RICHLINE LEASING AND FINANCE P. LTD, MUMBAI V. ITO 4(1)(1), MUMBAI

ITA 3759/MUM/2010

• Counselvise Citation: 375919914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 16-04-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-05-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: VIJAY MEHTA
• Keywords: Opportunity of being heard
• Section: 147; 144; 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI BEFORE SHRI DINESH KUMAR AGARWAL (J.M.) AND SHRI RAJENDRA (A.M.) ITA NO. 3758/MUM/2010 ASSESSMENT YEAR : 2003-04 ITA NO. 3759/MUM/2010 ASSESSMENT YEAR : 2005-06 M/S RICHLINE LEASING AND FINANCE PVT. LTD., ROOM NO. 9-10,, BRIJWASI MANSION, DADI SETH AGIARY LANE, 6, NAVI WADI, MUMBAI 400002. PAN : AAACR2114B VS. INCOME TAX OFFICER, - 4(1)(1), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI C.G.K. NAIR DATE OF HEARING 16.4.2012 DATE OF PRONOUNCEMENT 25.4.2012 O R D E R PER DINESH KUMAR AGARWAL, J.M. THESE TWO APPEALS PREFERRED BY THE ASSESSEE ARE DIR ECTED AGAINST THE SEPARATE ORDERS DATED 7.4.2010 AND 9.4.2010 PAS SED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2003-04 & 2005-06 RESPECTI VELY. SINCE THE FACTS ARE IDENTICAL AND ISSUE INVOLVED IS COMMON, B OTH THESE APPEALS ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CO NVENIENCE. ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 2 2. BRIEFLY STATED FACTS OF THE CASE EXTRACTED FROM ITA NO. 3758/MUM/2010 FOR A.Y. 2003-04 ARE THAT THE ASSESSE E COMPANY IS ENGAGED IN THE BUSINESS OF SUB-BROKERAGE AND FINANC E SERVICES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTE D THAT THE ASSESSEE HAS PAID SUB-BROKERAGE OF RS. 35 LACS TO M/S SURASI K SERVICES LTD. IN ORDER TO VERIFY THE GENUINENESS OF THE SUB-BROKERAG E PAYMENT, THE A.O. ISSUED NOTICE U/S 133 (6) OF THE INCOME TAX ACT, 19 61 (THE ACT) TO M/S SURASIK SERVICES LTD. ASKING CERTAIN DETAILS. IN R ESPONSE, IT WAS, INTER ALIA, SUBMITTED BY M/S SURASIK SERVICES LTD. VIDE P ARA NO. 3.4.5 OF ITS LETTER DTD. 22.11.2007 AS UNDER (A.O. PAGE 3): PARA 3. 4.5:- IN RESPECT TO THIS DETAIL, WE LIKE T O STATE THAT WE HAVE NO BUSINESS OF ANY NATURE INCLUDING ANY BANKING TRA NSACTION WITH SAID REFERRED COMPANY AT ANY GIVEN TIME IN PAST OR TILL THE DATE. ON THE BASIS OF THE ABOVE REPLY, THE ASSESSEE WAS A SKED TO SHOW CAUSE AS TO WHY THE CLAIM OF SUB-BROKERAGE PAYMENT OF RS. 35 LACS SHOULD NOT BE DISALLOWED. IN RESPONSE TO THIS, IT WAS, INTER ALI A, SUBMITTED BY THE ASSESSEE AS UNDER:- (PAGE 4, PARA 3.6 OF THE ASSESS MENT ORDER) HERE WE WOULD LIKE TO DRAW YOUR GOODSELF ATTENTI ON THAT IN ORDER TO VERIFY THE GENUINENESS OF TRANSACTION WITH SSL, ASSESSEE HAS ALREADY FILED THE CONFIRMATION OF LEDG ER ACCOUNT FROM SSL SHOWING PAYMENT OF SUB-BROKERAGE TO THEM V IDE SUBMISSION DATED 21.11.2007 (COPY ANNEXED AS ANNEXU RE 1) AND CONFIRMATION FROM SSL FOR THE RECEIPT OF SUB-BR OKERAGE AMOUNT OF RS. 35 DUE TO THEM VIDE SUBMISSION DATED 20-9- 2007 (COPY ANNEXED TO ANNEXURE 2).FROM THE ABOVE IT IS CRYSTAL CLEAR THAT ASSESSEE HAS MADE THE PAYMENT OF SUB- BROKERAGE TO SSL. THE ASSESSEE FAILS TO UNDERSTAND AS TO WHY ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 3 SSL IS DENYING THE RECEIPT OF SUB-BROKERAGE PAID BY THE ASSESSEE WHEN INITIALLY THEY THEMSELVES HAVE CONFIR MED THE RECEIPT OF SUB-BROKERAGE PAID BY THE ASSESSE. FURTHER, SSL HAS RENDERED SERVICE TO THE ASSESSEE F OR WHICH THE PAYMENT HAS BEEN MADE. HOWEVER, THE A.O. DID NOT ACCEPT THE ASSESSEES SUB MISSION. THE A.O. WHILE OBSERVING THAT ASSESSEE HAS NOT FURNISHED ANY PROOF OF SERVICE RENDERED BY THE SAID PARTY NOR FILED ANY AGREEMENT FOR RENDERING SERVICES TO THE ASSESSEE AND ALSO THAT IN THE ASSESSMENT ORD ER FOR THE ASSESSMENT YEAR 2004-05 IN ASSESSEES OWN CASE, SIMILAR DISALL OWANCE OF SUB- BROKERAGE OF RS. 1,35,66,000/- HAS BEEN DISALLOWED, MADE THE DISALLOWANCE OF RS. 35 LACS ON THE GROUND THAT THE SAID EXPENSES HAVE NOT BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF THE BUSINESS AS REQUIRED U/S 37(1) OF THE ACT. 3. ON APPEAL, THE LD. CIT(A) AFTER CONSIDERING THE ASSESSEES SUBMISSION AND THE REMAND REPORT OF THE A.O. CONFIR MED THE DISALLOWANCE MADE BY THE A.O. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 5. GROUNDS OF APPEAL NO. 1 & 2 ARE AGAINST THE VAL IDITY OF THE EX-PARTE ORDER PASSED U/S 144 R.W.S. 147 OF THE ACT. ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 4 6. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUNDS WH ICH WERE NOT OBJECTED TO BY THE LD. D.R. 7. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORTI NG MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, REJECTED BEING NOT PRESSED . 8. GROUND NO. 3 IS AGAINST THE SUSTENANCE OF DISALL OWANCE OF RS. SUB- BROKERAGE AMOUNTING TO RS. 35 LACS PAID TO M/S SURA SIK SERVICES LTD. 9. AT THE TIME OF HEARING THE LD. COUNSEL FOR THE A SSESSEE, AT THE OUTSET, SUBMITS THAT THE ASSESSEE HAS MADE THE PAYM ENT OF SUB- BROKERAGE TO M/S SURASIK SERVICES LTD. BY CHEQUES W HICH HAS BEEN CREDITED BY THE BANK IN THE ACCOUNT OF THE SAID PAR TY, THEREFORE, THE ASSESSEE HAS DISCHARGED ITS BURDEN. HE FURTHER SUB MITS THAT IN THE INTERIM REMAND REPORT DTD. 17-04-2009 THE A.O. OBSE RVED THAT CITY CO- OPERATIVE BANK LTD. HAS STATED THAT THERE IS NO SUC H ACCOUNT IN THE NAME OF M/S SURASIK SERVICES LTD. MAINTAINED IN ITS BRAN CH. HOWEVER, IN THE FINAL REMAND REPORT DTD. 27-4-2009, THE A.O. STATED THAT THE AUTHORITY OF CITY CO-OPERATIVE BANK LTD. HAS FILED THE COPY OF A CCOUNT HOLDER OPENING FORM OF SURASIK SERVICES LTD. THE LD. CIT(A) HAS EX TRACTED THE SAME AS UNDER (PAGE 11 SUB PARA (IV) OF CIT(A)S ORDER):- ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 5 THE AUTHORITY AT THE CITY CO-OPERATIVE BANK LTD. H AS FILED THE COPY OF ACCOUNT HOLDER OPENING FORM OF M/S SURASIK SERVICES LTD. THE COPY OF CURRENT ACCOUNT NO. 2858 OF M/S SURASIK SERVICES LT D. HAS ALSO BEEN FILED. THE SAME IS ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. HOWEVER, DESPITE THE SAME THE LD. CIT(A) WITHOUT EX AMINING THE SAID BANK ACCOUNT, HAS CONFIRMED THE DISALLOWANCE MADE B Y THE A.O. HE THEREFORE SUBMITS THAT IN VIEW OF THE ORDER PASSED BY THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO. 2435/MUM/2008 FOR A. Y. 2004-05 ORDER DTD. 30-03-2009 AND IN THE INTEREST OF JUSTICE THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE A.O. 10. ON THE ORDER HAND, THE LEARNED D.R. WHILE RELYI NG ON THE ORDER OF THE A.O. SUBMITS THAT HE HAS NO OBJECTION IF THE IS SUE IS SET ASIDE TO THE FILE OF THE A.O. 11. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE F IND THAT THERE IS NO DISPUTE THAT THE ASSESSEE HAS FILED RELEVANT DOCUME NTARY EVIDENCE TO PROVE THAT THE PAYMENT OF SUB-BROKERAGE OF RS. 35 L ACS WAS MADE BY HIM TO M/S SURASIK SERVICES LTD. HOWEVER, THE SAME WAS DENIED BY M/S SURASIK SERVICES LTD. WE FURTHER FIND THAT IN SUPP ORT OF ITS CLAIM, THE ASSESSEE HAS ALSO FILED RELEVANT BANK ACCOUNT SHOWI NG THE CLEARANCE OF THE CHEQUES BY THE SAID PARTY. THE A.O. WITHOUT EX AMINING THE MATERIAL ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 6 EVIDENCE I.E. THE BANK ACCOUNT OF THE SAID PARTY OR OTHER RELEVANT MATERIAL HAS MADE THE DISALLOWANCE WHICH THE LD. CIT(A) HAS ALSO CONFIRMED. 12. IN ASSESSEES OWN CASE IN ITA NO. 2435/MUM/2008 ORDER DATED 30.3.2009 FOR A.Y. 2004-05 THE TRIBUNAL ON THE ISSU E OF DISALLOWANCE OF SUB-BROKERAGE OF RS. 1,35,66,000/- PAID TO LARITE I NDUSTRIES LTD. WHILE OBSERVING THAT THE CASE WAS NOT PROPERLY EXAMINED B Y THE REVENUE AND IT REQUIRES A FRESH ADJUDICATION HAS SET ASIDE THE ISS UE TO THE FILE OF THE A.O. 13. SINCE THE ISSUE NEEDS FURTHER EXAMINATION AT TH E END OF THE A.O., AND KEEPING IN VIEW THE ORDER OF THE TRIBUNAL IN AS SESSEES OWN CASE (SUPRA) WE ARE OF THE VIEW THAT THE MATTER SHOULD G O BACK TO THE FILE OF THE A.O. AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK THE MATTE R TO THE FILE OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR OBSERVATIONS HEREINABOVE AND IN ACCORDANCE WITH LAW AFTER PROVID ING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GR OUND TAKEN BY THE ASSESSEE IS, THEREFORE, PARTLY ALLOWED FOR STATISTI CAL PURPOSE.. ITA NO. 3759/M/2010 FOR A.Y. 2005-06 ( ASSESSEES APPEAL) . 14. GROUNDS OF APPEAL NO. 1 & 2 ARE AGAINST THE VAL IDITY OF EX PARTE ORDER PASSED BY THE A.O. U/S 144 R.W.S. 147 OF THE ACT. ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 7 15. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITS THAT HE DOES NOT WANT TO PRESS THE ABOVE GROUNDS WH ICH WERE NOT OBJECTED TO BY THE LD. D.R. 16. THAT BEING SO AND IN THE ABSENCE OF ANY SUPPORT ING MATERIAL PLACED ON RECORD BY THE LD. COUNSEL FOR THE ASSESSEE, THE GROUNDS TAKEN BY THE ASSESSEE ARE, THEREFORE, REJECTED BEING NOT PRESSED . 17. GROUND OF APPEAL NO. 3 IS AGAINST THE SUSTENANC E OF DISALLOWANCE OF SUB-BROKERAGE OF RS. 19,15,000/-. 18. AT THE TIME OF HEARING BOTH THE PARTIES HAVE AG REED THAT THE FACTS OF THE ABOVE ISSUE ARE SIMILAR TO THE FACTS OF THE CAS E FOR A.Y. 2003-04, THEREFORE, THE PLEA TAKEN BY THEM FOR THE SAID ASSE SSMENT YEAR, BE CONSIDERED WHILE DECIDING THE ABOVE GROUND OF APPEA L. 19. AFTER HEARING BOTH THE SIDES AND PERUSING THE M ATERIAL AVAILABLE ON RECORD AND IN ABSENCE OF ANY DISTINGUISHING FEATURE BROUGHT ON RECORD BY THE PARTIES, AND KEEPING IN VIEW OF OUR FINDINGS RE CORDED IN PARAS 11 TO 13 OF THIS ORDER, WE SET ASIDE THE ISSUE TO THE FIL E OF THE A.O. TO DECIDE THE SAME AFRESH IN THE LIGHT OF OUR ABOVE OBSERVATIONS MENTIONED THEREIN AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPPORTU NITY OF BEING HEARD TO THE ASSESSEE. THE GROUND TAKEN BY THE ASSESSEE IS T HEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ITA NO. 3758 & 3759/MUM/2010 M/S RICHLINE LEASING AND FINANCE P . LTD. 8 20. IN THE RESULT, BOTH THE APPEALS FILED BY THE AS SESSEE ARE PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THIS 25 TH DAY OF APRIL, 2012. SD/ - (RAJENDRA) ACCOUNTANT MEMBER SD/ - (DINESH KUMAR AGARWAL) JUDICIAL MEMBER MUMBAI, DATED 25 TH APRIL , 2012. RK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)- 7, MUMBAI 4. COMMISSIONER OF INCOME TAX 3, MUMBAI 5. DEPARTMENTAL REPRESENTATIVE, BENCH D, MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI