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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI RAJENDRA, AM & SHRI AMARJIT SINGH, JM
आयकर अपील सं/ (िनधा�रण वष� / Assessment Year: 2004-05) बनाम/ BPM Securities Pvt. Ltd. Income Tax Officer 2(1)(1) Veena Chambers, 21, Aayakar Bhavan, Vs. Dalal Street, Mumbai – 400 001 Mumbai – 400 001 �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACB3219M (अपीलाथ� /Appellant) (��थ� / Respondent) .. Assessee by: Shri Dalpat Shah Revenue by: Shri Suman Kumar सुनवाई की तारीख / Date of Hearing: 07.12.2016 घोषणा की तारीख /Date of Pronouncement: 22.03.2017 आदेश / O R D E R PER AMARJIT SINGH, JM:
The assessee has filed the present appeal against the order dated 12.09.2011 passed by the Commissioner of Income Tax (Appeals)-4, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y.2005-06 in which penalty levied by the Assessing Officer u/s.271(1)(c) to the tune of Rs.8,75,000/- was confirmed.
The assessee has raised the following grounds:- Ground No.1 “
ITA No.7061/M/2013 A.Y.2004-05
The CIT(Appeals) – 4, Mumbai erred in confirming penalty u/sec. 271(1)(c) of the Income Tax Act of Rs.8,75,000/-, particularly when he has not stated specifically whether the penalty has been imposed because of concealment of income or furnishment of inaccurate particulars of income, and therefore, the said order levying penalty u/sec 271(1)(c) is bad in law, illegal and void ab-initio. Ground No.2 2.1 Without prejudice, the said CIT(Appeals) erred in confirming the penalty levied u/s.271(1)(c) of Rs.8,75,000/- on disallowance of brokerage expenses claimed of Rs.25 Lacs ignoring the fact that the claim was under a bonafide belief and all the details and explanation were furnished at the assessment stage. 2.2 The ld. CIT(A) erred in not considering the fact that merely as disallowance of claim does not tantamount to concealment of income as held by the Hon’ble Supreme Court in the name of CIT Vs. Reliance Petrochemicals Pvt. Ltd., 322 ITR 154.
The brief facts of the case are that the assesse filed the return of income on 31.10.2005 declaring total income to the tune of Rs.Nil. The assessment was completed u/s.143(3) of the Income Tax Act, 1961 (in short “the Act”) on 12.12.2007 assessing total income to the tune of Rs.34,14,180/-. At the time of assessment, it was observed that the expenses in respect of brokerage paid to Banhem Securities P. Ltd. Of Rs.25,00,000/- was not found incurred for the purpose of business of the assessee. Therefore, the penalty was levied to the tune of Rs.8,75,000/-. The assessee filed an appeal before the CIT(A) who confirmed the order passed by the Assessing Officer, therefore, the assessee has filed the present appeal before us.
ISSUE NO.1 & 2
ITA No.7061/M/2013 A.Y.2004-05
Issue no.1 & 2 are interconnected, therefore are being taken up together for adjudication. Under these issues, the assessee has challenged the confirmation to levy the penalty to the tune of Rs.8,75,000/- by the Assessing Officer. Learned representative of the assessee has argued that the assessee has furnished all the details, documents and explanation to substantiate the claim of brokerage expenses but the claim was disallowed which cannot be treated as concealment of income in view of the law settled in CIT Vs. Reliance Petrochemicals Pvt. Ltd., 322 ITR 154, therefore, the penalty confirmed by the CIT(A) is wrong against law and facts and is liable to be deleted. However, on the other hand the learned representative of the department has placed reliance upon the order passed by the CIT(A) in question. On appraisal of the above mentioned orders and also documents on the file, it came into the notice that the assessee has shown the payment of Rs.25,00,000/- in Profit & Loss Account being brokerage paid to Banhem Securities Pvt. Ltd., however, the contention of the assessee was not found correct. The CIT(A) has also confirmed the order and the Hon’ble Income Tax Appellate Tribunal, Mumbai bench in for A.Y.2005-06 in the assessee’s own case dated 30.06.2011 confirmed the disallowance with a view that no service was rendered to the assessee by M/s. Banhem Securities Pvt. Ltd. and disallowed the brokerage u/s.37(1) of the Act. Anyhow, the quantum has been confirmed. The Assessing Officer took the view on the basis of this fact that the Bank of Rajashtan wrote to the Assessing Officer u/s.133(6) of the Act that M/s. Banhem Securities nowhere rendered services to the assessee. In the said circumstances, it is to be seen whether the claim of the assessee has been disallowed simply which does not attract the penalty in ITA No.7061/M/2013 A.Y.2004-05 view of the law settled in CIT Vs. Reliance Petrochemicals Pvt. Ltd., 322 ITR 154 or not. Before going further, it is necessary to advert the finding of the CIT(A) on record:-
“5. I have considered the facts of the case and submissions of the assessee. In view of the above details and sequence of events, it is clear that loan had already been sanctioned by The Bank of Rajasthan to M/s. Apollo International Ltd. on 23.03.2003 and, therefore, M/s.Banhem Securities could not have rendered any services in this regard because sub-mandate is claimed to have been given to them vide letter 19.06.2003, which is much after the date of sanction of loan. Assessee itself has been mandated vide letter dated 10.12.03 and, therefore, any sub-mandate prior to that to M/s.Banhem Securities vide letter dated 09.06.2003 is clearly an after thought and a document created falsely for making bogus claim of brokerage payment. The assessee has also produced letter dated 14.01.2004 from The Bank of Rajasthan regarding sanction of loan but the correct fact is established by the submissions of The Bank of Rajasthan in response to the notice u/s.133(6). Therefore, it is clearly established that assessee knowingly made a bogus claim of brokerage payment and further created false evidence in this ITA No.7061/M/2013 A.Y.2004-05 regard by way of making a sub-mandate letter dated 19.06.2003 and other correspondences.
The assessee is clearly caught in the provisions of section 271(1)(c) because the assessee has furnished inaccurate particulars of its income by making bogus claim of brokerage and further assessee is clearly caught in Explanation (1) to section 271(1)(c) also because the explanation filed by the assessee has been found to be false by the A.O. during assessment proceedings as well as during penalty proceedings. In view of the submissions of the The Bank of Rajasthan it is clear that the assessee’s explanation
The assessee has claimed to be paid the brokerage to M/s Benhem securities therefore it was incumbent upon the assessee to prove the transaction beyond the shadow of reasonable doubts which he failed to do so. Even Hon’ble ITAT in appeal N 5684/mum/2009confirmed the order passed by the Assessing officer. The transaction was not found genuine. It was not rightful claim which has been declined by the Assessing officer. There was nothing with the assessee to prove the genuineness of the transaction. The latter issued by the Bank of Rajasthan makes more clear about the transaction in which bank speaks about ignorance of transaction. Anyhow the claim was not found in accordance with law. The law
ITA No.7061/M/2013 A.Y.2004-05