Shri Pradeep Kumar Solanki (HUF), Bengaluru V. Addl. Commissioner Of Income Tax, Range - 2(2), Bengaluru

ITA 245/BANG/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8186 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 27-06-2019
• Assessment Year: misc
• Appeal Filed On: 06-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR
• Assessee Lawyers: V SRINIVASAN
• Keywords: Gross profit estimation; Gift; TDS; Set aside
• Section: 234B; 15

Judgement Text

ITA N O .245(B)/2017 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES : C, BANGALORE BEFORE SHRI A.K.GARODIA, ACCOUNTANT MEMBER AND SMT.BEENA PILLAI, JUDICAL MEMBER ITA NO. 245 (BANG)/201 7 (ASSESSMENT YEAR : 20 12 - 13 ) S HRI PRADEEP KUMAR SOLANKI (HUF) , NO.63, THRINETRA APA R TMENTS, GROUND FLOOR, 15 TH CROS S , TEMPLE ROAD, MALLESHWARAM, BANGALORE - 560 0 03 PANNO.A AIHP3180L APPELLANT VS THE ADDL. COMMISSIONER OF INCOME TAX , RANGE - 2(2), BANGALORE RESPONDENT APPELLANT BY : SHRI V. SRINIVASAN, AD VOCATE REVENUE BY : SHRI P. DHIVAHAR, ADDL. CIT DATE OF HEARING : 27 - 06 - 2019 DATE OF PRONOUNCEMENT : O R D E R PER BEENA PILLAI, JUDICIAL MEMBER : P RESENT APPEAL HAS BEEN FILED BY ASSESSEE AGAINST ORDER DATED 08/1 2/16 PASSED BY LD. CIT (A) - 2, BE NGALURU, FOR ASSESSMENT YEAR 2012 - 13 ON FOLLOWING GROUNDS OF APPEAL: 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FA R AS THEY ARE AGAI N ST THE APPELLANT ARE OPPOSED TO LA, E QUITY, WEIGHT ITA N O .245(B)/2017 2 OF EVIDENCE, PROBABILITIES, FACTS AND CIRCUM S TANCES OF THE C A SE. 2. THE INVOCATION OF THE PROVISIONS OF SECTIONS 143(2) OF THE ACT IS BAD IN LAW AS THER E IS NO MATERIAL INDUCING THE RE A S O N TO BELIEVE TH AT ANY CLAIM OF LOSS, EXEMPTION, DEDUCTION, ALLOWANCE OR RELIEF MA D E IN THE RETURN IS INADMISSIBLE TO ISSUE NOTICE U/S 143(2) AND CONSEQUENTLY, THE FINAL ASSESSMENT MADE IS BAD IN LAW AND LIABLE TO BE ANNULLED. 3. THE LD. CIT(A) IS NOT JUSTIFIED IN UPHOLDING THE DISALLOWANCE OF A SUM OF RS.11,52,385/ - BEING THE SAL E S PROMOTION EXPENSES UNDER THE FACTS AND IN THE CIRCUMSTANC E S OF THE APPELLANTS C A S E . THE DISALLOWANCE IS PURELY ON SUSPICION AND SURMISE, ASSUMPTIONS AND PRESUMPTIONS AND DESERVES TO B E DELETED. 3.1 WITHOUT PREJUDICE TO THE ABOVE, THE DISALLOWANCE MADE IS EXCESSIVE AND LIABLE TO REDUCED SUBSTANTIALLY. 4. WITHOUT PREJUDICE TO THE RIGHT TO SEEK WAIVER WITH HON'BLE CCIT/DG THE APPELLANT DENIES HIMSELF LIABLE TO BE CHARGED TO INTEREST U/ S 234A AND 234B OF THE ACT, WHICH UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE A PPELLANTS C A S E AND THE LEVY DESERVES TO BE C A NCELLED. 2. BRIEF FACTS OF THE CASE ARE AS UNDER: A SSESSEE FILED ITS RETURN OF INCOME FOR YEAR UNDER CONSIDERATION DECLARING T OTAL INCOME OF RS.22,19,000/ - ON 28/09/12. THE RETURN WAS PROCESSED UNDER SECTION 143 (1) OF THE IT ACT, AND SUBSEQUENTLY TAKEN UP FOR SCRUTINY. FOLLOWED BY WHICH NOTICE UNDER SECTION 142 (1) OF THE IT ACT, 1961 WAS ISSUED ALONG WITH QUESTIONNAIRE AND NOTIC E UNDER SECTION 143 (2) OF THE A CT. IN RESPONSE TO STATUTORY ITA N O .245(B)/2017 3 NOTICES, REPRESENTATIVE OF ASSESSEE APPEARED BEFORE LD. AO AND SUBMITTED INFORMATION AS CALLED FOR. 3. LD. AO O BSERVED THAT ASSESSEE DECLARED SALES TURNOVER OF RS. 55.34 CRORES FOR YEAR UNDER CONSIDERATION , ON WHICH GROSS PROFIT OF RS. 1.26 CRORE WAS DECLARED. ASSESSING OFFICER ACCEPTED LOW PROFIT PERCENT AGE DECLARED BY ASSESSEE AND EXPLANATION IN RESPECT OF THE SAME. IT WAS OBSERVED THAT ASSESSEE PAID COMMISSION WHICH WA S C A LL E D UPON TO BE EXP LAINED BY LD. AO. IN RESPONSE ASSESSEE FILED VARIOUS DETAILS WHEREIN , HE MADE EXPENS ES TOWARDS SALES PROMOTION. LD. AO OBSERVED THAT ASSESSEE PAID SUM OF RS. 2,09,300 / - TO THE SUPPLIER OF PENS IN MUMBAI WHICH WAS USED TO DISTRIBUTE AMONGST ITS CLIENT AS SALES PROMOTION. LD.AO RECORDED THAT , NO DOCUMENTS WERE PRODUCED FOR TRANSPORTING ALLEGED GIFT ITEMS TO CLIENT PLACES AND THEREFORE ENTIRE SALES PROMOTION EXPENSES WAS TR EATED AS BOGUS UNWARRANTED A ND FRIVOLOUS. HE THUS ADDED COMMISSION PAID TO THREE PERSONS AS NO DETAILS WERE FILED BY ASSESSEE AND ALSO DISALLOWED SALES PROMOTION EXPENSES MADE BY ASSESSEE. 4. AGGRIEVED BY ADDITIONS MADE BY LD.AO, ASSES SEE PREFERRED APPEAL BEFORE LD. CIT (A) WHO GAVE PART RELIEF TO ASSESSEE BY DELETING IS THE ADDITION MADE ON ACCOUNT OF COMMISSIO N PAID BY ASSESSEE. HOWEVER LD. CIT (A) CONFIRMED ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF SALES PROMOTION EXPENSES. 5. AGGRIEVED BY ORDER OF LD.CI T (A) , ASSESSEE IS IN APPEAL BEFORE US NOW. ITA N O .245(B)/2017 4 6. LD. AR AT THE OUTSET SUBMITTED THAT G ROUND NO. 1 IS GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. HE SUBMITTED THAT G ROUND NO. 2 , ASSESSEE DO NOT W ISH TO PRESS AND THEREFORE IS ON INSTRUCTION S THE SAID GROUND HAS BEEN WITHDRAWN. ACCORDINGLY , G ROUND NO. 2 STANDS DISMISSED AS WITHDRAWN. THE ONLY EFFECTIVE GROUND AS SUBMITTED BY LD. AR RAISED G ROUND NO. 3 AND 3.1 WHICH HAS BEEN RAISED IN RESPECT OF DISALLOWANCE OF SALES PROM OTION EXPENSES AMOUNTING TO RS. 11,52,385/ - . 7. LD. AR SUBMITTED THAT ASSES SING OFFICER DID NOT RAISE ANY QUERY REGARD ING EVIDE NCES THAT ASSESSEE NEEDS TO BE AD DUCED IN RESPECT OF SALES PROMOTION EXPENSES AND WITHOUT GIVING PROPER OPPORTUNITY MADE THE ADDITIONS. HE SUBMIT TED THAT ASSESSEE HAS RELEVANT DOCUMENTS TO ESTABLISH THAT EXPENSES WERE GENUINE IN NATURE. LD.AR SUBMITTED THAT ON ONE BREATH ASSESSING OFFICER ACCEPT S LOW GP OFFERED BY ASSESSEE , HOWEVER ON THE OTHER HAND EXPENSES CLAIMED BY ASSESSEE IS CONSIDERED TO BE BAD , NON - GENUINE AND BOGUS , WHICH IS CONTRARY TO EACH OTHER. 7.1 ON THE CONTRARY , LD. DR HAS SUBMITTED THAT IN THE EVENT ASSESSEE HAS SUFFICIENT DETAILS TO ESTABLISH ITS CLAIM THE ISSUE MAY BE SET ASIDE TO LD. AO FOR DUE VERIFICATION OF THE SAME. 8. WE HAVE PERUSED SUBMISSIONS ADVANCED BY BOTH SIDES IN THE LIGHT OF THE RECORDS PLACED BEFORE US. 8.1 IT IS OBSERVED THAT ASSESSEE HAS MADE EXPENSES TOWARDS PURCHASE OF MOBILE PHONE S PERFUMES AND PENCE ETC., TO BE DISTRIBUTED TO ITS CLIENTS IN KOLKATA AS SALES PROMOTION GESTURE. AS ITA N O .245(B)/2017 5 NO DETAILS W ERE FURNISHED IN REGARDS TO SUPPLY TO HIS CLIENTS, DISALLOWANCE W AS MADE BY LD. A O. LD. AR NOW SUBMITS THAT IT HE HAS ALL THE DETAILS WHICH COULD ESTABLISH ITS CLAIM OF EXPENSES. UNDER SUCH CIRCUMSTANCES WE DEEM IT PROPE R TO SET ASIDE THIS ISSUE TO LD. AO FOR DUE VERIFICATION OF ALL DETAILS FILED BY ASSESSEE AND TO CONSIDER THE CLAIM IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT ASSESSEE SHALL BE GRANTED PROPER OPPORTUNITY TO REPRESENT ITS CASE BEFORE LD. AO AND ASSESSING OFFICER SHALL CARRY OUT ALL NECESSARY INVESTIGATION IN ORDER TO ASCERTAINED NATURE OF EXPENSES. WITH THE ABOVE DIRECTIONS WE SET ASIDE THIS ISSUE BACK TO LD. AO. 9. ACCORDINGLY GROUND 3 AND 3.1 STANDS ALLOWED FOR STATISTICAL PURPOSES. 10. GROUND NO. 4 RAISE D BY ASSESSEE IS IN RESPECT OF INTEREST UNDER SECTION 234A AND B OF THE ACT WHICH IS PREMATURE AT THIS STAGE AND THEREFORE DO NOT REQUIRE ANY ADJUDICATION. 11. GROUND NO. 5 IS AGAIN GENERAL IN NATURE 12. I N THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PU R POSES. ORDE R PRONOUNCED IN OPEN COURT ON (A.K.GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: THE *AM ITA N O .245(B)/2017 6 COPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5. DR 6. ITO (TDS) 7.GUARD FILE BY ORDER ASSTT.REGISTRAR