TYCOON RESIDENCY P.LTD, MUMBAI V. ITO 5(3)(3), MUMBAI

ITA 485/MUM/2017

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0247 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D G PANSARILD
• Assessee Lawyers: S C TIWARI; RUTUJA PAWAR LD ARS
• Keywords: Business income; Principle of natural justice
• Section: 143(3); 133(6); 68

Judgement Text

ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 1 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE HONBLE SHRI JOGINDER SINGH, VP AND HONBLE SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.485/MUM/2017 ( / ASSESSMENT YEAR: 2012-13) TYCOON RESIDENCY P VT. LTD. 292, DUDHWALA HOUSE BELLASIS ROAD, MUMBAI CENTRAL MUMBAI-400 008 / VS. INCOME T AX OFFICER - 5(3)(3) 5TH FLOOR, AAYKAR BHAVAN M.K.ROAD MUMBAI-400 020 ./ ./PAN/GIR NO. AABCT-5184-C ( /APPELLANT ) : ( / RESPONDENT ) ASSESSEE BY : SHRI S.C. TIWARI AND MS.RUTUJA PAWAR-LD.ARS REVENUE BY : SHRI D.G. PANSARI-LD. DR / DATE OF HEARING : 30/10/2018 / DATE OF PRONOUNCEMENT : 11/12/2018 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2012-13 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-10, MUMBAI [CIT(A)], APPEAL NO.CIT(A)-10/ITO-5(3)(3)/88/2015-16 DATED 31/10/2016 BY RAISING THE FOLLOWING EFFECTIVE GROUN DS OF APPEAL:- ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 2 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ('CIT(A)') HAS ERRED IN CONFIRM ING THE ORDER OF ASSESSING OFFICER DISALLOWING AN AMOUNT OF RS.45,53 ,994/- BEING EARTH FILLING CHARGES PAID TO M/S. S.S. TRANSPORT ON THE PREMISE THAT (I) THE NOTICE U/S 133(6) OF THE INCOME TAX ACT, 1961 SENT TO M/S. S.S . TRANSPORT REMAINED UNSERVED AND (II) THE APPELLANT WAS UNABLE TO PRODU CE THE SAID PARTY BEFORE HIM WITHOUT APPRECIATING THE FACT THAT (A)THE SAID EXPENSE WAS INCURRED WHOLLY AND EXCLUSI VELY FOR THE PURPOSE OF THE BUSINESS AND DURING THE COURSE OF BUSINESS OF T HE APPELLANT; (B)M/S. S.S. TRANSPORT HAS A VALID PAN ISSUED BY TH E INCOME TAX DEPARTMENT AND THE PAYMENT MADE TO M/S. S.S. TRANSP ORT ALSO GETS REFLECTED IN THEIR BANK ACCOUNT WHICH PROVES THE EXISTENCE OF THE SAID PARTY AND ALSO THE GENUINENESS OF THE SAID TRANSACTION; (C)THE APPELLANT HAS DEDUCTED TAX AT SOURCE ON THE PAYMENT MADE TO M/S S.S. TRANSPORT AND DEPOSITED THE TAX SO DEDUCTED WI TH THE GOVERNMENT; (D)THE AO COULD HAVE VERIFIED FURTHER DETAILS OF TH E SAID PARTY FROM HIS COUNTERPART HAVING JURISDICTION OVER M/S. S.S. TRAN SPORT AS PAN OF THAT PARTY WAS ALREADY AVAILABLE WITH THE AO AND IF THE AO CAN ACCESS THE BANK STATEMENT OF THAT PARTY BEHIND THE BACK OF THE APPE LLANT HE COULD HAVE EASILY LOCATED THAT PARTY AND VERIFIED THE TRANSACTION WIT H THAT PARTY. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) HAS ERRED IN SUSTAINING DISALLOWANCE OF RS.45,53,994/- BEING EAR TH FILLING CHARGES PAID TO M/S. S.S. TRANSPORT MERELY ON THE BASIS OF CONJECTU RES, SURMISES AND SUSPICION THAT M/S. S.S. TRANSPORT AFTER THE RECEIP T OF PAYMENT FROM THE APPELLANT MADE CASH WITHDRAWALS WHICH MIGHT HAVE BE EN GIVEN BACK TO THE APPELLANT WITHOUT ANY CORROBORATIVE EVIDENCE AND WI THOUT APPRECIATING THAT AO HAS NEITHER CONFRONTED TO THE APPELLANT THE CONT ENTS OF THE BANK STATEMENT OF THE SAID PARTY DURING THE ASSESSMENT P ROCEEDINGS NOR PROVIDED TO THE APPELLANT THE SAID COPY OF THE BANK STATEMEN T AND USED THE SAME AGAINST THE APPELLANT AND HAS THEREBY NOT GIVEN THE APPELLANT A REASONABLE OPPORTUNITY OF PUTTING FORTH ITS CASE. 3. THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDE R OF AO ON THE GROUND THAT THERE WAS NO OBLIGATION ON THE PART OF THE APPELLAN T TO CARRY OUT THE WORK OF EARTH FILLING WITHOUT APPRECIATING THE FACT THAT WI THOUT CARRYING OUT THE SAID WORK THE APPELLANT WOULD NOT HAVE BEEN ABLE TO SELL THE PLOT OF LAND AS THERE WAS A HOLDING POND ON THE SAID PLOT AND THE SAID PL OT WAS SEVERAL FEET BELOW THE ROAD LEVEL AND THE APPELLANT HAD ASSUMED THE RE SPONSIBILITY OF CARRYING OUT THE EARTH FILLING WORK. 4. THE APPELLANT THEREFORE PRAYS THAT TH E DISALLOWANCE/ADDITION MADE OF RS.45,53,994/- BE DELETED. 5. EACH OF THE ABOVE GROUNDS ARE INDEPENDENT AND WI THOUT PREJUDICE TO ONE ANOTHER. 2.1 THE ASSESSEE BEING RESIDENT CORPORATE ENTITY E NGAGED AS BUILDER & DEVELOPER WAS ASSESSED IN SCRUTINY ASSESSMENT U/S 143(3) ON 28/03/2015 BY LD. INCOME TAX OFFICER-5(3)(3) [IN SH ORT AO] WHEREIN THE ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 3 INCOME OF THE ASSESSEE WAS ASSESSED AT RS.50.97 LAC S AFTER SOLE ADDITION OF RS.45.53 LAC AS AGAINST RETURNED INCOME OF RS.5.43 LACS E- FILED BY THE ASSESSEE ON 16/09/2012. 2.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE CLAIMED A SUM OF RS.45.99 LACS IN PROFIT & LOSS ACC OUNT UNDER THE HEAD CHANGES IN INVENTORIES. IT TRANSPIRED THAT DURING IMPUGNED AY, THE ASSESSEE HAD SOLD A PIECE OF LAND VIDE AGREEMENT DA TED 28/12/2011 FOR A SALE CONSIDERATION OF RS.121 LACS. THE LAND WAS S TATED TO BE PURCHASED IN THE YEAR 2008 AT COST OF RS.55.44 LACS . THE RESULTANT GAINS WERE OFFERED AS WELL ASSESSED UNDER THE HEAD BUSINESS INCOME. THE SUM OF RS.45.99 LACS AS DEBITED IN THE PROFIT & LOS S ACCOUNT WAS CLAIMED TO BE PAID TO AN ENTITY M/S S.S.TRANSPORT, THANE [CONTRACTEE] TOWARDS EARTH FILLING CHARGES IN THE SAID LAND. THE LD. AO, UPON PERUSAL OF VARIOUS CLAUSES OF SALE AGREEMENT DATED 28/12/20 11, CAME TO A CONCLUSION THAT THE TERMS OF THE AGREEMENT MENTIONE D NOTHING ABOUT EARTH FILLING ACTIVITY TO BE CARRIED OUT BY THE ASSESSEE AND IT WAS NOT OBLIGATORY ON THE PART OF THE ASSESSEE TO INCUR SUC H EXPENDITURE TO CARRY OUT ANY SUCH ACTIVITY. THE RELEVANT CLAUSES OF THE SALE AGREEMENT HAVE ALREADY BEEN EXTRACTED IN QUANTUM ASSESSMENT ORDER ON PAGES 2 TO 4. THE FACTUAL MATRIX LED LD. AO TO FORM AN OPINION TH AT THE IMPUGNED EXPENDITURE WAS A MERE DEVICE TO REDUCE THE PROFIT ARISING FROM THE SALE OF LAND. THE FIELD INQUIRY REVEALED THAT THE SAID E NTITY M/S S.S.TRANSPORT WAS NOT AVAILABLE AT THE GIVEN ADDRESS AND NOTICE S END U/S 133(6) TO CONFIRM THE TRANSACTIONS REMAINED UN-SERVED. THE AS SESSEE EXPRESSED INABILITY TO PRODUCE THE SAID PARTY. ALL THESE FACT ORS CASTED SERIOUS DOUBTS ABOUT GENUINENESS OF THE EXPENDITURE. THE ASSESSEE, VIDE SUBMISSIONS ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 4 DATED 13/02/2015 DEFENDED THE SAME BY SUBMITTING TH AT THE SALE OF PLOT COULD NOT HAVE BEEN POSSIBLE WITHOUT CARRYING OUT EARTH FILLING ACTIVITY. THE PERUSAL OF THE BANK STATEMENT REVEALED THAT THE CHEQUES OF RS.45.53 LACS ISSUED BY THE ASSESSEE WAS CREDITED I N THE ACCOUNT OF THE PARTY ON 18/05/2012 AND THEREAFTER, CASH WAS WITHDR AWN FROM THE SAID BANK ACCOUNT. FINALLY, THE EXPENDITURE OF RS.45.53 LACS AS CLAIMED BY THE ASSESSEE WAS DISALLOWED AND ADDED BACK TO THE I NCOME OF THE ASSESSEE. THE SAME, UPON CONFIRMATION BY FIRST APPE LLATE AUTHORITY, IS UNDER APPEAL BEFORE US. 3. THE LD. AUHTORIZED REPRESENTATIVE FOR ASSESSEE [AR], SHRI S.C.TIWARI, ON THE STRENGTH OF CERTAIN JUDICIAL PRONOUNCEMENTS SUBMITTED THAT THE ASSESSEE HAD DISCHARGED THE PRIMARY ONUS O F PROVING THE TRANSACTION AND THEREFORE, THE ONUS WAS ON REVENUE TO NEGATE THE SAME. OUR ATTENTION IS DRAWN TO THE FACT THAT THE PAYMENT S WERE THROUGH BANKING CHANNELS AFTER DEDUCTION OF TAX AT SOURCE A ND THE ASSESSEE WAS IN POSSESSION OF PRIMARY SUPPORTING DOCUMENTS. IT W AS ALSO SUBMITTED THAT PERMANENT ACCOUNT NUMBER [PAN] OF THE CONTRACTEE WAS AVAILABLE ON RECORD WHICH PROVES THE IDENTITY OF THE PAYEE. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE [DR], SHRI D.G.PANSARI SUBMITTED THAT THE ASSESSEE COULD NOT PROVE THE TRANSACTION WITH ANY C OGENT MATERIAL WHICH JUSTIFIES THE ADDITIONS. 4.1 WE HAVE CAREFULLY HEARD THE RIVAL SUBMISSIONS A ND PERUSED RELEVANT MATERIAL ON RECORD AND THE CASE LAWS RELIE D UPON BY RESPECTIVE REPRESENTATIVES. AT THE OUTSET IT IS NOTED THAT THE CORRECT AMOUNT OF EXPENDITURE DEBITED BY THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT IS ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 5 RS.45.99 LACS AS AGAINST RS.45.53 LACS TAKEN BY LD. AO. HOWEVER, WE ARE NOT CONCERNED WITH THE SAME AT THE MOMENT. 4.2 IT IS UNDISPUTED FACT THAT THE TERMS OF SALE AG REEMENT DATED 28/12/2011 ENTERED INTO BY THE ASSESSEE DO NOT ENVI SAGE CARRYING OUT OF ANY EARTH FILLING ACTIVITY BY THE ASSESSEE. NOTHING ON RECORD SUGGEST THAT IT WAS OBLIGATORY FOR THE ASSESSEE TO CARRY OUT THE SAME IN TERMS OF THE AGREEMENT. ALSO, THE SUBMISSIONS THAT THE SAID ACTI VITY WAS NECESSARY TO FACILITATE THE SALE OF LAND ARE NOT BACKED UP ANY C OGENT EVIDENCE. 4.3 IN SUPPORT OF THE TRANSACTIONS, THE ASSESSEE HA S PLACED ON RECORD COPY OF INVOICE NUMBER 11N001 DATED 01/08/2011 FOR RS.45.99 LACS ISSUED BY S.S.TRANSPORT , A PERUSAL OF WHICH REVEAL THE STATED WORK HAS BEEN CARRIED OUT DURING THE MONTH OF JULY, 2011. AP PARENTLY, THE PAYMENT OF THE INVOICE HAS BEEN MADE BY THE ASSESSE E DURING THE MONTH OF MARCH, 2012 VIDE CHEQUE NO. 204183 AFTER DEDUCTION OF TDS @1%. THE AFORESAID CHEQUE HAS BEEN CLEARED FROM ASS ESSEES BANK ON 18/05/2012. AS PER TDS CERTIFICATE, THE PAYMENT OF TDS IS STATED TO BE MADE ON 04/05/2012. THE CHRONOLOGY OF THE EVENT LEA D US TO FORM AN OPINION THAT THE ASSESSEE ENJOYED CREDIT PERIOD OF MORE THAN 8 MONTHS FROM THE AFORESAID CONTRACTEE WHICH INDICATE HEALTH Y BUSINESS RELATIONS OF THE CONTRACTEE WITH THE ASSESSEE. DESPITE THIS F ACT, THE ASSESSEE FAILED TO PROVIDE ANY CONFIRMATION OF THE TRANSACTI ON FROM THE CONTRACTEE OR PRODUCE THE PARTY FOR CONFIRMATION OF THE TRANSA CTION. NOTICE ISSUED U/S 133(6) AS WELL AS FIELD INQUIRY POINTED OUT THAT TH E SAID CONTRACTEE WAS NOT AVAILABLE AT THE GIVEN ADDRESS. MERE PAYMENT TH ROUGH BANKING CHANNEL OR DEDUCTION OF TDS AGAINST THE SAME, IN OU R OPINION, DOES NOT PROVE THE GENUINENESS OF THE EXPENDITURE PARTICULAR LY IN VIEW OF THE FACT ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 6 THAT CASH WAS WITHDRAWN IMMEDIATELY AFTER CREDIT OF THE CHEQUE. SO FAR AS THE CONTENTION THAT PAN OF THE CONTRACTEE WAS SUPPLIED TO LD. AO WHICH PROVES THE IDENTITY OF THE CONTRACTEE, WE FIN D CONTRADICTION IN THE SAME SINCE THE PAN OF THE CONTRACTEE AS PER INVOICE AS WELL TDS CERTIFICATE IS STATED TO BE AYNPK-7739-D WHEREAS THE PAN AS PER SUBMISSION BEFORE LD. AO IN LETTER DATED 18/02/2015 IS STATED TO BE APMPR-5156-B . THEREFORE, UPON CAREFUL PERUSAL OF FACTUAL MATRIX , WE ARE OF THE CONSIDERED OPINION THAT THE PRIMARY ONUS CASTED UPON ASSESSEE, IN THIS REGARD, HAS REMAINED UN-DISCHARGE D AND THEREFORE WE DO NOT FIND ANY FORCE IN THE SUBMISSIONS THAT THE O NUS HAD SHIFTED UPON REVENUE TO NEGATE THE TRANSACTION. 4.4 SO FAR AS THE RELIANCE PLACED BY LD. AR IN THE CASE OF CIT VS. ORISSA CORPN. (P) LTD. [25 TAXMAN 80F SC] IS CONCERNED, WE FIND THAT THE ADDITIONS WERE DELETED SINCE THE ASSESSEE HAD P ROVIDED ADEQUATE DETAILS TO THE REVENUE BUT REVENUE FAILED TO PURSUE THE MATTER FURTHER. THIS IS NOT THE CASE HERE. SIMILARLY THE DECISION I N THE CASE OF ANIS AHMAD & SONS VS CIT [167 TAXMAN 84 SC] WAS RENDERED IN A SITUATION WHERE MANY PARTIES APPEARED BEFORE LD. AO TO CONFIR M THE TRANSACTIONS WHEREAS THE BALANCE PARTIES COULD NOT APPEAR SINCE THEY WERE RESIDING OUTSIDE THE STATE. THE CASE OF CIT VS. ORCHID INDUSTRIES P. LTD. [ITA NO. 1433 OF 2014] RENDERED BY HONBLE BOMBAY HIGH COURT DEALT WITH ADDITION U/S 68 ON ACCOUNT OF SHARE APPLICATION MONEY WHEREIN THE ASSESSEE HAD PROVIDED PAN, CONFIRMATIONS, BANK STAT EMENT, FINANCIAL STATEMENTS OF THE CREDITORS AND EVIDENCES AS TO ALL OTMENT OF SHARES VIZ. SHARE APPLICATION FORM, ALLOTMENT LETTER, SHARE CER TIFICATE ETC. AND THEREFORE, NOT APPLICABLE TO THE FACT OF PRESENT CA SE. SIMILARLY, THE OTHER ITA.NO.485/MUM/2017 TYCOON RESIDENCY PRIVATE LIMITED ASSESSMENT YEAR-2012-13 7 CASE LAWS PLACED ON RECORD ARE FACTUALLY DIFFERENT AND DO NOT APPLY TO THE FACT OF THE PRESENT CASE. 4.5 KEEPING IN VIEW THE OVERALL FACTS AND CIRCUMSTA NCES AND PRINCIPLE OF NATURAL JUSTICE PARTICULARLY IN VIEW OF THE FACT THAT THE CONTRACTEE APPARENTLY SEEMS TO BE INCOME TAX PAYEE, WE DEEM IT FIT TO PROVIDE ANOTHER OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE HIS CLAIM BEFORE LOWER AUTHORITIES. THEREFORE, THE MATTER STAND REMI TTED BACK TO THE FILE OF LD. AO TO PROVIDE ANOTHER OPPORTUNITY TO THE ASSESS EE TO SUBSTANTIATE HIS CLAIM FAILING WHICH LD. AO SHALL BE AT LIBERTY TO A DJUDICATE THE SAME ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 5. RESULTANTLY, THE APPEAL STANDS ALLOWED FOR STATI STICAL PURPOSES IN TERMS OF OUR ABOVE ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2018. SD/- SD/- (JOGINDER SINGH) (MAN OJ KUMAR AGGARWAL) / VICE PRESIDENT / ACCOUNTANT MEMBER MUMBAI; DATED : 11/12/2018 SR.PS:-JAISYVARGHESE / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. $ ( ) / THE CIT(A) 4. $ / CIT CONCERNED 5. #% &###' , #' , / DR, ITAT, MUMBAI 6. & ()* / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI