ITO 8(1)(4), MUMBAI V. GENNEX CRESA PARTNERS CONSULTANTS P.L TD, MUMBAI

ITA 4480/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4525 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 27-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIKANT NAMDEO
• Assessee Lawyers: FIROZE ANDHYARUJINA
• Keywords: Unexplained expenditure; Business income; Rectification of order; Reason to believe; Reassessment proceedings
• Section: 69C; 14A; 147; 148; 28; 154

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI N.K . BILLAIYA, ACCOUNTANT MEMBER / I .T A NOS. 3853 TO 3855/MUM/2014 ( / ASSESSMENT YEAR :2006 - 07 TO 2008 - 09 M/S. GENNEX CRESA PARTNERS CONSULTANTS PVT. LTD., S - 202, NIMBUS CENTRE, OBEROI COMPLEX, ANDHERI (W), MUMBAI - 400 053 / VS. THE ITO, WARD 8(1)(4), AAYAKAR BHAVAN, MUMBAI - 400 020 / I .T A NO S. 4480 TO 4482 /MUM/2014 ( / ASSESSMENT YEAR : 2006 - 07 TO 2008 - 09 THE ITO, WARD 8(1)(4), AAYAKAR BHAVAN, MUMBAI - 400 020 / VS. M/S. GENNEX CRESA PARTNERS CONSULTANTS PVT. LTD., S - 202, NIMBUS CENTRE, OBEROI COMPLEX, ANDHERI (W), MUMBAI - 400 053 ./ ./ PAN/GIR NO. AACCG 6878K ( / APPELLANT ) .. ( / RESPONDENT ) / A SSESSEE BY: SHRI FIROZE ANDHYARUJINA / RE VENUE BY: SHRI SHRIKANT NAMDEO / DATE OF HEARING : 0 4 . 01 . 201 6 / DATE OF PRONOUNCEMENT : 04 . 0 1 .201 6 / O R D E R PER BENCH : M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 2 ITA NOS. 3853, 3854 & 3855/M /2014 ARE APPEALS BY THE ASSESSEE AGAINST THREE SEPARATE ORDERS OF THE LD. CIT(A) - 16 FOR ASSESSMENT YEARS 2006 - 07 TO 2008 - 09 AND ITA NOS. 4480, 481 & 4482/M/2014 ARE CROSS APPEALS BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF THE LD. CIT(A) FOR ASSESSMENT YEARS 2006 - 07 TO 2008 - 09. THI S BUNCH OF APPEALS WAS HEARD TOGETHER AS ISSUES INVOLVED ARE COMMON AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2. AT THE VERY OUTSET, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT IN ALL THE APPEALS BY THE ASSESSEE THE ADDITIONS MADE U/S. 148 HAVE BEEN CHALLENGED QUA THE REASONS RECORDED FOR REOPENING. AS THIS ISSUE GOES TO THE ROOT OF ALL THE ASSESSMENT UNDER CONSIDE RATION, WE PROCEED BY DECIDING THIS ISSUE FIRST. 3. THE GRIEVANCE OF THE ASSESSEE READS AS UNDER: THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION MADE BY THE LD. AO. INSPITE OF THE FACT THAT NO ADDITIONS WERE MADE FOR REASONS RECORDED FOR REOPENING U/ S. 148 & ERRED IN NOT FOLLOWING JURISDICTIONAL HIGH COURTS & OTHER HIGH COURTS DECISION . 4. IT WAS FURTHER AGREED BY THE REPRESENTATIVES OF BOTH SIDES THAT FACTS IN ISSUES RELATING TO THE AFOREMENTIONED GRIEVANCE ARE IDENTICAL IN ALL THE YEARS UNDER CON SIDERATION. ON THIS CONCESSION OF THE RIVAL REPRESENTATIVES, WE PROCEED BY CONSIDERING THE FACTS FOR ASSESSMENT YEAR 2006 - 07 IN ITA NO. 3853/M/2014. 5. FACTS OF THE CASE SHOW THAT THE ORIGINAL RETURN OF INCOME WAS FILED ON 30.11.2006 DECLARING TOTAL INC OME AT RS. 11,17,249/ - . THE M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 3 RETURN OF INCOME WAS DULY PROCESSED U/S. 143(1) OF THE ACT. THE SAID ORDER U/S. 143( 1 ) WAS SUBJECT TO A RECTIFICATION ORDER PASSED ON 5.8.2010. 5.1. ON PERUSING THE DETAILS VIS - - VIS THE TDS CERTIFICATE, THE ASSESSING OFFICER NOTICED THAT IN THE PROFIT & LOSS ACCOUNT THE ASSESSEE HAS OFFERED INCOME OF RS. 1,62,20,109/ - WHICH INCLUDED OTHER INCOME OF RS. 11,71,955/ - AND INCOME FROM SERVICES RENDERED AMOUNTING TO RS. 1,50,48,154/ - . THE AO FURTHER FOUND THAT AS PER THE TDS CERTI FICATE, THE ASSESSEE HAS RECEIVED PROFESSIONAL FEES OF RS. 1,54,63,228/ - AND COMMISSION OF RS. 4,83,869/ - TOTALING TO RS. 1,59,47,097/ - . THE AO COMPARED THIS INCOME AS PER THE TDS CERTIFICATE WITH THE INCOME SHOWN IN THE PROFIT & LOSS ACCOUNT, THE TOTAL OF WHICH WAS SHOWN AT RS. 1,50,48,154/ - . THE AO WAS OF THE FIRM BELIEF THAT PROFESSIONAL FEES AND COMMISSION AMOUNTING TO RS. 8,98,943/ - WAS NOT DISCLOSED BY THE ASSESSEE, 5.2. THE ASSESSMENT WAS REOPENED AND ACCORDINGLY STATUTORY NOTICE U/S. 148 WAS IS SUED. THE REASSESSMENT PROCEEDINGS STARTED, QUERIES WERE RAISED AND COMPLIED BY THE ASSESSEE AND FINALLY THE REASSESSMENT ORDER WAS MADE AT AN INCOME OF RS. 1,10,14,930/ - . 5.3. THE REASSESSMENT ORDER WAS CHALLENGED BEFORE THE LD. CIT(A) ON THE GROUND T HAT THE ADDITIONS MADE BY THE AO ARE OTHER THAN THE REASONS RECORDED AND HENCE THE REOPENING IS BAD IN LAW. HOWEVER, THIS CHALLENGE OF THE ASSESSEE DID NOT FIND ANY FAVOUR WITH THE LD. CIT(A). M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 4 6. AGGRIEVED, THE ASSESSEE IS BEFORE US. THE LD. COUNSEL FO R THE ASSESSEE STRAIGHTAWAY DREW OUR ATTENTION TO THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT WHICH IS PLACED AT EXHIBIT - 12 AND 13 OF THE PAPER BOOK. THE LD. COUNSEL FURTHER DREW OUR ATTENTION TO THE IMPUGNED ASSESSMENT ORDER AND POINTED OUT THAT NO ADDITIONS HAVE BEEN MADE FOR THE REASONS FOR WHICH THE ASSESSMENT WAS REOPENED. THE LD. COUNSEL VEHEMENTLY STATED THAT THIS IS AGAINST THE SETTLED PROPOSITION OF LAW LAID DOWN BY THE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF CIT VS JET AIRWA YS (I) LTD IN 331 ITR 236. 7. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE COULD NOT BRING ANY DISTINGUISHING DECISION IN FAVOUR OF THE REVENUE. 8. WE HAVE GIVEN A THOUGHTFUL CONSIDERATION TO THE ORDERS OF THE AUTHORITIES BELOW. WITH THE ASSISTANCE O F THE LD. COUNSEL, WE HAVE ALSO CONSIDERED THE RELEVANT DOCUMENTARY EVIDENCES BROUGHT ON RECORD AND REFERRED TO BEFORE US. THE REASONS RECORDED FOR REOPENING OF THE ASSESSMENT READ AS UNDER: TO: THE PRINCIPAL OFFICER, M/S. GENNEX CRESA PARTNERS CONSULTANTS PVT. LTD., S - 202, NIMBUS CENTRE, OBEROI COMPLEX, ANDHERI (W), MUMBAI - 400 053 DEAR SIR, SUB : INTIMATION OF REASONS FOR RE - OPENING THE ASSESSMENT U/S. 147 OF THE I.T. ACT FOR A.Y. 2006 - 07 - REG IN THIS REGARD, YOUR ASSESSMENT FOR THE A.Y. 2006 - 07 HAS BEEN REOPENED FOR THE FOLLOWING REASONS: M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 5 THE ASSESSEE HAS FILED RETURN FOR A.Y. 2006 - 07 ON 28.11.2006 DECLARING TOTAL INCOME OF RS. 11,17,249/ - . THE RETURN OF INCOME WAS PROCESSED U/S. 143(1) ON 28 .1.2008. VIDE LETTER DT. 12.3.2010, THE ASSESSEE SUBMITTED THE COPIES OF BALANCE SHEET, PROFIT & LOSS ACCOUNT, TDS CERTIFICATES ETC AND REQUESTED FOR CREDIT OF TDS. ACCORDINGLY, RECTIFICATION ORDER U/S. 154 WAS PASSED ON 5.8.2010. ON GOING THROUGH THE T DS CERTIFICATES AND P&L ACCOUNT, IT IS FOUND THAT THE ASESEE HAS OFFERED INCOME OF RS. 1,62,20,109/ - INCLUSIVE OF OTHER INCOME OF RS. 11,71,995/ - AND INCOME FROM SERVICES RENDERED AMOUNTING TO RS. 1,50,48,154/ - . HOWEVER, AS PER THE TDS CERTIFICATES SUBMIT TED BY THE ASSESSEE, IT IS SEEN THAT THE ASSESSEE HAS RECEIVED INCOME AS UNDER: INCOME AS PER TDS C ERTIFICATE INCOME AS PER RETURN 1. PROFESSIONAL FEES (I)REVENUE FROM TRANSACTION SERVICES 7607201 (I) SANTHOSH WILSON (II)DEWAN HOUSING FINANCE CORPN. LTD. (III) BHARAT PETROLEUM CORPN. LTD., (IV) GOLF LINKS SOFTWARE PARK P. LTD. (V) NVIDIA GRAPHICS P. LTD (VI) HALCROW CONSULTING INDIA LTD 199021 82650 149220 6099266 8767771 165300 (II) VALUATION FEES (III) AFFILIATION FEES (IV) INDIRECT INCOMES (V) FACILITY MANAGEMENT (VI) PROJECT MANAGEMENT BANGALORE (VII)PROJECT MANAGEMENT 3 PUNE 377500 345000 12926 370712 2622315 3712500 15463228 15048154 II COMMISSION (I) BIRLA SUNLIFE INSURANCE CO. LTD. (II) HONEYWELL AUTOMATION (I) LTD (III) METLIFE INDIA INSURANCE CO. P. LTD (IV) PBC VENTURES LTD (V) VATIKA HOSPITALITY P.LTD 11 6371 86987 148271 52896 79344 OTHER INCOME (I) DIVIDEND INCOME (II) EXCHANGE RATE DIFFERENCE (III) LONG TERM CAPITAL GAIN (IV) SHORT TERM CAPITAL GAIN 883031 8664 242833 37427 483869 1171955 15947097 16220109 AS PER TDS CERTIFICATES, THE ASSESSEE HAS RECEIVED PROFESSIONAL FEES OF RS. 1,54,63,228/ - AND COMMISSION OF RS. 4,83,869/ - TOTALING TO RS. 1,59,47,097/ - . HOWEVER, IT HAS OFFERED TO TAX REVENUE FROM TRANSACTION SERVICES OF RS. 76,07,201/ - , VALUATION FEES O F RS. 3,7,50/ - , AFFILIATION FEES OF RS. 3,45,000/ - , INDIRECT INCOMES OF RS. 12,926/ - , FACILITY MANAGEMENT OF RS. 3,70,712/ - , PROJECT MANAGEMENT (BANGALORE) OF RS. 26,22,315/ - AND PROJECT MANAGEMENT (PUNE) OF RS. 37,12,500/ - TOTALING RS. 1,50,48,154/ - RESUL TING M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 6 INTO NOT DISCLOSING THE TOTAL INCOME RECEIVED UNDER THE HEAD OF PROFESSIONAL FEES AND COMMISSION AMOUNTING TO RS. 8,98,943/ - (RS. 1,54,63,228/ - - RS. 1,50,48,154/ - ). IN VIEW OF THE ABOVE, IT IS CRYSTAL CLEAR THAT THE ASSESSEE HAS NOT OFFERED INCOME O F RS. 8,98,943/ - PERTAINING TO PROFESSIONAL FEES AND COMMISSION EARNED DURING THE F.Y. 205 - 06 RELEVANT TO A.Y 2006 - 07. HENCE,. I HAVE REASON TO BELIEVE THAT PROFESSIONAL FEES AND COMMISSION INCOME AMOUNTING TO RS. 8,98,943/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE I.T. ACT. HENCE THE ASSESSMENT IN THE CASE OF M/S. GENNEX CRESA PARTNERS CONSULTANTS PVT. LTD FOR A.Y. 2006 - 07 IS HEREBY REOPENED U/S. 147 BY ISSUE OF NOTICE U/S. 148 OF THE I.T. ACT. IN THIS REGARD, YOU ARE REQUESTED TO F URNISH OBJECTIONS/SUBMISSIONS, IF ANY ON 21.4.2011. YOURS FAITHFULLY, SD/ - (EKNATH ABHANG) INCOME TAX OFFICER 8(1) - 4,MUMBAI 9. A PERUSAL OF THE AFOREMENTIONED REASONS SHOWS THAT THE ASSESSMENT WAS REOPENED ON THE PRETEXT THAT INCOME OF RS. 8,98,943/ - HAS ESCAPED ASSESSMENT WITHIN THE MEANING OF SEC. 147 OF THE ACT. 9.1. KEEPING IN MIND THE AFOREMENTIONED REASONS AND THE QUANTUM O F INCOME ALLEGED TO HAVE BEEN ESCAPED ASSESSMENT, THE AO HAS COMPLETED THE ASSESSMENT AS UNDER: BUSINESS INCOME AS PER COMPUTATION OF THE ASSESSEE 8,36,989 ADD: AS DISCUSSED ABOVE (I) DISALLOWANCE U/S. 14A (PARA - 7) 41,140 / - (II) BUSINESS PROMOTION EXPENSES (PARA - 8) 49,169/ - (III) OUT OF POCKET EXPENSES U/S. 40A(2)(B) (PARA - 9) 5,07,600/ - IV) SALARY EXPENSES (PARA - 10) 9,12,500/ - (V) COMMISSION EXPENSES (PARA - 11) 5,81,276/ - (VI) PROFESSIONAL FEES EXPENSES (PARA - 12) 77,91,807/ - M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 7 (VII) UNEXPLAINED EXPENDITURE U/S. 69C (PARA - 13) 2,57,020/ - 1,01,40,512 INCOME FROM BUSINESS & PROFESSION 1,09,77,501 LONG TERM CAPITAL GAIN 2,42,833/ - LESS: EXEMPTED 2,42,833/ - ------ SHORT TERM CAPITAL GAIN 37,427 TOTAL INCOME 1,10,14,928 ROUNDED OFF TO RS. 1,10,14,930 9.2. A PERUSAL OF THE AFOREMENTIONED COMPUTATION OF ASSESSED INCOME SHOW THAT THERE IS NO ADDITION NOT EVEN A WHISPER OF THE INCOME OF RS. 8,98,943/ - ALLEGED TO HAVE ESCAPED ASSESSMENT VIDE REASONS FOR REOPENING THE ASSESSMENT. THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY IN THE CASE OF JET AIRWAYS (SUPRA) INTER ALIA HELD AS UNDER: HOWEVER, IF AFTER ISSUING A NOTICE U/S. 148, HE ACCEPTED THE CONTENTION OF THE ASSESSEE AND HOLDS THAT THE INCOME WHICH HE HAS INITIALLY FORMED A REASON TO BELIEF HAD ESCAPED ASSESSMENT, HAS AS A MATTER OF FACT NOT ESCAPED ASSESSMENT, IT IS NOT OPEN TO HI M INDEPENDENTLY TO ASSESS SOME OTHER INCOME. IF HE INTENDS TO DO SO, A FRESH NOTICE U/S. 148 WOULD BE NECESSARY, THE LEGALITY OF WHICH WOULD BE TESTED IN THE EVENT OF A CHALLENGE BY THE ASSESSEE. 9.3. AS MENTIONED ELSEWHERE, NO ADDITIONS HAVE BEEN MADE ON ACCOUNT OF INCOME WHICH FORMS A REASON TO BELIEVE A S ESCAPED ASSESSMENT. RESPECTFULLY FOLLOWING THE FINDINGS OF THE HONBLE JURISDICTIONAL HIGH COURT OF BOMBAY (SUPRA), IN OUR CONSIDERED OPINION , THE REASSESSMENT ORDER IS BAD IN LAW AND DESERVES TO BE VACATED. WE HOLD ACCORDINGLY. GRIEVANCE RAISED VIDE GROUND NO. 1 IS ALLOWED. M/S. GENNEX CRESA PARTNERS CONSULTANTS P. LTD. 8 9.4. THIS MAKES ALL OTHER GRIEVANCES INFRUCTUOUS AND THE CROSS APPEALS BY THE REVENUE OTIOSE. 10. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE ARE ALLOWED AND THE APPEA LS FILED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH JANUARY , 201 6 . SD/ - SD/ - ( SAKTIJIT DEY ) (N.K. BILLAIYA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI ; DATED : 4 TH JANUARY , 201 6 . . ./ RJ , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI