DCIT, New Delhi V. M/s Siel Edible Oils Ltd., Delhi

ITA 2336/DEL/2013

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2734 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 13-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAMES SANGSON
• Keywords: Additional evidence
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G , NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH . A. T. VARKEY , JM IT A NO. 2336/DEL/2013 : ASSTT. YEAR : 2008 - 0 9 DCIT, CIRCLE - 8(1) , NEW DEL HI VS M/S SIEL EDIBLE OILS LTD., 5 TH FLOOR, KIRTI MAHAL, 19, RAJENDRA PLACE, NEW DELHI - 08 (APPELLANT) (RESPONDENT) PAN NO. AA JCS7525A ASSESSEE BY : SH . V. P. GUPTA, ADV. REVENUE BY : SH. JAMES SANGSON , SR. DR DATE OF HEARING : 1 3.11 .201 5 DATE OF PRONOUNCE MENT : 13 . 01 .201 6 ORDER PER N. K. SAINI, AM : THIS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 31.01 .2013 OF LD. CIT(A) - X I , NEW DELHI . 2. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,37,848/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF COMMISSION EXPENSE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.29,74,498/ - MADE B Y THE ASSESSING OFFICER ON ACCOUNT OF FREIGHT OUTWARD. ITA NO. 2336 /D E L/2013 SIEL EDIBLE OILS LTD. 2 3. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.25,31,881/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF ADVERTISEMENT. 4. THE APPELLANT CRAVES, LEAVE OR RESERVING THE RIGHT TO AMEND MODIFY, A L TER, ADD OR FOREGO ANY GROUNDS OF APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. VIDE GROUND NO. 1, THE GRIEVANCE OF THE DEPARTMENT RELATES TO THE DELETION OF ADDITION OF RS.15,37,848/ - MADE BY THE AO ON ACCO UNT OF COMMISSION EXPENSE S . 4 . FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING A LOSS OF RS.1,93,73,757/ - ON 19.09.2008 WHICH WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). LATER ON, THE CASE SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE HAD DEBITED AN AMOUNT OF RS.15,37,848/ - IN ITS PROFIT AND LOSS ACCOUNT ON ACCOUNT OF SALE S COMMISSION EXPENSES. THE AO ASKED THE ASSESSE E TO FURNISH THE DETAIL S ALONG WITH DOCUMENTARY EVIDENCE S OF THE SAID EXPENSES. IN RESPONSE, THE ASSESSEE FURNISHED THE REQUISITE DETAIL VIDE LETTER DATED 22.11.2010. THE AO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE OBSERVED THAT NO BILL/VOUCHERS A ND AGREEMENT WITH THE PARTIES TO WHOM SUCH PAYMENTS WERE MADE WERE ITA NO. 2336 /D E L/2013 SIEL EDIBLE OILS LTD. 3 FURNISHED BY THE ASSESSEE TO SUBSTANTIATE THE CLAIM AND EVEN IF ANY SUCH AGREEMENT EXISTED, THE TRA NSACTION WAS NOT BEYOND DOUBT, T HEREFORE, IT WAS ESTABLISHED THAT THE EXPENSES WERE NOT WH OLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS ACTIVITIES. ACCORDINGLY, DISALLOWANCE OF RS.15,37,848/ - WAS MADE. 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE ASSESSEE WAS MAINTAINING FULL DETAILS IN RESPECT OF EACH OF THE HEADS OF THE EXPENSES AND THE ACCOUNTS WERE DULY AUDITED . IT WAS FURTHER SUBMITTED THAT THE COPIES OF VOUCHERS HAD NOT BEEN FURNISHED JUST FOR THE REASON OF BEING VOLUMINOUS AND IF THE AO WAS NOT SATISFIED WITH THE DE TAILS FURNIS HED BY THE ASSESSEE, H E OUGHT TO HAVE REQUIRED THE ASSESSEE TO SUBMIT FURTHER DETAIL/COPY OF AGREEMENT/BILLS & VOUCHERS IN RESPECT OF ANY OF THE ITEMS. THE ASSESSEE FURNISHED THE ADDITIONAL EVIDENCE S IN THE FORM OF VOUCHERS, BILLS AND OTHER SUPPORTING DOCU MENTS. THE LD. CIT(A) ASKED THE AO TO FURNISH THE REMAND REPORT AFTER GO ING THROUGH THE MATERIAL GIVEN BY THE ASSESSEE AND VERIFYING THE CONTENTION. HOWEVER, NO REPORT WAS RECEIVED BY THE LD. CIT(A) IN SPITE OF VARIOUS REMINDERS SENT VIDE LETTERS DATED 23. 05.2012, 10.09.2012, 15.01.2013. THEREFORE, THE LD. CIT(A) ADMITTED THE ADDITIONAL EVI DENCE S ITA NO. 2336 /D E L/2013 SIEL EDIBLE OILS LTD. 4 UNDER RULE 46A(B ) & ( C) OF THE INCOME TAX RULES, 1962 . THE LD. CIT(A) OBSERVED THAT THE COMMISSION OF RS.15,37,848/ - CLAIMED WAS ON THE SALES OF RS.71,26,76,050/ - WHICH APPEARED TO BE VERY SMALL AMOUNT . HE FURTHER OBSERVED THAT THE ASSESSEE FURNISHED THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM COMMISSION WAS PAID AND ALSO THE COPIES OF AGREEMENTS WERE ON RECORD. HE ALSO OBSERVED THAT THE AO HAD NOT DISCUSSED ANYW HERE ABOUT THE NATURE OF SERVICES AND PAYMENTS WERE GENUINE OR NOT AND WHETHER THOSE WERE MADE FOR THE PURPOSE OF BUSINESS. ACCORDING TO THE LD. CIT(A), THE DOCUMENTS FURNISHED BY THE ASSESSEE INDICATED CLEARLY THAT THE PAYMENTS WERE MADE TO AGENTS AS SALE S COMMISSION WHICH WAS ALLOWABLE AS DEDUCTION U/S 37(1) OF THE ACT. 6 . NOW THE DEPARTMENT IS IN APPEAL. THE LD. DR SUPPORTED THE ORDER OF THE AO AND REITERATED THE OBSERVATIONS MADE BY THE AO. 7 . IN HIS RIVAL SUBMISSIONS THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE OBSERVATIONS MADE BY THE LD. CIT(A) AND STRONGLY SUPPORTED THE IMPUGNED ORDER. ITA NO. 2336 /D E L/2013 SIEL EDIBLE OILS LTD. 5 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT APPEARS THAT THE AO IN SPITE OF VARIOUS OPPORTUNITY GIVEN BY THE LD. CIT(A) DID NOT COMMENT ON THE ADDITIONAL EVIDENCE S FURNISHED BY THE ASSESSEE IN THE FORM OF BILLS AND VOUCHERS, COPIES OF THE AGREEMENT RELATING TO THE COMMISSION PAID ON THE SALES. THE LD. CIT(A) VER IFIED FROM THE DETAILS FURNISHED BY THE ASSESSEE THAT THE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS WHICH WERE ALLOWABLE U/S 37(1) OF THE ACT AND THAT THE AMOUNT OF SALES COMMISSION WAS VERY SMALL IN COMPARISON TO THE QUANTUM OF SALE. WE, THEREFOR E, DO NOT SEE ANY MERIT IN THIS GROUND OF THE DEPARTMENTAL APPEAL. 9 . VIDE GROUND NOS. 2 & 3 , THE GRIEVANCE OF THE DEPARTMENT RELATE TO THE DELETION OF ADDITION OF R.29,74,798/ - AND RS.25,31,881/ - MADE BY THE AO ON ACCOUNT OF FREIGHT OUTWARD AND ADVERTISE MENT RESPECTIVELY. 10. FACTS RELATED TO THESE ISSUES IN BRIEF ARE THAT THE AO DISALLOWED 25% OF THE FREIGHT OUTWARD EXPENSES AND TOTAL AMOUNT OF THE ADVERTISEMENTS EXPENSES BY OBSERVING THAT THE ASSESSEE DID NOT PROVIDE ANY BILLS/VOUCHERS TO ITA NO. 2336 /D E L/2013 SIEL EDIBLE OILS LTD. 6 SUBSTANTIATE ITS CLAIM AND IN ITS REPLY IT HAD ONLY GIVEN BRIEF DESCRIPTION OF THE EXPENSES. 11. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO DELETED THE ADDITIONS MADE BY TH E AO BY OBSERVING THAT THE COPIES OF THE BILLS AND VOUCHERS WERE NE VER ASKED BY THE AO AND HE DID NOT GIVE AN OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE SUPPORTING DOCUMENTS WHICH WERE PRODUCED BEFORE THE LD. CIT(A) AND WERE TEST CHECK ED . ACCORDING TO THE LD. CIT(A) , THE AO SHOULD HAVE GIVEN A FINDING AS TO WHICH VOUCHERS WERE NOT GENUINE. HE WAS OF THE VIEW THAT THE ASSESSEE WAS REQUIRED TO INCUR THE ADVERTISEMENT AND FREIGHT EXPENSES FOR THE SALES OF RS.71,26,76,050/ - . ACCORDINGLY, THE ADDITION MADE BY THE AO WAS DELETED. 12. NOW THE DEPARTMENT IS IN APPEAL. 13. WE HAV E CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE LD. CIT(A) ADMITTED THE ADDITIONAL EVIDENCES UNDER RULE 46A(B) & (C) OF THE INCOME TAX RULES, 1962 , THOSE DOCUMENTS WERE NOT ASKED BY THE AO, SO WERE NOT PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS. HOWEVER, THE BILLS AND ITA NO. 2336 /D E L/2013 SIEL EDIBLE OILS LTD. 7 VOUCHERS TO SUBSTANTIATE THE CLAIM OF THE EXPENSES BEING INCURRED FOR THE BUSINESS PURPOSES WERE FURNISHED BEFORE THE LD. CIT(A) WHO VERIFIED THE SAME ON TEST CHECK BASIS. THE LD. CIT(A) DELETED THE ADDITION MADE BY THE AO BY CONSIDERING THE VOLUME O F SALES VIS - - VIS THE EXPENSES INCURRED ON FREIGHT OUTWARD AND ADVERTISEMENT. IN OUR OPINION, THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION MADE BY THE AO. WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THESE ISSUES. 14 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED. ( ORDER PRON OUNCED IN THE COURT ON 13 /01 / 2016 ) SD/ - SD/ - ( A . T. VARKEY ) ( N. K. SAINI ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 13 /01/2016 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR