JM FINANCIAL LTD ( FORMERLY KNOWN AS J.M. SHARE & STOCK BROKER LTD), MUMBAI V. DCIT 4(3), MUMBAI

ITA 5437/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 79329 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 29-04-2014
• Assessment Year: 1998-1999
• Appeal Filed On: 29-08-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Opportunity of being heard; Onus to prove
• Section: 133(6); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUM BAI , BEFORE SHRI D. MANMOHAN, VP AND SHRI SANJAY ARORA, AM I.T.A. NO. 5437/MUM/2012 ( / ASSESSMENT YEAR: 1998-99) J. M. FINANCIAL LIMITED (FORMERLY KNOWN AS J. M. SHARE & STOCK BROKERS LIMITED) 141, MAKER CHAMBERS NO. III, NARIMAN POINT, MUMBAI-400 021 VS. DY. CIT-4(3), AAYAKAR BHAVAN, M. K. MARG, MUMBAI-400 020 ! ' ./PAN/GIR NO. AAACJ 2590 B ( !# /APPELLANT ) : ( $%!# / RESPONDENT ) !#&' / APPELLANT BY : DR. K. SHIVARAM $%!#&' / RESPONDENT BY : SHRI SANJEEV JAIN ( )*&+, / DATE OF HEARING : 29.04.2014 -./&+, / DATE OF PRONOUNCEMENT : 16.07.2014 0 O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-9, MUMBAI (CIT(A) FOR SHO RT) DATED 12.06.2012, DISMISSING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S .143(3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A. Y.) 1998-99 VIDE ORDER DATED 23.12.2010. 2. THE APPEAL RAISES A SINGLE ISSUE, PER ITS TWO EF FECTIVE GROUNDS, I.E., QUA THE DISALLOWANCE OF SUB-BROKERAGE EXPENSES FOR RS.51,67 ,026/-. IT WOULD BE, TO ENABLE PROPER 2 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT APPRECIATION OF THE MATTER, NECESSARY TO RECOUNT TH E BACKGROUND FACTS OF THE CASE, LEADING TO THE INSTANT APPEAL BY THE ASSESSEE. THE ASSESSEE IS A COMPANY CARRYING ON THE BUSINESS OF SHARE AND STOCK BROKERING, BOTH IN THE PRIMARY A ND THE SECONDARY MARKET. DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR THE RELEVANT Y EAR, INITIATED BY THE ISSUE OF NOTICE U/S. 143(2) ON 23.08.2000, IT WAS CALLED UPON TO FURNISH THE NAMES AND ADDRESSES OF THE SUB- BROKERS TO WHOM BROKERAGE EXCEEDING RS.50,000/- FOR THE RELEVANT YEAR WAS PAID. THOUGH THE ASSESSEE SUBMITTED THE NAMES OF THE BROKERS (44 ) AS REQUIRED, DETAILING THE PAYMENTS THERETO (AT A TOTAL OF RS.74,05,267/-), THEIR ADDRE SSES STOOD NOT FURNISHED BY IT DESPITE A LAPSE OF OVER SIX MONTHS AND SEVERAL REMINDERS. THE SAME WAS, ACCORDINGLY, DISALLOWED AS BEING A BOGUS PAYMENT AND, IN ANY CASE, NOT SUBJ ECT TO VERIFICATION VIDE ASSESSMENT ORDER DATED 28.03.2001 (PB PGS.47-63). THE ASSESSEE FURNISHING THE DETAILS, I.E., THE NAMES AND ADDRESSES OF THE PARTIES TO WHOM THE SUB- BROKERAGE WAS CLAIMED TO HAVE BEEN PAID, SAVE FOR RS.10,51,975/-, THE LD. CIT(A) RESTR ICTED THE DISALLOWANCE TO THE SAID AMOUNT, DELETING AS A RESULT THE DISALLOWANCE FOR T HE BALANCE OF RS.63,53,292/- VIDE HIS APPELLATE ORDER DATED 28.10.2005 (PB PGS. 63-76). I N FURTHER APPEAL BEFORE THE TRIBUNAL, ON THIS STATE OF AFFAIRS BEING BROUGHT TO ITS NOTIC E, THE MATTER IN ITS VIEW WAS REQUIRED TO GO BACK TO THE FILE OF THE ASSESSING OFFICER (A.O.) TO ENABLE VERIFICATION OF THE ASSESSEES CLAIMS BY HIM (IN ITA NO.221/MUM(G)/2006 DATED 16.1 1.2009/PB PGS.79-85). 2.2 IN THE SET ASIDE PROCEEDINGS, THE ASSESSEE FURN ISHED THE NAMES AND ADDRESSES OF THE 34 PERSONS TO WHOM SUB-BROKERAGE FOR THE IMPUGNED A MOUNT OF RS.63.53 LACS WAS PAID. NOTICES U/S. 133(6) WERE ISSUED BY THE A.O. TO CONF IRM THE RECEIPT OF THE BROKERAGE BY THEM. MOST OF THE NOTICES WERE EITHER RECEIVED BACK UN-SERVED OR THE PERSONS RECEIVING THEM DID NOT REPLY. ONE ENTITY BY THE NAME, MERCHAN T NAVY OFFICER WELFARE FUND, RESPONDED BY DENYING HAVING RECEIVED ANY BROKERAGE. ACCORDINGLY, THE A.O. ALLOWED THE ASSESSEES CLAIM IN RESPECT OF SIX PARTIES FROM WHO M (PHOTO COPIES OF) LATEST CONFIRMATIONS WERE FILED (FOR RS.9,85,582/-) AND QUA TWO PARTIES WHO RESPONDED POSITIVELY TO THE NOTICES U/S.133(6), CLAIMING TO H AVE RECEIVED THE BROKERAGE (RS.2,00,714/-), I.E., FOR A TOTAL OF RS.11,86,266/ -, DISALLOWING THE BALANCE RS.51,67,026/-. 3 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT THE SAME STOOD CONFIRMED IN APPEAL IN-AS-MUCH AS TH E ASSESSEE WAS UNABLE TO IMPROVE ITS CASE THEREAT IN ANY MANNER; EVEN THE GENUINENESS OF THE TRANSACTIONS BEING IN THE VIEW OF THE LD. CIT(A) NOT BEYOND DOUBT. AGGRIEVED, THE ASS ESSEE IS IN SECOND APPEAL. 3. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. 3.1 AT THE OUTSET, WE OBSERVE THAT THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE HONBLE JURISDICTIONAL HIGH COURT, OR AS IT APPEARS TO BE THE PAPERS FILED IN ITS RESPECT PER THE ASSESSEES PAPER-BOOK BEING NEITHER SIGNED NOR COMPLETE (PB PGS.86-87), NOR IN FACT EVEN BEARING THE BARE PARTICULARS, VIZ. APPEAL NUMB ER, DATE OF FILING, ETC. IN FACT, NO REFERENCE WAS MADE TO THE SAID FACT DURING HEARIN G BY EITHER PARTY BEFORE US, AND IT IS ONLY UPON EXAMINING THE FILE AT THE TIME OF DICTATI ON THAT THIS ASPECT HAS COME TO OUR NOTICE. OUR ORDER, WE MAY CLARIFY, SHALL THEREFORE BE SUBJECT TO THE DECISION BY THE HONBLE HIGH COURT. 3.2 WE MAY, TO BEGIN WITH, REPRODUCE THE ORDER BY T HE TRIBUNAL IN THE FIRST ROUND, WHICH SHALL PROVIDE THE SCOPE OF THE INSTANT PROCE EDINGS, WHICH DERIVES ITS SUSTENANCE FROM THE SAME, BEING ALSO REFERRED TO BY THE LD. AU THORIZED REPRESENTATIVE (AR), THE ASSESSEES COUNSEL, DURING HEARING: 7. THIRD ISSUE IN APPEAL FOR AY 1998-99 RELATES T O IN RESTRICTING THE DISALLOWANCE ON ACCOUNT OF SUB-BROKERAGE FROM RS.74 ,05,267/- TO RS.10,51,975/- WITHOUT GIVING ANY VALID REASON. 7.1 THE AO DISALLOWED THE CLAIM OF BROKERAGE BY OB SERVING THAT NEITHER THE DETAILS OF SUB-BROKER HAVE BEEN FILED NOR PROPE R VOUCHERS HAVE BEEN FILED. THE CIT(A) ALLOWED THE BROKERAGE PAID TO THE PARTIE S, WHOSE ADDRESSES WERE FURNISHED BY THE ASSESSEE . 7.2 THE LD DR HAS STATED THAT NO OPPORTUNITY WAS G IVEN TO THE AO TO VERIFY THE CORRECTNESS OF THE BROKERAGE PAID TO THE PARTIES, WHOSE ADDRESSES WERE GIVEN BEFORE THE CIT(A); THEREFORE, THE MATTER SHOULD BE SENT BACK TO THE FILE OF THE AO. ON THE OTHER HAND, THE LD. COUN SEL OF THE ASSESSEE STATED THAT THOUGH ON THE BASIS OF DETAILS THE LD. CIT(A) HAS ALLOWED RELIEF TO THE ASSESSEE; HOWEVER, FOR VERIFICATION PURPOSES, THE M ATTER CAN BE SENT TO THE FILE OF THE AO. 4 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT 8. AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE MATTER SHOULD GO BACK T O THE FILE OF THE AO TO EXAMINE AND VERIFY THE DETAILS FILED BEFORE THE CIT (A) AS THE LD. AO WAS NOT ALLOWED ANY OPPORTUNITY FOR THE PURPOSE OF VERI FICATION . ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE AO TO PAS S A FRESH ORDER AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. WE ORDER ACCORDINGLY. [EMPHASIS, OURS] 3.3 AS THE READING OF THE ORDERS BY THE AUTHORITIES BELOW WOULD SHOW, AS WELL AS THE ARGUMENTS ADVANCED BEFORE US, THE ASSESSEES CASE I S THAT IT CANNOT BE PUT TO A DISADVANTAGE ON ACCOUNT OF SOME PARTIES, TO WHOM VE RIFICATION NOTICES U/S. 133(6) STOOD ISSUED, NOT RESPONDING OR RESPONDING BY STATING THA T THEY ARE IN THE ABSENCE OF THE OLD RECORDS NOT IN A POSITION TO CONFIRM THE TRANSACTIO N. PAYMENTS TO THEM, AFTER ALL, STAND MADE THROUGH THE BANKING CHANNEL. AGAIN, THE A.O. H AD THE POWER TO ENFORCE ATTENDANCE AND, THEREFORE, THE PLEA OF THE PARTIES HAVING NOT RESPONDED COULD NOT HOLD. THE REVENUES CASE, ON THE OTHER HAND, IS THAT THE ASSE SSEE ITSELF IS RESPONSIBLE FOR THE DELAY IN THE VERIFICATION AND, AS SUCH, IT CANNOT TAKE ADVAN TAGE OF ITS OWN WRONG. TWO, THE BURDEN OF PROOF FOR THE CLAIM U/S. 37(1) HAS, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NOT BEEN MET. RATHER, AS THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD SUBMIT, THE A.O. IN ALLOWING THE ASSESSEE ITS CLAIM IN RESPECT OF THE E XPENDITURE FOR WHICH CONFIRMATIONS (AS TO PAYMENT) STOOD FURNISHED HAS ONLY ACTED LIBERALL Y IN THE MATTER. TOWARD THIS, RELIANCE STANDS PLACED BY HIM ON THE DECISIONS IN THE CASE O F ITO VS. MADDI LAXMAIAH & CO. (P.) LTD. [1988] 31 TTJ 71 (HYD) AND G.R. PANDYA SHARE BROKING LTD. VS. ITO [2008] 26 SOT 431(MUM). 3.4 IT WOULD BE, BEFORE WE PROCEED TO ANALYZE THE F ACTS OF THE CASE AND THE ISSUE/S EMANATING FOR OUR ADJUDICATION, RELEVANT TO STATE T HE FIGURES IN RESPECT OF THE IMPUGNED CLAIM, I.E., AS SUBMITTED BEFORE US BY THE LD. AR, CLAIMING THE SAME TO HAVE BEEN SECURED FROM THE FILES OF THE REVENUE IN PURSUANCE TO AN RT I APPLICATION, SO AS TO HIGHLIGHT THE DIFFERENT ASPECTS OF THE MATTER: 5 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT (AMT. IN RS.) PARTICULARS AMOUNT AMOUNT AMOUNT DISALLOWED BY AO (SEE NOTE 1) 51,67,351 BREAK UP OF AMOUNT DISALLOWED CONFIRMATIONS FILED FOR 25,71,994 NOTICES U/S. 133(6) ISSUED 18,71,325 NO NOTICES U/S. L33(6) ISSUED 7,83,L35 52,26,454 ________ DIFFERENCE IN TOTAL 59,103 51,67,351 DETAILS OF CONFIRMATIONS FILED ________ CONFIRMATIONS FILED FOR 25,71,994 NOTICES U/S. 133(6) ISSUED FOR 22,97,925 NOTICES U/S. 133(6) NOT ISSUED FOR 2,74,069 25,71,994 DETAILS WITH RESPECT TO CONFIRMATIONS FILED AND NOT ICES ISSUED _________ NOTICES ISSUED FOR 22,97,925 PARTIES ATTENDED AND STATED THAT OLD RECORDS NOT AV AILABLE 21,52,226 PARTIES TO WHOM NOTICE U/S. L33(6) COULD NOT BE SER VED 1,45,699 22,97,925 DETAILS WHERE CONFIRMATIONS NOT FILED BUT NOTICES I SSUED _________ NOTICES ISSUED FOR 18,71,325 NOTICES SERVED BUT PARTIES DID NOT RESPOND L3,98,825 NOTICES SERVED AND PARTY DENIED HAVING RECEIVED BRO KERAGE 2,25,000 ________ NOTICES COULD NOT BE SERVED FOR 2,47,500 18,71,325 NOTE 1 CONFIRMATIONS FILED FOR - 25,71,994 CONFIRMATIONS NOT FILED - 26,54,460 TOTAL 52,26,454 ADMITTED DIFFERENCE (59,103) AMOUNT DISALLOWED 51,67,351 3.5 THE ISSUE, AS WE DISCERN, IS WITH REGARD TO THE BURDEN OF PROOF, I.E., ON WHOM LIES THE ONUS, AND WHETHER THE SAME STANDS DISCHARGED, S O THAT THE SAME, BEING BY ITS VERY 6 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT NATURE NOT A STATIC PHENOMENON BUT A CONTINUOUSLY S HIFTING OR VACILLATING BURDEN, HAS BEEN SHIFTED TO THE OTHER. TOWARDS THIS, OUR FIRST OBSER VATION IS THAT THE BURDEN U/S.37(1) OF THE ACT IS SQUARELY ON THE ASSESSEE IN-AS-MUCH AS IT IS FOR IT TO PROVE THAT THE EXPENDITURE BEING CLAIMED STANDS INCURRED WHOLLY AND EXCLUSIVEL Y FOR THE PURPOSE/S OF ITS BUSINESS. IF, DESPITE ALL THE MATERIALS AND EVIDENCES LED BY THE ASSESSEE, THE ASSESSING AUTHORITY IS STILL NOT SATISFIED, AND PROCEEDS TO MAKE A DISALLO WANCE IN ITS RESPECT, IT IS UPON THE APPELLATE AUTHORITIES TO DECIDE WHETHER THE SAID MA TERIAL AND EVIDENCE CAN, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, BE SAID TO BE OR CON SIDERED AS IN DISCHARGE OF THE BURDEN OF PROOF ON THE ASSESSEE. THIS BECOMES RELEVANT WHERE, FOR INSTANCE, THE A.O. SUBJECTS THE MATERIAL FURNISHED BY THE ASSESSEE TO VERIFICATION. HE MAY, SEEKING TO VERIFY A CLAIM OF EXPENDITURE, FOR EXAMPLE SPEAKING IN CONTEXT OF T HE PRESENT CASE, ISSUE NOTICE U/S.133(6) TO THE PAYEE, CONFIRMATION FROM WHOM HAS BEEN FURNI SHED BY THE ASSESSEE. A RESPONSE FROM THE NOTICEE MAY BE EITHER CORROBORATIVE (I.E., IN AGREEMENT) OR NOT SO. WHILE THE FORMER WOULD ORDINARILY RESOLVE THE MATTER, UNLESS OF COURSE THE ASSESSING AUTHORITY WISHES TO FURTHER INVESTIGATE THE SAME, A NON-CORRO BORATIVE RESPONSE WOULD OPERATE TO SHIFT THE ONUS BACK ON THE ASSESSEE, OF-COURSE BY A ND UPON BEING CONFRONTED WITH THE NOTICEES RESPONSE AND THE INFORMATION FURNISHED BY HIM U/S. 133(6). THEN, AGAIN, IS THE SCENARIO OF NON-RESPONSE, WHICH COULD BE DUE TO A V ARIETY OF UNDERLYING CAUSES. THE NOTICE ITSELF MAY HAVE NOT BEEN SERVED, OR EVEN IF SERVED, THE NOTICEE STATES OF HIS INABILITY TO FURNISH THE REQUIRED INFORMATION IN VIEW OF THE MATTER BEING OLD; THE RECORDS BEING NOT AVAILABLE/ DESTROYED, ETC., OR MAY EVEN SIMPLY CHOO SE NOT TO RESPOND. IT IS THESE DIFFERING CIRCUMSTANCES THAT POSE THE PROBLEM IN DETERMINING IF UNDER THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE THE BURDEN ON THE ASSESSE E STANDS DISCHARGED OR NOT, LEADING CONSEQUENTLY TO THE ADMISSIBILITY OR OTHERWISE OF I TS CLAIM OF THE RELEVANT EXPENDITURE AS A BUSINESS EXPENSE. 3.6.1 COMING TO THE FACTS OF THE CASE, THE ASSESSEE HAS ADMITTEDLY NOT FILED CONFIRMATIONS IN RESPECT OF THE EXPENDITURE TO THE EXTENT OF RS.2 6,54,460/- (THE SAME MAY, IN VIEW OF AN ADMITTED DIFFERENCE OF RS.59,103/-, WOULD STAND RES TRICTED TO RS.25,95,357 / REFER PARAS 7 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT 3.4 & 3.7 OF THIS ORDER). THERE IS, ACCORDINGLY, AN D CLEARLY, NO DISCHARGE OF THE INITIAL ONUS ON THE ASSESSEE U/S. 37(1) TO THAT EXTENT. THE EXPE NDITURE CONSEQUENTLY CANNOT BE ALLOWED, EXCEPT IN THE CIRCUMSTANCE OF THE NOTICEE RESPONDIN G AGREEABLY, I.E., WITH THE ASSESSEES RECORD WITH THE A.O. HAVING NOT ACTED UPON THE SA ME, SO THAT THERE IS NO REASON OR NOTHING ON RECORD TO DOUBT THE VERACITY OR THE AUTH ENTICITY OF THE INFORMATION FURNISHED BY THE PAYEE. THERE IS NO SUCH RESPONSE IN THE INSTANT CASE. AS SUCH, IRRESPECTIVE OF WHETHER THE NOTICES U/S.133(6) STAND ISSUED BY THE A.O. OR NOT (WHICH COULD AGAIN BE FOR THE REASON OF LACK OF PROPER ADDRESS, ETC.), THE INITIA L ONUS HAVING NOT BEEN DISCHARGED IN ITS RESPECT, EXPENDITURE TO THAT EXTENT, I.E., RS.26,54 ,460/-, STANDS TO BE DISALLOWED. WE DECIDE ACCORDINGLY. 3.6.2 WE NOW TAKE UP THE CASE WHERE CONFIRMATIONS S TAND FILED. OF THE SAME, THE A.O. HAS NOT ISSUED NOTICES TO PARTY/S, IN RESPECT OF EX PENDITURE FOR RS.2,74,069/-. THE INITIAL ONUS HAVING BEEN DISCHARGED BY THE ASSESSEE, SO THA T THERE IS NOTHING ON OR BROUGHT ON RECORD TO DOUBT OR REBUT THE SAME BY THE REVENUE, T HE EXPENDITURE TO THAT EXTENT IS CONFIRMED FOR BEING ALLOWED. WE DECIDE ACCORDINGLY. 3.6.3 WE MAY NEXT DISCUSS THE IMPLICATION OF THE CI RCUMSTANCE WHERE NOTICES STAND ISSUED BY THE A.O. (I.E., FOR RS.22.98 LACS). THE S AME COULD NOT BE SERVED ON ONE PARTY, NAMELY (AS STATED) VASAN GADRE, TO WHOM SUB-BROKERA GE IS CLAIMED TO HAVE BEEN PAID AT RS.1,45,699/-. THOUGH ORDINARILY THIS SHOULD NOT OP ERATE TO THE DETRIMENT OF THE ASSESSEE, IN THE INSTANT CASE THE CONFIRMATION (WHICH WOULD H AVE BEEN SIGNED BY THE PAYEE ONLY ON OR AFTER MAY 6, 2003) WAS FILED BEFORE THE ASSESSIN G AUTHORITY ONLY IN THE SET ASIDE PROCEEDINGS. THE CONFIRMATION (PB PG.99) ALSO DOES NOT BEAR THE PAN/GIR (OR EVEN THE WARD OR CIRCLE WHERE ASSESSED) OF THE SAID BROKER, OR HIS NAME OR ADDRESS, I.E., BELOW HIS SIGNATURE, AS REQUIRED PER THE CONFIRMATION LETTER ITSELF. EVEN HIS ADDRESS, THEREFORE, CANNOT BE SAID TO BE CONFIRMED, AND WHICH MAY BE RE SPONSIBLE FOR THE NON-SERVICE. THE CONFIRMATION IS ALSO NOT ACCOMPANIED BY A LEDGER AC COUNT, I.E., OF THE ASSESSEE OR OF THE INCOME ACCOUNT, AS APPEARING IN THE PAYEES BOOKS O F ACCOUNT. NEITHER, THEREFORE, IS THE CONFIRMATION COMPLETE NOR UNDER THE CIRCUMSTANCES S UBJECT TO VERIFICATION. THE 8 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT DISALLOWANCE OF THE EXPENDITURE CLAIMED IS, THEREFO RE, APPOSITE; THE ASSESSEE HAVING NOT BEEN ABLE TO IMPROVE ITS CASE, I.E., AS BEFORE THE A.O., IN ANY MANNER THEREAFTER. WE DECIDE ACCORDINGLY. 3.6.4 FINALLY, WE COME TO THE TRANCHE (FOR RS.21.52 LACS). THE NOTICES STAND RESPONDED TO BY THE NOTICEES, THOUGH BY WAY OF A DISCLAIMER, STA TING THAT IN VIEW OF THE RECORDS BEING OLD, THEY ARE NOT IN A POSITION TO CONFIRM THE RECE IPT OF PAYMENT ASCRIBED TO THEM AS SUB- BROKERAGE BY THE ASSESSEE. WE FIND THIS AS ANOMALOU S. ON WHAT BASIS, THEN, ONE MAY ASK, THEY HAD ISSUED THE CONFIRMATIONS IN THE FIRST PLAC E ? THIS WOULD BE PARTICULARLY SO IN RESPECT OF THE EXPENDITURE FOR RS.20.22 LACS IN-AS- MUCH AS THE CONFIRMATION IN ITS RESPECT IS OF A RECENT DATE, I.E., AFTER THE ASSESSMENT WAS SET ASIDE BY THE TRIBUNAL TO THE A.O. THE DISCLAIMERS UNDER THE CIRCUMSTANCES RAISE DOUBT ON THE VERACITY OF THE CONFIRMATIONS ITSELF, WHICH ARE IN RESPECT OF TWO PARTIES; THE RE LEVANT DETAILS BEING AS UNDER: I. K. C. PATEL, MUMBAI RS.1,30,582/- (CONFIRMATION L ETTER DATED 08.05.2003/PB PG.89); AND II. PARESH D. SHAH, MUMBAI RS.20,21,644/- (CONFIRMATI ON LETTER DATED 24.11.2010 , SO THAT IT WOULD HAVE BEEN SIGNED BY THE ADDRESSEE ON OR AFTER THAT DATE/PB PG.127). FURTHER, BOTH THE CONFIRMATIONS DO NOT CONTAIN THE NAMES AND ADDRESSES OF THE PAYEES, AS REQUIRED TO BE SUBSCRIBED BY THEM (PER THE CONFIRMA TIONS) BELOW THEIR SIGNATURE. THE MATTER, IN OUR CLEAR VIEW, REQUIRES FURTHER VERIFIC ATION TO ARRIVE AT A CONCLUSION ONE WAY OR THE OTHER AS TO THE VERACITY OF THE CONFIRMATION/S, BESIDES OF THE CORRESPONDING (BROKERING) SERVICES HAVING BEEN RENDERED BY THE PAYEES, AND TO WARD WHICH THE SAID EXPENDITURE STANDS CLAIMED. IT NEEDS TO BE APPRECIATED THAT THE INSTANT PROCEEDINGS ARE SET ASIDE PROCEEDING, SO THAT THE TERMS OF THE SET ASIDE SHAL L CONTINUE TO OBTAIN, I.E., WHERE AND TO THE EXTENT THE MATTER IS NOT DECIDED EITHER WAY ON THE BASIS OF THE FINDINGS IN THE SET ASIDE PROCEEDINGS, INCLUDING BEFORE US. THE MATTER IS, AC CORDINGLY, SET ASIDE TO THE FILE OF THE A.O. TO ALLOW THE ASSESSEE AN OPPORTUNITY TO PROVE ITS CLAIM QUA THE SUB-BROKERAGE FOR RS.21,52,226/-. WE DECIDE ACCORDINGLY. 9 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT 3.7 BEFORE PARTING WITH THIS ORDER, IT MAY ALSO BE RELEVANT TO STATE THAT WHILE ONE WOULD BE GENERALLY DISINCLINED TO FAVOUR A VERIFICATION P ROCESS YEARS AFTER THE TRANSACTION, WHICH IN FACT HAS ITS OWN LIMITATIONS, THE SAME CANNOT BE STATED OR HELD AS A MATTER OF RULE, AND WOULD BE SUBJECT TO OTHER CONSIDERATIONS IMPINGING ON THE MATTER, INCLUDING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. PUT SUCCINCTLY , THERE ARE LEGAL CONSTRAINTS TO THE AFORESAID PROPOSITION, BASED ON THE RULE OF EQUITY, IN-AS-MUCH AS THERE IS NO ESTOPPEL AGAINST LAW. TWO, IT NEEDS TO BE BORNE IN MIND THAT THE INSTANT PROCEEDINGS ARE SET ASIDE PROCEEDINGS, SO THAT THE TERMS OF THE SET ASIDE SHA LL OBTAIN, BINDING NOT ONLY THE AUTHORITIES BELOW BUT ALSO US, SO THAT OUR DECISION WOULD HAVE TO BE WITH REGARD TO AND CONSISTENT THEREWITH. THIRDLY, AND EQUALLY IMPORTAN TLY, IT IS THE ASSESSEE ITSELF WHICH IS RESPONSIBLE FOR ITS STATE OF AFFAIRS. EVEN THE PRIM ARY DETAILS OF THE PAYEES, I.E., THE NAMES AND ADDRESSES, WERE NOT FURNISHED TO THE ASSESSING AUTHORITY DESPITE ABUNDANT OPPORTUNITY GRANTED FOR THE SAME IN THE FIRST ROUND. THE RELIEF ALLOWED BY THE FIRST APPELLATE AUTHORITY IN THE FIRST ROUND BEING NOT ON THE BASIS OF ANY SP ECIFIC FACTUAL FINDING/S BY HIM, BUT SOLELY ON THE BASIS OF THE ADDRESSES HAVING BEEN FU RNISHED, SO THAT THERE WAS NO VERIFICATION, AND THE DISALLOWANCE RESTRICTED BY HI M TO THE AMOUNT FOR WHICH THE SAME COULD NOT BE FURNISHED EVEN BEFORE HIM, LED THE REV ENUE TO CHALLENGE HIS ORDER BEFORE THE TRIBUNAL, EVEN AS THE SAME STOOD ACCEPTED BY THE AS SESSEE. FINALLY, AS WE OBSERVE, THE SET ASIDE PROCEEDINGS HAVE FOUND ONE OF THE PAYEES TO H AVE DENIED HAVING RECEIVED THE PAYMENT, AND WHICH HAS NOT BEEN DISPUTED BY THE ASS ESSEE NOR ANY EXPLANATION FURNISHED IN ITS RESPECT, AS INDEED FOR THE AMOUNT FOR WHICH THE PARTICULARS COULD NOT BE FURNISHED BEFORE THE FIRST APPELLATE AUTHORITY IN THE FIRST R OUND (RS.10.52 LACS). THIS, DESPITE THE CLAIM OF THE PAYMENTS BEING MADE TO THE BROKERS UND ER A STANDARDIZED PROCESS AND THROUGH THE BANKING CHANNEL. WE ARE IN AGREEMENT WI TH THE LD. DR THAT THE REVENUE HAS IN FACT ACTED LIBERALLY, ALLOWING THE CLAIM FOR EXP ENDITURE WHERE AS MUCH AS A VALID CONFIRMATION AS TO THE RECEIPT OF PAYMENT STANDS FI LED. WE MAY FURTHER ADD THAT THE FIGURES STATED BY US IN THIS ORDER HAVE BEEN ADOPTED AS FURNISHED BY THE ASSESSEE BEFORE US, UPON BEING SOU RCED FROM THE A.O. UNDER RTI ACT. THE SAME, THEREFORE, WOULD BE SUBJECT TO CONFIRMATI ON BY THE A.O. WHILE GIVING APPEAL 10 ITA NO. 5437/MUM/2012 (A.Y. 1998-99) J. M. FINANCIAL LIMITED VS. DY. CIT EFFECT TO THIS ORDER. FURTHER, THERE BEING ADMITTED LY A DIFFERENCE OF RS.59,103/-, THE ASSESSEE SHALL EITHER EXPLAIN OR RECONCILE THE SAID DIFFERENCE BY LOCATING THE SOURCE OF ERROR. IN CASE, HOWEVER, THE SAME CANNOT BE AND NEI THER IS THE SAME FOUND BY THE A.O.; THE TOTAL EXPENDITURE CLAIMED BEING AT A AMOUNT LOWER ( BY THAT AMOUNT) FOR WHICH THE DETAIL STANDS SUBMITTED, THE BENEFIT OF DOUBT WOULD GO TO THE ASSESSEE, SO THAT THE EXPENDITURE TO BE ALLOWED WITH REFERENCE TO ANY PARTICULAR PAYEE ( SUB-BROKER) SHALL BE AS STATED, I.E., WITHOUT ANY ADJUSTMENT OR MODIFICATION ON ACCOUNT O F THE SAID ERROR/DIFFERENCE. WE DECIDE ACCORDINGLY. 4. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED AND PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 16, 2014 SD/- SD/- (D. MANMOHAN) (SANJAY ARORA) / VICE PRESIDENT / ACCOUNTANT MEMBER ( 1* MUMBAI; 2 DATED : 16.07.2014 )3 ROSHANI , SR. PS !' # $%&' ('% COPY OF THE ORDER FORWARDED TO : 1. !# / THE APPELLANT 2. $%!# / THE RESPONDENT 3. ( 4+ 5 6 / THE CIT(A) 4. ( 4+ / CIT - CONCERNED 5. 7)89$3+3:; ,:;/ ( 1* / DR, ITAT, MUMBAI 6. 9<=* GUARD FILE !' ) / BY ORDER, */)+ (DY./ASSTT. REGISTRAR) , ( 1* / ITAT, MUMBAI