ITO 13(3)(3), NAVI MUMBAI v. BHAVIN V. DESAI, MUMBAI

ITA 1362/MUM/2009 | 2005-2006
Pronouncement Date: 23-02-2010 | Result: Dismissed

Appeal Details

RSA Number 136219914 RSA 2009
Assessee PAN AABPD1383N
Bench Mumbai
Appeal Number ITA 1362/MUM/2009
Duration Of Justice 11 month(s) 26 day(s)
Appellant ITO 13(3)(3), NAVI MUMBAI
Respondent BHAVIN V. DESAI, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 23-02-2010
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 23-02-2010
Assessment Year 2005-2006
Appeal Filed On 27-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES B MUMBAI BEFORE SHRI R.S.SYAL AM AND SHRI R.S.PADVEKAR JM ITA NO.1362/MUM/2009 : ASST.YEAR 2005-2006 THE INCOME TAX OFFICER WARD 13(3)(3) MUMBAI. VS. SHRI BHAVIN V.DESAI 4C SAMBHAV TIRTH 2A BHULABHAI DESAI ROAD MARILE LINES MUMBAI 400 020. PA NO.AABPD1383N. (APPELLANT) (RESPONDENT) CO NO.155/MUM/2009 : ASST.YEAR 2005-2006 SHRI BHAVIN V.DESAI 4C SAMBHAV TIRTH 2A BHULABHAI DESAI ROAD MARILE LINES MUMBAI 400 020. VS. THE INCOME TAX OFFICER WARD 13(3)(3) MUMBAI. ( CROSS OBJECTOR ) (RESPONDENT) REVENUE BY : S/SHRI L.K.AGRAWAL S.S.RANA & PITAMBA R DAS ASSESSEE BY : SHRI B.V.JHAVERI O R D E R PER : R.S.SYAL AM : THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY T HE ASSESSEE ARISE OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 3.12.2008 IN RELATION TO THE ASSESSMENT YEAR 2005-2006. 2. THE FIRST GROUND OF THE REVENUES APPEAL IS AGAI NST THE DELETION OF ADDITION OF RS.48 12 647. BRIEFLY STATED THE FACTS OF THIS G ROUND ARE THAT THE ASSESSEE RECEIVED A SUM OF RS.1.87 CRORE FROM ABN AMRO BANK AGAINST WHICH A SUM OF RS.1.77 CRORE WAS CLAIMED AS REIMBURSEMENT OF EXPEN SES. THE NET FIGURE OF RS.10 45 899 WAS CREDITED TO THE PROFIT AND LOSS AC COUNT. THE ASSESSEE WAS CALLED UPON TO FURNISH INFORMATION IN REGARD TO THE RECEIP TS AND EXPENSES CLAIMED TO BE MADE AGAINST SUCH RECEIPTS WHICH DETAIL WAS SUBMIT TED. THE A.O. ALSO RECORDED THE STATEMENT OF SHRI VILAS PRABHUDESAI MANAGER B RANCH OPERATIONS ABN AMRO ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 2 BANK MUMBAI ON 13.9.2006 AND ANOTHER LETTER WAS AL SO ISSUED TO THE BANK ASKING FOR INFORMATION U/S.133(6). THE A.O. REPRODUCED CER TAIN PARTS FROM THE STATEMENT OF SHRI VILAS PRABHUDESAI IN THE ASSESSMENT ORDER. HE ALSO TOOK INTO CONSIDERATION AGREEMENT BETWEEN THE ASSESSEE AND ABN AMRO BANK AS PER WHICH THE ASSESSEE WAS ASSIGNED THE DUTY OF ENGAGING / HIRING SUCH PER SONS INFRASTRUCTURE AND MAKING THEM AVAILABLE TO THE BANK FOR USE IN PERFORMING TH E WORK IN RELATION TO CREDIT CARDS DEBIT CARDS CASH CARDS AND OTHER FORMS OF E LECTRONIC CARDS ISSUED BY THE BANK. AFTER CONSIDERING THE RELEVANT DETAILS THE A. O. HIGHLIGHTED THE FOLLOWING FACTS IN THE ASSESSMENT ORDER. (I) ASSESSEE IS A CHANNEL ASSOCIATE OF ABN AMRO BANK. H E RECEIVES AND AMOUNT OF RS.40 000/- PER MONTH AS A SERVICE PROVID ER. (II) HE WAS MADE RESPONSIBLE TO HIRE EMPLOYES FOR ABN AM RO BANK WHO WILL PROCURE BUSINESS IN TURN OF CREDIT CARDS IN THE AREA OF BANGALORE AND HYDERABAD. (III) ABN AMRO BANK CREDITS THE AMOUNT IN THE ACCOUNT OF THE ASSESSEE AT MUMBAI. FOR THE PAYMENT OF SALARY TO THOSE TEMPORAR Y EMPLOYEES. (IV) ASSESSEE RECEIVES DIRECTION FROM THE BANK TO CREDIT THE SALARY A/C. OF THE EMPLOYEE HIRED TO SELL THE CREDIT CARDS. (V) PAYMENT AS SALARY IS ROUTED THROUGH ANOTHER BANK A/ C OPENED IN THE CITIBANK. (VI) SIMILARLY ASSESSEE RECEIVES DIRECTION TO REIMBURSE THE AMOUNT ON A/C OF RENT ADVERTISEMENT ETC. (VII) FROM THE DETAILS FURNISHED MONTH-WISE IT IS FOUND THAT TO THE EXTENT OF REIMBURSEMENT ON ACCOUNT OF SALARY THE MONEY WAS CR EDITED INTO THE ACCOUNT OF CITIBANK FOR FURTHER DISBURSEMENT ON A/C OF SALARY TO THE EMPLOYEE HIRED FOR THIS PURPOSE. ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 3 3. THE ASSESSING OFFICER ALLOWED THE DEDUCTION FOR SALARY PAYMENT OF RS.1.39 CRORE AS CLAIMED BY THE ASSESSEE TOWARDS REIMBURSEM ENT BUT THE REMAINING EXPENSES OF RS.48.12 LAKHS WERE NOT ACCEPTED ON THE GROUND THAT THE DETAILS ON THIS ACCOUNT WERE NOT PROVIDED BY THE BANK OR THE ASSESS EE. HE THEREFORE MADE ADDITION OF RS.48.12 LAKHS. THE LEARNED CIT(A) DELE TED THE SAID ADDITION. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS SEEN FROM THE AFORE NOTED AGREEMENT COPY OF WHICH IS PLACED IN PAPER BOOK THAT THE ASSESSEE WAS SUPPOSED TO ENGAG E PERSONS AND MAKE THEM AVAILABLE TO THE USE OF THE BANK IN PERFORMING THE WORK IN RELATION TO THE CREDIT / DEBIT CARDS ETC. ISSUED BY THE BANK. CONSIDERATION FOR THE SERVICES HAS BEEN SET OUT IN CLAUSE 4 ANNEXURE-1 OF THE AGREEMENT WHICH REA DS AS UNDER:- `1. FOR ITS RESPONSIBILITIES THE BHAVEN DESAI SHAL L BE ENTITLED TO A FEE OF RS.40 000 PER MONTH. 2. THE BANK SHALL REIMBURSE ACTUAL EXPENSES INCURRED B Y BHAVEN DESAI THE IN EMPLOYMENT OF ITS PERSONNEL AND PROVISION OF EQUIPMENT AND FACILITIES ON THE BASIS OF A MONTHLY STATEMENT SUBM ITTED BY THE BHAVEN DESAI IN THAT REGARD. 3. THE BANK AGREES TO PAY FROM TIME TO TIME SUCH MUT UALLY AGREED ADVANCE SO AS TO ENABLE THE BHAVEN DESAI TO MEET VARIOUS EX PENSES ON BEHALF OF THE BANK. 5. FROM THE ABOVE ANNEXURE TO THE AGREEME NT IT CAN BE SEEN THAT THE ASSESSEE WAS TO INCUR EXPENDITURE IN THE DEVELOPMEN T OF ITS PERSONNEL AND PROVISION OF EQUIPMENT AND FACILITIES ETC. ON THE B ASIS OF STATEMENT SUBMITTED TO THE BANK AND IN TURN IT WAS THE DUTY OF THE BANK TO REI MBURSE SUCH ACTUAL EXPENDITURE. IN LIEU OF RENDERING ALL THESE SERVICES THE ASSESSE E WAS ENTITLED TO FEES OF RS.40 000 (PER MONTH). THERE IS NO DISPUTE ON THE FACT THAT T HE ASSESSEE RENDERED THESE SERVICES TO THE BANK FOR A PERIOD OF FIVE MONTHS AN D A SUM OF RS.2 LAKH WAS ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 4 CREDITED TO THE PROFIT AND LOSS ACCOUNT. PAGES 27 A ND 28 OF THE PAPER BOOK ARE LETTER FROM ABN AMRO BANK DATED 9 TH APRIL 2004 CLARIFYING REGARDING THE REIMBURSEMENT OF EXPENSES UNDER AGREEMENT DATED 2 ND APRIL 2004 REFERRED TO ABOVE. THIS LETTER ALSO MAKES THE POSITION CLEAR TH AT THE BANK SHALL REIMBURSE THE EXPENSES INCURRED. FROM THE COPY OF PROFIT AND LOSS ACCOUNT OF THE ASSESSEE PLACED AT PAGE `B OF THE PAPER BOOK IT CAN BE NOTICED TH AT APART FROM SHOWING PROFESSIONAL CHARGES AT RS.2 LAKHS (DUE FROM ABN AM RO BANK AT THE RATE OF RS.40 000 PER MONTH FOR FOUR MONTHS) SOFTWARE CONS ULTANCY CHARGES ETC. THE ASSESSEE ALSO RECEIVED A GROSS SUM OF RS.1.87 CRORE FROM ABN AMRO BANK OUT OF WHICH THERE WAS A REIMBURSEMENT OF EXPENSES INCURRE D TO THE TUNE OF RS.1.77 CRORE THEREBY LEAVING INCOME OF RS.10 45 899. THIS SUM OF RS.10 45 899 IS IN ADDITION TO PROFESSIONAL CHARGES. THIS AMOUNT REPRESENTS TAX DE DUCTED AT SOURCE BY ABN AMRO BANK FROM THE GROSS PAYMENT OF RS.1.77 CRORE MADE T O THE ASSESSEE TOWARDS REIMBURSEMENT OF EXPENSES. FROM THE ABOVE DISCUSSIO N IT CAN BE NOTICED THAT THE ASSESSEE WAS TO RENDER SERVICES TO ABN AMRO BANK FO R CONSIDERATION OF RS.40 000 PER MONTH. HE WAS TO INCUR EXPENSES ON BEHALF OF AB N AMRO BANK WHICH WERE TO BE REIMBURSED ACCORDINGLY. THE MODUS OPERANDI OF TH E TRANSACTIONS IS NOT DISPUTED. WHEN THE ASSESSING OFFICER ACCEPTED THE SALARY PAYM ENT OF RS.1.39 CRORE AS GENUINE WE ARE UNABLE TO APPRECIATE AS TO WHY THE OTHER EXPENSES INCURRED AND REIMBURSED IN THE SAME MANNER WERE NOT FOUND TO BE ACCEPTABLE. IN OUR CONSIDERED OPINION THE LEARNED CIT(A) WAS JUSTIFIE D IN COMING TO THE CONCLUSION THAT THE ADDITION OF RS.48.12 LAKHS WAS NOT SUSTAIN ABLE. WE THEREFORE UPHOLD THE IMPUGNED ORDER ON THIS ISSUE. THIS GROUND IS NOT A LLOWED. 6. THE ONLY OTHER GROUND WHICH SURVIVES FOR OUR CON SIDERATION IN THE REVENUES APPEAL IS AGAINST THE DELETION OF ADDITION OF RS.5 71 850 ON ACCOUNT OF SOFTWARE CONSULTANCY CHARGES. THE ASSESSEE DEPOSITED A TOTAL SUM OF RS. 14 37 600 IN CASH IN HIS BANK ACCOUNT. ON BEING CALLED UPON TO STATE THE SOURCE OF SUCH CASH DEPOSIT THE ASSESSEE MADE SUBMISSION THAT THE SUM OF RS. 5 71 850 WAS RECEIVED BY HIM ON ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 5 ACCOUNT OF SOFTWARE CONSULTANCY CHARGES WHICH THE A.O. DID NOT ACCEPT ON THE GROUND THAT THE CASH RECEIPT VOUCHERS WERE SELF PRE PARED IN THE NAME OF VARIOUS PERSONS FROM WHOM IT WAS CLAIMED THAT SOFTWARE BASE D CONSULTANCY CHARGES HAD BEEN RECEIVED. HE THEREFORE MADE ADDITION FOR RS. 5 71 850 WHICH CAME TO THE DELETED IN THE FIRST APPEAL. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD WE FIND THAT THE ASSESSEE MADE A CATEGORICAL CLAIM BEFORE THE ASSESSING OFFICER THAT HE HAD RECEIVED THIS SUM AS CONSULTANC Y CHARGES WHICH WAS DEPOSITED IN THE BANK ACCOUNT. THE SAID AMOUNT OF RS.5 71 850 WAS OFFERED FOR TAXATION IN THE INSTANT YEAR ITSELF. WE ARE UNABLE TO APPRECIAT E THE VIEW POINT OF THE ASSESSING OFFICER IN MAKING THE ADDITION FOR THE SAME WHICH A LREADY STOOD REFLECTED AS INCOME BY THE ASSESSEE VOLUNTARILY. WE THEREFORE UPHOLD THE VIEW POINT OF THE LEARNED CIT(A) ON THIS ISSUE. THIS GROUND IS THERE FORE NOT ALLOWED. 8. THE ONLY GROUND IN THE CROSS OBJECTION BY THE AS SESSEE IS AGAINST THE ADDITION OF RS.1 53 800 TOWARDS REFUND OF LOANS CLAIMED TO H AVE BEEN RECEIVED IN THE YEAR. WHILE DISCLOSING THE SOURCE OF CASH DEPOSITED IN T HE BANK THE ASSESSEE CLAIMED THAT A SUM OF RS.1 53 800 WAS SUNDRY LOAN RECEIVED BANK FROM 8 DIFFERENT PARTIES. IN SUPPORT OF THE SAME HE SUBMITTED LOAN CONFIRMAT IONS FROM SOME OF THE PARTIES. NOT CONVINCED WITH THE ASSESSEES EXPLANATION THE A.O. MADE ADDITION. NO RELIEF WAS ALLOWED IN THE FIRST APPEAL. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS MADE OUT A CASE THAT THE S AID SUM OF RS.1 53 800 WAS GIVEN AS LOAN IN THE PRECEDING YEAR WHICH WAS REFUN DED IN THE INSTANT YEAR. IN SUPPORT OF THIS CONTENTION THE ASSESSEE HAS PLACED ON RECORD A COPY OF PROFIT AND LOSS ACCOUNT AND BALANCE SHEET FOR THE SAID EARLIE R YEAR ALONG WITH THE ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 6 ACKNOWLEDGMENT OF RETURN OF INCOME. IT IS TRUE THAT IF THE GIVING OF LOAN STOOD ESTABLISHED IN THE PRECEDING YEAR THEN THE RECEIP T OF REFUND OF LOAN SHOULD NOT HAVE BEEN DOUBTED IN THE GIVEN CIRCUMSTANCES. ON A PERTINENT QUERY FROM THE BENCH ABOUT THE DATE OF FILING OF THE RETURN FOR TH E SAID EARLIER ASSESSMENT YEAR 2004-2005 THE LEARNED A.R. CATEGORICALLY MADE A S TATEMENT AT THE BAR THAT THE SAME WAS FILED WITHIN THE TIME ALLOWED U/S.139(1). HE HOWEVER COULD NOT PRODUCE THE ORIGINAL OF SUCH ACKNOWLEDGMENT OF RETURN. FROM THE COPY OF THE ACKNOWLEDGEMENT PLACED ON RECORD THE STAMP OF THE INCOME TAX DEPARTMENT BEARING THE DATE OF ITS RECEIPT IS NOT LEGIBLE. H OWEVER ON PERUSAL OF THE CONTENTS OF THIS ACKNOWLEDGEMENT IT IS OBSERVED THAT THE DATE O F PAYMENT OF SELF-ASSESSMENT TAX HAS BEEN MENTIONED AS 16 TH AUGUST 2005. IT THEREFORE TRANSPIRES THAT THE R ETURN FOR ASSESSMENT YEAR 2004-2005 WAS NOT FILED U/S.139 (1) AS PUT FORTH BY THE LD. AR DUE DATE IN WHICH CASE FELL WITHIN THE CALENDAR YEA R 2004. IT COULD HAVE BEEN FILED ONLY AFTER THE PAYMENT OF SELF ASSESSMENT TAX THE DATE OF WHICH IS MENTIONED IN THE RETURN ITSELF. WHEN ALL THE FACTS ARE CONSIDERED I N TOTALITY THERE REMAINS NO DOUBT WHATSOEVER THAT IT WAS ONLY AT THE TIME OF FINALIZ ATION OF THE RETURN FOR THE INSTANT YEAR WHICH WAS FILED ON 20.10.2005 THAT THE IDEA OF PROVING THE CASH TO THIS EXTENT BY SHOWING THE REFUND OF LOANS CAME TO THE ASSESSEE. WITH A VIEW TO PUT THE CLOAK OF THE GENUINENESS TO THE REFUND OF LOANS HE FILED THE RETURN OF INCOME FOR THE LAST YEAR SHOWING THE ADVANCING OF THE LOA NS IN CASH. AND FURTHER TO CIRCUMVENT THE RIGOR OF THE PROVISIONS OF SECTION 2 69SS AND 269T THE AMOUNT OF EACH LOAN WAS KEPT BELOW THE LIMIT OF RS. 19 000. EXCEPT FOR FILING A FEW CONFIRMATIONS THE ASSESSEE COULD NOT LEAD ANY OT HER EVIDENCE TO SUBSTANTIATE THAT HE HAD IN FACT ADVANCED LOAN TO THESE PARTIES IN THE EARLIER YEAR WHICH WERE REFUNDED IN THE YEAR IN QUESTION. FURTHER THERE IS NOTHING ON RECORD ON DEMONSTRATE THAT THE ASSESSEE WAS A REGULAR INCOME TAX ASSESSE E AND HE FILED ANY RETURN FOR THE A.Y. 2003-04 BEFORE THE DUE DATE. IT THEREFORE SHOWS THAT THE SAID RETURN FOR ASSESSMENT YEAR 2004-2005 WAS FILED ONLY WITH A VIE W TO ESTABLISH THE ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 7 GENUINENESS OF THE ARGUMENT TO BE ADVANCED IN SUPPO RT OF THE RECEIPT OF REFUND OF LOAN OF RS.1 53 800 IN THE CURRENT YEAR. WE ARE T HEREFORE OF THE CONSIDERED OPINION THAT THE AUTHORITIES BELOW WERE JUSTIFIED I N MAKING AND SUSTAINING THIS ADDITION. THIS GROUND FAILS. 10. IN THE RESULT THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED ON THIS 23 RD DAY OF FEBRUARY 2010. SD/- SD/- ( R.S.PADVEKAR ) ( R.S.SYAL ) JUDICIAL MEMBER ACCOUNTANT ME MBER MUMBAI : 23 RD FEBRUARY 2010. DEVDAS* COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) XIII MUMBAI. 5. THE DR/ITAT MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR ITAT MUMBAI. ITA NO.1362 & CO. 155/MUM/2009 SHRI BHAVIN V.DESAI. 8 DATE INITIAL 1. DRAFT DICTATED ON 22.02.2010 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 22.02.2010 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON SR.PS 7. FILE SENT TO THE BENCH CLERK SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 9. DATE OF DISPATCH OF ORDER. *