LATE SHRI KARIANNA M.SHETTY, MUMBAI V. ITO WD 14(3)3, MUMBAI

ITA 5848/MUM/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1148 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 1998-1999
• Appeal Filed On: 10-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R BHOOPATHI
• Assessee Lawyers: H D SAVE
• Keywords: Unexplained investment; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI C.N. PRASAD, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5848/M/2018 ASSESSMENT YEAR: 1998-99 LATE SHRI KARIANNA M. SHETTY, D.H. SAVE AND ASSOCIATES, 307 CHURCHGATE CHAMBERS, SIR VITHALDAS THAKURSEY ROAD, CHURCHGATE, MUMBAI 400 020 PAN: AADFN3167C VS. ITO WD 14(3)3, MUMBAI (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI H.D. SAVE, A.R. REVENUE BY : SHRI R. BHOOPATHI, D.R. DATE OF HEARING : 19.09.2019 DATE OF PRONOUNCEMENT : 17.12.2019 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 13.08.2014 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 1998-99. 2. THE ISSUE RAISED IN GROUND NO.1 & 2 IS AGAINST T HE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) READ W ITH SECTION 254 OF THE INCOME TAX ACT(HEREINAFTER REFERRED TO A S THE ACT) BEING ILLEGAL AS IN THE CASE OF ASSESSEE LATE SHRI KARIANNA M. SHETTY WHO WAS AN INDIVIDUAL ASSESSED UNDER GIR NO. 634 WAS ITA NO.5848/M/2018 LATE SHRI KARIANNA M. SHETTY 2 ASSESSED AS FIRM UNDER PAN NO.AADFN3167C DESPITE TH E LEGAL HEIR RESPONDED TO ALL THE NOTICES AND PRODUCED THE BOGUS ACCOUNTS. 3. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE ARE OF THE OPINION THAT THE ISSUE NEEDS TO BE EXAMINED AT THE LEVEL OF AO AS WE FIND MERITS IN TH E SUBMISSIONS OF THE LD AR THAT ASSESSEE WAS AN INDIVIDUAL AS HAS BEEN STATED IN THE ASSESSMENT ORDER, PAGE NO.1, ITEM NO.5 WHERE AS, THE PAN NO.AADFN3167C USED IS THAT OF A FIRM. ACCORDINGLY THE ISSUE IS RESTORED TO THE FILE OF THEN AO WITH A DIRECTION TO VERIFY THE SAME AND PASS THE PROPER ORDER AFTER AFFORDING A REASONA BLE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGL Y, THE ISSUE RAISED IN GROUND NO.1 & 2 IS ALLOWED FOR STATISTICA L PURPOSE. 4. THE ISSUE RAISED IN GROUND NO.3 IS AGAINST THE C ONFIRMATION OF ADDITION OF RS.3 LAKHS MADE TO THE INCOME OF TH E ASSESSEE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENTS BY TH E ASSESEE. 5. THE FACTS IN BRIEF ARE THAT THE ASSESSEE WAS RUN NING A HOTEL AND AO OBSERVED FROM THE BALANCE SHEET THAT THERE W ERE NO ASSETS WHICH ARE REQUIRED FOR OPERATING A DANCE BAR . ACCORDINGLY, THE AO ADDED RS.3 LAKHS AS UNEXPLAINED INVESTMENT TO THE INCOME OF THE ASSESSEE ON THE GRO UND THAT THERE WAS NO ASSETS APPEARING IN THE BALANCE SHEET OF THE ASSESSEE SUCH AS FURNITURE & FIXTURES, UTENSILS, A. C. ETC. WHICH WERE ESSENTIAL IN THE RUNNING OF A DANCE BAR. ACCO RDINGLY, THE AO ESTIMATED THE INVESTMENTS IN ASSETS AT RS.3 LAKH S AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE WHICH WAS AL SO UPHELD BY THE LD. CIT(A). ITA NO.5848/M/2018 LATE SHRI KARIANNA M. SHETTY 3 6. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ASSESSEE WAS DOING THE BUSINESS SINCE LONG I.E. MORE THAN 50 YEARS AND ALL THE ITEM S OF FURNITURE & FIXTURES, UTENSILS, A.C. WERE FULLY DEPRECIATED I N THE BOOKS OF ACCOUNTS OVER THE YEARS. THE LD. A.R. THEREFORE VE HEMENTLY SUBMITTED BEFORE US THAT SINCE THE BUSINESS OF THE ASSESSEE WAS EXISTING FROM MORE THAN 50 YEARS THERE WAS HARDLY A NY ASSETS LEFT IN THE BOOKS OF ACCOUNTS. MOREOVER, THE LD. A .R. SUBMITTED THAT THE AUTHORITIES BELOW HAVE FAILED TO POINT OUT ANY SPECIFIC ITEM WHICH WAS FOUND TO BE ON ACCOUNT OF UNEXPLAINE D INVESTMENTS. THE LD. D.R., ON THE OTHER HAND, REL IED ON THE ORDER OF LD. CIT(A). UNDER THESE FACTS AND CIRCUMST ANCES WHEN THE CASE OF THE ASSESSEE IS MORE THAN 50 YEARS OLD AND ASSESSEE IS NO MORE AND IN ABSENCE OF ANY SPEAKING AND REASO NED ORDER WE ARE LEFT WITH NO OPTION BUT TO DELETE THE ADDITI ON MADE ON ACCOUNT OF UNEXPLAINED INVESTMENTS. ACCORDINGLY, W E SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE SAME. 7. THE ISSUE IN GROUND NO.4 IS AGAINST UPHOLDING OF INCOME AT RS.1,95,000/- BY LD. CIT(A) AS AGAINST THE ESTIMATI ON OF INCOME AT RS.3,90,000/- BY THE AO. 8. THE AO OBSERVED THAT DURING THE COURSE OF ASSES SMENT PROCEEDINGS THAT THE COST OF SNACKS AND AERATED WATER DEBITED TO THE P&L ACCOUNT IS HIGHLY DISPROPORTIONATE TO TH E SALE OF ALCOHOL AND WINE DECLARED BY THE ASSESSEE AS INCOME . THE AO ALSO NOTED THAT THERE WAS A POSSIBILITY THAT THIS B EING A DANCE BAR THAT MONEY RECEIVED BY THE DANCING LADIES FROM THE CUSTOMER WAS SHARED WITH THE OWNER AND ACCORDINGLY HE ESTIMATED THE INCOME OF RS.4,50,000/- AND AFTER ALL OWING ITA NO.5848/M/2018 LATE SHRI KARIANNA M. SHETTY 4 DEDUCTION OF PROFIT ALREADY DECLARED RS.59,940/- AN D THUS THE CONCEALED OF INCOME WAS ESTIMATED AT RS.3,90,060/- . 9. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) RED UCED THE INCOME BY 50% AND DIRECTED THE AO TO MAKE THE ADDIT ION OF RS.1,95,030/-. WHILE DOING SO ,LD. CIT(A) OBSERVED THAT THE OBSERVATION OF THE AO THAT OWNER WAS SHARING THE MO NEY RECEIVED BY THE DANCING LADIES FROM THE CUSTOMERS I S NOT BEYOND IMAGINATION AND THUS CONFIRMED THE PART ADDITION. 10. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL ON RECORD, WE OBSERVE THAT THE ADDITION MADE BY THE AO AND AS SUSTAINED BY THE LD. CIT(A) AT RS.1,95,030/- IS PUR ELY A CONJUNCTURE AND ESTIMATION WITHOUT ANY MATERIAL. I N OUR OPINION, THE AUTHORITIES BELOW HAVE FAILED TO BRING ON RECORD ANY CONCRETE PROOF OR EVIDENCE TO CORROBORATE THEIR OBS ERVATIONS. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) A ND DIRECT THE AO TO DELETE THE ADDITION. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.12.2019. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.12.2019. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH ITA NO.5848/M/2018 LATE SHRI KARIANNA M. SHETTY 5 //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.