BPM SECURITIES P.LTD, MUMBAI V. ITO 2(1)(1), MUMBAI

ITA 8531/MUM/2011

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7906 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 01-06-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 16-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Bonafide belief; Wrong claim

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, MUM BAI , , , , ! BEFORE SHRI RAJENDRA, AM AND SHRI AMARJIT SINGH, JM / I.T.A. NO.8531/MUM/2011 ( '# $# / ASSESSMENT YEAR: 2004-05) BPM SECURITIES PVT. LTD. VEENA CHAMBERS, 21, DALAL STREET, MUMBAI 400 001 / VS. INCOME TAX OFFICER 2(1)(1) AAYAKAR BHAVAN, MUMBAI 400 001 ./ ./PAN/GIR NO. : AAACB3219M ( /APPELLANT ) .. ( / RESPONDENT ) / DATE OF HEARING: 07.12.2016 /DATE OF PRONOUNCEMENT: 22.03.2017 / O R D E R PER AMARJIT SINGH, JM: THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DATED 12.09.2011 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI [HEREINAFTER REFERRED TO AS THE CIT(A)] R ELEVANT TO THE A.Y.2005-06 IN WHICH PENALTY LEVIED BY THE ASSESSIN G OFFICER U/S.271(1)(C) TO THE TUNE OF RS.8,75,000/- WAS CONFIRMED. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS:- GROUND NO.1 ASSESSEE BY: SHRI DALPAT SHAH REVENUE BY: SHRI SUMAN KUMAR ITA NO.7061/M/2013 A.Y.2004-05 2 THE CIT(APPEALS) 4, MUMBAI ERRED IN CONFIRMING PE NALTY U/SEC. 271(1)(C) OF THE INCOME TAX ACT OF RS.8,75,0 00/-, PARTICULARLY WHEN HE HAS NOT STATED SPECIFICALLY WH ETHER THE PENALTY HAS BEEN IMPOSED BECAUSE OF CONCEALMENT OF INCOME OR FURNISHMENT OF INACCURATE PARTICULARS OF INCOME, A ND THEREFORE, THE SAID ORDER LEVYING PENALTY U/SEC 271(1)(C) IS B AD IN LAW, ILLEGAL AND VOID AB-INITIO. GROUND NO.2 2.1 WITHOUT PREJUDICE, THE SAID CIT(APPEALS) ERRED IN CONFIRMING THE PENALTY LEVIED U/S.271(1)(C) OF RS.8,75,000/- ON DISALLOWANCE OF BROKERAGE EXPENSES CLAIMED OF RS.25 LACS IGNORING THE FACT THAT THE CL AIM WAS UNDER A BONAFIDE BELIEF AND ALL THE DETAILS AND EXPLANATION WERE FURNISHED AT THE ASSESSMENT STAGE. 2.2 THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FAC T THAT MERELY AS DISALLOWANCE OF CLAIM DOES NOT TANTAMOUNT TO CONCEALMENT OF INCOME AS HELD BY THE HONBLE SUPREM E COURT IN THE NAME OF CIT VS. RELIANCE PETROCHEMICAL S PVT. LTD., 322 ITR 154. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE FILED THE RETURN OF INCOME ON 31.10.2005 DECLARING TOTAL INCOME TO THE TUNE OF RS.NIL. THE ASSESSMENT WAS COMPLETED U/S.143(3) OF THE INCOME T AX ACT, 1961 (IN SHORT THE ACT) ON 12.12.2007 ASSESSING TOTAL INCOME TO THE TUNE OF RS.34,14,180/-. AT THE TIME OF ASSESSMENT, IT WAS OBSERVED THAT THE EXPENSES IN RESPECT OF BROKERAGE PAID TO BANHEM SEC URITIES P. LTD. OF RS.25,00,000/- WAS NOT FOUND INCURRED FOR THE PURPO SE OF BUSINESS OF THE ASSESSEE. THEREFORE, THE PENALTY WAS LEVIED TO THE TUNE OF RS.8,75,000/-. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER, THEREFORE, THE ASS ESSEE HAS FILED THE PRESENT APPEAL BEFORE US. ISSUE NO.1 & 2 ITA NO.7061/M/2013 A.Y.2004-05 3 4. ISSUE NO.1 & 2 ARE INTERCONNECTED, THEREFORE ARE BEING TAKEN UP TOGETHER FOR ADJUDICATION. UNDER THESE ISSUES, THE ASSESSEE HAS CHALLENGED THE CONFIRMATION TO LEVY THE PENALTY TO THE TUNE OF RS.8,75,000/- BY THE ASSESSING OFFICER. LEARNED REPRESENTATIVE OF THE A SSESSEE HAS ARGUED THAT THE ASSESSEE HAS FURNISHED ALL THE DETAILS, DOCUMEN TS AND EXPLANATION TO SUBSTANTIATE THE CLAIM OF BROKERAGE EXPENSES BUT TH E CLAIM WAS DISALLOWED WHICH CANNOT BE TREATED AS CONCEALMENT OF INCOME IN VIEW OF THE LAW SETTLED IN CIT VS. RELIANCE PETROCHEMICALS PVT. LTD ., 322 ITR 154, THEREFORE, THE PENALTY CONFIRMED BY THE CIT(A) IS W RONG AGAINST LAW AND FACTS AND IS LIABLE TO BE DELETED. HOWEVER, ON THE OTHER HAND THE LEARNED REPRESENTATIVE OF THE DEPARTMENT HAS PLACED RELIANC E UPON THE ORDER PASSED BY THE CIT(A) IN QUESTION. ON APPRAISAL OF THE ABO VE MENTIONED ORDERS AND ALSO DOCUMENTS ON THE FILE, IT CAME INTO THE NOTICE THAT THE ASSESSEE HAS SHOWN THE PAYMENT OF RS.25,00,000/- IN PROFIT & LOS S ACCOUNT BEING BROKERAGE PAID TO BANHEM SECURITIES PVT. LTD., HOWE VER, THE CONTENTION OF THE ASSESSEE WAS NOT FOUND CORRECT. THE CIT(A) HAS ALSO CONFIRMED THE ORDER AND THE HONBLE INCOME TAX APPELLATE TRIBUNAL , MUMBAI BENCH IN ITA NO.5684/MUM/2009 FOR A.Y.2005-06 IN THE ASSESSE ES OWN CASE DATED 30.06.2011 CONFIRMED THE DISALLOWANCE WITH A VIEW T HAT NO SERVICE WAS RENDERED TO THE ASSESSEE BY M/S. BANHEM SECURITIES PVT. LTD. AND DISALLOWED THE BROKERAGE U/S.37(1) OF THE ACT. ANY HOW, THE QUANTUM HAS BEEN CONFIRMED. THE ASSESSING OFFICER TOOK THE VIEW ON THE BASIS OF THIS FACT THAT THE BANK OF RAJASHTAN WROTE TO THE ASSESS ING OFFICER U/S.133(6) OF THE ACT THAT M/S. BANHEM SECURITIES NOWHERE RENDERE D SERVICES TO THE ASSESSEE. IN THE SAID CIRCUMSTANCES, IT IS TO BE S EEN WHETHER THE CLAIM OF THE ASSESSEE HAS BEEN DISALLOWED SIMPLY WHICH DOES NOT ATTRACT THE PENALTY IN ITA NO.7061/M/2013 A.Y.2004-05 4 VIEW OF THE LAW SETTLED IN CIT VS. RELIANCE PETROC HEMICALS PVT. LTD., 322 ITR 154 OR NOT. BEFORE GOING FURTHER, IT IS NECESS ARY TO ADVERT THE FINDING OF THE CIT(A) ON RECORD:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND SUB MISSIONS OF THE ASSESSEE. IN VIEW OF THE ABOVE DETAILS AND SEQUENCE OF EVENTS, IT IS CLEAR THAT LOAN HAD ALREA DY BEEN SANCTIONED BY THE BANK OF RAJASTHAN TO M/S. APOLLO INTERNATIONAL LTD. ON 23.03.2003 AND, THEREF ORE, M/S.BANHEM SECURITIES COULD NOT HAVE RENDERED ANY SERVICES IN THIS REGARD BECAUSE SUB-MANDATE IS CLAI MED TO HAVE BEEN GIVEN TO THEM VIDE LETTER 19.06.2003, WHICH IS MUCH AFTER THE DATE OF SANCTION OF LOAN. ASSESSEE ITSELF HAS BEEN MANDATED VIDE LETTER DATED 10.12.03 AND, THEREFORE, ANY SUB-MANDATE PRIOR TO T HAT TO M/S.BANHEM SECURITIES VIDE LETTER DATED 09.06.20 03 IS CLEARLY AN AFTER THOUGHT AND A DOCUMENT CREATED FALSELY FOR MAKING BOGUS CLAIM OF BROKERAGE PAYMENT . THE ASSESSEE HAS ALSO PRODUCED LETTER DATED 14.01.2 004 FROM THE BANK OF RAJASTHAN REGARDING SANCTION OF LO AN BUT THE CORRECT FACT IS ESTABLISHED BY THE SUBMISSI ONS OF THE BANK OF RAJASTHAN IN RESPONSE TO THE NOTICE U/S.133(6). THEREFORE, IT IS CLEARLY ESTABLISHED T HAT ASSESSEE KNOWINGLY MADE A BOGUS CLAIM OF BROKERAGE PAYMENT AND FURTHER CREATED FALSE EVIDENCE IN THIS ITA NO.7061/M/2013 A.Y.2004-05 5 REGARD BY WAY OF MAKING A SUB-MANDATE LETTER DATED 19.06.2003 AND OTHER CORRESPONDENCES. 6. THE ASSESSEE IS CLEARLY CAUGHT IN THE PROVISIONS OF SECTION 271(1)(C) BECAUSE THE ASSESSEE HAS FURNISHE D INACCURATE PARTICULARS OF ITS INCOME BY MAKING BOGU S CLAIM OF BROKERAGE AND FURTHER ASSESSEE IS CLEARLY CAUGHT IN EXPLANATION (1) TO SECTION 271(1)(C) ALSO BECAUSE THE EXPLANATION FILED BY THE ASSESSEE HAS B EEN FOUND TO BE FALSE BY THE A.O. DURING ASSESSMENT PROCEEDINGS AS WELL AS DURING PENALTY PROCEEDINGS. IN VIEW OF THE SUBMISSIONS OF THE THE BANK OF RAJASTHA N IT IS CLEAR THAT THE ASSESSEES EXPLANATION 5. THE ASSESSEE HAS CLAIMED TO BE PAID THE BROKERAG E TO M/S BENHEM SECURITIES THEREFORE IT WAS INCUMBENT UPON T HE ASSESSEE TO PROVE THE TRANSACTION BEYOND THE SHADOW OF REASONAB LE DOUBTS WHICH HE FAILED TO DO SO. EVEN HONBLE ITAT IN APPEAL N 5684/MUM/2009CONFIRMED THE ORDER PASSED BY THE ASSE SSING OFFICER. THE TRANSACTION WAS NOT FOUND GENUINE. IT WAS NOT R IGHTFUL CLAIM WHICH HAS BEEN DECLINED BY THE ASSESSING OFFICER. T HERE WAS NOTHING WITH THE ASSESSEE TO PROVE THE GENUINENESS OF THE T RANSACTION. THE LATTER ISSUED BY THE BANK OF RAJASTHAN MAKES MORE C LEAR ABOUT THE TRANSACTION IN WHICH BANK SPEAKS ABOUT IGNORANCE OF TRANSACTION. ANYHOW THE CLAIM WAS NOT FOUND IN ACCORDANCE WITH L AW. THE LAW ITA NO.7061/M/2013 A.Y.2004-05 6 RELIED BY THE ASSESSEE IS ON DIFFERENT FOOTING. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS HEREBY ORDERED TO BE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND MARCH, 2017 . SD/- SD/- (RAJENDRA) (AMARJIT SINGH) / ACCOUNTANT MEMBER /JUDICIAL MEMBER MUMBAI; DATED :22 ND ! $% , 2017 MP & '$ / 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, MUMBAI