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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
AadoSa / O R D E R महावीर स ुंह, न्याययक दस्य/ PER MAHAVIR SINGH, JM: This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-9, Mumbai [in short CIT(A)], in appeal No. CIT(A)-9/Cir.4/14/2015-16, dated 14.10.2016. The Assessment was framed by the Income Tax Officer, Ward-4(2)(4) Mumbai (in short ITO/ AO) for the A.Y. 2012-13 vide order dated Nil, under section 143(3) of the Income-tax Act, 1961 (hereinafter ‘the Act’).
2 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the addition of ₹ 1.30 crores being amount not paid as advanced tax for AY 2014-15. For this assessee has raised the following ground No. 1: - “1) a) The learned Commissioner of Income Fax (Appeals) erred in confirming addition of Rs. 1,30,00,000/- being the amount not paid as an advance tax for A.Y. 2014-15. b) The learned Commissioner of Income Tax (Appeals) erred in not giving any reasons for dismissing the ground of appeal of the appellant. c) The learned Commissioner of Income Tax (Appeals) failed to consider that survey action was during the financial year 2013-14 relevant to A.Y. 2014-15 and there is no nexus whatsoever of it with A.Y. 2012-13. more so when the Joint Commissioner of Income Tax. Range 4(2). Mumbai has confirmed that it is pertain to A.Y. 2014-15.
3. Briefly stated facts are that the assessee is a builder and developer and doing trading in shares. A survey action under section 133A of the Act was conducted on the business premises of the assessee by the Income Tax Department on 19.03.2013, wherein various anomalies were found and accordingly, the assessee was confronted with respect to the profitability of the closing stock shown in the balance sheet. On account of this survey, the assessee agreed for surrender of ₹ 5.50 crores and admitted to pay the tax on the same. The AO noted that the assessee has paid a sum of ₹ 50 lacs only out of the tax determinable on the 3 declared amount at ₹ 1.80 crores. According to the AO, the assessee has to pay 1.80 crores fully. Therefore, as the assessee failed to pay the balance amount of ₹ 1.30 crores as advanced tax, the same was disallowed and added under section 69A / 69C of the Act to the total income of the assessee. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) confirmed the action of the AO by stating the facts in Para 5.1.3 as under: - “5.3.3 In view of the above, the AO was fully justified in making addition and therefore the same is upheld..”
4. The CIT(A) discussed the provisions of India Evidence Act, 1872 under section 114 on account of presumption. Aggrieved, assessee came in appeal before Tribunal.
We have heard rival contentions and gone through the facts and circumstances of the case. Before us, the learned Counsel for the assessee Shri Nitesh Joshi argued that how this liability can be added under section 69A or 69C of the Act. Accordingly, the learned Counsel for the assessee has not paid advance tax for that if any case income is determined, they can create demand but cannot make addition of this advanced tax of ₹ 1.30 crores. When this query was put to the learned Sr. Departmental Representative, she just relied on the orders of the lower authorities.
We find that this addition has no basis for making addition because advance tax not paid on surrendered amount and cannot be added under section 69A of the Act or 69C of the Act because payment is not made at all by the assessee. Hence, we are of the view that this addition made by the AO and confirmed by CIT(A) is without any basis and hence, deleted.
4 7. The next issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of expenses being purchase in stock in trade of ₹ 18,22,899/- under section 37 of the Act. For this assessee has raised the following ground No. 2: - “2) The learned Commissioner of Income Tax (Appeals) erred in confirming disallowance of Rs. 18,22,899/- u/s 37(I) of the Income Tax Act. 1961 being purchase of stock in trade.”
We have heard rival contentions and gone through the facts and circumstances of the case. The Brief facts are that the assessee has debited an amount of ₹ 18,22,899/- towards the purchase of stock in trade for the following items: - Sl Particulars Amount No. 1. Office Value 14,41,250 2. Property tax 8,071 3. Development charges 12,683 4. Deposit 10,000 5. Legal charges 5,000 6. Share money 250 7. Entrance Fee 10 8. Electric Installation charges 39,921 9. Maintenance charges 22,484 10. Property tax 2,83,230 Total 18,22,899 9. The AO noted that the purchase was claimed in the stock contradicts to the nature of the assessee and is not a revenue expenditure. Hence, he added this amount to the returned income of the assessee by disallowing the claim made by the assessee under section 37 of the Act. Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) also confirmed the action of the Assessing Officer. Aggrieved, assessee came in appeal before Tribunal.
5 10. We have heard rival contentions and gone through the facts and circumstances of the case. Before us, when a query was put to the learned Counsel for the assessee that how much matching entry in the balance sheet is made on account of closing stock wherein purchases were added and corresponding entry. The learned Counsel for the assessee sated that the accounts are not filed along with the details. Hence, he requested that the matter can be restored back to the file of the AO for verification if the matching entry is not made then addition should be made. When a query was put to the learned Sr. Departmental Representative, she fairly agreed that matter can be restored back to the file of the AO but subject to the condition that assessee will prove these purchase with stock in trade and matching entry of the same should be reflected in the balance sheet. In view of the above observation, we restore this issue back to the file of the Assessing Officer.
The next issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of expenditure by restricting the same at 20%. For this assessee has raised the following ground No.3A: - “3) a) The learned Commissioner of Income Tax (Appeals) erred in confirming 20% of expenditure amounting to Rs. 4,08,257/- out of following expenses incurred during the year:
6 Sr. Particulars Amount No. i) Conveyance charges 1,00,362/- ii) General Expenses 2,57,116/- iii) Maintenance charges 1,51,805/- iv) Motor Car Expenses 12,12,878/- v) Telephone Charges 3,19,124/- Total 20,41,285
We have heard rival contentions and gone through the facts and circumstances of the case. We noted that the assessee has claimed these expenses on account of Conveyance charges, General Expenses, Maintenance Expenses and motor car expenses and Telephone charges in total amounting to ₹ 20,41,285/-. The AO disallowed 20% of the above expenses being personal in nature. Hence, he make addition of ₹ 4,08,257/-. Aggrieved, assessee preferred the appeal before CIT(A), who also confirmed the restriction of addition at 20%. Aggrieved, came in appeal before us.
We have heard rival contentions and gone through the facts and circumstances of the case. The learned Counsel for the assessee before us sated that the AO has nowhere mentioned, the personal nature of expenditure and assessee being a private limited company, these expenditures cannot be attributed to the assessee being personal in nature.
On the other hand, the learned Sr. Departmental Representative supported the orders of the lower authorities.