ANAND BAL DHURI, MUMBAI V. ITO WD 11(1)(1), MUMBAI

ITA 831/MUM/2012

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4608 (ITAT-MUMBAI)
• Duration Of Justice: 7 year(s) 6 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 07-02-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANOJ KUMAR LD
• Assessee Lawyers: RASHMIKANT C MOD I; KETKI RAJESHIRKE LD ARS QRLPS
• Keywords: Unexplained cash credit; Business expenditure
• Section: 143(3); 68

Judgement Text

1 ITA NO.831/MUM/2012 ANAND BAL DHURI ASSESSMENT YEAR-2007-08 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI , , BEFORE SHRI SAKTIJIT DEY, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./ I.T.A. NO.831/MUM/2012 ( / ASSESSMENT YEAR:2007-08) MR. ANAND BAL DHURI 304, SHIVTIRTH, BLDG. NO.2 BHULABHAI DESAI ROAD MUMBAI-400 026. / VS. INCOME TAX OFFICER WARD-11(1)(1) MUMBAI. KL ./ ./ PAN/GIR NO. ACHPD - 2356 - F ( LP / APPELLANT ) : ( QRLP / RESPONDENT ) LPS / APPELLANT BY : RASHMIKANT C. MODI & MS. KETKI RAJESHIRKE- LD. ARS QRLPS / RESPONDENT BY : MANOJ KUMAR - LD. DR / DATE OF HEARING : 26/08/2019 / DATE OF PRONOUNCEMENT : 26/08/2019 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER):- 1. AFORESAID MATTER IS A RECALLED MATTER SINCE THE APPEAL WAS INITIALLY DISMISSED BY TRIBUNAL VIDE ORDER DATED 26/09/2018. HOWEVER, THE ORDER HAS 2 ITA NO.831/MUM/2012 ANAND BAL DHURI ASSESSMENT YEAR-2007-08 BEEN RECALLED, UPON ASSESSEES APPLICATION, VIDE M. A. NO.206/MUM/2019 ORDER DATED 07/07/2019. ACCORDINGLY, THE APPEAL HAS COME UP FOR FRESH HEARING BEFORE THE BENCH. THE ASSESSEE IS AGGRIEVED BY CONFIRMATION OF CERTAIN ADDITIONS AS MADE BY LD.AO IN AN ASSESSMENT FRAMED U/S. 143(3) ON 23/12/2009. THE ASSESSEE IS A RESIDENT INDIVIDUA L AND STATED TO BE ENGAGED IN THE BUSINESS OF ARRANGING LOANS. THE ASS ESSEE REFLECTED NET PROFIT OF RS.3.20 LACS AGAINST PROFESSIONAL RECEIPT S OF RS.20.71 LACS. UPON HEARING RIVAL SUBMISSIONS, OUR ADJUDICATION TO THE SAME WOULD BE AS FOLLOWS. 2.1 THE FOLLOWING QUANTUM ADDITIONS, UPON CONFIRMAT ION BY LEARNED FIRST APPELLATE AUTHORITY, IS UNDER CHALLENGE BEFORE US: - NO. PARTICULARS AMOUNT (RS.) 1. ADDITION ON ACCOUNT OF PROFESSIONAL FEES 1,28,73 6/- 2. DISALLOWANCE OF COMMISSION AND PROFESSIONAL FEE 10,13,100/- 3. ADHOC DISALLOWANCE OF CERTAIN EXPENSES @ 20% 1,10,730/- 4. UNEXPLAINED CASH CREDIT U/S. 68 39,600/- 2.2 DURING ASSESSMENT PROCEEDINGS, IT TRANSPIRED TH AT THE ASSESSEE PROPOSED TO ARRANGE CERTAIN LOAN FOR AN ENTITY NAME LY M/S. ELITE INTERNATIONAL PVT. LTD. AND RECEIVED ON ACCOUNT PAYMENT OF RS.68.60 LACS. HOWEVER, THE TRANSACTION REMAINED UN-FRUCTIFIED AND THE ASSESSEE WAS TO REFUND THE AMOUNT OF RS.56.60 LACS AFTER RETAINING FEES OF RS.12 LACS. HOWEVER, AS AGAINST THE SAME, THE ASSESSEE CREDITED ONLY AN AMOUNT OF RS.10,71,264/- IN THE PROFIT & LOSS ACCOUNT AND ACC ORDINGLY, THE DIFFERENTIAL I.E. RS.1,28,736/- WAS ADDED TO THE INCOME OF THE A SSESSEE. FURTHER, AS A CONSEQUENCE, COMMISSION AND PROFESSIONAL FEES OF RS .10.13 LACS CLAIMED 3 ITA NO.831/MUM/2012 ANAND BAL DHURI ASSESSMENT YEAR-2007-08 BY THE ASSESSEE WERE DISALLOWED IN VIEW OF THE FACT THAT THE ASSESSEE FAILED TO PERFORM HIS OBLIGATION AND NO LOAN WAS ARRANGED. ANOTHER ADDITION OF RS.1.10 LACS WAS ADHOC DISALLOWANCE @20% AGAINST OF FICE EXPENSES, DRIVERS SALARY, TELEPHONE EXPENSES & TRAVELLING EX PENSES AGGREGATING TO RS.5,53,651/- SINCE THE EXPENDITURE WAS NOT FULLY V ERIFIABLE. THE LAST ADDITION OF RS.39,600/- IS ADDITION U/S 68, BEING T HE DIFFERENCE IN BALANCE REFLECTED BY THE ASSESSEE AGAINST M/S. ELITE INTERN ATIONAL PVT. LTD. AND AMOUNT DEMANDED BY THAT ENTITY FROM THE ASSESSEE. 3.1 UPON CAREFUL CONSIDERATION, WE FIND THAT THE AD DITION OF RS.1,28,736/- WOULD BE SUSTAINED SINCE NO PLAUSIBLE EXPLANATION H AS BEEN PUT FORTH BY LD. AR BEFORE US, IN THIS REGARD. GROUND NO.1 STAND DIS MISSED. 3.2 THE DISALLOWANCE OF EXPENDITURE OF RS.10.13 LAC S, IN OUR CONSIDERED OPINION, WAS NOT JUSTIFIED SINCE THE ASSESSEE WAS E NGAGED IN THE BUSINESS OF ARRANGING LOANS AND WHATEVER BUSINESS EXPENDITUR E WAS INCURRED FOR THE PURPOSE OF BUSINESS, WAS ALLOWABLE TO THE ASSESSEE. THE DEDUCTION OF THE SAME WAS NOT DEPENDENT UPON THE SUCCESSFUL ARRANGIN G OF LOANS. THE LD. AO HAS NOT DOUBTED THE GENUINENESS OF THE EXPENDITU RE AND HAS ACCEPTED THE INCOME OFFERED BY THE ASSESSEE OUT OF THIS TRAN SACTION. THEREFORE, THE REASONING PUT FORTH BY LD. AO COULD NOT BE A GROUND TO DENY THE LEGITIMATE BUSINESS EXPENDITURE. THEREFORE, THE DISALLOWANCE O F RS.10.13 LACS STAND DELETED. GROUND NO. 2 STAND ALLOWED. 3.3 THE ADHOC DISALLOWANCE @20% AS MADE BY LD.AO ON ACCOUNT OF EXPENDITURE AGGREGATING TO RS.5,53,651/- WAS ON THE HIGHER SIDE. WE RESTRICT THE SAME TO 10%. GROUND NO. 3 STAND PARTLY ALLOWED. 4 ITA NO.831/MUM/2012 ANAND BAL DHURI ASSESSMENT YEAR-2007-08 3.4 THE ADDITION MADE U/S 68 FOR RS.39,600/- WOULD NOT BE SUSTAINABLE IN VIEW OF THE FACT THAT THE SAME WAS MATTER OF RECONC ILIATION ONLY AND THE DIFFERENTIAL AMOUNT COULD NOT BE SAID TO BE UNEXPLA INED CASH CREDIT WITHIN THE MEANING OF SECTION 68. GROUND NO. 4 STAND ALLOW ED. THE OTHER GROUNDS ARE GENERAL IN NATURE AND WOULD REQUIRE NO ADJUDICA TION. 4. THE APPEAL STANDS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH AUGUST, 2019. SD/- SD/- (SAKTIJIT DEY) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 26/08/2019 SR.PS:-JAISY VARGHESE BC DC / COPY OF THE ORDER FORWARDED TO : 1. LP / THE APPELLANT 2. QRLP / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. ` A Q B , B , / DR, ITAT, MUMBAI 6. A CDE / GUARD FILE / BY ORDER, / (DY./ASSTT.REGISTRAR) , / ITAT, MUMBAI. 5 ITA NO.831/MUM/2012 ANAND BAL DHURI ASSESSMENT YEAR-2007-08