DCIT 17(3), MUMBAI V. CHETAN GOPAL SHAH, MUMBAI

ITA 4637/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9077 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 18-12-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 09-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Salary income; Additional evidence
• Section: 142(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI . . !'# , $ %& BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI N.K. BILLAIYA, AM ./I.T.A. NO.4637/MUM/2011 ( ' ' ' ' / ASSESSMENT YEAR : 2007-08 THE DCIT 17(3), PIRAMAL CHAMBERS, PAREL, MUMBAI-400 012 / VS. SHRI CHETAN GOPAL SHAH, 2/40 C WING, NITYA SUKHDHAM CHS, PAWRIPADE, DR. S.S. RAO ROAD, LALBAUG, MUMBAI-400 012 &( $ ./ )* ./PAN/GIR NO. AADCM 1290J ( (+ /APPELLANT ) .. ( ,-(+ / RESPONDENT ) (+ . / APPELLANT BY: SHRI RAJARSHI DWIVEDY ,-(+ / . / RESPONDENT BY SHRI BHUPENDRA SHAH / 01$ / DATE OF HEARING : 18.12.2012 23' / 01$ /DATE OF PRONOUNCEMENT :21.12.2012 %4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-27, MUMBAI DT.31.3.2011 PERTAINING TO A.Y. 2 007-08. 2. THE REVENUE HAS RAISED FOLLOWING GROUNDS OF APPE AL: ITA NO.4637/MUM/2011 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO ALLOW BUSINESS EXPENDITURE OF RS. 38,94,444/- MADE BY ASS ESSEE IN PROPRIETORSHIP WITHOUT GIVING ADEQUATE OPPORTUNITY TO THE AO TO EXAMINE THE MATERIAL WHICH WAS PRODUCED BEFOR E THE LD. CIT(A) AND WAS NOT PRODUCED BEFORE THE AO DURIN G THE ASSESSMENT PROCEEDINGS AND NOT CONSIDERING THE FACT THAT THE ASSESSEE HAD NOT PROMPTLY RESPONDED TO THE AO QUERI ES DURING THE REMAND PROCEEDS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN DIRECTING THE AO TO DELETE THE UNEXPLAINED CAPITAL INTRODUCED OF RS. 27,95,109/- W ITHOUT GIVING ADEQUATE OPPORTUNITY U/S 46A OF THE I.T. RUL ES. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE ASS ESSEE FAILED TO PRODUCE ANY EVIDENCE OR BOOKS OF ACCOUNTS BEFORE THE AO DURING THE ASSESSMENT PROCEEDING AND AS SUCH THE AO NEEDED TIME TO GO THROUGH THE EVIDENCE SUBMITTED BEFORE THE LD. CIT(A) FOR WHICH THE ASSESSEE HAS NOT ASSIS TED DURING THE REMAND PROCEEDINGS. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE DECISION OF THE LD. CIT(A) IS BASED ON IMPROPER APPRECIATION OF FACTS AND EVIDENCE AND IS THEREFORE ERRONEOUS. 5. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) BEING ERRONEOUS IN FACTS AND IN LAW BE REVERSED AND THAT OF THE AO BE RESTORED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF ARRANGING FINANCE/LOANS FOR VARI OUS PERSONAL NEEDS SUCH AS HOUSING, CAR LOANS, HOME LOANS ETC. FOR THE YEA R UNDER CONSIDERATION, THE ASSESSEE FILED RETURN OF INCOME ON 26.11.2007 D ECLARING TOTAL INCOME AT RS. 22,39,048/-. THE RETURN OF INCOME WAS SELEC TED FOR SCRUTINY ASSESSMENT AND ACCORDINGLY STATUTORY NOTICES U/S. 1 43(2) & 142(1) OF THE ACT WERE ISSUED AND SERVED ON THE ASSESSEE. ITA NO.4637/MUM/2011 3 4. WHILE SCRUTINIZING THE BALANCE SHEET OF THE ASSE SSEE, DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE IS PROPRIETOR OF 13 CONCERNS NAMELY AS UNDER: 1. MAITRIS FINANCE SERVICE 2. MAITRIS FINANCE SOLUTIONS 3. MAITRIS FINANCE HUB 4. MAITRIS FINANCE WIZ 5. MAITRIS HOME FINANCE SOLUTIONS 6. MAITRIS HOME FINANCE SOLUTIONS 7. MAITRIS MONEY SOLUTIONS 8. MAITRIS PERSONAL LOAN 9. MAITRIS PERSONAL SOLUTIONS 10. MAITRIS EASY MONEY 11. MAITRIS E-FUND 12. MAITRIS FINANCE 13. MAITRIS PERSONAL MONEY 5. THE ASSESSEE WAS ASKED TO FILE DETAILS IN RESPEC T OF THE LOANS AND BILLS AND VOUCHERS FOR EXPENSES. THE ASSESSEE WAS ALSO ASKED TO PRODUCE BOOKS OF ACCOUNT. ON THE APPOINTED DATE, THE ASSES SEE APPEARED AND SHOWED HIS INABILITY TO PRODUCE BOOKS OF ACCOUNTS S TATING THAT NO BOOKS OF ACCOUNTS WERE MAINTAINED. HOWEVER, THE ASSESSEE CO ULD NOT FILE DETAILS IN RESPECT OF THE EXPENSES CLAIMED ON THE GROUND THAT THE ACCOUNTANT HAS LEFT THE SERVICE. ON THE BASIS OF THE DETAILS AVAI LABLE ON RECORD, THE AO WENT ON TO COMPLETE THE ASSESSMENT BY DISALLOWING C OMMISSION AND BROKERAGE TO THE TUNE OF RS. 38,94,444/- AND ADDITI ON OF RS. 27,95,109/- AS UNEXPLAINED CAPITAL INTRODUCED IN 13 PROPRIETARY FIRMS. 6. THE ASSESSEE AGITATED THIS MATTER BEFORE THE LD. CIT(A). DURING THE COURSE OF THE APPELLATE PROCEEDINGS, IT WAS EXP LAINED TO THE CIT(A) THAT ON 9.2.2011 THE BUSINESS PREMISES OF THE ASSES SEE WERE SEALED BY SARASWAT CO. OP. BANK LTD FOR DEFAULT IN REPAYMENTS . THEREFORE, THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FOR NOT PRODUCING NECESSARY ITA NO.4637/MUM/2011 4 DETAILS/EVIDENCE BEFORE THE AO AND ACCORDINGLY FURN ISHED NECESSARY DETAILS OF EXPENSES AND CAPITAL INTRODUCED AS ADDIT IONAL EVIDENCES BEFORE THE LD. CIT(A). THE LD. CIT(A) TRANSMITTED ALL THE DETAILS FILED BY THE ASSESSEE TO THE AO CALLING FOR A REMAND REPORT. TH E AO SENT THE REMAND REPORT DT. 18.2.2011 IN WHICH HE HAS MENTIONED INT ER ALIA AS UNDER: I HAD THOROUGHLY GONE THROUGH THE SUBMISSION AND T HE DOCUMENTS PRODUCED BEFORE YOUR HONOUR AND REMANDED TO ME, AND WITH REFERENCE TO THE RULE 46A, I AM SATISF IED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE FROM PRODUCING BEFORE THE AO EVIDENCES WHICH HAD BEEN CA LLED FOR, AND ACCORDINGLY, I GIVE MY NO OBJECTION TO YOU R HONOUR TO ADMIT THE ADDITIONAL EVIDENCES PRODUCED BEFORE Y OUR HONOUR. I FURTHER REQUEST YOUR HONOUR TO EXAMINE THE EVIDEN CES PRODUCED BEFORE YOUR HONOUR DURING APPELLATE PROCEE DINGS AND PASS THE NECESSARY ORDER AS YOUR HONOUR DEEM FI T AFTER CONSIDERING ALL THE FACT, EVIDENCE AND RECORDS. 7. AFTER CONSIDERING THE NECESSARY DETAILS FILED BY THE ASSESSEE IN SUPPORT OF THE EXPENDITURE CLAIMED BY IT, THE LD. C IT(A) HELD AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, ARGUMENTS OF THE AO AND THE WRITTEN SUBMISSIONS OF THE AUITHO RISED REPRESENTATIVE OF THE APPELLANT. I FIND THAT IN TH E PROPRIETORSHIP CONCERN, MAITRI FINANCE SOLUTION THE APPELLANT HAS DISCLOSED A NET PROFIT OF RS. 2,39,297/-. THE RELEVANT EXPENSES IN CURRED AMOUNTING TO RS. 23,19,464/- HAVE BEEN SUPPORTED BY BILLS AND VOUCHERS THEREFORE, DISALLOWANCE OF EXPENSES AMOUNTING TO RS . 23,19,464/- CANNOT BE MADE. IN REST OF THE CONCERNS APPELLANT HAS DISCLOSED GROSS INCOME OF RS. 13,35,683/- AND GROSS EXPENSES OF RS. 15,55,802/- RESULTING IN A LOSS OF RS. 2,20,115/-. I FIND THAT THE MAJOR EXPENSES RELATE TO SALARY, BANK CHARGES, SERV ICE TAX, COMMISSION AND OFFICE RENT. THEY ARE REGULAR/ROUTI NE BUSINESS EXPENSES AND ARE PRIMA FACIE ALLOWABLE. THE BILLS AND VOUCHERS RELATING TO RELEVANT EXPENDITURE HAVE BEEN SUBMITTE D. CONSEQUENTLY, THE DISALLOWANCE OF RS. 38,94,444/- C ANNOT BE SUSTAINED AND IS DELETED. ITA NO.4637/MUM/2011 5 8. BEFORE US THE LD. DEPARTMENTAL REPRESENTATIVE ST RONGLY RELIED UPON THE FINDINGS OF AO AND CONTENDED THAT THE NECE SSARY DETAILS WERE NOT MADE AVAILABLE TO THE AO BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS AND THE LD. CIT(A) HIMSELF H AS EXAMINED WITHOUT AFFORDING ANY OPPORTUNITY TO THE AO. 9. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN STATED BEFORE THE LD. CIT(A). 10. WE HAVE CONSIDERED THE FACTS AND THE SUBMISSION S MADE BY THE RIVAL PARTIES. WE DO NOT FIND ANY MERIT IN THE SUB MISSION OF THE DR INASMUCH AS THE LD. CIT(A) HAS TRANSMITTED ALL THE NECESSARY DETAILS/EVIDENCES FILED BY THE ASSESSEE DURING THE COURSE OF THE APPELLATE PROCEEDINGS TO THE AO CALLING FOR REMAND REPORT AN D THE AO HIMSELF HAS MENTIONED IN THE REMAND REPORT THAT HE HAD THOROUG HLY GONE THROUGH THE SUBMISSIONS AND THE DOCUMENTS PRODUCED BY THE ASSE SSEE BEFORE THE LD. CIT(A) AND HAS REQUESTED THE LD. CIT(A) TO EXAMINE THE EVIDENCES PRODUCED BY THE ASSESSEE. THEREFORE, THE OBJECTION OF THE DR THAT LD. CIT(A) HIMSELF HAS EXAMINED THE NECESSARY DETAILS D OES NOT HOLD ANY WATER. A PERUSAL OF THE ORDER OF THE LD. CIT(A) SU GGEST THAT THE LD. CIT(A) HAS EXAMINED THE EVIDENCES FILED BY THE ASS ESSEE AND THEREAFTER CAME TO THE FINDING THAT ADDITION OF RS. 38,94,444/ - CANNOT BE SUSTAINED. AS NO NEW MATERIAL FACTS HAVE BEEN BROUGHT ON RECOR D, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE LD. CI T(A). ACCORDINGLY GROUND NO. 1 OF THE APPEAL IS DISMISSED. 11. GROUND NO. 2 RELATES TO THE DELETION OF UNEXPLA INED CAPITAL INTRODUCED AT RS. 27,95,109/-. 12. A PERUSAL OF THE ASSESSMENT ORDER SHOW THAT THE AO HAS ADDED THE CAPITAL INTRODUCED BY THE ASSESSEE IN HIS FOLLOWING PROPRIETARY CONCERNS. ITA NO.4637/MUM/2011 6 1. MAITRIS FINANCE SOLUTION 13,30,652/- 2. MAITRIS FUND 92,600/- 3. MAITRIS FINANCE 2,93,215 4. MAITRIS FINANCE SERVICE 2,52,787/- 5. MAITRIS FINANCIAL HUB 34,930/- 6. MAITRIS FIN WIZ 1,50,081/- 7. MAITRIS HOME FINANCE SOLUTIONS 2,35,244/- 8. MAITRIS HOME LOANS SOLUTIONS 97,600/- 9. MAITRIS HOUSING LOANS SOLUTION 97,600/- 10. MAITRIS MONEY SOLUTION 7,600/- 11. MAITRIS PERSONAL MONEY 97,600/- 12. MAITRIS PERSONAL SOLUTION 7,600/- 13. MAITRIS EASY MONEY 97,600 27,95,109 13. BEFORE THE LD. CIT(A), THE ASSESSEE EXPLAINED T HAT THE AO HAS ADDED THE AMOUNT AS NO DETAILS WERE FURNISHED BY TH E ASSESSEE. HOWEVER, FOR THE REASONS EXPLAINED HEREINABOVE, THE ASSESSEE FILED NECESSARY DETAILS BEFORE THE LD. CIT(A). 14. AFTER CONSIDERING THE FACTS AND THE DETAILS/EVI DENCES FILED BY THE ASSESSEE, THE LD. CIT(A) CAME TO THE CONCLUSION AS UNDER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE , ARGUMENTS OF THE AO AND THE WRITTEN SUBMISSIONS OF THE AUTHORISED REPRESENTATIVE OF THE APPELLANT. I FIND THAT THE APPELLANT HAD TAKEN BANK LOANS OF RS. 56,06,098/- F ROM VARIOUS BANKS SUCH AS ABN AMRO, CORPN. BANK, DEVELOPMENT CREDIT BANK, HSBC, SARASWAT CO. OP. BAN K, INDIABULLS CREDIT SERVICE LTD. ETC. APART FROM THI S APPELLANT HAD TAXABLE INCOME FROM SALARY AMOUNTING TO RS. 24,00,000/-. EVEN WITHOUT CONSIDERING THE UNSECURE D LOANS THE CAPITAL INTRODUCED BY THE APPELLANT STANDS EXPL AINED. THEREFORE, THERE CANNOT BE ANY ADDITION ON THIS ACC OUNT. THE ADDITION OF RS. 27,95,109/- IS DELETED. ITA NO.4637/MUM/2011 7 15. BEFORE US THE LD. DR REITERATED WHAT HAS BEEN A RGUED FOR GROUND NO. 1 HEREINABOVE, FOR THE SIMILAR REASONS WE DO NO T ACCEPT THE SUBMISSIONS OF THE LD. DR AS NECESSARY EVIDENCES WE RE TRANSMITTED BY THE LD. CIT(A) TO THE AO FOR VERIFICATION AND THE A O DID NOT AVAIL THIS OPPORTUNITY INSTEAD PUT THE BALL IN CIT(A)S COURT REQUESTING THE LD. CIT(A) TO EXAMINE THE NECESSARY DETAILS WHICH WE F IND THAT THE LD. CIT(A) HAS RIGHTLY DONE BEFORE COMING TO THE CONCLU SION THAT THE ADDITION OF RS. 27,95,109/- CANNOT BE SUSTAINED. AS NO NEW FACTS HAVE BEEN BROUGHT ON RECORD, WE DO NOT FIND ANY REASON TO INT ERFERE WITH THE FINDINGS OF THE LD. CIT(A). GROUND NO. 2 IS ACCORD INGLY DISMISSED. 16. GROUND NO. 3, 4 & 5 ARE GENERAL IN NATURE BY WH ICH THE REVENUE HAS QUESTIONED THE ADMISSIBILITY OF ADDITIONAL EVID ENCES AS POINTED OUT HEREINABOVE. THE LD. CIT(A) ADMITTED THE ADDITIONA L EVIDENCES ONLY AFTER GIVING A REASONABLE OPPORTUNITY TO THE AO AS EVIDENCED FROM THE REMAND REPORT OF THE AO. THEREFORE, WE DO NOT FIND ANY REASON TO ENTERTAIN THESE GROUNDS OF APPEAL WHICH ARE ACCORDI NGLY DISMISSED. 14. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 5 06 )& / 7 $5) / )0 8' ORDER PRONOUNCED IN THE OPEN COURT ON 21.12.2012 %4 / 3' $ 7 9%6 21.12.2012 3 / : SD/- SD/- (H.L. KARWA) (N.K. BILLAIYA) /PRESIDENT $ %& / ACCOUNTANT MEMBER MUMBAI; 9% DATED 21.12.2012 . . ./ RJ , SR. PS ITA NO.4637/MUM/2011 8 %4 / ,0 ; '0 / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. < ( ) / THE CIT(A)- 4. < / CIT 5. =: ,0 , , / DR, ITAT, MUMBAI 6. :> ? / GUARD FILE. %4 / BY ORDER, - 0 ,0 //TRUE COPY// @ / 8 ) DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI