M/s Arya Motors, Berhampur V. ACIT, Berhampur

ITA 177/CTK/2010

• Counselvise Citation: 17722114 RSA 2010
• Duration Of Justice: 5 year(s) 5 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-10-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 10-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASIT KUMAR MOHAPATRA
• Assessee Lawyers: P C SETHI
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH, CUTTACK . . , & , BEFORE S/SHRI P.M.JAGTAP, ACCOUNTANT M EMBER & PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ' ./ ITA NO.177/CTK/2010 ( # # # # $% $% $% $% / ASSESSMENT YEAR :2006-07) M/S. ARYA MOTORS, ASKA ROAD, GANJAM VS. ACIT, BERHAMPUR CIRCLE, BERHAMPUR ' ./ & ' ./PAN/GIR NO. AAGFM 0487 P ( ' /APPELLANT ) .. ( ()' / RESPONDENT ) # , , , , /ASSESSEE BY : SHRI P.C.SETHI $ , , , , /REVENUE BY : SHRI ASIT KUMAR MOHAPATRA #$- / DATE OF HEARING : 26 TH OCT. 2015 ./% /DATE OF PRONOUNCEMENT 28 TH OCT. 2015 0 0 0 0 / O R D E R PER PARTHA SARATHI CHAUDHURY, JM CHALLENGING THE ORDER OF THE LD CIT(A), BERHAMPUR, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US ON THE FOLLOWING GROUNDS: 1. THE LEARNED CIT (A) HAS COMMITTED A SERIOUS ERROR B Y NOT DECIDING THE ISSUE U/S 40(A) (IA) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED AS 'THE ACT') SO FAR MAKING T HE DISTINCTION BETWEEN THE ISSUE OF PAYABLE AND PAID IS CONCERNED AND THEREFORE THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEARNED CIT (A) U/S 40 (A) (IA) OF THE ACT I S LIABLE TO BE DELETED. 2. THAT, THE LEARNED CIT (A) HAS COMMITTED A SERIOU S ERROR IN CONFIRMING THE ADDITION OF RS.36,275/- ULS 40 (A) (IA) OF THE ACT WHEN THE TAX DEDUCTED ON SUCH AMOUNT HAS BEEN DEPOS ITED TO THE CREDIT OF CENTRAL GOVERNMENT ON OR BEFORE THE DUE D ATE OF-FILING ITA NO. 177/CTK/2010 ASSESSMENT YEAR :2006-07 2 THE RETURN AND FOR THAT MATTER THE SAID ADDITION IS LIABLE TO BE DELETED. 3. THAT, THE LEARNED CIT (A) HAS COMMITTED A SERIOU S ERROR BY CONFIRMING THE DISALLOWANCE OF THE INCENTIVE AMOUNT ING TO RS. 1,54,214/- MADE BY THE LEARNED ASSESSING OFFICER WH ICH IS CONTRARY TO EVIDENCE ON RECORD AND FOR THAT MATTER THE INCENTIVES PAID TO STAFF IS LIABLE TO BE ALLOWED. 4. THAT, THE LEARNED CIT (A) HAS ERRED BOTH IN LA W AND IN FACT BY CONFIRMING THE DISALLOWANCE OF THE COMMISSION AM OUNTING TO RS. 1,01,000/- MADE BY THE LEARNED ASSESSING OFFICER AN D SAME IS LIABLE TO BE ALLOWED. 5. THAT, THE LEARNED CIT (A) HAS COMMITTED A SERIOUS E RROR BY CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFIC ER IN DISALLOWING RS. 3,95,900/- REGARDING PAYMENT OF COMMISSION U/S 40(A) (IA) OF THE ACT AND SAME IS LIABLE TO BE ALLOWED. 6. THAT, THE CIT (A) HAS ERRED BOTH IN LAW AND IN FACT CONFIRMING THE ORDER OF THE LEARNED ASSESSING OFFICER IN DISALLOWI NG THE PAYMENT OF COMMISSION OF RS. 3,95,000/- WHEN THE SAID EXPEN SES ARE MEANT FOR BUSINESS PURPOSES. THEREFORE, THE ADDITIO N CONFIRMED BY THE LEARNED CIT (A) IS LIABLE TO BE DELETED. 7. THAT, THE CIT (A) HAS ERRED BOTH IN LAW AND IN FACT BY DISALLOWING THE DONATION OF RS. 17,450/- WHEN THE SAME ARE PAID IN THE BUSINESS NECESSITY OF THE APPELLANT. 2. BRIEF FACTS OF THIS CASE ARE THAT THE RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION WAS FILED ON 30.10.2006 DECLARI NG TOTAL INCOME AT RS.4,90,300/-. SUBSEQUENTLY, THE CASE WAS SELECTED FOR SCRUTINY AN D NOTICES U/S.143(2) AND 142(1) ITA NO. 177/CTK/2010 ASSESSMENT YEAR :2006-07 3 WERE SERVED. THE ASSESSMENT WAS COMPLETED U/S.143( 3) OF THE ACT DETERMINING THE TOTAL INCOME AT RS.15,81,370/-. THE ASSESSEE FIRM IS ENGAGED IN THE SALE OF TWO WHEELERS AND TRACTORS THROUGH THE DEALERSHIP OF TVS MOTORS COMPANY LTD., AND TRACTORS AND FARM EQUIPMENTS LTD., RESPECTIVELY. BOOKS OF A CCOUNT, BANK ACCOUNTS AND OTHER RELEVANT DETAILS WERE PRODUCED BEFORE THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS. ON PERUSAL OF THE ASSESSME NT ORDER AND THE ORDER OF THE LD CIT(A), WE FIND THAT THERE ARE DISCREPANCIES BY THE ASSESSEE AND THE DEPARTMENT HAS MADE THE ADDITION ON ESTIMATE BASIS. THEREFORE, IN STEAD OF GOING TO THE GROUNDS OF APPEAL AS STATED EARLIER, WE WOULD DECIDE THE APPEA L ON TECHNICAL ASPECT. THAT IN THE ASSESSMENT ORDER, THE AO OBSERVED THAT THE TOTAL AM OUNT OF RS.33,24,460/- WAS DEBITED ON ACCOUNT OF DISCOUNT AND COMMISSION OF TRACTOR SA LES. OUT OF ABOVE EXPENSES, THE ASSESSEE FIRM COULD ONLY FILE DETAILS OF CASH DISCO UNT CORRELATING THEM TO SALE INVOICES AGAINST WHICH SUCH AMOUNTS WERE DEBITED. HOWEVER, REGARDING THE BALANCE FIGURE OF RS.4,33,374/-, NEITHER ANY DOCUMENTS NOR SALE INVOI CES WERE FILED. EVEN DETAILS OF PERSONS TO WHOM SUCH INCENTIVES AND COMMISSION ALLE GEDLY PAID BY CASH COULD BE FURNISHED DESPITE SUFFICIENT OPPORTUNITIES GIVEN TO THE ASSESSEE. SIMILARLY, IN THE ORDER OF THE LD CIT(A), THE LD CIT(A) HAS OBSERVED THAT EXCE PT THE DEBIT VOUCHERS, THERE WERE NO OTHER RECORDS MAINTAINED BY THE FIRM. NO CORRELATIO N OF THE INCENTIVES AND COMMISSION WITH THE SALE BILLS OF TRACTORS COULD BE ESTABLISHE D THEREBY CASTING DOUBTS ON THE ACTUAL SERVICES RENDERED BY THESE PEOPLE. HOWEVER, IN THE SAME ORDER, THE LD CIT(A) STATES THAT KEEPING ALL THE INFIRMITIES ASIDE, THE ADDITIO N IS RESTRICTED TO 50% AS REASONABLE. WE ARE UNABLE TO UNDERSTAND THAT ON ONE HAND, THE LD C IT(A) OBSERVED THAT PROPER DOCUMENTS WERE NOT FILED BY THE ASSESSEE AND ON THE OTHER HAND RESTRICTED THE DISALLOWANCE TO 50% WITHOUT PASSING A SPEAKING ORD ER. UNDER THE CIRCUMSTANCES, ITA NO. 177/CTK/2010 ASSESSMENT YEAR :2006-07 4 BOTH THE ORDERS OF THE A.O. AND CIT(A) CANNOT BE SU STAINED. WHILE MAKING JUDGEMENT ONE SHOULD HAVE REASONABLE NEXUS TO THE A VAILABLE MATERIAL AND CIRCUMSTANCES. THEREFORE, IN THE INTEREST OF JUST ICE, WE FEEL IT DEEM AND PROPER TO SET ASIDE THE ORDER OF THE LD CIT(A) AND REMIT IT BACK TO THE FILE OF THE AO WITH A DIRECTION TO DECIDE THE SAME AFRESH WITH PROPER EVIDENCE OF THE ISSUES ARISING OUT OF THIS CASE. 3. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 /10/2 015 SD/- SD/- . . ,/P.M.JAGTAP ,PARTHA SARATHI CHAUDHURY /ACCOUNTANT MEMBER / JUDICIAL MEMBER CUTTACK; #' DATED 28/10 /2015 B.K.PARIDA, SPS 0 0 0 0 ( ( ( ( 3% 3% 3% 3% / COPY OF THE ORDER FORWARDED TO : 0# 0# 0# 0# / BY ORDER, SR. PRIVATE SECRETARY, , / ITAT, CUTTACK 1. ' / THE APPELLANT : M/S. ARYA MOTORS, ASKA ROAD, GANJA 2. ()' / THE RESPONDENT. ACIT, BERHAMPU 3. 4 ( ) / THE CIT(A), BERHAMPUR 4. 4 / CIT , BHUBANESWAR 5. $5 (# , / DR, ITAT, CUTTACK 6. 6 7- / GUARD FILE. ) ( //TRUE COPY//