ACIT RG 17(3), MUMBAI v. C.H. JAVA & CO, MUMBAI

ITA 6609/MUM/2012 | 2001-2002
Pronouncement Date: 30-04-2015 | Result: Dismissed

Appeal Details

RSA Number 660919914 RSA 2012
Assessee PAN AAAFC1085D
Bench Mumbai
Appeal Number ITA 6609/MUM/2012
Duration Of Justice 2 year(s) 5 month(s) 30 day(s)
Appellant ACIT RG 17(3), MUMBAI
Respondent C.H. JAVA & CO, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2015
Appeal Filed By Department
Order Result Dismissed
Bench Allotted C
Tribunal Order Date 30-04-2015
Date Of Final Hearing 02-02-2015
Next Hearing Date 02-02-2015
Assessment Year 2001-2002
Appeal Filed On 31-10-2012
Judgment Text
INCOME TAX APPELLATE TRIBUNAL MUMBAI - C BENCH BEFORE S/SH. I P BANSAL JUDICIAL MEMBER & RAJENDRA ACCOUNTANT MEMBER /. ITA NO6609./MUM/2012 / ASSESSMENT YEAR - 2001 - 02 ACIT - 17(3) ROOM NO.604 6TH FLOOR PIRAMAL CHAMBERS PAREL MUMBAI - 12. VS M/S. C.H. JAVA & COMPANY. A - 256 BYCULLA SERVICE INDUSTRIES D.K. MARG BYCULLA MUMBAI - 27 PAN:AAAFC 1085 D ( / ASSESSEE ) ( / RESPONDENT ) /ASSESSEE BY :SHRI VIMAL PUNMIYA / REVENUE BY :SHRI PREM AMAND J. / DATE OF HEARING :30 - 04 - 2015 / DATE OF PRONOUNCEMENT :30 - 04 - 2015 1961 254 ( 1 ) ORDER U/S.254(1)OF THE INCOME - TAX ACT 1961(ACT) PER RAJENDRA AM - CHALLENGING THE ORDER DT.17/8/2012 OF THE CIT(A) - 19 MUMBAI ASSESSING OFFICER(AO) HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.ON TH E FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE PENALTY OF RS.4 64 510/ - WITHOUT TAKING INTO ACCOUNT THAT ASSESSEE HAD FAILED TO PROVIDE SATISFACTORY EXPLANATION TO SUBSTANTIATE THE GENUINENESS OF CLAIM. 2.ON T HE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS.4 64 510/ - IN HOLDING THAT ASSESSEE HAS TAKEN ONE OF THE POSSIBLE VIEWS IN COMPUTING ITS INCOME WILL NOT AMOUNT TO CONCEALMENT WITHOUT CONSIDER ING THAT DISALLOWANCE WAS MADE AFTER MAKING PROPER ENQUIRES. 2. ASSESSEE - FIRM ENGAGED IN THE BUSINESS OF TRADING IN PAPER AND PAPER BOARDS FILED ITS RETURN OF INCOME ON 30/10/2001 DECLARING TOTAL INCOME OF RS.87.23 LACS.THE AO COMPLETED THE ASSESSMENT U/S .143(3) OF THE ACT ON 17/2/2004 DETERMINING THE INCOME OF THE ASSESSEE AT RS. 98 56 650/ - . THE AO DISALLOWED COMMISSION PAYMENT OF RS.11 34 344/ - OUT OF THE TOTAL COMMISSION PAYMENT OF RS.13.45 LACS AS HE WAS OF THE OPINION THAT SAME WAS NOT INCURRED WHOL LY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES.BESIDES TREATING THE EXPENDITURE AS IN - GENUINE HE ALSO INITIATED PENALTY PROCEEDINGS U/S.271(1)(C) OF THE ACT.VIDE HIS ORDER DT.27.3.2006 THE AO LEVIED PENALTY RS.4 64 510/ - FOR FURNISHING INACCURATE PARTICULARS OF INCOME. 3. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE FIRST APPELLATE AUTHORITY(FAA) WHO UPHELD THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF COMMISSION PAYMENT. IN THE APPEAL FILED AGAINST THE PENALTY ORDER THE ASSESSE E CONTENTED THAT SIMILAR ISSUE HAD ARISEN IN THE NEXT YEAR I.E. 2002 - 03 THAT THE MATTER TRAVELLED UP TO THE TRIBUNAL THAT THE TRIBUNAL HAD SET ASIDE THE ORDER OF THE FAA THAT THE PAYMENT MADE BY THE ASSESSEE WAS FOR PROCUR ING BUSINESS THOUGH THE AGENTS T HAT THE AO WAS NOT JUSTIFIED IN LEVYING PENALTY. I TA/6609/M/13 - CHJ 2 4.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE PENALTY ORDER THE FAA HELD THAT THE AO LEVIED THE PENALTY ONLY BECAUSE THE ADDITIONS MADE BY HIM WERE CONFIRMED IN THE APPELLATE PROCEEDINGS THAT H E HAD NOT BROUGHT ON RECORD ANY NEW FACT AT THE TIME OF PASSING THE PENALTY ORDER THAT THE ORDER OF THE TRIBUNAL CONFIRMING THE ACTION OF THE AO FOR DISALLOWING THE COMMISSION HAD BEEN SET ASIDE BY THE H ONBLE B OMBAY H IGH C OURT VIDE ITS ORDER DT.16.11. 20 09. THE FAA FURTHER MENTIONED THAT THE T RIBUNAL WHILE DECIDING THE APPEALS ON THE IDENTICAL ISSUE FOR THE AY . S . 2002 - 03 2003 - 04 AND 2004 - 05 HAD DECIDED THE I SSUE IN FAVOUR OF THE ASSESSEE THAT THE FAA HAD ALSO ALLOWED THE APPEAL FILED BY THE ASSESSEE FOR T HE AY .20 05 - 06 WITH REGARD TO COMMISSION PAYMENT.REFERRING TO THE CASE OF RELIANCE PETROPRODUCTS LTD.(322ITR158) THE FAA HELD THAT THE ISSUE OF PAYMENT OF COMMISSION HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE T IN SUBSEQUENT AYS THAT THE VIEW TAKE N BY THE ASSESSEE IS ONE OF THE POSSIBLE VIEW THAT THE ASSESSEE HAD DISCLOSED ALL RELEVANT FACTS REGARDING THE COMPUTATION OF INCOME AT THE FILING OF RETURN ITSELF T HAT THE ACTION OF THE ASSESSEE IN CLAIMING THE DEDUCTION WAS UNDER THE BONA FIDE BELIEF TH AT SUCH DEDUCTION WAS ALLOWABLE THAT THE AO DID NOT FIND THE CLAIM OF THE ASSESSEE ACCEPTABLE WAS DIFFERENT MATTER THAT MERE NON ACCEPTANCE OF THE CLAIM MADE BY THE AO WOULD NOT MAKE THE ASSESSEE LI ABLE TO CONCEALMENT OF PENALTY.FINALLY THE FAA DELETED T HE PENALTY LEVIED BY THE AO. 5. BEFORE US DEPARTMENTAL REPRESENTATIVE (DR) FAIRLY CONSIDERED THE ISSUE OF COMMISSION PAYMENT HAS BEEN DECIDED IN FAVOUR OF ASSESSEE BY THE TRIBUNAL WHILE ADJUDICATING THE APPEAL FOR THE SUBSEQUENT AYS.AUTHORISED REPRESENTATIVE (AR) REFERRED TO THE ORDER OF THE TR I BUNAL DT.14. 0 1. 2015(ITA/ 2326/MUM/05 AY 01 - 02)TO WHICH ONE OF US WAS THE PARTY. WE FIND WHILE DECIDING THE APPEAL THE TRIBUNAL HAD HELD AS UNDER : - \ 4. WE HAVE HEARD THE LD AR AS WELL AS LD. DR AND CONSIDERED THE RE LEVANT MATERIAL ON RECORD. AS IT IS DIRECTED BY THE HON'BLE HIGH COURT THAT THE APPEAL OF THE ASSESSEE HAS TO BE CONSIDERED IN THE LIGHT OF THE ORDERS OF THIS TRIBUNAL FOR AY. 2002 - 03 AND 2003 - 04 IN ASSESSEE'S OWN CASE. WE FIND THAT THE ISSUE INVOLVED F OR THE A.Y. UNDER CONSIDERATION AS WELL AS FOR THE A.Y. 2002 - 03 AND 2004 - 05 ARE IDENTICAL REGARDING DISALLOWANCE OF COMMISSION PAID TO THE SAME PARTY. IT IS PERTINENT TO NOTE THAT THAT THE ORDER DATED 17.6.2008 WAS THE FIRST ORDER OF THIS TRIBUNAL FOR T HE A.Y. 2001 - 02 HOWEVER AT THE TIME OF HEARING FOR AY. 2003 - 04 AND 2004 - 05 THE PARTIES HAVE NOT BROUGHT THIS FACT TO THE NOTICE OF THIS TRIBUNAL THAT IN THE EARLIER AY. I.E. A.Y. 2001 - 02 THE TRIBUNAL HAD ALREADY DECIDED THE ISSUE AGAINST THE ASSESSEE . THEREFORE WE FIND THAT THE PARTIES HAD CONCEALED A MATERIAL FACT WHICH OUGHT TO HAVE BEEN DISCLOSED BEFORE THE TRIBUNAL IN THE PROCEEDINGS OF SUBSEQUENT A.YS. THEREFORE THERE IS A GROSS MISCONDUCT ON THE PART OF BOTH ASSESSEE AS WELL AS REVENUE IN N OT BRINGING THE FACT INTO THE NOTICE OF TRIBUNAL THE EARLIER ORDER OF THIS TRIBUNAL IN ASSESSEE'S OWN CASE AND ON THE SAME ISSUE DURING THE PROCEEDINGS FOR A.Y. 2002 - 03 AND 2004 - 05. WE FURTHER NOTE THAT EVEN THE REVENUE HAS FAILED TO FILE ANY MISCELLA NEOUS APPLICATION FOR TAKING THE CORRECTIVE MEASURE AND THEREFORE THERE IS A GROSS NEGLIGENCE ON THE PART OF THE REVENUE IN THIS RESPECT SINCE THE ORDER DATED 17.06.2008 HAS ALREADY BEEN SET ASIDE BY THE HON'BLE HIGH COURT THEREFORE WE HAVE NO OTHER OPTION BUT TO FOLLOW THE ORDERS OF THE TRIBUNAL FOR AY. 2002 - 03 AND 2004 - 05 ON THE SAME ISSUE. FOR THE AY. 2002 - 03. THE TRIBUNAL VIDE ORDER DATED 1.12.2008 IN ITA NO. 6390/MUM/2005 HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE IN PARA 4 AS UNDER. - ' WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE PERUSED THE COPIES OF VARIOUS DOCUMENTS FILED IN THE COMPILATION BY THE ASSESSEE. WE FIND THAT HE ASSESSEE HAS FILED CONFIRMATION FROM THE PAYEES OF THE COMMISSION AMOUNT AND THE AMOUNT OF COMMISSION WAS PAID PER CHEQUES I TA/6609/M/13 - CHJ 3 ONLY. THE PAYEES OF THE COMMISSION AMOUNT HAVE COMPLIED WITH THE SUMMONS ISSUED BY THE ASSESSING OFFICER AND HAS CONFIRMED THE PAYMENT OF COMMISSION TO THEM. PAN OF ALL THE PAYEES OF THE COMMISSION AMOUNT WAS FILED BEFORE THE ASSESSING OFFICER. IT IS NOT UNUSUAL THAT THE PARTIES TO WHOM THE SALES WERE MADE DO NOT HAVE ANY KNOWLEDGE OF THE PERSON TO WHOM THE COMMISSION HAS BEEN CLAIMED BY THE ASSESSEE AS HAVING PAID FOR THE SERVICES RENDERED TO THE ASSESSEE COMPANY AND THIS FACTOR AL ONE IS NOT SUFFICIENT TO HOLD THAT THE COMMISSION PAYMENTS EARNED BY THE ASSESSEE ARE NOT GENUINE. IN SUCH CASE THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES OF THE CASE HAS TO BE EXAMINED IN ORDER TO DECIDE THE GENUINENESS OR OTHERWISE OF THE COMMISSION PAYMENT CLAIMED BY THE ASSESSEE. ALL THE PAYEES OF THE COMMISSION AGENTS ARE EXISTING INCOME TAX ASSESSEES AND HAVE CONFIRMED THE PAYMENT OF COMMISSION TO THEM AND THE PAYMENTS WERE MADE PER CHEQUES ONLY. THE PAYEES OF THE COMMISSION AMOUNT IN THEIR CON FIRMATION FILED BEFORE THE. ASSESSING OFFICER HAVE DETAILED THE SERVICES RENDERED BY THEM TO THE ASSESSEE COMPANY IN THE MATTER OF SALES MADE BY THE ASSESSEE COMPANY. ONE OF THE PAYEES SHRI SACHIN D. PORWAL IN HIS CONFIRMATION LETTER MENTIONED THE SAME PAYMENTS OF COMMISSION RECEIVED BY HIM THROUGH THE ASSESSEE COMPANY IH THE PAST YEARS. LIKEWISE SHRI S. P. GUPTA HAS CONFIRMED THAT THEY ARE REGULARLY ORGANIZING BUSINESS ON BEHALF OF THE ASSESSEE FIRM AND HAVE THEIR BUSINESS TRANSACTION IN THE PAST YEARS AS WELL AS IN THE NEXT YEAR. MLS. G.L BAL GRAPHIC (INDIA) HAS CONFIRMED THAT HE HAS PROVIDED A PACKAGE OF SERVICES TO THE ASSESSEE FIRM TO ENABLE THEM TO OBTAIN THE SALES DURING THE RELEVANT PERIOD AND A PROPRIETOR THEREOF IS A SCIENCE GRADUATE - WI TH THE 20 YEARS OF EXPERIENCE IN THE AREAS OF SURFACE COATINGS ETC. M/S. R.M. ASSOCIATES HAS ALSO DETAILED THE SERVICES RENDERED TO THE ASSESSEE FIRM DURING THE RELEVANT PERIOD AND HE HAS ALSO CONFIRMED THAT HE IS A SCIENCE GRADUATE WITH 20 YEARS OF EXP ERIENCE IN THE SURFACE COATINGS ETC. THE ASSESSEE HAS DECLARED THE RETURN OF INCOME TO RS.L.41 CRORES DURING THE YEAR. THE REVENUE COULD NOT PRODUCE ANY MATERIAL ON RECORD TO SUGGEST THAT THE COMMISSION PAYMENTS CLAIMED BY THE ASSESSEE ARE FICTITIOUS OR NOT GENUINE. IN THESE FACTS OF THE CASE WE HOLD THAT THE ASSESSEE IS ENTITLED TO DEDUCTION OF THE COMMISSION AMOUNT CLAIMED BY IT AND ACCORDINGLY THE GROUND NO. 1 OF THE ASSESSEE IS ALLOWED.' 5. A SIMILAR VIEW WAS TAKEN BY THE TRIBUNAL FOR A.Y. 200 3 - 04 VIDE ORDER DATED 6.8.2009 IN ITA NO. 420/MUM/2008 IN PARA 5 AS UNDER: - WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE RIVAL CONTENTIONS. THE FACTS IN THE YEAR UNDER APPEAL ARE ADMITTEDLY IDENTICAL AS IN THE PRECEDING ASSESSMENT YEAR EXCEPT THAT IN THE YEAR UNDER APPEAL COMMISSION HAS ALSO BEEN PAID TO SHRI DASMAL PORWAL OF RS. 95 000/ - TO WHOM THE COMMISSION HAD NOT BEEN PAID IN THE ASSESSMENT YEAR 2002 - 03. TAKING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THIS CASE INTO CONSIDERATION PAR TICULARLY THE FACT THAT SIMILAR DISALLOWANCE MADE FOR THE ASSESSMENT YEAR 2002 - 03 BY THE REVENUE STANDS DELETED WE FIND NO JUSTIFICATION TO TAKE A DIFFERENT VIEW IN THE YEAR UNDER APPEAL. 6. WE FIND FROM THE RECORD THAT THE FACTS ARE IDENTICAL AND THE COMMISSION AGENT HAS CONFIRMED THE TRANSACTION AND RECEIPT OF COMMISSION FROM THE ASSESSEE. ON THE BASIS OF THESE FACTS THE TRIBUNAL FOR THE A.Y. 2002 - 03 AND 2003 - 04 ALLOWED THE CLAIM OF THE ASSESSEE. WE FURTHER NOTE THAT THE ASSESSING OFFICER WHILE D ISALLOWING THE COMMISSION HAS GIVEN MUCH EMPHASIS ON THE POINT THAT THE PURCHASER DID NOT PAY ANY COMMISSION TO THE AGENT THIS APPROACH OF THE ASSESSING OFFICER CANNOT BE APPROVED WHEN THE COMMISSION AGENT HAS CONFIRMED THE RECEIPT OF COMMISSION FROM T HE ASSESSEE ON THE TRANSACTION OF SALE BY THE ASSESSEE TO THE OTHER PARTY. ACCORDINGLY IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE EARLIER ORDERS OF THIS TRIBUNAL WE SET ASIDE THE ORDERS OF AUTHORITIES BELOW ON THIS ISSUE AND ALLOW T HE CLAIM OF THE ASSESSEE. I TA/6609/M/13 - CHJ 4 RESPECTFULLY FOLLOWING THE ORDER OF THE TRIBUNAL FOR THE EARLIER YEARS AND CONSIDERING THE FACT THAT IDENTICAL ISSUE HAS BEEN DECIDE IN FAVOUR OF THE ASSESSEE.WE ARE OF THE OPINION THAT THE AO WAS NOT JUSTIFIED IN LEVYING PE N ALTY US. 271(1)(C) OF THE ACT. THEREFORE CONFIRMING THE ORDER OF FAA WE DECIDE THE EFFECTIVE GROUND OF APPEAL AGAINST THE AO AS A RESULT APPEAL FILED BY THE AO STANDS DISMISSED. . ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH APRIL 2015. 2015 SD/ - SD/ - ( /I P BANSAL) ( / RAJENDRA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / MUMBAI /DATE: 30 .04.2015 JV / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ 4. THE CONCERNED CIT / 5. DR A BENCH ITAT MUMBAI / . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER / DY./ASST. REGISTRAR / ITAT MUMBAI.