ALLIANCE FINSTOCK LTD, MUMBAI V. DCIT CEN CIR 4(2) CEN RG 4, MUMBAI

MA 636/MUM/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8859 (ITAT-MUMBAI)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 26-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2013-2014
• Appeal Filed On: 23-10-2018
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI SANDEEP GOSAIN (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) MA 636 /MUM/201 8 (C.O. NO. 53/MUM/2018) ASSESSMENT YEAR: 2013 - 14 M/S ALLIANCE FINSTOCK LTD. G - 1, COURT CHAMBERS, GROUND FLOOR, V. THAKERSAY MARG, 35, NEW MARINE LINES, MUMBAI - 400020. VS. ASST. COMMISSIONER OF INCOME TAX CENTRAL CIRCLE - 4(2), MUMBAI CENTRAL RANGE - 4 PR. CIT(C) - 2 MUMBAI PAN NO. AADCA9058Q APPELLANT RESPONDENT ASSESSEE BY : MS. PRAKASH JHUNJHUNWALA, AR REVENUE BY : MR. RAJEEV GUBGOTRA, SR. DR DATE OF HEARING : 29/03/2019 DATE OF PRONOUNCEMENT: 26/06/2019 ORDER PER N.K. PRADHAN, AM BY MEANS OF THIS MISCELLANEOUS APPLICATION (MA), THE APPLICANT SEEKS RECALL OF THE ORDER DATED 18.07.2018 PASSED BY THE ITAT D BENCH MUMBAI (C.O. NO. 53/MUM/2018) FOR THE ASSESSMENT YEAR (AY) 2013 - 14 . 2. THE LD. COUNSEL OF THE ASSESSEE SUBMITS THAT THE ITAT ALLOWED THE APPEAL OF THE REVENUE ON RESTORING THE MATTER TO THE FILE OF THE AO FOR MAKING THE ASSESSMENT AFRESH ; HOWEVER, IT DID NOT ADJUDICATE THE LEGAL GROUNDS RAISED BY THE ASSESSEE WHICH GOES TO THE ROOT OF THE CASE UNDER WHICH CIRCUMSTANCES, TH E APPEAL OF THE REVENUE BECOMES INFRUCTUOUS AND THE ADDITION MADE IN THE ASSESSMENT IS UNJUSTIFIED AS M/S ALLIANCE FINSTOCK M.A. NO. 636/MUM/2018 2 (A) THE ASSESSEE HAD UNDISPUTEDLY NOT WRITTEN BACK THE LIABILITY IN THE BOOKS OF ACCOUNT AND HAD ACKNOWLEDGED THE LIABILITY IN THE AUDITED BALANCE SHEET, THUS THE ADDITION MADE U/S 41(1) WOULD STAND DELETED, (B) AS THERE IS NO ALLEGED REMISSION AND CESSATION OF TRADE LIABILITY DURING THE IMPUGNED YEAR, THUS FOLLOWING THE JURISDICTIONAL HIGH COURT DECISION IN CIT V. ENAM SECURITIES PVT. LTD. 345 ITR 64, THE ADDITION U/S 41(1) NEEDS TO BE DELETED. THE LD. COUNSEL FURTHER SUBMITS THAT THE ITAT AT PARA 7 INCORRECTLY HELD THAT THERE IS NO EVIDENCE THAT THE DOCUMENTS CONSIDERED BY THE LD. CIT(A) IS FILED BEFORE THE AO. THE SAID FINDING IS INCORRECT SINCE THE ONLY ALLEGATION IN GROUND NO. 2 OF THE DEPARTMENTS APPEAL WAS THAT THE CERTIFICATE OF CHARTERED ACCOUNTANT WAS NOT FILED BEFORE THE AO. IT IS STATED THAT THE AO, AT PARA 6 OF THE ASSESSMENT ORDER HAS ACCEPTED THAT LIABILITIES ARE OUTSTANDING SINCE EARLIER YEA RS. THUS IT IS SUBMITTED BY THE LD. COUNSEL THAT (I) THE ITAT DID NOT ADJUDICATE THE LEGAL GROUNDS OF THE CROSS OBJECTIONS (CO) FILED BY THE ASSESSEE AND INCORRECTLY HELD THE ASSESSEES CO AS INFRUCTUOUS, (II) THE ITAT INCORRECTLY HELD THAT THERE IS NO EVIDENCE THAT THE DOCUMENTS CONSIDERED BY THE LD. CIT(A) WERE FILED BEFORE THE AO, WHEREAS THE ALLEGATION IN GROUND NO. 2 OF THE DEPARTMENTS APPEAL WAS ONLY WITH REGARD TO THE CA CERTIFICATE AND (III) THE ITAT DID NOT CONSIDER THE JUDICIAL DECISION OF THE HONBLE JURISDICTIONAL AND OTHER HIGH COURTS WHILE DECIDING THE MATTER. THEREFORE, THE LD. COUNSEL SUBMITS BEFORE THE TRIBUNAL (A) TO ADJUDICATE THE GROUNDS RAISED IN THE CO, (B) TO MODIFY THE ORDER ON UPHOLDING THE DELETION OF ADDITION U/S 41(1) OF THE ACT AND (C) TO RECALL THE ENTIRE ORDER FOR ADJUDICATION AFRESH. M/S ALLIANCE FINSTOCK M.A. NO. 636/MUM/2018 3 3. ON THE OTHER HAND THE LD. DR SUBMITS THAT CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, THE TRIBUNAL HAS RIGHTLY SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORED THE MATTER TO TH E FILE OF THE AO TO MAKE AN ORDER AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS SUBMITTED BY HIM THAT THERE IS NO MISTAKE APPARENT FROM RECORD AND THEREFORE THE MA FILED BY THE ASSESSEE U/S 254(2) BE DISMISSED. 4. WE HAV E HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BELOW. IN THE INSTANT CASE, THE GROUNDS OF APPEAL FILED BY THE REVENUE READ AS UNDER: I. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A), WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S 41(1) WHEREIN ASSESSEE FAILED TO PROVE THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENUINENESS OF THE TRANSACTION. II. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A), WAS JUSTIFIED IN DELETING THE DISALLOWANCE U/S 41(1) WHEREIN OPPORTUNITY HAS NOT BEEN TO THE AO REGARDING SUBMISSION OF NEW EVIDENCES I.E. CERTIFICATE OF THE CHARTERED ACCOUNTANT ETC. DURING THE APPELLATE PROCEEDINGS ON THE ADMISSIBILITY OF NEW EVIDENCE UNDER RULE 46A. 4.1 THE CROSS - OBJECTION RAISED BY THE ASSESSEE IS AS UNDER: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE DELETED THE ADDITION U/S 41(1) OF RS.1,00,00,000/ - OF ALLEGED REMISSION/CESSATION OF TRADE LIABILITY SINCE THE ASSESSEE HAD NOT WRITTEN BACK THE LIABILITY AND HAD ACKNOWLEDGED THE LIABILITY IN ITS AUDITED BOOKS OF ACCOUNTS; M/S ALLIANCE FINSTOCK M.A. NO. 636/MUM/2018 4 ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) OUGHT TO HAVE DELETED TH E ADDITION U/S 41(1) SINCE THE ALLEGED REMISSION OR CESSATION OF ALLEGED TRADE LIABILITY IS NOT MADE DURING IMPUGNED YEAR. 4.2 IN THE INSTANT CASE, THE ASSESSING OFFICER (AO) HAS RECORDED AT PARA 5 (PAGE 5 - 6) OF THE ASSESSMENT ORDER DATED 26.02.2016 THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE VIDE LETTER DATED 08.02.2016 SUBMITTED A LIST OF SUNDRY CREDITORS, WHEREIN THE ASSESSEE HAS SHOWN TWO CREDITORS NAMELY DOSTI CORPORATION AND PARAS CORPORATE SERVICES P. LTD. HAVING AN OUTSTANDING BALANCE OF RS.50,00,000/ - EACH TOTALLING TO RS.1,00,00,000/ - . HO WEVER, THE AR FAILED TO FILE CONFIRMATION FROM THE PARTIES. FURTHER, THE AO HAS RECORDED THAT ON FACTS, THE ASSESSEE ALSO FAILED TO GIVE ANY EVIDENCE REGARDING THE IDENTITY AND CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENUINENESS OF THE TRANSACTION; TH E ASSESSEE ALSO COULD NOT SUBMIT ANY PAYMENT OF THE LIABILITY SUBSEQUENTLY, TILL THE DATE OF ASSESSMENT ORDER. HOWEVER, BEFORE THE LD. CIT(A), THE AR OF THE ASSESSEE FILED THE DETAILS IN THE SHAPE OF (I) NAME, ADDRESS AND PAN OF THE PARTY, (II) DATE OF RE CEIPT OF AMOUNT BY THE ASSESSEE, (III) BANK AND MODE OF RECEIPT AND (IV) AMOUNT. THE LD. CIT(A) HAS MENTIONED AT PAGE 16 OF HIS ORDER DATED 29.06.2016 THAT K.N. SHAH & CO., CAS AND REGULAR AUDITORS IN RESPECT OF BOTH THESE CASES HAVE GIVEN A CERTIFICATE THAT THE AMOUNT OF RS.50,00,000/ - IN CASE OF M/S PARAS CORPORATE SERVICES PVT. LTD. HAS BEEN OUTSTANDING SINCE 27.08.2007 AND IT WAS NOT IN THE NATURE OF A TRADE LIABILITY AND HAD NOT BEEN CHARGED TO PROFIT AND LOSS ACCOUNT AND DOES NOT RELATE TO REVENUE E XPENSE S CLAIMED IN ANY EARLIER YEAR; A M/S ALLIANCE FINSTOCK M.A. NO. 636/MUM/2018 5 SIMILAR CERTIFICATE HAS BEEN GIVEN IN RESPECT OF M/S DOSTI CORPORATION THAT THIS AMOUNT HAS BEEN OUTSTANDING SINCE 17.04.2006 AND WAS NOT IN THE NATURE OF TRADE LIABILITY. 4.3 IT IS FOUND FROM THE WRITTEN SUBMISSION DATED 24.06.2016 FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT AT PARA 2.1 (PAGE 46 - 47 OF PAPER BOOK ) , THE AR OF THE ASSESSEE HAS STATED THE FOLLOWING: IN SUPPORT OF THE FACT THAT THE OUTSTANDING BALANCE OF SUCH PARTIES RELATE TO UNSECURED LOANS AND D OES NOT PERTAIN TO TRADE LIABILITY, THE UNDERSTATED DOCUMENTS ARE RELIED UPON : - A. LEDGER ACCOUNT OF M/S PARAS CORPORATE SERVICES PVT. LTD. AND M/S DOSTI CORPORATION FROM FY 2006 - 07 TILL IMPUGNED YEAR; B. BANK BOOK DISCLOSING THE RECEIPT OF MONEY FROM S UCH 2 PARTIES DURING FY 2006 - 07 AND FY 2007 - 08; C. C.A. CERTIFICATE ISSUED BY K.N. SHAH & CO. CHARTERED ACCOUNTANTS CERTIFYING THAT SUCH OUTSTANDING BALANCE DOES NOT PERTAIN TO TRADE LIABILITY AND HAS NOT BEEN CHARGED TO P&L A/C IN ANY EARLIER YEARS; D. ASSESSMENT ORDER U/S 143(3) OF EARLIER YEARS WHEREIN SUCH LIABILITY HAS BEEN ACCEPTED AS GENUINE IN ALL ASSESSMENT; A PERUSAL OF THE ASSESSMENT ORDER PASSED BY THE AO, THE WRITTEN SUBMISSION FILED BY THE ASSESSEE BEFORE THE LD. CIT(A), THE ORDER OF THE LD. CIT(A) AND THE PAPER BOOK FILED BEFORE US SHOWS THAT THERE IS NO EVIDENCE THAT ABOVE DOCUMENTS WERE FILED BEFORE THE AO. THE FACT REMAINS THAT THE 2 ND GROUND OF APPEAL FILED BY THE REVENUE IS INEXTRICABLY LINKED WITH THE ABOVE DOCUMENTS. 4.4 IN VIEW OF THE ABOVE FACTS, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORED THE MATTER TO THE FILE OF THE AO TO MAKE AN ORDER M/S ALLIANCE FINSTOCK M.A. NO. 636/MUM/2018 6 AFRESH AFTER GIVING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. AS THE MATTER WAS RESTORED TO THE FILE OF THE AO, WE DID NO T ADVERT TO THE CASE LAWS RELIED ON BY THE LD. COUNSEL. THE GROUNDS OF APPEAL FILED BY THE REVENUE AND THE CROSS OBJECTION RAISED BY THE ASSESSEE BEING BASED ON SAME FACTS, WE ALLOWED THE APPEAL FILED BY THE REVENUE FOR STATISTICAL PURPOSES AND TREATED T HE CO FILED BY THE ASSESSEE AS INFRUCTUOUS. A PERUSAL OF THE ABOVE FACTS CLEARLY INDICATE THAT THE APPLICANT HAS NOT POINTED OUT ANY MISTAKE APPARENT FROM THE RECORD. A MISTAKE APPARENT ON THE RECORD MUST BE AN OBVIOUS MISTAKE AND NOT SOMETHING WHICH CAN BE ESTABLISHED BY A LONG DRAWN PROCESS OF REASONING ON POINTS ON WHICH THERE MAY BE CONCEIVABLY TWO OPINIONS. A DECISION ON A DEBATABLE POINT OF LAW IS NOT A MISTAKE AP PARENT FROM THE RECORD. THIS VIEW IS SUPPORTED BY THE DECISION OF THE HONBLE SUPREME COURT IN T.S. BALARAM, ITO V. VOLKART BROS ., (1971) 82 ITR 50 (SC), MASTER CONSTRUCTION CO. P. LTD. V. STATE OF ORISSA , AIR 1966 SC 1047, KARAM CHAND THAPAR & BROS. (COAL SALES) LTD. V. STATE OF U.P. (1976) TAX LR 1921, 1927 (SC) AND CCE V. ASCU LTD ., (2003) 9 SCC 230, 232. IN FACT, NOT A SINGLE ERROR IN THE IMPUGNED ORDER HAS BEEN POINTED OUT BY THE APPLICANT. WHAT THE APPLICANT WANTS IS A REVIEW OF THE ORDER PASSED BY THE TRIBUNAL. THE TRIBUNAL IS A CREATURE OF THE STATUTE. THE TRIBUNAL CANNOT REVIEW ITS OWN DECISION UNLESS IT IS PERMITTED TO DO SO BY THE STATUTE. THE HONBLE SUPREME COURT HAS HELD IN PATEL NARSHI THAKERSHI V. PRADYUMANSINGHJI ARJUNSINGHJI [AIR 1970 SC 1273] THAT THE POWER TO REVIEW IS NOT AN INHERENT POWER. IT MUST BE CONFERRED BY LAW EITHER SPECIFICALLY OR BY NECESSARY IMPLICATION. IT IS A SETTLED LAW THAT THE TRIBUNAL HAS NO POWER TO REVIEW ITS ORDER IN THE M/S ALLIANCE FINSTOCK M.A. NO. 636/MUM/2018 7 GARB OF SECTION 254(2) OF THE ACT AS HELD IN CIT V. GLOBE TRANSPORT CORPN. [1992] 195 ITR 311 (RAJ) (HC), CIT V. ROOP NARAIN SARDAR MAL [2004] 267 ITR 601 (RAJ) (HC), CIT V. DEVILAL SONI [2004] 271 ITR 566 (RAJ) (HC), JAINARAIN JEEVRAJ V. CIT [1980] 121 ITR 358 (RAJ.) (HC), PRAJATANTRA PRACHAR SAMITI V. CIT [2003] 264 ITR 160 (ORISSA) (HC), CIT V. JAGABANDHU ROUL [1984] 145 ITR 153 (ORISSA) (HC), CIT & A NR. V. ITAT & ANR. [1992] 196 ITR 640 (ORISSA) (HC), SHAW WALLACE & CO. LTD. V. ITAT & OTHERS [1999] 240 ITR 579 (CAL) (HC), CIT V. SUMAN TEA & PLYWOOD INDUSTRIES PVT. LTD. [1997] 226 ITR 34 (CAL) (HC), ITO V. ITAT & ANR. [1998] 229 ITR 651 (PAT.) (HC), CI T & ANR. V. ITAT & ANR. [1994] 206 ITR 126 (AP) (HC), ACIT V. C. N. ANANTHRAM [2004] 266 ITR 470 (KAR) (HC). 5 . THUS THE PRESENT MA BEING DEVOID OF MERIT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/06/2019. SD/ - SD/ - ( SANDEEP GOSAIN ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 26/06/2019 RAHUL SHARMA, SR. P.S. 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// ( SR. PRIVATE SECRETARY ) ITAT, MUMBAI