Shri Madanlal Saria, Kolkata V. A.C.I.T, Circle-38, Kolkata., Kolkata

ITA 2173/KOL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 1856 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 8 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2017
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Next Hearing Date: 06-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 26-07-2013
• Court: TRIBUNAL
• Department Lawyers: MD GHAYAS UDDIN
• Section: 143(3); 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH : KOLKATA [BEFORE HONBLE SRI N.V.VASUDEVAN, JM] I.T.A NO. 2173/KOL/20 13 ASSESSMENT YEAR : 2009-1 0 SHRI MADANLAL SARIA -VS.- ASST. C.I.T., CIRCLE-38, KOLKATA KOLKATA [PAN : AZFPS 9457 B] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SUNI L SURANA, FCA FOR THE RESPONDENT : MD. GHAYAS UDDIN, J CIT, SR.DR DATE OF HEARING : 07.04.2017. DATE OF PRONOUNCEMENT : 12.04.2017. ORDER PER N.V.VASUDEVAN, JM THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 14.05.2013 OF C.I.T.(A)-XXIV, KOLKATA RELATING TO A.Y.2009-10. 2. GROUND NO.1 RAISED BY THE ASSESSEE IS GENERA L AND CALLS FOR NO SPECIFIC ADJUDICATION. 3. GROUND NO.2 AND 3 RAISED BY THE ASSESSEE CA N BE CONVENIENTLY DECIDED TOGETHER AND THESE GROUNDS OF APPEAL READ AS FOLLOWS :- 2. FOR THAT THE LD. C.I.T(A) ERRED IN CONFIRMING T HE ADDITION OF RS. 2,58,632/- BEING COMMISSION PAID TO SABITA INDUSTRIAL AGENCY I GNORING THE FACT THAT THE SAME WAS DULY CONFIRMED BY THE COMMISSION AGENT IN RESPO NSE TO NOTICE U/S. 133(6) WHEREIN THE SERVICES RENDERED WERE ALSO CONFIRMED. 3. FOR THAT THE LD. C.I.T(A) ERRED IN CONFIRMING TH E ADDITION OF RS. 850/- AND RS. 19,543/- BEING COMMISSION PAID TO SHREE SHYAM MARKE TING SERVICE AND JASWANT MOURYA RESPECTIVELY IGNORING THE FACT THAT THE SAME WAS DULY CONFIRMED BY THE COMMISSION AGENT AND THE SERVICES RENDERED WERE ALS O CONFIRMED. 2 ITA NO.2173/KOL/2013 SRI MADANLAL SARIA A.YR.2009-10 2 4. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE TRADING AND MANUFACTURING OF ENGINEERING GOODS. IT WAS THE PLEA OF THE ASSESEE T HAT THERE WAS A FIRE IN THE ASSESSEES BUSINESS PREMISES IN FEBRUARY, 2011 I.E. ON 03.02.2 011 AT NO.13, INDIA EXCHANGE PLACE, KOLKATA-700001 WHERE THE ASSESSEE HAD A TABLE SPAC E IN THE SECOND FLOOR WHERE ALL THE PAPERS AND DOCUMENTS AND RECORDS RELATING TO THE BU SINESS AFFAIRS OF THE ASSESSEE WERE KEPT. ALL THOSE PAPERS, DOCUMENTS AND RECORDS GOT D ESTROYED IN THE FIRE. THIS FACT IS NOT DISPUTED BY THE REVENUE. 5. THE ASSESSEE WHILE COMPUTING ITS INCOME FROM BUSINESS HAD CLAIMED EXPENSES ON ACCOUNT OF COMMISSION PAYMENT OF RS.10,06,312/-. OU T OF THE ABOVE COMMISSION PAID TO SAVITA INDUSTRIAL AGENCIES BANDAUR WEST AMOUNTIN G TO RS.2,58,632/-, SHRI SHYAM MARKETING SERVICE, JAIPUR AMOUNTING TO RS.850/- AND YASWANT MOURYA AMOUNTING TO RS.19,543/- WAS DISALLOWED BY AO AND CONFIRMED BY CIT(A) AND THIS ADDITION IS THE SUBJECT MATTER OF GROUND NOS. 2 AND 3 BEFORE THE TR IBUNAL. 6. THE AO DISALLOWED THE AFORESAID COMMISSION FO R THE REASON THAT (I) COMPLETE ADDRESS OF THE PARTIES WAS NOT SUBMITTED (II) FROM THE DETAILS OF SALES DEBTORS AND CREDITORS, THE AO FOUND NO PARTY WAS STATIONED AT T HE PLACE WHERE FROM THE RECIPIENTS OF THE COMMISSION OPERATED AND THEREFORE IT COULD NOT BE ASCERTAINED AS TO WHAT SERVICES WERE RENDERED BY THE RECIPIENTS OF THE COMMISSION. (III) NO DETAILS OF TDS WHETHER DEDUCTED AND DEPOSITED WERE FURNISHED BY THE ASSESS EE (IV) THERE WAS NO COMPLIANCE AT THE TIME OF HEARING BEFORE THE AO AND THEREFORE THE GENUINENESS OF THE TRANSACTIONS COULD NOT BE VERIFIED. 7. BEFORE CIT(A) THE ASSESSEE FILED GENERAL LEDG ER OF SAVITA INDUSTRIAL AGENCIES AS PER THE BOOKS OF THE ASSESSEE WHICH IS PLACED AT PAGES 4 AND 5 OF THE ASSESSEES PAPER BOOK. THE ASSESSEE ALSO FILED LETTER OF SAVITA INDUSTRIAL AGENCIES ADDRESSED TO THE ASSESSEE WHEREIN THEY HAVE GIVEN THE DETAILS OF ORDER NUMBER , ITEM THAT WERE SUPPLIED UTILIZING 3 ITA NO.2173/KOL/2013 SRI MADANLAL SARIA A.YR.2009-10 3 THE SERVICE OF SAVITA INDUSTRIAL AGENCIES AND THE P ERSON TO WHOM IT WAS SUPPLIED, QUANTITY, VALUE OF THE ORDER AND THE COMMISSION PAY ABLE TO THEM AND THE DETAILS OF TDS. THESE DOCUMENTS ARE PLACED AT PAGES 6 TO 20 OF THE ASSESSEES PAPER BOOK. 8. SIMILARLY IN RESPECT OF SHRI SHYAM MARKETING SERVICE THE GENERAL LEDGER ACCOUNT AND THE PARTICULARS OF TRANSACTION FOR WHICH COMMIS SION WAS DUE AND PAYABLE WAS GIVEN BY THE ASSESSEE AND THE SAME IS PLACED AT PAGES 21 AND 22 OF THE ASSESSEES PAPER BOOK. IN RESPECT OF YASHWANT MOURYA THE GENERAL LEDGER AN D CORRESPONDENCE GIVING COMPLETE DETAILS OF THE TRANSACTION FOR WHICH COMMISSION WAS PAYABLE WAS ALSO GIVEN AND THE SAME IS PLACED AT PAGES 23 TO 25 OF THE ASSESSEES PAPER BOOK. 9. SINCE THESE DETAILS WERE FILED BEFORE CIT(A), THE CIT(A) CALLED FOR A REMAND REPORT FROM THE AO. IN HIS REMAND REPORT DATED 23.11.2012, THE AO AFTER EXAMINING ALL THE DETAILS SUBMITTED THAT THERE WAS NO RESPONSE FROM S AVITA INDUSTRIAL AGENCIES TO THE NOTICE ISSUED BY HIM U/S.133(6) OF THE ACT IN THE R EMAND PROCEEDINGS. 10. THE ASSESSEE SUBMITTED BEFORE CIT(A) THAT AL L THE DOCUMENTS TO SATISFY THAT THE GROUNDS ON WHICH THE COMMISSION WAS DISALLOWED BY T HE AO WERE PRODUCED BEFORE THE AND THERE IS NO REASON THAT THE DISALLOWANCE SHOULD BE SUSTAINED. THE ASSESSEE ALSO POINTED OUT THAT THE RENDERING OF SERVICES BY THE P ARTIES HAS BEEN PROVED AND SIMILARLY COMMISSION PAID TO THE VERY SAME PARTIES IN THE PAS T WAS ALLOWED AS DEDUCTION IN THE ASSESSMENT COMPLETED U/S 143(3) OF THE ACT. COPY OF THE ASSESSMENT ORDER FOR A.Y.2008-09 IN WHICH THE ASSESSEE HAD CLAIMED COMMI SSION PAYMENT TO THE VERY SAME PARTIES WAS ALLOWED BY AO BY ORDER DATED 31.12.2010 . THE SAME IS AT PAGES 33 AND 34 OF THE ASSESSEES PAPER BOOK. THE DETAILS OF THE CO MMISSION PAID TO THE VERY SAME PARTIES IN A.Y.2008-09 IS AVAILABLE AT PAGE 31 OF T HE ASSESSEES PAPER BOOK. 4 ITA NO.2173/KOL/2013 SRI MADANLAL SARIA A.YR.2009-10 4 11. THE CIT(A) WAS OF THE VIEW THAT SINCE SAVITA I NDUSTRIAL AGENCIES, SHRI SHYAM MARKETING SERVICE AND YASHWANT MOURYA HAD NOT RESPO NDED TO THE NOTICE ISSUED BY THE AO U/S 133(6) OF THE ACT, THE SERVICES RENDERED BY THEM COULD NOT BE VERIFIED AND THEREFORE HE SUSTAINED THE DISALLOWANCE MADE BY AO. 12. AGGRIEVED BY THE ORDER OF CIT(A) THE ASSESSEE HAS RAISED GROUND NOS. 2 AND 3 BEFORE THE TRIBUNAL. 13. I HAVE HEARD THE SUBMISSIONS OF THE LD. COUN SEL FOR THE ASSESSEE AND THE LD. DR. THE LD. COUNSEL FOR THE ASSESSEE TOOK US THROUGH TH E EVIDENCE FILED BY THE ASSESSEE TO SUBSTANTIATE HIS CLAIM FOR DEDUCTION ON ACCOUNT OF COMMISSION. IT WAS HIGHLIGHTED BY HIM THAT IF THE AO WANTED TO ASCERTAIN CERTAIN OTHE R DETAILS FROM THE AFORESAID THREE PARTIES NOTHING PREVENTED HIM FROM ENFORCING THEIR ATTENDANCE BY ISSUING SUMMONS U/S 131 OF THE ACT. HAVING FAILED TO DO SO, THE AO COUL D NOT BE HEARD TO SAY THAT SERVICES RENDERED BY THE RECIPIENTS OF THE COMMISSION COULD NOT BE VERIFIED. THE LD. DR RELIED ON THE DECISION OF ITAT, KOLKATA C BENCH IN THE CAS E OF UNITED TRADERS CO. VS TRO (2012) 27 TAXMANN.COM 293 (KOL.) WHEREIN IT WAS HEL D THAT THE EVIDENCE OF SERVICES HAVING BEEN RENDERED SHOULD BE AVAILABLE TO ALLOW C OMMISSION PAYMENT AS AN EXPENDITURE. ACCORDING TO HIM THE ASSESSEE FAILED T O PROVE THE NATURE OF SERVICES IN THE PRESENT CASE. HENCE THE DISALLOWANCE SHOULD BE SUST AINED. 14. AFTER CAREFUL CONSIDERATION OF THE RIVAL SUB MISSIONS AND THE MATERIAL ON RECORD, I AM OF THE VIEW THAT THE DISALLOWANCE OF COMMISSION CANNOT BE SUSTAINED. AS ALREADY SEEN, THE PAYMENT OF COMMISSION AND THE TRANSACTION S FOR WHICH SAVITA INDUSTRIAL AGENCIES ACTED AS AN INTERMEDIARY HAVE BEEN GIVEN F ROM PAGES 6 TO 20 OF THE ASSESSEES PAPER BOOK. THIS CONTAINS THE ENTIRE DETAILS OF THE TRANSACTIONS FOR WHICH THE RECIPIENT RECEIVED COMMISSION AND THE CONTRACT FOR WHICH HE H AS ACTED AS AN INTERMEDIARY, THE VALUE OF THE CONTRACT, PERCENTAGE OF THE COMMISSION , DETAILS OF TDS ETC. IN THE LIGHT OF 5 ITA NO.2173/KOL/2013 SRI MADANLAL SARIA A.YR.2009-10 5 THIS AVAILABILITY OF DOCUMENTARY EVIDENCE WHICH CON TAINS ALL DETAILS, IT IS FUTILE TO CONTEND THAT THE ASSESSEE HAS FAILED TO PROVE THE N ATURE OF SERVICES RENDERED. AS RIGHTLY CONTENDED BY THE LD. COUNSEL FOR THE ASSESSEE, IF THE AO WAS SERIOUS IN VERIFYING THE NATURE OF SERVICES RENDERED BY THE RECIPIENTS NOTHI NG PREVENTED HIM FROM ISSUING SUMMONS U/S 131 OF THE ACT TO ENFORCE THE ATTENDANC E OF SAVITA INDUSTRIAL AGENCIES. THE POSITION OF THE OTHER PARTIES SHRI SHYAM MARKET ING SERVICE AND YASHWANT MOURYA ARE ALSO IDENTICAL. I ALSO FIND THAT EXPENDITURE O N ACCOUNT OF COMMISSION TO THE AFORESAID THREE PARTIES HAS BEEN CLAIMED IN A.Y.200 8-09 AND ALLOWED BY THE AO. THIS FACT ALSO GOES TO SHOW THAT THE CLAIM OF THE ASSESS EE IS GENUINE AND CALLS FOR NO DISALLOWANCE. FOR THE REASONS GIVEN ABOVE I DIRECT THAT COMMISSION PAID TO SAVITA INDUSTRIAL AGENCIES, SHRI SHYAM MARKETING SERVICE AND YASHWANT MOURYA BE ALLOWED AS DEDUCTION. GROUND NOS. 2 AND 3 RAISED BY THE ASS ESSEE ARE ALLOWED. 15. GROUND NO.4 RAISED BY THE ASSESSEE READS AS F OLLOWS :- 4. FOR THAT THE LD. C.I.T(A) ERRED IN CONFIRMING T HE ADDITION OF RS. 14,629/- FROM TELEPHONE EXPENSES, RS. 55,856/- FROM CONVEYANCE EX PENSES AND RS. 37,720/- FROM TRAVELLING EXPENSES FULLY INCURRED FOR BUSINESS PUR POSES. 16. AS CAN BE SEEN FROM GROUNDS OF APPEAL, THE D ISALLOWANCE OF TELEPHONE EXPENSES, CONVEYANCE EXPENSES AND TRAVELLING EXPENSES AT 20% OF THE EXPENSES CLAIMED BY THE ASSESSEE WAS MADE BY THE AO ON AN ADHOC BASIC FOR T HE REASON THAT PERSONAL USE OF THESE FACILITIES BY THE ASSESSEE CANNOT BE RULED OU T. THE CIT(A) RESTRICTED THE DISALLOWANCE TO 10%. AS WE HAVE ALREADY SEEN THE AS SESSEE WAS HANDICAPPED BY THE FACT THAT SEVERAL OF DOCUMENTS TO SUPPORT HIS CLAIM WERE DESTROYED IN A FIRE AT HIS BUSINESS PREMISES. IN MY VIEW SUCH DISALLOWANCE ON AN ADHOC BASIS WITHOUT ANY SATISFACTORY MATERIAL CANNOT BE SUSTAINED. I, THERE FORE DIRECT THAT THE AFORESAID DISALLOWANCES SHOULD ALSO BE DELETED. GROUND NO.4 R AISED BY THE ASSESSEE IS ALLOWED. 6 ITA NO.2173/KOL/2013 SRI MADANLAL SARIA A.YR.2009-10 6 17. IN THE RESULT THE APPEAL BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12.04.2017. SD/- [ N.V.VASUDEVAN ] JUDICIAL MEMBER DATED : 12.04.2017. [RG PS] COPY OF THE ORDER FORWARDED TO: 1. SRI MADANLAL SARIA, MANIKARAN APARTMENT, 3B, RAM MOHAN MULLICK GARDEN LANE, TOWER EASTERN B , FLAT NO.8EF, KOLKATA-700010. 2. ASSTT. C.I.T., CIRCLE-38, KOLKATA. 3. CIT(A)-XXIV, KOLKATA. 4. C.I.T.-XIII, KO LKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSTT.REGISTRAR, ITAT, KOLKATA BENCHES