Mahendrabhai M Ajmera, Ahmedabad V. The Asst. Commissioner Of Income TAx, Circle 6(1), Ahmedabad

ITA 2254/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7785 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 09-10-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./ ITA NO.2254/AHD/2017 / ASSTT. YEAR: 2014-15 MEHENDRABHAI M. AJMERA PROP. OF RUSHABH INDUSTRIES PLOT NO.137/20, GIDC ESTATE ROAD NO.29 NEXT TO MEERA METAL ODHAV, AHMEDABAD 382 415. PAN : ABHPA 9937 E VS. ACIT, CIR.6(1) AHMEDABAD. / (APPELLANT) / (RESPONDENT) ASSESSEE BY : SHRI PARIN SHAH, AR REVENUE BY : SHRI JAYANT JHAVERI, SR.DR ! / DATE OF HEARING : 09/04/2019 '#$ ! / DATE OF PRONOUNCEMENT: 24/04/2019 %& / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-6, AHMEDABAD DATED 24.8.2017 PASSED FOR T HE ASSTT.YEAR 2014-15. 2. THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL. ITS GRIEVANCE REVOLVES AROUND A SINGLE ISSUE, WHEREBY I T HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISA LLOWANCE OUT OF COMMISSION PAID BY THE ASSESSEE. ITA NO.2254/AHD/2017 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 5.9.2014 DECLARING TOTAL INCOME AT RS.31,40,036/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTI NY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE H AS PAID COMMISSION TO THE FOLLOWING PARTIES: SN NAME TOTAL COMMISSION PAID (RS.) DETAIL OF SERVICE RENDERED RATE OF COMMISSION 1 BATLIBOI LTD. 8084 SELLING AGENT 10 % 2 DEEPAK TRIKHA 18362 SELLING AGENT 3% 3 SACHIN R. PATEL 203000 SELLING AGENT 5% 4 SHAILENDRA SAHAY 200000 SELLING AGENT 5% 5 SHALIN M AJMERA 499113 SELLING AGENT 5% TOTAL AMOUNT 9,44,145 . 4. OUT OF THE TOTAL COMMISSION PAID, THE LD.AO DISA LLOWED RS.1,50,000/- ON AN ADHOC BASIS. ON APPEAL, THE LD.CIT(A) GAVE NOTICE FOR ENHANCEMENT OF INCOME. THE LD.CIT(A) HA S OBSERVED THAT COMMISSION OF RS.4,99,113/-WAS GIVEN TO SON OF THE ASSESSEE, WHICH DESERVES TO BE DISALLOWED UNDER SEC TION 40A(2)(B) OF THE ACT AS WELL AS ON ACCOUNT OF NON-P ROVIDING OF ANY SERVICES. AFTER HEARING THE ASSESSEE, THE LD.CIT(A ) DISALLOWED TOTAL SUM OF RS.4,99,113/- WHICH INCLUDED A SUM OF RS.1.50 LAKHS ALREADY DISALLOWED BY THE AO. IN OTHER WORDS, THE LD.CIT(A) ENHANCED THE DISALLOWANCE BY A SUM OF RS.3,45,113/- ITA NO.2254/AHD/2017 3 5. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, W E HAVE GONE THROUGH THE RECORD. IN RESPONSE TO THE SHOW CAUSE FOR ENHANCEMENT OF INCOME, THE ASSESSEE HAS CONTENDED T HAT HIS SON, SHALIN M. AJMERA IS ELECTRICAL ENGINEER AGED ABOUT 24-25 YEARS. HE HAS HELPED THE ASSESSEE TO TAKE CARE OF SALES MA DE TO THREE CONCERNS, VIZ. ARISE INDIA, R.S. ENTERPRISE, GAYA A ND SHALIN PUMP AGENCY, PATNA. TOTAL ORDERS WORTH RS.99.82 CRORES WERE PROCURED FROM THESE CONCERNS. THE LD.CIT(A) DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE ON THE GROUND THAT THESE ARE THE OL D CUSTOMERS OF THE ASSESSEE. HENCE, SHRI SHALIN M. AJMERA HAS NOT PROVIDED ANY SPECIFIC SERVICE TO THE ASSESSEE. TO OUR MIND, THE LD.CIT(A) FAILED TO APPRECIATE THE NATURE OF ASSESSEES BUSINESS, AN D ALSO BUSINESS REALITIES. IF IN THE FIRM, ASSESSEES SON, WHO IS ELECTRIC ENGINEER, JOINED BUSINESS BY PROVIDING HIS SERVICES, THEN THO SE SERVICE CANNOT BE IGNORED SIMPLY FOR THE REASONS THAT HE HA S TAKEN CARE OF OLD CUSTOMERS. IT IS PERTINENT TO NOTE THAT TOTAL ORDERS WORTH OF RS.99.82 CRORES PERTAINING TO THREE PARTIES WERE RE QUIRED TO BE PROCESSED. SOMEBODY MUST HAVE TO DEVOTE ENERGY FOR TAKING CARE OF THIS ORDER AND IMPLEMENTATION OF THESE ORDERS. GOODS MUST HAVE BEEN DISPATCHED TO THEM. SIMPLY BECAUSE THEY ARE OLD CUSTOMERS THAT DOES NOT MEAN THAT ORDERS WILL BE PR OCESSED AUTOMATICALLY, AND NO PERSONAL CARE WOULD BE REQUIR ED. THERE ARE SO MANY FACTORS EVEN FOR CATERING OLD CUSTOMERS ALS O VIZ. DELIVERY OF GOODS, RECEIPT OF PAYMENTS, COMPLAINTS ABOUT THE GOODS, ALL THESE THINGS ARE NECESSARY PART OF DAY-TO-DAY BUSIN ESS. THUS, THE LD.CIT(A) HAS ERRED IN ENHANCING THE INCOME BY MAKI NG DISALLOWANCE OUT OF COMMISSION PAID TO THE SON. HO WEVER, AS FAR AS DISALLOWANCE OF RS.1,50,000/- IS CONCERNED THAT WAS DISALLOWED ON AN ESTIMATE BASIS OUT OF TOTAL COMMISSION PAID B Y THE ASSESSEE. ITA NO.2254/AHD/2017 4 THE RANGE OF THE PAYMENT IS BEING MADE FROM 3% TO 5 % AND 10% TO THE PARTIES. THE ASSESSEE FAILED TO GIVE ANY RA TIONALE ABOUT THIS VARIATION AND EXACT NATURE OF SERVICES RENDERED BY THE PERSONS WHO HAVE BEEN GIVEN HIGHER RATE OF COMMISSION. WHE N THE ASSESSEE FAILED TO GIVE THESE DETAILS, THEN THE AO MADE DISALLOWANCE ON ADHOC BASIS. CONSIDERING HIS ORDERS, WE CONFIRM THE DISALLOWANCE TO THE EXTENT OF RS.1,50,000/-. H OWEVER, THE ENHANCED AMOUNT DISALLOWED BY THE CIT(A) IS DELETED . IN OTHER WORDS, THE DISALLOWANCE OF COMMISSION EXPENSES AT R S.1,50,000/- LAKHS IS CONFIRMED, AND FURTHER DISALLOWANCE MADE B Y THE LD.CIT(A) AT RS.3,49,113/- IS CONCERNED, IT IS DELE TED. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 24 TH APRIL, 2019. SD/- SD/- (AMARJIT SINGH) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER