SHREE OM INDUSTRIES, BHARATPUR V. ACIT, BHARATPUR

ITA 17/JPR/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5147 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 01-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA CIT DR DHK
• Keywords: Business income; Business expenditure
• Section: 143(3); 133(6); 131; 10

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPUN] YS[KK LNL; DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 17/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 M/S. SHREE OM INDUSTRIES NEW MANDI BHARATPUR CUKE VS. THE ACIT CIRCLE- BHARATPUR BHARATPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABFJFS 6439 H VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI RAJENDRA AGARWAL, CA JKTLO DH VKSJ LS@ REVENUE BY:SHRI R.A. VERMA, ADDL.CIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 12/07/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 15/07/2016 VKNS'K@ ORDER PER BHAGCHAND, AM THE ASSESSEE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A), ALWAR DATED 15-10-2015 FOR THE ASSESSMEN T YEAR 2011-12 RAISING THEREIN FOLLOWING GROUND:- (I) THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5.00 LACS OUT OF TOTAL ADDITION OF RS. 11,21,661/- MADE DISALLOWING THE ENTIRE BROKERAGE C LAIMED. 2.1 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE E -FILED ITS RETURN OF INCOME ON 06-08-2011 FOR THE ASSESSMENT YEAR 2011-1 2 DECLARING TOTAL ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 2 INCOME OF RS. 21,68,440/-. NOTICE U/S 143(2) OF THE ACT DATED 18-09-2012 WAS ISSUED AND SERVED UPON THE ASSESSEE. THE LD. AR OF THE ATTENDED THE HEARING BEFORE THE AO AND FILED THE RELEVANT DETAIL S ALONGWITH BOOKS OF ACCOUNT WHICH WERE TEST CHECKED BY THE AO. THE AO O BSERVED THAT THE ASSESSEE HAS CLAIMED FOLLOWING EXPENSES UNDER THE HEAD BROKERAGE. (I) BROKERAGE MUSTARD CAKE RS. 2,02,787/- (II) BORKERAGE MUSTARD OIL RS. 7,61,704/- (III) BROKERAGE MUSTARD SEED RS. 1,57,170/- TOTAL RS. 11,21,661/- THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE ASSESSEE TO FILE THE COPIES OF BILLS ISSUED BY THE GROCERS AGAINST WHICH BROKERAGE PAYMENT ON SALE/PURCHASE WAS MADE, COPIES OF AGREEMENT / BROKER APPOINTMENT LETTERS IN RESPECT OF THE BROKER S, LEDGER ACCOUNTS OF ALL THE PERSONS TO WHOM BROKERAGE WAS PAID, DETAILS OF SERVICE RENDERED, DETAILS OF SALE / PURCHASES WHICH WERE MADE THROUGH THESE BROKERS. HOWEVER, THE AO OBSERVED THAT THE ASSESSEE NEITHER PRODUCED ANY BROKER/ AGENT FOR EXAMINATION NOR FILED ANY DETAILS DESIRED BY THE AO. THE AO NOTED AS PER THE MATERIALS AVAILABLE ON RECORD BEFO RE HIM THAT IN THE CASES TO WHOM SUCH BROKERAGE PAYMENTS HAVE BEEN MADE BY T HE ASSESSEE FIRM, THE RESPECTIVE ACCOUNTS OF THE BROKERS HAVE BEEN CR EDITED BY THE BROKERAGE AMOUNT ON THE LAST DAY OF THE ACCOUNTING YEAR AND THE PAYMENTS HAVE BEEN MADE IN THE NEXT YEAR. IN ADDITI ON, THE BILLS RAISED BY ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 3 ALL THESE SAID BROKERS HAVE BEEN RAISED ON THE LAST DAY OF THE ACCOUNTING YEAR. THE AO SURPRISINGLY NOTED THAT THESE SO CALLE D BROKERS CLAIMED TO PROVIDE SERVICES FOR THE WHOLE YEAR AND SILENTLY WA IT FOR NEXT 6 MONTHS OR MORE TO RECEIVE PAYMENT AGAINST THE SERVICE PROVIDE D. THE AO FURTHER ON PERUSAL OF THE SALE / PURCHASE BILLS PRODUCED BY T HE ASSESSEE, OBSERVED THAT THE NAME OF ANY BROKER IS NOT APPEARING ON ANY SALE / PURCHASE BILLS FOR WHICH THE SAID BROKERS HAD ARRANGED SALE/PURCHA SES. THE AO FURTHER OBSERVED THAT WHOLE GAMUT OF RAISING BILLS FOR BROK ERAGE AT THE FAG END OF THE YEAR AND RECEIVING CHEQUES FROM THE ASSESSEE FI RM FOR BROKERAGE IN THE NEXT YEAR IS A MAKE-BELIEVE ARRANGEMENT BETWEEN THE ASSESSEE FIRM AND THE BROKERS TO SIPHON OFF THE PROFIT TO EVADE T AX. THE AO HAS RELIED ON THE FOLLOWING CASE LAWS:- (I) NIEMLA TEXTILES FINISHING MILLS (P) LTD. VS. C IT ,100 ITR 611 (P&H) (II) PRECISION INSTRUMENT MANUFACTURING CO. VS. CIT , 137 ITR 5 (DEL.) (III) VISHNU COTTON MILLS LTD. VS. CIT, 117 ITR 754 (CAL.) THE AO FURTHER ASKED THE ASSESSEE TO PRODUCE THE CO RRESPONDENCE MADE BETWEEN HIM AND THESE BROKERS DURING THE YEAR WHICH COULD NOT BE PRODUCED BEFORE THE AO AND ESTABLISH THE CORRESPOND ENCE BETWEEN THE ASSESSEE AND BROKERS. THE AO ALSO NOTICED THAT ALL THE BROKERS OF THE ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 4 ASSESSEE BELONG TO BHARATPUR EXCEPT ONE WHILE SALE OF THE ASSESSEE IS SPREAD ALL OVER INDIA. ACCORDING TO THE AREA OF SAL E OF THE ASSESSEE, ITS BROKER SHOULD BE LOCATED ALL OVER THE COUNTRY. IT I S VERY DIFFICULT FOR A PERSON WHO BELONGS TO BHARATPUR, MANAGE SALE FOR AS SESSEE IN AURANGABAD OR IN ANY OTHER PART OF INDIA. THE AO TH US NOTED THAT THE ASSESSEE HAS MADE A MAKE BELIEVE ARRANGEMENT TO REDUCE ITS PROFIT. THE AO THUS ISSUE NOTICES U/S 133(6) OF THE ACT TO SOME OF THE BROKERS NAMELY SHRI SANJAY BHARDWAJ, SHRI GANGA SHARAN DALA L, M/S. SHREE BIHARI JI CORPORATION, SHRI SANJAY KUMAR DALALAND M /S. ASHOKA TRADING CO. TO PROVIDE THE DETAILS AND DOCUMENTS AS INDICAT ED IN THE ASSESSMENT ORDER. IT IS NOTED BY THE AO THAT THESE ABOVE BROKE RS HAD NOT GIVEN NAMES, ADDRESSES AND TELEPHONE NUMBERS OF THE PARTI ES TO WHOM SALES/ PURCHASES WERE MADE BY M/S. SHREE OM INDUSTRIES THR OUGH THEM DURING THE YEAR. THE AO ASKED THE ABOVE BROKERS TO FILE CO PIES OF THE BOOKING FORMS RECEIVED FROM THE CUSTOMERS FOR WHOM SALES WE RE ARRANGED BY THEM AND COPIES OF BOOKING FORMS SUBMITTED BY THEM TO M/S. SHREE OM INDUSTRIES FOR ARRANGING THE SALES/ PURCHASES ON WH ICH COMMISSION HAD BEEN EARNED. HOWEVER, ONLY M/S. ASHOKA TRADING CO. STATED THAT THE BUSINESS HAD BEEN CONDUCTED OVER TELEPHONE OR BY PE RSONAL VISIT AND OTHER BROKERS REMAINED SILENT. THUS THE AO CONSIDERED THA T THE REASON FOR NOT ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 5 SUPPLYING ADDRESSES AND TELEPHONE NUMBERS OF THESE PARTIES WAS THAT THEY DID NOT KNOW THEM AND HAD NOT DONE ANY TRANSACTION WITH THEM. THE AO CAME TO CONCLUSION THAT THE BROKERAGE PAID BY M/S. SHREE OM INDUSTRIES TO ALL THE BROKERS ARE NOT GENUINE IN NATURE. HENCE , THE AO DISALLOWED THE BROKERAGE EXPENSES UNDER DIFFERENT HEADS AMOUNTING TO RS. 11,21,661/- AND THUS MADE AN ADDITION OF RS. 11,21,661 TO THE I NCOME OF THE ASSESSEE. 2.2 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTE R BEFORE THE LD. CIT(A) WHO HAS RESTRICTED THE ADDITION TO THE EXTEN T OF RS. 5.00 LACS OUT OF TOTAL ADDITION OF RS. 11,21,661/- BY OBSERVING A S UNDER:- 4.5 CONSIDERING THE SUBMISSIONS MADE ON THIS ISSU E AND MATERIAL AVAILABLE ON RECORD, I FIND THAT THE APPEL LANT HAS FAILED TO PRODUCE ANY EVIDENCE TO CONTROVERT THE FI NDINGS GIVEN BY THE AO. THE APPELLANT HAS NOT BEEN ABLE TO FURNISH THE HARD EVIDENCE IN THE FORM OF NAMES AND ADDRESSE S OF THE PARTIES/ PURCHASERS TO WHOM GOODS HAVE BEEN SOLD BY THE BROKERS. THE AMOUNT OF COMMISSION HAS BEEN ALLOWED BY THE AO IN THE PRECEDING YEARS CANNOT BE TAKEN AS A GROU ND FOR NOT FURNISHING THE DETAILS WITH REGARD TO THE NAMES , ADDRESSES AND TELEPHONE NUMBERS OF THE PARTIES TO WHOM SALES HAVE BEEN MADE. THE BROKER-WISE DETAILS OF THE PARTIES A LOGGWITH THEIR ADDRESSES, TELEPHONE NUMBERS COULD NOT BE FIL ED BY THE APPELLANT EVEN IN THE COURSE OF PRESENT PROCEEDINGS . 4.6 HOWEVER, IT COULD NOT BE SAID THAT NO COMMISSION HAS BEEN PAID SINCE THE SALES OF THE APP ELLANT HAVE BEEN ACCEPTED AS SUCH AND HAVE INCREASED AS CO MPARED TO THE PRECEDING YEAR. THEREFORE, I HOLD THAT IT WO ULD BE JUST AND FAIR TO RESTRICT THE ADDITION OF RS. 5.00 LACS OUT OF THE TOTAL ADDITION OF RS. 11,21,661/- MADE BY THE AO UN DER THIS HEAD. ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 6 2.3 DURING THE COURSE OF HEARING, THE LD. AR FILED THE FOLLOWING WRITTEN SUBMISSION PRAYING THEREIN TO DELETE THE REMAINING ADDITION OF RS. 5.00 LACS CONFIRMED BY THE LD. CIT(A). THE LD.AO ALLEGED AT PAGE NO.2 OF THE ASSESSMENT ORDER THAT ON PERUSAL OF SALES/PURCHASES BILLS PRODUCED BY THE AS SESSEE IT IS OBSERVED THAT THE NAME OF ANY BROKER IS NOT APPEARING ON ANY SALES/PU RCHASES BILL FOR WHICH THEY SAID BROKERS HAS ARRANGED SALES/PURCHASES WHILE IN FACT AT EACH AND EVERY PURCHASES/SALES BILLS THE NAME OF THE RELEVANT BROK ER IS APPEARING AS EVIDENT FROM THE ILLUSTRATIVE BILLS AT (PB-16 TO 29) AND ON THIS WRONG & SOLE PRESUMPTION THE LD.AO HELD THAT NO SERVICES HAVE BEEN RENDERED BY T HE SO CLAIMED BROKERS TO WARRANT ANY BROKERAGE AS SUCH HE CONSIDERED THAT FI RM HAS NOT PROVED THE AMOUNT OF BROKERAGE RS.11,21,661/- AND HE DISALLOWED THE E NTIRE CLAIM OF BROKERAGE MADE AND MADE AN ADDITION OF RS.11,21,661/- TO THE INCOM E OF THE ASSESSEE FIRM. THE LD.AO RELIED ON THE FOLLOWING JUDGEMENTS WHICH ARE NOT AT ALL APPLICABLE TO THE FACTS AND CIRCUMUSTANCES OF THE C ASE AS THE FACTS AND CIRCUMUSTANCES OF THESE JUDGEMENTS ARE DIFFERENT AT ALL AS FOLLOWINGS:- IN THE CASE OF NIEMLA TEXTILES FINISHING MILLS PVT. LTD. V.CIT 100 ITR 611, THE ASSESSEE CLAIMED BROKERAGE AND COMMISSION RS. 69,228 PAID TO MESSRS. TEXTILE PROCESSING AGENCY, AMRITSAR. THE COMMISSION TO THIS FIRM WAS STATED TO HAVE BEEN PAID IN PURSUANCE OF AN AGREEMENT DATED M ARCH 31, 1960, WHEREBY THIS FIRM WAS APPOINTED AS AGENT OF THE ASSESSEE. THE FI RM, MESSRS. TEXTILE PROCESSING AGENCY, AMRITSAR, CAME INTO EXISTENCE ON APRIL 1, 1 960, UNDER A PARTNERSHIP AGREEMENT, WHICH WAS EXECUTED ON THE SAME DAY. THE INCOME-TAX OFFICER FOUND THAT ON MARCH 31, 1960, WHEN THE AGREEMENT BETWEEN THE ASSESSEE AND MESSRS. TEXTILE PROCESSING AGENCY WAS EXECUTED, THE FIRM, M ESSRS. TEXTILE PROCESSING AGENCY, WAS NOT IN EXISTENCE. SINCE THE FIRM HAD NO T COME INTO EXISTENCE ON THAT DATE THERE WAS NO QUESTION OF DR. HET RAM AGGARWAL ENTERING INTO AN AGREEMENT WITH THE ASSESSEE AS AGENT OF THAT FIRM. SINCE ONE OF THE PARTIES TO THE AGREEMENT DID NOT, AS A MATTER OF FACT, EXIST ON THE DATE WHE N THE AGREEMENT IS PURPORTED TO HAVE BEEN MADE, THE AGREEMENT WAS HELD BY THE INCOM E-TAX OFFICER AS VOID A INITIO AND THE COMMISSION ALLEGED TO HAVE BEEN PAID IN PURSUANCE OF THE AGREEMENT WAS ACCORDINGLY HELD TO BE INADMISSIBLE. THE INCOME-TAX OFFICER FURTHER FOUND THAT THE PARTNERS OF THIS FIRM WERE E ITHER DIRECTORS IN THE ASSESSEE- COMPANY OR THEY WERE CLOSELY RELATED TO THE DIRECTO RS. THE RELATIONSHIP OF EACH OF THE PARTNERS WITH THE DIRECTORS OF THE ASSESSEE-COM PANY WAS GIVEN BY THE INCOME- TAX OFFICER IN THE ASSESSMENT ORDER . THE INCOME-TA X OFFICER CAME TO THE CONCLUSION THAT, IN VIEW OF THE PROVISIONS OF SECTI ON 314 OF THE COMPANIES ACT, 1956, AND IN THE ABSENCE OF ANY SPECIAL RESOLUTION BY THE COMPANY ACCORDING CONSENT BEFORE APPOINTING MESSRS. TEXTILE PROCESSIN G AGENCY AS AGENTS, THE APPOINTMENT OF THE FIRM AS AGENTS WAS ILLEGAL. RELY ING ON THE BOMBAY HIGH COURT JUDGMENT IN COMMISSIONER OF INCOME-TAX V. HAZI AZIZ AND ABDUL SHAKOOR BROS . ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 7 AND THE PUNJAB HIGH COURT JUDGMENT IN RAJ WOLLEN INDUSTRIES V. COMMISSIONER OF INCOME-TAX , HE HELD THAT SINCE MESSRS. TEXTILE PROCESSING AGE NCY WAS APPOINTED TO HOLD THE OFFICE OF PROFIT UNDER THE COMPANY, IN VIOLATION OF THE PROVISIONS OF SECTION 314 OF THE COMPANIES ACT, 1956, THE COMMISS ION PAID TO IT COULD NOT BE ALLOWED AS DEDUCTION UNDER SECTION 10 (2) (XV). IN THE CASE OF PRECISION INSTRUMENT MFG.CO. V.CIT 1 37 ITR 5, THE ITO CAME TO THE CONCLUSION THAT ACTUALLY NO FIRM HAD CO ME INTO EXISTENCE. APART FROM THE FACTS MENTIONED, HE NOTICED THAT AS A RESULT OF THIS ARRANGEMENT 70 PER CENT. OF THE COMMISSION PAID TO THE FIRM CAME BACK TO THE FA MILY OF SRI GOPAL. HE ALSO NOTED THAT THE ASSESSEE HAD ITS OWN SEPARATE STOCKI STS AND THAT NO ORDERS WERE SHOWN TO HAVE BEEN BOOKED BY CHANDRA SALES CORPORAT ION. THE ITO, HOWEVER, DID NOT DISALLOW THE ENTIRE AMOUNT OF RS. 35,619. H E FOUND THAT, ACCORDING TO CHANDRAS SALES CORPORATION, ITS NET PROFITS FOR THE CALENDAR YEAR 1964 WAS RS. 20,000 BECAUSE, OUT OF THE COMMISSIONER OF RS. 35,6 19 RECEIVED BY IT, ABOUT RS. 16,000 HAD BEEN SPENT ON TOURING, ADVERTISING AND E STABLISHMENT EXPENSES. THE ITO WAS OF THE OPINION THAT A SUM OF ABOUT RS. 10,0 00 MAY HAVE ACTUALLY BEEN SPENT BY THE ASSESSEE FOR ADVERTISING AND TRAVELING FOR PROMOTION OF SALES. HE, THEREFORE, ALLOWED THIS SUM OF RS. 10,619 AND DISAL LOWED RS. 25,000 FROM THE CLAIM MADE BY THE ASSESSEE. THE ITO ALSO FOUND THAT THE FIRM HAD NO ASSETS AND THE INVESTMENT MADE BY THE PARTNERS WAS VERY NEGLIG IBLE. IN THE CASE OF VISHNU COTTON MILLS LTD. V.CIT 117 I TR 754, AT THE ASSESSMENTS THE ASSESSEE CLAIMED THAT THE COMMISSIO N OR REMUNERATION PAID TO THE SAID PERSONS AS AFORESAID WERE BUSINESS EXPENDITURE AND SHOULD BE DEDUCTED IN COMPUTING ITS INCOME. THE ITO FOUND THAT ONE SAMPAT MALL SETHIA WAS THE SOLE PROPRIETOR OF M/S. SAMPAT & CO., AND THAT HE WAS A BROTHER OF MANGILAL SETHIA. BHIKAMCHAND SETHIA AND KUNDHAN SETHIA, BROTHERS OF THE SAID MANGILAL SETHIA, WERE PARTNERS OF MANGILAL BHIKAMCHAND. THE ITO ISSU ED A SUMMONS UNDER S. 131 OF THE I.T. ACT, 1961, TO SAMPAT & CO., PURSUANT WH ERETO THE SAID BHIKAMCHAND SETHIA, THE BROTHER AND THE CONSTITUTED ATTORNEY OF SAMPAT MALL SETHIA, ATTENDED AND DEPOSED. THE ITO FOUND THAT THERE WAS NO EVIDEN CE TO SHOW THAT SAMPAT MALL SETHIA HAD BEEN RESPONSIBLE FOR ACCEPTANCE OF THE T ENDER OF THE ASSESSEE BY THE AUTHORITY CONCERNED. HE NOTED THAT THE TENDER OF TH E ASSESSEE WAS SUBMITTED PURSUANT TO A PUBLIC NOTICE AND THAT THERE WAS ALSO NO EVIDENCE TO ESTABLISH ANY SPECIAL KNOWLEDGE OF THE MANUFACTURING SUPERVISOR F OR SUPERVISION OF THE MANUFACTURE OF THE GOODS. THE INDEMNITY CLAUSES IN THE AGREEMENT WAS FOUND TO BE A DEAD LETTER AS NO CLAIM HAD EVER BEEN PREFERRE D BY THE ASSESSEE AGAINST THE MANUFACTURING SUPERVISOR. THE REMUNERATION PAID TO SAMPAT & CO., WAS, THEREFORE, DISALLOWED BY THE ITO. THE ITO ALSO SUMM ONED MANGILAL SETHIA, THE SOLE SELLING AGENT OF THE ASSESSEE FOR SPUN R.C.C. PIPES AND COLLARS. MANGILAL APPEARED AND STATED THAT THE BUSINESS HAD BEEN LOOK ED AFTER BY HIS BROTHER AND CONSTITUTED ATTORNEY, BHIKAMCHAND SETHIA, AND THAT HE COULD ADDUCE NO EVIDENCE TO SHOW THE NATURE OF THE SERVICES RENDERED TO ENAB LE HIM EARN THE COMMISSION. THE ITO ALSO NOTED THAT THE GOODS IN RESPECT OF WHI CH COMMISSION HAD BEEN PAID TO SAMPAT MALL SETHIA AND MANGILAL SETHIA HAD ALL B EEN SOLD TO GOVERNMENT DEPARTMENTS. THE ITO CONCLUDED THAT THE SOLE SELLIN G AGENT HAD RENDERED NO SERVICE WHATSOEVER AND ANY COMMISSION PAID TO IT WA S EX GRATIA. THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF SUCH COMMISSION WAS, THER EFORE, REJECTED. THE ITO ALSO ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 8 ISSUED A SUMMONS TO THE FIRM, MANGILAL BHIKAMCHAND, IN RESPONSE WHERETO BHIKAMCHAND SETHIA, A PARTNER, ATTENDED AND DEPOSED . WHEN ASKED IF HE COULD GIVE THE NAMES OF THE PARTIES WHOSE ORDER HE HAD SE CURED FOR THE ASSESSEE HE PROMISED TO PRODUCE REGISTERS AT A LATER DATE FROM WHICH SUCH NAMES WOULD APPEAR. ULTIMATELY, HE DID NOT PRODUCE ANY SUCH REG ISTER ON THE GROUND THAT THEY RELATED TO THE PERIOD PRIOR TO THE PROMULGATION OF THE CEMENT CONTROL ORDER. HE ADMITTED THAT AFTER SUCH CONTROL WAS IMPOSED HE HAD NOTHING TO DO TOWARDS SECURING ORDERS. ACCORDINGLY, THE CLAIM OF THE ASSE SSEE FOR DEDUCTION OF PAYMENT MADE TO THIS PARTY WAS ALSO REJECTED. IN THE CASE OF ASSESSEE:- (1)COMPLETE ADDRESS OF BROKERS WERE PROVIDED TO THE LD.AO(PB-1), (2)TDS U/S 194H WERE DEDUCTED OUT OF EACH AND EVERY PAYMENT BROKERAGE EXPENDITURE (PB-3), (3) COPIES OF ALL BROKERS ACCOUNT (PB-4 TO 9) WERE FURNISHED BEFORE THE LD.AO, (4) PHOTOCOPIES OF BILLS ISSUED BY THE BROKERS WERE FURNISHED BEFORE THE LD.AO (PB-10) (5) NOTICES U/S 133(6) OF THE INCOME TAX ACT,1961 W ERE DIRECTLY ISSUED BY THE LD.AO TO THE EACH AND EVERY BROKER (6) WHO ALL DIRECTLY CONFIRMED THE RECEIPT OF BROKE RAGE FROM THE ASSESSEE FIRM (7) THE BROKERAGE WAS PAID IN TERMS OF RATE OF BROK ERAGE PREVAILING IN THE MARKET AND (8) THE BROKERAGE PAID BY THE ASSESSEE FIRM IS COMP ARABLE TO THE RATE OF BROKERAGE BEING PAID BY OTHER IDENTICAL INDUSTRIES AS WELL AS IN THE PRECEEDING YEAR. (9) NAMES OF BROKER WHO HAD EFFECTED THE SALES/PURC HASES ARE VERY CLEARLY AVAILABLE ON EACH AND EVERY RELEVANT PURCHASES/SALE S BILLS AS EVIDENT FROM THE ILLUSTRATIVE BILLS (PB-16 TO 29) NO CONTRARY EVIDENCE OR INFORMATION WAS AVAILABLE W ITH THE LD.AO AGAINST THE PAYMENT OF BROKERAGE BY THE ASSESSEE FI RM, THE ASSESSEE FIRM IS REGULARLY MAKING THE PAYMENT OF BROKERAGE SINCE LON G AND THE SAME IS BEING REGULARLY ALLOWED BY THE INCOME TAX DEPARTMENT IN T HE ASSESSMENTS U/S 143(3) YEAR TO YEAR AND NEVER NO DISALLOWANCE OF BROKERAGE WAS MADE. DURING THE IMMEDIATE PRECEEDING ASSESSMENT YEAR I.E ., 2010-11 THE ASSESSEE FIRM CLAIMED BROKERAGE OF RS. 9,85,014/- ( 185440 + 660190 + 139384) (PB-11) AGAINST THE TOTAL SALES OF RS.2170.43 LACS (PB-12) WHICH WERE ALLOWED BY THE LD.AO WHILE COMPLETING THE ASSESSMENT U/S 143(3 ) VIDE ORDER DT. 11.03.2013 (PB-13 TO15) AND NO DISALLOWANCE OR ADDITION MADE B Y THE LD.AO IN REGARD TO PAYMENT OF BROKERAGE. ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 9 HENCE CONSIDERING THE ABOVE SUBMISSIONS THE DISALLO WANCE OF BROKERAGE MADE BY THE LD.AO IS UNJUSTIFIED AND NEEDS DELETION . BUT THE LD.CIT(A) WITHOUT APPRECIATING THE DETAILED SUBMISSIONS PUT FORTH BEFORE HIM AND SETTING ASIDE THE BARE FACT THAT EA CH AND EVERY PURCHASES/ SALES BILLS IS HAVING THE NAME OF THE RELEVANT BROKER WHO EFFECTED THE PURCHASES/SALES, EACH AND VERY PAYMENT OF BROKERAGE HAS BEEN MADE BY ACCOUNT PAYEE CHEQUE THROUGH BANKING CHANNEL, ON EACH AND EVERY PAYMENT OF BROKERAGE TDS U/S 194H HAS BEEN DEDUCTED AND DEPOSITED IN THE ACCOUNT OF T HE CENTRAL GOVERNMENT, ALL THE BROKERS HAVE CONFIRMED THE RECEIPT OF BROKERAGE IN THE INDEPENDENT PROCEEDINGS U/S 133(6) MADE BY THE LD.AO AND THEY ALL HAVE SHOW N THE RECEIPT OF BROKERAGE IN THEIR RESPECTIVE RETURNS OF INCOME FILED AND WHICH WERE WELL ACCEPTED BY THE INCOME TAX DEPARTMENT IN THEIR RESPECTIVE ASSESSMEN T CONFIRMED THE ADDITION OF RS.5,00,000/- OUT OF TOTAL ADDITION OF RS.11,21,661 /- MADE BY THE LD.AO STATING THAT THE APPELLANT HAS FAILED TO PRODUCE ANY EVIDE NCE TO CONTROVERT THE FINDING GIVEN BY THE AO. THE APPELLANT HAS NOT BEEN ABLE TO FURNISH THE HARD EVIDENCE IN THE FORM OF NAMES AND ADDRESSES OF THE PARTIES/ PUR CHASES TO WHOM GOODS HAVE BEEN SOLD BY THE BROKERS. THE AMOUNT OF COMMISSION HAS BEEN ALLOWED BY THE AO IN THE PRECEDING YEARS CANNOT BE TAKEN AS GROUND FO R NOT FURNISHING THE DETAILS WITH REGARD TO NAMES, ADDRESSES AND TELEPHONE NUMBE RS OF THE PARTIES TO WHOM SALES HAVE BEEN MADE. THE BROKWERWISE DETAILS OF TH E PARTIES ALONGWITH THEIR ADDRESSES, TELEPHONE NUMBERS COULD NOT BE FILLED BY THE APPELLANT EVEN IN THE COURSE OF PRESENT PROCEEDINGS. HOWEVER IT COULD NOT BE SAID THAT NO COMMISSION HAS BEEN PAID SINCE THE SALES OF THE APPELLANT HAVE BEEN ACCEPTED AS SUNCH AND HAVE INCREASED AS COMPARED TO THE PRECEDING YEAR. KEEPING IN VIEW THE ABOVE SUBMISSIONS THE LD.CIT ( A) HAS ERRED IN CONFIRMING THE LUMP SUM HUGE ADDITION OF RS.5.00 LA C, WHICH NEEDS DELETION. 2.4 THE LD. DR RELIED ON THE LOWER AUTHORITIES. 2.5 I HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. IT IS NOTED THAT ALL THE PAYME NTS OF BROKERAGE WAS MADE THROUGH ACCOUNT PAYEE CHEQUES. DUE TAX WAS DED UCTED AND PAID TO THE GOVT. FULL ADDRESSES AND PAN OF THE BROKERS WER E PROVIDED TO WHOM THE BROKERAGE WAS PAID. ALL THE BILLS CONTAIN NAMES OF THE BROKERS THROUGH WHOM DEAL WAS FINALIZED. THE AO ISSUED NOTICES U/S 133(6) OF THE ACT ITA NO. 17/JP/2016 M/S. SHREE OM INDUSTRIES VS. ACIT, CIRCLE- BHARATPU R . 10 WHICH HAS BEEN DULY COMPLIED WITH BY THE PERSONS TO WHOM THESE NOTICES WERE ISSUED AND THEY HAVE CONFIRMED THE RECEIPT OF THE BROKERAGE. THEREFORE, IN MY CONSIDERED VIEW, THE LD. CIT(A) WA S NOT JUSTIFIED IN NOT GRANTING FULL RELIEF TO THE ASSESSEE. THEREFORE, I DIRECT TO ALLOW FULL RELIEF TO THE ASSESSEE WITH REGARD TO THE PAYMENT OF BROKE RAGE. HENCE, THE APPEAL OF THE ASSESSEE IS ALLOWED. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15 /0 7/2016 SD/- HKKXPUN ( BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 15 /07/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S. SHREE OM INDUSTRIES, BHARATPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE- BHARATPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 17/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ @ ASSISTANT. REGISTRAR