VIJAY S. POOJARI, MUMBAI V. ITO 22(2)(4), NAVI MUMBAI

ITA 2427/MUM/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84313 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 01-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAWAN KU MAR BEERLA
• Assessee Lawyers: SUBODH RATNAPARKHI
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, , , , , ,, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F, MUMBAI , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI SANJAY ARORA, ACCOUNTANT MEMBER ITA NO.2427/MUM/2013 (AY: 2007-08) SHRI VIJAY S. POOJARI PROP. SRINIVAS CLEARING & SHIPPING AGENCY, CHANDRA HOUSE, 3 RD FLR., PERIN NARIMAN STREET, FORT MUMBAI-400 001. ! ! ! ! / VS. ITO-22(2)(4) TOWER NO.6, VASHI RAILWAY STATION COMPLEX VASHI NAVI MUMBAI-400 707. ( #$ / // / APPELLANT) ( %&#$ / RESPONDENT) P.A. NO.AFIPP 9807 M #$ ' ( ' ( ' ( ' ( /APPELLANT BY : SHRI SUBODH RATNAPARKHI %&#$ ' ( ' ( ' ( ' ( /RESPONDENT BY : SHRI PAWAN KUMAR BEERLA ! ' )* / // / DATE OF HEARING : 01/12/2014 +,- ' )* / DATE OF PRONOUNCEMENT : 02 /12 /2014 . . . . / / / / O R D E R PER JOGINDER SINGH (JM) : THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DAT ED 28/12/2012 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI, UPHOLDING LEVYING PENALTY U/S 271B OF THE INCOME-TA X ACT,1961 ( HEREINAFTER THE ACT ) AMOUNTING TO RS. 1 LAKH WITHOUT APPRECIATING REASONABLE CAUSE WHICH EXISTED IN NOT GETTING THE ACCOUNTS AUDITED AS PROVIDED U/S 44AB OF THE ACT. ITA NO.2427/MUM/2013 SHRI VIJAY S. POOJARI LTD. 2 2. DURING HEARING THE LD. COUNSEL FOR THE ASSESSEE, SHRI SUBODH RATNAPARKHI ADVANCED HIS ARGUMENTS WHICH ARE IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT W HILE UPHOLDING THE PENALTY THE LD. COMMISSIONER OF INCOME TAX (APP EALS) DID NOT APPRECIATE THAT THE ASSESSEE BEING A FORWARDING AGE NT, THE AMOUNTS RECEIVED AS REIMBURSEMENT OF EXPENSES, CANN OT PARTAKE THE CHARACTER OF SALES, TURNOVER OR GROSS RECEIPTS, THEREFORE, THE PROVISIONS OF SECTION 44AB OF THE ACT ARE NOT ATTRA CTED. ALTERNATIVELY, IT WAS ARGUED THAT IN VIEW OF THE PR OVISIONS OF SECTION 273B AND BY TAKING RECOURSE OF REASONABLE C AUSE WHICH EXISTED IN NOT GETTING THE ACCOUNT AUDITED AS PROVI DED U/S 44AB, THE PENALTY U/S 271B IS EVEN NOT IMPOSABLE. 2.1. ON THE OTHER HAND, THE LD. DR SHRI PAWAN KUM AR BEERLA DEFENDED THE IMPOSITION OF PENALTY BY CONTEN DING THAT THE TOTAL TURNOVER OF THE ASSESSEE EXCEEDED THE PRESCRI BED LIMIT AS PROVIDED UNDER THE ACT, THEREFORE, PENALTY WAS RIGH TLY IMPOSED. IT WAS ALSO PLEADED THAT THERE IS NO REASONABLE CAU SE AS HAS BEEN CANVASSED BY THE LD. COUNSEL. THE IMPOSITION OF PE NALTY BY THE ASSESSING OFFICER AND UPHOLDING THE SAME BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS DEFENDED. 2.2. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S SRINIVAS C LEARING AND SHIPPING AGENCY ENGAGED IN THE BUSINESS OF CLEARING AND FORWARDING AGENT ON BEHALF OF VARIOUS CLIENTS. THE ACTIVITIES OF THE ASSESSEE INCLUDE CLEARANCE OF GOODS AND ARTICLE S FROM PORT TRUST AUTHORITIES, PREPARATION OF DOCUMENTS RELATED TO CUSTOMS. ITA NO.2427/MUM/2013 SHRI VIJAY S. POOJARI LTD. 3 WHILE PERFORMING THESE ACTIVITIES, THE ASSESSEE CLA IMED TO HAVE INCURRED CERTAIN EXPENDITURE LIKE STEAMER FREIGHT, ACD CHARGES, TERMINAL HANDLING CHARGES AND INLAND HAULAGE CHARGE S, ETC ON BEHALF OF HIS CLIENTS WHICH ARE LATER REIMBURSED TO HIM BY SUCH CLIENTS. AS PER THE ASSESSEE, THE INCOME INCLUDES AGENCY CHARGES OF RS.35,25,576/-, STEAMER FREIGHT OF RS.3, 30,88.03/-, BROKERAGE OF RS.4,405.32/- AND TRANSPORTATION CHARG ES OF RS.60,532.26/-. THE CLAIM OF THE ASSESSEE IS THAT THE AGGREGATE OF THESE EXPENSES DOES NOT CROSS THE PRESCRIBED LIM IT OF RS.40 LAKHS. IT WAS ALSO CONTENDED THAT AS PER GUIDANCE NOTE NO.5.10 (VI), ISSUED BY ICAI, GROSS RECEIPTS DOES NOT INCLU DE REIMBURSEMENT OF EXPENDITURE. FURTHER, OUR ATTENTI ON WAS INVITED TO GUIDANCE NOTE NO.5.11 (VI) WITH RESPECT TO REIMBURSEMENT OF CUSTOMS DUTY AND OTHER CHARGES COL LECTED BY CLEARING AGENT 2.3. THE LD. ASSESSING OFFICER ASKED THE ASSESSEE T O RECONCILE AND EXPLAINED THE DIFFERENCE BETWEEN THE STATEMENT OF TOTAL INCOME AND THE FIGURES MENTIONED THE TDS CERTIFICAT E. THE ASSESSEE EXPLAINED THE SAME AS HAS BEEN DETAILED FR OM PAGES 2 TO 7 OF THE ASSESSMENT ORDER AS PER WHICH THE GROSS AMOUNT COMES TO RS.4,60,21,743/- ON WHICH THE ASSESSEE PAI D TDS AMOUNTING TO RS.18,81,599/- . THE ASSESSING OFFICER CALCULATED THE TOTAL INCOME OF RS.4,82,18,810/- AND AFTER ALLO WING THE DEDUCTION UNDER CHAPTER VI A THE TOTAL INCOME WAS C ALCULATED AT RS.4,81,08,810/- INCLUSIVE OF STGC. THE LD. ASSESS ING OFFICER ALSO IMPOSED PENALTY OF RS. 1 LAKH U/S 271B OF THE ACT ON THE GROUND THAT THE TOTAL TURNOVER OF THE ASSESSEE WAS ITA NO.2427/MUM/2013 SHRI VIJAY S. POOJARI LTD. 4 RS.4,98,78,202/- WHICH EXCEEDED THE LIMIT OF RS.40 LAKHS THUS THE ASSESSEE WAS LIABLE TO GET ITS ACCOUNT AUDITED AS PER THE PROVISIONS OF SECTION 44AB OF THE ACT. 2.4. ON APPEAL, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) SUSTAINED THE IMPOSITION OF PENALTY BY HO LDING THAT THE ASSESSEE WAS LIABLE TO GET ITS ACCOUNT AUDITED AND THE PLEA OF REASONABLE CAUSE TAKEN BEFORE HIM WAS ALSO NOT APPR ECIATED, THUS THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL . 2.5. BEFORE COMING TO ANY CONCLUSION, WE ARE EXPEC TED TO HAVE A GLANCE ON FACTS. THERE IS NO DISPUTE TO THE FACT THAT THE ASSESSEE WAS ACTING AS AN AGENT FACILITATING THE CO NTRACT BETWEEN THE PARTIES AND THE ASSESSEE WAS ONLY ENTITLED FOR COMMISSION FOR THE SERVICES RENDERED TO ITS CLIENTS AS CARRYING AN D FORWARDING AGENT REFLECTING THE RECEIPTS OF SUCH COMMISSION A GENCY CHARGES. THE BREAKUP OF RECEIPTS IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE IS SUMMARIZED AS UNDER:- TOTAL RECEIPTS RS.4,98,78,202/ - LESS : ON ACCOUNT OF REIMBURSEMENT FROM CUSTOMERS OF SEA FREIGHT, DOCUMENTATION, INSURANCE, TRANSPORT CHARGES ETC. RS.4,60,21,743/ - COMMISSION FROM CUSTOMERS/STEAMER FREIGHT PARTIES RS. 38,56,459/ - OTHER INCOME BROKERAGE RS. 4,405.32 TRANSPORTATION RS.60,532.26 RS. 64,93 7/ - TOTAL TURNOVER OF THE APPELLANT AS PER PROFIT & LOSS ACCOUNT RS.39,21,396/ - 2.6. IF THE AFORESAID TABLE IS ANALYZED ONE CLEAR FACT IS EMERGING THAT THE ASSESSEE EARNED COMMISSION OF RS.38,56,459/- AND OTHER INCOME FROM BROKERAGE AND ITA NO.2427/MUM/2013 SHRI VIJAY S. POOJARI LTD. 5 TRANSPORTATION IF INCLUDED (RS. 64,937/-) THE TOTAL TURNOVER COMES TO RS.39,21,396/-. SO FAR AS, SHOWING THE TO TAL RECEIPT OF RS.4,98,78,202/- IS CONCERNED THE AMOUNT OF RS.4,60 ,21,743/- IS ON ACCOUNT OF REIMBURSEMENT OF CUSTOMERS OF SEA FREIGHT, DOCUMENTATION, INSURANCE AND TRANSPORT CHARGES ETC. THUS, AGAIN THE COMMISSION COMES TO RS.38,56,459/- AS WE HAVE DISCUSSED EARLIER. EVEN OTHERWISE, AS PER PARA 5.1 5 OF THE GUIDANCE NOTE ON TAX AUDIT, ISSUED BY ICAI, THE AMO UNTS COLLECTED AS REIMBURSEMENT OF CUSTOMS DUTY AND OTHE R CHARGES, COLLECTED BY THE CLEARING AGENT DO NOT FORM PART OF TURNOVER/GROSS RECEIPTS FOR THE PURPOSES OF SECTION 44AB OF THE AC T. OUR VIEW FIND SUPPORTS FROM THE RATIO LAID DOWN FROM THE DEC ISION IN 248 ITR 256 (BOM), WHEREIN, THE ASSESSEE ACTED AS AN A GENT BETWEEN THE PRINCIPLE AND MEDIA AND EARNED COMMISSI ON ON THE TRANSACTIONS. THE ASSESSING OFFICER LEVIED PENALTY FOR FAILURE TO GET ITS ACCOUNT AUDITED. THE HONBLE JURISDICTIONA L HIGH COURT HELD THAT SINCE THE PENALTY WAS DELETED BY THE TRIB UNAL ON THE FINDING THAT THE ASSESSEE ONLY ACTED AS AGENT FOR C OMMISSION, THEREFORE, PENALTY WAS JUSTIFIABLY DELETED. RELI ANCE CAN BE PLACED UPON CIRCULAR NO. 452 DATED 17/03/1986 FROM CBDT. WE FURTHER NOTE THAT IN THE IMPUGNED ORDER THE LD. COMMISSIONER OF INCOME TAX (APPEALS) CONSIDERED THE STEAMER FREI GHT CHARGES OF RS.2,49,952/- TWICE RESULTING INTO EXCEEDING THE FI GURES FROM PRESCRIBED MONETARY LIMIT OF RS.40 LAKHS. IT IS N OTED THAT THE STEAMER FREIGHT CHARGES ARE RS.3,30,883/- AND AN AR ITHMETIC ERROR OCCURRED WHEN IT WAS CLUBBED WITH THE FIGURE OF RS. 2,49,952/-, RESULTING INTO DOUBLE ADDITION ON THE S AME COUNT. SINCE THE ASSESSEE EARNED TOTAL INCOME FROM THE CO MMISSION AS ITA NO.2427/MUM/2013 SHRI VIJAY S. POOJARI LTD. 6 A AGENT TO THE TUNE OF RS.39,21,396/- (INCLUSIVE OF COMMISSION OF RS. 38,56,459/-, BROKERAGE AND TRANSPORTATION I.E. RS.4,405 +60,532 RESPECTIVELY), THUS, SECTION 44AB OF THE AC T IS NOT APPLICABLE TO THE FACTS OF THE PRESENT APPEAL. IDE NTICAL RATIO WAS LAID DOWN IN ABHAY KUMAR & COM. VS UOI 164 ITR 148 (RAJ.). 2.7. IF THIS ISSUE IS ANALYZED IN THE PERSPECTIVE OF REASONABLE CAUSE STILL IT CAN BE SAID THAT THE AS SESSEE, UNDER THE FACTS AVAILABLE ON RECORD WAS UNDER A REASONAB LE BELIEF THAT SINCE IN THE CASE OF A COMMISSION AGENT THE ASSESSE E HAS RECEIVED ONLY COMMISSION CHARGES, CONSEQUENTLY, OTH ER REIMBURSABLE EXPENSES ARE NOT TO BE INCLUDABLE AS I NCOME OF THE ASSESSEE THUS FROM THIS ANGLE ALSO THE ASSESSEE WAS UNDER A BONA-FIDE BELIEF THAT HE IS NOT TO GET HIS ACCOUNT AUDITED S INCE THE INCOME WAS BELOW PRESCRIBED MONETARY LIMIT. TH US, THERE WAS A REASONABLE CAUSE IN NOT GETTING THE ACCOUNTS AUDITED, SO FROM THIS ANGLE ALSO THE PENALTY IS NOT IMPOSABLE. IN VIEW OF THESE FACTS, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSI ON OF THE HEARING ON 01 ST DAY OF DECEMBER, 2014 . . ' +,- /!0 01.12.2014 , ' 6 SD/- SD/- (SANJAY ARORA) (JOGINDER SINGH) / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; /! DATED : 02 ND DECEMBER, 2014. F{X~{T? P.S/. !.. ITA NO.2427/MUM/2013 SHRI VIJAY S. POOJARI LTD. 7 . ' %)7 87-) . ' %)7 87-) . ' %)7 87-) . ' %)7 87-)/ COPY OF THE ORDER FORWARDED TO : 1. #$ / THE APPELLANT 2. %&#$ / THE RESPONDENT. 3. 9 ( ) / THE CIT, MUMBAI. 4. 9 / CIT(A)- MUMBAI 5. 7<6 %)! , , / DR, ITAT, MUMBAI 6. 6= > / GUARD FILE. .! .! .! .! / BY ORDER, &7) %) //TRUE COPY// ? ?? ?/ // /@ A @ A @ A @ A (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI