EMINENT TRAVELS P. LTD, MUMBAI V. ITO 1(1)(3), MUMBAI

ITA 4936/MUM/2011

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71181 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Next Hearing Date: 13-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 22-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T ROUMUAN PALTE
• Assessee Lawyers: DR K SHIVRAM; AJAY R SINGH
• Keywords: Unexplained investment; Additional evidence
• Section: 143(3)

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI .. , !'# $ $ $ $ %&. !.'.. $( ) !'# !* BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM !./ I.T.A. NO. 4936 /MUM/2011 ( )( , $-, )( , $-, )( , $-, )( , $-, / / / / ASSESSMENT YEAR : 2006-07) EMINENT TRAVELS PRIVATE LTD., C/O R.A. JAGTAP & CO., 427, PAREKH MARKET, 39, KENNEDY BRIDGE, OPERA HOUSE, MUMBAI 400 004. ( ( ( ( / VS. INCOME TAX OFFICER (1)(3), AAYAKAR BHAVAN, MUMBAI - 20. #. !./ PAN : AAACE2507M ( ./ / // / APPELLANT ) .. ( 01./ / RESPONDENT ) ./ 2 3 ! / APPELLANT BY : DR. K. SHIVRAM & SHRI AJAY R. SINGH 01./ 2 3 ! / RESPONDENT BY : SHRI T. ROUMUAN PALTE !($ 2 / // / DATE OF HEARING : 13-08-13 45- 2 / DATE OF PRONOUNCEMENT : 18-09-13 '6 / O R D E R PER P.M. JAGTAP, A.M. : .. , !'# THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) - 1, MUMBAI DATED 22-02-2009. 2. THE ISSUE RAISED IN GROUND NO. 1 RELATES TO THE ADDITION OF RS. 64,500/- MADE BY THE A.O. AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF UNEXPLAINED INVESTMENT ALLEGEDLY MADE BY THE ASSESSEE IN THE FI XED ASSETS. ITA 4936/M/11 2 3. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY WH ICH IS ENGAGED IN THE BUSINESS OF TRAVEL MANAGEMENT AND SERVICES AND MAIN LY CATERS TO THE CORPORATE CUSTOMERS. THE RETURN OF INCOME FOR THE Y EAR UNDER CONSIDERATION WAS FILED BY IT ON 21-10-2006 DECLARING LOSS OF RS. 18,26,354/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS MADE INVESTMENT OF RS. 64,500/- IN THE PURCHASE OF FIXED ASSETS. THE ASSESSEE, HOWEVER, COULD NOT PRODUCE A NY DOCUMENTARY EVIDENCE IN SUPPORT OF THE SAID ADDITION MADE TO THE FIXED A SSETS AND IN THE ABSENCE OF SUCH EVIDENCE, THE INVESTMENT MADE BY THE ASSESSEE IN FIXED ASSETS AMOUNTING TO RS. 64,500/- WAS ADDED BY THE A.O. TO THE TOTAL INCOME OF THE ASSESSEE TREATING THE SAME AS UNEXPLAINED. BEFORE T HE LD. CIT(A), A LETTER WAS FILED BY THE ASSESSEE STATING THEREIN THAT THE COPI ES OF RELEVANT BILLS FOR PURCHASE OF ASSETS ARE ENCLOSED. ACCORDING TO THE LD. CIT(A), NO SUCH BILLS WERE ATTACHED WITH THE SAID LETTER AND HE THEREFORE CONFIRMED THE ADDITION MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED INVESTME NT MADE BY THE ASSESSEE IN THE FIXED ASSETS. 4. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS FILED THE COPIES OF RELEVANT BILLS FOR THE PURCHASE OF FIXED ASSETS AS ADDITIONAL EVIDENCE BEFORE US AND HAS ALSO FILED AN APPLICATIO N SEEKING ADMISSION OF THE SAID ADDITIONAL EVIDENCE ON THE GROUND THAT NO OPPO RTUNITY WAS GIVEN BY THE LD. CIT(A) TO THE ASSESSEE TO FILE THE SAID EVIDENC E EVEN AFTER NOTICING THAT THE RELEVANT BILLS HAD REMAINED TO BE ENCLOSED WITH THE LETTER INADVERTENTLY. THE LD. D.R. HAS NOT RAISED ANY OBJECTION FOR THE ADMIS SION OF THE SAID ADDITIONAL EVIDENCE. HE, HOWEVER, HAS SUBMITTED THAT AN OPPOR TUNITY SHOULD BE GIVEN TO THE A.O. TO VERIFY THE SAID BILLS FILED BY THE ASSE SSEE FOR THE FIRST TIME BEFORE THE TRIBUNAL. ACCORDINGLY, THE IMPUGNED ORDER OF T HE LD. CIT(A) ON THIS ISSUE IS SET ASIDE AND THE MATTER IS RESTORED TO THE FILE OF THE A.O. FOR DECIDING THE SAME AFRESH AFTER VERIFYING THE COPIES OF RELEVANT BILLS FOR THE PURCHASE OF FIXED ITA 4936/M/11 3 ASSETS FILED BY THE ASSESSEE FOR THE FIRST TIME BEF ORE THE TRIBUNAL AS ADDITIONAL EVIDENCE. GROUND NO. 1 IS ACCORDINGLY TREATED AS AL LOWED FOR STATISTICAL PURPOSE. 5. THE ISSUE RAISED IN GROUND NO. 2 RELATES TO THE DISALLOWANCE OF RS. 7,20,798/- SUSTAINED BY THE LD. CIT(A) OUT OF TOTAL DISALLOWANCE OF RS. 14,41,798/- MADE BY THE A.O. ON ACCOUNT OF HANDLING CHARGES. 6. IN THE PROFIT AND LOSS ACCOUNT FILED ALONG WITH THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION, A SUM OF RS. 1,44,17, 976/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF HANDLING CHARGES. DURING TH E COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE A.O. THAT THE CLA IM OF THE ASSESSEE FOR HANDLING CHARGES WAS BASED ON SELF MADE VOUCHERS AN D THE SAME WAS NOT SUPPORTED BY PROPER EVIDENCE IN THE FORM OF BILLS E TC. HE, THEREFORE, DISALLOWED THE HANDLING CHARGES CLAIMED BY THE ASSESSEE TO THE EXTENT OF RS. 14,41,798/- BEING 10% OF THE TOTAL EXPENSES FOR THE UNVERIFIABL E AND UNVOUCHED ELEMENT INVOLVED THEREIN. BEFORE THE LD. CIT(A) IT WAS EXP LAINED ON BEHALF OF THE ASSESSEE THAT THE HANDLING CHARGES REPRESENTED THAT PART OF THE COMMISSION EARNED BY THE ASSESSEE FROM THE AIR LINES WHICH WAS PASSED OVER TO THE CUSTOMERS. IT WAS SUBMITTED THAT THE ASSESSEE RECEI VED PAYMENT FROM THE CUSTOMER AFTER DEDUCTING THE HANDLING CHARGES AND T HERE WAS THUS NO OTHER EVIDENCE TO SUPPORT THE HANDLING CHARGES CLAIMED BY THE ASSESSEE EXCEPT THE SELF MADE VOUCHERS. IT WAS ALSO POINTED OUT THAT M/ S TCS LIMITED WAS THE MAIN CUSTOMER OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND OUT OF THE TOTAL HANDLING CHARGES OF RS. 1,44,17,976/- CLAIMED, RS. 1,25,03,597/- WERE PERTAINING TO TCS LIMITED WHO HAD DEDUCTED THE HANDLING CHARGES WHILE MAKING PAYMENT TO THE ASSESSEE FOR WHICH PROPER SUP PORTING EVIDENCE WAS AVAILABLE. THE LD. CIT(A) DID NOT ACCEPT THE STAND OF THE ASSESSEE ON THIS ISSUE FULLY ON THE GROUND THAT THE BURDEN WAS ON TH E ASSESSEE TO SUPPORT AND SUBSTANTIATE ITS CLAIM FOR HANDLING CHARGES ON EVID ENCE AND HELD THAT THE ASSESSEE HAVING FAILED TO DISCHARGE SUCH ONUS FULLY , SOME DISALLOWANCE ON ITA 4936/M/11 4 ACCOUNT OF UNVERIFIABLE ELEMENT INVOLVED IN THE HAN DLING CHARGES WAS CALLED FOR. THE LD. CIT(A) ACCORDINGLY RESTRICTED THE DISA LLOWANCE OF 10% OUT OF HANDLING CHARGES MADE BY THE A.O. TO THE EXTENT OF 5% CONSIDERING THE SAME TO BE FAIR AND REASONABLE. STILL AGGRIEVED THE ASS ESSEE HAS PREFERRED THIS APPEAL BEFORE US. 7. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. AS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) AS WELL AS BEFORE US, THE HAN DLING CHARGES REPRESENTING PART OF THE COMMISSION EARNED BY THE ASSESSEE FROM THE AIR LINES AND SHARED WITH ITS CUSTOMER, WERE DEDUCTED BY THE CONCERNED C USTOMERS DIRECTLY FROM THE PAYMENT MADE TO THE ASSESSEE COMPANY. M/S TCS L IMITED WAS ONE OF THE MAIN CUSTOMERS OF THE ASSESSEE COMPANY DURING THE Y EAR UNDER CONSIDERATION AND HANDLING CHARGES OF RS. 1,25,03,597/- WERE PERT AINING TO THE SAID MAIN CUSTOMER ALONE. M/S TCS LIMITED WHILE MAKING PAYME NT TO THE ASSESSEE HAD DEDUCTED THE HANDLING CHARGES AND ALTHOUGH THERE WA S NO INDEPENDENT DOCUMENTARY EVIDENCE AVAILABLE TO SUPPORT THE PAYME NT HANDLING CHARGES, THE FACT OF DEDUCTION OF HANDLING CHARGES BY A BIG COMPANY LIKE TCS LIMITED BY ITSELF WAS SUFFICIENT TO SHOW THAT PART OF THE C OMMISSION FROM AIR LINES HAD NOT BEEN RECEIVED BY THE ASSESSEE AND THE SAME WAS SHARED BY TCS LIMITED. HAVING REGARD TO ALL THESE FACTS OF THE CASE AS WEL L AS THE FACT THAT NO DISALLOWANCE ON ACCOUNT OF HANDLING CHARGES WAS MAD E BY THE A.O. IN THE ASSESSMENT COMPLETED IN THE CASE OF THE ASSESSEE FO R A.Y. 2003-04 U/S 143(3) OF THE ACT, WE ARE OF THE VIEW THAT NO DISALLOWANCE ON ACCOUNT OF HANDLING CHARGES PAID BY THE ASSESSEE TO TCS LIMITED CAN BE MADE. IN OUR OPINION, THE DISALLOWANCE MADE BY THE A.O. AND SUSTAINED BY THE LD. CIT(A) OUT OF HANDLING CHARGES PAID TO OTHER PARTIES, HOWEVER, IS SUSTAINA BLE IN THE ABSENCE OF RELEVANT DETAILS OR DOCUMENTS FILED BY THE ASSESSEE TO SUPPORT AND SUBSTANTIATE THE SAME FULLY. WE THEREFORE RESTRICT THE DISALLOWANCE ON THIS ISSUE TO THE EXTENT OF 5% OF HANDLING CHARGES PAID BY THE ASSESSEE TO ITS OTHER ITA 4936/M/11 5 CUSTOMERS AMOUNTING TO RS. 19,14,379/- AND ALLOW PA RTLY GROUND NO. 2 OF THE ASSESSEES APPEAL. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. )( ,7 2 86 #$ 2 9: ; ORDER PRONOUNCED IN THE OPEN COURT ON 18-09-2013. . '6 2 45- <'(= 18-09-2013 5 2 SD /- SD /- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) ) !'# JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI ; <'( DATED $.)(.!./ RK , SR. PS '6 2 0)8> ?>- '6 2 0)8> ?>- '6 2 0)8> ?>- '6 2 0)8> ?>-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. @() / THE CIT(A)- 1, MUMBAI 4. @ / CIT 1, MUMBAI 5. >$C 0))( , , / DR, ITAT, MUMBAI E BENCH 6. %, D / GUARD FILE. '6(! '6(! '6(! '6(! / BY ORDER, !1> 0) //TRUE COPY// E E E E/ // /!9 !9 !9 !9 ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI