Income Tax Appellate Tribunal - Mumbai
Khimji Poonja Freight Forwards P. Ltd, vs Department Of Income Tax on 30 October, 2009
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCHES "A" : MUMBAI
BEFORE SHRI D. MANMOHAN, HON'BLE 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) M/s. Khimji Poonja Freight
Room No. 545, Aayakar vs. Forwarders P. Ltd. 19-21, Dalal
Bhavan, Mumbai - 400 020 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 rectification of the Order dated 30th October, 2009 on the ground that disallowance of non- receipted expenditure at 50% of the total claim was wrongly restricted to 10% overlooking the latest decision of the ITAT in assessee's own case for the assessment year 2003-2004 (ITA. No. 4969/Mum/2006 dated 26-03- 2009).
2. It may be noticed here that non-receipted expenditure admittedly comprises of conveyance charges, loading and unloading expenses and other incidental expenses which were incurred exclusively for the purpose of business and without incurring such 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-receipted expenses the Assessing Officer sought to disallow a portion of the 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 assessee's own case for the earlier assessment years 2004-2005 and 2005-2006 since Revenue was of the opinion that the amounts disallowable ought to have been more than 10%, an appeal was preferred to the Appellate Tribunal as has been done in assessee's own case for the earlier years. In respect of the assessment year 2004-2005 the ITAT, 'A' Bench, Mumbai (ITA. No.2477 & 3668/M/07 dated 25th March, 2009) had taken a considered view on the issue while holding that the disallowance of 10% would meet the ends of justice, as against 50% disallowed by the Assessing Officer. Having regard 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 that restricting the disallowance at 10% is reasonable, though in the case of estimate of income or disallowance of expenditure on estimate basis some guess work is inevitable. When an appeal for the assessment year 2003-2004 of the same assessee has come up for hearing before ITAT, 'A' Bench, Mumbai, (one of the Members was a party to the earlier decision), it appears that earlier orders of the ITAT were not brought to the notice of the Bench and thus, the Bench, in its wisdom, thought fit to sustain disallowance of 20% of the total expenditure. If a decision is rendered by a Bench overlooking the earlier decision on the same issue or in ignorance of the view taken earlier, a later decision would be held to be per incurium and perhaps for that reason the Revenue has thought fit not to bring it to the notice of the Bench when the appeal for assessment year 2006-2007 was taken up for hearing. The learned Counsel, appearing on behalf of the assessee, relied upon the earlier two Orders of 3 the ITAT while prosecuting the appeal for the assessment year 2006- 2007, wherein disallowance was restricted to 10%. Having regard to the consistent view taken by the ITAT, this Bench upheld the Order of the learned CIT(A) and dismissed the appeal filed by the Revenue by holding that restricting disallowance to 10% of the non-receipted 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 Rajeshwar (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 be justified in invoking its power under section 254 (2) of the Act. However, the facts in the instant case are different. Disallowance of a portion of the expenditure on estimate basis is always a matter of discretion and while exercising the discretion the Bench had taken aid of two earlier decisions of the ITAT which were anterior to the Order passed by the ITAT in assessee's own case for the assessment year 2003-2004. Under these circumstances, it cannot be said that the assumptions on the basis of which Order was passed by the Appellate Tribunal was 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 exercise of the powers vested in them under section 254 (2) of the Act, cannot look into some other circumstances which would support or not support its conclusion and a mistake which requires to be established by arguments and long drawn process of reasoning, on which there may be conceivably two opinions, cannot be considered as a mistake apparent from record.
46. Having regard to the facts and circumstances of the case, we do not find any mistake in the impugned order passed by the ITAT. Therefore, the miscellaneous application filed by the Revenue is rejected.
Order pronounced accordingly in the open Court.
Sd/- Sd/- (R.K. PANDA) (D.MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT Mumbai, Date 02nd 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.