M/s. Modern Industries, Ahmedabad V. The ACIT., Circle-2, Ahmedabad

ITA 2904/AHD/2007

• Counselvise Citation: [2009] 115 COUNSELVISE.COM (IT) 0195 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-09-2009
• Assessment Year: 2000-2001
• Appeal Filed On: 06-07-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NEETA SHAH
• Assessee Lawyers: S N DIVETIA
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE SHRI P.K.BANSAL, ACCOUNTANT MEMBER AND SHRI MAHAVIR SINGH, JUDICIAL MEMBER ITA NO.2904/AHD/2007 ASSESSMENT YEAR: 2000-01 DATE OF HEARING:9.9.09 DRAFTED:9.9.09 M/S. MODERN INDUSTRIES 2, CLOTH COMMERCIAL CENTRE 3 RD FL. SAKAR BAZAR, AHMEDABAD PAN NO.AACFM5407H V/S . ACIT, CIRCLE-2, AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI S.N. DIVETIA, AR RESPONDENT BY:- SMT. NEETA SHAH, SR. DR O R D E R PER MAHAVIR SINGH JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-VI, AHMEDABAD IN APPEAL NO CIT (A)VI/CIR.2/98/2005-06 DATED 08-06-2007. THE ASSESSMENT WAS FRAMED BY THE ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE-2, AHMEDABAD U/S.147 R.W.S. 143(3) OF THE IN COME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 01-0 3-2006 FOR THE ASSESSMENT YEAR 2000-01. 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE DISALLOWANCE OF COMMISSION PAYMENT O F RS.1,70,970/-. 3. AT THE OUTSET LD. COUNSEL FOR THE ASSESSEE FILED A COPY OF TRIBUNALS ORDER IN THE IMMEDIATE NEXT ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2001-02 IN ITA NO.3275/AHD/2004 DATED 03-10-2008 IN ASSESSEES OWN CASE, THE TRIBU NAL HAS ITA NO.2904/AHD/2007 A.Y. 2000-01 M/S. MODERN INDUSTRIES V. ACIT CIR-2 ABD PAGE 2 ALLOWED THE CLAIM OF COMMISSION EXACTLY ON SIMILAR FACTS BY HOLDING IN PARA-4 TO 6 AS UNDER:- 4. GROUND NO.3 RELATES TO DISALLOWANCE OF COMMISSI ON OF RS.1,16,030/-. THE BRIEF FACTS OF THE CASE RELATING TO THIS GROUND ARE THAT THE ASSESSEE HAS PAID COMMISSION OF RS.1,1 6,030/- TO SHRI CHAMPAVAT. THE AO OBSERVED THAT THE ASSESSEE H AS NOT PRODUCED SHRI CHAMPAVAT AND MOST OF THE PAYMENTS WE RE MADE IN CASH. HE THEREFORE MADE THE IMPUGNED ADDITION. W HEN THE MATTER WENT BEFORE THE CIT(A), THE CIT(A) CONFIRMED THE DISALLOWANCE BY OBSERVING AS UNDER: 5.1. I HAVE CONSIDERED THE SUBMISSIONS OF THE LEAR NED COUNSEL, COMMENTS OF THE ASSESSING OFFICER AND COUNTER COMMENTS OF THE A PPELLANT. I HAVE ALSO PERUSED THE DETAILS ON RECORD. THE APPELLANT CLAIME D PAYMENT OF COMMISSION OF RS.1,16,030/- TO SHRI G.S. CHAMPAVAT FOR PROMOTI ON OF SALES OF HUSK. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE GENUIN ENESS OF THIS CLAIM BECAUSE THERE WAS NO DOCUMENTARY EVIDENCE ON RECORD TO SHOW AS TO WHETHER ANY SERVICES WERE RENDERED BY SHRI G.S. CHA MPAVAT FOR PROMOTION OF SALE OF HUSK AS CLAIMED AND FURTHER THE MOST OF THE PAYMENTS WERE MADE IN CASH. HE, THEREFORE, REQUIRED THE APPELLANT TO PROD UCE SHRI G.S. CHAMPAVAT BEFORE HIM ON 11.3.2004. THE APPELLANT, HOWEVER, DI D NOT OBLIGE. THE ASSESSING OFFICER, THEREFORE, ISSUED A SHOW CAUSE N OTICE TO THE APPELLANT ON 17.3.2004 ASKING IT TO EXPLAIN AS TO WHY THE CLAIM FOR PAYMENT OF COMMISSION OF RS.1,16,030/- TO SHRI G.S. CHAMPAVAT SHOULD NOT BE DISALLOWED. IN RESPONSE TO THIS NOTICE, THE APPELLANT FILED A REPL Y ON 22.3.2004. IN THIS REPLY, IT WAS PLEADED THAT SHRI G.S. CHAMPAVAT COULD NOT BE P RODUCED BEFORE THE ASSESSING OFFICER ON 11.3.2004 BECAUSE SHRI G.S. CH AMPAVAT WAS ADMITTED IN THE HOSPITAL ON THAT DATE ON ACCOUNT OF SOME ILL NESS. THE APPELLANT ALSO STATED THAT HE WAS FILING THE PROOF AS REGARDS REND ERING OF SERVICES BY SHRI G.S. CHAMPAVAT FOR PROMOTION OF SALE OF HUSK AND AL SO THE REASON AS TO WHY SHRI G.S. CHAMPAVAT DID NOT FILE HIS INCOME TAX RET URN. THE ASSESSING OFFICER REJECTED THIS EXPLANATION ON THE GROUND THAT THE BA NK STATEMENT OF SHRI G.S. CHAMPAVAT WAS NOT PRODUCED AND FURTHER IT ALSO COUL D NOT BE VERIFIED AS TO WHETHER THE ALLEGED COMMISSION OF RS.1,16,030/- WAS OFFERED BY SHRI G.S.CHAMPAVAT FOR ASSESSMENT BECAUSE SHRI G.S. CHAM PAVAT DID NOT FILE HIS INCOME-TAX RETURN FOR THE A.Y.2001-02 AND HE, ACCOR DINGLY, DISALLOWED THE CLAIM FOR PAYMENT OF COMMISSION TO SHRI G.S. CHAMPA VAT. THE FINDINGS OF THE ASSESSING OFFICER ARE CORRECT AND LOGICAL. THE ONUS LAY ON THE APPELLANT TO PROVE THE GENUINENESS OF ITS CLAIM OF HAVING PAID T HE COMMISSION OF RS.1,16,030/- TO SHRI G.S. CHAMPAVAT AND ALSO TO ES TABLISH AS TO WHETHER ANY SERVICES WERE RENDERED BY SHRI G.S. CHAMPAVAT TO TH E BUSINESS OF THE APPELLANT FIRM SO AS TO JUSTIFY THE PAYMENT OF SUCH HUGE AMOUNT OF COMMISSION TO HIM. THE APPELLANT HAS DEFINITELY NOT DISCHARGED THIS ONUS SATISFACTORILY. IT DID NOT PRODUCE SHRI G.S. CHAMPA VAT BEFORE THE ASSESSING OFFICER ON 11.3.2004. EVEN IF IT IS ASSUMED THAT SH RI G.S. CHAMPAVAT WAS ILL ON 11.3.2004, AT LEAST, HE COULD HAVE BEEN PRODUCED ON 22.3.2004 IN RESPONSE TO THE ASSESSING OFFICERS SHOW CAUSE NOTI CE DATED 17.3.2004. IT IS NOT THE CASE OF THE APPELLANT THAT SHRI G.S. CHAMPA VAT, THE RECIPIENT OF THE ITA NO.2904/AHD/2007 A.Y. 2000-01 M/S. MODERN INDUSTRIES V. ACIT CIR-2 ABD PAGE 3 ALLEGED COMMISSION, REMAINED SERIOUSLY ILL SO AS TO REQUIRE HIS HOSPITALIZATION THROUGHOUT DURING THIS PERIOD FROM 11.3.2004 TO 22. 3.2004. FROM THE FACTS ON RECORD, IT IS CLEAR THAT THE APPELLANT INTENTIONALL Y AVOIDED TO PRODUCE SHRI G.S. CHAMPAVAT BEFORE THE ASSESSING OFFICER. IN THE CIRC UMSTANCES, THE APPELLANTS CLAIM FOR PAYMENT OF ALLEGED COMMISSION OF RS.1,16,030/- TO SHRI G.S. CHAMPAVAT CANNOT BE TAKEN AS ESTABLISHED. THE ASSESSING OFFICER, THEREFORE, WAS JUSTIFIED IN DISALLOWING THIS CLAIM AND HIS FINDINGS IN THIS REGARD ARE UPHELD. ACCORDINGLY, THE DISALLOWANCE OF CLAIM FOR PAYMENT OF COMMISSION OF RS.1,16,030/- TO SHRI G.S. CHAMPAVAT IS CONFIRME D. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND, PERUSED THE MATERIAL ON RECORD ALONG WITH THE ORDER OF THE TAX AUTHORITIES BELOW. IT IS TRUE THAT THE MOST OF THE PAYMENTS WERE MADE TO SHRI G.S. CHAMPAVAT IN CASH BUT THE FACT REMAINS THAT ALL THE SE PAYMENTS ARE GENUINE. FURTHER, SHRI G.S.CHAMPAVAT COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER ON 11.3.2004 AS HE WAS HOSPITALIZED ON THAT DATE. WE ALSO FIND THAT THE COMMISSION WAS PAID BY THE ASSESSEE TO SHRI G.S.CHAMPAVAT FOR THE SERVICES REN DERED BY HIM TOWARDS THE SALE OF HUSK. SHRI CHAMPAVAT HAS CONFIR MED THE RECEIPT OF COMMISSION. SHRI G.S. CHAMPAVAT WAS A CA NVASSING AGENT OF THE ASSESSEE FIRM AND THAT IT IS A NORMAL PRACTICE IN THE ASSESSEES LINE OF BUSINESS IN AS MUCH AS SIMILAR P AYMENTS FOR CANVASSING OF CHANADAL AND BESAN WERE MADE TO THE B ROKERS SHRI PRATAPRAI M.SANGHVI, M/S.SHIVSHAKTI TRADING CO., M/ S.JAYANT TRADERS, SHRI SHAILESHKUMAR M. BHANANI ETC. WHICH H AVE BEEN ALLOWED. THE ASSESSEE HAS SUBMITTED ITS EXPLANATIO N TO THE ASSESSING OFFICER VIDE ITS LETTER DATED 22.3.2004 A S REGARDS ITS FAILURE TO PRODUCE SHRI G.S.CHAMPAVAT BEFORE HIM ON 11.3.2004. NO FURTHER OPPORTUNITY WAS ALLOWED BY THE ASSESSING OFFICER TO PRODUCE SHRI G.S.CHAMPAVAT BEFORE HIM. THE AO HAS MADE THE ADDITION MERELY ON THE BASIS OF PRESUMPTION THAT THAT SHRI G.S.CHAMPAVAT WAS NOT PR ODUCED BY THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDING S. BUT WE FIND THAT IN THAT CASE, THE ASSESSING OFFICER COULD HAVE SUMMONED AND EXAMINED SHRI G.S.CHAMPAVAT TO ASCERTA IN THE GENUINENESS OF THE ASSESSEES CLAIM AS REGARDS PAYM ENT OF COMMISSION TO HIM. IN VIEW OF THESE FACTS, IN OUR OPINION, THE ASSESSE E HAS BEEN ABLE TO ESTABLISH THE GENUINENESS OF THE CLAIM BY DISCHA RGING THE ONUS LAYS UPON HIM. WE, THEREFORE, SET-ASIDE THE ORDER O F THE CIT(A) ON THIS POINT AND DIRECT THE AO TO DELETE THE IMPUGNED ADDITION. THUS, THIS GROUND TAKEN BY THE ASSESSEE IS ALLOWED. ITA NO.2904/AHD/2007 A.Y. 2000-01 M/S. MODERN INDUSTRIES V. ACIT CIR-2 ABD PAGE 4 4. AS THE FACTS ARE EXACTLY IDENTICAL IN THE PRES ENT YEAR ALSO AND THE LD. DEPARTMENTAL REPRESENTATIVE HAS NOT DISPUTED THE SA ME, TAKING A CONSISTENT VIEW WE ALLOW THE CLAIM OF THE ASSESSEE. 5. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 30/10/2009 SD/- SD/- (P.K.BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD, DATED : 30/10/2009 *DKP COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)-VI, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD