ITO 21(2)(1), MUMBAI V. HARESH V SHAH, MUMBAI

ITA 6092/MUM/2012

• Counselvise Citation: 609219914 RSA 2012
• Duration Of Justice: 1 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 30-01-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 05-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: PITAMBAR DAS
• Assessee Lawyers: K S CHOKSHI
• Keywords: Opportunity of being heard
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH H, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 6092/MUM/2012 ASSESSMENT YEAR: 2009-10 ITO -21(2)(1) 505, 5 TH FLOOR, C-10, PRATYAKSH KAR BHAVAN, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-.400 051 VS. SHRI HARESH V. SHAH, B-23/24, 2 ND FLOOR, HIGHWAY APPTS. EASTERN EXPRESS HIGHWAY, SION(E), MUMBAI.-22 (APPELLANT) (RESPONDENT) PERMANENT ACCOUNT NO. :- AADPS 0020 R ASSESSEE BY : SHRI K.S. CHOKSHI REVENUE BY : SHRI PITAMBAR DAS DATE OF HEARING : 30.01.2014 DATE OF PRONOUNCEMENT : 07.02.2014 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A)-32, MUMBAI DATED 4.07.2012 FOR THE ASSESSMENT YEAR 2009 -10. 2. IN GROUND NO. 1, THE REVENUE HAS AGITATED THE AC TION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE OF PROFESSIONAL FEE OF RS.4,40,078 /- MADE BY THE AO. THE SAID PROFESSIONAL FEE WAS CLAIMED BY THE ASSESSEE IN RES PECT OF PAYMENTS OF PROFESSIONAL FEE MADE TO ONE MRS. KIRTI H. CHOKSHI FOR RENDERING SER VICES OF ACCOUNTING AS WELL AS MAINTENANCE OF COMPUTER SYSTEM INCLUDING CORRESPOND ENCE WITH THE FOREIGN CLIENTS. HOWEVER, THE AO DID NOT AGREE WITH THE CONTENTION O N THE GROUND THAT THE ASSESSEE WAS NOT ABLE TO SUBSTANTIATE THE CLAIM WITH PROPER DOCU MENTARY EVIDENCE AND THEREBY THE AO DISALLOWED THE IMPUGNED EXPENDITURE. ON APPEAL THE LD.CIT(A) DELETED THE IMPUGNED DISALLOWANCE/ADDITION ON THE REASON THAT THE RECIPI ENT OF THE PROFESSIONAL FEES WAS ITA NO. 6092/MUM/2012 SHRI HARESH V. SHAH, ASSESSMENT YEAR: 2009-10 2 QUALIFIED TO RENDER THE SERVICES CLAIMED AND WAS NO T RELATED TO THE ASSESSEE. THE LD.CIT(A) ALSO OBSERVED THAT THE PAYMENTS WERE DULY EVIDENCED BY THE DEDUCTING TDS ON THIS EXPENDITURE. AGGRIEVED BY THE IMPUGNED DECISIO N, THE REVENUE HAS RAISED THIS GROUND IN THE APPEAL BEFORE US. 2.1 HAVING HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD, IT IS PERTINENT TO MENTION THAT THE ASSESSEE, IN RESPONSE TO THE NOTIC E OF THE AO, HAS FILED A LETTER DATED 20.12.2011 DURING THE ASSESSMENT PROCEEDINGS, THE C OPY OF WHICH IS AVAILABLE AT PAGE NUMBERS 1-4 OF THE PAPER BOOK. IN ANNEXURE I OF THE SAID LETTER, THE ASSESSEE HAS STATED THAT THE RECIPIENT IS QUALIFIED WITH M.COM DEGREE A ND ALSO HOLDS A 5 YEAR DIPLOMA OF NIIT IN COMPUTER ENGINEERING. SINCE THE ASSESSEE DID NOT HAVE FULL TIME AVAILABILITY OF HIS ACCOUNTANT, SHE CARRIED OUT THE ACCOUNTING THROUGH THE SYSTEM WHEN THE BUSINESS HAS GROWN SUBSTANTIALLY. FURTHER, THE ASSESSEE HAS POIN TED OUT THAT SHE HAS ATTENDED ALL THE BOOKS, COMPUTER SYSTEMS AND CORRESPONDENCE WITH FOR EIGN CLIENTS THROUGHOUT THE YEAR FOR WHICH THE PROFESSIONAL FEES HAS BEEN PAID. SHE IS A LSO ASSESSED TO INCOME TAX UNDER PAN ALWPS7117H AND THE NECESSARY DEBIT NOTES ARE ALREAD Y IN THE RECORDS OF THE REVENUE AND TDS @ 10% AND SURCHARGE HAS BEEN DEDUCTED ON PA YMENT U/S 194J OF THE ACT. HOWEVER, THOUGH THE AO, IN THE ASSESSMENT ORDER HAS MENTIONED ABOUT THE SAID LETTER OF THE ASSESSEE, THE AO IS OF THE VIEW THAT THE ASSESS EE IS NOT ABLE TO SUBSTANTIATE THE CLAIM WITH PROPER DOCUMENTARY EVIDENCE. CONSIDERING THE F ACTS IN TOTO, THE SAID DECISION OF THE AO, IN OUR VIEW IS NOT BASED ON ANY SOUND REASONING , SINCE IT IS FOR THE AO TO REBUT THE CLAIM BY POINTING OUT SPECIFIC DISCREPANCY IN THE E XPLANATION OF THE ASSESSEE. AFTER NOTING THAT THE RECIPIENT OF THE PROFESSIONAL FEES IS QUAL IFIED TO RENDER THE SERVICES CLAIMED WHO IS NOT RELATED TO THE ASSESSEE, THE PAYMENTS WERE DULY EVIDENCED BY THE DEDUCTING TDS ON THIS EXPENDITURE AND ALSO THE AO HAS NOT REBUTTED T HE CLAIM BY POINTING OUT SPECIFIC DISCREPANCY IN THE EXPLANATION OF THE ASSESSEE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF THE LD.CIT(A) DELETING THE IMPUGNED DISALLOWANCE /ADDITION MADE BY THE AO. THUS, THE DECISION OF THE LD.CIT(A) ON THIS COUNT IS UPHELD. RESULTANTLY, GROUND NO 1 IS DISMISSED . 3. IN GROUNDS NO. 2 TO 5, THE REVENUE HAS AGITATED THE DECISION OF THE LD.CIT(A) IN DELETING THE DISALLOWANCE OF RS.71,12,675/- MADE BY THE AO ON ACCOUNT OF PURCHASES ITA NO. 6092/MUM/2012 SHRI HARESH V. SHAH, ASSESSMENT YEAR: 2009-10 3 MADE BY THE ASSESSEE FROM THE PARTIES NAMELY M/S. R .R. ENGINEERING, M/S. HITESH CHEMICALS ETC BEING IN THE NATURE OF CIRCULAR TRADI NG. 3.1 AT THE OUTSET, IT IS OBSERVED THAT DURING THE C OURSE OF THE ASSESSMENT PROCEEDINGS, THE AO ISSUED NOTICES U/S 133(6) TO SEVERAL PARTIES OUT OF WHICH 3 PARTIES NAMELY M/S. R.R. ENGINEERING, M/S. HITESH CHEMICALS AND M/S. KO THARI CHEMICALS AND SOLVENTS LTD. HAS NOT RESPONDED TO THE NOTICES U/S 133(6) SENT BY THE AO. THE AO HAS ALSO ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE TO PRODUCE THE SAID PA RTIES ON 20.12.2011. VIDE LETTER DATED 20.12.2011, THE ASSESSEE HAS STATED THAT THEY ARE T HE REGULAR PARTIES AND SUBMITTED THEIR LEDGER ACCOUNTS ALONG WITH ADDRESS AND PURCHASE AND SALE BILLS IN RESPECT OF THOSE PARTIES. IT HAS ALSO BEEN STATED THAT THE ASSESSEE HAS BEEN TRYING TO TAKE CONFIRMATION FROM THE SAID PARTIES BUT DUE TO END OF THE DECEMBE R, IT IS NOT POSSIBLE TO GET CONFIRMATIONS IMMEDIATELY. HOWEVER, THE PERUSAL OF THE ASSESSMENT ORDER INDICATES THAT THERE IS NO DISCUSSION ON THE SAID DISALLOWANCE EXC EPT MAKING THE DISALLOWANCE/ADDITION IN THE COMPUTATION DONE BY THE AO. HOWEVER, THE LD.CIT (A) HAS DELETED THE DISALLOWANCE/ADDITION AS THE ASSESSEE HAS EXPLAINED THE NATURE OF WHICH HAVE BEEN FOUND TO BE GENUINE TRANSACTIONS DULY SUPPORTED BY BILLS AND ALL THE SALES AND PURCHASES HAVE BEEN DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AN D APPELLANT HAS EARNED SUBSTANTIAL PROFIT ON SUCH TRANSACTIONS. HOWEVER, WHILE RELYING ON THE BILLS AND OTHER EVIDENCES PRODUCED BY THE ASSESSEE, THE LD.CIT(A) HAS NOT GIV EN ANY OPPORTUNITY TO THE AO TO VERIFY THE VERACITY OF THE EVIDENCES/CLAIM OF THE A SSESSEE. CONSIDERING THE ENTIRETY OF THE FACTS, WE ARE OF THE CONSIDERED OPINION THAT IT IS JUST AND PROPER TO REMIT THE ISSUE BACK TO THE FILE OF THE AO TO DECIDE THE MATTER AFRESH AFTE R GIVING OPPORTUNITY OF BEING HEARD TO THE ASSESSEE TO PLACE ALL THE MATERIALS IN SUPPORT OF THE CLAIM. WE ORDER AND DIRECT ACCORDINGLY. GROUNDS NO 2-5 ARE ALLOWED FOR STATIST ICAL PURPOSE. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 7 TH DAY OF FEBRUARY, 2014. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 07.02.2014 *SRIVASTAVA ITA NO. 6092/MUM/2012 SHRI HARESH V. SHAH, ASSESSMENT YEAR: 2009-10 4 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR H BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.