DCIT 2(2), v. KHIMJI POONJA FREIGHT FORWARDS P. LTD,

MA 326/MUM/2010 | 2006-2007
Pronouncement Date: 02-07-2010 | Result: Dismissed

Appeal Details

RSA Number 32619924 RSA 2010
Bench Mumbai
Appeal Number MA 326/MUM/2010
Duration Of Justice 1 month(s) 16 day(s)
Appellant DCIT 2(2),
Respondent KHIMJI POONJA FREIGHT FORWARDS P. LTD,
Appeal Type Miscellaneous Application
Pronouncement Date 02-07-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 02-07-2010
Assessment Year 2006-2007
Appeal Filed On 17-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A : MUMBAI BEFORE SHRI D. MANMOHAN HONBLE VICE PRESIDENT AND SHRI R.K. PANDA ACCOUNTANT MEMBER M.A. NO. 326/MUM/2010 ARISING OUT OF ITA. NO. 7161/MUM/2008 ASSESSMENT YEAR 2006-2007 DCIT 2 (2) ROOM NO. 545 AAYAKAR BHAVAN MUMBAI 400 020 VS. M/S. KHIMJI POONJA FREIGHT FORWARDERS P. LTD. 19-21 DALAL STREET FORT MUMBAI 400 001 PAN AAACK-4719-K (APPLICANT) (RESPONDENT) FOR APPLICANT : SHRI R.M. TIWARI (DR) FOR RESPONDENT : SHRI HITEN VASANT ORDER PER D. MANMOHAN V.P. 1. BY THIS APPLICATION THE REVENUE SEEKS RECTIFIC ATION OF THE ORDER DATED 30 TH OCTOBER 2009 ON THE GROUND THAT DISALLOWANCE OF N ON- RECEIPTED EXPENDITURE AT 50% OF THE TOTAL CLAIM WAS WRONGLY RESTRICTED TO 10% OVERLOOKING THE LATEST DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-2004 (ITA. NO. 4969/MUM/20 06 DATED 26-03- 2009). 2. IT MAY BE NOTICED HERE THAT NON-RECEIPTED EXPEN DITURE ADMITTEDLY COMPRISES OF CONVEYANCE CHARGES LOADING AND UNLOADING EXPENSES AND OTHER INCIDENTAL EXPENSES WHICH WERE I NCURRED EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND WITHOUT INCURRING S UCH EXPENDITURE ASSESSEE-COMPANY COULD NOT HAVE BEEN IN A POSITION TO PROVIDE THE SERVICES TO ITS CLIENTS. HOWEVER HAVING REGARD TO THE FACT THAT THIRD PARTY VOUCHERS WERE NOT AVAILABLE TO SUPPORT NON-RECEIPTE D EXPENSES THE ASSESSING OFFICER SOUGHT TO DISALLOW A PORTION OF T HE EXPENDITURE ON 2 ESTIMATE BASIS AND THUS ESTIMATED 50% OF THE CLAIM AS HAVING INCURRED FOR NON-BUSINESS PURPOSES. 3. ON AN APPEAL FILED BY THE ASSESSEE THE LEARNED CIT(A) RESTRICTED THE DISALLOWANCE TO 10% BEARING IN MIND THE VIEW TAKEN BY HIS PREDECESSOR IN THE ASSESSEES OWN CASE FOR THE EARL IER ASSESSMENT YEARS 2004-2005 AND 2005-2006 SINCE REVENUE WAS OF THE OP INION THAT THE AMOUNTS DISALLOWABLE OUGHT TO HAVE BEEN MORE THAN 1 0% AN APPEAL WAS PREFERRED TO THE APPELLATE TRIBUNAL AS HAS BEEN DON E IN ASSESSEES OWN CASE FOR THE EARLIER YEARS. IN RESPECT OF THE ASSES SMENT YEAR 2004-2005 THE ITAT A BENCH MUMBAI (ITA. NO.2477 & 3668/M/ 07 DATED 25 TH MARCH 2009) HAD TAKEN A CONSIDERED VIEW ON THE ISS UE WHILE HOLDING THAT THE DISALLOWANCE OF 10% WOULD MEET THE ENDS OF JUSTICE AS AGAINST 50% DISALLOWED BY THE ASSESSING OFFICER. HAVING REG ARD TO THE RULE OF CONSISTENCY THE ITAT H BENCH MUMBAI IN ASSESSEE S OWN CASE FOR THE ASSESSMENT YEAR 2005-2006 (ITA. NO. 2949/2008 DATED 24-7-2009) UPHELD THE ORDER OF THE LEARNED CIT(A) BY HOLDING T HAT RESTRICTING THE DISALLOWANCE AT 10% IS REASONABLE THOUGH IN THE CA SE OF ESTIMATE OF INCOME OR DISALLOWANCE OF EXPENDITURE ON ESTIMATE B ASIS SOME GUESS WORK IS INEVITABLE. WHEN AN APPEAL FOR THE ASSESSME NT YEAR 2003-2004 OF THE SAME ASSESSEE HAS COME UP FOR HEARING BEFORE IT AT A BENCH MUMBAI (ONE OF THE MEMBERS WAS A PARTY TO THE EARL IER DECISION) IT APPEARS THAT EARLIER ORDERS OF THE ITAT WERE NOT BR OUGHT TO THE NOTICE OF THE BENCH AND THUS THE BENCH IN ITS WISDOM THOUG HT FIT TO SUSTAIN DISALLOWANCE OF 20% OF THE TOTAL EXPENDITURE. IF A DECISION IS RENDERED BY A BENCH OVERLOOKING THE EARLIER DECISION ON THE SAM E ISSUE OR IN IGNORANCE OF THE VIEW TAKEN EARLIER A LATER DECISI ON WOULD BE HELD TO BE PER INCURIUM AND PERHAPS FOR THAT REASON THE REVENUE HAS THOUGH T FIT NOT TO BRING IT TO THE NOTICE OF THE BENCH WHEN THE APP EAL FOR ASSESSMENT YEAR 2006-2007 WAS TAKEN UP FOR HEARING. THE LEARNE D COUNSEL APPEARING ON BEHALF OF THE ASSESSEE RELIED UPON TH E EARLIER TWO ORDERS OF 3 THE ITAT WHILE PROSECUTING THE APPEAL FOR THE ASSES SMENT YEAR 2006- 2007 WHEREIN DISALLOWANCE WAS RESTRICTED TO 10%. H AVING REGARD TO THE CONSISTENT VIEW TAKEN BY THE ITAT THIS BENCH UPHEL D THE ORDER OF THE LEARNED CIT(A) AND DISMISSED THE APPEAL FILED BY TH E REVENUE BY HOLDING THAT RESTRICTING DISALLOWANCE TO 10% OF THE NON-REC EIPTED EXPENDITURE IS REASONABLE. SINCE ORDER PASSED BY THE ITAT IS BASED ON FACTS AVAILABLE ON RECORD SEEKING RECTIFICATION UNDER SECTION 254 (2) OF THE ACT WOULD AMOUNT TO SEEKING REVIEW OF THE MATTER WHICH IS NOT PERMISSIBLE UNDER THE ACT. 4. LEARNED DR RELIED UPON THE DECISION OF THE HON BLE DELHI HIGH COURT IN THE CASE OF CIT VS. SHAKUNTALA RAJESH WAR (1986) 160 ITR 840 TO SUBMIT THAT IF THE ASSUMPTION ON THE BASIS OF WHICH AN ORDER IS PASSED TURNS OUT TO BE WRONG THE TRIBUNAL WOULD B E JUSTIFIED IN INVOKING ITS POWER UNDER SECTION 254 (2) OF THE ACT . HOWEVER THE FACTS IN THE INSTANT CASE ARE DIFFERENT. DISALLOWANCE OF A P ORTION OF THE EXPENDITURE ON ESTIMATE BASIS IS ALWAYS A MATTER OF DISCRETION AND WHILE EXERCISING THE DISCRETION THE BENCH HAD TAKEN AID O F TWO EARLIER DECISIONS OF THE ITAT WHICH WERE ANTERIOR TO THE ORDER PASSED BY THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2003-20 04. UNDER THESE CIRCUMSTANCES IT CANNOT BE SAID THAT THE ASSUMPTIO NS ON THE BASIS OF WHICH ORDER WAS PASSED BY THE APPELLATE TRIBUNAL WA S WRONG. 5. IT MAY BE RELEVANT TO NOTICE HERE THAT THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RAMESH ELECTRIC & TRADING CO. (1993) 203 ITR 497 (BOM.) OBSERVED THAT THE TRIBUNAL IN E XERCISE OF THE POWERS VESTED IN THEM UNDER SECTION 254 (2) OF THE ACT CA NNOT LOOK INTO SOME OTHER CIRCUMSTANCES WHICH WOULD SUPPORT OR NOT SUPP ORT ITS CONCLUSION AND A MISTAKE WHICH REQUIRES TO BE ESTABLISHED BY A RGUMENTS AND LONG DRAWN PROCESS OF REASONING ON WHICH THERE MAY BE C ONCEIVABLY TWO OPINIONS CANNOT BE CONSIDERED AS A MISTAKE APPAREN T FROM RECORD. 4 6. HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE WE DO NOT FIND ANY MISTAKE IN THE IMPUGNED ORDER PASSE D BY THE ITAT. THEREFORE THE MISCELLANEOUS APPLICATION FILED BY T HE REVENUE IS REJECTED. ORDER PRONOUNCED ACCORDINGLY IN THE OPEN COURT. SD/- SD/- (R.K. PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI DATE 02 ND JULY 2010. VBP/- COPY TO 1. DCIT 2 (2) ROOM NO. 545 AAYAKAR BHAVAN MUMBAI 400 020 2. M/S. KHIMJI POONJA FREIGHT FORWARDERS P. LTD. 19 -21 DALAL STREET FORT MUMBAI 400 001 PAN AAACK-4719-K 3. CIT (A) CENTRAL-III R.NO. 25-A AAYAKAR BHAVAN M.K. ROAD MUMBAI 400 020. 4. CIT CENTRAL-IV MUMBAI. 5. D.R. A BENCH 6. GUARD FILE. (TRUE COPY) BY ORDER ASST. REGISTRAR ITAT MUMBAI BENCHES MUMBAI.