Moly Metal Pvt.Ltd., Ahmedabad V. The Dy.CIT.,(OSD)-1,Circle-4, Ahmedabad

ITA 2653/AHD/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6043 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 30-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVATIA
• Keywords: Opportunity of being heard; Additional evidence
• Section: 143(3); 142(1)

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JM, AND SHRI MANISH BORAD, AM ./ITA.NO. 2653/AHD/2014, 1168 & 1169/AHD/2016 ( / ASSTT YEARS :2010-11 TO 2012-13) MOLY METAL PVT. LTD. 202, ADITYA BLDG, MITHAKHALI SIX ROADS, AHMEDABAD-380006 VS. THE DCIT (OSD), CIRCLE-4, AHMEDABAD. OR THE DCIT, CIRCLE-2(1)(2) PRATYAKSH KAR BHAVAN, AMBAWADI, AHMEDABAD. (APPELLANT) (RESPONDENT) / APPELLANT BY: SHRI S.N. DIVATIA, A.R. / RESPONDENT BY: SHRI PRASOON KABRA, SR. D.R / DATE OF HEARING 02-05-2017 /DATE OF PRONOUNCEMENT 08-05-2017 / O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER THESE THREE APPEALS ARE DIRECTED AT THE INSTANCE OF ASSESSEE FOR ASSESSMENT YEAR 2010-11, 2011-12 & 2012-13. APPEAL FOR ASSESSMENT YEAR 2010-11 IS DIRECTED AGAINST THE ORDER OF COMMISSION ER OF INCOME TAX (APPEALS)-VIII/AHD DATED 14.07.2014. APPEALS FOR ASSESSMENT YEARS 2011- 12 & 2012-13 ARE DIRECTED AGAINST SEPARATE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-2/AHD DATED 21.03.2016. ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 2 2. AS GROUNDS RAISED IN THESE THREE APPEALS ARE S IMILAR AND FACTS ARE COMMON THEY HAVE BEEN HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. 3. IN ALL THESE THREE APPEALS ASSESSEE IS AGGRIEVED WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) UPHOLD ING DISALLOWANCE OF COMMISSION EXPENSE OF RS. 7,70,157/-, RS. 15,92,520 /- & 5,66,015/- RESPECTIVELY. FOR THE PURPOSE OF ADJUDICATING THE I SSUE WILL TAKE RELEVANT FACT FOR ASSESSMENT YEAR 2010-11 AS BASE AND APPLY OUR D ECISION TO ASSESSMENT YEAR 2011-12 & 2012-13. 4. BRIEFLY STATED FACTS FOR ASSESSMENT YEAR 2010-11 ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS O F MANUFACTURING & SUPPLY OF FERRO MOLYBDENUM AND FERROALLOYS STEEL. RETURN OF INCOME WAS FILED ON 20.01.2009 DECLARING TOTAL INCOME OF RS. 5,27,90,190/-. CASE PICKED UP FOR SCRUTINY ASSESSMENT. NOTICE U/S. 143(2) OF T HE ACT FOLLOWED BY NOTICE U/S. 142(1) OF THE ACT WAS ISSUED AND DULY SERVED CALLING VARIOUS DETAILS. NECESSARY INFORMATIONS WERE SUBMITTED BY THE ASSESS EE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED THAT COMMIS SION ON SALE AT RS. 21,75,210/- DEBITED TO PROFIT AND LOSS ACCOUNT INCL UDED RS. 5,33,516/- PAID TO SMT. MAYA CHOWDHARY @ 3.50% ON THE SALE MADE OF RS. 1.53 CRORES AND COMMISSION OF RS. 2,36,640/- PAID TO SMT. RAJNI CHO WDHARY @ OF 2.60% ON SALE OF RS. 92.37 LAKHS. LEARNED ASSESSING OFFICER WAS NOT CONVINCED WITH THE SUBMISSIONS OF THE ASSESSEE AS THE ASSESSEE WAS UNABLE TO SUBMIT ANY EVIDENCE TO SHOW AS TO HOW IT HAS EMPLOYED THE SERV ICES OF THE ABOVE LADIES AND THE GENUINENESS OF THE EXPENDITURE. ACCORDINGLY THE COMMISSION EXPENSES OF RS. 7,70,157/- WERE TREATED AS BOGUS AN D WERE DISALLOWED. INCOME ASSESSED AT RS. 5,35,60,347/-. ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 3 5. AGGRIEVED ASSESSEE WENT IN APPEAL BEFORE COMMISS IONER OF INCOME TAX (APPEALS) BUT COULD NOT BE SUCCEEDED AS THE DIS ALLOWANCE WAS CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OBS ERVING AS FOLLOW:- 2. AGGRIEVED WITH THE ABOVE ORDER OF A.O., THE ASSESSEE FILED APPEAL BE FORE THE CIT (A) AND THE CIT (A) VIDE ORDER NO. CIT (A)-VIII/ACIT-CIR.4/ 394/11-12 DATED 19/12/2012 DELETED THE ADDITION ON ACCOUNT OF G.P. OF RS.2,24,78,303/- AND CONFIRMED THE DISALLOWANCE OF COMMISSION EXPENSES OF RS.11,86,246/-. 2. SUBSEQUENTLY, THE ASSESSEE AS WELL AS REVENUE FILED APPEAL BEFORE TH E HON'BLE ITAT AGAINST THE ORDER OF ID.CIT (A) AND THE HON'BLE ITAT IN ITA N O.528 & 782/AHD/2013 VIDE ORDER DATED 17/01/2014 DISMISSED BOTH THE APPEAL VIZ. ASSESSEE AS WELL AS REVENUE. AGAINST THE SAID ORDER OF THE HON'BLE ITAT, THE ASSESS EE FILED MISCELLANEOUS APPLICATION BEARING NO. 98/AHD/2014 (IN ITA NO. 528/AHD/2013) FOR THE YEAR UNDE R CONSIDERATION AS PER RULE 19 OF ITAT FOR ADMISSION OF ADDITIONAL EVIDENCE STATING THAT WHILE DECIDING THE GROUND ABOUT THE CLAIM OF PAYMENT OF COMMISSION, THE AD DITIONAL EVIDENCE AND THE OTHER EVIDENCES PLACED ON RECORD WERE NOT CONSIDERED BY THE HON'BLE TRIBUNAL. IT IS ALSO SUBMITTED THAT THE NON-CONSIDERATION OF ADDITIONAL E VIDENCES FURNISHED AT THE TIME OF HEARING WAS A MISTAKE APPARENT ON RECORD AND THEREFORE, THE SAME CAN BE RECTIFIED U/S. 254(2) OF THE ACT. 3. THE HON'BLE ITAT DISPOSED OFF THE ABOVE MISCELLANEOUS APPLICATION AL LOWING THE MISCELLANEOUS APPLICATION RECALLING THE ORDER PASSED BY THEM IN I TA NO. 528/AHD/2013 DATED 17/01/2014 FOR THE LIMITED PURPOSE. THE HON'BLE ITAT STATED IN THE ORDER ABOVE MENTIONED MISCELLANEOUS APPLICATION THAT 'REGISTRY IS DIRECTED TO FIX THE HEARING ON 05/11/2014. SINCE THE DATE OF HEARING HAS BEEN PRONOUNCED IN THE OPEN COURT, THE ISSUANCE OF SEPARATE NOTICE IS DISPENSED WITH'. THEREAFTER A FRESH ORDER IN ITA NO. 528/AHD/2013 IN ASSESSEE'S APPEAL WAS PASSED ON 19/02/2016 ALLOWING THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE. VIDE PARA 4 OF THE ABOVE ORDER, THE HON'BLE ITAT STAT ED AS UNDER: 11 WITH THE ABOVE FACTUAL BACKGROUND, THIS APPEAL IS HEARD ONLY FOR THE L IMITED PURPOSE OF THE ADMISSIBILITY OF THE ADDITIONAL EVIDENCE. THE ID. COUNSEL WAS HEARD AT LENGTH. WE HAVE ALSO GIVEN A THOUGHTFUL CONSIDERATION TO THE APPLICATION FOR THE ADMIS SIBILITY OF ADDITIONAL EVIDENCE DATED 25.04.2013. IN OUR CONSIDERED OPTION, THE ADDITIONAL EVIDENC ES GO TO THE ROOT OF THE MATTER AND THEREFORE, THE ASSESSEE DESERVES AN OPPORTUN ITY TO DEFEND ITS CASE. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE ADMIT THE ADD ITIONAL EVIDENCES AND ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 4 RESTORE THE MATTER TO THE FILES OF THE A.O. THE ASSESSEE IS DIRECTED TO FILE THE NECESSARY EVIDENCES RELATING TO THE CLAIM OF COMMISSION BEFORE THE A.O- THE A.O. IS DIRECTED TO VERIFY AND EXAMINE AND DECIDE THE ISSUE AFRESH AFTER GIVING A REASONAB LE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE.' 4. TO GIVE EFFECT TO THE DIRECTION OF THE HON'BLE ITAT AS GIVE N IN PARA 3 ABOVE, NOTICE U/S. 143(2) R.W.S. 254 OF THE INCOME TAX ACT WAS ISSUED ON 24/08/2016 . IN RESPONSE TO THE NOTICE ISSUED, SHRI ANAND SHAH, C.A., ON BEHALF OF THE ASSESSEE COMPANY DULY AUTHORIZED ATTENDED AND SUBMITTED THE DETAILS CALLED FOR. ON THE BASIS OF DETAILS PRODUCED AND FILED, THE CASE WAS DISCUSSED AND HEARD. 5. DURING THE COURSE OF SET-ASIDE ASSESSMENT PROCEEDINGS, THE ASSES SEE WAS SPECIFICALLY ASKED TO FURNISH ALL RELEVANT DOCUMENTS AND EVIDENCE S IN SUPPORT OF ITS CLAIM AS DIRECTED BY THE HON'BLE ITAT AND AS NARRATED IN PARA 4 OF THE ORDER OF THE HON'BLE ITAT SO AS TO ENABLE THE UNDERSIGNED TO TAKE A FAIR VIEW ON THE IS SUE SET-ASIDE BY THE HON'BLE ITAT. VIDE ORDER SHEET ENTRY DATED 21/10/2016, THE AUTHORISED R EPRESENTATIVE OF THE ASSESSEE WAS ASKED TO FILE AFFIDAVIT OF ALL THREE AGE NTS FOR WORK DONE. IN RESPONSE, THE ASSESSEE FILED DETAILS ON 07/11/2016. 6 THE ABOVE SUBMISSION OF THE ASSESSEE AND DETAILS (AFFIDAVIT) FILE D HAS BEEN DULY CONSIDERED AND FOUND ACCEPTABLE AND THEREFORE, NO ADDITION ON ACCOUNT OF COMMIS SION EXPENSES IS REQUIRED TO BE MADE. 6. AGGRIEVED ASSESSEE CAME IN APPEAL BEFORE COMMISS IONER OF INCOME TAX(APPEALS) AGAINST THE ORDER 143(3) R.W.S. 263 B UT COULD NOT SUCCEED AS LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DISMISS ED ASSESSEES APPEAL. 7. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNA L. 8. AT THE OUTSET LEARNED COUNSEL FOR THE ASSESSEE S UBMITTED THAT ISSUE OF DISALLOWANCE OF COMMISSION ALSO PREVAILED DURING AS SESSMENT YEAR 2009-10 WHEREIN LEARNED ASSESSING OFFICER DISALLOWED COMMIS SION PAID TO THREE LADIES AT RS. 11,86,246/-. LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 5 DID NOT GRANT ANY RELIEF. THIS ISSUE TRAVELLED UPTO THE HONBLE ITAT, HOWEVER BOTH THE APPEAL OF ASSESSEE & REVENUE WERE DISMISS ED VIDE ITA NO. 528 AND 782/AHD/2013 DATED 17.01.2014. AGAINST THE ABOVE SA ID ORDER OF TH HONBLE ITAT, THE ASSESSEE FILED MISCELLANEOUS APPLICATION BEARING NO. 98/AHD/2014 STATING THAT WHILE DECIDING THE GROUND ABOUT THE CL AIM OF PAYMENT OF COMMISSION, THE ADDITIONAL EVIDENCE AND THE OTHER E VIDENCES PLACED ON RECORD WERE NOT CONSIDERED BY THE HONBLE TRIBUNAL. LEARNED COUNSEL FURTHER SUBMITTED THAT HONBLE TRIBUNAL DISPOSED OFF THE AB OVE REFERRED MISCELLANEOUS APPLICATION RECALLING THE ORDER PASSE D BY THEM IN ITA NO. 528/AHD/2013 DATED 17/01/2014 FOR THE LIMITED PURPO SE. THE CASE WAS RE- FIXED AND A FRESH ORDER WAS PASSED ON 19.02.2016 AL LOWING THE APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE AND DIRECTING THE ASSESSEE TO FILE THE NECESSARY EVIDENCE RELATING TO THE CLAIM OF COMMISSION BEFORE THE ASSESSING OFFICER. 9. IT WAS FURTHER SUBMITTED THAT ASSESSMENT ORDER U /S. 143(3) R.W.S. 254 OF THE ACT WAS COMPLETED ON 07.11.2016 CONSIDERING THE DETAILS INCLUDING AFFIDAVIT FILED BY THE ASSESSEE TO SUPPORT THE GENU INENESS OF THE COMMISSION EXPENSE. THE LEARNED ASSESSING OFFICER COMPLETED TH E ASSESSMENT AFTER MAKING NO ADDITION ON ACCOUNT OF COMMISSION EXPENSE S WHICH WERE PREVIOUSLY MADE IN THE ASSESSMENT ORDER U/S. 143(3) DATED 28.12.2011 DISALLOWING COMMISSION EXPENSES OF RS. 11,86,246/- 10. LEARNED COUNSEL FURTHER SUBMITTED THE NATURE OF EXPENDITURE FOR ASSESSMENT YEARS 2010-11, 2011-12 & 2012-13 ARE SIM ILAR TO THAT OF ASSESSMENT YEAR 2009-10 AND ALL RELATES TO COMMISSI ON PAID TO THREE LADIES AS A PERCENTAGE OF SALES FIGURE. FURTHER THE LEARNED A SSESSING OFFICER HAS HIMSELF ACCEPTED THE GENUINENESS AND BONAFIDENESS O F THE COMMISSION EXPENSE OF RS. 11,86,246/- PAID TO THREE LADIES NAM ELY MAY CHOWDHARY, ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 6 LAXMI DEVI AND RAJNI CHOWDHARY FOR ASSESSMENT YEAR 2009-10 THEN THE DISALLOWANCE FOR COMMISSION EXPENSE FOR ASSESSMENT YEAR 2010-11 TO 2012- 13 IS CERTAINLY NOT CALLED FOR. 11. ON THE OTHER HAND LEARNED DEPARTMENTAL REPRESEN TATIVE SUPPORTED THE ORDER OF THE AUTHORITIES. 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD PLACED BEFORE US. COMMON ISSUE FOR ASSESSMENT YEAR 2010-11 TO 2012-13 HAS BEEN RAISED BY THE ASSESSEE IS AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) UPHOLDING THE DISALLOWANCE OF COMMISS ION EXPENSE RELATING TO ASSESSMENT YEAR 2010-11 TO 2012-13 TO FOLLOWING PER SONS:- SL NO. NAME OF THE PERSONS A.Y. 2010-11 A.Y. 2011-12 A.Y. 2012-13 1 MAYA CHOWDHARY RS. 5,33,517/- RS. 8,90,895/- RS. 2,90,667/- 2 LAXMI DEVI --- RS. 7,01,625/- RS. 2,75,348/- 3 RAJANI CHOWDHARY RS. 2,36,640/- --- --- 13. WE OBSERVE THAT LEARNED COUNSELS CONTENTION IN SHORT IS THAT FOR ASSESSMENT YEAR 2009-10 ALSO SIMILAR DISALLOWANCE O F RS. 11,86,246/- OF COMMISSION EXPENSE PAID TO FOLLOWING THREE PERSONS WAS MADE:- SL NO. NAME OF THE PERSONS AY.2009-10 1 MAYA CHOWDHARY 5,41,534/- 2 LAXMI DEVI 4,24,712/- 3 RAJANI CHOWDHARY 2,20,000/- TOTAL 11,86,246/- ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 7 14. FURTHER WE OBSERVE THAT IN THE ORIGINAL ASSESSM ENT PROCEEDINGS U/S. 143(3) LEARNED ASSESSING OFFICER DISALLOWED RS. 11, 86,246/- AS BOGUS COMMISSION EXPENSE. THIS ADDITION WAS CONFIRMED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS). IN APPEAL BEFORE THE COORD INATE BENCH ASSESSEE LOST IN VIDE ITA NO. 528/A/13. THEREAFTER ASSESSEE FILED MISCELLANEOUS APPLICATION BEARING NO. 98/A/14 WHICH WAS DISPOSED OFF BY THE TRIBUNAL RECALLING THE ORDER PASSED IN ITA NO. 528/AHD/2013 DATED 17.01.14 FOR LIMITED PURPOSE. THEREAFTER A FRESH ORDER DATED 19. 02.2016 WAS PASSED ALLOWING THE APPEAL OF ASSESSEE FOR STATISTICAL PUR POSES RESTORING THE MATTER TO THE FILE OF ASSESSING OFFICER IN ORDER TO VERIFY AN D EXAMINE THE ADDITIONAL EVIDENCE AND DECIDE THE ISSUE AFRESH. SUBSEQUENTLY LEARNED ASSESSING OFFICER COMPLETED ASSESSMENT PROCEEDINGS U/S. 143(3) R.W.S. 254 OF THE ACT ON 07.11.16 MAKING NO ADDITION ON ACCOUNT OF COMMISSIO N EXPENSE WHICH WAS MADE EARLIER IN THE ORIGINAL ASSESSMENT PROCEEDINGS . LEARNED ASSESSING OFFICER AFTER VERIFYING THE DETAILS AND AFFIDAVIT F ILED BY THE ASSESSEE, ACCEPTED THE GENUINENESS AND BONAFIDENESS OF THE COMMISSION EXPENSE OF RS. 11,86,246/- PAID TO ABOVE SAID THREE PERSONS CALCUL ATED BY APPLYING A CERTAIN PERCENTAGE ON THE SALES MADE BY THEM. 15. IN LIEU OF THE ABOVE FACTS WE FIND THAT THE ASS ESSEE HAS SATISFIED THE ASSESSING OFFICER ABOUT THE IDENTITY GENUINENESS AN D BONAFIDENESS OF THE COMMISSION EXPENDITURE PAID TO THE ABOVE REFERRED T HREE PERSONS DURING ASSESSMENT YEAR 2009-10. IT HAS NOT BEEN DISPUTED B Y THE REVENUE THAT THE COMMISSION OF SIMILAR NATURE HAS BEEN PAID TO THESE PARTIES DURING THE ASSESSMENT YEAR 2010-11 TO 2012-13 AT RS. 7,70,157/ -, RS. 15,92,520/-, RS. 5,66,015/-. ITA.NO.2653/AHD/2014, 1168 & 1169/AHD/2016 ASSESSMENT YEARS 2010-11 TO 2012-13 - 8 16. WE ARE THEREFORE OF THE VIEW THAT IN THE GIVEN FACTS AND CIRCUMSTANCES, AS THE GENUINENESS AND BONAFIDENESS OF THE TRANSACT ION OF COMMISSION PAYMENT MADE TO THESE THREE PERSON HAS BEEN ESTABLI SHED WE FIND NO REASON TO SUSTAIN THE DISALLOWANCE OF IMPUGNED COMMISSION EXPENSE OF RS. 7,70,157/-, RS. 15,92,520/- & RS. 5,66,015/- FOR A. Y. 2010-11, A.Y. 2011- 12 & A.Y. 2012-13 RESPECTIVELY. WE THEREFORE SET AS IDE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) AND ALLOW THES E THREE APPEALS OF THE ASSESSEE. ORDER PRONOUNCED IN THE COURT ON 8 TH MAY, 2017 AT AHMEDABAD. SD/- SD/- (SHRI RAJPAL YADAV) JUDICIAL MEMBER DATED, 08 /05 /2017 MUKUL KUMAR, P.S. (SHRI MANISH BOARD) ACCOUNTANT MEMBER ! '!/ COPY OF THE ORDER FORWARDED TO : 1. $% / THE APPELLANT 2. &$% / THE RESPONDENT. 3. '(( ) * / CONCERNED CIT 4. ) * ( ) / THE CIT(A)- 5. !-. , , /DR,ITAT, AHMEDABAD. 6. .0 12 / GUARD FILE. ) ' / BY ORDER, ' (3 (ASSTT.REGISTRAR) ITAT, AHMEDABAD