 40(A)(IA), HE DREW OUR ATTENTION TO THE DETAILS FURNISHED IN THE ANNEXURES FILED ALONG WITH AFFIDAVIT AND SUBMITTED THAT OUT OF RS.9,90,127/- T HE ASSESSEE HAS SUO ITA NO. 4227/MUM/2012 ASSESSMENT YEAR: 2008-09 4 MOTU DISALLOWED 2,05,008 WHICH THE LD. CIT(A) HAS D IRECTED TO GIVE THE BENEFIT. HE SUBMITTED THAT ENTIRE MATTER HAS NOT BE EN PROPERLY EXAMINED EITHER BY THE AO OR BY THE LD.CIT(A). THER EFORE, MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO. REGA RDING DISALLOWANCE OF EXPENSES HE SUBMITTED THAT ALL THESE EXPENSES WERE FOR THE BUSINESS PURPOSE AND THE INTEREST OF HOUSING LOAN WAS AS PER CONTRACTUAL ARRANGEMENT. THE DETAILS OF THESE EXPENSES WERE DUL Y FURNISHED BEFORE THE AO, BUT NOT CONSIDERED. THUS, NO DISALLOWANCE S HOULD BE MADE. 5. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE AO AS WELL LD.CIT(A) AND SUBMITTED THAT THE ONUS IS UPON THE ASSESSEE TO SHOW THAT THE PURCHASES HAVE BEEN MADE FROM GENU INE PARTY DULY SUPPORTED BY BILLS. THE ASSESSEE HAS EVEN FAILED TO FURNISH THE BILLS RELATING TO PURCHASES AGGREGATING TO RS. 54 LAKHS. IN ABSENCE OF SUCH A BILL, THE DISALLOWANCE HAS RIGHTLY BEEN CONFIRMED. FURTHER THE DETAILS GIVEN BY THE ASSESSEE AT THIS STAGE HAS NOT BEEN VE RIFIED, EITHER OF THE AUTHORITIES AND THEREFORE THE MATTER CAN BE SENT BA CK TO THE FILE OF THE AO. REGARDING OTHER TWO ADDITIONS, HE SUBMITTED THA T NO PROPER EXPLANATION OR EVIDENCES HAVE BEEN FILED THAT SUCH AN EXPENSES WAS FOR BUSINESS PURPOSE AND NO COMPLIANCE OF LAW HAS BEEN MADE. WHY TDS HAS NOT BEEN DEDUCTED HAS NOT BEEN PROPERLY EXPLAIN ED, THEREFORE, DISALLOWANCE U/S 40(A)(IA) HAS RIGHTLY BEEN CONFIRM ED BY THE LD.CIT(A). 6. WE HAVE HEARD RIVAL SUBMISSIONS AND ALSO PERUSED THE MATERIAL PLACED ON RECORD ON RECORD. SO FAR AS THE ADDITION ON ACCOUNT OF PURCHASES ARE CONCERNED, WE FIND THAT OUT OF TOTAL PURCHASES OF MORE THAN 103 CRORES, THE ASSESSEE COULD NOT SUBSTANTIAT E THE PURCHASE IN RESPECT OF FEW BILLS. NOW BEFORE US, THE ASSESSEE H AS FURNISHED THE DETAILS OF THE PURCHASES GIVING BILL NOS., DATE, NA ME OF THE PARTY AND THE ITA NO. 4227/MUM/2012 ASSESSMENT YEAR: 2008-09 5 QUANTITY PURCHASED ALONG WITH THE ADDRESS OF THE BU YERS AND THE SUPPLIERS. SINCE ALL THESE DETAILS HAVE NOT BEEN PR OPERLY VERIFIED OR EXAMINED. THEREFORE, IN THE INTEREST OF JUSTICE, WE FEEL THAT THIS ISSUE SHOULD BE RESTORED BACK TO THE FILE OF THE AO TO DE CIDE THE ISSUE AFRESH AFTER EXAMINING THESE DETAILS AND ASSESSEE WILL HAV E TO SUBSTANTIATE THESE DETAILS. ACCORDINGLY, GROUND NO. 1 IS SET ASI DE TO THE FILE OF THE AO. 7. AS REGARDS THE DISALLOWANCE U/S 40(A)(IA), AGAIN THE DETAILS OF THESE EXPENSES HAVE BEEN FILED BEFORE US ALONG WITH THE AFFIDAVIT. THESE DETAILS ONLY GIVE THE PURPOSE OF THE PAYMENT AND TH E AMOUNT PAID. WHY TDS PROVISIONS ARE NOT APPLICABLE HAD NOT BEEN PROP ERLY EXPLAINED. THIS ISSUE ALSO NEEDS TO BE RESTORED BACK TO THE FILE OF THE AO TO BE EXAMINED AFRESH AND THE ASSESSEE WILL FURNISH THE P ROPER REASONING AND EXPLANATION AS TO WHY TDS PROVISIONS ARE NOT APPLIC ABLE. ACCORDINGLY GROUND N. 2 IS ALSO SET ASIDE. 8. REGARDING DISALLOWANCE OF EXPENSES AGGREGATING T O RS.2,12,749/-, WE FIND THAT THE DETAILS OF CREDIT CARD EXPENSES OF RS.88,409/- HAS NOT BEEN FURNISHED. THE INTEREST PAYMENT HAS BEEN CLAIM ED BY THE COUNSEL THAT IT WAS A LOAN TAKEN FROM LIC AS A HOUSING LOAN . WHAT ARE THE TERMS AND CONDITIONS AND NOW THE INTEREST IS ALLOWABLE AN D HOW IT IS FOR THE PURPOSE OF BUSINESS, HAS NOT BEEN EXPLAINED. THEREF ORE, WE ARE OF THE OPINION THAT THIS MATTER SHOULD ALSO BE RESTORED BA CK TO THE FILE OF THE AO TO BE DECIDED AFRESH, AS NO DETAILS HAVE BEEN CO NSIDERED ON DISCUSSED EITHER BY THE AO OR BY THE LD.CIT(A). THU S, GROUND NO. 3 IS ALSO SET ASIDE TO THE FILE OF THE AO. ITA NO. 4227/MUM/2012 ASSESSMENT YEAR: 2008-09 6 9. NEEDLESS TO SAY THAT AO WILL PROVIDE DUE AND EFF ECTIVE OPPORTUNITY OF HEARING T THE ASSESSEE IN THE SET ASIDE PROCEEDI NGS. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21 ST DAY JANUARY, 2015. SD/- SD/- (D. KARUNAKA RAO) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 21.01.2015 *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR I BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.