Imperial Overseas , Kolkata V. ITO, Ward - 35(2), Kolkata , Kolkata

ITA 1934/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6709 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-09-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ARINDAM BHATTACHARYA
• Assessee Lawyers: N P JAIN
• Section: 69C; 143(3); 133(6); 32

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH SMC KOLKATA BEFORE SHRI S.S, GODARA, JUDICIAL MEMBER ITA NO.1406/KOL/2018 ASSESSMENT YEAR:2014-15 MAHESH ENTERPRISES 33/1 NETAJI SUBHASH ROAD, MARSHALL HOUSE, ROOM NO.847, KOLKATA-001 [ PAN NO.AAOFM 9684 N ] / V/S . INCOME TAX OFFICER, WARD-35(4), AAYAKAR BHWAN, POORBA, 110, SHANTIPALLY, KOLKATA- 107 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI N.P. JAIN, ADVOCATE /BY RESPONDENT SHRI ARINDAM BHATTACHARYA, ADDL. CIT-DR ITA NO.1934/KOL/2018 ASSESSMENT YEAR:2014-15 IMPERIAL OVERSEAS C/O SUBASH AGARWAL & ASSOCIATES, SIDDHA GIBSON,1, GIBSON LANE, SUITE-213, 2 ND FLOOR, KOLKATA-69 [ PAN NO.AACFI 3068 A ] / V/S . INCOME TAX OFFICER, WARD-35(2), AAYAKAR BHWAN, POORBA, 110, SHANTIPALLY, KOLKATA- 107 /APPELLANT .. /RESPONDENT /BY APPELLANT SHRI BRIJESH KUMAR SINGH, ADVOCATE /BY RESPONDENT SHRI ARINDAM BHATTACHARYA, ADDL. CIT-DR /DATE OF HEARING 03-01-2019 /DATE OF PRONOUNCEMENT 23-01-2019 /O R D E R THESE TWO ASSESSEES APPEAL(S) FOR ASSESSMENT YEAR 2014-15, ARISE AGAINST THE COMMISSIONER OF INCOME-TAX (APPEALS)-10, KOLKATAS SEPARATE ORDER DATED 11.06.2018 & 01.05.2018 PASSED IN CASE NOS.415/CIT( A)-10/W-35(2)/14-15/ 2016- ITA NO. 1406 & 1934/KOL/2018 A.Y. 2014 -15 MAHESH ENTERPRISES /IMPERIAL OVERSEAS VS. ITO WD- 35(2)/35(4), KOL. PAGE 2 17/KOL./543/CIT(A)-10/WD-35(4)/2016-17/KOL; RESPECT IVELY INVOLVING PROCEEDINGS U/S. 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD THE TWO ASSESSEES AS WELL AS THE REVENUE REIT ERATING THEIR RESPECTIVE STAND AGAINST AND IN SUPPORT OF VARIOUS DISALLOWANC E(S) / ADDITION(S) FORMING THE SUBJECT-MATTER OF PLEADINGS IN BOTH THE CASE(S) . CASE FILE(S) PERUSED. 2. I NOTICE AT THE OUTSET, THAT THE SOLE SUBSTANTIV E ISSUE IN FORMER ASSESSEES APPEAL ITA NO.1406/KOL/2018 AND FIRST SUBSTANTIVE G ROUND IN LATTER ASSESSEES APPEAL ITA NO.1934/KOL/2018 CHALLENGE BOTH THE LOWER AUTHO RITIES IDENTICAL FINDINGS DISALLOWING THE RESPECTIVE COMMISSION PAYMENTS OF 7,95,009/- AND 12,47,104/-. THE FORMER ASSESSEE HAD MADE THE IMPUGNED PAYMENTS TO S HRI ABHIJIT PAUL AND SHASHNK SONTHALIA WHEREAS THE LATTER ASSESSEE MADE COMMISSI ON PAYMENT TO M/S KISLAY TRADING PVT. LTD., & SRI PRAKASH CHAND BAID. THERE IS NO DISPUTE THAT THESE TWO ASSESSEES HAVE PLACED ON RECORD ALL DETAILS INCLUDI NG PAN, TDS DEDUCTION, ADDRESS ETC., THE REVENUES SOLE CASE AS PER BOTH THE LOWE R AUTHORITIES FINDINGS IS THAT THESE ASSESSEES COULD NOT PROVE THAT THE PAYEES / COMMISS ION AGENT HAD ACTUALLY RENDERED COMMISSION SERVICES IN QUESTION IN ASSESSMENT AS WE LL THE LOWER APPELLATE PROCEEDINGS. I FIND NO REASON TO CONCUR WITH THIS S TAND. HON'BLE JURISDICTIONAL HIGH COURTS DECISION IN CIT VS. M/S INBUILT MERCHANT PV T. LTD. ITAT NO. 225 OF 2013 GA NO. 3825 OF 2013 DECIDED ON 14.03.2014 HAS UPHELD T HIS TRIBUNALS ORDER DELETING IDENTICAL COMMISSION DISALLOWANCE BASED ON RELEVAN T DOCUMENTARY EVIDENCE OF COMMISSION PAYMENTS ALIKE IN THE INSTANT CASE AS UN DER:- THE COURT: THE APPEAL IS DIRECTED AGAINST A JUDGMEN T AND ORDER DATED 23RD MAY, 2013 BY WHICH THE LEARNED INCOME TAX APPELLATE TRIB UNAL HELD AS FOLLOWS: '6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PER USAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS DISALLOW ED THE COMMISSION PAYMENT IN RESPECT OF 25 AGENTS, WHO ARE THE RESIDE NTS OF THE NORTH EAST. THE ASSESSEE HAS ALSO DEDUCTED THE TDS ON THE SAME, WHI CH IS NOT DISPUTED. A PERUSAL OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS TAKEN INTO CONSIDERATION THE FACT THAT THE COMMISSI ON HAS BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES AFTER DEDUCTING TDS. THE LEAR NED COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALSO CONSIDERED THE FACT T HAT THE AGENT WERE RESIDENTS OF NORTH EAST. IN THE CIRCUMSTANCES, WE A RE OF THE VIEW THAT THE FINDING OF THE LEARNED COMMISSIONER OF INCOME-TAX ( APPEALS) ON THIS ISSUE IS ON A RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERF ERENCE. THE SAME IS UPHELD. THIS GROUND OF THE REVENUE'S APPEAL IS DISMISSED'. ITA NO. 1406 & 1934/KOL/2018 A.Y. 2014 -15 MAHESH ENTERPRISES /IMPERIAL OVERSEAS VS. ITO WD- 35(2)/35(4), KOL. PAGE 3 AGGRIEVED BY THE AFORESAID ORDER, THE REVENUE HAS C OME UP IN APPEAL. MR. BHOWMICK, LEARNED ADVOCATE APPEARING FOR THE APPELLANT-REVENU E SUBMITTED THAT THE NOTICES ISSUED TO THE RECIPIENTS OF COMMISSION CAME BACK UN SERVED IN MOST OF THE CASES, PICKED UP FOR SCRUTINY, AND IN THE CASES WHERE NOTI CES WERE SERVED, NO REPLY WAS RECEIVED. THE ASSESSING OFFICER, IN THE CIRCUMSTANC ES, WAS OF THE OPINION THAT THE EXPENDITURE AMOUNTING TO A SUM OF RS.68,09,845/- CO ULD NOT BE ALLOWED. HE ALSO DREW OUR ATTENTION TO THE FOLLOWING VIEWS EXPRESSED BY T HE ASSESSING OFFICER. 'THE SUBMISSION OF COPY OF LEDGER ACCOUNT IN WHICH PAYMENT MADE TO HAVE BEEN SHOWN THROUGH BANK AND DEDUCTION OF TDS IS NOT SUFFICIENT TO PROVE THAT THE TRANSACTION IS GENUINE. THE COPY OF THE LEDGER ACCOUNT IS NOTHING BUT THE EXTRACTS OF THE BOOKS ON THE BASIS OF WHICH THE ASS ESSEE COMPANY CLAIMED HIS EXPENSES. IT IS MADE BY THE ASSESSEE COMPANY ITSELF . MERE PAYMENT THROUGH BANKING CHANNEL IS NOT SACROSANCT NOR COULD IT MAKE A NON GENUINE TRANSACTION GENUINE. THEREFORE, THE GENUINENESS OF PAYMENT OF T HE COMMISSION TO THE AGENTS WHO HAS SUBMITTED NO REPLY IN RESPONSE TO NO TICE U/S 133(6) IS DOUBTFUL. FURTHER, THE IDENTITY OF THE AGENTS TO WHOM LETTERS WERE SENT U/S 133(6) RETURNED BACK UNSERVED IS ALSO NOT PROVED AND HENCE THE COMMISSION CLAIMED TO HAVE BEEN PAID TO THEM IS ALSO NOT GENUINE. THER EFORE, RS.68,09,845/- IS ADDED TO THE INCOME OF THE ASSESSEE COMPANY'. THE VIEWS EXPRESSED BY THE ASSESSING OFFICER ARE ER RONEOUS IN LAW. THE ASSESSING OFFICER HAS OVERLOOKED THE IMPORTANCE OF THE BOOKS OF ACCOUNTS MAINTAINED IN THE ORDINARY COURSE OF BUSINESS. REFERENCE IN THIS REGA RD MAY BE MADE TO SUB-SECTION (2) OF SECTION 32 OF THE INDIAN EVIDENCE ACT, 1872. THE BOOKS OF ACCOUNTS MAINTAINED IN THE ORDINARY COURSE OF BUSINESS ARE RELEVANT AND TH EY CANNOT BE DISCARDED IN THE ABSENCE OF APPROPRIATE REASONS. THE MERE FACT THAT RECIPIENT DID NOT REPLY IN SOME CASES OR THEY WERE NOT FOUND AT THE ADDRESS FURNISH ED BY THE ASSESSEE DOES NOT IN THE LEAST PROVE THE FACT THAT THEY WERE NON EXISTENT OR THAT THE PAYMENTS SHOWN TO HAVE BEEN MADE BY THE ASSESSEE WERE IMAGINARY. WITH THE ADVANCEMENT OF TECHNOLOGY, IT HAS BECOME POSSIBLE TO SELL GOODS THROUGHOUT THE CO UNTRY THROUGH THE INTERNET. FOR THAT PURPOSE, AGENTS ARE REQUIRED THROUGHOUT THE CO UNTRY. THE MECHANISM IN THAT REGARD HAS BEEN DISCLOSED BY THE ASSESSEE AND HAS B EEN RECORDED IN THE ORDER OF THE CIT (APPEALS). FOR THE PURPOSE OF CARRYING ON ITS B USINESS, THE ASSESSEE HAS TO RECRUIT THE AGENTS. IT MAY NOT BE POSSIBLE FOR THE ASSESSEE TO KNOW THEM PERSONALLY. WHATEVER ADDRESS WAS FURNISHED TO THE ASSESSEE, HAS BEEN DIS CLOSED TO THE INCOME-TAX DEPARTMENT. PAYMENTS WERE ADMITTEDLY MADE BY CHEQUE AFTER DEDUCTION OF TAX. THE TAX DEDUCTED AS SOURCE HAS DULY BEEN DEPOSITED. THE JUDGMENT IN THE CASE OF CIT VS. PRECISION FINANCE PVT. LTD. REPORTED IN 208 ITR 465 RELIED UPON BY MR. BHOWMIC K DOES NOT REALLY ASSIST HIM. THE AFORESAID JUDGMENT IS AN AUTHORITY FOR THE PROPOSITION THAT MERE PAYMENT BY ACCOUNT PAYEE CHEQUE CANNOT ES TABLISH THAT THE TRANSACTION WAS GENUINE, BUT IN THE CASE BEFORE US, BESIDES THE FAC T THAT PAYMENT WAS MADE BY CHEQUE, THERE ARE OTHER PIECES OF EVIDENCE AVAILABLE WHICH ARE AS FOLLOWS: A) BOOKS OF ACCOUNTS MAINTAINED BY THE ASSESSEE IN THE ORDINARY COURSE OF BUSINESS; B) DEDUCTION OF TAX AT SOURCE; C) DEPOSIT OF THE MONEY DEDUCTED AT SOURCE; D) PART ICULARS OF THE RECIPIENT WERE DULY FURNISHED; WE ARE, AS SUCH, OF THE OPINIO N THAT THE VIEWS EXPRESSED BY THE LEARNED TRIBUNAL ARE UNEXCEPTIONABLE. WE, TH EREFORE REFUSE TO ADMIT THE APPEAL. THE APPEAL IS THUS DISMISSED. ITA NO. 1406 & 1934/KOL/2018 A.Y. 2014 -15 MAHESH ENTERPRISES /IMPERIAL OVERSEAS VS. ITO WD- 35(2)/35(4), KOL. PAGE 4 I ADOPT THE ABOVE DETAILED REASONING MUTATIS MUTAND IS TO DELETE THE IDENTICAL COMMISSION DISALLOWANCE OF BOTH THESE CASE(S). THE FORMER ASSESSEES APPEAL ITA NO.1406/KOL/2018 RAISING THE SOLE SUBSTANTIVE ISSUE IS ACCEPTED. 3. THIS LEAVES ME THE LATTER ASSESSEES SECOND SUBS TANTIVE GROUND CHALLENGING EXPENDITURE DISALLOWANCE OF 3,18,308/- PAID TO M/S VASUKINATH ENTERPRISES INCUR RED ON ACCOUNT OF PACKAGING OF GOODS U/S 69C AS WELL A S ESTIMATED ADDITION OF 3,183/- ON ACCOUNT OF ALLEGED COMMISSION CHARGES PAID OUT OF BOOKS THEREUPON. THIS ASSESSEES SOLE SUBSTANTIVE PLEA DURING THE COURSE OF HEARING BEFORE ME IS THAT THE ISS9UE DESERVE TO BE RESTORED BACK TO THE ASSESSING OFFICER FOR VERIFICATION OF THE NECESSARY DETAILS. LEARNED COUNSEL FAILS TO DISPUTE THAT BOTH THE LOWER AUTHORITIES HAVE SUFFICIENTLY HEARD THE ASSESSEE AND GRANTED AMPLE O PPORTUNITIES TO PROVE ITS EXPLANATION REGARDING THE IMPUGNED PAYMENT TO M/S V ASUKINATH ENTERPRISES. IT FAILED TO DO SO DURING ASSESSMENT AS WELL AS IN LOWER APPE LLATE PROCEEDINGS. I THEREFORE FIND NO REASON TO INTERFERE WITH THE IMPUGNED DISALLOWAN CE / ADDITION(S). THE ASSESSEE FAILS IN THE INSTANT SECOND ISSUE. ITS APPEAL ITA NO.1934 /KOL/2018 IS PARTLY ALLOWED. 4. FORMER ASSESSEES APPEAL ITA NO.1406/KOL/2018 IS ALLOWED AND WHEREAS LATTER ASSESSEES APPEAL ITA NO.1934/KOL/2018 IS PARTLY AL LOWED IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 23/01/2019 SD/- (S.S. GODARA) JUDICIAL MEMBE R KOLKATA, *DKP/SR.PS - 23/01/2019 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT- MAHESH ENTERPRISES, 33/1, N.S.ROAD, MAR HALL HOUSE, R.NO.847 KOLKATA-001/IMPERIAL OVERSEAS, C/O SUBASH AG ARWAL & ASSOCIATES SIDDHA GIBSON, 1, GIBSON LANE, S UITE-213, 2 ND FL, KOL-69 2. /RESPONDENT-ITO WARD-35(4)/(2) AAYAKAR BHAWAN, POORVA , 110, SHANTIPALLY, KOLKATA-107 3. ' % / CONCERNED CIT 4. % - / CIT (A) 5. & ))' , ' / DR, ITAT, KOLKATA 6. + / GUARD FILE. BY ORDER/ , /TRUE COPY/ / ',