COLLECTIVE HEADS, MUMBAI V. ACIT - 31(1), MUMBAI

ITA 702/MUM/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5444 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 01-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SUBHASH SHETTY
• Keywords: Unexplained cash credit; Principle of natural justice; Corroborative evidences; Capital expenditure; TDS; Set aside
• Section: 40A(3); 143(3); 142(1); 250; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER & SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO. 702/MUM/2017 ( ASSESSMENT YEARS: 2012-13 ) COLLECTIVE HEADS 520, ATLANTA ESTATE, NEAR VIRAVANI ESTATE, GOREGAON (E), MUMBAI 400 063 / VS. ACIT 31(1) MUMBAI. ./ ./ PAN/GIR NO. : AAHFC2327F ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI SUBHASH SHETTY, AR / RESPONDENT BY : SHRI MALLIKARJUN UTTURE, DR / DATE OF HEARING 01/10/2020 !'# / DATE OF PRONOUNCEMENT 06/10/2020 / O R D E R PER PAVAN KUMAR GADALE - JM: THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF CIT(A) -42, MUMBAI PASSED U/S 143(3) AND 250 OF THE INCOME TAX ACT, 1961. AT THE TIME OF HEARING, THE LD.AR SUBMITTED THAT THERE IS A DELAY OF 95 DAYS IN FILING THE APPEAL BE FORE THE TRIBUNAL AND SUPPORTED WITH CONDONATION APPLICATION AND AFFIDAVIT. THE LD.DR RAISED OBJECT IONS ITA NO . 702/MUM/2017 COLLECTIVE HEADS, MUMBAI. - 2 - ON CONDONATION OF DELAY. WE CONSIDERED THE FACTS IN THE APPLICATION, AND FOUND THE DELAY IS REASONABLE. ACCORDINGLY, WE CONDONE THE DELAY AND THE APPEAL IS ADMITTED AND HEARD. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT(A) COMMITTED A GROSS ERROR OF LAW A ND FACT IN ENHANCING THE APPELLANTS INCOME BY RS. 19.56,638/- ON ACCOUNT OF ALLEGED CASH CREDIT IN PA RTNERS ACCOUNT AND SALE OF SCRAP. 2. THE LD. CIT(A) GROSSLY ERRED IN MAKING AN ADDIT ION OF RS. 14,52,422/- U/S 68 OF THE ACT ON THE GROUND OF UNEXPLAINED CASH CREDIT IN PARTNERS ACCOUNT DURING THE RELEVANT PREVIOUS YEAR. 3. THE LD. CIT(A) GROSSLY ERRED IN NOT APPRECIATIN G THE SUBMISSIONS OF THE APPELLANT THAT WHENEVER ANY FUND IS URGENTLY REQUIRED BY THE APPELLANT DURING THE COURS E OF ITS BUSINESS, THE SAME WAS BROUGHT BY THE PARTNERS FROM THEIR PERSONAL SOURCE OF INCOME, WHICH ARE ALREADY EXPLAINED TO THE REVENUE. 4. THE LD. CIT(A) COMMITTED A GROSS ERROR OF LAW A ND FACT IN MAKING AN ADDITION OF RS. 5,04,216/- ON ACC OUNT OF SALE OF SCRAP PURELY ON ESTIMATION WITHOUT ANY B ASIS WHATSOEVER. 5. THE LD. CIT(A) GROSSLY ERRED IN REJECTING THE SUBMISSIONS OF THE APPELLANT THAT IT HAD NOT EARNED INCOME ON SALE OF SCRAP. ITA NO . 702/MUM/2017 COLLECTIVE HEADS, MUMBAI. - 3 - 2. THE BRIEF FACTS OF CASE ARE THAT THE ASSESSEE IS PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF EVENT MANAGEMENT, INTEGRATED MARKETING COMMUNICATION AGENCIES AND FILED THE RETURN OF INCOME FOR THE A.Y 2012-13 ON 29.09.2012 WITH A TOTAL INCOME OF RS. 26,53,380/-.SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AND THE NOTICE U/S 143(2) AND 142(1) OF T HE ACT WERE ISSUED. IN COMPLIANCE, LD. AR OF THE ASSES SEE APPEARED FROM TIME TO TIME AND SUBMITTED THE DETAIL S INCLUDING TAX AUDIT REPORT AND FINANCIAL STATEMENTS . THE A.O ON PERUSAL OF THE AUDITED ACCOUNTS FOUND THAT THE ASSESSEE HAS CLAIMED EXPENDITURE WHICH IS IN THE NATURE OF CAPITAL EXPENDITURE AND DISALLOWED TH E SAME. SIMILARLY, A.O MADE DISALLOWANCE U/S 40(A)(I A) OF THE ACT FOR NON DEDUCTION OF TDS ON EXPENSES OF RS.10,67,607/-AND DISALLOWANCE U/S 40A(3) OF THE AC T FOR CASH PAYMENTS EXCEEDING THE LIMIT OF RS. 9,00,375/- AND ADDITION OF UNDISCLOSED INTEREST INCOME ON FIXED DEPOSITS RS. 58,760/-.THE AO FINAL LY ASSESSED THE TOTAL INCOME OF RS.56,90,260/-AND PASSED THE ORDER U/S 143(3) OF THE ACT DATED 12.03.2015. AGGRIEVED BY THE ORDER, THE ASSESSEE HA S FILED AN APPEAL BEFORE THE CIT(A). THE LD.CIT(A) ITA NO . 702/MUM/2017 COLLECTIVE HEADS, MUMBAI. - 4 - CONSIDERED THE GROUNDS OF APPEAL, FINDINGS OF AO, SUBMISSIONS OF THE ASSESSEE AND HAS GRANTED PARTIA L RELIEF ON CLAIMS AND PARTLY ALLOWED THE APPEAL OF T HE ASSESSEE. AGGRIEVED BY THE CIT(A) ORDER, THE ASSESS EE HAS FILED AN APPEAL WITH THE TRIBUNAL. 3. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESS EE SUBMITTED THAT CIT(A) HAS ERRED IN IGNORING THE FAC TS THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND IN ITS FIRST YEAR OF BUSINESS OPERATIONS. THE ASSESSEE HAS FILE D EXPLANATIONS ON CLAIMS BEFORE THE LOWER AUTHORITIES AND THE CIT(A) HAS OVERLOOKED THE INFORMATION. FURTHER THE LD.AR PRAYED FOR AN OPPORTUNITY TO SUBSTANTIATE THE CASE WITH THE EVIDENCES. CONTRA, T HE LD.DR SUPPORTED THE ORDERS OF THE CIT(A). 4. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE CONSIDERED THE SUBMISSIONS O F THE LD. AR ON THE ASPECTS OF FIRST YEAR OF OPERATIO NS OF THE PARTNERSHIP FIRM. FURTHER, THE FACTS AND THE DETAILS FILED BY THE ASSESSEE, PLAY A VITAL ROLE IN DECISION MAKING AND WHEREAS THE CIT(A) HAS GRANTED PARTIAL RELIEF TO THE ASSESSEE. THE CONTENTIONS OF THE LD. AR THAT NO PROPER OPPORTUNITY OF HEARING WAS ITA NO . 702/MUM/2017 COLLECTIVE HEADS, MUMBAI. - 5 - PROVIDED BEFORE THE CIT(A) TO SUBSTANTIATE THE CASE WITH SUPPORTING EVIDENCES. WE CONSIDERING THE PRINCIPLES OF NATURAL JUSTICE, GRANT ONE MORE OPPORTUNITY OF HEARING TO THE ASSESSEE. ACCORDINGLY , WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THE EN TIRE DISPUTED ISSUE TO THE FILE OF THE CIT(A) TO ADJUDIC ATE AFRESH ON MERITS AND PASS A SPEAKING ORDER. IT IS NEVERTHELESS TO MENTION THAT, THE ASSESSEE SHOULD B E PROVIDED ADEQUATE OPPORTUNITY OF HEARING AND SHALL COOPERATE IN SUBMITTING THE INFORMATION FOR EARLY DISPOSAL OF THE APPEAL AND THE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 06.10.2020 SD/- SD/- (SHAMIM YAHYA) (PAVAN KUMAR GADALE ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 06/10/2020 KRK, PS ITA NO . 702/MUM/2017 COLLECTIVE HEADS, MUMBAI. - 6 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / THE CIT(A) 4. ) ( ) / CONCERNED CIT 5. ,-. //'( , '(# , & / DR, ITAT, MUMBAI 6. .34 5 / GUARD FILE. / BY ORDER, , / //TRUE COPY// 1. / ( ASST. REGISTRAR) !' #, / ITAT, MUMBAI