BLEND FINANCIAL SERVICES LTD, MUMBAI V. DCIT 8(1), MUMBAI

ITA 4397/MUM/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1362 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-04-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2007-2008
• Appeal Filed On: 20-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN KUMARDR
• Assessee Lawyers: RAJESH SANGHAVI
• Keywords: Opportunity of being heard; Question of law
• Section: 143(3); 131; 132

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI , , , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ITA NO.4397/MUM/2015 ASSESSMENT YEAR: 2007-08 M/S BLEND FINANCIAL SERVICES LTD. ( FORMERLY KNOWN AS BLEND FINANCIAL SERVICES PVT. LTD. ), C/O- R.SANGHVI & CO. 104, RIZVI CHAMBERS-2, JAIN MANDIR MARG, BANDRA (W), MUMBAI-400050 / VS. DCIT - 8(1), AAYAKAR BHAVAN, CHURCHGATE, M.K. ROAD, MUMBAI-400020 ( ! /ASSESSEE) ( & / REVENUE) PA NO.:-AAACB6024C ! / ASSESSEE BY SHRI RAJESH SANGHAVI & / REVENUE BY SHRI SUMAN KUMAR-DR & ( ) ! * / DATE OF HEARING : 03/04/2017 ) ! * / DATE OF ORDER: 03/04/2017 ITA NO.4397/MUM/2015 M/S BLEND FINANCIAL SERVICES LTD. ( FORMERLY KNOWN AS BLEND FINANCIAL SERVICES PVT. LTD . ) 2 / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER) THIS APPEAL IS BY THE ASSESSEE AGAINST THE CONFIRM ATION OF PENALTY OF RS.1,07,78,410/- IMPOSED U/S 271(1)(C ) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT). 2. DURING HEARING, THE LD. COUNSEL FOR THE ASSESSE E, SHRI RAJESH SANGHVI, CONTENDED THAT THE QUANTUM ADD ITION HAS BEEN SET-ASIDE, BY THE HON'BLE HIGH COURT, TO T HE FILE OF THE ASSESSING OFFICER. THE LD. COUNSEL ALSO PRODUCE D THE COPY OF THE ORDER OF THE TRIBUNAL AS WELL AS THE CO PY OF THE ORDER DATED 20/10/2015 (ITA NO.1961 OF 2013) PASSED BY HON'BLE HIGH COURT. THE LD. DR, SHRI SUMAN KUMAR, CONTENDED THAT PENALTY APPEAL ALSO MAY BE SET-ASIDE TO THE FILE OF THE ASSESSING OFFICER. 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION OF THE ORDER DATED 20/10/2015 (ITA NO.1961 OF 2013) FO R READY REFERENCE AND ANALYSIS:- THIS APPEAL FILED BY THE REVENUE UNDER SECTION 260 -A OF THE INCOME TAX ACT, 1961 (THE ACT), CHALLENGES THE ORDER DATED 19 TH APRIL, 2013 PASSED BY THE INCOME TAX APPELLATE TRIBUNAL (THE TR IBUNAL). THE ASSESSMENT YEAR INVOLVED IS A. Y. 2007-08. 2. THE APPEAL IS ADMITTED ON THE FOLLOWING SUBSTANT IAL QUESTION OF LAW:- ITA NO.4397/MUM/2015 M/S BLEND FINANCIAL SERVICES LTD. ( FORMERLY KNOWN AS BLEND FINANCIAL SERVICES PVT. LTD . ) 3 ' WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL ERRED IN NOT GRANTING AN OPPORTUNITY O F CROSS EXAMINATION, ALTHOUGH SPECIFICALLY REQUESTED BY THE APPELLANT, O F MR. SANDEEP K. SITANI, ON THE BASIS OF WHOSE STATEMENTS RECORDED U NDER SECTION 131 AND 132 OF THE ACT, THE COMMISSION AND PROFESSIONAL FEES PAID BY THE APPELLANT WERE DISALLOWED? ' 3. AT THE REQUEST OF COUNSEL FOR THE PARTIES, THE APPEAL ITSELF IS TAKEN FOR FINAL DISPOSAL. THIS IS FOR THE REASON TH AT IT IS AN AGREED POSITION BETWEEN THE COUNSEL THAT THE ISSUE ARISING HEREIN S TANDS CONCLUDED BY THE DECISION OF THIS COURT IN R. W. PROMOTIONS PVT. LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX (2015) 123 DRT 137. IN T HE AFORESAID CASE OF R. W. PROMOTIONS PVT. LTD. (SUPRA), THIS COURT S ET ASIDE THE ORDER OF THE TRIBUNAL AND RESTORED THE ISSUE OF ALLOWING OR NOT THE CLAIM OF EXPENDITURE MADE BY THE APPELLANT THEREIN TO ONE M/ S. INORBIT ADVERTISING & MARKETING SERVICES (P) LTD., (INORBIT) AND M/S, N UPUR MANAGEMENT CONSULTANCY (P) LTD. (NUPUR) TO THE ASSESSING OFFIC ER FOR PASSING A FRESH ORDER. THIS, AFTER GIVING AN OPPORTUNITY TO THE APP ELLANT-ASSESSEE THEREIN TO CROSS EXAMINE THE WITNESS RELIED UPON BY THE REV ENUE TO DISALLOW THE CLAIM OF EXPENDITURE BEFORE PASSING AN ORDER UNDER SECTION 143(3) OF THE ACT. ATTENTION WAS INVITED TO THE ORDER DATED 16TH JANUARY, 2013 OF THE TRIBUNAL IN THE CASE OF R. W. PROMOTIONS PVT. LTD. (SUPRA) WHICH INDICATES THAT MR. SANDEEP K. SITANI IS THE VERY PE RSON WHO HAD GIVEN STATEMENTS/ EVIDENCE IN RESPECT OF M/S. INORBIT & M /S. NUPUR. 4. IN THE PRESENT FACTS ALSO, THE PARTIES INVOLVED AMONGST OTHERS ARE MZS, INORBIT AND MZ'S.NUPUR ON WHOSE BEHALF, EV IDENCE HAS BEEN GIVEN UP BY MR. SANDEEP K. SITANI AND THE REVENUE I S PLACING RELIANCE UPON HIS STATEMENT TO DISALLOW THE EXPENDITURE JUST AS IN THE CASE OF R. W. PROMOTIONS PVT. LTD. (SUPRA). FURTHER, IN THIS C ASE ALSO, THE ASSESSING OFFICER HAD NOT ALLOWED CROSS EXAMINATION OF MR. SA NDEEP K. SITANI, THE PERSON WHO MANAGE BOTH THE COMPANIES ON WHOSE EVIDE NCE REVENUE WAS PLACING RELIANCE. THE ONLY ADDITIONAL FEATURES IN THIS CASE IS THAT MR. SANDEEP K. SITANI'S EVIDENCE IS BEING RELIED UPON B Y THE REVENUE NOT ONLY TO DISALLOW THE PAYMENT MADE TO M/S. INORBIT & M/S, NUPUR BUT VARIOUS OTHER COMPANIES ALSO. 5. MR. PINTO, LEARNED COUNSEL APPEARING FOR THE R EVENUE FAIRLY STATES THAT THE FACTS ARISING IN THIS CASE ARE IDEN TICAL TO THOSE ARISING IN R. W. PROMOTIONS PVT. LTD. (SUPRA) INASMUCH AS IN B OTH THE CASES, EXPENDITURE WAS DISALLOWED ON THE BASIS OF THE STAT EMENTS OF MR. SANDEEP K. SITANI WITHOUT HAVING MADE HIM AVAILABLE FOR CROSS EXAMINATION. THIS EVEN WHEN SOUGHT. IN THE ABOVE CI RCUMSTANCE, MR. PINTO SUBMITS THAT IN THE INTEREST OF JUSTICE, THE DECISION OF THIS COURT IN R. W. PROMOTIONS PVT. LTD. (SUPRA) BE FOLLOWED. ITA NO.4397/MUM/2015 M/S BLEND FINANCIAL SERVICES LTD. ( FORMERLY KNOWN AS BLEND FINANCIAL SERVICES PVT. LTD . ) 4 6. WE FIND THAT IT IS AN UNDISPUTED POSITION BEFOR E US THAT SOME OF THE EXPENDITURE INCURRED ON ACCOUNT OF COMMISSION A ND PROFESSIONAL FEES BY THE APPELLANT HAS BEEN DISALLOWED ON THE BA SIS OF THE STATEMENTS OF MR. SANDEEP K. SITANI WITHOUT MAKING HIM AVAILABLE FOR CROSS EXAMINATION EVEN WHEN SOUGHT. THUS, THE FACTU AL MATRIX IN THIS CASE IS SIMILAR TO ONE IN R. W. PROMOTIONS PVT. LTD . (SUPRA) AND, THEREFORE, FOR REASONS INDICATED THEREIN, WE ANSWER THE SUBSTANTIAL QUESTION OF LAW IN THE AFFIRMATIVE I.E. IN FAVOUR O F THE APPELLANT AND AGAINST THE REVENUE. THEREFORE, THE IMPUGNED ORDER OF THE TRIBUNAL IS SET ASIDE AND THE ISSUE IS RESTORED TO THE ASSESSIN G OFFICER TO PASS A FRESH ORDER AFTER FOLLOWING THE PRINCIPLES OF NATUR AL JUSTICE INCLUDING MAKING AVAILABLE MR. SANDEEP K. SITANI FOR CROSS EX AMINATION BY THE APPELLANT. 7. APPEAL DISPOSED OF IN THE ABOVE TERMS. NO ORDE R AS TO COSTS. 2.2. IT IS NOTED THAT THE TRIBUNAL VIDE ORDER DATE D 19/04/2013 (ITA NO.6814/MUM/2011), WHILE DEALING WI TH THE QUANTUM ADDITION, DISMISSED THE APPEAL OF THE A SSESSEE, AGAINST WHICH THE ASSESSEE CHALLENGED THE SAME BEFO RE THE HON'BLE HIGH COURT. THE HON'BLE HIGH COURT VIDE AFO RESAID ORDER DATED 20/10/2015 SET-ASIDE THE ORDER OF THE T RIBUNAL AND RESTORED THE ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION, FOLLOWING THE PRINCIPLE OF NAT URAL JUSTICE. IT IS NOT THE CASE THAT QUANTUM ADDITION W AS DELETED BY HIGH COURT RATHER IT WAS DIRECTED THAT MR. SANDE EP K. SITANI MAY BE MADE AVAILABLE FOR CROSS EXAMINATION BY THE ASSESSEE. IN VIEW OF THIS FACTUAL MATRIX AND FOLLOW ING THE PRINCIPLE LAID DOWN BY THE HON'BLE HIGH COURT, AS A GREED BY THE ASSESSEE ALSO, WE DEEM IT FIT AN APPROPRIATE TO RESTORE THE PENALTY APPEAL ALSO TO THE FILE OF THE ASSESSIN G OFFICER AS THE SAME WILL BE DEPENDED UPON THE OUTCOME OF THE QUANTUM ADDITION. NEEDLESS TO MENTION HERE THAT THE ITA NO.4397/MUM/2015 M/S BLEND FINANCIAL SERVICES LTD. ( FORMERLY KNOWN AS BLEND FINANCIAL SERVICES PVT. LTD . ) 5 ASSESSEE BE PROVIDED DUE OPPORTUNITY OF BEING HEARD WITH FURTHER LIBERTY TO FURNISH NECESSARY EVIDENCE, IF A NY, IN SUPPORT OF ITS CLAIM. THUS, THE APPEAL OF THE ASSE SSEE IS ALLOWED FOR STATISTICAL PURPOSES. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 03/04/2017. SD/- SD/- ( RAMIT KOCHAR ) (JOGINDER SINGH) '# / ACCOUNTANT MEMBER $# / JUDICIAL MEMBER ( MUMBAI; + DATED : 03/04/2017 F{X~{T? P.S / ,& %$&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. -./0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. 3 3 4! ( -. ) / THE CIT, MUMBAI. 4. 3 3 4! / CIT(A)- , MUMBAI 5. 5&6 1! , 3 -.* - 7 , ( / DR, ITAT, MUMBAI 6. 8 9( / GUARD FILE. / BY ORDER, 25.! 1! //TRUE COPY// / (DY./ASSTT. REGISTRAR) , ( / ITAT, MUMBAI,