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Income Tax Appellate Tribunal, MUMBAI BENCH “J”, MUMBAI
Before: SHRI G.S. PANNU & SHRI RAM LAL NEGI
The captioned appeal by the assessee is directed against the order of CIT(A)-3, Thane dated 08.07.2016 pertaining to the Assessment Year 2012- 13, which in turn has arisen from the order passed by the Assessing Officer, Kalyan dated 27.03.2015 u/s 143(3) of the Income Tax Act, 1961 (in short ‘the Act’).
In this appeal, although assessee has raised multiple Grounds of appeal, but the dispute is confined to two issues, namely, disallowance of purchases aggregating to Rs.7,61,720/- and disallowance of interest paid to partners aggregating to Rs.93,04,583/-.
3. It was a common point between the parties that similar issues had come-up before the Tribunal in assessee’s own case for Assessment Year 2011-12 in dated 23.10.2017. However, with regard to the disallowance of purchases u/s 69C of the Act of Rs.7,61,720/-, the learned representative pointed out that though in Assessment Year 2010-11, the entire purchases have been held to be unexplained by the Tribunal also, but the facts in this year are quite different. It was pointed out that in the instant year, assessee had effected purchases from M/s. Mahavir Enterprises and M/s. Moksha Impex, whereas the parties in Assessment Year 2011-12 were different. It was also sought to be pointed out that the fact- situation in the instant year is quite different as in Assessment Year 2011-12, investigations were carried out by the Assessing Officer, which is not the case in the instant year.
The ld. DR appearing for the Revenue has, however, defended the treatment of purchases of Rs.7,61,720/- as unexplained by pointing out that both the parties in question were found to be indulging in providing accommodation entries by the Maharashtra Sales Tax Dept.
Having considered the rival stands and also the precedent in assessee’s own case for Assessment Year 2011-12 (supra), we deem it fit and proper to direct the Assessing Officer to co-relate the facts of the instant year vis-a-vis those considered by the Tribunal in Assessment Year 2011-12 and if the Assessing Officer finds that the facts of the instant year are similar to those considered by the Tribunal in Assessment Year 2011-12, then, following the precedent, the impugned purchases are liable to be considered as unexplained. So, however, if the finding of the Assessing Officer is to the contrary, then, he shall be at liberty to take such decision as is in accordance with the law. We may clarify here that the aforesaid exercise shall be carried out by the Assessing Officer after giving the assessee a reasonable opportunity of being heard and only thereafter the Assessing Officer shall proceed to pass an order afresh, as per law. Thus, on this aspect, for statistical purposes, appeal of assessee is allowed.
The second issue is with regard to disallowance u/s 40(ba) of the Act on account of interest of Rs.93,04,583/- paid to the partners. The Assessing Officer disallowed the interest paid to the partners on the ground that assessee was an AOP and, therefore, interest paid to the partners was not allowable in terms of Sec. 40(ba) of the Act. The CIT(A) has also sustained the disallowance.
At the time of hearing, the learned representative pointed out that similar issue came-up before the Tribunal in Assessment Year 2011-12 in assessee’s own case and considering the plea of the assessee that it was a partnership firm and not an AOP, the matter was set-aside to the file of the Assessing Officer for examination afresh. In this context, the following discussion in the order of the Tribunal dated 23.10.2017 is relevant :-
“7.2. Next ground is with regard to disallowance of interest of Rs.83,97,919/- paid to the members of AOP by invoking provisions of Section 40(ba). The assessee has now filed an additional evidences by way of supplementary partnership deed dated 22.09.2008 (pb/page 15-19) amending original JV agreement dated 12-09-2008 and it is now claimed that the status of the assessee is of the partnership firm and not AOP . The assessee has also filed correspondence with registrar of firms, which are all placed in paper book filed with the tribunal (page 22-25/pb). These documents needs verification by the authorities below and we are inclined to set aside and restore this issue to the file of the AO for necessary verification and enquiry before adjudicating denovo on merits in set aside proceedings after giving an opportunity of being heard to the assessee in accordance with principles of natural justice in accordance with law. One peculiar facts we have observed that the supplementary partnership deed is dated 22.09.2008 modifying J.V agreement dated 12.09.2008. The stamp paper used for aforesaid supplementary partnership deed are issued by treasury on 28-04-2008, while the original J.V agreement was executed on a stamp paper issued by treasury on 02.09.2008. The A.O shall verify this aspect and its genuineness as to why old stamp papers which were issued by treasury even prior to the execution of JV agreement were used by the assessee for modifying original JV agreement to execute supplementary partnership deed. We order accordingly.”
As the facts and circumstances of the dispute are similar in this year, following the aforesaid precedent, the matter is restored back to the file of the Assessing Officer who shall carry out the verification on the same lines as directed by the Tribunal vide its order dated 23.10.2017 (supra), of course, after allowing the assessee an opportunity of being heard and only thereafter pass an order afresh, as per law. Thus, on this aspect also, assessee succeeds for statistical purpose.
In the result, appeal of the assessee is partly allowed for statistical purposes.
Order pronounced in the open court on 15th June, 2018.