TMI Blog2014 (7) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... ischarged in its respect, expenditure to that extent, i.e., ₹ 26,54,460/-, stands to be disallowed. Expenditure with reference to any particular payee (sub-broker) - HELD THAT:- We are in agreement with the ld. DR that the Revenue has in fact acted liberally, allowing the claim for expenditure where as much as a valid confirmation as to the receipt of payment stands filed. We may further add that the figures stated by us in this order have been adopted as furnished by the assessee before us, upon being sourced from the A.O. under RTI Act. The same, therefore, would be subject to confirmation by the A.O. while giving appeal effect to this order. Further, there being admittedly a difference of ₹ 59,103/-, the assessee shall either explain or reconcile the said difference by locating the source of error. In case, however, the same cannot be and neither is the same found by the A.O.; the total expenditure claimed being at a amount lower (by that amount) for which the detail stands submitted, the benefit of doubt would go to the assessee, so that the expenditure to be allowed with reference to any particular payee (sub-broker) shall be as stated, i.e., without any ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No.221/Mum(G)/2006 dated 16.11.2009/PB pgs.79-85). 2.2 In the set aside proceedings, the assessee furnished the names and addresses of the 34 persons to whom sub-brokerage for the impugned amount of ₹ 63.53 lacs was paid. Notices u/s. 133(6) were issued by the A.O. to confirm the receipt of the brokerage by them. Most of the notices were either received back un-served or the persons receiving them did not reply. One entity by the name, Merchant Navy Officer Welfare Fund, responded by denying having received any brokerage. Accordingly, the A.O. allowed the assessee s claim in respect of six parties from whom (photo copies of) latest confirmations were filed (for ₹ 9,85,582/-) and qua two parties who responded positively to the notices u/s.133(6), claiming to have received the brokerage (₹ 2,00,714/-), i.e., for a total of ₹ 11,86,266/-, disallowing the balance ₹ 51,67,026/-. The same stood confirmed in appeal in-as-much as the assessee was unable to improve its case thereat in any manner; even the genuineness of the transactions being in the view of the ld. CIT(A) not beyond doubt. Aggrieved, the assessee is in second appeal. 3. We have heard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of the orders by the authorities below would show, as well as the arguments advanced before us, the assessee s case is that it cannot be put to a disadvantage on account of some parties, to whom verification notices u/s. 133(6) stood issued, not responding or responding by stating that they are in the absence of the old records not in a position to confirm the transaction. Payments to them, after all, stand made through the banking channel. Again, the A.O. had the power to enforce attendance and, therefore, the plea of the parties having not responded could not hold. The Revenue s case, on the other hand, is that the assessee itself is responsible for the delay in the verification and, as such, it cannot take advantage of its own wrong. Two, the burden of proof for the claim u/s. 37(1) has, in the facts and circumstances of the case, not been met. Rather, as the ld. Departmental Representative (DR) would submit, the A.O. in allowing the assessee its claim in respect of the expenditure for which confirmations (as to payment) stood furnished has only acted liberally in the matter. Toward this, reliance stands placed by him on the decisions in the case of ITO vs. Maddi Laxmaiah C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notices could not be served for 2,47,500 18,71,325 Note 1 Confirmations filed for 25,71,994 Confirmations not filed 26,54,460 Total 52,26,454 Admitted difference (59,103) Amount disallowed 51,67,351 3.5 The issue, as we discern, is with regard to the burden of proof, i.e., on whom lies the onus, and whether the same stands discharged, so that the same, being by its very nature not a static phenomenon but a continuously shifting or vacillating burden, has been shifted to the other. Towards this, our first observation is that the burden u/s.37(1) of the Act is squarely on the assessee in-as-much as it is for it to prove that the expenditure being claimed stands incurred wholly and exclusively for the purpose/s of its business. If, despite all the materials and evidences led by the assessee, the assessing authority is still not satisfied, and proceeds to make a disallowance in its respect, it is upon the appellate authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive of whether the notices u/s.133(6) stand issued by the A.O. or not (which could again be for the reason of lack of proper address, etc.), the initial onus having not been discharged in its respect, expenditure to that extent, i.e., ₹ 26,54,460/-, stands to be disallowed. We decide accordingly. 3.6.2 We now take up the case where confirmations stand filed. Of the same, the A.O. has not issued notices to party/s, in respect of expenditure for ₹ 2,74,069/-. The initial onus having been discharged by the assessee, so that there is nothing on or brought on record to doubt or rebut the same by the Revenue, the expenditure to that extent is confirmed for being allowed. We decide accordingly. 3.6.3 We may next discuss the implication of the circumstance where notices stand issued by the A.O. (i.e., for ₹ 22.98 lacs). The same could not be served on one party, namely (as stated) Vasan Gadre, to whom sub-brokerage is claimed to have been paid at ₹ 1,45,699/-. Though ordinarily this should not operate to the detriment of the assessee, in the instant case the confirmation (which would have been signed by the payee only on or after May 6, 2003) was filed befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t needs to be appreciated that the instant proceedings are set aside proceeding, so that the terms of the set aside shall continue to obtain, i.e., where and to the extent the matter is not decided either way on the basis of the findings in the set aside proceedings, including before us. The matter is, accordingly, set aside to the file of the A.O. to allow the assessee an opportunity to prove its claim qua the sub-brokerage for ₹ 21,52,226/-. We decide accordingly. 3.7 Before parting with this order, it may also be relevant to state that while one would be generally disinclined to favour a verification process years after the transaction, which in fact has its own limitations, the same cannot be stated or held as a matter of rule, and would be subject to other considerations impinging on the matter, including the peculiar facts and circumstances of the case. Put succinctly, there are legal constraints to the aforesaid proposition, based on the rule of equity, in-as-much as there is no estoppel against law. Two, it needs to be borne in mind that the instant proceedings are set aside proceedings, so that the terms of the set aside shall obtain, binding not only the authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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