Vinay Unique Construction P Ltd Mumbai v. Acit 15 3 Mumbai

In The Income Tax Appellate Tribunal J Bench Mumbai Before Shri Saktijit Dey Judicial Member And Shri N K Pradhan Accountant Member And Ita N O 1910 Mum 2016 Assessment Year 2011 12 M S Vin Ay Unique Construction P Ltd Formerly Vinay Unique Construction Co A 08 Om Maheshwar Niketan Harsha Park Chandavarkar Road Borivali W Mumbai 400 092 Pan No Aaecv 7326 B Appellant V S Acit 15 3 R No 122 1 St Floor Matru Mandir Mumbai 400 007 Respondent Appellant By Shr I Subodh Ratnaparkhi Respondent By Ms Aarjoo Garodia Date Of Hearing 12 12 2017 Date Of Order 12 12 2017 O R D E R Per Saktijit Dey J M This Is An Appeal By The Assessee Against The Order Dated 19 01 2016 Of Ld Commissioner Of Income Tax Appeals 44 Mumbai For A Y 2011 12 2 Ground No 1 I Has Not Been Pressed H Ence Dismissed 2 3 In Ground No 1 Ii Assessee Has Challenged Disallowance Of 49 18 527 Under Section 40 A Ia Of The Act 4 Briefly The Facts Are The Assessee A Company Is Engaged In The Business Of Builder And Developer F Or Th E Assessment Year Under Dispute A Ssessee Filed Its Return Of Income On 30 09 2011 Declaring Total Income Of 1 27 39 434 During T He Assessment P Roceedings The A Ssessing O Fficer Noticed That Though The Assessee Has Paid Interest Of 49 18 527 To N On B Anking F Inancial C Ompanies Nbfc Towards Loans Availed From Them However The Assessee Has Not Deducted Tax At Source While Making Such Paymen T He Therefore Called Upon The Assessee To Explain Why The Interest Paid Should Not Be Disallowed Under Section 40 A Ia Of The Act 5 In Reply Though The Assessee Justified Its Action In Not Deducting Tax At Source On The Interest Paid However The Assessing Officer Rejecting The Explanation Of The Assessee Disallowed An Amount Of 49 18 527 Under Section 40 A Ia Of The Act The Disallowance Made By The Assessing Officer Was Also Sustained By The First Appellate Authority 6 The Ld A Uthorize D R Epresentative Submitted Before Us The Payees Recipients Of Interest Paid By The Assessee Have Included The Amount In Computing The Ir Taxable Income Therefore As Per Second Proviso To 3 Section 40 A Ia Of The Act No Disallowance Can Be Made Under The Said Provision Further Learned Ar Submitted The Second Proviso To Section 40 A Ia Will Apply Retrospectively In This Context He Relied Upon The Following Decisions I Cit Vs Ansal Land Mark Township P Ltd 61 Taxmann Com 45 Delhi 2015 Ii Dcit Vs Ups Jetair Express P Ltd 56 Taxmann Com 387 Mumbai Trib 2015 Iii Redeus Advertising P Ltd Vs Acit 80 Taxmann Com 353 Mum Trib 2017 Iv Ito Vs Dr Jaideep Kumar Sharma 152 Itd 270 Delhi 2015 7 The Leaned A Uthorized R Epresentative Submitted The Issue May Be Restored Back To The Assessing Officer To Examine This Aspect 8 The Learned D Epartmental R Epresentative Submitted The Onus Is On The Assessee To Substantiate That The Recipients Have Offered The Interest Paid To Them As Income In The Relevant Assessment Year 9 We Have Heard Rival Submissions And Perused Materials On Record In Principle We Agree With The Contention Of Learned A Uthorized R Epresentative That The Second Proviso Of Section 40 A Ia Will Have R Etrospective Operation The Decisions Relied Upon By The Learned Authorized Representative Supports This View However A Careful Reading Of The Second Proviso To Section 40 A Ia Would Make It Clear That It Will Apply If The Assessee Is Not Deemed To Be An 4 Assessee In Default In Terms O F First Proviso Of Section 201 1 Of The Act As Per The Conditions Of Section 201 1 Of The Act The Onus Is O N The Assessee To Demonstrate Through Documentary Evidence That The Recipients Have Offered The Amount Paid To Them Without Deducting Tax At Source As Income In The Return Of Income Filed For The Relevant Assessment Year 1 1 Since The Aforesaid Claim Of The Assessee Requires Factual Verificat Ion And The Assessee Has To Bring Proper Evidence On Record To Prove I Ts Claim We Restore The Issue To The File Of The Assessing Officer For Fresh Adjudication After Due Opportunity Of Being Heard To The Assessee In Case Assessees Claim That The Recipients Have Offered The Interest Paid To Them As Income In The Relevant A Ssessm Ent Year Is Found To Be Correct N O Disallowance Under Section 40 A Ia Should Be Made With The Aforesaid Observation S The Ground Is Allowed For Statistical Purposes 1 2 In Ground No 2 Assessee Has Challenged Of Addition Of 10 40 053 On Account Of Bogus Purchases 1 3 Briefly The Facts Are During The Assessment Proceedings The Assessing Officer On The Basis Of Information Available On Record Found That Purchases To The Tune Of 50 28 05 Made From Eight Parties 5 Were Bogus In Nature As Those Parties Are Hawala Operators And Are Providing Accommodation Bills 14 Further To Verify The Authenticity Of The Purchase S The Assessing Officer Issued Notices Under Section 133 6 To The Concerned Parties Which Returned Unserved By The Postal Author Ities With Remark S Le F T Unknown Etc The Assessing Officer Also Observed That Apart From Furnishing Purchase Invoices The Assessee Could Not Prove The Physical Delivery Of Goods At Its Premises Through Delivery Challan Transportation Bills Etc T Herefore He Treated The Purchases Made Of 50 28 053 From The Concerned Parties As Bogus And Added Back To The Income Of The Assessee 15 Ld Commissioner A Ppeals After Considering The Submissions Of The Assessee Held That The Entire Purchases Can Not Be Added To The Income Of The Assessee As The Consumption Of Material Has Not Been Doubted By The Assessing Officer He Also Found That The Assessing Officer Has Not Doubted The Sales Figure Or The Work In Progress Therefore Learned Commissioner A Ppeals Held Since Only The Source Of Purchase S Is Doubtful The Profit Element Embedded In Such Purc Hases Can Be Considered For Addition Accordingly He Quantified The Disallowance At 20 Of The Alleged Bogus Purchases 6 16 The Only Submission By The Learned A Uthorized R Epresentative Before Us Is The Disallowance Of 20 Is On A Much Higher Side A Nd Should Be Suitably Scaled Down Learned D Epartmental R Epresentative Relied Upon The Observations Of The Commissioner A Ppeals 17 We Have Heard Rival Co Ntentions And Perused Material On Record The Issue Before Us Is The Quantum Of Disallowance To Be Made Out Of Bogus Purchases As Could Be Seen Learned Commissioner A Ppeals Has Disallowed 20 Out Of The Alleged Bogus Purchases However It Is A Fact Th At The Assessee Is Engaged In The Business Of Builder And Developer Civil Construction Work Therefore It Cannot Be Expected To Earn Profit Of 20 Further In Similar Types Of Cases The Tribunal Is Consistently Upholding Disallowance At 12 5 Of The A Lleged Bogus Purchase In Tune With The Aforesaid Consistent View Of The Tribunal We Restrict The Disallowance To 12 5 Of The Alleged Bogus Purchases Furt H Er We May Make It Clear That Our Aforesaid Decision Is Purely In The Context Of The Facts Involve D In The Present Appeal Ground Raised Is Partly Allowed 18 In The Result Assessees Appeal Is Partly Allowed Order Pronounced In The Open Court On 12 12 2017 Sd Sd Sd N K Pradhan Accountant Member Sd Saktijit Dey Judicial Member 7 Mumbai Dated 12 12 2017 Copy Of The Order Forwarded To 1 The Assessee 2 The Revenue 3 The Cit A 4 The Cit Mumbai City Concerned 5 The Dr Itat Mumbai 6 Guard File True Copy By Order Karuna Sr Private Secretary Dy Asstt Registrar Itat Mumbai