ACIT 10(1), MUMBAI V. AUTOMOTIVE MANAUFACTURERS P. LTD, MUMBAI

ITA 7839/MUM/2011

• Counselvise Citation: 783919914 RSA 2011
• Duration Of Justice: 3 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 21-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ASGHAR ZAIN
• Assessee Lawyers: DILIP THAKKAR
• Keywords: Additional evidence

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI I.P. BANSAL, (JM) AND B.R.BASKARAN (AM) . . , . . , ./ I.T. A. NO . 7839 /MUM/20 1 1 ( / ASSESSMENT YEAR : 200 8 - 09 ) ASSTT.COMMISSIONER OF INCOME TAX - 1 0 ( 1 ), ROOM NO.4 55 , 4 TH FLOOR, A A YAKAR BHAVAN,M.K.ROAD, MUMBAI - 400020 / VS. M/S AUTOMOTIVE MANUFACTURERS PVT LTD, 108,AUTOMOTIVE HOUSE, BAZAR WA RD, KURLA(W), MUMBAI - 400070 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AA ACA3428K / : APPELLANT BY: SHRI ASGHAR ZAIN / RE SPONDENT BY : SHRI DILIP THAKKAR / DATE OF HEARING : 29.6. 2015 / DATE OF PRONOUNCEMENT : 29.6. 2015 / O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER : THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 1 1 .8 .2011 PASSED BY THE LD.CIT(A) - 21 , MUMBAI AND IT RELATES TO ASSESSMENT YEAR 2008 - 09 . 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD.CIT(A) IN GRANTING RELIEF IN RESPECT OF FOLLOWING TWO ADDITION S: A) DETERMINATION OF ANNUAL LETTING VALUE AT RS.40,73, 809/ - AND B) DISALLOWANCE OF EXPENSES TOWARDS PRE - OPERATIVE EXPENSES AMOUNTING TO RS.15,35,59,355/ - ITA NO. 7839 / M/ 11 2 3. WE HEARD PARTIES AND PERUSED THE RECORD . THE ASSESSEE IS A DEALER IN AUTOMOBILES AND ALSO TRADING OF FAST MOVING CONSUMER GOODS. THE ASSESSEE HAD DECL ARE D RENTAL INCOME OF RS.8760 / - IN AGGREGAT E IN RESPECT OF THREE PROPERTIES LOCATED AT SECUNDERABAD. THE AO ASKED THE ASSESSE E TO FURNISH ALL THE DETAILS IN RELATION TO LET OUT PROPERTIES IN ORDER TO EXAMINE THE CORRECTNESS OF ANNUAL LETTING VALUE DISCLO SED BY THE ASSESSEE . HOWEVER, THE ASSESSEE DID NOT FILE ANY REPLY. HENCE , AO DETERMINED THE ALV OF ALL THE THREE PROPERTIES AT RS.40.82 LAKHS AND ASSESSED THE DIFFERENCE AS INCOME OF THE ASSESSEE. THE AO ALSO NOTICED THAT THE ASSESSEE HAS STARTED TWO NE W BUSINESSES , VIZ., DEALING IN EARTH MOVING EQUIPMENTS AND RUNNING SUPER MARKE T S . THE AO NOTICED THAT THE ASSESSEE HAS NOT DECLARED ANY EXPENDITURE RELATING TO SETTING UP OF TWO NEW LINE OF BUSINESSES I.E. NO PREOPERATIVE EXPENSES WAS SHOWN BY THE ASSESSEE . T HOUGH THE AO CALLED FOR EXPLANATION IN THIS REGARD, YET THE ASSESSEE FAILED TO FURNISH ANY D ETAILS AND HENCE, THE AO ESTIMATED THE PRE - OPERATIVE EXPENSES @ 0.5% OF THE AGGREGATE EXPENSES CLAIMED BY THE ASSESSEE IN ITS PROFIT AND LOSS ACCOUNT. THE SAME WORKED OUT TO RS.15,35,59,355/ - AND THE AO DISALLOWED THE ABOVE SAID AMOUNT AS RELATING TO PRE - OPERATIVE EXPENSES IN SETTING UP TWO NEW LINES OF BUSINESS. 4 . IN THE APPELLATE PROCEEDINGS, THE LD.CIT(A) DELETED BOTH THE DISALLOWANCES AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. 5 . ON PERUSAL OF THE ORDER PASSED BY THE LD.CIT(A) , WE NOTICE THA T THE ASSESSEE HAS FURNISHED ADDITIONAL EVIDENCES BEFORE THE LD.CIT(A) IN RESPECT OF RENTAL INCOME AND THE SAME HAS BEEN CONSIDERED BY THE LD . C IT(A) FOR GRANT ING THE RELIEF TO THE ASSESSEE. HOWEVER, WE NOTICE THAT THE LD. CIT(A) HAS NOT CONFRONTED THESE ADDITIONAL EVIDENCES WITH THE AO . T HIS ACTION OF LD CIT(A) CLEARLY VIOLATES THE PROVISIONS OF RULE 46A OF T HE ITA NO. 7839 / M/ 11 3 INCOME TAX RULES, 1962. UNDER T HESE SET OF FACTS AND CIRCUMSTANCES, WE A R E OF THE VIEW THAT THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) SHOULD BE EXAMINED BY THE AO AND HENCE, THIS ISSUE REQUIRES FRESH CONSIDERATION AT THE END OF THE AO. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD.CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE TH IS ISSUE AFRESH BY CONSIDERING THE RELEVANT EVIDENCES THAT WERE/ THAT MAY BE FILED BY THE ASSESSEE. AFTER AFFORDING NECESSARY OPPORTUNITY OF BEING HEA R D TO THE ASSESSEE , THE AO MAY TAKE PROPER DECISION ON THIS ISSUE IN ACCORDANCE WITH LAW. 6. THE NEXT ISSUE RELATES TO DETERMINATION OF DISALLOWANCE OF PREOPERATIVE EXPENSES . WE NOTICE THAT THE AO WAS CONSTRAINED TO ESTIMATE PRE - OPERATIVE EXPEN SES @ 0.5% OF THE AGGREGATE EXPENSES CLAIMED BY THE ASSESSEE, SINCE THE ASSESSEE FAILED TO FURNISH THE DETAILS THAT WERE CALLED FOR BY THE AO . WE FURTHER NOTICE THAT THE LD.CIT(A) HAS DELETED THIS ADDITION WITHOUT EXAMINING THE NECESSARY DETAILS. BEFORE US, THE LD A.R SUBMITTED THAT THE DEALING IN EARTH MOVING EQUIPMENTS IS ONLY EXTENSION OF THE EXISTING LINE OF BUSINESS AND THE SUPER MARKETS WERE OPENED IN THE PREMISES OF PETROL PUMP ALREADY RUN BY THE ASSESSEE. ACCORDINGLY HE SUBMITTED THAT THE ASSESSE E DID NOT INCUR ANY PRE - OPERATIVE EXPENSES AS PRESUMED BY THE AO. HOWEVER, WE HAVE NOTICED THAT THE AO WAS CONSTRAINED TO ESTIMATE THE PRE - OPERATIVE EXPENSES, SINCE THE ASSESSEE FAILED TO FURNISH THE DETAILS/EXPLANATION. 7. UNDER TH IS SET OF FACTS, WE ARE OF THE VIEW THAT THIS ISSUE ALSO REQUIRES FRESH EXAMINATION AT THE END OF THE AO . ACCORDINGLY, WE SET ASIDE THE ORDER OF THE LD.CIT(A) ON THIS ISSUE AND RESTORE THE SAME TO THE FILE OF THE AO WITH A DIRECTION TO EXAMINE THIS ISSUE AFRESH AND TAKE P ROPER DECISION IN ACCORDANCE WITH LAW . THE ASSESSEE IS ALSO DIRECTED TO FURNISH ITA NO. 7839 / M/ 11 4 ALL THE DETAILS THAT MAY BE CALLED FOR BY THE AO AND CO - OPERATE WITH THE AO TO ARRIVE AT A PROPER CONCLUSION ON THIS MATTER . 8 . IN THE R ESULT, THE APPEAL OF THE REVENUE IS TR EATED AS ALLOWED FOR STATISTICAL PURPOSES . THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29TH JUNE , 2015 . 29TH JUNE , 201 5 SD SD ( . . / I.P. BANSAL ) ( . . / B.R. BASKARAN ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI: 29TH JUNE , 201 5 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCER NED 4. / CIT CONCERNED 5. 6. , , / DR, ITAT, MUMBAI CONCERNED / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI