Khaitan Electonics, Kolkata V. ACIT, Circle-35, Kolkata, Kolkata

CO 93/KOL/2016

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3590 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 3 month(s) 2 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Assessment record
• Section: 143(3); 142(1); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI ABY. T. VARKEY, JM & SHRI M. BALAGANESH, AM ] I.T.A NO. 2229/KOL/20 16 ASSESSMENT YEAR : 2010-1 1 ACIT, CIRCLE-35,KOLKATA -VS - M/S KHAITAN ELECTRONICS [PAN: AAEFK 9226 A] (APPELLANT) (RESPONDENT ) C.O. NO. 93/KOL/2016 (ARISING OUT OF I.T.A NO. 2229/KOL/201 6) ASSESSMENT YEAR : 2010-1 1 M/S KHAITAN ELECTRONICS -VS - ACIT, CIRCLE-35,KOLKATA [PAN: AAEFK 9226 A] (APPELLANT) (RESPONDEN T) FOR THE APPELLANT : SHRI S.M. SURANA, A DVOCATE FOR THE RESPONDENT : SHRI ARINDAM BHATTACHARJ EE, ADDL. CIT DATE OF HEARING : 14.03.2018 DATE OF PRONOUNCEMENT : 21.03.2018 ORDER PER BENCH: 1. THIS APPEAL BY THE REVENUE AND THE CROSS OBJECTI ON BY THE ASSESSEE DIRECTED AGAINST THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INC OME TAX (APPEALS) 10, KOLKATA (IN SHORT THE LD CITA) IN APPEAL NO. 23/CIT(A)-10/C IR-35/2013-14/KOL DATED 01.09.2016 AGAINST THE ORDER PASSED BY THE ACIT, CI RCLE-35, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143(3) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) DATED 25.03.2013 FOR THE ASSESSMENT YEAR 2010-11. AS THE ISSUES ARE IDENTICAL, BOTH THESE APPEALS ARE TAKEN UP TOGETHER AND DISPOSED OFF BY T HIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 2 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 2 2. THE FIRST ISSUE TO BE DECIDED IN THE APPEAL OF T HE REVENUE IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION OF RS 3,51,9 32/- MADE ON ACCOUNT OF MACHINERY HIRE CHARGES IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSE SSEE IS A PARTNERSHIP FIRM ENGAGED IN THE MANUFACTURING OF BALLASTS / CHOKE AND HAD FILED ITS RETURN OF INCOME FOR THE ASST YEAR 2010-11 ON 24.9.2010 DISCLOSING TOTAL INCOME OF RS 1,33,14,980/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD AO OBSERVED THAT THE ASSESSE HAD DEBITED AN AMOUNT OF RS 39,24,876.53 UNDER THE HEAD MACHINERY HIRE CHAR GES IN ITS PROFIT AND LOSS ACCOUNT. THE LD AO ISSUED A QUESTIONNAIRE U/S 142(1) OF THE ACT DATED 16.8.2012 ASKING THE ASSESSEE TO FURNISH THE DETAILS IN RESPECT OF THE S AME. THE ASSESSEE SUBMITTED THE RELATED DOCUMENTS AND STATED AS UNDER:- PAYMENT TO PHILIPS ELECTRONICS INDIA LTD - RS 38,6 9,298.96 PAYMENT TO AMIT KR GHOSE & OTHERS - RS 55,577. 57 THE LD AO ASKED THE ASSESSEE TO PRODUCE THE RELEVAN T BILLS AND VOUCHERS FOR THE SAME. THE ASSESSEE PRODUCED THE SAME EXCEPT ONE BILL. TH E ASSESSEE WAS ASKED TO SHOW THESE PAYMENTS IN THE BANK STATEMENTS WHICH WAS NOT DONE BY THE ASSESSEE. ACCORDINGLY, THE LD AO DISALLOWED THE SAME IN THE ASSESSMENT. 2.2. BEFORE THE LD CITA, IT WAS SUBMITTED THAT THE ENTIRE PAYMENT OF MACHINERY HIRE CHARGES WERE MADE AFTER DUE DEDUCTION OF TAX AT SOU RCE AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES. IT WAS ALSO PLEADED AS TO HOW AND WHERE FROM THE LD AO HAD ARRIVED AT THE FIGURE OF RS 3,51,932/- THAT WAS ULT IMATELY DISALLOWED IN THE ASSESSMENT. IT WAS PLEADED FURTHER THAT THE ENTIRE BOOKS OF ACC OUNTS WERE PRODUCED BEFORE THE LD AO 3 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 3 WHICH WERE ALSO VERIFIED BY THE LD AO AND NO DISCRE PANCY WAS FOUND BY THE LD AO IN THE SAME. THE LD CITA APPRECIATED THE CONTENTIONS O F THE ASSESSEE AND FOUND THAT THE ASSESSEE HAD FURNISHED THE ENTIRE DETAILS OF MACHIN ERY HIRE CHARGES PAID TO M/S PHILIPS ELECTRONICS INDIA LTD TOGETHER WITH THE DETAILS OF BILL DATE, BILL AMOUNT, TAX DEDUCTED AT SOURCE AND DATE OF REMITTANCE OF TDS TO ACCOUNT OF CENTRAL GOVERNMENT. THE LD CITA ALSO OBSERVED THAT THE ASSESSEE HAD PRODUCED ALL TH E COPIES OF DEBIT NOTES RELATING TO THE PAYMENTS MADE TO THE PARTIES SUCH AS PHILIPS INDIA AND AMIT KR GHOSE AND THE SAME ARE AVAILABLE IN THE ASSESSMENT RECORDS. HE APPRECIAT ED THE CONTENTIONS OF THE ASSESSEE BY OBSERVING THAT THE LD AO HAS NOT SPECIFICALLY POINT ED OUT AS TO WHICH BILL WAS NOT SUBMITTED FOR THE IMPUGNED FIGURE OF RS 3,51,932/- DISALLOWED BY HIM. HE HELD THAT WHEN ALL THE PAYMENTS ARE MADE THROUGH BANKING CHAN NELS, THERE IS NO REASON TO DISBELIEVE A SMALL PORTION OF THE PAYMENTS WHEN THE Y ARE PROPERLY VOUCHED . ACCORDINGLY, HE DELETED THE ADDITION MADE IN THE SU M OF RS 3,51,932/-. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US ON THE FOLLOWING GRO UND:- I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 3,51,932/- MADE BY THE AO ON AC COUNT OF AN MACHINERY HIRE CHARGES BY HOLDING THAT THE SAME WAS PROPERLY VOUCH ED AND MADE THROUGH BANK ACCOUNT OF THE ASSESSEE. 2.3. THE LD DR ARGUED THAT THE LD CITA WAS NOT SURE AS TO WHETHER THE ASSESSEE HAD SUBMITTED ALL THE BILLS . THIS IS CLEAR FROM THE O BSERVATION OF THE LD CITA THAT ALL THE PAYMENTS APPEAR TO BE RECONCILED WITH THE DEBIT NOT ES AND THE TDS EFFECTED FOR THE PARTIES. HENCE HE ARGUED THAT THE LD CITA HIMSEL F WAS DOUBTFUL ABOUT THE FACTUM OF FURNISHING OF NECESSARY DETAILS BY THE ASSESSEE BEF ORE THE LD AO OR BEFORE HIM, AND ACCORDINGLY ERRED IN GRANTING RELIEF TO THE ASSESSE E. HE ARGUED THAT WHEN THE LD AO HAD GIVEN RELIEF FOR 90% OF THE EXPENDITURE, WHY AT ALL HE WOULD NOT HAVE GIVEN RELIEF FOR THE REMAINING 10% OF THE EXPENDITURE. HENCE THE ACTION OF THE LD AO NEED TO BE SEEN IN A 4 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 4 HOLISTIC MANNER IN AS MUCH AS HE HAD DISALLOWED ONL Y TO THE EXTENT OF BILL AND EVIDENCE NOT PROVIDED BY THE ASSESSEE IN THE SUM OF RS 3,51, 932/-. IN RESPONSE TO THIS, THE LD AR VEHEMENTLY SUPPORTED THE ORDER OF THE LD CITA AND S TATED THAT IT IS NOT KNOWN AS TO WHEREFROM THE LD AO HAD TAKEN THE FIGURE OF RS 3,51 ,932/- TO JUSTIFY HIS CONCLUSION THAT THE ASSESSEE HAD NOT SUBMITTED THE SUPPORTING DOCUM ENTS IN THAT REGARD. 2.4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD. THE DISPUTE ARISES ONLY WITH REGARD TO PAYMENT MADE TO PHILIPS ELECTRONICS INDIA LTD. WE HAVE GONE THROUGH THE CONTENTS OF PAGES 122 TO 1 24 OF PAPER BOOK CONTAINING THE DATE WISE DETAILS OF MACHINERY HIRE CHARGES PAID TO PHILIPS ELECTRONICS INDIA LTD TOGETHER WITH BILL DETAILS, PAN , GROSS AMOUNT, TDS DETAILS AND TDS REMITTANCE DETAILS. WE HAVE ALSO GONE THROUGH THE ENTIRE LEDGER ACCOUNT OF PHILIPS ELECTRONICS INDIA LTD FOR THE PERIOD 1.4.2009 TO 31.3.2010 ENCLOSED IN THE PA PER BOOK AND WE ARE NOT ABLE TO FIND THE FIGURE DISALLOWED BY THE LD AO IN THE SUM OF RS 3,51,932/-. EVEN THE LD DR WAS NOT ABLE TO IDENTIFY THE SAID FIGURE FROM THE SAID LEDG ER ACCOUNT BEFORE US. IT IS NOT IN DISPUTE THAT THESE PAPERS WERE SUBMITTED BEFORE THE LD AO. IN VIEW OF THESE FACTS, WE HOLD THAT THE LD CITA HAD RIGHTLY DELETED THE ADDIT ION IN THE SUM OF RS 3,51,932/-. ACCORDINGLY, THE GROUND NO. 1 RAISED BY THE REVENUE IS DISMISSED. 3. THE NEXT ISSUE TO BE DECIDED IN THIS APPEAL IS A S TO WHETHER THE LD CITA WAS JUSTIFIED IN DELETING THE ADDITION OF RS 97,02,695/- ON ACCOU NT OF COMMISSION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 3.1. THE BRIEF FACTS OF THIS ISSUE IS THAT THE LD A O OBSERVED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS 97,02,694.86 IN THE PROFIT AND LOSS ACCOUNT UNDER THE HEAD COMMISSION PAYMENT AND WAS ASKED TO PRODUCE ALL R ELEVANT DOCUMENTS OF THE SAID EXPENSES. THE ASSESSEE SUBMITTED THE FOLLOWING TA BLE ALONG WITH THE BILLS AND LEDGER ACCOUNT :- 5 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 5 3.2. THE LD AO FURTHER ISSUED A QUESTIONNAIRE DATED 28.1.2013 RAISING THE FOLLOWING QUERIES :- A) LEDGER AND TDS CERTIFICATE OF COMMISSION PAID . B) PARTY WISE PURCHASE FOR WHICH YOU HAVE PAID THE COMMISSION. C) WHETHER THERE IS ANY AGREEMENT BETWEEN THE ASSES SEE AND THE COMMISSION AGENT ? IF YES, THE COPIES THEREOF TO BE PRODUCED. D) WHETHER SUCH TYPES OF COMMISSION HAS BEEN CLAIME D IN EARLIER YEARS BY EMPLOYING THE SAME COMMISSION AGENT ? IF YES, DETAILS TO BE F URNISHED. E) WHETHER THE PARTIES FROM WHOM THE PURCHASE HAVE BEEN PROCURED BY THE COMMISSION AGENT, ARE NEW PARTIES INTRODUCED FOR THE FIRST TIM E DURING THE RELEVANT PERIOD I.E FOR THE 6 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 6 FY 2009-10 OR THEY ARE OLD PARTIES FROM WHOM PURCHA SE HAVE BEEN MADE BY THE ASSESSEE IN EARLIER YEARS WITHOUT ENGAGING ANY COMM ISSION AGENT ? 3.3. THE ASSESSEE STATED THAT THERE WAS NO WRITTEN AGREEMENT BETWEEN PARTY AND COMMISSION AGENT FOR SUCH TRANSACTIONS. ASSESSEE H AD CLAIMED COMMISSION EXPENSE IN EARLIER YEARS ALSO BUT THE COMMISSION AGENTS WERE N EW (EXCEPT PRAMOD KUMAR AGARWAL). THE LD AO OBSERVED THAT THE ASSESSEE DID NOT SUBMIT ANY REPLY FURTHER. HE OBSERVED THAT IT WAS FOUND THAT THE TOTAL AMOUNT WH ICH WAS CLAIMED BY THE ASSESSEE AS COMMISSION PAYMENT WAS OUTSTANDING TILL THE END OF THE YEAR I.E 31.3.2010, WHICH RAISES A QUESTION OF DOUBT ABOUT THE GENUINENESS OF SUCH T RANSACTIONS AS ANY COMMISSION AGENT WOULD NOT ALLOW ANY ASSESSEE TO LINGER THE PAYMENT OF SUCH COMMISSION IF HE OR SHE HAD ACTUALLY ACTED AS A COMMISSION AGENT. THE COMMISSIO N BILL WAS RAISED AT THE FAG END OF THE FINANCIAL YEAR ALTHOUGH THE PURCHASES FROM THE PARTIES WERE MADE REGULARLY FROM VERY BEGINNING OF THE FINANCIAL YEAR. THE LD AO CO NDUCTED FURTHER INQUIRY IN THIS REGARD BY ISSUING SUMMOSN U/S 131 OF THE ACT DATED 22.2.20 13 TO THE FOLLOWING PARTIES :- A) PRAMOD KUMAR AGARWAL B) DIRECTOR OF MITTAL IRON & FOUNDRY LTD C) DIRECTOR OF TIJIYA STEELS PVT LTD IN RESPONSE , SHRI PRAMOD KUMAR AGARWAL APPEARED BE FORE THE LD AO ON 4.3.2013 , DIRECTOR OF MITTAL IRON & FOUNDRY LTD MR VIJAY KUMA R AGARWAL APPEARED ON 6.3.2013 AND AUTHORIZED REPRESENTATIVE OF TIJIYA STEELS PVT LTD MR AMIT KUMAR JAISWAL APPEARED ON 12.3.2013. DURING THE COURSE OF PROCEEDINGS U/S 131 OF THE ACT, SHRI VIJAY KUMAR AGARWAL PRESENTED A BILL ACCORDING TO WHICH HE EARN ED COMMISSION FROM KHAITAN ELECTRONICS IN THEIR PURCHASE OF ITEMS FROM THE RES PECTIVE 12 PARTIES. MR AGARWAL STATED THAT HE MET FEW PARTIES PERSONALLY IN THEIR OFFICES AND CONTACTED THE REST OF THE PARTIES OVER PHONE. THE LD AO OBSERVED THAT MR AGARWAL WAS UNABLE TO PROVIDE THE ADDRESSES 7 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 7 OR CONTACT NUMBERS OF ANY OF THE PARTIES, FURNISH T HE QUANTITY OF GOODS PURCHASED AS WELL AS THEIR APPROXIMATE PURCHASE PRICE. THIS MADE TH E LD AO TO DISBELIEVE THE COMMISSION PAYMENT MADE TO MITTAL IRON & FOUNDRY LT D IN AS MUCH AS THE SERVICES RENDERED BY THE COMMISSION AGENT WERE NOT CONCLUSIV ELY PROVED BY THE AGENT. SIMILAR WAS THE CASE WITH SHRI PRAMOD KUMAR AGARWAL AND AUTHORIZED REPRESENTATIVE OF TIJIYA STEELS PVT LTD MR AMIT KUMAR JAISWAL. THE L D AO OBSERVED THAT THE SERVICES RENDERED TO THE ASSESSEE FOR EARNING COMMISSION HAD NOT BEEN CONCLUSIVELY PROVED BY THESE THREE PARTIES. THE STATEMENTS RECORDED FROM THESE PARTIES WERE SHOWN TO THE AR OF THE ASSESSEE AND WAS ASKED TO EXPLAIN TO PROVE T HE GENUINENESS OF THE PAYMENTS OF COMMISSION BY THE ASSESSEE IN THE LIGHT OF THE STAT EMENTS SHOWN TO HIM. THE LD AO OBSERVED THAT DEDUCTION OF TAX AT SOURCE ON COMMISS ION PAYMENTS IS NOT SACROSANCT TO PROVE THE GENUINENESS OF COMMISSION EXPENDITURE. ACCORDINGLY THE LD AO DISALLOWED THE ENTIRE COMMISSION EXPENDITURE OF RS 97,26,495 I N THE ASSESSMENT. 3.4. THE ASSESSEE PLEADED BEFORE THE LD CITA THAT ALL THE COMMISSION AGENTS ARE INCOME TAX ASSESSEES AND HAD DULY REFLECTED THE COMMISSION RECEIVED FROM THE ASSESSEE AS THEIR INCOME AND PAID TAXES THEREON. IT IS NOT THE CASE THAT THOSE COMMISSION AGENTS HAD ONLY COMMISSION INCOME IN THEIR RETURNS AND IT IS ALSO N OT THE CASE THAT THEY HAD RECEIVED COMMISSION ONLY FROM THE ASSESSEE HEREIN. THE ASSE SSEE FURNISHED EVIDENCES IN THIS REGARD TO PROVE THE GENUINITY OF THE TRANSACTIONS B EFORE THE LD CITA. 3.5. THE LD CITA EXAMINED THE ASSESSMENT RECORDS AN D ALSO THE STATEMENTS RECORDED BY THE LD AO FROM THE AFORESAID THREE COMMISSION AGENT S. THE LD CITA OBSERVED THAT THE ASSESSEE HAD EFFECTED PURCHASES OF RS 37,91,73,428. 28 DURING THE YEAR AND THAT COMMISSION OF RS 97,02,695/- WAS PAYABLE ON ACCOUNT OF SUCH PURCHASES. HE OBSERVED 8 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 8 THAT THE LD AO HAD NOT MENTIONED WHETHER THE COMMIS SION WAS PAYABLE ON ACCOUNT OF THE WHOLE PURCHASES OR RELATES ONLY TO PART OF THE SAID PURCHASES. FROM THE EXAMINATION OF THE THREE COMMISSION AGENTS BY THE LD AO, THE LD CITA FOUND THAT THE ASSESSEE HAD SUBMITTED A FAIR AMOUNT OF DETAILS AND DOCUMENTARY EVIDENCES BEFORE THE LD AO. WITH REGARD TO THE DETAILS OF 12 PARTIES MENTIONED IN TH E BILL SUBMITTED BY SHRI VIJAY KUMAR AGARWAL, DIRECTOR OF MITTAL IRON & FOUNDRY LTD, WH EREIN HE HAD STATED THAT MITTAL IRON & FOUNDRY LTD WAS INSTRUMENTAL IN SOURCING THE PURC HASES FROM THESE 12 PARTIES TO THE ASSESSEE FOR WHICH THE ASSESSEE HAD PAID COMMISSION TO MITTAL IRON & FOUNDRY LTD. IN THIS REGARD, THE LD CITA OBSERVED THAT SHRI VIJAY K UMAR AGARWAL, DIRECTOR OF MITTAL IRON & FOUNDRY LTD , HAD STATED THAT HE HAD SUBMITT ED THE LIST OF VENDORS WHO HAD SUPPLIED GOODS TO ASSESSEE AND ALSO OBSERVED THAT T HE SAID COMPANY HAD ALSO RECEIVED COMMISSION INCOME FROM M/S SENDOZ. THE LD CITA OB SERVED THAT SHRI VIJAY KUMAR AGARWAL HAD ALSO MADE A MENTION IN HIS STATEMENT RE GARDING THE NAMES OF SOME OF THE PRODUCTS LIKE BOBBINS, CONNECTORS, VARNISH PAINT, P LASTIC COVERS AND IGNITERS. THE LD CITA OBSERVED THAT SIMILAR IS THE POSITION IN THE S TATEMENTS RECORDED FROM OTHER TWO COMMISSION AGENTS. THE LD CITA ALSO OBSERVED THAT T HE COMMISSION PAYMENTS WERE NOT MADE TO ANY RELATED PARTIES SO AS TO ALLEGE ANY CON NIVANCE OF THE ASSESSEE WITH THE SAID PARTIES. THE LD CITA IN ADDITION TO PLACING RELIANC E ON VARIOUS DECISIONS, PLACED RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS ALFA HYDRONICS PVT LTD IN ITA NO. 549 OF 2004 DATED 10.11.2014 WHEREIN IT WAS HELD THAT WHEN THERE WAS NOTHING TO SHOW THAT THE TRANSA CTION OF THE PAYMENTS OF COMMISSION WAS NOT GENUINE OR THE COMMISSION WAS EXCESSIVE OR UNREASONABLE, NO DISALLOWANCE CAN BE MADE. ACCORDINGLY, HE DELETED THE DISALLOWANCE OF COMMISSION IN THE SUM OF RS 97,26,495/- MADE BY THE LD AO. AGGRIEVED, THE REVEN UE IS IN APPEAL BEFORE US ON THE FOLLOWING GROUND:- (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS. 97,02,695/- MADE BY TH E AO ON ACCOUNT OF PAYMENT OF COMMISSION PAID BY THE ASSESSEE WHICH IS BOGUS. 9 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 9 3.6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIALS AVAILABLE ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE FILED IN T HIS REGARD COMPRISING OF DETAILS OF COMMISSION PAID (ENCLOSED IN PAGE 36 OF THE PAPER B OOK) ; BILLS RAISED BY COMMISSION AGENTS FOR COMMISSION TOGETHER WITH TDS CERTIFICATE S (ENCLOSED IN PAGES 37 TO 45 OF PB) ; COPY OF AUDITED BALANCE SHEET AND PROFIT AND LOSS ACCOUNT TOGETHER WITH THE IT ACKNOWLEDGEMENT RETURN COPY OF THE COMMISSION AGENT S M/S MITTAL IRON & FOUNDRY LTD AND M/S TIJIYA STEELS PVT LTD FOR THE ASST YEAR 2010-11 (ENCLOSED IN PAGES 46 TO 102 OF PB) ; COPY OF BANK STATEMENT OF ASSESSEE SHO WING THE PAYMENT MADE TO THESE COMMISSION AGENTS ( ENCLOSED IN PAGES 103 TO 119 OF PB) AND COMPARATIVE STATEMENT OF NET PROFIT EARNED WHICH IS HIGHEST DURING THE YEAR (ENCLOSED IN PAGE 120 OF PB) . WE ALSO FIND THAT THE DETAILS OF SUNDRY CREDITORS EXCE EDING PURCHASE VALUE OF RS 10 LACS AND ABOVE WERE FURNISHED BY THE ASSESSEE BEFORE THE LD AO. IN THE SAID DETAILS, THE NAMES AND ADDRESSES OF VARIOUS SUNDRY CREDITORS WHERE PUR CHASE VALUE IS MORE THAN RS 10 LACS ARE FURNISHED. WE FIND THAT THE VERY SAME PARTIES ARE ALSO MENTIONED IN THE BILLS RAISED BY THE COMMISSION AGENTS AND THE VALUE OF PURCHASES TO PROVE THAT THE COMMISSION BILL IS RAISED FOR SOURCING THE PURCHASES FROM THESE PAR TIES TO THE ASSESSEE HEREIN. THIS DOCUMENT CONCLUSIVELY GOES TO PROVE THAT THE COMMIS SION AGENTS HAD INDEED RENDERED SERVICES TO THE ASSESSEE. MOREOVER, THE ASSESSEE H AD MADE THE PAYMENT OF COMMISSION TO AGENTS BY ACCOUNT PAYEE CHEQUES AFTER DEDUCTION OF TAX AT SOURCE AND THOSE COMMISSION AGENTS HAD REFLECTED THE COMMISSION INCO ME IN THEIR RESPECTIVE INCOME TAX RETURNS. WE ALSO FIND THAT THOSE COMMISSION AGENTS HAVE DISCLOSED MORE TAXABLE INCOME IN THEIR RETURNS WHICH INCLUDES ASSESSEES COMMISSI ON ALSO AND WE FIND THAT THOSE PARTIES ARE IN RECEIPT OF COMMISSION FROM VARIOUS PERSONS O THER THAN ASSESSEE ALSO. THE LD CITA HAD STATED THAT THESE COMMISSION AGENTS ARE NO T RELATED PARTIES OR FAMILY MEMBERS OF THE ASSESSEE WHICH FACTS REMAIN UNCONTROVERTED B Y THE REVENUE BEFORE US. HENCE THERE IS NO REASON TO SUSPECT THESE TRANSACTIONS. THE THREE COMMISSION AGENTS TO WHOM SUMMONS WERE ISSUED U/S 131 OF THE ACT HAD APPEARED BEFORE THE LD AO AND HAD SUBMITTED NECESSARY DOCUMENTS AND CLEARLY DEPOSED T HAT THEY HAD RENDERED SERVICES TO 10 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 10 THE ASSESSEE FOR WHICH COMMISSION WAS RECEIVED FROM THE ASSESSEE FIRM BY THEM. THE NAMES AND ADDRESSES OF THE VENDORS FROM WHOM THE PU RCHASES WERE SOURCED TO THE ASSESSEE WERE ALSO PROVIDED TO THE LD AO. HENCE IF AT ALL, THERE IS ANY DOUBT ON THE SAME, THE LD AO COULD HAVE VERIFIED THE SAME WITH T HE CONCERNED VENDORS TO ASCERTAIN THE VERACITY OF THE TRANSACTIONS. THIS IS NOT THE CASE THAT THE ASSESSEE AS WELL AS THE COMMISSION AGENTS HAD NOT SUBMITTED ANY DETAILS SO AS TO GIVE ONE MORE OPPORTUNITY TO THE REVENUE FOR MAKING FRESH ENQUIRY. WE ALSO FIND THAT THE NET PROFIT SHOWN BY THE ASSESSEE DURING THIS YEAR HAD INCREASED SUBSTANTIAL LY WHEN COMPARED TO THAT IN THE EARLIER YEAR. SINCE THE SERVICES RENDERED BY THE C OMMISSION AGENTS HAD BEEN PROVED CONCLUSIVELY IN THE INSTANT CASE, THE RELIANCE PLAC ED ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF VISHNU AGE NCIES (P) LTD VS CIT REPORTED IN 117 ITR 754 (CAL) DOES NOT COME TO THE RESCUE OF THE RE VENUE, AS IN THAT CASE, THE SERVICES RENDERED WERE NOT PROVED BY THE ASSESSEE. HENCE TH E SAME IS FACTUALLY DISTINGUISHABLE. HENCE IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTAN CES , WE HOLD THAT THE FACT OF RENDERING OF SERVICES BY THESE COMMISSION AGENTS TO THE ASSESSEE HAS BEEN PROVED BEYOND DOUBT AND ACCORDINGLY THE ASSESSEE IS SQUARE LY ELIGIBLE FOR DEDUCTION OF COMMISSION EXPENDITURE U/S 37 OF THE ACT. ACCORDIN GLY, THE GROUND NO. 2 RAISED BY THE REVENUE IS DISMISSED. 4. THE GROUND NO. 3 RAISED BY THE REVENUE IS GENERA L IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 5. THE LD AR STATED THAT THE CROSS OBJECTION PREFER RED BY THE ASSESSEE IS WITHDRAWN BY HIM. ACCORDINGLY THE CROSS OBJECTION OF THE ASSESS EE IS DISMISSED AS WITHDRAWN. 11 ITA NO.2229/KOL/2016& C.O. NO. 93/KOL/2016 M/S KHAITAN ELECTRONICS A.YR.2010-11 11 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED AND CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON 21.03. 2018 SD/- SD/- [A.T. VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 21.03.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ACIT, CIRCLE-35, KOLKATA, AAYAKAR BHAWAN POORVA, 8 TH FLOOR, 110, SHANTIPALLY, KOLKATA-700107. 2. M/S KHAITAN ELECTRONICS, P-38, INDIA EXCHANGE PL ACE, ARUN CHAMBERS, 3 RD FLOOR, KOLKATA-700001. 3. C.I.T(A)- , KOLKATA 4. C.I.T.- K OLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S