BRINKS ARYA INDIA (P) LTD, MUMBAI V. DCIT CEN CIR 39, MUMBAI

ITA 562/MUM/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62202 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 2 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2012
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 31-10-2011
• Assessment Year: 1998-1999
• Appeal Filed On: 22-01-2010
• Court: TRIBUNAL
• Department Lawyers: PRDEEP K SINGH
• Assessee Lawyers: Y P TRIVEDI
• Keywords: Business expenditure; Question of law; Initiation of penalty proceedings; Wrong claim
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B BEFORE SHRI J. SUDHAKAR REDDY (AM) & S.S. GODARA (J M) I.T.A.NO. 437/MUM/2010 (ASSESSMENT YEAR 1995-96) I.T.A.NO. 397/MUM/2010 (ASSESSMENT YEAR 1996-97) I.T.A.NO. 502/MUM/2010 (ASSESSMENT YEAR 1997-98) I.T.A.NO. 562/MUM/2010 (ASSESSMENT YEAR 1998-99) BRINKS ARYA INDIA (P) LTD. BALLARD HOUSE GROUND FLOOR ADI MARZBAN PATH BALLARD ESTATE MUMBAI-400 001. VS. DCIT CENTRAL CIRCLE 39 ROOM NO. 32(1) AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. APPELLANT RESPONDENT PAN/GIR NO. : AAACB3302R ASSESSEE BY : SHRI Y.P. TRIVEDI & MS. USHA DALAL DEPARTMENT BY : SHRI PRDEEP K. SINGH DATE OF HEARING : 13.3.2012 DATE OF PRONOUNCEMENT : 4.4.2012 ORDER PER S.S. GODARA (JM) :- THE INSTANT 4 APPEALS HAVE BEEN PREFERRED BY THE A SSESSEE AGAINST THE ORDER OF LEARNED CIT(A) (CONFIRMING THE PENALTY ) DATED 13.11.2009. 2. AT THE OUTSET, LEARNED AR APPEARING HAS STATED T HAT IN ALL FOUR APPEALS, COMMON ISSUE IS INVOLVED. THEREFORE, HE ST ATED THAT ITA NO. 437/MUM/10 BE DECIDED AS MAIN CASE. WE ACCEPT THE S AME. DECIDE ITA NO. 437/MUM/10 HEREUNDER :- ITA NO. 437/MUM/10 3. IN THE INSTANT APPEAL BEFORE US, THE ASSESSEE HA S RAISED 7 GROUNDS. OUT OF THESE 7 GROUNDS, GROUND NOS. 3-5 CH ALLENGE CORRECTNESS OF THE ORDER PASSED BY ITAT MUMBAI IN QUANTUM CASE PERTAINING TO THE BRINKS ARYA INDIA (P) LTD. 2 ASSESSEE. SINCE ISSUE OF QUANTUM HAS BEEN DECIDED A GAINST THE ASSESSEE, THE INSTANT APPEAL IS NOT THE PROPER REMEDY TO CHAL LENGE THE LEGALITY OF EARLIER ORDER DATED 8.12.2008 (SUPRA). 4. AT THIS STAGE, SENIOR COUNSEL APPEARING BEFORE U S HAS ALSO PRODUCED A COPY OF THE ORDER DATED 5.8.2011 IN ITA NO. 1385-1388 OF 2009 TITLED M/S. BRINKS ARYA INDIA (P) LTD. (ASSESS EE HEREIN)VS. CIT, MUMBAI. SUBMITTED THAT IN THE QUANTUM CASE, WHICH I S THE BACKBONE OF THE INSTANT PENALTY PROCEEDINGS, HON'BLE JURISDICTI ONAL HIGH COURT HAS ADMITTED APPEALS AGAINST ASSESSMENT ORDER BY FRAMIN G SUBSTANTIAL QUESTIONS OF LAW. SO, HE PRAYED THAT ADMISSION OF A PPEALS HAVE A DIRECT BEARING QUA THE OUTCOME OF THE INSTANT CASE. 5. AFTER GOING THROUGH THE ORDER OF HON'BLE HIGH CO URT, WE ARE OF THE OPINION THAT ADMISSION OF THE APPEALS ABOVESAID IN THE HON'BLE HIGH COURT DOES NOT AMOUNT AUTOMATIC STAY OF THE FINDING S ARRIVED AT BY ITAT AS WELL AS OTHER AUTHORITIES. NOR DOES THE SAME HAS ANY BEARING QUA THE OUTCOME OF THE CASE. THEREFORE, WE MAKE IT CLEAR TH AT THE ABOVE SAID GROUND NOS. 3,4&5 ARE NOT MAINTAINABLE. LEARNED SR. COUNSEL ALSO PRAYS FOR WITHDRAWAL OF THE SAME AS NOT PRESSED. ACCEDING HIS REQUEST, WE ORDER ACCORDINGLY. 6. COMING THE REST OF THE GROUNDS I.E. GROUND NO. 1 ,2,6&7, THE SAME ARE REPRODUCED AS UNDER :- 1) THE COMMISSIONER OF INCOME TAX (A) ERRED IN LAW AND ON FACTS IN UPHOLDING LEVY OF PENALTY OF ` 26,61,307/- U/S. 271(1)(C) OF THE ACT. 2) THE LOWER AUTHORITIES ERRED IN RELYING UPON THE ORD ER OF THE ITAT IN QUANTUM APPEAL WHICH HAD RESTORED THE ASSES SING OFFICERS ORDER WHO HAD DISALLOWED CLAIM FOR DEDUCT ION OF CLEARING & FORWARDING CHARGES PAID TO M/S. ARYA OFF SHORE SERVICES PVT. LTD. 6) THE CIT(A) FAILED TO APPRECIATE THAT UNDER THE CONT RACT ACT, CONTRACT CAN BE PERFORMED BY ANY PERSON IF THE PROM ISEE IS NOT IN A POSITION TO PERFORM THE CONTRACT. IN THE A PPELLANTS CASE M/S. ARYA OFFSHORE SERVICES PVT. LTD. HAD ARRA GED THE SERVICES OF M/S. N.JAMNADAS & CO. TO COMPLETE THE C LEARING & FORWARDING WORK ON BEHALF OF THE APPELLANT. BRINKS ARYA INDIA (P) LTD. 3 7) THE CIT(A) FAILED TO APPRECIATE THAT THERE WAS NO CONCEALMENT ON THE PART OF THE APPELLANT AS ADEQUAT E DISCLOSURE WITH REGARD TO CLEARING & FORWARDING CHA RGES WAS MADE IN THE ANNUAL ACCOUNTS AS ALSO DURING THE ASSESSMENT PROCEEDINGS. ABOVE GROUNDS ARE INTERCONNECTED, THEREFORE, THEY A RE DECIDED TOGETHER. 8. BRIEF FACTS LEADING TO FILING OF THE INSTANT APP EAL ARE THAT REGARDING A.Y. 1995-96, THE ASSESSEE FILED ITS RETURN OF INCO ME. HOWEVER, ASSESSING OFFICER MADE CERTAIN ADDITIONS ON ACCOUNT OF EXPEND ITURE FOR CLEARING & FORWARDING PAYMENTS TO ITS SISTER CONCERN M/S. ARYA OFFSHORE SERVICES PVT. LTD. TO THE TUNE OF ` 57,85,450/- VIDE ORDER DATED 26.6.2009. 9. AGAINST THE SAID ADDITION, ASSESSEE PREFERRED AP PEAL. LEARNED CIT(A) ALLOWED IT ON 31.1.2003. HELD THAT PAYMENT O F SUCH EXPENDITURE HAD ALSO BEEN MADE BY THE ASSESSEE IN EARLIER ASSES SMENT YEARS SINCE 20.9.1981. THEREFORE, IN THE OPINION OF LEARNED CIT (A), SINCE THIS PRACTICE WAS CONTINUING FOR THE LAST 14 YEARS SO EXPENDITURE ALLEGED INCURRED BY ASSESSEE WAS TREATED AS BUSINESS EXPENDITURE. 10. HOWEVER, IN APPEAL PREFERRED BY THE REVENUE BEF ORE THIS BENCH OF THE ITAT, THE ASSESSMENT ORDER WAS UPHELD VIDE ORDE R DATED 8.12.2008 THEREBY SETTING ASIDE THE ORDER OF LEARNED CIT(A) D ATED 30.1.2003. WHILE DECIDING THE SAID APPEALS, HON'BLE CO-ORDINATE BENC H OBSERVED AS UNDER:- 8. IN THE BACKGROUND OF THE ABOVE RIVAL POINTS O F VIEWS, WE FIND THAT THE THERE IS NO DISPUTE ON THE GENUINENESS OF THE PAYME NTS TO AOSPL. THE SAID CHARGES WAS PAID VIDE THE LETTER DATED 20.9.1981 AN D THE APPLICABLE C&F CHARGES PER PARCEL WAS DECIDED TO AT THE RATE OF ` 275/- ONLY PER PARCEL OF DIAMONDS/VALUABLE AS DECIDED VIDE THE LETTER DATED 24.1.1989 W. E. F. 1.10.1988 AND THE SAID RATE ARE APPLICABLE TO ALL T HE FOUR AYS IN QUESTION. FURTHER, THERE IS NO DISPUTE ON THE PURPOSE OF THE PAYMENT TO AOSPL AND IT IS FOR ARRANGING THE CLEARING AND FORWARDING OF DIAMOND/VALUABLE PARCELS THROUGH M/S N JAMNADAS & CO, WELL-KNOWN AND RECOGNIZED CLEARING HOUSE AGENTS AND IATA MEMBER. FURTHER, THE RELATIONSHIP AMONG THE ASSESSEE, AOSPL AND M/S N JAMNADAS & CO I S OBVIOUSLY AND UNDOUBTEDLY VERY CLOSE AS DISCUSSED IN THE PARAGRAP HS ABOVE AND CONTROL AND MANAGEMENT OF THESE ENTITIES IS ONE AND THE SAM E AS THE MEMBERS OF THE KOTAK FAMILY HAVE 60% STAKE IN THE ASSESSEE -JV COMPANY AND HOLD BRINKS ARYA INDIA (P) LTD. 4 AOSPL AND M/S N JAMNADAS & CO FULLY. IN THE BACKGRO UND OF THE ABOVE FACTS, WE HAVE TO EXAMINE THE CONTENTS OF THE AGREE MENT. PARA (C) FROM THE LETTER DATED 20 SEPTEMBER, 1981 SIGNED BY BOTH THE ASSESSEE AND THE AOSPL RELEVANT AND IT READS THAT AOSPL WILL ALSO A RRANGE FOR CLEARING AND FORWARDING OF DIAMOND PARCELS THROUGH M/S N JAM NADAS & CO WELL KNOWN RECOGNIZED CLEARING HOUSE AGENTS AND IATA MEM BERS AND THE C&F CHARGES PAYABLE TO AOSPL WILL BE AS MAY BE MUTU ALLY AGREED. THUS, THE ARRANGING FOR CLEARING AND FORWARDING OF DIAMOND PARCELS THROUGH M/S N JAMNADAS & CO IS THE SERVICES RENDERE D BY THE AOSPL FOR WHICH THE ASSESSEE INCURRED THE SAID EXPENDITURE IN THE SAID AYS. IN THIS REGARD THE RELEVANT SUB-ISSUES THAT ARISE FROM THE ABOVE FACTS ARE: A. WHETHER THE ASSESSEE - JV COMPANY WAS JUSTIFIED IN MAKING THE PAYMENT OF C&F CHARGES AT ALL TO AOSPL, WHEN THE ASSESSEE R ECEIVED THE SERVICES FROM N JAMNADAS & CO FREE OF CHARGES AND NOT FROM T HE AOSPL? B. WHAT ARE THE SERVICES ACTUALLY RENDERED BY THE AOSPL IN LIES OF C & F CHARGES? C. WHETHER THE ASSESSEE NEEDED THE SERVICES OF AOSP L FOR ARRANGING THE SERVICES OF M/S N JAMNADAS & CO, WHEN ALL THE CONTR OL AND MANAGEMENT IS ONE AND THE SAME AS THESE CONCERNS ARE INTER-REL ATED? D. DOES THE SAID EXPENDITURE SHOULD BE CONSIDERED AS EXPENDED WHOLL Y AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION, WHEN T HE ASSESSEE HIMSELF WAS IN A POSITION TO MAKE THE SUCH AN ARRANGEMENT OF EM PLOYING SERVICES OF M/S N JAMNADAS & CO, WHICH RENDERED SERVICES FREE O F CHARGES AND WHEN THE AOSPL DID NOT HAVE TO MAKE ANY PAYMENT TO M/S N JAMNADAS & CO AND ALSO WHEN THERE IS NO FORMAL ARRANGEMENT BETWEE N AOSPL AND M/S N JAMNADAS & CO IN THIS REGARD. 9. FROM THE ABOVE, WE FIND THAT THE LETTER (IE A GREEMENT) DATED 20.9.1981 AND 24.1.1989 ARE THE ONLY EVIDENCES IN SUPPORT OF THE PAYMENT OF C & F CHARGES AND THEIR PERUSAL REVEALED THAT ARRANGING THE CLEARING AND FORWARDING OF DIAMOND PARCELS THROUGH M/S N JAMNADA S & CO IS THE ONLY REASON FOR EXPENDING OF THE C&F CHARGES BY THE ASSE SSEE IN ALL THESE 4 AYS. IN OUR OPINION, WHEN THE CONTROL AND MANAGEMEN T OF THE CONCERNS IS ONE AND THE SAME AS DISCUSSED ABOVE, I.E. NJ KOTAK, K B KOTAK AND B J KOTAK, THE COUNSELS ARGUMENT THAT AOSPL IS ENTITLE D TO C&F CHARES IS NOT ACCEPTABLE TO US. IN FACT, M/S N JAMNADAS & CO, WHO ACTUALLY RENDERED SERVICES TO THE ASSESSEE AND IS ENTITLED T O THE CONSIDERATION HAVE NOT RECEIVED ANYTHING. BUT THE FACT IS THAT M/S N J AMNADAS & CO HAD DONE THE SERVICES FOR FREE OF CHARGES. IT IS HELD SO AS M/S N JAMNADAS & CO DID NOT RECEIVE ANY CONSIDERATION IN LIEU OF SERVICES D IRECTLY EITHER FROM THE ASSESSEE OR INDIRECTLY THROUGH AOSPL. IN EFFECT, TH E ASSESSEE PAID THE SAID AMOUNTS TO AOSPL FOR NOTHING AND RECEIVED THE SAID SERVICES FREE OF ANY CHARGES. FURTHER, IT IS NOT THE CASE OF THE ASSESSE ES COUNSEL THAT THERE EXISTS THE AN AGREEMENT FOR RENDERING OF SERVICES B ETWEEN THE AOSPL AND THE M/S N JAMNADAS & CO AND THE SAID AMOUNTS WERE P ASSED ON TO M/S N JAMNADAS &CO. 10. REGARDING THE IMPORTANCE OF THE AGREEMENT DA TED 20.9.1981 , WHEN THE SERVICES ARE NOT RENDERED BY THE PAYEE-AOSPL, T HE ITS SANCTITY HAS TO BRINKS ARYA INDIA (P) LTD. 5 BE ADDRESSED TO IN THE LIGHT OF THE SUPREME COURTS JUDGMENT IN THE CASE OF LACHMINARAYANA MADAN LAL V CIT (86 ITR 439)(SC), WH ERE THE SC HELD THAT MERELY BECAUSE THE ASSESSEE ESTABLISHED THE EX ISTENCE OF AN AGREEMENT BETWEEN HIM AND HIS AGENTS AND AN ACTUAL PAYMENT HE REUNDER, IT WOULD NOT TAKE AWAY THE JURISDICTION OR THE DISCRETION OF THE AO TO CONSIDER WHETHER THE EXPENDITURE WAS GENUINELY AND EXCLUSIVE LY INCURRED FOR THE PURPOSES OF THE BUSINESS AND WHETHER THE EXPENDITUR E WAS COMMERCIALLY EXPEDIENT. 11. IN SUCH CIRCUMSTANCES, THE CLAIM OF EXPENDING O F THE C&FR CHARGES OF RS 57,85,480/-, RS 72,24,800/-, RS 75,64,650/- FOR THE AYS 1995-96, 1996- 97 AND 1999-2000 RESPECTIVELY, NEED MORE DELVING ON THE PROVISIONS OF SECTION 37 OF THE INCOME TAX ACT. IN THIS REGARD, I T IS A SETTLED LAW THAT THE EXPENDITURE WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION IS ONLY ALLOWABLE AS DEDUCTION UNDER SEC TION 37 OF THE ACT. FURTHER, IT IS ALSO SETTLED THAT THE ADVERB, WHOLL Y REFERS TO THE QUANTUM OF THE EXPENDITURE, THE SUM OF MONEY SPENT AND THE SEC OND ADVERB EXCLUSIVELY HAS REFERENCE TO THE PURPOSE BEHIND T HE EXPENDITURE AND NOT THE MOTIVE OR OBJECT BF EXPENDITURE AS HELD BY THE APEX COURT IN THE CASE OF SASOON J DAVID & CO P LTD V CIT 118 ITR 261(SC). TH US, ONLY THE C&F CHARGES PAID TO AOSPL FOR SOLE BUSINESS PURPOSES AL ONE ARE ALLOWED U/S 37 AND NOT OTHERWISE. WE FIND THERE IS NO DISPUTE B ETWEEN THE PARTIES ON THE QUANTUM ASPECT OF THE CLAIM AND THE DISPUTE IS RESTRICTED TO THE PURPOSES OF THE BUSINESS. AS SUCH, IT IS NOT THE CASE OF THE ASSESSEES COUNSEL THAT THERE EXISTS THE AN AGREEMENT FOR REND ERING THE SERVICES BETWEEN THE AOSPL AND THE M/S N JAMNADAS & CO AND A OSPL PAID ANY SUM OR WOULD PAY ANY AMOUNT IN LIEU OF THE SERVICES GIVEN TO THE ASSESSEE AT A LATER DATE. THUS, THE AOSPL HAS NOT RENDERED A NY SERVICES TO THE ASSESSEE AND THE C&F CHARGES PAID BY THE ASSESSEE F OR ARRANGING M/S N JAMNADAS & CO IS NOT CONSIDERED TO BE SOLELY FOR AS SESSEES BUSINESS PURPOSES. FURTHER, UNDER THE PROVISIONS OF SECTION 37 OF THE ACT, WHAT IS TO BE SEEN IS THE NEXUS BETWEEN THE EXPENDITURE AND TH E BUSINESS PURPOSE AND NOT WHETHER THE SAID PAYMENT OF EXPENDITURE HAS BEE N FINALLY SUFFERED TAX OR NOT IN THE HANDS OF THE RECIPIENT. THEREFORE, TH E COUNSELS ARGUMENTS ON THE CHARGE OF TAX ON SAID PAYMENTS IN THE HANDS OF AOSPL SHALL BE HELP HIM AS THE ISSUE IN QUESTION RELATES TO THE ALLOWAB ILITY OF THE CLAIM OF EXPENDITURE AND NOT CHARGING OF A RECEIPT. NEVERTHE LESS, IT IS SETTLED POSITION THAT INCOME SHOULD SUFFER TAX IN THE CORRE CT HANDS AS HELD BY THE SUPREME COURT IN THE CASE OF JAM BROTHERS V UNION O F INDIA.(77LTR 107)(SC), WHICH WAS FOLLOWED BY THE RAJASTHAN HIGH COURT IN THE CASE OF JAIRARNDASS LOKESH KUMAR (250 ITR 526)(RAJ) RELIED ON BY SRI AJAY, LD DR FOR REVENUE. AS DISCUSSED IN PAGE 527 OF VOLUME 250, IF/N THE CASE OF A, IT HAS BEEN FOUND THAT A HAS EARNED INCOME, THEN THE OBLIGATION IS ON A TO BE ASSESSED AND PAY TAX ON THE INCOME EARNED BY HIM AND IN THE INSTANT CASE, IT IS AOSPL WHO IS IN RECEIPT OF THE CHARGES AND AOSPL HAS RIGHTLY OFFERED THE SAME TO TAX. OFFERING OF THE SAID CHARG ES TO TAX WRONGLY OR RIGHTLY IN THE HANDS OF AOSPL DOES NOT HELP THE ASS ESSEE SO LONG AS THE ASSESSEE DID NOT PAY THE CHARGES SOLELY FOR THE BUS INESS PURPOSES AND SAID BRINKS ARYA INDIA (P) LTD. 6 CHARGES ARE NOT PAID TO M/S N JAMNADAS & CO EITHER DIRECTLY OR THROUGH THE AOSPL. CONSIDERING THE ASSESSEES POSITION IN D IRECTLY ENGAGING OR EMPLOYING M/S. N.JAMNADAS & CO. AND ALSO FINDING NO NEED FOR PARTICIPATION OF AOSPL IN THIS REGARD AND FURTHER, ON FINDING ASSESSEE GETTING REQUISITE SERVICES WITHOUT INCURRED OF ANY EXPENDITURE FROM M/S. JAMNADAS & CO., THE ALLEGED EXPENDITURE, IN OUR OPI NION, CANNOT BE HELD EXPENDED FOR SOLE BUSINESS PURPOSES OF THE ASSESSEE . 11. THE ASSESSEE CHALLENGED THIS ORDER OF THE ITAT IN QUANTUM CASE BEFORE HON'BLE JURISDICTIONAL HIGH COURT. ADMITTEDL Y, THE SAID APPEAL HAS BEEN ADMITTED BY FRAMING SUBSTANTIAL QUESTION OF LA W (SUPRA). 12. IN THE INSTANT PENALTY PROCEEDINGS, THE ASSESS EE CLAIMED THAT THERE HAS NOT BEEN ANY CONCEALMENT OF INCOME OR WRO NG PARTICULARS FILED SO AS TO WARRANT INITIATION OF PENALTY PROCEEDINGS. HOWEVER, BY DETAILED ORDER TAKING INTO CONSIDERATION THE FINDINGS OF ITA T MUMBAI (SUPRA), MINIMUM PENALTY LEVIABLE @ 100% OF THE AMOUNT IN QU ESTION WAS IMPOSED VIDE ORDER DATED 26.6.2009. 13. IN APPEAL, LEARNED CIT(A) HAS ALSO UPHELD THE O RDER BY RELYING THE ORDER DATED 8.12.2008 PASSED BY HON'BLE CO-ORDINATE BENCH OF MUMBAI ITAT. FURTHER HELD THAT ONCE IT IS ESTABLISHED THAT THE EXPENDITURE IN QUESTION HAD NOT BEEN INCURRED FOR THE PURPOSE OF B USINESS THEN LOGICAL CONCLUSION IS THAT THE SAME WAS A BOGUS CLAIM. IT I S IN THIS BACKGROUND, INSTANT APPEAL IS BEFORE US. 14. OPENING HIS ARGUMENTS, LEARNED SR. COUNSEL APPE ARING FOR ASSESSEE HAS DRAWN OUR ATTENTION TOWARDS THE PAPER BOOK AVAILABLE. SUBMITTED THAT IN VIEW OF THE FACT THAT THE ASSESSE E HAD BEEN CLAIMING SUCH EXPENDITURE SINCE1981 PAID TO ITS GROUP CONCER N N. JAMNADAS & CO. BUT THROUGH ITS ANOTHER GROUP CONCERN M/S. ARYA OFFSHORE SERVICES P. LTD., THEREFORE THERE HAS NOT BEEN ANY ATTEMPT O N BEHALF OF THE ASSESSEE OF EITHER CONCEALMENT OF INCOME OR FILING OF WRONG CLAIM BY GIVING INACCURATE PARTICULARS. AS PER LEARNED SR. COUNSEL, SINCE THE ASSESSMENT OFFICER IN THE INTERVENING PERIOD HAD BE EN ACCEPTING SUCH EXPENDITURE, IT CANNOT BE PRESUMED THAT THE ASSESSE E HAD TRIED TO GET ANY UNDUE GAIN. BRINKS ARYA INDIA (P) LTD. 7 15. IN ADDITION TO THIS, LEARNED SR. COUNSEL HAS AL SO STRESSED THE POINT THAT IN THE INSTANT CASE, IT WAS NOT INSTANCE OF MI STAKE OF FACT COMMITTED BY ASSESSEE, BUT A CASE OF MISTAKE OF LAW. IN THE O PINION OF COUNSEL, ONCE HON'BLE HIGH COURT HAS ADMITTED APPEAL BY FRAMING S UBSTANTIAL QUESTION OF LAW, IT HAS TO BE REASONABLY INFERRED THAT ANY A SSESSEE CAN COMMIT A MISTAKE WITH BONAFIDE REASONS. ALSO REITERATED BY D RAWING OUR ATTENTION TOWARDS FINDINGS OF LEARNED CIT(A) IN THE ORDER DAT ED 30.1.2003 (SUPRA). RELIED ON CHRONOLOGY OF EVENTS IN THE HAND I.E. TH E ASSESSING OFFICER MADE ADDITIONS, LEARNED CIT(A) SET ASIDE ADDITIONS, ITAT AGAIN SET ASIDE THE ORDER OF LEARNED CIT(A) AND NOW APPEALS ARE PEN DING BEFORE HON'BLE HIGH COURT MAKE IT AMPLY CLEAR THAT THE ASSESSEE IS ENTITLED FOR LENIENT VIEW. 16. FURTHER, LEARNED SR. COUNSEL HAS ALSO READ OVER CONTENTS OF ORDER DATED 8.12.2008 (SUPRA) OF ITAT MUMBAI TO CONTEND T HAT THE GENUINENESS OF THE BUSINESS EXPENDITURE IN QUESTION HAD NOT BEEN DISPUTED. ALSO PRODUCED BEFORE US COPY OF THE ORDER OF HON'BLE CO- ORDINATE BENCH IN ITA NO. 2379/MUM/09, WHEREIN IT H AS BEEN HELD THAT ONCE IN A PENALTY CASES, SUBSTANTIAL QUESTION OF LA W ARE FRAMED BY HON'BLE HIGH COURT IN THE QUANTUM CASE, ASSESSEE IS ENTITLED FOR THE RELIEF AS DEBATABLE ISSUE OF ADDITION IS INVOLVED. IN LIGHT THEREOF LEARNED SR. COUNSEL SUBMITTED THAT THE PENALTY PROCEEDINGS ARE ALTOGETHER DIFFERENT PROCEEDINGS AS COMPARED TO THE ASSESSMENT PROCEEDINGS WHEREIN ASSESSEE CAN ALWAYS PROVE THAT HIS CONDUCT IN FILING RETURN ETC. WAS STRICTLY BONAFIDE. ALSO CITED VARIOUS JUDGEMENT S IN SUPPORT THEREOF I.E. 322 ITR 158, CIT VS. RELIANCE PETROCHEMICALS, 329 ITR 483 (DEL), 330 ITR 558 AS WELL 259 ITR 212 OF HON'BLE KOLKATA & DE LHI HIGH COURT. ON THE BASIS OF SAME, LEARNED SR. COUNSEL PRAYED THAT THE IMPUGNED ORDERS OF PENALTY ARE NOT BASED ON CORRECT APPRECIATION OF LAW, HENCE, LIABLE TO BE SET ASIDE. 17. LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHE R HAND SUBMITTED BEFORE US THAT THE CLAIM OF EXPENDITURE M ADE BY THE ASSESSEE HAS ATTAINED FINALITY AS PER ITAT ORDER DATED 8.12. 2008, WHEREIN IT HAS BEEN HELD THAT N. JAMNADAS & CO. NEVER RECEIVED AN Y PAYMENT FROM THE BRINKS ARYA INDIA (P) LTD. 8 ASSESSEE. ON THE BASIS ON THE SAID FINDINGS, LEARNE D DEPARTMENTAL REPRESENTATIVE CONTENDED THE NET RESULT OF THE SAME IS THAT THE CLAIM IN HAND OF THE BUSINESS EXPENDITURE RAISED BY THE ASSE SSEE WAS IN FACT A BOGUS CLAIM. ONCE, IT HAS BEEN HELD TO BE A BOGUS C LAIM, LEARNED DEPARTMENTAL REPRESENTATIVE STATED THAT IT IS A FIT CASE FOR IMPOSING PENALTY. REGARDING ADMISSION OF THE APPEAL OF HON'BLE HIGH C OURT FILED BY THE ASSESSEE IN THE QUANTUM CASE, LEARNED DEPARTMEN TAL REPRESENTATIVE SUBMITTED THAT MERE ADMISSION OF APPEAL AFTER FRAM ING SUBSTANTIAL QUESTIONS OF LAW IS NO GROUND TO SET ASIDE THE PENA LTY ORDERS. 18. WE HAVE HEARD LEARNED SR. COUNSEL APPEARING FOR THE ASSESSEE AND LEARNED DEPARTMENTAL REPRESENTATIVE AS WELL. RECOR D OF THE CASE HAS BEEN DULY PERUSED. IN LIGHT THEREOF, WE FIND THAT T HE CLAIM OF BUSINESS EXPENDITURE CLAIMED BY THE ASSESSEE HAS BEEN HELD T O BE FALSE CLAIM IN THE ABSENCE OF ANY WORK DONE BY ITS GROUP CONCERN N . JAMNADAS & CO. ALTHOUGH, ASSESSEE HAS ALSO STATED BEFORE THE RELEV ANT PROVISIONS OF THE CONTRACT ACT I.E. SECTION 2D CLAIMED THAT IN CASE O F A CONTRACT, PAYMENT CONSIDERATION BY EVEN THIRD PARTY IS ADMISSIBLE. BU T AFTER GOING THROUGH FINDINGS ARRIVED AT BY HON'BLE CO-ORDINATE BENCH OF THE ITAT, IT IS CLEAR THAT EVEN RENDERING OF SERVICE BY N. JAMNADAS & CO. HAS NOT BEEN PROVED BY THE ASSESSEE. ONCE NEITHER THE SERVICES RENDERED BY COMPANY CLAIMING PAYMENT NOR FURTHER PAYMENT BY GROUP CONCERN M/S. A RYA OFFSHORE SERVICES PVT. LTD. TO OTHER COMPANY N. JAMNADAS & C O. ETC. HAS BEEN PROVED, THEN ONLY ONCE INFERENCE IS LIABLE TO BE DR AWN IS OF MAKING BOGUS CLAIMS BY THE ASSESSEE. SO FAR AS ARGUMENT OF LEARN ED SR. COUNSEL IN LIGHT OF THE ABOVE CASE LAW IN RELIANCE PETROCHEMIC ALS ETC. (SUPRA), THAT THE PENALTY PROCEEDINGS ARE SEPARATE PROCEEDINGS, W E RESPECTFULLY AGREE WITH THE CASE LAW. BUT IN THE SAID CASE, HON'BLE AP EX COURT WAS NOT DEALING WITH CASE OF BOGUS OR FALSE CLAIM AS WE ARE DEALING IN THE INSTANT CASE. 19. ARGUMENTS OF LEARNED SR. COUNSEL THAT HON'BLE HIGH COURT HAS ADMITTED APPEALS, IN SUCH A CASE HE IS ENTITLED FOR BENEFIT OF DELETING THE PENALTY AS PER THE CO-ORDINATE BENCH ORDER DATED 18.3.2011. WE BRINKS ARYA INDIA (P) LTD. 9 ARE UNABLE TO AGREE WITH THE SAME. OF COURSE, SUCH ISSUES AND ARGUMENTS ARE BEING DEALT WITH BY VARIOUS COURTS FR OM TIME TO TIME. BUT HON'BLE DELHI HIGH COURT IN ITA NO. 1977 OF 2010 TI TLED AS SPLENDER CONSTRUCTION HAS CATEGORICALLY HELD IN PARA 10 THAT ONCE ASSESSEE FAILS SUCCESSIVELY BEFORE THE AUTHORITIES, THEN THE ISSUE OF PENALTY IS NO MORE DEBATABLE. IN THIS REGARD, WE ALSO RELYING ON CO-OR DINATE BENCH OF MUMBAI ITAT ITSELF IN IT(SS)A.NO.160/MUM/2007 IN TR IUMPH INTERNATIONAL FINANCE I LTD. VS. ACIT, IN WHICH IT HAS BEEN HELD IN PARA 8 THAT MERE ADMISSION OF APPEAL FILED BY THE ASSESSEE BEFORE HON'BLE HIGH COURT WOULD NOT IPSO FACTO MAKE OUT A CASE OF NON-L EVYING OF PENALTY. 20. ACCORDINGLY, BY RELYING ON THE ORDER OF ITAT DA TED 8.12.2008, IN TRIUMP INTERNATIONAL (SUPRA) AS WELL HON'BLE DELHI HIGH COURT IN SPLENDER CONSTRUCTION (SUPRA), WE FIND NO MERIT IN GROUNDS RAISED BY THE ASSESSEE. ACCORDINGLY, WE DISMISS THE APPEAL IN HAN D. 21. SINCE, LEARNED SR. COUNSEL REPRESENTING THE ASS ESSEE HAS VARY FAIRLY STATED THAT THE ISSUE INVOLVED IS THE SAME I N ALL FOUR APPEALS, THEREFORE, THE SAME ARE ALSO DISMISSED. COPY OF THI S ORDER BE PLACED IN CASE FILE OF OTHER THREE APPEALS. ORDER HAS BEEN PRONOUNCED ON 4 TH DAY OF APRIL, 2012. SD/- (J. SUDHAKAR REDDY) ACCOUNTANT MEMBER SD/- (S.S. GODARA) JUDICIAL MEMBER DATED : 4 TH APRIL, 2012. COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT, CONCERNED. 5. THE DR CONCERNED, MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR, ITAT, MUMBAI PS