Shri Deepak Jetha, Indore V. THE DCIT CIRCLE 5(1), Indore

ITA 14/IND/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2360 (ITAT-INDORE)
• Duration Of Justice: 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 17-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Opportunity of being heard
• Section: 143(3); 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.14/IND/2017 ASSESSMENT YEAR: 2011-12 SHRI DEEPAK JETHA C/O GIRDHARGARG& ASSOCIATES, 409/411, CHETAK CENTRE INDORE, 12/2, RNT MARG INDORE-452001 / VS. D CIT - 5 ( 1 ), INDORE (APPELLANT) (REVENUE ) P.A. NO. ACPPJ9587N APPELLANT BY SHRI GIRDHARGARG CA , REVENUE BY SHRI RAJIV JAIN , SR. DR DATE OF HEARING: 02.01.2018 DATE OF PRONOUNCEMENT: 12.01.2018 / O R D E R PER MANISH BORAD, A.M: THIS APPEAL OF ASSESSEE PERTAINING TO A.Y. 2011-12 IS DIRECTEDAGAINST THE ORDER OF LD. COMMISSIONER OF IN COME TAX(APPEALS)-II, INDORE,(IN SHORT CIT(A)), DATED 30.09.2016 WHICH IS ARISING OUT OF THE ORDER U/S 143(3) OF THE INCOME T AX ACT 1961(HEREINAFTER CALLED AS THE ACT) FRAMED ON 07. 03.2014 BY DCIT CIRCLE 5(1). DEEPAK JETHA 2 2 . BRIEFLY STATED FACTS AS CULLED OUT ON THE RECORDS ARE THAT THE ASSESSEE IS ON INDIVIDUAL EARNING INCOME FROM ADVE RTISING AGENCY. RETURN OF INCOME FILED ON 28.09.2011 DECLARING INCO ME OF RS.19,45,250/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. NOTICES U/S 143(2) AND 142(1) ALONG WITH DETAILED Q UESTIONNAIRE WAS DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF EXAMINATION OF BOOKS OF ACCOUNT AND FINANCIAL STATEMENT. LD. ASSES SING OFFICER (IN SHORT LD.AO) ALSO LOOKED INTO THE CLAIM OF COMMISSI ON EXPENSES, TRAVELLING EXPENSES, TELEPHONE EXPENSES AND VEHICLE RUNNING & MAINTENANCE EXPENSES. THE AO WAS NOT CONVINCED WITH THE GENUINENESS OF CLAIM OF COMMISSION EXPENSES AS THEY WERE NOT SUPPORTED WITH NECESSARY DOCUMENTS WHICH COULD PROV E THE NATURE AND NECESSITY OF SERVICE AND THE JUSTIFICATION OF S UCH PAYMENTS. THE AO ACCORDINGLY DISALLOWED THE COMMISSION EXPENDITUR E OF RS.19,36,242/- PAID TO SIX PARTIES ALONG WITH OTHER DISALLOWANCE OF EXPENSES MADE ADDITION OF RS.20,88,403/- AND ASSESS ED THE INCOME AT RS.4033,653/-. 3. BEING AGGRIEVED THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND PARTLY SUCCEEDED. 4. NOW, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUN AL RAISING A SOLE GROUND AGAINST THE ORDER OF LD. CIT(A) CONFIRMING T HE ADDITION ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENDITURE O F RS.19,36,242/-. THE LD. COUNSEL FOR THE ASSESSEE RE ITERATING THE SUBMISSIONS MADE BEFORE THE LD. CIT(A), FURTHER ADD ED THAT ALL THE NECESSARY DETAILS INCLUDING NAME, ADDRESS, PAN, NO. HAVE BEEN PROVIDED, PAYMENT OF COMMISSION HAS BEEN MADE BY AC COUNT PAYEE DEEPAK JETHA 3 CHEQUE AND TAX HAS BEEN DEDUCTED AT SOURCE, THE ALL EGED COMMISSION AMOUNT HAS BEEN OFFERED TO TAX BY THE SI X PARTIES. THE CONFIRMATION OF ACCOUNT ALSO STANDS FILED. FURTHER IT WAS ALSO PLEADED THAT SIMILAR CLAIM OF COMMISSION PAID TO VE RY SAME PARTIES WERE ALLOWED IN THE PRECEDING YEAR ALSO. 5. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF BOTH THE PARTIES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED RECORD PLACED BEFORE US. SOLE ISSUE RELATES TO DISALLOWANCE OF CO MMISSION OF RS.19,36,242/- PAID TO FOLLOWING SEVEN PARTIES: 1. GOURAV HEDA 25,000/- 2. KAMAL HEDA HUF 6,12,422/- 3. NAVEEN ABHIKARAN PVT. LTD. 2,73,642/- 4. PARAGABHIKARAN PVT. LTD. 4,26,084/- 5. RITESHYADAV 95,535/- 6. SATISH CHANDRA HEDA HUF 5,02,422/- 7. AJAY MISHRA 1,137/- TOTAL 19,36,242/- IN THE ABOVE STATED DETAILS COMMISSION OF RS.1,137 /- HAS BEEN PAID TO AJAY MISHRA. WE OBSERVE THAT THE IMPUGNED A MOUNT HAS BEEN PAID BY ACCOUNT PAYEE CHEQUE AND LOOKING TO TH E SMALLNESS OF AMOUNT, WE DELETE THIS DISALLOWANCE OF RS.1,137/-. 7. AS REGARDS THE AMOUNT OF COMMISSION OF RS.25,000 /- AND RS.95,535/- PAID TO GOURAV HEDA AND RITESH YADAV, W E FIND THAT BOTH THESE PERSONS WERE EX-EMPLOYEES OF SAMSUNG LTD . AND THEY PROCURED THE ORDER OF ADVERTISEMENT FOR SAMSUNG LTD . AND THE DEEPAK JETHA 4 PERCENTAGE OF COMMISSION WAS APROX. 1.25% OF THE TO TAL INVOICES RAISED BY THE ASSESSEE. WE ARE SATISFIED WITH THE I DENTITY GENUINENESS AND CREDITWORTHINESS OF THESE PAYMENTS TOTALLING TO RS.1,20,535/- AND WE ACCORDINGLY DELETE THE DISALLO WANCE OF COMMISSION PAID TO THESE TWO PARTIES AT RS.1,20,535 /-. 8. AS REGARDS THE BALANCE COMMISSION EXPENSES OF RS.18,14,570/-, DURING THE COURSE OF ASSESSMENT PRO CEEDINGS THE ASSESSEE HAS FILED VARIOUS DETAILS IN SUPPORT OF IT S CLAIM. THE AO TEST CHECKED THE COMMISSION BILL PRODUCED AND OBSER VED THAT EVERY BILL INVARIABLY CONTAINED THE SAME PARTICULAR. WE HAVE LIASONING SERVICES FOR YOUR CLIENT DURING THE F.Y. 2010-11. MAJOR PORTION OF THE COMMISSION WAS PAID FOR PROCURING THE BUSINESS FROM INDORE MUNICIPAL CORPORATION AS A CLIENT. EVEN, THOUGH, TH E ASSESSEE PROVIDED SUFFICIENT DETAILS TO PROVE THE IDENTITY A ND CREDITWORTHINESS OF ALL THE COMMISSION AGENTS BUT IN VIEW OF BOTH TH E LOWER AUTHORITIES THE GENUINENESS OF THE EXPENDITURE WAS NOT PROVED. HOWEVER, THIS FACT IS NOT DISPUTED BY THE REVENUE A LSO THAT THE ASSESSEE FILED ALL THE DETAILS PERTAINING TO NAME, ADDRESS, PAN, CONFIRMATION OF ACCOUNT, INCOME TAX RETURN OF FEW A GENTS, DETAILS OF TAX DEDUCTED AT SOURCE AND PAYMENT MADE BY ACCOUNT PAYEE CHEQUES. 9. WE, HOWEVER, IN ORDER TO ASCERTAIN AS TO WHETHER T HE PAYMENT OF COMMISSION WAS GENUINE AND WAS ACTUALLY INCURRED IN THE REGULAR COURSE OF BUSINESS, EXAMINED THE RELATED DE TAILS FILED IN THE PAPER BOOK. WE FIND THAT THE ASSESSEE PAID MAJOR C OMMISSION TO VARIOUS AGENTS FOR PROCURING THE BUSINESS OF ADVER TISEMENT OF M/S. DEEPAK JETHA 5 INDORE MUNICIPAL CORPORATION. NOTHING HAS BEEN BROU GHT ON RECORD BEFORE THE LOWER AUTHORITIES AS WELL AS BEFORE US W HICH COULD PROVE THAT THERE WAS COMMUNICATION BETWEEN AGENT AND THE ASSESSEE FOR PROCURING VARIOUS ORDERS DURING THE YEAR. THERE IS NO AGREEMENT SHOWING CONDITIONS AND NATURE OF SERVICE TO BE PROV IDED BY THE AGENTS AND THE PERCENTAGE OF COMMISSION OR ANY OTHE R ALTERNATE BASIS FOR COMPUTING THE COMMISSION. FURTHER FROM PE RUSAL OF THE CONFIRMATION ACCOUNTS OF ALL THE FOUR ALLEGED COMMI SSION AGENTS, WE FIND THAT THE OPENING AND CLOSING BALANCE ARE NIL, CREDITING OF COMMISSION PAYABLE AND PAYMENT HAS OCCURRED ON THE SAME DATE AND THE FIGURE OF COMMISSION IS CONSOLIDATED FIGURE , MEANING THEREBY, THAT ENTRIES OF COMMISSION HAVE NOT BEEN S HOWN AS AND WHEN THE ORDER IS PROCURED. REASON FOR MENTIONING, THESE FACTS AS EMANATING OUT FROM THE CONFIRMATION OF ACCOUNTS ARE THAT A POSSIBILITY CANNOT BE IGNORED THAT THE ALLEGED COMM ISSION EXPENDITURE MAY BE AN ADJUSTMENT TOWARDS LOWERING D OWN THE TAXABLE INCOME. 10. FURTHER EVEN THOUGH, THE LD. AO WAS IN POSSESSION O F ALL NECESSARY DETAILS INCLUDING NAME, ADDRESS AND PAN N O. AND INCOME TAX RETURN, HE HAS NOT TAKEN STEP FURTHER TO CALL I NFORMATION DIRECTLY THROUGH THE AGENTS OR TO RECORD THEIR STATEMENT. 11. WE, THEREFORE, IN THE GIVEN FACTS AND CIRCUMSTANCES OF THE CASE WHEREIN THE ASSESSEE HAS NOT BEEN FAIRLY SUCCESSFUL TO DEMONSTRATE OR PROVE THE GENUINENESS OF THE COMMISSION EXPENDIT URE AND ON THE OTHER HAND, LD. AO HAS NOT ADOPTED NECESSARY MEASUR ES TO VERIFY THE IMPUGNED TRANSACTIONS INCLUDING CALLING OF DETA ILS FROM AGENTS DEEPAK JETHA 6 WHICH COULD SHOW THE COMMUNICATION BETWEEN THE ASSE SSEE, COMMISSION AGENT AND THE CLIENT. WE THEREFORE, SET ASIDE THE ISSUE RAISED IN THIS APPEAL RELATING TO DISALLOWANCE OF C OMMISSION EXPENDITURE OF RS.18,14,570/- TO THE FILE OF LD. A O SO AS TO EXAMINE THE ISSUE AFRESH, IN THE LIGHT OF OUR ABOVE OBSERVATIONS AND WE ALSO DIRECT THE ASSESSE TO REMAIN COMPLAINT AND FURNISH NECESSARY INFORMATION AS CALLED FOR. NEEDLESS TO ME NTION THAT A PROPER OPPORTUNITY OF BEING HEARD IS TO BE PROVIDED TO THE ASSESSEE. 12 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 12 .01.20 18. SD/- (KUL BHARAT) SD/- (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER INDORE; DATED : 12/ 01/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE