ITO WD 22(2)4, NAVI MUMBAI v. HARISHCHANDRA V GHAYAL, MUMBAI

ITA 4650/MUM/2010 | 2007-2008
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 465019914 RSA 2010
Assessee PAN AAFPG8864M
Bench Mumbai
Appeal Number ITA 4650/MUM/2010
Duration Of Justice 1 year(s) 1 month(s) 17 day(s)
Appellant ITO WD 22(2)4, NAVI MUMBAI
Respondent HARISHCHANDRA V GHAYAL, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted H
Tribunal Order Date 22-07-2011
Assessment Year 2007-2008
Appeal Filed On 04-06-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H MUMBAI BEFORE SHRI P.M.JAGTAP ACCOUNTANT MEMBER & SHRI VIJAY PAL RAO JUDICIAL MEMBER. I.T.A. NO. 4650/MUM/2010 ASSESSMENT YEAR : 2007-08. THE INCOME-TAX OFFICER SHRI HARISHCHANDRA V. GHAYAL 22(2)-4 MUMBAI. VS. GANESH NAGAR D HOUSING SOCIETY SHOP NO.17 J.R. BORICHA MARG 7 RASTA MAHALAXMI OPP. KASTURBA HOSPITAL MUMBAI 400 011. PAN :AAFPG 8864M. APPELLANT. RESPONDENT. APPELLANT BY : SHRI V.V. SHASTRI RESPONDENT BY : SHRI SUBHASH S. SHETTY. O R D E R. PER P.M. JAGTAP A.M. : THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LEARNED CIT(APPEALS)-33 MUMBAI DATED 18-03-2010 AND THE GR OUNDS RAISED BY THE REVENUE THEREIN READ AS UNDER : 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS.19 94 372/- AD DED AS UNVERIFIED SUNDRY CREDITORS WITHOUT APPRECIATING THE FACT THAT ASSESSEE DID NOT PRODUCE ANY DETAILS BEFORE THE ASSESSING OFFICER AT THE TIME OF ASSESSMENT PROCEEDINGS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN ALLOWING RELIEF OF RS.2 87 638/- AND RS.24 612/- OUT OF ADDITIONS MADE OUT OF PURCHASES AND OUT OF VARIOUS EXPENSES R ESPECTIVELY WITHOUT 2 ITA NO. 4650/MUM/2010 ASSESSMENT YEAR : 2007-08. APPRECIATING THE FACT THAT ASSESSEE DID NOT PRODUCE ANY BASIC DOCUMENTS/DETAILS BEFORE THE ASSESSING OFFICER AT T HE TIME OF ASSESSMENT PROCEEDINGS. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LD. CIT(A) ERRED IN ACCEPTING FRESH EVIDENCE WHEN THERE WAS N O BONAFIDE REASON FOR THE ASSESSEE FOR NOT PRODUCING THE SAME AT THE TIME OF ASSESSMENT PROCEEDINGS AND THE LD. CIT(A) OUGHT TO HAVE CALL F OR A REMAND REPORT BEFORE ALLOWING RELIEF TO THE ASSESSEE. 2. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS REGARDS GROUND NO 1 AND 3 I NVOLVING A COMMON ISSUE RELATING TO ADDITION MADE ON ACCOUNT OF SUNDRY CRED ITORS IT IS OBSERVED THAT THE AMOUNT OF TWO CREDITORS APPEARING IN THE BALANCE SH EET OF THE ASSESSEE WAS ADDED BY THE AO TO HIS TOTAL INCOME ON THE GROUND THAT TH E RELEVANT DETAILS WERE NOT FURNISHED BY THE ASSESSEE INSPITE OF SUFFICIENT OPP ORTUNITY GIVEN DURING THE COURSE OF ASSESSMENT PROCEEDINGS. AS NOTED BY THE AO THE ASSESSEE HAD ALSO FAILED TO EXPLAIN SINCE WHEN THE SAID AMOUNT WAS OUTSTANDING AND WHETHER THE SAME WAS SUBSEQUENTLY PAID. THE AO THEREFORE HELD THAT THE RE WAS A FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH THE VERY EXISTENCE OF THE SAID LIABILITY AND TREATING THE SAME AS CEASED TO HAVE EXISTED THE AMOUNT OF RS.19 94 372/- WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. DURING THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE HOWEVER FURNISHED THE RELEVANT DETAILS O F THE CONCERNED CREDITORS BEFORE THE LEARNED CIT(APPEALS). HE ALSO FILED ADDITIONAL EVIDENCE IN THE FORM OF COPIES OF RELEVANT BANK STATEMENTS TO SHOW THAT THE SAID C REDITS WERE FINALLY SETTLED IN THE FINANCIAL YEAR 2007-08. RELYING ON THESE DETAILS AN D DOCUMENTS FILED BY THE ASSESSEE BEFORE HIM THE LEARNED CIT(APPEALS) ACCEP TED THE STAND OF THE ASSESSEE THAT THE CONCERNED CREDITORS WERE VERY MUCH IN EXIS TENCE IN THE YEAR UNDER CONSIDERATION AND THE ADDITION MADE BY THE AO ON TH IS ISSUE WAS DELETED BY HIM. 3 ITA NO. 4650/MUM/2010 ASSESSMENT YEAR : 2007-08. 3. AT THE TIME OF HEARING BEFORE US THE ONLY CONTE NTION RAISED BY THE LEARNED DR IS THAT THE RELEVANT DETAILS AND DOCUMENTS FURNI SHED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LEARNED CIT(APPEALS) TO ESTABLISH T HE EXISTENCE OF THE CONCERNED CREDITORS WERE RELIED UPON BY THE LEARNED CIT(APPEA LS) TO GIVE RELIEF TO THE ASSESSEE ON THIS ISSUE WITHOUT AFFORDING ANY OPPORT UNITY TO THE AO TO VERIFY THE SAME. AS RIGHTLY CONTENDED BY HIM THE RELIANCE PLA CED BY THE LEARNED CIT(APPEALS) ON THE SAID EVIDENCE TO GIVE RELIEF TO THE ASSESSEE ON THIS ISSUE IS IN VIOLATION OF RULE 46A OF INCOME TAX RULES 1962 AND THIS POSITION HAS NOT BEEN DISPUTED EVEN BY THE LEARNED COUNSEL FOR THE ASSESS EE. WE THEREFORE SET ASIDE THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE AND RESTORE THE MATTER TO THE FILE OF THE AO FOR DECIDING THE SAME AFRESH IN THE LIGHT OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LEARNED CIT(APPEALS) AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD. 4. GROUND NO. 1 AND 3 OF THE REVENUES APPEAL ARE A CCORDINGLY TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5. AS REGARDS GROUND NO.2 RELATING TO THE DISALLOWA NCE MADE OUT OF PURCHASES AND VARIOUS EXPENSES IT IS OBSERVED THAT 20% OF TH E PURCHASES CLAIMED BY THE ASSESSEE AT RS.28 81 380/- WERE DISALLOWED BY THE A O ON THE GROUND THAT THERE WAS FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE THE NECESSARY DOCUMENTARY EVIDENCE TO ESTABLISH THAT THE SAID PURCHASES WERE MADE FOR THE PURPOSE OF HIS BUSINESS. ACCORDING TO THE AO IN THE ABSENCE OF ANY SUCH EVI DENCE PRODUCED BY THE ASSESSEE VERIFICATION OF ANY SUCH PURCHASES WAS NO T POSSIBLE AND ACCORDINGLY THE DISALLOWANCE OF 20% OF THE PURCHASES WAS MADE BY HI M. FOR THE SIMILAR REASONS THE DISALLOWANCE OF 20% OUT OF VARIOUS EXPENSES CLA IMED BY THE ASSESSEE AT RS.2 46 126/- WAS ALSO MADE BY THE AO. EVEN BEFORE THE LEARNED CIT(APPEALS) 4 ITA NO. 4650/MUM/2010 ASSESSMENT YEAR : 2007-08. THE ASSESSEE FAILED TO PRODUCE ANY DETAILS OR DOCUM ENTS TO SUPPORT AND SUBSTANTIATE HIS CLAIM FOR PURCHASES AND VARIOUS EXPENSES. IT WA S HOWEVER SUBMITTED BY THE ASSESSEE THAT TOTAL SALES OF RS.32 14 542/- WAS DEC LARED BY HIM FOR THE YEAR UNDER CONSIDERATION AGAINST THE CORRESPONDING PURCHASES A ND WHEN THE SALE SO DECLARED WAS ACCEPTED BY THE AO THERE WAS NO REASON FOR HIM TO DOUBT OR DISPUTE THE GENUINENESS OF PURCHASES AS WELL AS VARIOUS EXPENSE S. THE LEARNED CIT(APPEALS) FOUND SOME MERIT IN THIS SUBMISSION OF THE ASSESSEE . ACCORDING TO HIM THE ASSESSEE HAVING DECLARED SALES OF RS.32 14 542/- AN D THE SAME HAVING BEEN ACCEPTED BY THE AO THE DISALLOWANCE OF 20% MADE OU T OF CORRESPONDING PURCHASES OF RS.28 81 380/- AND EXPENSES OF RS.2 46 126/- AS CLAIMED BY THE ASSESSEE WAS UNREASONABLE AND EXCESSIVE. HOWEVER K EEPING IN VIEW THE FAILURE OF THE ASSESSEE TO PRODUCE THE RELEVANT DETAILS AND DO CUMENTS TO SUPPORT AND SUBSTANTIATE HIS CLAIM FOR THE SAID PURCHASES AND E XPENSES THE LEARNED CIT(APPEALS) FOUND IT FAIR AND REASONABLE TO RESTRI CT THE DISALLOWANCE OF 20% MADE BY THE AO OUT OF THE SAID PURCHASES AND EXPENSES TO 10%. 6. AFTER HAVING CONSIDERED THE RIVAL SUBMISSIONS AN D PERUSED THE RELEVANT MATERIAL ON RECORD WE FIND NO JUSTIFIABLE REASON T O INTERFERE WITH THE IMPUGNED ORDER OF THE LEARNED CIT(APPEALS) ON THIS ISSUE. NO DOUBT IN THE ABSENCE OF ANY EVIDENCE PRODUCED BY THE ASSESSEE TO SUPPORT AND SU BSTANTIATE ITS CLAIM FOR PURCHASE AND VARIOUS EXPENSES SOME DISALLOWANCE FO R WANT OF SUCH EVIDENCE WAS CALLED FOR. HOWEVER KEEPING IN VIEW THAT SALES OF RS.32 14 542/- WERE DECLARED BY THE ASSESSEE AGAINST THE SAID PURCHASES WHICH WAS A CCEPTED BY THE AO THE DISALLOWANCE OF 20% OUT OF PURCHASES AND EXPENSES A S MADE BY THE AO WAS EXCESSIVE AND UNREASONABLE. THE LEARNED CIT(APPEALS ) IN OUR OPINION THEREFORE WAS QUITE FAIR AND REASONABLE TO RESTRICT THE SAME TO 10% AND HAVING REGARD TO ALL THE FACTS OF THE CASE WE FIND NO JUSTIFIABLE REASO N TO INTERFERE WITH HIS IMPUGNED 5 ITA NO. 4650/MUM/2010 ASSESSMENT YEAR : 2007-08. ORDER ON THIS ISSUE. THE SAME IS THEREFORE UPHELD AND GROUND NO.2 OF THE REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS TREA TED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 22 ND DAY OF JULY 2011. SD/- SD/- (VIJAY PAL RAO) (P.M. JAGTAP) JUDICIAL MEMBER ACCOUNTAN T MEMBER MUMBAI DATED: 22 ND JULY 2011. WAKODE COPY TO : 1. APPELLANT 2. RESPONDENT 3. C.I.T. 4. CIT(A) 5. DR H-BENCH. (TRUE COPY ) BY ORD ER ASSTT. R EGISTRAR ITAT MUMBAI BEN CHES MUMBA I.