Power House, New Delhi V. ITO, New Delhi

ITA 2039/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6836 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 2
• Next Hearing Date: 06-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 08-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Keywords: Opportunity of being heard
• Section: 143(3); 142(1); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-2, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 2039/DEL/2015 A.Y. 2010-11 M/S POWER HOUSE, A-2/48, PARTEEK APRTMENTS, PASCHIM VIHAR, NEW DELHI 110 063 (PAN: AALFP00063H) VS. ITO, WARD 38(3), NEW DELHI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. VED JAIN, CA DEPARTMENT BY : SH. AMRIT LAL, SR. DR ORDER PER H.S. SIDHU, JM ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER DATED 2 7.1.2015 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)XX , NEW DELHI PERTAINING TO ASSESSMENT YEAR 2010-11. 2. THE ASSESSEE HAS FILED THE REVISED GROUNDS OF APPEAL WHICH READ AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS)[(CIT(A)] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARN ED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMI NG THE ITA NO.2039/DEL/2015 2 DISALLOWANCE OF INTEREST ON CAPITAL AMOUNTING TO RS.2,30 ,975/- MADE BY AO UNDER SECTION 40(B) OF THE ACT. (II) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARN ED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRM ING THE ADDITION OF RS.8,78,000/- MADE BY THE AO ON ACCOUNT OF THE REMUNERATION TO THE PARTNERS IGNORING THE SUPPLEMENTA RY DEED EXECUTED AMONG THE PARTIES MERELY ON THE BASIS OF SUSPI CION. (III) THAT THE DISALLOWANCES ON ACCOUNT OF THE INTEREST AND REMUNERATION TO THE PARTNERS HAVE BEEN CONFIRMED DESP ITE THE ASSESSEE FULFILLING ALL THE CONDITIONS FOR THE SAME. 3(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARN ED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMI NG THE DISALLOWANCE OF COMMISSION AMOUNTING TO RS.4,83,880/- MA DE BY AO UNDER SECTION 37(1) OF THE ACT. (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED DESPITE THE EXPENSES BEING INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS AND THERE IS NO PROHIBITION UNDER LAW FOR I NCURRING SUCH EXPENDITURE. 4(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARN ED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN CONFIRMI NG THE ITA NO.2039/DEL/2015 3 DISALLOWANCE OF AN AMOUNT OF RS.63,895/- MADE BY AO ON ACCOUNT OF CARTAGE EXPENSES. (II) THAT THE DISALLOWANCE HAS BEEN CONFIRMED DESPITE THE SAME HAVE BEEN MADE ARBITRARILY AT THE RATE OF 10% WITHOUT THERE BEING ANY BASIS FOR THE SAME. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A P ARTNERSHIP FIRM ENGAGED IN THE BUSINESS OF INSTALLATION AND SALES OF UPS AND INVERTERS SYSTEMS AND THEIR MAINTENANCE. THE FIRM IS COMPRISING OF TWO MRS. ANJALI BALI AND MRS. KOPAL BAKSHI SHARING PROFITS IN RATIO OF 1:1 RESPECTIVELY. THE RETURN WAS FILED ON 24.9.2010 DECLARING AN INCOME OF R S. 17,24,640/-. THE SAID RETURN WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 196 1 AND SUBSEQUENTLY THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY . THE AO ISSUED A NOTICE U/S. 143(2) ON 24.8.2011. FURTHER NOTICE U/S. 142(1) ALONGWITH THE DETAILED QUESTIONNAIRE WAS ISSUED ON 23.1 .2012. IN COMPLIANCE TO THE ABOVE SAID NOTICES, THE ASSESSEE FILED THE VARIOUS DETAILS AND INFORMATION AND ATTENDED THE PROCEEDINGS FROM TI ME TO TIME. THEREAFTER, THE AO PASSED THE ASSESSMENT ORDER DATED 15. 3.2013 U/S. 143(3) OF THE I.T. ACT, 1961 BY MAKING VARIOUS ADDIT IONS AND ASSESSED THE TAXABLE INCOME AT RS. 33,81,390/-. 4. AGAINST THE ASSESSMENT ORDER DATED 15.3.2013, ASSESSEE APPE ALED BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER D ATED 27.1.2015 HAS DISMISSED THE APPEAL OF THE ASSESSEE. 5. AGGRIEVED WITH THE AFORESAID ORDER OF THE LD. CIT (A), ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO.2039/DEL/2015 4 6. DURING THE HEARING, LD. COUNSEL OF THE ASSESSEE WITH REGARD TO GROUND NO. 2 HAS STATED THAT ADDITION IN DISPUTE HAS BEEN MAD E BY THE AO ON ACCOUNT OF REMUNERATION TO THE PARTNERS IGNORING THE SUPPLEMENTARY DEED EXECUTED AMONG THE PARTIES MERELY ON THE BASIS OF SUSPICI ON. AS REGARDS THE GROUND NO. 3 IS CONCERNED, THE LD. COUNSEL OF THE ASSESSEE STATED THAT THE DISALLOWANCE IN DISPUTE HAS BEEN CONFIRMED BY THE LD. CIT(A) DESPITE THE EXPENSES BEING INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THERE IS NO PROHIBITION UNDER LAW FOR INCURRING SU CH EXPENDITURE AND WITH REGARD TO GROUND NO. 4 HE STATED THAT THE DISALLOWANCE HAS BEEN MADE @10% WITHOUT ANY BASIS FOR THE SAME. THEREFORE, HE RE QUESTED THAT THE ADDITIONS IN DISPUTE MAY BE DELETED AND APPEAL OF THE ASSESSEE BE ALLOWED. 7. ON THE CONTRARY, LD. DR OPPOSED THE AFORESAID CONTE NTION OF THE LD. COUNSEL OF THE ASSESSEE AND RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND REQUESTED THAT THE SAME MAY BE UPHELD. 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RELE VANT RECORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS PASSED BY THE REVENUE AUTHORITIES. WITH REGARD TO GROUND NO. 2 IS CONCERNED, I FIND THAT IT WAS THE CONTENTION OF THE LD. COUNSEL OF THE ASSESSEE THAT THE LOWER AUTHOR ITIES IGNORED THE SUPPLEMENTARY DEED EXECUTED AMONG THE PARTIES MEREL Y ON THE BASIS OF SUSPICION, HOWEVER, THE LD. DR HAS STATED THAT ASSESSEE HA S NOT FILED ANY DOCUMENT TO SHOW THAT THE COPY OF SUPPLEMENTARY DEED F ILED BY IT IS AUTHENTIC, NEITHER THE SUPPLEMENTARY DEED WAS AVAILABL E NOR THERE IS ANY EVIDENCE TO SHOW THAT THE COPY OF THE DEED WAS SENT TO T HE REGISTRAR OF FIRMS OR TO THE AO TO SHOW THAT THE DEED WAS PREPARED ON 1.10.2009 AND THE CLAIM IS AUTHENTIC. IN THE INTEREST OF JUSTICE, I AM OF THE VIEW THAT THE MATTER NEEDS TO BE RE-EXAMINED AT THE LEVEL OF THE A O TO DECIDE THE SAME AFRESH, UNDER THE LAW. ACCORDINGLY, I REMIT BACK THE I SSUE IN DISPUTE TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH, AFTER GIVIN G ADEQUATE OPPORTUNITY OF ITA NO.2039/DEL/2015 5 BEING HEARD. THE ASSESSEE IS DIRECTED TO PRODUCE ALL THE MATERIALS/DOCUMENTS BEFORE THE AO TO SUBSTANTIATE HIS CLAIM ON THE ISSUE IN DISPUTE. 8.1 WITH REGARD TO GROUND NO. 3 IS CONCERNED, I FIND THAT LD. COUNSEL OF THE ASSESSEE HAS STATED THAT THE DISALLOWANCE ON ACCOUNT OF CO MMISSION WAS THE EXPENSES INCURRED WHOLLY AND EXCLUSIVELY FOR THE PU RPOSE OF BUSINESS AND THERE IS NO PROHIBITION UNDER LAW FOR INCURRING SUCH E XPENDITURE. HOWEVER, THE LD. DR STATED THAT ASSESSEE WAS UNABLE TO PRODUCE AN Y EVIDENCE TO SHOW THAT COMMISSION HAS ACTUALLY BEEN PAID FOR PERFORMA NCE OF WORK IN CONNECTION WITH THE BUSINESS. I FIND THAT ASSESSEE HAS TO PRODUCE THE EVIDENCE BEFORE THE AO TO SHOW THE COMMISSION HAS ACTUALL Y BEEN PAID WHICH HE HAS NOT DONE. THEREFORE, IN THE INTEREST OF JUSTICE, I REMIT BACK THE ISSUE IN DISPUTE TO THE FILE OF THE AO FOR FRESH CONSIDER ATION, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. T HE ASSESSEE IS DIRECTED TO PRODUCE ALL THE RELEVANT DOCUMENTS / MAT ERIAL TO SUBSTANTIATE HIS CLAIM BEFORE THE AO. 8.2 WITH REGARD TO GROUND NO. 4 IS CONCERNED, I FIND THAT LD. COUNSEL OF THE ASSESSEE HAS STATED THAT THE DISALLOWANCE WAS MADE @10% WITHOUT THERE BEING ANY BASIS FOR THE SAME. HOWEVER, THE LD. D R STATED THAT AO DISALLOWED 10% OF THE EXPENSE ON FREIGHT AND CARTAGE ON THE BASIS THAT THE PAYMENTS WERE MADE IN CASH AND WERE NOT SUPPORTED BY A NY INDEPENDENT BILLS OR DOCUMENTS. HE FURTHER STATED THAT EVEN AT THE APPELLATE STAGE THE ASSESSEE WAS UNABLE TO SHOW THAT THE ENTIRE PAYMENT WAS A UTHENTIC. I FIND THAT ASSESSEE HAS TO PRODUCE THE EVIDENCE BEFORE THE AO TO SHOW THAT THE ENTIRE PAYMENT WAS AUTHENTIC WHICH HE HAS NOT DONE. THE REFORE, IN THE INTEREST OF JUSTICE, I REMIT BACK THE ISSUE IN DISPUTE TO THE FILE OF THE AO FOR FRESH CONSIDERATION, AFTER GIVING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ITA NO.2039/DEL/2015 6 ASSESSEE. THE ASSESSEE IS DIRECTED TO PRODUCE ALL THE RELEVA NT DOCUMENTS / MATERIAL TO SUBSTANTIATE HIS CLAIM BEFORE THE AO. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STAN DS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/2016. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE:19/10/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES