Pratima Mohapatra, Khurda V. ITO, Khurda

ITA 156/CTK/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52439 (ITAT-CUTTACK)
• Duration Of Justice: 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-12-2011
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 28-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 25-03-2011
• Court: TRIBUNAL
• Department Lawyers: S C MOHANTY
• Assessee Lawyers: G NAIKR KAR ARS
• Section: 40A(3)

Judgement Text

IN THE INC O ME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE : SHRI K.K.GUPTA, AM , AND SHRI K.S.S.PRASAD RAO, JM ITA NO. 156/CTK/2011 (ASSESSMENT YEAR 2006 - 07) PRATIMA MOHAPATRA, PROP. M/S.SHIBANI MOTORS, MAIN ROAD, AT/P.O.RAJSUNAKHALA, DISTRIC T. KHURDA PAN: ALNPM 1990 M VERSUS INCOME - TAX OFFICER , KHURDA WARD, KHURDA. (APPELLANT) (RESPONDENT) FOR THE APPELLANT: SHRI G.NAIK/R.KAR, ARS FOR THE RESPONDENT SHRI S.C.MOHANTY, DR DATE OF HEARING : 28.11.2011 DATE OF PRONOUNCEMENT : 16.12.2011 ORDER SHRI K.S.S.PRASAD RAO, JM : THIS APPEAL IS FILED BY THE ASSESSEE HAVING BEEN AGGRIEVED BY THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) DT.24.1.2011 FOR THE ASSESSMENT YEAR 2006 - 07 IN THE CASE OF THE ASSESSEE. 2. THE SOLE ISSUE RAISE D BY THE ASSESSEE IS RELATING TO UPHOLDING AN ADDITION OF 5,46,270 MADE U/S.40A(3) OF THE INCOME - TAX ACT,1961. 3. BOTH THE PARTIES WERE HEARD REGARDING THE ISSUE AND ITS LEGAL IMPLICATIONS. 4. THE UNDISPUTED FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE IS A PROPRIETORSHIP CONCERN DEALING IN SALE OF HERO HON DA TWO - WHEELER VEHICLES. THE ORIGINAL DEALER OF HERO HONDA IS M/S.ROHAN AUTORIDERS PVT. LTD., BHUBANESWAR FOR SALE OF HERO HONDA TWO WHEELER VEHICLES IN THE AREA OF RAJSUINAKHALA WHERE THE ASSESSEE IS CARRYING N ITS BUSINESS. IN THE PERIOD UNDER CONSIDERAT ION, THE ASSESSEE HAS RECEIVED VEHICLES FROM M/S.ROHAN AUTORIDERS PVT. LTD., AND SOLD THE SAME TO THE ULTIMATE BUYERS. THE TOTAL VALUE OF THE VEHICLES DEALT WITH BY THE ASSESSEE IS 27,31,350. THE ASSESSEE PAID THE AMOUNTS TO THE SAID M/S.ROHAN AUTORIDERS PVT. LTD., SOON AFTER REALIZATION OF THE SALE PROCEEDS OF THE VEHICLES RECEIVED BY IT. THE ASSESSING OFFICER HAS ITA NO.156/CTK/2011 2 TAKEN THIS AS PURCHASES BY THE ASSESSEE AND DISALLOWED 20% OF THE T OTAL PAYMENTS STATING THAT THE ASSESSEE HAS PAID MORE THAN 20,000 IN CASH TO THE SAID M/S.ROHAN AUTORIDERS PVT. LTD. 5. THE ASSESSEE IN ITS FINANCIAL ACCOUNTS SUCH AS PROFIT & LOSS ACCOUNT AND BALANCE SHEET HAS NOT SHOWN PURCHASE AND SALE OF VEHICLES. IT HAS ONLY SHOWN COMMISSION EARNED BY HIM ON SALE OF THE VEHICLES FOR M/S.ROHAN AUTORIDERS PVT. LTD., FOR COMMISSION. THEREFORE, THERE IS NO PURCHASE AND SALE OF VEHICLES BY THE ASSESSEE AS SUCH ON ITS OWN ACCOUNT. THEREFORE, THE PAYMENTS MADE BY THE ASSESS EE TO M/S.ROHAN AUTORIDERS PVT. LTD., IS ONLY TOWARDS THE VEHICLES RECEIVED BY IT FOR SALE ON COMMISSION. THIS FACTUAL ASPECT WILL NOT COME WITHIN THE AMBIT OF SECTION 40A(3) OF THE INCOME - TAX ACT,1961 INASMUCH AS THERE IS NO PURCHASE AND SALE OF THE VEHIC LES BY THE ASSESSEE. IT IS SELLING THE VEHICLES ON BEHALF OF M/S.ROHAN AUTORIDERS PVT. LTD., ON COMMISSION BASIS ONLY AND THAT IS WHY IT HAS SHOWN THE SAME AS COMMISSION INCOME AND ACCEPTED BY THE DEPARTMENT. IN THESE FACTUAL CIRCUMSTANCES OF THE CASE, THE PAYMENTS MADE TO M/S.ROHAN AUTORIDERS PVT. LTD., WILL NOT COME WITHIN THE PURVIEW OF SECTION 40A(3) OF THE INCOME - TAX ACT,1961. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND UPHELD BY THE LEARNED CIT(A) IS NOT SUSTAIN ABLE FOR LEGAL SCRUTINY AND HENCE, THE SAME IS DIRECTED TO BE DELETED BY ALLOWING THE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. S D/ - S D/ - (K.K.GUPTA) ACCOUNTANT MEMBER ( K.S.S.PRA SAD RAO) JUDICIAL MEMBER DATE: 16.12.2011 H.K.PADHEE, SENIOR PRIVATE SECRETARY. ITA NO.156/CTK/2011 3 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT: PRATIMA MOHAPATRA, PROP. M/S.SHIBANI MOTORS, MAIN ROAD, AT/P.O.RAJSUNAKHALA, DISTRI CT. KHURDA 2. THE RESPONDENT: INCOME - TAX OFFICER , KHURDA WARD, KHURDA. 3. THE CIT, 4. THE CIT(A), 5. THE DR, CUTTACK 6. GUARD FILE (IN DUPLICATE) TRUE COPY, BY ORDER, SENIOR PRIVATE SECRETARY.