M/s. ITCG Solutinos Pvt. Ltd., Baroda V. The Asstt. Commissioner of Income Tax, Circle-1(1)(2), Baroda

ITA 1051/AHD/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 5136 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-11-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 01-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI AMARJIT SINGH, ACCOUNTANT MEMBER& MS. MADHUMITA ROY, JUDICIAL MEMBER I.T.A. NO. 1051/AHD/2017 (ASSESSMENT YEAR: 2012-13) M/S. ITCG SOLUTIONS PVT. LTD. 301, EARTH THE LANDMARK, OPP. SATSANG PARTY PLOT SUN PHARMA ROAD, ATLADRA, BARODA-390012 VS. ASST. CIT. CIRCLE-1(1)(2), VADODARA [ PAN NO. AAC C I 2 679 G ] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : MS. URVASHI SODHAN, AR RESPONDENT BY : SHRI UMA SHANKAR PRASAD, SR. D.R. DATE OF HEARING 21.11.2019 DATE OF PRONOUNCEMENT 19.02.2020 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 31.03.2017 PASSED BY THE COMMISSIONER OF INCO ME TAX (APPEALS) 1, VADODARA ARISING OUT OF THE ORDER DATED 20.03.20 15 PASSED BY THE ACIT, CIRCLE-1(1)(2), BARODA UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FOR ASSESSME NT YEAR 2012-13. 2. THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGE D IN THE BUSINESS OF TRADING OF SOFTWARE LICENSE AND INSTALLATION OF LIC ENSES SOFTWARE FILED ITS RETURN OF INCOME ON 25.09.2012 DECLARING NET TAXABL E INCOME AT RS. 58,03,617/- WHICH WAS FINALIZED UNDER SECTION 143(3 ) OF THE ACT BY THE LD. ITA NO.1051/AHD/2017 M/S. ITCG SOLUTIONS PVT. LTD. VS. ACIT ASST.YEAR 2012-13 - 2 - AO UPON MAKING ADDITION OF RS. 43,91,614/- ON ACCOU NT OF BOGUS COMMISSION EXPENSES OUT OF THE TOTAL COMMISSION EXP ENSES CLAIMED OF RS. 53,99,419/- WHICH WAS IN TURNED UPHELD BY THE LD. C IT(A). HENCE, THE INSTANT APPEAL BEFORE US. WE HAVE HEARD THE PARTIES, WE HAVE ALSO PERUSED TH E RELEVANT MATERIALS AVAILABLE ON RECORD. THE BRIEF FACT LEAD ING TO THE CASE IS THIS THAT DURING THE COURSE OF ASSESSMENT PROCEEDING UPON VER IFICATION OF THE PROFIT AND LOSS ACCOUNT AND THE RETURN OF INCOME FILED BY THE ASSESSEE IT WAS FOUND THAT THE ASSESSEE HAS DEBITED A SUM OF RS. 53,99,41 9/- TOWARDS COMMISSION AS AGAINST RS. 3,87,136/- DEBITED IN THE IMMEDIATEL Y PRECEDING ASSESSMENT YEAR. THE ASSESSEE AS PER REQUEST OF THE REVENUE S UBMITTED A LETTER DATED 10.11.2014 SHOWING THE DETAILS OF TDS DEDUCTED ON T HE COMMISSION PAID DURING THE F.Y. 2011-12; HOWEVER, NO JUSTIFICATION FOR PAYMENT OF SUCH COMMISSION WAS PROVIDED BY THE ASSESSEE AT THAT JUN CTURE WHEREUPON BY AND UNDER A LETTER DATED 05.03.2015 ISSUED BY THE REVEN UE ASSESSEE WAS ASKED TO JUSTIFY THE DISPROPORTIONATE HIKE IN THE COMMISSION EXPENSES FROM RS. 3,87,136 TO 53,99,419/- IN COMPARISON TO THE LAST Y EAR. FURTHER THAT THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS, THE NAME AND ADDRESS OF THE AGENTS, THEIR QUALIFICATION, NATURE OF SERVICES REN DERED, NAME AND ADDRESS OF THE PARTIES FROM WHOM THE ORDERS PROCURED, SERVICES OBTAINED, BILL-WISE QUANTUM OF BUSINESS/SERVICES/SALES PROCURED AS WELL AS THE EVIDENCES IN RESPECT OF THE SERVICES RENDERED ALONG WITH THE LED GER ACCOUNTS OF THE COMMISSION OF THOSE AGENTS MENTIONED THEREIN. THE ASSESSEE WAS FURTHER DIRECTED TO PRODUCE THE SEVEN AGENTS ALONG WITH THE IR IDENTITY PROOF, BANK PASSBOOK CONTAINING TRANSACTION DURING F.YS. 2011-1 2 AND 2012-13. IN ITA NO.1051/AHD/2017 M/S. ITCG SOLUTIONS PVT. LTD. VS. ACIT ASST.YEAR 2012-13 - 3 - RESPONSE THEREOF BY AND UNDER A WRITTEN SUBMISSION DATED 09.03.2015 THE ASSESSEE INFORMED THE LD. AO THAT SINCE THE COMPANY SALES HAS INCREASED FROM 3.64 CRORES TO 17.43 CRORES, THE COMMISSION EX PENSES, CONSEQUENTLY HAS ALSO INCREASED FROM RS. 3,87,136/- TO 53,99,419 /-. FURTHER THAT IN ORDER TO INCREASE THE TURNOVER AND TO SUSTAIN THE BUSINES S IN THE COMPETITIVE MARKET IT IS NECESSARY FOR THE ASSESSEE TO INTRODUC E AGENT SYSTEM WITH GOOD INCENTIVE WHO CAN FIND BUSINESS FOR THE COMPANY. A PART FROM THAT THE DETAILS REGARDING THE NATURE OF SERVICES RENDERED, NAME AND ADDRESS OF THE PARTIES FOR WHOM ORDERS WERE PROCURED, BILL-WISE QU ANTUM OF BUSINESS, RATE OF COMMISSION AND QUANTUM OF COMMISSION PAID HAS AL READY BEEN MADE AVAILABLE TO THE LD. AO BY AND UNDER THE EARLIER RE PRESENTATION DATED 10.11.2014 AS ALSO SUBMITTED BY THE ASSESSEE. THE COPIES OF THE LEDGER ACCOUNTS OF ALL THE COMMISSION AGENTS AS APPEARED I N THE BOOKS OF ACCOUNT FOR A.Y. 2013-14 AND THE IDENTITY PROOF ALONG WITH INCOME-TAX RETURN SHOWING COMMISSION INCOME OF COMMISSION AGENT WERE ALSO SUBMITTED BY THE ASSESSEE ON 29.11.2014. COPIES OF BANK STATEME NT OF THE COMPANY FOR F.Y. 2011-12 HIGHLIGHTING DEBIT ENTRIES, INCOME-TAX RETURN ALONG WITH THE ACKNOWLEDGEMENT OF RETURN OF INCOME, AND THE PAN NO . OF ALL THE PARTIES AS ASKED BY THE REVENUE WAS DULY SUBMITTED BY THE ASSE SSEE. 3. AT THE TIME OF HEARING OF THE INSTANT APPEAL THE LD. ADVOCATE APPEARING FOR THE ASSESSEE RELIED UPON THE SUBMISSI ON MADE BEFORE THE COMMISSIONER OF INCOME-TAX ON 17.01.2017 BEING PART OF THE RECORD COMMENCING FROM PAGE 116 TO 121 OF THE PAPER BOOK B EFORE US FROM WHICH IT REVEALS THAT THE ASSESSEE TOOK THE TROUBLE OF EX PLAINING HOW THE COMMISSION HAS BEEN PAID TO EACH OF THE PARTIES, HO W MUCH SALES WAS MADE ITA NO.1051/AHD/2017 M/S. ITCG SOLUTIONS PVT. LTD. VS. ACIT ASST.YEAR 2012-13 - 4 - AND HOW MUCH TDS WAS DEDUCTED AS WELL AS THE DATE O F PAYMENT OF SUCH COMMISSION. HOWEVER, THE CASE OF THE REVENUE IS TH IS THAT THE ASSESSEE HAS FAILED TO FURNISH THE SERVICES RENDERED BY THE AGEN TS OR THAT THE AGREEMENT ENTERED INTO BY AND BETWEEN THE ASSESSEE COMPANY AN D THE AGENTS. ULTIMATELY THE LD. AO HAS COME TO A FINDING THAT TH E ASSESSEE HAS DEBITED THE EXPENSES JUST TO REDUCE ITS TAX LIABILITY AND T O EYEWASH THE REVENUE BY CLAIMING BOGUS COMMISSION EXPENSES IN THE NAME OF V ARIOUS COMMISSION AGENTS AND SUCH COMMISSION HAS BEEN PAID WITHOUT AN Y BASIS OR ON A PARTICULAR RATE. WE HAVE CAREFULLY CONSIDERED THE MATERIALS MENTION ED ABOVE WHICH ARE AVAILABLE BEFORE US AS HAS BEEN POINTED OUT BY THE LD. AR WHICH WAS REQUIRED BY THE REVENUE TIME TO TIME; ACCORDING TO US THOSE HAVE NOT BEEN TAKEN CARE OF IN THEIR PROPER PERSPECTIVE BY THE RE VENUE. HENCE IN ORDER TO PREVENT THE MISCARRIAGE OF JUSTICE WE FIND IT FIT A ND PROPER TO REMIT THE ISSUE TO THE FILE OF THE LD. AO WITH A DIRECTION UPON HIM TO REVISIT THE ISSUE AFRESH AND TO DECIDE THE SAME UPON CONSIDERING THE EVIDENC ES ON RECORD AND ANY OTHER EVIDENCES WHICH THE ASSESSEE MAY CHOOSE TO FI LE AT THE TIME OF HEARING OF MATTER. HENCE, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. THIS ORDER PRONOUNCED IN OPEN COURT ON 19/02/2020 SD/- SD/- (AMRJIT SINGH) (MS. MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 19/02/2020 TANMAY, SR. PS TRUE COPY ITA NO.1051/AHD/2017 M/S. ITCG SOLUTIONS PVT. LTD. VS. ACIT ASST.YEAR 2012-13 - 5 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)- 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 17.02.2020 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 18.02.2020 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 19.02.2020 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT .02.2020 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S 20.02.2020 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 20 .02.2020 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER