CREAM CENTRE ICE CREAM MFG. CO., MUMBAI V. ADDL CIT 18(2), MUMBAI

ITA 5369/MUM/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7906 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 09-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Share purchase agreement; Opportunity of being heard; Proportionate interest; Additional evidence; Cost of acquisition; Notional interest

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH C,MUMBAI BEFORE SHRI N.V. VASUDEVAN (JM) & SHRI RAJENDRA SI NGH (AM) I.T.A.NO.5369/MUM/2009 (A.Y. 2006-07) CREAM CENTRE ICE CREAM MFG.CO., FULCHAND NIVAS, CHOWPATTY SEA FACE, MUMBAI-4007. PAN: AAAFC 1008J VS. ADDL.COMMR. OF INCOME-TAX-18(2), MUMBAI. APPELLANT RESPONDENT I.T.A.NO. 5468/MUM/2009 (A.Y. 2006-07) ASST.COMMR. OF INCOME-TAX-18(2), R.NO.115, 1 ST FLOOR, PIRAMAL CHAMBERS, PATEL, MUMBAI-400 012. VS. CREAM CENTRE ICE CREAM MFG.CO., FULCHAND NIVAS, CHOWPATTY SEA FACE, MUMBAI-4007. PAN: AAAFC 1008J APPELLANT RESPONDENT ASSESSEE BY SHRI SUBHASH S.SHETTY. DEPARTMEMT BY SHRI O. P. SHARMA. O R D E R PER RAJENDRA SINGH, AM : THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 07-07-2009 OF THE CIT(A)-XVIII, MUMBAI, FOR THE ASSTT. YEAR 2006- 07. THESE ARE BEING DISPOSED OF BY A SINGLE CONSOLIDATED ORDER FOR THE SAKE OF C ONVENIENCE. 2. THE DISPUTES RAISED IN THESE APPEALS RELATE TO C OMPUTATION OF CAPITAL GAINS FROM SALE OF FLAT, DISALLOWANCE OF INTEREST AND CON VEYANCE EXPENSES AND ADDITION ON ACCOUNT OF EMBEZZLEMENT OF CASH. ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 2 3. WE WILL FIRST TAKE UP THE APPEAL OF THE REVENUE IN ITA NO.5468/MUM/09. IN THIS APPEAL, THE ONLY DISPUTE RAISED BY THE REV ENUE IS REGARDING THE COMPUTATION OF CAPITAL GAINS FROM SAL E OF FLAT AND RATE OF TAX. THE AO NOTED THAT THE ASSESSEE HAD SOLD FLAT AT BANDRA FROM WHICH LONG-TERM CAPITAL GAIN OF RS.89,47,639/- WAS SHOWN ON WHICH TAX WAS PAID @ 10%. WHILE COMPUTING CAPITAL GAINS, THE ASSESSEE HAD NOT INDEX ED THE COST OF ACQUISITION. THE AO POINTED OUT THAT THE PROPERTY HAD BEEN PURCH ASED FOR RS.11400000/- AS PER AGREEMENT AND THERE WERE FURTHER EXPENSES OF RS .55,000/- INCURRED. HOWEVER, THE ASSESSEE HAD SHOWN THE COST OF THE PRO PERTY IN THE COMPUTATION OF CAPITAL GAINS AT RS.12664861/-. THE ASSESSEE THEREA FTER REVISED THE COMPUTATION AS PER WHICH THE LONG-TERM CAPITAL GAIN WAS SHOWN A T RS.7537140/- IN PLACE OF RS.8947639/-. THE AO, HOWEVER, ON EXAMINATION OF DO CUMENTS, NOTED THAT THE FLAT HAD BEEN PURCHASED ON 15-07-2002 AND THE SAME HAD BEEN SOLD AS PER AGREEMENT DATED 10-05-2005. THE ASSESSEE ALSO PAID STAMP DUTY OF RS.10,70,750/- ON 04-07-2002. THUS, THE PROPERTY HA D BEEN SOLD WITHIN A PERIOD OF 3 YEARS. THE AO ASKED THE ASSESSEE TO EXPLAIN WH Y THE CAPITAL GAIN SHOULD NOT BE TREATED AS SHORT-TERM CAPITAL GAIN. THE ASSESSEE SUBMITTED THE SALE DEED HAD BEEN EXECUTED ON 21-07-2005 AND POSSESSION HAD AL SO BEEN GIVEN ONLY ON 21- 07-2005 AND THEREFORE THE DATE OF TRANSFER WAS 21- 07-2005 AND THUS THE CAPITAL GAIN WAS LONG-TERM CAPITAL GAIN. THE AO, HOWEVER, O BSERVED THAT THE AGREEMENT DATED 21-07-2005 WAS ONLY A COVER UP TO SHOW THE CA PITAL GAINS AS LONG-TERM CAPITAL GAINS IN ORDER TO HAVE TAX ADVANTAGE. THE P ROPERTY HAD BEEN TRANSFERRED AS PER AGREEMENT DATED 10-05-2005 WHICH WAS A COMPL ETE AGREEMENT. THE ASSESSEE HAD ALSO NOT PRODUCED THE AGREEMENT DATED 10-05-2005. THE AO, THEREFORE, TREATED THE CAPITAL GAINS OF RS.89,47,63 9/- AS SHORT-TERM CAPITAL GAINS AND TAXED THE SAME @ 30%. ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 3 3.1. DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE FURNISHED COPY OF THE AGREEMENT DATED 10-05-2005. THE CIT(A), THEREFORE, REMANDED THE MATTER TO THE AO AS THE AGREEMENT WAS AN ADDITIONAL EVIDENCE. AFTER CONSIDERING THE REMAND REPORT DATED 25-05-2009 AND AFTER EXAMINATIO N OF RECORDS, THE CIT(A) NOTED THAT AS PER THE AGREEMENT DATED 10-05-2005 TH E TOTAL CONSIDERATION FIXED WAS RS.2.16 CRORES, OUT OF WHICH A SUM OF RS.20 LAK HS WAS TO BE PAID ON OR BEFORE THE EXECUTION OF THE AGREEMENT; A SUM OF RS. 1.86 CRORES WAS TO BE PAID WITHIN 15 DAYS FROM THE DATE OF EXECUTION OF AGREEM ENT AND THE BALANCE AMOUNT OF RS.10 LAKHS WAS TO BE PAID ON OR BEFORE 21-07-2 005. FURTHER, AS PER THE SAID AGREEMENT, THE SALE AND TRANSFER OF THE SAID SHARES AND THE FLAT SHALL BE COMPLETE ON THE HAPPENING OF THE FOLLOWING EVENTS : A) PAYMENT BY THE TRANSFEREE TO THE TRANSFEROR OF THE ENTIRE SUM OF RS.2,16,00,000/- (RUPEES TWO CRORES AND SIXTEEN LAK HS ONLY) BEING THE AGREED PURCHASE PRICE PAYABLE BY THE TRANSFEREE S TO THE TRANSFERORS IN RESPECT OF THE SAID SHARES AND THE S AID FLAT. B) EXECUTION AND REGISTRATION BY THE TRANSFEROR OF THE DEED OF TRANSFER AND ASSIGNMENT FOR THE PURPOSE OF TRANSFER RING TO AND VESTING THE SAID SHARES AND THE SAID FLAT IN FAVOUR OF THE TRANSFEREES. C) DELIVERY OF VACANT AND PEACEFUL POSSESSION OF TH E SAID FLAT TO THE TRANSFEREES. D) DELIVERY BY THE TRANSFEROR TO THE TRANSFEREE OF THE INSTRUMENT OF TRANSFER IN RESPECT OF THE SAID SHARES DULY EXECUTE D BY HER AND COMPLETE IN ALL RESPECTS TOGETHER WITH THE RELEVANT SHARE CERTIFICATE BEING NO.1 IN RESPECT OF THE SAID SHARES; AND E) DELIVERY BY THE TRANSFEROR TO THE TRANSFEREE OF ALL RELEVANT PAPERS, DEEDS, DOCUMENTS, WRITINGS AND INSTRUMENTS EVIDENCING THE TRANSFERORS RIGHT, TITLE AND INTEREST IN THE SAID SHARES AND THE SAID FLAT. 3.2 THE CIT(A) FURTHER NOTED THAT POSSESSION OF THE FLAT HAD BEEN HANDED OVER ON 21-07-2005 AS PER CERTIFICATE RECEIVED FROM THE BUYER. THE SALE DEED WAS ALSO EXECUTED AND REGISTERED ON 21-07-2005. THE CIT (A), THEREFORE, CONCLUDED ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 4 THAT THE TRANSFER OF THE FLAT UNDER THE PROVISIONS OF SEC. 2(47)(V) OF I.T. ACT READ WITH SEC. 53A OF TRANSFER OF PROPERTY ACT WAS COMPL ETE ONLY ON 21-07-2005 AND THEREFORE THE CAPITAL GAINS HAD TO BE TREATED AS LO NG-TERM CAPITAL GAINS. HE, THEREFORE, DIRECTED THE AO TO TREAT THE CAPITAL GAI N AS LONG-TERM CAPITAL GAIN TO BE COMPUTED AFTER TAKING INTO CONSIDERATION THE INDEXE D COST OF ACQUISITION AND TAX RATE TO BE APPLIED WOULD BE 20%. AGGRIEVED BY THE SAID ORDER OF CIT(A), THE REVENUE IS IN APPEAL. 3.3. BEFORE US, THE LD. A.R. FOR THE ASSESSEE SUBMI TTED THAT THE FLAT HAD BEEN SOLD AS PER AGREEMENT DATED 10-05-2005 WHICH CLEARL Y PROVIDED THAT THE SALE/TRANSFER WOULD BE COMPLETE ONLY ON HAPPENING O F CERTAIN EVENTS INCLUDING PAYMENT OF ENTIRE CONSIDERATION AND HANDING OVER OF POSSESSION OF THE FLAT. IT WAS POINTED OUT THAT POSSESSION HAD BEEN HANDED OVE R ON 21-07-2005 AND THE PROPERTY WAS ALSO REGISTERED ON THE SAME DATE. IT W AS ALSO SUBMITTED THAT THE AO HAD CONFUSED THE SALE DEED DATED 21-07-2005 WITH SO ME NEW AGREEMENT WHICH HE CONSIDERED AS A DEVICE TO EVADE TAX. IN FACT, TH ERE WAS NO NEW AGREEMENT AND THE AGREEMENT DATED 21-07-2005 REFERRED TO BY THE A O WAS ONLY THE SALE DEED DULY EXECUTED. THEREFORE, THE LONG-TERM CAPITAL GAI NS HAD BEEN RIGHTLY ASSESSED. 3.4. THE LD. D.R., ON THE OTHER HAND, SUBMITTED TH AT THE ENTIRE CONSIDERATION HAD BEEN RECEIVED BY THE ASSESSEE MUCH BEFORE 21-07 -2005 AND STAMP DUTY HAD ALSO BEEN PAID. THEREFORE, THE FLAT HAD BEEN TRANSF ERRED BY 10-05-2005 AND THE GAIN SHOULD HAVE BEEN TAKEN AS SHORT-TERM CAPITAL G AIN. 3.5 THE LD. A.R., IN REPLY, CLARIFIED THAT THE ASSE SSEE HAD NOT PAID ANY STAMP DUTY. WHAT THE AO REFERRED TO WAS THE STAMP PAPER DATED 07-05-2005 WHICH COULD BE USED AT ANY TIME WITHIN A PERIOD OF 6 MONT HS. 3.6 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING COMPUTATION OF CAPITAL GAIN F ROM SALE OF FLAT AT BANDRA ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 5 OWNED BY THE ASSESSEE. THE FLAT HAD BEEN PURCHASED ON 15-07-2002. THE ASSESSEE SOLD THE FLAT VIDE AGREEMENT DATED 10-05-2 005. THE AGREEMENT CLEARLY PROVIDED THAT THE TRANSFER OF FLAT WAS TO BE COMPLE TE ONLY ON PAYMENT OF ENTIRE CONSIDERATION AND ON HANDING OVER POSSESSION OF THE FLAT. IN THIS CASE, THE ASSESSEE HAD PRODUCED CERTIFICATE FROM THE BUYER SH OWING THAT POSSESSION OF THE FLAT HAD BEEN HANDED OVER ONLY ON 21-07-2005. UNDER THE PROVISIONS OF SEC. 2(47)(V), ANY TRANSACTION INVOLVING THE ALLOWING OF POSSESSION OF ANY IMMOVEABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANC E OF A CONTRACT OF THE NATURE REFERRED TO IN SEC. 53A OF THE TRANSFER OF PROPERTY ACT, WILL BE DEEMED TO BE TRANSFER. THEREFORE, EVEN IN CASES WHERE THE CONSID ERATION HAD NOT BEEN FULLY RECEIVED BY THE ASSESSEE BUT IN TERMS OF THE CONTRA CT POSSESSION HAD BEEN HANDED OVER, IT WILL BE A CASE OF TRANSFER OF PROPE RTY ON THE DATE OF HANDING OVER OF THE POSSESSION. THEREFORE, EVEN UNDER THE PROVIS IONS OF SEC. 2(47)(V), TRANSFER COULD NOT BE COMPLETE BEFORE THE DATE OF HANDING OV ER POSSESSION. IN CASE, SALE DEED HAS BEEN EXECUTED IN THE CASE OF A PROPERTY, T HE TRANSFER WILL BE THE DATE OF SALE DEED, BUT IN A CASE WHERE SALE DEED HAS NOT BEEN EXECUTED, THE PROPERTY COULD STILL BE CONSIDERED AS TRANSFERRED ON THE DA TE OF HANDING OVER OF POSSESSION IN TERMS OF THE PROVISIONS OF SEC. 2(47)(V). IN TH IS CASE, THE POSSESSION HAD BEEN GIVEN ON 21-07-2005 AND THE SALE DEED HAD ALSO BEE N EXECUTED ON THE SAID DAY. THEREFORE, IN OUR VIEW, THE DATE OF TRANSFER W OULD BE 21-07-2005 AND SINCE THE PROPERTY HAD BEEN PURCHASED ON 15-07-2002, THE CAPITAL GAIN ARISING WOULD BE LONG-TERM CAPITAL GAIN. THE CAPITAL GAIN HAS TO BE COMPUTED AFTER CONSIDERING THE INDEXED COST OF ACQUISITION AND THE RATE OF TAX TO BE APPLIED WOULD BE 20%. WE, THEREFORE, SEE NO INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS, THEREFORE, UPHELD. ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 6 4. IN THE APPEAL OF THE ASSESSEE IN ITA NO.5369/MUM/2009 , DISPUTES HAVE BEEN RAISED ON THREE DIFFERENT GROUNDS. 4.1 THE FIRST DISPUTE IS REGARDING DISALLOWANCE OF INTEREST EXPENSES AMOUNTING TO RS.11,43,084/-. THE ASSESSEE FOR THE RELEVANT PE RIOD HAD SHOWN PAYMENT OF INTEREST TO DIFFERENT PARTIES AS UNDER : A) CITI BANK RS. 4,21,898 B) CITI BANK RS. 4,64,205.88 C) HDFC BANK RS. 42,787.52 D) MRS. SABINA CHONA RS.1,26,3 53 E) MASTER RISHI CHONA RS.4,11,326 THE AO NOTED THAT THE PARTNER SHRI SANJIV CHONA HAD MAINTAINED THREE ACCOUNTS WITH THE FIRM I.E. FIXED DEPOSIT ACCOUNT, CURRENT A CCOUNT AND LOAN ACCOUNT. IN THE CURRENT ACCOUNT, THERE WAS DEBIT BALANCE OF RS.20,3 4,201.11 AND IN THE LOAN ACCOUNT ALSO THERE WAS DEBIT BALANCE OF RS.74,91,50 0/-. FURTHER, FROM THE CURRENT ACCOUNT, MR. SANJIV CHONA HAD ADVANCED RS.5 0,00,000/- TO MR. SUNIL KAPUR, RS.4,65,200/- TO AUDIO VISION AND FROM THAT ACCOUNT HE HAD ALSO INVESTED IN SHARES. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY PROPORTIONATE INTEREST SHOULD NOT BE DISALLOWED AS THE FUNDS OF THE FIRM HAD BEEN USED BY THE PARTNER FOR PERSONAL PURPOSES. THE A SSESSEE EXPLAINED THAT BORROWED FUNDS OF THE FIRM HAD NOT BEEN UTILIZED FO R WITHDRAWAL BY THE PARTNER. IT WAS ALSO SUBMITTED THAT THERE WERE NO SPECIFIC PROV ISIONS FOR CHARGING INTEREST ON DEBIT BALANCES IN PARTNERS ACCOUNTS. THE AO, HO WEVER, NOTED THAT PARA-7 OF THE PARTNERSHIP DEED CLEARLY MENTIONED THAT THE OUT STANDING CREDIT BALANCE OF ANY PARTNER INCLUDING MINOR SHALL CARRY INTEREST @ 10%. THE FIRM HAD PAID INTEREST TO OTHER PARTNERS. IT WAS ALSO OBSERVED BY HIM THAT T HE PARTNERS HAD DELIBERATELY NOT PUT A CLAUSE IN RELATION TO DEBIT BALANCE BUT THE FACT WAS THAT THE FIRMS FUNDS WERE DIRECTED FOR PERSONAL USE BY THE PARTNER S. THE TOTAL DEBIT BALANCE IN ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 7 THE ACCOUNT OF MR. SANJIV CHONA WAS RS.95,25,700/-. THE AO, THEREFORE, DISALLOWED NOTIONAL INTEREST @ 12% WHICH CAME TO RS .11,43,084/-. 4.1.1 IN APPEAL, THE ASSESSEE SUBMITTED THAT INTER EST HAD BEEN PAID ON BORROWINGS TAKEN IN THE EARLIER YEARS BUT OVERDRAW AL IN THE PARTNERS ACCOUNT WAS IN THE CURRENT YEAR. IT WAS ALSO SUBMITTED THA T THE ASSESSEE HAD SUFFICIENT FUNDS OF ITS OWN I.E. IT HAD SOLD FLAT AT RS.2.16 C RORES AND HAD RECEIVED INSTALLMENTS FROM 04-04-2005 ONWARDS. IT WAS ALSO S UBMITTED THAT THE ASSESSEE HAD SUFFICIENT RESERVE AT THE TIME OF GIVING INTERE ST-FREE WITHDRAWALS/ADVANCES TO SHRI SANJIV CHONA. AS REGARDS THE ADVANCE OF RS.50 LAKHS TO MR. SUNIL KAPUR, IT WAS SUBMITTED THAT THE ADVANCE HAD BEEN GIVEN OUT O F BUSINESS NECESSITY. THE CIT(A) OBSERVED THAT THERE WAS NO EVIDENCE TO SHOW THAT THE ASSESSEE HAD ENOUGH RESERVE AT THE TIME OF GIVING INTEREST-FREE WITHDRAWAL/ADVANCE TO MR. CHONA. THERE WAS ALSO NO EVIDENCE TO SHOW THAT THE ADVANCE TO MR. SUNIL KAPUR HAD BEEN GIVEN FOR THE PURPOSES OF BUSINESS. IT WAS ALSO OBSERVED BY HIM THAT THROUGHOUT THE YEAR THE ASSESSEE HAD OVERDRAFT BALA NCE IN THE COMMON OVERDRAFT ACCOUNT. HE, THEREFORE, CONFIRMED THE DISALLOWANCE MADE BY THE AO. 4.1.2 BEFORE US, THE LD. A.R. FOR THE ASSESSEE REI TERATED THE EARLIER SUBMISSIONS THAT THERE WAS NO CASE FOR ANY DISALLOWANCE AS THE LOANS AND BORROWING WERE FROM OWN FUNDS. IT WAS, HOWEVER, ADMITTED HAT THE A SSESSEE HAD NOT FILED ANY FUND FLOW STATEMENT FOR THE ENTIRE PERIOD BEFORE TH E LOWER AUTHORITIES. THE FUND FLOW STATEMENT HAD BEEN FILED ONLY FOR TWO MONTHS. THE LD. A.R., HOWEVER, AGREED THAT HE WOULD BE ABLE TO FILE THE FUND FLOW STATEME NT FOR THE ENTIRE PERIOD IN CASE FURTHER OPPORTUNITY WAS GIVEN. 4.1.3 THE LD. D.R., ON THE OTHER HAND, SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW AND ARGUED THAT THE DISALLOWANCE HAD BEEN PR OPERLY MADE. ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 8 4.1.4 WE HAVE PERUSED THE RECORDS AND CONSIDERED TH E MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF INTEREST ON TH E BORROWINGS MADE BY THE ASSESSEE ON THE GROUND THAT THE PARTNER MR. SANJIV CHONA HAD OVERDRAWN HIS ACCOUNT AND THE MONEY HAD BEEN USED FOR HIS PERSONA L PURPOSES. THERE WAS DEBIT BALANCE OF RS.20,34,201/- IN HIS FIXED CAPITAL ACC OUNT AND DEBIT BALANCE OF RS.74,91,500/- IN THE LOAN ACCOUNT. FURTHER, FROM T HE CURRENT ACCOUNT, MR. SANJIV CHONA HAD ADVANCED A SUM OF RS.50 LAKHS TO MR. SUNIL KAPUR AND ALSO WITHDRAWN MONEY FOR INVESTMENT IN SHARES. THE AO, T HEREFORE, MADE DISALLOWANCE OF INTEREST PROPORTIONATELY TO THE MON EY OVERDRAWN BY THE PARTNER, WHICH HAS BEEN CONFIRMED BY THE CIT(A). THE CASE OF THE ASSESSEE, HOWEVER, IS THAT IT HAD SUFFICIENT RESERVE OF ITS OWN ON THE DA TE OF WITHDRAWAL OF MONEY AS WELL AS ADVANCE GIVEN TO MR. SANJIV CHONA FROM THE ACCOUNTS OF THE FIRM. IT WAS ALSO SUBMITTED THAT INTEREST HAD BEEN PAID ON BORRO WINGS IN THE EARLIER YEARS AND THEREFORE IT COULD NOT BE SAID THAT THE BORROWINGS HAD BEEN UTILIZED IN MAKING ADVANCE/WITHDRAWAL BY THE PARTNER. HOWEVER, WE FIND THAT THE ASSESSEE HAD NOT SUBMITTED FUND FLOW STATEMENT FOR THE ENTIRE PERIOD TO PROVE ITS POINT. WE ALSO NOTE THAT THE CLAIM OF THE ASSESSEE THAT THE BORROW INGS HAD BEEN MADE IN EARLIER YEARS HAD ALSO NOT BEEN EXAMINED BY THE AUTHORITIES BELOW. IN OUR VIEW, THE MATTER REQUIRES FRESH EXAMINATION FOR ARRIVING AT A FAIR CONCLUSION IN THE MATTER. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AN D RESTORE THE MATTER BACK TO THE FILE OF AO FOR PASSING A FRESH ORDER AFTER NECE SSARY EXAMINATION AND AFTER ALLOWING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . 4.2 THE SECOND ISSUE IS REGARDING DISALLOWANCE OF R S.1,48,411/- OUT OF CONVEYANCE EXPENSES. THE AO NOTED THAT THE ASSESSEE HAD NOT GIVEN ANY DETAILS OF CONVEYANCE EXPENSES. THE AO, THEREFORE, DISALLOW ED ON ESTIMATE 20% OF SUCH EXPENSES AMOUNTING TO RS.1,48,411/-. IN APPEAL, THE CIT(A) NOTED THAT THE ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 9 EXPENSES CONSISTED OF SMALL AMOUNTS RELATING TO TAX I/BUS FARE AND THEREFORE WERE NOT VERIFIABLE AND HE, THEREFORE, CONFIRMED TH E DISALLOWANCE MADE BY THE AO, AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL. 4.2.1 WE HAVE HEARD BOTH THE PARTIES, PERUSED THE R ECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING ESTIMAT ED DISALLOWANCE OUT OF CONVEYANCE EXPENSES CONSISTING OF TAXI/BUS FARES ET C. THERE IS NO DISPUTE THAT FULL DETAILS WERE NOT GIVEN AND THESE EXPENSES WERE NOT FULLY VERIFIABLE. THEREFORE, DISALLOWANCE ON ESTIMATE IS JUSTIFIED. HOWEVER, IN OUR OPINION, IT WOULD MEET THE ENDS OF JUSTICE IF THE DISALLOWANCE IS RESTRICTED T O 10%. WE ORDER ACCORDINGLY. 4.3 THE THIRD DISPUTE IS REGARDING ADDITION OF RS.2 0,000/- ON ACCOUNT OF EMBEZZLEMENT OF CASH. AT THE TIME OF HEARING OF THE APPEAL, THE LD. A.R. FOR THE ASSESSEE DID NOT PRESS THIS GROUND OF APPEAL. THIS GROUND IS, THEREFORE, DISMISSED AS NOT PRESSED. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED, WHEREAS THAT BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 18TH DAY OF MARCH, 2011. SD/- SD/- (N.V. VASUDEVAN) (RAJENDRA SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 18TH MARCH , 2011. NG: COPY TO : 1.DEPARTMENT. 2.ASSESSEE. 3 CIT(A)-XVIII,,MUMBAI. 4 CIT, MC-XVIII,MUMBAI. ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 10 5.DR,C BENCH,MUMBAI. 6.MASTER FILE. (TRUE COPY) BY ORDER, ASST.REGISTRAR, ITAT, MUMBAI. ITA NOS.5369 & 5468/M/09 - CREAM CENTRE ICE CREAM MFG.CO. 11 DETAILS DATE INITIALS DESIGNA TION 1. DRAFT DICTATED ON 10-03-2011 SR.PS/ 2. DRAFT PLACED BEFORE AUTHOR 14-03-2011 SR.PS/ 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/ AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/ 6. KEPT FOR PRONOUNCEMENT ON SR.PS/ 7. FILE SENT TO THE BENCH CLERK SR.PS/ 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO THE AR 10. DATE OF DISPATCH OF ORDER