RAJESH & CO, MUMBAI v. ITO 14(3)(3), MUMBAI

ITA 3049/MUM/2013 | 2009-2010
Pronouncement Date: 30-09-2016

Appeal Details

RSA Number 304919914 RSA 2013
Assessee PAN AAEFR0949P
Bench Mumbai
Appeal Number ITA 3049/MUM/2013
Duration Of Justice 3 year(s) 5 month(s) 7 day(s)
Appellant RAJESH & CO, MUMBAI
Respondent ITO 14(3)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-09-2016
Appeal Filed By Assessee
Bench Allotted D
Tribunal Order Date 30-09-2016
Date Of Final Hearing 29-09-2016
Next Hearing Date 29-09-2016
Assessment Year 2009-2010
Appeal Filed On 22-04-2013
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI SANJAY GARG (JUDICIAL MEMBER) AND SHRI ASHWANI TANEJA (ACCOUNTANT MEMBER) I.T.A. NO.3049/MUM/2013 (ASSESSMENT YEAR: 2009-10) M/S RAJESH & CO E/9 1 ST FLOOR BHANGWADI KALBADEVI MUMBAI 2 VS ITO 14(3)(3) MUMBAI PAN : AAEFR0949P (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SHRI B.S. BIST (CIT DR) DATE OF HEARING : 29-09-2016 DATE OF PRONOUNCEMENT : 30-09-2016 O R D E R PER ASHWANI TANEJA AM: THIS APPEAL IS AGAINST THE ORDER OF COMMISSIONER O F INCOME-TAX (APPEALS)-25 MUMBAI [HEREINAFTER CALLED CIT(A)] DA TED 26-02-2013 PASSED AGAINST THE ASSESSMENT ORDER DATED 26-12-2013 FOR A .Y. 2009-10 ON THE FOLLOWING GROUNDS: 1 DISALLOWANCE OF INTEREST EXPENDITURE: 1.1 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN UPHOLDING THE DISALLOWANCE OF INT EREST EXPENDITURE. 1.2 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FAILED TO APPRECIATE THAT THERE IS NO JUSTIFICATION FOR 2 I.T.A. NO.3049/MUM/2013 DISALLOWANCE OF INTEREST EXPENDITURE. 1.3 THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) FAILED TO APPRECIATE THAT THE MAXIMUM AMOUNT THAT C AN BE ATTRIBUTED TO THE BORROWED FUNDS IS ONLY RS. 17 88 595/- AND ACCORDINGLY THE DISALLOWANCE CAN AT THE MOST B E OF RS. 1 90 092/- AND NOTHING MORE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN UPHOLDING THE ADHOC DISALLOWANCE OF RS. 9 760/- OUT OF CONVEYANCE EXPENSES AND RS. 17 7 40/- OUT OF SUNDRY EXPENSES AT THE RATE OF 20%. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPRECIATE THAT THE ADHOC DISAL LOWANCE AT THE RATE OF 20% IS EXCESSIVE AND UNREASONABLE. 2. IT IS NOTED THAT IN THIS CASE NONE APPEARED ON BEH ALF OF THE ASSESSEE. ON AN EARLIER OCCASION COST OF RS.100/- WAS IMPOSE D UPON THE ASSESSEE ON 09-02-2015 FOR NOT ARGUING THE MATTER. DESPITE THA T THERE HAS BEEN NO APPEARANCE FROM THE ASSESSEE. AS PER RECORDS NOTIC E WAS SENT BY RPAD WHICH IS NOT RECEIVED BACK AS UN-SERVED. UNDER THES E CIRCUMSTANCES WE HAVE NO OPTION BUT TO PROCEED EXPARTE QUA THE ASSESSEE. 3. REGARDING GROUND 1 IT WAS SUBMITTED BY THE LD. DR THAT DISALLOWANCE WAS MADE ON ACCOUNT OF INTEREST ON THE GROUND THAT INTEREST FREE ADVANCES WERE MADE BY THE ASSESSEE AGGREGATING TO RS.6 83 20 0. BEFORE THE LD. CIT(A) EXHAUSTIVE DETAILS WERE FILED BUT THE DISAL LOWANCE WAS CONFIRMED. WE HAVE GONE THROUGH THE ORDERS OF LOWER AUTHORITIES. IT IS NOTED BY US THAT ONE OF THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD. CIT(A) READS AS UNDER: WITHOUT PREJUDICE TO THE ABOVE IT IS HUMBLY SUBMIT TED THAT THE DISALLOWANCE OF INTEREST OF RS. 6 83 2001- IS EXCES SIVE AND UNREASONABLE. OPENING BALANCE OF THE THE BORROWED F UNDS IS ONLY RS.15 91 402/- OF WHICH INTEREST FREE FUNDS ARE RS . 44 4021- AND INTEREST COMPONENT OF THE PRECEDING YEAR IS RS. 2 4 5 6021-. THUS IN THE PRECEDING YEAR ONLY THE AMOUNT OF RS. 13 01 398/- (15.91 402 (44 402+2 45 602) CAN BE ATTRIBUTED TO THE INTEREST FREE ADVANCES TO THE SISTER CONCERNS A ND NOTHING MORE. IN THE RELEVANT YEAR THE ADDITION TO THE IN TEREST FREE ADVANCES TO THE SISTER CONCERNS IS OF RS. 6 39 297/ - AND THE INTEREST FREE LOANS RECEIVED BY THE APPELLANT I S RS. 1 52 100/-. THUS THE NET INTEREST FREE ADVANCES TO THE SISTER C ONCERNS IS RS. 3 I.T.A. NO.3049/MUM/2013 4 87 197/- WHICH CAN BE ATTRIBUTED TO THE WED FUNDS IN THE CURRENT YEAR. THUS THE TOTAL AMOU NT WHICH CAN BE ATTRIBUTED TO THE BORROWED FUNDS IN THE CURRENT YEAR. THUS THE TOTAL AMOUNT WHICH CAN BE ATTRIBUTED TO BORROWE D FUNDS IS RS.17 88 595/- (13 01 398 + 4 87 197). THUS THE DISALLOWANCE COULD BE AT THE MOST BE RS.1 90 092/- (9 09 933 X 17 88 595) / 76 20 738). THUS THE LEARNED ASSESS ING OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE OF RS. 6 83 200/- AND THE DISALLOWANCE IS EXCESSIVE AND UNREASONABLE. YOUR HONOUR MAY BE PLEASED TO REDUCE THE DISALLOWANCE ACCORDINGLY. 4. IT IS NOTED FROM THE PERUSAL OF THE CONCLUSIVE FIND INGS OF THE LD.CIT(A) THAT THE AFORESAID ARGUMENT HAS NOT BEEN PROPERLY D EALT WITH. THE ASSESSEE HAS MADE AN ATTEMPT TO SHOW THAT EVEN IF THE DISALL OWANCE HAS TO BE MADE BUT THE AMOUNT HAS TO BE QUANTIFIED CORRECTLY ON THE BA SIS OF CORRECT FACTS. THIS ARGUMENT HAS NOT BEEN PROPERLY DEALT WITH BY THE LD .CIT(A) WHILE CONFIRMING THE DISALLOWANCE. THEREFORE IN THE INTEREST OF JU STICE WE SEND THIS ISSUE BACK TO THE FILE OF THE LD. CIT(A) WITH A DIRECTION TO G IVE OPPORTUNITY OF HEARING TO THE ASSESSEE TO EXPLAIN THESE FACTS AND DISALLOWANCE I F ANY SHOULD BE MADE BASED UPON THE CORRECT FACTS. GROUND 1 MAY BE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 5. IN GROUNDS 2 3 & 4 THE ASSESSEE HAS CONTESTED THE ADHOC DISALLOWANCE OUT OF CONVEYANCE MADE @20%. IT HAS BEEN STATED IN THE GROUNDS THAT THE RATE OF DISALLOWANCE IS EXCESSIVE AND UNREASONABLE. THE LD. DR FAIRLY SUBMITTED THAT IT CAN BE REDUCED TO 10% I N THE FACTS AND CIRCUMSTANCES OF THE CASE. THEREFORE KEEPING IN V IEW THE FACTS AND CIRCUMSTANCES OF THE CASE WE DIRECT THAT THE DISALL OWANCE BE REDUCED TO 10%; THE ASSESSEE GETS RELIEF ACCORDINGLY. THESE GROUND S MAY BE TREATED AS PARTLY ALLOWED. 4 I.T.A. NO.3049/MUM/2013 6. IN THE RESULT APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON THIS 30 TH DAY OF SEPTEMBER 2016. SD/- SD/- (SANJAY GARG) (ASHWANI TANEJA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI DT : 30 TH SEPTEMBER 2016 PK/- COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE D-BENCH (TRUE COPY) BY ORDER ASSTT.REGISTRAR ITAT MUMBAI BENCHES