Fastflow Merchants Pvt. Ltd., Howrah V. A.C.I.T.(OSD), Ward-1(1), Kolkata

ITA 866/KOL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 9458 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2015-2016
• Appeal Filed On: 22-04-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Bogus

Judgement Text

I.T.A. NO. 866/KOL/2019 ASSESSMENT YEAR: 2 015-2016 FASTFLOW MERCHANTS PRIVATE LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA B BENCH, KOLKATA BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT AND SHRI SATBEER SINGH GODARA, JUDICIAL MEMBER I.T.A. NO. 866/KOL/2019 ASSESSMENT YEAR: 2015-2016 FASTFLOW MERCHANTS PRIVATE LIMITED,................ ..........................APPELLANT 104/1, FORESHORE ROAD, RAMKRISHNAPUR, HOWRAH-711 102 [PAN:AAACF6520H] -VS.- ASSISTANT COMMISSIONER OF INCOME TAX (OSD),........ .................RESPONDENT WARD-1(1), KOLKATA AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 APPEARANCES BY: SHRI ANIL KOCHAR, ADVOCATE , FOR THE APPELLA NT SMT. RANU BISWAS, ADDL. CIT, FOR THE RESPONDE NT DATE OF CONCLUDING THE HEARING : DECEMBER 10, 2019 DATE OF PRONOUNCING THE ORDER : JANUARY 08, 2020 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, KOLKATA DA TED 29 TH MARCH, 2019 AND THE SOLITARY ISSUE INVOLVED THEREIN RELATE S TO THE DISALLOWANCE OF RS.17,55,000/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALARY EXPENDITURE, WHICH IS SUSTAINED BY THE LD. CIT(APPE ALS) TO THE EXTENT OF 90%. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INVESTMEN T COMPANY, WHICH FILED ITS RETURN OF INCOME FOR THE YEAR UNDER CONSI DERATION ON 10.09.2015 DECLARING TOTAL INCOME OF RS.51,350/-. IN THE PROFI T & LOSS ACCOUNT FILED ALONG WITH THE SAID RETURN, A SUM OF RS.17,64,680/- WAS DEBITED BY THE ASSESSEE ON ACCOUNT OF SALARY AND BONUS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE-COMPANY WAS CALLED UPON B Y THE ASSESSING I.T.A. NO. 866/KOL/2019 ASSESSMENT YEAR: 2 015-2016 FASTFLOW MERCHANTS PRIVATE LIMITED 2 OFFICER TO PROVIDE THE RELEVANT DETAILS OF SALARY A ND BONUS CLAIMED TO BE PAID TO THE NINE EMPLOYEES. ALTHOUGH THE NAMES OF T HE EMPLOYEES WERE PROVIDED BY THE ASSESSEE-COMPANY, THEIR AADHAAR NUM BERS AND DETAILS OF PROVIDENT FUND ACCOUNTS WERE NOT FURNISHED BY THE A SSESSEE. EVEN THE DETAILS OF BANK ACCOUNTS THROUGH WHICH SALARY AND B ONUS TO THE EMPLOYEES WERE PAID COULD NOT BE FURNISHED BY THE A SSESSEE. KEEPING IN VIEW THIS FAILURE OF THE ASSESSEE TO FURNISH THE RE LEVANT DETAILS AND DOCUMENTS AND HAVING REGARD TO THE FACT THAT THE AC TIVITY OF THE ASSESSEE- COMPANY WAS LIMITED TO INVESTMENT, WHICH HAD RESULT ED IN EARNING THE INCOME ON ACCOUNT OF INTEREST ONLY TO THE EXTENT OF RS.29,79,864/-, THE CLAIM OF THE ASSESSEE FOR EXPENDITURE INCURRED ON S ALARY AND BONUS WAS TREATED BY THE ASSESSING OFFICER AS BOGUS AND THE S AME WAS DISALLOWED BY HIM. ON APPEAL, THE LD. CIT(APPEALS) SUSTAINED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALARY AND BONU S TO THE EXTENT OF 90% ALLOWING THE RELIEF OF 10% TO THE ASSESSEE ON THIS ISSUE. AGGRIEVED BY THE ORDER OF THE LD. CIT(APPEALS), THE ASSESSEE HAS PRE FERRED THIS APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE LD. COUN SEL FOR THE ASSESSEE HAS SUBMITTED THAT EVEN THOUGH THE DETAILS REQUIRED BY THE ASSESSING OFFICER IN RESPECT OF SALARY AND BONUS PAID BY THE ASSESSEE -COMPANY TO THE NINE EMPLOYEES WERE NOT FULLY FURNISHED BY THE ASSESSEE, THE DISALLOWANCE MADE BY HIM AND SUSTAINED BY THE LD. CIT(APPEALS) T O THE EXTENT OF 90% IS HIGHLY EXCESSIVE AND UNREASONABLE KEEPING IN VIEW T HE FACT THAT THE ASSESSEE IS A COMPANY, WHICH WAS ENGAGED IN THE BUS INESS OF INVESTMENT AND THE INVESTMENT MADE BY IT IN THE UNLISTED EQUIT Y SHARES HAD INCREASED FROM RS.2,83,50,000/- TO RS.5,07,05,000/- DURING TH E YEAR UNDER CONSIDERATION AS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. HE HAS ALSO POINTED OUT THAT RECOVERY OF LOANS AND ADVANCES TO THE TUNE OF RS.2.89 CRORES WAS MADE BY THE ASSESSEE-COMPANY DUR ING THE YEAR UNDER CONSIDERATION AND THE SAID AMOUNT WAS INVESTED IN T HE EQUITY SHARES OF I.T.A. NO. 866/KOL/2019 ASSESSMENT YEAR: 2 015-2016 FASTFLOW MERCHANTS PRIVATE LIMITED 3 UNLISTED COMPANIES. KEEPING IN VIEW THE FACTUM AND QUANTUM OF THESE INVESTMENT ACTIVITIES CARRIED ON BY THE ASSESSEE-CO MPANY DURING THE YEAR UNDER CONSIDERATION, WHICH IS DULY TAKEN NOTE OF BY THE ASSESSING OFFICER IN PARAGRAPH NO. 2.1 OF THE ASSESSMENT ORDER AND HA VING REGARD TO THE FACT THAT THE STATUS OF THE ASSESSEE BEING A COMPANY, WH ICH IS REQUIRED TO COMPLY WITH THE STATUTORY REQUIREMENT, WE ARE OF TH E VIEW THAT THE DISALLOWANCE OF 90% OF THE EXPENDITURE CLAIMED BY T HE ASSESSEE ON ACCOUNT OF SALARY AND BONUS AS SUSTAINED BY THE LD. CIT(APPEALS) IS HIGHLY EXCESSIVE AND UNREASONABLE. ACCORDING TO US, IT WOU LD BE FAIR AND REASONABLE IN THE FACTS AND CIRCUMSTANCES OF THE CA SE TO RESTRICT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF SALARY AND BONUS TO 50%. WE ACCORDINGLY MODIFY THE IMPUGNED OR DER OF THE LD. CIT(APPEALS) ON THIS ISSUE AND RESTRICT THE DISALLO WANCE MADE BY THE ASSESSING OFFICER ON ACCOUNT OF SALARY AND BONUS TO 50%. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JANUARY 08, 2 020. SD/- SD/- (SATBEER SINGH GODARA) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT KOLKATA, THE 8 TH DAY OF JANUARY, 2020 COPIES TO : (1) FASTFLOW MERCHANTS PRIVATE LIMITED, 104/1, FORESHORE ROAD, RAMKRISHNAPUR, HOWRAH-711 102 (2) ASSISTANT COMMISSIONER OF INCOME TAX (OSD), WARD-1(1), KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-12, KOL KATA, (4) COMMISSIONER OF INCOME TAX , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.