Anil Sahajwani , Mumbai vs Assessee

आयकर अपील य अ धकरण, ए खंडपीठ मंब ु ई INCOME TAX APPELLATE TRIBUNAL,MUMBAI - A -BENCH सव ी आई पी बंसल , या यक सद य एवं राजे , लेखा सद य Before S/Sh. I P Bansal,Judicial Member & Rajendra,Accountant Member आयकर अपील सं/.ITA No.3462/Mum/2012, नधारण वष/Assessment Year-08-09 Mr. Anil Sahajwani Income tax Officer-19(1)(3) 11/437, Tirupati Apartments Mumbai.

14th Road Khar (W) Vs Mumbai-400 054. PAN:AAUPS 1357 E (अपीलाथ /Appellant) ( यथ / Respondent) नधा रती ओर से/Assessee by :Shri S.C. Tiwari राज व क ओर से/ Revenue by :Shri Asghar Zain सुनवाई क तार ख/ Date of Hearing :03-06 -2015 घोषणा क तार ख / Date of Pronouncement :03-06-2015 आयकर अ ध नयम,1961 क धारा 254(1)के अ तगत आदे श Order u/s.254(1)of the Inco me-tax Act,1961(Act) लेखा सद य राजे के अनुसार PER RAJENDRA, AM-

Challenging the order dt.29.2.2012 of CIT(A)-30, Mumbai the assessee has raised following Grounds of Appeal:

"The ld. Commissioner of Income tax(Appeals) erred in confirming the addition made by the Assessing Officer by disallowing the claim of custom deposit written off Rs.4,58,000/- . He ought to have appreciated that the said sum was expended in the ordinary course of business of your appellant and had become irrecoverable only in previous year relevant to assessment year 2008-09 and is allowable as business expenditure u/s. 37 of the I.T. Act, 1961.

Your appellant humbly prays that the said sum of rs.4,58,000/- be allowed as business expenditure u/s. 37 of the I.T. Act, 1961 in computing the business income for the assessment year 2008-09."

During the course of hearing before us the Authorised Representative (AR),referred to the application made by the assessee for admitting additional evidences. It was stated that the cheque drawn by the buyer of the goods i.e. M/s. Ashtalaxmi Mercantile Pvt. Ltd.(AMPL)and the letter sent by AMPL could not be filed before the First Appellate Authority (FAA),that these were vital documents for deciding the appeal.Departmental Representative(DR)left the issue of accepting the additional evidences to the discretion of the Bench. After going through the material available on record,we are of the opinion that in the interest of justice the additional evidence produced by the assessee should be admitted,as they would have some bearing on outcome of the appeal.

2.Assessee-an individual,deriving income from business and capital gains filed his return of income on,29.9.2008,declaring total income ofRs.8.26lacs.Assessing Officer(AO)completed the assessment on 20.12.2010,u/s.143(3) of the Act,determining the income of the assessee,at Rs. 12.84 lacs.During the assessment proceedings the AO found that the assessee had debited the P&L Account on account of custom deposit write off for a sum of Rs.4.58 lacs.He directed the assessee to explain as how the written off custom deposit was allowable. In his reply,the assessee ITA/3462/Mum/2012-AY-2008-09,AS.

stated that custom deposit was duly paid in FY 2004-05 towards import of material, that the said deposit was refundable, that he tried his level best to recover the security deposit, that he could not recover the same, that considering the same amount as bad debts,he wrote it off during the year under appeal.After considering the submission of the assessee,the AO held that the amount in dispute was not a debt which was not written off, that the disputed amount was not incidental to the business of the assessee. Finally, he disallowed the claim made by the assessee .

3.Aggrieved by the order of the AO, the assessee preferred an order before the First Appellate Authority ( FAA). Before him, it was argued that the assessee was engaged in the business of dealing in non-ferrous metals and scrap,that he had entered into a high-sea sales transaction with regular customer,that he had directly paid a security deposit with the custom department for one of the high sea sales,that refund of the said deposit was to go to the buyer,that a memorandum of understanding was entered into by the assessee with the buyer for recovery of the amount , that the buyer had issued undated cheques to the assessee as security for repayment of the deposit, that subsequently the buyer became untraceable, that the amount of custom deposit could not be recovered and had to be written off, that the security deposit was paid in the ordinary course of business, that the amount had not been recovered till filing of the appeal. After considering the submission of the assessee and the assessment order the FAA held that the claim made u/s.36

(vii)by the assessee was not allowable, that the assessee had not offered custom deposit as income in any of the previous years, that the assessee had not produced any evidence to prove the efforts made by him, the amount in question was not incurred wholly and exclusively for the business of the assessee.Finally,confirming the order of the AO,the FAA dismissed the appeal of the assessee .

4.Before us,the Authorised Representative(AR) referred to the additional evidence and requested that the matter may be restored to the file of AO for fresh adjudication.Departmental Representa- tive(DR)stated that Department had no objection if matter was sent back to the AO.

5.We have heard the rival submissions and perused the material available on record.In the earlier part of our order,we have admitted the additional evidence filed by the assessee.We are of the opinion,that in the interest of justice we are restoring the matter to the file of AO for fresh adjudication. He is directed to afford a reasonable opportunity of hearing to the assessee and pass a speaking order after considering the additional evidence. Effective ground of appeal filed by the assessee is decided in his favour,in part.

As a result,appeal filed by the assessee stands partly allowed.

फलतः नधा रती वारा दा खल क गई अपील अंशतःमंजरू क जाती है . Order pronounced in the open court on 3rd,June,2015. आदे श क घोषणा खल ु े यायालय म दनांक 3 जून ,2015 को क गई ।

Sd/- Sd/- (आई पी बंसल/I P Bansal) (राजे / RAJENDRA) या यक सद य / JUDICIAL MEMBER लेखा सद य / ACCOUNTANT MEMBER मुंबई/Mumbai, दनांक/Date: 03.06.2015 व. न.स. Jv.Sr.PS. 2 ITA/3462/Mum/2012-AY-2008-09,AS.

आदे श क त ल प अ े षत/Copy of the Order forwarded to : 1.Appellant /अपीलाथ 2. Respondent / यथ

3.The concerned CIT(A)/संब ध अपील य आयकर आयु त, 4.The concerned CIT /संब ध आयकर आयु त

5.DR "A" Bench, ITAT, Mumbai / वभागीय त न ध, ए खंडपीठ,आ.अ. याया.मुंबई

6.Guard File/गाड फाईल स या पत त //True Copy// आदे शानस ु ार/ BY ORDER, उप/सहायक पंजीकार Dy./Asst. Registrar आयकर अपील य अ धकरण, मुंबई /ITAT, Mumbai.

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