ITO 20(3)-1, MUMBAI v. UNIMARINE SERVICES, MUMBAI

ITA 5541/MUM/2009 | 2006-2007
Pronouncement Date: 28-01-2011 | Result: Partly Allowed

Appeal Details

RSA Number 554119914 RSA 2009
Assessee PAN AABFU0506C
Bench Mumbai
Appeal Number ITA 5541/MUM/2009
Duration Of Justice 1 year(s) 3 month(s) 19 day(s)
Appellant ITO 20(3)-1, MUMBAI
Respondent UNIMARINE SERVICES, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted F
Tribunal Order Date 28-01-2011
Date Of Final Hearing 04-01-2011
Next Hearing Date 04-01-2011
Assessment Year 2006-2007
Appeal Filed On 09-10-2009
Judgment Text
1 ITA 5541/MUM/09 M/S UNIMARINE SERVICES IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F BEFORE SHRI R.V. EASWAR PRESIDENT AND SHRI P.M. JA GTAP A.M. ITA NO. 5541/MUM/2009 ASSESSMENT YEAR 2006-07 INCOME TAX OFFICER 20(3)-1 ROOM NO. 605 6 TH FLOOR PIRAMAL CHAMBERS PAREL MUMBAI 400 058. VS. M/S UNIMARINE SERVICES A-406 ROYAL SANDS SHASTRI NAGAR NEW LINK ROAD ANDHERI (W) MUMBAI. 12 PAN AABFU 0506C APPELLANT RESPONDENT APPELLANT BY SMT. ASHIMA GUPTA RESPONDENT BY MS. VASANTI B. PATEL ORDER PER P.M. JAGTAP A.M. THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF LD. CIT(A) XXXII MUMBAI DATED 23.7.09 AND THE ACTION OF THE LD. CIT( A) IN DELETING THE ADDITIONS OF ` 20.26 LACS AND ` 4.41 LACS MADE BY THE A.O. ON ACCOUNT OF DISALLOWA NCE OF PURCHASES AND DISALLOWANCE OUT OF TRAVELLING EXPENSES RESPECTIVEL Y IS CHALLENGED THEREIN BY THE REVENUE BY RAISING THE FOLLOWING GROUNDS: 1. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LAW AND THE CIRCUMSTANCES OF THE CASE IN DELETING THE ADDITION OF ` 20.26 LAKHS ON ACCOUNT OF DISALLOWANCES OF PURCHASES AND IN DELETING ` 4 41 089/- OUT OF THE DISALLOWANCE MADE ON ACCOUNT OF TRAVELLING EXPENSES. 2. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W AND THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE FACT THAT THE ASSE SSEE FAILED TO PROVE THE GENUINENESS OF THE TRANSACTION WITH M/S PESCANOVA SHIPPING INDI A LTD. AND ALSO IN ADMITTING FACTS WITHOUT FOLLOWING THE PROCEDURE LAID DOWN UND ER RULE 46-A OF THE IT RULES. 3. THE LEARNED CIT(A) HAS ERRED ON FACTS AND IN LA W AND THE CIRCUMSTANCES OF THE CASE IN NOT APPRECIATING THE FACT THAT THE ASSE SSEE FAILED TO DISCHARGE THE ONUS OF 2 ITA 5541/MUM/09 M/S UNIMARINE SERVICES FURNISHING THE PROOF THAT EXPENDITURE ON TRAVELLING WAS INCURRED EXCLUSIVELY FOR BUSINESS PURPOSES. 2. THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHI P FIRM WHICH IS ENGAGED IN THE BUSINESS OF SHIPPING AND TRADING OF CONTAINERS AND MARINE SERVICES ACTIVITY. THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION WAS FILED B Y IT ON 31.10.06 DECLARING A TOTAL INCOME OF ` 5 01 850/-. DURING THE COURSE OF ASSESSMENT PROCEE DINGS THE A.O. NOTICED FROM THE BALANCE SHEET OF THE ASSESSEE THAT A SUM O F ` 20.26 LACS WAS SHOWN AS PAYABLE TO M/S PESCANOVA SHIPPING INDIA PVT. LTD. HE ALSO NOTE D THAT TOTAL PURCHASES MADE BY THE ASSESSEE FROM THE SAID PARTY DURING THE YEAR UNDER CONSIDERATION WERE ONLY TO THE EXTENT OF ` 17.67 LACS AND NO PAYMENT AGAINST THE SAID PURCHAS ES WAS MADE BY THE ASSESSEE EVEN UP TO 31.3.06. HE THEREFORE REQUIRED THE ASSESSE E TO ESTABLISH THE GENUINENESS OF TRANSACTIONS MADE BY IT WITH THE SAID PARTY BY PROD UCING RELEVANT DOCUMENTARY EVIDENCE. IN REPLY A COPY OF PURCHASE BILL OF M/S PESCANOVA SHIPPING INDIA PVT. WAS FILED BY THE ASSESSEE BEFORE THE A.O. IT WAS ALSO SUBMITTED THA T THE AMOUNT PAYABLE TO THE SAID PARTY WAS PAID BY THE ASSESSEE SUBSEQUENTLY IN THE FINANC IAL YEAR 2006-07 AND 2007-08. THE EXACT DETAILS OF THE SAID PAYMENTS HOWEVER WERE N OT FURNISHED BY THE ASSESSEE. EVEN THE COPY OF PURCHASE BILL OF THE SAID PARTY FILED BY TH E ASSESSEE DID NOT CONTAIN RELEVANT DETAILS SUCH AS ADDRESS SALES TAX NO. ETC. ACCORDI NG TO THE A.O. CROSS VERIFICATION OF THE ASSESSEES CLAIM FOR THE PURCHASES MADE FROM THE SA ID PARTY WAS NOT POSSIBLE IN THE ABSENCE OF THE SAID DETAILS AND KEEPING IN VIEW THE SAME AS WELL AS THE INORDINATE DELAY IN MAKING THE PAYMENT AGAINST THE SAID PURCHASES BY TH E ASSESSEE THE TRANSACTIONS OF THE ASSESSEE WITH M/S PESCANOVA SHIPPING INDIA PVT. LTD . WERE TREATED BY THE A.O. AS NOT GENUINE. ACCORDINGLY THE AMOUNT OF ` 20.26 LACS WAS ADDED BY HIM TO THE TOTAL INCOME OF THE ASSESSEE. ITS CLAIM FOR DEDUCTION ON ACCOUNT OF TRAVELLING EXPENSES ALSO COULD NOT BE SUPPORTED AND SUBSTANTIATED BY THE ASSESSEE BY F URNISHING THE RELEVANT DETAILS AND EVIDENCE TO ESTABLISH THAT THE SAME WERE INCURRED F OR THE PURPOSE OF BUSINESS. THE A.O. THEREFORE DISALLOWED THE TRAVELLING EXPENDITURE OF ` 5 88 119/- CLAIMED BY THE ASSESSEE. ACCORDINGLY THE TOTAL INCOME OF THE ASSESSEE WAS D ETERMINED BY THE A.O. AT ` 3 ITA 5541/MUM/09 M/S UNIMARINE SERVICES 31 15 965/- VIDE AN ORDER DATED 30.12.08 AS AGAINST THE TOTAL INCOME OF ` 5 01 846/- DECLARED BY THE ASSESSEE IN ITS RETURN OF INCOME. 3. AGGRIEVED BY THE ORDER OF THE A.O. PASSED U/S 14 3(3) AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND AFTER TAKING INTO CONSIDERATION THE DETAILS AND DOCUMENTS FURNISHED BY THE ASSESSEE BEFORE HIM THE LD. CIT(A) DELETED BOTH THE ADDITIONS MADE BY THE A.O. ON ACCOUNT OF ALLEGED BO GUS PURCHASES AND DISALLOWANCE OF TRAVELLING EXPENSES FOR THE FOLLOWING REASONS GIVEN IN PARAGRAPH NO. 2.4 AND 3.3 OF HIS IMPUGNED ORDER:- I HAVE CONSIDERED THE FACTS OF THE CASE AS WELL AS THE ARGUMENTS OF THE APPELLANT IN REGARD TO PURCHASES MADE FROM PESCANOV A SHIPPING (INDIA) LTD. I AGREE THAT PURCHASE AND SALE OF EACH AND EVERY CONTAINER PURCHASED FROM THIS COMPANY HAS BEEN ACCOUNTED FOR IN THE BOOKS OF THE APPELLANT. THEREFORE THE A.O. CANNOT DISALLOW PURCHASES WHILE AT THE SAME TIME HE ACCEPT S THE SALES IN RESPECT OF THESE CONTAINERS. THE BOOKS OF ACCOUNTS OF THE APPELLANT HAVE BEEN AUDITED U/S 44AB AND ANY DISALLOWANCE OF PURCHASES CAN BE MADE ONLY IF T HE PURCHASES ARE PROVED TO BE BOGUS WHICH THE A.O. HAS NOT DONE. ALSO THE OBSERV ATIONS OF THE A.O. THAT THE ADDRESS OF THE SAID COMPANY WAS NOT FURNISHED IS IN CORRECT BECAUSE THE ADDRESS WAS AVAILABLE IN THE LIST OF CREDITORS FURNISHED BY THE APPELLANT. WHEN EACH AND EVERY CONTAINER IN RESPECT OF PESCANOVA SHIPPING (INDIA) PVT. LTD. HAS BEEN SOLD AND SUCH SALES HAVE BEEN ACCEPTED BY THE A.O. IT IS NOT UND ERSTOOD AS TO HOW HE CAN DISALLOW THE PURCHASES OF THE VERY SAME CONTAINERS WHICH AR E INDIVIDUALLY IDENTIFIABLE FROM THEIR UNIQUE NUMBER. THE A.O. CANNOT DISALLOW AN A MOUNT MERELY ON THE BASIS OF SUSPICION. THESE ARGUMENTS OF THE APPELLANT ARE AL SO SUPPORTED BY THE CASE LAWS CITED ABOVE. THEREFORE THE ADDITION OF ` 20.26 LACS MADE BY THE A.O. IS UNJUSTIFIED AND THE SAME IS HEREBY DELETED. I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND THE FACTS OF THE CASE AS NARRATED BY THE A.O. IN HIS ASSESSMENT ORDER. I T IS A FACT THAT THE APPELLANT DID NOT SUBMIT ALL THE DETAILS REGARDING TRAVELLING EXPENDI TURE AS SPECIFICALLY REQUIRED BY THE A.O. TO ESTABLISH THAT THE SAME HAS BEEN INCURRED F OR THE PURPOSE OF BUSINESS. HOWEVER IT IS ALSO A FACT THAT SOME TRAVELLING EXP ENDITURE IS REQUIRED TO BE SPENT IN EACH AND EVERY BUSINESS. FURTHERMORE THE APPELLANT NOT ONLY IMPORTS THE MARINE CONTAINERS BUT ALSO EXPORTS THEM AND HENCE FOREIGN TRAVELLING EXPENDITURE IS NECESSARILY INVOLVED. IN MY OPINION THE A.O. WAS NOT JUSTIFIED IN DISALLOWING WHOLE OF THE EXPENDITURE AS HE HAS NOT PROVED EVEN A SING LE ITEM OF EXPENDITURE TO BE BOGUS IN NATURE. IN VIEW OF OVERALL FACTS AND CIRC UMSTANCES OF THE CASE AND IN THE INTEREST OF NATURAL JUSTICE I THEREFORE DIRECT THE A.O. TO DISALLOW 25% OF THE EXPENDITURE I.E ` 1 47 030. THE BALANCE DISALLOWANCE OF ` 4 41 089/- IS THEREFORE DELETED. 4 ITA 5541/MUM/09 M/S UNIMARINE SERVICES 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE RE VENUE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. AS SUBMITTED BY THE LD. D.R. A ND ACCEPTED EVEN BY THE LEARNED COUNSEL FOR THE ASSESSEE BOTH THE IMPUGNED ADDITIO NS MADE BY THE A.O. HAVE BEEN DELETED BY THE LD. CIT(A) RELYING ON THE FOLLOWING DETAILS AND DOCUMENTS FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE HIM:- 1. COPIES OF SALES BILLS AGAINST PURCHASES FROM M/S PESCANOVA SHIPPING (I) P. LTD. 2. COPIES OF BILLS AND TRAVELLING EXPENSES INCURRE D. AS FURTHER SUBMITTED BY THE LD. D.R. THE ABOVE DOC UMENTS FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE LD. CIT(A) AS ADDITIONAL EVID ENCE HAVE BEEN RELIED UPON BY THE LD. CIT(A) TO DECIDE THE ISSUE IN FAVOUR OF THE ASSESS EE WITHOUT ALLOWING ANY OPPORTUNITY TO THE A.O. TO VERIFY THE SAME AS PER THE REQUIREMENTS OF RULE 46-A OF INCOME TAX RULES AND THIS POSITION WHICH IS EVIDENT FROM THE IMPUGNED OR DER OF THE LD. CIT(A) HAS NOT BEEN DISPUTED EVEN BY THE LEARNED COUNSEL FOR THE ASSESS EE. WE THEREFORE FIND IT FAIR AND PROPER AND IN THE INTEREST OF JUSTICE TO SET ASIDE THE IMPUGNED ORDER OF THE LD. CIT(A) ON BOTH THE ISSUES IN DISPUTE AND RESTORE THE MATTER T O THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AFTER AFFORDING THE ASSESSEE A PROPER OPPORT UNITY OF BEING HEARD. 6. IN THE RESULT APPEAL OF THE REVENUE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON 28 TH JANUARY 2011. SD/- SD/- (R.V. EASWAR) (P.M. JAGTAP) PRESIDENT A CCOUNTANT MEMBER MUMBAI DATED 28 TH JANUARY 2011. 5 ITA 5541/MUM/09 M/S UNIMARINE SERVICES RK COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT (A)- XXXII - MUMBAI 4. THE CIT -20 MUMBAI 5. THE DR BENCH F 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 6 ITA 5541/MUM/09 M/S UNIMARINE SERVICES DATE INITIALS 1 DRAFT DICTATED ON 12.1.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 13.1.11 SR. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER