SAMAR TECHNOLOGY, MUMBAI V. ITO 21(3)(2), MUMBAI

ITA 2268/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0945 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: BHUPENDRA SHAH LD
• Section: 143(3); 131

Judgement Text

ITA NO.2268//M/2014 SAMAR TECHNOLOGY ASSESSMENT YEAR-2006-07 IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.2268/MUM/2014 ( / ASSESSMENT YEAR: 2006-07) SAMAR TECHNOLOGY 12 COSMOS, A CO-OPERATIVE HSG. SOCIETY SHIVSHRUSHTI KURLA (E) MUMBAI 400 024 / VS. INCOME TAX OFFICER 21(3)(2) MUMBAI 400 020 ./ ./PAN/GIR NO. AARFS-7001-E ( /APPELLANT ) : ( !' / RESPONDENT ) / APPELLANT BY : SHRI BHUPENDRA SHAH, LD AR !' / RESPONDENT BY : SHRI NAVEEN GUPTA, LD. DR / DATE OF HEARING : 01/05/2017 / DATE OF PRONOUNCEMENT : 01/05/2017 ITA NO.2268//M/2014 SAMAR TECHNOLOGY ASSESSMENT YEAR-2006-07 2 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2006-07 ASSAILS THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-32 [CIT(A)], MUMBAI DATED 10/01/2014 QUA CONFIRMATION OF DISALLOWANCE OF RS.12,65,614/- OUT OF PROFESSIONAL FEES. IT IS NOTED THAT THE APPE AL HAS BEEN FILED WITH A DELAY OF 15 DAYS AND THE ASSESSE, VIDE HIS REQUEST LETTER DA TED 14/04/2014 ALONG WITH AFFIDAVIT OF THE PARTNER OF THE FIRM, REQUESTED FOR CONDONATION OF THE SAME WHEREIN DELAY HAS BEEN ATTRIBUTED TO CHANGE IN COUNSEL AND OTHER FACTORS BEYOND THE CONTROL OF THE ASSESSEE. NO SERIOUS OBJECTION HAS B EEN RAISED BY THE REVENUE AND IN THE INTEREST OF JUSTICE AND KEEPING IN MIND THE MINOR DELAY, WE CONDONE THE SAME AND PROCEEDS TO DECIDE THE APPEAL ON MERIT S. 2. FACTS LEADING TO THE DISPUTE ARE THAT THE ASS ESSE, BEING RESIDENT FIRM, WAS ASSESSED U/S 143(3) AT RS.19,78,330/- VIDE ASSESSIN G OFFICER [AO] ORDER DATED 03/11/2008 AFTER DISALLOWANCE OF PROFESSIONAL FEE OF RS.14,73,298/-. THE ASSESSE WAS ENGAGED IN THE BUSINESS OF TRADING OF COMPUTER SOFTWARE & HARDWARE AND CLAIMED AN EXPENDITURE OF RS.14,73,298/- AS PROFESSIONAL FEE WHICH WAS PAID TO NINE PERSONS FOR SUMS RANGING BET WEEN RS.17000/- TO RS.7,22,988/-. TO VERIFY THE GENUINENESS OF THE SAM E, SUMMONS U/S 131 OF THE ACT WERE SENT TO THREE PAYEES OUT OF WHICH TWO PERS ONS NAMELY AKSHAY SHAH & MARY SAJJI ATTENDED THE PROCEEDINGS AND RECORDED STATEMENT ON OATH WHEREAS THE THIRD PERSON NAMELY ASHOK SHAH NEVER TURNED UP TO CONFIRM THE TRANSACTION. THE TWO PAYEES DENIED HAVING RENDERED ANY SERVICES TO THE ASSESSEE WHICH LED THE LD. AO TO MAKE THE IMPUGNED ADDITIONS OF RS.14, 73,298/- CLAIMED AS PROFESSIONAL FEES . 3. THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUC CESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 10/01/2014 AND IN SUPPORT SUBMITTED FEW ITA NO.2268//M/2014 SAMAR TECHNOLOGY ASSESSMENT YEAR-2006-07 3 CONFIRMATIONS FROM PAYEES AND TDS CERTIFICATES, AGA INST WHICH A REMAND REPORT WAS CALLED FROM THE LD. AO. THE ASSESSEE WAS ALSO P ROVIDED WITH CROSS- EXAMINATION OF ONE OF THE PAYEE AS PER HIS REQUEST. AFTER PERUSING REMAND REPORT, ASSESSEES SUBMISSIONS, STATEMENTS MADE BY PAYEES AND OTHER MATERIAL, THE LD. CIT(A) FINALLY PROVIDED PART RELIEF TO ASSE SSEE BY RESTRICTING THE DISALLOWANCE TO RS.12,65,614/-. STILL AGGRIEVED, TH E ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. COUNSEL FOR ASSESSEE [AR], BHUPENDRA SHAH , INVITED OUR ATTENTION TO THE FACT THAT THE ASSESSEE WAS ENGAGED IN SOFTWARE DEVELOPMENT AND SINCE IT DID NOT HAVE ANY EMPLOYEE OF ITS OWN, IT ENGAGED OU TSIDE PROFESSIONAL TO CARRY OUT THE SAID WORK. FURTHER, THE ASSESSEE DEDUCTED T DS FROM THE IMPUGNED PAYMENT AS REQUIRED BY LAW AND MADE ALL THE PAYMENT S THROUGH BANKING CHANNELS AND THEREFORE, FULFILLED ITS PART OF OBLIG ATIONS AND HENCE, NOTHING MORE COULD BE ASKED FROM THE ASSESSEE TO SUBSTANTIATE HI S CLAIM. 5. PER C ONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE DREW OUR ATTEN TION TO THE FACT THAT THE VARIOUS PAYEES CATEGORICALLY DENIED H AVING RENDERED ANY SERVICES TO THE ASSESSEE WHICH IN ITSELF JUSTIFY THE IMPUGNED A DDITION NOTWITHSTANDING THE FACT THAT THE PAYMENTS WERE THROUGH BANKING CHANNELS AFT ER DEDUCTION OF TDS THEREFROM. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RELEVANT MATERIAL ON RECORD. A PERUSAL OF PROFIT & LOSS ACCOUNT PLACED IN THE PAPER BOOK REVEALS THAT THE ASSESSEE HAS ACHIEVED TURNOVER OF RS.73.04 LACS AND REFLECTED GROSS PROFIT & NET PROFIT OF RS.26.29 LACS & RS.5.05 LACS RESPEC TIVELY. HOWEVER, THE BIFURCATION OF SALES BETWEEN TRADING AND SERVICE AC TIVITY DOES NOT EMANATE FROM THE RECORD AND THE LD. AR ALSO COULD NOT PROVIDE TH E SAME PER QUERY FROM THE BENCH. THEREFORE, ON THE FACTS, IN THE INTEREST OF JUSTICE & KEEPING IN MIND THE QUANTUM OF SALES REVENUE, WE SEE NO HARM IN PROVIDI NG ANOTHER OPPORTUNITY TO ASSESSEE TO CONTEST HIS CLAIM BEFORE LD. AO BY PROV ING THE FACTUM OF RENDERING ITA NO.2268//M/2014 SAMAR TECHNOLOGY ASSESSMENT YEAR-2006-07 4 OF SERVICES BY THE RESPECTIVE PAYEES. THEREFORE, TH E MATTER IS RESTORED BACK TO THE LD. AO FOR FRESH APPRECIATION AND ADJUDICATION QUA PROFESSIONAL FEES PAID BY THE ASSESSEE. THE ASSESSEE IS DIRECTED TO SUBSTANTI ATE HIS CLAIM FORTHWITH BEFORE LD. AO FAILING WHICH AO SHALL BE AT LIBERTY TO DECI DE THE SAME AS PER LAW ON THE BASIS OF MATERIAL AVAILABLE ON RECORD. 7. THE ASSESSEE HAS ASSAILED LEVY OF INTEREST U/S 2 34 AND THE SAME BEING MANDATORY AND CONSEQUENTIAL IN NATURE, REQUIRE NO I NTERFERENCE ON OUR PART AND THEREFORE, TREATED AS DISMISSED. 8. IN NUTSHELL, THE ASSESSEES APPEAL STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST MAY, 2017. SD/- SD/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 01.05.2017 SR.PS:- THIRUMALESH / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. * ( ) / THE CIT(A) 4. * / CIT CONCERNED 5. !%- , - , / DR, ITAT, MUMBAI 6. ./ / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI