Smt. Jaspreet Kaur, New Delhi V. DCIT, New Delhi

CO 407/DEL/2012

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8506 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-05-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-05-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 15-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHUMANA SEN
• Assessee Lawyers: RAJNEESH
• Keywords: Business expenditure; Additional evidence
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI R. P. TOLANI : JUDICIAL MEMBER AND SHRI J.S. REDDY : ACCOUNTANT MEMBER ITA NO. 4765 /DEL/ 2012 ASSESSMENT YEAR: 2009-20 DY. CIT, CIRCLE-26(1), VS. SMT. JASPREET KAUR, NEW DELHI. 212-A, JYOTI SHIKHAR, DISTRICT CENT RE JANAKPURI, NEW DELHI. PAN: AAIPK 2754 K C.O. NO. 407 /DEL/ 2012 ( IN ITA NO. 4765/DEL/2012) ASSESSMENT YEAR: 2009-20 SMT. JASPREET KAUR, VS. DY. CIT, CIRCLE-26(1), 212-A, JYOTI SHIKHAR, DISTRICT CENTRE NEW DELHI. JANAKPURI, NEW DELHI. (APPELLANT ) (RESPONDENT) REVENUE BY : MS. SHUMANA SEN SR. DR ASSESSEE BY : SHRI RAJNEESH CA ORDER PER R. P. TOLANI, J.M: THESE ARE REVENUES APPEAL AND ASSESSEES CROSS OBJ ECTION AGAINST CIT(A)-XXIV, NEW DELHIS ORDER DATED 21-6-2012 RELA TING TO ASSESSMENT YEAR 2009-10. 2. LD. COUNSEL FOR THE ASSESSEE AT THE OUT SET CONT ENDS THAT THE CROSS- OBJECTION FILED BY THE ASSESSEE IS ONLY IN SUPPORT OF THE ORDER OF THE CIT(A) AND DOES NOT RAISE ANY FRESH ISSUE. 3. LD. DR IS HEARD. 2 4. SINCE THE CROSS-OBJECTION IS ONLY IN SUPPORT OF THE ORDER OF CIT(A), THE SAME IS INFRUCTUOUS AND DISMISSED ACCORDINGLY. 5. THE REVENUES APPEAL RAISES FOLLOWING GROUNDS: (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) ERRED IN DELETING THE DISALLOWANCE OF COMMIS SION PAID AMOUNTING TO RS. 16,80,000/-. (II) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE CIT(A) ERRED IN DELETING THE ADDITION MADE U/S 69A OF THE I.T. ACT 1961 AMOUNTING TO RS. 7,81,585/-. THE APPELLANT CRAVES THE RIGHT TO ADD OR ALTER ANY GROUND OF APPEAL. 6. BRIEF FACTS ARE: THE ASSESSEE IS ENGAGED AS AGEN T OF VARIOUS COMPANIES FOR SELLING OF INDUSTRIAL BOILERS. REGULAR BOOKS OF ACCOUNT ARE MAINTAINED AS REQUIRED U/S 44AB WHICH ARE DULY AUDITED AND SUPPOR TED BY AUDIT REPORT IN FORM NO. 3CD OF THE ACT. 7. APROPOS FIRST GROUND ABOUT DISALLOWANCE OF COMMI SSION PAID AMOUNTING TO RS. 16,80,000/-, BRIEF FACTS ARE: THE ASSESSEE EMPLOYED FOLLOWING SUB-AGENTS FOR UTILIZING THEIR SERVICES I N HER BUSINESS ACTIVITY OF EARNING COMMISSION FROM SALE OF BOILERS: 1) SHRI RANJIT SINGH 2) SHRI RAJESH KUMAR; 3) SHRI KIRTIPAL SINGH. 8. ASSESSING OFFICER ASKED THE ASSESSEE TO PROVIDE COMPLETE DETAILS OF COMMISSIONS PAID, BANK STATEMENTS OF THE PERSONS CO NCERNED, THEIR INCOME- TAX RETURNS ETC. THE ASSESSEE FILED CONFIRMATIONS, DETAILS OF COMMISSION PAYMENTS AND ACKNOWLEDGEMENT OF ITRS. THE CONFIRMAT ION OF SHRI PARVINDER PAL SINGH WAS AWAITED WHICH WAS FILED BY THE ASSESSEE ON 20-12- 3 2011. ACCORDING TO ASSESSING OFFICER, THE COMPLIANC E DID NOT CONTAIN COMPLETE DETAILS OF SUCH RECIPIENTS AND THOUGH THE AGREEMENTS AND KIND OF SERVICES TO BE PROVIDED BY SUCH PARTIES WERE SUBMIT TED, THE NATURE OF SERVICES RENDERED NOT EXPLAINED. UNSATISFIED, ASSE SSING OFFICER HELD THE COMMISSION PAYMENT TO THESE PERSONS AMOUNTING TO RS . 16,80,000/- TO BE BOGUS AND DISALLOWED THE SAME. 9. AGGRIEVED ASSESSEE PREFERRED FIRST APPEAL. CIT(A ) DELETED THE ADDITION BY FOLLOWING OBSERVATIONS: 4.2. I HAVE CAREFULLY PERUSED THE EVIDENCES PLACED ON RECORD BY THE APPELLANT AND THE SUBMISSIONS MADE BY HER. I HAVE ALSO CAREFULLY GONE THROUGH THE LOGIC OF THE AO AS EVIDE NT FROM THE ASSESSMENT ORDER. THE FACTS ARE THAT THE APPELLANT HA EARNED COMMISSION INCOME TO THE TUNE OF RS. 60 LACS AND HA S PAID COMMISSION TO THE TUNE OF RS.16,80,0001-. SHE HAS GIVEN THE COMPLETE NAMES AND ADDRESSES OF ALL THE PERSONS TO WHOM SHE HAS PAID COMMISSION. SHE HAS ALSO PRODUCED COPIES O F ITR ACKNOWLEDGEMENTS AND COPIES OF BANK STATEMENTS OF A LL THE PERSONS TO WHOM SHE HAS PAID COMMISSION. THESE EVID ENCES CANNOT BE BRUSHED ASIDE BY THE AO SIMPLY ON THE BASIS OF SUSPICION, CONJECTURES AND SURMISES. THE AO AGREES IN THE ASSESSMENT ORDER THAT ALL REQUISITE ENTRIES HAVE BE EN MADE IN THE BOOKS OF ACCOUNTS OF THE APPELLANT. HE ALSO AGREES THAT PAYMENTS HAVE BEEN MADE BY CHEQUE AND TDS HAS BEEN DULY D. DUCTED WHEREVER SUCH PAYMENTS HAVE BEE N MADE. HOWEVER, HE MAKES A REMARK THAT MERE ENTRIES IN THE BOOKS OF ACCOUNTS ALL' NOT DETERMINATIVE OF NATURE OF TRANSA CTIONS AND IT IS THE INTENT AND CONDUCT OF THE PARTIES WHICH IS MORE IMPORTANT. THE AO HAS CASTED A SUSPICION ON TH E GENUINENESS OF THESE TRANSACTIONS HUT, HE HAS NOT B ROUGHT ON RECORD EVEN A SHRED OF EVIDENCE TO PROVE HIS ALLEGA TIONS. HE HAS NOT CARRIED OUT ANY INVESTIGATIONS BY ISSUING SUMMO NS U/S. 131 TO THE PARTIES TO WHOM COMMISSION HAVE BEEN PAID BY THE APPELLANT. HE HAS NOT CARED TO CROSS-VERIFY THE REC EIPT OF COMMISSION BY THE FIVE RECIPIENTS FROM THEIR RESPEC TIVE AO'S. 4 THE AO HAS MERELY CONVINCED HIMSELF THAT ALL THE PA YMENTS OF COMMISSION MADE BY THE APPELLANT ARE BOGUS. SUCH UNSUBSTANTIATED ADDITIONS DO NOT WITHSTAND THE TEST OF JUDICIAL SCRUTINY, PARTICULARLY WHEN CONFIRMATIONS, ITR ACKNOWLEDGEMENTS AND COPIES OF BANK STATEMENTS OF T HE PARTIES CONCERNED ARE AVAILABLE FOR EXAMINATION AND THE AO HAS HIMSELF AGREED THAT THE COMMISSIONS HAVE BEEN PAID THROUGH BANKING CHANNELS AND TDS HAS BEEN DULY DEDUCTED ON EACH SUCH PAYMENT. IF AT ALL, THE AO HAD ANY SUSPICION T HAT THE APPARENT WAS NOT REAL, HE SHOULD HAVE FURTHER INVES TIGATED AND BROUGHT ON RECORD EVIDENCES TO THE CONTRARY. HE HAS DONE NOTHING OF THE SORT AND HAS MERELY MADE THE ADDITIO NS ON THE BASIS OF PURE SUSPICION. RELIANCE IS PLACED IN THE ORDER OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F CI'I' VS. SEPTU INDIA PVT. LTD. (2008) 305 ITR 295 (P&H). WHE REIN THE HON'BLE HIGH COURT UPHELD THE DECISION OF HON'BLE I TAT, BENCH D, NEW DELHI IN THE CASE OF THE RESPONDENT FO R A.Y. 1997-98. AGGRIEVED, REVENUE IS BEFORE US. 10. LD. DR CONTENDS THAT FILING OF INCOME-TAX RETU RNS OF THE RECIPIENTS DOES NOT SUFFICE THE REQUIREMENT AS MERELY BOOK ENT RIES DO NOT PROVE THE RENDERING OF SERVICE AND GENUINENESS OF PAYMENT FOR THE SAME. WITH INCOME- TAX RETURNS, NO OTHER STATEMENTS HAVE BEEN FILED. S IMILARLY, THE ACTUAL NATURE OF SERVICES RENDERED BY SUB AGENTS HAVE NOT BEEN EX PLAINED BY THE ASSESSEE. AS ACTUAL RENDERING OF SERVICES AND THEIR NATURE H AVE NOT BEEN ESTABLISHED BY THE ASSESSEE, THE BURDEN CAST ON HER TO DEMONSTR ATE THE GENUINENESS AND BUSINESS EXPEDIENCY OF THE EXPENDITURE HAS NOT BEEN ESTABLISHED. THEREFORE, EXPENDITURE WAS RIGHTLY DISALLOWED BY ASSESSING OFF ICER. BESIDES, CIT(A) HAS RELIED ON SUCH DOCUMENTS WHICH HAD NOT BEEN FURNIS HED BEFORE ASSESSING OFFICER. 11. APROPOS GROUND NO. 2, CIT(A) DELETED THE ADDITI ON BY FOLLOWING OBSERVATIONS: 5 4.4 IN THE SECOND GROUND OF APPEAL THE APPELLANT HA S IMPUGNED THE ADDITION OF RS.7,81,585/- ON THE GROUNDS OF DIF FERENCE IN GROSS EARNINGS VIS-A-VIS THE AMOUNT APPEARING IN AI R. THE APPELLANT SUBMITTED THAT THE DIFFERENCE WAS CLEARLY EXPLAINED IN OUR SUBMISSIONS AS AMOUNT FOR DEBIT NOTE FROM THE C LIENT ON ACCOUNT OF SERVICE TAX. THE APPELLANT HAS RECONCILE D THE FULL AMOUNT AND HAS SUBMITTED THAT SERVICE TAX PAID AMOU NTED TO RS.6A9,022/- AND AS PROOF OF THE SAME, COPY OF SERV ICE TAX RETURN FILED AND CHALLANS FOR THE AMOUNTS PAID HAVE BEEN SUBMITTED AND PLACED ON RECORD BY THE APPELLANT AS REGARDS THE BALANCE AMOUNT OF RS. 1,32,563/-, THE APPELLANT SUB MITTED THIS IS ON ACCOUNT OF INCOME BOOKED IN THE NEXT YEAR AS PER THE BOOKS OF ACCOUNTS T HE APPELLANT. WHILE, THE PRINCIPALS HAVE DEDUCTED TDS ON 31.03.2009 BY MAKING PROVISIONAL EN TRIES. THE APPELLANT HAS AVERRED THAT THE AMOUNT OF RS. 1, 32,563/- STANDS INCLUDED IN THE NEXT YEAR'S AUDITED BOOKS OF ACCOUNTS AND HENCE, NO REVENUE HAS BEEN EVADED FOR TAX. I HAVE C AREFULLY PERUSED THE SUBMISSIONS MADE BY THE APPELLANT, WHO HAS STATED THAT COPIES OF SERVICE TAX RETURNS WERE DULY FILED VIDE PARA 9 OF OUR LETTER DATED 18.08.2011, WHICH HAS NOT BEEN TAK EN INTO CONSIDERATION BY THE ID. AO BEFORE MAKING THIS ADDITION. I HAVE ALSO GONE THROUGH CAREFULLY THE ASSESSMENT ORDER PA SSED BY THE AO , WHEREIN HE HAS STATED THAT NO PROOF OF SERVICE TAX PAID WAS FILED BY THE ASSESSEE DURING THE COURSE OF THE ASSE SSMENT PROCEEDINGS. THIS IS NOT TOTALLY CORRECT AS COPY OF SERVICE TAX RETURNS HAD ALREADY BEEN PLACED ON RECORD BY THE AP PELLANT AND THE AO COULD HAVE CALLED FOR COPIES OF THE CHALLANS SPECIFICALLY. THEREFORE, FINDING MERIT IN THE SUBMISSIONS MADE BY THE APPELLANT, THE ADDITION OF RS.7,81,585/- TO THE INCOME OF THE APPELLANT IS HEREBY DELETED. 12. APROPOS GROUND 2, LD. DR CONTENDS THAT THE DIFF ERENCE IN SERVICE TAX PAYMENT WAS NOT EXPLAINED BY THE ASSESSEE PROPERLY. THEREFORE, ASSESSING OFFICER HAS RIGHTLY MADE THE DISALLOWANCE. LD. DR R ELIED ON THE JUDGMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF SCHNEIDER E LECTRIC INDIA LTD. VS. CIT (2008) 171 TAXMAN 177 (DEL.). 6 13. LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND , VEHEMENTLY ARGUES THAT ALL THE RELEVANT DETAILS AND SUBMISSIONS WERE FILED BEFORE THE ASSESSING OFFICER. THE FACT THAT ASSESSEE EARNS COMMISSION IN COME FROM BUSINESS OF SELLING THE INDUSTRIAL BOILER HAS NOT BEEN DISPUTED . FOR CARRYING OUT SUCH BUSINESS ACTIVITY SUB AGENTS ARE REQUIRED IN FIELD, WHOSE SERVICES WERE ACTUALLY UTILIZED. COMMISSION IS PAID BY WAY OF DU LY EXECUTED AGREEMENT WHICH HAS BEEN REFERRED TO THE AO. THE ASSESSING OF FICER HAS DISALLOWED THE COMMISSION PAYMENT BY OVER INSISTENCE OF PHYSICALLY PRODUCING THESE PARTIES AND INFERRED THAT ACTUAL RENDERING OF SERVI CES IS DOUBTFUL. LD. COUNSEL CONTENDS THAT THE PAYMENT OF COMMISSION, BASED ON A GREEMENT, IS MADE BY CHEQUES AND PROPER TDS IS DEDUCTED THEREON. SIMILAR LY, THE SERVICE TAX ON THE COMMISSION RECEIVED BY THE ASSESSEE IS DEDUCTED BY HER PRINCIPALS AND THE SERVICE TAX IS PAID ON THE COMMISSION PAID BY H ER TO SUB AGENTS. ALL THESE DETAILS WERE INCORPORATED IN THE BOOKS OF A/C WHICH ARE DULY AUDITED. THE NECESSARY CONFIRMATIONS ARE FILED, THEREFORE, THE ASSESSEE DISCHARGED ITS BURDEN ON BOTH ISSUES IN A REASONABLE MANNER BY ENO UGH EVIDENCE. MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE THE RECIPIEN TS IN PERSON CANNOT BE HELD AGAINST THE ASSESSEE, OVERLOOKING AND BRUSHING ASIDE THE OVERWHELMING EVIDENCE FILED IN SUPPORT OF PAYMENT OF COMMISSION AS A BUSINESS EXPENDITURE INCURRED DURING THE COURSE OF BUSINESS. 14. APROPOS GROUND NO. 2 LD. COUNSEL CONTENDS THAT THE SERVICE TAX DIFFERENCE WAS CLEARLY EXPLAINED, RECONCILED ALONG WITH THE COPY OF SERVICE TAX RETURN AND CHALLAN WHICH IS DULY CONSIDERED BY CIT(A) IN HIS DETAILED ORDER, WHICH SHOULD BE UPHELD. 15. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE T HROUGH THE RELEVANT MATERIAL AVAILABLE ON RECORD. REVENUE HAS NOT RAISE D ANY GROUND FOR 7 ADMISSION OF ADDITIONAL EVIDENCE U/S 46A. THEREFORE , WE ARE UNABLE TO ACCEDE TO THE PLEA OF THE LD. DR IN THIS REGARD. 16. APROPOS GROUND NO. 1, THE ASSESSEE IS REGULARLY ASSESSED TO TAX, MAINTAINING AUDITED BOOKS OF ACCOUNT. THE COMMISSIO N PAID TO SUB AGENTS IS THROUGH BANKING CHANNELS, SUPPORTED BY AGREEMENT, T DS THEREON IS DEDUCTED AND SERVICE TAX IS ALSO PAID. IN OUR CONSIDERED VIE W, THESE FACTS REASONABLY DISCHARGE THE BURDEN OF THE ASSESSEE FOR ESTABLISHI NG THE GENUINENESS AND BUSINESS EXPEDIENCY OF THE EXPENSES. MERELY BECAUSE THE ASSESSEE COULD NOT PRODUCE SUBAGENTS PHYSICALLY CANNOT BE HELD AGAINST HER. IN VIEW THEREOF, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A), DELETING T HE DISALLOWANCE. HIS ORDER ON THIS IS ISSUE IS UPHELD. GROUND IS DISMISSED. 17. APROPOS GROUND NO. 2 ALSO THE ALLEGED DIFFERENC E IN SERVICE TAX FIGURES HAS BEEN DULY EXPLAINED BY THE ASSESSEE WHICH HAS BEEN DESCRIBED IN EXTENSIVE DETAILS BY THE CIT(A). SERVICE TAX IS STA TUTORY PAYMENT AND CLAIMED TO BE PAID WITHIN THE YEAR AND DIFFERENCE, IF ANY, HAS BEEN RECONCILED BY ASSESSEE AND FACTUALLY VERIFIED BY THE CIT(A). W E SEE NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) ON THIS ASPECT, ACCORDINGLY, THE SAME IS UPHELD. 18. IN THE RESULT, REVENUES APPEAL A WELL AS ASSES SEES CROSS-OBJECTION ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 17 /05/ 2013. SD/- SD/- (J.S. REDDY ) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 17 TH MAY, 2013 *MP* COPY FORWARDED TO 3. CIT 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT 8