ITO 19(2)1, MUMBAI V. EAST WEST CORPORATION, MUMBAI

ITA 1878/MUM/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79282 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: J
• Next Hearing Date: 12-05-2014
• Assessment Year: 1996-1997
• Appeal Filed On: 07-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS NEERAJA PRADHAN
• Keywords: Business expenditure; Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI SANJAY GARG , JUDICIAL MEMBER ./I.T.A. NO. 1878/M/2011 ( AY: 1996 - 1997 ) ITO - 19(2)1, R.NO.312, 3 RD FLOOR, PIRAMAL CHAMBERS, LALBAUG, PAREL, MUMBAI - 400012. / VS. M/S. EAST WEST CORPORATION, 159, CST ROAD, KALINA, SANTACRUZ (E), MUMBAI - 98. ./ PAN : AAAFE1150F ( / APPELLANT) .. ( / RESPONDENT ) / A PPELLANT BY : MRS. NEERAJA PRADHAN, DR / RESPONDENT BY : MS. VASANTI PATEL / DATE OF HEARING :30 .6.2014 / DATE OF PRONOUNCEMENT :30 .6.2014 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 7.3.2011 IS AGAINST THE ORDER OF THE CIT (A) - 30, MUMBAI DATED 1.12.2010 FOR THE ASSESSMENT YEAR 1996 - 97. 2. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING EFFECTIVE GROUND WHICH READ S AS UNDER: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) HAS ERRED IN DELETING PENALTY OF RS. 42,97,360/ - LEVIED U/S 271(1)(C) OF THE ACT BY THE AO, JUST BECAUSE OF THE QUASHING THE ORDER U/S 143(3) R.W.S. 254 OF THE ACT BY THE LD CIT ( A) IGNORING THE FACT THAT THE ORDER OF THE CIT (A) FOR DELETING THE QUANTUM ADDITION HAS BEEN CHALLENGED BEFORE THE ITAT. 3. AT THE OUTSET, MS. VASANTI PATEL, LD COUNSEL FOR THE ASSESSEE FILED A COPY OF THE ORDER OF THE TRIBUNAL IN ASSESSEES OWN CASE ON THE QUANTUM APPEAL FOR THE AY 1996 - 97 VIDE ITA NO.5555/MUM/2009 AND MENTIONED THAT THE TRIBUNAL HAS DELETED THE QUANTUM ADDITI ON IN THE SAID APPEAL (SUPRA) AND THEREFORE, THE PENALTIES ARE NOT SUSTAINABLE. IN THIS REGARD, BRINGING OUR ATTENTION TO THE ABOVE MENTIONED GROUND OF THE A PPEAL, LD COUNSEL MENTIONED THAT THE PENALTY RELATES TO THE DISALLOWANCE ON ACCOUNT OF DISCOUNTING / FINANCING CHARGES OF RS.53,71,700/ - AND 2 THE ASSESSEE GOT RELIEF IN THE TRIBUNAL ON QUANTUM ADDITION. IN ORDER TO SUBSTANTIATE THE SAME, LD COUNSEL BROUGHT OUR ATTENTION TO THE PARA 4 & 5 OF THE SAID ORDER OF THE TRIBUNAL DATED 24.7.2013 AND READ OUT TH E RELEVANT CONTENTS WHICH READ AS UNDER: 4. FROM THE BODY OF THE ASSESSMENT ORDER IT CAN BE SEEN THAT THE ASSESSING OFFICER SIMPLY REPEATED THE ASSESSMENT AND FIRST APPELLATE AUTHORITYS ORDER WITHOUT DISCUSSING ANYTHING NEW ABOUT THE MATTER ON WHICH THE TRIBUNAL GAVE DIRECTION. HE SIMPLY NOTICED THAT THE ASSESSEE DID NOT PRODUCE ANY ADDITIONAL EVIDENCE TO CO - RELATE THE FINANCING CHARGES WITH THE BUSINESS EXPENDITURE. AS AGAINST THAT, THE LEARNED AR INVITED OUR ATTENTION TOWARDS VARIOUS DETAILS FURNISHED B EFORE THE ASSESSING OFFICER DURING THE COURSE OF SUCH FRESH PROCEEDINGS. FIRST LETTER OF THE ASSESSEE IN THE FRESH PROCEEDINGS IS DATED 05.09.2006 BY WHICH IT FURNISHED FUND FLOW STATEMENT, BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR IN QUESTION AND FOR THE EARLIER YEAR, DETAILS OF DISCOUNT CHARGES PAID, STATEMENT OF ACCOUNT, PARTIES IN SUPPORT OF RECEIPT / PAYMENT OF DISCOUNTING CHARGES, COPIES OF ACCOUNT OF PARTIES TRACING THE ORIGINAL FUNDS, USER OF FUNDS AND REPAYMENT OF CHARGES WITH DISCOUNT ING CHARGES ETC. ANOTHER LETTER WAS FILED BEFORE THE ASSESSING OFFICER ON 24.11.2006 PRODUCING COMPLETE BOOKS OF ACCOUNT, DETAILS OF FINANCE CHARGES PAID WITH BIFURCATION OF PARTIES AND RATE OF INTEREST AND A COPY OF ASSESSMENT ORDER PASSED BY THE A.O. FOR THE PRECEDING YEAR IN WHICH SIMILAR DEDUCTION WAS ALLOWED. THE PRESENT ASSESSMENT ORDER WAS PASSED BY THE A.O. ON 18.12.2006 AFTER FILING OF THE ABOVE REFERRED DOCUMENTS BY THE ASSESSEE. IT IS SURPRISING THAT THE ASSESSING OFFICER DID NOT MAKE A WHISPER I N THE ASSESSMENT ORDER OF SUCH DETAILS HAVING BEEN FILED BY THE ASSESSEE. WHAT TO TALK OF ADVERSELY COMMENTING, THE A.O. EVEN DID NOT BOTHER TO INCORPORATE OR DISCUSS SUCH FACTS IN THE ASSESSMENT ORDER. THIS FACT HAS BEEN ELABORATELY CONSIDERED BY THE LEAR NED CIT(A), THE DISCUSSION ON WHICH HAS BEEN MADE IN PARAS 1.10 TO 1.14 OF THE IMPUGNED ORDER. ON THE APPRECIATION OF THE ENTIRE MATERIAL / EVIDENCE PLACED BY THE ASSESSEE BEFORE THE A.O. IN THE FRESH ROUND OF PROCEEDINGS, THE LEARNED CIT(A) HAS RECORDED A CATEGORICAL FINDING THAT THESE EXPENSES WERE INCURRED DURING THE COURSE OF BUSINESS. APART FROM RELYING ON THE ASSESSMENT ORDER, THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT THE FINDINGS GIVEN BY THE LEARNED CIT(A) IN SUPPORT OF THE GRANT OF DEDUCTION. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER IN DELETING THE SAID ADDITION. 5. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS AND CIRCUMSTANCES OF OTHER FOUR APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF DELTA INTERNATIONAL, DISCUSSED ABOVE . FOLLOWING THE VIEW TAKEN HEREINABOVE, WE UPHOLD THE IMPUGNED ORDERS AND CONFIRM THE DELETION OF ADDITION IN ALL THESE CASES . 4. THUS, THE ADDITIONS MADE ON ACCOUNT OF DISCOUNTING / FINANCING CHARGES WERE FOUND DELETED BY THE TRIBUNAL IN QUANTUM APPEAL VIDE ITS ORDER DATED 24.7.2013. THEREFORE, CONSIDERING THE SAME THE CONCEALMENT PENALTY LEVIED U/S 271(1)(C) OF THE ACT IS NOT SUSTAINABLE. ACCORDINGLY, THE PENALTIES ARE DELETED AND THE GROUNDS RAISED BY THE REVENUE ARE D ISMISSED . 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH JUNE, 2014. SD / - S D / - (SANJAY GARG ) (D. KARUNAKARA RAO ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; 30/06/2014 3 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI