MAC REDEDIES P.LTD, MUMBAI V. ITO 6(3)-3, MUMBAI

ITA 8115/MUM/2010

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3498 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-05-2016
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 23-04-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 24-11-2010
• Court: TRIBUNAL
• Department Lawyers: BHARTI SINGH
• Assessee Lawyers: VISHWAS V MEHENDALE
• Keywords: Unexplained cash credit
• Section: 143(3); 68

Judgement Text

1 ITA NO.,8115 /MUM/2010 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI MAHAVIR SINGH JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO. 8115/MUM/2010 (ASSESSMENT YEAR : 2006-07) M/S MAC REMEDIES PVT LTD KHANDELWAL JAIN & CO 6-B, PIL COURT, 6 TH FLOOR 111 M.K. ROAD, CHURCHGATE MUMBAI 20. VS ITO 6(3) - 3, MUMBAI PAN : AADCM8596M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI VISHWAS V MEHENDALE RESPONDENT BY MISS BHARTI SINGH DATE OF HEARING : 17-05-2016 DATE OF PRONOUNCEMENT : 25 -05-2016 O R D E R PER ASHWANI TANEJA, AM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-1, MUMBAI (HER EINAFTER CALLED THE CIT) PASSED AGAINST ORDER U/S 143(3) DATED 05-12-2008 FO R THE ASSESSMENT YEAR 2006-07, ON THE FOLLOWING GROUNDS : 1. THE LEARNED TAXING AUTHORITIES HAD ERRED IN DIS ALLOWING RS.102719/- OUT OF FREIGHT AND TRANSPORTATION EXPEN SES AT 10% OF EXPENSES ON ESTIMATED BASIS. CONSIDERING THE FACTS OF THE CASE AND PROVISIONS OF LAW, THE EXPENSES BE ALLOWED IN FULL. JUST AND PROPER RELIEF BE GRANTED THE APPELLANT. 2 ITA NO.,8115 /MUM/2010 2. THE LEARNED TAXING AUTHORITIES HAD ERRED IN DISA LLOWING RS. 389098/- OUT OF FIELD TOUR EXPENSES AT 10% OF EXPEN SES ON ESTIMATED BASIS. CONSIDERING THE FACTS OF THE CASE AND PROVISIONS OF LAW, THE EXPENSES MAY BE ALLOWED IN FULL. JUST AND PROPER RELIEF BE GRANTED TO THE APPELLANT. 3 THE LEARNED TAXING AUTHORITIES HAD ERRED IN TREAT ING THE UNSECURED LOANS OF RS.1165500/- AS UNEXPLAINED CASH CREDIT U/S 68 OF THE IT ACT, 1961 AND MAKING ADDITION TO TOTAL IN COME OF THE ASSESSEE. CONSIDERING THE FACTS OF THE CASE AND PRO VISIONS OF LAW, THE ADDITION MADE MAY BE DELETED. JUST AND PROPER R ELIEF BE GRANTED TO THE APPELLANT. 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE AD VANCED BY SHRI VISHWAS S MEHENDALE ON BEHALF OF THE ASSESSEE AND M ISS BHARTI SINGH ON BEHALF OF THE REVENUE. 3. GROUNDS 1 & 2 : IN THESE GROUNDS, THE ASSESSEE HAS CHALLENGED THE ACTION OF LOWER AUTHORITIES IN MAKING DISALLOWANCE OUT OF FREIGHT AND TRANSPORTATION EXPENSES @10% OF THE TOTAL EXPENSES, ON ESTIMATED BASIS. DURING THE COURSE OF HEARING THE LD. COUNSEL FOR TH E ASSESSEE SUBMITTED THAT THE ASSESSEE HAD SUBMITTED ALL THE DETAILS AND DOCU MENTARY EVIDENCES IN SUPPORT OF THE EXPENSES AND THAT UNDER THESE CIRCUM STANCES, THE ASSESSING OFFICER COULD NOT HAVE AND SHOULD NOT HAVE RESORTED TO THE ACTION OF MAKING DISALLOWANCE ON ADHOC OR ESTIMATE BASIS AND THAT TO O WITHOUT SPECIFICALLY POINTING OUT WHAT MORE WAS REQUIRED TO BE DONE TO S UBSTANTIATE THESE EXPENSES. HE SUBMITTED THAT THESE ISSUES CAN BE SE NT BACK TO THE ASSESSING OFFICER TO EXAMINE THESE EXPENSES METICULOUSLY AND TO MAKE SPECIFIC DISALLOWANCES, IF AT ALL REQUIRED, FOR WANT OF SPEC IFIC EVIDENCES. 3 ITA NO.,8115 /MUM/2010 4. PER CONTRA, THE LD.DR SUBMITTED THAT SINCE COMPL ETE EVIDENCES WERE NOT SUBMITTED, THE ASSESSING OFFICER RESORTED TO MAKE D ISALLOWANCE ON ESTIMATE BASIS. SHE DID NOT RAISE ANY OBJECTION FOR SENDING THESE ISSUES BACK TO H ASSESSING OFFICER. 5. WE HAVE GONE THROUGH HE ORDERS OF THE LOWER AUTH ORITIES AS WELL AS SUBMISSIONS MADE BY BOTH THE SIDES BEFORE US. IT I S NOTED FROM THE PERUSAL OF THE ORDERS THAT THE ASSESSEE HAD SUBMITTED THE DETA ILS AND DOCUMENTS AS WERE REQUIRED BY THE ASSESSING OFFICER. THEREAFTER SOME DISCREPANCIES WERE NOTICED BY THE ASSESSING OFFICER AND IN CONSEQUENCE TO THE SAME HE MADE ADHOC / ESTIMATED DISALLOWANCES. THE ASSESSEE HAS DESIRED THAT NO ADHOC DISALLOWANCE SHOULD BE MADE AS HE IS READY TO SUBST ANTIATE THE EXPENSES IN THE BEST POSSIBLE MANNER, IN THE GIVEN CIRCUMSTANCE S. UNDER THESE CIRCUMSTANCES, WE FIND IT PROPER TO SEND BOTH THE I SSUES BACK TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO GIVE ADEQUA TE OPPORTUNITY OF HEARING TO THE ASSESSEE TO SUBSTANTIATE THESE EXPENSES. TH E ASSESSING OFFICER SHALL TAKE INTO ACCOUNT ALL THE FACTS AND CIRCUMSTANCES O F THE CASE AND SHALL MAKE ONLY SPECIFIC DISALLOWANCE, IF REQUIRED UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF TH CASE. THE ASSESSEE IS FREE TO RAISE ALL FACTUAL AND LEGAL ISSUES BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL TAKE INTO CONSIDERATION ALL THE DETAILS AND EVIDENCES ON OBJE CTIVE BASIS BEFORE PASSING FRESH ASSESSMENT ORDER ON THESE ISSUES. THUS, WITH THESE DIRECTIONS, GROUND 1 & 2 ARE SENT BACK TO THE FILE OF THE ASSESSING OFFI CER AND MAY BE TREATED AS ALLOWED, FOR STATISTICAL PURPOSE. 4 ITA NO.,8115 /MUM/2010 6. GROUND 3 : I N THIS GROUND, THE ASSESSE HAS CHALLENGED THE ACTIO N OF LOWER AUTHORITIES IN MAKING ADDITION U/S 68 FOR AN AGGREGATE AMOUNT OF RS.11,65,500 BEING THE AMOUNT RECEIVED FROM FOLLOWI NG THREE PARTIES : 1. SHANTANU ENTERPRISES RS. 2,40,000 2. SHRI JAYANT PADALKAR RS.5,00,000 3. NIKHANT SHRIRAM SADAVARTE RS.4,25,500 TOTAL .... RS.11,65,500 IT IS NOTED FROM PERUSAL OF THE ORDERS OF AUTHORITI ES THAT THESE AMOUNTS WERE ADDED ON THE GROUND THAT THE ASSESSEE FAILED TO SUB STANTIATE THESE AMOUNTS IN TERMS OF SETION 68. ACCORDING TO THE LOWER AUTH ORITIES, THE ASSESSEE COULD NOT PROVE THE CREDITWORTHINESS OF THESE THREE PARTI ES AND THESE LOANS REMAINED UNCONFIRMED. 7. DURING THE COURSE OF HEARING BEFORE, THE LD.COUN SEL HAS DRAWN OUR ATTENTION ON VARIOUS PAGES OF THE PAPER BOOK SHOWIN G THAT THESE LOANS WERE RECEIVED THROUGH BANKING CHANNELS, INTEREST WAS PAI D AND TDS WAS ALSO DEDUCTED. IT WAS FURTHER SHOWN THAT THESE LOANS WE RE SUBSEQUENTLY REPAID IN SUBSEQUENT YEARS BY THE ASSESSEE BY ACCOUNT PAYEE C HEQUES AND THROUGH BANKING CHANNELS. 5 ITA NO.,8115 /MUM/2010 8. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT SINC E ASSESSEE COULD NOT PROPERLY SUBSTANTIATE THESE AMOUNTS, THE ADDITION H AS RIGHTLY BEEN MADE U/S 68 OF THE ACT AND REQUESTED TO UPHOLD THE ORDERS OF THE LOWER AUTHORITIES ON THIS ISSUE. 9. WE HAVE GONE THROUGH THE SUBMISSIONS MADE BY BOT H THE SIDES AS WELL AS DETAILS AND DOCUMENTARY EVIDENCES SHOWN TO US. WITH REGARD TO FIRST TWO PARTIES, VIZ. SHANTANU ENTERPRISES AND NIKHANT SHRI RAM SADAVARTE, IT IS NOTED BY US THAT THE AMOUNT OF LOAN WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUES. WE HAVE EXAMINED THE BANK STATEMENTS OF BOTH THE PE RSONS AND FOUND THAT NO CASH WAS DEPOSITED PRIOR TO ISSUANCE OF CHEQUES TO THE ASSESSEE. WE HAVE ALSO EXAMINED THE TDS CERTIFICATE ISSUED BY THE ASS ESSEE ON ACCOUNT OF DEDUCTION OF TDS ON THE AMOUNT OF INTEREST PAID ON THESE LOANS. IT IS FURTHER NOTED BY US THAT THESE LOANS HAD BEEN SUBSEQUENTLY REPAID TO THESE PERSONS. COPY OF CONFIRMATIONS CONTAINING COMPLETE ADDRESSE S ARE ALSO ON RECORD. UNDER THESE CIRCUMSTANCES, IF THE ASSESSING OFFICER HAD ANY DOUBT, THEN, HE WAS FREE TO MAKE FURTHER VERIFICATION WITH THESE PE RSONS. IN OUR CONSIDERED VIEW, THE ASSESSEE HAS DISCHARGED ITS BURDEN U/S 68 OF THE ACT. THE ASSESSING OFFICER HAD MADE THE ADDITION ON THE BASIS OF PRESU MPTION AND GUESS WORK WHICH IS NOT PERMITTED UNDER THE LAW. WE DIRECT TH E ASSESSING OFFICER TO DELETE THE ADDITION WITH RESPECT TO THESE TWO PERSO NS. 10. WITH RESPECT TO LOAN RECEIVED FROM SHRI JAYANT PADALKAR IT WAS INFORMED BY THE LD.COUNSEL THAT INADVERTENTLY THE BANK STATE MENT OF THE RELEVANT PERIOD COULD NOT BE BROUGHT ON RECORD. HE SUBMITTED THAT IT HAPPENED DUE TO OVERSIGHT. IT WAS FURTHER SUBMITTED BY HIM THAT HE CAN BRING REQUISITE DETAILS ON RECORD, IF AN OPPORTUNITY WAS GIVEN TO HIM. THU S, AFTER TAKING INTO ACCOUNT 6 ITA NO.,8115 /MUM/2010 OF THE FACTS AND CIRCUMSTANCES WE FIND IT APPROPRIA TE TO SEND THE ISSUE OF LOAN RECEIVED FROM SHRI JAYANT PADALKAR BACK TO THE FILE OF THE ASSESSING OFFICER, WHO SHALL GIVE SUFFICIENT OPPORTUNITY TO THE ASSESS EE TO SUBMIT REQUISITE DOCUMENTARY EVIDENCES ON RECORD TO SUBSTANTIATE THE SAID LOAN. THE ASSESSING OFFICER SHALL DECIDE THIS ISSUE AFTER TAK ING INTO CONSIDERATION ALL THE DETAILS AND DOCUMENTARY EVIDENCES AS HAS BEEN SUBMI TTED BY THE ASSESSEE TO SUBSTANTIATE THIS LOAN AMOUNT IN TERMS OF SECTION 6 8 OF THE ACT. THIS GROUND MAY BE TREATED AS PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 25 TH MAY, 2016. SD/- SD/- MAHAVIR SINGH ASHWANI TANEJA JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DT :25 TH MAY, 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE , B BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR, ITAT, MUMBAI BENCHES