JM FINANCIAL LTD. (FORMERLY KNOWN AS JM SHARES & STOCK BROKERS PVT.LTD.), MUMBAI V. ADDL.CIT., SPL.RANGE-22, MUMBAI

ITA 3472/MUM/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8830 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 03-09-2012
• Assessment Year: 1998-1999
• Appeal Filed On: 02-05-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SANJAY R PARIKH; K SHIVARAM
• Keywords: Wrong claim

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J MUMBAI . . , . BEFORE SHRI B.R. MITTAL, JUDICIAL MEMBER / AND , . . SHRI RAJENDRA, ACCOUNTANT MEMBER . / ITA NO. 3472/MUM/2011 / ASSESSMENT YEAR 1998-99 JM FINANCIAL LTD (FORMERLY KNOWN AS JM SHARES & STOCK BROKERS PVT. LTD.) 141, MAKER CHAMBERS-III, NARIMAN POINT, MUMBAI 400 021 PAN: AAACJ 2590 B VS. ITO 4(3)(1) AAYAKAR BHAVAN, M.K. MARG, CHURCH GATE, MUMBAI. ( / APPELLANT ) ( ! / RESPONDENT ) ' / APPELLANT BY : SHRI K. SHIVARAM & SHRI SANJAY R. PARIKH ! # ' / RESPONDENT BY : SHRI RAJARSHI DWIVEDY # $%& / DATE OF HEARING : 03 -09-2012 '( # $%& / DATE OF PRONOUNCEMENT : 26 -09-2012 )* / O R D E R PER RAJENDRA, A.M. THE FOLLOWING ARE THE GROUNDS OF APPEAL FILED BY TH E APPELLANT AGAINST THE ORDER DATED 25-02-2011 OF THE CIT(A)-10, MUMBAI : A)LEVY OF PENALTY U/S. 271(1)( C) RS. 5,00,000/ - 1)THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) -10, MUMBAI [CIT(A)] ERRED ON FACTS AND IN LAW IN CONFIRMING THE ORDER O F THE INCOME TAX OFFICER- ITA NO. 3472/MUM/2011 JM FINANCIAL LTD 2 4(3)(1), MUMBAI (AO) LEVYING A PENALTY U/S. 271(1)( C) ON THE APPELLANT AMOUNTING TO RS. 5,00,000/-. 2)THE LEARNED CIT(A) AND THE AO FAILED TO APPRECIA TE THAT THE APPELLANT HAD NEITHER CONCEALED THEIR INCOME NOR FURNISHED INACCU RATE PARTICULARS OF THEIR INCOME, WHICH WOULD WARRANT THE LEVY OF PENALTY U/S . 271(1)( C). 3)THE APPELLANT PRAYS THAT THE PENALTY OF RS. 5,00 ,000/- LEVIED BY THE AO ON THE APPELLANT U/S. 271(1)( C) AND AS CONFIRMED BY THE C IT(A) MAY BE DELETED. B) GENERAL 4)THE ABOVE GROUNDS OF APPEAL ARE WITHOUT PREJUDIC E TO ONE ANOTHER AND THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, DELETE OR MODIFY ANY OF THE ABOVE GROUNDS OF APPEAL. 2. THE APPELLANT, A PUBLIC LIMITED COMPANY, ENGAGED IN THE BUSINESS OF SHARE AND STOCK BROKERS, FILED ITS RETURN OF INCOME ON 27.11. 1998 DECLARING INCOME AT A LOSS OF RS.3,39,24,610/-. THE RETURN WAS SELECTED FOR SCRU TINY BY THE ASSESSING OFFICER (AO). ON 28.03.2001 AO ASSESSED THE INCOME OF THE APPELLA NT, U/S.143 (3) OF THE INCOME- TAX ACT,1961(ACT), AT A LOSS OF RS.91,99,620/- BY M AKING VARIOUS ADDITIONS, DISALLOWANCES AND ADJUSTMENTS. ONE OF THE DISALLOW ANCES WAS ON ACCOUNT OF SUB- BROKERAGE CLAIMED TO HAVE BEEN PAID BY THE APPELLAN T. THE AO DISALLOWED A SUM OF RS.74.05 LAKHS OUT OF THE TOTAL BROKERAGE PAID BY THE ASSESSEE ON THE GROUND THAT THE ASSESSEE-COMPANY HAD NOT FURNISHED THE ADDRESSES OF THE PARTIES TO WHOM SUB BROKERAGE WAS PAID. THE APPELLANT FILED AN APPEAL A GAINST THE ORDER OF THE AO BEFORE THE FIRST APPELLATE AUTHORITY (FAA) WHO REDUCED THE DISALLOWANCE TO RS.10.5LACS. 3. THE AO ALSO INITIATED PENALTY PROCEEDINGS FOR CONCE ALMENT OF INCOME AND FURNISHING OF INACCURATE PARTICULARS AS PER THE PRO VISIONS OF SECTION 271(1)(C) OF THE ACT. AFTER CONSIDERING THE REPLY FILED BY THE ASSE SSEE-COMPANY (05.02.2007) AO HELD THAT THOUGH THE APPELLANT WAS GIVEN AMPLE OPPORTUN ITIES TO PRODUCE THE NAMES AND ADDRESSES OF THE PARTIES TO WHOM SUB BROKERAGE OVE R RS. 50,000 WAS PAID, YET IT DID NOT PRODUCE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF ITS CLAIM EITHER DURING SCRUTINY PROCEEDINGS OR THE PENALTY PROCEEDINGS, THAT THE AS SESSEE-COMPANY HAD FAILED TO SUBSTANTIATE ALL THE FACTS AND MATERIALS RELATING T O COMPUTATION SUBMITTED IN THE RETURN OF INCOME, THAT EXPLANATION 1 TO THE SECTION 271(1) (C) OF THE ACT WAS CLEARLY APPLICABLE IN THE CASE UNDER CONSIDERATION. RELYING UPON THE CASES OF SHRI KRISHNA TRADING CO. (253ITR645) MOHD. M FAROOQUI (259 ITR13 2) AND A SREENIVASA PAI (242 ITR 29) HE HELD THAT ASSESSEE HAD MADE A WRONG CLAIM, THAT THE ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND THER EBY HAD CONCEALED INCOME. INVOKING THE PROVISIONS OF SECTION 271(1)(C) READ W ITH EXPL.1 OF THE ACT HE IMPOSED A PENALTY AMOUNTING TO RS. 5 LAKHS. ASSESSEE PREFERRE D AN APPEAL BEFORE THE FAA. AFTER CONSIDERING THE SUBMISSIONS FILED BY THE APPE LLANT-COMPANY AND THE ASSESSMENT ORDER HE OBSERVED THAT APPELLANT HAD NOT FURNISHED DETAILS OF ADDRESS, BEFORE THE AO, IN RESPECT OF 44 PARTIES TO WHOM BROKERAGE OF RS.74 .05 LAKHS WAS PAID, THAT EVEN BEFORE FAA ASSESSEE WAS NOT ABLE TO FURNISH ADDRESS OF SUB-BROKERAGE AMOUNTING TO RS.10.51 LAKHS, THAT DETAILS OF SUB-BROKERAGE WAS C ALLED FOR WITH REGARD TO THE BROKERS WHOM PAYMENT OF MORE THAN RS.50,000/- WAS MADE. FI NALLY, HE HELD THAT ASSESSEE HAD FURNISHED INACCURATE PARTICULARS OF INCOME AND HAD CONCEALED INCOME. ITA NO. 3472/MUM/2011 JM FINANCIAL LTD 3 4. BEFORE US, AR SUBMITTED THAT DURING THE HEARING SPE CIFIC QUESTION WAS PUT TO THE AR ABOUT THE FATE OF THE QUANTUM APPEAL FILED B Y IT BEFORE THE ITAT. IT WAS SUBMITTED THAT G BENCH OF THE TRIBUNAL VIDE ITS ORD ER DATED 16.11.2009 (ITA/221/MUM/06 AY.1998-99) HAD RESTORED BACK THE MATTER TO THE FILE OF THE AO. IT WAS FURTHER SUBMITTED THAT AO HAD AGAIN MADE ADD ITION WITH REGARD TO SUB- BROKERAGE PAID AND SAME WERE CONFIRMED BY THE FAA. 4.1. FROM THE ABOVE FACTS IT IS CLEAR THAT ISSUE OF GENU INENESS OF PAYMENT OF BROKERAGE WAS SENT BACK TO THE AO FOR FRESH ADJUDIC ATION. AS THE PENALTY ORDER UNDER CONSIDERATION IS DIRECTLY RELATED TO THE QUANTUM, S O, WE ARE OF THE OPINION THAT MATTER OF LEVYING OF PENALTY SHOULD ALSO BE REMITTED BACK TO THE FILE OF THE AO. WE SET ASIDE THE ORDERS PASSED BY THE AO AND THE FAA OF IMPOSING PENALTY. AO IS FREE TO INVOKE/NOT TO INVOKE THE PROVISIONS OF SECTION 271( 1)(C) OF THE ACT WITH REGARD TO ADDITIONS MADE, WHILE PASSING RE-ADJUDICATION ORDER S, IN PURSUANCE OF THE ORDER OF THE TRIBUNAL. WITH THESE OBSERVATIONS APPEAL UNDER CONSIDERATION STANDS DISPOSED-OFF FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2012. SD/- SD/- ( . . / B.R. MITTAL ) ( , / RAJENDRA ) )+ / JUDICIAL MEMBER & )+ / ACCOUNTANT MEMBER MUMBAI, ,) DATE: 26 TH SEPTEMBER, 2012 TNMM )* )* )* )* # ## # $- $- $- $- .-$ .-$ .-$ .-$ / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT (A) 4. THE CONCERNED CIT 5. DR J BENCH, ITAT, MUMBAI 6. GUARD FILE !-$ $ //TRUE COPY// )* )* )* )* / BY ORDER, / // / / 0 0 0 0 DY./ASSTT. REGISTRAR , / ITAT, MUMBAI