MIHIR BUILDERS, MUMBAI V. ITO WD 25(3)(1), MUMBAI

ITA 7315/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4241 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 12-12-2013
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: BEHARILAL
• Keywords: Unexplained investment

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B , BENCH MUMBAI BEFORE SHRI R.C.SHARMA , A M & SHRI AMARJIT SINGH , J M ./ ITA NO. 7315 / MUM/20 1 3 ( / ASSESSMENT YEAR : 20 0 6 - 0 7 ) MIHIR BUILDERS, 3 HARI DARSHAN, A WING, BHOGILAL FADIA ROAD, KANDIVLI(W) - 400067 VS. ITO WD - 25(3)(1), MUMBAI - 50 ./ ./ PAN/GIR NO. : A A AFM 2938 F ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI BEHARILAL /REVENUE BY : SHRI SUMIT KUMAR / DATE OF HEARING : 17 / 1 1 /201 5 / DATE OF PRONOUNCEMENT : 10/02 /2016 / O R D E R PER R.C.SHARMA ( A .M.) : TH IS IS AN APPEAL FILED BY TH E ASSESSEE AGAINST THE ORDER OF CIT(A), MUMBAI, DATED 6 - 2 - 2013 , FOR THE ASSESSMENT YEAR 20 0 6 - 0 7 . 2. RIVAL CONTENTIONS HAVE BEEN HEARD. FACTS IN BRIEF ARE THAT ASSESSEE IS ENGAGED IN THE BUSINESS OF BUILDER AND DEVELOPER. WITH REGARD TO THE DISALLOWANCE OF INTEREST EXPENSES, WE FOUND THAT I N THE COURSE OF ASSESSMENT, THE AO NOTICED THAT THE ASSESSEE DID NOT FURNISH THE DETAILS OF PAN NO. OF PARTIES TO WHOM INTEREST WAS PAID. HE FURTHER NOTICED THAT THE ABOVE PARTIES TO WHOM INTEREST WAS PAID DID NOT RESPOND TO THE HEARING NOTICES. HE FURTHER FOUND THAT THE ASSESSEE DID NOT DEDUCT TDS IN RESPECT OF INTEREST PAYMENT OF RS.20,288/ - . HE, THEREFORE, DISALLOWED INTEREST PAYMENTS AND THE TOTAL DISALLOWANCE WAS RS.1,47,956/ - . THE ASSESSEE WAS ALLOWED OPPORTUNITIES TO SUBSTANTIATE BEFORE THE AO DURING REMAND PROCEEDINGS. ITA NO. 7315 /1 3 2 3. WE HAVE CONSIDERED REMAND REPORT AS WELL AS NOTICES ISSUED BY THE AO TO THE CONCERNED PARTIES, SINCE NO CONFIRMATION WAS FILED, THE AO HAS CORRECTLY DISALLOWED THE AMOUNT OF INTEREST. NOTHING WAS B ROUGHT ON RECORD BY LD. AR TO PERSUADE US TO DEVIATE FROM THE FINDINGS RECORDED BY LOWER AUTHORITIES. ACCORDINGLY, WE CONFIRM THE ACTION OF THE AO. 4. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO ADDITION OF RS.3 LAKHS. THE AO ADDED RS.3 LAKHS REPRESENTIN G LOAN FROM MANGAL SHAH ON THE GROUND THAT LOAN CONFIRMATION WAS NOT FILED. THE ASSESSEE WAS ALLOWED OPPORTUNITIES TO GET THE THREE INGREDIENTS FOR LOAN I.E. GENUINETY OF TRANSACTION, TRANSACTION THROUGH BANK AND CREDITWORTHINESS OF LOAN CREDITORS. BUT THE ASSESSEE COULD NOT PROVE THE THREE ESSENTIAL INGREDIENTS OF LOAN. EVEN DURING THE REMAND PROCEEDING, THE ASSESSEE COULD NOT SUBSTANTIATE THE GENUINENESS OF THE LOAN TRANSACTION. ACCORDINGLY, WE CONFIRM THE ADDITION MADE BY THE AO. 5. THE NEXT GRIEVANCE OF THE ASSESSEE RELATES TO ADDITION OF RS.9,69,949/ - U/S.41(1) OF THE I.T.ACT . THE CIT(A) FOUND THAT THE AO HAD MADE ADDITION OF RS.10,59,779/ - REPRESENTING THE AMOUNT RECEIVED AGAINST SALE OF FLAT. THE AO INVOKED PROVISIONS OF SECTION 41(1) AND ADDED THE A MOUNT IN ASSESSEES INCOME. 6. WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND THAT ASSESSEE WAS IN RECEIPT OF ADVANCE FOR BOOKING OF FLAT FROM THE FOLLOWING PARTIES : - I) YOGINI BHATIA 6,40,000 (ORIGINALLY 8,40,000 RS.2,00,000 PAID BACK) II) JAWAHAR DAVE 2,10,000 III) GURU PRASHED 20,000 ITA NO. 7315 /1 3 3 THIS AMOUNT REPRESENTING AMOUNT RECEIVED AGAINST THE SALE OF FLATS, WAS NOT CLAIMED AS DEDUCTION BY WAY OF EXPENSES, THEREFORE, SAME CANNOT BE ADDED U/S.41(1) OF THE ACT. 7. WE ALSO FOUND THAT THE ASSESSEE HAS GO T LETTERS FROM THESE PARTIES AGREEING TO TREAT THEIR ADVANCE S AS L OANS . UNDER THESE CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR ADDING THESE AMOUNT U/S.41(1), INSOFAR AS THERE IS NO WAIVER OF ANY CREDITS WHICH HAS BEEN TAKEN BENEFIT BY ASSESSEE IN THE EAR LIER YEAR BY DEBITING EXPENSES , BUT NOT PAID SINCE LONG. IN THE INTEREST OF JUSTICE AND FAIR - PLAY, WE RESTORE THIS GROUND TO THE FILE OF AO FOR DECIDING AFRESH AS PER LAW. 8 . WITH REGARD TO THE DISALLOWANCE OF RS.50,000/ - ON ACCOUNT OF REMUNERATION OF THE PARTNER, WE FOUND THAT THE AO HAS DISALLOWED THE SAME ON THE PLEA THAT THERE WAS LOSS IN THE FIRM, THEREFORE, REMUNERATION TO PARTNERS CANNOT BE ALLOWED AS PER PROVISIONS OF SECTION 40(B)(V). EVEN IN CASE OF LOSS REMUNERATION UPTO 50000/ - PAID TO THE PARTN ERS IS ALLOWABLE. ACCORDINGLY, WE DIRECT THE AO TO ALLOW THE DEDUCTION OF RS.50000/ - ON ACCOUNT OF REMUNERATION PAID TO PARTNERS. 9 . THE AO ALSO MADE ADHOC DISALLOWANCE OF RS. 44,602/ - , WHICH WAS 50% OF THE EXPENSES CLAIMED BY THE ASSESSEE. WE FOUND THAT AS SESSEE BEING A PARTNERSHIP FIRM ALREADY FILED FBT RETURN, ACCORDINGLY, NO DISALLOWANCE IS WARRANTED TOWARDS PERSONAL ELEMENT . THE AO IS DIRECTED TO DELETE THE SAME. 10 . THE AO HAS MADE ADDITION OF RS.14,27,350/ - AS UNEXPLAINED INVESTMENT. WE FOUND THAT AO MADE THIS ADDITION WITH RESPECT TO THE SUNDRY DEBTORS ON THE PLEA THAT ASSESSEE HAS NOT FURNISHED ANY ITA NO. 7315 /1 3 4 EXPLANATION FOR INCREASE IN SUNDRY DEBTORS DURING THE YEAR. IT WAS CONTENDED BY LD. AR THAT ASSESSEE HAS FILED FULL EXPLANATION WITH REGARD TO THE INCREAS E IN DEBTOR AS COMPARED TO THE DEBTORS IN THE LAST YEAR. FROM THE RECORD WE FOUND THAT ASSESSEE HAD MADE A SALE OF FLAT OF RS.30,50,000/ - TO SHRI SUHAS KUMBHAR. IT APPEARS THAT LOWER AUTHORITIES HAVE NOT PROPERLY APPRECIATED THE FACTS AND THE EVIDENCES FIL ED BEFORE THEM. IN THE INTEREST OF JUSTICE AND FAIR - PLAY WE RESTORE THIS ISSUE BACK TO THE FILE OF AO FOR DECIDING AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 11 . THE AO HAS MADE ADDITION OF RS.85,830/ - IN RESPECT OF LOAN, WHICH WAS NOT BORROWED D URING THE YEAR, WHICH WAS VERIFIABLE FROM THE RECORDS. IN THE INTEREST OF JUSTICE, THIS ISSUE IS ALSO RESTORED BACK TO THE FILE OF AO FOR DECIDING AFRESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 1 2 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10/02 /2016 SD/ - SD/ - ( AMARJIT SINGH ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED 10/02 /201 6 . . /PKM , . / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / ( ASSTT. REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPON DENT. 3. ( ) / THE CIT(A) , MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY//