DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -3(3)(1), MUMBAI vs. M/S HEM BHATTAD , MUMBAI
No AI summary yet for this case.
Income Tax Appellate Tribunal, MUMBAI BENCH “E” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI RAHUL CHAUDHARY
PER OM PRAKASH KANT, AM
These cross appeals by the Revenue and the assessee are directed against order dated 29.04.2023 passed by the Ld. Commissioner of Income-tax (Appeals) – National Faceless Appeal
HEM Bhattad 2 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018- Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018 Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2018 19.
The grounds raised by the Revenue are reproduced as under: grounds raised by the Revenue are reproduced as under: grounds raised by the Revenue are reproduced as under:
The CIT(A) erred in granting credit for TDS of Rs.93,97,430/ The CIT(A) erred in granting credit for TDS of Rs.93,97,430/ The CIT(A) erred in granting credit for TDS of Rs.93,97,430/- without appreciating that the corresponding income is not assessable without appreciating that the corresponding income is not assessable without appreciating that the corresponding income is not assessable for this year and also without ascertaining as to when this income for this year and also without ascertaining as to when this income for this year and also without ascertaining as to when this income was offered to tax. was offered to tax. 2. The CIT(A) erred in deleting various disallowances made u/s 37 The CIT(A) erred in deleting various disallowances made u/s 37 The CIT(A) erred in deleting various disallowances made u/s 37 and u/s 40(a)(ia) which were made on account of non and u/s 40(a)(ia) which were made on account of non-compliance of compliance of the assessee to the notices of the AO for showing business the assessee to the notices of the AO for showing business the assessee to the notices of the AO for showing business expediency of the expenses and for producing expediency of the expenses and for producing necessary proof of necessary proof of deduction and depositing of the tax, by merely relying on the deduction and depositing of the tax, by merely relying on the deduction and depositing of the tax, by merely relying on the submissions of the assessee and not subjecting them to cross submissions of the assessee and not subjecting them to cross submissions of the assessee and not subjecting them to cross- verification by the AO. The CIT(A) ought to have called for a remand verification by the AO. The CIT(A) ought to have called for a remand verification by the AO. The CIT(A) ought to have called for a remand report and allowed the AO to cross verify t report and allowed the AO to cross verify the submissions with he submissions with reference to evidences towards payment of tax etc. reference to evidences towards payment of tax etc. 3. The CIT(A) erred in deleting payments made to MCGM as FSI 3. The CIT(A) erred in deleting payments made to MCGM as FSI 3. The CIT(A) erred in deleting payments made to MCGM as FSI premium, premium, premium, development, development, development, cess, cess, cess, property property property tax tax tax etc. etc. etc. totalling totalling totalling to to to Rs.25,23,91, 144/ Rs.25,23,91, 144/ - despite the assessee's failure to produce the despite the assessee's failure to produce the proof of payments during assessment proceedings, by merely relying proof of payments during assessment proceedings, by merely relying proof of payments during assessment proceedings, by merely relying on the documents produced during the appellate proceedings which on the documents produced during the appellate proceedings which on the documents produced during the appellate proceedings which constitute additional evidence. The CIT(A) erred in admitting these constitute additional evidence. The CIT(A) erred in admitting these constitute additional evidence. The CIT(A) erred in admitting these evidences without affording a reasonable opportunity to evidences without affording a reasonable opportunity to the AO for the AO for examination of the evidences as per sub rule 3 of Rule 46A of the examination of the evidences as per sub rule 3 of Rule 46A of the examination of the evidences as per sub rule 3 of Rule 46A of the Income Tax Rules and passed this appellate order in violation of Rule Income Tax Rules and passed this appellate order in violation of Rule Income Tax Rules and passed this appellate order in violation of Rule 46A of the Income Tax Rules. 46A of the Income Tax Rules. 4. The CIT(A) erred in deleting the payments made to tenants and 4. The CIT(A) erred in deleting the payments made to tenants and 4. The CIT(A) erred in deleting the payments made to tenants and stamp duty / stamp duty / registration expenses of Rs. 90,60,260/ registration expenses of Rs. 90,60,260/- and Rs.23,70,602/- - respectively without allowing the AO to examine the respectively without allowing the AO to examine the evidences evidences evidences produced produced produced during during during appellate appellate appellate proceedings proceedings proceedings C C C I I I and and and accordingly passed appellate order in violation of Rule 46A of the accordingly passed appellate order in violation of Rule 46A of the accordingly passed appellate order in violation of Rule 46A of the Income Tax Rules. Tax Rules. 5. The CIT(A) erred in deleting the additions of Rs.49,88,18,107/ The CIT(A) erred in deleting the additions of Rs.49,88,18,107/- The CIT(A) erred in deleting the additions of Rs.49,88,18,107/ and Rs.8,52,71,486/ and Rs.8,52,71,486/- by holding that the appellant proved the by holding that the appellant proved the identity, creditworthiness and genuineness of the parties to whom identity, creditworthiness and genuineness of the parties to whom identity, creditworthiness and genuineness of the parties to whom the assessee had purportedly given loans by not appreciating tha the assessee had purportedly given loans by not appreciating tha the assessee had purportedly given loans by not appreciating that these are the ingredients to be proved in respect of loan taken. The these are the ingredients to be proved in respect of loan taken. The these are the ingredients to be proved in respect of loan taken. The CIT(A) ought to have remanded this matter for further examination as CIT(A) ought to have remanded this matter for further examination as CIT(A) ought to have remanded this matter for further examination as to whether these are interest to whether these are interest-free loans borrowed or advances and free loans borrowed or advances and any interest disallowance is called for. any interest disallowance is called for. 6. The CIT(A) erred in deleting disallowance of Rs.2,87,05,900/ T(A) erred in deleting disallowance of Rs.2,87,05,900/ T(A) erred in deleting disallowance of Rs.2,87,05,900/- being 20% of payment made to the associate concern M/s Peninsula being 20% of payment made to the associate concern M/s Peninsula being 20% of payment made to the associate concern M/s Peninsula
HEM Bhattad 3 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
Land Ltd. without affording an opportunity to the AO to examine the Land Ltd. without affording an opportunity to the AO to examine the Land Ltd. without affording an opportunity to the AO to examine the fair market value of the transaction and whether the said party is fair market value of the transaction and whether the said party is fair market value of the transaction and whether the said party is a related party. 2.1 The grounds raised by the assessee are reproduced as under: raised by the assessee are reproduced as under: raised by the assessee are reproduced as under:
The Ld CIT(A) erred in confirming the addition of Rs.27,00.000/ The Ld CIT(A) erred in confirming the addition of Rs.27,00.000/- The Ld CIT(A) erred in confirming the addition of Rs.27,00.000/ being the legal and professional fee payment at the rate of 30 per being the legal and professional fee payment at the rate of 30 per being the legal and professional fee payment at the rate of 30 per cent on Rs.9000000 i.e. Rs.2700000 and ad cent on Rs.9000000 i.e. Rs.2700000 and added the same to the total ded the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. income of the assessee in view of section 40 a ia of the IT Act 1961. income of the assessee in view of section 40 a ia of the IT Act 1961. 2. The Ld CIT(A) erred in confirming the addition of Rs. 1,58,61,967/ The Ld CIT(A) erred in confirming the addition of Rs. 1,58,61,967/- The Ld CIT(A) erred in confirming the addition of Rs. 1,58,61,967/ being 30 per cent of the payments made to IHFL of Rs.46128174 being 30 per cent of the payments made to IHFL of Rs.46128174 being 30 per cent of the payments made to IHFL of Rs.46128174 and to India Bulls of Rs.674 and to India Bulls of Rs.6745050 totaling to Rs.52873224 5050 totaling to Rs.52873224 i.e. Rs. 15861967 and added the same to the total income of the 15861967 and added the same to the total income of the assessee in assessee in view of section 40 a ia of the IT Act 1961. view of section 40 a ia of the IT Act 1961. 3. The Ld CIT(A) erred in confirming the addition of Rs.26,400/ The Ld CIT(A) erred in confirming the addition of Rs.26,400/- The Ld CIT(A) erred in confirming the addition of Rs.26,400/ being g 30 percent of the Finance charges being g 30 percent of the Finance charges payment to IHFL of 88000 payment to IHFL of 88000 i.e. Rs.26400 and added the same to the total income of the Rs.26400 and added the same to the total income of the Rs.26400 and added the same to the total income of the assessee in in view of section 40 a ia of the IT Act 1961. in view of section 40 a ia of the IT Act 1961. 4. The Ld CIT(A) erred in confirming the addition of Rs.40,968/ The Ld CIT(A) erred in confirming the addition of Rs.40,968/- The Ld CIT(A) erred in confirming the addition of Rs.40,968/ being 30 percent of the marketing expenses paid being 30 percent of the marketing expenses paid to Regenti Media to Regenti Media Pvt Ltd of Rs. 136550 i.e.Rs.40968 and added the same to the total Pvt Ltd of Rs. 136550 i.e.Rs.40968 and added the same to the total Pvt Ltd of Rs. 136550 i.e.Rs.40968 and added the same to the total income of the assessee in view of section 40 a ia of the IT Act 1961. income of the assessee in view of section 40 a ia of the IT Act 1961. income of the assessee in view of section 40 a ia of the IT Act 1961. 3. Briefly stated facts of the case are that the assessee, Briefly stated facts of the case are that the assessee, Briefly stated facts of the case are that the assessee, an Association of Person (AO Association of Person (AOP), was engaged in the business of real d in the business of real estate development during relevant year during relevant year. The assessee entered . The assessee entered into a joint development agreement dated 27.09.2012 with ‘R M Bhutter a joint development agreement dated 27.09.2012 with a joint development agreement dated 27.09.2012 with and Co. Ltd’. being a confirming party and ‘P ’. being a confirming party and ‘Peninsula land ltd eninsula land ltd’. being the developer. In view of t . In view of the agreement, the assessee had he agreement, the assessee had been allotted specified area of duly constructed apartment. Out of been allotted specified area of duly constructed apartment. Out of been allotted specified area of duly constructed apartment. Out of the area allotted, the assessee had sold under construction the area allotted, the assessee had sold under construction the area allotted, the assessee had sold under construction apartment to various buyers since financial year 2013-14. During apartment to various buyers since financial year 2013 apartment to various buyers since financial year 2013 the year under consideration the the year under consideration the assessee received assessee received sale proceeds from the various buyers to whom the apartments were sold and as the various buyers to whom the apartments were sold and as the various buyers to whom the apartments were sold and as
HEM Bhattad 4 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
per the provisions of section 194IA of the per the provisions of section 194IA of the Income-tax tax Act, 1961 ( in short the Act), the buyers had deducted TDS @ 1% on the the buyers had deducted TDS @ 1% on the the buyers had deducted TDS @ 1% on the payments made to the assessee. It payments made to the assessee. It is claimed by the assessee that it is claimed by the assessee that it was following project completion method project completion method of accounting and of accounting and therefore, revenue was to be was to be recognized only on the completion of recognized only on the completion of the project and till the completion of the project the expenditure the project and till the completion of the project the expenditure the project and till the completion of the project the expenditure was to be carried forward as carried forward as work-in-progress.
For the year under consideration the assessee filed return of income For the year under consideration the assessee filed return of income For the year under consideration the assessee filed return of income on 31.10.2018. The return of income filed by the assessee was on 31.10.2018. The return of income filed by the assessee was on 31.10.2018. The return of income filed by the assessee was selected for complete scrutiny and statutory notices under the Act selected for complete scrutiny and statutory notices under the Act selected for complete scrutiny and statutory notices under the Act were issued. The Assessing Officer issu were issued. The Assessing Officer issued various notices u/s ed various notices u/s 142(1) of the Act but there was no compliance on the part of the 142(1) of the Act but there was no compliance on the part of the 142(1) of the Act but there was no compliance on the part of the assessee. The Ld. Assessing Officer has referred various date of the assessee. The Ld. Assessing Officer has referred various date of the assessee. The Ld. Assessing Officer has referred various date of the such notices issued as 28.10.2019 ; 08.12.2020 ; 06.01.2021. such notices issued as 28.10.2019 ; 08.12.2020 ; 06.01.2021. such notices issued as 28.10.2019 ; 08.12.2020 ; 06.01.2021. Thereafter the assessee responded part Thereafter the assessee responded partly to the notices issued on ly to the notices issued on 28.02.2021, 06.02.2021 and 19.03.2021. But in view of the part 28.02.2021, 06.02.2021 and 19.03.2021. But in view of the part 28.02.2021, 06.02.2021 and 19.03.2021. But in view of the part compliance the Assessing Officer rejected the claim of TDS credit of compliance the Assessing Officer rejected the claim of TDS credit of compliance the Assessing Officer rejected the claim of TDS credit of Rs.93,97,430/-. . . The The The Assessing Assessing Assessing Officer Officer Officer also also also disallowed disallowed disallowed the the the percentage of various expenses. percentage of various expenses. For ready reference, t ady reference, the finding of the Assessing Officer the Assessing Officer in respect of ‘miscellaneous legal expenses miscellaneous legal expenses’ and ‘consultancy charge payment consultancy charge payment’ is reproduced as under: is reproduced as under:
“2) Assessee was requested to provide details of mis.legal (MBDC 2) Assessee was requested to provide details of mis.legal (MBDC 2) Assessee was requested to provide details of mis.legal (MBDC- exp.)/service exp.)/service tax tax payment payment of of Rs. Rs. 166366 1663 66 i.e. i.e. name name of of payee/pan/address, date, amount, mode of payment, bank name & payee/pan/address, date, amount, mode of payment, bank name & payee/pan/address, date, amount, mode of payment, bank name & a/c no. and reflection of aforesaid payments in it's bank statement a/c no. and reflection of aforesaid payments in it's bank statement a/c no. and reflection of aforesaid payments in it's bank statement unless it was requested to show cause why 20% of Rs.166366 unless it was requested to show cause why 20% of Rs.166366 unless it was requested to show cause why 20% of Rs.166366
HEM Bhattad 5 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
should not be added to it's total income and penal should not be added to it's total income and penal action should not action should not be initiated; In response, there was non In response, there was non-compliance from it's end on or before due compliance from it's end on or before due date and time. Therefore, 20% of Rs. 166366 i.e. rs.33273 is added date and time. Therefore, 20% of Rs. 166366 i.e. rs.33273 is added date and time. Therefore, 20% of Rs. 166366 i.e. rs.33273 is added to it's total income u/s 37 and penalty proceeding u/s 271(1)(c) is to it's total income u/s 37 and penalty proceeding u/s 271(1)(c) is to it's total income u/s 37 and penalty proceeding u/s 271(1)(c) is initiated separatel initiated separately. 3)regarding consultancy charges payment, assessee did not deduct 3)regarding consultancy charges payment, assessee did not deduct 3)regarding consultancy charges payment, assessee did not deduct and pay tds on payments made to Architect Hafeez contractor and pay tds on payments made to Architect Hafeez contractor and pay tds on payments made to Architect Hafeez contractor (Rs.5000000) (Rs.5000000) (Rs.5000000) & & & MB MB MB development development development corporation corporation corporation (Rs.2225000), (Rs.2225000), (Rs.2225000), therefore, it was requested to show cause with proper supporting therefore, it was requested to show cause with proper supporting therefore, it was requested to show cause with proper supporting documents why 30% of aforesaid expenses should not be added to ts why 30% of aforesaid expenses should not be added to ts why 30% of aforesaid expenses should not be added to it's total income and penal action should not be initiated; it's total income and penal action should not be initiated; In response, there was non In response, there was non-compliance from it's end on or before due compliance from it's end on or before due date and time. Therefore, 30% of Rs.7225000(5000000+2225000) date and time. Therefore, 30% of Rs.7225000(5000000+2225000) date and time. Therefore, 30% of Rs.7225000(5000000+2225000) i.e. rs.2167500 is added to it's total income u/s 40(a)(ia) and penalty 67500 is added to it's total income u/s 40(a)(ia) and penalty 67500 is added to it's total income u/s 40(a)(ia) and penalty proceeding u/s 271(1)(c) is initiated separately. proceeding u/s 271(1)(c) is initiated separately.” 3.1 The Assessing Officer has similarly made disallowance for The Assessing Officer has similarly made disallowance for The Assessing Officer has similarly made disallowance for other items of the expenses. A detailed chart of the addition made of the expenses. A detailed chart of the addition made of the expenses. A detailed chart of the addition made by the assessee while computing the total income is reproduced as by the assessee while computing the total income is reproduced as by the assessee while computing the total income is reproduced as under:
Income Declared by the assessee in the ITR for AY 2018-19 Income Declared by the assessee in the ITR for AY 2018 19 Rs. Nil Para No. Particulars Particulars Addition (Rs.) Rs. 1. TDS claim for AY TDS claim for AY 2018-19 of Rs.9397430 of Rs.9397430 2. 20% of mbdc exp. 20% of mbdc exp. 33270 3. Consultancy charges Consultancy charges 2167500 4(a) Legal & prof. fee Legal & prof. fee 21529425 4(b) Legal & prof. fee to Kotak Legal & prof. fee to Kotak 2700000 Hahindra inv. Ltd. Hahindra inv. Ltd. 5. Interest payment Interest payment 15861967 6. Finance charges Finance charges-ihfl 26400 7(a). Rent Rent rates taxes mcgm 252391144 development cess etc. development cess etc. 7(b) Rent rates taxes rent Rent rates taxes rent 9060263 8. Loan given Loan given 498818107 9. Stamping charge Stamping charge 2370602 10. Regent media Regent media 40968 11(a) Transit Transit premises premises 27000 accommodation accommodation 11(b) Arihant corpn. Arihant corpn. 21645 12. Security charge Security charge 99534 13. Development exp. Development exp. 225832
HEM Bhattad 6 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
Sundry creditor Sundry creditor 422579 15. Admn. Exp. Admn. Exp. 1391560 16. Peninsula land Peninsula land 28705900 17. Bhattad bros. etc. Bhattad bros. etc. 85271486 921165182 Assessed total Income Assessed total Income 921165182 Assessed total income r/o Assessed total income r/o 921165180 to 4. On further appeal, the assessee filed various documents and On further appeal, the assessee filed various documents and On further appeal, the assessee filed various documents and evidences before the Ld. CIT(A). After considering those evidences evidences before the Ld. CIT(A). After considering those evidences evidences before the Ld. CIT(A). After considering those evidences the Ld. CIT(A) deleted the additions partly. the Ld. CIT(A) deleted the additions partly.
Aggrieved, both the assessee and the Revenue are before the both the assessee and the Revenue are before the both the assessee and the Revenue are before the Tribunal by way of raising respective grounds. al by way of raising respective grounds.
As far as the ground No. 1 of the appeal of the Revenue is As far as the ground No. 1 of the appeal of the Revenue is As far as the ground No. 1 of the appeal of the Revenue is concerned we find that the Ld. CIT(A) has directed the Assessing concerned we find that the Ld. CIT(A) has directed the Assessing concerned we find that the Ld. CIT(A) has directed the Assessing Officer to allow the benefit of the TDS credit in the assessment in Officer to allow the benefit of the TDS credit in the assessment in Officer to allow the benefit of the TDS credit in the assessment in which income is offe which income is offered subject to verification by the Assessing red subject to verification by the Assessing Officer. The relevant finding of the Ld. CIT(A) is reproduced as Officer. The relevant finding of the Ld. CIT(A) is reproduced as Officer. The relevant finding of the Ld. CIT(A) is reproduced as under:
“4.2 GROUND NO 10 “4.2 GROUND NO 10 The Ld. A.O. has erred in disallowing the claim of TDS of Rs.93,97, The Ld. A.O. has erred in disallowing the claim of TDS of Rs.93,97, The Ld. A.O. has erred in disallowing the claim of TDS of Rs.93,97, 430/- of the assessee and thereby erred in stating th of the assessee and thereby erred in stating that the assessee at the assessee has not sold any property. has not sold any property. AO in assessment order has stated that TDS amount of AO in assessment order has stated that TDS amount of AO in assessment order has stated that TDS amount of Rs.93,97,430/- - have been deducted by property buyers @ 1% u/s have been deducted by property buyers @ 1% u/s 194IA of the Act on advances payments of Rs.93974300 to assesse. 194IA of the Act on advances payments of Rs.93974300 to assesse. 194IA of the Act on advances payments of Rs.93974300 to assesse. AO has given inference that as th AO has given inference that as the advances of Rs. 93974300 are e advances of Rs. 93974300 are not assessee's income during the year, assesse is not eligible to not assessee's income during the year, assesse is not eligible to not assessee's income during the year, assesse is not eligible to claim TDS deduction of Rs.9397430 during the year. claim TDS deduction of Rs.9397430 during the year. The appellant in the submission above has quoted section 198 & 199 The appellant in the submission above has quoted section 198 & 199 The appellant in the submission above has quoted section 198 & 199 of the Income Tax Act. The appellant has of the Income Tax Act. The appellant has stated that as per these stated that as per these sections, the TDS provision are not charging sections and have no sections, the TDS provision are not charging sections and have no sections, the TDS provision are not charging sections and have no impact on computation of total income of the appellant. impact on computation of total income of the appellant.
HEM Bhattad 7 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
There is no dispute to the fact that the appellant has shown advance There is no dispute to the fact that the appellant has shown advance There is no dispute to the fact that the appellant has shown advance of Rs.Rs.9,39,74,300/ of Rs.Rs.9,39,74,300/- in the year in respect of which TDS was respect of which TDS was deducted by the purchasing party. The issue is whether the deducted by the purchasing party. The issue is whether the deducted by the purchasing party. The issue is whether the appellant can claim the benefit of TDS i.e. in A.Y. 2018 appellant can claim the benefit of TDS i.e. in A.Y. 2018-19 i.e. year 19 i.e. year under consideration or the year in which it offers corresponding under consideration or the year in which it offers corresponding under consideration or the year in which it offers corresponding income in the income tax return. In t income in the income tax return. In this regard, I note that sub his regard, I note that sub-rule (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides (3) to the rule 37BA of Income Tax Rule r.w.s. 199 of the Act provides that Credit for tax deducted at source and paid to the Central that Credit for tax deducted at source and paid to the Central that Credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such Government, shall be given for the assessment year for which such Government, shall be given for the assessment year for which such income is assessable. A income is assessable. Accordingly, I am of the view that the ccordingly, I am of the view that the appellant should be allowed the benefit of TDS credit in the AY in appellant should be allowed the benefit of TDS credit in the AY in appellant should be allowed the benefit of TDS credit in the AY in which income is offered, subject to the verification. which income is offered, subject to the verification. Hence, the ground of appeal of the appellant is allowed in the terms Hence, the ground of appeal of the appellant is allowed in the terms Hence, the ground of appeal of the appellant is allowed in the terms of the above direction. of the above direction. Ground No. 10 is allowed. nd No. 10 is allowed.” 7. We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. In our dispute and perused the relevant material on record. In our dispute and perused the relevant material on record. In our opinion, the Ld. CIT(A) has adjudicated the issue following the opinion, the Ld. CIT(A) has adjudicated the issue following the opinion, the Ld. CIT(A) has adjudicated the issue following the relevant rules of the Income relevant rules of the Income-tax Rules, 1962 (in short ‘the Rules’) (in short ‘the Rules’) and directed the Assessing O and directed the Assessing Officer to allow the benefit of the TDS fficer to allow the benefit of the TDS credit in the assessment year in which income could be offered by credit in the assessment year in which income could be offered by credit in the assessment year in which income could be offered by the assessee. In our opinion, there is no infirmity in the finding of the assessee. In our opinion, there is no infirmity in the finding of the assessee. In our opinion, there is no infirmity in the finding of the Ld. CIT(A) on the issue i the Ld. CIT(A) on the issue in dispute and accordingly n dispute and accordingly, we dismiss the ground No. 1 of the appeal of the Revenue. the ground No. 1 of the appeal of the Revenue.
As far as to ground no As far as to ground nos. 2 to 6 of the appeal of the Revenue . 2 to 6 of the appeal of the Revenue are concerned, the grounds revolves mainly around the issue of not concerned, the grounds revolves mainly around the issue of not concerned, the grounds revolves mainly around the issue of not providing opportunity of being heard to providing opportunity of being heard to the Assessing Officer in the Assessing Officer in respect of the additional evidence filed before the Ld. CIT(A) under respect of the additional evidence filed before the Ld. CIT(A) under respect of the additional evidence filed before the Ld. CIT(A) under the procedure laid down in Rule 46 of the Rules. the procedure laid down in Rule 46 of the Rules.
HEM Bhattad 8 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
8.1 We find that the Ld. CIT(A) has mainly We find that the Ld. CIT(A) has mainly allowed relief to the allowed relief to the assessee, in view of the various submissions a n view of the various submissions a n view of the various submissions and documents produced before him but the Ld. CIT(A) has not followed the produced before him but the Ld. CIT(A) has not followed the produced before him but the Ld. CIT(A) has not followed the procedure laid down under Rule 46A of the Rules and did not procedure laid down under Rule 46A of the Rules and did not procedure laid down under Rule 46A of the Rules and did not provide any opportunity to the Assessing Officer provide any opportunity to the Assessing Officer for commenting on those additional evidence those additional evidences. For ready reference, the finding of the he finding of the Ld. CIT(A) in respect of disallowance of legal expenses ) in respect of disallowance of legal expenses ) in respect of disallowance of legal expenses, transit permit expenses etc. is reproduced as under: permit expenses etc. is reproduced as under:
“GROUND NO 27 “GROUND NO 27 The Ld. A.O. erred in disallowing the 20 percent of the The Ld. A.O. erred in disallowing the 20 percent of the The Ld. A.O. erred in disallowing the 20 percent of the Administrative expenses of Rs.69,57,798/ Administrative expenses of Rs.69,57,798/- that is Rs.13,91,560/ that is Rs.13,91,560/- and added the same t and added the same to the total income of the assessee in view of o the total income of the assessee in view of section 37 of the IT Act 1961. section 37 of the IT Act 1961. The grounds of appeal and submission of the appellant has been The grounds of appeal and submission of the appellant has been The grounds of appeal and submission of the appellant has been perused. AO has disallowed 20% of the miscellaneous legal perused. AO has disallowed 20% of the miscellaneous legal perused. AO has disallowed 20% of the miscellaneous legal expenses, transit premises expenses, payment made to expenses, transit premises expenses, payment made to expenses, transit premises expenses, payment made to Arihant Corporation, payment made to Sundry Creditor Sh. Corporation, payment made to Sundry Creditor Sh. Dinanath Gupta and Administrative expenses as no reply to final Dinanath Gupta and Administrative expenses as no reply to final Dinanath Gupta and Administrative expenses as no reply to final show cause notice has been given. The appellant has stated that AO show cause notice has been given. The appellant has stated that AO show cause notice has been given. The appellant has stated that AO has neither pointed out any defect in books of accounts nor has has neither pointed out any defect in books of accounts nor has has neither pointed out any defect in books of accounts nor has rejected the books of accounts. cted the books of accounts. During the appellate proceedings, the appellant has furnished During the appellate proceedings, the appellant has furnished During the appellate proceedings, the appellant has furnished ledger, cash book, bank statement and party wise details of these ledger, cash book, bank statement and party wise details of these ledger, cash book, bank statement and party wise details of these expenses. There is no rationale given by AO for adhoc 20% expenses. There is no rationale given by AO for adhoc 20% expenses. There is no rationale given by AO for adhoc 20% disallowance of such expenses in the asses disallowance of such expenses in the assessment order. The AO has sment order. The AO has not given any evidence or basis for considering 20% expenses as not given any evidence or basis for considering 20% expenses as not given any evidence or basis for considering 20% expenses as non-genuine. Hence, the adhoc disallowance of 20% as mentioned in genuine. Hence, the adhoc disallowance of 20% as mentioned in genuine. Hence, the adhoc disallowance of 20% as mentioned in above grounds of appeal is deleted. above grounds of appeal is deleted.” 8.2 The Ld. CIT(A) has allowed relief in respect of other grounds The Ld. CIT(A) has allowed relief in respect of other grounds The Ld. CIT(A) has allowed relief in respect of other grounds also in similar manner. In our opinion the action of the Ld. CIT(A) is also in similar manner. In our opinion the action of the Ld. CIT(A) is also in similar manner. In our opinion the action of the Ld. CIT(A) is in violation of the Rules 46A of the Rules and therefore, we feel it in violation of the Rules 46A of the Rules and therefore, we feel it in violation of the Rules 46A of the Rules and therefore, we feel it appropriate to set aside the finding of the Ld. CIT(A) in respect of appropriate to set aside the finding of the Ld. CIT(A) in respect of appropriate to set aside the finding of the Ld. CIT(A) in respect of
HEM Bhattad 9 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
issues raised in ground No ground Nos. 2 to 6 of the appeal and restore al and restore the matter back to the file of the AO for deciding afresh after matter back to the file of the AO for deciding afresh after matter back to the file of the AO for deciding afresh after considering the submission of considering the submission of asessee and the documentary and the documentary evidence in support of claim by the assessee. It is needless to evidence in support of claim by the assessee. It is needless to evidence in support of claim by the assessee. It is needless to mention that the assessee shall be afforded adequate opportunity of mention that the assessee shall be afforded adequate op mention that the assessee shall be afforded adequate op being heard. The ground No being heard. The ground Nos. 2 to 6 of the Revenue are allowed for . 2 to 6 of the Revenue are allowed for statistical purposes.
In ground Nos. 1 to 4 of the appeal of the assessee . 1 to 4 of the appeal of the assessee, the Ld. . 1 to 4 of the appeal of the assessee Counsel of the assessee submitted that the Ld. CIT(A) has Counsel of the assessee submitted that the Ld. CIT(A) has Counsel of the assessee submitted that the Ld. CIT(A) has confirmed the expenses without confirmed the expenses without taking into consideration the taking into consideration the documentary evidence of the assessee and therefore, same also documentary evidence of the assessee and therefore, same also documentary evidence of the assessee and therefore, same also might be sent back to the Ld. Assessing Officer for deciding afresh. might be sent back to the Ld. Assessing Officer for deciding afresh. might be sent back to the Ld. Assessing Officer for deciding afresh. The Ld. Departmental Representative (DR) fairly accepted the Departmental Representative (DR) fairly accepted the Departmental Representative (DR) fairly accepted the proposition of the Ld. Counsel of proposition of the Ld. Counsel of the assessee. In view of the facts the assessee. In view of the facts that the Ld. CIT(A) has not considered the documentary evidences that the Ld. CIT(A) has not considered the documentary evidence that the Ld. CIT(A) has not considered the documentary evidence in respect of additions made by the Assessing Officer ,therefore, we in respect of additions made by the Assessing Officer in respect of additions made by the Assessing Officer set aside the finding of the Ld. CIT(A) on the issues raised in ground set aside the finding of the Ld. CIT(A) on the issues raised in ground set aside the finding of the Ld. CIT(A) on the issues raised in ground Nos. 1 to 4 of the appeal and restore the issues to the file of the he appeal and restore the issues to the file of the he appeal and restore the issues to the file of the Assessing Officer for deciding afresh after considering the Assessing Officer for deciding afresh after considering the Assessing Officer for deciding afresh after considering the submission of the assessee submission of the assessee and documentary evidence filed by the documentary evidence filed by the assessee. It is needless to mention that the assessee shall be assessee. It is needless to mention that the assessee shall be assessee. It is needless to mention that the assessee shall be afforded adequate opportunity of being heard. The ground No e opportunity of being heard. The ground Nos. 1 to e opportunity of being heard. The ground No 4 of the assessee are accordingly allowed for statistical purposes. 4 of the assessee are accordingly allowed for statistical purposes. 4 of the assessee are accordingly allowed for statistical purposes.
HEM Bhattad 10 ITA Nos. 1934 & 2314/Mum/2023 ITA Nos. 1934 & 2314/Mum/2023
In the result, the appeal of the Revenue is partly allowed for In the result, the appeal of the Revenue is partly allowed for In the result, the appeal of the Revenue is partly allowed for statistical purposes whereas the appeal of the assessee is allowed statistical purposes whereas the appeal of the assessee is allowed statistical purposes whereas the appeal of the assessee is allowed for statistical purposes. r statistical purposes.
Order pronounced in the open Court on nounced in the open Court on 10/10/2023. /10/2023. Sd/ Sd/- Sd/ Sd/- (RAHUL CHAUDHARY RAHUL CHAUDHARY) (OM PRAKASH KANT OM PRAKASH KANT) JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER Mumbai; Dated: 10/10/2023 Rahul Sharma, Sr. P.S. Copy of the Order forwarded to Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. BY ORDER, BY ORDER, //True Copy// (Assistant Registrar) (Assistant Registrar) ITAT, Mumbai ITAT, Mumbai
