M/s. Nomus Communication System, Baroda V. The ACIT, Circle-2(2), Baroda

ITA 2551/AHD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8041 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V K SINGH

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] LOZJH IZNHI DQEKJ DSFM;K] YS[KK LNL; ,OA EGKOHN IZL KN] U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA U;KF;D LNL; DS LE{KA BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ./ I.T.A. NO.2551/AHD/2014 ( / ASSESSMENT YEAR : 2006-07) M/S. NOMAS COMM SYSTEMS, 601, GUNJAN TOWERS, OFF. ALEMBIC GORWA ROAD, VADODARA 390 016 / VS. ACIT, CIRCLE 2(2), AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA 390 007 ./ ./ PAN/GIR NO. : AABFN 2482 L ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : WRITTEN SUBMISSION / RESPONDENT BY : SHRI V. K. SINGH, SR. D.R. / DATE OF HEARING 23/11/2017 !'# / DATE OF PRONOUNCEMENT 01/12/2017 $% / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-II, BARODA, APP EAL NO. CAB/II- 43/13-14 DATED 20/06/2014 FOR THE ASSESSMENT YEAR ( AY) 2006-07, ON THE FOLLOWING GROUNDS: THE LD. CIT(A)-II, BARODA ERRED IN FACT AND IN LAW IN CONFIRMING THE ACTION OF THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2(2), BARODA IN LEVYING PENALTY AMOUNTING TO RS.3,27,590/ - U/S.271(1)(C) OF THE INCOME TAX ACT, 1961 ON THE FOLLOWING ADDITIONS : I. DISALLOWANCE MADE INVOKING SECTION 40A(2). ITA NO.2551/AHD /2014 M/S. NOMUS COMM SYSTEMS VS. ACIT ASST.YEAR 2006-07 - 2 - II. DISALLOWANCE OF COMMISSION. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- IN THIS CASE, THE ORDER U/S.143(3) OF THE I.T. ACT WAS PASSED ON 30.12.2008 ASSESSING THE TOTAL INCOME AT RS.75,70,1 70/- AS AGAINST RS.64,92,120/- DECLARED BY THE ASSESSEE IN ITS RETU RN OF INCOME FILED ON 27.12.2006 IN THE ASSESSMENT ORDER, PENALTY PROCEED INGS WERE INITIATED U/S.271(I)(C) ON THE FOLLOWING ADDITIONS/DISALLOWAN CE:- A) ADDITION ON A/C OF LEGAL AND PROFESSIONAL CHARGES A MOUNTING TO RS.3,60,000/-. B) DISALLOWANCE OF SALARY PAID TO WIFE OF PARTNER AMOU NTING TO RS.1,05,320/-. C) ADDITION ON ACCOUNT OF COMMISSION AMOUNTING TO RS.6 ,13,232/- 3. BEING AGGRIEVED WITH THE ORDER, THE ASSESSES PRE FERRED AN APPEAL BEFORE LD.CIT(A). VIDE HIS ORDER DATED 17.10.2011, THE LD.CIT(A) DECIDED THE ABOVE THREE ISSUES, THE DETAILS OF WHIC H ARE AS UNDER: SR. NO. NATURE OF ADDITION/DISALLOWANCE AMOUNT AS P ER CIT(A) 1. LEGAL & PROFESSIONAL CHARGES 3,60,000 DISMISSED 2. SALARY PAID TO WIFE OF PARTNER 1,05,320 RELIEF GRA NTED 3. COMMISSION 6,13,232 DISMISSED 4. AS ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME, PENALTY PROCEEDINGS U/S.271(1)(C) WERE INITIATED. A SHOW-CA USE NOTICE WAS SERVED TO THE ASSESSEE AND ASSESSEES REPLY AS FOLLOWS: 5. AS RECORDS THE ISSUE OF LEGAL & PROFESSIONAL CH ARGES THE ASSESSEE HAS CLAIMED LEGAL AND PROFESSIONAL CHARGE OF RS.3,6 0,000/- PAID TO ITA NO.2551/AHD /2014 M/S. NOMUS COMM SYSTEMS VS. ACIT ASST.YEAR 2006-07 - 3 - IFTC AND IT WAS MENTIONED IN THE AUDIT REPORT IN RE SPECT OF PARTICULARS OF PAYMENT MADE TO PERSONS SPECIFIED IN SECTION 40A (2)(B) OF THE I.T ACE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE ASSESSEE WAS REQUIRED TO JUSTIFY THE ABOVE PAYMENT AND TO EXPLAI N AS TO WHAT SERVICES WERE RENDERED BY THE ABOVE PARTY TO WHOM AN AMOUNT OF RS.3,60,000/- WAS PAID. IN THIS REGARD, ASSESSEE STATED THAT INTE RNATIONAL FINANCE AND TECHNICAL CONSULTANT IS A PROPRIETARY CONCERN OF SH RI VINODKANT SANGHANI, FATHER OF SHRI JIGNESH SANGHANI, ONE OF T HE PARTNERS OF THE FIRM. IT IS ALSO STATED THAT THE SAID PAYMENT HAS B EEN MADE TOWARDS RETAINER SHIP SERVICES. DURING THE COURSE OF ASSESS MENT AS WELL AS APPELLATE PROCEEDINGS, THE ASSESSEE HAS FAILED TO E STABLISH THE SERVICES RENDERED BY SHRI VINODKANT SANGHANI FOR WHICH A FEE OF RS.3,60,000/- WAS REQUIRED TO PAID AND ACCORDINGLY ASSESSING OFFI CER DISALLOWED RS.3,60,000/- ON ACCOUNT OF LEGAL AND PROFESSIONAL CHARGES, IT IS THEREFORE., CRYSTAL CLEAR THAT THE ASSESSEE HAS FUR NISHED INACCURATE PARTICULARS OF INCOME. 6. WITH REGARD TO THE ISSUE OF DISALL OWANCE MADE ON ACCOUNT OF COMMISSION PAYMENT OF RS,6,13,232/- TO VARIOUS PARTIES, THE ASSESSES HAS NOT BEEN ABLE TO PROVE EITHER IN THE A SSESSMENT PROCEEDINGS OR AT THE APPELLATE STAGE THAT ANY SERV ICES WERE RENDERED BY THE PARTIES WARRANTING PAYMENT OF COMMISSION. SI NCE THE ASSESSEE FAILED TO PROVE THE GENUINENESS OF THE COMMISSION P AYMENT, THE A.O MADE AN ADDITION OF RS.6,13,232/- IT IS THEREFORE, CRYSTAL CLEAR THAT THE ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF IN COME. 5. BUT ASSESSEE COULD NOT SATISFY THE LD. AO HENCE, HE LEVIED THE PENALTY OF RS.3,27,590/-. 6. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF T HE ASSESSEE. 7. NOW APPELLANTS APPEAL IS BEFORE US. ITA NO.2551/AHD /2014 M/S. NOMUS COMM SYSTEMS VS. ACIT ASST.YEAR 2006-07 - 4 - 8. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. IN THIS CASE, ASSESSEE IS ENGAGED IN THE BUSINESS OF M ANUFACTURING AND TRADING OF ELECTRONIC PRODUCTS. THE RETURN OF INCOM E WAS FILED ON 27/12/2006 DECLARING TOTAL INCOME OF RS.64,92,120/- . THE ASSESSMENT WAS FINALIZED ON 30/08/2008 DETERMINING TOTAL INCOM E OF RS.75,70,170/- AFTER MAKING ADDITION OF RS.3,60,000/- ON ACCOUNT O F LEGAL AND PROFESSIONAL CHARGES AND DISALLOWANCE OF RS.1,05,32 0/- ON ACCOUNT OF SALARY PAID TO ONE MRS. NEHA J. SANGHANI AND RS.6,1 3,232/- ON ACCOUNT OF COMMISSION. PENALTY U/S.271(1)(C) WERE INITIATED WI TH RESPECT TO THESE ADDITION/DISALLOWANCE AND WERE LEVIED BY ORDER DATE D 13/03/2013 FOR RS.3,27,590/-. LD.AR SUBMITTED AN ORDER OF CO-ORDIN ATE BENCH IN ITA NO.3123/AHD/2011 FOR ASSESSMENT YEAR 2006-07 IN ASS ESSEES OWN CASE WITH REGARD TO DISALLOWANCE MADE INVOKING SECTION 4 0A(2) HAS BEEN DELETED. 9. SO FAR AS GROUND WITH REGARD TO DISALLOWANCE OF COMMISSION IS CONCERNED. LD.AR CITED AN ORDER OF CO-ORDINATE BENC H IN ITA NO.1272/AHD/2014 FOR ASSESSMENT YEAR 2005-06 AT PAG E 9, PARA 10.1. ON IDENTICAL ISSUE PENALTY HAS BEEN DELETED BY THE ITA T. 10. THEREFORE, IN VIEW OF THE ABOVE TWO ORDERS OF T HE CO-ORDINATE BENCH, WE DELETE THE PENALTY AGAINST THE APPELLANT. ITA NO.2551/AHD /2014 M/S. NOMUS COMM SYSTEMS VS. ACIT ASST.YEAR 2006-07 - 5 - 11. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 01/12/2017 SD/- SD/- IZNHI DQEKJ IZNHI DQEKJ IZNHI DQEKJ IZNHI DQEKJ DSFM;K DSFM;K DSFM;K DSFM;K EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRADIP KUMAR KEDIA) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 01/12/2017 PRITI YADAV, SR.PS !'#$ %$' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. & '( ) / CONCERNED CIT 4. ) () / THE CIT(A)-II, BARODA 5. ,-. //'( , '(# , 12$&$ / DR, ITAT, AHMEDABAD 6. .34 5 / GUARD FILE. & ' / BY ORDER, , / //TRUE COPY// (/' )* ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD TRUE COPY 1. DATE OF DICTATION 24/11/2017 (DICTATION-PAD 2 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER