ACIT, Circle-40, Kolkata, Kolkata V. Mohammed Amiruddin, Kolkata

ITA 462/KOL/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7778 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-07-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2017
• Court: TRIBUNAL

Judgement Text

ITA NO. 462/KOL/2017 ASSESSMENT YEAR: 2013-2014 MOHAMMED AMIRUDDIN 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA A BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ) AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A. NO. 462/KOL/2017 ASSESSMENT YEAR: 2013-2014 ASSISTANT COMMISSIONER OF INCOME TAX,.............. .................... APPELLANT CIRCLE-40, KOLKATA, 3, GOVT. PLACE WEST, 2 ND FLOOR, KOLKATA-700 001 -VS.- MOHAMMED AMIRUDDIN,................................ ......................... RESPONDENT 21, TANTI BAGAN ROAD, KOLKATA-700 014 [PAN: AEOPA0441F] APPEARANCES BY: SHRI C.J. SINGH, JCIT, SR. D.R , FOR THE APPELLANT SHRI A.K. GHOSH, ADVOCATE, FOR THE RESPONDEN T DATE OF CONCLUDING THE HEARING : JUNE 20, 2019 DATE OF PRONOUNCING THE ORDER : JULY 24, 2019 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT (KZ):- THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKATA DA TED 16.12.2016. 2. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL, WHO IS ENGAGED IN THE BU SINESS OF TRANSPORTATION UNDER THE NAME AND STYLE OF HIS PROP RIETARY CONCERNS M/S. ASHANA TRAVELS AND M/S. A TO Z. THE RETURN OF INCOM E FOR THE YEAR UNDER CONSIDERATION WAS FILED BY THE ASSESSEE ON 29.09.20 13 DECLARING TOTAL INCOME OF RS.43,71,510/-. THE SAID RETURN WAS SELEC TED FOR SCRUTINY AND A NOTICE UNDER SECTION 143(2) WAS ISSUED BY THE ASSES SING OFFICER CALLING ITA NO. 462/KOL/2017 ASSESSMENT YEAR: 2013-2014 MOHAMMED AMIRUDDIN 2 FOR CERTAIN DETAILS AND DOCUMENTS FROM THE ASSESSEE . THERE WAS, HOWEVER, NO SATISFACTORY COMPLIANCE ON THE PART OF THE ASSES SEE TO THE SAID NOTICE AS WELL AS THE SUBSEQUENT NOTICES ISSUED BY THE ASS ESSING OFFICER UNDER SECTION 142(1) DURING THE COURSE OF ASSESSMENT PROC EEDINGS. AS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER, THE ASSESSEE THUS FAILED TO PRODUCE THE BOOKS OF ACCOUNT, SUPPORTING DOCUMENTS AND OTHER SPECIFIC REQUISITIONS DURING THE COURSE OF ASSESSMENT PROCEE DINGS INSPITE OF SEVERAL OPPORTUNITIES PROVIDED IN THIS REGARD. HE, THEREFORE, PROCEEDED TO COMPLETE THE ASSESSMENT ON THE BASIS OF DOCUMENTS A VAILABLE ON RECORD. 3. IN THE PROFIT & LOSS ACCOUNT OF M/S. ASHANA TRAV ELS, THE ASSESSEE HAD DEBITED A SUM OF RS.65,62,672/- ON ACCOUNT OF R ENT PAID TO DOCK YARDS. THE RELEVANT DETAILS SUCH AS THE NAME OF THE PARTIES TO WHOM THE RENT WAS PAID, CORRESPONDING BILLS, ETC., HOWEVER, WERE NOT FURNISHED BY THE ASSESSEE. AS FOUND BY THE ASSESSING OFFICER, NO TAX AT SOURCE WAS ALSO DEDUCTED BY THE ASSESSEE FROM THE PAYMENT OF THE SA ID RENT. HE, THEREFORE, DISALLOWED THE EXPENSES OF RS.65,62,672/ - CLAIMED BY THE ASSESSEE ON ACCOUNT OF RENT PAID TO DOCK YARDS. IN THE PROFIT & LOSS ACCOUNT OF M/S. ASHANA TRAVELS, THE ASSESSEE HAD DE BITED RS.2,80,653/- AND RS.14,03,331/- ON ACCOUNT OF HIRE PURCHASE INTE REST AND BANK INTEREST PAID TO M/S. KOTAK MAHINDRA, M/S. MAHINDRA FINANCIAL AND M/S. RELIGARE LIMITED. SINCE NO TAX AT SOURCE WAS DEDUCT ED BY THE ASSESSEE FROM THE PAYMENT OF THE SAID INTEREST, THE ASSESSIN G OFFICER INVOKED SECTION 40(A)(IA) AND MADE A DISALLOWANCE ON ACCOUN T OF INTEREST EXPENSES. THE ASSESSEE HAD ALSO TAKEN A LOAN OF RS. 1,42,24,771/- FROM M/S. RELIGARE LIMITED AND THE INTEREST PAID ON LOAN AMOUNTING TO RS.27,79,834/- WAS CLAIMED AS EXPENDITURE. SINCE TH E ASSESSEE COULD NOT EXPLAIN THE BUSINESS EXPEDIENCY OF THE LOAN TAKEN F ROM M/S. RELIGARE LIMITED AND THERE WAS ALSO FAILURE ON THE PART OF T HE ASSESSEE TO DEDUCT TAX AT SOURCE FROM THE INTEREST PAID ON THE SAID LO AN, THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS.27,79,834/- WAS DISALL OWED BY THE ASSESSING OFFICER. ACCORDINGLY IN THE ASSESSMENT COMPLETED UN DER SECTION 143(3) ITA NO. 462/KOL/2017 ASSESSMENT YEAR: 2013-2014 MOHAMMED AMIRUDDIN 3 VIDE AN ORDER DATED 22.12.2015, THE TOTAL INCOME OF THE ASSESSEE WAS DETERMINED BY THE ASSESSING OFFICER AT RS.1,63,99,0 75/-. 4. AGAINST THE ORDER PASSED BY THE ASSESSING OFFICE R UNDER SECTION 143(3), AN APPEAL WAS PREFERRED BY THE ASSESSEE BEF ORE THE LD. CIT(APPEALS) AND AFTER CONSIDERING THE SUBMISSIONS MADE ON BEHALF OF THE ASSESSEE, THE LD. CIT(APPEALS) DELETED THE DISALLOW ANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF RENT PAID TO STOCK YARDS AS WELL AS INTEREST FOR THE FOLLOWING REASONS GIVEN IN HIS IMP UGNED ORDER:- 3.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. FROM THE DETAILS SUBM ITTED IT IS CLEAR THAT APART FROM THE PAYMENTS OF RS.12,60,000/ - TO TEJPAL SINGH , RS. 12,60,000/- TO SATINDER PAL SING H AND RS.8,64,880/- TO SH. NIRMAL MODI, ALL PAYMENTS WERE BELOW THE THRESHOLD OF SECTION 194I OF THE INCOME TAX ACT AND HENCE NOT APPLICABLE. AS REGARDS THE PAYMENTS OF RS.12,60,000 /- TO TEJPAL SINGH , RS.12,60,000/- TO SATINDER PAL SINGH AND RS.8,64,880/- TO SH. NIRMAL MODI, NECESSARY DOCUMEN TATION OF FORM 26A HAS BEEN SUBMITTED AND VERIFIED, HENCE DED UCTION OF TDS WAS NOT MANDATORY. THE DISALLOWANCE IS THUS DEL ETED. 4.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. THE AO DISALLOWED THE INTEREST PAYMENTS TO THE TUNE OF RS.16,83,984/- FOR NON-DEDU CTING OF TDS. THE APPELLANT HAS SUBMITTED THAT THESE INTERES T PAYMENTS WERE PAID HDB FINANCE WHICH IS SUBSIDIARY OF HDFC BANK AND HENCE COVERED U/S 194A3(III) OF THE INCOME TAX ACT AND HENCE TDS IS NOT NECESSARY. I FIND FORCE IN THE CONTENTION OF THE APPELLANT AND HENCE THE DISALLOWANCE IS DELE TED. 5.2. I HAVE CONSIDERED THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. THE AO DISALLOWED THE EXPENSES TO THE TUBE OF RS.27,79,834/- FOR NON-DEDUCTING OF TDS ON A/C. OF 'INTEREST ON LOAN' .THE APPELLANT HAS SUBMITTED A CERTIFICATE U/S 201(1) ISSUED BY THE CA WHICH CERTIFIES THAT RE LIGARE FINVEST LTD. HAS STATED TO HAVE TAKEN THE SAID AMOU NT AS INCOME IN ITS RETURN OF INCOME. HENCE THE ACTION OF THE AO HAS NO BASIS AND IS DELETED. 5. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE REVENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL ON THE FO LLOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN ALLOWING THE ENTIRE IMPUGNED DISALLOWANCE AMOUNT OF RS.65,62,672/- ON ACCOUNT OF RENT PAID BY ADMITTING FRESH ITA NO. 462/KOL/2017 ASSESSMENT YEAR: 2013-2014 MOHAMMED AMIRUDDIN 4 EVIDENCE WITHOUT GIVING THE ASSESSING OFFICER AN OP PORTUNITY UNDER REMAND. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN GIVING RELIEF OF RS.65,62,672/- TO THE ASSESSEE BY FULLY ACCEPTING THE SUBMISSION MADE BEFORE HIM, THEREBY V IOLATING THE PROVISIONS OF RULE 46A OF THE INCOME TAX RULES, 1962. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY ASSESSING OFFI CER OF RS.2,80,653/- U/S 40(A)(IA) OF THE I.T. ACT IN RESP ECT OF KOTAK MAHINDRA PRIME LTD. AND MAHINDRA & MAHINDRA FINANCI AL WITHOUT APPRECIATING THE REQUIREMENTS OF THE PROVIS ION OF SECTION 194A OF THE I.T. ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN DELETING OF RS.27,79,834/- ON THE GROUND OF A C. A.'S CERTIFICATE U/S. 201(1) STATING THAT THE SAID SUM H AD BEEN TAKEN AS ITS INCOME BY M/S RELIGARE FINVEST LTD. IG NORING THE FACT THAT THE ADDITION WAS MADE BECAUSE ASSESSEE FA ILED TO ESTABLISH IN ANY MANNER THAT SUCH PAYMENTS OF INTER EST WAS FOR BUSINESS PURPOSE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) ERRED IN HIS DECISION DIRECTING TO ALLOW INTEREST O F RS.27,79,834/- AGAINST LOAN TAKEN OF RS.1,42,24,771 /-, WHEREAS THE INCIDENCE AND NECESSITY OF INCURRING SU CH EXPENSES WERE NOT DULY ESTABLISHED FOR BUSINESS PUR POSE. 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. D.R. HAS CONTENDED THAT THE IMPUGNED DISALLOWANCE ON ACCOUNT OF RENT AND INTERE ST WAS MADE BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER MAINLY FO R THE FAILURE OF THE ASSESSEE TO FURNISH THE RELEVANT DETAILS AND DOCUME NTS TO SUPPORT AND SUBSTANTIATE THE CLAIM MADE FOR DEDUCTION OF RENT A ND INTEREST EXPENSES. HE HAS SUBMITTED THAT THESE DETAILS AND DOCUMENTS, HOWEVER, WERE FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(APPEAL S) FOR THE FIRST TIME DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE H IM AND THE SAME CONSTITUTING ADDITIONAL EVIDENCE WAS CONSIDERED AND RELIED UPON BY THE LD. CIT(APPEALS) TO GIVE RELIEF TO THE ASSESSEE WIT HOUT GIVING ANY OPPORTUNITY TO THE ASSESSING OFFICER TO VERIFY THE SAME. HE HAS CONTENDED THAT THERE IS THUS A CLEAR VIOLATION OF THE PROVISI ONS OF RULE 46A OF THE INCOME TAX RULES, 1962 AND THIS POSITION CLEARLY EV IDENT FROM THE RECORD ITA NO. 462/KOL/2017 ASSESSMENT YEAR: 2013-2014 MOHAMMED AMIRUDDIN 5 INCLUDING THE ORDERS OF THE AUTHORITIES BELOW IS NO T DISPUTED EVEN BY THE LD. COUNSEL FOR THE ASSESSEE. WE, THEREFORE, CONSID ER IT JUST AND PROPER TO SET ASIDE THE IMPUGNED ORDER PASSED BY THE LD. CIT( APPEALS) AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR CONSIDERING THE SAME AFRESH AFTER VERIFYING THE RELEVANT DETAILS AND DOC UMENTS FURNISHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD. CIT(APPE ALS). NEEDLESS TO OBSERVE, THAT THE ASSESSING OFFICER SHALL AFFORD PR OPER AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE WHILE MA KING THE ASSESSMENT AFRESH. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS TREA TED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 24, 201 9. SD/- SD/- (S.S. VISWANETHRA RAVI) (P.M. JAGTAP ) JUDICIAL MEMBER V ICE-PRESIDENT (KZ) KOLKATA, THE 24 TH DAY OF JULY, 2019 COPIES TO : (1) ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-40, KOLKATA, 3, GOVT. PLACE WEST, 2 ND FLOOR, KOLKATA-700 001 (2) MOHAMMED AMIRUDDIN, 21, TANTI BAGAN ROAD, KOLKATA-700 014 (3) COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKA TA, (4) COMMISSIONER OF INCOME TAX- ,KOLKATA (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.