SUNRAJ PLASTICS, MUMBAI V. DCIT CIR 22(2), NAVI MUMBAI

ITA 5789/MUM/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 2267 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2006-2007
• Appeal Filed On: 15-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Assessee Lawyers: LALCHAND CHAU DHARY
• Keywords: Additional evidence
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES E, MUMBAI BEFORE SHRI B.R.BASKARAN (AM) AND SHRI RAM LAL NEGI ( JM) ITA NO 5789/MUM/2014 ASSESSMENT YEAR: 2006-07 M/S. SUNRAJ PLASTICS, 326, BHAVESHWAR ARCADE, LBS MARG, GHATKOPER (W), MUMBAI- 400 086. PAN:- AAAFS7122D VS. THE DY. CIT, CIRCLE 22(2), TOWER NO.6, 4 TH FLOOR, VASHI RLY STATION BUILDING, VASHI , NAVI MUMBAI- 400 703. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI. LALCHAND CHAUDHARY RESPONDENT BY : SHRI. A.K.KARDAM DATE OF HEARING: 1 8 /10 /2016 DATE OF PRONOUNCEMENT: 26/10/20 16 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAINST ORDER DATED 18/07/2014 PASSED BY THE LD. CIT(APPEALS)-33 MUMBAI FOR THE ASST. YEAR 2006-07, WHEREBY THE LD. CIT(A) CONFIRMED THE PENAL TY LEVIED BY THE A.O U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 (IN SHORT TH E ACT) AND DISMISSED THE APPEAL OF THE ASSESSEE. 2. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER ON THE FOLLOWING EFFECTIVE GROUND OF APPEAL:- 2 ITA NO 5789/MUM/2014 ASSESSMENT YEAR: 2006-07 1. ON FACTS AND IN LAW, THE CIT(A) ERRED IN CONFIR MING THE PENALTY LEVIED BY THE A.O U/S 271(1)(C) OF THE INCOME TAX A CT, 1961 WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE AND ASS ESSEES EXPLANATION THEREOF. 3. AT THE OUTSET THE LD. AR SUBMITTED THAT IN QUAN TUM APPEAL BOTH THE ADDITIONS CONFIRMED BY THE LD. CIT(A) HAVE BEEN DEL ETED BY THE ITAT VIDE ORDER DATED 11/12/2014. THEREFORE, THE PENALTY ORDER DOES NOT SUSTAIN. 4. ON THE OTHER HAND THE LD. DR DID NOT CONTROVERT THE AFORESAID FACTS. IN THE LIGHT OF THE RESPECTIVE SUBMISSION, WE PERUSED THE DOCUMENTS PLACED BEFORE US. WE FIND THAT THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS DELETED THE ADDITION OF RS. 11,59,144/- PAID BY THE ASSESSEE TO THE BROKER HOLDING AS UNDER:- 2.3 FIRST WE SHALL DEAL WITH THE PAYMENT OF BROKER AGE/COMMISSION AMOUNTING TO RS.11,59,144/-PAID BY THE ASSESSEE TO THE BROKER. THE PAYMENT WAS PAID BY THE ASSESSEE TO THE BROKER TO P RANAV MARITIME SERVICES PVT. LTD. FOR PROCURING GOODS FROM SUNFLAG IRON AND STEEL COMP. LTD. AND R.L. STEELS LTD. THE ASSESSING OFFIC ER MADE ENQUIRIES FROM THE CONCERNED PARTIES. AS PER THE RE VENUE, SUNFLAG IRON AND STEEL COMP. LTD. VIDE THEIR LETTER DATED 0 5/12/2008 CLAIMED THAT THEY MADE THE SALES DIRECTLY TO THE AS SESSEE AND R.L. STEELS NEITHER CONFIRMED NOR DENIED THE EXISTENCE O F ANY BROKER. A QUERY WAS RAISED BY THE BENCH TO THE LD COUNSEL FOR THE ASSESSEE REGARDING THESE REPLIES. IT WAS EXPLAINED THAT DUE TO BUSINESS EXIGENCIES SOMETIMES IT IS NOT TOLD TO THE PARTY AS TO FOR WHOM THE BROKERS WERE WORKING AND SUCH BROKERS ARE PROVIDING THE GOODS AND AT COMPETITIVE RATES. WHAT IT MAY BE, WE FIND THAT PAYMENTS WERE MADE BY THE ASSESSEE TO THE BROKER AND DEDUCTED TAX AT SOURCE ON SUCH PAYMENTS WHICH WERE MADE THROUGH ACCOUNT PAYEE CHEQUE. THE ASSESSEE DULY FILED THE AFFIDAVIT OF THE BROKER RIGHT FROM ASSESSMENT STAGE AND LATER STAGES ALSO CONFIRMING T HE PAYMENT/RECEIPT OF BROKERAGE. THE CLAIM WAS DENIED BY THE ASSESSING OFFICER ON THE PLEA THAT THERE WAS NO EVI DENCE OF 3 ITA NO 5789/MUM/2014 ASSESSMENT YEAR: 2006-07 RENDERING OF SERVICES. BROADLY, WE ARE OF THE VIEW, IT IS ALWAYS NOT POSSIBLE TO PRODUCE EVIDENCE OF RENDERING OF SERVIC ES AND THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS MERELY END ORSED THE STAND OF THE ASSESSING OFFICER WITHOUT MAKING AN EL ABORATE ENQUIRY. THE ASSESSEE ALSO PRODUCED AGREEMENT DATED 05/04/20 05 BETWEEN THE ASSESSEE AND SHRI MANISH SHAWANT, DIRECTOR OF M /S PRANAV MARITIME SERVICES PVT. LTD. SUPPORTED BY AN AFFIDAV IT REGARDING RENDERING OF SERVICES. THE LD. CIT (A) DISCARDED TH E AGREEMENT DATED 05/04/2005 WHICH WAS FILED AS ADDITIONAL EVIDENCE M ERELY ON THE GROUND THAT IT WAS NOT FILED BEFORE THE ASSESSING O FFICER. ANOTHER FACT TO BE NOTED HERE IS THAT IN THE SUBSEQUENT ASS ESSMENT YEAR, THE DEPARTMENT ACCEPTED THE PAYMENT OF BROKERAGE TO THE SAME BROKER WHILE PASSING ORDER U/S 143(3) OF THE ACT FOR A.Y. 2007-08. AS CANVASSED BY THE LD. COUNSEL FOR THE ASSESSEE, SHRI MANISH SHAWANT, PURSUANT TO ENQUIRY BY THE ASSESSING OFFIC ER, VIDE REPLY DATED 08/10/2009 CATEGORICALLY TOLD THAT HE RECEIVE D THE COMMISSION FROM THE ASSESSEE (PAGE-64 OF THE PAPER BOOK), WHEREIN, THE BANK STATEMENT, RECEIVING THE PAYMENT THROUGH C HEQUE BY THE ASSESSEE WAS ALSO ANNEXED ALONGWITH THE LEDGER ACCO UNT FOR THE PERIOD FROM 01/04/2006 TO 31/03/2007. IT IS ALSO NO TED THAT THE BROKER ALSO CLAIMED SUCH BROKERAGE INCOME BY FILING A RETURN ALONGWITH COMPUTATION OF INCOME WHICH WAS ALSO MADE AVAILABLE TO THE ASSESSING OFFICER. IT SEEMS THAT DENIAL OF RELI EF TO THE ASSESSEE IS BASED UPON PRESUMPTION. IN SUCH A SITUATION, WE ARE OF THE VIEW, PRESUMPTION CANNOT TAKE THE SHAPE OF EVIDENCE, HOWE VER STRONG IT MAY BE, MORE SPECIFICALLY WHEN ENOUGH MATERIAL IS A VAILABLE ON RECORD EVIDENCING THE BROKERAGE PAYMENT. THE REPLY OF THE BROKER WAS IN RESPONSE TO LETTER DATED 01/10/2009 WRITTEN TO HIM (PAGE - 65 OF THE PAPER BOOK) BY THE DCIT. THE ASSESSEE HAS ALSO DULY SHOWN THE AMOUNT BY WAY OF CREDIT NOTE (PAGE-66 OF THE PAPER BOOK) AND LEDGER ACCOUNT (PAGE-67 OF THE PAPER BOOK). IN VIEW OF THESE FACTS, WE ARE OF THE OPINION THAT THE ADDITION WAS WRONGLY MADE, THUS THIS GROUND OF THE ASSESSEE IS ALLOWED. 5. SO FAR AS THE ADDITION OF RS. 21,63,545/- MADE U/S 145A OF THE ACT IS CONCERNED THE CO-ORDINATE BENCH HAS SET ASIDE THE I SSUE AFRESH IN THE LIGHT OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2008-09 (ITA NO. 4 ITA NO 5789/MUM/2014 ASSESSMENT YEAR: 2006-07 8211/MUM/2011) IN WHICH IDENTICAL CLAIM ISSUE WAS DECIDED IN FAVOUR OF THE ASSESSEE. SINCE OUT OF THE TWO ADDITIONS CONFIRMED BY THE LD. CIT(A), ONE ADDITION HAS BEEN DELETED AND THE SECOND ADDITION H AS BEEN SET ASIDE TO THE FILE OF AO FOR FRESH ADJUDICATION, THE PENALTY ORDER DOE S NOT SURVIVE. IN VIEW OF THE AFORESAID FACT WE SET ASIDE THE IMPUGNED ORDER PASS ED BY THE LD. CIT(A), ALLOW THE APPEAL FILED BY THE ASSESSEE AND DECIDE THE SOL E GROUND OF APPEAL IN FAVOUR OF THE ASSESSEE. THE AO IS AT LIBERTY TO INITIATE P ENALTY PROCEEDINGS IN THE SET ASIDE PROCEEDINGS IF SO WARRENTED. 6. IN THE RESULT APPEAL FILED BY THE ASSESSEE FOR A .Y. 2006-07 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH OCTOBER, 2016 SD/- SD/ - ( B.R.BASKARAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED:26/10/2016 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A)- 4. / CIT 5. ! , # !$ , / DR, ITAT, MUMBAI 6. %& ' / GUARD FILE. / BY ORDER, ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI PRAMILA