ACIT 4 (3)(1) , MUMBAI V. TULSI MARKETING PVT. LTD., MUMBAI

MA 94/MUM/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8805 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-07-2021
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2021
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Transactions in derivatives; Tax effect
• Section: 143(3); 254(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER M.A. NO. 94/MUM./2021 ( ARISING OUT OF ITA NO. 97 / MUM . / 20 1 9 ) ( ASSESSMENT YEAR : 20 10 11 ) ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4(3)(1), MUMBAI . APPLICANT (ORIGINAL RESPONDENT) V/S TULSI MARKETING PVT. LTD. 49, LAWYERS CHAMBER PICKET ROAD, MUMBAI 400 002 PAN AAACT1348K . RESPONDEN T (ORIGINAL APPELLANT) ASSESSEE BY : NONE REVENUE BY : SHRI BHARAT ANDHALE DATE OF HEARING 02 . 07 .20 21 DATE OF ORDER 30.07.2021 O R D E R PER S. RIFAUR RAHMAN , A.M. B Y THIS MISC. APPLICATION, THE REVENUE SEEKS RECALL / RE INSTATE THE ORDER DATED 20 TH AUGUST 2019, PASSED IN ITA NO.97/MUM./2019, FOR THE ASSESSMENT YEAR 2010 11. 2. THE ISSUE RAISED IN THE PRESENT MISC. APPLICATION IN THE FORM OF PROPOSED GROUNDS OF APPEAL , IS REPRODUCED BELOW: - ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE HONBLE ITAT HAS ERRED IN DISMISSING THE APPEAL AS WITHDRAWN / NOT PRESSED, DUE TO THE LOW TAX EFFECT AS PER 2 TULSI MARKETING PVT. LTD. THE CBDT CIRCULAR NO.71/2019 DATED 8 TH AUGUST 2019, WITHOUT CONSIDERING THE FACT THAT THE SAID CASE FALLS UNDER EXCEPTION TO MONETARY LIMIT S FOR FILING APPEALS SPECIFIED AS PER CBDT 3. NONE APPEARED ON BEHALF OF THE RESPONDENT ASSESSEE. 4. THE CONTENTS OF THE MISC. APPLICATION FILED BY THE REVENUE ARE AS UNDER: MAY IT PLEASE YOUR HONOUR. 1. THE HON'BLE INCOME TAX APPELLATE TRIBUNAL, MUMBAI 'D' BENCH WAS PLEASED TO PASS AN ORDER IN THE ABOVE MENTIONED CASE ON 20.08.2019 IN ITA NO. 97/MUM/2019 FOR A.Y. 2010 11. THE APPEAL WAS FILED BY THE DEPARTMENT. 2. THE MAIN GROUNDS OF APPEAL RAISED BY THE REVENUE WAS AGAINST THE DECISION OF THE LD CIT(A) OF DEL ETING THE ADDITION MADE BY THE AO OF RS 62,97,499/ - ON ACCOUNT OF SUPPRESSION OF PROFIT BY WAY OF CLIENT CODE MODIFICATIONS BY THE BROKERS AND THE ADDITION FOR UNEXPLAINED EXPENDITURE OF RS. 1,88,925/ - . ISSUES RAISED IN THE MISCELLANEOUS APPLICATION UNDER SECTION 254(2) OF THE ACT THE APPLICANT SUBMITS THAT BY APPLYING THE CIRCULAR DATED 08.08.20 19 READ WITH CIRCULAR DATED 11.07.2018 (SUPRA), THE HON'BLE ITAT HAS DISMISSED THE APPEAL OF THE REVENUE AS WITHDRAWN / NOT PRESSED. BRIEF FACTS OF THE ASSESSEE : THE ASSESSEE FILED ITS RETURN OF INCOME ON 15.10.2010 DECLARING TOTAL INCOME OF RS.97,14,936/ - . INFORMATION RECEIVED FROM I&CI THAT THE ASSESSEE HAS INDULGED IN CLIENT CODE MODIFICATION AND SHOWN FICTITIOUS LOSSES, THE AO AFTER VERIFICATION OF THE CLAIM DURING SCRUTINY PROCEEDINGS, DISALLOWED THE FICTITIOUS LOSS OF RS. 62,97,499/ - CLAIMED BY ASSESSEE AND ALSO ADDED THE COMMISSION/ BROKERAGE ON THESE ENTRIES AMOUNTING TO RS.1,88,925/ - AS UNEXPLAINED EXPENDITURE. THE ASSESSMENT WAS COMPLETED U/S. 143(3) ON 11.03.2013, ASSESSING TOTAL INCOME AT ` 1,03,81,342. AGGRIEVED BY THE ABOVE ORDER ASSESSEE FILED AN APPEAL TO CIT(A). 3 TULSI MARKETING PVT. LTD. THE LD. CIT(A) DELETED THE ADDITION MADE. AGAINST THIS ORDER OF LD. CIT(A) AN APPEAL WAS FILED BY THE REVENUE BEING APPEAL NO.ITA NO.97/MUM./2019 FOR A.Y. 2010 11. THE HON'BLE ITAT VIDE ORDER NO ITA NO. 97/MUM/2019 DATED 20.08.2019 HAS HELD THAT THE CBDT, VIDE CIRCULAR NO. 17/2019 DATED 8 TH AUGUST, 2019. HAS AMENDED PARA 3 OF CIRCULAR NO. 3/2018 DATED 11.07.2018 MODIFYING THE MONETA RY LIMITS FOR FILING OF APPEALS BY THE DEPARTMENT BY THE TRIBUNAL. THE TAX EFFECT IN DISPUTE IN THE CAPTIONED APPEAL IS STATED TO BE BELOW THE ENHANCED MONETARY LIMT OF RS. 50 LAKHS SPECIFIED IN THE CBDT CIRCULAR DATED 08.08.2019 (SUPRA) READ WITH CIRCULAR 11,07,2018(SUPRA). THE HON'BLE ITAT WITHOUT GOING IN TO THE MERITS OF THE CASE, HAS HELD THAT THIS APPEAL IS DEEMED TO BE WITHDRAWN/NOT PRESSED AS IT'S FILING IS NOT IN CONSONANCE WITH THE CBDT CIRCULAR DATED 08,08.2019(SUPRA) READ WITH CIRCULAR 1 1.07.2018(SUPRA). FURTHER, IT ALSO RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF DCIT & OTRS. VS. MSEB HOLDING COMPANY LTD. (SLP(CIVIL) NO. 26373/2019 DATED 16.08.2019) HAS TAKEN COGNIZANCE OF THE ENHANCED LIMIT WHILE DISMISSING THE SLP ARISING FROM THE JUDGMENT PASSED BY THE HON'BLE BOMBAY HIGH COURT IN WP NO. 3642/2018 DATED 25.01.2019. BY APPLYING THE CIRCULAR DTD. 08.08.2 0 19 READ WITH CIRCULAR DATED 1 1.07,2018 (SUPRA), THE CAPTIONED APPEAL OF THE REVENUE IS DISMISSED AS WITHDRAWN /NOT PRESSED. IN THIS REGARD IT IS SUBMITTED THAT THE ADDITION IN THIS CASE IS BASED ON THE INFORMATION RECEIVED FROM O/O DIT (INTELL, CR INV ) MUMBAI THROUGH 0/0 PR. CIT - 4 THAT FICTITIOUS PROFITS AND LOSSES WERE CREATED BY SOME BROKERS BY MISUSING THE CL IENT CODE MODIFICATION FACILITY IN F & 0 SEGMENT ON NSE DURING MARCH 2010. THE INFORMATION IN THE CASE OF THE ASSESSEE TO HAVE RECEIVED PROFIT/LOSS CREATED BY CLIENT CODE MODIFICATION IS AS UNDER: BROKER NAME LOSS BECAUSE OF CLIENT CODE MODIFICATION F&O SEGMENT TULSI MARKETING PVT. LTD. ` 62,97,499 HENCE AS THE CASE IS COVERED BY THE EXCEPTIONS LAID DOWN BY CIRCULAR NO. 23 OF 2019 WHERE 'ORGANIZED TAX EVASION SCAM' IS NOTICED, SUCH CASES ARE TO BE DISPUTED BEFORE HIGHER APPELLATE AUTHORITIES. THEREFORE CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE HON'BLE TRIBUNAL IS REQUESTED TO KINDLY RECALL AND RE - INSTATE THE APPEAL FILED BY THE REVENUE FOR ADJUDICATION ON MERITS. 4 TULSI MARKETING PVT. LTD. 5. CONSIDERED THE SUBMISSIONS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE INFORMATION RECEIVED BY THE ASSESSING OFFICER FROM THE O/O THE DIT (INTELL. CR INV.), MUMBAI, THROUGH O/O THE PCIT 4, IS THE INTERNAL SOURCE OF THE DEPARTMENT, BUT AS PER THE EXCEPTION MEN TIONED IN CIRCULAR NO.17 OF 2019, DATED 8 TH AUGUST 2 0 1 9 , THE ABOVE SOURCE OF INFORMATION BY WAY OF INTERNAL SOURCE OF THE DEPARTMENT DO NOT FALL UNDER THE SCOPE OF THE CIRCULAR BEARING NUMBER CITED SUPRA. CONSEQUENTLY, IN THIS VIEW OF THE MATTER, WE DEEM IT FIT AND APPROPRIATE TO DISMISS THE APPLICATION FILED BY THE REVENUE AS SUCH. 6. IN THE RESULT, MISC. APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.07.2021 SD/ - MAHAVIR SINGH VICE PRESIDENT SD/ - S. RIFAUR RAHMAN ACCOUNTANT MEMBER MUMBAI, DATED: 30.07.2021 COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, MUMBAI CITY CONCERNED; (5) THE DR, ITAT, MUMBAI; (6) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ASSISTANT REGISTRAR ITAT, MUMBAI 5 TULSI MARKETING PVT. LTD. DATE INITIAL 1. DRAFT DICTATED ON 26 . 07 .20 21 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 26 .0 7 .2021 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 30 .0 7 .2021 SR.PS 6. DATE OF PRONOUNCEMENT 30 .0 7 .2021 SR.PS 7. FILE SENT TO THE BENCH CLERK 30 .0 7 .2021 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER