ITO, Ward - 3(4), Kolkata, Kolkata V. M/s. I.M.I Abrasives Pvt. Ltd., Kolkata

ITA 2201/KOL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62128 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2012
• Appeal Filed By: Department
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 13-12-2010
• Court: TRIBUNAL
• Department Lawyers: B K DAS
• Assessee Lawyers: S K TULSIYAN
• Section: 133(6)

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH A , KOLKATA [ () . .. . . .. . , ,, , , ! ''# $% ''# $% ''# $% ''# $% ] ]] ] [BEFORE HONBLE SRI C.D.RAO, AM & HONBLE SRI GE ORGE MATHAN, JM] !' !' !' !' /ITA NO.2201/KOL/2010 (%) *+/ ASSESSMENT YEAR : 2006-07 ($- / APPELLANT ) - % - ( /0$- /RESPONDENT) I.T.O., WARD-3(4), . M/S.I.M.I..ABRASIVES PVT .LTD. KOLKATA -VERSUS- KOLKATA (PAN: AAACI 5600 F) $- 1 2 / FOR THE APPELLANT: SHRI B.K.DAS /0$- 1 2 / FOR THE RESPONDENT: SHRI S.K.TULSIYAN 3%4 1 /DATE OF HEARING : 04.07.2012. 5* 1 /DATE OF PRONOUNCEMENT : 04.07.2012. 6 / ORDER ( (( ( . .. . . .. . ) )) ), , , , PER SHRI C.D.RAO, AM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST ORDE R OF THE LD.CIT(A)-I KOLKATA IN APPEAL NO.295/CIT(A)-I/WD-3(4)/08-09 DATED 02.09 .2010, FOR A.YR. 2006-07. 2. SHRI B.K.DAS, LD. DR APPEARED ON BEHALF OF THE R EVENUE AND SHRI S.K.TULSIYAN, LD. AR APPEARED ON BEHALF OF ASSESSEE. 3. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLO WING GROUND :- 1. LD. CIT(A) HAS ERRED ON THE FACTS AND CIRCUMSTA NCES OF THE CASE IN DELETING THE ADDITION OF RS.38,89,213/- MADE BY THE ASSESSING OF FICER UNDER THE HEAD BOGUS COMMISSION. 2. LD. CIT(A) HAS ERRED ON THE FACTS & CIRCUMSTANCE S OF THE CASE, IN ACCEPTING THE ASSESSEES EXPLANATION THAT THE AGENTS WERE REQUIRE D TO ACT ON ITS BEHALF WITHOUT DISCLOSING THEIR IDENTITIES WITHOUT APPRECIATING TH E FINDINGS OF THE A.O THAT EXISTENCE OF THESE AGENTS AS MIDDLEMAN WAS NOT PROVED FROM VERIF ICATION. 3. LD. CIT(A) HAS ERRED ON THE FACTS & CIRCUMSTANCE S OF THE CASE IN ACCEPTING THE ASSESSEES CONTENTION THAT SERVICE RENDERED BY THE AGENTS IS PROVED FROM THEIR AFFIDAVITS WITHOUT APPRECIATING THE FACTS THAT AT THE TIME OF HEARING ASSESSEE FAILED TO PROVE THE URGENCY & GENUINENESS OF SERVICE RENDERED BY THESE AGENTS. 2 4. ON THE FACTS & CIRCUMSTANCES OF THE CASE THE ORD ER OF LD CIT (A) IS PERVERSE HENCE SAME MAY BE SET ASIDE AND ORDER OF A.O BE RESTORED. 5. THE APPELLANT CRAVES LEAVE TO AMEND, MODIFY AND ALTER ANY GROUNDS OF APPEAL DURING COURSE OF HEARING OF THE CASE. 4. IT WAS THE SUBMISSION BY THE LD. DR THAT THE ON LY ISSUE IN THE APPEAL WAS AGAINST THE ACTION OF LD. CIT(A) IN DELETING THE DI SALLOWANCE MADE BY THE AO REPRESENTING BOGUS COMMISSION CLAIMED TO HAVE BEEN PAID BY THE ASSESSEE. IT WAS THE SUBMISSION THAT NOTICE U/S 133(6) OF THE IT ACT HA D BEEN ISSUED TO THE VARIOUS SUPPLIERS AND THE PURCHASERS AS IDENTIFIED BY THE A SSESSEE. IT WAS THE SUBMISSION THAT ALL THE PERSONS TO WHOM THE NOTICE U/S 133(6) OF TH E IT ACT WHO WERE THE BUYERS OF THE ASSESSEES PRODUCTS HAD CATEGORICALLY ADMITTED THAT THE TRANSACTIONS WERE DIRECTLY BETWEEN THE ASSESSEE AND THE SAID PURCHASERS AND WH EN THERE WAS NO AGENCY INVOLVED. IT WAS THE SUBMISSION THAT AS THE PURCHASERS HAD CA TEGORICALLY ADMITTED THAT THERE MAY BE NO AGENTS INVOLVED IN THE TRANSACTIONS WITH THE ASSESSEE. THE AO HAD HELD THAT THE COMMISSION PAYMENT TO THE AGENTS WERE LIABLE TO BE DISALLOWED. CONSEQUENTLY THE AO HAD TREATED THE TRANSACTIONS OF THE COMMISSION PAYM ENTS TO THE AGENTS AS BOGUS. IT WAS THE SUBMISSION THAT ON APPEAL THE LD. CIT(A) HAD AC CEPTED THE CONTENTION OF THE ASSESSEE THAT THE AGENTS WERE ON BEHALF OF THE ASSE SEE AS THE EMPLOYEES OF THE ASSESSEE AND REPRESENTING BEFORE THE PURCHASERS OF THE ASSES SEES PRODUCTS AS THE EMPLOYEES OF THE ASSESSEE. IT WAS THE SUBMISSION THAT THERE IS A REASON WHY THE PURCHASERS HAD ADMITTED THAT THEY WERE DEALING DIRECTLY WITH THE A SSESSEE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) FURTHER HELD THAT SIMILAR COMMISSION PAYMENTS TO THE IDENTICAL PARTIES IN THE SUBSEQUENT YEARS HAD ALSO BEEN ACCEPTED BY T HE REVENUE. IT WAS THE SUBMISSION THAT THE LD. CIT(A) HAD ACCEPTED THE CONTENTION OF THE ASSESSEE AND HAD DELETED THE SAME. THE LD. DR VEHEMENTLY SUPPORTED THE ORDERS OF THE AO. 5. IN REPLY THE LD. AR DREW OUR ATTENTION TO THE CO PIES OF THE APPOINTMENT LETTERS OF THE AGENTS WHICH WERE FOUND AT PAGES 258 TO 271 OF THE PAPER BOOK. IT WAS THE SUBMISSION THAT THE SELLING AGENTS WERE DELCREDER A GENTS AND SPECIFICALLY POINTED OUT THAT THE COMMISSION PAYMENTS AND THE PROOF OF THE C OMMISSION PAYMENTS WERE ALSO SPECIFICALLY POINTED OUT IN THE AGREEMENTS. IT WAS THE SUBMISSION THAT ALL EXPENSES 3 RELATING TO THE AGENCY WERE BORNE BY THE AGENTS. TH E LD. AR FURTHER DREW OUR ATTENTION TO THE COPIES OF THE PURCHASE ORDERS WHICH WERE FOU ND AT PAGES 52 TO 62 OF THE PAPER BOOK AND PAGES 120 TO 124 OF THE PAPER BOOK AS ALSO THE COPIES OF THE COMMISSION BILLS RAISED BY THE SALES AGENTS. IT WAS THE SUBMIS SION THAT THE ASSESSEE HAD SEVEN BRANCHES ALL OVER INDIA AND ALL THE BRANCHES WERE R UN BY THE AGENTS WHO HAD ACTED AS THE EMPLOYEES OF THE ASSESSEE. IT WAS THE SUBMISSIO N THAT THE AGENTS HAD ALSO DISCLOSED THE COMMISSION RECEIVED BY THEM FROM THE ASSESSEE I N THEIR RETURNS AND THAT HAS BEEN ACCEPTED BY THE REVENUE. IT WAS THE SUBMISSION THAT THE ORDER OF THE LD. CIT(A) WAS LIABLE TO BE UPHELD. 6. WE HAVE HEARD THE SUBMISSIONS. A PERUSAL OF THE LD. CIT(A) MORE SPECIFICALLY FROM PAGES 5 TO 8 OF THE LD. CIT(A) HAS VERIFIED TH E EVIDENCES FILED BY THE ASSESSEE. IT WAS ALSO NOTICED THAT THE LD. CIT(A) HAS CATEGORICA LLY GIVEN THE FINDING THAT THE COMMISSION PAYMENTS HAVE BEEN ACCEPTED BY THE REVEN UE DURING THE EARLIER YEARS AS ALSO IN THE SUBSEQUENT YEARS AND THE ASSESSMENT HAS BEEN DONE UNDER SCRUTINY. A PERUSAL OF THE EVIDENCES FILED BY THE ASSESSEE BEF ORE US IN THE FORM OF APPOINTMENT LETTERS AS ALSO THE COPIES OF THE INCOME TAX RETURN S OF THE AGENTS WHICH WERE FOUND AT PAGES 272 TO 281 OF THE PAPER BOOK ALSO SHOWS THAT THE AGENTS HAVE DISCLOSED THE COMMISSION RECEIVED FROM THE ASSESSEE IN THEIR RETU RNS AND THE SAME HAVE ALSO BEEN ACCEPTED THEREIN. THE RETURNS FILED BY THE ASSESSEE ARE ALSO MUCH BEFORE THE SCRUTINY PROCEEDINGS HAVE BEEN INITIATED IN THE CASE OF THE ASSESSEE. THE AGREEMENTS WITH THE AGENTS HAVE ALSO NOT BEEN SHOWN BY THE REVENUE TO B E A BOGUS AGREEMENT. IT IS NOTICED THAT THE REVENUE HAS DISBELIEVED THE CLAIM OF COMMI SSION ONLY BECAUSE OF THE STATEMENTS WHICH HAVE BEEN GIVEN BY THE PURCHASERS FROM THE ASSESSEE U/S 133(6 ) OF THE IT ACT. ON A SPECIFIC DIRECTION FROM THE BENCH THE LD. AR PLACED BEFORE US THE COPIES OF 133(6) STATEMENTS/LETTERS FROM THE VARIOU S PURCHASERS. A PERUSAL OF THE SAID LETTERS FROM THE PURCHASERS IN SOME CASES DID SHOW THAT IT WAS A DIRECT TRANSACTION. HOWEVER, THE NAMES OF THE PERSONS WITH WHOM THE SAI D COMPANIES HAVE BEEN DEALT WITH ARE NOT COMING FROM THE SAID LETTER. INTERESTI NGLY, THE ADDRESS OF THE ASSESSEE IS 36, STRAND ROAD, KOLKATA AND THE ADDRESS GIVEN BY M /S.TEREX VETRA U/S 133(6) OF THE IT ACT IS IMI, ABRASIVES (P) LTD.PLOT NO.MCF-113A, SANJAT COLONY, SECTOR-22, 4 FAIRDABAD. THIS ITSELF CATEGORICALLY ADMITS TO THE FACT THAT THE ASSESSEE WAS HAVING THE AGENT AND THE AGENT AT FARIDABAD HAD DEALT WITH THE SAID M/S.TEREX VETRA. THUS 133(6) WHICH HAS BEEN OBTAINED BY THE AO IN FACT COMES IN FAVOUR OF THE ASSESSEE. UNDER THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE IS ON THE RIGHT FOOTING AND DOES NOT CALL FOR ANY INTERFE RENCE. UNDER THE CIRCUMSTANCES THE APPEAL OF THE REVENUE STANDS DISMISSED. 7. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. ORDER PRONOUNCED AS DICTATED IN THE OPEN COURT ON 0 4.07.2012. SD/- SD/- [ .''# $% , ] [ .., ] [ GEORGE MATHAN ] [ C. D. RAO ] JUDICIAL MEMBER ACCOUNTANT MEMBER ( (( ( ) )) ) DATE: 04.07.2012. R.G.(.P.S.) 6 1 /((7 87*9- COPY OF THE ORDER FORWARDED TO: 1. M/S.I.M.I.ABRASIVES PVT. LTD., 36, STRAND ROAD, 4 TH FLOOR, ROOM NO.26A, KOLKATA-700001. 2 THE I.T.O., WARD-3(4), KOLKATA 3. THE CIT- 4. THE CIT(A)-I, KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA 07 /(/ TRUE COPY, 6%3/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES