Shehla Ahmed (Smt.), Kanpur V. Income Tax Officer, Kanpur

ITA 101/LKW/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 4300 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 06-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 02-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 40A(3); 131

Judgement Text

I.T.A. NO.101/LKW/15 ASSESSMENT YEAR:2010-11 1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B, LUCKNOW BEFORE SHRI P. K. BANSAL, ACCOUNTANT MEMBER AND SHRI ABY T. VARKEY, JUDICIAL MEMBER ITA NO.101/LKW/2015 ASSESSMENT YEAR:2010-11 SMT. SHEHLA AHMAD PROP. M/S S. S. INTERNATIONAL, 376-C, JAJMAU, KANPUR. PAN:AEXPA4122N VS. INCOME TAX OFFICER, WARD-1(4), KANPUR. (APPELLANT) (RESPONDENT) O R D E R PER P. K. BANSAL, A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-II, KANPUR DATED 09/10/2014. 2. GROUND NO. 1 TO 8 RELATE TO ONLY ONE ISSUE I.E. THE DISALLOWANCE OF COMMISSION INCURRED BY THE ASSESSEE DURING THE YEAR AMOUNTING TO RS.14,43,000/-. THE BRIEF FACTS RELATED TO THIS IS SUE ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT THE ASSESSEE HAS PAID COMMISSION OF RS.14.43 LAC WHICH IS SHOWN TO BE PAID TO THE RELATIVE SHRI KALIM AKHTAR, SMT. SANA AHEMAD, S HRI IMTIAZ AKHTAR AND SHAZEB REHMAN. THE ASSESSING OFFICER DISALLOWED TH E SAID COMMISSION AMOUNTING TO RS.14,43,000/- AS IN HIS OPINION THE A SSESSEE COULD NOT FURNISH COGENT EVIDENCE TO PROVE THE ACTUAL SERVICE S RENDERED BY THE ASSESSEE. WHEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) ALSO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. APPELLANT BY SHRI P. K. KAPOOR, C. A. RESPONDENT BY SHRI A MIT NIGAM, D. R. DATE OF HEARING 06/06/2016 DATE OF PRONOUNCEMENT 27 / 07 /2016 I.T.A. NO.101/LKW/15 ASSESSMENT YEAR:2010-11 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS, CAREFULLY C ONSIDERED THE SAME ALONG WITH THE ORDERS OF THE TAX AUTHORITIES BELOW. WE NOTED THAT THIS IS A CASE WHERE THE ASSESSEE HAS SUBMITTED BEFORE THE AS SESSING OFFICER NOT ONLY THE COPY OF THE STATEMENT ON OATH OF ALL THE F OUR AGENTS TO WHOM THE COMMISSION HAS BEEN PAID BUT ALSO FILED THE CONFIRM ATION LETTER ISSUED BY THE PURCHASER IN RESPECT OF EACH AND EVERY AGENT WH O HAVE CONFIRMED THAT THEY HAVE MADE THE PURCHASES THROUGH THE AGENT. CO NFIRMATION FOR VARIOUS PURCHASES MADE THROUGH AGENT SHRI KALIM AKHTAR IS A VAILABLE ON PAGE NO. 22 OF THE PAPER BOOK, CONFIRMATION OF SANA AHMED IN RESPECT OF PURCHASES MADE THROUGH AGENT SANA AHMAD IS AVAILABLE ON PAGE NO. 31 OF THE PAPER BOOK, CONFIRMED ISSUED BY M/S EVEREST TANNERY PVT. LTD. AND M/S CALICO TRENDS FOR VARIOUS PURCHASES MADE THROUGH AGENT IMT IAZ AKHTAR IS AVAILABLE ON PAGES 41 & 42 OF THE PAPER BOOK, CONFIRMATION LE TTER ISSUED BY M/S MODEL EXIMS, M/S MODEL TANNERS INDIA (P) LTD. AND M /S MODEL ECHOES PVT. LTD. FOR VARIOUS PURCHASES MADE THROUGH AGENT SHAHZ EB REHMAN IS AVAILABLE ON PAGES 51 TO 53 OF THE PAPER BOOK. WE HAVE ALSO GONE THROUGH THE COPY OF BILLS BEING RAISED BY EACH OF THE PERSO NS TO WHOM THE COMMISSION HAS BEEN PAID, THE COPIES OF WHICH ARE A VAILABLE IN PAPER BOOK. WE ALSO NOTED THAT THE ASSESSEE HAS DULY DEDUCTED T HE TAX AT SOURCE IN RESPECT OF THE COMMISSION BEING PAID TO ALL THESE P ARTIES. IN OUR OPINION, A COMMISSION AGENT BRINGS TWO PARTIES TOGETHER I.E. T HE PURCHASER AND SELLER INTO CONTACT SO THAT THAT THE SELLER CAN SELL THE G OODS AND THE PURCHASER CAN BUY THE SAME. THE MOMENT HE BRINGS BOTH THE PARTIE S TOGETHER, HIS COMMISSION ACCRUES. BRINGING THE TWO PARTIES IN CO NTACT FOR SETTLING THE DEAL ITSELF PROVES THE RENDERING OF THE SERVICES BY THE AGENTS. WE NOTED THAT IN THIS CASE THE ASSESSING OFFICER HAS RECORDE D THE STATEMENT U/S 131 OF THE ACT IN RESPECT OF THE AGENT TO WHOM THE COMM ISSION HAS BEEN PAID. ALL THESE PARTIES HAVE DULY CONFIRMED THAT THEY WER E PAID COMMISSION. THE REVENUE HAS NOT APPLIED THE PROVISION OF SECTION 40 A(2) OF THE ACT. IN VIEW I.T.A. NO.101/LKW/15 ASSESSMENT YEAR:2010-11 3 OF THIS FACT, WE ARE SATISFIED THAT THE ASSESSEE HA S INCURRED EXPENDITURE FOR THE PURPOSE OF MAKING THE PAYMENT TOWARDS THE COMMI SSION. WE ALSO NOTED THAT DURING THE IMPUGNED ASSESSMENT YEAR, THE GROSS PROFIT OF THE ASSESSEE HAS INCREASED FROM 1.09% TO 4.28%. THESE GROUNDS ARE ALLOWED. 4. GROUND NO. 9 & 10 RELATE TO THE DISALLOWANCE BEI NG MADE BY THE ASSESSING OFFICER OUT OF THE CONVEYANCE EXPENSES, D IESEL EXPENSES, MISC. EXPENSES AND TELEPHONE EXPENSES AMOUNTING TO RS.57, 600/- (50%), RS.50,939/- (100%), RS.5,000/- (12.5%) AND RS.10,00 0/- (20%) RESPECTIVELY. IT IS NOT DENIED BY LEARNED A. R. OF THE ASSESSEE THAT THE CONVEYANCE AND DIESEL EXPENSES HAVE BEEN INCURRED I N RESPECT OF THE VEHICLE, THE PERSONAL USE OF WHICH CANNOT BE RULED OUT. IN OUR OPINION, THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AND SUST AINED BY CIT(A) ARE ON HIGHER SIDE. UNDER SECTION 38(2) OF THE ACT, THE A SSESSING OFFICER IS EMPOWERED TO DISALLOW PART OF THE EXPENSES TO THE E XTENT THEY HAVE BEEN INCURRED FOR PERSONAL PURPOSES. SINCE THE ASSESSEE HAS NOT GIVEN THE DETAILS OF THE EXPENSES WHICH CAN BE REGARDED TO BE THE PERSONAL EXPENSES, WE THEREFORE, RESTRICT THE DISALLOWANCE IN RESPECT OF CONVEYANCE, DIESEL, MISC. EXPENSES AS WELL AS TELEPHONE EXPENSES TO 10% OF THE EXPENSES. IN OUR OPINION, THIS WILL MEET THE ENDS OF JUSTICE. A CCORDINGLY, THESE GROUNDS ARE PARTLY ALLOWED. 5. GROUND NO. 11, 12, & 13 RELATE TO SUSTENANCE OF DISALLOWANCE OF RS.29,040/- MADE TO STATUS CLUB GARDEN RETREAT K.P. LTD. THE FACTS RELATED TO THIS ISSUE ARE THAT THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS INCURRED A SUM OF RS.29,040/- IN CASH ON 26/02/2010 BY MAKING THE PAYMENT TO STATUS CLUB GARDEN RETREAT K.P. LTD. AND THE SAID EXPENDITURE INCLUDED THE AMOUNT UNDER THE HEAD STAFF WELFARE EX PENSES. SINCE THE EXPENSES WERE IN VIOLATION OF PROVISIONS OF SECTION 40A(3) THEREFORE, THE ASSESSING OFFICER DISALLOWED A SUM OF RS.29,040/-. WHEN THE MATTER WENT I.T.A. NO.101/LKW/15 ASSESSMENT YEAR:2010-11 4 BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE SAID DI SALLOWANCE. BEFORE US, LEARNED A. R. OF THE ASSESSEE VEHEMENTLY CONTENDED THAT THE PAYMENT HAS NOT BEEN INCURRED IN CASH BUT THE PAYMENT HAS BEEN MADE THROUGH ACCOUNT PAYEE CHEQUE. THE ONUS LIES ON THE ASSESSEE TO PRO VE THAT HIS CASE DOES NOT FALL WITHIN THE CLUTCHES OF PROVISIONS OF SECTI ON 40A(3) OF THE ACT. THE LEARNED A. R. OF THE ASSESSEE CONTENDED BEFORE US T HAT THE ASSESSEE HAS MADE THE PAYMENT THROUGH ACCOUNT PAYEE CHEQUE BUT C OULD NOT ADDUCE ANY EVIDENCE IN THIS REGARD SO THAT WE CAN GIVE A F INDING OF FACT AS BOTH THE PARTIES AGREED. WE, THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY TO BOTH THE PARTIES, SET ASIDE THE ORDER OF CIT(A) ON THIS ISSUE AND RESTORE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION THAT THE ASSESSING OFFICER SHALL VERIFY WHETHER THE ASSESSEE HAS MADE THE PAYMENT TO STATUS CLUB GARDEN RETREAT K.P. LTD. THROUGH ACC OUNT PAYEE CHEQUE. IN CASE THE ASSESSING OFFICER IS SATISFIED THAT THE PA YMENT HAS NOT BEEN MADE IN CASH, THE ASSESSING OFFICER IS DIRECTED TO DELET E THE SAID DISALLOWANCE. THE ASSESSEE IS ALSO DIRECTED TO ADDUCE THE EVIDENC E ON WHICH HE MAY RELY IN THIS REGARD AND CO-OPERATE THE ASSESSING OFFICER . THESE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER PRONOUNCED IN THE OPEN COURT ON 27/07/2016) SD/. SD/. ( ABY T. VARKEY ) ( P. K . BANSAL ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED:27/07/2016 *SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR