ITO 9(2) 1, MUMBAI V. JAGMANDRI FINVEST P. LTD, MUMBAI

ITA 7099/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 9397 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2012
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Next Hearing Date: 04-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 14-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KRISHNAMOORTY
• Assessee Lawyers: R C JAIN
• Keywords: Reassessment proceedings
• Section: 133(6); 131

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI . . , , ! '#$% , & ' BEFORE S/SHRI DINESH KUMAR AGARW AL JM, AND N.K. BILLAIYA, AM ./I.T.A. NO.7099/MUM/2010 ( ( ( ( ( / ASSESSMENT YEAR: 2007-08 THE INCOME-TAX OFFICER-9(2)-1, AAYAKAR BHAVAN, MUMBAI-400 020 / VS. M/S. JAGMANDRI FINVEST PVT. LTD., D-108 LOTUS, ANSAL VIHAR LINK ROAD, BORIVALI (W), MUMBAI-400 092 ) & ./ *+ ./PAN/GIR NO. : AAACJ 1452A ( ), /APPELLANT ) .. ( -.), / RESPONDENT ) ), / / APPELLANT BY: SHRI KRISHNAMOORTY -.), 0 / / RESPONDENT BY : SHRI R.C. JAIN 0 1& / DATE OF HEARING :08.11.2012 23( 0 1& / DATE OF PRONOUNCEMENT : 21.11.2012 4 / O R D E R PER DINESH KUMAR AGARWAL, JM: THIS APPEAL PREFERRED BY THE REVENUE IS DIRECTED AG AINST THE ORDER DT.19.08.2010 PASSED BY THE LD. CIT(A) FOR THE ASSE SSMENT YEAR 2007-08. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE-COMPANY IS ENGAGED IN THE BUSINESS OF CONSULTANCY, TRADING AND INVESTMENT. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER CAME TO KNOW FROM THE AIR INFORMATION THAT M/S. COX AND KINGS TRAVEL AND FINANCE LTD. (COX & KING, IN SHORT), 12/13 CECIL COURT, 1 ST FLOOR, LONSDOWNE ROAD, COLABA, MUMBAI HAD CREDITED IN THE ACCOUNT OF THE ASSESSEE FEES FO R PROFESSIONAL/TECHNICAL ITA NO. 7099/MUM/2010 2 SERVICES OF RS. 44,91,000/- AND HAD MADE TDS THEREO N. HE OBSERVED THAT THE ASSESSEE HAD NOT ACCOUNTED FOR THE SAID AMOUNT AS I NCOME OF THE YEAR. ON BEING ASKED, THE ASSESSEE DENIED THAT IT HAD PROVID ED ANY PROFESSIONAL OR TECHNICAL SERVICES TO COX & KINGS AND HAD ANY CONNE CTION WITH THEM DURING THE RELEVANT YEAR. THE AO ISSUED LETTER OF ENQUIRY U/S. 133(6) OF THE INCOME- TAX ACT 1961 (THE ACT) TO COX & KINGS ASKING FOR TH E COPY OF THE LEDGER ACCOUNT OF THE ASSESSEE, DETAILS OF PAYMENT MADE, E TC. THERE WAS NO RESPONSE. THE AO AGAIN ISSUED TWO MORE LETTERS FOL LOWED BY A SUMMONS U/S. 131 OF THE ACT, BUT TO NO AVAIL. HE CAME TO KNOW T HAT COX & KING ARE ASSESSED TO TAX BY DCIT 16(1), DELHI AND ON VERIFIC ATION FOUND THAT COX & KING HAD DEBITED RS. 44,91,000/- TO ITS P&L ACCOUNT AS EXPENSES ON PROFESSIONAL & TECHNICAL SERVICES. HE FURTHER FOUN D THAT COX & KING HAD DEBITED THIS SUM BASED ON THE DEBIT NOTE DT. 25.03. 2007 ISSUED BY THE ASSESSEE TOWARDS BILL FOR PROFESSIONAL FEES FOR CON DUCTING FINANCIAL VALUATION OF COX & KINGS (INDIA) P. LTD. AND SUBMITTING CONFIDEN TIAL REPORTS TO M/S. KUBBER INVESTMENTS (MARITIUS) P. LTD. THE DEBIT NOTE WAS S IGNED BY SHRI S.R. AGARWAL, AS DIRECTOR OF THE ASSESSEE ALONGWITH PAN DETAILS. THE AO CONFRONTED THE SAME TO THE ASSESSEE WHO REITERATED ITS EARLIER STAND. IT WAS FURTHER SUBMITTED THAT THERE WAS NO NEGOTIATION WI TH THE SAID PARTY FOR RENDERING PROFESSIONAL/TECHNICAL SERVICES. AS IT HAD NO INFRASTRUCTURE OF ITS OWN, IT PLANNED TO OUTSOURCE THE SAME AND ISSUED A PROFORMA DEBIT NOTE MAKING ITS QUOTE. THE DEAL DID NOT GO THROUGH. THE ASSESSEE ALLEGED THAT COX & KINGS HAD MISUSED THE PROFORMA DEBIT NOTE TO CLAIM EXPENSES AT ITS END. IT HAS NEITHER RECEIVED ANY SUCH PAYMENT NOR T HE TDS CERTIFICATE MAKING DEDUCTION OF TAX. IT WAS THEREFORE SUBMITTE D THAT THE IMPUGNED SUM CANNOT BE ASSESSED AS ITS INCOME. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES SUBMISSION. THE AO OBSERVED THAT THE AM OUNT IN QUESTION RECEIVED BY THE ASSESSEE WAS CONTRADICTORY TO ITS S TATEMENT AS THE ASSESSEE HAD ISSUED A DEBIT NOTE DT. 25.03.2007 TO COX & KIN GS. HE FURTHER OBSERVED THAT THE ASSESSEE WAS FOLLOWING THE MERCANTILE SYST EM OF ACCOUNTING AND THE AMOUNT OF RS. 44,91,000/- SHOULD HAVE BEEN OFFERED AS INCOME OF THE CURRENT ITA NO. 7099/MUM/2010 3 YEAR AND ACCORDINGLY, HE ADDED THE SAID SUM AS UNDI SCLOSED INCOME OF THE ASSESSEE. 3. ON APPEAL, THE LD. CIT(A) OBSERVED THAT IT IS SE TTLED LAW THAT IN ALL CASES IN WHICH A RECEIPT IS SOUGHT TO BE TAXED AS I NCOME, THE BURDEN LIES UPON THE DEPARTMENT TO PROVE THAT IT IS WITHIN THE TAXIN G PROVISIONS. HE FURTHER OBSERVED THAT THE ASSESSEE HAS DENIED ANY SUCH TRAN SACTION WITH COX & KINGS FOR THE IMPUGNED SUM. EVEN THE AO TRIED TO VERIFY THE SAME BY ISSUING LETTERS AND SUMMONS TO THE SAID CONCERN WHICH CHOSE TO IGNO RE. THERE IS, THUS, NO CONFIRMATION ON THE IMPUGNED TRANSACTION BY COX & K INGS EXCEPT THE DEBIT NOTE WHICH IS CLAIMED AS PROFORMA INVOICE BY THE AS SESSEE AND NO MATERIAL IS AVAILABLE TO SHOW THE NATURE OF PROFESSIONAL/TECHNI CAL SERVICES RENDERED, HOW, WHEN AND WHERE RENDERED. HE FURTHER OBSERVED THAT THE AO HAS MERELY RELIED ON THE P&L A/C OF THE SAID CONCERN SHOWING D EBIT OF THE IMPUGNED SUM AS EXPENSES AND THERE IS NO PROOF THAT THE IMPUGNED SUM WAS PASSED TO THE ASSESSEE OR EVEN THE TDS CERTIFICATE WAS ISSUED TO IT. HE FURTHER OBSERVED THAT AN ENTRY IN THE BOOKS OF ACCOUNT OF COX & KIN G DOES NOT BY ITSELF PROVE THE RELEVANT TRANSACTION. HE FURTHER OBSERVED THAT IT CAN BE AN UNILATERAL ACT ON ITS PART OF THE DECEIT OR FRAUD OR TO FRAME THE ASSESSEE AND HENCE THERE IS FORCE IN THE CONTENTION OF THE ASSESSEE THAT COX & KINGS HAD MISUSED ITS PROFORMA INVOICE/DEBIT NOTE TO CLAIM EXPENSES OF TH E IMPUGNED SUM. HE, THEREFORE, HELD THAT THERE IS NO BASIS TO TREAT THE IMPUGNED SUM AS UNDISCLOSED INCOME OF THE ASSESSEE AND ACCORDINGLY HE DELETED THE ADDITION OF RS. 44,91,000/- MADE BY THE AO. 4. BEING AGGRIEVED BY THE ORDER OF THE LD. CIT(A), REVENUE IS IN APPEAL BEFORE US TAKING FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 44,91,000/- BEING PROFESSIONAL/TECHNICAL SERVICES R ECEIVED BY THE ASSESSEE FIRM M/S. COX & KINGS TRAVEL & FINA NCE LTD. DESPITE THE EVIDENCE AVAILABLE ON RECORD IN TH E FORM OF ANNUAL INFORMATION REPORT AS WELL AS THE PROFIT & LOSS ACCOUNT OF THE PRAYER. ITA NO. 7099/MUM/2010 4 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE IMPUG NED SUM WAS NOT RECEIVED BY THE ASSESSEE, DISREGARDING THE EVIDENCE IN THE FORM OF ANNUAL INFORMATION REPORT, T DS CERTIFICATE GIVEN BY THE DEDUCTOR AND PROFIT & LOSS ACCOUNT OF THE PAYER ALL OF WHICH GO TO PROVE THAT THE AMOU NT UNDER REFERENCE HAD INDEED ACCRUED TO THE ASSESSEE AND THAT THE ASSESSEE OMITTED TO DISCLOSE THIS INCOME I N ITS RETURN. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED . 5. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REP RESENTATIVE SUPPORTS THE ORDER OF THE AO. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSES SEE WHILE REFERRING TO THE PAPER BOOK CONTAINING SEVEN PAGES SUBMITS THAT THE ASSESSEE HAS RECEIVED LETTER DT. 09.05.2009 FROM COX & KINGS TRA VEL & FINANCE LTD., TO SHOW THAT THEY HAVE NEVER HAD DEALING WITH THE ASSE SSEE AND THE DENIAL OF THE PAYMENT TO THE ASSESSEE. HE FURTHER SUBMITS TH AT M/S. TULIP STAR HOTELS LTD., (FORMERLY COX & KINGS) HAS ALSO REVISED THEIR TDS RETURNS DELETING THE NAME OF THE ASSESSEE COMPANY FROM THE STATEMENT OF THE TDS. HE FURTHER SUBMITS THAT THE AO VIDE LETTER DT. 7.8.2012 ADDRES SED TO THE PRINCIPAL OFFICER, M/S. TULIP STAR HOTELS LTD. SOUGHT INFORMATION U/S. 133(6) OF THE I.T. ACT IN THE COURSE OF THE REASSESSMENT PROCEEDINGS ON THE S AME ISSUE. HE FURTHER SUBMITS THAT ON THE SAID INFORMATION, M/S. TULIP ST AR HOTELS LTD. DENIED ANY SUCH TRANSACTION WITH THE ASSESSEE. HE THEREFORE S UBMITS THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE ADDITION MADE B Y THE AO AND THEREFORE THE ORDER PASSED BY HIM BE UPHELD. 7. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE RIVAL PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO DISPUTE THAT THE PAPER BOOK FILED BY THE ASSESSEE CONTAIN ING PAGE NOS. 1 TO 7 WERE ITA NO. 7099/MUM/2010 5 NOT FILED BEFORE THE AO/LD. CIT(A), THEREFORE THERE WAS NO OCCASION FOR THE REVENUE AUTHORITIES TO CONSIDER THE ISSUE IN THE LI GHT OF THE EVIDENCE FILED BY THE ASSESSEE AT THIS STAGE. WE FURTHER FIND THAT T HE AO BEFORE INITIATING REASSESSMENT PROCEEDINGS ON THE SAME ISSUE AGAINST THE ASSESSEE FOR THE ASSESSMENT YEAR 2007-08 HAS SENT A LETTER DT. 7.8.2 012 TO THE PRINCIPAL OFFICER OF M/S. TULIP STAR HOTELS LTD. ASKING CERTAIN DETAI LS REGARDING THE RECEIPT OF THE SAID AMOUNT WHICH WAS DENIED BY THE SAID COMPAN Y. SINCE ALL THESE MATERIALS WHICH GO TO THE ROOT OF THE MATTER WERE N OT AVAILABLE BEFORE THE REVENUE AUTHORITIES, THEREFORE, IN THE INTEREST OF JUSTICE, WE AFTER ADMITTING THE SAME CONSIDER IT FAIR AND REASONABLE THAT THE M ATTER SHOULD GO BACK TO THE FILE OF THE AO AND ACCORDINGLY WE SET ASIDE THE ORDERS PASSED BY THE REVENUE AUTHORITIES ON THIS ACCOUNT AND SEND BACK T HE MATTER TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN THE LIGHT OF OU R OBSERVATIONS HEREINABOVE AND ACCORDING TO LAW AFTER PROVIDING REASONABLE OPP ORTUNITY OF BEING HEARD TO THE ASSESSEE. THE GROUNDS TAKEN BY THE REVENUE ARE THEREFORE PARTLY ALLOWED FOR STATISTICAL PURPOSES. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. 5 16 * 0 7 80 9:; 4 <1 0 *1 =$ ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST NOVEMBER, 2012 . 4 0 3( & 7 > 6 21.11.2012 3 0 ? SD/- SD/- (N.K. BILLAIYA) (DINESH KUMAR AGARWAL) & / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; > DATED / /2012 . . ./ RJ , SR. PS ITA NO. 7099/MUM/2010 6 4 4 4 4 0 00 0 -1' -1' -1' -1' '(1 '(1 '(1 '(1 / COPY OF THE ORDER FORWARDED TO : 1. ), / THE APPELLANT 2. -.), / THE RESPONDENT. 3. @ ( ) / THE CIT(A)- 4. @ / CIT 5. 'A? -1 , , / DR, ITAT, MUMBAI 6. ? B / GUARD FILE. 4 4 4 4 / BY ORDER, .'1 -1 //TRUE COPY// 9 99 9 / = = = = * * * * (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI