YASH FISCAL SERVICES P.LTD, NAVI MUMBAI V. ITO WD 2(1)(2), MUMBAI

ITA 763/MUM/2017

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 9645 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 03-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Assessee Lawyers: VINAY P DOSHI
• Keywords: Unexplained cash credit; Additional evidence
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO.763/MUM/2017 (ASSESSMENT YEAR: 2012-13) M/S. YASH FISCAL SERVICES P. LTD. VS. INCOME TAX OFFICER - 2(1)(2 ) 1307, COSMOS TOWERS, SAROVAR VIHAR ROAD, SECTOR-11 CBD BELAPUR, NAVI MUMBAI ROOM NO. 543, 5 TH FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AAACC2197D APPELLANT RESPONDENT ASSESSEE BY: SHRI VINAY P. DOSHI REVENUE BY: MS. N. HEMALATHA DATE OF HEARING: 10.08.2017 DATE OF PRONOUNCEMENT: 22.09.2017 O R D E R PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF THE CIT(A)-4, MUMBAI DATED 05.12.2016 FOR A.Y. 2012-13. 2. IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWIN G THREE GROUNDS, WHICH I SHALL DEAL IN SERIATIM: - 1 ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED COMMISSIONER OF INCOME TAX APPEALS (LD. CIT -(A)) HAS ERRED IN LAW IN UPHOLDING THE DECISION OF THE LEARN ED ASSESSING OFFICER OF DISALLOWING THE LOSS ON SALE OF SHARES R S 18,65,994/- INSPITE OF DOCUMENTARY EVIDENCE IE COPY OF CONTRACT NOTE WERE SUBMITTED DURING THE APPELLATE PROCEEDINGS. 2 ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED CIT-A HAS FURTHER ERRED IN SUSTAINING THE D ECISION OF THE LEARNED ASSESSING OFFICER ADDITION OF RS 3,00,000/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 WHEREAS THE SOURCE OF CASH DEPOSITED WERE ALREADY SUBMITTED AT THE TIME OF THE ASSESSMENT PROCEEDINGS. ITA NO. 763/MUM/2017 M/S. YASH FISCAL SERVICES P. LTD. 2 3 ON THE FACTS, IN THE CIRCUMSTANCES OF THE CASE & IN LAW THE LEARNED CIT-A HAS ALSO ERRED IN NOT APPRECIATING TH E FACT THAT THE LEARNED ASSESSING OFFICER HAD FURTHER ERRED IN DISA LLOWING CAR RENT OF RS 1,20,000/- OF THE APPELLANT COMPANY, NOT CONSIDERING THE SUBMISSIONS GIVEN DURING APPELLATE PROCEEDINGS . 3. THE ASSESSEE BEFORE ME IS A COMPANY INCORPORATED U NDER THE COMPANIES ACT, 1956 AND IS, INTER ALIA, ENGAGED IN THE BUSINESS OF CONSULTANCY SERVICES. THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT HAS BEEN FINALISED BY THE AO AT AN INCOME OF ` 49,15,434/- AS AGAINST THE RETURNED INCOME OF ` 10,03,140/-, AFTER MAKING CERTAIN ADDITIONS/ DISALLOWANCES WHICH WERE CARRIED IN APPEAL BEFORE T HE CIT(A). THE CIT(A) HAS GIVEN PARTIAL RELIEF AND NOT BEING SATISFIED WI TH THE ORDER OF THE CIT(A) THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE TRIBUN AL. 4. BEFORE ME THE FIRST ISSUE RAISED BY THE ASSESSEE IS WITH REGARD TO THE ACTION OF THE INCOME TAX AUTHORITIES IN DISALLOWING THE LOSS ON SALE OF SHARES OF ` 18,65,994/-. IN THIS CONTEXT THE RELEVANT DISCUSSIO N IN PARA 4 OF THE ASSESSMENT ORDER REVEALS THAT THE AO CONCLUDED THAT THE CLAIM OF LOSS ON SALE OF SHARES AMOUNTING TO ` 18,65,994/- REMAINS UNEXPLAINED. THE AO HAS NOTED THAT THE ASSESSEE HAS FAILED TO PROVIDE A NY DETAILS AS REGARDING THE ORIGIN OF THE LOSS, THE GENUINENESS OF THE CLAI M OF LOSS, ETC. THE CIT(A) IN PARA 3.2 OF HIS ORDER ALSO RECORDS THAT THE ASSE SSEE HAS FAILED TO SATISFY THE GENUINENESS OF THE SHARE TRANSACTIONS. ALSO, AS PER THE CIT(A), THE ASSESSEE HAD NOT SUBMITTED ANY VERIFIABLE EVIDENCE TO THE AO AND ACCORDINGLY THE CIT(A) AFFAIRMED THE ACTION OF THE AO IN DISALLOWING THE LOSS OF ` 18,65,994/-. 5. BEFORE ME THE PLEA OF THE LEARNED A.R. OF THE ASSES SEE IS THAT BOTH THE AUTHORITIES BELOW HAVE NEGATED THE CLAIM OF THE ASSESSEE BY ONLY MAKING GENERAL OBSERVATIONS WHEREAS THE ASSESSEE HA D FURNISHED APPROPRIATE MATERIALS AND EVIDENCES WHICH HAVE NOT BEEN REFERRED TO AT ALL. ON THIS ASPECT IT IS EXPLAINED THAT THE LOSS IS ON ACCOUNT OF SALE OF PURCHASE AND SALE OF COMMODITIES AND FOR THAT MATTE R HE HAS REFERRED TO PAGES 44 TO 43 OF THE PAPER BOOK WHEREIN ARE PLACED COPIES OF THE CONTRACT NOTES ISSUES BY THE RESPECTIVE BROKERS. IT WAS EXPL AINED THAT THE AFORESAID ITA NO. 763/MUM/2017 M/S. YASH FISCAL SERVICES P. LTD. 3 EVIDENCE WAS FURNISHED TO THE CIT(A) FOR ADMISSION UNDER RULE 46A OF THE INCOME TAX RULES, 1962 BECAUSE THE SAME COULD NOT B E FURNISHED AT THE STAGE OF ASSESSMENT PROCEEDINGS. ACCORDING TO THE L EARNED A.R. THE CIT(A) HAS UNJUSTLY BRUSHED ASIDE THE ENTIRE EVIDENCE EVEN WITHOUT POINTING OUT AS TO WHY THE ADDITIONAL EVIDENCE IS NOT BEING ADMI TTED FOR CONSIDERATION. 6. ON THE OTHER HAND, THE LEARNED D.R. APPEARING FOR T HE REVENUE POINTED OUT THAT THE APPLICATION OF THE ASSESSEE SE EKING ADMISSION OF ADDITIONAL EVIDENCE BEFORE THE CIT(A) WAS RESPONDED TO BY THE AO IN HIS REMAND REPORT DATED 16.06.2016, A COPY OF WHICH IS IN THE PAPER BOOK FILED BY THE ASSESSEE. THEREFORE, ACCORDING TO HER THE CI T(A) DID NOT FIND IT JUSTIFIABLE TO ADMIT THE ADDITIONAL EVIDENCE AND HE NCE THE SAME HAS NOT BEEN CONSIDERED WHILE ADJUDICATING THE PLEA OF THE ASSESSEE. 7. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. OSTENSIBLY IN THE PRESENT CASE THE ASSESSEE FILED CERTAIN ADDITIONAL EVIDENCE BEFORE THE CIT(A) WHICH WAS NOT HITHERTO FILED BEFORE THE AO DURING T HE ASSESSMENT PROCEEDINGS. THE ADDITIONAL EVIDENCE WHICH IS RELEV ANT FOR THE IMPUGNED DISPUTE IS IN THE SHAPE OF CONTRACT NOTES ISSUED BY THE BROKER FOR SALE AND PURCHASE OF COMMODITIES, WHICH HAS RESULTED IN THE IMPUGNED LOSS OF ` 18,65,994/-. THE ORDER OF THE CIT(A) IS CONSPICUOUS BY ITS SILENCE AS TO WHY THE ADDITIONAL EVIDENCE HAS NOT BEEN ADMITTED I NSPITE OF THE FACT THAT THE CIT(A) ALSO CALLED FOR A REMAND REPORT FROM THE AO, WHO FURNISHED THE SAME VIDE REPORT DATED 16.06.2016. BEFORE ME THE LE ARNED A.R. HAS ALSO FURNISHED A COPY OF THE WRITTEN SUBMISSION ADDRESSE D TO THE CIT(A) POST THE REMAND REPORT OF THE AO. IN THIS BACKGROUND, IN MY VIEW, IT WAS IMPERATIVE TO THE CIT(A) TO HAVE CONSIDERED THE APP LICATION OF THE ASSESSEE SEEKING ADMISSION OF ADDITIONAL EVIDENCE IN THE MAN NER MANDATED UNDER RULE 46A OF THE INCOME TAX RULES. IN THE ABSENCE OF THE SAME HAVING BEEN DONE BY THE CIT(A), IN MY VIEW, HIS ORDER BECOMES U NSUSTAINABLE. AS A CONSEQUENCE I SET ASIDE THE ORDER OF THE CIT(A) ON THIS ASPECT AND RESTORE IT BACK TO THE FILE OF THE CIT(A) TO ADJUDICATE THE IS SUE OF CLAIM OF LOSS OF ` 18,65,994/- AFRESH AND AS PER LAW. NEEDLESS TO MENT ION THAT THE ASSESSEE SHOULD BE PROVIDED REASONABLE OPPORTUNITY OF HEARIN G BEFORE PASSING FRESH ITA NO. 763/MUM/2017 M/S. YASH FISCAL SERVICES P. LTD. 4 ORDER. SO FAR AS THE FIRST ISSUE IS CONCERNED THE A SSESSEE SUCCEEDS FOR STATISTICAL PURPOSES. 8. THE SECOND GROUND RAISED BY THE ASSESSEE IS WITH RE GARD TO ADDITION OF ` 3,00,000/- WHICH HAS BEEN SUSTAINED BY THE CIT(A) A S UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT. AT THE TIM E OF HEARING THE LEARNED A.R. HAS NOT PRESSED THE SAID ISSUE AND ACCORDINGLY THE SAME IS DISMISSED AS NOT PRESSED. 9. THE LAST GROUND IN THIS APPEAL IS WITH REGARD TO TH E ACTION OF THE INCOME TAX AUTHORITIES IN DISALLOWING THE EXPENDITU RE ON CAR RENT OF ` 1,20,000/-. AT THE STAGE OF ASSESSMENT IT HAS BEEN NOTED BY THE AO THAT AN AMOUNT OF ` 2,39,250/- TOWARDS RENT WAS DEBITED TO THE PROFIT & LOSS ACCOUNT AND SINCE THE ASSESSEE COULD NOT FURNISH AN Y DETAILS, THE ENTIRE AMOUNT WAS DISALLOWED. THE CIT(A) NOTED THAT THE SU M OF ` 2,39,250/- COMPRISES OF OFFICE RENT ` 1,19,250/- AND CAR RENT ` 1,20,000/-. HE HAS ALLOWED THE CLAIM FOR OFFICE RENT BUT SUSTAINED THE DISALLOWANCE OF ` 1,20,000/- REPRESENTING CAR RENTAL ON THE GROUND TH AT THE ASSESSEE COULD NEITHER FURNISH PROPER EXPLANATION FOR HIRING CAR N OR IT WAS ESTABLISHED THAT THE CAR HAS BEEN USED FOR BUSINESS PURPOSES. A GAINST SUCH DECISION OF THE CIT(A) ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 10. BEFORE ME, APART FROM REFERRING TO PAGE 44 OF THE P APER BOOK, WHICH IS THE CONFIRMATION FOR PAYMENT OF CAR RENTAL TO ONE M /S. RCS & ASSOCIATES, THERE IS NO EXPLANATION WITH REGARD TO THE USE OF T HE CAR. ACCORDINGLY I FIND NO JUSTIFIABLE REASON TO INTERFERE WITH THE FINDING S OF THE CIT(A) ON THIS ASPECT, WHICH IS HEREBY AFFIRMED. THUS, ON THIS ASP ECT THE ASSESSEE FAILS. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND SEPTEMBER, 2017. SD/ - (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATED: 22 ND SEPTEMBER, 2017 ITA NO. 763/MUM/2017 M/S. YASH FISCAL SERVICES P. LTD. 5 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -4, MUMBAI 4. THE PR. CIT 2, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.