M/S.POSEIDON SHIPPING AGENCY P. LTD, Mumbai V. PR.CIT-5, Mumbai

ITA 2446/MUM/2018

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5852 (ITAT-MUMBAI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 20-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H N SINGH
• Assessee Lawyers: AJAY R SINGH
• Keywords: Revision of order; TDS
• Section: 143(3); 142(1); 195; 201; 143(2); 263

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMB AI BEFORE SHRI G.S. PANNU, VICE PRESIDENT AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA NO. 2446/MUM/2018 (ASSESSMENT YEAR 2013-14 ) M/S POSEIDON SHIPPING AGENCY P. LTD. 610, KOHINOOR CITY MALL, OFF LBS MARG, KURLA(W), MUMBAI- 400070. PAN: AADCP7086R VS. PR. CIT-5 ROOM NO. 501, M.K. ROAD, AAYAKAR BHAWAN, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI AJAY R. SINGH (AR) RESPONDENT BY : SHRI H.N. SINGH (DR) DATE OF HEARING : 19.09.2018 DATE OF PRONOUNCEMEN T : 14.12.2018 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE UNDER SECTION 253 OF INCOME TAX ACT IS DIRECTED AGAINST THE ORDER OF LEARNED PR. COMMISSIO NER OF INCOME-TAX- 5, (FOR SHORT THE LD. PCIT), MUMBAI DATED 28 TH OF FEBRUARY 2018, PASSED UNDER SECTION 263 OF THE INCOME TAX ACT (ACT ) DATED 05.03.2016 FOR ASSESSMENT YEAR 2013-14.THE ASSESSEE HAS RAISED FOLLOWING GROUND OF APPEAL ; 1. THE LD PR.CIT ERRED IN PASSING THE REVISION ORDE R U/S 263 OF THE ACT HOLDING THE ASSESSMENT ORDER DT 5/3/2016 AS ERRONEO US AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE ON THE ALLEG ED GROUND THAT AO HAS NOT MADE INQUIRY IN REGARDS TO RECEIPT SHOWN IN SERVICE TAX RETURN OF THE ASSESSEE VIS A VIS AS PER P&L A/C AND THAT THE FORE IGN PRINCIPALS HAVE PAID TAXES IN INDIA U/S 172 OF THE ACT OR NOT, WITHOUT A PPRECIATING THAT IN COURSE ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 2 OF ASSESSMENT, COMPLETE DETAILS OF FOREIGN REMITTAN CE, RECONCILIATION OF ACCOUNT VIS A VIS SERVICE TAX RETURN & 26AS, DETAIL S OF VARIOUS RECEIPT ETC WERE FILED AND EXPLAINED TO ASSESSING OFFICER ; THE REFORE THE REVISION U/S 263 IS BAD IN LAW. 2. THE LEARNED PR.CIT FAILED TO APPRECIATE THAT, TH E PRINCIPALS HAD PAID TAX U/S 172 OF THE ACT WHICH IS DULY SUPPORTED BY DOCUM ENTS DETAILS LIKE COMPUTATION OF TOTAL INCOME, ACKNOWLEDGEMENT OF RET URN AND AGENCY AGREEMENT ETC, SAME WERE FURNISHED BEFORE PRO CIT, ALSO THE FACT THAT SAME INQUIRY WAS MADE IN AY 2012-13 ALSO, THEREFORE TO TREAT THE ASSESSMENT ORDER AS ERRONEOUS AND PREJUDICIAL TO TH E INTEREST OF REVENUE IS NOT JUSTIFIED, THEREFORE THE ORDER U/S. 263 IS BAD IN LAW. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF SHIPPING AND FORWARDING AGENT, FILED IT S RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 30.09.2013 DECLARING TOTAL INCOME OF RS. 98,61,652/-. THE ASSESSMENT WAS SELECTED FOR SC RUTINY. STATUTORY NOTICE UNDER SECTION 143(2) DATED 05.09.2014 AND NO TICE UNDER SECTION 142(1) DATED 10.07.2014 WAS ISSUED AND SERVED ON TH E ASSESSEE. AFTER TAKING THE SUBMISSION AND EXPLANATION ON RECORD, TH E ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 05.03.2016. THE A SSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER MADE ADHOC DISAL LOWANCES @ 15% OF TOTAL EXPENSES OF RS. 12,75,945/- IN THE ASSESSM ENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT. THE ASSESSMENT ORD ER WAS REVISED BY LD. PCIT BY EXERCISING THE POWER UNDER SECTION 263 ON 28.02.2018. BEFORE REVISING THE ASSESSMENT ORDER, THE LD. PCIT ISSUED NOTICE UNDER ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 3 SECTION 263 DATED 05.02.2018 RAISING THE FOLLOWING ISSUES WHICH ACCORDING TO HIM REQUIRE VERIFICATION: A. WHETHER TDS U/S 195 WAS DEDUCTED ON THE PAYMENTS MA DE TO NON- RESIDENTS BY THE ASSESSEE? IF NOT, WHETHER NECESSAR Y CERTIFICATE WAS OBTAINED FOR NON-DEDUCTION OF TDS? B. WHETHER INCOME OF ALL THE PRINCIPALS WAS EXEMPT FRO M TAX IN INDIA? FOR INSTANCE, SHIPPING INCOME OF THE NON-RESIDENTS FROM NON-DTAA COUNTRIES IS NOT EXEMPT. C. WHETHER ALL PRINCIPALS HAVE GOT ANNUAL EXEMPT CERTI FICATE FROM INTERNATIONAL TAXATION UNDER SECTION 172, IF IT IS OCCASIONAL SHIPPING? D. WHETHER PAYMENT IS ACTUALLY OF THE NON-RESIDENT OR THE INCOME OF THE ASSESSEE? 3. THE ASSESSEE FILED ITS REPLY DATED 14.02.2018. IN T HE REPLY, THE ASSESSEE CONTENDED THAT DURING THE RELEVANT YEAR UNDER CONSI DERATION THE ASSESSEE WAS AGENT OF QATAR NAVIGATION, HEAD OFFICE R OF WHICH IS IN DUBAI, UAE AND ASIAN SHIPPING FRIGHT LINER (M) SDN BHD , HAVING HEAD OFFICER AT MALAYSIA. BOTH THE PRINCIPAL HAS PAID TAX IN INDIA UNDER SECTION 172 OF INCOME-TAX UNDER SECTION 172 OF INCOME- TAX ACT. PRINCIPALS HAVE NOT APPLIED FOR EXEMPTION CERTIFICATE AS THEY HAVE PAID UNDER SECTION 172. THE ASSESSEE ALSO CONT ENDED THAT THE PAYMENT IS ACTUALLY OF NON-RESIDENT. NATURE OF PRIN CIPLE INCOME AND THAT OF AGENT IS DEFINED IN THE AGENCY AGREEMENT. T HE ASSESSEE ALSO CONTENDED THAT SIMILAR ISSUE WAS RAISED IN A.Y. 201 2-13 UNDER SECTION 263 AND AFTER VERIFICATION IT WAS ACCEPTED BY AO. ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 4 4. THE REPLY OF ASSESSEE WAS NOT ACCEPTED BY LD PCIT. THE LD. PCIT CONCLUDED THAT THE AO PASSED THE ASSESSMENT ORDER W ITHOUT MAKING ENQUIRY THAT SHOULD HAVE BEEN MADE, WHICH HAS RENDE RED THE ASSESSMENT ORDER ERRONEOUS AND SO FAR AS PREJUDICIA L TO THE INTEREST OF REVENUE AND THAT EXPLANATION 2 OF SECTION 263(1) IS CLEARLY ATTRACTED. THE LD. PCIT SET-ASIDE THE ASSESSMENT ORDER AND DIR ECTED THE AO TO MAKE FRESH ASSESSMENT ORDER AFTER MAKING THE DETAIL ED ENQUIRY. THUS, AGGRIEVED BY THE ORDER OF LD. PCIT, THE ASSESSEE HA S FILED THIS APPEAL BEFORE THIS TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECOR D. THE LD. AR OF THE ASSESSEE SUBMITS THAT DURING THE ORIGINAL ASSES SMENT PROCEEDING, ALL THE DETAILS AND RE-CONCILIATION STATEMENT WITH REGARD TO SERVICE TAX WERE EXAMINED AND VERIFIED BY THE ASSESSING OFFICER . THE LD. AR OF THE ASSESSEE SUBMITS THAT THE ASSESSING OFFICER VID E ITS NOTICE UNDER SECTION 142(1) DATED 18.12.2015 AND IN QUESTION NO. 19 RAISED SPECIFIC QUESTION FOR SEEKING RE-CONCILIATION THAT TURNOVER REPORTED IN SERVICE TAX RETURN IS MORE THAN THE INCOME TAX RETURN. THE ASSESSEE VIDE ITS REPLY DATED 29.01.2016 FURNISHED THE DETAILS OF RE- CONCILIATION OF INCOME AS PER THE SERVICE TAX RETURN AND INCOME TAX RETURN. THUS, THE ASSESSING OFFICER FULLY VERIFIED THE FACT AND AFTER DISSATISFACTION ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 5 ACCEPTED THE REPLY OF ASSESSEE AS CORRECT. THE ORIG INAL ASSESSMENT ORDER PASSED BY ASSESSING OFFICER IS NEITHER ERRONE OUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. THE ORDER OF ASSESSING OFFICER IS IN ACCORDANCE WITH LAW. THE LD. AR OF THE ASSESSEE SUB MITS THAT PROCEEDING UNDER SECTION 263 IS REQUIRED. MOREOVER, SIMILAR ISSUE UNDER SECTION 263 IN PRECEDING ASSESSMENT YEAR FOR ASSESSMENT YEAR 2012-13 WAS CONCLUDED AS ACCEPTED AS THE ASSESSEES CONTENTION. THE LD. PCIT WHILE GIVING HIS FINDING HAS NOT GIVEN ANY FINDING AS TO HOW THE ORDER IS ERRONEOUS OR PREJUDICIAL TO THE INTERE ST OF REVENUE, THEREFORE, THE ORDER PASSED UNDER SECTION 263 IS BA D-IN-LAW AND LIABLE TO BE QUASHED. THE LD. PCIT FAILED TO APPRECIATE TH E PROVISION OF SECTION 172 OF THE ACT. THE LD. PCIT INSTEAD OF CON SIDERING THE REPLY OF ASSESSEE, BRUSHED IT ASIDE HOLDING THAT ISSUE RE QUIRED FURTHER ENQUIRY. IN SUPPORT OF HIS SUBMISSION, THE LD. AR O F THE ASSESSEE PLACED ON RECORD THE COPY OF ORDER PASSED UNDER SEC TION 143(3)/263 FOR ASSESSMENT YEAR 2012-13 WHEREIN SIMILAR CONTENT ION WAS ACCEPTED BY THE REVENUE. 6. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASS ESSEE RELIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN CIT VS. GA BRIEL INDIA [1993] [203 ITR 108 (BOM)], HONBLE GUJARAT HIGH CO URT IN CIT VS. ARIVIND JEWELLERS [259 ITR 502 (GUJ)], HONBLE DELH I HIGH COURT IN CIT VS. ASHISH RAJPAL [2010] [320 ITR 674(DEL.). ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 6 7. THE LD. AR OF THE ASSESSEE IN HIS ALTERNATIVE SUBMI SSION SUBMITS THAT ALL DETAILS WERE FILED BEFORE THE ASSESSING OFFICER AND THE ASSESSING OFFICER HAS APPLIED HIS MIND ON ALL FACTS BEFORE PA SSING THE ASSESSMENT ORDER. THUS, THE ORDER CANNOT BE SAID TO BE ERRONEO US. THE PHRASE PREJUDICIAL TO THE INTEREST OF REVENUE HAS TO BE R EAD FOR CONSUMPTION WITH ERRONEOUS ORDER PASSED BY ASSESSING OFFICER. EVERY LOSS OF REVENUE AS A CONSEQUENT OF AN ORDER OF ASSESSING OF FICER CANNOT BE TREATED AS PREJUDICIAL TO THE INTEREST OF REVENUE W HEN THE ISSUE IS EXAMINED BY ASSESSING OFFICER AND THE ASSESSING OFF ICER PASSED THE ORDER AFTER FULL VERIFICATION OF THE FACTS, THE AS SESSMENT ORDER CANNOT BE REVISED UNDER SECTION 263. THE REVISIONARY JURIS DICTIONAL CANNOT BE ALLOWED TO BE EXERCISED BY COMMISSIONER FOR MAKING ROVING ENQUIRY, THERE IS NO LOSS TO REVENUE, NO INCOME HAS ESCAPED ASSESSMENT. THE LD. AR OF THE ASSESSEE SUBMITS THAT ORDER IS NEITHER PR EJUDICIAL TO THE INTEREST OF REVENUE OF THE PROPOSED ACTION IS UNCAL LED FOR. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASSESSEE RELIED U PON THE FOLLOWING DECISION: (I) CIT VS. HOTZ INDUSTRIES LTD. 920140 [49 TAXMANN.COM 267 (DELHI)]. (II) CIT VS. GALILEO INDIA P LTD. (2014) 220 TAXMAN 115 (MAG) (DELHI) (HC)]. (III) RASHRIYA CHEMICALS & FERTILIZER LIMITED VS. CIT (IT A NO. 3625/MUM/2017 (MUMBAI TRIB.). (IV) CIT VS. RELIANCE COMMUNICATION LTD. 92016) 240 TAXM AN 655 (BOM HC). ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 7 (V) PCIT VS. GINGER PROPERTIES P. LTD. 92017) 396 ITR 4 96 (GUJ. HC). (VI) NARAYAN TATU RANE VS. ITO (MUMBAI TRIB.) 970 TAXMAN N.COM 227) (ITA NO. 2690, 2691/M/2016. (VII) AMIRA PURE FOODS PVT. LTD. VS. PCIT (2008) 63 ITR ( TRIB) 355 (DELHI TRIB.). (VIII) LACK OF ENQUIRY VS. INADEQUATE INQUIRY. 8. IN FURTHER ALTERNATIVE SUBMISSION THAT LD. PCIT MUS T RECORD A FINDING THAT ORDER IS ERRONEOUS BY CONDUCTING HIS OWN ENQUI RY AND GIVE CLEAR CONCLUSION THAT THE ORDER IS ERRONEOUS. THE LD. AR OF THE ASSESSEE SUBMITS THAT IN HONBLE DELHI HIGH COURT IN JYOTI F OUNDATION [357 ITR 388 (DEL. HC)], HELD THAT WHERE THERE IS AN IDE NTICAL ENQUIRY BUT NO LACK OF ENQUIRY, THE COMMISSIONER MUST RECORD TH E FINDING THAT ORDER IS ERRONEOUS. 9. ON THE OTHER HAND, THE LD. CIT-DR FOR THE REVENUE R ELIED UPON THE ORDER OF LD. PCIT. THE LD. DR FURTHER SUBMITS THAT THE ASSESSING OFFICER HAS NOT REFERRED ANYTHING IN THE ASSESSMENT ORDER ABOUT THE ENQUIRIES CONDUCTED WITH REGARD TO SERVICE TAX RETU RN. THUS, THE PRESENT CASE IS CLEARLY COVERED BY THE EXPLANATION 2 OF SECTION 263(1) OF THE ACT. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOT DIS CUSSED THE ISSUE, WHICH IS SOUGHT TO BE REVISED BY LD. PCIT. HOWEVER, THE ASSESSING OFFICER DURING THE ASSESSMENT VIDE ITS NOTICE DATED 18.12.2015 RAISED ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 8 THE SPECIFIC ENQUIRY VIDE QUESTION NO. 19, WHICH WE HAVE REPRODUCED BELOW: 19. PLEASE FILE COPIES OF SERVICE TAX RETURN ALONG WITH THE ENCLOSURES. IT IS OBSERVED THAT HIGHER TURNOVER REPORTED IN SERVICE T AX RETURN THAN THE IT RETURN PLEASE RECONCILES. 11. THE ASSESSEE VIDES ITS REPLY DATED 29.01.2016 FURNI SHED RE-CONCILIATION INCOME AS PER INCOME TAX RETURN AS WELL AS SERVICE TAX RETURN. THE ASSESSEE ALSO FURNISHED THE COMPLETE DETAILS OF SER VICE TAX RETURN. THE ASSESSEE FURNISHED NOTE ON RETURN FILED WITH SERVI CE TAX AUTHORITY AND HAS CLEARLY MENTIONED THAT ASSESSEE IS AN AGENT OF VARIOUS FOREIGN SHIPPING LINES. THE ASSESSEE ON BEHALF OF THE PRINC IPLE COLLECTED THE CHARGES FOR SHIPPING FROM CONSUMER, WHICH ARE FREI GHT AND TERMINAL HANDLING CHARGES OUT OF FREIGHT AND TERMINAL HANDLI NG CHARGES, NO HANDLING CHARGES IS LIABLE TO BE SERVICE TAX AND FR EIGHT IS EXEMPT FROM PAYMENT OF SERVICE TAX. THE SERVICE TAX IS COLLECTE D AND PAID ON SUCH INCOME ON BEHALF OF THE AGENT. THEREFORE, THE INCOM E OF PRINCIPLE IS INCLUDED IN THE SERVICE TAX RETURN OF ASSESSEE. THE ASSESSEE IS AN AGENT EARNED FIXED PERCENTAGE OF COMMISSION ON EXPORT AND IMPORT ON FREIGHT. THE ASSESSEE ALSO COLLECTED DOCUMENTATION AND OTHER CHARGES WHICH SERVICE IS TAXABLE INCOME. THUS, WE HAVE SEEN THAT THE ASSESSEE HAS FURNISHED COMPLETE DETAILS TO THE ASSESSING OFF ICER. THE ASSESSING OFFICER AFTER HIS SATISFACTION AND WITHOUT MENTIONI NG ANYTHING ABOUT THE ISSUE ACCEPTED THE CONTENTION OF ASSESSEE. ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 9 12. THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GA BRIEL INDIA (SUPRA) HELD THAT WHEN THE INCOME TAX OFFICER (ITO) MADE EN QUIRIES WITH REGARD TO THE EXPENDITURE INCURRED BY ASSESSEE. THE ASSESSEE FURNISHED DETAILED EXPLANATION IN THIS REGARD BY A LETTER IN WRITING. ALL ARE PART OF THE RECORD OF THE ASSESSEE AND THE CLAIM WAS ALLOWE D BY ITO ON BEING SATISFIED WITH THE EXPLANATION OF ASSESSEE. SUCH DE CISION OF ITO CANNOT BE HELD TO BE ERRONEOUS IN HIS ORDER; HE HAS NOT MADE ELABORATE DISCUSSION IN THIS REGARD. SIMILARLY, HONBLE GUJAR AT HIGH COURT IN CIT VS. ARIVIND JEWELLERS (SUPRA) HELD THAT WHEN MA TERIAL WAS ON RECORD AND WAS CONSIDERED BY ASSESSING OFFICER/ITO AND A PARTICULAR VIEW WAS TAKEN, THE MERE FACT THAT DIFFERENT VIEW CAN BE TAKEN SHOULD NOT BE THE BASE OF ACTION UNDER SECTION 263. 13. SIMILARLY THE HONBLE DELHI HIGH COURT IN CIT VS. A SHISH RAJPAT (SUPRA) HELD THAT MERELY BECAUSE THE ASSESSMENT ORD ER DOES NOT REFER TO QUERY RAISED BY ASSESSING OFFICER DURING THE SCRUTI NY AND RESPONSE OF THE ASSESSEE THERETO IT CANNOT BE SAID THAT THERE W AS NO ENQUIRY AND THE ASSESSMENT ORDER IS ERRONEOUS AND PREJUDICIAL. AS WE HAVE ALREADY NOTED AND REFERRED THAT THE ASSESSING OFFICER MADE SPECIFIC ENQUIRY WITH REGARD TO SERVICE TAX RETURN AND RECEIPT OF IN COME IN THE ORIGINAL ASSESSMENT AND ACCEPTED THE SAME, THEREFORE, IN OUR VIEW, THE ORDER PASSED BY ASSESSING OFFICER IS NOT ERRONEOUS. THERE FORE, THE PRECONDITION FOR EXERCISE OF POWER UNDER SECTION 26 3 IS NOT FULFILLED. ITA NO. 2446 MUM 2018-M/S POSEIDON SHIPPING AGENCY P. LTD. 10 HENCE, THE LD PCIT WAS JUSTIFIED IN REVISING THE AS SESSMENT ORDER. THEREFORE, WE ACCEPT THE APPEAL FILED BY THE ASSESS EE AND SET-ASIDE THE ORDER PASSED BY LD. PCIT. 14. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2018. SD/- S D/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT J UDICIAL MEMBER MUMBAI, DATE: 14.12.2018 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR C BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI