K.Devadoss, CHENNAI V. ACIT, Thanjavur

CO 120/CHNY/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7393 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 19-06-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 21-07-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT ME MBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1127/MDS/2011 (ASSESSMENT YEAR: 2006-07) THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I, THANJAVUR. VS. SHRI K.DEVADOSS, PROP. M/S. MATHA AGENCIES, NO.60,MATHA KOVIL STREET, PATTUKOTTAI, THANJAVUR DIST. PAN:AEEPD8924Q (APPELLANT) (RESPONDENT) & CROSS OBJECTION NO.120 /MDS/2011 (IN ITA NO.1127/MDS/2011) (ASSESSMENT YEAR: 2006-07) SHRI K.DEVADOSS, C/O. S.SRIDHAR, ADVOCATE, NEW NO.14, OLD NO.82, FLAT NO.5 1 ST AVENUE, INDIRA NAGAR, ADYAR, CHENNAI-600 020. PAN:AEEPD8924Q VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-I, THANJAVUR. (CROSS OBJECTOR) (RESPONDENT) REVENUE BY : MR. K.E.B.RANGARAJAN, JR.STANDING COU NSEL ASSESSEE BY : MR. S.SRIDHAR, ADVOCATE DATE OF HEARING : 19 TH JUNE, 2012 DATE OF PRONOUNCEMENT : 28 TH JUNE, 2012 O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER: THE PRESENT APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE CIT(A) , TIRUCHIRAPALLI DATED 23 RD MARCH, 2011. ITA NO. 1127/MDS/2011 & CO NO.120/MDS/11 2 2. THE ASSESSEE IS A WHOLESALE DEALER IN RICE AND P ADDY. FOR THE ASSESSMENT YEAR 2006-07, HE FILED HIS RETUR N OF INCOME ON 31.10.2006 ADMITTING TOTAL INCOME OF ` 7,95,490/-. SCRUTINY ASSESSMENT WAS MADE UNDER SECTION 143(3) AND CERTAIN ADDITIONS/DISALLOWANCES WERE MADE IN THE DE CLARED INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER VID E ASSESSMENT ORDER DATED 30.12.2008. AGGRIEVED AGAIN ST THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A) AFTER TAKING INTO CONSIDERAT ION THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE ASSESSEE PAR TLY ALLOWED THE APPEAL OF THE ASSESSEE VIDE ORDER DATED 23.03.2011. NOW, THE REVENUE HAS COME IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE ORDER OF THE CIT(A) ON THE G ROUND THAT THE CIT(A) HAS ERRED IN RESTRICTING THE DISALLOWANC E TOWARDS LOADING CHARGES, LORRY HIRING CHARGES, BROKERAGE AN D COMMISSION WITHOUT ANY COGENT EVIDENCE BEING BROUGH T ON RECORD BY THE ASSESSEE. ITA NO. 1127/MDS/2011 & CO NO.120/MDS/11 3 3. MR. KEB. RENGARAJAN, DR APPEARING ON BEHALF OF T HE REVENUE SUBMITTED THAT THE ASSESSEE HAD NOT PRODUCE D ANY SUPPORTING MATERIAL IN THE FORM OF BILLS/VOUCHERS T O SHOW THAT HE HAD INCURRED TO THE EXTENT CLAIMED TOWARDS LOADI NG AND TRANSPORTATION OF THE RICE/PADDY. HE FURTHER SUBMI TTED THAT ON THE EXAMINATION OF BOOKS OF ACCOUNTS, IT WAS FOUND THAT NAMES OF PAYEES, LORRY NUMBERS WERE ALSO NOT RECORD ED. THE ASSESSING OFFICER AFTER TAKING INTO CONSIDERATION T HE FACTS OF THE CASE ALLOWED LOADING EXPENSES @ ` 2/- PER BAG INSTEAD OF ` 3/- PER BAG AS CLAIMED BY THE ASSESSEE AND 80% OF THE TRANSPORTATION CHARGES. HE FURTHER SUBMITTED THAT T HE ASSESSEE HAD CLAIMED EXPENSES TOWARDS PAYMENT OF BROKERAGE AND COMMISSION. THE COMMISSION WAS PAID W ITHOUT DEDUCTING TAX AT SOURCE. MOREOVER, THE COMMISSION P AID WAS VERY MUCH ON THE HIGHER SIDE. HE STRONGLY SUPPORTED THE ASSESSMENT ORDER. 4. ON THE OTHER HAND, MR. S.SRIDHAR, ADVOCATE APPEA RING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESS EE HAD CLAIMED ACTUAL LOADING CHARGES AND TRANSPORTATION C HARGES OF ITA NO. 1127/MDS/2011 & CO NO.120/MDS/11 4 PADDY. HE FURTHER SUBMITTED THAT A PERUSAL OF THE A SSESSMENT ORDER SHOWS THAT THE COMMISSION WAS PAID TO MANAGE AGRICULTURISTS AND IN NONE OF THE CASES COMMISSION PAID WAS MORE THAN ` 2,500/-. THEREFORE, THE PROVISIONS OF SECTION 40(A)(IA) ARE NOT ATTRACTED. HE FURTHER SUBMITTED T HAT THE CIT(A) HAS PASSED REASONABLE ORDER PARTLY ALLOWING THE APPEAL OF THE ASSESSEE. HE STRONGLY SUPPORTED THE O RDER OF THE CIT(A). 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE PARTI ES AND HAVE GONE THROUGH THE ORDERS PASSED BY THE AUTH ORITIES BELOW. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS MADE ADDITIONS/DISALLOWANCES WITH REGARD TO LOADING CHARGES AND TRANSPORTATION CHARGE S MERELY ON ESTIMATION BASIS. SIMILARLY, WITH REGARD TO PAY MENT OF BROKERAGE AND COMMISSION, THE ASSESSING OFFICER MER ELY ON GUESS WORK HAS DISALLOWED 75% OF THE AMOUNT CLAIMED AS COMMISSION/BROKERAGE. THE ASSESSING OFFICER HAS FUR THER ERRED IN DISALLOWING THE REMAINING AMOUNT OF THE COMMISSION/BROKERAGE ON THE GROUND THAT THE SAME WA S PAID WITHOUT DEDUCTING TAX AT SOURCE BY APPLYING THE PRO VISIONS OF ITA NO. 1127/MDS/2011 & CO NO.120/MDS/11 5 SECTION 40(A)(IA) OF THE ACT. THE CIT(A) HAS PARTL Y ALLOWED THE APPEAL OF THE ASSESSEE BY GRANTING RELIEF TO THE AS SESSEE BY RESTRICTING THE DISALLOWANCE TO ` 0.50 PAISE PER BAG INSTEAD OF ` 1/- PER BAG AND DISALLOWING ONLY 5% OF THE TRANSPOR TATION EXPENSES INSTEAD OF 20% DISALLOWED BY THE ASSESSING OFFICER. THE COUNSEL FOR THE ASSESSEE HAD SUBMITTED THAT THE ASSESSEE HAD PAID BROKERAGE/COMMISSION AS PART OF T HE PROMOTION OF BUSINESS. THE ASSESSING OFFICER HAD DI SALLOWED THE SAME TO THE EXTENT OF 75% WHICH THE CIT(A) HAS REDUCED TO 25% . AS REGARDS DISALLOWANCE UNDER SECTION 40( A)(IA) IS CONCERNED, THE ASSESSING OFFICER HAS ERRED IN APPLY ING THE PROVISIONS OF SECTION 40(A)(IA) IN THE FACTS OF TH E CASE AS IN NONE OF THE INSTANCES, THE COMMISSION PAID WAS MOR E THAN ` 2,500/- AS IS EVIDENT FROM TABLE AT PAGE 3 OF THE A SSESSMENT ORDER. THE ORDER OF THE CIT(A) IN MAKING MODIFICATI ONS OF THE DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFIC ER IS JUST AND EQUITABLE. WE ARE IN AGREEMENT WITH THE FINDING S OF THE CIT(A) AND UPHOLD THE IMPUGNED ORDER. WE SEE NO MER IT IN THE APPEAL OF THE REVENUE AS WELL AS CROSS OBJECTIO N OF THE ASSESSEE. ITA NO. 1127/MDS/2011 & CO NO.120/MDS/11 6 6. ACCORDINGLY THE APPEAL OF THE REVENUE AND THE C ROSS OBJECTION OF THE ASSESSEE ARE DISMISSED BEING DEVOI D OF ANY MERIT. ORDER PRONOUNCED IN THE OPEN COURT ON THURSDAY, THE 28 TH DAY OF JUNE, 2012 AT CHENNAI. SD/- SD/- (ABRAHAM P.GEORGE) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 28 TH JUNE, 2012. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R. (3) CIT (6) G.F.