M/s. Unique Sales Agencies, Kolkata V. ITO, Ward - 36(4), Kolkata, Kolkata

ITA 2265/KOL/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9238 (ITAT-KOLKATA)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-03-2011
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 27-12-2010
• Court: TRIBUNAL
• Department Lawyers: P P SARKAR
• Assessee Lawyers: N O N E
• Keywords: Business expenditure; TDS; Set aside
• Section: 143(3); 133(6); 131

Judgement Text

, SMC(B) , , IN THE INCOME TAX APPELLATE TRIBUNAL SMC(B) BENCH : KOLKATA () BEFORE , ) [BEFORE HONBLE SRI MAHAVIR SINGH, JM] / I.T.A NO. 2265/KOL/2010 !' !' !' !'/ // / ASSESSMENT YEAR : 2006-07 M/S. UNIQUE SALES AGENCIES VS INCOME-TAX OFFICER, WD-36(4), KOLKATA (PAN-AAAFU 9151 C) ( $% /APPELLANT ) (&'$%/ RESPONDENT ) FOR THE APPELLANT: N O N E FOR THE RESPONDENT: SHRI P. P. SARKAR () / ORDER THIS APPEAL LED BY ASSESSEE IS ARISING OUT OF THE O RDER OF CIT(A)-XX, KOLKATA IN APPEAL NO.425/CIT(A)-XX/WARD-36(4)/08-09/KOL VIDE O RDER DATED 27.08.2010. THE ASSESSMENT WAS FRAMED BY ITO, WARD-36(4), KOLKATA U /S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASS ESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 23.12.2008. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF COMMISSION PAYMENT. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING GROUND NO.1: 1.THAT THE LD. CIT(A) DISALLOWED A COMMISSION PAID TO COMMISSION AGENTS FOR LIAISON WORK ON BEHALF OF THE FIRM AMOUNTING TO RS .149,110/- WHICH IS UNJUSTIFIED AND BAD IN LAW AND CRAVES DELETION. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT THE ASSESSEE IS IN THE BUSINESS OF TRADING AND GENERAL ORDER SUPPLIER IN T HE LINE OF ELECTRICAL ITEMS AND MOST OF THE CUSTOMERS ARE GOVERNMENT DEPARTMENTS, S EMI-GOVERNMENT AND CORPORATE HOUSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PAID COMMISSI ON TO THE FOLLOWING: SL. NO. NAME OF COMMISSION AGENT AMOUNT OF COMMISSION IN RS. I) SHRI ABHAY AGARWAL 98,610/- II) SHRI SURESH KUMAR AGARWAL 50,500/- TOTAL COMMISSION EXPENSES 1,49,110/- ITA 2265/K/2010 M/S. UNIQUE SALES AGENCIES AY 06-07 4. THE ASSESSEE CONTENDED THAT COMMISSION PAYMENTS TO COMMISSION AGENT IS IN NORMAL COURSE OF BUSINESS I.E. PROCUREMENT OF CONTR ACT WITH THE ORGANIZATIONS AND TO MAINTAIN GOOD AND CORDIAL RELATIONS IN ORDER TO GET THE BUSINESS IN THE COMPETITIVE MARKET. THE ASSESSEE CONTENDED THAT THESE TWO COMM ISSION AGENTS, ARE INCOME TAX ASSESSEE AND THEY FILED COPIES OF RETURNS INCOME WI TH THE ASSESSING OFFICER. HE CONTENDED THAT COMMISSION WAS PAID THROUGH ACCOUNT PAYEE CHEQUE AND TDS WAS ALSO DEDUCTED. DURING THE COURSE OF HEARING, THE ASSESS ING OFFICER ISSUED NOTICES U/S. 133(6) OF THE ACT TO THE CONCERNED PARTIES, TO WHOM THE SU PPLIES WERE MADE AND THE SO CALLED COMMISSION CLAIMED TO HAVE BEEN PAID TO THESE COMMI SSION AGENTS. THESE PARTIES INFORMED THE ASSESSING OFFICER THAT THE TRANSACTION S WERE MADE DIRECTLY WITH THE ASSESSEE AND NO MIDDLEMEN OR COMMISSION AGENTS WERE INVOLVED. ACCORDINGLY, ASSESSING OFFICER CONCLUDED THAT NO SERVICES WERE R ENDERED BY THESE COMMISSION AGENTS TO JUSTIFY COMMISSION PAYMENT AND HE DISALLOWED THI S COMMISSION PAID TO SRI ABHAY AGARWAL AMOUNTING TO RS.98,610/- AND SHRI SURESH KU MAR AGARWAL AMOUNTING TO RS.50,500/-. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A). THE CIT(A) ALSO CONFIRMED THE ACTION OF THE ASSESSING OFFICER BY GI VING FOLLOWING FINDINGS: I DO NOT FIND MERIT IN THE CONTENTIONS OF THE APPEL LANT. THE A.O. HAS NOT MADE THE DISALLOWANCE BECAUSE HE DOUBTED THE PAYMENTS O F COMMISSION. THE DISALLOWANCE WAS MADE ON THE GROUND THAT NO SERVIC ES WERE RENDERED BY THE COMMISSION AGENTS. IN RESPONSE TO NOTICES U/S 133( 6), THE CONCERNED PARTIES INFORMED THE A.O. THAT THE TRANSACTIONS WERE MADE DIRECTLY, AND, THAT NO COMMISSION AGENT WAS INVOLVED. THE A.O. HAS BROUGH T ADVERSE MATERIAL ON RECORD WHICH THE APPELLANT FAILED TO CONTROVERT. THE APPELLANT ALSO FAILED TO PRODUCE THE COMMISSION AGENTS, THOUGH REASONABLE O PPORTUNITY WAS ALLOWED BY THE A.O. UNDER THE CIRCUMSTANCES, THE A.O. WAS JU STIFIED IN HOLDING THAT NO SERVICES WERE RENDERED BY THE COMMISSION AGENTS; A ND SO, THE CLAIM WAS NOT ALLOWABLE AS BUSINESS EXPENDITURE. THE ADDITION O F RS.1,49,110/- IS CONFIRMED. GROUND NO. 1 IS DISMISSED. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 5. THE LD. SR. DR BEFORE US STATED THAT THE COMMISS ION DISALLOWANCE WAS MADE ONLY ON THE PREMISE THAT THESE COMMISSION AGENTS HA VE NOT PROVIDED ANY SERVICE AS STATED BY THE PARTIES, TO WHOM MATERIAL HAVE BEEN S UPPLIED AND ON ACCOUNT OF WHICH SO CALLED COMMISSION WAS PAID. HE STATED THAT ASSESSI NG OFFICER AS WELL AS CIT(A) HAS RIGHTLY MADE DISALLOWANCE AND THE SAME MAY BE CONFI RMED. ITA 2265/K/2010 M/S. UNIQUE SALES AGENCIES AY 06-07 6. I HAVE HEARD LD. DR AND GONE THROUGH THE CASE RE CORDS. I FIND THAT NONE OF THE COMMISSION AGENTS DESPITE HAVING ADDRESSES, WERE EX AMINED BY THE ASSESSING OFFICER AND EVEN NO CROSS EXAMINATION WAS ALLOWED IN REGAR D TO THE PARTIES, TO WHOM NOTICES U/S. 133(6) OF THE ACT WAS ISSUED BY THE ASSESSING OFFICER. IN CASE, ASSESSING OFFICER WANTS TO CONFIRM, WHETHER SERVICES WERE PROVIDED OR NOT BY THESE TWO COMMISSION AGENTS FOR PROCUREMENT OF ORDERS, BOTH SHOULD BE EX AMINED AND THE SAME SHOULD BE DECIDED ACCORDINGLY. IN VIEW OF THESE FACTS, I AM OF THE VIEW THAT LET THIS ISSUE BE EXAMINED AFRESH BY ASSESSING OFFICER IN THE LIGHT O F THE FACT THAT THESE PAYMENTS HAVE BEEN MADE BY ACCOUNT PAYEE CHEQUES, TDS IS DEDUCTED AND THESE TWO COMMISSION AGENTS ARE INCOME TAX ASSESSEES. THESE COMMISSION AGENTS SHOULD BE EXAMINED ON THE ASPECT, WHETHER THEY HAVE RENDERED SERVICES OR NOT, AND ASSESSING OFFICER WILL DO THE SAME. THE ASSESSING OFFICER, TO ENFORCE ATTENDANCE , CAN ISSUE SUMMONS U/S. 131 OF THE ACT TO THESE PARTIES. ACCORDINGLY, THIS ISSUE OF T HE ASSESSEES APPEAL IS SET ASIDE AND ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. 8. ORDER PRONOUNCED IN OPEN COURT ON 14 TH DAY OF MARCH, 2011. SD/- , (MAHAVIR SINGH) JUDIC IAL MEMBER ( *+ *+ *+ *+) )) ) DATED 14 TH DAY OF MARCH, 2011 ,- ./ 0 JD.(SR.P.S.) () 1 &2 3(2!4- COPY OF THE ORDER FORWARDED TO: 1 . $% / APPELLANT M/S. UNIQUE SALES AGENCIES, 215, OLD CH INA BAZAR STREET, KOLKATA-700 001. 2 &'$% / RESPONDENT, ITO, WARD-36(4), KOLKATA. 3 . ) / THE CIT(A), KOLKATA 4. ) ( )/ CIT, KOLKATA 5 . ;< & / DR, KOLKATA BENCHES, KOLKATA '2 &/ TRUE COPY, ()=/ BY ORDER, / /ASSTT. REGISTRAR .