TaxTMI 
TaxTMI 
2021 (2) TMI 1055
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....otice issued u/s 148 of the Income Tax Act, 1961 by the Learned Assessing Officer for the aforesaid year as valid. The Appellant submits that notice u/s 148 of the Income Tax Act, 1961 issued by the Learned Assessing Officer for re-opening of the assessment proceedings is bad in law and therefore it is further submitted that the assessment order passed by the Learned Assessing Officer u/s 143(3) r.w.s. 147 for the aforesaid year is bad in law and be quashed. 2. On facts and in the circumstances of the case, the Appellant submits that the Learned Commissioner of Income Tax (Appeals). Mumbai erred in upholding the disallowance of advertisement expenditure of Rs. 10,36,872/- made by the Learned Assessing Officer u/s 40(a)(ia) of The Income Tax Act, 1961 for non- deduction of TDS. The Appellant submits that the disallowance of advertisement expenditure of Rs. 10,36,872/- be deleted. 3. On facts and in the circumstances of the case, the Appellant submits that the Learned Commissioner of Income Tax (Appeals), Mumbai erred in upholding the disallowance of Other expenditure of Rs. 11,87,074/- made by the Learned Assessing Officer. The Appellant ....
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.... 6 ICICI Bank Ltd./A Ad Agency - 50,000 - 7 Saraswati Advertising Service AACPP8500A 1,00,000 - 8 The Begining - 1,53,000 - Total 10,36,872 5. The assessee failed to prove the genuineness of the claim, therefore, the advertisement expenditure in sum of Rs. 10,36,872/- was disallowed u/s 40(a)(ia) of the I. T. Act, 1961 and added to the income of the assessee. The assessee also claimed the other expenses in sum of Rs. 20,51,244/- in the Profit & Loss Account. The notice was issued to prove the genuineness of the claim. The assessee failed to prove the claim to the extent of Rs. 11,87,074/-, therefore, the same was disallowed u/s 37(1) of the Act and added back to the income of the assessee. An information was received from the information of the DIT(Inv.) Mumbai, in which it was conveyed that the assessee company was involved for taking the accommodation entry from Praveen Kumar Jain and his group. The assessee has received the share application money from the following parties to the tune of Rs. 5,02,01,480/- which is hereby reproduced as under.:- Sr. No. Name Transa....
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....e ITAT Mumbai Bench in the case of Mahindra & Mahindra Ltd. Vs. DCIT, Range-2(2) dated 14.05.2019, CIT Vs. Ansal Land Mark Township Pvt. Ltd. (2015) 61 Taxmann.com 45 (Delhi High Court) and M/s. Hindustan Coca Cola Beverage Vs. CIT dated 16.08.2007. However, on the other hand, the Ld. Representative of the Department has strongly relied upon the finding of the CIT(A). The basic contention of the assessee is that the payee has paid the tax. It is not in dispute that the second proviso of Section 40(a)(ia) of the Act r.w. Section 201(1) as inserted by the Finance Act, 2012 dated 01.04.2013 allows the claim of the non-deduction of TDS where the payee has filed the return of income and offered sum received from the assessee to tax. The said amendment was effected retrospectively w.e.f. A.Y. 2005-06. The issue in question has been dealt with by the Hon‟ble ITAT Mumbai "D‟ Bench in the case of Mahindra & Mahindra Ltd. Vs. DCIT, Range-2(2) (supra). The relevant finding is hereby reproduced as under.:- "12. We shall now deliberate on the aspect that now when the assessee has not been held to be an assessee in default under the first proviso to sub-section (1) of Sec.20....
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....see satisfies the conditions envisaged in sub-section (1) of Sec.201, then it cannot be held to be an assessee in default, and as per the second proviso of Sec. 40(a)(ia) no disallowance would be called for in its hands. We thus for the said limited purpose restore the matter to the file of the A.O for making necessary verifications. In case the assessee is able to demonstrate before the A.O that it had duly complied with the conditions envisaged in the second proviso of Sec.40(a)(ia) r.w.s 201(1) of the I.T Act, then the disallowance to the said extent made under Sec. 40(a)(ia) in its hands shall stand vacated. 13. Insofar the reliance placed by the ld. A.R on the judgment in the case of CIT Vs. Kotak Securities Ltd. (2012) 340 ITR 333 (Bom) is concerned, we find that the same is found to be distinguishable on facts. In the aforesaid case, as both the revenue and the assessee were under a bonafide belief as regards the liability to deduct TDS on transaction charges paid to the Bombay Stock Exchange right from the year 1995 i.e. coming into effect of Section 194J, till the assessment year in question, therefore, it was in the backdrop of the said peculiar facts of the case....
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....n opportunity of being heard is required to be given to the assessee in accordance with law. Accordingly, this issue is being decided in favour of the assessee against the revenue for statistical purposes. ISSUE No. 4 11. Under this issue the assessee has challenged non-granting of depreciation on capital expenses. Since the issue no. 3 has been restored before the AO to verify the claim of the assessee, therefore, capital expenses are in question and yet to be decided in accordance with law. Anyhow upon the capital expenses, the depreciation is required to be allowable u/s 32 of the Act. Accordingly, we set aside the finding of the CIT(A) on this issue and restore the issue before the AO to verify the claim of the assessee in accordance with law. Needless to say that an opportunity of being heard is liable to be given to the assessee in accordance with law. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE No. 5 12. Issue no. 5 is formal in nature which is nowhere required for adjudication. In the result, the appeal filed by the assessee is hereby partly allowed. ITA. No. 4337/Mum/2019 The revenue has filed the present app....
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....herefore, there is no need to repeat the same. ISSUE NO. 1 15. Under this issue the revenue has challenged the deletion of addition of Rs. 4,00,00,000/- made by AO u/s 68 of the I. T. Act, 1961. The Ld. Representative of the revenue has argued that the CIT(A) has wrongly deleted the addition, therefore, the finding of the CIT(A) is not justifiable, hence is liable to be set aside. However, on the other hand, the Ld. Representative of the assessee has strongly relied upon the order passed by the CIT(A) in question. Before going further, we deem it necessary to advert the finding of the CIT(A) on record.:- "10. I have considered the facts of the case and submission of the appellant and findings by the AO. On the merits, the issue is of unexplained credits u/s 68, to which my findings are as under. The legal position is very well settled i.e. where any credits are found in the books of the assessee, the onus is on the assessee to prove the genuineness of the same and on failure of the assessee, the presumption u/s 68 becomes absolute and the credits are treated as income of the assessee. The assessee can discharge the onus by producing confirmation from the share applic....
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....rce-of-source as well. Firstly, in the case in hand, the amounts received were in the F.Y. i.e. A.Y.2012-13 and further this proviso would apply only from AN. 2013-14. {Ref: decision of the Bombay High Court in Gangadeep Infrastructure 394 ITR 680 (Born.)). The Hon‟ble jurisdictional High Court reiterated the said position in PCIT V/s. Veedhata Tower Pvt. Ltd. ITXA/819 of 2015 dated 17th April 2018. However, the said proviso was inserted because, sec.68 (unamended) was incapable of obliging the assessee to prove the source-of-source and hence the proviso was required to inserted. It follows that where the proviso doesn‟t apply, the sec.68 does not put the burden on the assessee to prove the source-of-source. 10.4 From the above, as submitted by the AR, it follows that it is not the business of the assessee to find out the source of the money of his creditors {CIT V/s. Daulat Ram Rawaltmull 87 ITR 349 (SC). Reference can also be made to the decision of the Apex Court in CIT vs Orissa Corporation Pvt Ltd. 158 ITR 78 (SC). It is also possible that a creditor may have advanced funds from out of his exempted income. For eg. If the creditor has agricultural income wh....
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....that, in the case of CIT V/s. U.M. Shah, Proprietor, Shrenik Trading Co. 90 ITR 396 (Bom.)). the Hon'ble jurisdictional High Court held that once credible material is produced before the AO, the AO is expected to make efforts to dislodge the explanation given by the assessee. No such thing has been done by the AO. The AO cannot simply reject explanation/materials produced by the assessee without bringing any contrary findings on record. In this regard. I find that the decision referred by the appellant's AR on the issue of company is managed and controlled by Praveen Kumar Jain/Bhawarlal Jain and also other Jurisdictional ITAT/High Court cases decided on similar facts in favour of the assessee which are binding on the undersigned, the case laws are as under: 1 ITO-4(3)(1) Mumbai Vs. Nityanand Industries Pvt. Ltd. ITA. No.4277 & 4278/M/2017 2 Komal Agrotech Pvt. Ltd. Hyderabad Vs. The ITO, ward 2(1) Hyderabad ITA. No.437/Hyd/2016 3 Arceli Realty Ltd. Vs. ITO 15(1)(1), Mumbia 4 Shri Naresh Hiran VS. ITO 30(2)(4), Mumbai ITA 1236/M/2017, ITAT Mumbai 5 ITO 25(3)(5), Mumbai VS. M/s. Vikram Kuktilal Vora, ITA. 842/Mum/2017 6 M/s. Reliance Corpo....
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.... did not even resort to issue notice u/s 133(6) of the Act to the share subscribers and seek their replies before arriving at a conclusion that the receipt of share capital by the assessee is to be added as unexplained cash credit under section 68 of the Act. In these circumstances, the CIT(A) went through each and every document filed by the assessee before the AO and concluded that the assessee had duly proved all the three necessary ingredients viz identity and creditworthiness of share subscribers together with the genuineness of transactions, apart from placing reliance on various decisions. We find that the same parties from whom share subscription money is received by the assessee has been the subject matter of adjudication and this tribunal in various decisions as listed by the CIT(A) had considered them to be genuine and having sufficient creditworthiness apart from proving their identity beyond doubt. The learned counsel for the assessee also placed reliance on the decision of Hon‟ble Jurisdictional High Court in the case of CIT vs Gagandeep Infrastructure Pvt Ltd in Income Tax Appeal No. 1613 of 2014 dated 20.3.2017 in support of his contentions and in support of t....
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.... such cases the suppliers would be willing to sell at a much less rate as compared to the rate that they would have charged otherwise, certainly goods must have been purchased from the grey market therefore the profit made by the assessee would be equal to the difference in price of bogus purchases and the rate at which goods are obtained from the grey markets. At the same time, it is an undisputed fact that the assessee failed to prove the delivery of material by producing transport receipts etc. and failed to produce any suppliers before the AO to prove the transactions. It is pertinent to visit the decisions of Hon'ble ITAT, Ahmedabad and Hon'ble Gujarat High Court in the case of CIT Vs Simit P Sheth (2013) on the issue. Hon'ble ITAT held the following in the referred case.: "Having heard the submissions of both sides, we have been informed that the malpractice of bogus purchase is mainly to save 10% sales tax etc. It has also been informed that in this industry about 2.5% is the profit margin. Therefore, respectfully following the decisions of the co-ordinate bench pronounced on identical circumstances, we hereby direct that the ITA No 3238 & 3293/Ahd/2009 ....