M/s Mahanth Motors , Davangere V. The Deputy Commissioner of Income Tax, Circle-1(1), Davangere

SA 278/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6196 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 11 day(s)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 01-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 20-12-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKAS K SURYAWANSHI
• Assessee Lawyers: RENUKA PRASAD C M
• Keywords: Opportunity of being heard; Set aside
• Section: 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER S.P. NOS. 278 & 279/BANG/2018 (IN ITA NOS.3351 & 3352/BANG/2018) & ITA NOS. 3351 & 3352/BANG/2018 ASSESSMENT YEAR S : 2014 - 15 & 2015 - 16 M/S. MAHANTH MOTORS, OPP: GMIT COLLEGE, HARIHAR ROAD, DAVANGERE 577 006. PAN: AAHFM0738J VS. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 1 (1), DAVANGERE. APPELLANT RESPONDENT ASSESSEE BY : SHRI RENUKA PRASAD .C.M, ADVOCATE REVENUE BY : SHRI VIKAS K. SURYAWANSHI, ADDL. CIT (DR) DATE OF HEARING : 11 . 01 .201 9 DATE OF PRONOUNCEMENT : 11 . 01 .201 9 O R D E R PER BENCH: AS PER THESE TWO STAY PETITIONS, THE ASSESSEE IS SE EKING STAY OF DISPUTED OUTSTANDING DEMAND OF RS. 12,57,920/- FOR ASSESSMEN T YEAR 2014-15 AND RS. 23,86,190/- FOR ASSESSMENT YEAR 2015-16. 2. IN COURSE OF HEARING OF THESE TWO STAY PETITIONS , IT WAS SUBMITTED BY THE LD. AR OF ASSESSEE THAT IN FACT, IN BOTH THESE YEARS, T HE ORDER OF CIT (A) IS VERY CRYPTIC AND THEREFORE, INSTEAD OF DECIDING THE STAY PETITIONS, THESE APPEALS ITSELF CAN BE DECIDED BECAUSE THE MATTER IN BOTH YE ARS HAS TO BE RESTORED BACK TO THE FILE OF CIT (A) FOR FRESH DECISION BY W AY OF A SPEAKING AND REASONED ORDER. THE LD. DR OF REVENUE OPPOSED GRAN TING OF STAY. HE ALSO SUBMITTED THAT IN BOTH YEARS, THE ORDER OF CIT (A) SHOULD BE CONFIRMED. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FIRST OF ALL, WE EXAMINE THIS SUBMISSION OF THE LEARNED AR OF THE ASSESSEE THAT T HESE APPEALS OF THE S.P. NOS. 278 & 279/BANG/2018 (IN ITA NOS. 3351 & 3352/BANG/2018) & ITA NOS. 3351 & 3352/BANG/2018 PAGE 2 OF 4 ASSESSEE CAN BE DECIDED BY RESTORING BACK THE MATTE R TO CIT (A) FOR FRESH DECISION BY WAY OF A SPEAKING AND REASONED ORDER. WE FIND THAT AS PER THE STATEMENT OF FACTS FILED BY THE ASSESSEE BEFORE CIT (A) IN BOTH THESE YEARS WHICH RUN INTO 9 PAGES IN ASSESSMENT YEAR 2014-15 A ND 7 PAGES IN ASSESSMENT YEAR 2015-16, THE ASSESSEE HAS MADE DETA ILED SUBMISSIONS ABOUT THE FACTS AND THE LD. CIT (A) HAS DECIDED THE DISPUTED ISSUE IN BOTH YEARS IN A VERY CRYPTIC MANNER. FOR READY REFERENC E, WE REPRODUCE THE RELEVANT PARA OF THE ORDER OF CIT (A) IN BOTH YEARS . IN ASSESSMENT YEAR 2014-15, THE RELEVANT PARA OF THE ORDER OF LD. CIT (A) IS PARA NOS. 7A TO 9A. THE SAME ARE REPRODUCED HEREINBELOW FOR READY REFER ENCE. 7A. THE ARGUMENTS OF THE AR ARE CONSIDERED. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO. IN MY VIEW, THE ORDER OF THE A O NEEDS NO INTERFERENCE AS THE APPELLANT HAS NOT BEEN ABLE TO SUBSTANTIATE AS TO WHY THE EXPENSES HAVE NOT BEEN INFLATED. THEREFORE, THE GROUND FAILS. 8. IN GROUND NUMBER 4, ESTIMATION OF INCOME OF RS.8 ,28,000/- FROM TP REGISTRATION IS CONTESTED. THE ORDER OF THE AO IS R EPRODUCED FOR THE SAKE OF CLARITY. 'LETTERS WERE ISSUED TO SOME OF THE PURCHASERS TO P ROVIDE DETAILS. AS PER WHICH IT WAS NOTICED THAT ASSESSEE COLLECT O N ROAD PRICE FROM CUSTOMERS HOWEVER SALES INCLUDE ONLY THE SHOWROOM P RICE AS PER INVOICE. WHEN CONFRONTED ASSESSEE CLAIMED THAT THE AMOUNTS RECEIVED TOWARDS REGISTRATION AND / OR INSURANCE AND ROAD TA X ARE RETURNED TO CLIENTS AND THEY ARE INTRODUCED TO THE BROKERS WHO GETS THE THINGS DONE. HENCE ASSESSEE IS ONLY LIASONING AND NO FINAN CIAL THING IS INVOLVED. IF THE AMOUNT IF GOING TO BE RETURNED TO CLIENTS WH ICH IN MANY OF A TIMES IS IN CASH THEN IT IS NOT UNDERSTANDABLE AS T O WHY IT IS COLLECTED? EVEN WITHOUT COLLECTING THE AMOUNT, THE CLIENT CAN BE INTRODUCED TO BROKER AND CLIENT WOULD PAY DIRECTLY TO BROKER. THE SAME IS NOT EXPLAINED SATISFACTORILY. WITH REGARD TO TP REGISTRATION, ACCOUNTANT SHRI. AJ JAPPA F K STATED THAT TP INCOME IS OFFERED IN SUBSEQUENT YEAR . HOWEVER FOR A Y 2014-15 THE SAME IS NOT OFFERED. ASSESSEE'S CLAIM T HAT NO MARGIN IS TAKEN BY THE ASSESSEE AND ENTIRE AMOUNT RECEIVED FR OM CUSTOMERS TOWARDS TF REGISTRATION IS PASSED ON TO THE BROKERS IS NOT ACCEPTABLE IN ABSENCE OF EVIDENCES. NO DETAILS OF BROKERS, PAY MENTS MADE TO THEM, MODE OF PAYMENT ARE PROVIDED IN THE TP REGIST RATION. HENCE THE S.P. NOS. 278 & 279/BANG/2018 (IN ITA NOS. 3351 & 3352/BANG/2018) & ITA NOS. 3351 & 3352/BANG/2018 PAGE 3 OF 4 UNDERSIGNED DO NOT HAVE ANY OTHER ROUTE THAN ESTIMA TING THE INCOME FROM TF REGISTRATION WHICH IS NOT OFFERED FOR F Y 2 013-4 CONSIDERING A MARGIN OF RS. 800/- PER VEHICLE, TP REGISTRATION INCOME (NET IS ESTIMATED AT RS.8,28,000/--). IN VIEW OF THE ABOVE, THE ASSESSMENT IS CONCLUDED B Y MAKING AN ADDITION OF RS. 40,28,932/- TO THE RETURNED INCOME. ' 8A. THE ARGUMENTS OF THE AR AND SUBMISSIONS MADE AR E CONSIDERED. I HAVE CAREFULLY PERUSED THE ORDER OF THE AO. IN MY V IEW, THE ORDER OF THE AO NEEDS NO INTERFERENCE AS I AM NOT IN AGREEME NT WITH THE AVERMENT OF THE AR AS TO WHY THE INCOME FROM TP REG ISTRATION SHOULD NOT BE ADDED. THEREFORE, THE GROUND FAILS. 9. IN GROUND NUMBER 5, THE APPELLANT QUESTIONS THE VALIDITY OF BUSINESS PREMISES BEING INSPECTED BY THE AO DURING THE COURS E OF SCRUTINY AND IN GROUND NUMBER 6, THE APPELLANT CONTENDS THAT THE AO HAD PASSED ORDER WITHOUT GIVING PROPER OPPORTUNITY TO EXPLAIN. 9A. I FIND IT DIFFICULT TO BELIEVE THE SAME. THE CA SE WAS SELECTED FOR SCRUTINY. DETAILS WERE CALLED FOR. IT APPEARS THAT THE DETAILS PROVIDED WERE REASONS ENOUGH FOR THE AO TO CONDUCT PHYSICAL INSPECTION. GENERALLY, THIS IS NOT A PRACTICE. IT IS ONLY TO UN DERSTAND AND APPRECIATE, THE AO HAS DONE THIS EXERCISE. THE AO H AS DONE A LOT OF WORK. SO, IT IS NOT FAIR TO SAY SUFFICIENT OPPORTUN ITY WAS NOT GIVEN. THEREFORE, BOTH THE GROUNDS ARE DISMISSED FOR STATI STICAL PURPOSE. 4. SIMILARLY, IN ASSESSMENT YEAR 2015-16, THE RELEV ANT PARA OF THE ORDER OF CIT (A) ARE PARA NOS. 7A AND 8 WHICH ARE REPRODUCED HER EINBELOW FOR READY REFERENCE. 7A. THE ARGUMENTS OF THE AR ARE CONSIDERED. I HAVE CAREFULLY PERUSED THE SUBMISSIONS MADE BY THE AR AND THE ORDER OF THE AO. IN MY VIEW, THE ORDER OF THE AO NEEDS NO INTERFERENCE AS THE AP PELLANT HAS NOT BEEN ABLE TO RECONCILE THE DISCREPANCIES FOUND OUT BY THE AO. THEREFORE, THE GROUND FAILS. 8. IN GROUND NUMBER 6, THE APPELLANT CONTENDS THAT THE AO HAD PASSED ORDER WITHOUT GIVING PROPER OPPORTUNITY TO EXPLAIN. I FIND IT DIFFICULT TO BELIEVE THE SAME. THE CASE WAS SELECTED FOR SCRUTIN Y. DETAILS WERE CALLED FOR. THE AO HAS DONE A LOT OF W ORK. SO, IT IS NOT FAIR TO SAY SUFFICIENT OPPORTUNITY WAS NOT GIVEN. T HEREFORE, THE GROUND IS DISMISSED FOR STATISTICAL PURPOSE. S.P. NOS. 278 & 279/BANG/2018 (IN ITA NOS. 3351 & 3352/BANG/2018) & ITA NOS. 3351 & 3352/BANG/2018 PAGE 4 OF 4 5. FROM THE ABOVE PARAS REPRODUCED FROM THESE TWO O RDERS OF LD. CIT (A), IT IS SEEN THAT LD. CIT (A) HAS SIMPLY HELD THAT IN HIS V IEW, THE ORDER OF THE AO NEEDS NO INTERFERENCE WITHOUT ANY DISCUSSION AND WI THOUT INDICATING ANY BASIS FOR HOLDING SO. HENCE, IT IS CLEAR THAT HE PA SSED THE ORDER IN CRYPTIC MANNER WITHOUT PASSING A SPEAKING AND REASONED ORDE R IN RESPECT OF VARIOUS CONTENTIONS RAISED BY THE ASSESSEE. HENCE WE FEEL IT PROPER TO SET ASIDE THESE TWO ORDERS OF CIT (A) AND RESTORE THE M ATTER BACK TO HIS FILE FOR A FRESH DECISION BY WAY OF A SPEAKING AND REASONED OR DER AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH SIDES . WE ORDER ACCORDINGLY. SINCE THE APPEALS OF THE ASSESSEE ITSELF ARE DECIDE D, THE STAY PETITIONS FILED BY ASSESSEE DO NOT SURVIVE AND HENCE, NO ADJUDICATI ON IS CALLED FOR IN RESPECT OF THESE TWO STAY PETITIONS. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES AND BOTH THE STAY PETITIONS FILED BY THE A SSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 11 TH JANUARY, 2019. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.