Kumar Consumers Services Ltd., Baroda V. The Income tax Officer,Ward-1(4), Baroda

ITA 1074/AHD/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5778 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 21-08-2017
• Assessment Year: 2002-2003
• Appeal Filed On: 11-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: V K SINGH
• Keywords: Corroborative evidences
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AHMEDABAD BEFORE, SHRI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHRI S. S. GODARA, JUDICIAL MEMBER ITA NO. 1074/AHD/2014 (ASSESSMENT YEAR : 2002-03) KUMAR CONSUMERS SERVICES LTD., GF/54, AVISHKAR COMPLEX, OLD PADRA ROAD, BARODA APP ELLANT VS. INCOME TAX OFFICER, WARD 1(4), BARODA RESPONDENT PAN: AABCK6114D / BY ASSESSEE : SHRI HEMANT SUTHAR, A.R. / BY REVENUE : SHRI V. K. SINGH, SR. D.R. /DATE OF HEARING : 05.02.2018 /DATE OF PRONOUNCEMENT : 28.03.2018 ORDER PER S. S. GODARA, JUDICIAL MEMBER THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2002-03 ARISES FROM THE CIT(A)-I, BARODAS ORDER DATED 03.01.2014, IN CASE NO. CAB-I/ 11/2012-13, AFFIRMING ASSESSING OFFICERS ACTION LEVYING PENALTY OF RS.3, 29,770/- IN HIS ORDER DATED 22.03.2012, IN PROCEEDINGS U/S.271(1)(C) OF THE INC OME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO. 1074/AHD/14 [KUMAR CONSUMERS SERVICES LTD. VS. ITO ] A.Y. 2002-03 - 2 - 2. WE NOTICE AT THE OUTSET THAT THE IMPUGNED PENALT Y PERTAINS TO FIVE QUANTUM DISALLOWANCES/ADDITIONS ON INCENTIVE PAYMENTS, UNEX PLAINED CASH CREDITS/DEPOSITS U/S.68, LOANS AND ADVANCES TO M/S. COX AND KINGS (I NDIA) LTD., OTHER PERSONS AND EXPENDITURE INCURRED BY ASSESSEES DIRECTOR SHRI AS HWIN PATEL REPRESENTING CORRESPONDING AMOUNTS OF RS.7LACS, RS.40,000/-, RS. 1,10,000/-, RS.1,02,260/- AND RS.1,40,815/-; RESPECTIVELY. BOTH ASSESSING OFFICE R AS WELL AS CIT(A) TREAT THE SAME AS AN INSTANCE OF FURNISHING OF INACCURATE PAR TICULARS OF INCOME IN ORDER TO INVOKE SECTION 271(1)(C) OF THE ACT. CASE FILE SUG GESTS THAT THE ASSESSEE HAD FILED ITS QUANTUM APPEAL ITA NO.2950/AHD/2010 BEFORE THIS TRIBUNAL. A CO-ORDINATE BENCHS ORDER DATED 12.05.2016 CONFIRMED ALL THE SA ID DISALLOWANCES EXCEPT THE THIRD ISSUE OF ADVANCES MADE TO M/S. COX AND KINGS (INDIA) LTD. THE IMPUGNED CORRESPONDING PENALTY QUA THE SAID ISSUE IS THEREFO RE DELETED. 3. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS REITERATING BOTH PARTIES STANDS AGAINST AND IN SUPPORT OF THE IMPUGNED PENALTY. HONBLE APEX COURTS LAND MARK DECISION IN CIT VS. RELIANCE PETR OPRODUCTS 322 ITR 158(SC) HAS SETTLED THE LEGAL POSITION LONG BACK THAT QUANTUM A ND PENALTY ARE SEPARATE PROCEEDINGS WHEREIN EACH AND EVERY DISALLOWANCE/ADD ITION MADE IN COURSE OF THE FORMER DOES NOT IPSO FACTO ATTRACT THE LATTER PENAL PROVISION. WE KEEP IN MIND THE SAID FINE DISTINCTION TO DECIDE THE QUESTION AS TO WHETHER THE ABOVE FOUR DISALLOWANCES/ADDITIONS AMOUNT TO FURNISHING OF INA CCURATE PARTICULARS OF INCOME OR NOT. THE FIRST SUCH ISSUE IS THAT OF DISALLOWANCE/ ADDITION OF RS.7LACS OUT OF TOTAL INCENTIVE PAYMENT AMOUNTING TO RS.39.71LACS. LEARN ED CO-ORDINATE BENCHS QUANTUM FINDINGS(SUPRA) READ AS UNDER: 4. ASSESSEE IS IN THE BUSINESS OF PROVIDING CREDIT CARD, SIM CARDS OF MOBILE PHONE. THE RETURN FOR THE YEAR UNDER CONSIDERATION WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE COURSE OF THE SCRUTINY ASSES SMENT PROCEEDINGS, THE A.O FOUND THAT ON THE TOTAL GROSS RECEIPT OF RS. 81 .78 LACS, ASSESSEE HAS CLAIMED INCENTIVE AND COMMISSION OF RS. 39.71 LACS. THE A.O FURTHER OBSERVED THAT THOUGH THE COMMISSION DURING THE YEAR UNDER CONSIDERATION HAS FALLEN TO 71.16 LACS AS COMPARED WITH THE PREVI OUS YEAR AND YET THE COMMISSION EXPENSES CONTINUED AT THE LEVEL OF 39.6 LACS . THE A.O FURTHER OBSERVED THAT AT THE TIME OF SURVEY TOTAL INCENTIVE WAS ONLY RS. 10.54 LACS TILL 22.01.2002 AND THE SAME JUMPED TO 36.33 LACS M EANING THEREBY THAT THE ITA NO. 1074/AHD/14 [KUMAR CONSUMERS SERVICES LTD. VS. ITO ] A.Y. 2002-03 - 3 - ASSESSEE HAS BOOKED EXPENSES OF RS. 25.79 LACS DURI NG THE INTERVENING PERIOD FROM 22.01.2002 TO 31.03.2002. 5. SINCE, THE ASSESSEE FAILED TO FURNISH DETAILS OF RECIPIENT AND THE BASIS OF WORKING THE INCENTIVE, THE A.O DISALLOWED THE EXCES S CLAIM OF INCENTIVE TO THE TUNE OF RS. 25.78 LACS. 6. ASSESSEE STRONGLY AGITATED THE MATTER BEFOR E THE ID. CIT(A) AND REITERATED ITS CLAIM OF INCENTIVE PAYMENT. AFTER CO NSIDERING THE FACTS AND THE SUBMISSIONS, THE ID. CIT(A) HELD AS UNDER:- 'IT IS NOTED THAT THE COMMISSION RECEIPTS DECLINED FROM RS. 81,78 LAKH IN F.Y, 2000-01 TO RS. 71.16 LAKH IN F.Y. 2001-02, WHE REAS COMMISSION PAYMENTS REMAINED MORE OR /ESS CONSTANT, I.E. RS. 3 9.6 LAKH IN F.Y. 2001-02 AS AGAINST RS. 39.71 LAKH IN F.Y. 2000-01. IN APPELLANT'S BUSINESS, THE RATIO CO MMISSION/INCENTIVE EXPENSES TO COMMISSION RECEIPTS WOULD MORE OR LESS BE THE SAME OVER THE YEARS. THE RATIO OF COMMISSION/INCENTIVE EXPENSES TO COMMISSION RECEIPTS WORKS OUT TO 44.393 % IN A.Y. 2001-02, AS PER EXPENSES ALLOWED IN THE ASSESSMENT FOR A.Y. 200 1-02 AND APPEAL ORDER NO. CAB-IV/397/09-10 DATED 9.8.2010. AS PER THIS RA TIO, IN A.Y. 2002-03, COMMISSION EXPENSES SHOULD BE RS. 31,59,321/- I.E. 44.393% OF RS. 71,16,712/-KEEPING THIS IN VIEW, DISALLOWANCE OF RS . 7,00,000/- OUT OF COMMISSION/INCENTIVE EXPENSES IS CONFIRMED AND BALA NCE DISALLOWANCE IS CANCELLED.' 7. BEFORE US, THE ID. COUNSEL FOR THE ASSESSEE COUL D NOT SUBMIT ANY OTHER DETAILS IN SUPPORT OF ITS CLAIM AND THE ID. D.R. ST RONGLY RELIED UPON THE FINDINGS OF THE FIRST APPELLATE AUTHORITY. 8. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE A UTHORITIES BELOW. WE FIND THAT IN THE EARLIER ASSESSMENT YEAR, DISALLOWANCE O F INCENTIVE TRAVELLED UP TO THE TRIBUNAL AND THE TRIBUNAL IN ITA NO. 2949/AHD/2 010 ON PAGE 4 PARA 8 OF ITS ORDER HELD AS UNDER:- 8. AFTER HEARING BOTH THE PARTIES AND PERUSING THE RECORD, WE FIND THAT ADDITION HAS BEEN MADE BY THE AO BY DISALLOWING 1/1 0 TH OF COMMISSION PAID TO VARIOUS PARTIES BY THE ASSESSEE ON THE GROUND TH AT THERE WAS HUGE INCREASE UNDER THIS HEAD IN COMPARISON TO PROPORTIO NATE EXPENSES ON THIS ACCOUNT IN THE IMMEDIATELY PRECEDING YEAR WITH REFE RENCE TO RECEIPTS OF THE ASSESSEE AND ASSESSEE FAILED TO JUSTIFY THIS INCREA SE. BEFORE LD. CIT(A) ALSO ASSESSEE WAS NOT ABLE TO SATISFY HIM BY WAY OF PROD UCING SUPPORTING EVIDENCE THOUGH LD. CIT(A) GAVE AMPLE OPPORTUNITY F OR DOING THIS. BEFORE US ALSO ASSESSEE FAILED TO SUBSTANTIATE HIS CLAIM A NY FURTHER, THEREFORE WE ARE NOT INCLINED TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND THE SAME IS HEREBY UPHELD. GROUND NO. 1 OF ASSESSEE'S APPEAL IS DISMISSED. 9. SINCE IN THE EARLIER YEAR, DISALLOWANCE OF 1/10 TH OF COMMISSION PAID HAS BEEN UPHELD BY THE TRIBUNAL (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS AND HE SAME ARE CONFIRMED. GROUN D NO.1 IS ACCORDINGLY DISMISSED. ITA NO. 1074/AHD/14 [KUMAR CONSUMERS SERVICES LTD. VS. ITO ] A.Y. 2002-03 - 4 - 4. IT IS THUS CLEAR THAT THE QUANTUM DISALLOWANCE H AD BEEN MADE ON AD HOC BASIS WITHOUT ANY QUESTION OF ITS GENUINENESS PER SE. WE CONCLUDE THAT ACCORDINGLY THAT THE SAME IS NOT IN THE NATURE OF FURNISHING OF INAC CURATE PARTICULARS OF INCOME AS THE QUANTUM DISALLOWANCE HEREINABOVE HAS ARISEN AS THE ASSESSEE COULD NOT PROVE ITS JUSTIFICATION TO HAVE INCURRED THE SAME IN THE RELE VANT PREVIOUS YEAR AS PER ITS TURNOVER AND PROFIT FIGURE. WE ACCORDINGLY ACCEPT ASSESSEES CHALLENGE TO CORRECTNESS OF THE IMPUGNED PENALTY QUA THIS FIRST ISSUE. 5. NEXT PENALTY ISSUE IS THAT OF SECTION 68 ADDITIO N OF RS.40,000/- ONLY. IT EMERGES THAT THE ASSESSING OFFICERS REMAND REPORT SUBMITTED DURING THE COURSE OF THE QUANTUM LOWER APPELLATE PROCEEDINGS ON 10.05.20 10 FOUND AGGREGATE SUM OF RS.12,21,251/- OUT OF RS.12,61,251/- TO BE GENUINE. THE ASSESSEE DOES NOT APPEAR TO HAVE FILED CONFIRMATION OF SHRI NARAYANBHAI MOTIBHA I IN THIS REGARD. WE OBSERVE IN THESE FACTS THAT THE SAID FAILURE IN VIEW OF ALL MI TIGATING FACTS PARTICULARLY IN VIEW OF THE TAX PAYER HAVING PROVED ALMOST ALL OF THE AMOUN TS IN QUESTION CANNOT BE TAKEN AS AN INSTANCE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME. WE ACCEPT ASSESSEES CHALLENGE TO THE IMPUGNED PENALTY QUA THIS SECOND I SSUE AS WELL. 6. THIRD PENALTY ISSUE IS QUANTUM ADDITION OF RS.1, 02,620/- IN THE NATURE OF PAYMENTS MADE TO VARIOUS PARTIES. THIS ADDITION IS BASED ON BLANK PAYMENT VOUCHERS IN ANNEXURE A-13 (PAGES 85 TO 89). THE AS SESSEE DID NOT FILE ANY EXPLANATION IN QUANTUM PROCEEDINGS AS PER THE CIT(A )S CORRESPONDING LOWER APPELLATE ORDER. THE ASSESSEE HOWEVER APPEARS TO H AVE PLEADED IN THE INSTANT LOWER APPELLATE PROCEEDINGS THAT THE SUM IN QUESTION REPR ESENTED ITS CASH BALANCE IN REGULAR BOOKS AS FOLLOWS: DATE AS PER VOUCHER AMOUNT BALANCE AS PER REGULAR B OOKS OF ACCOUNTS ON THE DATE AS MENTIONED IN THE VOUCHER 11.05.2001 30,000 1,78,197 12.05.2001 40,000 1,62,197 19.06.2001 20,000 1,28,763 20.06.2001 7,000 1,40,763 23.06.2001 5,620 1,05,153 ITA NO. 1074/AHD/14 [KUMAR CONSUMERS SERVICES LTD. VS. ITO ] A.Y. 2002-03 - 5 - 7. LEARNED DEPARTMENTAL REPRESENTATIVE FAILS TO DIS PUTE THAT THE CIT(A) HAS NOT SPECIFICALLY REJECTED THE ABOVE TELLING OF THE CASH BALANCE VIS--VIS THE SUM IN QUESTION. WE THEREFORE DELETE THE IMPUGNED PENALTY PERTAINING TO THIS THIRD ISSUE AS WELL. 8. WE NOW LEFT WITH THE REMAINING ISSUE OF RS.1,40, 815/- AS EXPENDITURE INCURRED BY ASSESSEES DIRECTOR SHRI ASHWIN PATEL. IT EMERGES THAT THE ASSESSEE HAS NOT FILED ANY EXPLANATION MUCH LESS A SATISFACTORY ONE IN QUANTUM AS WELL AS IN THE INSTANT PENALTY PROCEEDINGS. WE THUS REJECT ASSESS EES SUBSTANTIVE GROUND RELEVANT TO THE INSTANT ISSUE. THE IMPUGNED PENALTY ON THIS LAST ISSUE IS THEREFORE AFFIRMED. 9. THIS ASSESSEES APPEAL IS PARTLY ALLOWED. [PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF MARCH, 2018.] SD/- SD/- ( PRAMOD KUMAR ) ( S. S. GODARA) ACCOUNTANT MEMBER JUDICIA L MEMBER AHMEDABAD: DATED 28/03/2018 TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- / REVENUE 2 / ASSESSEE ! / CONCERNED CIT 4 !- / CIT (A) ( )* + ,--. . /0 / DR, ITAT, AHMEDABAD 1 + 23 4 5 / GUARD FILE. BY ORDER / . // . /0