Chennai Civil Tech Research Foundation Pvt. Ltd., CHENNAI V. ITO Corporate Ward 1(3), CHENNAI

MA 193/CHNY/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1841 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 14-11-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 12-09-2018
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VASUVOOR SRIDHAR
• Assessee Lawyers: MOHAMED HANIF MAJEED DIRECTOR
• Keywords: Rectification of order

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT M EMBER ] M.P.NO.193/CHNY/2018 ./I.T.A. NO. 2974/CHNY/2017 / ASSESSMENT YEAR : 2013-2014. M/S. CHENNAI CIVIL TECH RESEARCH FOUNDATION PVT. LTD, NO.264, NEHRU NAGAR, 2 ND MAIN ROAD, OFF OMR NEAR KANDHANCHAVADI, KOTTIVAKKAM, CHENNAI 600 096 [PAN AADCC 0887H] VS. THE INCOME TAX OFFICER, CORPORATE WARD 1(3) CHENNAI. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. MOHAMED HANIF MAJEED, DIRECTOR /RESPONDENT BY : SHRI. VASUVOOR SRIDHAR, JCIT. /DATE OF HEARING : 16-11-2018 !' /DATE OF PRONOUNCEMENT : 16-11-2018 % / O R D E R ASSESSEE THROUGH THIS MISCELLANEOUS PETITION STATE S THAT THE TRIBUNAL WHILE PASSING THE IMPUGNED ORDER, THOUGH IT APPRECIATED THE WORK DONE BY THE WIVES OF THE DIRECTOR OF THE ASSES SEE COMPANY, DID NOT GIVE APPROPRIATE RELIEF FOR THE CLAIM OF THEIR REMUNERATION. 2. SHRI. MOHAMED HANIF MAJEED, A DIRECTOR OF ASSESSEE COMPANY APPEARING ON BEHALF OF THE ASSESSEE SUBMIT TED THAT THE MP. NO.193 /2018 :- 2 -: TRIBUNAL DID NOT DISPUTE THE FACTUM OF SERVICES RE NDERED BY THE DIRECTORS WIVES. HOWEVER, ACCORDING TO HIM, THE T RIBUNAL HAD ERRONEOUSLY CONSIDERED THE SUBMISSION OF THE DEPART MENT AS A REPRESENTATION MADE BY THE ASSESSEES COUNSEL, IN LINE 4 OF PARA 7 OF THE TRIBUNAL ORDER. AS PER SHRI. MOHAMED HANIF MA JEED, ALL THE FOUR DIRECTORS WIVES WERE ELIGIBLE FOR REMUNERATION, BU T THIS WAS NOT ALLOWED, DESPITE SERVICES RENDERED BY THE SAID PERS ONS. FURTHER, ACCORDING TO HIM, LD. AUTHORISED REPRESENTATIVE APP EARING FOR THE ASSESSEE DID NOT PRESENT ALL THE FACTS CORRECTLY. A CCORDING TO HIM, THE DISALLOWANCE WILL HAVE CASCADING EFFECT AND EVEN TH E VERY EXISTENCE OF THE ASSESSEE WILL BE JEOPARDIZED. 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT THERE WAS NO MISTAKE IN THE ORDER OF THE TRIBUNAL. 4. WE HAVE HEARD THE RIVAL CONTENTIONS. PARA 7 OF THE TRIBUNAL ORDER IS REPRODUCED HEREUNDER:- 7. PER CONTRA, THE LD.DR SUBMITTED THAT ONE OF TH E FOUR PERSONS, NAMELY SMT. G.SAROJA DID NOT APPEAR ON SUM MONS AND NO EVIDENCE WHATSOEVER WAS PRODUCED IN SUPPORT OF THE CONTENTION THAT SHE WAS DOING ANY WORK AS MANAGER (FINANCE). FURTHER, AS PER THE LD.AR, OTHER THREE PERSONS IN THEIR STATEMENTS GIVEN TO THE AO HAD CLEARLY MENTIO NED THAT THEY WERE EITHER NOT ATTENDING THE OFFICE REGULARLY OR WAS NOT AUTHORIZED TO SIGN ANY DOCUMENTS MAINTAINED BY THE ASSESSEE COMPANY NOR AWARE ABOUT THE TYPE OF ACCOUN TING SOFTWARE USED. THUS, ACCORDING TO HIM, NONE OF THE SE PERSONS WERE RENDERING ANY SERVICE AND DISALLOWANCE U/S.40A(2) OF THE ACT WAS RIGHTLY DONE BY THE ASSES SING OFFICER . MP. NO.193 /2018 :- 3 -: IT IS TRUE THAT IN THE SECOND SENTENCE, THE SUBMISS ION OF THE LD. DEPARTMENTAL REPRESENTATIVE HAS BEEN STATED AS SUB MISSION OF THE LD. AUTHORISED REPRESENTATIVE. HOWEVER THE INTENT OF P ARA 7 DOES SHOW THAT THESE WERE THE SUBMISSIONS OF LD. DEPARTMENTAL REPRESENTATIVE AND IT WAS ONLY A TYPOGRAPHICAL MISTAKE THAT LD. AUTHORISED REPRESENTATIVE WAS MENTIONED INSTEAD. WHILE ARRI VING ITS FINDINGS THIS TRIBUNAL HAD DULY CONSIDERED THE STATEMENTS OF SMT. RENUKA SREENATH, SMT. YASMIN HANIF AND SMT. L. PARVEEN NIYAZ. CONSI DERING THE FACTS OF CASE, THIS TRIBUNAL HELD THAT THE SALARY FOR THE F OUR PERSONS WHO WERE WIVES OF THE DIRECTORS HAD TO BE RESTRICTED TO G4 ,24,000/-. THE FINDINGS OF THE TRIBUNAL AS IT APPEARS AT PARA 9 OF THE ORDER IS REPRODUCED HEREUNDER:- 9. SMT. RENUKA SREENATH, CLEARLY MENTIONED THAT SHE ATTENDED THE OFFICE ONLY WHEN IT WAS REQUIRED AND THERE WAS NO ATTENDANCE REGISTER, WHEREIN, SHE WAS SIGNING. SMT. YASMIN HANIF SAID THAT NOBODY WORKED UNDER HER. SMT. L.PARVEEN NIYAZ, STATED THAT SHE WAS ONLY DEPOSITING CASH IN THE BANK, FILLING UP THE CHALLAN AND WAS NOT AWARE OF THE TYPE OF SOFTWARE MAINTAINED BY THE ASSESSEE COMPANY FOR ITS ACCOUNTING PURPOSES. SMT. RENUKA SREENATH WAS ASSIGNED AS MANAGER(ADMN.), SMT. YASMIN HANIF AS MANAGER (MARKETING) AND SMT. L.PARVEEN NIYAZ AS MANAGER(ACCOUNTS), WHICH ARE ALL APPARENTLY VERY SENIOR POSITIONS IN MANAGEMENT. IN MY OPINION THERE IS MUCH STRENGTH IN THE ARGUMENT OF THE LD.DR, THAT THESE PERSONS WERE NOT HAVING NECESSARY QUALIFICATION AND COULD HAVE NEVER RENDERED SERVICES COMMENSURATE WITH THE POSTS HELD BY THEM. AS FOR SMT.G.SAROJA, SHE DID NOT APPEAR BEFORE THE AO. LD.CIT(A) HAD ANALYZED MP. NO.193 /2018 :- 4 -: THE SALARY PAID BY THE ASSESSEE TO ITS OTHER EMPLOYEES AS UNDER: S.NO. NAME OF EMPLOYEE DESIGNATIO N QUALIFICA TION EXPERIE NCE IN YEARS SALARY PAID 1 ANBAZHAGAN SR.LAB TECHNICIAN SSLC 25 1,70,300.00 2 HABIBULLAH OFFICE ASST. SSLC 5 1,56,000.00 3 KRITHIKA A/C. EXECUTIVE ASST. B.COM 5 1,48,529.00 4 MOHAMMED SIDDIQUE TECHNICAL OFFICER BE 4 34,016.00 5 PRIYA MALINI A/C. RECEPTIONIS T B.SC 9 1,42,717.00 6 RAFIQ JR.CHEMIST B.SC. 8 1,56,000.00 7 RAJA A/C. LAB TECHNICIAN SSLC 4 1,13,656.00 8 RAJESH A/C. LAB TECHNICIAN PLUS TWO 2 62,368.00 9 RAMESH RAJA TECHNICAL OFFICER BE 7 1,52,698.00 10 RAMKUMAR A/C. LAB TECHNICIAN SSLC 6 88,100.00 11 SANKAR.S TECHNICAL OFFICER BE 6 34,016.00 12 SANTHI.D (SERVANT MAID) SERVANT MAID 5 TH 0 17,950.00 13 SANTOSH KUMAR.V LAB TECHNICIAN SSLC 4 77,434.00 14 SELVARAJ A/C. LAB TECHNICIAN SSLC 4 8,390.00 15 SRINIVASAN A.M. CHEMIST B.SC. 7 1,42,985.00 16 THANGAKUMAR A/C. TECHNICAL OFFICER BE 6 1,62,347.00 17 VENKATESH A/C. LAB TECHNICIAN SSLC 8 1,84,500.00 18 VIGNESHWARAN LAB TECHNICIAN PLUS TWO 1 10,268.00 19 VIJAYALAKSHMI A/C. ACCOUNTANT B.SC. 15 1,90,704. 00 20 VINOTH KUMAR LAB TECHNICIAN SSLC 2 81,906.00 TOTAL-B 21,34,884.00 MP. NO.193 /2018 :- 5 -: LD.CIT(A) HAD AVERAGED THE SALARY OF THE ABOVE PERSONS AND CAME TO THE FIGURE OF RS.1,06,000/-. HE CONSIDERED IT TO BE THE FAIR SALARY THAT COULD B E ALLOWED TO THE THREE LADIES WHO WERE WIVES OF THE DIRECTORS OF THE ASSESSEE AND WHO HAD APPEARED BEFORE THE LD.AO. A LOOK AT THE TABLE ABOVE, CLEARLY INDICATE THAT MANY OF THEM WERE MORE OR EQUALLY QUALIFIED THAN THE FOUR PERSONS WHO WERE WIVES OF THE DIRECTORS OF THE ASSESSEE COMPANY. NO DOUBT, THE LD.AR DID SUBMIT THAT THE AO HAD NOT BROUGHT OUT ANY COMPARABLE CASE TO PROVE THAT THE PAYMENTS WERE EXCESSIVE. HOWEVER, IN MY OPINION, THE ABOVE TABLE EXTRACTED BY LD.CIT(A) GIVE COMPARABLE CASES WHICH GOES TO SHOW THAT THE SALARY PAID BY THE ASSESSEE TO THE FOUR PERSONS WERE EXCESSIVE. LD.CIT(A) WAS FAIR IN ALLOWING RS.1,06,000/- AS SALARY FOR THE THREE PERSONS WHO HAD APPEARED BEFORE THE AO. NEVERTHELESS, IN MY OPINION SMT. G.SAROJA OUGHT NOT HAVE BEEN DENIED THIS BENEFIT, JUST FOR A REASON THAT SHE DID NOT APPEAR BEFORE THE AO. ESPECIALLY SO SINCE, THE THREE PERSONS WHO APPEARED BEFORE THE LD.AO, HAD NOT GIVEN ANY INFORMATION ENLIGHTENING ENOUGH TO SHOW THAT THEY WERE DOING ANY WORK COMMENSURATE WITH THEIR ASSIGNED POSITIONS. I AM OF THE OPINION THAT THE SALARY OF RS.4,24,000/- FOR ALL THE FOUR PERSONS WOULD HAVE BEEN FAIR VALUE OF THE SERVICES RENDERED BY THEM. LD.AO IS DIRECTED TO ALLOW SALARY OF RS.4,24,000/- TO THE FOUR PERSONS. BALANCE DISALLOWANCE IS SUSTAINED U/S.40A(2) OF THE ACT. PLEADING OF THE ASSESSEE THAT THE DISALLOWANCE WOU LD RESULT IN JEOPARDIZING ITS VERY EXISTENCE DUE TO ITS CASCADIN G EFFECT, THOUGH APPEALING ON THE EMOTIONAL LEVEL, CANNOT BE CITED A S A MISTAKE IN THE ORDER OF THE TRIBUNAL. I AM OF THE OPINION THAT AS SESSEE IN THE GUISE OF MISCELLANEOUS PETITION IS SEEKING A REVISION OF THE ORDER OF THE MP. NO.193 /2018 :- 6 -: TRIBUNAL. SUB SECTION (2) OF SECTION 254 OF THE AC T ALLOWS ONLY RECTIFICATION OF MISTAKES WHICH ARE GLARING AND A PPARENT AND DOES NOT GIVE ANY ROOM FOR A REVIEW. 5. IN THE RESULT, THE MISCELLANEOUS PETITION FILED BY THE ASSESSEE STANDS DISMISSED. ORDER PRONOUNCED ON FRIDAY, THE 16 TH DAY OF NOVEMBER,2018 AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED:16 TH NOVEMBER, 2018. KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF