MOHANLAL I. MODI, MUMBAI V. ITO 25(3)(1), MUMBAI

ITA 6629/MUM/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0278 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-11-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income; Depreciation; Commercial expediency
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH B , MUMBAI BEFORE SHRI P.K.BANSAL, VICE PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO.6629/MUM/2013 FOR (ASSESSMENT YEAR : 2008-09 ) MR. MOHANLAL I. MODI MR. R.R. BANDEKAR (CHARTERED ACCOUNTANT), B-8, SAARTHAK, AAREY ROAD, GOREGAON (EAST), MUMBAI-400063. PAN: AAIPM2224J VS. ITO-25(3)(1), PRATYAKSHAKAR BHAVAN, BKC, BANDRA (EAST), MUMBAI-400051. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI V.K. AGARWAL ( DR) DATE OF HEARING : 01.06.2017 DATE OF PRONOUNCEMENT : 14.06.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JM: 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF THE IN COME TAX ACT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF I NCOME TAX (APPEALS) CIT(A)- 35, MUMBAI DATED 26.08.2013 FOR ASSESSMENT YEAR (AY ) 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES AND IN LAW, T HE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT,1961, IS IN VALID AND BAD IN LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN PARTLY ALLOWING THE APPEAL. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN PARTLY ALLOWING THE APPEAL AND T HAT TOO WITHOUT EVEN APPRECIATING FULLY AND PROPERLY THE FACTS OF THE CA SE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ACTION OF THE A.O . IN DISALLOWING THE 2 ITA NO. 6629/M/2013 MR. MOHANLAL I. MODI INTEREST OF RS.1,59,959/- AND ASSESSING THE AMOUNT OF INTEREST OF RS.1,59,959/- AS BUSINESS INCOME. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ACTION OF THE A.O . IN DISALLOWING THE DEPRECIATION OF RS. 146,921/- AND ASSESSING THE SAM E AS BUSINESS INCOME. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN CONFIRMING THE ACTION OF THE A.O . IN DISALLOWING THE EXPENSES TO THE EXTENT OF RS. 85,185/- AND ASSESSIN G THE SAME AS BUSINESS INCOME. 1) 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED C.I.T.(A) ERRED IN NOT DEALING WITH THE GRO UNDS OF APPEAL. PETITIONERS ALSO REQUEST TO DELETE THE PENALTIES AN D THE INTEREST CHARGED UNDER VARIOUS SECTIONS OF THE INCOME TAX ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF TRADING OF TEXTILE UNDER THE PROPRIETARY CONCERNED NAMELY M/S RAJESH TEXTILE, FILED HIS RETURN OF INCOME FOR RELEVANT AY ON 29.09.2008, DECLARING TOTAL INCOME AT RS. 5,18,380/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 31.12.2010. THE ASSESSING OFFICER (AO) WHILE FRAMING THE ASSESSMENT ORDER BES IDES OTHER ADDITION AND DISALLOWANCE MADE THE DISALLOWANCE OF INTEREST EXPE NSES OF RS. 1,59,959/-, DEPRECIATION OF RS 1,46,921 AND EXPENSES OF RS. 2,12,960/-. ON APPEAL BEFORE T HE LD. CIT(A), THE DISALLOWANCE OF INTEREST EXPENSES A ND DEPRECIATION WAS SUSTAINED, HOWEVER, THE DISALLOWANCE ON ACCOUNT OF EXPENSES WA S RESTRICTED TO RS. 85,185/-. FURTHER, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE WAI TING FOR SUFFICIENT TIME AND PASS OVER OF THE MATTER. WE HAVE NOTICED THAT ASSES SEE HAS NEVER CAME TO ATTEND AND TO PERSUE HIS APPEAL AFTER FILING IT. THE NOTIC E FOR HEARING OF APPEAL WAS SENT ON A NUMBER OF TIME, AT THE ADDRESS PROVIDED IN COLUMN -10 OF FORM NO. 36(APPEAL FORM). NEITHER THE ASSESSEE NOR HIS C.A., WHOSE ADD RESS WAS PROVIDED IN APPEAL 3 ITA NO. 6629/M/2013 MR. MOHANLAL I. MODI MEMO, CAME FORWARD TO ATTEND THE PROCEEDING. WE HAV E FURTHER NOTICED THAT NOTICE FOR HEARING FOR 01.06.2017 WAS DULY SERVED BY WAY O F RPAD, THE ACKNOWLEDGEMENT OF SERVICE OF NOTICE IS AVAILABLE O N RECORD. THUS, WE LEFT NO OPTION EXCEPT TO HEAR THE SUBMISSION OF LD. DR FOR THE REVENUE. 4. THE LD. DR FOR THE REVENUE ARGUED THAT BEFORE LOWER AUTHORITY, THE ASSESSEE FAILED TO PROVE THE COMMERCIAL EXPEDIENCY REGARDING ADVANC ING THE INTEREST FREE LOAN. THUS, THE DISALLOWANCE OF INTEREST EXPENSES WAS RIG HTLY DISALLOWED BY AO AND UPHELD BY LD. CIT(A). FOR DISALLOWANCE OF DEPRECIAT ION, THE LD. DR FOR THE REVENUE ARGUED THAT THE ASSESSEE FAILED TO PRODUCE BEFORE A O AS WELL AS BEFORE THE LD. CIT(A) REGARDING MANUFACTURING CONCERNED OR UTILIZI NG THE COMMERCIAL ASSETS . AS NO EVIDENCE WAS PRODUCED BY ASSESSEE, THE LOWER AUT HORITY RIGHTLY DISALLOWED THE DEPRECIATION. MOREOVER, THE ASSESSEE CLAIMED HIMSEL F AS A TRADER AND NOT A MANUFACTURER. AGAINST, THE THIRD GROUND OF APPEAL I .E. DISALLOWANCE OF EXPENSES WITH REGARD TO TRAVELLING, SALE PROMOTION EXPENSES AND SALARY, IT WAS ARGUED THAT ALL EVIDENCE WHICH WERE FILED WERE SELF-SERVING DOC UMENT AND NO CONFIRMATION OF THIRD PARTIES WERE FILED. HOWEVER, THE LD. CIT(A) C ONSIDERING THE TOTALITY OF THE FACT RESTRICTED THE DISALLOWANCE TO 10% OF EXPENSES CLAI MED, WHICH IS QUITE REASONABLE AND THE ASSESSEE IS NOT ENTITLED FOR FURTHER RELIEF . 5. WE HAVE CONSIDERED THE SUBMISSION OF LD. DR FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FOUND THAT THE SUB MISSIONS OF LD. DR FOR THE REVENUE ARE INCONSONANCE WITH THE FACT AVAILABLE ON RECORD. THE ASSESSEE HAD NEITHER COME FORWARD NOR FILED ANY DOCUMENTARY EVI DENCE TO SUBSTANTIATE HIS CLAIM BEFORE US. THUS, WE DO NOT FIND ANY MERIT IN ALL T HE THREE EFFECTIVE GROUNDS OF APPEAL RAISED IN GROUND NO. 4, 5 & 6 OF THE PRESENT APPEAL. 4 ITA NO. 6629/M/2013 MR. MOHANLAL I. MODI 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON THI S DAY OF JUNE, 2017. SD SD/- (P.K. BANSAL) (PAWAN SINGH) VICE-PRESIDENT JUDICIAL MEMBER MUMBAI; DATED 14/06/2017 S.K.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/