ITO 24(2)(2), MUMBAI V. SMITA SAWANT, MUMBAI

ITA 7084/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5875 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 20-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 27-11-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R K SAHU
• Assessee Lawyers: VISHWAS H MEHENDALE
• Keywords: Opportunity of being heard; Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI . . , . . , BEFORE SHRI H. L. KARWA, PRESIDENT AND SHRI N. K. BILLAIYA, A.M. ./ I.T.A. NO. 7084/MUM/2012 ( / ASSESSMENT YEAR: 2009-10) INCOME TAX OFFICER-24(2)(2), ROOM NO.604, 6 TH FLOOR, PRATYAKSHAKAR BHAVAN, B. K. C., BANDRA, MUMBAI-400 051 / VS. SMITA SAWANT, 2/10, HAJIVALI TRUST CHAWL, KURAR VILLAGE, KOKANIPADA, MALAD (E), MUMBAI-400 097 ' ./#$ ./PAN/GIR NO. AWSPS 2313 Q ( '% /APPELLANT ) : ( &''% / RESPONDENT ) '% ( ) / APPELLANT BY : SHRI R. K. SAHU &''% ( ) / RESPONDENT BY : SHRI VISHWAS H. MEHENDALE * + ( ,- / DATE OF HEARING : 20.03.2014 ./01 ( ,- / DATE OF PRONOUNCEMENT : 26.03.2014 2 / O R D E R PER N. K. BILLAIYA, A. M.: THIS APPEAL BY THE REVENUE IS PREFERRED AGAINST THE ORDER OF LD. CIT(A)-34, MUMBAI DATED 11.09.2012 PERTAINING TO THE ASSESSMEN T YEAR (A.Y.) 2009-10. THE REVENUE HAS RAISED FOLLOWING SUBSTANTIVE GROUNDS OF APPEAL: I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS .7,84,840/- ON ACCOUNT OF DIFFERENCE IN FINAL ACCOUNT DESPITE THE ASSESSEE SU BMITTING TWO SEPARATE FINANCIAL ACCOUNTS PREPARED FOR SUBMISSION TO BANK AND INCOME -TAX. II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS .88,000/- ON ACCOUNT OF 2 ITA NO. 7084/MUM/2012 (A.Y. 2009-10) ITO VS. SMITA SAWANT DIFFERENCE IN BALANCE OF CREDITORS DESPITE THE ASSE SSEE FAILING TO SUBSTANTIATE THE SAME AT THE TIME OF ASSESSMENT PROCEEDINGS. III) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO OF RS .18,71,655/- ON ACCOUNT OF DIFFERENCE IN PURCHASE AND SALES DESPITE THE ASSESS EE FAILING TO EXPLAIN THE SAME AT THE TIME OF ASSESSMENT PROCEEDINGS. IV) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN ADMITTING ADDITIONAL EVIDENCE U/S.46A WITH OUT GIVING OPPORTUNITY TO AO IN CONTRAVENTION OF RULE 46A. 2. GROUND NO. 1 RELATES TO THE DELETION OF ADDITION OF RS.7,84,840/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THERE IS SOME DIFFERENCE IN THE FINAL ACCOUNTS SUBMITTED BY THE ASSESSEE. THE ASSESSEE WA S ASKED TO EXPLAIN THE DIFFERENCE. IT WAS EXPLAINED THAT INADVERTENTLY THE ASSESSEE HAS P RODUCED TWO COPIES OF BALANCE SHEET AND PROFIT AND LOSS ACCOUNT, ONE WAS AUDITED AND TH E OTHER ONE WAS A PROVISIONAL SET. IT WAS EXPLAINED THAT THE PROVISIONAL SET OF FINAL ACC OUNTS WAS IRRELEVANT AND ONLY THE AUDITED STATEMENT OF ACCOUNT SHOULD BE CONSIDERED. THE AO DISMISSED THIS SUBMISSION OF THE ASSESSEE. THE AO WAS OF BELIEF THAT THE ASSESSE E HAS FAILED TO EXPLAIN THE DIFFERENCE IN THE TWO STATEMENTS. THE AO PROCEEDED TO MAKE THE AD DITION OF RS.7,84,840/- ON ACCOUNT OF THE FOLLOWING DIFFERENCES FOUND IN THE TWO SETS OF FINAL ACCOUNTS: A) DIFFERENCE IN INCOME RS.1,32,740/- B) DIFFERENCE IN MAJOR EXPENSES RS.3,48,550/- C) DIFFERENCE IN SUNDRY CREDITORS RS.3,03,550/- TOTAL RS.7,84,840/- 3. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A) AND STRONGLY CONTENDED THAT THE AO ERRED IN CONSIDERING THE PROVISIONAL SET OF FINAL ACCOUNT WHEREAS ONLY THE AUDITED STATEMENT OF ACCOUNT SHOULD HAVE BEEN CONSIDERED. T HE ASSESSEE FURTHER EXPLAINED THE DIFFERENCES AS MENTIONED BY THE AO IN HIS ORDER. AF TER CONSIDERING THE FACTS AND THE SUBMISSIONS, THE LD. CIT(A) OBSERVED THAT THE PROVI SIONAL ACCOUNTS WERE SUBJECT TO MODIFICATION BY PASSING RECTIFICATION ENTRIES AFTER AUDIT, HENCE THE DIFFERENCES ARE BOUND TO BE BETWEEN THE PROVISIONAL AND AUDITED STATEMENT OF ACCOUNT. AFTER CONSIDERING BOTH 3 ITA NO. 7084/MUM/2012 (A.Y. 2009-10) ITO VS. SMITA SAWANT THE AUDITED AS WELL AS THE PROVISIONAL STATEMENT OF ACCOUNTS, THE LD. CIT(A) WAS OF THE BELIEF THAT THE AO HAS GONE TOTALLY BY THE PROVISIO NAL ACCOUNT AND ADDED THE DIFFERENCES TO THE INCOME. SINCE THE ACCOUNT HAS BEEN AUDITED U /S.44AB, THE AO SHOULD HAVE TAKEN THE FIGURES AUTHENTICATED BY THE AUDIT REPORT AND N OT BY PROVISIONAL STATEMENT OF ACCOUNT. ACCORDINGLY, THE LD. CIT(A) DELETED THE ADDITION OF RS.7,84,840/-. AGGRIEVED, THE REVENUE IS BEFORE US. 4. THE LD. DR STRONGLY SUPPORTED THE FINDINGS OF TH E AO. THE LD. COUNSEL FOR THE ASSESSEE REITERATED WHAT HAS BEEN SUBMITTED BEFORE THE LOWER AUTHORITIES. 5. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE LOWE R AUTHORITIES. IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD FILED TWO SETS OF FINAL ACCOU NTS BEFORE THE AO. IT IS ALSO NOT IN DISPUTE THAT ONE OF THE SETS WAS AUDITED STATEMENT OF ACCOUNTS. THE LD. CIT(A) HAS VERY CORRECTLY CONSIDERED THE AUDITED STATEMENT OF ACCOU NT. THEREFORE, WE DO NOT FIND ANY ERROR OR INFIRMITY IN THE FINDINGS OF THE LD. CIT(A). GRO UND NO. 1 IS ACCORDINGLY DISMISSED. 6. GROUND NO. 2 RELATES TO THE DELETION OF THE ADDI TION OF RS.88,000/- ON ACCOUNT OF DIFFERENCE IN BALANCE OF CREDITORS AND GROUND NO. 3 RELATES TO THE DELETION OF THE ADDITION OF RS.18,71,655/- ON ACCOUNT OF DIFFERENCE IN PURCH ASE AND SALES. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT CREDIT BALANCE OF M/S. D. C. INFOTECH IN THE BOOKS OF THE ASSESSEE WAS AT RS.1,19,300/-. HOWEVER , IN REPLY TO THE NOTICE U/S. 133(6) OF THE ACT, M/S. D. C. INFOTECH CONFIRMED A BALANCE OF RS.31,300/- ONLY. THE AO ADDED BACK RS.88,000/- AS INCOME OF THE ASSESSEE. THE AO FURTHER NOTICED THAT AS PER THE PROFIT AND LOSS ACCOUNT THE PURCHASES WERE AT RS.1,48,45,3 22/-, WHEREAS AS PER THE LIST OF PURCHASES SUBMITTED BY THE ASSESSEE, THE TOTAL PURC HASES WERE AT RS.1,54,50,778/-. SIMILARLY, SALES SHOWN IN P & L A/C. WAS AT RS.1,60 ,57,376/- AND AS PER THE LIST THE SAME WAS SHOWN AT RS.1,73,23,575/-. THE TOTAL DIFFERENCE WAS AT RS.18,71,655/-. THE AO ADDED THIS DIFFERENCE TO THE TOTAL INCOME OF THE AS SESSEE. THE ASSESSEE CARRIED BOTH THESE MATTERS BEFORE THE LD. CIT(A) AND FILED A DETAILED RECONCILIATION STATEMENT. IT WAS EXPLAINED THAT THE TWO CREDIT NOTES OF RS.66,000/- AND RS.22,000/- WERE NOT ACCOUNTED BY 4 ITA NO. 7084/MUM/2012 (A.Y. 2009-10) ITO VS. SMITA SAWANT THE ASSESSEE IN THE FINANCIAL YEAR (F.Y.) 2008-09, WHEREAS M/S. D. C. INFOTECH HAS ACCOUNTED THE CREDIT NOTES IN THE F.Y. 2008-09. THE REFORE THE DIFFERENCE OF RS.88,000/- AROSE DURING THE YEAR UNDER CONSIDERATION. THE LD. CIT(A) WAS CONVINCED WITH THE EXPLANATION OF THE ASSESSEE AND DELETED THE ADDITIO N OF RS.88,000/-. INSOFAR AS THE DIFFERENCE IN PURCHASES AND SALES WERE CONCERNED, T HE ASSESSEE FILED PARTY-WISE DETAILS OF PURCHASES AND SALES. IT WAS EXPLAINED THAT THE DIFF ERENCE HAS ARISEN BECAUSE OF THE INCLUSION OF VAT IN THE PURCHASE AND SALES LIST, WH EREAS THE P & L A/C HAVE BEEN DEBITED AND CREDITED BY PURCHASES AND SALES NET OF VAT. THE LD. CIT(A) WAS CONVINCED WITH THE RECONCILIATION AND DELETED THE ADDITION. AGGRIEVED BY THIS, THE REVENUE IS BEFORE US. 7. AT THE VERY OUTSET, THE LD. DR SUBMITTED THAT TH E LD. CIT(A) HAS ADMITTED CERTAIN EVIDENCES WHICH WERE IN VIOLATION OF RULE 46A SINCE THESE DETAILS WERE NEVER FILED BEFORE THE AO. THE LD. COUNSEL FOR THE ASSESSEE FAIRLY CON CEDED THAT THE DETAILS WERE NOT FILED BEFORE THE AO. 8. AFTER CAREFULLY PERUSING THE ORDERS OF THE LOWER AUTHORITIES AND THE SUBMISSIONS MADE BY THE RIVAL PARTIES, IN OUR CONSIDERED VIEW T HESE DETAILS OUGHT TO HAVE BEEN FILED BEFORE THE AO. THEREFORE, IN THE INTEREST OF JUSTIC E AND FAIR PLAY, WE RESTORE THESE ISSUES BACK TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTE D TO FILE NECESSARY DETAILS/RECONCILIATION BEFORE THE AO. THE AO IS DIRECTED TO EXAMINE AND VE RIFY THE DETAILS/RECONCILIATION AND DECIDE THESE ISSUES AFRESH AFTER GIVING A REASONABL E AND SUFFICIENT OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. GROUND NOS. 2 & 3 ARE ACCORD INGLY ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE REVENUES APPEAL IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. 31,4 # ( 5( 678 9 92 : , ( #, ; ORDER PRONOUNCED IN THE OPEN COURT ON MARCH 26, 201 4 SD/- SD/- (H. L. KARWA) (N. K. BILLAIYA) / PRESIDENT / ACCOUNTANT MEMBER * + MUMBAI; < DATED : 26.03.2014 5 ITA NO. 7084/MUM/2012 (A.Y. 2009-10) ITO VS. SMITA SAWANT .=../ ROSHANI , SR. PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPELLANT 2. &''% / THE RESPONDENT 3. * >, ( ) / THE CIT(A) 4. * >, / CIT - CONCERNED 5. ABC &=,=DE , - DE1 , * + / DR, ITAT, MUMBAI 6. CF G+ / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , * + / ITAT, MUMBAI