LAW CHARTER,MUMBAI vs. ASST CIT CIR 11(2), MUMBAI

स्थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AABFL2094G (अपीलाथी /Appellant) .. (प्रत्यथी / Respondent) Assessee by: Shri Niraj Sheth Revenue by: Shri Prakash R. Mane सुनवाई की तारीख / Date of Hearing: 11.05.2017 घोषणा की तारीख /Date of Pronouncement: 31 .05.2017 आदेश / O R D E R

PER AMARJIT SINGH, JM:

2. A.Y.2008-09 “1:0 Re.: Disallowance of Life insurance premium amounting to Rs.20,00,000/-: 1:

1. The Commissioner of Income-tax (Appeals) has erred in confirming the disallowance made by the Assessing Officer of Rs.20,00,000/- being life insurance premium paid by the Appellant for its partners. 1:2 The Appellant submits that considering the facts and circumstances of its case and law prevailing on the subject the expenditure by way of life insurance premium incurred by it was wholly, exclusively and necessarily for the purpose of its business and is hence allowable in computing its business income and the Commissioner of Income-tax (Appeals) ought to have held as such. 1:3 The Appellant submits that the Assessing Officer be directed to delete the disallowance so made by him and to re- compute its total income accordingly. 1:4 Without prejudice to the aforesaid the Commissioner of Income-tax (Appeals) has erred in not accepting the revised claim made by the Appellant during the course of the assessment proceedings of treating the said premium as a part of partner's remuneration, which claim was not made by it at the time of filing its return of income for the year. 2:

0. Re.: Disallowance of conveyance, telephone, electricity and entertainment expenses; 2:

1. The Commissioner of Income-tax (Appeals) has erred in confirming the disallowance made by the Assessing Officer in respect of conveyance, telephone, electricity and entertainment expenses amounting to Rs.5,35,000/- incurred by the Appellant. 2:

2. The Appellant submits that considering the facts and circumstances of its case and the law prevailing on the subject, the said expenses are allowable while computing its total income and the Commissioner of Income-tax (Appeals) ought to have held as such.

ITA No.883/M/2012 A.Y.2008-09 2:3 The Appellant submits that the Assessing Officer be directed to delete the disallowance so made by him and to re- compute its total income accordingly. 3:0 Re.: Non-admission of additional evidence: 3: 1 The Commissioner of Income-tax (Appeals) has erred in not admitting the additional evidence filed by the Appellant before him without appreciating the fact that the Appellant had sufficient cause / reasons for not filing the additional evidence before the Assessing Officer. 3 :2 The Appellant submits that considering the facts and circumstance of its case and the law prevailing on the subject the additional evidences were germane to the issue at hand and were admissible in terms of Rule 46A of the Income-tax Rules,1962 and the Commissioner of Income-tax (Appeals) ought to have considered the same while deciding the appeal. 4: 0 Re.: General: 4: 1 The Appellant craves leave to add, alter, amend, substitute and / or modify in any manner whatsoever all or any of the foregoing grounds of appeal at or before the hearing of the appeal.”

3. The brief facts of the case are that the Assessee filed its return of income for the assessment year of 2002-03 on 30.09.2008 declaring total income to the tune of Rs.99,67,060/-. The return was processed u/s.143(1) on 01.02.2010 of the Income Tax Act, 1961 (in short “the Act”). Thereafter, the case was selected for scrutiny under CASS. Notice u/s 143(2) dated 12.08.2009 was issued and served upon the Assessee. Thereafter a fresh notices u/s 143(2) and 142(1) of the Act dated 21.07.2010 were issued and served upon the Assessee. The Assessee is a partnership firm working as Advocate, Solicitors & Notary and involved in carrying out professional work in the legal A.Y.2008-09 profession. It was noticed that the Assessee has made investment of an amount of Rs.37,05,971/- in mutual funds but did not offer disallowance u/s14A of the I.T. Act read with Rule 8D. Therefore in the said circumstances 0.5% of the investment to the tune of Rs.37,05,971/- was disallowed i.e. tune of Rs.18,529/- and was added to the income of the Assessee. It was also noticed that the sum of Rs.20,00,000/- was debited on account of Life Insurance Premium. The said amount was treated in the nature of personal expenses and was not allowed u/s37 of the I.T. Act, 1961. Therefore, the amount to the tune of Rs.20,00,000/- was added to the income of the Assessee. The Assessee also claimed expenses to the tune of Rs.5,35,000/- and the details of which is hereby mentioned below: (i) Conveyance expenses Rs.2,60,000/- (ii) Telephone expenses Rs.45,000/- (iii) Electricity expenses Rs.1,50,000/- (iv) Entertainment expenses Rs.80,000/- Total- 5,35,000/- 4. Since, no evidence of any kind was produced to which it can be assumed that the said expenditure was incurred for the purpose of firm therefore, the Assessing Officer disallowed the said expenses and added to the income of the Assessee. The Assessment was completed by assessing the income to the tune of Rs.1,25,20,590/-. Since, the Assessee was not satisfied. Therefore, the Assessee has filed the appeal before the CIT(A)-3 Mumbai who partly allowed the appeal of A.Y.2008-09 the Assessee but did not allow the claim of the Assessee fully therefore, the Assessee filed the present appeal before us. ISSUE NO.1 & 2:- 5. The Ld. representative of the Assessee has argued that the CIT(A) did not admit the additional evidence which led to gross violation of principles of natural justice, therefore, in the said circumstances the finding of the CIT(A) is not justifiable and the case is liable to be remanded before the Assessing Officer to consider the additional evidence in accordance with law. It is also specifically argued that the case of the Assessee for the assessment year 2010-11 has already been remanded before the Assessing Officer on similar issues by virtue of order dated 21.04.2017 passed by the ITAT in 4875/M/2016, therefore in the said circumstances, the present case is also required to be remanded because the matter is subjudice before the Assessing Officer on similar issues. However, on the other hand the Ld. representative of the department has strongly relied upon the order passed by the CIT(A) in question. Order dated 07. 12.2011 in question perused. We noticed that the Assessee produce some additional evidence before the CIT(A) such as memorandum of understanding dated 28.04.2007, photo-copy or insurance document etc. but the CIT(A) did not consider the same on the ground of that the same was not produced before the Assessing Officer. This finding is in connection with the Issue No.1 whereas in connection with the ITA No.883/M/2012 A.Y.2008-09 Issue No.2. It is also specifically mentioned that the Assessee wanted to adduce some additional evidence in support of his claim of Conveyance expenses, Telephone expenses, Electricity expenses & entertainment expenses but the additional evidence was not allowed. Apparently, while deciding the above mentioned issues the contention of the assessee for adducing the additional evidence was not considered by the CIT(A). However, it also came into notice that the matter of controversy was also pending before the Assessing Officer for the AY.2010-11. The said matter came before the Assessing Officer in pursuance of the decision of the ITAT in in which all the issues have been restored before the AO to decide the matter controversy afresh in the light of the evidence adducible by the parties. Since, the matter controversy is already under-subjudice before the AO to decide the matter of controversy a fresh therefore, in the interest of justice we are of the view that the matter needs afresh adjudication by the AO after due giving an opportunity of being heard to the Assessee in accordance with law.

6. Accordingly, we set aside the finding of the CIT(A) on all the issues and restored the issues before the AO to decide the matter of controversy afresh in view of the above said observation. We ordered accordingly. In the result, the appeal of the Assessee is hereby allowed for statistical purpose.