ACIT 10(2), MUMBAI V. BSWX COM INTERNATIONAL LTD, MUMBAI

ITA 870/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5849 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-03-2014
• Assessment Year: 2001-2002
• Appeal Filed On: 09-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Difference of opinion
• Section: 68; 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B , MUMBAI BEFORE SHRI N. K. BILLAIYA , ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ITA NO. 1958/M/2011 ASSESSMENT YEAR: 2001 - 02 M/S. BSWX.COM INTERNATIONAL LIMITED, C/O. JMT & ASSOCIATES, 3 04 - 305, A - WING, WINSWAY COMPLEX, OPP. ANDHERI RAILWAY STATION, ANDHERI (E), MUMBAI 400 069 PAN: AAABC3556A VS. ASSTT. COMMISSIONER OF INCOME TAX - 10(2), ROOM NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ITA NO. 870/M/2012 ASSESSMENT YEAR: 2001 - 02 ASSTT. COMMISSIONER OF INCOME TAX - 10(2), ROOM NO.432, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 VS. M/S. BSWX.COM INTERNATIONAL LIMITED, C/O. JMT & ASSOCIATES, 304 - 305, A - WING, WINSWAY COMPLEX, OPP. ANDHERI RAILWAY STATION, ANDHERI (E), MUMBAI 400 069 PAN: AAABC3556A (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VIJAY MEHTA, A.R. REVENUE BY : SHRI MALLIKARJUN UTTURE, D.R. DATE OF HEARING : 25.03. 201 4 DATE OF PRONOUNCEMENT : 28.03.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: WITH THIS COMMON ORDER WE WILL DISPOSE OF TWO APPEALS I.E. ONE FILED BY THE ASSESSEE RELATING TO QUANTUM A DDITIONS AND THE OTHER FILED BY THE REVENUE ITA NO. 1958/M/2011 & ITA NO.870/M/2012 M/S. BSWX.COM INTERNATIONAL LIMITED 2 RELATING TO DELETION OF THE PENALTY BY THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)]. FIRST WE TAKE UP THE APPEAL OF THE ASSESSEE RELATING TO QUANTUM ADDITION. ITA NO. 1958/M /2011 2. THE ASSESSEE HAS AGITATED THE CONFIRMATION OF ADDITION OF UNSECURED LOANS OF RS.28,39,639/ - UNDER SECTION 68 OF THE INCOME TAX (HEREINAFTER REFERRED TO AS THE ACT). THIS IS THE SECOND ROUND OF APPEAL BEFORE THIS TRIBUNAL. EARLIER THE MATTER WAS SET ASIDE TO THE LD. CIT(A) BY THE TRIBUNAL VIDE ORDER DATED 01.12.08 PASSED IN ITA NO.1041/M/06 TO DECIDE THE SAME ON MERITS , HOLDING THAT THE DISMISSAL OF THE APPEAL BY THE LD. CIT(A) FOR WANT OF MAINTAINABILITY WAS WRONG. THEREAFTER THE LD. CIT(A) VID E IMPUGNED ORDER HAS DECIDED THE VARIOUS ISSUES TAKEN BEFORE HIM BY THE ASSESSEE. THOUGH MOST OF THE ISSUES VIDE IMPUGNED ORDER HAVE BEEN DECIDED IN FAVOUR OF THE ASSESSEE, HOWEVER THE ISSUE RELATING TO ADDITION OF RS.28,39,639/ - AS UNEXPLAINED CASH UNDER SECTION 68 OF THE ACT HAS BEEN DECIDED AGAINST THE ASSESSEE. 3. THE LD. CIT(A) WHILE DECIDING THE SAID ISSUE HAS CALLED FOR A REMAND REPORT FROM THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE AO). THE AO IN HIS REMAND REPORT REPORTED THAT THE U NSECURED LOANS IN QUESTION WERE OBTAINED BY THE ASSESSEE FROM THE FAMILY MEMBERS WHO WERE ALSO DIRECTORS OF THE ASSESSEE COMPANY. THE ASSESSEE HAD FURNISHED THE DETAILS LIKE NAMES, ADDRESSES, PAN OF THE PARTIES FROM WHOM THE UNSECURED LOANS WERE RECEIVED. HOWEVER, THE ASSESSEE HAD FAILED TO FURNISH THE BANK DETAILS OF THE SAID PARTIES. HOWEVER, THE SAID DETAILS WERE FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(A) . B UT , THE LD. CIT(A) DID NOT LOOK INTO THE SAID DETAILS TREATING IT AS FRESH ADDITIONAL EVI DENCE AND FURTHER HOLDING THAT THE ASSESSEE HAD ALREADY BEEN ITA NO. 1958/M/2011 & ITA NO.870/M/2012 M/S. BSWX.COM INTERNATIONAL LIMITED 3 GIVEN SUFFICIENT OPPORTUNITY TO PRODUCE THE SAID EVIDENCE AND THERE WAS NO QUESTION OF LOOKING AT THE SAID EVIDENCE AT THAT STAGE. HE THEREFORE CONFIRMED THE ADDITIONS. 4. WE HAVE HEARD THE L D. REPRESENTATIVES OF BOTH THE PARTIES AND ALSO HAVE GONE THROUGH THE RECORDS. IT IS AN ADMITTED FACT THAT THE LOANS IN QUESTION WERE OBTAINED BY THE ASSESSEE FROM FAMILY MEMBERS WHO WERE ALSO THE DIRECTORS OF THE ASSESSEE COMPANY. THE AO HAS NOT DOUBTED THE GENUINENESS OF THE LOAN TRANSACTIONS. THE CLAIM HAS BEEN REJECTED ONLY ON THE GROUND THAT THE ASSESSEE HAD FAILED TO FURNISH THE BANK STATEMENTS BEFORE THE AO. HOWEVER, THE FACT , THAT CANNOT BE LOST OF SIGHT , IS THAT SUCH DETAILS WERE FURNISHED BY T HE ASSESSEE BEFORE THE LD. CIT(A) DURING THE APPELLATE PROCEEDINGS. THE LD. CIT(A) REFUSED TO LOOK INTO THOSE DETAILS TREATING IT AS FRESH EVIDENCE. THE LD. A.R. OF THE ASSESSEE HAS BROUGHT OUR ATTENTION TO THE FACT THAT NECESSARY EXPLANATION WAS GIVEN B Y THE ASSESSEE TO THE LD. CIT(A) FOR THE REASONS BECAUSE OF WHICH IT COULD NOT FURNISH THE SAID DETAILS BEFORE THE AO AND THOSE EXPLANATIONS WERE CONSIDERED BY THE LD. CIT(A) IN THE PENALTY APPEAL AND IN THE LIGHT OF SAID EXPLANATIONS , THE PENALTY IN RELAT ION TO THIS ISSUE WAS DELETED BY THE LD. CIT(A). 5. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. REPRESENTATIVE OF THE ASSESSEE. THE GENUINENESS OF THE TRANSACTION IN QUESTION IS NOT IN DISPUTE. THE NECESSARY DETAILS SUCH AS THE NAMES, ADDRESSES, PAN OF THE PARTIES FROM WHOM THE UNSECURED LOANS WERE RECEIVED WERE SUBMITTED BY THE ASSESSEE TO THE AO BUT T HE ONLY DOCUMENT I.E. THE BANK STATEMENT OF THE PARTIES COULD NOT BE FURNISHED BY THE ASSESSEE BEFORE THE AO. HOWEVER, THE SAME WAS FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(A). WHEN THE ASSESSEE HAD FURNISHED SUFFICIENT DETAILS BEFORE THE AO AND MERELY BECAUSE THE ASSESSEE COULD NOT FURNISH THE BANK STATEMENTS BEFORE THE AO THAT ITSELF , IN OUR VIEW , WAS NOT SUFFICIENT TO ITA NO. 1958/M/2011 & ITA NO.870/M/2012 M/S. BSWX.COM INTERNATIONAL LIMITED 4 MAKE THE ADDITIONS UNDER T HIS HEAD. IF THE AO HAD ANY DOUBT ABOUT THE GENUINENESS OF TRANSACTION OR CREDITWORTHINESS OF THE CREDITORS , HE COULD HAVE SUMMONED THE NECESSARY CREDITORS OR SHOULD HAVE ASKED THEM TO FURNISH THE NECESSARY DETAILS. BANK STATEMENT OF THE PARTIES WAS NOT A DOCUMENT WHICH WAS IN THE POSSESSION OF THE ASSESSEE. THE ASSESSEE AT THE MOST COULD HAVE REQUESTED THE CONCERNED PARTIES TO PROVIDE HIM THE BANK DETAILS. ON THE OTHER HAND , THE AO IS VESTED WITH THE REQUIRED POWERS UNDER THE ACT TO CALL FO R SUCH DETA ILS FROM THE RESPECTIVE CREDITORS. THE ACT OF THE LD. CIT(A) IN REFUSING TO LOOK INTO THE BANK STATEMENTS IN OUR VIEW , IS ALSO NOT JUSTIFIED . THE BANK STATEMENT FURNISHED BY THE ASSESSEE BEFORE THE LD. CIT(A) WAS NOT A NEW EVIDENCE RATHER THE SAME WAS IN COMPLIANCE WITH THE DIRECTIONS OF THE AO AND WAS IN THE SHAPE OF CORROBORATION OF THE DETAILS ALREADY FURNISHED BY THE ASSESSEE BEFORE THE AO. MOREOVER, THE LD. CIT(A) IN PENALTY APPEAL HAS ALSO EXAMINED THE EXPLANATION OF THE ASSESSEE AS TO WHY HE COULD NOT FURNISH THOSE BANK STATEMENTS BEFORE THE AO AND HAS ACCEPTED THE SAID EXPLANATION A S SATISFACTORY. EVEN OTHERWISE , WHILE REFUSING TO TAKE INTO CONSIDERATION THE RELEVANT DOCUMENTS WHICH WERE VERY MUCH NECESSARY FOR THE JUST DECISION OF THE CASE, LEAR NED CIT(A) FAILED TO EXERCISE HIS APPELLATE JURISDICTION U/S 250 OF THE ACT. THE DUTY WAS ALSO CAST UPON THE LEARNED CIT(A) TO ADMIT AND CONSIDER THE EVIDENCE PRODUCED BEFORE HIM BY THE ASSESSEE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF SMT. PRABHAVAT I S.SHAH V. CIT [(1998) 231 ITR 1 (BOM.)] HAS HELD THAT THE POWERS CONFERRED ON THE FIRST APPELLATE AUTHORITY UNDER SUB - SECTION (4) OF SECTION 250 OF THE ACT, BEING A QUASI - JUDICIAL POWER, IT IS INCUMBENT ON HIM TO EXERCISE THE SAME, IF THE FACTS AND CIRC UMSTANCES JUSTIFY . THERE IS NO DOUBT ABOUT THE LEGAL POSITION THAT IF ANY DOCUMENT FURNISHED BY THE ASSESSEE BEFORE THE COMMISSIONER (APPEALS) IS IN THE NATURE OF CLINCHING EVIDENCE WHICH GOES TO THE ROOT OF THE CASE , THEN IN THE INTEREST OF ITA NO. 1958/M/2011 & ITA NO.870/M/2012 M/S. BSWX.COM INTERNATIONAL LIMITED 5 JUSTICE SUCH TYPES OF EVIDENCE SHOULD NOT BE REJECTED. 6 . IN VIEW OF THE ABOVE, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED AND THE IMPUGNED ADDITION IS HEREBY ORDERED TO BE DELETED. ITA NO. 870/M/2012 7 . THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AGAI NST THE DELETION OF THE PENALTY BY THE LD. CIT(A) VIDE ORDER DATED 29.11.11 WHICH WAS LEVIED BY THE AO UNDER SECTION 271(1)(C) OF THE ACT. THE REVENUE HAS AGITATED THE DELETION OF THE PENALTY IN RESPECT OF DISALLOWANCES ON THREE ISSUES I.E. UNEXPLAINED CA SH CREDITS AMOUNTING TO RS.28,39,639/ - , DEFERRED REVENUE EXPENSES AMOUNTING TO RS. 31,32,765/ - AND LOSS ON SALE OF DEPRECIABLE ASSETS AMOUNTING TO RS.1,78,280/ - . 8 . WE HAVE HEARD THE LD. REPRESENTATIVES OF THE PARTIES ON THE ISSUE. SO FAR THE PENALTY IN RELATION TO THE ADDITION OF RS.28,39,639/ - UNDER SECTION 68 OF THE ACT IS CONCERNED, WE HAVE DELETED THE QUANTUM ADDITION ON THIS ISSUE A S PER OUR FINDINGS GIVEN ABOVE WHILE DISPOSING OF ITA NO. 1958/M/2011. SINCE THE QUANTUM ADDITIONS HAVE ALREADY BEEN D ELETED, HENCE THE QUESTION OF LEVY OF PENALTY IN RELATION TO THE SAID ADDITION DOES NOT SURVIVE. THE LD. CIT(A) IN VIEW OF THE EXPLANATIONS GIVEN BY THE ASSESSEE HAS ALREADY DELETED THE SAID PENALTY. IN VIEW OF THE ABOVE STATED POSITION, THE ORDER OF THE LD. CIT(A) DELETING THE PENALTY ON THE ABOVE ISSUE IS HEREBY UPHELD. 9 . SO FAR THE PENALTY IN RELATION TO DEFERRED REVENUE EXPENSES AMOUNTING TO RS.31,32,765/ - IS CONCERNED, IT HAS BEEN CONTENDED BY THE LD. D.R. THAT THE SAID EXPENDITURE WAS CLAIMED BY THE ASSESSEE AS REVENUE IN NATURE , WHEREAS THE AO HELD THE SAME AS CAPITAL IN NATURE. THE LD. A.R. HAS CONTENDED THAT THOUGH THE ITA NO. 1958/M/2011 & ITA NO.870/M/2012 M/S. BSWX.COM INTERNATIONAL LIMITED 6 AO HAD TREATED THE SAID EXPENDITURE AS CAPITAL IN NATURE HOWEVER THE ASSESSEE HAS BEEN ALLOWED 60% DEPRECIATION ON THE CAPITA L ASSET RELATING TO SAID EXPENDITURE. HE HAS FURTHER CONTENDED THAT IT IS NOT A CASE OF CONCEALMENT OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. MERELY BECAUSE THE EXPENDITURE CLAIMED BY THE ASSESSEE HAS BEEN TREATED BY THE AUTHORITIES AS CAPITAL IN NATURE , THAT ITSELF , IS NOT A GROUND FOR LEVY OF PENALTY. THE LD. CIT(A) HAS DELETED THE PENALTY OBSERVING THAT THERE WAS NO DISPUTE THAT THE EXPENSES WERE NOT GENUINE EXPENSES OR THE CLAIM WAS FALSE. IT WAS MERELY DIFFERENCE OF OPINION THAT THE EXPENSES WERE REVENUE OR CAPITAL IN NATURE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) IN THIS RESPECT AND HENCE THE DELETION OF PENALTY ON THIS ACCOUNT IS HEREBY UPHELD. 1 0 . SO FAR THE DELETION OF PENALTY IN RESPECT OF DISALLOWAN CE RELATING TO LOSS ON SALE OF DEPRECIABLE ASSET AMOUNTING TO RS. 1,78,280/ - IS CONCERNED, THE QUESTION BEFORE THE AO WAS THAT AS TO WHETHER THE CLAIM WAS ALLOWABLE AS A BUSINESS LOSS OR SHORT TERM CAPITAL LOSS . THE LD. A.R. BEFORE US HAS SUBMITTED THAT TH E OVERALL RETURN OF THE ASSESSEE FOR THE ASSESSMENT YEAR IN QUESTION WAS IN LOSS. SO THERE WAS NO QUESTION OF CONCEALMENT OF ANY INCOME OR AVOIDANCE OF ANY TAX E VEN THOUGH THE LOSS IN QUESTION HAS BEEN TREATED BY THE AO AS SHORT TERM CAPITAL LOSS . T HE ON LY DIFFERENCE THAT HAS BEEN MADE IS THAT INSTEAD OF CARRY ING FORWARD THE SAID LOSS AS BUSINESS LOSS , THE ASSESSEE HAS CARRIED FORWARD THE SAME AS SHORT TERM CAPITAL LOSS. THE LD. CIT(A) WHILE DELETING THE PENALTY HAS OBSERVED THAT IT WAS NOT A CASE OF CO NCEALMENT OF PARTICULARS OF INCOME OR FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) ON THIS ISSUE ALSO AND THE SAME IS HEREBY UPHELD. ITA NO. 1958/M/2011 & ITA NO.870/M/2012 M/S. BSWX.COM INTERNATIONAL LIMITED 7 1 1 . IN VIEW OF OUR ABOVE OBSERVATIONS, THE APPEAL OF THE ASSESSEE IS HEREBY ALLOWED AND THE APPEAL OF THE REVENUE IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.03. 201 4 . SD/ - SD/ - ( N. K. BILLAIYA ) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 28.03 . 2014 * KISHORE COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT ( A) CONCERNED, MUMBAI THE DR C BENCH //TRUE COPY// [ BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.