MANISH N SHARMA, NAVI MUMBAI V. DCIT 22(3), NAVI MUMBAI

ITA 71/MUM/2010

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2024 (ITAT-MUMBAI)
• Duration Of Justice: 6 year(s) 9 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 24-06-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 05-01-2010
• Court: TRIBUNAL
• Department Lawyers: N P SINGH
• Assessee Lawyers: MADHAV AGARWAL
• Keywords: Unexplained cash credit; Principle of natural justice; Commercial expediency
• Section: 143(3); 148; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA, AM & SHRI SANDEEP GOSAIN , JM ITA NO. 71 / MUM/20 1 0 ( ASSESSMENT YEAR : 2003 - 04 ) SHRI MANISH SHARMA 24/202, NRI SEA WOODS ESTATE, SECTOR 54,56,58 NERUL, NAVI MUMBAI VS. DCIT 22(3), MUMBAI PAN/GIR NO. APPELLANT ) .. RESPONDENT ) ASSESSEE BY SHRI MADHAV AGARWAL REVENUE BY SHRI N.P.SINGH DATE OF HEARING 26/07 /2016 DATE OF PRONOUNCEME NT 02 / 11 /2016 / O R D E R PER R.C.SHARMA (A.M) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2003 - 2004, IN THE MATTER OF ORDER PASSED U/S. 143(3) READ WITH SECTION 148 OF THE I.T.ACT. 2. RIVAL CONTENTIONS HAVE BEE N HEARD AND RECORD PERUSED. 3. FACTS IN BRIEF ARE THAT ASSESSEE WAS HAVING SOURCE OF INCOME FROM BUSINESS AND INCOME FROM OTHER SOURCES. DURING THE YEAR, ASSESSEES CLAIM FOR COMMISSION INCURRED FOR THE PURPOSE OF BUSINESS WAS DISALLOWED BY THE AO BY HOLDI NG THAT IT WAS NOT INCURRED FOR THE PURPOSE OF BUSINESS AND CONFIRMATION WAS NOT FILED BY ASSESSEE. 4. BY THE IMPUGNED ORDER CIT(A) CONFIRMED THE ACTION OF THE AO. ITA NO. 71/MUM/2010 MANISH N. SHARMA 2 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE ORDERS OF THE AUTHORITIES B ELOW. FROM THE RECORD, WE FOUND THAT ASSESSEE HAS PAID COMMISSION TO SHRI. MAHESH DAULATRAM HARJANI FOR PROVIDING INFORMATION REGARDING SINGAPORE BASED COMPANIES INTERESTED IN QUOTING FOR SOME TENDERS IN INDIAN BLUE C HIP COMPANIES. THE ASSESSEE HAS FILED R ELEVANT CONFIRMATION RECEIVED FROM MAHESH DAULATRAM HARJANI TO THE AO VIDE HIS LETTER DATED 29/12/2008, BUT BY THAT TIME AO HAD ALREADY PASSED HIS ORDER. HOWEVER, DURING THE COURSE OF APPELLATE PROCEEDINGS, ASSESSEE AGAIN PRODUCED COPY OF CONFIRMATION RECE IVED BY SAID PARTY DULY CONFIRMING THE RECEIPT OF COMMISSION BY THE SAID PARTY. WE FOUND THAT COMMISSION SO PAID WAS FOR THE PURPOSE OF BUSINESS AND INCURRED WHOLLY AND EXCLUSIVELY IN THE BUSINESS INTEREST FOR PROCURING MORE BUSINESS. ASSESSEE HAD DISCHARG ED THE BURDEN CASTED ON HIM BY FURNISH ING THE CONFIRMATION OF THE PARTY TO WHOM COMMISSION WAS PAID AND ALSO COMMERCIAL EXPEDIENCY FOR SUCH PAYMENT. ACCORDINGLY, WE DO NOT FIND ANY JUSTIFICATION FOR DISALLOWANCE OF THE COMMISSION OF RS.5.00 LACS SO P AID FO R THE PURPOSE OF BUSINESS. A CCORDINGLY, AO IS DIRECTED TO ALLOW THE SAME. 6 . THE SECOND GROUND OF APPEAL RELATES TO ADDITION OF RS.22,331/ - ON ACCOUNT OF UNEXPLAINED CASH CREDIT. THE ASSESSING OFFICER HAS STATED THAT A SUM OF RS.22,331/ - OVER AND ABOVE THE CASH BALANCE HELD BY THE ASSESSEE HAS BEEN DEPOSITED IN THE BANK ACCOUNT. 7 . THE C ONTENTION OF ASSESSEE WAS THAT COMPUTER ACCOUNTING SYSTEM OF THE ASSESSEE GOT CORRUPTED AND THEY HAVE WRITTEN ALL THE BOOKS OF ITA NO. 71/MUM/2010 MANISH N. SHARMA 3 ACCOUNTS WITHIN A SHORT PERIOD OF TIME. THE A FORESAID EXCESS IS NOTHING BUT A KEY IN ERROR. HOWEVER, THE AO DID NOT ACCEPT ASSESSEES CONTENTION AND DECLINED ASSESSEES CLAIM. FROM THE ORDER OF THE LOWER AUTHORITIES, WE FOUND THAT THEY HAVE NOT APPRECIATED THE FACTS PROPERLY AND MADE AN ADDITION OF R S. 22,331/ - . IN THE INTEREST OF JUSTICE, WE RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR DECIDING AFRESH AFTER CONSIDERING ASSESSEES CONTENTION AND JUSTIFICATION. WE DIRECT ACCORDINGLY. 8 . THE 3 RD GROUND OF APPEAL RELATES TO DISALLOWANCE OF RS.15000/ - OUT OF CONVEYANCE, OFFICE EXPENSES AND HIRING CHARGES. THE ASSESSING OFFICER HAS DISALLOWED OUT OF THESE EXPENSES FOR WANT OF VERIFICATION FOR THE REASON THAT MOST OF THE PAYMENTS WERE MADE IN CASH. THE ACTION OF THE ASSESSING OFFICER IN MAKING SUCH DISA LLOWANCE CANNOT BE FAULTED WITH AS DURING THE APPELLATE PROCEEDINGS ALSO THE ASSESSEE HAS NOT BEEN ABLE TO VERIFY THE EXPENSES IN TOTALITY BY WAY OF PROOF. HOWEVER, CONSIDERING THE NATURE OF BUSINESS AND IN THE INTEREST OF NATURAL JUSTICE, THE DISALLOWANCE WAS RESTRICTED BY CIT(A) TO 10% OF THE SAID EXPENSES AND THE BALANCE ADDITION WAS DELETED. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FOR RESTRICTING THE DISALLOWANCE TO THE EXTENT OF 10% OF SAID EXPENSES. IN THE RESULT, THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. 10. IN TH E RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. O RDER PRONOUNCED IN THE OPEN COURT ON THIS 02/11 /2016 S D/ - ( SANDEEP GOSAIN ) S D/ - ( R.C.SHARMA ) JUDICIAL MEMBER ACCOUNTANT MEMBER ITA NO. 71/MUM/2010 MANISH N. SHARMA 4 MUMBAI ; DATED 02 / 11 /201 6 KARUNA SR. 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. //TRU E COPY//