DEPUTY COMMISSIONER OF INCOME TAX 1(3)(1), MUMBAI vs. M/S. SHAH GRANITES PRIVATE LIMITED, MUMBAI

Appellant by : None Respondent by : Soumendu Kumar Dash Date of Hearing 13.09.2022 Date of Pronouncement 28.09.2022 आदेश / O R D E R Per Amarjit Singh (AM):

The present appeal filed by the revenue is directed against the order passed by the ld. CIT(A)-3, Mumbai which in turn arises from the order passed by the A.O u/s 143(3) of the Income Tax Act, 1961, for A.Y. 2012-13. The revenue has raised the following grounds before us:

1. On the facts and circumstances of the case the Ld. CIT(A) erred in law in deleting the disallowance of Rs.1,33,67,274/ made u/s 36(1)(ii) of the Act"

2 Deputy Commissioner of Income Tax -1(3)(1) Vs. M/s Shah Granites Pvt. Ltd.

2. On the facts and circumstances of the case the Ld.CIT(A) has erred in law in deleting the addition of Rs.140,16,818/ made u/s 69C of the Act, on the non-genuine expenses claimed towards the various parties for the services supposed to be received from despite the fact that the assessee could not prove the genuineness of the said expenditure.

3. The appellant craves leave to add to, amend or withdraw the aforesaid ground of appeal

2. This case was listed for hearing for more than 3 times however, no compliance was made from the side of the assessee therefore, the appeal filed by the Revenue is adjudicated by hearing the ld. D.R. and perusal of material on record.

3. The fact in brief is that the return of income declaring income of Rs.13,55,572/- was filed on 30.11.2012. The case was subject to scrutiny assessment and notice u/s 143(2) of the Act was issued on 07.08.2013. During the course of assessment the A.O had issued notices u/s 133(6) of the Act to the parties from whom certain services were utilized by the assessee for the year under consideration. However, no compliance was made in response to the notice u/s 133(6) issued by the A.O. Consequently, the A.O has treated amount of Rs.1,40,18,818/- as unexplained expenditure u/s 69C of the Act and same was added to the total income. During the course of assessment the A.O has also noticed that assessee had made loan advances to its associated companies totaling to Rs.72,25,537/- as on 31.03.2012. The break-up of such detail of advances given as under:

Sr. No. Loans given to Amount (Rs.) 1. Loan to wholly owned subsidiary M/s 4,36,06,322/- Star Granites & Marbles Pvt. Ltd. Singapore 2. Advances to others including M/s Shah 2,86,49,215/- Granites Contracting LLC, Advance to Daily RO, Shri Brijen Joshi & Shri Nagendra Prasad 3 Deputy Commissioner of Income Tax -1(3)(1) Vs. M/s Shah Granites Pvt. Ltd. Total 7,22,55,537/- The A.O has further noticed that assesse has not charged any interest on the aforesaid advances made to the related concern, however, it has debited interest expenditure to the amount of Rs.2,64,83,920/- in the profit and loss account. Consequently, the A.O has levied interest @ 18.5% on the aggregating loan and advance of Rs.7,22,55,537/- and computed interest of Rs.1,33,67,274/- which was proportionately disallowed u/s 36(1)(iii) of the Act.

3. Aggrieved, the assessee filed the appeal before the ld. CIT(A). In respect of disallowance of Rs.1,40,16,818/- made u/s 69C of the Act the ld. CIT(A) had allowed the claim of the assessee stating that source of expenditure was fully explained and the payment were made through banking channel and all the bills were produced which were not rejected.

Sr. Name of the Party Section Date of issue Expected Present No. date of status reply 1. Shri V. Srinivas 133(6) 02.02.2015 12.02.2015 Reply not Reddy recd.

4. M/s Shakti Marble 133(6) 02.02.2015 12.02.2015 Reply no recd.

5. In respect of deleing disallowance of interest expenses of Rs.1,33,76,274/- ld. D.R. contended that the detailed information and relevant evidences mentioned by the ld. CIT(A) in his findings were not furnished by the assessee before the A.O and no remand report was called by the ld. CIT(A) from the AO before deciding this issue.