MANDAKINI V MAHAJAN, MUMBAI V. DCIT CIR 21(3), MUMBAI

ITA 1440/MUM/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3692 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: J
• Next Hearing Date: 28-03-2013
• Assessment Year: 2004-2005
• Appeal Filed On: 22-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRAVIN N SHAH

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI R S SYAL, ACCOUNTANT MEMBER & SHRI SANJAY GARG, JUDICIAL MEMBER ITA NO.:1440/MUM/2010 ASSESSMENT YEAR: 2004-05 MANDAKINI V MAHAJAN, VS. THE DCIT CIR. 21(3), A-10 NEW LIFE CHS, MUMBAI SHIV SHRUSTI, NEHRU NAGAR, KURLA (EAST), MUMBAI- 400 024. PAN : AAHPM3161F (APPELLANT) (RESPONDENT) APPELLANT BY : MR.PRAVIN N SHAH RESPONDENT BY : MR.SANJAY AGRAWAL DATE OF HEARING : 01.05.2013 DATE OF PRONOUNCEMENT : 08.05.2013 ORDER PER SANJAY GARG, JM : THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE CIT(A) DATED 29.09.2009 RELEVANT TO A.Y. 2004-05, C ONFIRMING THE DISALLOWANCE OF RS. 3,01,536/- BEING COMMISSION PAID TO MR. SUDHAKA R S KATOL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E AN INDIVIDUAL IS THE PROPRIETOR OF M/S. LABORATORY SUPPLIERS ENGAGED IN MANUFACTURI NG OF AROMATIC CHEMICALS. IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED EXPENDIT URE OF RS.3,01,536/- ON ACCOUNT OF COMMISSION PAID TO MR. SUDHAKAR S KATOL. THE AO DURING THE ASSESSMENT PROCEEDINGS SOUGHT DETAILS/CONFIRMATION REGARDING T HE COMMISSION PAID TO MR. SUDHAKAR S KATOL. HE ALSO ISSUED NOTICE U/S. 133(6 ) TO THE CUSTOMERS OF THE ASSESSEE NAMELY M/S. S H KELKAR & CO. PVT. LTD., M/ S. ORIENTAL AROMATIC LTD. AND ITA NO. 1440/MUM/2010 AY : 2004-05 2 M/S. FIRMENICH AROMATICS (I) PVT. LTD., FOR THE SAK E OF CONFIRMATION OF SERVICES RENDERED BY MR. SUDHAKAR S KATOL AS COMMISSION AGEN T. IN RESPONSE, M/S. ORIENTAL AROMATIC LTD. VIDE LETTER DATED 05.09.2006 INTIMATE D THAT NO AGENCY/BROKER WAS INVOLVED FROM THEIR SIDE AND THAT THEY WERE NOT AWA RE OF ANY AGENT/BROKER FROM LABORATORY SUPPLIERS (THE ASSESSEE) WITH REGARD TO SALES MADE TO THEM. THEY FURTHER STATED THAT THEY WERE HAVING BUSINESS RELATIONS WIT H THE ASSESSEE FOR THE LAST ABOUT 10 YEARS AND ORDERS WERE PLACED DIRECTLY. SIMILAR TYPE OF REPLY WAS GIVEN BY M/S. S H KELKAR & CO. PVT. LTD WHEREAS NO REPLY WAS RECEIV ED FROM M/S. FIRMENICH AROMATICS (I) PVT. LTD. THE ASSESSEES REPRESENTAT IVE BEFORE THE AO SUBMITTED THAT MR. SUDHAKAR S KATOL HAD BEEN APPOINTED TO LOOK AFT ER SALES AND COLLECTION FROM M/S. S H KELKAR & CO. PVT. LTD. AND M/S. ORIENTAL AROMAT IC LTD. THERE WASNT ANY OTHER PERSON EMPLOYED BY THE ASSESSEE TO LOOK AFTER SALES AND COLLECTION. MR. SUDHAKAR S KATOL WAS REPRESENTING THE ASSESSEE FOR THE LAST ON E AND A HALF DECADE. FOR HIS SERVICES, COMPENSATION WAS PAID IN TERMS OF PERCENT AGE OF TURNOVER OR ON THE BASIS OF QUANTITY SOLD AND THE SAME WAS ENTERED AS COMMIS SION IN THE BOOKS OF THE ASSESSEE. SINCE MR. SUDHAKAR S KATOL WAS REPRESENT ING THE ASSESSEE FOR THE LAST ABOUT 15 YEARS, THIS WAS THE REASON THAT THE OUTSID ERS DID NOT CONSIDER HIM AS AN AGENT RATHER THE REPRESENTATIVE OF THE COMPANY. TH E AO NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE, DISALLOWED THE C OMMISSION OF RS. 3,01,536/- SHOWN TO BE PAID TO MR. SUDHAKAR S KATOL AND ADDED BACK THE SAME TO THE INCOME OF THE ASSESSEE. THE LEARNED CIT(A) CONFIRMED THE SAI D DISALLOWANCE. THE ASSESSEE IS THUS IN APPEAL BEFORE US. 3. THE AO IN THE ASSESSMENT ORDER HAS OBSERVED THAT THE ASSESSEE HAD FAILED TO GIVE ANY EVIDENCE OF SERVICES RENDERED BY MR. SUDHA KAR S KATOL. THE ASSESSEE HAD ALSO FAILED TO PRODUCE MR. SUDHAKAR S KATOL BEFORE HIM. THE LEARNED AR HAS BROUGHT TO OUR NOTICE THE FACT THAT MR. SUDHAKAR S KATOL HA D EXPIRED ON 03.07.2004 AND HE HAS RELIED ON THE DEATH CERTIFICATE ISSUED IN THIS RESPECT, WHICH HAS BEEN PLACED AT ITA NO. 1440/MUM/2010 AY : 2004-05 3 PAGE NO.10 OF THE PAPER-BOOK. HE HAS FURTHER SUBMI TTED THAT THE ASSESSMENT PROCEEDINGS WERE TAKEN IN THE CASE OF THE ASSESSEE IN THE YEAR 2006 AND THE DEATH CERTIFICATE OF MR. SUDHAKAR S KATOL WAS PRODUCED BE FORE THE AO BUT THE AO FAILED TO TAKE NOTE OF THE SAME. HE HAS ALSO DRAWN OUR ATTEN TION TO THE INCOME TAX RETURN OF MR. SUDHAKAR S KATOL PERTAINING TO A.Y. 2004-05, WH ICH WAS SIGNED BY HIS WIDOW AND THE COMMISSION INCOME OF RS. 3,01,536/- RECEIVED BY MR. KATOL HAS BEEN DULY CLAIMED IN THE SAID RETURN. FROM THE DOCUMENTS ON THE FILE IT CAN BE NOTICED THAT THERE IS SUFFICIENT EVIDENCE ON THE FILE TO SHOW TH AT THE SAID MR. SUDHAKAR S KATOL WAS WORKING WITH THE ASSESSEE FOR THE LAST 10-15 YE ARS. THE CASE OF THE ASSESSEE HAD BEEN TAKEN UP FOR SCRUTINY BY THE AO FOR THE A. YS 1991-92, 1992-93, 1993-94, 1995-96, 1996-97, 1997-98, 2001-02, 2002-03 AND IN ALL THE SAID YEARS COMMISSION WAS PAID TO MR. SUDHAKAR S KATOL AND PAYMENT WAS CL AIMED AS EXPENDITURE BUT THE SAME WAS NEVER DISPUTED BY THE REVENUE. EVEN DURING THE A.Y. 1992-93 ONLY THE QUANTUM OF COMMISSION PAID TO MR. SUDHAKAR S KATOL WAS DISPUTED BY THE REVENUE BUT ULTIMATELY THE CASE WAS DECIDED IN FAVOUR OF TH E ASSESSEE. IT IS NOT THE CASE THAT THE ASSESSEE HAS CLAIMED THE COMMISSION PAID TO MR. SUDHAKAR S KATOL FOR THE FIRST TIME RATHER THE ASSESSEE HAD BEEN CLAIMING THE COMM ISSION PAID TO MR. SUDHAKAR S KATOL FOR HIS SERVICES FOR THE LAST 10-15 YEARS AND THE REVENUE HAD NEVER DISPUTED THE SAME. IT WAS THE CLAIM OF THE ASSESSEE THAT MR . SUDHAKAR S KATOL WAS REPRESENTING THE ASSESSEE COMPANY, LOOKING AFTER TH E SALES AND COLLECTION AND WAS TREATED AS REPRESENTATIVE OF THE COMPANY AND NOT CO MMISSION AGENT HENCE, THE CUSTOMER COMPANIES COULD NOT CERTIFY THAT THERE WAS ANY COMMISSION AGENT/BROKER INVOLVED IN SALE TRANSACTIONS. THE ASSESSEE HAD PR ODUCED A CERTIFICATE FROM ONE OF THE SAID CUSTOMER M/S. S H KELKAR & CO. PVT. LTD D ATED 06.12.94, VIDE WHICH IT HAD BEEN CERTIFIED THAT MR. SUDHAKAR S KATOL WAS REPRE SENTING M/S. LABORATORY SUPPLIERS (THE ASSESSEE). THE OBSERVATION OF THE AO THAT THE ASSESSEE HAD FAILED TO PRODUCE MR. SUDHAKAR S KATOL, SHOWS HIS INAPPLICATION OF MI ND TO THE FACT OF THE CASE THAT THE ASSESSEE HAD ALREADY PRODUCED MR. KATOLS DEATH CER TIFICATE BEFORE HIM. THERE IS ITA NO. 1440/MUM/2010 AY : 2004-05 4 SUFFICIENT EVIDENCE ON FILE TO PROVE THAT MR. SUDHA KAR S KATOL WAS REPRESENTING THE ASSESSEE COMPANY AND THE COMMISSION PAID BY THE ASS ESSEE COMPANY TO HIM FOR THE LAST 10-15 YEARS WAS ALSO CLAIMED TO BE RECEIVED BY MR. KATOL IN HIS INCOME TAX RETURNS. IN OUR VIEW THE AUTHORITIES BELOW HAVE WR ONGLY DISALLOWED THE COMMISSION PAID BY THE ASSESSEE TO MR. SUDHAKAR S KATOL. IN V IEW OF OUR OBSERVATIONS MADE ABOVE, THE ORDER OF THE CIT(A) IS SET ASIDE AND THE REBY THE DISALLOWANCE MADE BY THE AO ALSO. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 8 TH DAY OF MAY 2013. SD/- SD/- (R S SYAL) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DT : 8 TH MAY, 2013 SA COPY FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE C.I.T. CONCERNED MUMBAI 4. CIT (A) CONCERNED MUMBAI 5. THE DR, J - BENCH, ITAT, MUMBAI //TRUE COPY// BY ORDER ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI