DCIT OSD II, V. JITENDRA J.MEHTA,

MA 498/MUM/2012

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 9725 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 19-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Assessment Year: 2006-2007
• Appeal Filed On: 31-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI I BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI VIJAY PAL RAO, JM & SHRI N K BILLAIYA , AM MISCELLANEOUS APPLICATION NOS. 497 & 498/MUM/2012 ARISING OUT OF ITA NOS. 5438 & 170/MUM/2010 (ASST YEARS 2005-06 & 2006-07 ) THE DY COMMR OF INCOME TAX OSD(II) MUMBAI VS SH JITENDRA J MEHTA PROP M/S S J IMPEX 1401 REHEJA CENTRE 14 TH FLOOR, NARIMAN POINT MUMBAI 21 (APPLICANT) (RESPONDENT) PAN NO. AAPPM2381K ASSESSEE BY SH VIJAY MEHTA REVENUE BY SH O P MEENA DT.OF HEARING 14 TH DEC 2012 DT OF PRONOUNCEMENT 19 TH DEC 2012 ORDER PER VIJAY PAL RAO, JM THESE MISCELLANEOUS APPLICATIONS BY THE REVENUE AR E DIRECTED AGAINST THE ORDER DATED 14TH OCT 2011 OF THE TRIBUNAL WHEREBY T HE APPEALS OF THE ASSESSEE FOR THE AY 2005-06 AND 2006-07 WERE DISPOSED OFF BY A C OMPOSITE ORDER. 2 IN THESE MISCELLANEOUS APPLICATIONS, THE REVENUE HAS ALLEGED A MISTAKE IN THE ORDER OF THE TRIBUNAL WITH RESPECT TO THE ISSUE OF DISALLOWANCE OF BROKERAGE EXPENSES WHICH IS COMMON FOR BOTH THE ASSESSMENT YEARS. 2.1 THE LD DR HAS SUBMITTED THAT IT IS APPARENT FRO M THE IMPUGNED ORDER OF THE TRIBUNAL THAT THE FACTS OF THE CASE AS DISCUSSED IN THE ASSESSMENT ORDER AND AS PERCEIVED AND DISCUSSED BY THE TRIBUNAL IN THE IMPU GNED ORDER ARE DIFFERENT AND THEREFORE, THE RELIEF GRANTED ON THE BASIS OF DIFFE RENT SET OF FACT IS A MISTAKE CREPT ON THE RECORD REQUIRES TO BE RECTIFIED U/S 254(2). MA NOS 497 & 498/M/2012 . 2 2.2 HE HAS REFERRED PARA 13 OF THE IMPUGNED ORDER O F THE TRIBUNAL AND SUBMITTED THAT THE TRIBUNAL HAS RECORDED THE FACT THAT THE AS SESSING OFFICER HAS RECORDED IN THE ASSESSMENT ORDER THAT ALL THE PARTIES EXCEPT THREE HAVE CONFIRMED HAVING TRANSACTIONS WITH THE ASSESSEE; BUT HAVE DENIED INV OLVEMENT OF ANY BROKER AND PAYMENT OF BROKERAGE. THE LD DR HAS SUBMITTED THA T ENQUIRIES CONDUCTED BY THE ASSESSING OFFICER FROM THE PARTIES WERE TWO-FOLD; O NE REGARDING HAVING ANY TRANSACTION WITH THE ASSESSEE, AND SECONDLY IN RESP ECT OF INVOLVEMENT OF BROKER IN THE SAID TRANSACTION. THE QUESTION OF PAYMENT OF B ROKERAGE BY THE SAID PARTIES TO THE BROKER WAS NOT AT ALL IN THE PICTURE; THEREFORE , THE TRIBUNAL HAS CONSIDERED A WRONG FACT. HE HAS FURTHER SUBMITTED THAT THE PAYM ENT OF BROKERAGE WAS DISPUTED BECAUSE THE OTHER PARTIES TO THE TRANSACTION DENIED HAVING ANY INVOLVEMENT OF ANY BROKER, WHICH CONSEQUENTLY LED TO AN INFERENCE THAT THE BROKER HAS NOT RENDERED ANY SERVICES TO THE ASSESSEE AND SO THE ASSESSEE WA S NOT ENTITLED TO ANY CLAIM OF BROKERAGE PAID. 2.3 THE LD DR HAS FURTHER SUBMITTED THAT THE ASSESS ING OFFICER HAS DOUBTED THE SERVICES RENDERED BY THE BROKER WHICH THE OTHER PA RTIES CONFIRMED THAT THERE WAS NO BROKER INVOLVED, AND THEREFORE, NO SERVICES WERE RENDERED BY THE BROKER; BUT THE FINDING OF THE TRIBUNAL IS BASED ON PRESUMPTION OF WRONG FACTS. WHEN THE PARTIES WITH WHOM ENQUIRIES WERE CONDUCTED HAVE DENIED THE INVOLVEMENT OF BROKER, THEN THIS TRIBUNAL HAS TAKEN THE FACT THAT THE ASSESSEE HAS AVAILED SERVICES OF THE BROKER, AS GRANTED. 2.4 THE LD DR HAS FURTHER SUBMITTED THAT THE REASON ING GIVEN BY THE TRIBUNAL WAS ALSO CONTRARY TO THE FACTS OF THE CASE. THE OBSERV ATIONS OF THE TRIBUNAL THAT THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY DIRECT EV IDENCE OR FACTS SHOWING THAT THE CLAIM OF THE ASSESSEE IS NOT GENUINE AND NO SERVIC E WAS RENDERED BY THE BROKER, IS MA NOS 497 & 498/M/2012 . 3 ALSO NOT CORRECT AS THE PARTIES HAVE CONFIRMED THA T NO BROKER WAS INVOLVED IN THE TRANSACTION. THUS, THE LD DR HAS SUBMITTED THAT TH ERE IS A MISTAKE IN THE IMPUGNED ORDER OF THIS TRIBUNAL BECAUSE OF NON CONSIDERATION AND NON APPRECIATION OF VITAL FACTS OF THE ASSESSMENT ORDER AND PLEADED TO RE-CON SIDER THE DECISION ON THIS ISSUE FOR RECTIFICATION. 2.5 ON THE OTHER HAND, THE LD AR OF THE ASSESSEE HA S SUBMITTED THAT WHEN THE ISSUE HAS BEEN DECIDED AFTER CONSIDERING ALL THE RE LEVANT FACTS, THEN THERE IS NO MISTAKE APPARENT ON RECORD WHICH CAN BE RECTIFIED U NDER THE PROVISIONS OF SEC. 254(2). THE MISCELLANEOUS APPLICATIONS OF THE REVE NUE DISCUSSED THE FACTS AND MERITS OF THE CASE OF THE ASSESSEE AND NO APPARENT MISTAKE IN THE ORDER HAS BEEN POINTED OUT. HE HAS FURTHER SUBMITTED THAT THE TRI BUNAL HAS TAKEN NOTE OF THE FACT THAT OTHER PARTIES HAVE DENIED THE PAYMENT OF BROKE RAGE TO THE BROKER WHICH ITSELF SAYS THAT THEY HAVE NOT AVAILED ANY SERVICES OF THE BROKER; BUT WHEN THE ASSESSEE HAS AVAILED THE SERVICES OF THE BROKER, THEN ON TH E BASIS OF THE STAND OF THE OTHER PARTIES, THE CLAIM OF THE ASSESSEE CANNOT BE DENIED WITHOUT PROVING THE FACT THAT THE ASSESSEE HAS NOT AVAILED THE SERVICES OF THE BR OKER. HE HAS SUPPORTED THE ORDER OF THE TRIBUNAL. 3 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE REVENUE HAS ATTEMPTED BY WAY OF THESE MISCELLANEOUS APPLICATIONS TO POINT OUT THAT THE TRIBUNAL HAS CONSIDERED WRONG FA CTS WHILE DECIDING THE ISSUE OF DISALLOWANCE OF BROKERAGE PAYMENT. THE FIRST ALLEG ATION IN THE MISCELLANEOUS APPLICATIONS IS REGARDING RECORDING OF THE FACTS IN PARA 13 OF THE IMPUGNED ORDER THAT THE ASSESSING OFFICER HAS RECORDED THAT ALL TH ESE PARTIES HAVE CONFIRMED TRANSACTIONS WITH THE ASSESSEE OF SALE AND PURCHASE OF DEPB/DFRC LICENSES EXCEPT THREE; BUT HAVE DENIED INVOLVEMENT OF ANY BROKER AN D PAYMENT OF BROKERAGE. WE MA NOS 497 & 498/M/2012 . 4 FIND THAT THERE IS NO MISTAKE IN RECORDING OF THESE FACTS AS THE SAME ARE DULY RECORDED AT PAGE 5 & 6 OF THE ASSESSMENT ORDER FORT THE AY 2005-06 AS UNDER: MA NOS 497 & 498/M/2012 . 5 SIMILARLY, FOR THE AY 2006-07, THE ASSESSING OFFICE R HAS RECORDED THESE FACTS AGAIN. 4 THE TRIBUNAL HAS MENTIONED THESE FACTS IN PARA 13 OF THE IMPUGNED ORDER AS UNDER: 13 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PE RUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSING OFFICER DISALLOWE D THE PART OF THE BROKERAGE PAID BY THE ASSESSEE. IN RESPONSE TO THE S UMMONS ISSUED TO THE PARTIES TO THE SALE AND PURCHASE TRANSACTIONS OF DEPB /DFRC LICENSES; IT WAS DENIED THAT ANY BROKER WAS INVOLVED IN THE TRANSACTI ON. THE ASSESSING OFFICER HAS RECORDED IN THE ASSESSMENT ORDER THAT ALL THESE PARTIES, EXCEPT THREE HAVE CONFIRMED HAVING TRANSACTIONS WITH THE ASSESSEE; BU T THEY HAVE DENIED THE INVOLVEMENT OF ANY BROKER AND PAYMENT OF BROKERAGE. IT IS TO BE NOTED THAT THE PAYMENT OF BROKERAGE HAS NOT BEEN DISPUTED BY T HE ASSESSING OFFICER. IT IS ALSO NOT DISPUTED THAT THE BROKERAGE HAS BEEN PAID AFTER DEDUCTION OF TDS. IT IS NOT THE CASE OF THE REVENUE THAT THE RECIPIENT S OF THE BROKERAGE HAVE EITHER DENIED OR DISPUTED THE AMOUNT RECEIVED ON ACCOU NT OF BROKERAGE FROM THE ASSESSEE. THE SOLE BASIS OF DISALLOWANCE BY THE ASSESSING OFFICER IS THE RESPONSE TO THE SUMMONS ISSUED TO THE OTHER PAR TIES. 4.1 IT IS CLEAR FROM THE ORDER OF THE ASSESSING OFF ICER AS WELL AS THE RECORDING OF THE FACTS BY THE TRIBUNAL IN PARA 13 OF THE IMPUGNED OR DER THAT THERE IS NO CONTRADICTION AS FAR AS THE FACTS RECORDED BY THE TRIBUNAL. 4.2 THE OTHER CONTENTION OF THE LD DR IS ON THE POI NT THAT WHEN THE OTHER PARTIES HAVE DENIED INVOLVEMENT OF ANY BROKER AND PAYMENT O F BROKERAGE, THERE WAS NO MA NOS 497 & 498/M/2012 . 6 SERVICES RENDERED BY THE BROKER TO THE ASSESSEE AND THEREFORE, THE CLAIM OF THE ASSESSEE IS NOT ALLOWABLE. 4.3 IT IS TO BE NOTED THAT THE TRIBUNAL HAS CONSIDE RED ALL THESE FACTS AS WELL AS CONTENTION OF THE LD DR RAISED AT THE TIME OF HEAR ING OF THE APPEAL AND THEREAFTER HAVE DISCUSSED THE ISSUE ELABORATELY IN PARA 13.1 & 13.2 AS UNDER: 13.1 IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS NOT CLAIMED THAT THE BROKERAGE, IN THESE TRANSACTIONS, WAS PAID BY BOTH T HE PARTIES. WHEN THE ASSESSEE IS ENGAGED/APPOINTED THE BROKER FOR INTRODUCT ION OF THE PARTY AND THEREAFTER IF THE BUSINESS HAS BEEN TRANSACTED BETWEE N THE ASSESSEE AND THE OTHER PARTIES, THEN, THE PAYMENT OF BROKERAGE CANNOT BE DISPUTED SOLELY ON THE GROUND THAT THE OTHER PARTY HAS NOT APPOINTED ANY BROKER AND THEREFORE, HAS NOT PAID ANY BROKERAGE. THE PAYMENT OF BROKERAGE BY THE ASSESSEE IS AN INDEPENDENT TRANSACTION BETWEEN THE ASSESSEE AND TH E BROKER AND NOTHING TO DO WITH THE PAYMENT OF THE BROKERAGE BY THE OTHER PARTIES. WHEN THE PAYMENT WAS NOT DISPUTED BY THE RECIPIENT OF THE BRO KERAGE AGAINST THE TRANSACTION OF THE PURCHASE AND SALE OF DEPB/DFRC LI CENSES THEN THE DISALLOWANCE OF THE CLAIM OF THE ASSESSEE BY THE ASSESSING OFFICER IS NOT JUSTIFIED. THE OTHER PARTIES HAVE ACCEPTED THE TRANSA CTIONS OF SALE AND PURCHASE OF DEPB/DFRC LICENSES WITH THE ASSESSEE THE N, THE CLAIM OF PAYMENT OF BROKERAGE HAS TO BE DECIDED ON THE BASIS OF THE BUSINESS TRANSACTION OF THE ASSESSEE AND NOT ON THE BASIS T HE FACT THAT THE OTHER PARTIES HAVE NOT APPOINTED ANY BROKER AND PAID ANY BR OKERAGE. THE ASSESSING OFFICER HAS DOUBTED THE SERVICES RENDERED B Y THE BROKER AND INFERRED THAT THE BROKERAGE WAS PAID WITHOUT ANY ACT UAL SERVICES RENDERED BY THE ASSESSEE SOLELY ON THE FACT THAT THE OTHER PARTIE S TO THE TRANSACTIONS OF SALE AND PURCHASE DID NOT PAY ANY BROKERAGE. WHEN TH E ASSESSEE IS IN THE BUSINESS OF SALE AND PURCHASE OF DEPB/DFRC LICENSES AND THERE IS A TIME LIMIT OF VALIDITY OF THE SAID LICENSE THEN THE RISK INVOLV ED IN THE TRANSACTION OF PURCHASE AND SALE DUE TO EFFLUX OF TIME IS OF THE AS SESSEE AND TO MITIGATE THE SAID RISK, THE ASSESSEE HAS AVAILED THE SERVICES OF T HE BROKER FOR INTRODUCTION OF THE PARTIES, WHO ARE INTERESTED IN PURCHASE OR SELLIN G OF DEPB/DFRC LICENSES. THE ASSESSING OFFICER HAS NOT DISPUTED THAT THE PA YMENT OF BROKERAGE IS NOT PREVAILING IN SUCH KIND OF BUSINESS AND THE BROKER TO WHOM PAYMENT WAS MADE WAS NOT IN THE BUSINESS OF BROKERAGE. THEREFORE, ONCE THE PAYMENT OF THE SAID AMOUNT, AFTER DEDUCTION OF TDS TO THE BROKER HAS NOT BEEN DISPUTED THEN, THE REASON FOR DISALLOWANCE THAT THE OTHER PARTI ES HAVE NOT PAID ANY BROKERAGE, IN OUR OPINION IS HIGHLY IMPROPER AND UNJUST IFIED. THE ASSESSING OFFICER, INSTEAD OF VERIFYING THE FACTS FROM THE BROK ER ITSELF, CONDUCTED ENQUIRY FROM THE OTHER PARTIES, WHO HAVE ACCEPTED THE TRANSA CTIONS WITH THE ASSESSEE OF SALE AND PURCHASE OF DEPB/DFRC LICENSES BUT DENIE D ANY PAYMENT OF BROKERAGE. ONCE THE TRANSACTIONS OF SALE AND PURCHAS ES ARE FOUND GENUINE AND ACTUAL PAYMENT OF THE AMOUNT, AFTER TDS IS NOT DISPUTED, THEN, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT APPROV E THE VIEW OF THE LOWER AUTHORITIES IN REFUSING/DISALLOWING THE CLAIM OF THE ASSESSEE. MA NOS 497 & 498/M/2012 . 7 13.2 THE ASSESSING OFFICER HAS NOT BROUGHT OUT ANY D IRECT EVIDENCE OR FACT SHOWING THAT THE CLAIM OF THE ASSESSEE IS NOT GENUI NE AND NO SERVICE WAS RENDERED BY THE BROKER; INSTEAD, THE ASSESSING OFFICE R INFERRED AND PRESUMED THAT THE TRANSACTION OF PAYMENT OF BROKERAGE IS NOT G ENUINE SINCE THE OTHER PARTIES TO THE SALE AND PURCHASE OF DEPE/DFRC LICENSE S HAS NOT PAID ANY BROKERAGE. WHEN THE TRANSACTION OF SALE AND PURCHAS E AND PAYMENT OF THE AMOUNT ON ACCOUNT OF BROKERAGE, AFTER DEDUCTION OF TD S HAS NOT BEEN DISPUTED, THEN IN THE ABSENCE OF ANY DIRECT EVIDENCE OR MATERIAL TO INDICATE THE NON GENUINEITY OF THE TRANSACTIONS, THE CLAIM OF THE ASSESSEE CANNOT BE DISALLOWED. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(A) AND ALLOW THE CLAIM OF THE ASSESSEE ON THIS ACCOUNT. 4.4 THE FINDING OF THE TRIBUNAL IS BASED ON THE FAC TS THAT THE ASSESSING OFFICER HAS NOT DISPUTED THE PAYMENT OF BROKERAGE AS THE SAME W AS PAID AFTER THE DEDUCTION OF TDS AND DISALLOWANCE MADE BY THE ASSESSING OFFIC ER ON THE BASIS THAT THE OTHER PARTIES HAVE DENIED THE ROLE OF ANY BROKER AND THE PAYMENT OF BROKERAGE. IN ORDER TO ASCERTAIN WHETHER THE ASSESSEE HAD AVAILED THE S ERVICES OF THE BROKER, IT IS IMMATERIAL WHETHER THE OTHER PARTIES AVAILED THE SE RVICES OR NOT; THEREFORE, MERELY ON THE GROUND THAT THE OTHER PARTIES HAVE NOT AVAILED THE SERVICES OF THE BROKER DOES NOT IPSO FACT PROVE THAT THE FACT THAT THE ASSESSEE HAS NOT AVAILED THE SERVICES OF THE BROKER. 4.5 THE ASSESSING OFFICER DID NOT EXAMINE AND VERIFY TH IS FACT FROM THE BROKER ITSELF. THEREFORE, WHEN THE ISSUE HAS BEEN DECIDED ON MERIT S AFTER CONSIDERING ALL THE RELEVANT FACTS AND CIRCUMSTANCES, THEN THE RELIEF S OUGHT IN THE MISCELLANEOUS APPLICATIONS OF THE REVENUE IS NOTHING BUT REVERSAL OF THE FINDING OF THE TRIBUNAL ON THE MERITS OF THE ISSUE. 5 EVEN OTHER OTHERWISE, THE SCOPE OF SEC 254(2) IS VERY LIMITED AND CIRCUMSCRIBED. FOR EXERCISING THE JURISDICTIONAL U/ S 254(2), IT IS THE MANDATORY CONDITION THAT SUCH MISTAKE SHOULD BE WIDE APPARENT , MANIFEST AND PATENT AND NOT MA NOS 497 & 498/M/2012 . 8 SOMETHING WHICH COULD BE INVOLVED SERIOUS CIRCUMSTA NCES OF DISPUTES OF QUESTION OF FACTS OR LAW AND CAN BE ESTABLISHED BY LONG DRAWN P ROCESS AND REASONING ON THE POINT TO BE RECTIFIED. A PATENT MISTAKE AS WELL AS EVIDENT ERROR, WHICH DOES NOT REQUIRE AN ELABORATE DISCUSSION OF EVIDENCE OR ARGU MENTS TO ESTABLISH CAN BE SAID TO BE AN ERROR APPARENT ON THE FACE OF THE RECORDS AND CAN BE RECTIFIED UNDER THE AMBIT OF SECTION 254(2). IT IS WELL SETTLED THAT S EC 254(2) DOES NOT CONFER POWER ON THE TRIBUNAL TO REVIEW IS EARLIER ORDER. THUS, THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER PASSED ON MERIT AND IN THE GRAB OF RECTIFICAT ION OF MISTAKE NO ORDER CAN BE PASSED U/S 254(2) WHICH AMOUNTS TO REVERSAL OF THE ORDER PASSED AFTER DISCUSSING ALL THE FACTS AND STATUTORY PROVISIONS IN DETAIL. THER EFORE, WE DO NOT FIND ANY MERIT IN THE MISCELLANEOUS APPLICATION FILED BY THE ASSESSEE. 5.1 IT IS MANIFEST FROM THE MISCELLANEOUS APPLICATI ONS AND THE CONTENTION OF THE LD DR THAT THE REVENUE IS SEEKING REVIEW OF THE IMPUGN ED ORDER UNDER THE PROVISIONS OF SEC. 254(2) AND THEREFORE, THE MISCELLANEOUS APPLIC ATION FILED BY THE REVENUE IS A GROSS MISUSE AND ABUSE OF PROCESS OF LAW AND ACCORD INGLY DESERVES TO BE DISMISSED. 6 IN THE RESULT, THE MISCELLANEOUS APPLICATIONS FIL ED BY THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 19 TH DAY OF DEC 2012 SD/- SD/- ( N K BILLAIYA ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 19 TH DEC 2012 RAJ* MA NOS 497 & 498/M/2012 . 9 COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI