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TMI Blog2020 (11) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... It clearly indicates that assessing officer has made this assessment in overzealous. The various courts have held that only real and actual income alone can be taxed and unrealistic or highly presumptive income cannot be proper to tax - reasonable profit expected in this line of business could be 8 to 10%. Since assessee has already declared 7.79% as its income, we direct assessing officer to estimate the total income at 10%. Therefore, we direct assessing officer to sustain the profit @ 2.21% of travel business. Addition in respect of sundry creditors and ad hoc disallowance of expenditure - CIT(A) already directed the assessing officer to consider the real and actual expenditure and redo the actual profit after allowing the real expenditure incurred by the assessee for the purpose of business. After verifying the profit and loss account, the expenses claimed by the assessee seems to be reasonable and we do not see any reason to disturb the profit declared by the assessee. Even the sundry creditors was disallowed only due to non availability of information from assessee and otherwise, no business will be carried out without any creditors, as far as in this case, assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income declaring total income of ₹ 2,48,060/ on 27.09.2004. The return of income was accompanied with statement of total income, statement of affairs, audited financial report and audit report in the prescribed form No. 3 CB and 3 CD. The case was selected for scrutiny, notices under section 143 (2) and 142 (1) were issued and served on the assessee. The assessing officer issued several notices along with questionnaire calling record information/document to the assessee. Details of issue and serving of the notices are placed on record by the assessing officer and it is discussed elaborately in assessment order in page No. 2 and 3. Subsequently assessee himself appeared time to time and could not give the satisfactory reply to assessing officer. Accordingly assessing officer completed the assessment adopting best judgement as per section 144 Of the Income Tax Act 1961 (in short Act ). 3. Since there was no assistance from assessee, assessing officer suo moto made the following additions: A. AO observed that assessee has introduced ₹ 352,000 in its capital account under the proprietary concern M/s Mahalaxmi Motors Services Station. B. AO observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officer has separately added marriage gift and agricultural income, it amounts to double addition to that extent. Ld CIT(A) has deleted the same and he sustained the balance addition to the extent of ₹ 1,12,500/- b. with regard to agricultural income, after considering assessee submission, he opined that there are as many as 6 co-owners in the agricultural land. It fetched ₹ 30,000 as deposit and annual rent of ₹ 25,000/ accordingly he determined the share of the assessee at ₹ 9,167/ . Accordingly he allowed to that extent and balance addition was sustained. c. With regard to ad hoc disallowance of various expenses incurred in the proprietary concerns of the assessee, he observed that certain expenses like insurance, bank charges, interest are verifiable, it is fully verifiable and exclusively incurred for the purpose of business. He directed the assessing officer to allow to that extent. d. All other disallowances were sustained by Ld CIT(A). 5. Aggrieved with the above order, assessee preferred an appeal before us, raising following grounds of appeal:- Unexplained Capital at ₹ 1,12,500/- a) On the facts and in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7; 1,64,150/- 6. Marriage Expenses at ₹ 52,500/- a) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals)-II, Thane owed in making addition of ₹ 52,500/- on ground of Marriage expenses. 7. Adhoc Disallowance at ₹ 1,63,374/- :- a) On the facts and in the circumstances of the case and in law the learned Commissioner of Income Tax (Appeals)-II, Thane erred in confirming adhoc disallowance of expenses at ₹ 1,63,374/-. 8. Difference in value of cost of construction of building at ₹ 3,88,000/- a) On the facts and in the circumstances of the case and in law, the Ld. CIT(A)-II Thane erred in confirming addition made on ground of difference in value of cost of construction. b) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) II Thane, erred in not verifying the supporting documents and explanation submitted at the time of hearing at the time of appeal proceedings. The appellant craves, leave to add to, amend, alter or withdraw any of the above grounds of appeal before or at the time of hearing of the appeal, if necessary. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of affairs as on 31.03.2003 in which assessee was holding FDR with Tata Finance of ₹ 1,10,000/ and interest accrued on above FDR of ₹ 26,830/ . During this assessment year he submitted that assessee has liquidated the above deposits and interest. The Ld CIT(A) rejected above source of income as it will not increase cash flow to the assessee. We do not agree with Ld CIT(A) but it is one of the source that can increase cash balance of the assessee during this assessment year. We noticed that Ld CIT(A) has sustained addition to the extent of ₹ 1,12,500. Since there is evidence that assessee has encashed the deposit along with interest and there is a established source for the assessee, accordingly we deem it fit to delete the addition sustained by the Ld CIT(A). Accordingly the ground No. 1 raised by the assessee is allowed. 11. With regard to ground No. 2 7, these additions are relating to business income of proprietary concerns run by the assessee. We noticed from the records that assessee has already declared profit in M/s Shree Siddhivinayak Tours of ₹ 85,393.68 against the grass receives of ₹ 10,96,418/ (@ 7.79% of gross receipts) and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counted as creditors. Accordingly, We direct assessing officer to delete addition in respect of sundry creditors and ad hoc disallowance of expenditure. In short we direct assessing officer to estimate 2.21% of travel business only. In the result the ground No. 2 and 7 are partly allowed. 13. With regard to ground No. 3, assessee has submitted additional evidence before us for the purchase of Tata car which is placed on record. Since it is an additional evidence, we deem it fit to remit this issue back to the file of assessing officer to verify the genuineness of the submitted bill and if it is found proper, we direct assessing officer to allow the depreciation claimed by the assessee against this car. Accordingly ground raised by the assessee is allowed for statistical purpose. 14. With regard to ground No. 4, agricultural income, no new material or any new document submitted before us. We do not see any reason to interfere with the findings of Ld CIT(A). 15. With regard to ground No. 5, marriage gift received in the marriage of the assessee, Ld CIT(A) sustained the addition made by the AO to the extent of ₹ 1,64,150/ . Before us Ld AR submitted a affidavit from mot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the assessee is accordingly allowed. 18. In the net result, appeal filed by the assessee is partly allowed. 19. It is pertinent to mention here that this order is pronounced after a period of 90 days from the date of conclusion of the hearing. In this regard, we place reliance on the decision of co-ordinate bench of this Tribunal in the case of JSW Ltd in ITA Nos. 6264 6103/Mum/2018 dated 14.5.2020, wherein this issue has been addressed in detail allowing time to pronounce the order beyond 90 days from the date of conclusion of hearing by excluding the days for which the lockdown announced by the Government was in force. The relevant observations of this tribunal in the said binding precedent are as under:- 7. However, before we part with the matter, we must deal with one procedural issue as well. While hearing of these appeals was concluded on 7th January 2020, this order thereon is being pronounced today on 14th day of May, 2020, much after the expiry of 90 days from the date of conclusion of hearing. We are also alive to the fact that rule 34(5) of the Income Tax Appellate Tribunal Rules 1963, which deals with pronouncement of orders, provides as follows: ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enforcement of health advisories with a view of checking spread of Covid 19. The epidemic situation in Mumbai being grave, there was not much of a relaxation in subsequent lockdowns also. In any case, there was unprecedented disruption of judicial wok all over the country. As a matter of fact, it has been such an unprecedented situation, causing disruption in the functioning of judicial machinery, that Hon ble Supreme Court of India, in an unprecedented order in the history of India and vide order dated 6.5.2020 read with order dated 23.3.2020, extended the limitation to exclude not only this lockdown period but also a few more days prior to, and after, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [(2017) 392 ITR 244 (Bom)], Hon ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon ble Bombay High Court itself has, vide judgment dated 15th April 2020, held that directed while calculating the time for disposal of matters made time- bound by this Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly . The extraordinary steps taken suomotu by Hon ble jurisdictional High Court and Hon ble Supreme Court also indicate that this period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily ,in the light of the above analysis of the legal position, the period during which lockout was in force is to ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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