REHAN A.R. SUMAR(PROP. AAR ESS ENTERPRISE),MUMBAI vs. ITO 12(2)(2), MUMBAI

Date of Hearing – 05.12.2016 Date of Order –

O R D E R PER SAKTIJIT DEY, J.M.

Captioned appeal at the instance of the assessee is directed against the order dated 28th November 2013, passed by the learned Commissioner (Appeals)–23, Mumbai, for assessment year 2009–10.

2 Shri Rehan A.R. Sumar concern Aar Ess Enterprises. During the assessment proceedings, the Assessing Officer noticing that the assessee has debited an amount of ` 96,000, under the head “Event Expenses” called upon the assessee to explain and justify the claim. In response, it was submitted by the assessee that for conducting an event, he had taken a sports ground and the expenditure incurred was towards rental charges. In support of such claim, assessee also furnished certain documentary evidences. The Assessing Officer after verifying the documentary evidences, observed, out of the expenses claimed an amount of ` 48,000 was shown as deposits which is refundable from one month from the completion of the event. He, therefore, held that the amount of ` 48,000 is not an expenditure but a deposit. He further held that the payment made being more than ` 28,000, at a time, assessee was required to deduct tax at source. On the aforesaid basis, he disallowed deduction claimed of ` 48,000. Aggrieved, the assessee filed appeal before the first appellate authority.

3 Shri Rehan A.R. Sumar Departmental Representative. As could be seen from the facts on record, the amount of ` 48,000 was disallowed on the ground that it was a refundable deposit. However, as could be seen, before the first appellate authority, the assessee had submitted that out of refundable deposits of ` 48,000, the payee has recovered expenses of ` 8,474 and the balance amount was refunded in financial year 2009–10 and assessee has offered it as income in assessment year 2010–11. Out of the disallowance made of ` 48,000 by the Assessing Officer, the learned Commissioner (Appeals) allowed ` 8,474 while disallowing the balance amount of ` 39,529. In our view if the assessee had offered the said amount to tax in the assessment year 2010–11, the same should not have been taxed in the impugned assessment year. We, therefore, direct the Assessing Officer to verify this aspect and decide this issue after providing opportunity of being heard to the assessee. Grounds no.1 and 2 are allowed for statistical purposes.

4 Shri Rehan A.R. Sumar 2008 was shown at ` 25,88,541=27. He also noticed that during the relevant previous year, there is introduction of capital to the tune of ` 10.05 lakh. He, therefore, called upon the assessee to reconcile the capital account. In response, it was submitted by the assessee that the introduction of capital is only ` 1,55,000 and the balance amount of ` 8,50,000 was introduced in financial year 2005–06. The Assessing Officer after examining the reply of the assessee, however, was not convinced with the same. He observed, as per audited account for financial year 2007–08, the actual opening balance as on 1st April 2008, would be ` 2588541=27 instead of ` 19,67,812=7 shown by the assessee. After adjusting the introduction of capital made during the year, he worked out the difference between the actual opening balance and balance shown by the assessee at ` 2,29,271 and added to the income of the assessee. The assessee challenged the addition before the first appellate authority.