MITSUI O.S.K LINES (INDIA) P. LTD, MUMBAI V. DCIT 8(2), MUMBAI

ITA 7757/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3598 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 30-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANDHRI GUPTA
• Keywords: Business income; Additional evidence
• Section: 143(3); 142(1); 115JB; 133(6); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUMBAI BEFORE SHRI SHAILENDRA KUMAR YADAV , JM AND SHRI RAJESH KUMAR, AM ./ I.T.A. NO . 7757/ MUM/20 14 ( / ASSESSMENT YEAR : 201 0 - 11) MITSUI OSK LINES (INDIA) PVT L TD, UNIT NO.53B&54. 5 TH FLOOR, KALPATARU SQUARE, KONDIVITA LANE, OFF ANDHERI KURLA ROAD, ANDHERI (E), MUMBAI - 400059 / VS. DY .COMMISSIONER OF INCOME TAX - 8 (2), A A YAKAR BHAVAN, M.K.ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN NO. : AADCMO823B / APPELLANT BY: S MT. AARTI VISSANJI / RESPONDENT BY SHRI RANDHRI GUPTA / DATE OF H EARING : 3.8.2016 / DATE OF PRONOUNCEMENT : 22. 8 .2016 / O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) - 17 , MUMBAI D ATED 11.9.2014 PERTAINING TO A.Y. 2010 - 11 . 2. THE ISSUE S RAISED IN GROUND NO.1(B) IS I N RESPECT OF CONFIRMATION OF RS.7,30,755/ - FOR UN - RECONCILED ENTRIES ON ACCOUNT OF NON - RECONCILIATION OF AIR INFORMATION AND GROUND NO 1(C) IS QUA NON ADJUDICATIO N OF GROUND RAISED ITA NO .7757 / M/1 4 2 IN RESPECT OF RS.2,48,631/ - APPEARING IN AIR IN RESPECT OF THOSE PARTIES WITH WHOM THE ASSESSEE DENIED TO HAVE ANY BUSINESS DEALINGS. 3. FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME ON 28.9.2010 DECLARING TOTAL IN COME AT RS.74,92,150/ - WH ICH WAS PROCESSED U/S 143( 1 ) OF THE ACT ON 26.4.2011 . THEREAFTER, SCRUTINY PROCEEDINGS WERE I NI T IATED AGAINST THE ASSESSEE AND STATUTORY NOTICES UNDER SECTION 143(2) AND 142(1) WERE ISSUED AND SERVED UPON THE ASSESSEE. THE ASSESS EE WAS ENGAGED IN THE BUSINESS OF SHIPPING AND LOGISTIC SERVICES AND TRADING IN PALLETS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO ON THE BASIS AIR INFORMATION , THE AO ASKED THE ASSESSEE TO FURNISH THE DETAILS OF TRANSACTION ALONG WITH THE REC ONCILIATION WITH ITS BOOKS OF ACCOUNT. HOWEVER, THE ASSESSEE COULD NOT EXPLAIN THE DIFFERENCE OF RS.1,52,69,815 / - T HE DETAILS WHEREOF IS GIVEN IN PARA 6.1 OF THE ASSESSMENT ORDER AND THEREFORE THE SAME WAS TREATED AS INCOME AND ACCORDINGLY ADDED TO TH E TOTAL INCOME OF THE ASSESSEE BY PASSING THE ORDER OF ASSESSMENT UNDER SECTION 10.12. 2014 UNDER SECTION 143(3) ASSESSING THE TOTAL INCOME AT RS.2,27,61,970/ - UNDER THE NORMAL PROVISIONS OF THE ACT AND AT RS.68 , 28 , 591/ - UNDER THE PROVISIONS OF SECTI ON 115JB OF THE ACT . AGGRIEVED BY T HE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING T HE COURSE OF APPELLATE PROCEEDINGS , THE ASSESSEE FILED ADDITIONAL EVIDENCES BEFORE THE LD. CIT(A) WHO IN TURN FORWARDED THE SAME TO THE AO FOR FURTHER VERIFICATION. IN THE REMAND REPORT, THE AO SUBMITTED THAT THE ADDITIONAL EVIDENCE SUBMITTED ITA NO .7757 / M/1 4 3 BY THE ASSESSEE AND REVI SED FORM NO. 26AS, THE DIFFEREN CE TO THE TUNE OF RS.1 , 45 , 39 , 060/ - WAS RECONCILED WHICH RELATED TO ONE PAR T Y NAMELY DIAMOND TRADING AND CONSULTANCY LTD W AS DULY ACCOUNTED FOR IN THE BOOKS OF ASSESSEE. HOWEVER, THE AO STATED THAT THE ASSESSEE COULD NOT RECONCILE RS.7,30,755/ - AND SUBMITTED THAT NO RELIEF COULD BE GRANTED IN RESPECT OF THE SAID AMOUNT. F INA LLY, THE LD. CIT(A) ALLOWED THE APPEAL OF THE ASSE SSEE PARTLY VIDE PARA 1.3.8 OF THE APPELLATE ORDER WHICH IS AS UNDER : 1.3.8 ADVERTING TO THE FACTS OF THE APPELLANT CASE, IT IS SEEN THAT ALL THE BASIS OF ADDITIONAL EVIDENCES AND REVISED 26AS, IT WAS CO NFIRMED BY THE LD.AO THAT THE APPELLANT HAS RECONCILED THE TRANSACTIONS AMOUNTING TO RS .1, 45,39,060/ - WI TH RESPECT OF DIAMOND TRADING AND CONSULTANCY LTD. REPORTED IN THE AIR WITH THE APPELLANTS BOOKS. IT CAN BEEN SEEN THAT SUCH RECONCILIATION IS PRIMARIL Y ON THE FACT THAT APPELLANT HAS NOT TRANSACTION WITH THE DIAMOND TRADING AND CONSULTANCY LTD. THE FACT WHICH WAS RATIFIED BY THE PARTY BY DEVISING ITS TDS RETURN. THEREFORE, THE ADDITION MADE BY THE LD. AO IN RESPECT OF UN - RECONCILED AMOUNT IN RELATION TO DIAMOND TRADING AND CONSULTANCY LTD IS DELETED AS THE SAME STAND FULLY JUSTIFIED UNDOUBTEDLY, THERE IS ADDED IN THE CONTENTION OF HE APPELLANT THAT AO SHOULD HAVE ISSUED NOTICES UNDER SECTION 131 OR UNDER SECTION 133(6) OF THE ACT TO VERIFY THE TRAN SACTION IN QUESTION AFTER ADMISSION OF THE APPELLANT THAT THESE TRANSACTIONS DO NOT BELONG TO IT. HOWEVER, AFTER SUCH A LAPSE OF TIME IT IS ALSO A DUTY OF THE APPELLANT TO CONTACT THE PARTIES TO CLARIFY THE POSITION AS IT HAD DONE IN THE CASE OF DIAMOND TRADING AND CONSULTANCY LTD. HOWEVER, THE APPELLANT HAS NOT RESORTED TO SUCH EFFORTS WHICH RESULTED IN NON - RECONCILIATION OF TRANSACTIONS AMOUNTING TO RS.7,30,755/ - . THEREFORE, THE UNRECONCILED TRANSACTIONS ARE ADDED BACK TO THE TOTAL INCOME OF THE APPEL LANT, THIS GROUND OF APPEAL IS THUS PARTLY ALLOWED 4 . THE LD. AR VEHEMENTLY ARGUED THAT THE ADDITION AS SUSTAINED BY THE LD. CIT(A) ON THE BASIS OF AIR INFORMATION AND REVISED FORM 26AS WAS WRONG THE ASSESSEE HAS NO BUSINESS TRANSACTIONS WITH THOSE PA RTIES APPEARING IN AIR/FORM26AS AND ANY ADDITION MADE ON THE BASIS OF AIR INFORMATION/FORM ITA NO .7757 / M/1 4 4 NO . 26AS WERE BAD IN LAW AND DESERVED TO BE DELETED . THE LD. COUNSEL SUBMITTED THAT IF AT ALL THE AO HA D ANY DOUBTS HE COULD HAVE ISSUED SUMMONS UNDER SECTION 1 33(6) OF THE ACT AND SHOULD HAVE CARRIED OUT FURTHER INVESTIGATION INTO THE ISSUE AS HE HAS ALL THE INFORMATION I N HIS POSSESSION BUT INSTEAD OF IT HE SIMPLY PROCEEDED TO ADD THE INCOME TO THE TOTAL INCOME OF THE ASSESSEE WHICH WAS ALSO CONFIRMED BY THE LD. CIT(A). THE LD. AR SUBMITTED THAT THE CASE OF THE ASSESSEE IS FULLY COVERED BY THE DECISION OF MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V/S BLR INDIA PVT LTD IN ITA NO.5556/MUM/2013(AY - 2008 - 09) DATED 11.4.2016 IN WHICH THE IDENTICAL ISSU E HAS BEEN DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE. THE LD. AR FINALLY RELIED ON THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL AND PRAYED FOR DELETION OF ADDITION. ON THE CONTRARY, THE LD DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ADDITION WAS BASED ON THE ENTRIES AS APPEARED IN THE AIR INFORMATION/FORM NO.26AS AS THE ASSESSEE COULD NOT RECONCILE OR OFFER ANY PLAUSIBLE EXPLANATION AND PRAYED FOR THE CONFIRMATION OF THE ORDER OF LD. CIT(A). 5 . WE HAVE C AREFULLY CONSIDERED THE SUBMISSIONS OF THE PARTIES, PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF AUTHORITIES BELOW AND CASE LAWS RELIED UPON BY THE PARTIES . WE FIND THAT THE ADDITION HAS BEEN MADE QUA UNRECONCILED ENTRIES APPEARING IN THE AIR INFORMATION/FORM NO.26AS WHICH WAS TOTALLY DENIED BY THE ASSESSEE THAT IT HAD NEVER ANY BUSINESS TRANSACTIONS WITH THESE PARTIES DURING THE YEAR. WE FURTHER FIND THAT ITA NO .7757 / M/1 4 5 THE AO HAS NOT BOTHER ED TO INVESTIGATE THE MATTER FURTHER AND SIMPLY ADDED THE AMOUN T OF UN - RECONCILED ENTRIES IN THE INCOME OF THE ASSESSEE. THE CASE OF THE ASSESSEE ALSO FINDS STRONG SUPPORT FROM THE DECISION IN T HE CA S E OF ACIT V/S BLR INDIA PVT LTD (SUPRA) IN WHICH IDENTICAL ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. THE RELEV ANT PORTION OF THE DECISION IS REPRODUCED BELOW : 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE LD. DR SUBMITTED BEFORE US THAT THE ASSESSEE WAS NOT ABLE TO RE - CONCILE THE DIFFERENCE BETWEEN THE BOOKS OF ACCOUNT WI TH THE AIR INFORMATION AND THEREFORE, THE ADDITION WAS RIGHTLY MADE. PER CONTRA, THE LD. AR SUBMITTED BEFORE US THAT RECONCILIATION OF AIR DATA IS NOT POSSIBLE WITH THE BOOKS OF ACCOUNTS AS THE INFORMATION IN THE AIR WERE NOT PUT INTO THE COMPUTER BY T HE ASSESSEE BUT BY THOSE PARTIES WHO DEDUCTED THE TDS FROM THE CONTRACTUAL PAYMENTS MADE TO THE ASSESSEE. THUS THERE WAS EVERY POSSIBILITY THAT SOME DEDUCTED TAX AT SOURCES ON PAYMENT BASIS WHEREAS OTHERS ON ACCRUAL BASIS AND IN SOME CASES MIGHT HAVE WR ONGLY DEDUCTED THE TDS. THE AR FURTHER SUBMITTED THAT THE TOTAL SALES AS SHOWN IN THE BOOKS OF ACCOUNTS WERE RS.2,42,06,01,170/ - WHEREAS THE TOTAL SALES IN AIR REPORT WERE RS. 48,42,51,354/ - WHICH IS JUST 20% OF THE TOTAL SALES OF THE ASSESSEE. OUT OF T HE SAID AIR ENTRIES THE ASSESSEE HAD RECONCILED THE ENTRIES AMOUNTING TO RS.46,97,07,933/ - MEANING THEREBY THAT 97% OF THE AIR ENTRIES WERE RECONCILED BY THE ASSESSEE. THE DIFFERENCE MISMATCH MIGHT BE DUE TO FAULTY RETURN FILED BY THE 3 RD PARTY. THE LD . AR FURTHER SUBMITTED THAT IN ORDER TO VERIFY THE UN - RECONCILED ITEMS OF AIR INFORMATION, THE AO HAS SENT NOTICE UNDER SECTION 133(6) TO VARIOUS PARTIES ON THE ADDRESSES PROVIDED IN THE AIR INFORMATION TWICE BUT ALL THE NOTICES WERE RETURNED BACK UN DELIVERED TO THE DEPARTMENT WHICH PROVED THAT THE AIR INFORMATION COULD NOT BE RELIED UPON TO MAKE ADDITION IN THE HANDS OF THE ASSESSEE. THE LD. AR FURTHER SUBMITTED BEFORE US THAT THE ISSUE WAS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF CO - O RDINATE BENCH IN ITS OWN CASE IN ITA NO. 3057/MUM/2012(AY - 2007 - 08) DATED 24.5.2013. THE LD.AR ALSO RELIED UPON THE DECISION OF THE TRIBUNAL IN THE CASE OF SHRI S GANESH V/S ACIT IN ITA NO.527/MUM/2010 (AY 2006 - 07) DATED 8.12.2010, WHEREIN IT HAS BEEN HELD THAT IN ABSENCE ANY RECORD CONTRARY TO THE FACT, THE REVENUE AUTHORITIES COULD NOT MAKE ANY ADDITION ON ACCOUNT OF AIR INFORMATION. WE FIND FROM THE ABOVE, THAT THE CASE OF THE ITA NO .7757 / M/1 4 6 ASSESSEE IS SQUARELY COVERED BY ITS OWN DECISION IN M/S. BLR INDIA PVT. LTD (SUPRA) THE RELEVANT FINDINGS OF THE SAID ORDER ARE REPRODUCED BELOW : 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE ASSESSEE HAD SHOWN HIGHER INCOME THAN THE INCOME REPORTED IN THE REPORT RECEIVED BY THE AO. IT RECONCILED ALL THE ACCOUNTS WHEREVER LEDGER ENTRIES WERE MADE AVAILABLE TO IT. ONLY IN ONE CASE HE COULD NOT RECONCILE THE ENTRIES. FROM THE RR OF THE AO IT IS EVIDENT THAT THE FACTS NARRATED BY THE FAA (PARA 2.2) ARE CORRECT AND BASED ON SOUND FOOTINGS. FAA HAD UPHELD A PORTION OF ADDITION WHERE ASSESSEE HAD FAILED TO RECONCILE THE FIGURE. IN OUR OPINION, IN THESE CIRCUMSTANCES, HIS ORDER DOES NOT SUFFER FROM ANY FACTUAL OR LEGAL INFIRMITY. THEREFORE, CONFIRMING HIS ORDER WE DECIDE GROUND NO.1 A GAINST THE AO. WE THEREFORE, FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL UPHOLD THE ORDER OF THE LD. CIT(A). THIS GROUND OF APPEAL IS DISMISSED AND THE AO IS DIRECTED ACCORDINGLY. 6 . THE FACTS OF THE ASSESSEES CASE ARE SQUARELY C OVERED BY THE DECISION CITED (SUPRA) AND WE R ESPECTFULLY FOLLOWING THE RATIO LAID DOWN IN THE ABOVE DECISION, DIRECT THE AO TO DELETE THE ADDITION . 7 . IN THE RESULT THE APPEAL OF THE ASSESSEE IS ALLOWED . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN CO URT ON 22 ND AUG , 2016 . 22 ND AUG, 2016 SD/ - SD/ - ( SHAILENDRA KUMAR YADAV ) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 22 ND AUG , 2016 . . . ./ SRL , SR. PS ITA NO .7757 / M/1 4 7 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESP ONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, / / TRUE COPY / / (ASSTT. REGISTRAR) , /ITAT, MUMBA I ITA NO .7757 / M/1 4 8 ITA NO .7757 / M/1 4 9 DATE INITIALS 1. DRAFT DICTATED ON 3.8. 2016 SPS 2. DRAFT PLACED BEFORE AUTHOR 17.8 .2016 SPS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM 5. APPROVED DRAFT COMES TO THE SR. PS SPS 6. KEPT FOR PRONOUNCEMENT ON SPS 7. FILE SENT TO THE BENCH CLERK SPS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE ON WHICH FILE GOES TO A.R. 10. DATE OF DISPATCH OF ORDER