MARKS SHIPPING P.LTD, MUMBAI V. DCIT CIR 4(2),

ITA 5456/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8140 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 27-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: T A KHAN
• Keywords: Presumptive income

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL BENCH B MUMBAI BEFORE SHRI D.T.GARASIA , JM AND SHRI RAJESH KUMAR, AM I.T.A. NO. 5456 /MUM/20 1 5 ( / ASSESSMENT YEAR : 2 0 0 7 - 08 ) MARKS SHIPPING PVT.LTD. , NO.401/402, 4 TH FLOOR, ATLANTA TOWER SAHAR ROAD, ANDHERI (E), MUMBAI. / VS. DY.COMMISSIONER OF I NCOME TAX CIRCLE - 4(2), MUMBAI ./ PAN : AA ACM3202B ( / APPELLANT) : ( / RESPONDENT ) I.T.A. NO. 5457 MUM/20 1 5 ( / ASSESSMENT YEAR : 200 6 - 07 ) MARKS SHIPPING PVT.LTD., NO.401/402, 4 TH FLOOR, ATLANTA TOWER SAHAR ROAD, ANDHERI (E), MUMBAI / VS. DY.COMMISSIONER OF INCOME TAX CIRCLE - 4(2), MUMBAI ./ PAN : AAACM3202B ( / APPELLANT) : ( / RESPONDENT ) / ASSESSEE BY : SHRI PRAMOD KUMAR PARIDA / REVENUE BY : SHRI T A KHAN / DATE OF HEARING : 7 .12.2017 / DATE OF PRONOUNCEMENT : 21 . 1 2 . 201 7 2 I.T.A. NO . 5456 AND 5457/MUM/2015 / O R D E R PER RAJESH KUMAR, A. M: THESE APPEALS BY THE ASSESSEE S ARE DIRECTED AGAINST THE ORDER DATED 9.9.2015 PASSED BY THE LD.CIT(A) - 9, MUMBAI, FOR THE ASSESSMENT YEAR S 200 7 - 08 AND 2006 - 07 RESPECTIVELY. SINCE THE ISSUES RAISED IN THESE APPEALS ARE I DENTICAL ON FACTS, THEREFORE, WE ARE DECIDING THESE APPEALS BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. ITA NO. 5456 /MUM/201 5 2. THOUGH THERE ARE NUMEROUS GROUNDS OF APPEAL RAISED BY THE ASSESSEE BUT THE EFFECTIVE GROUNDS OF APPEAL IS QUA CONFI RMATION OF ADDITION ON ACCOUNT OF TRANSPORT ERS CHARGES AMOUNTING TO RS. 5,64,200/ - WHICH WAS BASED UPON THE DISALLOWANCE S MADE IN THE ASSESSMENT YEAR 2005 - 06 WITHOUT VERIFYING THE FACTS. 3. FACTS OF THE CASE ARE THAT THE AO ON THE BASIS OF ASSESSMENT YEA R 2005 - 06 MADE A DISALLOWANCE OF RS.5,64,200/ - AS PAID TO THREE PARTIES I.E.SHRI GANESH LIFTERS AND OMKAR FORKLIFT SERVICE RS.4,17,200/ - AND RS.1,47,000/ - RESPECTIVELY TOTALING TO RS.5,64,200/ - ON THE BASIS OF THE FINDING OF THE AO FOR THE ASSESSM ENT YEAR 2005 - 06 AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND THAT THE ABOVE PERSONS WERE NOT OF MEANS AND THE PAYMENT WERE IMMEDIATELY WITHDRAWN FROM THEIR BANK ACCOUNTS. THE LD. CIT(A) CONFIRMED THE AOS ORDER VIDE ORDER DATED 3 I.T.A. NO . 5456 AND 5457/MUM/2015 10 .3.2011 WHICH WAS APPEALED BEFORE THE INCOME TAX APPELLATE TRIBUNAL WHO DECIDED THE APPEAL VIDE ORDER DATED 15.6.2012 REMITTING THE ISSUE TO THE FILE OF THE AO TO DECIDE THE ISSUE DENOVO. BEFORE THE AO IN THE RE - ASSESSMENT PROCEEDINGS AGAIN THE ASSES SEE SUBMITTED THAT THE SERVICES OF THE TRANSPORTERS WERE TAKEN FOR MOVE MENT OF CARGO IN THE PORT PREMISES AND TO THE CLIENTS PREMISES FOR WHICH IT WAS UNDER CONTRACTUAL OBLIGATIONS WITH THE CLIENTS SINCE THE ASSESSEE COMPANY D ID NOT HAVE ANY TRANSPORT VEHICLE S. T HE LD AR SUBMITTED THAT ASSESSEE HAS ALSO PAID SERVICE TAX ON TRANSPORTERS SERVICES AND CHARGED THE SAME FROM THE CUSTOMERS AND NONE OF RECIPIENTS WERE RELATED PARTIES. IT WAS ALSO STATED THAT THEY ARE BEING ASSESSED TO THE TAX ON PRESUMPT IVE BASIS U/S 44AE OF THE ACT AND NOT MAINTAINING ANY REGULAR BOOKS OF ACCOUNTS. HOWEVER, THE AO ADDED THE SAID AMOUNT OF RS.5,64,200/ - BY CITING AND REFERRING TO THE DISALLOWANCE MADE IN THE ASSESSMENT YEAR 2005 - 06 AND 2006 - 07. IN THE APPELLATE PR OCEEDINGS, THE FAA CONFIRMED THE ACTION OF THE AO VIDE PARA 5 OF THE APPELLATE ORDER AS UNDER : 5 DECISION: I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSION MADE BY THE APPELLANT WITH REFERENCE TO VARIOUS GROUNDS. THE CASE IS D ISCUSSED AND DECIDED HEREINAFTER. TO START WITH, THE APPELLANT HAS RELIED UPON AFFIDAVIT OF THE TRANSPORTERS BUT AT THE SAME TIME, HAS NOT PRODUCED THEM BEFORE THE AO. EVEN OTHERWISE, AFFIDAVIT IS NOTHING MORE THAN SELF - SERVING DOCUMENT AS HELD BY VARIOUS HON'BLE COURTS. THE ONUS IS ON THE ASSESSEE TO PROVE THAT THE EXPENSES WERE WHOLLY AND FULLY FOR BUSINESS PURPOSE. IT IS FOR THE ASSESSEE TO PROVE THAT THE TRANSPORTATION WAS MADE; PAYMENT WAS MADE WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSES. THE FACT THA T THE TRANSPORTERS 4 I.T.A. NO . 5456 AND 5457/MUM/2015 DID EXIST, IS NOT THE ISSUE IN QUESTION; THEIR CORRESPONDING SERVICES HAVE BEEN QUESTIONED BY THE AO. EVEN IF THE TRANSPORTERS WERE MEN OF MEANS THAT ITSELF IS NOT THE CRITERIA TO BE DECIDED, THE AR'S ARGUMENT ARE LIKE DEFENDING ADDITION UL S 68 WHICH IS NOT THE CASE HERE. THE ISSUE IS CORRESPONDING SERVICES BY THE TRANSPORTERS. THE DOCUMENTS REFERRED BY THE APPELLANT'S AR HAVE ALREADY BEEN CONSIDERED BY THE AO. THE APPELLANT IS FOLLOWING ONE OR OTHER DEVICES FOR INFLATING EXPENSES IN V ARIOUS ASSESSMENT YEARS TO REDUCE ITS PROFITS. THE APPELLANT HAS A HISTORY OF SUCH ADDITIONS SINCE THE A.Y'1997 - 98. UNDER THE GIVEN FACTS AND CIRCUMSTANCES, I DO NOT FIND ANY REASON TO DIFFER WITH AO'S FINDINGS AND THEREFORE, I UPHOLD THE ADDITIONS/ DISALL OWANCES MADE BY THE AO. IN THE RESULT, THE APPELLANTS GROUND OF APPEAL IS DISMISSED. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS PLACED BEFORE US AND ALSO GONE THROUGH THE IMPUGNED ORDERS. WE FIND THAT THE ASSESSEE HAS BEEN AVAILING THE SERVICES OF THE TRANSPORTERS FOR TRANSPORTING THE GOODS FOR WHICH THE PAYMENTS WERE MADE BY CHEQUE S . THE RECIPIENTS OF THE PAYMENTS WERE SMALL TRANSPORTERS AND WERE NOT MAINTAINING ANY BOOKS OF ACCOUNTS W ERE ALSO ASSESSED TO TAX ON PRESUMPTIVE BASIS UNDE R SECTION 44AE OF THE ACT. THIS IS BEING THE SECOND ROUND OF LITIGATION, THEREFORE IT WOULD BE NOT BE FAIR TO RESTORE THE MATTER TO THE FILE OF THE AO FOR VERIFICATION. IN THE PRESENT CIRCUMSTANCES OF THE CASE, WE FIND IT FAIR AND REASONABLE, IF THE DI SALLOWANCE IS MADE ON THE PERCENTAGE BASIS, TO AVOID UNNECESSARY LITIGATION AND TO PUT THE MATER TO END AS THE ISSUE INVOLVED IS VERY P ETTY AND RELATING TO THE TRANSPORTERS WHO ARE NOT MAINTAINING THE BOOKS OF ACCOUNTS AND EVEN ARE NOT TRACEABLE AFTER A CONSIDERABLE PERIOD. UNDER THESE CIRCUMSTANCES , WE ARE OF 5 I.T.A. NO . 5456 AND 5457/MUM/2015 THE VIE W THAT IT WOULD BE FAIR AND REASONABLE TO APPLY A RATE OF 5% OF THE TOTAL DISALLOWANCE OF RS. 5,64,200/ - . ACCORDINGLY WE SET ASIDE CIT(A) ORDER AND PARTLY SUSTAIN THE ADDITION AT THE RA TE OF 5% OF THE TOTAL DISALLOWANCE AS STATED ABOVE. THE AO IS DIRECTED ACCORDINGLY. RESULTANTLY, THE APPEALS OF THE ASSESSEE IS PARTLY ALLOWED. I.T.A. NO.5457MUM/2015 5 . THE ISSUE RAISED IN GROUNDS OF APPEAL NO.1 TO 3 ARE IDENTICAL TO THAT OF THE ASSES SMENT YEAR 2007 - 08. SINCE WE HAVE RESTRICTED THE DISALLOWANCE TO 5% OF THE TOTAL AMOUNT OF DISALLOWANCE, THE SAME WOULD , MUTATI S MUTANDIS , APPLY TO THESE GROUND AS WELL. ACCORDINGLY, THE DISALLOWANCE OF 5% OF RS.11,43,398/ - IS SUSTAINED. THESE GROUNDS A RE ALLOWED PARTLY. 6 . THE ISSUE RAISED IN GROUNDS OF APPEAL NO.4 IS AGAINST THE DISALLOWANCE OF RS.3,70,000/ - . 7 . FACTS IN BRIEF ARE THAT THE ASSESSEE DISALLOWED THE SAID EXPENSES IN THE COMPUTATION OF INCOME FOR THE PREVIOUS YEAR 2005 - 06 ON ACCOUNT OF NON DEDUCTION OF TAX AT SOURCE AND LATER ON WHEN THE TDS PAID IN THE ASSESSMENT YEAR 2006 - 07 AND DEPOSITED IN THE GOVERNMENT TREASURY, THE SAID EXPENSES WERE CLAIMED. THE AO DISALLOWED THE SAID EXPENSES ON THE GROUND OF BEING FICTITIOUS IN ASSESSMENT YEAR 2 005 - 06 . IN THE APPELLATE PROCEEDINGS, THE FAA ALSO CONFIRMED THE ACTION OF THE AO WHICH WAS SET ASIDE BY THE ITAT AND RESTORED THE ISSUE TO THE FILE OF THE AO . IN THIS CASE ALSO THE ISSUE OF 6 I.T.A. NO . 5456 AND 5457/MUM/2015 DISALLOWANCE IS OF TRANSPORT EXPENSES WHICH HAS BEEN DECIDED BY US IN PARA 5 ABOVE WITH THE ONLY DIFFERENCE THAT THE TDS WAS DEDUCTED DURING THE YEAR AND AS PER ASSESSEE THE SAME SHOULD BE ALLOWED IN THE CURRENT YEAR. SINCE WE HAVE ALREADY DECIDED THE SIMILAR ISSUE BY SUSTAINING THE ADDITION AT 5% OF THE TOTAL AMO UNT OF DISALLOWANCE. APPLYING THE SAME ANALOGY WE DIRECT THE AO TO MAKE ADDITION @ 5% OF RS. 3,70,000/ - . THIS GROUND IS PARTLY ALLOWED . 8 . IN THE RESULT, APPEAL FOR THE ASSESSMENT YEAR 2006 - 07 AND 2007 - 08 ARE PARTLY ALLOWED . ORDER PRONOUNCED ON 21 ST DE C, 2017. S D SD ( D.T.GARASIA ) ( RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED : . 21. 1 2 .2017 SR.PS:SRL: / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD F ILE / BY ORDER, TRUE COPY / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI