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ACIT, Central Circle 15(1),Room No. 104, Matru Mandir,1st Floor, Tardeo Road, Mumbai 400007 Vs. Swapnil Enterprises, B-104 Harshad Apartments,Behind Evarad Nagar, E.E.Highway, Sion (East),Mumbai 400 022
September, 04th 2012
                           ITA No.5166 of 2011 & CO 73 of 2012 Swapnil Enterprises Mumbai A Bench

                        "A" Bench, Mumbai

             Before Shri B.R. Mittal, Judicial Member and
              Shri B. Ramakotaiah, Accountant Member

                      ITA No.5166/Mum/2011
                      (Assessment year: 2008-09)

ACIT, Central Circle 15(1),             Vs.     Swapnil Enterprises, B-104
Room No. 104, Matru Mandir,                     Harshad Apartments,
1st Floor, Tardeo Road,                         Behind Evarad Nagar, E.E.
Mumbai 400007                                   Highway, Sion (East),
                                                Mumbai ­ 400 022
                                                PAN: ABDFS 2484 B
(Appellant)                                        (Respondent)

                        C.O. No.73/Mum/2012
               (Arising out of ITA No.5166/Mum/2011)
                       (Assessment year: 2008-09)

Swapnil Enterprises, B-104              Vs.     ACIT, Central Circle 15(1),
Harshad Apartments, Behind                      Room No. 104, Matru
Evarad Nagar, E.E. Highway,                     Mandir, 1st Floor,
Sion (East), Mumbai ­ 400 022                   Tardeo Road,
PAN: ABDFS 2484 B                               Mumbai 400007
(Cross Objector)                                   (Respondent)

                     Department by: Shri T.D. Singh, DR
                     Assessee by:   Shri C.V. Dharkar

                     Date of Hearing:       23/8/2012
                     Date of Pronouncement: 31/8/2012


Per B. Ramakotaiah, A.M.

      The Revenue appeal preferred against the roder of the CIT (A)-
26 Mumbai, dated 29.04.2011 and assessee preferred cross
2.    Briefly stated, assessee is a registered firm engaged in the
business of transportation of debris and other materials arising of
demolished structures. Since details called for are not filed by

                                     Page 1 of 4
                           ITA No.5166 of 2011 & CO 73 of 2012 Swapnil Enterprises Mumbai A Bench

assessee, AO rejected the books of account and disallowed 25% of
the expenditure claimed in the books of account in an order u/s
144. Further since assessee has not furnished any details, an
amount of `32,43,130/- was also added as income under section 68
has increased in current liability and further an amount of
`37,40,960/- again under section 68 in unsecured loans shown
during the year.

3.    Before the CIT (A) assessee submitted that out of the
expenditure claim, disallowance was of `85,28,956/- i.e. 25% of the
total expenses aggregating to `3,41,15,825/-. It was submitted that
major expenditure pertain to the payments towards work to a single
party Offbeat Developers Pvt. Ltd and balance of expenditure was
towards day-to-day maintenance. It was also further submitted that
expenses on Oil, diesel and payments to other transport shown as
purchases on which TDS was made. Therefore, as against
`85,28,956/- disallowed by AO, the CIT (A) sustained 10% of the
disallowances of other expenses at `.1,37,140/-. After considering
the submissions including that amount of unsecured loan of
`45,67,250/- from ICICI Bank was also disallowed, the CIT (A)
deleted the addition under section 68. Therefore, the Revenue is
aggrieved. No opportunity was given to AO and no details were
furnished in the course of assessment. The Revenue has raised four
grounds in this regard.

4.    In the cross objection, assessee contends that AO was not
correct in completing the assessment under section 144 which was
bad in law suffering from legal infirmities.

5.    We have heard the learned DR and the learned Counsel. At
the outset it was noticed that in the assessment proceedings there
was   non   furnishing    of   information           which         lead      to     AO      for
disallowance of 25% of the expenses and also making addition as
unexplained cash credits and loans under section 68. Even though

                                     Page 2 of 4
                           ITA No.5166 of 2011 & CO 73 of 2012 Swapnil Enterprises Mumbai A Bench

the estimation was little high pitched which is not according to the
spirit of the provision of section 144, we are of the opinion that the
CIT (A) also equally erred in deleting the amounts. First of all there
was no additional information before the CIT (A) as there is no
admission of any additional evidence. Not only that on the basis of
the statements made by assessee, substantial amounts were deleted
without     subjecting   them    to    verification          by      AO      in     remand
proceedings. CIT (A) should have followed the principles of natural
justice and should not have put the onus on AO as seen from the
tenor of the order while deleting the amounts. It is also surprisingly
seen that assessee has paid the entire amount to work done to a
single party Offbeat Developers Pvt. Ltd. On the reason that this
payment cannot leave any scope for improper work done by
assessee, the CIT(A) deleted the same without verification. This
reasoning in our view is not correct since any expenditure claim has
to be verified whether the expenditure has been spent wholly or
exclusively for the purpose of business under the provisions of
section 37(1). Since the assessment was completed ex-parte for
failure to furnish details as called for and since the CIT (A) also did
not have any additional evidence to delete the addition, we are of
the opinion that the matter requires re-examination by AO.
Accordingly the orders of AO and CIT (A) are set aside and
assessment proceedings for the assessment year is restored to the
file of AO. AO should give due opportunity to assessee to explain
various claims. AO should also keep in mind that assessee has not
come up in appeal on the 10% of the expenditure disallowed and
confirmed by the CIT (A). To that extent if the other expenditures
are found genuine, the addition has to be sustained. With these
directions, the Revenue appeal is considered allowed for statistical

                                      Page 3 of 4
                                 ITA No.5166 of 2011 & CO 73 of 2012 Swapnil Enterprises Mumbai A Bench

6.        In    a   way    assessee's      objection         with       reference         to     the
proceedings under section 144 raised in the Cross Objection were
also covered by this decision.

7.        In the result both the appeal of Revenue and Cross Objection
filed by assessee are considered as allowed for statistical purposes.

          Order pronounced in the open court on 31st August, 2012.

                 Sd/-                                           Sd/-
             (B.R. Mittal)                                (B. Ramakotaiah)
           Judicial Member                               Accountant Member

Mumbai, dated 31st August, 2012.


Copy to:

     1.   The   Appellant
     2.   The   Respondent
     3.   The   concerned CIT(A)
     4.   The   concerned CIT
     5.   The   DR, "A" Bench, ITAT, Mumbai

                                       By Order

                               Assistant Registrar
                          Income Tax Appellate Tribunal,
                            Mumbai Benches, MUMBAI

                                           Page 4 of 4
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