ITO 19(2)(1), MUMBAI v. EAST WEST CORPORATION, MUMBAI

ITA 5555/MUM/2009 | 1996-1997
Pronouncement Date: 24-07-2013 | Result: Dismissed

Appeal Details

RSA Number 555519914 RSA 2009
Assessee PAN AAAFD2233J
Bench Mumbai
Appeal Number ITA 5555/MUM/2009
Duration Of Justice 3 year(s) 9 month(s) 15 day(s)
Appellant ITO 19(2)(1), MUMBAI
Respondent EAST WEST CORPORATION, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 24-07-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 24-07-2013
Date Of Final Hearing 22-07-2013
Next Hearing Date 22-07-2013
Assessment Year 1996-1997
Appeal Filed On 09-10-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES D MUMBAI .. ! ' #. . $.. % & ' ' BEFORE SHRI R.S.SYAL AM AND DR.S.T.M.PAVALAN JM ITA NO.5028/MUM/2009 : ASST.YEAR 1996-1997 THE INCOME TAX OFFICER WARD 19(2)(1) MUMBAI. M/S.DELTA INTERNATIONAL 159 C.S.T.ROAD KALINA SANTACRUZ (EAST) MUMBAI 400 098. PAN : AAAFD2233J. ( () / // / APPELLANT) % % % % / VS. ( + ()/ RESPONDENT) ITA NO.5554/MUM/2009 : ASST.YEAR 1997-1998 THE INCOME TAX OFFICER WARD 19(2)(1) MUMBAI. M/S.D.B.ESTATE 159 C.S.T.ROAD KALINA SANTACRUZ (EAST) MUMBAI 400 098. PAN : AAAFD0790L. ( () / // / APPELLANT) % % % % / VS. ( + ()/ RESPONDENT) ITA NO.5287/MUM/2009 : ASST.YEAR 1996-1997 THE INCOME TAX OFFICER WARD 19(2)(1) MUMBAI. M/S.FELLOWSHIP CORPORATION 159 C.S.T.ROAD KALINA SANTACRUZ (EAST) MUMBAI 400 098. PAN : AAAFF0775B. ( () / // / APPELLANT) % % % % / VS. ( + ()/ RESPONDENT) ITA NO.5366/MUM/2009 : ASST.YEAR 1996-1997 THE INCOME TAX OFFICER WARD 19(2)(1) MUMBAI. M/S.ALPHA CORPORATION 159 C.S.T.ROAD KALINA SANTACRUZ (EAST) MUMBAI 400 098. PAN : AAAFA5724H. ( () / // / APPELLANT) % % % % / VS. ( + ()/ RESPONDENT) ITA NO.5555/MUM/2009 : ASST.YEAR 1996-1997 THE INCOME TAX OFFICER WARD 19(2)(1) MUMBAI. M/S.EAST WEST CORPORATION 159 C.S.T.ROAD KALINA SANTACRUZ (EAST) MUMBAI 400 098. PAN : AAAFB1150F. ( () / // / APPELLANT) % % % % / VS. ( + ()/ RESPONDENT) () - -- - . . . . / APPELLANT BY : SHRI D.K.SINHA + () - . - . - . - . / RESPONDENT BY : MS.VASANTI PATEL ITA NO.5028/MUM/2009 & ORS. M/S.DELTA INTERNATIONAL & ORS. 2 % - /! / / / / DATE OF HEARING : 22.07.2013 012 - /! / DATE OF PRONOUNCEMENT : 24.07.2013 ' 3 ' 3 ' 3 ' 3 / / / / O R D E R PER BENCH : THESE FIVE APPEALS BY DIFFERENT BUT CONNECTED ASSES SEES RELATE TO ASSESSMENT YEARS 1996-1997 AND 1997-1998. SINCE COM MON ISSUE IS RAISED IN THESE APPEALS WE ARE THEREFORE PROCEEDI NG TO DISPOSE THEM OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONV ENIENCE. 2. BRIEFLY STATED THE FACTS OF M/S.DELTA INTERNATIO NAL IN ITA NO.5028/MUM/2009 ARE THAT THE ORIGINAL ASSESSMENT IN THIS CASE WAS COMPLETED MAKING ADDITION INTER ALIA OF ` 7.62 LAKH ON ACCOUNT OF DISCOUNTING CHARGES PAID TO BANK AND ` 108.49 LAKH PAID TO OTHERS. WHEN THE MATTER FINALLY CAME UP BEFORE THE TRIBUNAL THE ISSUE WAS RESTORED TO THE FILE OF A.O. WITH A DIRECTION TO EX AMINE AS TO WHETHER SUCH DISCOUNT/INTEREST WAS INCURRED BY THE ASSESSEE IN CARRYING ON OF ITS BUSINESS. THIS ORDER WAS PASSED BY THE TRIBUNAL BY FOLLOWING ANOTHER ORDER BY THE TRIBUNAL IN THE CASE OF FELLOW SHIP CORPORATION V. JCIT [ITA NO.4352/MUM/2001] WHICH IS ALSO INVOL VED IN THE PRESENT BATCH OF APPEALS. PURSUANT TO THE DIRECTION GIVEN BY THE TRIBUNAL THE ASSESSING OFFICER REPEATED THE ADDITI ON OF ` 1.16 CRORE TOWARDS FINANCE CHARGES IN THE PRESENT CASE. THE LE ARNED CIT(A) HOWEVER DELETED THE SAID ADDITION. THE REVENUE HAS COME UP IN APPEAL AGAINST SUCH DELETION. ITA NO.5028/MUM/2009 & ORS. M/S.DELTA INTERNATIONAL & ORS. 3 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE TRIBU NAL IN ITS EARLIER ORDER DIRECTED THE ASSESSING OFFICER TO EXAMINE THE NATURE OF INTEREST/DISCOUNT INCURRED AND ITS NEXUS WITH THE C ARRYING ON OF THE BUSINESS. FROM THE ASSESSMENT ORDER IT IS APPARENT THAT AFTER RECORDING THE DATES ON WHICH NOTICES WERE ISSUED THE A.O. RE PRODUCED THE ORIGINAL ORDER PASSED BY HIM U/S 143(3) AND THEREAF TER REPRODUCED ITS CONFIRMATION BY THE LEARNED CIT(A) IN THE FIRST ROU ND. IT IS ON PAGE NO.8 THAT THE ASSESSING OFFICER HAS GIVEN HIS FINDI NG AS UNDER:- AS THE ASSESSEE HAS NOT PRODUCED ANY ADDITIONAL EVIDENCE NOW TO SHOW THAT FINANCING CHARGES PAID AR E ATTRIBUTABLE TO THE BUSINESS EXPENDITURE AND IN VIE W OF THE DETAILED REASONING GIVEN BY THE A.O. IN HIS ORI GINAL ASSESSMENT ORDER AND SUBSEQUENTLY UPHELD BY THE CIT (A). I HAVE NO REASON TO DEVIATE FROM THE STAND TAKEN BY THE A.O. IN THE ORIGINAL ORDER HENCE ASSESSEES CLAIM OF LOSS IS REJECTED. ACCORDINGLY THE FINANCING CHARGES AMOUNTING TO ` 1 16 42 135/- ARE DISALLOWED AND PENALTY PROCEEDINGS U/S 271(1)(C) ARE INITIATED FOR CONCEAL ING THE INCOME AND ALSO FURNISHING INACCURATE PARTICULARS O F HIS INCOME. 4. FROM THE BODY OF THE ASSESSMENT ORDER IT CAN BE SEEN THAT THE ASSESSING OFFICER SIMPLY REPEATED THE ASSESSMENT AN D FIRST APPELLATE AUTHORITYS ORDER WITHOUT DISCUSSING ANYTHING NEW A BOUT THE MATTER ON WHICH THE TRIBUNAL GAVE DIRECTION. HE SIMPLY NOT ICED THAT THE ASSESSEE DID NOT PRODUCE ANY ADDITIONAL EVIDENCE TO CO-RELATE THE FINANCING CHARGES WITH THE BUSINESS EXPENDITURE. AS AGAINST THAT THE LEARNED AR INVITED OUR ATTENTION TOWARDS VARIOUS DE TAILS FURNISHED ITA NO.5028/MUM/2009 & ORS. M/S.DELTA INTERNATIONAL & ORS. 4 BEFORE THE ASSESSING OFFICER DURING THE COURSE OF S UCH FRESH PROCEEDINGS. FIRST LETTER OF THE ASSESSEE IN THE FR ESH PROCEEDINGS IS DATED 05.09.2006 BY WHICH IT FURNISHED FUND FLOW ST ATEMENT BALANCE SHEET AND PROFIT AND LOSS ACCOUNT FOR THE YEAR IN Q UESTION AND FOR THE EARLIER YEAR DETAILS OF DISCOUNT CHARGES PAID STA TEMENT OF ACCOUNT PARTIES IN SUPPORT OF RECEIPT / PAYMENT OF DISCOUNT ING CHARGES COPIES OF ACCOUNT OF PARTIES TRACING THE ORIGINAL FUNDS U SER OF FUNDS AND REPAYMENT OF CHARGES WITH DISCOUNTING CHARGES ETC. ANOTHER LETTER WAS FILED BEFORE THE ASSESSING OFFICER ON 24.11.200 6 PRODUCING COMPLETE BOOKS OF ACCOUNT DETAILS OF FINANCE CHARG ES PAID WITH BIFURCATION OF PARTIES AND RATE OF INTEREST AND A C OPY OF ASSESSMENT ORDER PASSED BY THE A.O. FOR THE PRECEDING YEAR IN WHICH SIMILAR DEDUCTION WAS ALLOWED. THE PRESENT ASSESSMENT ORDER WAS PASSED BY THE A.O. ON 18.12.2006 AFTER FILING OF THE ABOVE RE FERRED DOCUMENTS BY THE ASSESSEE. IT IS SURPRISING THAT THE ASSESSIN G OFFICER DID NOT MAKE A WHISPER IN THE ASSESSMENT ORDER OF SUCH DETA ILS HAVING BEEN FILED BY THE ASSESSEE. WHAT TO TALK OF ADVERSELY CO MMENTING THE A.O. EVEN DID NOT BOTHER TO INCORPORATE OR DISCUSS SUCH FACTS IN THE ASSESSMENT ORDER. THIS FACT HAS BEEN ELABORATELY CO NSIDERED BY THE LEARNED CIT(A) THE DISCUSSION ON WHICH HAS BEEN MA DE IN PARAS 1.10 TO 1.14 OF THE IMPUGNED ORDER. ON THE APPRECIATION OF THE ENTIRE MATERIAL / EVIDENCE PLACED BY THE ASSESSEE BEFORE T HE A.O. IN THE FRESH ROUND OF PROCEEDINGS THE LEARNED CIT(A) HAS RECORD ED A CATEGORICAL FINDING THAT THESE EXPENSES WERE INCURRED DURING TH E COURSE OF BUSINESS. APART FROM RELYING ON THE ASSESSMENT ORDE R THE LEARNED DEPARTMENTAL REPRESENTATIVE COULD NOT CONTROVERT TH E FINDINGS GIVEN ITA NO.5028/MUM/2009 & ORS. M/S.DELTA INTERNATIONAL & ORS. 5 BY THE LEARNED CIT(A) IN SUPPORT OF THE GRANT OF DE DUCTION. WE THEREFORE UPHOLD THE IMPUGNED ORDER IN DELETING TH E SAID ADDITION. 5. BOTH THE SIDES ARE IN AGREEMENT THAT THE FACTS A ND CIRCUMSTANCES OF OTHER FOUR APPEALS ARE MUTATIS MUTANDIS SIMILAR TO THOSE OF DELTA INTERNATIONAL DISCUSSED ABOVE. FOLLOWING THE VIEW TAKEN HEREINABOVE WE UPHOLD THE IMPUGNED ORDERS AND CONF IRM THE DELETION OF ADDITION IN ALL THESE CASES. 6. 4 /5 6 !47 - 7/ 89 IN THE RESULT ALL THE APPEALS STAND DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF JULY 2013. ' 3 - 012 :'%5 1 - ; SD/- SD/- (DR.S.T.M.PAVALAN) (R.S.SYAL) & ' & ' & ' & ' / JUDICIAL MEMBER ! ' ! ' ! ' ! ' / ACCOUNTANT MEMBER MUMBAI ; :'% DATED : 24 TH JULY 2013. DEVDAS* ' 3 - +&/<= > =2/ ' 3 - +&/<= > =2/ ' 3 - +&/<= > =2/ ' 3 - +&/<= > =2// COPY OF THE ORDER FORWARDED TO : 1. () / THE APPELLANT 2. + () / THE RESPONDENT. 3. ? () / THE CIT MUMBAI. 4. ? / CIT(A) - XIX MUMBAI 5. =B; +&/&% / DR ITAT MUMBAI 6. ; C / GUARD FILE. ' 3% ' 3% ' 3% ' 3% / BY ORDER =/ +&/ //TRUE COPY// D D D D/ // /8 7 8 7 8 7 8 7 ( DY./ASSTT. REGISTRAR)