AYAS E KHATRI, MUMBAI V. ASST CIT CEN CIR 9, MUMBAI

ITA 6937/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 3181 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 28-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DEEPAK PRASAD
• Assessee Lawyers: P R TOPRANI
• Keywords: Principle of natural justice
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEORE SHRI G.S.PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER. ITA NO.8397 /MUM/2010 (ASSESSMENT YEAR : 2006-07) P.H.FINANCIAL & INVESTMENT CONSULTANTS P. LTD.., 6 TH FLOOR, JAISINGH BUSINESS CENTRE, PARSIWADSA, SAHAR ROAD, ANDHERI(EAST) MUMBAI 400 099 PAN: AAACP 2816L ... APPELLANT VS. THE DCIT-4(2), AAYKAR BHAVAN, MK ROAD, MUMBAI 400 020 MUMBAI. .... RESPON DENT ASSESSEE BY : SHRI P.R.TOPRANI REVENUE BY : SHRI DEEPAK PRASAD DATE OF HEARING : 07/09/2015 DATE OF PRONOUNCEMENT : 07/09/2015 ORDER PER G.S. PANNU,AM: THE CAPTIONED APPEAL IS DIRECTED AGAINST ORDE R PASSED BY CIT(A)-8, MUMBAI DATED 12/11/2010, PERTAINING TO TH E ASSESSMENT YEAR 2006-07, WHICH IN TURN HAS ARISEN FROM AN ORDER PAS SED BY ASSESSING OFFICER DATED 30/11/2009 UNDER SECTION 143(3) R.W.S . 148 OF THE ACT(IN SHORT THE ACT). 2 ITA NO.8397 /MUM/2010 (ASSESSMENT YEAR : 2006-07) 2. IN THIS APPEAL, ALTHOUGH ASSESSEE HAS RAISED MUL TIPLE GROUNDS OF APPEAL, BUT THE SOLITARY DISPUTE IS WITH REGARD TO AN ADDITION OF RS.68,58,468/- MADE BY THE INCOME TAX AUTHORITIES O N ACCOUNT OF BOGUS EXPENSES. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELL ANT IS A COMPANY INCORPORATED UNDER THE PROVISIONS OF COMPANIES ACT, 1956 AND IS A MEMBER OF NATIONAL STOCK EXCHANGE ENGAGED IN THE BU SINESS OF DISTRIBUTION OF MUTUAL FUNDS. FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION, IT FILED A RETURN OF INCOME ON 27/11 /2006, DECLARING A TOTAL INCOME OF RS.1,81,47,930/- WHICH WAS SUBJECT TO SCRUTINY ASSESSMENT AND IN THE ASSESSMENT FINALIZED UNDER SE CTION 143(3) DATED 28/11/2008, THE TOTAL INCOME WAS DETERMINED AT RS.1 ,82,87,797/-. 4. THE ASSESSEE COMPANY WAS FOUND TO HAVE MADE PAYM ENTS OF RS.68,58,468/- TO ONE M/S. INORBIT ADVERTISING & M ARKETING SERVICES PVT. LTD. DURING THE YEAR UNDER CONSIDERATION THE SAID AMOUNT WAS CLAIMED AS EXPENDITURE IN THE PROFIT & LOSS ACCOUNT AS EXPENSES TOWARDS INCOME EARNED FROM IPO BROKERAGE & INCENTIV ES IN THE NATURE OF MAILING, MARKETING AND PROCESSING ACTIVITIES. THE ASSESSING OFFICER ISSUED A NOTICE UNDER SECTION 148 OF THE ACT AND RE -OPENED THE ASSESSMENT ORIGINALLY COMPLETED ON 28/11/2008, ON T HE GROUND THAT AN INFORMATION WAS RECEIVED FROM M/S. INORBIT ADVERTI SING & MARKETING SERVICES PVT. LTD. THAT IT WAS ONLY ISSUING ACCO MMODATION BILLS AND NO ACTUAL SERVICES WERE RENDERED. IN THE ENSUING ASSE SSMENT, THE ASSESSING OFFICER RELIED UPON THE STATEMENTS OF THR EE PERSONS CONNECTED WITH M/S. INORBIT ADVERTISING & MARKETIN G SERVICES PVT. LTD. GROUP NAMELY, SHRI SANDIP KAILASHCHAND SITANI, SHRI DEENANATH 3 ITA NO.8397 /MUM/2010 (ASSESSMENT YEAR : 2006-07) YADAVAGE AND SHRI PRADEEP PRAJAPATI AND HELD THAT E XPENDITURE OF RS.68,58,468/-, DEBITED BY THE ASSESSEE ON ACCOUNT OF PAYMENT TO M/S. INORBIT ADVERTISING & MARKETING SERVICES PVT. LTD. WAS A BOGUS EXPENDITURE. 5. BEFORE CIT(A) AS ALSO BEFORE US, THE ASSESSEE RAISED VARIOUS GROUNDS FOR ASSAILING THE ACTION OF THE ASSESSING OFFICER. SO HOWEVER, A PERTINENT POINT RAISED BY THE ASSESSEE IS THAT NO O PPORTUNITY WAS ALLOWED BY THE ASSESSING OFFICER TO REBUT OR CROSS VERIFY/CROSS EXAMINE THE PERSONS WHOSE STATEMENTS HAD BEEN RELIED UPON T O MAKE THE IMPUGNED ADDITION. LD. REPRESENTATIVE FOR THE ASSES SEE POINTED OUT THAT EVEN BEFORE THE CIT(A) ASSESSEE HAD RAISED TH E AFORESAID POINT BUT THE SAME HAS BEEN MERELY BRUSHED-ASIDE. AT THE TIM E OF HEARING, LD. REPRESENTATIVE FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WOULD BE SATISFIED, IF THE MATTER IS RESTORED BACK TO THE FI LE OF ASSESSING OFFICER FOR ALLOWING THE ASSESSEE TO CROSS-VERIFY/CROSS-EXA MINE THE PERSONS WHOSE STATEMENTS, ASSESSING OFFICER HAS RELIED UP ON TO MAKE THE IMPUGNED ADDITION. 6. LD. DEPARTMENTAL REPRESENTATIVE APPEARING FOR T HE REVENUE HAS NOT OPPOSED THE PLEA OF THE ASSESSEE SEEKING REMAN D OF THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR ALLOWING THE ASSESSEE AN OPPORTUNITY TO REBUT AS WELL AS CROSS-VERIFY THE ST ATEMENTS OF THE THREE PERSONS RELIED UPON BY THE ASSESSING OFFICER. 7. HAVING CONSIDERED THE RIVAL SUBMISSIONS, IN OUR VIEW, THERE IS A CLEAR ERROR ON THE PART OF THE ASSESSING OFFICER I N DENYING THE ASSESSEE AN OPPORTUNITY TO CROSS-EXAMINE THE DEPONENTS, WHOS E STATEMENTS HAVE BEEN RELIED UPON TO MAKE THE IMPUGNED ADDITION S. NOTABLY, 4 ITA NO.8397 /MUM/2010 (ASSESSMENT YEAR : 2006-07) ASSESSEE HAD RESISTED THE ACTION OF THE ASSESSING O FFICER BY WAY OF ITS WRITTEN SUBMISSION DATED 05/10/2009, WHICH HAS BEE N DULY REPRODUCED BY THE ASSESSING OFFICER IN PARA 3.4 OF THE ASSESSM ENT ORDER. IN THE SAID WRITTEN SUBMISSIONS, ASSESSEE HAD EXPLAINED TH AT THE TRANSACTIONS WITH M/S. INORBIT ADVERTISING & MARKETING SERVICES PVT. LTD. WERE ENTERED INTO WITH BY THE THEN DIRECTORS, WHO HAD L ATER DIED IN A ROAD ACCIDENT AND WERE NOT AVAILABLE WHEN THE ASSESSING OFFICER INITIATED THE IMPUGNED ASSESSMENT PROCEEDINGS. FURTHERMORE, ASSE SSEE POINTED OUT THAT THE STATEMENTS OF THE THREE PERSONS SOUGHT TO BE RELIED UPON WERE OBTAINED IN THE ABSENCE OF THE ASSESSEE AND WITHOUT ALLOWING THE ASSESSEE AN OPPORTUNITY TO REBUT AS WELL AS CROSS V ERIFY THE STATEMENTS. IN VIEW OF AFORESAID CIRCUMSTANCES, IN OUR VIEW, IT WAS IMPERATIVE FOR THE ASSESSING OFFICER TO ALLOW THE ASSESSEE AN OPPO RTUNITY TO CROSS- EXAMINE THE DEPONENTS WHOSE STATEMENTS HAVE BEEN RE CORDED AND HAS BEEN UTILIZED AGAINST THE ASSESSEE IN ORDER TO MAKE THE IMPUGNED ADDITION. IT IS A TRITE LAW AND THE SAME DOES NO T REQUIRE ANY EMPHASIS THAT PRINCIPLES OF NATURAL JUSTICE REQUIRE THE ASSE SSING OFFICER TO ALLOW THE ASSESSEE A CREDIBLE OPPORTUNITY TO REBUT ANY AD VERSE MATERIAL OR EVIDENCE, WHICH IS SOUGHT TO BE USED AGAINST THE AS SESSEE. BE THAT AS IT MAY, IN DEFERENCE TO THE PLEA OF THE APPELLANT BEFO RE US, WE DEEM IT FIT AND PROPER TO SET-ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER WHO SHALL ALL OW THE ASSESSEE AN OPPORTUNITY TO CROSS-VERIFY/CROSS EXAMINE THE DEPON ENTS WHOSE STATEMENTS ARE SOUGHT TO BE USED AGAINST THE ASSESS EE. NEEDLESS TO MENTION, THE ASSESSING OFFICER SHALL ALLOW THE ASSE SSEE AN APPROPRIATE OPPORTUNITY IN ACCORDANCE WITH LAW TO SUBSTANTIATE THE CLAIM MADE IN 5 ITA NO.8397 /MUM/2010 (ASSESSMENT YEAR : 2006-07) ITS RETURN OF INCOME AND ONLY THEREAFTER PASS AN OR DER AFRESH ON THE IMPUGNED ASPECT AS PER LAW. 8. BEFORE PARTING, WE MAY ALSO MAKE IT CLEAR THAT O UR ACTION OF RESTORING THE MATTER BACK TO THE FILE OF ASSESSING OFFICER IS NO REFLECTION ON THE MERITS OF THE IMPUGNED ADDITION, WHICH SHALL BE RE-ADJUDICATED BY THE ASSESSING OFFICER KEEPING IN MIND OUR AFORES AID DIRECTIONS AND AS PER LAW. 9. THUS, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT I N THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF T HE HEARING ON 7/09/2015. SD/- SD/- (PAWAN SINGH) (G.S.PANNU) JUDICIAL MEMBER ACCOUNTNAT MEMBER MUMBAI, DATED 07/09/2015 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, MUMBA I VM , SR. PS