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Income Tax Appellate Tribunal, MUMBAI BENCHES “B”, MUMBAI
Before: Shri Joginder Singh, & Shri Ramit Kochar
आदेश / O R D E R Per Joginder Singh (Judicial Member) This appeal is by the assessee against the confirmation of penalty of Rs.1,07,78,410/- imposed u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter the Act).
During hearing, the ld. counsel for the assessee, Shri Rajesh Sanghvi, contended that the quantum addition has been set-aside, by the Hon'ble High Court, to the file of the Assessing Officer. The ld. counsel also produced the copy of the order of the Tribunal as well as the copy of the order dated 20/10/2015 (ITA No.1961 of 2013) passed by Hon'ble High Court. The ld. DR, Shri Suman Kumar, contended that penalty appeal also may be set-aside to the file of the Assessing Officer.
2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion of the order dated 20/10/2015 (ITA No.1961 of 2013) for ready reference and analysis:-
“This Appeal filed by the Revenue under Section 260-A of the Income Tax Act, 1961 (the Act), challenges the order dated 19th April, 2013 passed by the Income Tax Appellate Tribunal (the Tribunal). The Assessment Year involved is A. Y. 2007-08.
2. The appeal is admitted on the following substantial question of law:-
M/s Blend Financial Services Ltd. (Formerly known as Blend Financial Services Pvt. Ltd.)
Whether on the facts and in the circumstances of the case and in law, the Tribunal erred in not granting an opportunity of cross examination, although specifically requested by the appellant, of Mr. Sandeep K. Sitani, on the basis of whose statements recorded under Section 131 and 132 of the Act, the commission and professional fees paid by the appellant were disallowed?
At the request of Counsel for the parties, the appeal itself is taken for final disposal. This is for the reason that it is an agreed position between the Counsel that the issue arising herein stands concluded by the decision of this Court in R. W. Promotions Pvt. Ltd. vs. Assistant Commissioner of Income Tax (2015) 123 DRT 137. In the aforesaid case of R. W. Promotions Pvt. Ltd. (supra), this Court set aside the order of the Tribunal and restored the issue of allowing or not the claim of expenditure made by the Appellant therein to one M/s. Inorbit Advertising & Marketing Services (P) Ltd., (Inorbit) and M/s, Nupur Management Consultancy (P) Ltd. (Nupur) to the Assessing Officer for passing a fresh order. This, after giving an opportunity to the appellant-assessee therein to cross examine the witness relied upon by the Revenue to disallow the claim of expenditure before passing an order under Section 143(3) of the Act. Attention was invited to the order dated 16th January, 2013 of the Tribunal in the case of R. W. Promotions Pvt. Ltd. (supra) which indicates that Mr. Sandeep K. Sitani is the very person who had given statements/ evidence in respect of M/s. Inorbit & M/s. Nupur.
In the present facts also, the parties involved amongst others are Mzs, Inorbit and Mz's.Nupur on whose behalf, evidence has been given up by Mr. Sandeep K. Sitani and the Revenue is placing reliance upon his statement to disallow the expenditure just as in the case of R. W. Promotions Pvt. Ltd. (supra). Further, in this case also, the Assessing Officer had not allowed cross examination of Mr. Sandeep K. Sitani, the person who manage both the companies on whose evidence Revenue was placing reliance. The only additional features in this case is that Mr. Sandeep K. Sitani's evidence is being relied upon by the Revenue not only to disallow the payment made to M/s. Inorbit & M/s, Nupur but various other companies also.
Mr. Pinto, learned Counsel appearing for the Revenue fairly states that the facts arising in this case are identical to those arising in R. W. Promotions Pvt. Ltd. (supra) inasmuch as in both the cases, expenditure was disallowed on the basis of the statements of Mr. Sandeep K. Sitani without having made him available for cross examination. This even when sought. In the above circumstance, Mr. Pinto submits that in the interest of justice, the decision of this Court in R. W. Promotions Pvt. Ltd. (supra) be followed.
M/s Blend Financial Services Ltd. (Formerly known as Blend Financial Services Pvt. Ltd.)
We find that it IS an undisputed position before us that some of the expenditure incurred on account of commission and professional fees by the Appellant has been disallowed on the basis of the statements of Mr. Sandeep K. Sitani without making him available for cross examination even when sought. Thus, the factual matrix in this case is similar to one in R. W. Promotions Pvt. Ltd. (supra) and, therefore, for reasons indicated therein, we answer the substantial question of law in the affirmative i.e. in favour of the appellant and against the Revenue. Therefore, the impugned order of the Tribunal is set aside and the issue is restored to the Assessing Officer to pass a fresh order after following the principles of natural justice including making available Mr. Sandeep K. Sitani for cross examination by the Appellant.
Appeal disposed of in the above terms. No order as to costs.”
2.2. It is noted that the Tribunal vide order dated 19/04/2013 (ITA No.6814/Mum/2011), while dealing with the quantum addition, dismissed the appeal of the assessee, against which the assessee challenged the same before the Hon'ble High Court. The Hon'ble High Court vide aforesaid order dated 20/10/2015 set-aside the order of the Tribunal and restored the issue to the file of the Assessing Officer for fresh consideration, following the principle of natural justice. It is not the case that quantum addition was deleted by High Court rather it was directed that Mr. Sandeep K. Sitani may be made available for cross examination by the assessee. In view of this factual matrix and following the principle laid down by the Hon'ble High Court, as agreed by the assessee also, we deem it fit an appropriate to restore the penalty appeal also to the file of the Assessing Officer as the same will be depended upon the outcome of the quantum addition. Needless to mention here that the M/s Blend Financial Services Ltd. (Formerly known as Blend Financial Services Pvt. Ltd.) assessee be provided due opportunity of being heard with further liberty to furnish necessary evidence, if any, in support of its claim. Thus, the appeal of the assessee is allowed for statistical purposes.
Finally, the appeal of the assessee is allowed for statistical purposes.