MAZARS, MUMBAI V. ACIT WARD 17(2), MUMBAI

ITA 6544/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 8781 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 16-11-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAMA MANGAL
• Assessee Lawyers: M M GOLVALA AW MS HETA L SHAH
• Keywords: Opportunity of being heard; Corroborative evidences
• Section: 234B; 201; 13; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY , JUDICIAL MEMBER AND SHRI M. BALAGANESH, ACCOUNTANT MEMBER ITA NO. 6544 / MUM . /201 8 ( ASSESSMENT YEAR : 20 12 13 ) MAZARS , ESPLANADE HOUSE 29, HAZARIMAL SOMANI MARG FORT, MUMBAI 400 001 PAN AATFM2606D . APPELLANT V/S ASSTT. COMMISSIONER OF INCOME TAX WARD 17(2), MUMBAI . RESPONDENT ASSESSEE BY : SHRI M.M. GOLVALA A/W MS. HETA L SHAH REVENUE BY : SHRI KAMA MANGAL DATE OF HEARING 13.01.2020 DATE OF ORDER 17.01.2020 O R D E R PER SAKTIJIT DEY. J.M. THE AFORESAID APPEAL HA S BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 21 ST AUGUST 2018, PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 57 , MUMBAI, FOR THE ASSESSMENT Y EAR 201 2 13 . 2. THERE IS A DELAY OF 10 DAYS IN FILING THE PRESENT APPEAL. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE CON TENTS OF THE 2 MAZARS DELAY CONDONATION APPLICATION AND AFFIDAVIT FILED, WE ARE SATISFIED THAT THE DELAY IN FILING THE APPEAL IS DUE TO REASO NABLE CAUSE. HENCE , WE ARE INCLINED TO CONDONE THE DELAY OF 10 DAYS AND ADMIT THE APPEAL FOR ADJUDICATION ON MERIT. 3. IN GROUND NO.1, THE ASSESSEE HAS CHALLENGED THE DISALLOWANCE OF UNRECOVERED OUT OF POCKET EXPENSES AMOUNTING TO ` 5,04,264. 4. BRIEF FACTS ARE, THE ASSESSEE , A PARTNERSHIP FIRM , IS ENGAGED IN THE BUSINESS OF CONSULTING IN CORPORATE FINANCE , INCLUDING , FINANCIAL AND TAX DUE DILIGENCE OF INTERNAL CONTROL, INTERNAL AUDIT, ACCOUNTING AND OTHER SERVICES. FOR THE ASSESSMENT YEAR UNDER DISPUTE , THE ASSESSEE FILED ITS RETURN OF INCOME ON 30 TH SEPTEMBER 2012 DECLARING LOSS OF ` 46,80,931. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS DEBITED AN AMOUNT OF ` 30,47,912, TOWARDS CLIENT RECOVERY EXPENSES. WHEN CALLED UPON BY THE ASSESSING OFFICER TO FURNISH DETAILS AND JUSTIFY THE CLAIM, THE ASSESSEE FURNISHED NECESSARY DETAILS AND SUBMITTED THAT WHILE RENDERING SERVICES TO CLIENT S , THE ASSESSEE HAS TO INCUR CERTAIN OUT OF POCKET EXPENSES WHICH ARE SUBSEQUENTLY RECOVERED FROM THE CLIENT S . HOWEVER, IN CER TAIN CASES, THE CLIENTS REFUSED/ DECLINED TO REIMBURSE SUCH EXPENDITURE. THEREFORE, THE ASS ESSEE HAS TO CLAIM SUCH EXPENDITURE ON ITS ACCOUNT. AFTER PERUSING THE SUBMISSIONS OF THE ASSESSEE IN THE CO NTEXT OF MATERI ALS FURNISHED, THE ASSESSING OFFICER FOUND THAT OUT OF THE TOTAL 3 MAZARS EXPENDITURE OF ` 30,47,912, THE ASSESSEE HAS RECOVERED AN AMOUNT OF ` 25,43,648. AS REGARDS THE BALANCE AMOUNT OF ` 5,04,264, THE ASSESSING OFFICER HELD THAT SINCE THE ASSESSEE COULD NOT FURNIS H ANY SUPPORTING EVIDENCE TO ESTABLISH THAT THE EXPENDITURES ARE NOT RECOVERABLE , THE SAME HAS TO BE DISALLOWED. ACCORDINGLY, HE DISALLOWED THE AMOUNT OF ` 5,04,264. THOUGH, THE ASSESSEE CONTESTED THE AFOR ESAID DISALLOWANCE, HOWEVER, LEARNED COMMISSIONER (A PPEALS) ALSO UPHELD THE DISALLOWANCE. 5. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THERE IS NO DISPUTE THAT THE ASSESSEE HAS INCURRED THE EXPENDITURE , AS , ALL THE DETAILS RELATING TO SUCH EXPENDITURE WERE FURNISHED BEFORE THE ASSESSING OFFICER. HE SUB MITTED , EVEN THE NAME OF THE PARTIES FOR WHOM EXPENDITURE WAS INCURRED WAS ALSO FURNISHED TO THE ASSESSING OFFICER. HE SUBMITTED , A DETAILED EXPLANATION WAS ALSO FILED BEFORE THE ASSESSING OFFICER EXPLAINING THE NATURE OF EXPENSES. HE SUBMITTED , WITHOUT PROPERLY CONSIDERING ASSESSEES EXPLANATION AND THE EVIDENCES FILED, THE ASSESSING OFFICER HAS DISALLOWED THE AMOUNT. HE ALSO SUBMITTED , WHILE DECIDING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2013 14, IN ITA NO.2505/MUM./201 8, DATED 30 TH SEPTEMBER 2019, THE TRIBUNAL HAS DELETED THE DISALLOWANCE. THUS, HE SUBMITTED , FACTS BEING IDENTICAL , THE DISALLOWANCE MADE IN THE IMPUGNED ASSESSMENT YEAR SHOULD ALSO BE DELETED. 4 MAZARS 6. THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE OBSER VATIONS OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS). 7. WE HAVE CONSIDERED RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. AS COULD BE SEEN FROM THE FACTS ON RECORD, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAS INCURRED CERTAIN OUT OF POCKET EXPENDITURE WHILE RENDERING SERVICES TO THE CLIENTS. A MAJOR PART OF SUCH EXPENDITURE HAS BEEN RECOVERED FROM THE CLIENT S . HOWEVER, ONLY AN AMOUNT OF ` 5,04,264, REMAINED UNRECOVERED. THE ASSESSING OFFICER HAS DISALLOWED THE AMOUNT PRIMARILY ON THE REASONING THAT THE ASSESSEE FAILED TO FURNISH ANY EVIDENCE TO SHOW THAT THE AMOUNT IS NOT RECOVERABLE. HOWEVER, THE ASSESSEE HAS FURNISHED ALL THE DETAILS RELATING TO THE EXPENDITURE INCURRED , INCLUDING , THE DETAILS OF PARTIES FOR WHOM SUCH EXPENDIT URE WAS INCURRED. IT IS ALSO NOT A FACT THAT THE ASSESSEE HAS RECEIVED THE DISPUTED AMOUNT FROM THE CLIENT S . IN SUCH CIRCUMSTANCES, THE EXPLANATION OF THE ASSESSEE THAT THE AMOUNT IS NOT RECOVERABLE HAS TO BE ACCEPTED. IT IS RELEVANT TO OBSERVE , WHILE DECI DING IDENTICAL ISSUE IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2013 14 CITED SUPRA, THE TRIBUNAL HAS DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUSTAINED BY LEARNED COMMISSIONER (APPEALS). FACTS BEING IDENTICAL, FOLLOWING THE AFORESAID DECISION OF THE 5 MAZARS CO ORDINATE BENCH, WE DELETE THE DISALLOWANCE OF ` 5,04,264. ACCOR DINGLY, THIS GROUND IS ALLOWED . 8. GROUND NO.2, IS NOT PRESSED DUE TO SMALLNESS OF THE ADDITION. ACCORDINGLY, THIS GROUND IS DISMISSED WITHOUT PREJUDICE TO THE RIGHT S AND CON TENTIONS OF THE PARTIES, IF SUCH ISSUE ARISES IN ANY OTHER ASSESSMENT YEAR IN FUTURE. 9. BESIDES THE ABOVE, THE ASSESSEE HAS RAISED ADDITIONAL GROUND WITH REGARD TO THE DETERMINATION OF LOSS AT ` 41,26,920, AND LEVY OF INTEREST UNDER SECTION 234B OF THE ACT FOR THE VERY SAME AMOUNT. 10. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THE TAX PAYABLE BY THE ASSESSEE IS NIL . RATHER, THE ASSESSEE IS ENTITLED FOR REFUND OF ` 47,27,381 DUE TO CREDIT OF T DS. THEREFORE , NO INTEREST AT ALL IS PAYABLE UNDER SECTION 234B OF THE ACT. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED , THOUGH , THE ASSESSEE HAS FILED AN APPLICATION FOR RECTIFICATION UNDER SECTION 154 OF THE ACT ON 28 TH AUGUST 2018, BEFORE TH E ASSESS ING OFFICER, NO ACTION AS YET HAS BEEN TAKEN BY THE ASSESSING OFFICER. THUS, HE SUBMITTED , THE ASSESSING OFFICER MAY BE DIRECTED TO DISPOSE OFF ASSESSEES APPLICATION FOR RECTIFICATION WITHIN A TIME BOUND PERIOD. 6 MAZARS 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE HA S NO OBJECTION IF A DIRECTION IS ISSUED TO THE ASSESSING OFFICER FOR DISPOSAL OF ASSESSEES APPLICATION UNDER SECTION 154 OF THE ACT. 12. HAVING CONSIDERING THE RIVAL SUBMISSIONS, WE ARE OF THE VIEW THAT THE ADDITIONAL GROUND RAISED BY THE ASSESSEE SINCE DO ES NOT REQUIRE INVESTIGATION INTO FRESH FACT S , HAVE TO BE ADMITTED FOR ADJUDICATION. ACCORDINGLY, WE DO SO. 13. HAVING HELD SO, IT IS NOTICED THAT ON THE ISSUE RAISED IN THE ADDITIONAL GROUND, THE ASSESSEE HAS ALREADY MOVED AN APPLICATION FOR RECTIFICATION OF M ISTAKE UNDER SECTION 154 OF THE ACT, BEFORE THE ASSESSING OFFICER AS EARLY AS ON 28 TH AUGUST 2018. IT IS STATED BEFORE US BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE SAID APPLICATION IS STILL PENDING. IN OUR VIEW, THE IN ACTION OF THE ASSESSING OFFICER IN DISPOSING OFF ASSESSEES APPLICATION FILED UNDER SECTION 154 OF THE ACT FOR SUCH A LONG PERIOD CANNOT BE APPRECIATED. THEREFORE, WE DIRECT THE ASSESSING OFFICER TO DISPOSE OFF ASSESSEES APPLICATION FILED UNDER SECTION 154 OF T HE ACT , AS REFERRED TO ABOVE , AS EXPEDITIOUSLY AS POSSIBLE AND PREFERABLY WITHIN A PERIOD OF THREE MONTHS FROM THE DATE OF RECEIPT OF THIS ORDER. NEEDLESS TO MENTION, THE ASSESSING OFFICER MUST DISPOSE OFF THE AFORESAID APPLICATION FILED BY THE ASSESSEE ON MERITS AND IN ACCORDANCE WITH LAW AFTER AFFORDING A REASONABLE 7 MAZARS OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ADDITIONAL GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 14. IN THE RESULT, APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 17.01.2020 SD/ - M. BALAGANESH ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMB AI, DATED: 17.01.2020 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI