ASST CIT CIR 3, THANE V. SAGAR SAI ENTERAPRISES, DOMBIVALI

ITA 4485/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8345 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 15-02-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Tax effect

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI , . . , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO.4485/MUM/2014 ASSESSMENT YEAR: 2009-10 ACIT, CIRCLE-3, 02 ND FLOOR, RANI MANSION, MURBAD ROAD, KALYAN (W)-DIST-THANE, MAHARASHTRA-421301, / VS. M/S SAGAR SAI ENTERPRISES, SHOP NO.6, VENKATESH DARSHAN, SUBHASH ROAD, VISHNU NAGAR, DOMBIVILI (W) MAHARASHTRA-421202 ( ' / REVENUE) ( #$ % /ASSESSEE) P.A. NO. ABFFS2332B ' / REVENUE BY SHRI VISHWAS MUNDHE-DR #$ % / ASSESSEE BY NONE & ' ' % ( / DATE OF HEAR ING : 16/02/2017 ' % ( / DATE OF ORDER: 16/02/2017 M/S SAGAR SAI ENTERPRISES ITA NO.4485/MUM/2014 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 04/03/2014 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, DELETING THE PENALTY IMPOSED U/S 271(1)(C) OF THE I NCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. DR, SHRI VISHWAS MUNDHE, AT THE OUTSET, POINTED OUT THAT THE QUANTUM APPEAL OF THE REVENUE WAS DISMISSED BY THE TRIBUNAL (ITA NO.3057/MUM/2014) ORDER DATED 09/05/2016, BEING LOW TAX EFFECT INVOLVED. ON THE OTHER HAND, NONE WAS PR ESENT FOR THE ASSESSEE. WE FIND THAT THIS APPEAL WAS FILED BY THE DEPARTMENT ON 27/06/2014 AND ON 12/07/2016, THE DEPARTMENT WAS DIRECTED TO EFFECT SERVICE UPON THE ASSESSEE. ON 15/02/2017, NO PROOF OF SERVICE WAS PRODUCED. T HIS APPEAL WAS ADJOURNED TO 16/02/2017. THE ASSESSEE NE ITHER PRESENTED ITSELF NOR MOVED ANY ADJOURNMENT PETITION , THEREFORE, WE HAVE NO OPTION BUT TO PROCEED EX-PART E, QUA THE ASSESSEE AND TEND TO DISPOSE OFF THIS APPEAL ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 2.1. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM CAME INTO EXISTENCE ON 06/04/2006, CONSISTING OF THREE PARTNE RS NAMELY SHRI VASANT AMRUTA KANCHAR, NANDA VASANT M/S SAGAR SAI ENTERPRISES ITA NO.4485/MUM/2014 3 KANCHAR AND NARAYAT AMRUTA KANCHAR. THE ASSESSEE FI RM WAS CARRYING ON THE BUSINESS AS ELECTRICAL CONTRACT OR. THE ASSESSEE FILED E-RETURN DECLARING INCOME OF RS.33,5 6,604/- ON A TURNOVER OF RS.7,22,64,327/- ON 30/09/2009. THE TAXABLE NET PROFIT WAS ARRIVED AT AFTER DEBITING TH E REMUNERATION TO THE PARTNERS TO THE TUNE OF RS.23,2 5,236/-. THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME, WHEREIN, THE LD. ASSESSING OFFICER DISALLOWED THE REMUNERATION PAID TO THE PARTNERS AFTER HAVING RECO URSE TO CBDT CIRCULAR NO.739 DATED 25/03/1996 BY OBSERVING THAT IN THE PARTNERSHIP DEED, THE REMUNERATION PAYABLE T O WORKING PARTNERS HAS NOT BEEN QUANTIFIED. 2.2. ON APPEAL BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEAL), THE FACTUAL MATRIX WAS CONSIDERED AND THE PENALTY WAS DELETED. THE REVENUE IS AGGRIEVED AND I S IN APPEAL BEFORE THIS TRIBUNAL. 2.3. WE FIND THAT WHILE COMING TO A PARTICULAR CONCLUSION, THE LD. COMMISSIONER OF INCOME TAX (APP EAL) NOTED THAT SO FAR AS THE DISALLOWANCE OF REMUNERATI ON TO THE PARTNERS IS CONCERNED, IT WAS ALLOWED IN FAVOUR OF THE ASSESSEE VIDE ORDER IN APPEAL NO.244/11-12 DATED 08/01/2014. THE RELEVANT OBSERVATION HAS BEEN OBSER VED IN PARA -7 OF THE IMPUGNED ORDER. SO FAR AS, THE DIFFE RENCE IN ACCOUNT OF FOUR PARTIES FROM WHOM THE ASSESSEE HAD SHOWN PURCHASES AT HIGHER AMOUNT, AS COMPARE TO ADMITTED BY THOSE PARTIES, THE FIRST APPELLATE AUTHORITY FOUND THAT THE M/S SAGAR SAI ENTERPRISES ITA NO.4485/MUM/2014 4 ASSESSEE HAS ACCOUNTED FOR A PROFORMA INVOICE AMOUN TING TO RS.1,38,121/- IN ITS BOOKS OF ACCOUNTS, WHICH WERE INADVERTENTLY TREATED AS PURCHASE BILLS. IN THE CAS E OF ARIHANT TRADING CO., ONE BILL OF RS.50,139/- WAS INADVERTENTLY RECORDED TWICE. IN THE CASE OF RAHUL CABLES PVT. LTD., THE DIFFERENCE OF RS.2,04,628/- WAS ON A CCOUNT OF GOODS RETURNED BY THE ASSESSEE TO THE SUPPLIER, WHI CH WAS NOT ENTERED IN THE LEDGER ACCOUNT OF THE PARTY. THE BILL OF HAVELS INDIA LTD. WAS PLACED ON RECORD BY THE ASSES SEE, AS PER WHICH, HAVELS INDIA LTD. HAD MADE CERTAIN SALES TO RAHUL CABLES PVT. LTD. FROM WHOM, THE ASSESSEE MADE PURCH ASES AMOUNTING TO RS.9,54,821/-. M/S RAHUL CABLES PVT. LTD. HAD ADVANCED A COPY OF ORIGINAL BILL RECEIVED FROM HAVELS INDIA LTD TO THE ASSESSEE AND THE ASSESSEE INADVERT ENTLY RECORDED THIS PURCHASE SECOND TIME IN THE NAME OF H AVELS INDIA PVT. LTD. THESE INADVERTENT MISTAKES WERE EVE N POINTED OUT DURING ASSESSMENT PROCEEDINGS. THESE MISTAKES W ERE HELD TO BE BONA-FIDE AND NOT DELIBERATE WITH A INTE NTION TO CONCEAL PARTICULARS OF INCOME OR TO FURNISH INACCUR ATE PARTICULARS, WE FIND NO INFIRMITY IN THE CONCLUSION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL), BECAUSE, IF ON TECHNICALITIES, THE STAND OF THE LD. COMMISSIONER O F INCOME TAX (APPEAL) IS REVERSED, IT WILL AMOUNT TO UNJUST ENRICHMENT OF THE REVENUE AND CERTAINLY VIOLATE ARTICLE-265 OF CONSTITUTION OF INDIA, WHICH SAYS THAT ONLY LEGITIM ATE TAXES HAS TO BE LEVIED AND COLLECTED. THE STAND OF THE LD . COMMISSIONER OF INCOME TAX (APPEAL) IS AFFIRMED, MO RE M/S SAGAR SAI ENTERPRISES ITA NO.4485/MUM/2014 5 SPECIFICALLY WHEN, THE FACTUAL FINDING RECORDED IN THE IMPUGNED ORDER WAS NEITHER CONTROVERTED BY THE REVE NUE NOR NEW FACTS WERE BROUGHT TO OUR NOTICE. THUS, THE APPEAL OF THE REVENUE IS DISMISSED. FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. DR AT THE CONCLUSION OF THE HEARING ON 16/02/2017. SD/- SD/- ( N.K. PRADHAN ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER & MUMBAI; * DATED : 16/02/2017 F{X~{T? P.S / +' %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. ,-./ / THE APPELLANT 2. 0./ / THE RESPONDENT. 3. 1 1 & 2% ( ,- ) / THE CIT, MUMBAI. 4. 1 1 & 2% / CIT(A)- , MUMBAI 5. 4'5 % , 1 ,-( , 6 , & / DR, ITAT, MUMBAI 6. 7# 8 / GUARD FILE. / BY ORDER, 04-% % //TRUE COPY// / (DY./ASSTT. REGISTRAR) , & / ITAT, MUMBAI,