M/s. Sagar Rubber Products Pvt. Ltd, Mehsana V. ACIT, Mehsana Circle, Mehsana

ITA 199/AHD/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7089 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 23-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: H V DOSHI
• Keywords: Opportunity of being heard; TDS; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA NO. 199/AHD/2018 (ASSESSMENT YEAR : 2014-15) M/S. SAGAR RUBBER PRODUCTS PVT. LTD., 143, GIDC, PHASE-2, MODHERA ROAD, MEHSANA 384 002. VS. ACIT, MEHSANA CIRCLE, MEHSANA [PAN NO. AAJCS 8525 L] ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI H. V. DOSHI, A.R. RESPONDENT BY : SHRI MUDIT NAGPAL, SR. D.R. DATE OF HEARING 08/07/2019 DATE OF PRONOUNCEMENT 23/07/2019 O R D E R PER MS. MADHUMITA ROY - JM: THE INSTANT APPEAL FILED BY THE ASSESSEE IS DIRECTE D AGAINST THE ORDER DATED 17.11.2017 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)- GANDHINAGAR, AHMEDABAD ARISING OUT OF THE ORDER DATED 23.05.2016 PASSED BY THE ACIT, MEHSANA CIRCLE, MEHSANA UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED AS TO THE ACT) FOR THE ASSESSMENT YEAR 2014-15 WI TH THE FOLLOWING GROUNDS: (1) LEARNED CIT(A) HAD ERRED IN LAW AND FACT IN CONFIR MING THE ASSESSMENT ORDER MADE BY AO WITH REGARD TO ADDITION OF INCOME BY DIS ALLOWANCE OF 25% OF SALES COMMISSION EXP. OF RS.9,20,480/- (2) LEARNED CIT(A) HAD ERRED IN LAW AND FACTS IN CONFIR MING THE ASSESSMENT ORDER MADE BY AO WITH REGARD TO ADDITION OF INCOME BY DIS ALLOWANCE OF EMPLOYEE CONTRIBUTION TO PF OF RS.17,737/-. (3) THE APPELLANT CRAVE LEAVE TO ADD, AMEND, ALTER OR D ELETE ANY OF ABOVE GROUNDS OF APPEAL. (4) THE APPELLANT PREY FOR THE RELIEF THAT ADDITION CON FIRMED BY CIT(A) SHOULD BE DELETED. - 2 - ITA NO.199/AHD/2018 SAGAR RUBBER PRODUCTS PVT. LTD. VS ACIT ASST.YEAR 2014-15 2. GROUND NO.1 RELATES TO CONFIRMING OF ADDITION OF INCOME BY DIS ALLOWANCE OF 25% OF SALES COMMISSION EXP. OF RS.9,20,480/-. 3. THE ASSESSEE COMPANY FILED ITS RETURN OF INCOME ON 30.09.2014 DECLARING TOTAL INCOME OF RS.45,41,940/- WHICH WAS PROCESSED U/S 14 3(1) OF THE ACT. SUBSEQUENTLY, NOTICE U/S 143(2) OF THE ACT UNDER SCRUTINY DATED 2 8.08.2015 WAS SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDIN G, UPON VERIFICATION OF THE PROFIT AND LOSS ACCOUNT, IT WAS FOUND THAT THE ASSESSEE HAS DE BITED AN AMOUNT OF RS.36,81,895/- UNDER THE HEAD SALES COMMISSION EXPENSES. PREVIOU SLY DURING THE COURSE OF ASSESSMENT PROCEEDING FOR A.Y. 2013-14 UPON ENQUIRY IN RESPECT OF SOME OF THE RECIPIENT OF THE SALES COMMISSION EXPENSES CLAIMED BY THE ASSESSEE , DISALLOWANCE EQUAL TO 25% WAS MADE BY THE AO. THE LEARNED AO WAS OF THE VIEW SINC E THE ASSESSEE HAS PAID THE DUE TAX DEMAND RAISED AND NOT PREFERRED EVEN AN APPEAL AGAI NST SUCH ADDITION FOLLOWING THE SAME ORDER ADDED SUCH 25% OF THE ENTIRE EXPENSES OF RS.3 6,81,895/- I.E. RS.9,20,480/-. SUCH PLEA OF THE ASSESSING OFFICER WAS FOUND SUITABLE BY THE LEARNED CIT(A) AND HE THEREFORE CONFIRMED SAID ADDITION. 4. AT THE TIME OF HEARING OF THE INSTANT APPEAL, LE ARNED COUNSEL APPEARING FOR THE ASSESSEE HAS TAKEN US TO THE ORDER PASSED BY THE LE ARNED CIT(A) FOR A.Y. 2013-14 IN THE APPEAL PREFERRED BY THE ASSESSEE AFTER THE ADDITION WAS MADE BY THE LEARNED AO FOR A.Y. 2014-15 WHEREBY AND WHEREUNDER THE ADDITION IN RESP ECT OF DISALLOWANCE OF 25% OF THE COMMISSION EXPENSES FOR THE YEAR UNDER CONSIDERATIO N I.E. FOR A.Y. 2013-14 WAS DELETED. IN THAT VIEW OF THE MATTER, THE DISALLOWANCE MADE B Y THE REVENUE HAS BEEN PRAYED TO BE DELETED BY US. HOWEVER, THE LEARNED DR HAS FAILED T O CONTROVERT THE SAID CONTENTION MADE BY THE AR BEFORE US. 5. HEARD THE RESPECTIVE PARTIES, PERUSED THE RELEVA NT MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO CAREFULLY CONSIDERED THE ORDER PASSED BY THE LEARNED CIT(A) FOR A.Y. - 3 - ITA NO.199/AHD/2018 SAGAR RUBBER PRODUCTS PVT. LTD. VS ACIT ASST.YEAR 2014-15 2013-14. THE RELEVANT PORTION OF THE OBSERVATION WH ILE DELETING SUCH DISALLOWANCE IS AS FOLLOWS: THE A.O. HAS NOT DOUBTED THE GENUINENESS OF THE PAYMENT WHICH HAS BEEN MADE THROUGH BANKING CHANNEL WITH COMPLIANCE OF PRO VISIONS OF RELATING TO TDS FROM COMMISSION. THE A.O. HAS THOUGH NOTED THAT THE RE WERE SUBSEQUENT WITHDRAWALS F ROM THE BANK ACCOUNTS OF THE RECIPIENTS OF COMMISSI ON BUT DID NOT BRING ANY EVIDENCE TO DEMONSTRATE THAT THE MONEY WA S GIVEN BACK TO THE APPELLANT COMPANY OR USED BY THEM FOR THEIR PERSONAL NEEDS. T HE COPSES OF RETURNS OF INCOME IN CASES OF SOME OF THE COMMISSION AGENTS WE RE FILED IN THE FORM OF PAPER BOOK WHICH REFLECTED THE DUE DISCLOSURE OF THE COMM ISSION INCOME EITHER DIRECTLY IN THE STATEMENT OF TOTAL INCOME OR THROUGH PROFIT & LOSS ACCOUNT. THEREFORE, IN VIEW OF THE ABOVE FACTS, THE A.O.'S FINDINGS GIVEN FOR MAKING AD-HOC DISALLOWANCE @ 25% OF TOTAL COMMISSION EXPENSES CANNOT BE HELD T O BE VALIDLY MADE. THE APPELLANT HAS ALSO RELIED ON SEVERAL DECISIONS WHIC H DEMONSTRATE THAT NO DISALLOWANCE ON ESTIMATE BASIS CAN BE MADE BY ARBIT RARY EXERCISE OF POWER WITHOUT IDENTIFYING A SPECIFIC ITEM OF SUCH EXPENSE S OR THE PERSONS TO WHOM SUCH PAYMENTS ARE MADE WHICH HAVE TO BE HELD AS EXCESSIV E, BOGUS OR INGENUINE IN ABSENCE OF ANY ADEQUATE EVIDENCE OR INFORMATION ON RECORD FOR DERIVING THE CONCLUSION THAT THE EXPENSES WERE BOGUS ETC. CONSIDERING OVERALL FACTS OF THE CASE, THE DISALLOWANCE MADE OF RS.24,48,300 /- IS DIRECTED TO BE DELETED. ACCORDINGLY, GROUND NO.1 OF THE APPEAL IS ALLOWED. TAKING INTO CONSIDERATION THIS PARTICULAR ASPECT OF THE MATTER, WE FIND NO JUSTIFICATION IN SUSTAINING THE ORDER OF ADDITION P ASSED BY THE REVENUE. HENCE, THE ADDITION MADE BY THE AUTHORITIES BELOW IS DELETED. 6. GROUND NO.2 RELATES TO DISALLOWANCE OF EMPLOYEES CONTRIBUTION TOWARDS PF TO THE TUNE OF RS.17,737/-. 7. THE AMOUNT FOR PF CONTRIBUTION FOR THE MONTH OF DECEMBER 2013 PAID ON 20.01.2014 THOUGH BEYOND THE DUE DATE BUT WITHIN TH E GRACE PERIOD UNDER PF ACT AS THE CASE MADE OUT BY THE ASSESSEE BEFORE US AND WE THUS FIND IT FIT AND PROPER TO OFFER A FURTHER OPPORTUNITY TO THE ASSESSEE TO REPRESENT HI S CASE BEFORE THE ASSESSING OFFICER WITH RELEVANT DOCUMENTS IN SUPPORT OF ITS CLAIM. HENCE, WE SET ASIDE THE ISSUE TO THE FILE OF THE - 4 - ITA NO.199/AHD/2018 SAGAR RUBBER PRODUCTS PVT. LTD. VS ACIT ASST.YEAR 2014-15 LEARNED AO TO CONSIDER THE SAME AFRESH UPON GIVING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AND ALSO UPON TAKEN INTO CONSIDERATION THE EVIDENCES ON RECORD WHICH THE ASSESSEE MAY CHOOSE TO FILE AT THE TIME OF HEARING OF THE APPEAL. WE, FURTHER, MAKE IT CLEAR THAT THE ASSESSEE WILL ALSO CO-OPERATE WITH THE LEA RNED AO AND WILL NOT TAKE ANY UNNECESSARY ADJOURNMENT. HENCE, ASSESSEES APPEAL I S ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.3 AND 4 ARE USUAL GROUNDS, HENCE NO ORDER NEED BE PASSED. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. THIS ORDER PRONOUNCED IN OPEN COURT ON 23/07/2019 SD/- SD/- ( WASEEM AHMED ) ( MS. MADHUMITA ROY ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/07/2019 PRITI YADAV, SR.PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. () / THE CIT(A)-GANDHINAGAR, AHMEDABAD. 5. , ! ' , #$%% / DR, ITAT, AHMEDABAD 6. &' () / GUARD FILE. / BY ORDER, //TRUE COPY// / ( DY./ASSTT.REGISTRAR) !, #$ / ITAT, AHMEDABAD 1. DATE OF DICTATION 08.07.2019 (COVERED CASE 3) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 11.07.2019 3. OTHER MEMBER. 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 12.07.2019 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER