The ACIT, Co. Circle-7(1), Ahmedabad V. Aqua Submersible Pvt. Ltd., Ahmedabad

ITA 2088/AHD/1996

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6039 (ITAT-AHMEDABAD)
• Duration Of Justice: 18 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2014
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 19-06-2014
• Assessment Year: 1992-1993
• Appeal Filed On: 15-05-1996
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: K C THAKER
• Keywords: Business income

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NOS.2088/AHD/1996 A.Y. 1992-93 ACIT, CO. CIRCLE 7(1), AHMEDABAD. VS AQUA SUBMERSIBLE PVT. LTD., 8, CAPITAL COMMERCIAL CENTRE, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : MISS SURABHI SHARMA, SR.D.R., ASSESSEE(S) BY : SHRI K.C. THAKER, A.R. / DATE OF HEARING : 19/06/2014 / DATE OF PRONOUNCEMENT: 27/06/2014 / O R D E R PER SHRI MUKUL KUMAR SHRAWAT, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LEARNED CIT(A)-V, AHMEDABAD, DATED 23.02.1996. THE GROUND RAISED BY THE REVENUE IS REPRODUCED BELOW: THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DE LETING AN ADDITION OF RS.2,87,549/- BEING COMMISSION PAYMENT. 2. EARLIER AN ORDER WAS PASSED BY ITAT A BENCH AH MEDABAD (ITA NO.2088/AHD/1996, A.Y. 1993), DATED 12.011.2001 WHI CH WAS AN EX- PARTE ORDER QUA THE ASSESSEE AND THE VERDICT AS PER PARAGRAPH 5 WAS AS UNDER: 5. AFTER CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE ASSESSEE HAS FAILED PROV E THE PRIMARY ONUS THAT THE COMMISSION AGENTS HAVE RENDERED SERVICES T O THE ASSESSEE. IN SUCH A SITUATION, WE ARE OF CONSIDERED VIEW THAT TH E SERVICES WERE NOT ACTUALLY RENDERED BY COMMISSION AGENTS AND PAYMENTS WERE NOT MADE ITA NO.2088/AHD/1996 ACIT CO. CIRCLE-7(1), AHMEDABAD VS. AQUA SUBMERSIBL E PVT. LTD. A.Y. 1992-1993. - 2 - OUT OF COMMERCIAL CONSIDERATION AND THE ASSESSEE HA S FAILED TO PROVE THIS ASPECT BY COGENT EVIDENCE OR MATERIAL AND THE COMMISSION PAID IS NOT DEDUCTED. THE ABOVE VIEW IS SUPPORTED BY THE JU DGEMENT OF THE HONBLE GUJARAT HIGH COURT IN THE CASE REPORTED IN 227 ITR 846. 2.1 SINCE, IT WAS AN EX-PARTE ORDER, THEREFORE, VID E AN ORDER BEARING M.A. NO.365/AHD/2006, THE SAME WAS RECALLED BY FOLL OWING RULE 24 OF TRIBUNAL RULES 1963 VIDE ORDER DATED 11.04.2014. SI NCE, THE MATTER WAS RECALLED, THEREFORE, THIS APPEAL IS NOW AGAIN FIXED FOR HEARING. 3. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDING ASSESSMENT ORDER PASSED U/S.143(3) DATED 7 TH DECEMBER, 1994 WERE THAT THE ASSESSEE COMPANY IS IN TRADING OF SUBMERSIBLE PUMPS. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD PAID A COMMISSION OF RS.2,87,549/- . THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE COMMISSION PA YMENT. IT WAS INFORMED THAT TWO COMMISSION AGENTS HAVE BEEN APPOI NTED AND THE COMMISSION WAS PAID TO THEM THROUGH ACCOUNT PAYEE C HEQUES OVER WHICH TDS WAS DEDUCTED. IN THE ABSENCE OF SATISFACTORY RE PLY, THE EXPENDITURE WAS DISALLOWED. 4. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, IT WAS CONTESTED THAT THE CONFIRMATION OF BOTH THE COMMISSION AGENTS WERE PRODUCED AND THAT THE COMMISSION IS ALSO PAID IN RESPECT OF SUPPLIES TO GOVERNMENT OR SEMI-GOVERNMENT DEPARTMENTS. SINCE , THE PAYMENTS WERE PAID THROUGH CROSS CHEQUES AND THE TDS WAS DED UCTED; THEREFORE, LD. CIT(A) HAS HELD THAT IT WAS WRONG ON THE PART O F THE AO TO DISALLOW THE CLAIM OF EXPENDITURE. RESULTANTLY, THE ADDITION WAS DELETED. ITA NO.2088/AHD/1996 ACIT CO. CIRCLE-7(1), AHMEDABAD VS. AQUA SUBMERSIBL E PVT. LTD. A.Y. 1992-1993. - 3 - 5. FROM THE SIDE OF THE REVENUE, LEARNED SR.D.R., M ISS SURABHI SHARMA APPEARED. HER MAIN CONTENTION IS THAT THE HO NBLE TRIBUNAL IN THE FIRST ROUND OF APPEAL HAD ALREADY GIVEN A FINDING O N FACTS THAT THE SERVICES WERE NOT ACTUALLY RENDERED BY THE COMMISSION AGENTS AND THE PAYMENTS WERE NOT MADE OUT OF COMMERCIAL CONSIDERATION. SHE HAS ALSO INFORMED THAT THE RESPECTED TRIBUNAL HAS FOLLOWED AN ORDER O F HONBLE GUAHATI HIGH COURT PRONOUNCED IN THE CASE OF ASSAM PESTICIDES & AGRO CHEMICALS, 227 ITR 846 . THE MATTER WAS RECALLED BECAUSE IT WAS AN EX- PARTY ORDER OF THE TRIBUNAL BUT THE REASON OUGHT TO BE THAT THE ASSESSEE WAS REQUIRED TO REBUT THE FINDING OF THE TRIBUNAL A ND FOR THAT THIS OPPORTUNITY OF HEARING WAS GRANTED. EVEN, NOW THE A SSESSEE IS NOT IN A POSITION TO REBUT THAT FINDING; HENCE, THAT ORDER O F THE TRIBUNAL SHOULD AGAIN BE FOLLOWED BY CONFIRMING THE DISALLOWANCE. 6. FROM THE SIDE OF THE RESPONDENT-ASSESSEE, LEARNE D AR, MR. K.C. THAKER APPEARED AND INFORMED THAT DUE TO THE FACT T HAT THE PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE AND THE TDS WAS D EDUCTED, THE ASSESSEE HAD PROVED THE IDENTITY AND THE GENUINENES S OF THE PAYMENT. EVEN, THE TAX DEDUCTED WAS DEPOSITED IN THE GOVERNM ENT ACCOUNT, THEREFORE, NO DISALLOWANCE IS WARRANTED. HE HAS ALS O PLACED A CHART BEFORE US TO DEMONSTRATE THAT ON THE TOTAL SALES ONLY A SM ALL PERCENTAGE OF COMMISSION WAS PAID; HENCE, THE SAID PAYMENT WAS NE ITHER EXORBITANT NOR EXCESSIVE. HE HAS PLEADED THAT THE EXPENDITURE BEIN G REASONABLE DESERVES TO BE ALLOWED. 7. HAVING HEARD THE SUBMISSION OF BOTH THE SIDES WE ARE OF THE OPINION THAT ONCE A VIEW HAS BEEN TAKEN BY THE RESP ECTED CO-ORDINATE ITA NO.2088/AHD/1996 ACIT CO. CIRCLE-7(1), AHMEDABAD VS. AQUA SUBMERSIBL E PVT. LTD. A.Y. 1992-1993. - 4 - BENCH AND A FINDING ON FACTS HAD ALREADY BEEN GIVEN , THEN IT IS NOT PROPER FOR US TO TAKE AN ANOTHER VIEW. ALTHOUGH THAT ORDER WAS RECALLED BUT WITH THE PURPOSE THAT BEING AN EX-PARTE ORDER, THE ASSES SEE WAS NOT AFFORDED OPPORTUNITY TO CHALLENGE THAT FINDING. DUE TO THE L ACK OF OPPORTUNITY, THE ORDER OF THE TRIBUNAL WAS RECALLED BUT WITH AN EXPE CTATION THAT THE ASSESSEE SHALL COME FORWARD WITH CERTAIN CONCURRENT EVIDENCES TO PROVE THE NATURE OF THE SERVICES RENDERED. THIS IS THE O NE ASPECT, BUT THE OTHER ASPECT CAN ALSO NOT BE IGNORED THAT THE PAYMENT OF COMMISSION WAS PAID THROUGH ACCOUNT PAYEE CHEQUE AND THE TDS WAS DEDUCT ED. CONSIDERING BOTH THE SITUATIONS, WE HAVE ASKED BOTH THE PARTIES TO SETTLE THIS ISSUE BEING VERY OLD PERTAINING TO THE YEAR 1992. LEARNED AR HAS EXPRESSED HIS INABILITY TO GET THOSE EVIDENCES AFTER THE LAPSE OF A DECADE. THEREFORE, AFTER HAVING CONSULTATION WITH THE PARTIES, WE DEEM IT PROPER TO MAKE AN ADHOC DISALLOWANCE OF RS.50,000/- TOWARDS COMMISSIO N PAYMENT TO GET THE ISSUE RESOLVED. LEARNED AR HAS AGREED, BY PUTTI NG IN WRITING, FOR THE CONFIRMATION OF THE SAID ADHOC DISALLOWANCE. THIS G ROUND OF THE REVENUE IS PARTLY ALLOWED. 8. IN THE RESULT, REVENUES APPEAL IS PARTLY ALLOWE D. SD/- SD/- (ANIL CHATURVEDI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 27/06/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD ITA NO.2088/AHD/1996 ACIT CO. CIRCLE-7(1), AHMEDABAD VS. AQUA SUBMERSIBL E PVT. LTD. A.Y. 1992-1993. - 5 - 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD