A.C.I.T. CIR,7(1), MUMBAI V. M/S. NPIL LABORATORIES & DIAGNOSTICS PVT.LTD., MUMBAI

ITA 5941/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 7270 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 22-03-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 29-09-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA; S S RANA
• Assessee Lawyers: M D INAMDAR
• Keywords: Accommodation entries

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B, MUMBAI BEFORE SHRI R.K.GUPTA, JM AND SHRI R.S.SYAL, AM ITA NO.5941/MUM/2008 : ASST.YEAR 2004-2005 THE ASSTT.COMMISSIONER OF INCOME-TAX CIRCLE 7(1) MUMBAI. VS. M/S.NPIL LABORATORIES & DIAGNOSTICS PRIVATE LIMITED, NICHOLAS PARIMAL TOWER GANPATRAO KADAM MARG, LOWER PAREL (W) MUMBAI 400 013. PA NO.AACCT9117E. (APPELLANT) (RESPONDENT) APPELLANT BY : S/SHRI VIRENDRA OJHA & S.S.RANA RESPONDENT BY : SHRI M.D.INAMDAR O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 3.7.2008 IN RELATION TO THE ASSESSMENT YEAR 2004-2005. 2. THE FIRST GROUND IS AGAINST THE DIRECTION OF THE CIT(A) TO ALLOW THE CLAIM OF PROFESSIONAL FEES PAID TO DR. S.ROY AS WHOLLY AND E XCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS. THE FACTS OF THIS GROUND ARE T HAT THE ASSESSEE PAID A SUM OF RS.1.20 CRORE TO DR.S.ROY FOR PROFESSIONAL SERVICES . THE A.O. COMPARED THIS PAYMENT WITH THE PAYMENTS MADE TO OTHER DOCTORS AND CAME TO THE CONCLUSION THAT THE PAYMENT TO DR.S.ROY WERE SUBSTANTIALLY HIGHER. HE DISALLOWED 50% OF THE PROFESSIONAL FEES WHICH RESULTED INTO AN ADDITION O F RS.60,23,463. THE LEARNED CIT(A) DELETED THIS ADDITION. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT SIMILAR ISSUE CAME UP BEF ORE THE TRIBUNAL IN ASSESSEES OWN CASE IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR I .E. 2003-2004. THE TRIBUNAL IN ITA NO.1163/MUM/2007 VIDE ITS ORDER DATED 19.2.2009 , A COPY OF WHICH IS AVAILABLE ON RECORD, APPROVED THE VIEW TAKEN BY THE LEARNED CIT(A) AND THUS ITA NO.5941/MUM/2008 M/S.NPIL LABORATORIES & DIAGNOSTICS PVT.LTD. 2 DISMISSED THE REVENUES APPEAL. AS THE FACTS AND CI RCUMSTANCES OF THE INSTANT GROUND ARE SIMILAR TO THOSE OF THE IMMEDIATELY PREC EDING YEAR, RESPECTFULLY FOLLOWING THE PRECEDENT, WE UPHOLD THE IMPUGNED ORD ER ON THIS ISSUE. THIS GROUND IS NOT ALLOWED. 4. GROUND NO.2 IS AGAINST RESTRICTING THE ADDITION ON ACCOUNT OF BOGUS PAYMENT TO M/S. JALKANTA ORGANIC CHEMICALS LIMITED FROM RS. 5.75 LAKHS TO RS.4 LAKHS. THE A.O. RECEIVED INFORMATION FROM THE DIRECTOR OF INCO ME-TAX (INV.) THAT THE ASSESSEE HAD TAKEN SOME ACCOMMODATION ENTRIES FROM M/S.JALKA NTA ORGANIC CHEMICALS LIMITED AMOUNTING TO RS.5,75,000 DURING THE PREVIOU S YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. THE A.O. MADE ADDITION OF RS.5.75 LAKHS. IN THE FIRST APPEAL IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT ONLY PAYMENT TO THE TUNE OF RS.4,00,000 WAS MADE TO M/S.JALKANTA ORGANI C CHEMICALS LIMITED AND THE ADDITION BE RESTRICTED TO THAT ONLY. THE LEARNED CI T(A), ON THE PERUSAL OF COPY OF ACCOUNT OF M/S.JALKANTA ORGANIC CHEMICALS LIMITED, REDUCED THE ADDITION TO RS.4 LAKHS. THERE IS NO CROSS APPEAL BY THE ASSESSEE ON THIS ISSUE. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THERE IS A REFERENCE TO THE ASS ESSEES CLAIM OF PAYMENT OF RS.4 LAKHS CLAIMED TO HAVE BEEN MADE TO M/S.JALKANTA ORG ANIC CHEMICALS LIMITED IN THE ASSESSMENT ORDER ITSELF. THE LEARNED CIT(A), ON THE PERUSAL OF THE COPY OF ACCOUNT, HELD THAT THE ADDITION COULD NOT BE MADE FOR THE SU M WHICH WAS NOT CLAIMED AS DEDUCTION. IT IS HOW THE SAID ADDITION OF RS.4 LAKH S WAS CONFIRMED. NO MATERIAL HAS BEEN PLACED ON RECORD ON BEHALF OF THE REVENUE TO S UPPORT ITS CONTENTION THAT THERE WAS A DEDUCTION OF RS.5.75 LAKHS CLAIMED BY THE AS SESSEE IN THIS YEAR ON ACCOUNT OF PAYMENT TO M/S.JALKANTA ORGANIC CHEMICALS LIMITE D. AS THE DEDUCTION WAS CLAIMED ONLY FOR RS.4.00 LACS, NATURALLY THERE COUL D NOT BE ANY QUESTION OF MAKING ADDITION OVER AND ABOVE THAT. WE, THEREFORE, UPHOLD THE IMPUGNED ORDER RESTRICTING THE ADDITION TO RS.4 LAKHS. THIS GROUND IS NOT ALL OWED. ITA NO.5941/MUM/2008 M/S.NPIL LABORATORIES & DIAGNOSTICS PVT.LTD. 3 6. THE LAST EFFECTIVE GROUND IS AGAINST THE DELETIO N OF ADDITION ON ACCOUNT OF PURCHASE FROM M/S.INDIAN DRUG DISTRIBUTORS. THE ASS ESSEE CLAIMED TO HAVE MADE PURCHASES AMOUNTING TO RS.3,55,665 FROM M/S. INDIAN DRUG DISTRIBUTORS. IN ORDER TO VERIFY THE GENUINENESS OF THE TRANSACTIONS WITH THIS PARTY, THE A.O. ISSUED NOTICE U/S.133(6). AS THERE WAS NO RESPONSE FROM THE SAID PARTY, THE A.O. REQUIRED THE ASSESSEE TO PRODUCE A REPRESENTATIVE OF THE SAID M/ S. INDIAN DRUG DISTRIBUTORS. IN RESPONSE TO THAT THE ASSESSEE FILED A LETTER DATED 18.12.2006 REQUESTING FOR SOME TIME. THE A.O. DID NOT GIVE ANY TIME AND CAME TO T HE CONCLUSION THAT THE SAID PAYMENT WAS NON-GENUINE EXPENDITURE. THE SAME WAS, THEREFORE, DISALLOWED. DURING THE FIRST APPELLATE PROCEEDINGS THE LEARNED CIT(A) NOTED THAT THE ASSESSEE REQUESTED FOR SOMETIME FROM A.O. VIDE LETTER DATED 18.12.2006 FOR ENABLING IT TO FURNISH CONFIRMATION FROM THE SAID PARTY WHICH REQU EST WAS NOT ALLOWED. DURING THE APPELLATE PROCEEDINGS, INFORMATION WAS CALLED FOR F ROM M/S. INDIAN DRUG DISTRIBUTORS AND THE SAME WAS OBTAINED. ON THE PERU SAL OF THE COPY OF ACCOUNT, THE LEARNED CIT(A) NOTED THAT THE PURCHASES MADE BY THE ASSESSEE WERE TO THE TUNE OF RS.4,31,110 AND ALL THE PAYMENTS WERE MADE THROUGH CHEQUES. IT WAS, THEREFORE, HELD THAT THE ADDITION WAS NOT CALLED FOR. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS NOTICED THAT THE ASSESSMENT WAS COMPLE TED ON 28.12.2006 AND THE ASSESSEES REQUEST FOR GRANT OF SOME TIME FOR PROD UCING THE NECESSARY EVIDENCE WAS NOT ACCEDED TO. HOWEVER, DURING THE APPELLATE P ROCEEDINGS COPY OF ACCOUNT FROM M/S. INDIAN DRUG DISTRIBUTORS WAS OBTAINED, WH ICH CONFIRMED THE TRANSACTION OF PURCHASES WITH THE ASSESSEE TO THE TUNE OF RS.4. 31 LAKHS AS AGAINST THE CLAIM OF THE ASSESSEE FOR RS. 3.55 LACS. IT IS STATED THAT F OR THE DIFFERENCE IN TWO FIGURES, THE ASSESSEE FILE RECONCILIATION BEFORE THE LD. CIT(A). IN VIEW OF THE FACT THAT THE PAYMENT WAS MADE BY THE ASSESSEE THROUGH BANKING CH ANNEL AND SUCH TRANSACTIONS STAND CONFIRMED BY THE PARTY, WE ARE OF THE CONSIDE RED OPINION THAT NO INFIRMITY CAN ITA NO.5941/MUM/2008 M/S.NPIL LABORATORIES & DIAGNOSTICS PVT.LTD. 4 BE FOUND IN THE IMPUGNED ORDER DELETING THE SAID AD DITION. THIS GROUND IS NOT ALLOWED. 8. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF MARCH 2010. SD/- SD/- ( R.K.GUPTA ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT M EMBER MUMBAI : 24 TH MARCH, 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - VII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.