ITO, Ward - 37(2), Kolkata, Kolkata V. M/s. Sarad Industrial Products, Kolkata

ITA 162/KOL/2012

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 1258 (ITAT-KOLKATA)
• Duration Of Justice: 6 year(s) 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 24-05-2017
• Assessment Year: 2004-2005
• Appeal Filed On: 02-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHERJEE
• Assessee Lawyers: V N PUROHIT; S M SURANA
• Keywords: Validity of assessment
• Section: 143(3); 154; 15

Judgement Text

, D , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH D KOLKATA BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI S.S.VISWANETHRA RAVI, JUDICIAL MEMBER ITA NO.1784/KOL/2011 & ITA NO.162/KOL/2012 ASSESSMENT YEAR:2004-05 M/S. SARAD INDUSTRIAL PRODUCTS, 26, AMHARST STREET, KOLKATA-700009 [ PAN NO.AAKFS 3984 K ] INCOME TAX OFFICER, WARD-37(2), 18, RABINDRA SARANI, PODDER COURT,KOLKATA-001 / V/S . / V/S . INCOME TAX OFFICER, WARD-37(2), 18, RABINDRA SARANI, PODDER COURT, KOLKATA-001 M/S SARAD INDUSTRIAL PRODUCTS, 26, AMHERST STREET, KOLKATA-009 /APPELLANT .. /RESPONDENT /BY ASSESSEE SHRI S.M. SURANA, ADVOCATE & SHRI V.N. PUROHIT, FCA ! /BY REVENUE SHRI ARINDAM BHATTACHERJEE, ADDL. CIT-DR /DATE OF HEARING 29-01-2018 /DATE OF PRONOUNCEMENT 21-03-2018 /O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THE ASSESSEE AS WELL AS REVENUE ARE IN CROSS-APPEAL AGAINST THE COMMON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-XXIV, KOLKA TA DATED 31.10.2011. ASSESSMENT WAS FRAMED BY ITO WARD-37(2), KOLKATA U/ S 143(3)/147 OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS COMMON ORDER DATED 30.12.2009 FOR ASSESSMENT YEAR 2004-05. THE CROSS-A PPEALS ARE HEARD TOGETHER AND DISPOSED OF BY THIS COMMON ORDER. ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 2 SHRI S.M. SURANA AND SHRI V.N. PUROHIT, LD. AUTHORI ZED REPRESENTATIVES APPEARED ON BEHALF OF ASSESSEE AND SHRI ARINDAM BHATTACHERJYEE, LD. DEPARTMENTAL REPRESENTATIVE APPEARED ON BEHALF OF REVENUE. FIRST WE TAKE UP REVENUES APPEAL IN ITA NO.162/KOL /2012 FOR A.Y. 04-05 . 2. AT THE OUTSET, IT IS OBSERVED THAT THERE IS A DE LAY OF 19 DAYS ON THE PART OF REVENUE IN FILING THIS APPEAL BEFORE THE TRIBUNAL. IN THIS REGARD, THE REVENUE HAS FILED AN APPLICATION SEEKING CONDONATION OF THE DELAY AND KEEPING IN VIEW THE REASONS GIVEN THEREIN, WHICH IS DULY SUPPORTED BY AN AFFIDAVIT FI LED BY THE REVENUE, WE ARE OF THE VIEW THAT THERE IS A SUFFICIENT CAUSE FOR THE DELAY ON THE PART OF REVENUE IN FILING THIS APPEAL. HENCE, WE CONDONE THE SAID DELAY AND PROCEE D TO DISPOSE OF THIS APPEAL OF REVENUE ON MERIT. 3. SOLE REVISED ISSUE RAISED BY REVENUE IN THIS APP EAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION OF 28,61,101/- WHICH WAS ADDED BY THE ASSESSING OFFICE R ON ACCOUNT OF SUPPRESSION OF SALES. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE, A PARTNE RSHIP FIRM, DEALS IN THE BUSINESS AS GENERAL MERCHANT AND COMMISSION AGENT. THE AO DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS OBSERVED THAT THERE IS A MISMATCH IN TH E AMOUNT OF SALES DECLARED BY ASSESSEE IN ITS RETURN OF INCOME VIS-A-VIS DETAILS OF SALES FILED BY ASSESSEE AMOUNTING TO 28,61,101/-ONLY. AS SUCH THE ASSESSEE HAS SHOWN LES S AMOUNT OF SALES. ON CONFRONTATION, ASSESSEE SUBMITTED THAT DETAILS OF S ALES FILED BEFORE AO DURING ASSESSMENT PROCEEDINGS IS INCLUSIVE OF SALES-TAX / CENTRAL SALES TAX AND FREIGHT. AS SUCH, THERE WAS NO UNDER REPORTING SALES DECLARED I N THE AUDITED FINANCIAL STATEMENT. HOWEVER, THE AO DISREGARDED THE CONTENTION OF ASSES SEE AND TREATED THE DIFFERENCE OF AMOUNT OF 28,61,101/- AS SUPPRESSED SALE. ACCORDINGLY, AO ADD ED THE SAME TO THE TOTAL INCOME OF ASSESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) FILED RECONCILIATION STATEMENT AS DETAILED UNDER:- SALES AS PER PROFIT & LOSS A/C RS.2,46,48,435/- ADD: SALES TAX RS. 32,10,933/- ADD: CENTRAL SALES TAX RS. 7,169/- ADD: FREIGHT RS. 16,150/- RS.2,78,82,687/- LESS: DISCOUNT ON SALES RS. 2,34,105/- ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 3 RS.2,76,48,582/- LESS: SALES ON CONSIGNMENT A/C RS. 52,653/- GROSS TURNOVER AS PER ST RETURN FILED RS.2,75,95,929 /- THE ASSESSEE ALSO SUBMITTED THAT THE AMOUNT OF SALE S TAX WAS NOT ADDED IN THE TURNOVER AND THE SAME WAS SHOWN AS LIABILITY UNDER THE HEAD CURRENT LIABILITY IN THE BALANCE- SHEET. THE ASSESSEE HAS BEEN FOLLOWING THIS PRACTIC E CONSISTENTLY WHICH WAS DULY ACCEPTED BY THE REVENUE IN EARLIER YEARS. LD. CIT(A ) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY THE AO BY OBSERVING AS UNDER:- 3.4 I HAVE CONSIDERED THE ABOVE SUBMISSIONS. IN MY VIEW, THE ASSESSING OFFICER HAS NOT APPRECIATED THE METHOD OF ACCOUNTIN G IN THE INSTANT CASE. THE APPELLANT FIRM HAS ACCOUNTED FOR SALES TAX AS CURRE NT ACCOUNT. IT HAS BEEN EXPLAINED THAT THE SALES TAX COLLECTED AGAINST SALE S HAS BEEN DIRECTLY CREDITED TO SALES TAX PAYABLE ACCOUNT AND ONLY NET SALES IS CRE DITED IN TRADING AND PROFIT & LOSS ACCOUNT. THE APPELLANT FIRM PAID THE SALES T AX TO THE CREDIT OF GOVERNMENT AS AND WHEN IT BECAME DUE. I HAVE ALSO C ONSIDERED THE RECONCILIATION OF SALES AS DISCUSSED ABOVE. IN THIS CONNECTION, IT IS OBSERVED THAT THE ASSESSING OFFICER HAS PASSED TWO ORDERS U/ S. 143(3/147 ON 30.12.2009. HE HAS MADE REFERENCE TO ANOTHER ORDER PASSED U/S.1 54/143(3)/147. HOWEVER, THE LD. A/R HAS INFORMED THAT NO SUCH ORDER U/S. 15 4 WAS EVER SERVED ON THE APPELLANT. IN THESE CIRCUMSTANCES, I WOULD LIKE TO STATE THAT THE ASSESSING OFFICER SHOULD NOT PASS MULTIPLE ORDERS U/S. 143(3) /147ON THE SAME DAY IN THE SAME CASE WITHOUT ANY REASON. IN THE REMAND, THE AS SESSING OFFICER HAS INFORMED THAT THE GROSS SALES SHOULD BE TAKEN AT R.2,75,95,929/- INSTEAD OF RS.2,75,09,536/- AND IN THE PROCESS THE COMPUTATION OF ASSESSED INCOME SHOULD BE ENHANCED BY RS.86,393/- . AS REGARDS THE SUGGESTION OF THE ASSESSING OFFICER FOR ENHANCEMENT OF INCOME BY RS.8 6,393/-, IT IS EXPLAINED THAT THE LD. DY. COMMISSIONER, COMMERCIAL TAX, DHAR AMTALA CIRCLE, KOLKATA HAS DELETED THE ENHANCEMENT AS MADE BY THE ACCI/SL CHARGE & THE GROSS TURNOVER HAS BEEN FIXED AT RS.2,75,95,929/- VIDE HI S ORDER DATED 06.07.2007 IN APPEAL CASE NO. A/DCCT/DH/SL/34/06-07. IN VIEW OF I TS, THE REQUEST OF THE ASSESSING OFFICER FOR ENHANCEMENT OF INCOME BY RS.8 6,393/- IS REJECTED. FROM THE RECONCILIATION STATEMENT OF SALES AS GIVEN AT P ARA 3.2, IT IS EVIDENT THAT THERE IS NO UNDER-STATEMENT OF SALES. THE ASSESSING OFFIC ER HAS WRONGLY MADE THE ADDITION OF RS.31,35,402/- ON INCORRECT FACTS AS HE HAS FAILED TO APPRECIATE THE METHOD OF ACCOUNTING FOLLOWED BY THE APPELLANT-FIRM . THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION OF RS.31,35,402/- A FTER VERIFYING THE PROOF FOR PAYMENT OF SALES TAX. THUS, THE APPELLANT GETS A RE LIEF OF RS.31,35,402/-. THIS GROUND OF APPEAL IS ALLOWED. THE REVENUE, BEING AGGRIEVED, BY THIS ORDER OF LD. CIT(A) IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 4 6. LD. DR FOR THE REVENUE VEHEMENTLY RELIED ON THE ORDER OF AO AND LEFT THE ISSUE TO THE DISCRETION OF THE BENCH. ON THE OTHER HAND, LD. AR FOR THE ASSESSEE FILED PAPER BOOK WHICH IS RUNNING FROM PAGES 1 TO 60 AND STATED THAT THE ISSUE MAY BE DECIDED ON MERIT. 7. WE HAVE HEARD THE CONTENTIONS OF THE RIVAL PARTI ES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. AT THE OUTSET, IT WAS OBSERVED THAT SIMILAR ADDITION ON ACCOUNT OF SUPPRESSION OF SALE WAS MADE BY AO IN ASSESSMENT YE AR 2006-07 WHICH WAS SUBSEQUENTLY DELETED BY LD. CIT(A). SUBSEQUENTLY TH E MATTER WAS CARRIED TO TRIBUNAL BY THE REVENUE. HOWEVER THE TRIBUNAL WAS PLEASED TO UPHELD THE ORDER OF LD. CIT(A) IN ITA NO.1917/KOL/2012 IN ASSESSEES OWN CASE, THE RELEVANT EXTRACT OF THE ORDER IS REPRODUCED BELOW:- 21. HEARD RIVAL SUBMISSIONS AND PERUSED THE MATERI AL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSEE HAS CURRENT ACCOUNT FOR S ALES TAX AND SALES TAX COLLECTED AMOUNT AGAINST SALES HAS BEEN DIRECTLY CR EDITED TO SALES TAX PAYABLE ACCOUNT. FROM THE RECONCILIATION STATEMENT OF SALES , IT IS EVIDENT THAT THERE IS NO UNDER-STATEMENT OF SALES AS ALLEGED BY THE AO. W E FURTHER FIND THAT THE AO HAS FAILED TO APPRECIATE THE METHOD OF ACCOUNTING F OLLOWED BY THE ASSESSEE. IN VIEW OF ABOVE, WE ARE OF THE VIEW THAT THE CIT(A) W AS JUSTIFIED IN DIRECTING THE AO TO DELETE THE ADDITION OF RS.29,90,664/- BY VERI FYING THE ORIGINAL CHALLANS FOR PAYMENT OF SALES. WE FIND NO INFIRMITY IN THE I MPUGNED ORDER OF THE CIT AND UPHOLD THE SAME. GROUND NO. 3 RAISED BY THE REVENUE IS DISMISSED. RESPECTFULLY FOLLOWING THE SAME, WE CONFIRM THE ORD ER OF LD. CIT(A). HENCE, THIS GROUND OF REVENUE IS DISMISSED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. COMING TO ASSESSEES APPEAL IN ITA NO.1784/KOL/2011 FOR A.Y. 04-05 . 9. IN THIS APPEAL FOUR GROUNDS HAVE BEEN RAISED OUT OF WHICH GROUND NO.3 WAS NOT PRESSED AND THEREFORE SAME IS DISMISSED AS NOT PRES SED AND GROUND NO.1 & 4 ARE GENERAL IN NATURE AND DO NOT REQUIRE SEPARATE ADJUD ICATION. 10. SOLE ISSUE RAISED BY ASSESSEE IN GROUND NO.2 IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF 1,72,296/- ON ACCOUNT OF UNDER-STATEMENT OF COMMIS SION INCOME MADE BY AO. 11. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS RECEIVED COMMISSION INCOME OF 11,90,285/- FROM THE PARTIES IN PURSUANCE TO TDS ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 5 CERTIFICATE ISSUED BY THEM. THE NECESSARY DETAILS O F THE PARTIES FROM WHOM THE COMMISSION WERE RECEIVED BY ASSESSEE STAND AS UNDER :- I) M/S BALARAMPUR CHINI MILLS LTD. RS.316645/- II) M/S FINOLEX CABLE LTD. RS.789907/- III) M/S PARRYS CONFECTIONERY LTD. RS. 41600/- IV) M/S HUNTSMAN ADVANCED MATERIALS (I) LTD. RS. 23000/- V) J 4F NUTRI PLUS (AS STATED IN THE STATEMENT) RS. 19080/- RS.1190285/- HOWEVER, ASSESSEE HAS SHOWN COMMISSION INCOME OF 9,22,994/- IN ITS FINANCIAL STATEMENT. THEREFORE, A DIFFERENCE OF 2,67,291/- WAS OBSERVED BY THE AO. ON QUESTION, THE ASSESSEE FAILED TO PROVIDE ANY SATISF ACTORY REPLY, THEREFORE AO DISALLOWED THE SAME AND ADDED TO THE TOTAL INCOME O F ASSESSEE. 12. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE LD. CIT(A) AND FILED RECONCILIATION STATEMENT DEPICTING THE AMOUNT OF CO MMISSION WHICH IS REPRODUCED AS UNDER:- NAME OF THE PARTY COMMISSION SERVICE TAX REIMBURSEMENT OF EXP. TOTAL TDS FINOLEX CABLES LTD. 731415.00 58512.00 *789927.00 43446.00 BALRAMPUR CHINNI MILLS LTD. 172500.00 13350.00 139796.00 ***316646.00 6490.00 JF NUTRIPLUS LTD. 19080.00 ****19080.00 PARRY CONFECTINERY MADRAS 18500.00 **18500.00 407.00 HUNTSMAN ADVANCED METERIAL 23000.00 23000.00 460.00 922994.00 1167153.00 THE ASSESSEE FURTHER SUBMITTED THAT THERE WAS SOME MISTAKE IN THE AMOUNT OF COMMISSION RECORDED BY THE AO WHILE PASSING ASSESSM ENT ORDER. IT WAS ALSO SUBMITTED THAT AO HAS ADDED THE AMOUNT OF SERVICE T AX AND REIMBURSEMENT OF EXPENSES IN THE GROSS AMOUNT OF COMMISSION AS DISCU SSED ABOVE. THE ASSESSEE HAS NOT BEEN SHOWING THE AMOUNT OF SERVICE TAX AND REIMBURS EMENT OF EXPENSE IN THE PROFIT AND LOSS ACCOUNT. THE AMOUNT OF SERVICE TAX AND REI MBURSEMENT OF EXPENSE HAS BEEN SHOWN IN THE BALANCE-SHEET AND IN VIEW OF ABOVE ASS ESSEE SUBMITTED THAT NO ADDITION AS OBSERVED BY ASSESSING OFFICER CAN BE CALLED FOR. HOWEVER, LD. CIT(A) AFTER ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 6 CONSIDERING THE SUBMISSIONS OF ASSESSEE DELETED ADD ITION IN PART MADE BY AO. THE LD. CIT-A ALSO OBSERVED THE FACT THAT THE AMOUNT OF SER VICE TAX AS WELL AS REIMBURSEMENT OF EXPENSES WAS WRONGLY RECORDED BY AO DURING THE A SSESSMENT PROCEEDINGS. HOWEVER, LD. CIT(A) WAS NOT CONVINCED WITH THE AMOU NT OF REIMBURSEMENT OF EXPENSE CLAIMED BY ASSESSEE AND ACCORDINGLY THE ORD ER OF AO WAS PARTLY CONFIRMED BY OBSERVING AS UNDER:- 3.10 I HAVE CONSIDERED THE SUBMISSION OF LD. A/R O F THE APPELLANT. THE LD. A/R HAS CLARIFIED THAT THE APPELLANT-FIRM IS CREDIT ING THE COMMISSION TO THE PROFIT & LOSS ACCOUNT AND THE SERVICE TAX AND REIMB URSEMENT OF EXPENSES IS TREATED AS CURRENT ACCOUNT. IT HAS BEEN FURTHER CLA RIFIED THAT THE WHOLE AMOUNT COLLECTED AS A SERVICE TAX WAS PAID TO THE CREDIT O F SERVICE TAX DEPARTMENT AND IT DID NOT PASS THROUGH P&L A/C. AS PER THE EXPLANA TIONS OF THE LD. A/R, THE APPELLANT-FIRM HAS RECEIVED THE TOTAL COMMISSIONS O F RS.11,67,153/-, OUT OF WHICH IT HAS CLAIMED SERVICE TAX OF RS.71,862/- AN D REIMBURSEMENT OF EXPENSES OF RS.1,72,296/-. THUS, THE APPELLANT HAS SHOWN THE INCOME OF RS.9,22,994/- UNDER THE HEAD COMMISSION. IN THE REMAND REPORT, T HE ASSESSING OFFICER HAS STATED THAT THE APPELLANT HAS FAILED TO PRODUCE THE COPIES OF AGREEMENT FOR COMMISSION BEFORE HIM. THE LD. A/R HAS SUBMITTED PA RA-WISE COMMENTS ON THE SAID REMAND REPORT VIDE HIS LETTER DATED 14.10.2011 . HOWEVER, HE HAS FAILED TO FURNISH ANY EVIDENCE SUCH AS COPIES OF AGREEMENTS F OR COMMISSION IN SUPPORT OF REIMBURSEMENT OF EXPENSES. THE ASSESSING OFFICER HA S ALSO OBSERVED THAT THE APPELLANT HAS SHOWN SALES OF RS.2,46,48,435/-, MISC INCOME OF RS.10,96,535/- INCLUDING COMMISSION AND INTEREST OF RS.1,03,883/-. HOWEVER, THE APPELLANT HAS DISCLOSED NET PROFIT OF RS.24,510/- ONLY DURING THE YEAR. IN NORMAL CIRCUMSTANCES, ALL THE EXPENSES SHOULD HAVE BEEN RO UTED THROUGH P&L A/C. IN THE INSTANT CASE, THE APPELLANT HAS DIRECTLY ADJUST ED A SUM OF RS.1,72,296/-. AGAINST COMMISSION AS REIMBURSEMENT OF EXPENSES WIT H A PURPOSE TO CAMOUFLAGE ITS ACCOUNTS AND REDUCE THE TAXABLE INCO ME. THE LD. A/R HAS FAILED TO SUBMIT ANY EVIDENCE TO PROVE THE GENUINENESS OF THE EXPENSES FOR RS.1,72,296/- WHICH HAS BEEN CAMOUFLAGED AS REIMBURSEMENT OF EXPENSES .. IN MY OPINION, THE EXPENDITURE OF RS.1,72,296/- WHI CH HAVE BEEN DIRECTLY ADJUSTED AGAINST COMMISSION IS NOT GENUINE. ACCORDI NGLY, THE ADDITION OF R.1,72,296/- ON ACCOUNT OF COMMISSION IS UPHELD. T HE APPELLANT HAS ALSO REDUCED SERVICE TAX OF R.71,862/- FROM COMMISSIONS. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE PAYMENT OF SERVICE TAX FOR RS .71,862/- OUT OF COMMISSION AFTER VERIFYING THE PROOF OF SERVICE TAXES. ( THE LD. A/R HAS ALSO POINTED THAT THERE ARE A FEW ARITHMETIC ERRORS IN THE ASSESSMENT ORDER ). THUS THE ADDITION OF RS.2,48,158/- ON ACCOUNT OF EXCESS COMMISSION RECEIVED NOT SHOWN IS RESTRICTED TO RS.1,72,296/-. THUS THE APPELLANT GET S A RELIEF O RS.75,862/-.THIS GROUND OF APPEAL IS PARTLY ALLOWED. THE ASSESSEE, BEING AGGRIEVED BY THIS ORDER OF LD. CIT(A) HAS COME UP AN APPEAL BEFORE US. ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 7 13. LD. AR FOR THE ASSESSEE BEFORE US SUBMITTED THA T THE AMOUNT OF REIMBURSEMENT OF EXPENSE WAS CLAIMED FROM THE PARTIES. THEREFORE SAME WAS REDUCED FROM THE AMOUNT OF GROSS COMMISSION. LD. AR IN SUPPORT ASSES SEES CLAIM DREW OUR ATTENTION ON THE CONFIRMATION FILED BY M/SBALRAMPR CHINNI MIL LS LTD. WHICH IS PLACED AT PAGE 11 OF THE PAPER BOOK. SIMILARLY, LD. AR DREW OUR AT TENTION ON THE DEBIT NOTE ISSUED BY ASSESSEE TO M/S PARRY CONFECTIONERY MADRAS AND HUNS TMAN ADVANCED METERIAL WHICH ARE PLACED ON PAGES 30 AND 31 OF THE PAPER BOOK. TH E LD. AR ACCORDINGLY, SUBMITTED THAT THE AMOUNT OF DEBIT NOTE ISSUED TO THE ABOVE P ARTIES REPRESENT THE REIMBURSEMENT OF EXPENSE. IN VIEW OF ABOVE, LD. AR FOR THE ASSESS EE PLEADED BEFORE US THAT THE AMOUNT OF REIMBURSEMENT OF EXPENSE CANNOT BE LIABLE TO BE TAXED UNDER THE PROVISION OF ACT. THE LD. AR ALSO SUBMITTED THAT THE AO HAS PASSED TW O DIFFERENT ASSESSMENT ORDER FOR THE SAME YEAR THUS NO COGNIZANCE SHOULD BE GIVEN TO SUCH ASSESSMENT ORDERS. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE NECESS ARY EVIDENCE SUGGESTING THAT NO EXPENSE AGAINST THE REIMBURSEMENT OF EXPENSES HAS B EEN CLAIMED BY THE ASSESSEE WAS FURNISHED BEFORE THE AUTHORITIES BELOW. THEREFORE, LD. DR RELIED ON THE ORDER OF AUTHORITIES BELOW. 14. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. FROM THE AFORESAID DI SCUSSION, WE NOTE THAT THE LIMITED ISSUE REQUIRES ADJUDICATION WITH REGARD TO THE AMOU NT OF REIMBURSEMENT EXPENSE ADJUSTED AGAINST THE COMMISSION INCOME. THE ASSESSE E CLAIMED TO HAVE RECEIVED REIMBURSEMENT OF EXPENSE WHICH WAS ADJUSTED AGAINST THE COMMISSION INCOME FROM THE FOLLOWING PARTIES:- SL.NO. NAME OF PARTY AMOUNT 1 BALRAMPUR CHINNI MILLS LTD 130796 2 PARRY CONFECTIONERY MADRAS 18500 3 HUNTSMAN ADVANCED METERIAL 23,000 WE NOTE THAT THERE IS CONFIRMATION FROM BALRAMPURA CHINNI MILLS LTD. DEPICTING THE AMOUNT OF COMMISSION PAID TO THE ASSESSEE AS WELL A S THE AMOUNT OF REIMBURSEMENT OF EXPENSE PAID TO THE ASSESSEE WHICH IS PLACED ON PAG E 11 OF THE PAPER BOOK. FROM THE ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 8 AFORESAID CONFIRMATION WE NOTE THAT THE ASSESSEE HA S RECEIVED REIMBURSEMENT OF EXPENSE OF 1,30,796/- ONLY. SIMILARLY, WE NOTE THAT THE DEBIT NOTE ISSUED BY AS SESSEE TO THE BALANCE TWO PARTIES FOR ADJUSTING REIMBURSEMENT OF EXPENSE AGAINST THE COMM ISSION INCOME PLACED ON PAGE 30 AND 31 OF THE PAPER BOOK. IT WAS ALSO OBSERVED B Y US THAT THE NECESSARY DETAILS WITH REGARD TO PARTIES WHICH PAID REIMBURSEMENT TO ASSES SEE WERE AVAILABLE TO THE AO. THUS AN INFERENCE CAN BE DRAWN THE AMOUNT OF 1,72,296/- REPRESENT THE REIMBURSEMENT OF EXPENSE. 14.1 NOW THE ISSUE ARISES HOW THIS REIMBURSEMENT OF EXPENSES WERE ADJUSTED IN ITS BOOKS OF ACCOUNTS OF THE ASSESSEE WHETHER THESE WER E ADJUSTED IN THE INDIVIDUAL LEDGER OF THE PARTIES AND WITHOUT ROUTING THROUGH THE PROF IT AND LOSS ACCOUNT. HOWEVER, AFTER CONSIDERING THE FACTS IN TOTALITY TH E ISSUE REMAINS UNANSWERED WHETHER THE ASSESSEE REDUCED ITS EXPENSES CLAIMED IN THE PR OFIT & LOSS ACCOUNT BY THE AMOUNT OF REIMBURSEMENT OF EXPENSE. IN OUR CONSIDERED VIEW , IT WAS THE DUTY OF ASSESSEE TO DEMONSTRATE BEFORE AUTHORITIES BELOW THAT NO EXPENS E AGAINST THE REIMBURSEMENT OF EXPENSE WAS CLAIMED BY ASSESSEE IN ITS PROFIT AND L OSS ACCOUNT. THEREFORE WE FIND DIFFICULT TO BELIEVE THE VERSION OF ASSESSEE THAT T HE AMOUNT OF REIMBURSEMENT OF EXPENSE HAS BEEN ADJUSTED AGAINST THE COMMISSION IN COME AND CORRESPONDING EXPENSES WERE NOT CLAIMED IN THE PROFIT AND LOSS AC COUNT IN THE ABSENCE OF DOCUMENTARY EVIDENCE. THUS WE APPREHEND THAT ASSESS EE HAS ADJUSTED THE REIMBURSEMENT OF EXPENSE AGAINST THE COMMISSION INC OME AND AT THE SAME TIME IT HAS NOT REDUCED THE CORRESPONDING EXPENSE CLAIMED IN TH E PROFIT AND LOSS ACCOUNT. WE ALSO NOTE THAT LD. CIT(A) HAS GIVEN VERY CLEAR FINDING I N ITS APPELLATE ORDER AS DETAILED UNDER:- THE LD. A/R HAS FAILED TO SUBMIT ANY EVIDENCE TO P ROVE THE GENUINENESS OF THE EXPENSES FOR RS.1,72,296/- WHICH HAS BEEN CAMOUFLAG ED AS REIMBURSEMENT OF EXPENSES. EVEN BEFORE US, LD. AR HAS NOT PRODUCED THE DOCUMEN TARY EVIDENCE SUGGESTING THAT THE EXPENSE AGAINST REIMBURSEMENT WAS NOT CLAIMED I N ITS PROFIT AND LOSS ACCOUNT. IN THIS VIEW OF THE ABOVE MATTER, WE HOLD THAT THERE REMAINS NO AMBIGUITY THAT THE AMOUNT REPRESENTING THE REIMBURSEMENT OF EXPENSE RE MAINS TO BE VERIFIED WHETHER THE ITA NO.1784/KOL/2011 &162/KOL/2012 A.Y. 2004-05 M/S SARAD INDUSTRIAL PRODUCTS VS. ITO WD-37( 2) KOL. PAGE 9 ASSESSEE HAS CLAIMED EXPENSE IN ITS PROFIT AND LOSS ACCOUNT AGAINST THE REIMBURSEMENT OF EXPENSE OR NOT. FOR THIS LIMITED PURPOSE, WE ARE INCLINED TO RESTORE THIS ISSUE BACK TO THE FILE OF AO FOR FRESH ADJUDICATION IN ACCORDANCE WITH LAW AND IN THE LIGHT OF ABOVE STATED DISCUSSION. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSE AS INDICATED ABOVE. WE HAVE DECIDED THE ISSUE OF THE ASSESSEE ON MERIT THEREFORE WE ARE INCLINED NOT TO ADJUDICATE THE ISSUE RAISED BY THE ASSESSEE ON THE VALIDITY OF ASSESSMENT. MOREOVER WE NOTE THAT THE ISSUE ON THE VALIDITY OF THE ASSESSME NT HAS NOT BEEN RAISED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. 15. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSE. 16. IN COMBINE RESULT, REVENUES APPEAL IS DISMISSED AN D THAT OF ASSESSEES APPEAL IS TREATED PARTLY ALLOWED FOR STA TISTICAL PURPOSE. ORDER PRONOUNCED IN OPEN COURT ON 21/03/2018 SD/- SD/- ( ( !) ( !) (S.S.VISWANETHRA RAVI) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER *DKP, SR.P.S * - 21/03/2018 / KOLKATA / COPY OF ORDER FORWARDED TO:- 1. /ASSESSEE-M/S SARAD INDUSTRIAL PRODUCGTS,26, AMHARS T ST. KOLKATA-009 2. ! /REVENUE-INCOME TAX OFFICER, WARD-37(2), PODDAR COU RT, KOLKATA-001 3. - . / CONCERNED CIT 4. . - / CIT (A) 5. / ((- , - / DR, ITAT, KOLKATA 6. 3 / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY HEAD OF OFFICE/DDO -,