DCIT 14(1)(2), MUMBAI V. ESKAYEM CONSULTANTS P.LTD, MUMBAI

ITA 5139/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9003 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 29-10-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Principle of natural justice; Additional evidence; Reassessment proceedings
• Section: 69C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , , BEFORE S/SHRI RAJENDRA, A.M. AND SANDEEP GOSAIN,J.M . ./ ././ ./ ITA NO. 5139/MUM/2015 / ASSESSMENT YEAR: 2009-10 DY. CIT 14(1)(2) ROOM NO.40, 4TH FLOOR, AAYAKAR BHAVAN MAHARSHI KARVE ROAD, MUMBAI-400 020. VS. M/S. ESKAYEM CONSULTANTS PVT.LTD. 310, 3RD FLOOR, SWASTIK CHAMBERS, CST RD., CHEMBUR, MUMBAI-71. PAN: AAACE 0040 K ( / // / APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI V. JUSTIN-DR ASSESSEE BY: SHRI HARESH P. SHAH / // / DATE OF HEARING: 27/09/2017 ! / DATE OF PRONOUNCEMENT:03.11.2017 , ,, , 1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , ,, , /PER RAJENDRA,AM:- CHALLENGING THE ORDER,DT.17/08/2015 OF CIT(A)-22, M UMBAI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL.ASSESSEE,A PRIVATE LIMITED COMPANY,FILED ITS RETURN OF INCOME ON 26/09/2009,DECLARING TOTAL INCOME OF RS.2.21 CRORE S.THE AO COMPLETED THE ASSESSMENT ON 25/02/2015,U/S. 143(3) R.W.S. 147 OF THE ACT,DETERM INING ITS INCOME AT RS.4.05 CRORES. 2. EFFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE ADDITION OF RS.1.83 CRORES MADE BY THE AO UNDER THE HEAD UNEXPLAINED EXPENDITURE, U/S.69C OF THE ACT.DURING THE REASSESSMENT PROCEEDINGS THE AO DIRECTED THE ASSESSEE TO FILE R ECONCILIATION ABOUT THE PROFESSIONAL FEE AS APPEARING IN FORM 26AS AND AS SHOWN IN THE P&L ACCO UNT.HE OBSERVED THAT THE ASSESSEE HAD SHOWN PROFITABILITY OF RS.3.89 CRORES WHEREAS A S PER FORM NO.26AS IT HAD RECEIVED RS.4.76 CRORES DURING THE YEAR UNDER APPEAL.VIDE IT S LETTER,DATED 07/02/15,THE ASSESSEE SUBMITTED THAT IT HAD SHOWN PROFESSIONAL FEE AGAINS T THE GROSS RECEIPT,THAT AN AMOUNT OF RS.1.83 CRORES WAS NETTED OFF ON ACCOUNT OF PROFESS IONAL FEE PAID AND THAT THE BALANCE AMOUNT (INCLUDING SERVICE TAX OF RS.47.97 LAKHS )OF RS.3.8 9 CRORES WAS CREDITED IN THE BOOKS OF ACCOUNT. HOWEVER, THE AO HELD THAT A TRUE AND CORRE CT PICTURE OF THE COMPANY WAS NOT REFLECTED IN ITS AUDITED P&L ACCOUNT, THAT IT HAD N OT SHOWN THE GROSS PROFESSIONAL FEE OF RS.5.22 CRORES) AND TOTAL PAYMENT (RS.1.83 CRORES) IN THE P&L ACCOUNT ,THAT RECEIPTS TOTALING TO RS.1.83 CRORES WERE APPEARING IN THE BOOKS OF A CCOUNT (HE MADE DISALLOWANCE OF RS.1.83 5139/M/15(09-10) M/S. ESKAYEM CONSULTANTS PVT.LTD. 2 CRORES INVOKING PROVISIONS OF SECTION 69C OF THE A CT AND HELD THAT THE ASSESSEE HAD NOT FILED CONFIRMATION FROM PARTIES, THAT GENUINENESS OF FEE PAID BY THE ASSESSEE REMAINED DOUBTFUL, THAT THE CREDIT WORTHINESS OF THE PARTY WAS NOT PRO VED,THAT IT HAD NOT ATTACHED BANK STATEMENTS, THAT THE LEGITIMACY OF THE TRANSACTIONS REMAINED UN TRUE, THAT THE CLAIM MADE BY THE ASSESSEE FOR INCURRING THE EXPENSES REMAINED DOUBTFUL,THAT T HE SAME WERE NOT SUPPORTED BY VOUCHERS / INVOICES BILLS. 3. AGGRIEVED BY THE ORDER OF AO ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY(FAA)AND MADE ELABORATE SUBMISSIONS AND I T ALSO RELIED UPON CERTAIN CASE LAWS. AFTER CONSIDERING THE AVAILABLE MATERIAL,THE FAA HE LD THAT THE ASSESSEE WAS NOT GIVEN AN OPPORTUNITY TO EXPLAIN AS TO WHY THE ADDITION ON AC COUNT OF UNEXPLAINED EXPENDITURE SHOULD NOT BE MADE,THAT THE PRINCIPLES OF NATURAL JUSTICE WERE VIOLATED , THAT THE AO HAD WRONGLY INVOKED THE PROVISIONS OF SECTION 69C, THAT THE AO HAD NOT AFFORDED AN OPPORTUNITY TO THE ASSESSEE TO FILE VOUCHERS/INVOICES/BILLS/RECEIPTS. FINALLY, HE DELETED THE ADDITION MADE BY THE AO. 4. BEFORE US, THE DEPARTMENTAL REPRESENTATIVE (DR) STA TED THAT THE ASSESSEE HAD NOT FURNISHED NECESSARY DETAILS BEFORE AO, THAT FAA HAD PASSED A CRYPTIC AND NON-SPEAKING ORDER,THAT CLAIMING DEDUCTION ON ACCOUNT OF INCURRING OF EXPEN DITURE THE ASSESSEE HAD TO PRODUCE RELIABLE EVIDENCES. THE AUTHORISED REPRESENTATIVE ( AR) SUPPORTED THE ORDER OF THE FAA AND STATED THAT ALL THE NECESSARY INFORMATION WAS FURNI SHED DURING COURSE OF ASSESSMENT PROCEED - INGS, THAT NO OPPORTUNITY WAS GIVEN TO PROVE ITS CL AIM. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND PERUSED THE MAT ERIALS AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAD NOT PRODUCED DOCUMENTS APPEAR ING AT SL.NO.2,3,7 OF PB BEFORE AO , WHEREAS SAME WAS FURNISHED DURING APPELLATE PROCEE DINGS .THE FAA HAS NOT MENTIONED ANYTHING ABOUT THE REQUEST MADE BY ASSESSEE TO PRO DUCE ADDITIONAL EVIDENCES OR ACCEPTANCE OF SAME BY HIM.THUS,THESE EVIDENCES WERE NEVER EXAM INED BY AO. THE FAA HAS CO- TERMINUS POWER WITH AO, SO, EITHER HE SHOULD HAVE E XAMINED THE EVIDENCES OR SHOULD HAVE CALLED FOR REMAND REPORT FROM THE AO. WE FIND THAT ORDER PASSED BY HIM IS NON SPEAKING .IN OUR OPINION,MATTER NEEDS FURTHER VERIFICATION.THERE FORE,IN THE INTEREST OF JUSTICE,WE ARE REMITTING BACK THE ISSUE TO THE FILE OF AO FOR FRES H ADJUDICATION HE IS DIRECTED TO AFFORD A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE FINALIZING THE ASSESSMENT.EFFECTIVE GROUND OF APPEAL IS DECIDED IN FAVOUR OF THE AO I N PART. 5139/M/15(09-10) M/S. ESKAYEM CONSULTANTS PVT.LTD. 3 AS A RESULT, APPEAL FILED BY AO STANDS PARTLY ALLOW ED. . ORDER PRONOUNCED IN THE OPEN COURT ON 03 RD NOVEMBER , 2017. 03 2017 SD/- SD/- ( /SANDEEP GOSAIN) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 03.11.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.