VISHWAKARMA ENTERPRISES, MUMBAI v. ITO 25(2)(4), MUMBAI

ITA 3425/MUM/2009 | 2004-2005
Pronouncement Date: 14-11-2014 | Result: Partly Allowed

Appeal Details

RSA Number 342519914 RSA 2009
Assessee PAN AAAFV5192N
Bench Mumbai
Appeal Number ITA 3425/MUM/2009
Duration Of Justice 5 year(s) 5 month(s) 18 day(s)
Appellant VISHWAKARMA ENTERPRISES, MUMBAI
Respondent ITO 25(2)(4), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 14-11-2014
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 14-11-2014
Date Of Final Hearing 26-12-2013
Next Hearing Date 26-12-2013
Assessment Year 2004-2005
Appeal Filed On 26-05-2009
Judgment Text
Q Q Q Q INCOME TAX APPELLATE TRIBUNAL MUMBAI - F BENCH. ! BEFORE S/SH.VIJAY PAL RAO JUDICIAL MEM BER & RAJENDRA ACCOUNTANT MEMBER /. ITA NO.3425/MUM/2009 ' ' ' ' # # # # / ASSESSMENT YEAR-2004-05 M/S VISHWAKARMA ENTERPRISES 4 RAMKRUPA BUILDING DATTAPADA ROAD BORIVALI (E) MUMBAI. PAN:AAAFV5192N VS ITO 25(2)(4) C-10 PRATYAKSHKAR BHAVAN B.K.COMPLEX BANDRA (E) MUMBAI. ( $% / APPELLANT) ( &'$% / RESPONDENT) '() '() '() '() * * * * / ASSESSEE BY : SHRI M. SUBRAMANIAN + * / REVENUE BY : SHRI PAWAN KUMAR BEERLA ' ' ' ' + ++ + ) ) ) ) / DATE OF HEARING : 05-11-2014 -.# + ) / DATE OF PRONOUNCEMENT : 14-11-2014 ' ' ' '1961 1961 1961 1961 + + + + 254 254 254 254( (( (1 11 1) )) ) )7) )7) )7) )7) 8 8 8 8 ORDER U/S.254(1)OF THE INCOME-TAX ACT 1961(ACT) PER RAJENDRA AM ! ! ! ! ' ' ' ' : CHALLENGING THE ORDER DATED 11.10.2007 OF THE CIT(A )-XXV MUMBAI ASSESSEE HAS FILED FOLLOWING GROUNDS OF APPEALS: 1. THE LEARNED CIT(A) ERRED FOR CONFIRMATION OF ADDITI ONS MADE BY AO ON ACCOUNT OF DIFFERENCE IN TDS QUANTUM RECEIPTS OF RS. 6 17 411/-. 2. THE LEARNED CIT(A) ERRED FOR CONFIRMATION OF ADDITI ONS MADE BY AO ON ACCOUNT OF EXPENSES OF RS. 1 73 424/- 3. THE LEARNED CIT(A) ERRED FOR CONFIRMATION OF ADDITI ONS MADE BY AO ON ACCOUNT OF CAPITAL REDUCTION OF RS. 6 00 000/-. 4. THE LEARNED CIT(A) ERRED FOR CONFIRMATION OF ADDITI ONS MADE BY ON ACCOUNT INVESTMENT IN FIXED ASSETS OF RS. 73 750/-. 5. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER TO AME ND AND TO MODIFY ANY OF THE GROUNDS OF APPEAL. 2. ASSESSEE-FIRM ENGAGED IN THE BUSINESS OF CIVIL CON TRACT FILED ITS RETURN OF INCOME ON 01.11.2004 DECLARING NIL INCOME.ASSESSING OFFICER (AO) COMPLET ED THE ASSESSMENT U/S.143(30 OF THE ACT ON 29.11.2006 DETERMINING THE INCOME OF THE ASSESSEE A T RS. 40 70 510/-. THERE IS A DELAY OF 476 DAYS IN FILING THE APPEAL B EFORE THE TRIBUNAL.AFFIDAVITS HAVE BEEN FILED BY THE ASSESSEE ALONG WITH AN APPLICATION TO CONDONE T HE DELAY.IT WAS STATED THAT THE PERSON HANDLING THE ACCOUNTS HAD LEFT THE JOB THAT HE DID NOT HAND OVER HIS CHARGE TO ANYBODY THAT IN BETWEEN ONE OF THE PARTNERS EXPIRED THAT ASSESSEE CAME TO KNOW ABOUT THE ORDER OF THE CIT(A) ONLY DURING THE PENALTY PROCEEDINGS.DEPARTMENTAL REPRESENTATIVE (DR ) LEFT THE ISSUE TO THE DISCRETION OF THE BENCH.AFTER GOING THROUGH THE AFFIDAVITS AND THE AP PLICATION FILED BY THE ASSESSEE WE ARE OF THE OPINION THAT IT WAS PREVENTED BY A SUFFICIENT CAUSE FOR NOT FILING THE APPEAL IN TIME. IT IS FOUND THA T THE PERSON HANDLING THE ACCOUNT HAD LEFT THE ASSESS EE AND THERE WAS NOBODY TO HANDLE THE TAX MATTERS.CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE WE ARE OF THE OPINION THAT IT IS A FIT CASE FOR CONDONING THE DELAY. 2 ITA NO. 3425/M/2009 M/S VISHWAKARMA ENTERPRISES 3. FIRST GROUND OF APPEAL IS ABOUT ADDITION OF RS. 16 17 411/- ON ACCOUNT OF DIFFERENCE IN TDS QUANTUM RECEIPTS. DURING THE ASSESSMENT PROCEEDINGS THE AO FOUND THAT THE ASSESSEE HAD CREDITED JOB CONTRACT RECEIPTS OF RS. 19.98 LAKHS IN THE P&L A/C WHERESA THE TDS CERTIFICATES INDICATED CONTRACT RECEIPTS OF RS. 38.92 LAKHS. HE DIRECTED T HE ASSESSEE TO RECONCILE THE DIFFERENCE. THE ASSESSEE STATED THAT DIFFERENCE IN RECEIPT WAS ON A CCOUNT OF TDS CERTIFICATE OF M/S E.A.KHAN & SONS THAT THE CERTIFICATE WAS RECEIVED LATE THAT T HE SAID CONTRACT RECEIPTS WERE PERHAPS NEVER DISCLOSED IN ANY OF THE RETURN. THE AO HELD THAT TH E PERIOD OF CONTRACT IN THE TDS CERTIFICATE WAS 01.04.2002 TO 31.03.2003 THAT BY VIRTUE OF PROVISIO NS OF SECTION 199 OF THE ACT RECEIPTS HAD TO BE OFFERED IN THE AY 2004-05. FINALLY HE HELD THAT TH E ASSESSEE HAD FAILED TO DISCLOSE THE RECEIPTS OF RS. 29 43 203/-. HE MADE AN ADDITION OF RS. 29.43 L AKHS TO THE INCOME OF THE ASSESSEE. 3.1. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).BEFORE HIM IT WAS ARGUED THAT THE R ECEIPT IN QUESTION WAS OFFERED TO TAX IN AY 2003-04. A COPY OF ACCOUNT OF M/S E.A.KHAN & SONS F OR THE RELEVANT PERIOD WAS FILED ALONG WITH THE BANK ACCOUNT TO SHOW THAT MONEY WAS RECEIVED IN THAT YEAR.A COPY OF THE IT RETURN FOR THE AY 2003-04 WAS ALSO FILED.AFTER GOING THROUGH THE SUBM ISSION OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT THE ASSESSEE HAD OFFERED J OB RECEIPTS OF RS. 35.17 LAKHS IN THE PRECEDING YEAR THAT AS PER THE TDS CERTIFICATE IT RECEIVED RS . 29.43 LAKHS. AFTER GOING THROUGH THE RECONCILIATION STATEMENT THE FAA FOUND THAT INCOME AMOUNTING TO RS. 6.17 LAKHS WAS NOT OFFERED IN THE AY 2003-04. SHE FURTHER HELD THAT RECEIPTS O F RS. 6 17 411/- WERE NEITHER OFFERED BY THE ASSESSEE IN AY 2003-04 NOR IN AY 2004-05 WITH REGAR D TO WORK DONE FOR E.A.KHAN & SONS. AS A RESULT SHE DELETED THE ADDITION OF RS. 23.25 LAKHS AND CONFIRMED THE ADDITION TO THE EXTENT OF RS. 6.17 LAKHS.THE FAA DIRECTED THE AO TO WITHDRAW THE CLAIM OF TDS ALLOWED AGAINST THE PAYMENT IN AY 2004-05 ON RS.23.25 LAKHS AS PER THE PROVISIO NS OF SECTION 199 OF THE ACT. 3.2. BEFORE US AUTHORISED REPRESENTATIVE (AR) STATED TH AT ASSESSEE HAD NOT RECEIVED THE AMOUNT IN QUESTION.DR SUPPORTED THE ORDER OF THE FAA. WE HAVE PERUSED THE MATERIAL AND HEARD THE RIVAL SU BMISSIONS.WE FIND THAT WHILE DECIDING THE APPEAL THE FAA HAD RECONCILED THE FIGURE AND HAD GI VEN A FINDING OF FACT THAT OUT OF RS. 29.43 LAKHS RS. 23.25 LAKHS WERE OFFERED FOR TAXATION IN THE SUBSEQUENT AY. THE ASSESSEE WAS NOT ABLE TO LEAD ANY EVIDENCE THAT RS. 6.17 LAKHS WERE OFFER ED FOR TAXATION IN ANY OF THE YEARS.IN THESE CIRCUMSTANCES IF THE FAA HAD DIRECTED THE AO TO IN CLUDE THE SAID INCOME FOR THE YEAR UNDER CONSIDERATION THEN IN OUR OPINION THE STAND TAKEN B Y HER IS JUSTIFIED.THEREFORE CONFIRMING THE ORDER OF THE FAA WE DECIDE THE GROUND NO.1 AGAINST THE ASSESSEE. 4. NEXT GROUND OF APPEAL IS ABOUT CONFIRMATION OF ADDI TION ON ACCOUNT OF EXPENSES OF RS. 1.73 LAKHS.DURING THE ASSESSMENT PROCEEDINGS THE AO FOU ND THAT THE ASSESSEE HAD CLAIMED EXPENSES OF RS. 17 34 235/- EXCLUDING PARTNERSREMUNERATION AND INTEREST ON CAPITAL GAIN.IT WAS OBSERVED BY THE AO THAT EXCEPT SELF-SIGNED BILLS OF PURCHASE OF RS. 2 LAKHS THE ASSESSEE WAS NOT IS A POSITION TO SUPPORT ITS CLAIM.IT WAS ALSO STATED BEFORE HIM THAT THE ASSESSEE-FIRM WAS NOT ABLE TO GIVE ANY OTHER DETAILS ABOUT THE EXPENSES. THEREFORE THE AO MADE A DISALLOWANCE OF 25% OF THE EXPENDITURE ON AD HOC BASIS. IT RESULTED IN ADDITIO N OF RS. 4.33 LAKHS. 4.1. DURING THE APPEALLATE PROCEEDINGS AS PER THE FAA THE ASSESSEE COULD NOT SUBMIT DETAILS OF EXPENSES BILLS/VOUCHERS. IT WAS ALSO ACCEPTED THAT THE ASSESSEE DID NOT MAINTAIN PROPER BOOKS OF ACCOUNTS. AFTER GOING THROUGH THE SUBMISSION OF THE ASSESSEE SHE RESTRICTED THE DISALLOWANCE TO THE EXTENT OF 10% OF TOTAL CLAIM I.E. TO RS. 1.73 LAKH S. 4.2. BEFORE US AR STATED THAT THE ADDITION MADE BY THE A O AND CONFIRMED BY THE FAA WAS ON 3 ITA NO. 3425/M/2009 M/S VISHWAKARMA ENTERPRISES HIGHER SIDE THAT WHATEVER DETAILS WERE AVAILABLE W ERE FILED BEFORE THE AO. DR SUPPORTED THE ORDER OF THE FAA. AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND TH AT THE ASSESSEE HAD NOT PRODUCED ANY EVIDENCE EXCEPT FOR THE PURCHASE BILL OF RS. 2 LAKHS BEFORE THE AO OR BEFORE THE FAA.IN THESE CIRCUMSTAN - CES WE ARE OF THE OPINION THAT FAA WAS VERY REASON ABLE WHEN SHE HAD REDUCED THE DISALLOWANCE FROM 25% TO 10% OF THE EXPENDITURE INCURRED.CONFIRM ING HER ORDER WE DECIDE GROUND NO.2 AGAINST THE ASSESSEE. 5. NEXT GROUND OF APPEAL IS ABOUT ADDITION OF RS. 6 00 000/- ON ACCOUNT OF CAPITAL CONTRIBUTED IN CASH BY THE PARTNERS OF THE ASSESSEE-FIRM.ON PERUSA L OF THE DETAILS FILED BY THE ASSESSEE THE AO FOUND THAT CASH OF RS. 6 LAKHS WAS INTRODUCED THROU GH PARTNERS ACCOUNT.IT WAS ADMITTED BEFORE THE AO THAT UNACCOUNTED CASH INCOME OF THE FIRM WAS INTRODUCED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE AO ADDED THE SAID UNACCOUNTED INCOME WITHOUT DISTURBING THE INCOME OF THE PARTNERS. 5.1. IN THE APPELLATE PROCEEDINGS THE FAA OBSERVED THAT ASSESSEE-FIRM SHOULD NOT HAVE FILED THE APPEAL THAT IT HAD ADMITTED THE CONCEALED INCOME T HAT AR OF THE ASSESSEE THROUGH ORDER-SHEET DATED 21.09.2007 HAD SPECIFICALLY ADMITTED THAT THE UNACCOUNTED INCOME BELONGED TO THE FIRM THAT IT HAD NOTHING TO DO WITH THE PARTNERS THAT THE AR HAD WITHDREW THE GROUND OF APPEAL FILED BEFORE HIM.CONSIDERING THESE FACTS THE FAA CONFIRMED THE A DDITION OF RS. 6 LAKHS. 5.2. BEFORE US AR STATED THAT MATTER COULD BE DECIDED O N MERITS.DR SUPPORTED THE ORDER OF THE FAA.AFTER GOING THROUGH THE ORDER OF THE FAA WE FI ND THAT THE GROUND REGARDING THE ADDITION OF RS.6 LAKHS WAS WITHDRAWN BY THE ASSESSEE IN THE APP ELLATE PROCEEDINGS.IN OUR OPINION THERE WAS NO JUSTIFICATION FOR RAISING THE SAID GROUND AGAIN BEFORE THE TRIBUNAL. AS THE ASSESSEE ITSELF HAD ADMITTED BEFORE BOTH THE AUTHORITIES THAT RS. 6 LAK HS WAS THE UNACCOUNTED INCOME OF THE ASSESSEE THEREFORE CONFIRMING THE ORDER OF THE FAA WE DISMI SS GROUND NO.3. 6. LAST GROUND OF APPEAL IS ABOUT CONFIRMATION OF ADDI TION ON ACCOUNT OF INVESTMENT IN FIXED ASSETS OF RS. 73 750/-.DURING THE ASSESSMENT PROCEEDINGS T HE AO FOUND THAT THE ASSESSEE HAD SHOWN PURCHASES OF ASSETS OF RS. 70 000/- AS UNDER :- FURNITURE RS.10 000 PLANT & MACHINERY RS.20 0 00 MOTOR CAR R S.10 000 OFFICE EQUIPMENTS RS.20 000 OFFICE PREMISES RS.1 0 000 BEFORE THE AO IT WAS SUBMITTED THAT THERE WAS NO SU CH ACTUAL PURCHASES. IT WAS ONLY ADJUSTMENT ENTRIES TO MATCH THE BALANCE SHEET.THE AO HELD THAT THE ASSESSEE HAD NOT FILED ANY CONVINCING REPLY IN THAT REGARD.AS A RESULT HE ADDED AN AMOUNT OF RS.70 000/- AS UNEXPLAINED INVESTMENT U/S. 69C OF ACT. HE ALSO DISALLOWED DEPRECIATION ON ABOV E AMOUNT OF RS. 3750/-. 6.1. THE ASSESSEE FILED AN APPEAL BEFORE THE FAA.IT WAS STATED THAT THE ASSESSEE HAD MADE ADDITION TO FIXED ASSETS OF RS.60 000/- AND RS.10 000/- WAS SPENT FOR REPAIR OR OFFICE PREMISES THAT BY MISTAKE IT HAD TAKEN REPAIR EXPENSES OF OFFICE PREM ISES OF RS.10 000/- AS ADDITION OF FIXED ASSETS THAT THE AO HAD WRONGLY MADE ADDITION UNDER THE HEAD ADDITION OUT OF CASH BALANCE. AFTER GOING THROUGH THE ORDER OF THE AO AND SUBMISS IONS OF THE ASSESSEE THE FAA HELD THAT THERE COULD NOT BE ADDITION OF RS. 10 000/ IN MOTOR CAR A ND OFFICE PREMISES THAT THE ASSESSEE COULD NOT PRODUCE BILLS OR THE CASH BOOK TO SHOW THAT THE PAY MENT FOR PURCHASES OF ITEMS WAS MADE OUT OF 4 ITA NO. 3425/M/2009 M/S VISHWAKARMA ENTERPRISES CASH BALANCE. THE FAA UPHELD THE ORDER OF THE AO. 6.2. BEFORE US AR STATED THAT ENTRIES WERE MADE IN BALAN CE SHEET THAT THERE WAS NO JUSTIFICATION FOR INVOKING THE PROVISIONS OF SECTION 69C OF THE ACT.D R LEFT THE ISSUE THE DISCRETION OF THE BENCH. WE HAVE PERUSED THE MATERIAL BEFORE US.WE FIND THAT THE ASSESSEE HAD NOT CLAIMED ANY EXPENDITURE IN THE P & L ACCOUNTS CERTAIN ENTRIES W ERE MADE DIRECTLY IN THE BALANCE SHEET.IT IS TO BE REMEMBERED THAT THE ASSESSEE HAD AGREED FOR ADDI TION OF RS.6 LACS AND THUS IT HAD ACCESS TO THAT AMOUNT.IN OUR OPINION THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION U/S.69 C OF THE ACT AS THE CONDITIONS FOR INVOKING THE PROVISIONS OF THE SECTI ON WERE NOT EXISTING.SO REVERSING THE ORDER OF THE FAA WE DECIDE GROUND NO.4 IN FAVOUR OF THE ASSE SSEE. AS A RESULT APPEAL F ILED BY THE ASSESSEE STANDS PARTLY ALLOWED. ( 9 '() + 8): ; + ) <=. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH NOVEMBER 2014 . 8 + -.# ? @' 14 UO UOUO UOACJ ACJACJ ACJ 201 4 . + 7 A SD/- SD/- ( / VIJAY PAL RAO) ( ! ! ! ! / RAJENDRA) / JUDICIAL MEMBER /ACCOUNTANT MEMBER / MUMBAI @' /DATE: 14.11 . 2014. SK 8 8 8 8 + ++ + &) &) &) &) B #) B #) B #) B #) / COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE / $% 2. RESPONDENT / &'$% 3. THE CONCERNED CIT(A)/ C D 4. THE CONCERNED CIT / C D 5. DR F BENCH ITAT MUMBAI / E7 &)' Q Q Q Q . . . 6. GUARD FILE/ 7 F ') ') ') ') &) &)&) &) //TRUE COPY// 8' / BY ORDER G / < DY./ASST. REGISTRAR /ITAT MUMBAI