Nach Engineering Pvt.Ltd, Pune V. Income-tax Officer, Ward - (2)(4), Pune

ITA 1242/PUN/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3663 (ITAT-PUNE)
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-07-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NANDKUMAR V PARASNIS
• Keywords: Business income
• Section: 143(3); 133(6); 37(1)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1242 /P U N/201 8 / ASSESSM ENT YEAR : 20 1 2 - 1 3 NACH ENGINEERING PVT. LTD., PLOT NO.S - 42, GENERAL BLOCK, OPP. PAVANA INDUSTRIAL COMPLEX, MIDC, PUNE 411026 . / APPELLANT PAN: AAACN6305J VS. THE INCOME TAX OFFICER, WARD 2 ( 4 ), PUNE . / RESPONDEN T / APPELLANT BY : SHRI NANDKUMAR V. PARASNIS / RESPONDENT BY : SHRI RAJESH GAWALI / DATE OF HEARING : 1 7 . 0 1 .201 9 / DATE OF PRONOUNCEMENT: 20 . 0 2 .201 9 / ORDER P ER SUSHMA CHOWLA, J M : THE APPEAL FILED BY ASSESSEE IS AGAINST ORDER OF CIT (A) - 3 , PUNE , DATED 2 1 . 0 5 .201 8 RELATING TO ASSESSMENT YEAR 20 1 2 - 1 3 AGAINST ORDER PASSED UNDER SECTION 143(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2. THE ASSESSEE HAS R AISED THE FOLLOWING GROUNDS OF APPEAL: - THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS.6 , 00 , 000/ - MADE IN RESPECT OF LIASIONING CHARGES BE DELETED. ITA NO. 1242 /P U N/201 8 NACH ENGINEERING PVT. LTD. 2 THE APPELLANT COMPANY OBJECTS TO THE ORDER DATED 21.05.2018 PASSED BY THE COMMISSIONER OF INCOME TAX (APPE ALS) 3 PUNE FOR THE AFORESAID ASSESSMENT YEAR ON THE FOLLOWING GROUNDS. DISALLOWANCE OF LIASIONING CHARGES OF RS.6 , 00 , 000 / - 1 . WITHOUT CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE AND VARIOUS SUBMISSIONS MADE DURING THE ASSESSMENT PROCEEDINGS, THE LEARNE D THE COMMISSIONER OF INCOME TAX (APPEALS) 3 PUNE ERRED IN MAKING A DISALLOWANCE OF RS.6,00,000/ - PAID BY THE COMPANY AS LIASIONING CHARGES AS NOT GENUINE. 2 . WITHOUT CONSIDERING FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED THE COMMISSIONER OF INCOME TAX (APPEALS) 3 PUNE ERRED IN DISALLOWING LIASIONING CHARGES AS PER PROVISIONS OF SECTION 37(1) OF THE ACT WITHOUT APPRECIATING THE GENUINENESS OF THE EXPENSES. 3 . THE LEARNED THE COMMISSIONER OF INCOME TAX (APPEALS) 3 PUNE ERRED IN DISALLOWING THE SAID EXPENDI TURE FOR NON SUBMISSION OF SOME OF THE DOCUMENTS BY THE PERSON RECEIVING SAID LIASIONING CHARGES AFTER SERVING NOTICE U/S. 133(6) DESPITE THE FACT THAT THE COMPANY SUBMITTED THE ALL THE REQUIRED DOCUMENT AVAILABLE WITH THEM AND ALL THE PARTIES HAVE RESPOND ED TO THE NOTICE. GENERAL 4 . EACH ONE OF THE ABOVE GROUNDS OF APPEAL ARE DISTINCT AND SEPARATE AND WITHOUT PREJUDICE TO THE OTHER. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST DISALLOWANCE OF 6 LAKHS MADE IN RESPECT OF LIASONING CHARGES. 4 . BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SPECIAL PURPOSE MACHINERIES. THE CASE OF ASSESSEE WAS TAKEN UP FOR SCRUTINY AND IT WAS NOTED THAT THE ASSESSEE HAD PAID LIASONING CHARGES OF 15,18,423/ - TO VARIOUS PARTIES TOWARDS SECURING BUSINESS. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM OF EXPENDITURE AND INFORMATION WAS SOUGHT FROM THE RESPECTIVE PARTIES. TWO OF THE PARTIES I.E. SHRI SAI ENTERPRISES, JABALPUR AND GRACE TRANS TECH, HYDERABAD SUPPLIED THE INFORMATION PARTLY. THE THIRD PARTY ASP INDUSTRIES CO., NEW DELHI DID NOT FURNISH ANY INFORMATION. THE ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECTION 37(1) OF THE ACT OBSERVED THAT THE GENUINENESS OF LIASONING CHARGES ITA NO. 1242 /P U N/201 8 NACH ENGINEERING PVT. LTD. 3 WAS NOT PROVED BY THE A SSESSEE COMPANY. HENCE EXPENSES WERE NOT ALLOWABLE AND AN ADDITION OF 15,18,423/ - WAS MADE BY THE ASSESSING OFFICER. 5. BEFORE THE CIT(A), THE ASSESSEE POINTED OUT THAT IT HAD SUPPLIED SPECIAL PURPOSE MACHINERIES MAINLY OIL FILTRATION PLANTS, AS PER OR DER ON THE BASIS OF TENDERS TO VARIOUS GOVERNMENT AND SEMI GOVERNMENT CUSTOMERS ALL OVER INDIA. THESE ORDERS WERE CLEARED BY SUBMITTING TENDERS FLOATED BY THE CUSTOMERS AND THE ASSESSEE HAD TO TAKE THE HELP OF LOCAL CONSULTANTS FOR VARIOUS CONSULTANCIES A ND FOLLOW - UP WITH THE GOVERNMENT AND SEMI GOVERNMENT ORGANIZATIONS. THE CHARGES PAID TO THEM WERE DEBITED AS LIASONING CHARGES. THE ASSESSEE EXPLAINED THAT IT HAD ITS UNIT IN PUNE AND DONE THE LIASONING WORK AND HAS DONE THE JOB WORK OF PARTIES AT HYDERA BAD, NEW DELHI AND JABALPUR THROUGH LIASONING AGENTS. THE ASSESSEE ALSO PRODUCED BILLS / VOUCHERS IN RESPECT OF PAYMENTS TO THE PARTIES AND ALSO POINTED OUT THAT TAX AT SOURCE HAD BEEN DEDUCTED FROM THE AFORESAID PAYMENTS. HE ALSO FURNISHED THE CONFIRMAT IONS FROM THE SAID PARTIES. THE CIT(A) ALLOWED THE PAYMENTS MADE TO ASP INDUSTRIES CO., NEW DELHI AND SHRI SAI ENTERPRISES, JABALPUR AS GENUINE. HOWEVER, SINCE THE PAYMENT TO GRACE TRANS TECH, HYDERABAD WAS MADE IN CASH AND THE SAID PARTY HAD NOT FURNISH ED ANY CORRESPONDENCE AND THE ASSESSEE HAD FAILED TO ESTABLISH THE SERVICES RENDERED BY THE SAID PARTY, HENCE THE DISALLOWANCE OF 6 LAKHS WAS UPHELD. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE AMOUNT WAS NOT PAID THROUGH CASH BUT WAS ALSO PAID THROUGH BANK ENTRIES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE PROPRIETOR OF GRACE TRANS TECH, HYDERABAD HAD FILED THE RETURN OF INCOM E AND ITA NO. 1242 /P U N/201 8 NACH ENGINEERING PVT. LTD. 4 HAD SHOWN THE SAID RECEIPTS IN ITS PROFIT AND LOSS ACCOUNT. THE SAID INFORMATION WAS FILED BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS ITSELF VIDE LETTER DATED 03.02.2015 AND THERE IS NO MERIT IN THE STAND OF AUTHORITIES BELOW IN STAT ING THAT NO INCOME TAX RETURN WAS FILED BY THE SAID CONCERN. FURTHER, THE AMOUNT WAS NEGOTIATED AND PAID TO THE SAID PARTY ALONG WITH OTHER WORK DONE BY IT AND SOME OF THE PAYMENTS WERE MADE IN CHEQUE ALSO. THE INFORMATION WAS ALSO FILED BY GRACE TRANS T ECH, HYDERABAD BEFORE THE ASSESSING OFFICER IN RESPONSE TO NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 9. ON PERUSAL OF R ECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE ONLY ISSUE WHICH IS RAISED IN THE PRESENT APPEAL IS AGAINST DISALLOWANCE OF COMMISSION PAID TO THE CONCERN GRACE TRANS TECH, HYDERABAD. THE MAIN PLEA OF AUTHORITIES BELOW WAS THAT TH E SAID CONCERN HAS NOT FURNISHED INFORMATION COMPLETELY AND WAS ALSO NOT ASSESSABLE TO TAX. FIRST OF ALL, THE SAID CONCERN HAD FILED INFORMATION IN RESPONSE TO NOTICE ISSUED UNDER SECTION 133(6) OF THE ACT, WHICH IS DULY ACKNOWLEDGED BY THE ASSESSING OFFI CER IN THE ASSESSMENT ORDER. THE INFORMATION MAY BE INCOMPLETE BUT THE PERUSAL OF LEDGER ACCOUNT REFLECTS THE SAID PARTY TO HAVE RECEIVED THE PAYMENTS THROUGH BANK AND ALSO THROUGH CASH ENTRIES. SO, THERE IS NO MERIT IN HOLDING THAT THE WHOLE AMOUNT WAS PAID IN CASH. 10. ANOTHER ASPECT TO BE KEPT IN MIND IS THAT IN THE CONFIRMATION LETTER, COPY OF WHICH IS PLACED AT PAGE 12 OF PAPER BOOK, PAN NUMBER OF SAID PARTY WAS ALSO MENTIONED. THE ASSESSEE BEFORE THE TRIBUNAL HAS ALSO REFERRED TO THE ITA NO. 1242 /P U N/201 8 NACH ENGINEERING PVT. LTD. 5 COPY OF INCOME TAX RETURN FILED BY SOLE PROPRIETOR OF GRACE TRANS TECH, HYDERABAD . IN VIEW OF SUCH EVIDENCE AVAILABLE WITH THE ASSESSING OFFICER AND WHERE THE RECIPIENT IS ALSO A TAXED ENTITY AND HAD INCLUDED THE RECEIPTS AS PART OF ITS BUSINESS RECEIPTS, THERE IS NO MERIT IN MAKING THE AFORESAID DISALLOWANCE IN THE HANDS OF ASSESSEE. ACCORDINGLY, THE SAME IS REVERSED AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE EXPENDITURE OF 6 LAKHS. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 1 1 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF FEBRUARY , 201 9 . SD/ - (SUSHMA CHOWLA) / JUDICI AL MEMBER / PUNE ; DATED : 20 TH FEBRUARY , 201 9 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 3 , PUNE ; 4. THE PR. CIT - 2 , PUNE ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE