Subodh Kumar Chhajer, Kolkata V. ITO, Ward - 36(2), Kolkata, Kolkata

ITA 21/KOL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9337 (ITAT-KOLKATA)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-02-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2005-2006
• Appeal Filed On: 06-01-2011
• Court: TRIBUNAL
• Keywords: Business expenditure

Judgement Text

I.T.A NO. 21/KOL/2011-BKH 1 , , , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA () . . , , ! . '. # '$ , ,, , ) [BEFORE HONBLE SRI B.R.MITTAL, JM & HONBLE SRI B. K. HALDAR, AM] !% / I.T.A NO. 21/KOL/2011 &' () / ASSESSMENT YEAR : 2005-06 SUBODH KUMAR CHHAJER VS. INCOME-TAX OFFICER PAN: ABYPC 3571F WARD 36 (2), KOLKATA (+, /APPELLANT ) (-.+,/ RESPONDENT ) +, / FOR THE APPELLANT : / / SHRI VIKASH SURANA, LD.AR -.+, / FOR THE RESPONDENT : / / SHRI S.S KUMAR, LD.DR '0 / ORDER .'.#, , , , '$ , ,, , SHRI B.K.HALDAR, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS), XX, KOLKATA D ATED 30 TH NOVEMBER 2010 FOR THE ASSESSMENT YEAR 2005-06. 2. THE APPELLANT HAS TAKEN FOLLOWING GROUNDS OF APP EAL:- 1. FOR THAT THE LD. CIT (A) ERRED IN CONFIRMING THE DISALLOWANCE OF COMMISSION PAID RS.2,28,520/- ON THE GROUND THAT M/ S.HINDUSTAN LEVER LTD. IN THEIR LETTER STATED THAT AS PER THEIR COMPANYS POLICY NO MIDDLEMAN ARE ENTERTAINED, WHEN THE BROKERS RENDERE D SERVICES ON BEHALF OF THE APPELLANT AND THE PAYMENT OF COMMISSI ON WAS OUT OF BUSINESS EXPEDIENCY. 2. FOR THAT THE APPELLANT CRAVES LEAVE TO ADD, ALT ER ANY FURTHER GROUND OF APPEAL BEFORE THE HEARING. 3. DURING THE ASSESSMENT PROCEEDINGS IT WAS NOTICED BY THE AO THAT THE PROPRIETARY CONCERN M/S. MARVELLOUS INDIA CLAIMED COMMISSION EX PENSES OF RS.7,36,856/- IN THE P & L ACCOUNT, WHICH INCLUDED COMMISSION OF RS.1,29,061 /- AND RS.99,459/- PAID TO S/SRI LAXMIPAT DASANI AND BIJAY JAISWAL RESPECTIVELY ON A CCOUNT OF SALES MADE BY THE ASSESSEE TO M/S.HINDUSTAN LEVER LTD. . THE AO ISSUED NOTICE U/S.133(6) TO M/S.HINDUSTAN LEVER LTD. TO ASCERTAIN AS TO WHETHER ANY COMMISSION AGENT W AS INVOLVED FOR TRANSACTION BETWEEN THE COMPANY AND THE ASSESSEE. M/S. HINDUSTAN LEVER LTD. REPLIED AS UNDER:- I.T.A NO. 21/KOL/2011-BKH 2 IN REPLY TO YOUR QUERY/INFORMATION REGARDING INVOL VEMENT OF ANY THIRD PARTY/MIDDLEMAN IN DEALING WITH M/S. MARV ELLOUS INDIA AS PER THEIR POLICY THEY DO NOT ENTERTAIN A NY MIDDLEMAN. 3.1 THE AO CONFRONTED THE ASSESSEE WITH THE REPLY OF M/S.HINDUSTAN LEVER LTD. AND ASKED THE ASSESSEE TO SHOW CAUSE AS TO WHY THE COM MISSION PAYMENT OF RS.2,28,520/- SHOULD NOT BE DISALLOWED, SPECIALLY AS THE ASSESSEE HAS FAILED TO PRODUCE THE PARTIES BEFORE HIM, EVEN THOUGH TWO OPPORTUNITIES WERE ALLOWED AS PER ORDER SHEETS ENTRY DATED 10 & 17/12/2007. THE REPLY OF THE ASSESSEE WAS AS UNDER: - DURING THE FINANCIAL YEAR THE ASSESSEE HAD SOLD GO ODS TO HINDUSTAN LEVER LID. THE ASSESSEE UTILIZED THE SERV ICES OF BIJAY JAZSWAL AND LAXMLPAR DASANT FOR THESE TRANSACTIONS. THEY REPRESENTED THE ASSESSEE FOR PROCURING ORDERS, DELI VERY OF GOODS AND COLLECTION OF PAYMENTS/CHEQUES. FOR SUCH SERVICES THE ASSESSEE HAD PAID THEM COMMISSION. HINDUSTAN LE VER LIMITED HAD NOT PAID ANY COMMISSION TO THEM OR ANY OTHER PARTY FOR DEALING WITH THE ASSESSEE. THEY DO NOT KE EP ANY RECORD OF THE, PEOPLE WHO REPRESENT THEIR SUPPLIERS AS SUCH THEY ARE NOT IN A POSITION TO GIVE SUCH DETAILS. THE ASS ESSEE HAD MADE PAYMENT OF COMMISSION TO BOTH BIJAY JAISWAL AN D LAXMIPAT DASANI BY ACCOUNT PAYEE CHEQUES ONLY AND T AX HAD BEEN DEDUCTED AT SOURCE AS PER LAW AND DEPOSITED WI TH THE GOVERNMENT IN TIME. XEROX COPY OF THE TDS RETURN FILED FOR ASSESSMENT Y EAR 2005-06 DULY INCORPORATING THE DETAILS OF SUCH PAYMENT IS E NCLOSED HEREWITH FOR YOUR KIND VERIFICATION. REGARDING THEIR PERSONAL DEPOSITION PLEASE NOTE THA T MR LAXMLPAT DASANI HAD DIED SINCE THEN (XEROX COPY OF HIS DEATH CERTIFICATE IS ENCLOSED HEREWITH). BIJAY JAISWAL IS WILLING TO APPEAR BEFORE YOU FOR NECESSARY DEPOSITION BUT AT PRESENT HE IS OUT OF STATION AND WILL BE BACK AFTER 15 DAYS. THE ASSESSEE IS A SOLE PROPRIETOR AND CAN NOT MANAG E ALL HIS OPERATIONS PERSONALLY. THE MARKET IS VERY COMPETITI VE AND HE HAS TO TAKE THE SERVICES OF MIDDLE-MAN FOR SMOOTH RUNNING OF HIS BUSINESS TO THE UTMOST SATISFACTION OF HIS CUSTOMERS. HE HAD HI RED THE SERVICES OF THESE TWO PEOPLE FOR REPRESENTING HIM ON DIFFERENT OCCASIONS FOR SMOOTH COMPLETION OF HIS DEALING WITH HINDUSTAN LEV ER LTD. THE GENUINENESS OF THE COMMISSION PAYMENT IS THUS C LEARLY PROVED. I.T.A NO. 21/KOL/2011-BKH 3 3.2 THE AO, TAKING NOTE OF THE FACT THAT M/S.HINDUSTAN LEVER LTD. HAS CATEGORICALLY DENIED THE INVOLVEMENT OF ANY COMMISSION AGENT AND THE INA BILITY OF THE ASSESSEE TO PRODUCE THE SAID COMMISSION AGENTS, HELD THAT THE A SSESSEE HAS FAILED TO SHOW THAT ANY SERVICES WERE RENDERED BY THE COMMISSION AGENTS FOR WHICH THE IMPUGNED PAYMENTS WERE MADE TO THEM. HE, THEREFORE, DISALLOWED THE AMOUNT OF RS.2,28,520/-. 4. BEFORE THE LD.CIT(A), THE CASE OF THE ASSESSEE R EMAINED THE SAME. THE LD.CIT(A) HELD THAT THE ASSESSEE DID NOT BRING ON RECORD ANY MATERIAL TO SHOW THAT SERVICES WERE ACTUALLY RENDERED BY THE COMMISSION AGENTS TO JUSTI FY THE CLAIM OF THE COMMISSION PAYMENT. AS IT WAS FOUND THAT NO SERVICES WERE REND ERED BY THE COMMISSION AGENTS, THE PAYMENT OF COMMISSION WAS NOT ALLOWABLE AS BUSINESS EXPENDITURE. HE, THEREFORE, CONFIRMED THE IMPUGNED ADDITION. 5. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE T RIBUNAL. 6. BEFORE US THE LD.AR FOR THE ASSESSEE IN ADDITIO N TO RELYING ON THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW HAS CONTENDED THA T GROSS TURNOVER OF THE ASSESSEE DURING THE PREVIOUS YEAR INCREASED TO RS.2,16,51,00 0(APPROX) FROM RS.1,27,65,000(APPROX). FOR INCREASING THE TURNOVER THE ASSESSEE, BEING PROPRIETOR, HAD TO SPEND MORE TOWARDS COMMISSION PAYMENT. IT WAS FURTH ER SUBMITTED BY HIM THAT THE COMMISSION AGENTS HAVE ALSO FURNISHED THEIR RETURNS OF INCOME, WHICH HAVE BEEN ACCEPTED BY THE REVENUE. THUS, IF THE SAME AMOUNTS ARE ASSESSED IN ASSESSEES HAND, IT WOULD LEAD TO DOUBLE TAXATION. IT WAS, THEREFORE, CONTENDED THAT THE IMPUGNED ADDITION BE DELETED. 7. THE LD.DR ON THE OTHER HAND, RELIED ON THE ORDER S OF THE AUTHORITIES BELOW. IT WAS EMPHASIZED BY HIM THAT THERE IS POSITIVE EVIDENCE B ROUGHT ON RECORD BY THE AO THAT NO SERVICES WERE RENDERED BY THE SAID COMMISSION AGENT S. REFERRING TO APB PAGE-1, IT WAS SUBMITTED BY HIM THAT THE SO-CALLED COMMISSION AGEN TS WERE SUPPOSED TO HAVE RENDERED THE FOLLOWING SERVICES:- A. PROCURING ORDERS, B. ENSURING DELIVERY OF GOODS, AND C. ENSURING COLLECTION OF PAYMENTS /CHEQUES. I.T.A NO. 21/KOL/2011-BKH 4 HOWEVER, M/S. M/S.HINDUSTAN LEVER LTD. HAS CATEGORICALLY STATED THAT NO MIDDLEMAN WAS INVOLVED FOR PROCURING ORDERS. REFERRING TO P & L ACCOUNTS, SO-CALLED COMMISSION AGENTS AVAILABLE AT PAGES-8 & 11 OF THE APB, IT WA S POINTED OUT BY HIM THAT EXPENSES INCURRED BY THESE PARTIES WERE VERY MEAGER AND THE Y HAD RECEIVED BROKERAGE INCOME ONLY FROM ASSESSEE AND NOBODY ELSE. THUS, IT WAS ARGUED BY HIM THAT THERE IS NO EVIDENCE THAT THEY HAVE ENSURED DELIVERY OF GOODS AND HAVE WORKED TOWARDS COLLECTION OF CHEQUES/PAYMENT FROM M/S. .HINDUSTAN LEVER LTD ON BEHALF OF THE ASSESSEE . THIS WOULD SHOW THAT, IN FACT, NO SERVICES AS CLAIMED BY THE A SSESSEE WERE RENDERED BY THESE TWO PARTIES. AS THE ASSESSEE HAS FAILED TO BRING ON RE CORD ANY EVIDENCE THAT SUCH PARTIES INDEED RENDERED ANY SERVICES TO THE ASSESSEE FOR PR OCURING THE ORDERS ETC FROM M/S.HINDUSTAN LEVER LTD, IT WAS CONTENDED BY HIM THAT THE IMPUGNED ORDER OF THE LD.CIT(A) ON THIS ISSUE BE CONFIRMED. 8. WE HAVE HEARD THE PARTIES AND PERUSED THE RECOR D. WE FIND THAT THE REVENUE HAS BROUGHT ON RECORD POSITIVE EVIDENCE TO SHOW THAT TH E SAID COMMISSION AGENTS DID NOT RENDER ANY SERVICES FOR PROCURING ORDERS FROM M/S.HINDUSTAN LEVER LTD ON BEHALF OF THE ASSESSEE. NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE APPELLANT TO CONTROVERT SUCH EVIDENCE ON RECORD. IN THIS VIEW OF THE MATTER, WE HAVE NO HESITATION IN UPHOLDING THE IMPUGNED ORDER OF THE LD.CIT(A) ON THIS ISSUE. THUS , GROUND TAKEN BY THE ASSESSEE IS REJECTED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. # '0 $1' 2 1& 3 #4 5$ -02-2011 ORDER PRONOUNCED IN THE OPEN COURT ON 11-02-2011 SD/- SD/- [ . . , ] [ . ' . # , '$ ] (B.R.MITTAL ) (B. K. HALDAR) JUDICIAL MEMBER ACCOUNTANT MEMBER (5$) DATED :11-02-2011 I.T.A NO. 21/KOL/2011-BKH 5 *PP 67 &89 : /SR.P.S. '0 ; -< ='<(>- COPY OF THE ORDER FORWARDED TO: 1. +, /APPELLANT- SHRI SUBODH KUMAR CHHAJER C/O MARVELL OUS INDIA 54/1 CANNING ST., 4 TH FL., KOL-1. 2 -.+, / RESPONDENT : I.T.O W 36(2), 18 RABINDRA SARANI, PODDAR COURT, 3 RD FL., KOL-1. 3. 0&/ THE CIT, 4. 0& ()/ THE CIT(A), KOLKATA. 5. E3 -&/ DR, KOLKATA BENCHES, KOLKATA .< -/ TRUE COPY , '0&1/ BY ORDER , F !9 / DEPUTY REGISTRAR