Shri Amitkumar B.Tailor, Surat V. The Income tax Officer,Ward-5(1), Surat

ITA 2854/AHD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67828 (ITAT-AHMEDABAD)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 20-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: O P BATHEJA
• Assessee Lawyers: V V SHAH
• Keywords: Business expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI N. S. SAINI , ACCOUNTANT MEMBER ITA NO. 2854/AHD/2012 ASSESSMENT YEAR :2006-07 AMITKUMAR B. TAILOR C/O. MADHV & ASSOCIATES CHARTERED ACCOUNTANTS S-124/125 BELGIUM SQUARE, OPP LINEAR BUS STAND, NEAR DELHI GATE, SURAT 395003 V/S . INCOME TAX OFFICER, WARD 5(1), SURAT. PAN NO. A CSPT1838K (APPELLANT) .. (RESPONDENT) BY APPELLANT SHRI V. V. SHAH, A.R. /BY RESPONDENT SHRI O. P. BATHEJA, SR. D.R. /DATE OF HEARING 22.10.2013 /DATE OF PRONOUNCEMENT 25.10.2013 O R D E R PER : SHRI N. S. SAINI, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-I, SURAT, DATED 27.09.2012. 2. THE SOLE ISSUE INVOLVED IN THIS APPEAL IS THAT T HE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 1,45,590/- U/ S.271(1)(C) OF THE ACT. 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE ORDERS OF LOWER AUTHORITIES AND MATERIALS AVAILABLE ON RECORD. IN THE INSTANT CASE, THE ASSESSEE IS A POSTAL COMMISSION AGENT. DURING THE COURSE OF ASSESSMENT, COMMISSION OF RS.5,67,595/- WAS CLAIMED BY THE ASSE SSEE, AS PAID TO SHRI NITINBHAI RS.1,88,389/-, SHRI JAGDISHBHAI RS.1,84,1 59/- AND SHRI VIJAYBHAI RS. ITA NO. 2854/AHD/12 A.Y. 06-07 PAGE 2 1,95,047/- AND EXPENDITURE OF RS.49,325/- OUT OF TH E TOTAL EXPENDITURE OF RS.1,97,301/- WERE DISALLOWED. ON APPEAL, THE TRIB UNAL CONFIRMED THE DISALLOWANCE OF COMMISSION OF EXPENDITURE OF RS.5,6 7,595/- ON THE GROUND THAT THE ASSESSEE COULD NOT FURNISH THE EVIDENCE OF RENDERING OF SERVICES BY THE PERSONS TO WHOM COMMISSION WAS PAID. IN RESPEC T OF DISALLOWANCE OF RS.49,325/- MADE BY THE A.O., ON APPEAL, THE LD. CI T(A) REDUCED THE DISALLOWANCE TO RS.19,730/-. THE LD. CIT(A) CONFIR MED THE DISALLOWANCE TO THE EXTENT OF RS.19,730/- ON THE GROUND THAT THE ASSESS EE COULD NOT PRODUCE THE BOOKS OF ACCOUNT OR DOCUMENTS IN SUPPORT OF EXPENSE S. 4. IN THE MEAN WHILE ON 21.03.2012, THE ASSESSING O FFICER LEVIED PENALTY U/S.271(1)(C) OF RS.1,45,590/- IN RESPECT OF RS.5,6 7,595/-. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ABOVE LEVY OF PENALTY ON THE G ROUND THAT THE ASSESSEE COULD NOT PRODUCE THE EVIDENCE OF PAYMENT OF COMMIS SION, THE EVIDENCE OF SERVICE RENDERED AND THE BOOKS OF ACCOUNT AND THE A SSESSEE FAILED TO ESTABLISH THAT THE EXPENDITURE WAS BONAFIDE. 5. THE LD. A.R. OF THE ASSESSEE POINTED OUT BEFORE US THAT THE GENUINENESS OF THE PAYMENT OF COMMISSION ARE ESTABLISHED BY THE ASSESSEE BY PRODUCING CONFIRMATION OF THE THREE PARTIES TO WHOM COMMISSIO N WAS PAID AND COPY OF THE INCOME TAX RETURN. FURTHER, THE SUMMON TO THE SAID THREE PARTIES ISSUED BY THE DEPARTMENT WERE ALSO SERVED BY THE DEPARTMEN T ON THE SAID THREE PERSONS. BECAUSE OF NON-COOPERATION BY THE THREE P ARTIES, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE OF RENDERING OF SERV ICE BY THEM. HE POINTED OUT FROM THE ORDER OF THE TRIBUNAL PASSED IN QUANTU M APPEAL THAT THE ITA NO. 2854/AHD/12 A.Y. 06-07 PAGE 3 DISALLOWANCE WAS MADE ONLY ON THE GROUND THAT EVIDE NCE OF RENDERING OF SERVICES BY THE SAID THREE PARTIES COULD NOT BE PRO DUCED BY THE ASSESSEE. THUS, THE ENTIRE FACTS AVAILABLE WITH THE ASSESSEE, WERE PRODUCED BEFORE THE LOWER AUTHORITIES. 6. WE FIND THAT IN THE INSTANT CASE, DISALLOWANCE O F RS.49,325/- OUT OF THE BUSINESS EXPENDITURE OF RS.1,97,301/- MADE BY THE A .O. WAS REDUCED BY THE LD. CIT(A) TO RS.19,730/-. THUS, DISALLOWANCE OF R S.29,595/- WAS DELETED BY THE LD. CIT(A) IN QUANTUM APPEAL. IN THE ABOVE CIR CUMSTANCES, THERE COULD BE NO JUSTIFICATION FOR THE LD. CIT(A) TO CONFIRM THE LEVY OF PENALTY IN RESPECT OF THE SAID RS.29,595/-. FURTHER, WE FIND THAT THE BALANC E DISALLOWANCE OF RS.19,730/- WAS ON ESTIMATE BASIS AND NO MATERIAL W AS BROUGHT ON RECORD TO SHOW THAT THE SAME WAS BOGUS OR FIXITIOUS. FURTHER IN RESPECT OF COMMISSION PAYMENT OF RS.5,67,595/-, WE FIND THAT THE GENUINEN ESS OF THE PAYMENT HAS BEEN SUPPORTED BY THE CONFIRMATION OF THE RECIPIENT S AND THE INCOME TAX RETURN OF THE RECIPIENTS. IN THE ABOVE CIRCUMSTANC ES, THE DISALLOWANCE WAS MADE ONLY BECAUSE OF INABILITY OF ASSESSEE TO BRING ON RECORD MATERIAL FOR DEDUCTIBILITY OF THE AFORESAID EXPENSES BY PRODUCIN G EVIDENCES IN SUPPORT OF RENDERING OF SERVICES BY THE THREE RECIPIENTS OF P AYMENTS. THUS, IN THE INSTANT CASE, IT IS OBSERVED THAT THE DISALLOWANCE WAS MADE BECAUSE OF INABILITY OF THE ASSESSEE TO SUBSTANTIATE ITS CLAIM. BUT AT THE SAM E TIME, NO MATERIAL COULD BE BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THE C LAIM WAS NOT BONAFIDE OR THE CLAIM WAS FALSE OR NON GENUINE. THE HONBLE SU PREME COURT IN THE CASE OF CIT VS. RELIANCE PETROPRODUCTS PVT. LTD. [2010] 322 ITR 158, HAS HELD AS ITA NO. 2854/AHD/12 A.Y. 06-07 PAGE 4 UNDER: A MERE MAKING OF CLAIM, WHICH IS NOT SUSTAINABLE I N LAW, BY ITSELF, WILL NOT AMOUNT TO FURNISHING INACCURATE PARTICULAR S REGARDING THE INCOME OF THE ASSESSEE. SUCH A CLAIM MADE IN THE R ETURN CANNOT AMOUNT TO FURNISHING INACCURATE PARTICULARS. THUS, CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCE S OF THE CASE, IN OUR CONSIDERED VIEW, LEVY OF PENALTY OF RS.1,45,590/- I S NOT SUSTAINABLE. WE, ACCORDINGLY DELETE THE SAME AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 25 TH OF OCTOBER, 2013, AT AHMADABAD. SD/- SD/- ( MUKUL KR. SHRAWAT ) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA ! ! ! ! '! '! '! '! / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. '(' ) * / CONCERNED CIT 4. *- / CIT (A) 5. !./ ), ) , 12( / DR, ITAT, AHMEDABAD 6. /45 67 / GUARD FILE. BY ORDER/ , 8/ 1 ': ) , 12( ;