ITO, Ward-6(4), Kolkata, Kolkata V. M/S. Wall Street Capital Market Private Limited, Kolkata

ITA 2287/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4167 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2010-2011
• Appeal Filed On: 31-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D KUNDU
• Assessee Lawyers: RAJAT KUMAR KUREEL JCITSRDR
• Section: 143(3); 142(1); 133(6); 37(1); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 2257 / KOL / 2014 ASSESSMENT YEAR :2006-07 M/S CELLCON BAGBAZAR APARTMENT, BAGBAZAR, G.T. ROAD, P.O. CHANDERNAGORE, DIST. HOOGHLY, PIN 712 136 [ PAN NO. AADFC 6882 F ] V/S . INCOME TAX OFFICER, WARD- 1(1), AAYAKAR BHAWAN, KHADINAMORE, G.T. ROAD, P.O. CHINSURAH, DIST. HOOGHLY PIN. 712 101 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI D. KUNDU, ADVOCATE /BY RESPONDENT SHRI RAJAT KUMAR KUREEL, JCIT,SR-DR /DATE OF HEARING 05-12-2016 /DATE OF PRONOUNCEMENT 09-12-2016 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER O F COMMISSIONER OF INCOME TAX (APPEALS)-XXXII, KOLKATA DATED 13.10.201 4. ASSESSMENT WAS FRAMED BY ITO WARD-1(1), HOOGHLY U/S 143(3)/147) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HI S ORDER DATED 31.12.2008 FOR ASSESSMENT YEAR 2006-07. GROUND RAISED BY ASSESSEE PER ITS APPEAL READS AS UNDER:- 1) FOR THAT THE LD. COMMISSIONER OF INCOME TAX (AP PEALS), XXXII, KOLKATA IS INDULGED IN SPECULATION, CONJECTURE, SUR MISE AND SUSPICIOUS IN CONFIRMING THE DISALLOWANCE OF EXPENSES OF RS.6, 74,081/- MADE BY ITA NO.2257/KOL/2014 A.Y. 2006-07 M/S CELLCON VS. ITO WD-1(1) HGY. PAGE 2 THE LD. INCOME TAX OFFICER, WARRD-1(1), HOOGHLY, ON THE PLEA OF BOGUS COMMISSION AND OTHERS AND ADDED THE SAME TO THE TOT AL INCOME DISCLOSED BY THE APPELLANT WHICH IS ILLEGAL, ULTRA VIRES AND BAD IN LAW AND AS SUCH THE SAID DISALLOWANCE OF EXPENSES MAY PLEAS E BE ALLOWED IN FULL FOR THE SAKE OF JUSTICE. SHRI D. KUNDU, LD. ADVOCATE APPEARED ON BEHALF OF A SSESSEE AND SHRI RAJAT KUMAR KUREEL, LD. DEPARTMENTAL REPRESENTATIVE APPEA RED ON BEHALF OF REVENUE. 2. SOLE ISSUE RAISED BY ASSESSEE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN CONFIRMING THE ORDER OF ASSESSING OFFICER ON ACCOUN T OF DISALLOWANCE OF EXPENSES OF RS.6,74,081/- ON THE PLEA OF BOGUS COMM ISSION AND OTHERS. 3. BRIEFLY, THE FACTS ARE THAT THE ASSESSEE IN THE PRESENT CASE IS A PARTNERSHIP FIRM AND AUTHORIZED DISTRIBUTOR OF THE COMPANY NAMELY HUTCHISON TELECOM EAST PVT. LTD. THE ASSESSEE WAS APPOINTED FOR PERFORMING VARIOUS FUNCTIONS WITHIN THE TERRITORY ALLOTTED TO IT FOR C ELLULAR MOBILE SERVICES TO THE CUSTOMERS OF THE COMPANY AS PER THEIR DIRECTIONS AN D GUIDELINES, SUCH AS NEW SIM CARDS, E-TOP UP, PRE-PAID CARDS, SERVICE TICKET S ETC., THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION FILED ITS RETURN OF INCOME ON 30.10.2006 DECLARING TOTAL INCOME OF RS.4,66,260/- FROM THE SOURCE OF BU SINESS. SUBSEQUENTLY, THE CASE WAS PROCESSED U/S. 143(1) OF THE ACT AND THERE AFTER IT WAS RE-OPENED U/S. 148 OF THE ACT. ACCORDINGLY, THE NOTICE U/S 143(2)/ 142(1) OF THE ACT WAS ISSUED UPON THE ASSESSEE. THE ASSESSMENT WAS COMPLETED U/S 147 R.W.S. 143(3) OF THE ACT AT A TOTAL INCOME OF RS.23,00,180/- AFTER M AKING CERTAIN ADDITIONS / DISALLOWANCES TO THE TOTAL INCOME OF THE ASSESSEE. THE ASSESSEE, FOR THE YEAR UNDER CONSIDERATION HAS CLAIMED COMMISSION EXPENSE AS DETAILED BELOW:- 1 BABAI BOX, KHALPAR, GAR BAGANANE, SHEORAPHULI, HO OGHLY 712 222 89,565/- 2 MANOJ CELL PHONE SERVICES, NETAJI SUBHAS ROAD, RI SHRA, HOOGHLY 84,640/- 3 S.R. INDUSTRIES, KHALISANI, BRAMIN PARA, CHANDANN AGAR, HOOGHLY 1,11,050/- 4 SHIVANI ELECTRONICS CENTRE, N.I. HAAT, SAYARER MO RE, HOOGHLY 71,475/- 5 UNIVERSAL MARKETING, CHAWK BAZAR, BANDEL, HOOGHLY 62,951/- ITA NO.2257/KOL/2014 A.Y. 2006-07 M/S CELLCON VS. ITO WD-1(1) HGY. PAGE 3 6 WEB SOFT. BATALA, SERAMORE, NEAR POLICE STATION, HOOGHLY 86,155/- 7 BRIGHT INFOTECH, HOOOGHLY GHASTATION ROAD, HOOGHL Y 4,385/- 8 CELL POINT, PIPULPATI, CHINSURA, HOOGHLY 1,63,86 0/- NOTICE U/S. 133(6) OF THE ACT WERE ISSUED BY AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS TO THE ABOVE STATED PARTIES FOR THE CONFIRMATION BUT THERE WAS NO COMPLIANCE. ACCORDINGLY, AO DIRECTED T HE ASSESSEE TO PRODUCE THE AFORESAID PARTIES FOR CONFIRMATION OF THE COMMI SSION EXPENSE. HOWEVER, THE ASSESSEE FAILED TO DO SO AND SUBMITTED THAT IT HAS NO MEANS TO PRODUCE THE AFORESAID PARTIES FOR THE PURPOSE OF CONFIRMATI ON. ACCORDINGLY, AO DEPUTED ONE INSPECTOR OF INCOME TAX TO VERIFY THE PARTIES W ITH REGARD TO DETAILS OF AFORESAID EXPENSE. THE INSPECTOR IN TURN SUBMITTED THAT THERE WAS NO DOCUMENTARY EVIDENCE AVAILABLE WITH THE AFORESAID P ARTIES IN RESPECT OF COMMISSION EXPENSE CLAIMED BY ASSESSEE. THUS, AO DI SALLOWED THE COMMISSION FOR RS.6,74,081/- AS BOGUS COMMISSION AN D ADDED TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A) WHEREAS ASSESSEE SUBMITTED THAT THE AFORESAID COMMISSION WA S PAID THROUGH BANKING CHANNEL AND THEREFORE GENUINENESS OF THE PARTIES CA NNOT BE DOUBTED. HOWEVER, LD. CIT(A) DISREGARDED THE CLAIM OF ASSESS EE BY OBSERVING AS UNDER:- THE SUBMISSIONS OF THE ASSESSEE ARE CONSIDERED BUT CANNOT BE ACCEPTED AS EVIDENCE OF THE GENUINENESS OF THE COMM ISSION PAID. THE ASSESSEE HAS PRODUCED NO AGREEMENT FOR COMMISSION P AYMENT, NO CONFIRMATION OF ACCOUNT, NO DETAILS OF ASSESSMENT H ISTORY OF THE RECIPIENTS, NO COPY OF ANY BILL/VOUCHER RAISED BY T HE SO CALLED RECIPIENTS ETC. IN SHORT, ALL THE ASSESSEES ARGUMENTS ARE TO THE EFFECT THAT SINCE IT HAS PAID CERTAIN SUMS, THE AO SHOULD HAVE ACCEPTED THE PAYMENT AS GENUINE. THIS APPROACH IMPUGNED ORDER UNACCEPTABLE. THE AO HAS A RIGHT TO VERIFY ALL THE CLAIMS MADE BY THE ASSESSEE . SINCE IN THE PRESENT CASE, THE ASSESSEE HAS ADDUCED NO EVIDENCE TO PROVE THAT THE SO CALLED COMMISSION WAS WHOLLY AND SUBSTANTIALLY PAID FOR THE PURPOSE OF IT BUSINESS, THE ADDITION OF RS.6,74,081/- IS CONFI RMED. AGGRIEVED BY THIS, ASSESSEE HAS COME UP AN APPEAL B EFORE US. ITA NO.2257/KOL/2014 A.Y. 2006-07 M/S CELLCON VS. ITO WD-1(1) HGY. PAGE 4 5. BEFORE US LD. AR FOR THE ASSESSEE FILED A PAPER BOOK WHICH IS RUNNING PAGES FROM 1 TO 37 AND REITERATED SAME SUBMISSION A S MADE BEFORE LD. CIT(A). HE STATED THAT ISSUE MAY BE DECIDED ON MERI T. ON THE OTHER HAND, LD. DR SUBMITTED THAT THE PAYMENT MADE THROUGH BANKING CHANNEL DOES NOT SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS. I T IS THE DUTY OF ASSESSEE TO PRODUCE THE NECESSARY DOCUMENTS IN ORDER TO JUSTIFY THAT THE EXPENSE WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEES BUSINESS. HE VEHEMENTLY RELIED ON THE ORDER OF AUTHORITIES BELOW . 6. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. FACTS HAVE BEEN NARRATED IN DE TAILS ABOVE. SECTION 37(1) PRESCRIBES AS UNDER: '37(1). ANY EXPENDITURE NOT BEING EXPENDITURE OF TH E NATURE DESCRIBED IN SECTIONS 30 TO 36 AND NOT BEING IN THE NATURE OF CA PITAL EXPENDITURE OR PERSONAL EXPENSES OF THE ASSESSEE, LAID OUT OR EXPENDED WHOL LY AND EXCLUSIVELY FOR THE PURPOSES OF THE BUSINESS OR PROFESSION SHALL BE ALL OWED IN COMPUTING THE INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUS INESS OR PROFESSION'.' AS THE FACTS EMERGE, THE ASSESSING OFFICER ASKED SP ECIFIC QUERY TO DEMONSTRATE THAT THE EXPENDITURE WAS LAID OUT OR EX PENDED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS, MEANING TH EREBY THE AMOUNT WAS PAID FOR THE SERVICES WHICH ARE RENDERED FOR THE ASSESSE E'S BUSINESS. THE ASSESSEE SUPPLIED ONLY CONFIRMATION ABOUT THE PAYME NT OF COMMISSION THROUGH BANKING CHANNEL. HOWEVER, ON THE ISSUE OF R ENDERING OF SERVICE, NO DOCUMENTARY RECORD OR EVIDENCE WHATSOEVER WAS FURNI SHED ASSESSEE. THUS THE ASSESSEE HAS UTTERLY FAILED TO DEMONSTRATE THE NATURE AND EXTENT OF SERVICE RENDERED BY THE PARTIES AND AVAILED OF BY THE ASSES SEE FOR ITS BUSINESS OF TELECOM PRODUCTS AS DISTRIBUTOR. IN THIS SCENARIO W HAT APPEARS ON RECORD IS MERELY BOOK ENTRIES. IN OUR CONSIDERED VIEW THE ASS ESSEE HAS PRODUCED ONLY SKELETAL PAPER WORK OF THE ARRANGEMENT WITHOUT ANY IOTA OF EVIDENCE ABOUT ACTUAL BUSINESS SERVICES RENDERED. 6.1 WE MAY FURTHER ADD THAT THE HON'BLE SUPREME COU RT IN THE CASE OF CIT V. IMPERIAL CHEMICAL INDUSTRIES (INDIA) (P.) LTD. [1969] 74 ITR 17 HAS ITA NO.2257/KOL/2014 A.Y. 2006-07 M/S CELLCON VS. ITO WD-1(1) HGY. PAGE 5 UNEQUIVOCALLY HELD THAT THE BURDEN OF PROVING THAT A PARTICULAR EXPENDITURE HAS BEEN LAID OUT OR INCURRED WHOLLY AND EXCLUSIVELY FO R THE PURPOSE OF BUSINESS IS ENTIRELY ON THE ASSESSEE. THE DISCHARGE OF THE BURD EN HAS TO BE EFFECTIVE AND MEANINGFUL AND NOT TO COVER UP BY MERELY BOOK ENTRI ES AND PAPER WORK. IN VIEW THEREOF, WE SEE NO INFIRMITY IN THE ORDER OF T HE LOWER AUTHORITIES IN MAKING THIS DISALLOWANCE WHICH IS ACCORDINGLY UPHELD. THIS GROUND OF ASSESSEES APPEAL IS DISMISSED. 7. IN THE RESULT, ASSESSEES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 09 /12/2016 SD/- SD/- ( !') ( !') (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S $!% &- 09 / 12 /201 6 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S CELLCON, BAGBAZAR APARTMENT, BAGBAZA R, G.T. ROAD, P.O. CHANDERNAGO RE, DIST. HOOGHLY, PIN.712 136 2. /RESPONDENT-ITO WARD-1(1), AAYAKAR BHAWAN, KHADINAM ORE, G.T. ROAD, P.O. CHINSHURAH , DIST. HOOGHLY, PIN. 712 101 3. %.%/0 1 1 2 / CONCERNED CIT KOLKATA 4. 1 1 2- / CIT (A) KOLKATA 5. 567 /0, 1 /0 , / DR, ITAT, KOLKATA 6. 7:; <= / GUARD FILE. BY ORDER/ 1! , /TRUE COPY/ / % 1 /0 ,