ITO 8(1)(2), MUMBAI V. CLUBLINK (INDIA) P. LTD, MUMBAI

ITA 5429/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84389 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 30-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PREMANAND J
• Assessee Lawyers: S C TIWARI

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C , BENCH MUMBAI , BEFORE SHRI H. L. KARWA , PRESIDENT & SHRI R.C.SHARMA , A M ( / ITA NO. 2191 /MUM/201 2 ) ( ASSESSMENT YEAR :200 8 - 200 9 ) CLUBLINK (INDIA) PVT. LTD., PLOT NO. 1064, A & B CLUBLINK, CHINCHOLI BUNDER ROAD, NEW LINK ROAD, MALAD (W), MUMBAI - 400064 VS. ITO - 8(1)(2), MUMBAI PAN/GIR NO. : A ABCC 8207 D ( APPELLANT ) .. ( RESPONDENT ) AND ( /ITA NO. 5429 /MUM/2012) ( ASSESSMENT YEAR :200 9 - 20 10 ) ITO - 8(1)(2), MUMBAI VS. CLUBLINK (INDIA) PVT. LTD., PLOT NO.1064, A & B CLUBLINK, CHINCHOLI BUNDER RO AD, NEW LINK ROAD, MALAD (W), MUMBAI - 400064 PAN/GIR NO. : A ABCC 8207 D ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI S.C.TIWARI /REVENUE BY : SHRI PREMANAND J DATE OF HEARING : 9 TH DECEMBER 201 4 DATE OF PRONOUNCEMENT : 9 TH DECEMBER 201 4 O R D E R PER BENCH : ITA NO. 2191/MUM/2012 (BY ASSESSEE FOR A.Y. 2008 - 09 ) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGA INST THE ORDER OF CIT(A), DATED 15 - 2 - 2012 FOR ASSESSMENT YEAR 2008 - 09, IN THE MATTER OF IMPOSITION OF PENALTY U/S.271(1)(C) OF THE IT ACT. ITA NO. 2191 &5429 /201 2 2 2 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT AN ADDITION OF RS.6 LAKHS WAS MADE U /S.143(3), ON ACCOUNT OF UNSECURED LOANS IN VIEW OF FAILURE OF ASSESSEE TO PRODUCE THE LOAN CONFIRMATION OF M/S 3 GLOBAL SERVICES PVT. LTD. AND ALSO FAILED TO EXPLAIN THE NATURE AND SOURCES THEREOF. IN REPLY TO AOS SHOW - CAUSE NOTICE FOR MAKING SAID ADDITI ON U/S.68 OF THE ACT, THE REPRESENTATIVE OF ASSESSEE STATED THAT HE HAS NO OBJECTION FOR THE PROPOSED ADDITION OF RS. 6 LAKHS, ACCORDINGLY ADDITION OF RS.6 LAKHS WAS MADE U/S.68 OF THE ACT AND PENALTY PROCEEDINGS WAS ALSO INITIATED FOR CONCEALMENT OF PARTIC ULARS OF INCOME. VIDE ORDER PASSED U/S.271(1)(C) DATED 17 - 3 - 2011 THE AO IMPOSED PENALTY BY OBSERVING THAT ASSESSEE FAILED TO SUBSTANTIATE THE RECEIPT OF LOAN DURING THE ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDINGS, WHICH RESULTED INTO CONCEALMENT OF INCOME. 3 . BY THE IMPUGNED ORDER, THE CIT(A) CONFIRMED THE PENALTY BY OBSERVING THAT THE CREDITOR COMPANY HAS REFUSED ANY TRANSACTION WITH THE ASSESSEE , ACCORDINGLY, THE AO WAS JUSTIFIED IN IMPOSING THE PENALTY FOR THE ADDITION SO MAD E. AGAINST THE ORD ER OF CIT(A) CONFIRMING PENALTY U/S.271(1)(C), THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4 . LEARNED AR ARGUED THAT PENALTY PROCEEDINGS ARE DISTINCT FROM ASSESSMENT PROCEEDINGS, THEREFORE, ASSESSEE HAD ALL RIGHTS TO CHALLENGE THE ADDITION SO MADE IN QUA NTUM PROCEEDINGS WHICH RESULTED INTO LEVY OF PENALTY. LD. AR PLACED ON RECORD STATEMENT OF ACCOUNT OF M/S 3 GLOBAL SERVICES PVT. LTD. IN ITS BOOKS OF ACCOUNT ACCORDING TO WHICH LOAN OF RS. 6 LAKHS WAS RECEIVED ON 16 - 5 - 2006 FALLING IN THE FINANCIAL YEAR 2006 - 07 RELEVANT TO THE ASSESSMENT YEAR 2007 - 08 . AS PER LEARNED AR SINCE THE ITA NO. 2191 &5429 /201 2 3 AMOUNT WAS RECEIVED IN THE ASSESSMENT YEAR 2007 - 08, THE AO WAS NOT JUSTIFIED IN ADDING THIS AMOUNT DURING THE CURRENT ASSESSMENT YEAR I.E. 2008 - 09 AND THE PENALTY SO IMPOSED ON THIS A DDITION WAS ALSO NOT JUSTIFIED. LEARNED AR ALSO STATED AT BAR THAT AMOUNT WAS RECEIVED ONLY ON 16 - 5 - 2006, THEREFORE, NO ADDITION WAS WARRANTED DURING THE ASSESSMENT YEAR 2008 - 09 COVERING FINANCIAL YEAR 1 - 4 - 2007 TO 31 - 3 - 2008. 5 . ON THE OTHER HAND, THE CONTE NTION OF THE LEARNED DR WAS THAT ASSESSEE COULD NOT FILE EVEN LOAN CONFIRMATION DURING ASSESSMENT PROCEEDINGS NOR DURING PENALTY PROCEEDINGS EVEN AFTER GIVING SO MANY OPPORTUNITIES . T HEREFORE, THE AO WAS JUSTIFIED IN IMPOSING PENALTY AND THE CIT(A) HAS COR RECTLY CONFIRMED THE SAME. 6 . WE HAVE CONSIDERED RIVAL CONTENTIONS, CAREFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM THE RECORD THAT THE ADDITION OF RS. 6 LAKHS WAS MADE ON ACCOUNT OF UNSECURED LOANS U/S.68. IN RESPECT OF AMOUNT ALL EGED TO BE RECEIVED FROM M/S 3 GLOBAL SERVICES PVT. LTD., THE ASSESSEE WAS ASKED TO FILE LOAN CONFIRMATION AND TO SUBSTANTIATE GENUINENESS OF THE TRANSACTION. HOWEVER, ASSESSEE FAILED TO FILE THE LOAN CONFIRMATION AND IN REPLY TO AOS SHOW - CAUSE NOTICE PRO POSING THE SAID ADDITION, ASSESSEES REPRESENTATIVE SHRI S.H.BHATIA HAD SHOWN HIS NO OBJECTION FOR THE PROPOSED ADDITION OF RS. 6 LAKHS. ACCORDINGLY, THE AO MADE ADDITION U/S.68. THE ASSESSEE HAS NOT FILED ANY APPEAL AGAINST THE QUANTUM ADDITION OF RS. 6 LAK HS WHICH INDICATES THAT THE ASSESSEE ACCEPTED THE ADDITION SO MADE. SUBSEQUENTLY T HE AO ALSO LEVIED PENALTY WITH REGARD TO THE ADDITION SO MADE U/S.271(1)(C) OF THE ACT BY OBSERVING THAT ASSESSEE FAILED TO FILE CONFIRMATION DURING ASSESSMENT PROCEEDINGS ITA NO. 2191 &5429 /201 2 4 AS WELL AS PENALTY PROCEEDING. IN AN APPEAL FILED AGAINST PENALTY ORDER, IT WAS CONTENDED BY THE ASSESSEE BEFORE THE CIT(A) THAT DURING THE RELEVANT POINT OF TIME, THE ASSESSEE WAS NOT HAVING CORDIAL RELATION WITH THE COMPANY M/S 3 GLOBAL SERVICES PVT. LTD. FROM WHO M AMOUNT WAS RECEIVED. THE ADDRESS AND PAN NUMBER OF M/S 3 GLOBAL SERVICES PVT. LTD. WAS PROVIDED WITH THE CONTENTION THAT M/S 3 GLOBAL SERVICES PVT. LTD. HAS MERGED WITH M/S HUTCHISON 3 GLOBAL SERVICES LTD.. BY OBSERVING THAT THE AO HAS ISSUED LETT ER U/S.13 3(6) OF THE ACT TO M/S HUTCHISON 3G GLOBAL SERVICES LTD, WHO HAS REFUSED ANY TRANSACTION WITH THE ASSESSEE , T HE CIT(A) CONFIRMED THE ACTION OF THE AO FOR LEVY OF PENALTY U/S.271(1)(C) OF ACT. 7 . IT TRANSPIRES FROM THE ABOVE FACTS THAT ADDITION WAS MADE ON THE BASIS OF ALLEGED LOANS RECEIVED DURING THE YEAR BUT COULD NOT BE SUBSTANTIATED BY FILING EVEN THE LOAN CONFIRMATION. THE CONTENTION OF THE LEARNED AR WAS THAT THE AMOUNT WAS NOT RECEIVED DURING THE YEAR UNDER CONSIDERATION BUT WAS RECEIVED ONL Y IN EARLIER ASSESSMENT YEAR COVERING FINANCIAL YEAR STARTING FROM 1 ST APRIL, 2006 TO 31 ST MARCH, 2007. ACCORDINGLY, NO ADDITION IS WARRANTED , D URING THE YEAR UNDER CONSIDERATION RESULTING INTO NO PENALTY . H OWEVER, IT APPEARS FROM THE COPY OF LEDGER ACCOUN T IN ASSESSEES BOOKS OF ACCOUNTS FILED BY THE ASSESSEE THAT THE AMOUNT WAS RECEIVED ONLY ON 16 - 5 - 2006 THROUGH CHEQUE OF STATE BANK OF INDIA. HOWEVER, THE ACTUAL FACT OF RECEIPT OF CHEQUE FROM M/S 3 GLOBAL SERVICES PVT. LTD. ON 16 - 5 - 2006 CAN BE SUBSTANTIAT ED ONLY FROM CONFIRMATION OF THE LOAN CREDITOR AND CERTIFICATE OF BANKER TO THE EFFECT THAT ALLEGED AMOUNT OF RS.6 LAKHS IS CREDIT FROM M/S 3G GLOBAL SERVICES PVT. LTD. THE ASSESSEE HAS NOT FILED ANY LOAN CONFIRMATION NOR THE BANK ITA NO. 2191 &5429 /201 2 5 CERTIFICATE TO SUBSTANTIA TE ITS STAND OF RECEIPT OF LOAN ON 16 - 5 - 2006 FALLING IN THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE ANY OF LOWER AUTHORITY DURING QUANTUM AND PENALTY PROCEEDINGS . IN THE INTEREST OF JUSTICE AND FAIRPLAY, WE RESTORE THE MATTER BACK TO THE FILE OF AO FOR VERIFYING THE ACTUAL DATE OF RECEIPT OF LOAN FROM M/S 3G GLOBAL SERVICES PVT. LTD., AFTER CALLING THE BANK STATEMENT AND LOAN CONFIRMATION. IF THE AO FOUND THAT THE CHEQUE OF RS. 6 LAKHS FROM M/S 3G GLOBAL SERVICES PVT. LTD. WAS RECEIVED ONLY ON 16 - 5 - 2006 FALLING IN THE PREVIOUS YEAR I.E. 1 - 4 - 2006 TO 31 - 3 - 2007, THEN NO PENALTY IS IMPOSABLE WITH REGARD TO THIS ADDITION. WE DIRECT ACCORDINGLY. ITA NO. 5429/MUM/2012 (BY DEPARTMENT FOR A.Y.2009 - 10) : 8 . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF CIT(A), DATED 14 - 6 - 2012 FOR ASSESSMENT YEAR 200 9 - 10 , IN THE MATTER OF ORDER PASSED U/S.143(3) OF THE IT ACT. 9 . THE ONLY GRIEVANCE OF THE REVENUE REGARDING ACTION OF CIT(A) IN DELETING THE ADDITION MADE BY THE AO ON ACCOUNT OF RECEIPT FOR NEW MEMBERSHIP A MOUNTING TO RS. 16,31,837/ - . BY THE IMPUGNED ORDER THE CIT(A) DELETED THE ADDITION BY FOLLOWING THE ORDER OF ITAT IN ASSESSEES OWN CASE FOR A.Y.2004 - 05, PASSED IN ITA NO. 7658/MUM/2007, DATED 23 - 7 - 2010 . 10 . WE HAVE CONSIDERED R IVAL CONTENTIONS AND FOUND THA T THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN ITA NO.7658/MUM/2007 , DATED 23 - 7 - 2010, WHEREIN BY FOLLOWING THE DECISION OF SPECIAL BENCH OF CHENNAI IN CASE OF MAHINDRA HOLIDAYS & RESORT (INDIA) PVT. LTD.; AND THE DECISION OF ITA NO. 2191 &5429 /201 2 6 HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF TREASURE ISLAND RESORT (P) LTD. VS. DCIT, (2004) 90 ITD 814 (HYD) , THE ADDITION SO MADE WAS DELETED BY THE TRIBUNAL. THE PRECISE OBSERVATION OF THE TRIBUNAL AS UNDER: - 11. WE H AVE CAREFULLY CONSIDERED THE RI VAL SUBMISSIONS AND PERUSED THE RECORD. AT THE OUTSET, WE MAY NOTICE THA T THOU G H THERE ARE MINOR CHANGES IN THE RULES & REGULATIONS FOR MEMBERS (ON A COMPARISON BETWEEN REGULATIONS EXTRACTED BY THE ASSESSING OFFICER AND THE C OPY OF REGULATIONS FURNISHED BEFORE US), BROADLY THE INTENTION IS MADE CLEAR, IN THE FORM OF RULES & RE G U L A T I ONS, TO RECOVER COST OF CONSUMABLES AND RECURRING EXPENDITURE IN THE FORM OF ADDITIONAL FEES APART FROM CONNECTING THE NON REFUNDABLE FEES TO THE O VERALL WEAR AND TEAR OF THE CLUB PREMISES, INTEREST CHARGES, PROPERTY TAX, AUDIT FEES AND .OTHER SUCH INCIDENTAL EXPEN DITURE. HAVING REGARD TO THE FAC TS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT BRINGING TO TAX THE ENTIRE' NON REFUNDABLE FEES IN THE YEAR OF RECEIPT WOULD GIVE A DISTORTED PICTURE OF THE PROFITS OF THE YEAR OF RECEIPT. IN THE LIGHT OF THE DECISION 'OF THE ITAT, SPECIAL BENCH, CHENNA I ,. IN THE CASE OF MAH I NDRA HOLIDAYS & RESORT AS WELL AS THE DEC I S ION OF ITAT, HYDERABAD, IN THE CA SE OF TREASURE ISLAND RESORT (P) LTD. (WHEREIN ONE OF US IS A PARTY), WE ARE OF THE CONSIDERED OPINION THAT NON REFUNDABLE FEES WAS JUSTIFIABLY SPREAD OVER BY THE ASSESSEE ON A SYSTEMATIC AND RATIONAL BASIS AND SUCH METHODOLOGY DERIVES SANCTION FROM AS - 9 F URNISHED BEFORE US. SINCE THE ID. CIT(A) HAS CONSIDERED THE ISSUE IN GREAT DETAIL, BY ANALY Z I NG THE FACTS AS WELL AS THE PRINCIPLES LAID DOWN IN VARIOUS CASE LAW, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE CIT(A). 12. IN THE RESULT, WE UPHOL D THE ORDER OF CLT(A) AND DISMISS THE APPEAL FILED BY THE R EVENUE. 1 1 . AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SAME, RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A) FO R DELETING THE ADDITION. 1 2 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES , WHEREAS APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 9 TH DEC. 201 4 . 9 TH DEC. ,2014 SD/ - SD/ - ( ) ( H.L.KARWA ) ( ) ( R.C.SHARMA ) / PRESIDENT / ACCOUNTANT MEMBER MUMBAI ; DATED 09/12 /2014 /PKM , PS ITA NO. 2191 &5429 /201 2 7 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//