Ashok Kumar Jalan, Kolkata V. ACIT, Circle 37, Kolkata, Kolkata

ITA 1516/KOL/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0450 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 2 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 27-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R CHOWDHURY
• Assessee Lawyers: S K SONI LD
• Keywords: Corroborative evidences
• Section: 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH : KOLKATA [BEFORE HONBLE SHRI M.BALAGANESH, AM & HONBLE S HRI S.S.VISWANETHRA RAVI, JM] I.T.A NO. 1516/KOL/20 17 ASSESSMENT YEAR : 2012-1 3 ASHOK KUMAR JALAN -VS- ACIT, CIRCLE-37, KOLKATA . [PAN: ACOPJ 1651 N] (APPELLANT) (RESPOND ENT) FOR THE APPELLANT : SHRI S.K. SONI, LD . AR FOR THE RESPONDENT : SHRI R. CHOWDHURY, ADDL . CIT DATE OF HEARING : 10.09.2018 DATE OF PRONOUNCEMENT : 19. 09.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-11, KOLKATA [IN SHORT THE LD CIT(A)] IN APPEAL NO. 43/CIT(A)-11/CIR-37/KOL/15-16/KOL DATED 29.03.2017 PASSED BY THE ACIT, CIRCLE- 37, KOLKATA [ IN SHORT THE LD AO] UNDER SECTION 143 (3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 24.03.2015 FOR THE ASS ESSMENT YEAR 2012-13. 2. THE FIRST ISSUE TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF RS. 6,00 ,000/- PAID TO MR. ALOK JALAN (BROTHER OF THE ASSESSEE) TOWARDS COMMISSION, IN TH E FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.1516/KOL/2017 ASHOK KUMAR JALAN A.YR. 2012-13 2 3. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF TRADING OF STEEL TUBES. THE ASSESSEE HA D MADE PAYMENT OF RS. 23,17,317/- TO HIS BROTHER MR. ALOK JALAN AS UNDER: SALARY RS. 1,80,000/- COMMISSION AS PERCENTAGE OF TURNOVER RS. 21,37,317 /- TOTAL RS.23,17,317/- THE LD. AO OBSERVED THAT THE BROTHER OF THE ASSESSE E I.E. MR. ALOK JALAN WAS LOOKING AFTER THE FINANCE, ACCOUNTS AND SALE EXECUTION OF T HE BUSINESS OF THE ASSESSEE FOR THE PAST SEVERAL YEARS. HE ALSO OBSERVED THAT THE ASSES SEE HAD TAKEN LOAN FROM MR. ALOK JALAN AND PAID INTEREST TO HIM TO THE TUNE OF RS. 1 8,71,164/-. HE OBSERVED THAT THE ASSESSEE HAD PAID COMMISSION TO HIS BROTHER ON ONE HAND AND ON THE OTHER HAND HAD RECEIVED BACK THE SAID SUM AS UNSECURED LOAN FROM H IS BROTHER AND AGAIN HE PAID INTEREST THEREON. ACCORDINGLY, HE DISALLOWED A SUM OF RS. 6,00,000/- U/S 40A(2)(B) AS EXCESSIVE AND UNREASONABLE. THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT(A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE GONE THROUGH THE RIVAL SUBMISSIONS. WE F IND THAT THE ASSESSEE HAS BEEN MAKING PAYMENT OF SALARY AND COMMISSION TO HIS BROT HER AT AGREED TERMS FOR THE PAST SEVERAL YEARS FOR THE SERVICES RENDERED BY THE BROT HER TO THE BUSINESS OF THE ASSESSEE. THERE IS NO DISPUTE WITH REGARD TO SERVICES RENDERE D BY MR. ALOK JALAN AS IS QUITE EVIDENT FROM THE FINDINGS GIVEN BY THE LD. AO IN PA RA 2.1 OF THE ASSESSMENT ORDER. WE FIND THE BROTHER OF THE ASSESSEE I.E. ALOK JALAN HAD ALSO DULY INCLUDED THE SAID SUM AS HIS INCOME AND HAD PAID TAXES THEREON. THOUG H THIS ASPECT IS NOT RELEVANT FOR ALLOWABILITY OF COMMISSION EXPENDITURE IN THE HANDS OF THE ASSESSEE PAYER, WE FIND THAT WHEN THERE IS NO DISPUTE ON THE FACTUM OF SERV ICES RENDERED BY THE SAID PARTY TO 3 ITA NO.1516/KOL/2017 ASHOK KUMAR JALAN A.YR. 2012-13 3 THE ASSESSEE IN VIEW OF WHICH COMMISSION HAS BEEN P AID AND THE LD. AO WITHOUT BRINGING ANY COMPARABLE INSTANCES TO PROVE AS TO HO W THE COMMISSION PAID BY THE ASSESSEE IS EXCESSIVE OR UNREASONABLE WITHIN THE ME ANING OF SECTION 40A(2)(B) OF THE ACT, THE LD. AO CANNOT RESORT TO MAKE ANY DISALLOWA NCE OF EXPENDITURE ON AD HOC BASIS. WE ALSO FIND THAT THE INSTANT ISSUE IS ALREA DY COVERED IN FAVOUR OF THE ASSESSEE BY THE CO-ORDINATE BENCH OF THIS TRIBUNAL FOR ASSES SMENT YEAR 2010-11 IN I.T.A. NO. 577/KOL/2017 DATED 16.08.2017 IN HIS OWN CASE. IN V IEW OF THE AFORESAID OBSERVATIONS AND RESPECTFULLY FOLLOWING THE JUDICIA L PRECEDENT RELIED UPON HEREINABOVE, GROUND NO. 1 RAISED BY THE ASSESSEE IS ALLOWED. 5. THE LAST GROUND TO BE DECIDED IN THIS APPEAL IS AS TO WHETHER THE LD. CIT(A) WAS JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF VARIOUS EXPENDITURES AT 100% ON AD HOC BASIS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE BRIEF FACTS OF THIS ISSUE IS THAT THE ASSESS EE FURNISHED THE BOOKS OF ACCOUNTS AND BILLS AND VOUCHERS BEFORE THE LD. AO AND FROM T HE EXAMINATION OF THE SAME, THE LD. AO OBSERVED THAT CERTAIN EXPENDITURES WERE INCU RRED BY THE ASSESSEE IN CASH WHICH ARE NOT SUPPORTED WITH SUPPORTING EVIDENCES E XCEPT THE VOUCHERS. THE LD. AO IDENTIFIED SEVEN HEADS OF INCOME AND PROCEEDED TO M AKE DISALLOWANCE AT 10% THEREON ON AD HOC BASIS AS UNDER: 4 ITA NO.1516/KOL/2017 ASHOK KUMAR JALAN A.YR. 2012-13 4 THIS ACTION OF THE LD. AO WAS UPHELD BY THE LD. CIT (A). AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS. THE LD. AR ARGUED THAT THE BOOKS OF ACCOUNTS AND VOUCHERS WERE DULY SUBMITTED BEFORE TH E AO AND NO DEFECTS WERE FOUND BY THE LD. AO THEREON. THE LD. AR HAS FURNISH ED TABULATION OF VARIOUS EXPENDITURES FOR THE ASSESSMENT YEARS 2010-11, 2011 -12 AND 2012-13 AND ARGUED THAT THE PERCENTAGE OF EXPENDITURE THEREON ON SALES REMAINED STATIC WITH A VERY MINOR INCREASE YEAR AFTER YEAR. HE ALSO ARGUED THAT THERE ARE CERTAIN EXPENDITURES WHICH HAVE GONE DOWN DURING THE YEAR UNDER APPEAL WHEN CO MPARED TO EARLIER YEARS. HE ARGUED THAT EXCEPT TRAVELLING EXPENSES, ALL THE EXP ENDITURES HAD BEEN MAINTAINED PROPERLY AND IN RESPECT OF TRAVELLING EXPENSES, TH E SAME HAD INCREASED DURING THE YEAR IN VIEW OF THE FACT THAT THE ASSESSEE HAD TO T RAVEL FREQUENTLY TO SUCH NEW PLACES FOR EXPLORING NEW BUSINESSES. FURTHER HE FAIRLY AGR EED FOR SOME PERCENTAGE OF DISALLOWANCE THAT COULD BE MADE IN RESPECT OF SUCH TRAVELLING EXPENDITURE ALONE IN VIEW OF THE HUGE VARIATION OF PERCENTAGE IN THAT E XPENDITURE DURING THE YEAR WHEN COMPARED TO EARLIER YEARS. WE HAVE GONE THROUGH THE TABULATION FILED BY THE LD. AR AND WE FIND LOT OF FORCE IN THE ARGUMENT MADE BY TH E LD. AR AND ACCORDINGLY, DIRECT 5 ITA NO.1516/KOL/2017 ASHOK KUMAR JALAN A.YR. 2012-13 5 THE LD. AO NOT TO MAKE ANY DISALLOWANCE OF EXPENDIT URE ON AN AD HOC BASIS EXCEPT ON ACCOUNT OF TRAVELLING EXPENDITURE. WITH REGARD TO T RAVELLING EXPENDITURE WE HOLD THAT DISALLOWANCE MADE THEREON AT 5% WOULD MEET THE ENDS OF JUSTICE. ACCORDINGLY, GROUND NO. 2 RAISED BY THE ASSESSEE IS PARTLY ALLOW ED. 8. GROUND NOS. 3 AND 4 RAISED BY THE ASSESSEE ARE G ENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 19.09.2018 SD/- SD/ - [S.S. VISWANETHRA RAVI] [ M.BAL AGANESH ] JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 19.09.2018 SB, SR. PS COPY OF THE ORDER FORWARDED TO: 1. ASHOK KUMAR JALAN, C/O, CA S.K. SONI, 36, STRAND ROAD, 3 RD FLOOR, ROOM NO. 11, KOLKATA-700001. 2. ACIT, RANGE-37, 3, GOVT. PLACE (W), KOLKATA-7000 01. 3..C.I.T.(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVAT E SECRETARY HEAD OF OFFICE/D.D.O., ITAT, KOLKATA BENCHE S 6 ITA NO.1516/KOL/2017 ASHOK KUMAR JALAN A.YR. 2012-13 6 1 . THI S APPE A L B ) TH E A S S E SS ED AR I S E S O U L O F THE O RDE R O TT H E LE A M ED C O MM I SSIONER