ACIT 25(2), MUMBAI V. KIRAN SEVENTILAL SHAH, MUMBAI

ITA 1500/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 75555 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 18-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 21-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P SINGH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI BEFORE SHRI D KARUNAKARA RAO, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.1500/MUM/2011: ASST.YEAR 2007-08 THE ACIT 25(2), MUMBAI VS. KIRAN SEVENTILAL SHAH A-301, DWARKA CHS, DAULAT NAGAR, JAIN MANDIR CROSS ROAD, BORIVALI (E), MUMBAI 400 066 PAN AACPS1986M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI O P SINGH RESPONDENT BY : NONE DATE OF HEARING : 18.02.2014 DATE OF PRONOUNCEM ENT :18.02.2014 O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE AG AINST THE ORDER OF THE CIT(A) DATED 21.12.2010 CONTESTING THE DELETION OF THE ADDITION OF RS.10,31,564/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF DISALLOWANCE OF EXPENSES CLAIMED BY THE ASSESSEE UN DER THE HEAD DALALI AND BROKERAGE. ITA NO.: 1500/MUM/2011 ASSESSMENT YEAR: 2007-08 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURE OF CLOTH, FA BRICS & EXPORT OF CLOTH IN THE NAMES OF PROP RIETARY CONCERNS, M/S. SAGAR & CO., M/S. PADMAVATI FABRICS AND M/S. SHALIBHADRA EXPORTS. DURING THE CO URSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD CLAIMED BROKERAGE OF RS.10,31,564/- IN THE P&L ACCOUNT OF M/S PADMAVA TI FABRICS. THE ASSESSING OFFICER REQUIRED THE ASSE SSEE TO PRODUCE PARTY- WISE DETAILS OF BROKERAGE ALONG WITH THE DETAILS OF TDS. THE ASSESSEE SUBMITTED THE DETAILS OF TDS IN RESPEC T OF EACH PARTY. HOWEVER, THE A.O. HELD THAT THE ASSESSEE DID NOT FI LE CONF IRMATION IN RESPECT OF ENTIRE BROKERAGE PAID FROM THE PARTIES A LONG WITH COPY OF RETURN OF INCOME, BANK STATEMENT REFLECTING THE PAY MENTS. THE ASSESSING OFFICER ACCEPTED THE FACT THAT THE ASSESSEE FILED C ONFIRMATION TO THE EXTENT OF RS. 2,65,413/-. FROM TH E TDS DETAILS, THE ASSESSING OFFICER NOTICED THAT THE PAYMENTS OF BROKERAGE WERE MADE ON THE LAST DAY OF THE PREVIOUS YEAR. THE ASSESSING OFFICER HELD THAT THER E WAS NO WRITTEN AGREEMENT AND THE ASSESSEE DID NOT FILE THE DETAILS OF SERVICES RENDERED BY THE BROKERS AND, THEREFORE, DISALLOWED THE CLAIM OF BRO KERAGE AMOUNT OF RS. 10,31,564/-. 2. IN APPEAL BEFORE THE LEARNED CIT(A), IT WAS SUBMITT ED THAT THE ASSESSEE PAID BROKERAGE FOR PURCHASE OF YARN AS WEL L AS SALE OF CLOTH AND THE BROKERAGE AMOUNT COULD BE COMPUTED ONLY AT THE END OF THE FINANCIAL YEAR CONSIDERING THE ORDERS CANVASSED BY THE BROKER DURING THE YEAR. FURTHER THAT THE BROKERAGE AMOUNT WAS PAID ON LY AFTER THE SALE PROCEEDS WERE REALIZED AND THAT THE ASSESSEE MADE D IRECT PAYMENT OF BROKERAGE TO B ROKERS AS WELL AS THE CUSTOMERS DEDUCTED THE BROKER AGE AMOUNT FROM THE ASSESSEE. THE BREAK- UP OF THE BROKERAGE PAID WAS ALSO ITA NO.: 1500/MUM/2011 ASSESSMENT YEAR: 2007-08 3 SUBMITTED. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE HAD ALREADY FILED THE NECESSARY DETAILS BEFORE THE ASSESSING OFFICER AND HE HAD MADE THE BROKERAGE PAYMENT ONLY BY ACCOUNT PAYEE CHEQUE. 3. THE LEARNED CIT(A) AFTER CONSIDERING THE FACTS AND CIRCUMSTANCE S OF THE CASE OBSERVED THAT THE ASSESSEE HAD PAID DI RECT BROKERAGE TO 17 PARTIES AMOUNTING TO RS. 4,38,805/- OUT OF WHICH CO NFI RMATIONS WERE FILED TO THE EXTENT OF RS.2,65,413/- . FURTHER THAT THE ASSESSEE HAD FILED A COPY OF TDS RETURN ALONG WITH LETTER DATED 05.11.2009 IN WHICH NAMES OF 14 PARTIES APPEARED. THE ASSESSEE DID NOT DEDUCT TAX O NLY IN RESPECT OF 3 PARTIES TO WHOM THE BROKERAGE AMOUNT WAS LESS THAN RS.5,000/- AND FURTHER THAT THE CONFIRMATIONS WERE FILED TO THE E XTENT OF RS. 2,65,413/- . HE FURTHER OBSERVED THAT WHEN THE ASSESSEE HAS FURN ISHED PAN NUMBERS OF THE PERSONS TO WHOM THE BROKERAGE WAS PAID AS PE R THE TDS RET URN, IT WAS FOR THE ASSESSING OFFICER TO PROVE THAT THE ASSESSEE DID NOT MAKE BROKERAGE PAYMENT. HE THEREFORE HELD THAT THE ACTIO N OF THE ASSESSING OFFICER WAS NOT JUSTIFIED IN ADDING THE DIRECT PAYMENT OF B ROKERAGE TO THE EXTENT OF RS.4,38,805/- EVEN THOU GH THE ASSESSEE HAD FILED CONFIRMATION TO THE EXTENT OF RS. 2,65,413/- AND MORE THAN 95% OF BROKERAGE PAYMENT WAS SUPPORTED BY TDS DETAILS INCLUDING PAN NUMBER O F DEDUCTEES. REGARDING THE BROKERAGE AMOUNT PAID THROUGH THE CUSTOMERS, HE OBSERVED THAT THE ENTRIES IN THE BOOKS OF ACCOUNTS SUPPORTED THE CASE OF THE ASSESSEE AND THAT THERE WAS NO NECESSITY FOR FILING CONFIRMA TION IN RESPECT OF SUCH BROKERAGE AMOUNT. HE WAS SATISFIED WITH THE DEMONSTRATION GIVEN BY THE ASSESSEE BY TAKING THE E XAMPLE RELATING TO CERTAIN CUSTOMERS AND ENTRIES MADE ACCORDINGLY. THE ASSESSING OFFICER WAS NOT JUSTIFIED IN REQUIRING THE ASSESSEE TO FURN ISH THE CONFIRMATION AS IT WAS IMPOSSIBLE TO OBTAIN CONFIRMATI ON FROM SO MANY PARTIES TO WHOM THE ITA NO.: 1500/MUM/2011 ASSESSMENT YEAR: 2007-08 4 PAYMENT WAS MADE BY THE CUSTOMERS OF THE ASSESSEE. HE THEREFORE, DELETED THE ENTIRE ADDITION OF RS. 10,31,564/-. 4. BEFORE US, THE LEARNE D DR HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER. HOWEVER, HE COULD NOT POINT OUT AS ANY SPECIFIC DEFECT IN THE FINDINGS OF THE CIT(A) GIVEN AF TER DUE APPRECIATION OF EVIDENCE ON THE FILE. WE HAVE ALSO GONE THROUGH THE DETAILED OR DER OF THE CIT(A) AND DO NOT FIND ANY INFIRMITY IN THE WELL REASONED ORDE R. 5. WE DO NOT FIND ANY MERIT IN THE APPEAL OF THE REVENUE AND THE SAME IS HEREBY DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY 2014 SD/- SD/- (D KARUNAKARA RAO) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 18 TH FEBRUARY, 2014 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. THE CIT (A) CONCERNED MUMBAI 5. THE DR, I - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI