IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "H" MUMBAI
BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER
AND
SHRI RAJENDRA, ACCOUNTANT MEMBER
ITA No. 2119/Mum/2011
Assessment Year 2006-07
The Income Tax Officer 12(3)(1), M/s. Bhattad Brothers,
Aayakar Bhavan, 104, Bajaj Bhavan,
M.K. Road, Nariman Point,
Mumbai 400 020. Vs. Mumbai 400 021.
PAN: AABFB 8501 E
ITA No. 2192/Mum/2011
Assessment Year 2006-07
The Asst. Commissioner of Income M/s. M.B. Development
Tax 12(3),R.No. 135, Corporation,
1st Floor, 104, Bajaj Bhavan,
Aayakar Bhavan, Vs. Nariman Point,
Mumbai 400 020. Mumbai 400 021.
PAN: AACFM 9936 D
ITA No. 2193/Mum/2011
Assessment Year 2006-07
The Asst. Commissioner of Income M/s. Hari Construction,
Tax 12(3), 104, Bajaj Bhavan,
R.No. 135, Nariman Point,
1st Floor,Aayakar Bhavan, Vs. Mumbai 400 021.
Mumbai 400 020. PAN: AABFH 1212 L
ITA No. 2194/Mum/2011
Assessment Year 2006-07
The Dy. Commissioner of Income Shri Laxminarayan R.
Tax 12(3), Bhattad,
R.No. 137, 1st Floor, Shri Bhagwandas R. Bhattad,
Aayakar Bhavan, Vs. Shri Harishkumar R. Bhattad
Mumbai 400 020. Shri Harikishan R. Bhattad
Legal heir of Shri R.M.
Bhattad,
Prop. M/s. R.M. Bhutter &
Co.,104, Bajaj Bhavan,
Nariman Point,
Mumbai 400 021.
PAN: AABPG 2581 P
2 ITA No. 2119/Mum/2011
ITA No. 2192/Mum/2011
ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
ITA No. 2275/Mum/2011
Assessment Year 2006-07
The Income Tax Officer 12(3)(1), M/s. M.B. Constructions,
Aayakar Bhavan, 104, Bajaj Bhavan,
M.K. Road, Nariman Point,
Mumbai 400 020. Vs. Mumbai 400 021.
PAN: AACFM 9937 C
ITA No. 1107/Mum/2011
Assessment Year 2006-07
Late Mr. R.M. Bhattad, The Asst. Commissioner of
Prop. Of M/s. R.M. Bhutter & Co., Income Tax 12(3),
104, Bajaj Bhavan, Mumbai.
Nariman Point, Vs.
Mumbai 400 021.
PAN: AAHPB 4385 L
(Appellant ) (Respondent)
Revenue by : Shri Goli Sriniwas Rao
Assessee by : Shri Vimal Punmiya
Date of hearing : 23-07-2012
Date of pronouncement : 25-07-2012
ORDER
PER BENCH:
Following Grounds of Appeals were raised in the appeals filed by the Assessing
Officer (AO) against the orders dt. 21-12-2010 of CIT(A)-23, Mumbai.
ITA/2119/M/11-Bhattad Brothers
1."On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in
deleting the disallowance of Rs. l,75,400/ made by the AO on account of legal and
professional charges.
1.a.While doing so, the Ld. CIT.(A) failed to appreciate the fact that with respect to assessee's
claim for rendering supervision services to its sister concern no details and documentary
evidence supporting the expenditure has been furnished by the assessee:
2. On the facts and in the circumstances of the case and in law, the Id. CIT(A) has erred in
deleting the disallowances of Rs. 36,74,422/ on account of payment of salary as expenses.
3 ITA No. 2119/Mum/2011
ITA No. 2192/Mum/2011
ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
2.a. While doing so, the Ld. CIT.(A) failed to appreciate the fact that the assessee has neither
carried out any business activity nor established the nexus of the said expenses.
3. The appellant prays that the order of the Ld.CIT(A) on the above ground(s) be set aside
and that of the Assessing Officer be restored".
ITA/2192/M/11-M.B.Development Corporation-
1. On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in
deleting the disallowance of expenses of Rs. 1,12,27,810/-.
1.a. While doing so, the ld.CIT(A) erred in appreciating the fact that the assessee's claim of
various expenses against the compensation received from M/s. R.M. Bhutter & Co. is only to
reduce receipts by book entries.
2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
appreciating the fact that no business connection exist between the assessee and its sister
concern nor any services rendered by the assessee to its sister concern.
3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
allowing relief to the assessee ignoring the fact that no such expenses were reimbursed either
in the preceding year or in the succeeding year.
4. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
appreciating the fact that the expenses incurred by the assessee only on the basis of self made
vouchers and supported internal vouchers.
5. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
allowing relief to the assessee without appreciating the fact that merely comparing the profit
ratio and disregarding the above factors, noticed during the course of survey and only
nullified by the assessee by way of book entries.
6. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
deleting the addition made in the assessee's case by following its own appellate order
dt.2l.l2.20l0 in the case of R.M. Bhattad ignoring the fact that the decision of CIT(A) in this
case is challenged and the same is subject matter of appeal before this Hon'ble Tribunal.
7. The appellant prays that the order of the CIT(A) on the above ground(s) be set aside and
that of the Assessing Officer be restored.
8. The appellant craves leave to amend or alter any ground or add a new ground which may
be necessary".
ITA/2193/M/11-Hari Construction-
1."On the facts and in the circumstances of the case and in law, the ld.CIT(A) has erred in
deleting the addition of Rs.2,63,45,966/- made by the AO as unexplained expenditure u/s.69.
1.a. While doing so, the ld.CIT(A) failed to appreciate the fact that expenses claimed are
Unverifiable and without Supporting documentary evidence to substantiate the claim.
2. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
granting relief to the assessee ignoring the fact that no such expenses were reimbursed either
4 ITA No. 2119/Mum/2011
ITA No. 2192/Mum/2011
ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
in the Preceding year or in the succeeding year nor any services rendered to the sister
concern.
3. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
granting relief to the assessee ignoring the fact that no business connection exist between the
assessee and its sister concern M/s. R.M. Bhutter & Co.
4. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
granting relief to the assessee ignoring the fact that the reimbursement of the expenses is only
to justify to reduce the profit merely by book entries which are not determinative of taxable
income.
5. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
allowing relief to the assessee without appreciating the fact that merely comparing the profit
ratio and disregarding the above factors, noticed during the course of survey and only
nullified by the assessee by way of book entries.
6. On the facts and in the circumstances of the case and in law, the ld.CIT(A) erred in
deleting the addition made in the assessee's case by following its own appellate order
dt.21.12.2010 in the case of R.M. Bhattad ignoring the fact that the decision of CIT(A) in this
case is challenged and the same is subject matter of appeal before this Hon'ble Tribunal.
7. The appellant prays that the order of the CIT(A) on the above ground(s) be set aside and
that of the Assessing Officer be restored.
8. The appellant craves leave to amend or alter any ground or add a new ground Which may
be necessary"
ITA/2194/M/11-R.M.Bhattad-
1."On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in
deleting the disallowance of salary of Rs. 1,42,40,864/- and wages of Rs. 2,52,00,000/-.
1.a. While doing so, the ld. CIT(A) failed to appreciate the fact that the expenses claimed are
self made, unnumbered and unsupported internal vouchers.
2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in
granting relief to the assessee ignoring the fact that no such expense was reimbursed either in
the preceding year or in the succeeding years.
3. On the facts and in the circumstances of the case and in law, the ld. CITR(A) erred in
granting relief to the assessee ignoring the fact that no business connection exist between
assessee and its sister concerns nor rendered any service to the sister concern.
4. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in
granting relief to the assessee ignoring the fact that the reimbursement of expenses is only to
justify the reduce profit merely by book entries which are not determinative of taxable
income.
5. On the facts and in the circumstances of the case and in law, the id CIT(A) erred in
allowing relief to the assessee without appreciating the fact that merely comparing the profit
ratio and disregarding the above factors, noticed during the course of survey and only
5 ITA No. 2119/Mum/2011
ITA No. 2192/Mum/2011
ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
nullified by the assessee by way of book entries.
6. On facts and in the circumstances of the case and in law, the ld. CIT(A) erred in deleting
the disallowance of Rs. 2 1,80,005/- paid to sister concern M/s. Seven Seas Marketing Pvt Ltd
and M/s Aly Seeds System India Pvt. Ltd. Falling u/s 40A(2)(b) even though no business
connection existed between the assessee and the sister concern and ignoring the fact that the
said M/s. Seven Seas Mktg. Pvt Ltd is defunct company and no genuineness or nexus or
reasonableness is established by the assessee.
7. On the facts and in the circumstances of the case and in law, the id. CITA) erred in deleting
the disallowance of Rs. 14,37,765/- on account of freight charges ignoring the fact that
assessee has failed to substantiate the expenses with supporting bills and vouchers.
8. On the facts and in the circumstances of the case and in law, the id CIT(A) erred in
deleting the disallowance of unexplained expenditure u/s 69C of Rs. 15,76,255/- ignoring the
fact that no supporting evidence were produced by the assessee before the A.O. and thereby
admitting new evidence under Rule 46A.
9. On the facts and in the circumstances of the case and in law, the4 ld. CIT(A) erred in
deleting the disallowance of Rs. 32,86,955/- on account of depreciation on closing stock even
though no such provision exist in respect of depreciation u/s 32 read with relevant rules and
that too made on adhoc basis without any justification."
10. The appellant prays that the order of the CIT(A) on the above ground(s) be set aside and
that of the Assessing Officer be restored.
11. Appellant craves leave to amend or alter any ground or add a new which may be
necessary."
ITA/2275/M/11-M.B.Construction-
1."On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in
allowing expenditure of Rs. 26,43,861/- on account of legal and professional charges,
business promotion, miscellaneous expenses and repairs and maintenance expenses without
appreciating the fact that the assessee has failed to substantiate its claim of expenses during
the course of assessment proceedings.
2. On the facts and in the circumstances of the case and in law, the ld. CIT(A) has erred in
deleting the addition made in the assessee's case by following its own appellate order dtd.
2 1/12/2010 in the case of M/s. R.M. Bhattad ignoring the fact that the decision of CIT(A) in
this case is challenged and the same is subject matter of appeal before this Hon'ble
Tribunal."
3. The appellant prays that the order of the Ld.CIT(A) on the above ground(s) be set aside
and that of the Assessing Officer be restored.
4. The Appellant craves leave to amend or alter any ground or add a new ground which may
be necessary"
6 ITA No. 2119/Mum/2011
ITA No. 2192/Mum/2011
ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
In the appeal 1107/M/11 filed by the assessee, below mentioned grounds were raised
against the same order of CIT(A).
1. The ld. Commissioner of Income Tax (A) erred in confirming the treating
Rs. 5,00,000/- as cash receipts received on account of and against marriage
arrangements and thereby treating the same as cash credit u/s. 68 of the Income Tax
Act, 1961.
2. The ld. Commissioner of Income Tax (A) erred in confirming and capitalizing the
expenses incurred on purchase of pipes and added Rs. 5,33,570/- after deducting
depreciation thereon of Rs. 43,262/- (5,76,832 43,262) to the total income on the
ground that the same is capital in nature.
3. (i)The ld. Commissioner of Income Tax (A) erred in confirming the commission
expenses amounting to Rs. 13,02,317/- and added the same to the total income of the
assessee in view of section 40 (a)(ia) of the Income Tax Act, 1961.
(ii) And thereby the ld. Commissioner of Income Tax (A) also alleged that the
assessee had deducted TDS of Rs. 73,060/- on the corresponding expenses of
Rs. 13,02,317/- paid on 01-11-2006 and made late payment of TDS.
4. The ld. Commissioner of Income Tax (A) erred in setting aside issue back to
Assessing Officer with a direction to verify the position relating to TDS and make
disallowance in respect of such party in whose case TDS payments was delayed as
provided in section 40(a)(ia) in respect of professional fees paid of Rs. 20,42,589/-.
5. The ld. Commissioner of Income Tax (A) erred in confirming the charging interest
u/s. 234A, 234B, 234C & 234D of Income Tax Act, 1961.
6. The ld. Commissioner of Income Tax (A) erred in confirming the penalty proceedings
u/s. 271(1)( c ) r.w.s. 274 of Income Tax Act, 1961.
7. The ld. Commissioner of Income Tax (A) erred in confirming the penalty provisions
u/s. 269SS and 269T of the Income Tax Act, 1961 particularly when Addl.
Commissioner of Income Tax have already dropped the penalty proceedings.
2. Facts of the case:
M/s. R.M. Bhutter & Co., a proprietary concern of Late Shri R.M. Bhattad
engaged in the business of making and maintaining the structure for exhibition and
mandaps, had filed return of income on 31-10-2006 declaring total income of
Rs. 73.41 Lakhs. Assessment was finalised on 31-12-2008 by the AO determining the
income of the assessee at Rs. 5.96 Crores.
3. A survey action under section 133A of the Income Tax Act, 1961 (Act) was
carried out in the office premises of the assessee Group 17-03-2006. During the
survey action, it was found that the assessee had made huge cash expenses in respect
of purchases, labour wages and salary paid to employees of its sister concerns. The
assessee had maintained day to day cash book as well as books of account for all the
transactions entered into every day as the day to day transactions were of huge
volume.
7 ITA No. 2119/Mum/2011
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ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
3.1 Details of various entities of Bhattad Group, their status and assessments are
as under:
S.No. Name of the sister concern Status Assessment
01 Hari Construction Firm Protective Assessment
02 Bhattad Brothers Firm Assessment u/s.
144-A of the Act
03 M.B. Development Corporation Firm Protective Assessment
04 M.B. Construction Firm Assessment u/s.
144-A of the Act
3.2. Payments made by the proprietory concern of late Shri R.M. Bhattad, M/s.
R.M. Bhatter & Co.,to above referred group entities were disallowed. AO also made
protective assessments in other group concerns. Appeals filed by the assessee-group
were partly allowed by the First Appellate Authority (FAA).
4. When the matter was being argued, it was noticed that late Shri R. M. Bhattad
had passed away on 23-10-2008 exactly two months before the assessment order for
the AY under consideration was passed by the AO. Representatives from both sides
agreed to the fact that assessment passed by the AO was of a deceased person. In our
opinion assessment itself is not valid, so, we set-aside the same. AO is directed to
pass fresh assessment order after affording reasonable opportunities of hearing to the
legal heirs of the assessee.
4.1 With regard to the appeals filed by the AO in the matters of group cases (i.e.,
ITA Nos.2193/M/2011; 2119/M/2011; 2192/M/2011; 2275/M/2011) we find that
same are directly related to the main assessment order i.e., order of Late Shri R.M.
Bhattad. We remit these matters also to the AO for fresh adjudication.
4.2 We find that appeal filed by the assessee was filed by the legal heirs of late
Shri R.M. Bhattad. This appeal is also directly related to the assessment order passed
by the AO on 31-12-2008 in the case of late Shri R.M. Bhattad. As we have earlier
held that the assessment order passed after the death of the assessee was not a valid
assessment, so we remit this matter also to the AO for fresh adjudication.
Appeals of the AO as well as of the assessee are partially allowed for
statistical purposes.
Order pronounced in the open court on 25th July, 2012
Sd/- Sd/-
(B.R. MITTAL) (RAJENDRA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai,
Date 25th July, 2012
TNMM
8 ITA No. 2119/Mum/2011
ITA No. 2192/Mum/2011
ITA No. 2193/Mum/2011
ITA No. 2194/Mum/2011
ITA No. 2275/Mum/2011
ITA No. 1107/Mum/2011
Copy to:
1. Appellant
2. Respondent
3. The concerned CIT (A)
4. The concerned CIT
5. DR "H" Bench, ITAT, Mumbai
6. Guard File
(True copy)
By Order
Asst. Registrar,
Income Tax Appellate Tribunal,
Mumbai Benches, Mumbai
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