C RAMON & CO, MUMBAI V. DCIT CIR 15(1), MUMBAI

ITA 196/MUM/2012

• Counselvise Citation: 19619914 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 23-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 09-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T ROUMUAN PAITE
• Assessee Lawyers: J V CHHABRIA
• Keywords: Depreciation; Additional evidence; Wrong claim
• Section: 234B; 37(1)

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , / !' , # $ % BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 M/S.RAMON & CO. 803, SHARDA CHAMBERS, NEW MARINE LINES, MUMBAI 400020 / VS. THE DCIT, CIR. 15(1), MUMBAI. ( # ./ )* ./ PAN/GIR NO. : AAEFC 4508M ( (+ / APPELLANT ) .. ( ,-(+ / RESPONDENT ) APPELLANT BY SHRI J.V.CHHABRIA RESPONDENT BY : SHRI T.ROUMUAN PAITE . /# / DATE OF HEARING : 23/09//2013 01' . /# / DATE OF PRONOUNCEMENT : 23/09/2013 2 / O R D E R PER I.P.BANSAL, JM: THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DIRECTED AGAINST THE ORDER PASSED BY LD. CIT(A) -26, MUMBAI DATED 12/10/2011 F OR ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEAL READ AS UNDER: 1. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LE ARNED COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF COMMISSION PAYMENT OF RS.16,83,600/- TO M/S. NARAYAN POLYURETHANE INDUSTR IES. THE APPELLANT SUBMIT THAT PAYMENT OF COMMISSION IS GENUINE AND SAME MAY BE ALLOWED AS DEDUCTION U/S 37(1) OF INCOME TAX ACT, 1961. . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 2 2. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEA RNED COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN STATING THAT THE APPELLANT H AS NOT MADE APPLICATION U/S. 46A FOR ADMISSION OF FRESH EVIDENCES. THE LEARNED C OMMR. OF INCOME TAX (APPEALS) HAS DEALT WITH THE CORRESPONDENCE FILED B EFORE HIM DURING THE APPEAL PROCEEDINGS WHICH WERE NOT PRODUCED BEFORE THE LEAR NED ASSESSING OFFICER. THE APPELLANT PRAYS THAT THE OBSERVATION OF THE LEARNED COMMR. OF INCOME TAX (APPEALS) IS NOT JUSTIFIED ON THE FACTS OF THE CASE . 3. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEA RNED COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN CONCLUDING THAT THE COMMISSI ON PAYMENT IS BOGUS AND IS CLAIMED WITH THE INTENTION TO REDUCE THE TAX LIABIL ITY. 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE APP ELLANT PRAYS THAT THE COMMISSION PAYMENT OF RS. 16,83,600/- MAY BE ALLOWE D AS DEDUCTION. 5. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE LEA RNED COMMR. OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF THE EXPENDITURE INCURRED ON THE INSURANCE OF THE CAR AND DEPRECIATION AMOUNT ING TO RS.1,73,728/-. THE APPELLANT PRAYS THAT THEY ARE ENTITLED TO DEDUCTION OF THE SAME U/S 37(1) OF INCOME TAX ACT, 1961. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B AT RS.2,75,463/-. THE APP ELLANT DENIES THE LIABILITY / OF PAYMENT OF INTEREST U/S 234B. ON THE FACTS & CIRCUM STANCES OF THE CASE THE APPELLANT SUBMIT THAT LEVY OF INTEREST U/S 234B AT RS.2,75,463/- IS NOT JUSTIFIED AND BE DELETED. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D THE GROUNDS OF APPEAL WHICH ARE WITHOUT PREJUDICE TO ONE OTHER. 2. GROUND NO.1 TO 4 RELATE TO ISSUE OF DISALLOWANCE OF A SUM OF RS.16,83,600/- CLAIMED AS COMMISSION PAID BY THE AS SESSEE TO M/S. NARAYAN POLYURETHANE INDUSTRIES. GROUND NO.5 RELATES TO D ISALLOWANCE MADE IN RESPECT OF EXPENDITURE RELATING TO CAR, WHICH INCLUDE INSU RANCE AND DEPRECIATION. 3. AT THE TIME OF HEARING LD. AR DID NOT PRESS GRO UND NO.5, HENCE, THE SAME IS DISMISSED AS NOT PRESSED. GROUND NO.6 RE LATES TO LEVY OF INTEREST UNDER SECTION 234B OF THE INCOME TAX ACT, 1961(THE ACT). IT WAS SUBMITTED BY LD. AR THAT THE SAME IS CONSEQUENTIAL. ACCORDINGLY , AO IS DIRECTED TO RECOMPUTE THE INTEREST ON THE INCOME WHICH IS DETER MINED AFTER GIVING EFFECT TO THIS ORDER. . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 3 4. APROPOS, GROUND NO.1 TO 4, FACTS ARE THAT AS PER CLAIM OF THE ASSESSEE THIS AMOUNT IS PAID AS CONSULTANCY FEE IN CONSIDERA TION OF MUTUAL BENEFIT OF THE UNDERTAKING TOWARDS THE SERVICES PROVIDED ABOUT THE WORK/ASSISTANCE TO INTRODUCE FOR VARIOUS PROJECTS RELATING TO ONGC. THE ASSESSEE WAS REQUIRED TO EXPLAIN THAT HOW THE SAID AMOUNT IS ALLOWABLE. IT WAS SUBMITTED THAT THE SAID PARTY HAD AGREED TO ASSIST THE ASSESSEE BY PROVIDIN G NECESSARY GUIDANCE, LIAISONING AND ASSISTANCE FOR IDENTIFYING VARIOUS P ROJECTS UNDER PLANNING STAGE AND ARRANGE PRE-QUALIFICATION AND PROCURE ENQUIRIES ETC. FOR VARIOUS PROJECTS OF ONGC AND OTHER POTENTIAL CUSTOMERS SITUATED AT VARI OUS LOCATIONS. IT WAS SUBMITTED THAT ONCE ASSESSEE DECIDED TO PROCEED AHE AD ON ANY PARTICULAR ENQUIRY THE CONSULTANT BY HIS EXPERTISE COMMENCE P REPARATION OF OFFER. THE AO OBSERVED THAT SUCH REPLY OF THE ASSESSEE IN THE SHAPE OF PROOF IS NOT ONLY A SELF STYLED DECLARATION AND ASSESSEE DID NOT FILE ANY EVIDENCE TO PROVE THE WORK DONE BY THE SAID COMPANY. THEREFORE, THE SAID AMOU NT IS NOT ALLOWABLE AND IS A BOGUS CLAIM DESPITE THE FACT THAT THE SAID AMOUNT IS ALSO DISALLOWABLE UNDER SECTION 40(A)(IA) OF THE ACT FOR NON DEDUCTION OF T AX. IT IS IN THIS MANNER THE DISALLOWANCE WAS MADE BY THE AO. THE DISALLOWANCE WAS AGITATED IN AN APPEAL FIELD BEFORE LD. CIT(A) ON THE GROUND THAT THE NECE SSARY PROOF AND EVIDENCE FOR PAYMENT OF COMMISSION WAS PRODUCED BEFORE THE AO. THE DISALLOWANCE WAS MADE BY THE AO FOR A SUM OF RS. 19,65,670/-. BEFO RE LD. CIT(A) IT WAS CLAIMED THAT ACTUAL PAYMENT OF COMMISSION MADE BY THE ASSESSEE TO THE SAID PARTY IS A SUM OF RS.16,83,600/- IN PLACE OF A SUM DISALLOWED BY THE AO AT RS.19,65,670/-. IT WAS SUBMITTED THAT THE SAID PAR TY HAD INTRODUCED M/S. TOYO ENGINEERING INDIA LTD. TO THE ASSESSEE FROM WH OM THE ASSESSEE IS RECEIVING COMMISSION INCOME IN THE FORM OF CONSULTA NCY FEE OF RS.1.50 CRORES AS PER AGREEMENT DATED 11/7/2005. IT WAS SUBMITTED THAT IN IMMEDIATE PRECEDING YEAR SUCH COMMISSION WAS PAID BY THE ASSE SSEE TO THE SAID PARTY. THUS, IT WAS SUBMITTED THAT ASSESSEE HAS EARNED I TS CONSULTANCY FEE FROM M/S. TOYO ENGINEERING INDIA LTD., WHO WAS INTRODUCE D BY M/S. NARAYAN POLYURETHANE INDUSTRIES. THE LATER WAS COMPENSATED BY THE PAYMENT OF . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 4 COMMISSION. SO AS IT RELATES TO DEDUCTION OF TAX, IT WAS SUBMITTED THAT THE TDS WAS PAID BEFORE DUE DATE OF FILING OF RETURN AND TH E AMENDMENT INTRODUCED BY FINANCE ACT 2010 HAS BEEN HELD TO BE RETROSPECTIVE, THEREFORE, DISALLOWANCE COULD NOT BE MADE ON THE SAID AMOUNT. 5. LD. CIT(A) HAS CONSIDERED ALL THESE SUBMISSION S OF THE ASSESSEE. LD. CIT(A) OBSERVED THAT THOUGH THE SAID AMOUNT COULD N OT BE DISALLOWED UNDER SECTION 40(A)(IA) IN VIEW OF THE DECISION OF THE TR IBUNAL IN THE CASE OF M/S. GOLDEN STABLE LIFE STYLE BUT THE MAIN REASON FOR DI SALLOWANCE BY THE AO IS THAT IT IS A BOGUS CLAIM. LD. CIT(A) HAS AGREED WITH TH E FINDINGS RECORDED BY AO THAT IT IS A BOGUS CLAIM AS THERE IS NO IOTA BY ANY EVIDENCE AT ALL FROM WHERE A CONCLUSION CAN BE DRAWN THAT ANY SERVICE WAS RENDER ED BY THE SAID CONCERNED TO THE ASSESSEE. HE SUBMITTED THAT NEITHER DURING THE COURSE OF ASSESSMENT NOR DURING THE COURSE OF APPELLATE PROCEEDINGS ASSE SSEE WAS ABLE TO SUBMIT ANY DETAILS OF ANY ACTUAL SERVICES RENDERED BY THE SAID CONCERN TO THE ASSESSEE WHICH JUSTIFY THE PAYMENT OF HUGE COMMISSION. LD. CIT(A) FURTHER OBSERVED THAT THE PAYMENT OF COMMISSION IS CLAIMED ONLY ON T HE GROUND THAT THE SAID CONCERN HAD INTRODUCED THE ASSESSEE TO M/S. TOYO EN GINEERING INDIA LTD. FROM WHOM ASSESSEE IS RECEIVING COMMISSION. HE SUBMITTE D THAT EVEN IF FOR THE SAKE OF DISCUSSION IT MAY BE ACCEPTED AS CORRECT THEN ALSO ASSESSEE HAS FAILED TO GIVE ANY LOGICAL REASON FOR MAKING PAYMENT OF HUGE SUM OF RS.16,83,600/- AND WHAT WAS THE BASIS OF CALCULATION OF COMMISSION. T HE AGREEMENT DATED 11/7/2005 WAS BETWEEN THE ASSESSEE AND M/S. TOYO EN GINEERING INDIA LTD. AND IN THE SAID AGREEMENT ALSO THERE IS NO MENTION OF ANY ROLE OF THE SAID PARTY. THE ASSESSEE ALSO DID NOT ENTER INTO ANY AGREEMENT WITH M/S. NARAYAN POLYURETHANE INDUSTRIES DURING THE COURSE OF APPEA L ASSESSEE HAD FILED SOME COPIES OF SOME CORRESPONDENCE BETWEEN ASSESSEE AND M/S. NARAYAN POLYURETHANE INDUSTRIES WHICH ARE IN THE MONTH OF D ECEMBER, 2004 WHICH IS MUCH PRIOR TO THE AGREEMENT OF THE ASSESSEE WITH M/ S. TOYO ENGINEERING INDIA LTD. AND THOSE CORRESPONDENCE DOES NOT PERTAINS TO THE YEAR UNDER . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 5 CONSIDERATION. THOSE EVIDENCES WERE ONLY A PIECE OF PAPER CREATED JUST TO SHOW SOME VAGUE CORRESPONDENCE WHICH MAY BE THE DOCUMEN T CREATED AS AN AFTER THOUGHT BECAUSE THESE DOCUMENTS WERE NEITHER PLACE D BEFORE THE AO NOR THE ASSESSEE HAS MADE ANY APPLICATION UNDER RULE 46A FO R ADMISSION OF THE FRESH EVIDENCE. ALL THESE FACTS AND CIRCUMSTANCES PROVE THAT ASSESSEE HAS CLAIMED THE SAID EXPENDITURE SIMPLY WITH AN INTENTION TO RE DUCE ITS TAX LIABILITY. IN ABSENCE OF ANY EVIDENCE FOR RENDERING SERVICES BY T HE SAID PARTY TO THE ASSESSEE AMOUNT OF RS.16,83,600/- IS NOT GENUINE PAYMENT WHO LLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT IS IN THIS MANNER LD. CIT(A) HAS CONFIRMED THE DISALLOWANCE. ASSESSEE AGGRIEVED, HENCE, HAS FIELD AFOREMENTIONED GROUNDS. 6. LD. AR AFTER NARRATING THE FACTS WHICH HAVE BEEN DISCUSSED IN DETAIL IN THE ABOVE PART OF THIS ORDER REITERATED THE SUBMISS IONS MADE BY THE ASSESSEE BEFORE LD. CIT(A) WHICH HAVE ALSO BEEN DESCRIBED I N THE ABOVE PART OF THIS ORDER. FOR THE SAKE OF BREVITY AS THE CONTENTIO NS RAISED BY LD. AR BEFORE US ARE THE SAME AS THOSE WERE RAISED BEFORE LD. CIT(A) , WE DO NOT REPRODUCE THOSE ARGUMENTS. APART FROM RELYING ON THOSE SUBMISSIONS WHICH WERE MADE BEFORE LD. CIT(A) LD. AR PLACED RELIANCE ON THE DECISION O F HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. PRINTER HOUSE PVT. LTD., 188 TA XAMAN 70 (DEL). HE SUBMITTED THAT TDS WAS DEDUCTED BY THE ASSESSEE. I N PREVIOUS YEAR NO SUCH DISALLOWANCE WAS MADE. THE EVIDENCE SUBMITTED BY T HE ASSESSEE IN THE SHAPE OF CONFIRMATION OF CORRESPONDENCE BETWEEN ASSESSEE AND THE SAID PARTY. HE ADMITTED THAT THERE IS NO AGREEMENT BETWEEN THE ASS ESSEE AND M/S. NARAYAN POLYURETHANE INDUSTRIES. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDER PASSED BY AO AND LD. CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. ADMITTEDLY THERE IS NO AGREEMENT BETWE EN THE ASSESSEE AND M/S. . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 6 NARAYAN POLYURETHANE INDUSTRIES FOR MAKING PAYMENT OF COMMISSION. ADMITTEDLY THERE IS NO EVIDENCE ON RECORD ACCORDIN G TO WHICH IT CAN BE SAID THAT ANY SERVICE WAS RENDERED BY THE SAID M/S. NAR AYAN POLYURETHANE INDUSTRIES TO THE ASSESSEE WITH REGARD TO WORK DONE BY THE ASSESSEE OUT OF WHICH ASSESSEE HAS EARNED ANY INCOME. THERE IS NO MENTION OF M/S. NARAYAN POLYURETHANE INDUSTRIES IN THE AGREEMENT BETWEEN AS SESSEE AND M/S. TOYO ENGINEERING INDIA PVT. LTD. FROM WHOM THE ASSESSEE IS RECEIVING COMMISSION.` THE ALLEGED CONFIRMATION COPY, COPY OF WHICH HAS BE EN FILED AT PAGE 36 OF THE PAPER BOOK, DOES NOT SPECIFY THAT THE PAYMENT MADE BY THE ASSESSEE WAS IN RESPECT OF ANY SPECIFIC SERVICES RENDERED BY THE SA ID PARTY TO THE ASSESSEE. IT IS ONLY A BALANCE CONFIRMATION WHICH HAS NO BEARING O N THE QUESTION OF ALLOWABILITY OR OTHERWISE OF THE SAID AMOUNT TO THE ASSESSEE. APART FROM THE SAID BALANCE CONFIRMATION THERE IS NO MATERIAL ON R ECORD WHICH CONVEY THAT THE AMOUNT PAID BY THE ASSESSEE WAS RELATING TO ANY SER VICES RENDERED BY THE SAID PARTY TO THE ASSESSEE. LD. CIT(A) HAS RIGHTLY OBSE RVED THAT THE CORRESPONDENCE SUBMITTED BY THE ASSESSEE WHICH IS ALSO FILED IN TH E PAPER BOOK BEFORE US AT PAGES 79 TO 82 RELATES TO FINANCIAL YEAR 2003-04 AN D DO NOT RELATE TO THE YEAR UNDER CONSIDERATION. IT HAS ALSO BEEN RIGHTLY OBSE RVED BY LD. CIT(A) THAT THESE CORRESPONDENCES WERE PRODUCED WITHOUT HAVING RESORT TO RULE 46A OF IT RULES 1962. WHEN THESE DOCUMENTS WERE NOT ADMITTED BY LD . CIT(A), THEY CANNOT BE ADMITTED AT THIS STAGE ALSO, PARTICULARLY IN VIEW O F THE FACT THAT THESE HAVE NOT BEEN PRODUCED AS ADDITIONAL EVIDENCE BEFORE US. MO REOVER, THESE DOCUMENTS ALSO DO NOT SUPPORT THE CASE OF THE ASSESSEE. IN V IEW OF THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AND CLEAR CUT FIN DING RECORDED BY AO AND LD. CIT(A) THAT THERE IS NO EVIDENCE ON RECORD REGA RDING ACTUAL RENDERING OF SERVICES BY SAID PARTY TO THE ASSESSEE, WE DECLINE TO INTERFERE IN THE DISALLOWANCE SUSTAINED BY LD. CIT(A). WE MAY MENTI ON HERE THAT THE CONTENTION OF THE ASSESSEE THAT IT WAS NOT DISALLOW ED IN PREVIOUS YEAR, HAS NO RELEVANCE ON THE ALLOWABILITY OR OTHERWISE OF THIS AMOUNT IN THE PRESENT YEAR AS NO EVIDENCE HAS BEEN PRODUCED BY THE ASSESSEE ON RE CORD TO SHOW THAT THE SAID . / ITA NO. 196/MUM/2012 ' ' ' ' / ASSESSMENT YEAR 2007-08 7 CLAIM OF THE ASSESSEE WAS ACCEPTED BY WAY OF ORDER PASSED UNDER SECTION 143(3). THE DEDUCTION OF TAX FROM THE PAYMENT IS A LSO NOT RELEVANT FOR ALLOWABILITY OF THE CLAIM OF THE ASSESSEE AS FOR AL LOWABILITY OF COMMISSION, AS PER WELL ESTABLISHED LAW, IT IS NECESSARY FOR THE ASSESSEE TO PRODUCE EVIDENCE ON RECORD TO SHOW THAT SERVICES WERE ACTUALLY RENDE RED BY THE PARTY TO WHOM THE SAME HAS BEEN PAID. THERE IS NO EVIDENCE ON RE CORD EVEN TO SHOW THAT THE SAID PARTY HAD INTRODUCED THE ASSESSEE TO M/S. TOYO ENGINEERING INDIA LTD. FROM WHOM THE ASSESSEE IS RECEIVING COMMISSION. IN VIEW OF ALL THESE FACTS AND CIRCUMSTANCES, THE DISALLOWANCE SUSTAINED BY LD. CI T(A) IS CONFIRMED AND THESE GROUNDS OF THE ASSESSEE ARE DISMISSED. 9. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS D ISMISSED EXCEPT GROUND FOR LEVY OF INTEREST UNDER SECTION 234B WHICH HAS BEEN DIRECTED TO BE RECOMPUTED AS PER ASSESSED INCOME AFTER GIVING EFFECT TO THIS ORDER. ORDER PRONOUNCED IN THE OPEN COURT ON 23/09/2013 2 . 01' # 3 45 23 /09/2013 1 . 6 % SD/- SD/ - ( !' / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; 4 DATED 23 /09/2013 2 2 2 2 . .. . ,/78 ,/78 ,/78 ,/78 98'/ 98'/ 98'/ 98'/ / COPY OF THE ORDER FORWARDED TO : 1. (+ / THE APPELLANT 2. ,-(+ / THE RESPONDENT. 3. : ( ) / THE CIT(A)- 4. : / CIT 5. 8;6 ,/ , , / DR, ITAT, MUMBAI 6. 6< = / GUARD FILE. 2 2 2 2 / BY ORDER, -8/ ,/ //TRUE COPY// > >> > / ? ? ? ? ) ) ) ) (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI