AJAY C MEHTA & AKSHAY J DOSHI, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX 24(1), MUMBAI

ITA 6064/MUM/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0237 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 29-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GORADIA
• Keywords: Opportunity of being heard; Principle of natural justice

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) I.T.A. NO. 6064 /MUM/ 2017 (ASSESSMENT YEAR 20 09 - 10 ) M/S. AJAY C. MEHTA & AKSHAY J. DOSHI 106, SHREEPAL INDUSTRIAL ESTATE S.V. ROAD, JOGESHWARI (WEST) MUMBAI - 400 102. PAN :AAGFA2685R V S . DCIT - 24(1) ROOM NO. 503 BANDRA KURLA COMPLEX BANDRA MUMBAI - 400 51. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY SHRI MAHAVEER JAIN & SHRI PRATEEK JAIN DEPARTMENT BY MS. ARJU GORADIA DATE OF HEARING 21. 2 . 201 8 DATE OF PRONOUNC EMENT 21 . 2 . 201 8 O R D E R THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 06 - 06 - 2017 PASSED BY LD CIT(A) - 42, MUMBAI AND IT RELATES TO THE ASSESSMENT YEAR 2009 - 10. THE ASSESSEE IS AGGRIEVED BY THE DECISION RENDERED BY LD CIT(A) ON THE FOLLOWING ISSUES: - (A) ADDITION OF RS.10.00 LAKHS RECEIVED FROM M/S PANSU CONSTRUCTION (B) ADDITION OF RS.3.00 LAKHS RECEIVED FROM M/S CHAUHAN BROTHERS (C) DISALLOWANCE OF INTEREST EXPENSES RS.4,49,674/ - . 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSES SEE IS A PARTNERSHIP FIRM AND IS ENGAGED IN THE BUSINESS OF PURCHASE AND SALE OF TDR RIGHTS. 3. THE FIRST ISSUE RELATES TO THE ADDITION OF RS.10.00 LAKHS RECEIVED FROM M/S PANSU CONSTRUCTION. DURING THE COURSE OF ASSESSMENT PROCEEDING, THE AO NOTICE D THAT THE ASSESSEE HAS SHOWN LIABILITY OF RS.10.00 LAKHS AGAINST THE NAME OF M/S PANSU CONSTRUCTION & DEVELOPMENT P LTD. THE ASSESSEE SUBMITTED THAT IT HAS RECEIVED ADVANCE FROM THE ABOVE SAID PARTY AGAINST M/S. AJAY C. MEHTA & AKSHAY J. DOSHI 2 SUPPLY OF TDR RIGHTS. THE AO MADE ENQUIRIES WI TH M/S PANSU CONSTRUCTION, WHO CONFIRMED THE PAYMENT OF RS.10.00 LAKHS. HOWEVER IT STATED THAT HE HAS ALREADY RECEIVED TDR RIGHTS FROM THE ASSESSEE. UNDER THESE SET OF FACTS, THE AO HELD THAT THE ABOVE SAID AMOUNT OF RS.10.00 LAKHS IS ASSESSABLE IN THE H ANDS OF THE ASSESSEE AND ACCORDINGLY ASSESSED THE SAME. 4. BEFORE LD CIT(A), THE ASSESSEE CONTENDED THAT IT IS STILL LIABLE TO PAY RS.10.00 LAKHS TO M/S PANSU CONSTRUCTION AND FURTHER THE AO DID NO CONFRONT THE INFORMATION RECEIVED FROM THE ABOVE SAID PARTY WITH THE ASSESSEE. THE LD CIT(A) WAS NOT CONVINCED WITH THE CONTENTIONS OF THE ASSESSEE. HE TOOK THE VIEW THAT IT IS THE RESPONSIBILITY OF THE ASSESSEE TO SHOW THAT THE ABOVE SAID AMOUNT OF RS.10.00 LAKHS WAS STILL OUTSTANDING. ACCORDINGLY HE CONF IRMED THE ABOVE SAID ADDITION. 5. BEFORE ME, THE LD A.R REITERATED THE CONTENTIONS MADE BEFORE THE TAX AUTHORITIES. ON THE CONTRARY, THE LD D.R SUPPORTED THE ORDER PASSED BY LD CIT(A). 6. I NOTICE THAT THE AO HAS ASSESSED THE ABOVE SAID AMOUNT OF RS.10.00 LAKHS ON THE BASIS OF INFORMATION RECEIVED FROM M/S PANSU CONSTRUCTION. I NOTICE THAT THE ASSESSING OFFICER DID NOT CONFRONT THE SAME WITH THE ASSESSEE. THE CONTENTION OF THE ASSESSEE IS THAT THE ABOVE SAID AMOUNT OF RS.10.00 LAKHS IS STILL OUT STANDING, WHILE THE ABOVE SAID PARTY HAS STATED THAT IT HAS ALREADY RECEIVED TDR RIGHTS. IN VIEW OF CONTRADICTORY STAND BETWEEN THE PARTIES, IN MY VIEW, THE AO SHOULD HAVE CONFRONTED THE INFORMATION RECEIVED FROM M/S PANSU CONSTRUCTION WITH THE ASSESSEE A S IT WOULD HAVE PROMOTED THE CAUSE OF NATURAL JUSTICE. ACCORDINGLY I AM OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE AO. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF T HE AO WITH THE DIRECTION TO CONFRONT THE INFORMATION RECEIVED FROM M/S PANSU CONSTRUCTION AND ALSO TO COMPLY WITH THE REQUIREMENT OF LAW IN THIS REGARD. THEREAFTER, THE AO MAY TAKE APPROPRIATE DECISION IN ACCORDANCE WITH THE LAW. M/S. AJAY C. MEHTA & AKSHAY J. DOSHI 3 7. THE NEXT ADDITION RELATES TO CESSATION OF LIABILITY OF RS.3.00 LAKHS STANDING IN THE NAME OF M/S CHAUHAN BROTHERS. SINCE THE AMOUNT WAS SHOWN OUTSTANDING FOR MORE THAN FOUR YEARS, THE AO ASSESSED THE ABOVE SAID AMOUNT AS CEASED LIABILITY U/S 41(1) OF THE ACT. THE LD CIT(A ) ALSO CONFIRMED THE SAME. THE CASE OF THE ASSESSEE IS THAT THE ABOVE SAID AMOUNT IS STILL OUTSTANDING. THE LD A.R ALSO PLACED RELIANCE ON HOST OF CASE LAWS TO CONTEND THAT THE AMOUNT SHOWN AS LIABILITY CANNOT BE ASSESSED U/S 41(1) OF THE ACT. HOWEVER, I AM OF THE VIEW THAT IT IS THE DUTY OF THE ASSESSEE TO SHOW THAT THE AMOUNT IS STILL PAYABLE, SINCE THE ASSESSEE HAS CLAIMED THAT IT HAS RECEIVED EXCESS PAYMENT FROM THE ABOVE SAID ASSESSEE. UNDER THE THEORY OF HUMAN PROBABILITIES, NO ONE WILL LEAVE THE EXCESS PAYMENT UNCOLLECTED FOR ABOUT FOUR YEARS. I NOTICE THAT THE ASSESSEE HAS NOT FURNISHED ANY DOCUMENT TO PROVE THAT THE LIABILITY IS STILL PAYABLE. HENCE, IN THE INTEREST OF NATURAL JUSTICE, I AM OF THE VIEW THAT THE ASSESSEE SHOULD BE GIVEN ONE MOR E OPPORTUNITY TO PROVE THE LIABILITY. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING THIS ISSUE AFRESH. 8. THE NEXT ISSUE RELATES TO THE DISALLOWANCE OF INTEREST EXPENDITUR E OF RS.4,49,674/ - . THE AO NOTICED THAT THE ASSESSEE HAS ADVANCED LOANS AGGREGATING TO RS.2.09 CRORES AND HAS TAKEN LOANS TO THE TUNE OF RS.2.65 CRORES. THE AO NOTICED THAT THE ASSESSEE WAS PAYING INTEREST @ 12%, WHILE IT WAS COLLECTING INTEREST @ 6%. HE NCE THE AO DISALLOWED CLAIM OF EXTRA INTEREST OF RS.4,49,674/ - , BEING INTEREST PAID IN EXCESS OF 6%. THE LD CIT(A) ALSO CONFIRMED THE SAME. 9. THE CASE OF THE LD A.R IS THAT THE ASSESSEE HAS TAKEN INTEREST BEARING LOAN OF RS.70.00 LAKHS AND THE REMAINI NG LOANS ARE INTEREST FREE. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS USED INTEREST FREE FUNDS TO MAKE LOANS AT LOWER RATE OF INTEREST. I NOTICE THE AO HAS FAILED TO CONSIDER THESE BASIC FACTS AND HENCE I AM OF THE VIEW THAT THIS ISSUE ALSO REQUIRES FRE SH EXAMINATION. ACCORDINGLY I SET ASIDE THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO FOR EXAMINING IT AFRESH. M/S. AJAY C. MEHTA & AKSHAY J. DOSHI 4 10. NEEDLESS TO MENTION, THE ASSESSEE SHOULD BE GIVEN ADEQUATE OPPORTUNITY OF BEING HEARD. 11. I N THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PRONOUNCED IN THE COURT ON 2 1.2. 201 8 . SD/ - (B.R.BASKARAN) ACCOUNTANT MEMBER MUMBAI ; DATED : 21 / 2 / 20 1 8 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( SENIOR P RIVATE S ECRETARY ) P S ITAT, MUMBAI