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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आयकर अपील सं./ Year: 2014-15 Shri Mahendra Kumar Jain, Vs. The Income Tax Officer, Prop. M/s. M.S. & Sons, Non-Corporate Ward-5(3), No.446, Mint Street, 1st Floor, Chennai – 600 006. Sowcarpet, Chennai – 600 079. PAN: AACPB 6335P (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri D. Anand, Advocate ��यथ� क� ओर से /Respondent by : Shri AR.V. Sreenivasan, JCIT सुनवाई क� तार�ख/Date of Hearing : 14.08.2019 घोषणा क� तार�ख /Date of Pronouncement : 07.11.2019 आदेश / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER:
The Assessee filed this appeal against the order of the Commissioner of Income Tax (Appeals)-5, Chennai in dated 13.03.2018 for the assessment year 2014-15.
Shri Mahendra Kumar Jain, an individual, is proprietor of M/s. M.S. & Sons, is deriving income from trading of import license.
2 -: While making the assessment for the assessment year 2014-15, the Assessing Officer disallowed Rs.6,48,684/- towards document verification charges, Rs.84,000/- towards salary on adhoc basis and added Rs.2,06,900/- on notional basis calculated at the rate of 9% on the trade advance given during the course of business as ‘deemed business income’. Aggrieved against that order, the assessee filed appeal before the CIT(A). The ld.CIT(A) dismissed the appeal. Aggrieved against that order, the assessee filed this appeal.
3. The ld.AR pleaded that though the assessee’s main business operation was at Hoogly, West Bengal, verification charges were paid to the persons situated in and around Tamilnadu. Since, the assessee started the business recently and his brother’s business M/s. Renuja Enterprises has been in existence for over a decade, the assessee got the verification done through his brother’s concern M/s. Renuja Enterprieses. The assessee also engaged part time employees to look after the administrative work and office work to ensure that administrative cost were kept at a bare minimum expenditure. All these payments were made by cheques and are duly reflected in the bank account. Inspite of it, the Assessing Officer disallowed them without verifying the fact. The assessee paid Rs.25,40,000/- as trade advance to M/s. Noble Shipping, a business entity as CHA to get license
3 -: whenever it is available as per the assessee’s requirement. So, the nature of transaction is a trade advance. Since, the purpose has not been fulfilled, the amount paid was received back, towards which the Assessing Officer has added Rs.2,06,900/- as interest at the rate of 9% at a notional basis. The ld.CIT(A) without appreciating the facts and circumstances, has dismissed the appeal. Therefore, the ld.AR pleaded to allow this appeal. Per contra, the ld.DR supported the orders of lower authorities.
We heard the rival submissions and gone through the relevant material. The assessee’s main business operations are at Hoogly, West Bengal but claimed that it had incurred certain expenditure towards verification charges and salary paid to certain persons in and around Chennai. Moreover, the verification charges were paid in the name of M/s.Renuja Enterprises, a business concern owned by his brother. Similarly, the assessee has advanced money to M/s. Noble Shipping and received back during the year. It appears from the assessment order, though the Assessing Officer raised the query on these issues, the assessee made certain explanation but it appears that he has not placed proper material and evidence before the Assessing Officer detailing the transactions and its circumstances. In the facts and circumstances, these issues are remitted back to the 4 -: Assessing Officer for a fresh examination. The assessee shall lay all materials in support of his contention before the Assessing Officer and comply with the requirements of the Assessing Officer in accordance with law. The Assessing Officer is also free to conduct appropriate enquiry as deemed fit, however, he shall furnish due opportunity to the assessee on the materials etc., to be used against the assessee and on due consideration of the assessee’s clarification / explanation shall pass the order in accordance with law.
In the result, the appeal filed by the assessee is treated as allowed for statistical purposes.
Order pronounced in the Court on 7th November, 2019 in Chennai.