RESHMA ASHOK SHENVI, DOMBIVALI V. ITO WD 3(1), KALYAN

ITA 5968/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100675 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 24-09-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained investment

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN ,AM AND LALIT KUMAR, JM ./ I.T.A. NO . 5968 / MUM/20 14 ( / ASSESSMENT YEAR : 20 08 - 09 ) SMT. RESHMA ASHOK SHENVI, PROP OF TANVI DECORATOS AND CATERERS, A - 10, SNEHROOPMILAN CHS, NANDIVALI ROAD, P AND T COLONY, DOMIVALI - 421201. / VS. INCOME TAX OFFICER, 3(1), KALYAN ( / APPELLANT ) .. ( / RESPONDENT ) . / ./PAN/GIR NO. : BERPS1889B / APPELLANT BY SHRI PRADEEP D JOSHI / RSPONDENT BY SHRI AIRIJU JAIK A RAN / DATE OF HEARING : 20.8 . 201 5 / DATE OF P RONOUNCEMENT: 20.8. 201 5 / O R D E R PER B.R.BASKARAN, AM: THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 2.6.2014 PASSED BY THE LD. CIT(A) - 1, THANE AND IT RELATES TO ASSESSMENT YEAR 20 08 - 09 . 2 . THE FOLLOWING ISSUES ARE URGED IN THIS APPEAL: A) DISALLOWANCE OF PURCHASE OF COOKING GAS OF RS.1,19,390/ - ; B) ADDITION IN RESPECT OF DI F F ERENCE IN DEPOSIT WITH PATIDAR SAMAJ RS.3,77,455/ - ; AND C) ADHOC ADDITION OUT OF EXPENSES OF RS.50,000 / - ITA NO. 5968 / MUM/20 14 2 3 . WE HEARD THE PARTI ES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF CATERING UNDER THE NAME OF STYLE OF M /S TANVI DECORATORS AND CATERERS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO WANTED TO EXAMINE THE COOKING GAS EXPENSES CLAIMED BY THE ASSES SEE. THE ASSESSEE S T ATED THAT S HE HAS PURCHASED COOKING GAS FROM M/S CHATANYA GAS SERVICES. HENCE, THE AO ISSUED NOTICE U/S 133 (6) OF THE ACT TO THE ABOVE SAID GAS AGENCY CALLING FOR THE DETAILS. HOWEVER, THE SAID GAS AGENCY REPLIED THAT IT HAS NO T CAR RIED OUT ANY TRANSACTION WITH THE ASSESSEE. WHEN POINTED OUT THE REPLY GIVEN BY M/S CHATANYA GAS SERVICES, THE ASSESSEE SUBMITTED THAT SHE HAD PURCHASED THE GAS FROM THAT AGENCY IN THE IMMEDIATELY PRECEDING YEAR AND DURING THE YEAR UNDER CONSIDERATION, TH E COOKING GAS WAS PURCHASED FROM M /S MADHUKRISHNA GAS SERVICE. IN SUPPORT OF THE SAME, THE ASSESSEE FURNISHED A CONFIRMATION LETTER OBTAINED FROM M/S MADHUKRISHNA GAS SERVICE . HOWEVER , THE AO DID NOT ACCEPT THE SAME FOR THE REASON THAT THE AMOUNT OF PURC HASE WAS SHOWN AS OUTSTANDING AS PER THE CONFIRMATION LETTER. THE LD. CIT(A) ALSO CONFIRMED THE SAME. 4 . THE LD. COUNSEL APPEARING FOR THE ASSESSEE INVITED OUR ATTENTION TO THE CONFIRMATION LETTER GIVEN BY M /S MADHUKRISHNA GAS SERVICE AND SUBMITTED THA T THE ASSESSEE CANNOT CARRY ON COOKING ACTIVITIES WITHOUT THE USE OF COOKING GAS . HE SUBMITTED THAT THE ASSESSEE HAD WRONGLY GIVEN THE NAME OF THE GAS AGENCY INITIALLY, BUT LATER SHE HAS CORRECTED THE SAME AND ALSO FURNISHED THE CONFIRMATION LETTER. ACCO RDINGLY HE SUBMI TTED THAT THERE IS NO JUSTIFICATION FOR DISBELIEVING THE CLAIM OF THE ASSESSEE. THE LD D.R, ON THE CONTRARY, PLACED STRONG RELIANCE ON THE ORDER PASSED BY LD CIT(A). A PERUSAL OF THE CONFIRMATION LETTER FURNISHED BY M/S MADHUKRISHNA GAS S ERVICE WOULD SHOW THAT THE ABOVE SAID G AS AGENCY HAS SHOWN THE DETAILS OF SUPPLY OF GAS AS WELL AS THE DETAILS OF RECEIPT OF PAYMENT S. THE ITA NO. 5968 / MUM/20 14 3 ASSESSEE HAS MADE THE PAYMENTS BY WAY OF CASH AS WELL AS BY WAY OF CHEQUE. HENCE, THE OBSERVATION OF THE AO THAT THE ENTIRE AMOUNT WAS SHOWN AS OUTSTANDING IS WRONG. FURTHER, IT IS A KNOWN FACT THAT THE A SSESSEE CANNOT RUN THE CATERING SERVICES WITHOUT PURCHASING COOKING GAS. WE FURTHER NOTICE THAT THE AO HAS DISALLOWED THE ENTIRE CLAIM. HENCE, WE ARE OF THE VIEW THAT T HE TAX AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE FACTS RELATING TO THIS ISSUE. U NDER THESE SET OF FACTS, WE ARE OF THE VIEW THAT THERE IS NO REASON TO SUSPECT THE CLAIM MADE BY THE ASSESSEE IN VIEW OF THE DISCUSSIONS MADE SUPRA. ACCORDINGLY, WE SET AS IDE THE ORDER OF LD. CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE CLAIM MADE UNDER THE HEAD OF COOKING GAS. 5 . THE NEXT ISSUE RELATES TO THE ADDITION OF RS.3,77,455/ - . THE ASSES SEE HAD MADE DEPOSITS AMOUNTING TO RS.13,77,455/ - WITH PATIDHAR SAMA J MANDAL (THANE), DOMBIVALI AND SHOWED THE SAME IN THE ASSET SIDE OF BALANCE SHEET. HOWEVER, THE CONFIRMATION LETTER RECEIVED FROM PATIDHAR SAMAJ MANDAL STATED THAT THEY HAVE RECEIVED DEPOS I T OF RS.10 LAKHS ONLY FROM THE ASSESSEE. HENCE, THE AO ASSESSED THE DIFFERENCE AMOUNT OF RS.3,77,455/ - AS INCOME OF THE ASSESSEE. THE LD.CIT(A) ALSO CONFIRMED THE SAME . 6 . THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD PAID AN AMOUNT OF RS.3,77,455 / - AS ADVANCE ROYALTY IN CONNECTION WIT H BUILDING TAKEN ON LEASE FROM M/S PATIDHAR SAMAJ MANDAL IN ADDITION TO THE DEPOSIT AMOUNT OF RS.10.00 LAKHS . H E SUBMITTED THE PATIDHAR SAMAJ MANDAL HAVE DULY CONFIRMED THE DEPOSIT AMOUNT PAID BY THE ASSESSEE AND THEY DID NOT MENTION ANYTHING ABOUT THE PA YMENT OF ADVANCE ROYALTY. THE LD. COUNSEL FURTHER SUBMITTED THAT THE PAYMENT WAS MADE IN THE EARLIER YEAR AND HENCE THE SAME CANNOT BE ASSESSED DURING ITA NO. 5968 / MUM/20 14 4 THE YEAR UNDER CONSIDERATION. FURTHER, THE LD. COUNSEL SUBMITTED THAT , IF THE OTHER PARTY FAIL S TO ACCO UNT THE PAYMENT MADE BY THE ASSESSEE, THEN THE ASSESSEE CANNOT BE PENALIZED BY MAKING ADDITION . 7 . WE HAVE HEARD THE LD. DR ON THIS ISSUE . W E FIND MERIT S IN THE CONTENTIONS OF THE ASSESSEE . F IRST OF ALL , IT IS STATED THAT THE PAYMENT WAS NOT MA D E DURING THE YEAR UNDER CONSIDERATION AND HENCE THE SAME CANNOT BE SUBJECTED TO EX AMINATI ON DURING THIS YEAR. SECONDLY , THE ASSESSEE HAS DULY ACCOUNT ED THE PAYMENT AND HENCE IT CAN N OT FALL EITHER UNDER THE CATEGORY OF UNEXPLAINED INVESTMENT . THIRDLY, THE ABOVE S AID AMOUNT WAS NOT PAID AS DEPOSIT, BUT AS ADVANCE ROYALTY AND HENCE THE SAMAJ MANDAL DID NOT CONFIRM THE SAME. THE AO COULD HAVE CALLED FOR FURTHER CLARIFICATIONS FROM THE SAMAJ MANDAL, WHICH HAS NOT BEEN DONE. THE LD D.R ALSO COULD NOT EXPLAIN ABOUT THE AUTHORITY OR THE SECTION UNDER WHICH THE IMPUGNED ADDITION COULD HAVE BEEN MADE. UNDER THESE SET OF FACTS, WE DO NOT FIND ANY MERIT IN THE ADDITION OF RS.3,77,455/ - MADE BY THE AO . ACCORDINGLY, WE SET ASIDE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE AMOUNT. 8 . THE NEXT ISSUE RELATES TO THE ADDITION OF RS.50,000/ - MADE BY THE AO OUT OF THE EXPENSES CLAIMED BY THE ASSESSEE . THE AO DISALLOWED A SUM OF RS.50,000/ - OUT OF EXPENSES CLAIMED BY THE ASSESSEE , S INCE MOST OF THE EXPENSES WERE SUP PORTED BY SELF MADE VOUCHERS. THE LD. CIT(A) ALSO CONFIRMED THE SAME. 9 . BEFORE US, THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS CLAIMED A SUM OF RS.3,19,085/ - ONLY AS EXPENDITURE UNDER VARIOUS HEADS. THE MAJOR EXPENSE INCURR ED IS TOWARDS SALARY AND WAGES AMOUNTING TO RS.2,79,200/ - . A CCORDING LY HE SUBMITTED THAT THE DISALLOWANCE OF RS.50,000/ - IS NOT WARRANTED. ITA NO. 5968 / MUM/20 14 5 10 . WE NOTICE THAT THE EXPENSES INCURRED BY THE ASSESSEE UNDER THE VARIOUS HEAD S READ AS UNDER: S.NO. PARTICULARS AMOUNT RS. 1 REPAIRS AND MAINTENANCE 9,522.00 2 SALARY AND WAGES 2,79,200.00 3 SUNDRY EXPENSES 23,023.00 4 CONVEYANCE 7,339.00 TOTAL 3,19,085.00 ACCORDING TO THE ASSESSEE THE SALARY AND WAGES EXPENDITURE IS DULY SUPPORTED BY THE VOUCHERS. THE A GGREGATE OF REMAINING EXPENSES CLAIMED BY THE ASSESSEE WAS RS.39,885 / - . HENCE , THE DISALLOWANCE OF RS.50,000/ - MADE BY THE AO IS ON HIGHER SIDE. HOWEVER, SINCE THE ASSESSEE HAS MAINTAINED SELF MADE VOUCHERS, WHICH IS NOT SUSCEPTI BLE FOR VERIFICATION, WE ARE OF THE VIEW THAT A SUM OF RS.5000/ - SHOULD BE DISALLOWED TO TAKE CARE OF THE DEFICIENCY, IF ANY, IN THE MAINTENANCE OF VOUCHERS . WE ORDER ACCORDINGLY. IN VIEW OF THE ABOVE , THE ORDER OF LD. CIT(A) ON THIS ISSUE IS SET ASIDE AND THE AO IS DIRECTE D TO SUSTAIN THE DISALLOWANCE TO THE EXTENT OF RS.5000/ - ONLY. 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . PRONOUNCED ACCORDINGLY ON 20 TH AUGUST 2015. 20 AUGUST, 2015 SD SD ( LALIT KUMAR) ( B.R. BAS KARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 20 AUG , 2015 . . . ./ SRL , SR. PS ITA NO. 5968 / MUM/20 14 6 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / T HE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI