DCIT, CHENNAI V. R.M.Prime Solutions, CHENNAI

ITA 1901/CHNY/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5373 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-10-2018
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 01-08-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SAILENDRA MAMIDIPCIT
• Assessee Lawyers: M RAJAVELU
• Keywords: Business expenditure; Opportunity of being heard; Additional evidence
• Section: 133(6)

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A.NO.1901/CHNY/2016 / ASSESSMENT YEAR :2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 12(1), CHENNAI 600 006. VS. M/S. R.M. PRIME SOLUTIONS, OLD NO. 126, NEW NO. 261, THAMBU CHETTY STREET, CHENNAI 600 001. [PAN:AAKFR9899N] ( /APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SAILENDRA MAMIDI, PCIT / RESPONDENT BY : SHRI M. RAJAVELU, ADVOCATE / DATE OF HEARING : 19.08.2019 /DATE OF PRONOUNCEMENT : 18.10.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 13, CHENNAI DATED 28.03.2016 RELEVANT TO THE ASSESSMENT YEAR 2010-11. THE GROUND RAISED BY THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN ALLOWING THE BUSINESS PROMOTION EXPENSE BY CONSIDERING THE ADDITIONAL EVIDENCE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FIRM CONSIST OF 12 PARTNERS ENGAGED IN THE BUSINESS AS AN INSURANCE AGENT OF FUTURE GENERAL INDIA LIFE INSURANCE COMPANY LIMITED. THE ASSESSEE FILED RETURN OF INCOME I.T.A. NO.1901/CHNY/16 2 DECLARING TOTAL INCOME AT .4,05,17,325/-. THE CASE WAS SELECTED FOR SCRUTINY. THE ASSESSEE HAS SHOWN RECEIPTS FOR COMMISSION OF .28,21,05,685/- AGAINST WHICH, THE ASSESSEE HAS CLAIMED BUSINESS EXPENDITURES OF .22,64,65,653/-. ON VERIFICATION, THE ASSESSING OFFICER OBSERVED THAT THE DETAILS FILED BY THE ASSESSEE ARE IN PIECEMEAL AND IN LETHARGIC MANNER AND THE DETAILS IN RESPECT OF THE PARTNERS ARE INCOMPLETE. PENDING CROSS VERIFICATION AND CONSIDERING THE LIMITATION OF SCRUTINY ASSESSMENT, THE ASSESSING OFFICER DISALLOWED 80% OF THE CLAIM TOWARDS BUSINESS PROMOTION EXPENSES WHICH WORKS OUT TO .18,11,72,522/-. ON APPEAL, AFTER CONSIDERING THE REMAND REPORT AS WELL AS SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE. 3. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. DR HAS SUBMITTED THAT BY CONSIDERING ADDITIONAL EVIDENCE FURNISHED BY THE ASSESSEE, WITHOUT GIVING AN OPPORTUNITY TO THE ASSESSING OFFICER, THE LD. CIT(A) ERRONEOUSLY DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE AND PLEADED FOR RESTORING THE ASSESSMENT ORDER. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW INCLUDING PAPER BOOK. THE ASSESSEE HAS CLAIMED .22,64,65,653/- TOWARDS BUSINESS PROMOTION EXPENSES. HOWEVER, AS PER THE LEDGER COPIES, BUSINESS PROMOTION I.T.A. NO.1901/CHNY/16 3 WAS QUANTIFIED ONLY AT .15,50,59,737/- AND FOR THE BALANCE AMOUNT OF .7,14,05,916/-, THE ASSESSEE HAS NOT FURNISHED EVEN THE BREAK UP DETAILS FOR THE BUSINESS PROMOTION EXPENSES EITHER BEFORE THE ASSESSING OFFICER OR LD. CIT(A). DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE FILED FRESH SUBMISSIONS. THE ASSESSEE WAS ASKED TO FURNISH THE NAME & ADDRESSES OF THE PARTIES AS PER THE FRESH SUBMISSIONS. AFTER COLLECTING THE ADDRESS DETAILS, INFORMATION WERE CALLED FOR UNDER SECTION 133(6) OF THE ACT TO VERIFY THE GENUINENESS OF THE CLAIM. IN THE REMAND REPORT, THE ASSESSING OFFICER HAS OBSERVED THAT IN SOME OF THE CASES, THE TRANSACTION MAY HAVE BEEN PROVED, HOWEVER, THE PURPOSE OF BUSINESS EXPEDIENCY TO INCUR SUCH EXPENDITURE HAS NOT BEEN SUBSTANTIATED BY THE ASSESSEE. IT WAS ALSO MENTIONED IN THE REMAND REPORT THAT COMPLETE VERIFICATION COULD NOT BE MADE SINCE THE ASSESSEE HAS NOT SUBMITTED THE FULL DETAILS IN RESPECT OF RIYA TOURS & TRAVELS, SHAKTHI IMPEX, JAI AMBE AGENCY, VRLA MANUFACTURING COMPANY & YATHRI TRAVELS TO PROVE THE EXPENSES CLAIMED BY THE ASSESSEE ARE GENUINE. THE REMAND REPORT WAS GIVEN TO THE ASSESSEE FOR FILING ITS COUNTER. ACCORDINGLY, THE ASSESSEE FILED ITS OBJECTIONS/COMMENTS ON THE REMAND REPORT AND MOREOVER, THE NAME AND ADDRESS OF THE PARTIES AS ASKED IN THE REMAND REPORT WERE ALSO FURNISHED BEFORE THE LD. CIT(A). UPON THE RECEIPT OF ADDRESSES AND DETAILS OF PAYMENTS MADE TO PARTIES VIZ., GOLD STAR SALES AGENCY PVT. LTD., SHAKTHI IMPEX, R.P. TRADING COMPANY, MICRO SALES CORPORATION, IMPRESARIO EVENT MANAGEMENT PVT. LTD & RIDHI SIDHI IMPEX, I.T.A. NO.1901/CHNY/16 4 THE ACTION TAKEN BY THE LD. CIT(A) WAS NOT AVAILABLE IN THE APPELLATE ORDER. ON CAREFUL PERUSAL OF THE APPELLATE ORDER, WE FIND THAT WITHOUT PROPERLY VERIFYING THE GENUINENESS OF THE TRANSACTION RELATING TO THE PARTICULARS GIVEN BY THE ASSESSEE ALONG WITH OBJECTIONS OF THE REMAND REPORT, THE LD. CIT(A) SIMPLY ACCEPTED THE SUBMISSIONS AND CONCLUDED THE APPELLATE ORDER BY ALLOWING THE CLAIM OF BUSINESS PROMOTION EXPENSES IS FACTUALLY AND LEGALLY NOT CORRECT. FURTHER, WE FIND THAT THE ASSESSEE IS AN INSURANCE AGENT AND HENCE ITS ACTIVITIES ARE REGULATED BY INSURANCE REGULATORY AUTHORITIES AND OTHERS. WHEN THE ASSESSEE IS CLAIMING THE IMPUGNED EXPENDITURE, THE ONUS IS ON THE ASSESSEE TO PLACE RELEVANT MATERIALS RELATING TO BUSINESS EXPEDIENCY BEFORE THE ASSESSING OFFICER AND ESTABLISH ITS CASE BESIDES FURNISHING COMPLETE DETAILS IN RESPECT OF SIX COMPANIES AS STATED ABOVE AND THE ASSESSING OFFICER SHALL CONDUCT APPROPRIATE ENQUIRIES AS DEEMED FIT TO VERIFY THE GENUINENESS AND PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 18 TH OCTOBER, 2019 AT CHENNAI. SD/- SD/- (S. JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 18.10.2019 VM/- I.T.A. NO.1901/CHNY/16 5 /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.