ASST CIT 24(3), MUMBAI V. PARAMOPUNT FINANCIAL SERVICES, MUMBAI

ITA 3384/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4861 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ABHIRAMA KARTHIKEYAN
• Section: 271(1)(c); 260A; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER IT A NO. 3384/MUM./2017 ( ASSESSMENT YEAR : 20 0 9 10 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 24(3), MUMBAI . APP ELL ANT V/S M/S. PARAMOUNT FINANCIAL SERVICES B/402, POLARIS, OFF. MAROL MAROSHI ROAD ANDHERI (E), MUMBAI 400 059 PAN AAGFP3880M . RESPONDENT ASSESSEE BY : SHRI BHUPENDRA SHAH REVENUE BY : SHRI ABHI RAMA KARTHIKEYAN DATE OF HEARING 08 .0 5 .2019 DATE OF ORDER 22.05.2019 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HA S BEEN FILED BY THE REVENUE CHALLENGING T HE ORDER DATED 8 TH FEBRUARY 201 7 , PASSED BY THE LEARNED COMMISSIONER (APPEALS) 39 , MUMBAI, PERTAINING TO THE ASSESSMENT YEAR 2009 10. 2 . BRIEF FACTS ARE, FOR TH E ASSESSMENT YEAR UNDER DISPUTE THE ASSESSEE FILED ITS RETURN OF INCOME ON 21 ST SEPTEMBER 2009 DECLARING 2 M/S. PARAMOUNT FINANCIAL SERVICES TOTAL INCOME OF ` 1,44,36,320. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER WHILE VERIFYING THE ACCEPTABILITY OF VARIOUS DEDUCTIONS / EXPENDITURE CLAIMED BY THE ASSESSEE FOUND THAT THE ASSESSEE HAS CLAIMED DEDUCTION OF ` 1,78,52,082, ON ACCOUNT OF SUB BRO KERAGE. FURTHER, THE ASSESSEE HAD CLAIMED AN AMOUNT OF ` 2,08,681, TOWARDS INTEREST ON BROKERAGE. AFTER CALLING FOR THE DETAILS RELATING TO THE AFORESAID EXPENDITURE S , THE ASSESSING OFFICER CALLED UPON THE ASSESSEE TO JUSTIFY ALLOWABILITY OF THEM. AFTER CO NSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER DISALLOWED PAYMENT MADE TOWARDS SUB BROKERAGE BY TREATING IT AS BOGUS AND NOT INCURRED FOR THE PURPOSE OF BUSINESS. SIMILARLY, HE DISALLOWED THE INTEREST ON BROKERAGE OF ` 2,08,681. AGAINST T HE AFORESAID ADDITION S , THE ASSESSEE WENT IN APPEAL BEFORE T LEARNED COMMISSIONER (APPEALS) AND THEREAFTER BEFORE THE TRIBUNAL. DURING THE PENDENCY OF ASSESSEES APPEAL, THE ASSESSING OFFICER INITIATED PROCEEDINGS FOR IMPOSITION OF PENALTY UNDER SECTION 27 1(1)(C) OF THE ACT IN RE SPECT OF THE AFORESAID ADDITIONS/ DISALLOWANCE S AND ULTIMATELY PASSED AN ORDER IMPOSING PENALTY OF ` 61,38,852. AGAINST THE PENALTY ORDER SO PASSED, THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. 3 . IN THE COURSE O F APPEAL PROCEEDINGS, LEARNED COMMISSIONER (APPEALS) FOUND THAT OUT OF THE DEDUCTION CLAIMED OF ` 1,78,52,082, THE TRIBUNAL WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE, HAD 3 M/S. PARAMOUNT FINANCIAL SERVICES ALLOWED 90% AND SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER TO T HE EXTENT OF 10% OF SUB BROKERAGE PAYMENT. SINCE THE DISALLOWANCE OF SUB BROKERAGE PAYMENT TO THE EXTENT OF 10% WAS ON ESTIMATE BASIS , LEARNED COMMISSIONER (APPEALS) DELETED THE PENALTY IMPOSED WITH REGARD TO THE ADDITION MADE ON ACCOUNT OF SUB BROKERAGE P AYMENT. HOWEVER, HE CONFIRMED THE PENALTY IMPOSED ON TH E INTEREST ON BROKERAGE AMOUNTING TO ` 2,08,681. 4 . THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED , SINCE THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE INCOME EVEN WITH REGARD TO THE PART OF SUB BROKERAGE PAYMENT DISALLOWED BY THE TRIBUNAL, LEARNED COMMISSIONER (APPEALS) SHOULD HAVE SUSTAINED THE PENALTY IMPOSED UNDER SECTION 271(1)(C) OF THE ACT ON SUCH DISALLOWANCE. 5 . THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE PART DISALLOW ANCE OF SUB BROKERAGE PAYMENT BY THE TRIBUNAL WAS NOT ON ACCOUNT OF ANY DOUBT OVER THE GENUINENESS OF SUCH PAYMENT. THUS, HE SUBMITTED , IMPOSITION OF PENALTY UNDER SECTION 271(1)(C) OF THE ACT ON SUCH DISALLOWANCE MADE ON ESTIMATE BASIS CANNO T BE MADE. THEREFORE, HE FULLY SUPPORTED THE DECISION OF LEARNED COMMISSIONER (APPEALS). 6 . WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO THE DELETION 4 M/S. PARAMOUNT FINANCIAL SERVICES OF PENALTY IMPOSED UNDER SECTIO N 271(1)(C) OF THE ACT ON THE DISALLOWANCE/ADDITION MADE ON ACCOUNT OF SUB BROKERAGE PAYMENT OF ` 1,78,52,082. THOUGH , THE ASSESSING OFFICER HAD DISALLOWED THE SUB BROKERAGE PAYMENT BY TREATING IT AS BOGUS AND NOT FOR THE PURPOSE OF BUSINESS, HOWEVER, THE TRIBUNAL WHILE DECIDING THE QUANTUM APPEAL OF THE ASSESSEE HAD ALLOWED 90% OF THE EXPENDITURE AND HAS SUSTAINED THE DI SALLOWANCE TO THE EXTENT OF 10% OF THE TOTAL PAYMENT PURELY ON ESTIMATE BASIS. IT IS RELEVANT TO OBSERVE , AGAINST THE AFORESAID DECISION OF THE TRIBUNAL, THE REVENUE WENT IN APPEAL BEFORE THE HON'BLE JURISDICTIONAL HIGH COURT UNDER SECTION 260A OF THE ACT. WHILE DECIDING THE APPEAL OF THE REVENUE, THE HON'BLE JURISDICTIONAL HIGH COURT NOT ONLY SUSTAINED THE DECISION OF THE TRIBUNAL IN ALLOWING 90% OF THE SUB BROKERAGE PAYMENT BUT HAS ALSO OBSERVED THAT THERE IS NO DISPUTE REGARDING THE GENUINENESS OF EXPEND ITURE AND HAS HELD THAT DISALLOWAN CE WAS PURELY ON ESTIMATE BASIS. THUS, WHEN THE GENUINENESS OF THE PAYMENT IS NOT DOUBTED AND 90% OF THE EXPEN DI TURE HAS BEEN ALLOWED, PENALTY CANNOT BE IMPOSED UNDER SECTION 271(1)(C) OF THE ACT OF THE ACT ON THE DISALLOW ANCE OF BALANCE 10% MADE PURELY ON ESTIMATE BASIS . THEREFORE, FINDING NO INFIRMITY IN THE ORDER OF THE LEARNED COMMISSIONER (APPEALS), WE UPHOLD THE SAME BY DISMISSING THE GROUND RAISED BY THE REVENUE. 5 M/S. PARAMOUNT FINANCIAL SERVICES 7 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN C OURT ON 22.05.2019 SD/ - MANOJ KUMAR AGGARWAL ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI, DATED: 22.05.2019 COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT, MUMBAI CITY CONCERNED; ( 5 ) THE DR, ITAT, MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (ASSTT. REGISTRAR) ITAT, MUMBAI