MARVEL CONSULTANCY SERVICES, THANE V. A.C.I.T.CIRCLE 3, THANE

ITA 1575/MUM/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2284 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 03-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 23-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: MRT ANU K AGGARW AL
• Section: 133(6); 37

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G BENCH, MUMBAI . . , , BEFORE S/SHRI B.R.BASKARAN, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN, J UDICIAL MEMBER ./ I.T.A. NO. 1575 /MUM/ 201 1 ( / ASSESSMENT YEAR : 2007 - 08 ) M/S MARVEL CONSULTANCY SERVICES, 2 ND FLOOR, MAGNOLIA, EDEN WOOD COMPLEX, GLADY ALKWARS ROAD, THANE - 400607 / VS. ASSTT. COMMISSIONER OF INCOME TA X CIRCLE - 3,THANE ./ PAN : AAJFM2300E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI DEVENDRA JAIN / RESPONDENT BY : MRT.ANU K AGGARWAL / DATE OF HEARING : 3 .12. 2015 / DATE OF PRONOUNCEMENT : 3 .12. 2015 O R D E R PER B.R.BASKARAN,AM : THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST ORDER DATED 3.10.2010 PASSED BY THE LD. CIT(A) - 1, THANE AN D IT RELATES TO ASSESSMENT YEAR 2007 - 08. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD.CIT(A) IN CONFIRMING THE ADDITION OF COMMISSION EXPENSES OF RS.36.62 LAKHS. 3. THE FACTS RELATING TO THE ABOVE SAID ISSUE ARE IN BRIEF. THE ASSESSEE IS A PAR TNERSHIP FIRM ENGAGED IN THE BUSINESS AS MARKETING ORGANIZATION SPECIALIZING IN LIAISON WORKS. DU RING THE YEAR UNDER CONSIDERATION, IT RECEIVED COMMISSION INCOME OF RS.1.22 CR ORES AGAINST WHICH, TH E ASSESSEE ITA NO. 1575 / MUM/ 201 1 2 HAD , INTERALIA, CLAIMED COMMISSION EXPENSES OF R S.66.71 LAKHS. IN ORDER TO VERIFY THE GENUINENESS OF THE COMMISSION EXPENSES, THE AO ISSUED NOTICE S U/S 133(6) OF THE ACT TO THE RECIPIENTS OF THE COMMISSION PAYMENTS . THE AO RECEIVED CONFIRMATION FROM ALL THE PARTIES EXCEPT FROM FOLLOWING TWO PARTIES : A) INDRAVARUN SALES AGENCY - RS.36,37,590/ - B) BAVIGADDA - RS. 25,000/ - THE ASSESSEE ALSO COULD NOT FURNISH ANY DOCUMENTARY EVIDENCE TO PROVE THE NATURE OF SERVICES RENDERED BY THE ABOVE PARTIES. HENCE, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS FAILED TO PROVE THE GENUINENESS OF THE PAYMENTS MADE TO THE ABOVE PARTIES AND ACCORDINGLY DISALLOWED THE SAME. THE LD. CIT(A) ALSO CONFIRMED THE SAME AND HENCE THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. 4. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD OBTAINED CONTRACT FOR LIAIS O NING WORK FROM M/S KIRLOSKAR EBARA PUMPS LTD FOR LIAISONING WITH M/S RELIANCE PETROLEUM LTD. THE ASSESSEE ENTERED INTO A MEMORANDUM OF UNDERSTANDING WITH M/S INDRAVARUN SALES AGENCY PVT LTD. , AS P ER WHICH THE ASSESSEE HAS GIVEN THE WORK ON SUBCONTRACT BASIS. AS PER THE MOU , M/S INDRAVARUN SALES AGENCY PVT LTD RAISED INVOICES UPON THE ASSESSEE AND PAYMENT S THEREOF WERE MADE THROUGH BANKING CHANNEL. THE LD. COUNSEL SUBMITTED THAT THE AO WAS NOT COR RECT IN OBSERVING THAT THE ASSESSEE HAS FAILED TO PRO DUCE ANY BILLS RAISED BY INDRAVARUN SALES AGENCY PVT LTD. HE SUBMITTED THAT THE ASSESSEE HAD FURNISHED COPIES OF BILLS RAISED BY THE ABOVE SAID COMPANY TO THE AO. THE LD. COUNSEL FURTHER SUBMITTED THAT THE RATE OF NET PROFIT DECLARED BY THE ASSESSEE WAS CONSISTENT WITH THE EARLIER YEARS AND HENCE THERE IS NO REASON TO SUSPECT THE GENUINENESS OF COMMISSION EXPENSES. IN SUPPORT OF HIS CONTENTION, THE LD. AR PLACED HIS RELIANCE ON VARIOUS CASE LAW S . ITA NO. 1575 / MUM/ 201 1 3 5. O N THE CONTRARY , THE LD. DR SUBMITTED THAT THE MOU, BILLS RAISED BY M/S INDRAVARUN SALES AGENCY PVT LTD ARE SELF S ERV ING DOCUMENTS . THE LD. DR SUBMITTED THAT THE A O HAS CORRECTLY OBSERVED THAT , IN ORDER TO PROVE THE GENUINENESS OF THE COMMISSION PAYMENT, THE ASSESSEE HAS TO SHOW THAT THE AGENT HAS RENDERED SOME SERVICES TO THE ASSESSEE AND FURTHER THE SAME SHOULD BE SUBSTANTIATED BY DOCUMENTARY EVIDENCE S SHOWING THE NATURE OF SERVICES RENDERED. THE LD.DR SUBMITTED THAT THE ASSESSEE, IN THE INSTANT CASE , H AS FAILED TO SHOW THAT THE RECIPIENT OF THE PAYMENT HAS ACTUALLY RENDERED ANY SERVICES TO THE ASSESSEE AND ALSO HAVE FAILED TO EXPLAIN THE NATURE OF SERVICES RENDERED BY PAYEE. FURTHER, NO EVIDENCE WAS PRODUCED TO SHOW THAT THE SUB - CONTRACT WAS ACTUALLY E XECUTED BY THE AGENT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE PARTIES AND PERUSED THE RECORD. WE NOTICE THAT THE AO HAS MADE THE IMPUGNED ADDITION ON THE REASONING THAT THE ASSESSEE HAS FAILED TO EXPLAIN ABOUT THE NATURE OF SERVICES RENDERED BY THE RECIPIENT S OF THE COMMISSION PAYMENTS AND FURTHER IT HAS ALSO FAILED TO PRODUCE NECESSARY DOCUMENTARY EVIDENCES IN SUPPORT OF TH O SE SERVICES. EVEN THOUGH THE AO HAS STATED THAT THE ASSESSEE HAS FAILED TO PRODUCE THE BILLS , WHICH DOES NOT APPEAR TO BE CO RRECT OBSERVATION, YET THE MOOT POINT IS THAT THE ASSESSEE HAS FAILED TO PROVE THE NATURE OF SERVICES AND ALSO ACTUAL SERVICES RENDERED BY M/S INDRAVARUN SALES AGENCY PVT LTD. WE NOTICE THAT THE LD. CIT(A) HAS CORRECTLY APPRECIATED THESE FACT S AND HAS AL SO OBSERVED THAT THE PAYMENT THROUGH CHEQUE BY ITSELF IS OF NO CONSEQUENCE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. MOHAN A KALA (2007) 291 ITR 278 (SC). ACCORDINGLY HE HAS CONFIRMED THE DISALLOWANCE MADE BY THE AO. 7. THE LD. AR TRIED TO SUBSTANTIATE THE COMMISSION PAYMENT S INDIRECTLY BY CONTENDING THE RATE OF NET PROFIT DECLARED BY THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION COMPARES WELL WITH THE RATE OF PROFIT DECLARED IN THE ITA NO. 1575 / MUM/ 201 1 4 EARLIER YEARS. IN OUR VIEW, THE SAID ARGUMENT DOES NOT COME TO THE HELP OF THE ASSESSEE , SINCE THE ISSUE HEREIN IS WITH REGARD TO THE GENUINENESS OF COMMISSION EXPENSES CLAIMED BY THE ASSESSEE , WHICH IN TURN MEANS, THE GENUINENESS OF CLAIM OF SERVICES RENDERED BY THE RECIPIENT OF COMMISSION PAYMENT. THE ASSE SSEE HAS FAILED TO PR OVE THE SAME BY FURNISHING THE RELEVANT DOCUMENTS TO SHOW TH A T THE RECIPIENT OF THE COMMISSION HAS ACTUALLY RENDERED THE SERVICES TO THE ASSESSEE . SINCE THE ASSESSEE HAS FAILED IN THIS RESPECT, WE ARE OF THE VIEW THAT VARIOUS CASE LAW RELIED UPON BY THE ASSESSEE ARE DISTINGUISHABLE ON FACTS. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE DECISION TAKEN BY THE LD. CIT(A) ON THIS ISSUE. 8. THE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS : A) WITHOUT PREJUDICE TO GROUND NO.1, THE LD.CIT(A) HAS ERRED IN NOT GRANTING THE CREDIT FOR TDS ON THE SAID COMMISSION, WHICH HAS BEEN DISALLOWED AND THEREBY TAXED IN THE HANDS OF THE APPELLANT ONLY; B) WITHOUT PREJUDICE TO GROUND NO.1 AND GROUND NO.2, THE LD. CIT(A) HAS ERRED IN NO T ALLOWING DEDUCTION U/S 37 FOR THE TDS PAOD TO GOVERNMENT TREASURY ON THE SAID COMMISSION. IN OUR VIEW , THE S E MATTERS ARE REQUIRE D TO BE TAKEN UP BEFORE THE AO. ACCORDINGLY, WE DECLINE TO INTERFERE WITH THE SAME. 9 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3RD ,DEC, 2015 . SD SD ( / SANDEEP GOSAIN ) ( . . / B.R.BASKARAN) /JUDICIAL MEMBER /ACCOUNTANT MEMBER MUMBAI ; DATED .. 3RD , DEC,2015 . . ./ SRL , SR. PS ITA NO. 1575 / MUM/ 201 1 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLAN T 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE CO PY (ASSTT. REGISTRAR) , /ITAT, MUMBAI