B.K. TEX CORPORATION, MUMBAI v. ITO (CEN) THANE, MUMBAI

ITA 371/MUM/2011 | 2005-2006
Pronouncement Date: 29-07-2011 | Result: Allowed

Appeal Details

RSA Number 37119914 RSA 2011
Assessee PAN AAHFB7570R
Bench Mumbai
Appeal Number ITA 371/MUM/2011
Duration Of Justice 6 month(s) 15 day(s)
Appellant B.K. TEX CORPORATION, MUMBAI
Respondent ITO (CEN) THANE, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-07-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 29-07-2011
Assessment Year 2005-2006
Appeal Filed On 13-01-2011
Judgment Text
ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 1 OF 10 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH MUMBAI [CORAM: PRAMOD KUMAR AM AND ASHA VIJAYARAGHAVAN JM] ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005-06 B K TEX CORPORATION ...APPELLANT 10/ A-1 PLOT NO. 501 GOPAL NAGAR KALYAN NAGAR BHIWANDI [PAN : AAHFB7570R] VS. INCOME TAX OFFICER (CENTRAL WARD) THANE RESPON DENT APPEARANCES: A K GHOSH FOR THE APPELLANT USHA S NAIR FOR THE RESPONDENT DATE OF HEARING : 01 JUNE 2011 DATE OF PRONOUNCEMENT : 29 JULY 2011 O R D E R PER PRAMOD KUMAR: 1. THESE TWO APPEALS CALL INTO QUESTION CORRECTNESS TWO SEPARATE ORDERS OF THE CIT(A) BOTH DATED 29 TH SEPTEMBER 2010 IN THE MATTER OF ASSESSMENTS UNDER SECTION 143(3) R.W.S. 153 A OF THE INCOME TAX ACT FOR THE ASSESSMENT YEARS 2004-05 AND 2005-06. AS THESE APPEALS ARE FIL ED BY THE SAME ASSESSEE ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 2 OF 10 INVOLVE SOME COMMON ISSUES AND WERE HEARD TOGETHER WE ARE DISPOSING OF THE SAME BY WAY OF THIS CONSOLIDATED ORDER FOR BOTH THE ASSESSMENT YEARS. 2. IN THE ASSESSMENT YEAR 2004-05 THE ONLY GRIEVAN CE RAISED BY THE ASSESSEE IS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ENTIRE ADDIT ION OF RS 30 82 893 MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF ALLEGED INFLATED LABOUR CHARGES WITHOUT APPRECIATI NG THE FACT THAT THE APPELLANT HAS PAID CONSOLIDATED CHARGES TO THE CONTRACTORS TOWARDS GODOWN CHARGES INWARD TRANSPORT OCTROI W ARPINS SIZING BEAM SETTER DROPIN CHARGES WEAVING JOBBER CLIPP ING FOLDERS OUTWARD TRANSPORT ELECTRICITY MILL STORES SPARES LUBRICANT AND HAMAL CHARGES WHICH ARE CLAIMED UNDER THE HEAD LA BOUR CHARGES. 3. IN THE ASSESSMENT YEAR 2005-06 ALSO THE ASSESSE E HAS RAISED A MATERIALLY IDENTICAL GROUND (I.E GROUND NO. 1) WHI CH WE MUST TAKE UP TOGETHER WITH THE ABOVE GROUND OF APPEAL FOR THE AS SESSMENT YEAR 2004-05 AND WHICH IS AS FOLLOWS: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LEARNED CIT(A) ERRED IN CONFIRMING THE ENTIRE ADDIT ION OF RS 20 57 946 MADE BY THE LEARNED ASSESSING OFFICER IN RESPECT OF ALLEGED INFLATED LABOUR CHARGES WITHOUT APPRECIATI NG THE FACT THAT THE APPELLANT HAS PAID CONSOLIDATED CHARGES TO THE CONTRACTORS TOWARDS GODOWN CHARGES INWARD TRANSPORT OCTROI W ARPINS SIZING BEAM SETTER DROPIN CHARGES WEAVING JOBBER CLIPP ING FOLDERS OUTWARD TRANSPORT ELECTRICITY MILL STORES SPARES LUBRICANT AND HAMAL CHARGES WHICH ARE CLAIMED UNDER THE HEAD LA BOUR CHARGES. ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 3 OF 10 4. THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND TRADING OF CLOTHES AN D YARN. A SEARCH AND SEIZURE OPERATION UNDER SECTION 132 WAS CARRIED OUT ON THE OFFICE AND RESIDENTIAL PREMISES OF THE ASSESSEE. DURING THE CO URSE OF THIS SEARCH OPERATION CERTAIN INCRIMINATING DOCUMENTS WERE FOU ND AND STATEMENTS WERE ALSO RECORDED. WHEN SEARCH WAS CONDUCTED AT THE RE SIDENCE OF KANTILAL K GADA AT 10/A 501/502 GOPAL NAGAR BHIWANDI CHEQUE BOOK S PAY IN SLIPS AND BOOKS OF ACCOUNTS HELD BY VARIOUS PERSONS HAVE BEEN FOUND AND SEIZED. WHEN KALPESH GADA WAS CONFRONTED WITH THIS SEIZURE HE S TATED THAT THESE ARE THE ACCOUNTS OF THE SO CALLED JOB WORKERS OPERATED BY US FOR THE PURPOSE OF INFLATING THE EXPENSES. THESE ACCOUNTS USED FOR SIPHONING OFF THE AMOUNTS AS WAGES WERE MAINTAINED IN BRANCHES OF ABHUDAYA C OOPERATIVE BANK LIMITED AND SYNDICATE BANK. KALPESH GADA FURTHER AD MITTED THAT THOUGH HE IS SHOWING INCOME FROM LABOUR WORK RECEIVED FROM APPU TEXTILE MILLS ADMITTEDLY A GROUP FAMILY CONCERN THE ACTUAL WORK IS DONE BY THE SAID FIRM ITSELF AND THE PAYMENTS ARE SHOW TO HAVE BEEN MADE TO HIM ONLY TO INFLATE THE EXPENSES. IT WAS ALSO ACCEPTED THAT SIMILAR EXERCI SE WAS ALSO CONDUCTED BY OTHER GROUP CONCERNS AND THAT NO JOB WORK IS OUTSO URCED BY ANY OF THE MANUFACTURING CONCERNS AND THAT THE GREY CLOTH SHO WN TO HAVE BEEN MANUFACTURED THROUGH OUTSOURCING IS ACTUALLY MADE W ITH THE HELP OF THE INFRASTRUCTURE OF THE CONCERN CLAIMED TO BE OUTSOUR CING THE WORK. THE STATEMENTS OF SOME PERSONS WHOSE BANK ACCOUNT CHEQ UE BOOKS ETC WERE SO FOUND WERE ALSO RECORDED AND THEY CONFIRMED THAT T HEY ARE SALARIED EMPLOYEES OF THE GROUP CONCERNS AND THAT THEY DONOT GET ANYTHING OTHER THAN THEIR REGULAR SALARIES THAT THEIR PAN CARDS INCOM E TAX RETURNS AND ALL SUCH DOCUMENTS ARE ONLY WITH THE EMPLOYER THAT ALL THE TRANSACTIONS IN THESE ACCOUNTS ARE BEING DONE BY THE EMPLOYER THAT THEY HAVE ONLY SIGNED BLANK CHEQUES AND DOCUMENTS AND THAT THEY ARE NOT EVEN A WARE OF ALL THESE ACTIVITIES. IN RESPONSE TO THE QUESTION AS TO ON W HAT BASIS THE KARIGARS ARE PAID IT WAS STATED BY KALPESH GADA THAT THE KARIG ARS ARE PAID ON PER METER BASIS AND THAT AVERAGE RATE PAID IS RS 1.25 PER METER. ON THESE FACTS AND ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 4 OF 10 HAVING NOTED THAT THE ASSESSEE HAS MADE HUGE PAYMEN TS FOR LAABOUR CHARGES THE ASSESSING OFFICER CONCLUDED THAT WHILE ACTUAL P AYMENT TO KARIGARS IS ONLY RS 1.50 TO RS 2.00 PER METER AT THE MOST THE ASSES SEE HAS CLAIMED LABOUR CHARGES @ RS 6.50 PER METER IN THE NAME OF FAMILY M EMBERS AND THE EMPLOYEES. WHEN ASSESSEE WAS CONFRONTED WITH THIS AND THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO W HY LABOUR CHARGES SHOULD NOT BE DISALLOWED IT WAS SUBMITTED BY THE ASSESSEE THAT SHRI KALPESH GADA HAS ADMITTED INFLATION IN JOB WORK UNKNOWINGLY AS HE COULD NOT UNDERSTAND THE QUESTION AND THAT IN THE SAME MATTER BHAGWAN JI K GADA WHO IS THE MAIN CONDUCTOR AND ORGANIZER OF THE ENTIRE BUSINESS AND THE FAMILY HAS STRONGLY REJECTED THE QUESTION OF INFLATION OF LABO UR CHARGES. IT WAS ALSO SUBMITTED THAT OUT OF 18 LABOUR CONTRACTORS ONLY 2-3 PERSONS HAVE STATED ADVERSELY AND SURVEY TEAM HAS HELD THIS POINT STRON GLY. IT WAS ALSO SUBMITTED THAT ENTIRE EXPENSES CANNOT BE DISALLOWED. REASONA BLE DIFFERENCE WE HAVE DECLARED. AMOUNT OF RS 50 50 000 IS SUBSTANTIAL TO MATCH THE REAL COST OF PRODUCTION. IT WAS FURTHER SUBMITTED THAT THE RATE AT WHICH CONTRACTORS ARE ACTUALLY PAID IS RS 4 AND RS 4.50 IN THE YEARS 2004 -05 TO 2006-07 AND NOT RS 6 AS OBSERVED BY THE ASSESSING OFFICER AND IN CON SIDERATION OF PAYMENT SO MADE THE CONTRACTORS HAVE RENDERED PROPER AND SINC ERE SERVICES. THE ASSESSING OFFICER REJECTED THESE SUBMISSIONS NOTED THAT AS EVIDENT FROM THE MATERIAL FOUND DURING SEARCH PROCEEDINGS THE ASSES SEE WAS ENGAGED IN SYSTEMATIC AND LARGE SCALE INFLATION OF EXPENSES T HAT THE NET PROFIT DISCLOSED BY THE ASSESSEE IN ALL THESE YEARS IN EXCEPTIONALLY LOW BETWEEN 0.5% TO 2% AND THAT THE ASSESSEE HAS NOT PRODUCED ANY STOCK RE GISTER FOR VERIFICATION. THE ASSESSING OFFICER ADOPTED THE LABOUR CHARGES AL LOWABLE AT RS 1.50 PER METER AS ADMITTED BY THE ASSESSEE IN THE STATEMENT PROVIDED FOR A FURTHER RS 1.50 PER METER FOR OTHER INCIDENTAL EXPENSES SUCH A S TRANSPORT POWER AND ALL RELATED EXPENSES COMPUTED THE PRODUCTION QUANTITIE S ON THE BASIS OF THE TAX AUDIT REPORT FIGURES IN THE ABSENCE OF THE STOCK RE CORDS AND COMPUTED THE ALLOWABLE LABOUR CHARGES BY MULTIPLYING THE PRODUCT ION QUANTITY IN METERS WITH RS 3 PER METER. THE BALANCE CLAIM WAS DISALLO WED. AS AGAINST A CLAIM OF ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 5 OF 10 RS 1 29 40 629 ON ACCOUNT OF LABOUR CHARGES IN THE ASSESSMENT YEAR 2004-05 AN AMOUNT OF RS 30 82 893 WAS DISALLOWED. SIMILARLY OUT OF RS 67 33 740 CLAIMED AS HAVING BEEN SPENT ON LABOUR CHARGES IN T HE ASSESSMENT YEAR 2005- 06 AN AMOUNT OF RS 20 57 946 WAS DISALLOWED. AGGR IEVED ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) BUT WITHOUT ANY SUCCESS. THE CIT(A) AFFIRMED THE ACTION OF THE ASSESSING OFFICER BY OBS ERVING AS FOLLOWS: THE ARGUMENT OF THE AR IS HEARD AND THE CONTENTS OF THE ASSESSMENT ORDER IS PERUSED. FINDING OF BANK PASS BOOK AND SIG NED BLANK CHEQUES IN RESPECT OF THE LABOURERS AT THE RESIDENC E OF KANTILAL KHETSI GADA GOES TO SUPPORT THE VIEW THAT THE APPEL LANT HAS DELIBERATELY IN ORDER TO REDUCE THE TAX BURDEN RE SORTED TO INFLATION OF EXPENSES. THIS FACT HAS BEEN CLEARLY ADMITTED BY SHRI KALPESH GADA ONE OF THE MAIN PERSONS IN THE GROUP. MOREOVE R THE SO CALLED CONTRACTORS NAMELY JETHALAL PRAJAPTI BHAVESH PRAJ APATI JAISIGH KHILARI SHIVAJI SHINDE SIKANDAR A HATAR VINDO SH AGATIA DILIP PRAJAPATI RAJU G CHILVERI AND JAGMOHAN MAYRNA HAV E ALL STATED TO BE EMPLOYED ON SALARY BASIS AND BANK ACCOUNTS IN T HEIR NAMES ARE MAINTAINED BY THE EMPLOYER. THEY HAVE FURTHER STATE D THAT THEY SIGN ON BLANK CHEQUES AND HAND OVER THE SAME TO THE EMPL OYER. IT IS ALSO ESTABLISHED THAT CHEQUES ARE DEPOSITED INTO BANK AC COUNTS OF THE ABOVE MENTIONED LABOURERS AND CASH IS WITHDRAWN BY THE EMPLOYER. THE AO HAS ALSO FOUND THAT THE ASSESSEE HAS CLAIMED THE LABOUR CHARGES @ RS 6 PER METER WHEREAS THE ACTUAL PAYMEN T HAS RANGED FROM RS 1.5 TO RS 2 PER METER. KEEPING IN MIND THE OTHER EXPENSES THE AO HAS ALLOWED LABOUR CHARGES @ RS 3 PER METER. THIS ACCORDING TO ME IS FAIR ENOUGH AND I THEREFORE H OLD THAT THE ORDER OF THE ASSESSING OFFICER DOES NOT SUFFER FROM ANY I NFIRMITY. ACCORDINGLY I UPHOLD THE ACTION OF THE AO AND DISM ISS THIS GROUND. 5. THE ASSESSEE IS NOT SATISFIED BY THE STAND SO TA KEN BY THE CIT(A) AND IS ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 6 OF 10 IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATRIX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 7. WE HAVE NOTED THAT EVEN THOUGH THE CIT(A) HAS CA TEGORICALLY HELD THAT THE ASSESSEES CLAIM FOR LABOUR CHARGES PAYMENT IS BOGUS INASMUCH AS THE ASSESSEE WAS INVOLVED IN A SYSTEMATIC INFLATION OF EXPENSES BY USING BOGUS BANK ACCOUNTS IN THE NAME OF CERTAIN PERSONS EVEN A S THESE ACCOUNTS WERE ACTUALLY USED AND OPERATED BY THE ASSESSEE HIMSELF THE ASSESSEES LIMITED GRIEVANCE BEFORE US IS ON THE QUANTUM OF DISALLOWAN CE AND THE QUANTITIES OF PRODUCTION AS ALSO RATE AT WHICH INFLATION OF EXPE NSE IS ESTIMATED TO HAVE BEEN DONE ADOPTED FOR THE COMPUTATION OF DISALLOWA NCE. LEARNED COUNSEL HAS SIGHTED COPIES OF STOCK REGISTERS WHICH IF ADOPTED FOR BASIS OF COMPUTATION LEAD TO DIFFERENT PRODUCTION FIGURES THAN THE PRODU CTION FIGURES ADOPTED IN THE TAX AUDIT REPORT. LEARNED COUNSEL HAS ALSO SUBM ITTED THAT THE ACTUAL RATE OF PAYMENT OF LABOUR CHARGES IS NOT RS 6.50 PER MET ER AS ADOPTED BY THE ASSESSING OFFICER BUT MUCH LESS THAN THAT. WHEN HO WEVER WE ASKED HIM TO IDENTIFY THE BILLS OR EVIDENCES WHICH SUBSTANTIATE THE FACTUAL CONTENTIONS EMBEDDED IN HIS ARGUMENTS TO THIS EFFECT LEARNED C OUNSEL COULD NOT DO THE SAME. IT WAS ALSO POINTED OUT TO THE LEARNED COUN SEL THAT AS NOTED BY THE ASSESSING OFFICER STOCK RECORDS WERE NOT PRODUCED BEFORE HIM AND THIS FACTUAL OBSERVATION OF THE ASSESSING OFFICER HAS NE ITHER BEEN CHALLENGED IN APPEAL BEFORE THE CIT(A) NOR CONTROVERTED EVEN IN T HE STATEMENT OF FACTS ON RECORD. THE STATEMENT OF THE LEARNED COUNSEL REGAR DING AVAILABILITY OF STOCK RECORDS BEFORE THE ASSESSING OFFICER IS THUS NOT BO RNE OUT OF THE MATERIAL ON RECORD AND THEREFORE WE CANNOT PROCEED ON THE BA SIS THAT THE STOCK STATEMENTS WERE INDEED PRODUCED BEFORE THE ASSESSIN G OFFICER. AS THERE WAS NO CONTEMPORANEOUS RECORD OF QUANTITIES WE NEED NO T BE GUIDED BY THE STOCK REGISTERS WHICH WERE NOT AVAILABLE AT THAT POINT OF TIME. WE MUST THEREFORE UPHOLD THE ACTION OF THE AUTHORITIES IN PRINCIPLE. HAVING SAID THAT WE MUST ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 7 OF 10 HOWEVER POINT OUT THAT WHAT IS TO BE DISALLOWED IS THE LABOUR CHARGES PAID IN EXCESS OF RS 3 PER METER AS IS THE STAND TAKEN BY THE ASSESSING OFFICER HIMSELF AND THEREFORE THE RIGHT COMPUTATION OF DI SALLOWANCE WILL BE BY ADOPTING THE SAID FIGURE OF LABOUR CHARGES RATE IN THE ACTUAL BILL OF LABOUR CHARGES RECEIVED BY THE ASSESSEE. TO THAT EXTENT T HE ORDER OF THE CIT(A) REQUIRES TO BE MODIFIED. TO ENABLE THIS COMPUTATION THE ASSESSEE HAS TO FURNISH DETAILS OF ALL THE LABOUR BILLS ACCOUNTED F OR IN A PARTICULAR YEAR AND PRODUCE THE SAME FOR VERIFICATION AND THE LABOUR C HARGES ALLOWABLE WILL HAVE TO BE COMPUTED BY ADOPTING RS 3 PER METER IN RESPEC T OF THE QUANTITIES FOR WHICH THE BILLS ARE RAISED. IN CASE THE ASSESSEE I S UNABLE TO DO SO OR TO PRODUCE ANY OTHER SOUND BASIS ON WHICH COMPUTATIONS OF PRODUCTION QUANTITIES CAN BE DONE THE CIT(A) WILL BE AT LIBE RTY TO ADOPT THE PRODUCTION FIGURES ON THE BASIS OF TAX AUDIT REPORT SUBJECT TO CORRECTION OF MISTAKES AS POINTED OUT BY THE ASSESSEE AND COMPUTE THE ADMISS IBLE LABOUR CHARGES AT RS 3 PER METER MULTIPLIED TO THE QUANTITIES SO WORKED OUT. WE MAY ALSO MENTION THAT LEARNED COUNSEL FOR THE ASSESSEE URGED US TO M AKE ADJUSTMENT FOR INFLATION IN THE SUBSEQUENT YEARS BUT WE ARE NOT F AVOURABLY INCLINED TO THIS PRAYER BECAUSE THE STATEMENT ABOUT LABOUR CHARGES R ATES WAS MADE BY THE ASSESSEE WAS IN 2007 WHICH MUST BE REFERRING TO TH E LABOUR CHARGES RATES PAYABLE AT THAT POINT OF TIME WHEREAS THE YEARS BE FORE US PERTAIN TO EARLIER PERIOD. TO SUM UP WHILE WE CONFIRM THE ACTION OF T HE AUTHORITIES BELOW IN PRINCIPLE WE REMIT THE MATTER TO THE FILE OF THE C IT(A) FOR THE LIMITED PURPOSES OF MAKING CORRECTIONS OF QUANTITIES AND RA TE DIFFERENCE IF FOUND ADMISSIBLE IN THE LIGHT OF OBSERVATIONS MADE HEREI NABOVE. WE DIRECT THE ASSESSEE TO FULLY COOPERATE IN EXPEDITIOUS DISPOSAL OF THE REMANDED PROCEEDINGS AND MAKE IT CLEAR THAT IN THE ABSENCE O F ASSESSEES FURNISHING THE REQUIRED DETAILS AND POINTING OUT SPECIFIC MISTAKES IF ANY IN THE COMPUTATIONS IN TAX AUDIT REPORT QUANTITATIVE DETAILS AND COMPUT ATIONS IN THE ASSESSMENT ORDER NO RELIEF WILL BE ADMISSIBLE. WE ALSO DIRECT THE CIT(A) TO GIVE A DUE AND REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE A ND TO DEAL WITH ALL HIS CONTENTIONS BY WAY OF A SPEAKING ORDER AND IN ACCOR DANCE WITH THE LAW. THE ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 8 OF 10 MATTER STANDS RESTORED TO THE FILE OF THE CIT(A) WI TH THE DIRECTIONS AS ABOVE. 8. GROUND NO. 1 IN THE BOTH THE APPEALS IS THUS ALL OWED FOR STATISTICAL PURPOSES IN THE TERMS INDICATED ABOVE. 9. IN GROUND NO. 2 IN THE ASSESSMENT YEAR 2005-06 THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN CONFIRMING THE AOS ACTION IN DISA LLOWING THE EXPENSES AMOUNTING TO RS 37 33 740 BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT 1961. 10. LEARNED COUNSEL SUBMITS THAT THE CERTIFICATES U NDER SECTION 197(1) WERE MADE IN RESPECT OF THE ABOVE PAYMENTS BUT THESE CE RTIFICATES ARE MISPLACED AND HE CANNOT THEREFORE PRODUCE THE CERTIFICATES BEFORE US. HE HOWEVER SUBMITS THAT IN THE EVENT OF THE MATTER BEING RESTO RED TO THE FILE OF THE ASSESSING OFFICER HE WILL FURNISH COPIES OF THE CE RTIFICATES. WE ARE UNABLE TO SEE ANY MERITS IN THIS SUBMISSION. IN THE FIRST PLA CE THE DISALLOWANCE HAS BEEN MADE ONLY TO THE EXTENT OF RS 37 33 740 SINCE THE CERTIFICATES UNDER SECTION 197(1) ON FROM 15 AA AS PRODUCED BY THE AS SESSEE COVERED PAYMENTS UPTO RS 30 00 000 AND THE TOTAL PAYMENTS A GGREGATED TO RS 67 33 740. THEREFORE IT IS NOT THE COMPLETE ABSENC E OF CERTIFICATES UNDER SECTION 197(1) BUT MONETARY LIMITATION ON THE QUANT UM OF PAYMENTS ON THESE CERTIFICATES WHICH IS THE BASIS OF DISALLOWANCE. LEARNED COUNSEL IS NOT IN A POSITION TO CONTROVERT THE BASIS OF DISALLOWANCE. O NCE THE IMPUGNED DISALLOWANCE CANNOT BE DEMONSTRATED TO BE COVERED B Y THE CERTIFICATES UNDER SECTION 197(1) AND ONCE IT IS NOT IN DISPUTE AS IS THE POSITION IN THIS CASE THAT THE TAXES WERE REQUIRED TO BE DEDUCTED AT SOUR CE FROM THIS KIND OF PAYMENTS THE DISALLOWANCE CANNOT BE FAULTED. NO US EFUL PURPOSE WILL BE SERVED BY REMITTING THE MATTER TO THE FILE OF THE A O AS THE ASSESSEE ADMITTEDLY ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 9 OF 10 DOES NOT READILY HAVE THE CERTIFICATES. IN CASE HE CAN FIND THESE CERTIFICATES IN GOOD TIME IT WILL PERHAPS BE OPEN TO THE ASSESSEE TO APPROACH US BY WAY OF A RECTIFICATION PETITION. IN VIEW OF THESE DISCUSSION S AND BEARING IN MIND ENTIRETY OF THE CASE WE CONFIRM THE ACTION OF THE AUTHORITIES BELOW AND DECLINE TO INTERFERE IN THE MATTER. 11. GROUND NO. 2 IN THE ASSESSMENT YEAR 2005-06 IS SUBJECT TO THE ABOVE OBSERVATIONS DISMISSED. 12. IN GROUND NO. 3 IN APPEAL FOR THE ASSESSMENT YE AR 2006-07 THE ASSESSEE HAS RAISED THE FOLLOWING GRIEVANCE: ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW THE LEARNED CIT(A) ERRED IN CONFIRMING THE AOS ACTION IN DISA LLOWING THE EXPENSES AMOUNTING TO RS 1 18 980 BY INVOKING THE P ROVISIONS OF SECTION 40(A)(IA) OF THE INCOME TAX ACT 1961. 13. THE ABOVE GROUND OF APPEAL RELATES TO A BROKERA GE PAYMENT WHICH HAS BEEN DISALLOWED UNDER SECTION 40(A)(IA) AS TAX HAS NOT BEEN DEDUCTED AT SOURCE FROM THE SAME. NO SPECIFIC ARGUMENTS WERE AD VANCED IN SUPPORT OF THIS GRIEVANCE. IN ANY CASE HAVING PERUSED THE ORD ERS OF THE AUTHORITIES BELOW ON THE ISSUE AND IN THE ABSENCE OF ANYTHING T O DEMONSTRATE INFIRMITY IN THE STAND SO TAKEN WE ARE INCLINED TO CONFIRM THE ACTION OF THE CIT(A) ON MERITS AS WELL. NO INTERFERENCE IS CALLED FOR. 14. GROUND OF APPEAL NO. 3 FOR THE ASSESSMENT YEAR 2005-06 IS THUS DISMISSED. 15. IN THE RESULT WHILE APPEAL FOR THE ASSESSMENT YEAR 2004-05 IS ALLOWED FOR STATISTICAL PURPOSES APPEAL FOR THE ASSESSMENT YEAR 2005-06 IS PARTLY ITA NO. 371 AND 370/MUM/2011 ASSESSMENT YEARS: 2004-05 AND 2005- 06 PAGE 10 OF 10 ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT TODAY ON 29 TH DAY OF JULY 2011. SD/- SD/- (ASHA VIJAYARAGHAVAN ) (PRAMOD KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI; 29 TH DAY OF JULY 2011 . COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER MUMBAI 4. DEPARTMENTAL REPRESENTATIVE BENCH MUMBAI 5. GUARD FILE TRUE COPY BY ORDER ETC. ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES MUMBAI