K.K. CONSTRUCITON, MUMBAI V. ITO 19(3)(4), MUMBAI

ITA 7203/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75450 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 29-01-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 24-10-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Assessee Lawyers: D C JAIN
• Keywords: Additional evidence
• Section: 144; 11

Judgement Text

, INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A BENCH. , ! ! ! ! , ,, , BEFORE S/SH. RAJENDRA,ACCOUNTANT MEMBER & VIVEK VAR MA,JUDICIAL MEMBER /. ITA NO.7203/MUM/2011, # # # # $ $ $ $ / ASSESSMENT YEAR-2006-07 M/S K.K.CONSTRUCTION, C/O D.C. JAIN & CO., 75, BOMBAY MUTUAL BULDING, 1 ST FLOOR, DR. D.N.ROAD, FORT, MUMBAI-400001 VS ITO 19(3) (4) PEERAMAL CHAMBERS, 3 RD FLOOR, PAREL, MUMBAI-400012 PAN: AAHFK1109M ( %& / APPELLANT) ( '(%& / RESPONDENT) #)* #)* #)* #)* + + + + / ASSESSEE BY : SHRI D.C.JAIN , + / REVENUE BY : SHRI M.L.PERUMAL # # # # , ,, , *- *- *- *- / DATE OF HEARING : 29-01-2014 ./$ , *- / DATE OF PRONOUNCEMENT : 29-01-2014 # # # # , 1961 , ,, , 254 )1( *0* *0* *0* *0* 1 1 1 1 ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM # # # # : CHALLENGING THE ORDER DT.30.08.2011 OF THE CIT(A)-3 0,MUMBAI,ASSESSEE-COMPANY HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1)UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (A) ERRED IN CONFIRMING THE ORDER PASSED U/S. 144 OF I. T. ACT BY THE ASSESSING OFFICER. 2)UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED COM MISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF REMUNERATION AND INT EREST AMOUNTING TO RS. 2,75,000/- PAID TO THE PARTNERS. WITHOUT PREJUDICE TO THE ABOVE :- 2 (A) UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT(APPEALS) ERRED IN NOT THE ASSESSING OFFICER TO DELETE THE AMOUNT OF REMUNERATION AND INTEREST OF R S. 2,75,000!-FROM THE INCOME OF INDIVIDUAL PARTNERS , AS THE SAME IS TAXED IN THE HANDS OF FIRM, WHICH WI LL AMOUNT TO DOUBLE TAXATION. 3)UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADHOC DISALLOWANCE OF RS. 6,64,729/- OUT OF PURCHASES AND LABOUR CHARGES. 4)UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS.7,31, 506/- BEING SUNDRY CREDITORS AS CESSATION OF LIABILITY U/S. 41(1) OF I.T. ACT. 5)UNDER THE FACTS AND CIRCUMSTANCES THE LEARNED CIT (APPEALS) ERRED IN CONFIRMING THE DISALLOWANCE OF RS.1,08,721/-OUT OF TOTAL DISALLOWANCE OF RS. 16308 1/- MADE BY THE ASSESSING OFFICER OUT OF ADMINISTRATIVE EXPENSES. 6)THE APPELLANTS CRAVE LEAVE TO ADD, AMEND, ALTER,D ELETE THE GROUND/S OF APPEAL AT OR BEFORE THE HEARING OF APPEAL. ASSESSEE-FIRM,ENGAGED IN THE BUSINESS OF CIVIL CONT RCTORS,FILED ITS RETURN OF INCOME ON 24.10. 2006 DECLARING TOTAL INCOME OF RS.2,81,868/-.ASSESSING O FFICER (AO)FINALISED THE ASSESSMENT ORDER U/S.143(3) OF THE ACT,ON 22.09.2008,DETERMINING THE TOTAL INCOME AT RS. RS. 21,16.184/-.DURING THE COURSE OF HEARING BEFORE US,AUTHORISED REPRESENTATI VE(AR) SUBMITTED THAT THE ASSESSEE IS NOT INTERESTED IN PRESSING GROUNDS NO.1 &2.THEREORE,WE DISMISS GROUNDS NO.1 AND 2 AS NOT PRESSED. 2 ITA NO. 7203/MUM/2011 M/S K.K.CONSTRUCTION. BRIEF HISTORY OF THE CASE: 2 .IN THIS MATTE,AS PER THE AO,ASSESSEE DID NOT FILE ANY DETAILS OF PURCHASES.LABOUR CHARGES ETC.HE FURTHER HELD THAT BECAUSE OF THE NON COOPERATION OF THE ASSESSEE HE WAS COMPELLED TO PASS AN ORDER U/S.144 OF THE ACT.THE ASSESSEE WAS FURTHER TREATED AS AOP AS PER THE PROVISIONS OF SECTION 184(5) OF THE ACT AND INTEREST AND REMUNERATION TO THE MEM BERS/PARTNERS OF THE ASSESSEE WERE DISALLOWED. APART FROM THIS, ADDITIONS WERE MADE TO THE TOTAL I NCOME OF THE ASSESSEE ON ACCOUNT OF UNVERIFIED PURCHASES AND LABOUR CHARGES/SUNDRY CREDITORS AND U NVERIFIED EXPENSES.AGAINST THE ORDER OF THE AO,HE PREFERRED AN APPEAL BEFORE THE FIRST APPEAL A UTHORITY (FAA).AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDE R HE CALLED FOR A REMAND REPORT FROM THE AO, AS THE ASSESSEE HAD PRODUCED ADDITIONAL EVIDENCES BEFO RE HIM.IN HIS REPORT, AO DISCUSSED THE JUSTIFICATION OF FILING OF ADDITIONAL EVIDENCE UNDE R RULE 46A OF THE INCOME-TAX RULES,1962(RULES).HE MENTIONED THAT DETAILS/ SUBMIS SIONS MADE BY THE ASSESSEE PERTAINING TO PURCHASES/LABOUR CHARGES,SUNDRY CREDITORS AND EXPEN SES,WERE NOT ADMISSIBLE AS ADDITIONAL EVIDENCES.,THAT IN THE CASE OF THE ASSESSEE NONE OF THE FOUR CONDITIONS MENTIONED IN THE RULES WERE SATISFIED,THAT HE WAS JUSTIFIED IN MAKING BEST JUDG MENT ASSESSMENT,THAT THE ASSESSEE HAD NOT FILED COMPLETE DETAILS. 2.1. BEFOREUS,AUTHORISED REPRESENTATIVE(AR)SUBMITTED THA T BECAUSE OF THE REASONS BEYOND ITS CONTROL NECESSARY DETAILS COULD NOT BE FILED BEFORE THE AO,THAT ASSESSEE HAD FILE AUDITED STATEMENT OF ACCOUNTS AND TAX AUDIT REPORT,THAT AO DID NOT RE JECT THE BOOK-RESULT U/S.145 OF THE ACT,THAT ALL TH E DETAILS WERE FILED AT THE TIME OF REMAND PROCEEDING S,THAT IN THE REPORT AO HAD NOT MENTIONED THE TRUE FACTS.HE REFERRED THE PAGES NO. OF THE PAPER B OOK.DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT AO HAD CLEARLY MENTIONED THAT EVIDENCES WERE N OT PRODUCED DURING THE ASSESSMENT OR REMAND PROCEEDINGS. 2.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.WE FIND THAT IN HIS REMAND REPORT AO HAS DISCUSSED THE PROVISIONS OR RU LE 46(A)OF THE RULES AT LENGTH AND HAS SUBMITTED THAT ADDITIONAL EVIDENCES SHOULD NOT BE A DMITTED.IN OUR OPINION,IT IS WELL ESTABLISHED PRINCIPLES OF TAX-JURISPRUDENCE THAT THE POWERS OF THE FAA ARE COTERMINOUS WITH THE POWERS OF AN AO.HE IS THE PERSON TO DECIDE AS WHETHER OR NOT TO ADMIT FRESH EVIDENCE.IF HE WAS OF THE OPINION THAT AO SHOULD EXAMINE THE EVIDENCES PRODUCED DURIN G THE APPELLATE PROCEEDINGS AND HAD DIRECTED THE AO TO SUBMIT A REPORT,HE WAS FOLLOWING THE PROV ISIONS OF RULE 46(A) OF THE RULES.HE WAS AFFORDING AN OPPORTUNITY TO THE AO TO REBUT THE EVI DENCE.WE FIND THAT AO HAS NOT PROPER INQUIRY AS DESIRED BY THE FAA AND THE FAA HAS DECIDED THE ISSU E ON THE BASIS OF THE INCOMPLETE INQUIRIES.THEREFORE,IN OUR OPINION,IN THE INTEREST OF JUSTICE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION.AO IS DIRECTE D TO PROVIDE EFFECTIVE HEARING BEFORE DECIDING THE ISSUES RAISED BEFORE US.ASSESSEE IS DIRECTED TO EXT END FULL COOPERATION TO THE AO AND PRODUCE ALL NECESSARY DOCUMENTS DURING FRESH ASSESSMENT PROCEE DINGS.GROUNDS NO.3-5 ARE ALLOWED,IN PART,IN FAVOUR OF THE ASSESSEE. AS A RESULT APPEAL FILED BY TH E ASSESSEE STANDS PARTLY ALLOWED. 2*3 #)* 4 5 , 0 1*3 6 , * 78. ORDER PRONOUNCED IN THE OP EN COURT ON 29 TH JANUARY,2014 . 1 , ./$ : ;# 29 TUOJH TUOJH TUOJH TUOJH , 201 4 / , 0 < SD/- SD/- ( ! ! ! ! / VIVEK VERMA) ( / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER 3 ITA NO. 7203/MUM/2011 M/S K.K.CONSTRUCTION. / MUMBAI, ;# /DATE: 29 TH JANUARY,2014. SK 1 1 1 1 , ,, , '*! '*! '*! '*! =!$* =!$* =!$* =!$* / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / %& 2. RESPONDENT / '(%& 3. THE CONCERNED CIT (A) / > ? , 4. THE CONCERNED CIT / > ? 5. DR A BENCH, ITAT, MUMBAI / !@0 '*# , ,, , , . . . 6. GUARD FILE/ 0 2 (!* (!* (!* (!* '* '*'* '* //TRUE COPY// 1# / BY ORDER, A / 7 DY./ASST. REGISTRAR , /ITAT, MUMBAI