ITO 20(3)(1), MUMBAI V. ESSENTIAL CLOTHING CO., MUMBAI

ITA 1325/MUM/2012

• Counselvise Citation: 132519914 RSA 2012
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 19-08-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 27-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MARLON REGO
• Keywords: Onus to prove

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH E, MUMBAI BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND DR. S.T.M. PAVALAN, JUDICIAL MEMBER ITA NO. 1325/MUM/2012 ASSESSMENT YEAR: 2007-08 ITO 20(3)(1) 605 PIRAMAL CHAMBERS, LALBAUG, MUMBAI- 400 012 VS. M/S. ESSENTIAL CLOTHING CO. 208/403, STANDFORD PLAZA, B-65, OFF NEW LINK ROAD ANDHERI (W) MUMBAI- 53 PAN:AAAFE 1891 M (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MARLON REGO RESPONDENT BY : SHRI SHISHIR SRIVASTAVA DATE OF HEARING : 19.08.2013 DATE OF PRONOUNCEMENT : 25.09.2013 O R D E R PER DR. S.T.M. PAVALAN, JM: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF THE LD.CIT(A) -31, MUMBAI DATED 28.12.2011 FOR THE ASSESSMENT YEAR 20 07-08. 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS: 1. THE LEARNED CIT (A) HAS ERRED ON FACT AND IN LAW A ND IN THE CIRCUMSTANCES OF THE CASE IN DELETING AN ADDITION OF RS.9,84,440/- M ADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION PAYMENTS. 2. THE LEARNED CIT (A) HAS ERRED IN NOT APPRECIATING T HAT THE ASSESSED DID NOT PRODUCE ANY AGREEMENT WITH THE COMMISSION PAYEES. T HE BURDEN OF PROOF WAS NOT FULLY DISCHARGED BY THE ASSESSED. ASSESSEE HAS NOT BEEN PROVE FULLY THAT THE COMMISSION PAYMENT WERE MADE WHOLLY AND EXCLUSIVELY FOR ITS BUSINESS PURPOSE. 3. THE LEARNED CIT (A) HAS ERRED IN IGNORING THE FACT THAT ON THE SIMILAR ISSUE IS ASSESSEES OWN CASE FOR A.Y. 2006-07 THE ASSESSMENT IS SET ASIDE TO THE FILE OF AO FOR RE-EXAMINATION OF THE ISSUE, BY THE ITAT VID E ORDER DATED 04.03.2011. 4. THE APPELLANT PRAYS THAT THE ORDER OF CIT (APPEALS) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE AO BE RESTORED. ITA NO. 1325/MUM/2012 M/S. ESSENTIAL CLOTHING CO. ASSESSMENT YEAR : 2007-08 2 3. AT THE OUTSET, IT HAS BEEN POINTED OUT THAT THE ITAT IN THE ASSESSEES OWN CASE IN ITA NO. 1055/MUM/2010 FOR THE A.Y. 2006-07 HAS DECI DED A SIMILAR ISSUE IDENTICAL TO THE ISSUES RAISED IN THE GROUNDS OF PRESENT APPEAL AND THE RELEVANT FINDINGS ARE EXTRACTED HEREUNDER. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. DR A ND THE RELEVANT MATERIAL ON RECORD. THE MAIN OBJECTION OF THE AO WAS THAT NO AG REEMENT WAS PRODUCED IN RESPECT OF LELAC A.A.B.LTD, AND IT SEEMS THAT NO SU CH AGREEMENT WAS PRODUCED EVEN BEFORE THE LD.CIT(A). THOUGH IT HAS BEEN MENTI ONED BY THE LD.CIT(A) THAT DETAILS HAVE BEEN FILED, BUT HE HAS NOT EXAMINED WH ETHER HIGHER RATE OF COMMISSION WAS PAID AND IF SO, THEN WHAT WAS THE RE ASON. THE LD.CIT(A) HAS ALLOWED THE RELIEF MAINLY ON THE BASIS THAT ACCOUNT S WERE AUDITED, THE COMMISSION WAS PAID THROUGH BANKING CHANNEL WITH THE APPROVAL OF THE RBI AND EVEN THE EXPORTS HAVE BEEN FOUND TO BE GENUINE. THESE FACTO RS DO NOT PROVE THE GENUINENESS AS WELL AS REASONABILITY OF THE COMMISS ION. MERELY BECAUSE, COMMISSION WAS PAID THROUGH BANKING CHANNEL WITH TH E APPROVAL OF RBI, IT DOES NOT PROVE ANYTHING. THE LD.CIT(A) HAS ALSO NOT EXAMINED AS TO WHY THE RATES OF COMMISSION WERE HIGHER IN THIS CASE. ALL THESE MATT ERS REQUIRE EXAMINATION. BUT SINCE NO REPRESENTATION HAS BEEN MADE BEFORE US, TH EREFORE, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF THE LD.CIT(A) AN D REMIT THE MATER BACK TO THE FILE OF THE AO FOR RE-EXAMINATION OF THE ISSUE. THE ASSE SSEE IS ALSO DIRECTED TO COOPERATE WITH THE PROCEEDINGS AND FILE NECESSARY D ETAILS BECAUSE THE BURDEN IS ALWAYS ON THE ASSESSEE TO PROVE ANY CLAIM OF EXPEND ITURE. IN THE ABSENCE OF ANY CONTRARY FACTS BROUGHT ON REC ORD BY THE PARTIES FOR THE YEAR UNDER CONSIDERATION, WE, FOLLOWING THE AFOREMENTIONED DEC ISION OF THE ITAT DECIDE THE ISSUE IN THE PRESENT APPEAL IN THE SIMILAR LINE AS AFOREMENT IONED. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S ALLOWED FOR STATISTICAL PURPOSE . ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF SEPTEMBER, 2013. SD/- SD/- (P.M. JAGTAP) (DR. S.T.M. PAVALAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 25.09.2013. *SRIVASTAVA COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR E BENCH //TRUE COPY// BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.