THE ITO-13(2)(1), MUMBAI v. SHRI. GANGARAM BALWANT PANMAND, MUMBAI

ITA 5883/MUM/2008 | 2005-2006
Pronouncement Date: 12-02-2010 | Result: Dismissed

Appeal Details

RSA Number 588319914 RSA 2008
Bench Mumbai
Appeal Number ITA 5883/MUM/2008
Duration Of Justice 1 year(s) 4 month(s) 17 day(s)
Appellant THE ITO-13(2)(1), MUMBAI
Respondent SHRI. GANGARAM BALWANT PANMAND, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted G
Tribunal Order Date 12-02-2010
Date Of Final Hearing 29-01-2010
Next Hearing Date 29-01-2010
Assessment Year 2005-2006
Appeal Filed On 25-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G : MUMBAI BEFORE SHRI D.K. AGARWAL (JM) AND SHRI R.K. PAND A (AM) ITA NO.5883/MUM/2008 ASSESSMENT YEAR : 2005-06 INCOME TAX OFFICER WARD-13(2)(1) ROOM NO.425 4 TH FLOOR AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. ..( APPELLANT ) VS. SHRI GANGARAM BALWANT PANMAND 7 LODHA BHAWAN P.DMELLO ROAD CARNAC BUNDER MUMBAI-400 009. ..( RESPONDENT ) P.A. NO. (AAMPP 9829 J) APPELLANT BY : SHRI SUSHIL KUMAR RESPONDENT BY : SHR I ASHOK SHARMA O R D E R PER D.K. AGARWAL (JM). THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 2.7.2008 PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEAR 2005-06. 2. BRIEFLY STATED FACTS OF THE CASE ARE THAT THE ASSESSEE A N INDIVIDUAL IS ENGAGED IN THE BUSINESS OF TRANSPORT CONTR ACT. HE FILED RETURN DECLARING TOTAL INCOME OF RS.4 78 448/-. DURIN G THE COURSE OF ITA NO.5883/M/08 A.Y: 05-06 2 ASSESSMENT IT WAS INTERALIA OBSERVED BY THE AO THAT THE A SSESSEE HAS DEDUCTED RS.38 64 892/- FROM THE FREIGHT CHARGES BILLED AMOUNTING TO RS.7 02 05 897/- AND ADDED RS.32 799/- AS EXCESS RECEIVED AND NET FREIGHT RECEIVED OF RS.6 63 73 803/- WAS CREDITED TO P& L ACCOUNT. THE ASSESSEE WAS ASKED TO SUBSTANTIATE HIS CLAIM. IN RESPONSE THE ASSESSEE FILED HIS EXPLANATION VIDE LETTER DT.24.12.200 7 INTERALIA STATING THAT THE SHORT RECEIPTS OF RS.38 64 892/- IS TH E AMOUNT RECEIVED LESS FROM GROSS BILLING. THE PARTIES DO NOT AGR EE TO PAY DETENTION CHARGES AND SOMETIME DISCOUNTS ARE ASKED DUE TO COMPETITION. THESE AMOUNTS MAY BE TERMED AS MUTUALLY A GREED REBATES AND DISCOUNTS AND ALSO FILED PARTY-WISE LIST OF SU CH PAYMENTS. HOWEVER THE AO DID NOT ACCEPT THE ASSESSEES CLAIM . HE W AS OF THE VIEW THAT THE ASSESSEE COULD HAVE DEBITED DISCOUNT/REBATES UNDER APPROPRIATE HEADS WHICH WAS NOT DONE THE EXPLANATIO N ABOUT MUTUALLY AGREED AMOUNTS IS TOO FAR FROM BELIEF THE PARTIES WI TH WHOM THE ASSESSEE DEALS ARE SOMETIMES LEGAL ENTITIES AND THERE MUST BE A WRITTEN AGREEMENT BETWEEN THE PARTIES WITHOUT ANY PROPER DOCUMENTATION OR SUPPORTING DOCUMENTS IF A HUGE AMOUNT IS WRITTEN OFF FROM THE GROSS BILL AS SHORT RECEIVED THEN IT CAN O NLY BE TERMED AS SUPPRESSION OF TURNOVER OR BAD DEBTS AND ACCORDINGLY THE AO ADDED RS.38 64 892/- TO THE TOTAL INCOME OF THE ASSESSEE. THE AO AFTER MAKING SOME OTHER DISALLOWANCES COMPLETED THE ASSESSMENT AT AN ITA NO.5883/M/08 A.Y: 05-06 3 INCOME OF RS.77 06 602/- + AGRICULTURAL INCOME RS.9 97 7 00/- VIDE ORDER DATED 28.12.2007 PASSED U/S.143(3) OF THE INCOME TAX ACT 1961 (THE ACT). ON APPEAL THE LD. CIT(A) WHILE OB SERVING THAT NO ATTEMPT WAS MADE BY THE AO TO EXAMINE PARTY-WISE DETA ILS FILED BY THE ASSESSEE THE AO DISBELIEVED THE APPELLANTS CONTENTIO N WITHOUT ANY BASIS OR FACTS THE APPELLANT CANNOT BE TAXED ON T HE AMOUNT WHICH WAS NEVER RECEIVED OR WILL NOT RECEIVE DELETED THE AD DITION MADE BY THE AO. 3. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A) T HE REVENUE IS IN APPEAL BEFORE US CHALLENGING IN ALL THE GROUNDS THE DE LETION OF ADDITION OF RS.38 64 892/- . 4. AT THE TIME OF HEARING THE LD. DR SUBMITS THAT FOR THE REASONS AS MENTIONED IN THE ASSESSMENT ORDER THE LD. CIT(A) WAS N OT JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. 5. ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE WH ILE REITERATING THE SAME SUBMISSIONS AS SUBMITTED BEFORE TH E AO AND THE LD. CIT(A) FURTHER SUBMITS THAT THE ASSESSEE HAS FILED PAR TY-WISE DETAILS FROM WHOM SHORT PAYMENT WAS RECEIVED COPY OF WHICH IS APPEARING AT PAGE 17 TO 21 OF THE ASSESSEES PAPER BOOK . HE FURTHER SUBMITS THAT THE ASSESSEE HAS SHOWN GROSS AMOUNT OF FREIGHT BILLED AND OUT OF IT SHORT PAYMENT RECEIVED RS.38 64 892/- W AS DEDUCTED ITA NO.5883/M/08 A.Y: 05-06 4 AND THE EXCESS AMOUNT RECEIVED AGAINST THE BILLS RS.32 799 /- WAS ADDED. HE ALSO PLACED ON RECORD SOME INSTANCES TO SHOW THA T OUT OF BILLED AMOUNT RS.18 70 000/- THE ASSESSEE HAS RECEIVED SHO RT PAYMENT OF RS.1 29 063/- FROM TRISTAR OCEANIC SERVICE PV T. LTD. WHICH IS IN THE NATURE OF REBATE AND DISCOUNT AND THE AMOUNT IS VERY NOMINAL BASED ON PRUDENT BUSINESSMAN DECISION THEREFORE THE L D. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO AND HIS ORDER BE UPHELD. 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE R IVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND FACTS ARE NOT IN DISPUTE INASMUCH AS THE ASSESSEE HAS FILED PARTY-WISE DETAIL S FROM WHOM THE ASSESSEE HAS RECEIVED SHORT PAYMENTS AGAINST THE GROSS BILLED AMOUNT. THE ASSESSEES CONTENTION THAT THE SHORT P AYMENT RECEIVED IS ON ACCOUNT OF NON-RECEIPT OF DETENTION CHARG ES AND ALLOWING OF REBATES AND DISCOUNTS WAS NOT FOUND TO BE FALSE OR UN TRUE INASMUCH AS NO ATTEMPT WAS MADE TO EXAMINE THE SAID DETAILS FIL ED BY THE ASSESSEE. IN S.A. BUILDERS VS. CIT AND ANOTHER(2007) 288 ITR 1(SC) IT HAS BEEN OBSERVED BY THEIR LORDSHIPS (AT PLACITUM 35 AP PEARING AT PAGE-9 OF THE REPORT ) : ....THAT ONCE IT IS ESTABLISHED THAT THERE WAS N EXUS BETWEEN THE EXPENDITURE AND THE PURPOSE OF THE BUSI NESS (WHICH NEED NOT NECESSARILY BE THE BUSINESS OF THE ASSESSEE ITSELF) THE REVENUE CANNOT JUSTIFIABLY CL AIM TO ITA NO.5883/M/08 A.Y: 05-06 5 PUT ITSELF IN THE ARM-CHAIR OF THE BUSINESSMAN OR IN THE POSITION OF THE BOARD OF DIRECTORS AND ASSUME THE R OLE TO DECIDE HOW MUCH IS REASONABLE EXPENDITURE HAVING RE GARD TO THE CIRCUMSTANCES OF THE CASE. NO BUSINESSMAN C AN BE COMPLELLED TO MAXIMIZE HIS PROFIT. THE INCOME-TAX AUTHORITIES MUST PUT THEMSELVES IN THE SHOES OF THE ASSESSEE AND SEE HOW A PRUDENT BUSINESS MAN WOULD A CT. THE AUTHORITIES MUST NOT LOOK AT THE MATTER FROM TH EIR OWN VIEW POINT BUT THAT OF A PRUDENT BUSINESSMAN... .. 7. IN THE ABSENCE OF ANY OTHER CONTRARY MATERIAL PLACED ON RECORD BY THE REVENUE WE RESPECTFULLY FOLLOWING THE RATIO OF THE DECISION OF THE HONBLE SUPREME COURT (SUPRA) AND KEEPING IN VIEW TH AT THE ASSESSEE HAS ESTABLISHED THE NEXUS BETWEEN THE SHORT RECEIPTS ON A CCOUNT OF NON RECEIPT OF DETENTION CHARGES REBATE AND DISCOUNT A ND THE PURPOSE OF BUSINESS THE DISALLOWANCE MADE BY THE AO IS NOT SUS TAINABLE AND ACCORDINGLY WE ARE INCLINED TO UPHOLD THE FINDING OF T HE LD. CIT(A) IN DELETING THE DISALLOWANCE OF RS.38 64 892/-. THE GROU NDS TAKEN BY THE REVENUE ARE THEREFORE REJECTED. 8. IN THE RESULT THE REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 12.2.2010. SD/- SD/- ( R.K. PANDA ) ( D.K. AGARWAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED: 12.2.2010. JV. ITA NO.5883/M/08 A.Y: 05-06 6 COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 29.1.10 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 2.2.10 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 12.2.10 SR.PS/PS 7. FILE SENT TO THE BENCH CLERK 15.2.10 SR.PS/PS 8 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER