Asst. Commissioner of Income Tax, Circle-9(1), Hyderabad V. M/s Kumar Enterprises, Hyderabad

ITA 1750/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77863 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 19-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: K C DEVADAS
• Keywords: Additional evidence; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.1750/HYD/2013 ASSESSMENT YEAR 2010-2011 THE ACIT-9(1), HYDERABAD VS. M/S. KUMAR ENTERPRISES, HYDERABAD PAN AAFFK-7419-N APPELLANT RESPONDENT REVENUE BY: SRI SOLGY JOSE T. KOTTARAM ASSESSEE BY: SRI K.C. DEVADAS DATE OF HEARING: 28.04.2014 DATE OF PRONOUNCEMENT: 29.04.2014 O R D E R PER B. RAMAKOTAIAH, AM: THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE OR DER OF THE CIT(A)-VI, HYDERABAD DATED 25.09.2013 FOR A. Y. 2010- 2011. 2. AT THE OUTSET, LEARNED COUNSEL SUBMITTED THAT REVENUE CANNOT PREFER APPEAL AS THE TAX EFFECT IN T HIS CASE IS LESS THAN RS. 3 LAKHS AND SUBMITTED THE CALCULATION EXPLAINING THAT TAX EFFECT IS ONLY RS.2,98,311/- . BEING LESS THAN RS. 3 LAKHS MONETARY LIMIT PLACED BY THE CBDT INSTRUCTION NO. 3 OF 2011 DATED 9 TH FEBRUARY, 2011, THE DEPARTMENT IS NOT ELIGIBLE TO APPEAL AGAINST THE ORDER OF THE LEARNED CIT(A). 3. LEARNED D.R. HOWEVER, COULD NOT CONFIRM THE WORKING OF TAX EFFECT. WE HAVE CONSIDERED THAT INCL UDING SURCHARGE THEREON, THE AMOUNT MAY COME MARGINALLY A BOVE THE MONETARY LIMIT PLACED. THEREFORE, WITHOUT PREJUDICE TO THE ITA NO.1750/HYD/2013 M/S. KUMAR ENTERPRISES, HYDERABAD . 2 CONTENTIONS OF THE ASSESSEE ON THIS ISSUE, WE PROCE ED TO DECIDE THE APPEAL ON MERITS AS WELL. 4. GROUND NO.1 IS GENERAL IN NATURE AND THEREFORE, IT NEED NOT BE ADJUDICATED. 5. GROUND NO.2 IS WITH REFERENCE TO DELETION OF AN AMOUNT OF RS.3,88,854/- BY THE LEARNED CIT(A). BRIE FLY STATED, THE A.O. NOTICED THAT ASSESSEE CLAIMED AN AMOUNT OF RS.99,37,660/- AS COMMISSION AMOUNT AND ON VERIFICA TION FOUND OUT THAT MOST OF THE AMOUNTS HAVE BEEN CONFIR MED EXCEPT IN THE CASE OF ONE MR. R.D. RAJESH KUMAR TO WHOM AN AMOUNT OF RS.3,8,854/- WAS PAID. FOR WANT OF CONFIRMATION THIS AMOUNT WAS DISALLOWED BY THE A.O. ASSESSEE FURNISHED CONFI RMATION ALONG WITH FORM 16A ISSUED BY THE ASSESSEE-FIRM TO MR. R.D. RAJESH KUMAR WHICH WAS SENT TO THE A.O. IN THE REMA ND PROCEEDINGS. ASSESSING OFFICERS OBJECTION WAS HOWE VER, THAT THIS CONFIRMATION WAS DATED JUST BEFORE CONCLUSION OF TH E ASSESSMENT PROCEEDINGS, HENCE, CANNOT BE CONSIDERED AS GENUINE. 5.1. LEARNED CIT(A) CONSIDERING THE FACT THAT MOST OF THE COMMISSION HAS BEEN VERIFIED AND ACCEPTED AS REASON ABLE AND ASSESSEE ALSO FURNISHED CONFIRMATION ALONG WITH FOR M 16A, NOTICED THAT INSISTING OF INCOME TAX RETURN MAY BE AN EXCESS REQUIREMENT BUT THAT IS NOT REQUIRED FOR ESTABLISHI NG THE PAYMENT AS GENUINE. IN VIEW OF THAT, HE DELETED THE ADDITION MADE BY THE A.O. WHILE HOLDING THAT THE PAYMENT OF COMMISSION AS GENUINE. 6. ON CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A ) AS ASSESSEE NOT ONLY FILED THE CONFIRMATION BUT ALSO FURNISHED THE NECESSARY ITA NO.1750/HYD/2013 M/S. KUMAR ENTERPRISES, HYDERABAD . 3 EVIDENCES PROVING THE GENUINENESS OF THE EXPENDITUR E. THIS GROUND IS REJECTED. 7. GROUND NOS. 3 AND 5 PERTAIN TO THE ISSUE OF DISALLOWANCE MADE UNDER SECTION 40(A)(IA) OF THE AC T. A.O. ON NOTICING THAT ASSESSEE HAS PAID VARIOUS AMOUNTS CO NSIDERED THAT ASSESSEE HAS NOT DEDUCTED TAX ON 8 AMOUNTS ON WHICH INTEREST WAS PAID TO AN EXTENT OF RS.98,957/-. INVO KING THE PROVISIONS OF SECTION 40(A)(IA), A.O. DISALLOWED TH E ABOVE AMOUNT. ASSESSEE SUBMITTED THAT A.O. DID NOT ACCEPT THE EXPLANATION OF THE ASSESSEE THAT SUCH AMOUNTS WERE COVERED BY FORMS 15G/15H. ASSESSEE FURNISHED FORMS 15G/15H BEF ORE THE LEARNED CIT(A). IN REMAND, A.O. REPORTED THAT T HESE FORMS SUBMITTED BY THE ASSESSEE WERE INCOMPLETE AND WERE NOT SUBMITTED BEFORE THE LEARNED CIT AS PER RULE 29C. L EARNED CIT(A) CONSIDERING THE ASSESSEES EXPLANATION THAT THESE COPIES OF FORMS 15G/15H WERE NOT FURNISHED BEFORE THE A.O. BY OVER SIGHT CONSIDERED THE ADDITIONAL EVIDENCE AND THE RE PORT BY THE A.O. AND HELD THAT THERE IS NO LIABILITY TO DEDUCT TAX AND ACCORDINGLY, AMOUNTS CAN NOT BE DISALLOWED UNDER SE CTION 40(A)(IA). HE WAS OF THE OPINION THAT NON-FILING/DE LAYED FILING OF RELEVANT FORMS DOES NOT RESULT IN DISALLOWANCE UNDE R SECTION 40(A)(IA). LEARNED CIT(A) RELIED ON THE ITAT DECISI ONS IN THE CASE OF KARWAT STEEL TRADERS VS. ITO ITA.NO.6822/MUM/201 1 DATED 10.07.2013 AND VIPIN P. MEHTA VS. ITO ITA.NO.3317/MUM/2010 DATED 20.05.2011. ACCORDINGLY, HE DIRECTED THE A.O. TO ALLOW THE AMOUNT. 8. CONSIDERING THE FACT THAT CIT(A) DECISION IS IN LINE WITH THE PRINCIPLES ESTABLISHED BY THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF CIT VS. VALIBHAI KHANBHAI MANK AD 92 DTR (GUJ.) 267 WHEREIN THE HONBLE GUJARAT HIGH COURT H ELD THAT ITA NO.1750/HYD/2013 M/S. KUMAR ENTERPRISES, HYDERABAD . 4 FAILURE TO COMPLY WITH REQUIREMENT TO FURNISH DETAI LS TO INCOME TAX AUTHORITY IN PRESCRIBED FORM WITHIN PRESCRIBED TIME BY PAYEE MAY RESULT IN SOME ADVERSE CONSEQUENCES BUT S UCH FAILURE CANNOT BE VISUALISED BY ADVERSE CONSEQUENCE S PROVIDED UNDER SECTION 40(A)(IA), WE DO NOT SEE ANY REASON T O INTERFERE WITH THE ORDER OF THE CIT(A). ACCORDINGLY, GROUND N OS. 3 AND 5 ARE REJECTED. 9. GROUND NO.4 PERTAINS TO THE PAYMENT FOR FARMERS AWARENESS PROGRAMME. ASSESSEE CLAIMED AN AMOUNT OF RS.8,44,270/- TOWARDS ADMINISTRATIVE EXPENSES FOR F ARMERS AWARENESS PROGRAMME. THE A.O. NOTICED THAT AN AMOUN T OF RS.8000/- PER MONTH FOR EACH DISTRICT WAS PAID INIT IALLY FOR SIX DISTRICTS AND FROM OCTOBER, 2009 TO JANUARY 2010, N INE DISTRICTS WERE COVERED WHILE IN FEBRUARY, 2010, TEN DISTRICTS WERE ADDED. SINCE THE AMOUNT OF RS.7,93,992/- WAS SHOWN AS OUTS TANDING AT THE END OF THE YEAR AND NO CONFIRMATION WAS FILE D ABOUT THE PAYMENT TO MR. UMAMAHESHWAR RAO AND ON COMPARISON O F EARLIER YEAR EXPENSES, A.O. DISALLOWED 60% OF THE A BOVE EXPENSES MAKING ADDITION OF RS.5,06,562/- TO TAX. 9.1. BEFORE THE LEARNED CIT(A), IT WAS SUBMITTED T HAT ON THE BASIS OF THE INSTRUCTIONS GIVEN BY THE MICRO IR RIGATION PROJECTS, ASSESSEE HAS TO CONDUCT AWARE PROGRAMMES EVERY MONTH IN THE AREA SELECTED AND MR. UMAMAHESWARA RAO WAS CONDUCTING SUCH PROGRAMMES FROM A.Y. 2007-08. THESE AMOUNTS HAVE BEEN REGULARLY PAID AND THESE ARE ALSO BEING ALLOWED IN EARLIER YEARS. ASSESSEE INTURN, FURNISHE D RETURN OF INCOME FILED BY MR. UMAMAHESWARA RAO SHOWING GROSS RECEIPTS OF RS.69,96,967/-. THE ADDITIONAL EVIDENCE WAS REFE RRED TO THE A.O. A.O. WAS OF THE OPINION THAT ON VERIFICATION O F THE RETURNS, IT IS NOT VERIFIABLE WHETHER THE RECEIPTS FROM THE ASSESSEE WERE ITA NO.1750/HYD/2013 M/S. KUMAR ENTERPRISES, HYDERABAD . 5 INCLUDED IN THE TURNOVER AND FURTHER THERE IS NO EV IDENCE TO INDICATE THAT MR. UMAMAHESWARA RAO HAS ACTUALLY INC URRED EXPENSES ON BEHALF OF THE ASSESSEE. CONSIDERING THE OBSERVATIONS OF THE A.O. AND THE REMAND REPORT, THE LEARNED CIT(A) CONSIDERED THE PAST RECORD OF SUCH PAYMENTS ALSO AND HELD THAT THERE IS NO JUSTIFICATION FOR DISALLOWANC E OF THE EXPENDITURE. HENCE, THE REVENUE IS AGGRIEVED. 10. ON CONSIDERING THE EVIDENCE PLACED ON RECORD A ND THE REPORTS OF THE A.O. WE ARE OF THE OPINION THAT ORDER OF THE LD. CIT(A) REQUIRES CONFIRMATION. THERE IS NOTHING ON RECORD TO INDICATE THAT THE EXPENDITURE IS NOT GENUINE. AS RI GHTLY POINTED OUT BY THE LEARNED CIT(A), FARMERS AWARENESS PROGRA MME WAS BEING CONDUCTED REGULARLY BY THE ASSESSEE AND ASSES SEES TURNOVER IS ALSO INCREASING CORRESPONDING WITH THE EXPENDITURE. SINCE, MR. UMMAHESWARA RAO HAS CONFIRMED THE PAYMEN T AND BEING AN ASSESSEE ALSO ON RECORD AND THE AMOUNTS WE RE PAID BY WAY OF CHEQUE IN THE LATER YEAR, THERE IS NO NEED T O DOUBT THE EXPENDITURE WHICH WAS INCURRED IN THE COURSE OF BUS INESS. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A). GRO UND NO.4 OF THE REVENUE IS ACCORDINGLY REJECTED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2014. SD/- SD/- (SAKTIJIT DEY) JUDICIAL MEMBER (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 29 TH APRIL, 2014 VBP/- ITA NO.1750/HYD/2013 M/S. KUMAR ENTERPRISES, HYDERABAD . 6 COPY FORWARDED TO: 1. THE ACIT-9(1), ROOM NO.245, 2D, 2 ND FLOOR, I.T. TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 2. M/S. KUMAR ENTERPRISES, PLOT NO.131, SOUBHAGYAPU RAM COLONY, R.K. PURAM, HYDERABAD 3. THE CIT(A)-VI, HYDERABAD. 4. THE CIT-VI, HYDERABAD. 5. THE DR 'B' BENCH, ITAT, HYDERABAD