RADHA CONSTRUCTION P. LD, MUMBAI v. ACIT (OSD) 2(3), MUMBAI

ITA 7491/MUM/2010 | 2007-2008
Pronouncement Date: 03-07-2013 | Result: Allowed

Appeal Details

RSA Number 749119914 RSA 2010
Assessee PAN AAACR5682A
Bench Mumbai
Appeal Number ITA 7491/MUM/2010
Duration Of Justice 2 year(s) 8 month(s)
Appellant RADHA CONSTRUCTION P. LD, MUMBAI
Respondent ACIT (OSD) 2(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 03-07-2013
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted D
Tribunal Order Date 03-07-2013
Date Of Final Hearing 10-06-2013
Next Hearing Date 10-06-2013
Assessment Year 2007-2008
Appeal Filed On 02-11-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI . ! ! ! ! . ' ' ' ' ! !! ! $ $ $ $ %&' %&' %&' %&' % % % % BEFORE SHRI D. MANMOHAN VP AND SHRI D.KARUNAKARA RAO AM ITA NO. 7491/MUM/2010 (ASSESSMENT YEAR- 2007-2008) RADHA CONSTRUCTION PVT. LTD. 1301 AMMENA HEIGHT DR. A NAIR ROAD AGRIPADA MUMBAI. PAN: AAACR5682A VS ACIT (OSD)-2(3) R.NO. 555 AAYAKAR BHAWAN M.K. ROAD MUMBAI-400020 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI REEPAL G. TRAISHAWALA RESPONDENT BY : SHRI RAJARSHI DWIVEDY % ! ( )$ /DATE OF HEARING : 10-06-2013 *+ ( )$ /DATE OF PRONOUNCEMENT : 03.07.2013 & && & O R D E R . ' ' ' ' ! !! ! $ $ $ $ %&' %&' %&' %&' PER D. KARUNAKAR A RAO AM THIS APPEAL BY THE ASSESSEE AGAINST THE ORDER OF TH E CIT(A)-6 MUMBAI DATED 10.08.2010 FOR THE ASSESSMENT YEAR 2007-2008. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. THE LEARNED CIT(A) ERRED IN CONFIRMING THE ADDI TION MADE TOWARDS UNEXPLAINED EXPENDITURE IN RESPECT OF TRANS PORT CHARGES PAID TO LAKDAWALA TRANSPORT WITHOUT APPRECIATING THE FACT THAT ALL THE SUPPORTING IN RESPECT OF THE SAID EXPENDITURE WAS FURNISHED INCLUDING CONFIRMATION OF THE SAID PARTY AND HENCE THE ADDITION MADE TOWARDS UNEXPLAINED EXPENDITURE AMOUNTING TO RS. 23 84 421/- IS WITHOUT ANY JUSTIFICATION AND LIABLE TO BE DELETED. 2 ITA 7491/MUM/2010 M/S. RADHA CONSTRUCTION P. LTD. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE AND TAK E ON RECORD THE RETURN OF INCOME FILED BY THE SAID LAKDAWALA TR ANSPORT DULY OFFERING THE AMOUNT OF TRANSPORT CHARGES TO THE APP ELLANT AS ITS INCOME AND HENCE THE ADDITION OF RS. 23 84 421/- C ONFIRMED AS UNEXPLAINED IS WITHOUT ANY JUSTIFICATION AND LIA BLE TO BE DELETED. 3. BRIEFLY STATED RELEVANT FACTS OF THE CASE ARE TH AT THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 71 35 651/-. IN THIS CASE THERE WAS A SURVEY OPERATION ON 26.3.2007 U/S 133(A) OF THE ACT. AS O N DATE OF SURVEY THE PROFIT WAS COMPUTED AT RS.70 LAC. ASSESSMENT WAS COMPLETED U/ S 143(3) OF THE ACT AND THE TOTAL INCOME WAS DECLARED AT RS. 96 38 220/-. DURIN G THE ASSESSMENT PROCEEDINGS AO MADE ADDITION OF RS. 23 84 421/- ON ACCOUNT OF U NEXPLAINED EXPENDITURE WHICH IS THE SUBJECT MATTER OF THIS APPEAL BEFORE US. RE LEVANT FACTS TO THIS ISSUE ARE AS FOLLOWS. 4. DURING THE ASSESSMENT PROCEEDINGS AO NOTICED TH AT THE ASSESSEE CLAIMED EXPENDITURE ON ACCOUNT OF TRANSPORT CHARGES TO THE TUNE OF RS. 28 81 718/- INVOLVING LAKDAWALA TRANSPORT. AFTER EXAMINING THE RELEVANT B ILLS AO CAME TO THE CONCLUSION THAT RS. 4 94 963/- WHICH WAS CLAIMED FOR THE ASSE SSMENT YEAR 2006-07 CAN ONLY BE ALLOWED. IN THIS REGARD AS ON 31.3.2006 THE CLOSING BALANCE IS NIL AS PER THE BOOKS OF THE ASSESSEE. REGARDING BALANCE AMOUNT OF 23 84 421/- AO NOTICED THAT THESE EXPENSES DO NOT PERTAIN TO ASSESSMENT YEAR 20 07-08 AND NARRATED THE DISCREPANCY AS EVIDENT FROM THE CONTENTS OF PARA 3. 1 3.2 OF THE ASSESSMENT ORDER. IT IS THE CLAIM OF THE ASSESSEE THAT THE SAID AMOUNT HAS ACTUALLY RELATES TO PERIOD ENDING AS ON 31.3.2006 BUT THE RELEVANT BILLS COUL D NOT ENTERED IN THE BOOK AS THE BILLS WHICH WERE RECEIVED BY THE ASSESSEE WERE MIS PLACED. AS PER THE ASSESSEE DURING THE TIME OF RECONCILIATION WITH THE ACCOUNTS OF MR LOKHANDHWALA TRANSPORT THE DIFFERENCES IN ACCOUNTS CAME TO LIGHT AND THE B ILLS WERE ACCORDINGLY ACCOUNTED FOR IN THE AY 2006-07. THE ASSESSEE SHOULD BE GIV EN THE BENEFIT OF SAID BALANCE AS RELATABLE TO THE RELEVANT PERIOD AND ALLOW THE CLAI M OF THE ASSESSEE. THUS THE PAYMENT OF BALANCE OF RS. 23 84 421/- IS DUE AND PA YABLE TO THE SAID PARTY M/S. LAKDAWALA TRANSPORT AND THE CLAIM SHOULD BE ALLOWE D IGNORING THE ISSUANCE OF NOTICE IN THE ACCOUNTING. THUS IT IS ADMITTED POSI TION BY THE ASSESSEE THAT THE BILLS RELATE TO FINANCIAL YEAR 2005-06 AY 2006-07 WHICH ARE NOT ACCOUNTED IN THE SAME; 3 ITA 7491/MUM/2010 M/S. RADHA CONSTRUCTION P. LTD. BUT INSTEAD CONSIDERED IN BOOKS FOR THE AY 2007-08. IN SUPPORT THE ASSESSEE SUBMITTED FACT OF MAKING PAYMENT OF RS. 20 LACS WH ICH WAS PAID BY THE ASSESSEE TO M/S. LAKDAWALA TRANSPORT AFTER MAKING NECESSARY TDS IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. 5. DURING THE FIRST APPELLATE PROCEEDINGS THE ASSE SSEE SUBMITTED THAT M/S. LAKDAWALA TRANSPORT DULY ACCOUNTED THE SAID AMOUNT OF RS. 23 84 537/- IN THE ASSESSMENT YEAR 2005-06 AND IT SUPPORTS THE ASSESSE ES CONTENTION AND THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. HE ALSO MENTIONED THAT THE SAID AMOUNT WAS SHOWN AS INCOME OF THE SAID M/S. LAKDAWALA TRAN SPORT WHICH IS UNDISPUTED FACT. FURTHER THERE IS OTHER ISSUE CAME UP DURING THE CLAIM OF RECONCILIATION AND IT INVOLVES THE DISCREPANCIES WITH REGARD TO THE PURCHASE RETURN OF STEEL BY THE ASSESSEE FROM ANAS TRADING COMPANY . THE ASSESSEE MENTIONED THAT RS. 9 30 634/- WORTH OF PURCHASES WAS RETURNED TO THE A NAS TRADING COMPANY WHICH IS ALSO EXPLAINED TO THE AO. PARA 5.4 OF THE IMPUGNED ORDER CONTAINS THE RELEVANT FACTS IN THIS REGARD. THE CLAIM OF THE ASSESSEE WAS ACCEP TED WITH OUT PROPER EXAMINATION OF THE BOOKS AND THE BILL. 5.1. THUS AO MADE DISALLOWANCE TREATING THE SAID A MOUNT OF RS. 23 84 537/- AS UNEXPLAINED EXPENDITURE . ASSESSEE SUBMITTED THAT WHEN IT IS ACTUALLY NOT A N EXPENDITURE THE DISALLOWANCE IS NOT JUSTIFIABLE. F URTHER IT IS MENTIONED THAT WHEN THE SAID AMOUNT WAS INCLUDED/BOOKED TO THE WIP ACCO UNT WHICH ARE SUBSEQUENTLY CAPITALIZED IN THE CURRENT ASSESSMENT YEAR 2007-20 08 IT SHOULD NOT MAKE ANY DIFFERENCE IF THE SAME IS CLAIM AS EXPENDITURE OF T HE CURRENT YEAR. THE CIT (A) CONSIDERED THE ABOVE EXPLANATION OF THE ASSESSEE AN D REJECTED THE SAME. RELEVANT REASONING IS GIVEN IN PARA-6 OF THE IMPUGNED ORDER WHICH IS REPRODUCED AS UNDER. PARA -6:- THUS THE CONTENTION OF THE AR THAT THEY H AD NOTED THE DIFFERENCE WHEN THEY RECONCILED THE ACCOUNT WIT H LOKDAWALA TRANSPORT SEEMS MISPLACED. FURTHER THE C ONTENTION OF THE APPELLANT THAT THE FILE RELATING TO BILLS OF TRANSPORT REMAINED TO BE ENTERED IN THE BOOKS OF ACCOUNT IN T HE PRECEDING YEAR IS DIFFICULT TO ACCEPT SINCE THE ACC OUNTS ARE TO BE KEPT ON A DAY-TO-DAY BASIS. THE CONTENTION OF TH E APPELLANT CAN FURTHER NOT BE ACCEPTED IN VIEW OF THE FACT THA T EVEN WHEN THE ENTRIES PURPORTED TO HAVE BEEN MADE IN THE BOOK S WERE IN FACT MADE THE SAME APPEARED UNDER A WRONG HEAD AND TOO 4 ITA 7491/MUM/2010 M/S. RADHA CONSTRUCTION P. LTD. MANY UNCONNECTED ACCOUNTS GOT ADJUSTED UNDER THE HE AD PURCHASES. THIS SEEMS UNACCEPTABLE IN VIEW OF THE FACT THAT THE ACCOUNTS OF THE APPELLANT ARE AUDITED AND THE A UDITORS PARTICULARLY CHECK THE ACCOUNT HEADS UNDER WHICH TH E ENTRIES ARE MADE. FURTHER IT IS DIFFICULT TO ACCEPT THAT TH E ENTIRE TRANSPORT EXPENSES FOR THE FULLY YEAR REMAINED TO B E ENTERED IN THE BOOKS OF ACCOUNTS OF THE APPELLANT WITHOUT GETT ING NOTICED EVEN BY THE ACCOUNTS BRANCH. THE COPY OF RETURN OF INCOME OF IBRAHIM LAKDAWALA IN SUPPORT OF THE CONTENTION THAT THE SAID INCOME RELATING TO TRANSPORTATION CHARGES HAD BEEN DULY ACCOUNTED FOR BY THEM COULD NOT BE CONSIDERED AT TH E APPELLATE STAGE SINCE THE SAME WAS NOT FILED WITH THE AO. LOO KING AT ALL THE FACTS AND CIRCUMSTANCES OF THE CASE THE CONTENTION OF THE APPELLANT IS NOT RELIABLE AND THE SAME IS REJEC TED ACCORDINGLY. 6. THE ASSESSEE IS AGGRIEVED WITH THE ABOVE DECISION OF THE CIT(A) AND FILED THE PRESENT APPEAL BEFORE US. DURING THE PROCEEDINGS L EARNED COUNSEL FOR THE ASSESSEE NARRATED THE ABOVE FACTS OF THE CASE. FURTHER HE M ENTIONED THAT NOTWITHSTANDING THE DISCREPANCIES IN BOOK ENTRIES AND THE ENTRY OF THE BILLS MISTAKENLY IN THIS AY AND NOT IN THE YEAR IT WAS ACTUALLY INCURRED THE FACT IS THAT ASSESSEE RECOGNIZED THE PROFITS OF THE PURCHASE IN THE ASSESSMENT YEAR 2007 -2008. THEREFORE THERE ARE NO TAX IMPLICATIONS ON THIS ACCOUNT. IT IS SUBMITTED THAT CONSIDERING THE FACT THAT THE BILLS ARE FINALLY ACCOUNTED FOR THE CLAIM OF THE A SSESSEE SHOULD BE ACCEPTED. FURTHER WITH REGARD TO THE SUPPORTING EVIDENCES IN CONNECTI ON WITH THE RETURNS OF PURCHASES AMOUNTING TO RS. 9 13 634/- LD COUNSEL MENTIONED T HAT THE SAME ARE BORNE IN THE BOOKS OF THE ACCOUNTS AND BOTH THE PARTIES INVOLVED ARE ASSESSEE AND ANAS TRADING COMPANY. THEREFORE THERE IS NO ISSUE ON THIS NOW. FURTHER BRINING OUR ATTENTION TO PARA -6 OF THE IMPUGNED ORDER LD COUNSEL MENTIONED THAT THE ORDER OF THE CIT (A) HAS NOT ATTENDED TO THE ARGUMENTS OF THE ASSESSEE R EASONABLY AND IN ACCORDANCE WITH THE PROVISIONS OF SECTION 250(6) OF THE ACT. 7. ON THE OTHER HAND LD. DR FOR THE REVENUE MENTIO NED THAT IT IS A FACT THERE ARE OBVIOUS DISCREPANCIES IN THE BOOKS OF ACCOUNTS IN ACCOUNTING THE BILLS IN ACCORDANCE WITH THE DATES MENTIONED THEREIN. IT IS ALSO AN ADMITTED FACT THAT ASSESSEE FAILED TO SUPPORT THAT THE BILLS RAISED IN FINANCIAL YEAR 2005-2006 WERE NOT DELIVERED TO THE ASSESSEE. IT WAS CLAIMED THAT THE SAID BILLS WERE DELIVERED TO THE EMPLOYEES AT THE PROJECT SITE OF THE ASSESSEE AND T HE SAID BILLS WERE MISPLACED. FURTHER THERE IS NO EVIDENCE WHATSOEVER WITH REG ARD TO BONAFIDE OF THE RENDERING 5 ITA 7491/MUM/2010 M/S. RADHA CONSTRUCTION P. LTD. OF THE SERVICES TO THE ASSESSEE. THEREFORE THE OR DER OF THE CIT (A) IS REASONABLE AND DOES NOT CALL FOR ANY INTERFERENCE. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE O RDERS OF THE REVENUE AUTHORITIES AND THE PAPER BOOK OF THE ASSESSEE FILE D BEFORE US. WE HAVE ALSO PERUSED PARA 6 OF THE IMPUGNED ORDER IN PARTICULAR WHICH IS RELEVANT FOR ADJUDICATING THE APPEAL OF THE ASSESSEE. WITH REGAR D TO DELAYED RECONCILIATION OF THE ACCOUNTS BY THE PARTIES THE EXPLANATION OF THE ASS ESSEE CANNOT BE ACCEPTED AS THE SAID EXPLANATION CONSTITUTES A GENERAL EXPLANATION AND THE SAME IS ENIGMATIC. WHEN THE ACCOUNTS OF THE PARTIES ARE DULY AUDITED EMPLOY ING THE SERVICES OF THE TAX EXPERTS SHOULD SUCH EXPLANATION STANDS THE TEXT OF LEGAL SCRUTINY? BOTH PARTIES TO THE TRANSACTIONS ARE FOLLOWING THE PROJECT COMPLETI ON METHOD OF ACCOUNTING . THE EXPLANATION OF THE ASSESSEE WITH REGARD TO CONTENTI ON OF MISPLACEMENT OF THE DELIVERY OF BILLS IN THE PROJECT SITE OF THE ASSESS EE ETC ARE REQUIRED TO BE EVIDENCED TO ACCEPT IT AS A REASONABLE EXPLANATION. WITH REGARD TO THE CIT (A) FINDING THE TRANSPORT SERVICES WRONGLY ACCOUNTED IN THE PURCHAS E ACCOUNT ALSO REQUIRES THE VERIFICATION. FURTHER IT IS REQUIRED THAT THE PUR CHASES WHICH ARE ADJUSTED BY THE PURCHASE RETURNS ALSO NEEDS THOROUGH ENQUIRY TO BRI NG OUT ACTUAL PURCHASES ON THE ACTUAL SERVICE CHARGES AND ACTUAL PURCHASE RETURNS. THESE ASPECTS WERE NOT ATTENDED TO BY THE CIT (A) IN HIS ORDER AND MERELY TRAVELLED ON SUPERFICIAL ISSUES. FURTHER THERE IS NEED FOR VERIFICATION ON THE RECO NCILIATION OF ACCOUNTS QUA THE PURCHASE RETURNS OF STEEL TO ANAS TRADING COMPANY. THERE IS NEED FOR EXAMINING THE GENUINENESS OF SUCH RETURNS AND THE VERIFICATION OF THE SAME. THE ONUS IS ON THE ASSESSEE TO FURNISH RELEVANT COPIES OF INCOME TAX RE TURNS OF M/S. LAKDWALA TRANSPORT BEFORE THE AO TO SUPPORT THE SAID CLAIM T HAT SAID AMOUNT OF RS. 23 84 537/- AS ITS INCOME IN THE RELEVANT ASSESSMEN T YEARS. IT IS MENTIONED IN THE PARA -6 OF THE IMPUGNED ORDER THAT THE SAID EVIDENC ES WERE NOT FURNISHED BEFORE THE AO BUT FURNISHED ONLY BEFORE THE CIT (A) WHICH WAS NOT ACCEPTED BY HIM. 9. AFTER CONSIDERING THE ABOVE WE ARE OF THE OPINI ON THIS REQUIRES A DETAILED SPEAKING ORDER OF THE AO BY ATTENDING THE AFORESAID ISSUES IN THE SET ASIDE PROCEEDINGS. AO SHALL GRANT A REASONABLE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE IN THE SET ASIDE ASSESSMENT. ACCORDINGLY GROUNDS OF THE ASSESSEE ARE SET ASIDE . 6 ITA 7491/MUM/2010 M/S. RADHA CONSTRUCTION P. LTD. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 3.7.2013. SD/- SD/- (D.MANMOHAN) (D.KARUNAKAR RAO) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI : 3.7.2013. PS.- PRAMOD -.) /COPY TO:- 1) /0 /THE APPELLANT. 2) -1/0 /THE RESPONDENT. 3) 2 ( ) - MUMBAI / THE CIT (A)-20 MUMBAI. 4) 2 MUMBAI /THE CIT 9 MUMBAI 5) 3!45 -.). / THE D.R. D BENCH MUMBAI. 6) 5 6 7 COPY TO GUARD FILE. & % / BY ORDER / / TRUE COPY / / / % 8 DY./ASSTT. REGISTRAR I.T.A.T. MUMBAI