AJIT M. PENDURKAR, MUMBAI v. ITO 18(2)(1), MUMBAI

ITA 2532/MUM/2009 | 2005-2006
Pronouncement Date: 09-03-2011 | Result: Allowed

Appeal Details

RSA Number 253219914 RSA 2009
Assessee PAN AAGPP1981R
Bench Mumbai
Appeal Number ITA 2532/MUM/2009
Duration Of Justice 1 year(s) 10 month(s) 19 day(s)
Appellant AJIT M. PENDURKAR, MUMBAI
Respondent ITO 18(2)(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 09-03-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted A
Tribunal Order Date 09-03-2011
Assessment Year 2005-2006
Appeal Filed On 20-04-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI P.M. JAGTAP (AM) AND SMT. ASHA VIJAYARA GHAVAN (JM) ITA NO. 2532/MUM/2009 ASSESSMENT YEAR- 2005-06 SHRI AJIT M. PENDURKAR 8-A NEW POPATLAL BLDG. RANADE ROAD DADAR MUMBAI-400 028 PAN-AAGPP 1981R VS. THE ITO 18(2)(1) PIRAMAL CHAMBERS LALBAUG MUMBAI-400 012 (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI KESHAV B. BHUJLE RESPONDENT BY: SHRI SANJAY DUTT O R D E R PER ASHA VIJAYARAGHAVAN (JM) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER PASSED U/S. 263 OF THE I.T. ACT 1961. 2. THE LD. COUNSEL FOR THE ASSESSEE SHRI KESHAV B. BHUJLE SUBMITTED BEFORE US AS FOLLOWS: IN THE ORDER PASSED U/S. 263 OF THE I.T. ACT THE CIT HAS OBSERVED THAT THE ASSESSMENT ORDER DT. 3.12.2007 PA SSED BY THE AO U/S. 143(3) OF THE I.T. ACT WAS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE REVENUE FOR T HE FOLLOWING UNDER MENTIONED REASONS: 4.2 IN VIEW OF THE ABOVE IT IS SEEN THAT THE ASSES SEE HAS NOT BEEN ABLE TO PROVIDE DETAILS IN RESPECT OF TRAN SACTION WITH REGISTERED AND UNREGISTERED DEALERS TO THE TUNE OF RS. 3 52 125/- (1 44 925/- + 2 07 200). HOWEVER AN AM OUNT OF RS. 25 000/- ON ESTIMATED BASIS WAS ALREADY ADDED A T THE TIME OF ASSESSMENT. THEREFORE THE ASSESSMENT ORDE R IS ITA NO. 2532/M/09 2 ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INT EREST OF REVENUE TO THE EXTENT OF RS. 3 27 125/- (3 52 125 25 000) 5. NEITHER THE AO EXAMINED NOR THE ASSESSEE EXPLAIN ED HIS PERSONAL EXPENSES W.R.T DAY TODAY FAMILY MAINTE NANCE EXPENSES EDUCATION MEDICAL HOUSE MAINTENANCE RE NT CELEBRATIONS ENTERTAINMENT ETC. IT MAY BE EXAMIN ED TO CORRECT THE ERROR IN THE ASSESSMENT ORDER. 3. THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT AT PAGES 48 & 49 OF THE COMPILATION IS A NOTICE DT. 25.9.2007 WHEREIN T HE AO HAS SPECIFICALLY ASKED FOR VERIFICATION OF THE KARIGAR REGISTER AND DETAILS OF PARTY WISE LABOUT CHARGES PAID. THE DETAILS OF LABOUR CHARGES PAID AS CALLED FOR BY THE AO WHICH WERE FILED DURING THE COURSE OF THE A SSESSMENT PROCEEDINGS ARE PLACED AT PAGES 90 TO 128 OF THE C OMPILATION. HE FURTHER POINTED OUT AT PAGES 40 & 41 OF THE COMPILA TION IN EARLIER QUESTIONNAIRES DT. 10.1.2007 THE AO AT SR. NO. (M) HAS CALLED FOR ALL DETAILS OF EXPENSES EXCEEDING RS. 50 000/- DEBITED TO P&L A/C. SIMILARLY IN NOTICE DT. 9.3.2007 PLACED AT PAGE 4 2 & 42A THE AO HAS MADE AN IDENTICAL REQUEST. HE ALSO POINTED OUT THA T AFTER CONSIDERING THE DETAILS SUBMITTED VOUCHERS PRODUCED THE AO MADE A DISALLOWANCE OF RS. 25 000/- WHICH IS IN THE ASSESSMENT ORDER DT. 3.12. 2007 WHICH IS FOUND AT PAGES 32 & 33 OF THE COMPILATION AS UNDER: THE PROFIT & LOSS ACCOUNT OF M/S. M.V. PENDURKAR & CO. HAS BEEN DEBITED WITH AN AMOUNT OF RS. 14 50 788/- ON A CCOUNT OF LABOUR CHARGES. THE ASSESSEE WAS ASKED TO PRODUCE DETAILS AND PARTICULARS OF THESE EXPENSES. IN RESPONSE THE RETO THE AR OF THE ASSESSEE HAS FILED THE DETAILS OF LABOUR CHARGES PAID AND ALSO PRODUCED KACHHA VOUCHERS IN SUPPORT OF PAY MENT OF LABOUT CHARGES. HE HAS STATED THAT THOSE EXPENSES WERE INCURRED MAINLY IN CASH MODE FOR PAYMENT OF LABOUR CHARGES/MAJOORI TO THE LABOURERS FOR MAKING THE GOL D AND SILVER ORNAMENTS. ON VERIFICATION OF THE KACHHA VO UCHERS IT IS NOTICED THAT IN SOME VOUCHERS NO NAME OR ADDRESS OF THE WORKER WAS MENTIONED. THERE ARE FEW VOUCHERS IN WH ICH NATURE OF LABOUR JOB DONE BY THE KARAGIRS WERE NOT MENTIONED AND IN SOME VOUCHERS NO SIGNATURE OF THE RECIPIENT WERE ITA NO. 2532/M/09 3 FOUND. THE ASSESSEE IS NOT MAINTAINING PROPER AND COMPLETE SET OF VOUCHERS IN SUPPORT OF THESE LABOUR PAYMENTS . THEREFORE IN VIEW OF THE ABOVE DISCREPANCIES A LU MPSUM AMOUNT OF RS. 25 000/- IS DISALLOWED AND ADDED TO T HE TOTAL INCOME OF THE ASSESSEE. 4. WITH RESPECT TO THE OBSERVATION OF THE CIT PERTA INING TO DRAWINGS & FAMILY MAINTENANCE EXPENSES THE LD. COUNSEL FOR TH E ASSESSEE REPLIED AS FOLLOWS: IN THE ORDER PASSED U/S. 263 OF THE I.T. ACT THE CIT HAS STATED THAT NEITHER THE AO HAS EXAMINED NOR THE ASS ESSEE HAS EXPLAINED HIS PERSONAL EXPENSES WITH REFERENCE TO THE DAY TO DAY FAMILY MAINTENANCE EDUCATION HOUSE MAINTENANCE RENT CE LEBRATION ENTERTAINMENT ETC. THIS STATEMENT OF THE CIT IS FA CTUALLY INCORRECT. IN THE NOTICE DT. 10.1.2007 PLACED AT PAGES 40 & 41 OF TH E COMPILATION THE AO AT SR. NO. (N) HAS ASKED FOR DETAILS OF MONTHLY WITHDR AWALS ESTIMATED HOUSEHOLD EXPENSES ALONGWITH DETAILS OF OTHER FAMI LY MEMBERS DEPENDENT ON THE ASSESSEE. SIMILARLY IN THE NOTIC E DT. 9.3.2007 PLACED AT PAGES 42 TO 42A OF THE COMPILATION THE AO HAS ASKE D DETAILS OF MONTHLY DRAWINGS MADE AND REASONS FOR HEAVY DRAWINGS. THE ASSESSEE VIDE ITS LETTER DT. 10.10.2007 PLACED AT PAGE 69 OF THE COMP ILATION HAS GIVEN DETAILS OF MONTHLY HOUSEHOLD EXPENSES IN THE FORM OF ANNEXU RE-1 TO THE SAID LETTER PLACED AT PAGES 70 TO 72 OF THE COMPILATION. SIMIL ARLY AT PAGE 51 OF THE COMPILATION THE ASSESSEE HAS STATED TO THE AO THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAS NOT UNDERTAKEN ANY FOREIGN TRAVEL. REFER TO SR. NO. 5 CONTAINED IN THE SAID LETTER. 5. IN THE CASE OF CIT VS GABRIEL INDIA LTD. 203 ITR 108 IT HAS BEEN HELD AS FOLLOWS: THIS SECTION DOES NOT VISUALISE A CASE OF SUBSTITUT ION OF THE JUDGMENT OF THE COMMISSIONER FOR THAT OF THE INCOME -TAX OFFICER WHO PASSED THE ORDER UNLESS THE DECISION IS HELD TO BE ERRONEOUS. CASES MAY BE VISUALISED WHERE THE INCOME-TAX OFFICER WHILE MA KING AN ASSESSMENT EXAMINES THE ACCOUNTS MAKES ENQUIRIES APPLIES HIS MIND TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND DETERMINES THE INCOME EITHER BY ACCEPTING THE ACCOUNTS OR BY MAKING SOME ESTIMATES HIMSELF. T HE COMMISSIONER ON PERUSAL OF THE RECORDS MAY BE OF THE OPINION TH AT THE ESTIMATE MADE BY THE OFFICER CONCERNED WAS ON THE LOWER SIDE AND LEF T TO THE COMMISSIONER HE WOULD HAVE ESTIMATED THE INCOME AT A HIGHER FIGU RE THAN THE ONE DETERMINED BY THE INCOME-TAX OFFICER. THAT WOULD NO T VEST THE ITA NO. 2532/M/09 4 COMMISSIONER WITH POWER TO RE-EXAMINE THE ACCOUNTS AND DETERMINE THE INCOME HIMSELF AT A HIGHER FIGURE. 6. IT HAS BEEN FURTHER HELD AS FOLLOWS: INCOME-TAX OFFICER IN THIS CASE HAD MADE ENQUIRIES IN REGARD TO THE NATURE OF THE EXPENDITURE INCURRED BY THE ASSESSEE. THE ASSESSEE HAD GIVEN A DETAILED EXPLANATION IN THAT REGARD BY A LE TTER IN WRITING. ALL THESE WERE PART OF THE RECORD OF THE CASE. EVIDENTLY THE CLAIM WAS ALLOWED BY THE INCOME-TAX OFFICER ON BEING SATISFIED WITH THE EXPLANATION OF THE ASSESSEE. THIS DECISION OF THE INCOME-TAX OFFICER C OULD NOT BE HELD TO BE 'ERRONEOUS' SIMPLY BECAUSE IN HIS ORDER HE DID NOT MAKE AN ELABORATE DISCUSSION IN THAT REGARD. 7. WE FIND THAT THE LD. CIT HAS REVISED THE ASSESSM ENT ON THE GROUND THAT THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE THE DETAILS IN RESPECT OF TRANSACTION WITH REGISTERED AND UNREGISTERED DEALER S AND ALSO THE AO HAS NOT EXAMINED THE PERSONAL EXPENSES OF THE ASSESSEE. THE CIT HAS DRAWN A WRONG INFERENCE SINCE THE DETAILS OF LABOUR CHARG ES PAID WERE CALLED FOR BY THE AO WHICH WERE FILED DURING THE ASSESSMENT PR OCEEDINGS AND AFTER EXAMINATION THE AO MADE DISALLOWANCE OF RS. 25 000 /- WHICH HAS BEEN DISCUSSED BY HIM IN THE ASSESSMENT ORDER. SECONDLY THE STATEMENT OF LD. CIT THAT THE AO HAS NOT EXAMINED AND THE ASSESS EE HAS NOT EXPLAINED THE PERSONAL EXPENSES ARE FACTUALLY INCOR RECT. THE ASSESSEE HAS DEMONSTRATED BY SHOWING THE RELEVANT PAGES OF THE P APER BOOK WHEREIN THE AO HAD ASKED FOR MONTHLY DRAWINGS MADE AND THE REASONS FOR HEAVY DRAWINGS AND THE ASSESSEE VIDE LETTER DT. 10.10.200 7 HAS EXPLAINED THE SAME TO THE AO. FOLLOWING THE DECISION OF THE CIT V S GABRIEL INDIA LTD. WE HOLD THAT THE CIT ERRED IN APPLYING PROVISIONS O F SEC. 263 OF THE I.T. ACT AS THE ORDER OF THE AO IS NOT ERRONEOUS IN SO F AR AS IT WAS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HENCE WE ALLOW THE ASSESSEES APPEAL. ITA NO. 2532/M/09 5 8. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 9 TH DAY OF MARCH 2011 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 9 TH MARCH 2011 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR L BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 2532/M/09 6 DATE INITIALS 1 DRAFT DICTATED ON: 3 . 0 3 .201 1 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 3 .0 3 .2011 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK: DATE ON WHICH FILE GOES TO AR _________ ______ 10 . DATE OF DISPATCH OF ORDER: _________ ______