MANUBHAI P KAMDAR, MUMBAI V. ITO 24(2)(4), MUMBAI

ITA 7236/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0451 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 22-12-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 05-12-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PRAKASH R MANE
• Keywords: Unexplained expenditure
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI AMARJIT SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 7236 / MUM/20 14 ASSESSMENT YEAR: 2007 - 08 MR. MANUBHAI P KAMDAR VS. ITO 24(2)(4) 16, 3 RD FLOOR, PRITI APT. MUMBAI KHANDWALA LANE, MALAD (E) MUMBAI 400 09 7 PAN NO. AAPPK2958L (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. NEHA PARANJPE , A R REVENUE BY: MR. PRAKASH R. MANE , D R DATE OF HEARING : 11/05 /2017 DATE OF PRONOUNCEMENT: 07/08/2017 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2007 - 08. THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 34, MUMBAI AND ARISES OUT OF ORDER U/S 143(3) R.W.S. 147 OF THE INCOME TAX ACT, 1961 (TH E ACT). 2. T HE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER : I. ADDITION OF RS.23811.00 THAT ASSESSING OFFICER HAS ADDED RS.13,963.00 AS THERE IS DIFFERENCE WITH 3RD PARTY ACCOUNT OF M/S. FONNESSITER TELECOM SERVICES. THERE IS NO DIFFERENCE IN ACCOUNTS. THAT OPENING BALANCE OF M/S. FONNESSITER TELECOM SERVICES AND ASSESSEE IS AT RS.13,963.00 AND CLOSING BALANCE AT RS.70,339.50 THAT THE 3RD PARTY HAS SHOWN DEBIT ACCOUNT TOTAL AT RS.1,11,234.50 I.E. 13,963.50+ 97271.00 = 1,11,234.50 WHEREAS ASSESS EE ITA NO. 7236 /MUM/201 4 2 HAS ALSO SHOWN THE SAME FIGURE 13,963.50 + 97,271.00 AND HENCE ADDITION MAY BE DELETED & OBLIGE. COPY OF ACCOUNT ENCLOSED HEREWITH. THAT ASSESSING OFFICER HAS ADDED RS.9,848.00 AS THERE IS DIFFERENCE WITH 3RD PARTY ACCOUNT OF M/S. GAYTES INFORMATION. TH AT THE ASSESSEE HAS MADE PURCHASE DURING THE YEAR FROM 3RD PARTY AT RS.14,748.00 & HAVE PAID RS.4,600.00 AND BALANCE PAYABLE AS PER ASSESSEE ACCOUNT IS AT RS.10,148.00 WHEREAS IN 3RD PARTY ACCOUNT IS AT RS.9,848.00. NOW DIFFERENCE IS AT RS.300.00 ONLY AND HENCE MAY BE DELETED & OBLIGE. II. ADDITION OF CESSATION LIABILITY OF RS.2.33.626.00 THE ASSESSING OFFICER HAS ERRED IN ADDING RS.2,33,626.00 AS CESSATION OF LIABILITY, AS THE ABOVE LIABILITY OF RS.2,33,626.00 CONSIST OF A - 110490 & B - 123136. THE AMOUNT OF RS. 1,10,490.00 WAS ALREADY DISALLOWED BY THE ASSESSING OFFICER AS UNEX PLAINED EXPENDITURE AS PER PARA 5 OF THE ASSESSMENT ORDER. THER E CANNOT BE DOUBLE ADDITION ON ACCOUNT OF SAME AMOUNT AND THE OTHER AMOUNT OF RS.1,23,136.00 WAS A GENUINE LIABILITY WHICH WAS DULY PAID BY THE ASSESSEE BY CHEQUE NO. 2119 DRAWN ON BANK DENA BANK ON DATE 22/08/2007. IN VIEW OF THE ABOVE THE ADDITION OF RS.2,33,626.00 AS CESSATION OF LIABILITY BE DELETED. III. ADDITION UNEXPLAINED MONEY OF RS.5,525.00 THAT THE ASSESSING OFFICER HAS AD DED RS.5,525.00 AS UNEXPLAINED MONEY. THAT THE ASSESSEE HAS NOT PAID ANY MONEY AS THE TRANSACTION IS GENUINE & HENCE ADDITION MAY BE DELETED & OBLIGE. 3. THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE ASSESSEE WOULD NOT PRESS THE 1 ST GROUND OF APPEAL. ACCORDINGLY , THE ABOVE GROUND OF APPEAL IS DISMISSED AS NOT PRESSED. 3.1 WE TURN TO THE 2 ND GROUND OF APPEAL. THE ASSESSING OFFICER ( AO ) NOTICED THAT THE ASSESSEE HAD REFLECTED RS.1,10,490/ - AS PAYABLE TO SONOTRON TRADING CO. PVT. LTD. IN THE SUNDRY CREDITOR S LIST. IN RESPONSE TO THE NOTICE U/S 133(6) ISSUED BY THE AO, THE SAID PARTY ITA NO. 7236 /MUM/201 4 3 SENT A REPLY DATED 18.12.2009 WHEREIN SHRI KRISHANA KUMAR GUPTA, PROP. OF M/S SONOTRON TRADING CO. PVT. LTD. STATED THAT HE WAS NOT DOING ANY BUSINESS WITH THE ASSESSEE AND HE WAS ONLY DOING CHEQUE DISCOUNTING WITH THE ASSESSEE FOR A COMMISSION. IT WAS FURTHER STATED THAT SINCE NO RECORD WAS MAINTAINED BY THE PARTY, NO LEDGER ACCOUNT HAD BEEN SUBMITTED. THE ASSESSEE THEN SUBMITTED BEFORE THE AO THAT HE HAD E NTERED INTO A TRANSACTION WITH THE SAID PART Y AND DENIED THE FACT THAT SONOTRON TRADING CO. PVT. LTD. HAD DONE BILL DISCOUNTING FOR THE ASSESSEE. THE AO WAS NOT CONVINCED WITH THE ABOVE EXPLANATION OF THE ASSESSEE. THEREFORE, HE TREATED THE PURCHASE AMOUNT OF RS.1,10,490/ - AS BOGUS AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED EXPENDITURE. 3.2 THE AO ALSO NOTICED THAT AN AMOUNT OF RS.2,33,626/ - IS REFLECTED IN THE LIST OF OUTSTANDING IN THE BOOKS OF ACCOUNT OF THE ASSESSEE UNDER THE H EAD SUNDRY CREDITORS. IN RESPONSE TO A QUERY RAISED BY THE AO, IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID AMOUNT IS PAYABLE, HOWEVER, IT MAY BE ADDED BACK TO TOTAL INCOME OF THE ASSESSEE. THEREFORE, THE AO MADE AN ADDITION OF RS.2,33,626/ - . 3.3 THE AO OBSERVED THAT AS PER THE INFORMATION IN POSSESSION OF THE DEPARTMENT, AROUND 5% OF THE GROSS AMOUNT WAS PAYABLE FOR THE SERVICES OBTAINED. THEREFORE, HE MADE A FURTHER DISALLOWANCE OF RS.5,525/ - I.E. ESTIMATING @ 5% ON THE AMOUNT OF RS.1,10,490/ - . 4. AG GRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). REGARDING THE ADDITION OF RS.1,10,490/ - MADE BY THE AO, THE LD. CIT(A) HAS OBSERVED THAT DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE SUBMITTED THAT HE HAD MADE PURCHASES FROM M/S SONOT R ON TRADING CO. PVT. LTD. VIDE BILL NO. ST/1206 - 07 DATED 12.01.2007 AND HE HAD MADE PAYMENT OF THE ITA NO. 7236 /MUM/201 4 4 ABOVE AMOUNT BY CHEQUE NO. 962458 DATED 22.12.2009. IN SUPPORT OF THIS, THE ASSESSEE FURNISHED BEFORE THE LD. CIT(A) COPY OF CONFIRM ATION OF ACCOUNT, STATEMENT OF ACCOUNT FOR THE PERIOD 01.12.2009 TO 31.12.2009 AND LEDGER ACCOUNT FOR THE PERIOD 02.04.2004 TO 16.08.2011 TO SUBSTANTIATE HIS CLAIM. THE LD. CIT(A) HAVING EXAMINED THE SAME DIRECTED THE AO TO DELETE THE ADDITION OF RS.1,10,4 90/ - . 4.1 REGARDING THE ADDITION OF RS.2,33,626/ - MADE BY THE AO, THE LD. CIT(A) HAS OBSERVED THAT THE ASSESSEE HAD AGREED FOR THE ADDITION OF THE ABOVE AMOUNT AT THE TIME OF ASSESSMENT PROCEEDINGS. THEREFORE, SHE DISMISSED THE APPEAL OF THE ASSESSEE ON TH E ABOVE ISSUE. 4.2 REGARDING THE ADDITION OF RS.5,525/ - , THE LD. CIT(A) AGREED WITH THE ACTION OF THE AO. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A PAPER BOOK (P/B) CONTAINING (I) COPY OF PROFIT & LOSS ACCOUNT AND BALANCE SHEET AS ON 31.03.200 7, (II) COPY OF LEDGER ACCOUNT OF SONOTRON TRADING CO. PVT. LTD. FOR THE PERIOD OF 01.04.2006 TO 31.03.2007, (III) COPY OF LEDGER ACCOUNT OF SONOTRON TRADING CO. PVT. LTD. FOR THE PERIOD OF 01.04.2007 TO 31.03.2007, (IV) COPY OF LEDGER ACCOUNT OF SONOTRON TRADING CO. PVT. LTD. FOR THE PERIOD OF 01.04.2008 TO 31.03.2009, (V) COPY OF LEDGER ACCOUNT OF SONOTRON TRADING CO. PVT. LTD. FOR THE PERIOD OF 01.04.2010 TO 31.03.2011, (VI) COPY OF LEDGER ACCOUNT OF DENA BANK A/C, (VII) COPY OF A LETTER DATED 17.08.2011 FILED BEFORE THE AO AND (VIII) COPY OF SUBMISSION DATED 29.01.2014 FILED BEFORE THE LD. CIT(A). 5.1 THE LD. COUNSEL OF THE ASSESSEE FURTHER RELIES ON THE GROUNDS OF APPEAL FILED BY THE ASSESSEE. ITA NO. 7236 /MUM/201 4 5 6. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER PASSED BY THE LD. CIT(A). 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. WE BEGIN WITH THE 2 ND GROUND OF APPEAL. WE FIND THAT THE CESSATION OF LIABILITY OF RS.2,33,626/ - CONSISTS OF RS.1,10,490/ - AND RS.1,23,136/ - . THE AO HAS ALREADY MADE AN ADDITION OF RS.1,10,490/ - WHICH HAS BEEN DELETED BY THE LD. CIT(A). WE FIND FROM THE ACCOUNTS THAT THE OTHER AMOUNT OF RS.1,23,136/ - WAS DULY PAID BY THE ASSESSEE THROUGH CHEQUE NO. 2119 DRAWN ON DENA BANK ON 21.08.2007 AND IT WAS A GENUINE LIABILITY. WE DELETE THE ADDITION OF RS.1,23,136/ - MADE BY THE AO. THUS THE 2 ND GROUND OF APPEAL IS ALLOWED. 7.1 THE FURTHER DISALLOWANCE ON ESTIMATE @ 5% IS NOT CALLED FOR. WE THEREFORE, DELETE THE AD - HOC DISALLOWANCE OF RS.5,525/ - MADE BY THE AO. THUS THE 3 RD GROUND OF APPEAL IS ALLOWED. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPE N C OURT ON 07/08/2017. SD/ - SD/ - ( AMARJIT SINGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI : DATED: 07/08/2017 RAHUL SHARMA , SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . ITA NO. 7236 /MUM/201 4 6 BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI