Loading judgment…
No AI summary yet for this case.
Income Tax Appellate Tribunal, “SMC”, BENCH MUMBAI
Before: SHRI MAHAVIR SINGH & G. MANJUNATHA
Date of Hearing 14/10/2019 Date of Pronouncement 14/10/2019 आदेश आदेश / O R D E R आदेश आदेश PER G.MANJUNATHA (A.M):
These two appeals filed by the assessee are directed against separate, but identical orders of the Commissioner of Income Tax (Appeals) -48, Mumbai, both dated 26/03/2018 and they pertains to Assessment Years (AY) 2013-14 & 2014-15. Since, the facts are identical and issues are common, for the sake of convenience, these appeals were heard together and are disposed-off by this consolidated order.
ITA.No. 3917/ Mum/ 2018:- 2. The assessee has, more or less filed common grounds of appeal for both Assessment Year’s. Therefore, for the sake of brevity, grounds of appeal filed for AY 2013-14 are reproduced as under:-
1. Under the facts and circumstances of the case, the appellate order passed by the Ld. CIT (A) is illegal being against the principles of natural justice and against the provisions of IT Act, 1961 being passed without allowing any opportunity of being heard and not adjudicating the written submissions of the appellant company in true sense.
2. That the Ld. AO grossly erred in facts of the case in disallowing business loss of Rs. 12,21,793/- and assessing interest income of Rs. 27,10,450/- as income from other sources.
3. That the Ld. CIT(A) grossly erred in facts of the case in enumerating and presuming the submission of M's Mahan Industries Limited regarding management by Sb. Shirish C Shah during A.Y. 2008-09 to 2013-14 to have been furnished by the appellant company and hi relying upon the statement of Sh. Yogendra Gupta, director of M/s Mahan industries Limited who has nothing to do with the appellant company.
4. That the Ld. AO grossly erred in making addition of Rs. 41,50,000/- in the income of the appellant company used as conduit for providing accommodation entries despite the fact that the amount of cash deposits was transferred to ultimate beneficiary, M/s Emerald Digital Media Limited,
5. That the Ld, CIT(A) grossly erred in law m not adjudicating the legal submission of the appellant company that since the cash of Rs. 4l,50,000/- deposited in the bank account has been remitted to ultimate beneficiary, the same cannot be assessed as income of the appellant company.
6. That the Ld. CIT(A) grossly erred in facts of the case m issuing directions to verify the issue of interest of Rs- 1,20,100/- u/s 244A of the Act to the appellant company despite the fact that the appellant company had accepted the addition made. 7. The appellant craves leave to add, alter, modify and withdraw any ground of appeal before or during the appellate proceedings.
3. The brief facts of the case are that a search action u/s 132 of the I.T.Act, 1961 conducted in the case of Shri Shirish C Shah. During the course of search, it was noticed that the assesee providing bogus accommodation entries through various companies including, the assesee M/s Allied Computer International (Asia) Ltd. Pursuant to search, assessment proceedings u/s 153C of the I.T.Act, 1961 was initiated and the assessment has been completed u/s 143(3) r.w.s. 153C of the I.T.Act, 1961 on 30/03/2016 and determined total income at Rs. 32,45,550/-, by making additions towards cash deposits in bank account Rs. 4,15,000/-, interest income has been considered under the head income from other sources as against assessee admission under the head income from business/profession amounting to Rs. 27,10,450/- and additions towards interest on income tax refund u/s 244A amounting to Rs. 1,20,100/-. The assessee carried the matter in appeal before the first appellate authority. The Ld.CIT(A) for a detailed reasons recorded in his appellate order, dated 26/03/2018 partly allowed appeal filed by the assesse, where he had confirmed additions made towards unexplained cash credits of Rs. 4,15,000/- and also assessment of interest income under the head income from other sources, however set aside the issue of additions towards interest on income tax refund amounting to Rs. 1,20,100 to the Ld. AO to ascertain certain facts. Aggrieved to the Ld.CIT(A) order, the assessee is in appeal before us.
The Ld. AR for the assessee submitted that the Ld.CIT(A) has earned in confirming disallowances of business loss of Rs. 12,21,793/- and also assessed interest income of Rs. 27,10,450/- under the head income from other sources, ignoring the fact that the 4 & 3918/Mum/2018 Allied Computer International (Asia) Ltd. assesee has rightly considered interest income under the head income from business /profession. The Ld. AR, further submitted that the Ld.CIT(A) was erred in making additions of Rs. 41,15,000/- to the income of the assessee without appreciating the fact that the amount of cash deposits was ultimately transferred to beneficiary M/s Emerald Digital Media Ltd. Therefore, the issue may be set aside to the file of the AO to ascertain correct facts with regard to nature of interest income and also under which head of income, it is assessable and also to verify various expenditure debited into the profit and loss account.
The Ld. DR, on the other hand, strongly supported order of the Ld.CIT(A), however fairly accepted that the issue may be set aside to the file of the AO for denovo assessment order.
We have heard both the parties, perused the material available on record and gone through orders of the authorities below. It is an admitted fact that the assesee is in the activity of providing bogus accommodation entries to various beneficiary, including among group companies. This fact has been admitted during the course of search by Shri Shrish C Shah. The Ld. AO has disallowed total business loss claimed by the assessee, on the ground that the assessee did not have any business activities, except providing accommodation entries among group companies, accordingly he has disallowed total loss and assessed interest income under the head income from other sources. Likewise, the Ld. AO has made additions towards cash deposits into the bank account as unexplained cash credit, because the assesse could not explain the source of income. The claim of the assessee is that interest income
5 & 3918/Mum/2018 Allied Computer International (Asia) Ltd. is rightly assessed under the head income from business, because it is involved in the activity of providing short time finance and investment activity. The assessee, further claimed that total business loss claimed for the year cannot be disallowed, because expenditure debited into the profit and loss account includes various admin and other expenses, which are required to be incurred to maintain corporate status of the assessee. The assessee has also contended that the Ld. AO has made additions of Rs. 41,50,000/- towards cash deposits into bank account as unexplained cash credits without considering the explain of the assessee that said cash deposit was ultimately transfered to beneficiary M/s. Emerald Digital Media Ltd. We find that the Ld. AO has disallowed loss under the head business of profession, on the ground that the assesee was not having any business activity, except providing accommodation entries, whereas the assessee claims that expenditure debited into profit and loss account, includes certain admin and other expenditure which are required to be incurred for maintaining corporate status of the assessee. Facts are contradicting each other. Therefore, we are of the consider view that he issue needs to be re-examineed by the AO in light of various evidences filed by the assessee. Similarly, in respect of interest income, the Ld. AO was assessed interest under the head income from other sources, on the ground that the assessee was not having any business activity, except providing accommodation entries, therefore, the claim of the assessee cannot be accepted that interest income is assessable under the head income from business /profession. The assesee claims that it is involved in the business of short term financing and investment activity and interest income is assessable under the head income from business/profession. Facts are contradicting each
6 & 3918/Mum/2018 Allied Computer International (Asia) Ltd. other. Therefore, we set aside this issue also to the file of the AO for further verification. Similarly, in respect of additions towards unexplained cash credit, even though total cash deposits into the bank account is at Rs. 41,50,000/-, but the Ld. AO has made additions of Rs. 4,15000/- only. Further, the assessee claims that the amount of cash deposits was found in bank account was ultimately transfered to the beneficiary M/s Emerald Digital Media Limited. These facts were not emanating from the orders of the lower authorities. Therefore, we are of the considered view that this issue also needs to go back to the AO for further verification. Hence, we set aside all the issues to the file of the AO for fresh assessment denovo in accordance with law.
In the result, appeal filed by the assessee for AY 2013-14 is treated as allowed for statistical purposes.
ITA No. 3918/Mum/2018:-
The facts and issues involved in this appeal are also identical to facts and issues, which we have already considered in ITA No. 3917/um/2018. The reasons given by us in preceding paragraph in respect of disallowance of business loss shall mutatis mutandis apply to this appeal also. Therefore, for similar reasons we set aside this appeal to the file of the AO for denovo assessment.
In the result, appeal filed by the assessee for AY 2014-15 is treated as allowed for statistical purposes.
As a result, both appeals filed by the assesee are treated as allowed for statistical purposes.
Order pronounced in the open court on this 14 /10/2019