Income Tax Appellate Tribunal - Mumbai
Shree Dev Elopers, Mumbai vs Assessee on 9 March, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
"E" BENCH, MUMBAI
BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND
SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER
ITA no.6376/Mum./2011
(Assessment Year : 2006-07)
M/s. Shree Developers
22/A, Ratan Palace
186, Garodia Nagar ................ Appellant
Mumbai 400 077
PAN - AAZFS0026P
v/s
Dy. Commissioner of Income Tax
................ Respondent
Circle-15(3), Mumbai
Revenue by : Shri Ritesh Misra
Assessee by : Shri M. Subramanian
Date of Hearing - 02.03.2016 Date of Order - 09.03.2016
ORDER
PER SAKTIJIT DEY, J.M.
Aforesaid appeal by the assessee is directed against the order dated 13th June 2011, passed by the learned Commissioner (Appeals)- 26, Mumbai, for the assessment year 2006-07.
2. Assessee has raised following effective grounds:-
"1. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in passing order on the basis of conjunctures and surmises, contrary to 2 M/s. Shree Developers principles of natural justice and without properly appreciating and considering the submissions, documents, records and books of account before him.
2. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in confirming the addition of ` 15,00,000 by invoking section 145(3) on the basis of conjunctures and surmises and irrelevant material / contrary to facts of the case.
3. On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in sustaining the disallowance of ` 86,817 on account of interest paid to persons listed under section 40A(2)(b)."
3. Briefly stated the facts are, assessee a partnership firm is engaged in the business of builders and developers. For the assessment year in dispute, assessee filed its return of income on 27th October 2006, declaring income of ` 3,78,070. During the assessment proceedings, Assessing Officer while examining the expenditure claimed by the assessee, on account of material purchased and consumed found that assessee has not maintained any record of day- to-day material purchased / received and consumed. He also observed, labour charges claimed under various heads are not fully verifiable. He also alleged that expenditure claimed are through kachha vouchers. He, therefore, rejecting the books of account under section 145(3) of the Act, made ad-hoc addition of ` 15 lakh. Further, the Assessing Officer alleging that assessee had paid interest to persons specified under section 40A(2)(b), disallowed an amount of ` 3 M/s. Shree Developers 81,378. Against the additions made by the Assessing Officer, assessee preferred an appeal before the learned Commissioner (Appeals).
4. In the course of hearing of the appeal before the learned Commissioner (Appeals), assessee submitted written submission accompanied by documentary evidence justifying its claim and requested for deleting the addition. As it appears in midst of hearing, there was change in the incumbency of first appellate authority and a new Commissioner (Appeals) took over the charge. After taking over the charge, the learned Commissioner (Appeals) issued a fresh notice to the assessee for hearing of the appeal. In response to the said notice, assessee in letter dated 24th May 2011, requested the learned Commissioner (Appeals) to decide the issue on merit after considering the written submission filed by the assessee. Ultimately, learned Commissioner (Appeals) disposed off assessee's appeal by confirming both the additions.
5. As far as ground no.1, is concerned, learned Counsel for the assessee submitted, assessee in course of hearing of appeal before the first appellate authority has made detail submissions through written submissions filed on two occasions accompanied by voluminous documentary evidence in support of consumption of material and payment of labour charges. He submitted, as far as the other addition 4 M/s. Shree Developers under section 40A(2)(b) is concerned, assessee not only has made submissions before the learned Commissioner (Appeals) but also through evidence tried to explain the reasonableness of payment made. He submitted, though, it may be a fact that assessee had requested the learned Commissioner (Appeals) to dispose off assessee's appeal on the basis of written submissions filed, but the learned Commissioner (Appeals) without considering the written submissions of the assessee and the documentary evidences brought on record has confirmed the additions merely following the reasoning of the Assessing Officer. Learned Counsel for the assessee submitted, if the learned Commissioner (Appeals) had any doubt in respect of any of the issues and needed clarification, he should have granted opportunity to the assessee to explain the same for removing his doubt. He submitted, without affording any further opportunity and without considering the written submissions and documentary evidences brought on record learned Commissioner (Appeals) was not justified in sustaining the additions in violation of rules of nature justice. He, therefore, requested for restoring the matter back to the file of the learned Commissioner (Appeals) for adjudicating afresh.
6. Learned Departmental Representative has no serious objection if matter is restored back to learned CIT(A) for deciding afresh. 5
M/s. Shree Developers
7. We have considered the submissions of the parties and perused the material available on record. As could be seen, the Assessing Officer has made ad-hoc disallowance of ` 15 lakh out of the labour charges alleging non-furnishing of required details. However, it is the contention of the assessee before us that before the first appellate authority, the assessee along with written submissions has submitted, the entire documentary evidence, bills and vouchers in support of deduction claimed which has not at all been examined by the learned Commissioner (Appeals). In this context, he drew our attention to the copies of written submissions and documentary evidence submitted in the paper book. On a reference to the relevant pages of the paper book submitted by the assessee it is found that not only the assessee has made submissions in detail before the learned Commissioner (Appeals) but has also submitted various documentary evidences in support of its claim of material purchased / consumed and payment of labour charges. However, on a perusal of the impugned order of the learned Commissioner (Appeals), we find that he has not at all examined the documentary evidence produced by the assessee. Moreover, as far as additions made under section 40A(2)(b) neither there is any detail discussion either by the Assessing Officer nor by the learned Commissioner (Appeals) with reference to the material 6 M/s. Shree Developers brought on record. In the aforesaid view of the matter, we are of the consider opinion that assessee deserves an opportunity to explain his case before the learned Commissioner (Appeals) in the context of documentary evidences brought on record. Therefore, we are inclined to set aside the impugned order of the learned Commissioner (Appeals) and restore the matter back to his file for adjudicating the issue on merit after affording reasonable opportunity of being heard to the assessee. We also direct the assessee to appear before the learned Commissioner (Appeals) and co-operate in finalization of proceeding by effectively representing the case with necessary supporting evidence. As we are restoring the issue to the learned Commissioner (Appeals) for fresh adjudication, there is no need to adjudicate the grounds raised on merit which are also restored back to the file of the learned Commissioner (Appeals).
8. In the result, appeal is allowed for statistical purposes.
Order pronounced in the open Court on 09.03.2016 Sd/- Sd/-
RAMIT KOCHAR SAKTIJIT DEY
ACCOUNTANT MEMBER JUDICIAL MEMBER
MUMBAI, DATED: 09.03.2016
7
M/s. Shree Developers
Copy of the order forwarded to:
(1) The Assessee;
(2) The Revenue;
(3) The CIT(A);
(4) The CIT, Mumbai City concerned;
(5) The DR, ITAT, Mumbai;
(6) Guard file.
True Copy
By Order
Pradeep J. Chowdhury
Sr. Private Secretary
(Dy./Asstt. Registrar)
ITAT, Mumbai