S.K. SECURITIES & INVESTMENTS, MUMBAI v. ASST CIT 4(2), MUMBAI

ITA 2612/MUM/2011 | 2007-2008
Pronouncement Date: 22-07-2011 | Result: Partly Allowed

Appeal Details

RSA Number 261219914 RSA 2011
Assessee PAN AAMFS1741E
Bench Mumbai
Appeal Number ITA 2612/MUM/2011
Duration Of Justice 3 month(s) 17 day(s)
Appellant S.K. SECURITIES & INVESTMENTS, MUMBAI
Respondent ASST CIT 4(2), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 22-07-2011
Assessment Year 2007-2008
Appeal Filed On 05-04-2011
Judgment Text
1 ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI PRAMOD KUMAR AM & SHRI VIJAY PAL RA O JM ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) M/S S K SECURITIES & INVESTMENTS SHOP NO.1 SARSWATI SADAN 113/115 KSHAVJI NAIK ROAD CHINCH BUNDER\MUMBAI 400 009 VS THE ASST COMMR OF INCOME TAX 4(2) MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAMFS1741E ASSESSEE BY SHRI PRADEP N KAPSAI REVENUE BY SHRI G P TRIVDI PER VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 9.3.2011 OF THE CIT(A) FOR THE AY 2007-08. 2 THE FOLLOWING EFFECTIVE GROUND HAS BEEN TAKEN BY THE ASSESSEE: 1. THE LD CIT(A) ERRED IN LAW AND ON FACTS IN REJECTI NG THE APPLICATION FOR ADDITIONAL EVIDENCE SUBMITTED TO THE LD CIT(A) U/R 4 6A IGNORING THE FACT THAT YOUR APPELLANTS WERE PREVENTED FROM BY D ASSESSING OFF ICER IN BRINGING ON RECORD THE EVIDENCES ARE THE CASE OF THE APPELLANTS WA S COVERED BY THE PROVISIONS OF RULE 46A AND FURTHER EARED IN LAW IN N OT ADMITTING AND EXAMINING THE EVIDENCE UNDER HIS INHERENT POWERS. 2 THE LD CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING SUB BROKERAGE OF RS . 73 64 427 BEING SUB BROKERAGE PAID TO M/ ER V ENTERPRISES (PROP. RATILAL V SHAH) OF RS. 54 61 89 AND M/S KISHORE SHAH & CO (PROF KISHORE L SHAH) OF R S. 19 02 618 ON THE GROUND THAT GENUINENESS OF THE PARTIES AND THE NATU RE OF SERVICES RENDERED BY THE SUB BROKERS WAS NOT ESTABLISHED AND PASSED W ITHOUT PROVIDING ANY OPPORTUNITY OF CROSS EXAMINING THE SUCH BROKER EXAMINE D BY HIM AND FURTHER 2 ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) EARED IN LAW IN UPHOLDING THE ACTION OF THE LD AIO BY TOTALLY DISREGARDING AND IGNORING THE OVERWHELMING EVIDENCE FURNISHED B BEFORE HIM 3 THE LD CIT(A)ERRED IN LAW AND ON FACTS IN CONFIRM ING THE ACTION OF THE ASSESSING OFFICER IN ASSESSING THE TOTAL INCOME OF R S. 1 66 66 324/ AGAINST THE RETURNED INCOME OF RS. 93 01 897/- AND IN PROCESS MAKI NG AN ADDITION OF RS. 73 64 427/- TO THE RETURNED INCOME. 4 THE LD CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMI NG THE ACTION OF THE ASSESSING OFFICER IN ISSUING A NOTICE U/ 156 AND NOT ICE U/S 274 R.W.S 271 N THE NAME OF M/S S K SECURITIES P LTD INSTEAD OF M/S K SECURITIES AND INVESTMENTS : 5 .THE LD CIT(A) ERRED IN LAW AND ON FACTS IN CONFIR MING THE ACTION OF THE ASSESSING OFFICER IN LEVYING INTEREST U/S 234B AND 234C OF RS. 18 51 262 AND RS. 1 15 847 RESPECTIVELY WITHOUT GIVING ANY OPPORTUNI TY OF HEARING AND IN NOT PASSING ANY SPEAKING ORDER FOR THE LEVY OF INTEREST. 3 THE ASSESSEE IS A PARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF SUB-BROKER OF TH BOMBAY STOCK EXCHANGE( BSE) AND NATIONAL STOCK EXC HANGE (NSE) AND THE MAIN BROKER OF MUTUAL FUNDS. DURING THE YEAR RELEVANT T O THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE CARRIED OUT THE TRANSAC TIONS IN CASH SEGMENT OF BSE AND CASH AND DERIVATIVES SEGMENT OF NSE ON BEHALF OF VA RIOUS CLIENTS. THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 95 2 9.102/- ON 29.10.2007. SUBSEQUENTLY ON 2.11.2007 THE ASSESSEE FILED REVIS ED RETURN DECLARING THE TOTAL INCOME AT RS. 93 01 897/- ALONG WITH TAX AUDIT REPO RT U/S 44AB OF THE I T ACT. THE ASSESSMENT WAS FRAMED U/S 143(3) VIDE ORDER DATED 1 2.12.2009 WHEREBY THE ASSESSING OFFICER ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS. 1 66 66 320/ BY MAKING CERTAIN DISALLOWANCES/ADDITIONS. 4 GROUND NO.1 REGARDING REJCTION OF ADDITIONAL EVID ENCES BY THE CIT(A) U/S 46A. 4.1 DURING THE ASSESSMENT PROCEEDINGS THE ASSESSIN G OFFICER ASKED THE ASSESSEE TO PROVE THE IDENTITY GENUINENESS OF THE PARTIES A ND ESTABLISH THE SERVICES RENDERED BY THEM TO JUSTIFY THE DEDUCTION OF PAYMENT OF BROK ERAGE. THE ASSESSING OFFICER REJECTED THE CLAIM IN RESPECT OF RV ENTERPRISES AND KISHROE HAH &CO TO WHOM THE 3 ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) ASSESSEE CLAIMED TO HAVE PAID THE BROKERAGE ON THE GROUND THAT THEY COULD NOT ESTABLISH THAT THE SERVICE HAS BEEN RENDERED TO THE ASSESSEE. 5 BEFORE THE CIT(A) THE ASSESSEE FILED AN APPLICAT ION FOR ADMITTING ADDITIONAL EVIDENCES WHICH WAS REJECTED BY THE CIT(A) VIDE THE IMPUGNED ORDER. 6 BEFORE US THE LD AR OF THE ASSESSEE HAS SUBMITTE D THAT THE ASSESSEE WAS NOT GIVEN SUFFICIENT OPPORTUNITY OF BEING HEARD BY THE ASSESSING OFFICER TO SATISFY THE REQUIREMENT AND THE COMPLIANCE AS ASKED BY THE ASSE SSING OFFICER. HE HAS POINTED OUT THAT THE ASSESSING OFFICER ISSUED SUMMONS ON 2 0.11.2009 IN RESPONSE TO THAT THE PARTIES DID NOT APPEAR BEFORE THE ASSESSING OFFICER . THEREAFTER THE ASSESSING OFFICER DID NOT GIVE SUFFICIENT OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE RELEVANT RECORDS OR PARTIES AND PASSED THE ASSESSMENT ORDER ON 12.12.20 09. THE ASSESSEE FILED AFFIDAVIT CONFIRMATION LETTER TAX DEDUCTION CERTIFICATE CON FIRMATION OF THE ACCOUNTS IN THE BOOKS OF ACCOUNT OF THE PARTIES AS AN ADDITIONAL EV IDENCE BEFORE THE CIT(A) ALONG WITH AN APPLICATION FOR ADMISSION OF ADDITIONAL EVI DENCES U/R 46A OF THE IT RULES. THE CIT(A) REJECTED THE APPLICATION OF THE ASSESSEE. TH US THE LD AR URGED AND PLEADED THAT THE PROPOSED ADDITIONAL EVIDENCE IS THE COMPLI ANCE OF THE REQUIREMENT OF THE ASSESSING OFFICER AND THE SAME GOES TO THE ROOT OF THE ISSUE ON MERITS. THE DENIAL OF THE ADMISSION OF THE ADDITIONAL EVIDENCE BY THE CIT (A) IS UNJUSTIFIED BECAUSE IT WAS REJECTED ON TECHNICAL GROUND. ON THE OTHER HAND THE LD DR RELIED UPON THE ORDER OF THE CIT(A). 7 WE HAVE CONSIDERED THE RIVAL CONTENTION AND PERUS ED THE RELEVANT MATERIAL ON RECORD. THE DISALLOWANCE WAS MADE BY THE ASSESSI NG OFFICER AS THE ASSESSEE FAILED TO ESTABLISH THE IDENTITY GENUINENESS OF TH E PARTIES AND THE PURPOSE FOR WHICH THE BROKERAGE WAS PAID. IT APPEARS THAT THE PARTIE S WERE SUMMONED BY THE 4 ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) ASSESSING OFFICER TOWARDS THE FAG END OF THE LIMITA TION PERIOD FOR PASSING THE ASSESSMENT ORDER. THE ASSESSEE FILED AN APPLICATION BEFORE THE CIT(A) ALONG WITH THE FOLLOWING DOCUMENTS FOR ADMISSION OF THE SAME AS A DDITIONAL EVIDENCE U/R 46A OF THE I T RULES: 1. AFFIDAVIT OF SUB BROKERAGE NAMELY SHRI RATILAL V SHAH PROP R V ENTERPRISE & KISHOR L SHAH PRO KISHOR SHAH & CO 2. CONFIRMATIONS BY SEVEN CLIENTS OF M/S S K SECURI TIES & INVESTMENTS CONFIRMING THE RELATIONSHIP WITH SUB BROKERS 3. ZERO TAX DEDUCTION CERTIFICATE U/S 197 OF KISHOR L SHAH PROP KISHOR SHAH &CO 4. CONFIRMATIONS OF ACCOUNTS IN TH BOOKS OF M/S S K SECURITIES & INVESTMENTS BY R V ENTERPRISE AND KISHORE SHAH & CO. 8 WHILE DECIDING THE APPLICATION THE CIT(A) HAS OB SERVED AS UNDER: AS REGARDS THE APPELLANTS CONTENTION THAT THE DOCU MENTS COULD NOT BE PRODUCED DUE TO INADEQUATE TIME GRANTED BY THE ASSE SSING OFFICER I FIND THAT IT IS NOT THE CASE OF THE APPELLANT THAT IT HA D SOUGHT FURTHER TIME FROM THE ASSESSING OFFICER. THE APPELLANT HAS NOT PRODUCED A NY DOCUMENTARY EVIDENCE WHICH COULD ESTABLISH THAT IT HAD REQUESTED THE ASSESSING OFFICER TO GRANT FURTHER TIME TO ENABLE IT TO PRODUCE EVIDENCE IN SUPPORT OF ITS CLAIM. ON THE CONTRARY I FIND THAT SHRI NIMISH L KENIA WHO APP EARED BEFORE THE ASSESSING OFFICER ON 25.11.2009 STATED THAT HE WAS N OT ABLE TO PRODUCE THE SUB BROKER M/S R V ENTERPRISE & M/S KISHOR SHAH & CO AS HAS BEEN STATED BY THE ASSESSING OFFICER IN HIS ORDER WHICH AHS REMAINED UN-DENIED BY THE APPELLANT. IT I NOT THE CASE OF THE APPELLANT THAT SHRI NIMISH KNIA THE PARTNER OF THE APPELLANT REQUIRED FURTHER TIME FROM THE ASSESS ING OFFICER TO PRODUCE DOCUMENTS/EVIDENCES IN SUPPORT OF ITS CLAIM. I THER EFORE FIND THAT THE APPELLANTS CLAIM THAT IT WAS PREVENTED BY SUFFICIE NT CAUSE FROM INTRODUCTION OF EVIDENCES IN SUPPORT OF ITS CLAIM IS NOT SUSTAI NABLE. THE APPELLANTS REQUEST FOR ALLOWING ADMISSION OF ADDITIONAL EVIDENCES UNDER RULE 46A THEREFORE CANNOT B ACCEPTED. 9 AS IT IS CLEAR FROM THE ORDER OF THE CIT(A) THE APPLICATION HAS BEEN REJECTED ON THE GROUND THAT IN THE OPINION OF THE CIT(A) TH E ASSESSEE COULD NOT ESTABLISH SUFFICIENT CAUSE WHICH HAS PREVENTED THE ASSESSEE FROM THE PRODCUTION OF THE 5 ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) EVIDENCES BEFORE THE ASSESSING OFFICER. THE CIT(A) HAS GIVEN A FINDING THAT THE PROPOSED ADDITIONAL EVIDENCE IS NOT RELEVANT IN SU PPORT OF THE CLAIM OF THE ASSESSEE. 9.1 HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE WE ARE OF THE CONSIDERED OPINION THAT T HE INTENDED ADDITIONAL EVIDENCES ARE REQUIRED TO BE VERIFIED AND EXAMINED FOR PROPER ADJUDICATION OF THE MATTER IN ISSUE. ACCORDINGLY WE SET ASIDE THE ISSUE TO THE R ECORD OF THE ASSESSING OFFICER FOR VERIFICATION AND EXAMINATION OF THE ADDITIONAL EVID ENCES INTENDED TO BE FILED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. 10 GROUND NOS. 2 & 3 ARE CONNECTED TO GROUND NO.1 W HEREAS GROUND NO. 4 & 5 ARE CONSEQUENTIAL IN NATURE; THEREFORE NO SPECIFIC ADJUDICATION IS REQUIRED IN VIEW OF THE GROUND NO 1 SET ASIDE TO THE RECORD OF THE ASSE SSING OFFICER. 10 IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON THE 22 ND DAY OF JULY 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:22 ND JULY 2011 RAJ* 6 ITA NO. 2612/MUM/2011 (ASST YEAR 2007-08) COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI