SHRI RAHUL SINGHAL, TONK V. INCOME TAX OFFICER, WARD, TONK

ITA 1029/JPR/2018

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 9486 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA JCIT DHK
• Keywords: Opportunity of being heard
• Section: 143(3); 40(a)(ia)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES B, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 1029/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2014-15 SHRI RAHUL SINGHAL, PROP.- RAHUL SINGHAL, NEAR NIJAM HOUSE, SANGHPURA, PURANI TONK. CUKE VS. INCOME TAX OFFICER WARD- TONK. TAN/PAN NO.: BLDPS 9341 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MAHENDRA GARGIEYA & SHRI DEVANG GARGIEYA (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI ASHOK KHANNA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/12/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 20/12/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 02/07/2018 OF LD. CIT (A)-3, JAIPUR FOR THE A.Y. 201 4-14. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THE IMPUGNED ADDITIONS AND DISALLOWANCES MADE I N THE ORDER U/S 143(3) OF THE ACT DATED 29/12/2016 ARE BAD IN LAW A ND ON FACTS OF THE CASE, FOR WANT OF JURISDICTION AND VARIOUS OTHE R REASONS AND HENCE THE SAME KINDLY BE DELETED. 2. THE LD. CIT(A) ERRED IN LAW AS WELL AS ON THE FA CTS OF THE CASE IN PASSING THE IMPUGNED ORDER IN A HASTE WITHOUT AFFOR DING ADEQUATE AND REASONABLE OPPORTUNITY OF BEING HEARD. THE IMPU GNED ORDER ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 2 HAVING BEEN FRAMED IN GROSS BREACH OF NATURAL JUSTI CE, KINDLY BE QUASHED OR ALTERNATIVELY BE RESTORED TO THE FILE OF THE LD. CIT(A). 3. RS. 7,04,430:- IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LAW THE LD. A.O. HAS ERRED IN DISALLOWING A SUM OF RS. 7,04,430/- U/S 40(A)(IA) OF THE INCOME TAX ACT, 1961. THE ACTION O F THE LD A.O. IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FAC TS OF CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID DISALLOWANCE OF RS. 7,04,430/- U/S 40(A)(IA) OF THE INCOME TAX ACT, 196 1. 4. THE APPELLANT PRAYS YOUR HONOURS TO ADD AMEND OR A LTER ALL OR ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DATE OF HEAR ING. 2. THE ASSESSEE IS INDIVIDUAL AND PROPRIETOR OF M/S RAJESH & SONS. THE ASSESSEE IS DERIVING INCOME FROM DISTRIBUTORSHIP OF IDEA CELLULAR LIMITED FOR SALE OF SIM CARDS AND MOBILE RECHARGE COUPONS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT IN THE P&L ACCOUNT, THE ASSESSEE HAS SHOWN COMMISSION INCOME O F RS. 16,03,103/- WHICH HAS BEEN RECEIVED FROM THE PRINCIPAL, IDEA CEL LULAR LIMITED. THE ASSESSEE HAS ALSO ACCOUNTED OTHER EXPENSES IN THE P &L ACCOUNT WHICH INCLUDES COMMISSION OF RS. 7,04,430/- PAID TO THE R ETAILERS/DEALERS. THE ASSESSING OFFICER HELD THAT THE PAYMENT OF COMMISSI ONER OF THE RETAILERS/DEALERS WAS LIABLE TO TDS U/S 194H OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT), HOWEVER, THE ASSESSEE HAS NOT MA DE THE DEDUCTION OF TDS IN RESPECT OF THE PAYMENT OF THE SAID AMOUNT TO THE RETAILERS/DEALERS. ACCORDINGLY, THE ASSESSING OFFICER INVOKED THE PROV ISIONS OF SECTION ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 3 40(A)(IA) OF THE ACT AND DISALLOWED THE CLAIM OF DED UCTION OF RS. 07,04,430/-. 3. ON APPEAL, THE LD. CIT(A) HAS DISMISSED THE APPEA L OF THE ASSESSEE EX PARTE ON THE REASON THAT DESPITE OVER THE NOTICE S ISSUED TO THE ASSESSEE, NOBODY HAS ATTENDED THE HEARING NOR ANY A DJOURNMENT APPLICATION WAS FILED. 4. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THOUGH THE LD. CIT(A) HAS STATED IN THE ORDER THAT VARIOUS NOTI CES WERE ISSUED, HOWEVER, THE ASSESSEE DID NOT RECEIVE ANY OF THE ALL EGED NOTICE DUE TO THE REASON THAT THERE WAS A CHANGE OF ADDRESS AND TH E ASSESSEE HAS DULY MENTIONED THE CURRENT ADDRESS OF THE ASSESSEE IN TH E FORM NO. 35 BUT THE LD. CIT(A) APPEARS TO HAVE ISSUED THE NOTICE AT THE OLD ADDRESS. THE LD AR HAS FURTHER SUBMITTED THAT THE LD. CIT(A) FOR THE A. Y. 2012-13 AND 2013- 14 VIDE ORDERS DATED 29/08/2018 AND 01/08/2018 RESP ECTIVELY DELETED THE IDENTICAL ADDITION MADE BY THE ASSESSING OFFICER U/ S 40(A)(IA) OF THE ACT. THUS, THE ISSUE WAS FOUND BY THE LD. CIT(A) AS COVERE D IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DECISIONS INCLUDING THE DEC ISIONS OF THIS TRIBUNAL. HENCE, THE LD. AR HAS SUBMITTED THAT THE DISALLOWANC E MADE BY THE ASSESSING OFFICER MAY BE DELETED. ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 4 5. ON THE OTHER HAND, THE LD DR HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. HAVING CONSIDERED THE RIVAL SUBMISSIONS AS WELL A S RELEVANT MATERIAL ON RECORD WE NOTE THAT THE COMMISSION OF RS. 16,03,1 03/- WAS RECEIVED BY THE ASSESSEE FROM IDEA CELLULAR LIMITED. IT IS A LSO NOT IN DISPUTE THAT THE SAID COMMISSION AMOUNT WAS SUBJECTED TO TDS AS TH E IDEA CELLULAR LIMITED HAS ALREADY DEDUCTED TDS AT THE TIME OF PAYM ENT OF THE SAID COMMISSION. THE ASSESSEE HAS SHARED THE SAID COMMISS ION WITH THE DEALERS/RETAILERS TO THE TUNE OF RS. 7,04,430/-, TH US THE ASSESSING OFFICER HAS NOT DISPUTED THE FACT OF COMMISSION RECEIVED BY THE ASSESSEE WAS SHARED WITH THE DEALERS/RETAILERS AS PER THE AGREEME NT BETWEEN THE IDEA CELLULAR LIMITED AND THE ASSESSEE AS WELL AS THE DEA LERS/RETAILERS. IT IS ALSO NOT IN DISPUTE THAT THE AMOUNT OF TOTAL COMMISSION OF RS. 16,03,103/- HAS ALREADY SUFFERED TDS AT THE TIME OF PAYMENT. THUS, IT IS NOT A COMMISSION PAYMENT BY THE ASSESSEE IN THE CAPACITY OF PRINCIPA L TO THE RETAILERS/DEALERS AS AN AGENT OF THE ASSESSEE BUT T HE COMMISSION IS ORIGINALLY PAID BY THE IDEA CELLULAR LIMITED WHO IS ACTING AS A PRINCIPAL AND ALL OTHER PARTIES BEING DISTRIBUTOR, DEALERS AND RE TAILERS ARE RECEIVING THE COMMISSION FROM IDEA CELLULAR LIMITED. IT IS ONLY F OR THE SAKE OF COMPLETENESS OF THE ENTRIES IN THE BOOKS, THE COMMI SSION IS ROOTED ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 5 THROUGH THE ASSESSEES BOOKS OF ACCOUNT. WE FURTHER NOTE THAT THE LD. CIT(A) FOR THE A.Y. 2012-13 AND 2013-14 HAS CONSIDER ED AN IDENTICAL ISSUE AND DECIDED THE SAME IN FAVOUR OF THE ASSESSE E. FOR THE A.Y. 2012- 13, THE LD. CIT(A) HAS DEALT THIS ISSUE IN PARA 4 AS UNDER: 4. GROUND NO. 1 THIS GROUND IS RELATED TO THE ADDITION OF RS. 16,0 0,697/- U/S 40(A)(IA) OF THE I.T. ACT. THIS ISSUE DEALT BY THE ASSESSING OFFICER IN ASSESSMENT ORDER AS UNDER:- 4.1 THIS REPLY HAS BEEN PERUSED AND FOUND GENERAL IN NATURE. IT IS ADMITTED FACTS THAT THE ASSESSEE HAS NOT DEDUCTED TDS ON PAY MENT OF COMMISSION MORE THAN RS.5000/- TO THE RETAILERS. THE SUBMISSIO N OF THE ASSESSEE THAT M/S IDEA CELLULAR LTD. HAVE ALREADY DEDUCTED TDS AS PER THE PROVISIONS OF SECTION 19411 ON BEHALF OF THE ASSESSEE ON COMMISSI ON' PAID TO THE RETAILERS TO THE TUNE OF RS. 16,00,697/- AND ONCE T DS STANDS DEDUCTED THEN THERE IS NO REASON LEFT FOR ASSESSEE TO FURTHE R DEDUCT TDS ON THE SAME AMOUNT AGAIN. THIS WOULD AMOUNT TO DOUBLE DEDU CTION AND NOT PERMISSIBLE UNDER THE PROVISIONS OF LAW. THE SUBMIS SION OF THE ASSESSEE IS NOT FOUND CONVINCING. THE TELECOM COMPANIES HAVE DE DUCTED TDS ON THE PAYMENT MADE BY THEM TO THE ASSESSEE. THE COMPANY H AVE DEDUCTED TDS OF RS.2,40,036/- ON TOTAL COMMISSION PAYMENT OF RS.24,80,718/-. THE ASSESSEE WAS LIABLE TO DEDUCT TDS ON THE PAYMENT OF COMMISSION MADE BY HIM. THEREFORE, THERE WOULD BE NO DOUBLE DEDUCTI ON ON PAYMENT OF COMMISSION. MOREOVER, THE ARGUMENT OF THE ASSESSEE THAT IF THE ASSESSEE AND THE PRINCIPAL TELECOM COMPANY WAS TO DEDUCT TDS OF THE RETAILERS ON THE SAME AMOUNT THEN IT WOULD BE DEEMED TO BE DOUBL E INCOME RECEIVED IN THE HANDS OF THE RETAILERS WHEREAS THE INCOME IS ONLY RECEIVED ONCE AND HENCE IT WOULD LEAD TO AN ABSURD PROPOSITION. T HIS ARGUMENT OF THE ASSESSEE HAS NO FORCE. THE TELECOM COMPANIES WERE N OT UNDER ANY LEGAL ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 6 OBLIGATION TO DEDUCT TDS ON PAYMENT TO THE RETAILER S AS THEY HAVE PAID COMMISSION ONLY TO THE ASSESSEE. FURTHER, THE ASSES SEE HAS FOR HIS OWN CONVENIENCE ALLOWED TO THESE COMPANIES TO PAY PART OF THE COMMISSION ON HIS BEHALF DIRECTLY TO THE RETAILERS APPOINTED B Y HIM. THE ASSESSEE HAS NOT DEDUCTED TDS ON PAYMENT OF RS . 16,00,697/- AS PER PROVISIONS OF SECTION 194H. THEREFORE, AS PER PROVI SIONS OF SECTION 40(A)(IA) THE AMOUNT OF THE PAYMENT ON WHICH TAX IS DEDUCTIBLE AT SOURCE UNDER CHAPTER XII-B AND SALES RULES, 1987, FOR SURR ENDER OF STAMP PAPERS TO GOVERNMENT - PROVISION WOULD NOT RENDER STAMP VE NDORS AGENTS - TRANSACTION AMOUNT TO SALE-DISCOUNT ON SALE OF STAM P PAPER DOES NOT ATTRACT SECTION 194H - INCOME TAX ACT, 1961, S. 194 H. 13.3 CIT(TDS) VS. UNITED BREWERIES LTD [2017] 80 TA XMANN.COM 123 (ANDHRA PRADESH AND TELANGANA) SECTION 194H OF THE INCOME-TAX ACT, 1961 - DEDUCTI ON OF TAX AT SOURCE - COMMISSION OR BROKERAGE ETC. (TRADE INCENTIVES) - A SSESSMENT YEARS 2008- 09 TO 2010-11 - THERE BEING NO RELATIONSHIP OF A PR INCIPAL AND AGENT BETWEEN ASSESSEE AND RETAILERS, TRADE INCENTIVES PA ID BY ASSESSEE TO RETAILERS THROUGH DEL-CREDERE AGENTS IN ORDER TO BO OST ITS SALE COULD NOT BE TREATED AS COMMISSION FOR PURPOSE OF SECTION 194H [ IN FAVOUR OF ASSESSEE) 7. VARIOUS CASES HAVE ALREADY BEEN CITED. IN ANY C ASE HOWEVER, IF A DIFFERENT VIEW IS NOTICED, THE ISSUE BEING DEBATABLE, THE VIE W FAVOURABLE TO THE ASSESSEE SHOULD BE ADOPTED AS HELD IN THE CASE OF V EGETABLE PRODUCTS 88 ITR 192 (SC). FURTHER THE A/R RELIED UPON THE CASE LAW OF HONBL E ITAT JAIPUR BENCH WHERE IN THE ABOVE DIRECTLY COVER IN THE CASE OF M/ S CHOCOPACK ENTERPRISES ITA NO. 821/JP/2016 HELD THAT:- 'IT IS SERVICE PROVIDER WHO IS RESPONSIBLE FOR PAY ING THE SAID COMMISSION AND THEREFORE, THE PROVISIONS OF SECTION 194H ARE NOT A TTRACTED AGAINST THE DISTRIBUTOR. ACCORDINGLY, WHEN THE ASSESSEE IS NOT DIRECTLY AND INDIRECTLY IN DECIDING THE QUANTUM OF ALLEGED COMMISSION / DISCOUNT AS WELL AS DETERMINING THE RETAIL PRICE AT WHICH THE RECHARGE COUPONS IS SOLD TO THE CUSTOMER THEN THE PROVISIONS OF SECTION 194H CANNOT BE APPLIED ON THE ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 7 ASSESSEE. CONSEQUENTLY, DISALLOWANCE MADE BY THE AO U/S 40(A)(IA) IS DELETED.' THE SERVICE PROVIDER MAY BE ANY ONE WHETHER IT IS BSNL OR IDEA, ETC. AND THE POSITION OF THE ASSESSEE IS ALSO OF AN INTRMEDIATOR Y WHO IS NOT RESPONSIBLE FOR MAKING PAYMENT TO THE ULTIMATE RETAILER & HENCE S. 194H IS NOT APPLICABLE. ALSO KINDLY REFER AGAIN A RECENT ITAT ORDER DATED 24.05.2018 IN THE CASE OF VIRENDRA KUMAR VERMA IN IT A NO.970/JP/2017 WHEREIN THE DECISION OF M/S CHOCOPACK (SUPRA) HAS BEEN FOLLOWED ON IDENTICAL FA CTS. I PERUSED THE RECORD I FIND THAT THERE IS FORCE IN THE SUBMISSION OF THE A/R OF THE APPELLANT THAT THE ALLEGED PAYMENT OF COMMISSIO N WAS NOT PAID BY THE ASSESSEE TO THE RETAILERS BUT IT WAS DIRECTLY PAID BY THE MOBILE OPERATOR WHOSE SIM CARD AND PRE-PAID COUPONS WERE SOLD BY TH E ASSESSEE. THEREFORE, THE ASSESSEE WAS NOT UNDER OBLIGATION TO DEDUCT TDS ON SUCH AMOUNT. HE HAS FURTHER CONTENDED THAT SINCE THE ASSESSEE IS A DEALER, ONLY FOR ACCOUNTING PURPOSES THE ASSESSEE HAS MADE CONTRA EN TRIES IN RESPECT OF THE SAID AMOUNT BEING RECEIPTS AS WELL AS PAYMENTS WHER EAS THERE IS NO ACTUAL PAYMENT BY THE ASSESSEE BUT IT WAS PAID BY THE COMP ANY. FOR THIS RATIO THE A/R OF THE APPELLANT RELIED UPO N VARIOUS CASE LAWS AS DISCUSS ABOVE. THEREFORE CONSIDERING THE ABOVE OBSE RVATION AND FOLLOWING THE CASE LAWS DISCUSS AS ABOVE AND DECISION OF THE HONBLE ITAT JAIPUR BENCH IN THE CASE OF M/S CHOCOPANK ENTERPRISES IN I TA NO.821/JP/2016 AND IN THE CASE OF VIRENDRA KUMAR VERMA ITA NO. 970/JP/ 2017. I AM THE VIEW THAT APPELLANT IS NOT LIABLE TO DEDUCT THE TAX AT S OURCE. THEREFORE THE ACTION OF THE ASSESSING OFFICER IS NOT AS PER LAW TO DISAL LOW RS.8,15,665/- U/S 40(A)(IA) OF THE I.T. ACT. HENCE I DIRECT THE ASSES SING OFFICER TO DELETE THE ADDITION OF RS. 815665/-. THIS GROUND IS ALLOWED. THE FACTS OF THIS ASSESSMENT YEAR ARE TOTALLY SIMIL AR. THEREFORE FOLLOWING THE ABOVE DECISION I AM THE VIEW THAT APPELLANT IS NOT LIABLE TO DEDUCT THE TAX AT SOURCE. THEREFORE THE ACTION OF THE ASSE SSING OFFICER IS NOT AS PER LAW TO DISALLOW OF RS. 16,00,697/- U/S 40(A)(IA ) OF THE I.T. ACT. HENCE I DIRECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS. 16,00,697/-. THIS GROUND IS ALLOWED. ITA 1029/JP/2018_ RAHUL SINGHAL VS ITO 8 SIMILARLY FOR THE A.Y. 2013-14, THE ISSUE WAS DECIDE D BY THE LD. CIT(A) IN FAVOUR OF THE ASSESSEE. ONCE THE ISSUE WAS DECIDED I N FAVOUR OF THE ASSESSEE IN THE EARLIER ASSESSMENT YEARS THEN EVEN IF THERE WAS NO APPEARANCE ON BEHALF OF THE ASSESSEE, THE LD. CIT(A) WAS SUPPOSED TO HAVE TAKEN A CONSISTENT VIEW. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE ASSESSING OFFICER U/S 40(A)(IA) OF THE ACT. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2018. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 20 TH DECEMBER, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SHRI RAHUL SINGHAL, TONK. 2. IZR;FKHZ @ THE RESPONDENT- THE ITO WARD-TONK. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 1029/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR