VISHAL DILIP DOSHI, MUMBAI V. ITO 17(1)(3), MUMBAI

ITA 4276/MUM/2014

• Counselvise Citation: 427619914 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-06-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: G N MAKWANA
• Assessee Lawyers: NEHA PARANJAPE
• Keywords: Opportunity of being heard; Principle of natural justice; Corroborative evidences
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI G.S. PANNU , ACCOUNTANT MEMBER ITA NO . 42 76 / MUM./ 2014 ( ASSESSMENT YEAR : 20 09 10 ) SHRI VISHAL DILIP DOSHI 2502, SUMER TOWER BUILDING NO.5, SETH MOTISHA LANE MAZGAON, MUMBAI 400 010 PAN ACHPD5576F .. APPELLANT V/S INCOME TAX OFFICER WARD 17 (1)( 3 ) ROOM NO.114, 1 ST FLOOR PIRAMAL CHAMBERS, LALBAUG MUMBAI 400 012 .... RESPONDENT ASSESSEE BY : MS. NEHA PARANJAPE REVENUE BY : SHRI G.N. MAKWANA DATE OF HEARING 1 4 .0 7 .2015 DATE OF ORDER 28.07.2015 O R D E R PER G.S. PANNU, ACCOUNTANT MEMBER TH E PRESENT APPEAL PREFERRED BY THE ASSESSEE IS DIRECTED AGAINST THE IMPUGNED APPEAL ORDER DATED 1 4 TH MARCH 2014 , PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 19 , MU MBAI, FOR THE ASSESSMENT YEAR 20 09 10 , WITH REFERENCE TO THE ASSESSMENT ORDER DATED 2 9 TH DECEMBER 2011 , PASSED IN TERMS OF SECTION 143(3) OF THE SHRI VISHAL DILIP DOSHI 2 INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT' ) . THE G ROUNDS OF APPEAL RAISED BY THE ASSESSEE , ARE AS FOLLOWS : '1. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) - 19 MUMBAI [HEREINAFTER REFERRED TO AS 'CIT(A)'] ERRED IN PASSING THE ORDER DATED 14.03.2014 CONFIRMING THE ASSESSMENT ORDER DATED 29.12.2011 PASSED BY THE LD. A.O. WITHOUT APPRECIATING THE FACTS AND CIRCUMSTA NCES OF THE CASE. THE APPELLANT STRONGLY OBJECTS TO THE ORDER PASSED BY THE LD. CIT(A) AS UNDER: 2. EX - PARTE ORDER IS IN BREACH OF PRINCIPALS OF NATURAL JUSTICE. A. THE LD. CIT(A) ERRED IN CONFIRMING THE ASSESSMENT ORDER PASSED IN BREACH OF PRINCIPAL O F NATURAL JUSTICE WITHOUT AFFORDING THE APPELLANT AN APPROPRIATE OPPORTUNITY OF BEING HEARD. HENCE, THE ORDER DATED 14.03.2014 PASSED IN BREACH OF PRINCIPLES OF NATURA L JUSTICE IS BAD - IN - LAW AND THE SAME MAY BE QUASHED. 3. DEFAULT IS NOT DE LI BERATE: A . THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT HAS ACTED DILIGENTLY AND APPOINTED PROPERLY QUALIFIED PROFESSIONAL TO REPRESENT HIM. ALL THE NOTICES WERE HANDED OVER TO HIM ALONG WITH THE DETAILS. THE DEFAULT, IF ANY, IS NOT DUE TO ANY NEGLIGENCE ON THE PART OF THE APPELLANT. THE EX - PARTE ORDER IS BAD - IN - LAW AND THE SAME MAY BE QUASHED. 4. DISALLOWANCE ON ACCOUNT OF DIFFERENCE IN ITS DATA AND BOOKS OF ACCOUNT - RS.L,66,325/ - A. THE LD. CIT(A) ERRED IN CONF IR MING THE ACTION OF THE LD. A. O. IN M AKING DISALLOWANCE OF RS.1,66,325/ - ON ACCOUNT OF DIFFERENCE IN JOB CHARGES RECEIVED FROM M / S. SAHNEY COMMUTATORS PVT. LTD. AS PER THE ITS DATA AND BOOKS OF ACCOUNT WITHOUT APPRECIATING FACTS AND CIRCUMSTANCES OF THE CASE. B. THE LD. CIT(A) FAILED TO APP RECIATE THAT M / S. SAHNEY COMMUTATORS PVT. LTD. HAVE ACCOUNTED FOR THE INCOME RECEIVED FROM THE APPELLANT TOWARDS JOB WORK IN THE SHRI VISHAL DILIP DOSHI 3 NEXT ASSESSMENT YEAR. THUS, THE DISALLOWANCE OF RS.1,66,325/ - ON ACCOUNT OF DIFFERENCE IN RECONCILIATION OF THE ITS DATA FROM THE BOOKS OF ACCOUNT OF THE APPELLANT IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 5. ADHOC DISALLOWANCE OUT OF OFFICE EXPENSES - RS.16,550 / - A. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE LD. A.O. IN MAKING DISALLOWANCE OF RS.16,550 / - OUT OF OFFICE EXPENSES INCURRED DURING THE YEAR WITHOUT APPRECIATING FACT THAT THE SAME WERE INCURRED DURING THE NORMAL COURSE OF BUSINESS ACTIVITY. HENCE, ADHOC DISALLOWANCE OF 20% OUT OF OFFICE EXPENSES AMOUNTING TO RS.16,550 / IS NOT AT ALL JUSTIFIED A ND THE SAME MAY BE DELETED. B. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APPELLANT'S BOOKS OF ACCOUNT HAVE BEEN DULY AUDITED UNDER THE PROVISIONS OF SECTION 44AB OF THE ACT AND THE AUDITORS HAVE NOT GIVEN ANY ADVERSE COMMENTS WITH RESPECT TO THE OFFIC E EXPENSES INCURRED BY THE A PPELLANT. HENCE, ADHOC DISALLOWANCE OF 20% OUT OF OFFICE EXPENSES AMOUNTING TO RS.16,550 / - IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED . 2. THE ASSESSEE IS THE PROPRIETOR OF M/S. HI TECH PROFILES ENGAGED IN THE BUSINESS T HAT OF MANUFACTURING OF COPPER RODS, STRIPS AND WIRE BARS AND LABOUR JOBS. DURING THE PREVIOUS YEAR, THE ASSESSEE HAS SHOWN GROSS RECEIPTS AT ` 4,33,75,970, AND DECLARED A NET PROFIT OF ` 13,95,645. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH PARTY WISE DETAILS OF SALES AND JOB WORK CHARGES RECEIVED. THE ASSESSEE WAS ALSO ASKED TO FURNISH A STATEMENT OF PARTY WISE RECEIPTS COMPRISED IN ITS DETAILS AND THE INCOME ACTUALLY CREDITED IN PROFIT & LOSS ACCOUNT OF SHRI VISHAL DILIP DOSHI 4 THE YEAR WITH AN EXPLANATION FOR DIFFERENC E, IF ANY. THE ASSESSING OFFICER NOTICED FOLLOWING DIFFERENCES IN CONTRACT / JOB WORK CHARGES: NAME OF THE PARTY AMOUNT ( ` ) AS PER ITS DETAILS AMOUNT ( ` ) AS PER P&L A/C DIFFERENCE ( ` ) SAHNEY COMMUTATORS PVT. LTD. ` 93,28,495 ` 91,62,170 1,66,325 3. TH E ASSESSING OFFICER ALSO SOUGHT EXPLANATION AS TO WHY THE SAID DIFFERENCE AMOUNT OF ` 1,66,325, SHOULD NOT BE TREATED AS INCOME FOR THE YEAR UNDER CONSIDERATION. SINCE THE ASSESSEE WAS UNABLE TO EXPLAIN THE SAID DIFFERENCE, THE ASSESSING OFFICER ADDED THE SAID AMOUNT OF DIFFERENCE TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE HAS ALSO CLAIMED AN AMOUNT OF ` 82,733, ON ACCOUNT OF OFFICE EXPENSES. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE DETAILS WITH SUPPORTING EVIDENCE. THE ASSESSEE, HOWEVER , WAS NOT ABLE TO PRODUCE BILLS OR OTHER EVIDENCE FOR LARGE PART OF SUCH EXPENSES AND THE SAME WERE CLAIMED ON THE BASIS OF SELF MADE VOUCHERS. THE ASSESSING OFFICER HELD THAT SINCE THE EXPENSE WAS LARGELY INCURRED IN CASH , AND HENCE THE SAID EXPENSES COUL D NOT BE FULLY VERIFIABLE AND T HE ELEMENT OF PERSONAL EXPENSES COULD NOT BE RULED OUT. THE ASSESSING OFFICER, WHILE RELYING UPON THE DECISION OF THE SHRI VISHAL DILIP DOSHI 5 HON'BLE GUJARAT HIGH COURT IN CIT V/S CHANDRAVILAS HOTEL, [1987] 164 ITR 102 (GUJ.), HELD THAT THE GENUINEN ESS AND BUSINESS EXPEDIENCY OF SUCH EXPENSES HAS NO T BEEN SATISFACTORILY EXPLAINED AND HE DISALLOWED ` 16,550 BEING 1/5 OF THE TOTAL OFFICE E XPENSES CLAIMED BY THE ASSESSEE BASED ON THE PRESUMPTION OF PERSONAL USAGE. 5. THE FIRST APPELLANT AUTHORITY I . E ., TH E CIT(A) CONFIRMED THE DISALLOWANCE MADE BY ASSESSING OFFICER. 6. I NSOFAR AS G ROUND S NO.1 TO 3 ARE CONCERNED, THE SAME ARE GENERAL IN NATURE AND NO SPECIFIC ARGUMENTS HAVE BEEN MADE. ACCORDINGLY, THE SAME ARE DISMISSED. 7. WITH REGARD TO GROUND OF APPEAL NO.4 , THE LEARNED COUNSEL FOR THE ASSESSEE MADE A STATEMENT THAT THE INCOME OF ` 1,66,325, WHICH IS THE DIFFERENCE BETWEEN THE INCOME AS REPORTED IN ITS AT ` 93,28,495, AND THE REPORTED INCOME AS SHOWN IN THE PROFIT & LOSS ACCOUNT OF ` 91,62,170, HAS DULY BEEN ASSESSED IN THE PRECEDING ASSESSMENT YEAR AND HENCE, THE DIFFERENCE OF ` 1,66,325, HAS DULY BEEN S UBJECTED TO TAX BY THE REVENUE AND DUE TAX PAID TO THE REVENUE. SHRI VISHAL DILIP DOSHI 6 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE DID NOT RAISE ANY OBJECTION TO THE CONTENTIONS RAISE D BY THE LEARNED COUNSEL FOR THE ASSESSEE SUBJECT TO ITS VERIFICATION BY THE DEPARTMENT. 9. AFTER HEARING BOTH THE PARTIES AND ON A PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, I AM OF THE CONSIDERED OPINION THAT THE PRESENT ISSUE NEEDS TO BE RESTORED TO TH E FILE OF THE ASSESSING OFFICER FOR VERIFICATION AS TO WHETHER THE AMOUNT OF ` 1,66,325, AS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALREADY BEEN SUBJECTED TO TAX IN THE EARLIER YEAR AS CLAIMED BY THE ASSESSEE. IF IT BE SO, THEN THE TAX AFFECT IS REVENUE NEUTRAL AND, HENCE, THE ADDITION WILL STAND DELETED. CONSEQUENTLY, I SET ASIDE THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) AND RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR VERIFICATION IN TERMS INDICATED ABOVE. THUS, THE G RO UND NO.4, RAISED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 10. REGARDING G ROUND NO.5, THE ASSESSING OFFICER HAS DISALLOWED 1/5 OF THE OFFICE EXPENSES OF RS 82733 BEING RS. 16,550. THE ASSESSEE WAS NOT ABLE TO PRODUCE BILLS OR OTHER EVIDENCE FOR A L ARGE PART OF SUCH EXPENSES AND THE SAME WERE CLAIMED ON THE BASIS OF SELF MADE VOUCHERS. IT WAS OBSERVED BY THE ASSESSING OFFICER THAT THESE EXPENSES WERE INCURRED IN CASH AND ARE NOT SUPPORTED BY PROPER EVIDENCE. MOREOVER, THE ELEMENT OF PERSONAL USAGE WA S NOT RULED OUT SHRI VISHAL DILIP DOSHI 7 BY THE ASSESSING OFFICER AND, HENCE, HE DISALLOWED 1/5 OF OFFICE EXPENSES OF RS 82733 TO THE TUNE OF RS. 16,550, WHICH WAS UPHELD BY THE LEARNED CIT(A). 11. BEFORE M E , THE LEARNED COUNSEL FOR THE ASSESSEE TRIED TO JUSTIFY THE EXPENSES AND SUBMI TTED THAT AD HOC DISALLOWANCE CANNOT BE MADE. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 12. AFTER HEARING BOTH THE PARTIES AND ON A PERUSAL OF THE MATERIAL AVAILABLE ON RECORD, I AM OF THE CON SIDERED OPINION THAT PERSONAL USE OF EXPENSES CANNOT BE RULED OUT MORE SO WHEN THE LARGE PART OF THE SUCH EXPENSES ARE NOT SUPPORTED BY THE PROPER BILLS AND EVIDENCES AND ARE SELF MADE VOUCHERS . SO, HOWEVER, THE DISALLOWANCE OF 1/5 OF OFFICE EXPENSES MADE IS EXCESSIVE AND THE SAME IS REDUCED TO ` 5,000, TO PLUG LEAKAGE OF REVENUE, IF ANY. THE ORDER OF THE CIT(A) ON THIS ISSUE IS HEREBY SET ASIDE AND THE G ROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 13. GROUND NO.6 RELA TE S TO LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT. BOTH THE PARTIES ADMITTED BEFORE ME THAT THIS G ROUND IS CONSEQUENTIAL IN NATURE. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO GIVE CONSEQUENTIAL EFFECT WHILE RE COMPUTING THE INCOME OF SHRI VISHAL DILIP DOSHI 8 THE ASSESSEE KEEPING IN VIEW MY FINDINGS GIVEN ABOVE AND IN ACCORDANCE WITH THE PROVISIONS OF LAW. 14. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT O N 28.07. 2105 SD/ - G.S. PANNU ACCOUNTANT MEMBER MUMBAI, DATED : 28.07 .2015 COPY OF THE ORD ER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (DY./ASSTT. REGISTRAR) ITAT, MUMBAI