UMAKANT B AGARWAL, V. DCIT 9(1),

MA 272/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9157 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 24 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-09-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2006-2007
• Appeal Filed On: 02-05-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 37(1)

Judgement Text

MA NO.272 OF 2012 UMAKANT B AGARWAL MUMBAI PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL 'F' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER M.A.NO.272/MUM/2012 (ARISING OUT OF ITA NO.4853/MUM/2009) (ASSESSMENT YEAR: 2006-07) UMAKANT B. AGARWAL, A- 102/103 RAGHAV VASANT VALLEY COMPLEX, FILM CITY ROAD, MALAD (EAST), MUMBAI 400097 PAN: AAYPA 7843 D) VS. DY. COMMISSIONER OF INCOME TAX 9(1), MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI NEERAJ SHETH DEPARTMENT BY: SHRI MOHIT JAIN, DR DATE OF HEARING: 21/09/2012 DATE OF PRONOUNCEMENT: 26/09/2012 O R D E R PER B. RAMAKOTAIAH, A.M. THIS MISCELLANEOUS APPLICATION WAS FILED BY ASSESSE E AGAINST THE ORDER OF THE ITAT IN ITA NO.4853/MUM/2009 DATED 27 TH OCTOBER, 2010 ON REVENUE APPEAL. 2. THE MAIN ISSUE CONTESTED BY THE DEPARTMENT IN THE A PPEAL WAS REGARDING THE DELETION OF DISALLOWANCE OF COMMI SSION TO AN EXTENT OF ` 1,22,56,320/- PAID BY ASSESSEE TO TWO COMPANIES M/S PANJON PHARMA LTD ( ` 1,11,49,220) AND M/S SUVIDHA REALTORS AND CONSTRUCTION PVT LTD ( ` 11,07,000). AO MADE THE DISALLOWANCE OF THE CLAIM ON THE REASON THAT (A) THE SERVICES RENDERED BY THESE PARTIES WERE NOT PROVED AND (B) THAT THE NUMBER OF PARTIES WHOM AO CONTACTED HAD DENIED HAVING TRANSACTIONS WITH THESE PERSONS. THE CIT (A) HOWEVER, FOLLOWING VARIOUS JUDICIAL PRINCIP LES ALLOWED THE COMMISSION, HENCE REVENUE PREFERRED THE APPEAL. THE TRIBUNAL BY THE IMPUGNED ORDER ALLOWED DEPARTMENTAL APPEAL HOLD ING THAT MA NO.272 OF 2012 UMAKANT B AGARWAL MUMBAI PAGE 2 OF 6 ASSESSEE WAS UNABLE TO PROVE THAT THE AFORESAID PAR TIES RENDERED SERVICES AND THE PARTIES DENIED HAVING ANY CONTACT OR HAVING PLACED ANY ORDER ON THE SAID COMPANIES. THE TRIBUNAL RELYI NG ON THE FINDINGS OF AO UPHELD HIS ACTION AND ALLOWED THE RE VENUE APPEAL. 3. IT IS THE CONTENTION OF ASSESSEE IN THE MISCELLANEO US APPLICATION THAT CERTAIN ERRORS HAVE INADVERTENTLY CREPT INTO THE ORDER OF THE TRIBUNAL AND THESE ERRORS GO TO THE RO OT OF THE MATTER AND AFFECTED THE VERY SUBSTRATUM OF THE ORDER. THE ERRORS ARE (A) NON-CONSIDERATION OF THE THIRD MEMBER DECISION IN T HE CASE OF VIP INDUSTRIES LTD VS. IAC 36 ITD 70 (BOM) (TM) AND (B) REPLIES OF THE PARTIES WERE COMPLETELY MISUNDERSTOOD. IT WAS THE S UBMISSION THAT THESE ERRORS MAY BE RECTIFIED BY RECALLING THE SAID GROUND FOR BEING DECIDED AFRESH. 4. THE LEARNED COUNSEL APPEARING ON BEHALF OF ASSESSEE SUBMITTED THAT ASSESSEE HAD RELIED UPON THE DECISIO N OF THE THIRD MEMBER DECISION IN VIP INDUSTRIES CASE BEFORE THE C IT (A) AS WELL AS BEFORE THE TRIBUNAL. IT WAS THE SUBMISSION THAT THE FACTS IN THE CASE OF VIP INDUSTRIES ARE CLOSELY COMPARABLE TO THE FAC TS OF ASSESSEES CASE. THE CIT (A) RELIED UPON THIS DECISION HAD DEC IDED THE ISSUE IN FAVOUR OF ASSESSEE. BUT THE TRIBUNAL HOWEVER, NOT E VEN REFERRED TO THIS DECISION. THEREFORE, FAILURE TO DO SO CONSTITU TES A MISTAKE APPARENT FROM RECORD. THE LEARNED COUNSEL REFERRING TO VARIOUS PARAS IN THE ORDER OF THE ITAT IN VIP INDUSTRIES SU BMITTED THAT THESE FACTS ARE COMPARABLE BUT THE ITAT HAS NOT CON SIDERED THE THIRD MEMBER DECISION WHICH IS EQUIVALENT TO A SPEC IAL BENCH DECISION AND THEREFORE, RELYING ON THE PRINCIPLES L AID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF HONDA SIEL POWER PRODUCTS LTD . VS . CIT ( 2007) 295 ITR 466 SUBMITTED THAT NOT CONSIDERING THE COORDINATE BENCH DECISION WOULD JUS TIFY RECALLING THE ORDER AND RE-HEARING THE ISSUE AFRESH. MA NO.272 OF 2012 UMAKANT B AGARWAL MUMBAI PAGE 3 OF 6 5. WITH REFERENCE TO THE SECOND GROUND IT WAS THE SUBM ISSION THAT AO HAS SENT COMMON QUESTIONNAIRE TO VARIOUS PA RTIES ASKING THEM TO CERTIFY WHETHER ANY AMOUNT OF BROKERAGE GIV EN TO THE BROKER AND WHETHER THE TRANSACTIONS WITH ASSESSEE WAS DONE THROUGH THE BROKERS. IT WAS HIS SUBMISSION THAT SINCE AO INQUIR ED WHETHER ANY TRANSACTION WAS DONE THROUGH THE BROKER BUT, THERE IS NO INQUIRY WHETHER THE PARTY HAS ANY CONTACT WITH THE BROKER A ND SO THIS INQUIRY WAS ALTOGETHER DIFFERENT ASPECT, THE TRIBUN AL MISUNDERSTOOD THE REPLIES. 6. ON A SPECIFIC QUERY BY THE BENCH, THE LEARNED COUNS EL ADMITTED THAT ASSESSEE DID NOT PLACE ANY PAPER BOOK NOR THE DECISION OF THE VIP INDUSTRIES WAS CITED SPECIFICAL LY. IT WAS HIS CONTENTION THAT SINCE THE CIT (A)S ORDER WAS CONSI DERED BY THE ITAT IN ITS ENTIRETY AND SOME OF THE HIGH COURT ORDERS W ERE REFERRED THE ITAT SHOULD HAVE CONSIDERED THE THIRD MEMBER DECISI ON ALSO. IT WAS HIS SUBMISSION THAT THE FACTS ARE CLOSELY COMPARABL E AND THE TESTS LAID DOWN IN THE THIRD MEMBER DECISION SHOULD HAVE BEEN EXAMINED BY THE ITAT, WHILE DECIDING THE ISSUE AGAINST ASSES SEE. IT WAS FURTHER SUBMISSION THAT MERE SUSPICION ALONE DOES N OT LEAD TO DISALLOWANCE AND THERE COULD HAVE BEEN PROPER INQUI RY BY AO. THEREFORE, IN THE INTEREST OF JUSTICE IT WAS SUBMIT TED THAT THE MATTER BE RECALLED. 7. IN REPLY THE LEARNED DR SUBMITTED THAT THE APPLICAT ION BY ASSESSEE IS COMPLETELY MISPLACED. HE REFERRED TO TH E DETAILED ORDER PASSED BY THE ITAT TO SUBMIT THAT THE ENTIRE ORDER OF THE CIT (A) WAS CONSIDERED AND CLEAR FINDINGS WERE GIVEN IN THE ORD ER WHEREIN LENGTHY AND DETAILED DISCUSSION WAS MADE BY THE ITA T IN DIFFERING FROM THE OBSERVATIONS OF THE CIT (A) WHILE REVERSIN G HIS FINDINGS. FURTHER REFERRING TO THE ORDER OF THE VIP INDUSTRIE S (SUPRA) IT WAS SUBMITTED THAT ENOUGH DOCUMENTARY EVIDENCE WAS PLAC ED BEFORE THE AUTHORITIES (PARA 19 OF THE ORDER), THEREFORE THE T HIRD MEMBER MA NO.272 OF 2012 UMAKANT B AGARWAL MUMBAI PAGE 4 OF 6 OPINED THAT THERE WAS PREDOMINANT DOCUMENTARY EVID ENCE, WHICH WAS NOT DENIED. THE DECISION WAS IN FAVOUR OF ASSES SEE WHEREAS IN THE PRESENT CASE NO DOCUMENTARY EVIDENCE IN SUPPORT OF THE SERVICES WAS PLACED ON RECORD BY ASSESSEE AT ANY POINT OF TI ME NOR THE BURDEN PLACED UNDER SECTION 37(1) TO JUSTIFY THE EX PENDITURE WAS DISCHARGED. IT WAS HIS SUBMISSION THAT SINCE ASSESS EE DID NOT PROVE THE GENUINENESS OF THE PAYMENT BY FURNISHING ANY EV IDENCE, ITAT WAS JUSTIFIED IN COMING TO THE CONCLUSION SUPPORTIN G THE ORDER OF AO. 8. WE HAVE CONSIDERED THE ISSUE AND RIVAL CONTENTIONS ON THE BASIS OF MATERIAL PLACED BEFORE US. AS SEEN FROM TH E RECORD, THERE IS NO PAPER BOOK FILED BY ASSESSEE NOR THERE IS ANY CA SE LAW BOOK JUSTIFYING THE SUBMISSIONS MADE IN THE MISCELLANEOU S APPLICATION THAT ASSESSEE RELIED ON THE THIRD MEMBER DECISION O F THE ITAT. SINCE THERE IS NO RECORD OF CITING THIRD MEMBER DECISION SPECIFICALLY BEFORE THE BENCH, WE ARE UNABLE TO ACCEPT THE CONTENTIONS THAT THE ITAT SHOULD HAVE CONSIDERED THE THIRD MEMBER DECISION WH ICH WAS RELIED UPON BY THE CIT (A). AS RIGHTLY POINTED OUT BY THE LEARNED DR IN THIS CASE THERE IS NO DOCUMENTARY EVIDENCE WITH REFERENC E TO THE SERVICES RENDERED BY THE SAID PARTIES TO ASSESSEE AND IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, WE ARE UNABLE TO UNDERSTAND H OW THE DECISION GIVEN IN THE CASE OF VIP INDUSTRIES ON THE FACTS OF THE CASE ARE APPLICABLE TO THE PRESENT FACTS OF THE CASE. TH EREFORE, WE ARE OF THE OPINION THAT IN THE ABSENCE OF ANY SPECIFIC REF ERENCE TO THE ABOVE DECISION BY ASSESSEE IN THE ARGUMENTS PUT BEF ORE THE ITAT, IT CANNOT BE CONSIDERED THAT THERE IS A MISTAKE IN NOT REFERRING TO THE SAID DECISION. AS SEEN FROM THE ORDER OF THE ITAT N OT ONLY THE FACTS AS PLACED ON RECORD WERE ANALYZED BUT ALSO DIFFERED FROM THE OBSERVATIONS OF THE CIT (A). THEREFORE, WE ARE UNAB LE TO ACCEPT ASSESSEES CONTENTIONS. MA NO.272 OF 2012 UMAKANT B AGARWAL MUMBAI PAGE 5 OF 6 9. WITH REFERENCE TO THE 2 ND ISSUE ALSO IT IS ONLY ON THE BASIS OF THE ANALYSIS OF THE FINDINGS ON RECORD, THE ITAT OB SERVED CONCURRING WITH FINDINGS OF AO. WE ARE UNABLE TO ACCEPT ASSESS EES CONTENTIONS THAT THE ITAT MISUNDERSTOOD THE REPLIED GIVEN BY TH E PARTIES. IT IS FOR ASSESSEE TO JUSTIFY THE CLAIM OF THE EXPENDITUR E UNDER SECTION 37(1), THE ASPECT OF WHICH WAS DISCUSSED IN DETAIL IN PARA 19 & 20 OF THE ITAT ORDER. 10. IN VIEW OF THE DETAILED ORDER PASSED BY THE ITAT NO T ONLY TAKING INTO CONSIDERATION THE SUBMISSIONS MADE BEFO RE THE BENCH BY ASSESSEES COUNSEL BUT ALSO THE FINDINGS GIVEN B Y AO, WE ARE UNABLE TO CONSIDER THAT THERE ARE APPARENT MISTAKES IN THE ORDER OF THE ITAT. THEREFORE, ASSESSEES REQUEST FOR RECALLI NG THE ORDER FOR RECONSIDERATION CANNOT BE CONSIDERED AS IT IS BEYON D THE POWERS OF THE ITAT UNDER SECTION 254(2). THE PRINCIPLES LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RA MESH ELECTRIC & TRADING COMPANY (203 ITR 497) ARE KEPT IN MIND. I N THAT DECISION IT WAS HELD AS UNDER: 7. UNDER SECTION 254(2) OF THE INCOME-TAX ACT, 196 1, THE APPELLATE TRIBUNAL MAY, 'WITH A VIEW TO RECTIFYING ANY MISTAKE APPARENT FROM THE RECORD', AMEND ANY ORDER PASSED BY IT UNDER SUB-SECTION (1) WITHIN THE TIME PRESCRIBED THEREIN. IT IS AN ACCEPTED POSITION THAT THE APPELLATE TRIBUNAL DOES NOT HAVE ANY POWER TO REVIE W ITS OWN ORDERS UNDER THE PROVISIONS OF THE INCOME-TAX A CT, 1961. THE ONLY POWER WHICH THE TRIBUNAL POSSESSES I S TO RECTIFY ANY MISTAKE IN ITS OWN ORDER WHICH IS APPAR ENT FROM THE RECORD. THIS IS MERELY A POWER OF AMENDING ITS ORDER. THE POWER OF RECTIFICATION UNDER SECTION 254(2) CAN BE EXERCISED ONLY WHEN THE MISTAKE IS SOUGHT TO BE REC TIFIED IS AN OBVIOUS AND PATENT MISTAKE WHICH IS APPARENT FRO M THE RECORD, AND NOT A MISTAKE WHICH REQUIRES TO BE ESTA BLISHED BY ARGUMENTS AND A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIO NS. FAILURE OF THE TRIBUNAL TO CONSIDER AN ARGUMENT ADV ANCED BY EITHER PARTY FOR ARRIVING AT A CONCLUSION IS NOT AN ERROR APPARENT ON THE RECORD, ALTHOUGH IT MAY BE AN ERROR OF JUDGMENT. THE TRIBUNAL CANNOT, IN THE EXERCISE OF I TS POWER MA NO.272 OF 2012 UMAKANT B AGARWAL MUMBAI PAGE 6 OF 6 OF RECTIFICATION, LOOK INTO SOME OTHER CIRCUMSTANCE S WHICH WOULD SUPPORT OR NOT SUPPORT ITS CONCLUSION. 11. IN VIEW OF THE ABOVE, RESPECTFULLY FOLLOWING THE PR INCIPLES LAID DOWN THEREIN, WE REJECT THE MISCELLANEOUS APPLICATI ON FILED BY ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH SEPTEMBER, 2012. SD/- SD/- (D. MANMOHAN) (B. RAMAKOTAIAH) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI, DATED 26 TH SEPTEMBER, 2012. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, F BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI