M/s Renuka Shoe House, Asansol V. I.T.O Wd -2(3),Asansol, Asansol

ITA 1016/KOL/2013

• Counselvise Citation: 101623514 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-06-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-04-2013
• Court: TRIBUNAL
• Department Lawyers: SANJAY SR DR
• Assessee Lawyers: D DAS
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH: KOLKATA [BEFORE HON BLE SHRI B.P.JAIN, AM] I.T.A NO.1016 /KOL/2013 ASSESSMENT YEAR: 2007 - 08 M/S. RENUKA SHOE HOUSE VS I.T.O., WARD - 2 (3 ) ASANSOL ASANSOL (APPELLANT) ( RESPONDENT) (PAN: AAIFR 1732 N) FOR THE APPELLANT : SHRI D.DAS, ADVOCATE FOR THE RESPONDENT : SHRI SANJAY, SR.DR, ADDL. C.I.T. DATE OF HEARING : 03 .06 .2015. DATE OF PRONOUNCEMENT: 03 .06 .2015. ORDER PER SHRI B.P.JAIN, AM : THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF LD.CIT(A) - ASANSOL DATED 18.03.2013 FOR ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1. FOR THAT THE ORDER OF THE LD. CIT(A) IS ARBITRARY, EXCESSIVE, HENCE BAD IN LAW. 2. FOR THAT ON THE FACTS OF THE CASE THE LD. A.O. WAS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF RS.81,248/ - MADE BY THE AO ON A/C OF PARTNERS REMUNERATION PAID TO THE TWO LADY PARTNERS, WHEN THE PARTNERSHIP CONSISTS OF BOTH THE LADIES ONLY AND BOTH PARTNERS ARE ACTIVELY ENGAGED IN THE BUSINESS OF THE FIRM AND THE ADDITION MADE MAY PLEASE BE DELETED. 3. FOR THAT ON THE FACTS OF THE CASE THE LD.CIT(A), WAS NOT LEGALLY JUSTIFIED IN SUSTAINING THE ADDITION OF RS.22,505/ - MADE BY THE A.O., ON A/C OF PURCH ASE OF GOODS FROM MONIMALA ENTERPRISE, WHEN THE SAID PURCHASE WAS CONFIRMED BY THE SELLERS LEDGER A/C, AND THE ADDITION MADE MAY PLEASE BE DELETED. 3 . THE BRIEF FACTS OF THE CASE AS EMANATING FROM AO S ORDER ARE REPRODUCED HEREIN BELOW FOR THE SAKE OF C ONVENIENCE : - 6. THE ASSESSEE HAS CLAIMED TO HAVE GIVEN REMUNERATION OF RS.40,624/ - EACH TO ITS TWO PARTNERS. ON LOCAL ENQUIRY MADE, IT HAS CAME TO THE NOTICE OF THE UNDERSIGNED THAT NONE OF THE PARTNER IS ACTIVELY ENGAGED IN THE BUSINESS AND BOTH THE PAR TNERS ARE LADY AND SIMPLE HOUSE WIVES. TO VERIFY THE VERACITY OF THE FACT, SUMMONS U/S 131 OF THE I.T.ACT, ITA NO. 1016/KOL/2013 M/S. RENUKA SHOE HOUSE A.YR. 2007 - 08 2 1961 IS ISSUED TO BOTH THE PARTNERS, WHO ARE LADY ASKING THEM TO APPEAR PERSONALLY BEFORE THE UNDERSIGNED ON 01.12.2009. ONE OF THE PARTNE R SMT. DIPTI KUNDU APPEARED BEFORE THE UNDERSIGNED BUT THE OTHER PARTNER SMT. MANJUSHREE KUNDU DID NOT APPEAR AND SEND A WRITTEN SUBMISSION WHICH IS AS FOLLOWS : - I, SMT. MAN JUSHREE KUNDU, W/O - SHRI TAPAN KU NDU, PARTNER OF M/S. RENUKA SHOE, HERE DECLARE TH E FOLLOWING : - THAT I AM A WORKING PARTNER OF THE FIRM AND HOLDING 50% SHARE OF THE FIRM WHICH ESTABLISH BY THE PARTNERSHIP DEED. THAT ALL PAYMENTS AGAINST PURCHASE MADE BY US THROUGH CHEQUE AND WE ARE THE SIGNATORY AUTHORITY OF THE SAME. THAT ALL CORRESP ONDENCES WITH THE CO, S ALSO MADE BY US. DUE TO SERIOUS ILLNESS OF MY CHILDREN AGED ABOUT ONE & HALF YEARS OLD, I COULD NOT APPEAR BEFORE YOU, PLEASE CONSIDER THE SAME & OBLIGE. BUT NO EVIDENCE OF ILLNESS OF HER SON WAS PRODUCED, EVEN IF THE A/R AND THE O THER PARTNER WHO APPEARED BEFORE THE UNDERSIGNED WAS ASKED TO SUBMIT THE DOCTORS PRESCRIPTION. THE SAME LETTER WAS ALSO SUBMITTED BY THE OTHER PARTNER SMT. DIPTI KUNDU MENTIONING THE SAME THING. IN THE ABOVE MENTIONED SUBMISSION MADE BY BOTH THE PARTNERS IT IS WORTH NOTICEABLE THAT HOW THEY HAVE ANTICIPATED THAT THE UNDERSIGNED DESIRED THEIR APPEARANCE TO VERIFY THE FACT THAT WHETHER THEY ARE WORKING PARTNER OR SLEEPING PARTNER. WITHOUT HEARING THE QUESTION THEY HAVE TRIED TO REPLY IT. IT IS ALSO THE FACT THAT THE OTHER PARTNER HAS INTENTIONALLY TRIED TO AVOID TO BE PRESENT BEFORE THE UNDERSIGNED SO THAT THE FACT MAY GET REVEALED. FURTHER, TO VERIFY THE GENUINENESS OF HER CLAIM TO BE AN ACTIVE PARTNER, STATEMENT OF SMT. DIPTI KUNDU WAS RECORDED U/S 131 OF THE I.T.ACT, 1961 ON OATH IN PRESENCE OF HER HUSBAND SRI SAPAN KUNDU AND HER A/R, SRI SOUMETRA SARKAR, ADVOCATE. THE DEPOSITION TAKEN ON 01.12.2009 IS REPRODUCED BELOW : - STATEMENT OF SMT. DIPTI KUNDU TAKEN ON 01.12.2009 U/S 131 OF THE I.T.ACT, 1961 IN PRESENCE OF HER HUSBAND SRI SAPAN KUNDU AND A/R SRI SOUMITRA SARDAR, ADVOCATE I, SMT. DIPTI KUNDU SWEAR IN THE NAME OF GOD THAT I SHALL SPEAK THE WHOLE TRUTH AND NOTHING BUT THE TRUTH. SD/ - SD/ - PARTY I.T.O., W - 2(3), ASL. Q.1. PLEASE IDENTIFY YOURSELF? ANS. I AND SMT. DIPTI KUNDU, WIFE OF SRI SAPAN KUNDU, RESIDENT OF RAHA LANE, ASANSOL. Q2. WHAT IS YOUR QUALIFICATION? ANS I AM HIGHER SECONDARY PASS. Q3. DO YOU HAVE ANY CONNECTION WITH RENUKA SHOE HOUSE? ANS Y ES, I AM A WORKING PARTNER IN RENUKA SHOE HOUSE. Q4. WHAT TYPE OF WORK YOU DO THERE? ANS I GO THERE SOME TIMES TO SEE. Q5. BUT I HAVE NOT SEEN YOU EVER SITTING THERE IN THE SHOP? ANS ACTUALLY, I SELDOM GO THERE AS I AM A HOUSE WIFE AND I HAVE TO LOOK AFTER MY SMALL CHILDREN. SO I DEVOTE VERY FEW TIME THERE. Q6. HOW MUCH REMUNERATION YOU GET FROM RENUKA SHOE HOUSE? ANS I GET AROUND RS.30,000/ - TO RS.40,000/ - Q7. PLEASE SPECIFY EXACT FIGURE? ANS IT IS RS. 40,000/ - PER MONTH. Q8. FROM WHOM YOU DO YOUR BUSINESS ? ANS I PURCHASE SHOES FROM KHADIMS. ITA NO. 1016/KOL/2013 M/S. RENUKA SHOE HOUSE A.YR. 2007 - 08 3 Q9. WHERE IS THE OFFICE OF KHADIM? ANS IT IS IN KOLKATA. Q10. WHERE IN KOLKATA? ANS I DON T KNOW. Q11. HOW MUCH MONEY YOU INVESTED IN YOUR BUSINESS? ANS AROUND RS.50,000/ - EACH BY ME AND MY PARTNER SMT. MANJUSHREE KUNDU . Q.12 HOW MUCH STAFF ARE WORKING THERE IN YOU SHOP? WHAT IS THEIR MONTHLY SALARY? ANS THERE ARE 5 STAFFS. THEIR SALARIES ARE RS.1,000/ - TO THREE PERSONS AND RS.15,000/ - TO TWO PERSONS. Q13. WHO LOOKS AFTER YOUR INCOME TAX MATTERS? \ ANS I DO NOT KNOW, MY M ANAGE KNOW EVERYTHING. THE ABOVE STATEMENT IS GIVEN BY ME IN MY GOOD HEALTH AND SOUND MIND WITHOUT ANY FORCE OR COERCION. SD/ - SD/ - PARTY I.T.O., W - 2(3), ASL. FROM THE REPLY OF QUESTION NOS.5,6,7,10,11 AND 13, IT IS QUITE CLEAR THAT SHE DO N OT HAVE ANY IDEA OF HER BUSINESS. THE PERSON WHO DO NOT KNOW HOW MUCH REMUNERATION SHE IS GETTING AND THE EXACT LOCATION OF THE SINGLE PARTY FROM WHOM SHE MAKES HER ENTIRE PURCHASE, WHERE AS IN THE WRITTEN SUBMISSION SHE HAS WRITTEN THAT ALL THE CORRESPOND ENCE WITH THE CO. IS DONE BY HER. THIS IN ITSELF IS A SELF CONTRADICTORY STATEMENT. SHE ALSO DO NOT KNOW THE SALARY GIVEN TO HER STAFFS AND NOT EVEN KNOW THE NAME OF HER INCOME TAX LAWYER WITH WHOM SHE HAS COME FOR THE HEARING. HOW CAN PERSON LIKE THIS BE AN ACTIVE PARTNER OF A FIRM. IN REPLY TO QUESTION NO.13, SHE HAS CATEGORICALLY REPLIED THAT MY MANAGER KNOW EVERY THING. THAT CLEARLY MEANS THAT SHE IS MERELY A SIGNATORY AND ALL THE AFFAIRS OF HER BUSINESS IS CONDUCTED BY HER HUSBAND AND HER STAFF. MEREL Y SIGNING A CHEQUE DOES MAKES A PARTNER A WORKING PARTNER AND ELIGIBLE FOR GETTING REM UNERATION EVEN IF IT IS MENTIONED IN THE PARTNERSHIP DEED. IT IS WORTH MENTIONING THAT THE HUSBAND OF THE ASSESSEE IS ALSO ENGAGED IN THE BUSINESS OF SAME BRAND KHADIMS IN THE SAME LOCALITY IN THE NAME OF M/S. RANA SHOES HOUSE, IN WHICH THE HUSBAND OF BOTH THE LADY ARE PARTNERS. THE ASSESSEE HAS SET UP THE ANOTHER FIRM JUST TO DIVERSIFY THEIR INCOME AND TO GET THE BENEFIT OF INTEREST AND REMUNERATION TO PARTNERS. HENCE, FROM THE ABOVE DISCUSSION IT HAS BEEN PROVED BEYOND DOUBT THAT NONE OF THE PARTNERS ARE WORKING PARTNER. THEREFORE, THE REMUNERATION ALLOWED TO BOTH THE PARTNERS AMOUNTING TO RS.40,624/ - EACH AND TOTALING TO RS.81,248/ - IS BEING DISALLOWED AND ADDED TO TH E INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ACTION OF AO. 4. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS OF THE CASE. AT THE OUTSET, I AM OF THE VIEW THAT ANY LADY BEING A PARTNER OF A PARTNERSHIP FIRM, HAS NO BAR AND EVERY PERSON IS FREE TO WORK AND EARN HIS OR HER LIVINGS. THE AO BASICALLY MADE THE DISALLOWANCE SINCE THE PARTNERS ARE THE LADIES AND MADE A PRESUMPTION THAT THEY ARE NOT WORKING PARTNERS IN SPITE OF THE FACT THAT SMT. MANJUSHREE KUNDU IN RESPONSE TO NOTICE U /S 131 OF THE ACT COULD NOT APPEAR DUE TO SERIOUS ILLNESS OF HER CHILDREN, SUBMITTED IN WRITING BEFORE THE AO THAT SHE IS A WORKING PARTNER AND ALL THE PAYMENTS ITA NO. 1016/KOL/2013 M/S. RENUKA SHOE HOUSE A.YR. 2007 - 08 4 ARE MADE THROUGH CHEQUES AND SHE IS THE SIGNATORY OF THE SAME AND ALL THE CORRESPONDENCES OF TH E FIRM ARE DONE BY HER ALONG WITH THE OTHER PARTNER. ALSO THE OTHER PARTNER SMT. DIPTI KUNDU ALSO CONFIRMED OF HER WORKING AS A WORKING PARTNER AND SHE HAS STATED IN THE STATEMENT TAKEN ON OATH DRAWING HER SALARY AND DOING THE BUSINESS OF THE FIRM. THEREFO RE FROM ANY ANGLE THE SAID LADIES CANNOT BE SAID TO BE NON WORKING PARTNERS AND IN THE CIRCUMSTANCES AND FACTS OF THE CASE AO IS NOT JUSTIFIED TO TREAT THE SAID LADIES AS NON WORKING PARTNERS AND NOT JUSTIFIED IN DISALLOWING THE REMUNERATION PAID TO THEM. ACCORDINGLY ORDER OF THE LD. CIT(A) IS DIRECTED TO BE REVERSED AND GROUND NO.2 OF THE ASSESSEE IS ALLOWED. 5. AS REGARDS GROUND NO.3 THE BRIEF FACTS OF THE CASE AS EMANATING FROM AO S ORDER AS PER PARA - 5 AT PAGE - 6 ARE REPRODUCED HEREIN BELOW FOR THE SAK E OF CONVENIENCE : THE ASSESSEE HAS SHOWN PURCHASE OF RS.34,20,892/ - OUT OF WHICH PURCHASE OF RS.22,505/ - HAS BEEN SHOWN AS PURCHASE FROM OTHERS. THE ASSESEE WAS ASKED TO GIVE DETAILS AND EVIDENCES OF SUCH PURCHASE. IN RESPONSE TO THIS THE A/R OF THE ASSE SSEE SUBMITTED THAT PURCHASE OF ACCESSORIES WERE MADE FROM MANIMALA ENTERPRISES OF ASANSOL. HE WAS ASKED TO PRODUCE THE PURCHASE BILLS OF ALL THIS. BUT HE COULD NOT PRODUCE EVEN A SINGLE PURCHASE BILL EXCEPT A LEDGER COPY ISSUED FROM MANIMALA ENTERPRISES T HAT TOO WITHOUT ANY SIGNATURE AND SEAL. HENCE, IN THE ABSENCE OF ANY EVIDENCES THE ENTIRE AMOUNT OF PURCHASE SHOWN TO BE MADE FROM MANIMALA ENTERPRISES OF RS.22,505/ - IS BEING ADDED TO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ACTION OF AO . 6. I HAVE HEARD THE RIVAL CONTENTIONS AND GONE THROUGH THE FACTS OF THE CASE. SINCE THE ASSESSEE IN THE PRESENT CASE HAS NOT PRODUCED EVEN A SINGLE PURCHASE BILL EXCEPT A LEDGER COPY FROM M/S. MANIMALA ENTERPRISES AND THAT TOO WITHOUT ANY SIGNATURE AND SEAL BEFORE ANY OF THE AUTHORITIES BELOW AND EVEN BEFORE US. IN THE CIRCUMSTANCES AND FACTS OF THE CASE I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD.CIT(A), WHO HAS RIGHTLY CONFIRMED THE ACTION OF AO. GROUND NO.3 OF THE ASSESSEE IS DISMISSED. 7. GROUND NOS.1 AND 4, BEING GENERAL IN NATURE DO NOT REQUIRE ANY ADJUDICATION. ITA NO. 1016/KOL/2013 M/S. RENUKA SHOE HOUSE A.YR. 2007 - 08 5 8. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03.06.2015. SD/ - [ B.P.JAIN ] ACCOUNTANT MEMBER DATE: 03 .06 .2 015. R.G.(.P.S.) C OPY OF THE ORDER FORWARDED TO: 1 . M/S. RENUKA SHOE HOUSE, COURT MORE, BURNPUR, ASANSOL - 713304. 2 I.T.O., WARD - 2 (3), ASANSOL. 3 . CIT(A) - ASANSOL 4. CIT - KOLKATA. 5. CIT - DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES