M/s. Norinco Private Limited, Kolkata V. DCIT, Circle - 6(2), Kolkata, Kolkata

ITA 1551/KOL/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4803 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 10 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 30-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: C J SINGH JCITSRDR
• Assessee Lawyers: SOUMITRO CHOUDHURY
• Keywords: Business expenditure; Corroborative evidences; TDS
• Section: 143(3); 147; 148

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 1551 / KOL / 20 17 ASSESSMENT YEAR :2007-08 M/S NORINCO PVT. LTD. 14, NETAJI SUBHAS ROAD, KOLKATA-700 001 [ PAN NO.AAACN 9867 H ] V/S . DCIT, CIRCLE-6(2), P-7, CHOWRINIGHEE SQUARE, AAYAKAR BHAWAN, KOLKATA-69 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRO CHOUDHURY, ADVOCATE /BY RESPONDENT SHRI C.J. SINGH, JCIT-SR-DR /DATE OF HEARING 21-02-2019 /DATE OF PRONOUNCEMENT 17-05-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2007-08 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATAS D ATED 20.04.2017 PASSED IN CASE NO.857/CIT(A)-2/14-15, INVOLVING PROCEEDING S U/S 147 R.W.S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE ASSESSEES TWIN FOLDED PLEADINGS MAKE IT CLE AR THAT IT CHALLENGES VALIDITY OF THE IMPUGNED RE-OPENING AS WELL AS BOTH THE CIT(A)S ACTION DISALLOWING / COMMISSION EXPENSE OF 17,,28,897/- ON ACCOUNT OF BROKERAGE COMMISSION. 3. WE ADVERT TO THE RELEVANT BASIC FACTS FIRST. THI S ASSESSEE IS ADMITTEDLY ENGAGED IN COMMISSION AGENT, MANUFACTURING, REPRESE NTATIVES, ELECTRONIC FAIR TRADINGS, MAINTENANCE CONTRACTS AND PROJECT CONSULT ANCY SERVICES AS PER ASSESSMENT ORDER DATED 27.12.2010. THE DISPUTE HERE IN ISSUE THAT OF ITA NO.1551/KOL/2017 A.Y. 200 7-08 M/S NORINCO PVT. LTD. VS. DCIT, CIR-6(2), K OL. PAGE 2 CORRECTNESS OF BOGUS COMMISSION PAYMENT DISALLOWANC E INVOLVING COMMISSION / BROKERAGE AMOUNT OF 12,36,457, 4,92,440/- DATED 23.02.2007 AND 18.09.2006 IN CASE M/S NISCHAL CORPORATE SERVICES ( P) LTD AND M/S INDRAVANAU SALES AGENCY (P) LTD.; RESPECTIVELY. THE ASSESSING OFFICER ISSUED SEC. 148 NOTICE DATED 23.10.2009. THE DEPARTMENTS INVESTIGATION WINGS INDICATED THAT THE SAID PAYEES HAD BEEN FOUND TO HA VE BEEN PROVIDING COMMISSION / BROKERAGE BOGUS SALES BILLS ALONGWITH SERVICES. THE SAME TRIGGERED THE IMPUGNED RE-OPENING INTO MOTION. THE ASSESSEE PLEADED DURING THE COURSE OF RE-ASSESSMENT THAT IT HAD EXECUTED IT S CONTRACTS AGREEMENTS WITH THE TWO PAYEES IN THE RELEVANT PREVIOUS YEAR. IT PLACED ON RECORD COPIES OF BILLS ISSUED BY THE SAID COMPANIES, AGREEMENTS A ND LIST OF THE PERSONS / INDIVIDUALS WHO HAD ACTUALLY PROVIDE THE SERVICES I N ISSUE. THE ASSESSING OFFICER DECLINED THE SAME IN HIS ASSESSMENT ORDER D ATED 27.12.2010 TO DISALLOW THE IMPUGNED COMMISSION / BROKERAGE OF 17,28,897/- AS PAPER TRANSACTIONS WITHOUT ANY ACTUAL RECEIPT OF SERVICES . THE CIT(A) HAS UPHELD THE ASSESSING OFFICERS ACTION IN HIS LOWER APPELLATE F INDINGS GOING BY THE DEPARTMENT INVESTIGATION WINGS INFORMATION RECEIVE D. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS AGAINST AND IN SUPPORT OF THE IMPUGNED COMMISSION / BROKERA GE DISALLOWANCE MADE IN BOTH THE LOWER PROCEEDINGS. CASE FILE SUGGESTS THAT THE ASSESSEE HAD PLACED ON RECORD ALL OF ITS SERVICES AGREEMENT, PAYEES PAR TICULARS AS WELL AS BANK STATEMENT, TDS AND OTHER SUPPORTING EVIDENCE BEFORE BOTH THE LOWER AUTHORITIES FOR CLAIMING THE IMPUGNED COMMISSION / BROKERAGE AS ALLOWABLE BUSINESS EXPENDITURE. BOTH LOWER AUTHORITIES HAVE R EJECTED THE SAME GOING BY THE INVESTIGATION WINGS REPORT ACCUSING ITS PAYEES TO BE PROVIDING BOGUS COMMISSION / BROKERAGE ENTRIES. IT IS IN THIS BACKD ROP OF FACTS THAT WE FIND HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. M/S INBUILT MERCHANT PVT. LTD. ITAT NO.225 OF 2013 GA NO.3825 OF 2013 DECIDED ON 14.03.2014 HAS UPHELD THIS TRIBUNALS ORDER DELETING SIMILAR COMMI SSION / BROKERAGE DISALLOWANCE ON THE GROUND THAT THE CONCERNED TAXPA YER HAD DULY PLACED ON ITA NO.1551/KOL/2017 A.Y. 200 7-08 M/S NORINCO PVT. LTD. VS. DCIT, CIR-6(2), K OL. PAGE 3 RECORD ITS BOOKS OF ACCOUNT MAINTAINED IN ORDINARY COURSE OF BUSINESS, TDS DEDUCTION AND ALL PARTICULARS OF THE RECIPIENTS. TH E FACTUAL POSITION IS NO DIFFERENT IN THE INSTANT CASE AS WELL. THE DEPARTME NT HAD NOT RECORDED ANY MATERIAL APART FROM THE INVESTIGATION WINGS INFORM ATION WHICH HAS NOWHERE BEEN SEEN LIGHT OF THE DAY. WE THEREFORE GO BY THEI R LORDSHIPS REASONING TO DELETE THE IMPUGNED COMMISSION / BROKERAGE DISALLOW ANCE OF 17,28,897/-. THE ASSESSEE SUCCEEDS IN ITS LATTER SUBSTANTIVE GRO UND ON MERITS. THE REVENUES VEHEMENT CONTENTION SUPPORTING THE IMPUGN ED COMMISSION / BROKERAGE DISALLOWANCE ARE REJECTED THEREFORE. 5. THE ASSESSEES FORMER SUBSTANTIVE GROUND SEEKING TO QUASH THE IMPUGNED RE-OPENING / RE-ASSESSMENT IN SEC. 148 R.W .S. 147 PROCEEDINGS IS RENDERED INFRUCTUOUS. 6. THIS ASSESSEES APPEAL IS PARTLY ALLOWED IN ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT 17 /05/2019 SD/- SD/- ( %) (' %) (DR.A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 17 / 05 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S NORINCO PVT. LTD., 14, NETAJI SUBHAS ROAD, KOLKATA-700001 2. /RESPONDENT-DCIT, CIR-6(2), P-7, CHORWINNGHEE SQ. A AYAKAR BHAWAN, KOLKATA-69 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ 3,