ITO 14(3)(1), MUMBAI V. RAVIRAJ INVESTMENT CORPORATE (INDIA) P.LTD, MUMBAI

ITA 2786/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 8471 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2009-2010
• Appeal Filed On: 11-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VISHWAS MUNDHEDR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUM BAI , BEFORE SHRI RAJENDRA, A.M. AND SHRI PAWAN SINGH,J.M . ./ITA NO.2786/MUM/2015, / ASSESSMENT YEAR: 2009-10 ITO-14(3)(1) ROOM NO.430A, 4 TH FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-20 VS. M/S. RAVIRAJ INVESTMENTS CORPORATE (INDIA) PVT. LTD.,D-1, ASHA KUNJ CHS LTD. GROUND FLOOR, PLOT NO.82, NEXT TO VAISHALI HOTEL, OPP. SYNDICATE BANK , N.G. ACHARYA MARG, CHEMBUR, MUMBAI-400 071. PAN: AACCR 1243 D ( /APPELLANT ) ( / RESPONDENT ) REVENUE BY: SHRI VISHWAS MUNDHE-DR ASSESSEE BY: SHRI HARIDAS BHAT / DATE OF HEARING: 04.01.2017 !' / DATE OF PRONOUNCEMENT: 01.02.2017 ,1961 254(1) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) , ,, , -PER RAJENDRA,AM: CHALLENGING THE ORDER DT.26.2.15 OF CIT(A)-22, MUMB AI THE ASSESSING OFFICER(AO) HAS FILED THE PRESENT APPEAL. ASSESSEE-COMPANY,ENGAGED IN THE BUSINESS OF FINANCIAL CONSULTANCY AND BROKING OF MUTUAL FUNDS ETC.FILED ITS RETURN OF INC OME ON 26.09.2009,DECLARING TOTAL INCOME AT RS.16.16 LAKHS.THE AO COMPLETED THE ASSESSMENT O N 29.12.2011,U/S.143(3) OF THE ACT, DETERMINING ITS INCOME AT RS.75.58 LAKHS. 2.E FFECTIVE GROUND OF APPEAL IS ABOUT DELETING THE ADD ITION MADE ON ACCOUNT OF COMMISSION PAYMENT.DURING THE ASSESSMENT PROCEEDINGS,THE AO FO UND THAT THE ASSESSEE HAD PAID COMMISSION OF RS.59.12 LAKHS TO AMIT UMAKANT AGARWA L.THE ASSESSEE HAS PAID COMMISSION ON THE INVESTMENT MADE BY FOUR INVESTORS NAMELY SAD HANA A. NADKARNI, (RS.35 LAKHS); SHAKUNTALA R.AMBEKAR(RS.1.10 CRORES);SUJATA R.AMBEK AR(RS.35.00 LAKHS) AND RAJASHREE S. DOKRAS(RS.35 LAKHS)@2.75% BROKERAGE.HE ISSUED NOTIC ES U/S. 133 (6) TO THE INVESTORS.IN REPLY TO THE NOTICE THE INVESTORS STATED THAT INVES TMENT IN THE PNB ASSET MANAGEMENT CO. PVT. LTD.( PNB ASSET) WAS MADE THROUGH THE ASSESSEE -COMPANY. VIDE ORDER SHEET NOTING DT.13.12.11 THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AND ASKED IT TO EXPLAIN AS TO WHY THE COMMISSION PAYMEN T OF RS.59.12 LAKHS PAID TO AMIT AGARWAL SHOULD NOT BE DISALLOWED. THE ASSESSEE FILE D ITS REPLY ON 21.12.2011 AND STATED THAT PAYMENT WAS MADE BY CROSS ACCOUNT PAYEE CHEQUES. TH E AO HELD THAT ASSESSEE HAD NOT ITA NO.2786/MUM/2015 M/S. RAVIRAJ INVESTMENTS CORPORATE (INDIA) PVT. LTD . 2 PROVED THAT ANY SERVICES WERE RENDERED BY AMIT AGAR WAL, THAT THE APPLICATION FORM OF PNB ASSET NOWHERE MENTIONED THE NAME OF AMIT AGARWAL AS BROKER / SUB-BROKER, THAT COMMISSION PAYMENT FOR INTRODUCING OR BRINGING THE ABOVE MENTI ONED INVESTORS, WAS NOT GENUINE, THAT THE INVESTORS HAD CONFIRMED THAT THEY HAD MADE THE INVE STMENT DIRECTLY TO THE ASSESSEE, THAT COMMISSION PAYMENT WAS NOT INCURRED FOR BUSINESS PU RPOSES.FINALLY, HE MADE DISALLOWANCE OF RS.59.12 LAKHS AND ADDED IT TO THE INCOME OF THE ASSESSEE . 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFE RRED AN APPEAL BEFORE THE FAA AND MADE ELABORATE SUBMISSIONS. IT RELIED UPON CERTAIN CASE LAWS ALSO. AFTER CONSIDERING THE ORDER OF THE AO AND SUBMISSION OF THE ASSESSEE, THE FAA H ELD THAT THE ASSESSEE WAS A REGISTERED BROKER,THAT IT WOULD RECEIVE BROKERAGE INCOME AND I N TURN WOULD PAY COMMISSION TO SUB- BROKERS, THAT THE SUB-BROKER CODE OF AMIT AGARWAL W AS ARN-41999, THAT THE PAYMENT DETAILS OF PNB ASSET PROVED THAT AMIT AGARWAL WAS A SUB BRO KER,THAT PNB ASSET IN ITS PROFILE HAS MENTIONED THE SUB BROKER CODE AS ARN 41999, THAT T HE PROFILE SHOWED THAT FUNDS INVESTED BY RAMESH S.AMBEKAR AND SHAKUNTALA R.AMBEKAR WERE THRO UGH RAVIRAJ AND SUB BROKER AMIT AGARWAL ,THAT AMIT AGARWAL HAD OFFERED HIS INCOME I N INCOME TAX RETURN,THAT PAYMENT WAS MADE TO AMIT AGARWAL THROUGH BANKING CHANNEL,THAT T HE AO HAD MADE DISALLOWANCE BASED ON THE INFORMATION GIVEN BY THE CA OF THE INVESTORS ,THAT NO CROSS EXAMINATION WAS ALLOWED TO THE ASSESSEE OF THE CA OF THE INVESTORS, THAT TH E ASSESSEE HAD MADE PAYMENT TO SUB BROKER FOR THE SERVICES RENDERED BY HIM.HE REFERRED TO CAS E OF MOBILE INDEX(125ITD309) AND BHARAT BIJLEE LTD.(71ITD412).FINALLY,HE DELETED THE DISALL OWANCE MADE BY THE AO. 4. DURING THE COURSE OF HEARING BEFORE US, THE DEPARTM ENTAL REPRESENTATIVE (DR) ARGUED THAT THE ONUS WAS ON THE ASSESSEE TO PROVE THAT PAYMENT WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS,THAT NO EVIDENCE WAS PRODUCED TO PROVE THAT THE SUB-BROKER HAD RENDERED SERVICES, THAT THE ASSESSEE DID NOT ASK FOR CROSS EXAMINATION OF THE CA, THAT THE INVESTORS HAD MADE DIRECT INVESTMENT.THE AUTHORISED REPRESENTATIV E (AR) CONTENDED THAT GENUINENESS OF TRANSACTION WAS PROVED, THAT THE PORTFOLIO OF PNB C LEARLY MENTIONED THE NAME OF SUB BROKER, THAT PAYMENT WAS MADE THROUGH BANKING CHANNELS AND THE RECIPIENT HAD OFFERED HIS INCOME IN HIS RETURN, THAT THE INFORMATION OF THE CA HAD NO E VIDENTIAL VALUE. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US. WE FIND THAT THE AO HAD MADE ENQUIRIES ABOUT THE INVESTMENT MADE BY FOUR INVESTORS WITH THEIR CA,THAT HE HELD THAT SUB BROKER HAD NOT RENDERED ANY SERVICES TO THE ASSESSEE AND THAT COMMISSION EXPENDITURE WAS NOT INCURRED WHOLLY AND EXCLUSIVEL Y FOR BUSINESS PURPOSES, THAT THE FAA ITA NO.2786/MUM/2015 M/S. RAVIRAJ INVESTMENTS CORPORATE (INDIA) PVT. LTD . 3 REFERRED TO THE PROFILE OF PNB ASSETS AND HAD ALLOW ED THE APPEAL OF THE ASSESSEE.WE FIND THAT THE NAME OF AMIT AGARWAL APPEARS IN THE ACCOUNT STA TEMENT ISSUED BY PNB ASSETS (PG NO.2- 5 OF THE PB).IN THESE STATEMENTS SUB BROKER CODE A RN -41999 HAS BEEN MENTIONED AS SUB BROKER AND NAME OF THE BROKER IS SHOWN AS RAVIRAJ I NVESTMENTS.IT IS A THIRD PARTY INDEPENDENT EVIDENCE AND CANNOT BE IGNORED OR TAKEN LIGHTLY.ALL THE PAYMENTS WERE MADE THROUGH ACCOUNT PAYEE CHEQUES AND THE SUB BROKER HAD OFFERED THE IN COME RECEIVED TO THE ASSESSEE IN HIS RETURN (PG-18 OF THE PB).IN RESPONSE TO THE NOTICE ISSUED BY THE AO THE SUB BROKER HAS ADMITTED RECEIPT OF BROKERAGE FROM THE ASSESSEE.ALL THESE EVIDENCES PROVE THAT ASSESSEE HAD PAID SUB BROKERAGE TO AMIT AGARWAL DURING THE YEAR UNDER CONSIDERATION.THE AO HAD NOT BROUGHT ON RECORD THAT IT WAS BOGUS PAYMENT OR THE PAYMENT WAS CAPITAL IN NATURE.THEREFORE, WE DO NOT WANT TO INTERFERE WITH THE ORDER OF THE F AA.CONFIRMING THE SAME,WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO. AS A RESULT APPEAL FILED AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST FEBRUARY, 2017. 01 2017 SD/- SD/- ( /PAWAN SINGH) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 01.02.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR E BENCH, ITAT, MUMBAI / ! , , . . . 6. GUARD FILE/ '#$ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.