KRANT NARAIN AGNANI, MUMBAI v. ACIT 4(3), MUMBAI

ITA 962/MUM/2011 | 2004-2005
Pronouncement Date: 24-10-2016 | Result: Allowed

Appeal Details

RSA Number 96219914 RSA 2011
Assessee PAN AABPA3528L
Bench Mumbai
Appeal Number ITA 962/MUM/2011
Duration Of Justice 5 year(s) 8 month(s) 20 day(s)
Appellant KRANT NARAIN AGNANI, MUMBAI
Respondent ACIT 4(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-10-2016
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 24-10-2016
Date Of Final Hearing 07-07-2016
Next Hearing Date 07-07-2016
Assessment Year 2004-2005
Appeal Filed On 03-02-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI BEFORE S/SHRI SANJAY ARORA ACCOUNTANT MEMBER AND AMARJIT SINGH JUDICIAL MEMBER / I .T.A. NO.962/MUM/2011 ( / ASSESSMENT YEAR: 2004-05) SHRI KRANT NARAIN AGNANI D-207 GASPER ENCLAVE DR.AMBEDKAR ROAD BANDRA (W) MUMBAI - 400050 / VS. ASSISTANT COMMISSIONER OF INCOME TAX 4 (3) MUMBAI ./ ./ PAN/GIR NO. : AABPA3528L ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY: SHRI BHARAT L. GANDHI DEPARTMENT BY: DR. SUMAN RATNAM DARSI / DATE OF HEARING: 03.08.2016 /DATE OF PRONOUNCEMENT: 24.10.2016 ! / O R D E R PER AMARJIT SINGH JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER DATED 28.12.2010 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-10 MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] RE LEVANT TO THE A.Y.2004-05. 2. THE APPELLANT HAS RAISED THE FOLLOWING GROUNDS:- A) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACT S BY CONFIRMING THE ADDITIONS OF BAD DEBTS FOR RS.1 50 3 13/- WERE AS PER THE LAW AND AS PER THE VARIOUS CITATION RELI ED UPON AND STATED IN THE APPELLATE ORDER MAY WRITING OF THE B AD DEBTS ITA NO.962/MUM/2011 ASSESSMENT YEAR: 2004-05 2 WAS SUFFICIENT COMPLIANCE FOR 36(1)(7). THE APPELL ANT CRAVES LEAVE TO MOVE SEPARATE APPLICATION TO TAKE ADDITION AL EVIDENCE ON RECORD UNDER RULE 29 OF THE INCOME TAX APPELLATE TRIBUNAL RULES 1963 RELYING ON THE PUBLIC DOCUMENTS OF PUBLIC RECORDS OF THE NATIONAL STOCK E XCHANGE. B) THE LD. CIT APPEAL HAS ERRED IN LAW AND IN FACTS BY CONFIRMING THE ADDITION OF AN APPLICATION SOFTWARE WHICH WAS NOTHING BUT A BACK OFFICE ACCOUNTING SOFTWARE AND W HICH HAS LIFE SPAN BELOW TWO YEARS AND IT WAS A REVENUE EXPE NDITURE SQUARELY COVERED IN THE JUDGMENT OF AMWAY INDIA ENT ERPRISES REPORTED IN 114 TTJ 476 DELHI SPECIAL BENCH AND HEN CE IT HAS TO BE TREATED AS A REVENUE EXPENDITURE. THE GROUND WITH THE LD. CIT IS TOTALLY MISLAID AND THE JUDGEMENT RELIED UPON BY THE LD. CIT IS NOT AT ALL APPLICABLE TO THE FACTS O F THE CASE. C) THE LD. CIT APPEALS HAS ERRED IN LAW AND IN FACT S BY DISALLOWING THE COMPUTER EXPENSES AS WHICH IS MUCH MORE DETAILED OUT IN PARA 1.31 WITHOUT APPRECIATING THE FACTS THAT THESE WERE PURCHASED TO REPLACE THE ORIGINAL MONITO RS ETC. OR WHICH THE FULL COMPUTER UNIT WAS BASED AND FORMED A ND THE REPLACEMENT COST IS A REVENUE EXPENDITURE. THE APP ELLANT WILL CRAVE TO REFER AND RELY UPON THE VARIOUS JUDGEMENTS DURING THE TIME OF HEARING. D) THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW A ND INFACT BY TAKING INTO THE CONSIDERATION THE MARKET VALUE OF T HE PROPERTY AS PER THE STAMP OFFICE VALUATION WITHOUT CONSIDERI NG THE ENCUMBRANCES RELATED TO THE PROPERTY IN QUESTION. E) THE APPELLANT DISPUTES THE TOTAL TAX LIABILITY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED THE RETURN OF INCOME ON 01.11.2004 DECLARING TOTAL INCOME TO THE TUNE OF RS.3 02 530/-. THE RETURN WAS PROCESSED U/S.143(1) OF THE INCOME TAX ACT 1961( IN SHORT THE ACT) ON 31.03.2005. THE CASE WAS SELECTED UNDER COMPULSORY SCRUTINY UNDER PARA NO.2(J) OF NOR MS PRESCRIBED BY THE C.B.D.T. FOR SELECTION OF CASES FOR SCRUTINY. THER EAFTER THE NOTICES ITA NO.962/MUM/2011 ASSESSMENT YEAR: 2004-05 3 U/S.143(2) AND 142(1) OF THE ACT WERE ISSUED AND SE RVED UPON THE ASSESSEE. THEREAFTER THE INCOME OF THE ASSESSEE WA S ASSESSED TO THE TUNE OF RS.8 37 740/-. THE ASSESSEE WAS NOT SATISFIED W ITH THE ASSESSMENT OF INCOME ON THE POINT OF BAD DEBTS AND COMPUTER EXPEN SES THEREFORE FILED AN APPEAL BEFORE THE CIT(A) WHO DISMISSED THE APPEA L OF THE ASSESSEE THEREFORE FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1:- 4. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONFIRMATION OF ADDITION OF BAD DEBTS OF RS.1 50 313/-. ACCORDING TO THE FINDING OF THE ASSESSING OFFICER HE ADDED THE SAID BAD DEBTS IN TH E INCOME OF THE ASSESSEE ON THE GROUND THAT THE ASSESSING OFFICER I SSUED THE NOTICE TO DR.D.B.LOHANA AGAINST WHOM AN AMOUNT OF RS.1 25 313 /- WAS OUTSTANDING. THE ASSESSING OFFICER ISSUED THE NOTI CE TO HIM WHO DENIED THE OUTSTANDING AMOUNT. THEREFORE THE SAID BAD DE BTS WAS ADDED TO THE INCOME OF THE ASSESSEE. ACCORDINGLY THE ASSESSING OFFICER ALSO ISSUED THE NOTICE TO SHRI MANISH JOSHI AGAINST WHOM AN AMO UNT OF RS.25 000/- WAS OUTSTANDING. THE NOTICE RETURNED UNSERVED NO NEW ADDRESS WAS GIVEN THEREFORE THE SAID INCOME WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. THE SAID ADDITION WAS CONFIRMED BY (CIT (A)). THE LEARNED REPRESENTATIVE OF THE ASSESSEE MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE SAYING THEREIN THAT THE ACCOUNT S OF THE ASSESSEE WERE NOT PERUSED WHILE CONFIRMING THE ADDITION OF THE AM OUNT DUE AGAINST DR. D.B.LOHANA AND THE POLICE COMPLIANT WAS NOT PRODUCE D BEFORE THE ASSESSING OFFICER. THE ASSESSEE HAS ALSO ATTACHED THE COPY OF THE LEDGER WITH THE APPLICATION WHEREIN IT SEEMS THAT THE AMOU NT HAS BEEN PAID ITA NO.962/MUM/2011 ASSESSMENT YEAR: 2004-05 4 THROUGH CHEQUE. THE TRANSACTIONS WERE CONTINUING F URTHER IN THE ACCOUNTS UP TO THE YEAR 2005-06. IT IS NOT IN DISP UTE THAT WHILE REJECTING THE CLAIM OF THE ASSESSEE THE LEDGER ACCOUNTS WERE NOT EXAMINED BY THE ASSESSING OFFICER. SO FAR AS THE OUTSTANDING DEBT WITH REGARD TO SHRI MANISH JOSHI IS CONCERNED THE CLAIM OF THE BAD DEB TS HAS BEEN DECLINED MERELY ON THE FACTS THAT SHRI MANISH JOSHI WAS NOT RESIDING AT THE GIVEN ADDRESS HOWEVER NO NEW ADDRESS WAS REMITTED AND NO ACCOUNTS BOOKS OF THE ASSESSEE WAS EXAMINED. ANYHOW THE ASSESSING OFFICER DID NOT EXAMINE THIS ISSUE PROPERLY. THE ACCOUNT OF THE ASS ESSEE AND POLICE COMPLAINT ETC. WERE NOT PROPERLY EXAMINED BEFORE DE CLINING THE CLAIM OF THE ASSESSEE. THE APPLICATION FOR ADDITIONAL EVIDEN CE ACCOMPANIED BY THE RELEVANT DOCUMENTS SEEMS RELEVANT FOR THE PROPE R ADJUDICATION OF THE CASE AND IS REQUIRED TO BE EXAMINED TO ACHIEVE THE JUSTICE AND TO DECIDE THIS ISSUE PROPERLY. THEREFORE IN THE SAID CIRCUM STANCES WE ADMIT THE APPLICATION OF ADDITIONAL EVIDENCE ON THIS ISSUE AN D DIRECT THE ASSESSING OFFICER TO RE-EXAMINE THIS ISSUE IN VIEW OF THE EVI DENCE ADDUCED BY THE ASSESSEE BY GIVING HIM AN OPPORTUNITY OF BEING HEAR D. ACCORDINGLY THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE. ISSUE NO.2 & 3:- 5. ACCORDING TO THESE ISSUES THE ASSESSEE HAS CHALL ENGED THE CONFIRMATION OF COMPUTER EXPENSES WHICH HAS BEEN TR EATED BY THE ASSESSING OFFICER AS CAPITAL IN NATURE. THE ASSESS EE MOVED AN APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE BY WHICH HE WANTED TO ADDUCE THE PURCHASE CERTIFICATES FROM COMPTEK SOFTW ARE SERVICES LTD. CERTIFYING THAT THE APPLICANT PURCHASED DERIVATIVES BACK OFFICE ITA NO.962/MUM/2011 ASSESSMENT YEAR: 2004-05 5 ACCOUNTING SOFTWARE BY CLAIMING THAT THIS CERTIFICA TES AND BILLS WOULD BE NECESSARY TO DECIDE THE MATTER OF CONTROVERSY IN TH E INTEREST OF JUSTICE. IT IS ALSO ARGUED THAT THE COMPUTER EXPENSES ARE REVEN UE IN NATURE AND ARE LIABLE TO BE TREATED ACCORDINGLY IN THE INTEREST OF JUSTICE. IN SUPPORT OF THIS CONTENTION THE LEARNED REPRESENTATIVE OF THE A SSESSEE HAS PLACED RELIANCE ON THE LAW SETTLED IN TEK RAM (DEAD) THROU GH LRS VS. COMMISSIONER OF INCOME TAX SUPREME COURT OF INDIA [2013] 93 DTR (SC) 350. SINCE THE BILLS AND THE CERTIFICATES ISS UED BY THE COMPTEK SOFTWARE SERVICES ARE ON RECORD WHICH WERE NOT CONS IDERED AT THE TIME OF DECIDING THE ISSUE BY THE ASSESSING OFFICER. TH EREFORE IN VIEW OF THE SAID CIRCUMSTANCES AND BY RELYING UPON THE LAW MENT IONED ABOVE WE ADMIT THE PRESENT APPLICATION FOR ADDITIONAL EVIDEN CE AND DIRECT THE ASSESSING OFFICER TO DECIDE THE ISSUE AFRESH IN THE LIGHT OF THE ABOVE SAID ADDITIONAL EVIDENCE BY GIVING AN OPPORTUNITY OF BEI NG HEARD TO THE ASSESSEE. ACCORDINGLY THESE ISSUES ARE DECIDED IN FAVOUR OF ASSESSEE AGAINST THE REVENUE. ISSUE NO.4:- 6. UNDER THIS ISSUE THE ASSESSEE HAS CHALLENGED THE CONSIDERATION OF THE MARKET VALUE OF THE PROPERTY AS PER THE STAMP O FFICE VALUATION WHEREAS THE MARKET VALUE OF THE PROPERTY IN QUESTIO N WAS NOT CONSIDERED. HOWEVER THIS ISSUE HAS NOT CHALLENGED BEFORE THE CIT(A). THE CONTENTION OF THE ASSESSEE IS THAT THE ASSESSEE HAS GOT THE SUFFICIENT MATERIAL WITH HIM ON RECORD TO SHOW THAT THE STAMP VALUATION OF THE SHOP SOLD IS NOT REFLECTING THE CORRECT PRICE. THEREFOR E HE WANTED TO CHALLENGE THE SAID ADDITION OF THE LONG TERM CAPITA L GAIN BEFORE THE ITA NO.962/MUM/2011 ASSESSMENT YEAR: 2004-05 6 CIT(A). THE LEARNED REPRESENTATIVE OF THE ASSESSEE HAS ARGUED THAT NO DOUBT THIS GROUND HAS NOT CHALLENGED BEFORE THE CIT (A) BUT THE ASSESSEE CAN CHALLENGE THIS GROUND ON THE BASIS OF THE SETTL ED PRINCIPLE OF LAW AS HELD IN 349 ITR 336 CIT VS. PRUTHVI BROKERS & SHAR EHOLDERS PVT. LTD (BOMBAY HIGH COURT) PARA 23 OF THIS JUDGMENT IS HER EBY REPRODUCED BELOW: - 23. IT IS CLEAR TO US THAT THE SUPREME COURT DID N OT HOLD ANYTHING CONTRARY TO WHAT WAS HELD IN THE PREVIOUS JUDGMENTS TO THE EFFECT THAT EVEN IF A CLAIM IS NOT MADE BEFORE THE ASSESSI NG OFFICER IT CAN BE MADE BEFORE THE APPELLATE AUTHORITIES. THE JURIS DICTION OF THE APPELLATE AUTHORITIES TO ENTERTAIN SUCH A CLAIM HAS NOT BEEN NEGATED BY THE SUPREME COURT IN THIS JUDGMENT. IN F ACT THE SUPREME COURT MADE IT CLEAR THAT THE ISSUE IN THE C ASE WAS LIMITED TO THE POWER OF THE ASSESSING AUTHORITY AND THAT TH E JUDGMENT DOES NOT IMPINGE ON THE POWER OF THE TRIBUNAL UNDER SECT ION 254. IN CASE TITLED AS TEK RAM (DEAD) THROUGH LRS VS. CO MMISSIONER OF INCOME TAX SUPREME COURT OF INDIA [2013] 93 DTR (S C) 350. THE DOCUMENTS WERE FIRST TIME PRODUCED BEFORE THE HONB LE SUPREME COURT WHICH WERE ACCEPTED AND THE HONBLE SUPREME COURT R EMANDED THE CASE TO THE HIGH COURT TO CONSIDER THE NEW EVIDENCE AND DECIDE THE MATTER AFRESH IN ACCORDANCE WITH LAW. IN VIEW OF THE SAID LAW WE ARE OF THE VIEW THAT THE ASSESSEE CAN RAISE THE GROUND WHICH H E HAS NOT CHALLENGED BEFORE THE CIT(A) THEREFORE THE CONTENTION OF THE ASSESSEE HAS BEEN ACCEPTED ON THIS GROUND. IN VIEW OF THE SAID CIRC UMSTANCES THE ASSESSEE WANTED TO ADDUCE SOME EVIDENCE BEFORE ASSESSING OFF ICER SUCH AS ITA NO.962/MUM/2011 ASSESSMENT YEAR: 2004-05 7 VALUATION REPORT COMPARABLE REGISTRATION ETC. WHI CH WERE NOT PRODUCED EARLIER BEFORE THE ASSESSING OFFICER WHILE DECIDING THIS ISSUE THEREFORE WE ARE OF THE VIEW THAT THIS ISSUE IS REQUIRED TO B E AGAIN ADJUDICATED AFRESH IN VIEW OF THE ADDITIONAL EVIDENCE BY GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE REMIT THIS ISSUE B EFORE ASSESSING OFFICER TO DECIDE THIS ISSUE AFRESH IN VIEW OF THE OBSERVATIONS MADE ABOVE AND IN ACCORDANCE WITH LAW. 7. IN THE RESULT THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCTOBER 2016 SD/- SD/- (SANJAY ARORA) (AMARJIT SINGH) / ACCOUNTANT MEMBER #$ /JUDICIAL MEMBER % & MUMBAI; ' DATED : 24 TH OCTOBER 2016 MP MP MP MP / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ( ) / THE CIT(A)- 4. ( / CIT 5. )*+ $$ - - % & / DR ITAT MUMBAI 6. +./ 0 / GUARD FILE. / BY ORDER ) $ //TRUE COPY// / ! ' (DY./ASSTT. REGISTRAR) # $ % & / ITAT MUMBAI