AOON TRAVELS, MUMBAI V. ITO 19(2)(1), MUMBAI

ITA 7470/MUM/2013

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3296 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 25-08-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 19-12-2013
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A P SINHA
• Keywords: Onus to prove
• Section: 131; 68; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN (AM) & SHRI SANJAY GARG (JM) I.T.A. NO. 7470 /MUM/ 20 1 3 (ASSESSMENT YEAR 200 8 - 0 9 ) M/S. AROON TRAVELS B - 8, NANDAVAN SARASWAT COLONY NIVAS ROAD, SANTACRUS(W) MUMBAI - 400 054. VS. ITO 19(2)(1) MUMBAI. ( APPELLANT ) ( RESPONDENT ) PAN NO . AAAFA3864G ASSESSEE BY SHRI A.P. SINHA DEPARTMENT BY SHRI A.B. KOLI DATE OF HEARING 25 .8 . 201 6 DATE OF PRONOUNCEMENT 2.9 . 201 6 O R D E R PER B.R. BASKARAN (AM) : - THE APPE AL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 3.10.2013 PASSED BY LEARNED CIT(A) - 30, MUMBAI AND IT RELATES TO A.Y. 2008 - 09 . GROUNDS OF APPEAL URGED BY THE ASSESSEE GIVE RISE TO THE FOLLOWING ISSUES : - A) ADDITION OF UNSECURED LOAN B) DISALLOWANCE OF INTEREST CLAIMED ON UNSECURED LOAN C) DISALLOWANCE OUT OF EXPENSES ON ESTIMATED BASIS 2. THE ASSESSEE FIRM IS ENGAGED IN TRANSPORT AND CARRIER BUSINESS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE DID NOT APPEAR BEFORE THE ASSESSING OFFI CER. H ENCE THE ASSESSING OFFICER MADE THE ASSESSMENT TO THE BEST OF HIS JUDGEMENT U/S. 144 OF THE ACT. THE ASSESSEE FILED THE APPEAL BEFORE THE LEARNED CIT(A) AND GOT PARTIAL RELIEF. STILL AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. AROON TRAVE LS 2 3. FI RST ISSUE RELATES TO THE ADDITION MADE OUT OF UNSECURED LOAN. THE ASSESSING OFFICER ISSUED SUMMONS U/S. 131 OF THE ACT TO ALL THE LENDERS WHO HAD LENT THE MONEY TO THE ASSESSEE AGGREGATING TO ` 43,64,269/ - . SINE SOME OF THE SUMMONS WERE RETURNED BACK AND SOME OF THE PARTIES DID NOT RESPOND, THE ASSESSING OFFICER ASSESSED ENTIRE AMOUNT OF ` 43, 64,270 / - AS INCOME OF THE ASSESSEE. IN THE APPELLATE PROCEEDINGS THE ASSESSEE FURNISHED CERTAIN DETAILS AND HENCE LEARNED CIT(A) REMANDED THE MATTER TO THE FILE OF T HE ASSESSING OFFICER. IN THE REMAND REPORT, THE ASSESSING OFFICER REPORTED THAT THE LOAN TRANSACTIONS AGGREGATING TO ` 36,24,269/ - REMAINED UNVERIFIABLE. ACCORDINGLY, LEARNED CIT(A) GAVE RELIEF OF ` 7,90,000/ - AND CONFIRMED THE ADDITION TO THE EXTENT OF ` 36,24,269/ - . 4. LEARNED COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ADDITION CONFIRMED BY LEARNED CIT(A) MOSTLY CONSISTED OF LOANS TAKEN IN EARLIER YEARS AND HENCE ADDITION, IF ANY, COULD NOT HAVE BEEN MADE DURI NG THE YEAR UNDER CONSIDERATION. LEARNED AR ALSO FURNISHED A CHART SHOWING DETAILS OF UNSECURED LOANS AVAILABLE WITH THE ASSESSEE. SUMMARY POSITION OF THE SAID WOULD READ AS UNDER: - BALANCE AS ON 1.4.2007 ` 40,65,269/ - ADD: - FRESH LOAN TAKEN ` 8,41,000/ - ---------------- 49,06,269/ - L ESS : - RE PAYMENT MADE 5,42,000/ - ---------------- CL OSING BALANCE AS ON 31.3.2008 ` 43,6 4 ,269/ - ON A PERUSAL OF THE SUMMARY POSITION EXTRACTED ABOVE , WE FIND THAT THERE IS MERIT IN THE SUBMISSIONS MADE BY LEARNED AR. THE A DDITION U/S. 68 OF THE ACT IS REQUIRED TO BE MADE IN THE YEAR IN WHICH CASH CREDIT WAS FOUND RECORDED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. ACCORDINGLY, THE OPENING BALANCE OF UNSECURED LOAN COULD NOT HAVE BEEN ASSESSED DURING THE YEAR UNDER CONSIDERATION AND ADDITION, IF ANY, COULD HAVE BEEN MADE ONLY IN THE YEAR IN WHICH LOAN WAS T AKEN BY THE ASSESSEE. WE NOTICE THAT THE TAX AUTHORITIES HAVE AROON TRAVE LS 3 DECIDED THI S ISSUE WITHOUT APPRE CIATING THIS LEGAL POSITION AND THE ACTUAL FACTS AVAILABLE ON RECORD. ACCORDINGLY, WE ARE OF THE VIEW THAT THIS ISSUE REQUIRES FRESH EXAMINATION AT THE END OF THE ASSESSING OFFICER. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH. WE MAY MAKE IT CLEAR THAT OPENING BALANCE OF UNSECURED LOAN COULD NOT BE ASSESSED DURING THE YEAR UNDER CONSIDERATION AND THE ASSESSMENT SHOULD BE R ESTRICTED TO THE ITEMS OF LOAN TAKEN DURING THE YEAR UNDER CONSIDERATION , IF THE ASSESSEE WAS NOT ABLE TO DISCHARGE THE BURDEN OF PROOF PLACED UPON IT U/S. 68 OF THE ACT. NEEDLESS TO MENTION , THE ASSESSEE SHOULD BE GIVEN PROPER OPPORTUNITY OF BEING HEAR D . 5 . NEXT ISSUE RELATES TO DISALLOWANCE OF INTEREST EXPENSES OF ` 9,79,66/ - . SINCE WE HAVE RESTORED THE ISSUE RELATING TO UNSECURED LOAN TO THE FILE OF THE ASSESSING OFFICER, CORRESPONDING INTEREST DISALLOWANCE ALSO NEEDS TO BE SET ASIDE TO HIS FILE. ACCORD INGLY WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. 6 . LAST ISSUE RELATES TO ADHOC DISALLOWANCE OF ` 46,27,556/ - MADE BY THE ASSESSING OFFICER. THE ASSESSE E HAS CLAIMED VARIOUS EXPEN SES AGGREGATING TO ` 1,85,10,225/ - . SINCE THE ASSESSEE DID NOT FURNISH ANY DETAILS, THE ASSESSING OFFICER DISALLOWED 25% THEREOF AND THE LEARNED CIT(A) ALSO CONFIRMED THE SAME. 7 . AT THE TIME OF HEARING LEARNED AR SUBMITTED THA T THE ASSESSEE HAS PAID A SUM OF ` 17,07,628/ - AS R OAD TAX TO GOVERNMENT AND THE ASSESSING OFFICER HAS DISALLOWED 25% THERE FROM ALSO. HE SUBMITTED THAT THE PAYMENT MADE TO THE G OVERNMENT SH OULD NOT HAVE BEEN CONSIDERED BY THE ASSESSING OFFICER FOR MAKING ADHOC DISALLOWANCE. WITH REGARD TO THE DISALLOWANCE MAD E OUT OF REMAINING EXPENSES, LEARNED AR SUBMITTED THAT DISALLOWANCE OF 25% IS ON HIGHER SIDE. AROON TRAVE LS 4 8 . WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICE THAT THE D ISALLOW ANCE WAS WARRANTED , SINCE THE ASSESSEE DID NOT COOPERATE WITH THE ASSESSING OFFICER BY FURNISHING RELEVANT DETAILS. BEFORE US ALSO, THE ASSESSEE DID NOT FURNISH THE DETAILS AND HENCE WE ARE OF THE VIEW THAT DISALLOWANCE OUT OF EXPENSES IS CALLED FOR. HOWE VER, WE ARE OF THE VIEW THAT THE DISALLOWANCE MADE BY THE AO AT 25% IS ON THE HIGHER SIDE. WE ALSO FIND MERIT IN THE SU BMISSIONS OF THE ASSESSEE THAT R OAD TAX PAID TO THE G OVERNMENT SHOULD NOT BE SUBJECTED TO AD - HOC DISALLOWANCE. ACCORDINGLY, WE SET ASIDE THE ORDER PASSED BY LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING OFFICER TO EXAMINE THE NATURE OF PAYMENT OF R OAD TAX OF ` 17,07,628/ - AND ALLOW THE SAME FULLY IF IT HAS BEEN PAID TO GOVERNMENT. IN RESPECT OF REMAINING ITEMS OF EXPENSES, WE ARE OF THE VIEW THAT THE D ISALLOWANCE MAY BE RESTRICTED TO 10% , AND IN OUR VIEW , THE SAME WOULD MEET THE ENDS OF JUSTICE. IN CASE, THE ASSESSEE WAS NOT IN A POSITION TO PROVE THE PAYMENT OF RS.17,07,628/ - AS THE PAYMENT MADE TO GOVERNMENT, THE AO SHALL MAKE DIS ALLOWANCE OF 10% OF THAT EXPENSES ALSO. WE ORDER ACCORDINGLY. THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE STANDS MODIFIED ACCORDINGLY. 9 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER HAS BE EN PR ONOUNCED IN THE COURT ON 2.9 .2016 SD/ - SD/ - (SANJAY GARG ) (B.R.BASKARAN ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : 2 / 9 / 20 1 6 COPY OF THE O RDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// ( DY./ASSTT. REGISTRAR) PS ITAT, MUMBA I