Amarshiv Construction Pvt. Ltd., Baroda V. The Dy.CIT., Circle-1(1), Baroda

ITA 303/AHD/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5818 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 1 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 19-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M K PATEL
• Section: 143(3); 15

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: SHR I RAJPAL YADAV , JUDICIAL MEMBER AND SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AMARSHIV CONSTRUCTION PVT. LTD. 14, ATUL PARK SOCIETY, KARELIBAUG, BARODA - 390018 PAN: AACCA3235E (APPELLANT) VS THE DCIT, CIR - 1(1), AAYKAR BHAVAN, RACE COURSE, BARODA (RESPONDENT) REVENUE BY : S H RI PRASOON KABRA , S R. D . R. ASSESSEE BY: S H RI M.K. PATEL , A.R. DATE OF HEARING : 05 - 03 - 2 018 DATE OF PRONOUNCEMENT : 20 - 03 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBE R : - THIS ASSESSEE S APPEAL FOR A.Y. 2009 - 10 , ARIS ES FROM ORDER OF THE CIT(A) - 1, VADODARA DATED 27 - 11 - 2014 , IN PROCEEDINGS UNDER SECTION 2711(1 ) (C) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED CIT (APPEALS) ERRED IN HOLDING THAT PENALTY WAS LEVIABLE U/S 271(1)(C) DISALLOWANCE OF SALES COMMISSION. 2. THE LEARNED CIT (APPEALS) FURTHER ERRED IN CONFIRMING PENALTY OF RS.96,000/ - LEVIED U/S 271(1)(C) OF THE ACT 3. IT IS PRAYED THAT PENALTY LEVIED U/S 271(1)(C) BE DELETED. 3. BOTH THE GROUNDS OF APPEAL ARE RELATED TO THE COMMON ISSUE HENCE BOTH ARE DECIDED TOGETHER AS FOLLOWS. I T A NO . 303 / A HD/20 15 A SS ESSMENT YEAR 200 9 - 10 I.T.A NO. 303 /AHD/20 15 A.Y. 2009 - 10 PAGE NO AMARSHIV CONSTRUCTION PVT. LTD. VS. DCIT 2 4. THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE HAS FILED THE RETURN OF INCOME ON 26 TH SEPTEMBER , 2009 DECLARING TOTAL INCOME OF RS. 1 , 76 , 70 , 890/ - . THE ASSESSMENT U/S 143(3) OF THE ACT WAS FINALIZED BY MAK ING ADDITION ON ACCOUNT OF UNPROVED GENUINENESS OF COMMISSION EXPENSES OF RS . 2 , 81 , 124/ - . ON SCRUTINY T HE ASSESSING OFFICER NOTICED THAT ASSESSE E HAS CLAIMED RS. 2 , 41 , 124 / - AS COMMISSION EXPENSES PAID TO M/S SAMRAT TRADING CORPORATION, PROP. ASHOK M. PATEL, HUF . TO PROVE THE GENUINENESS OF THE COMMISSION EXPENSES, ASSESSEE WAS ASKED TO SUBSTANTIATE THE SERVICES RENDERED BY SHRI ASHOK M. PATEL HUF THE RECIPIENT OF THE AFORESAID COMMISSION. THE ASSSESSEE HAS EXPLAINED THAT THE COMMISSION PAYMENT HAS BEEN MADE FOR MATERIAL SOLD THROUGH THEM. HOWEVER,T HE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE ASSESSEE AS IT FAILED TO FURNISH TH E SUPPORTING RELEVANT MATERIAL TO PROVE THE GENUINENESS OF SERVICES RENDERED BY THE KARTA OF HUF. THEREFORE, THE ASSESSING OFFICER HAS INITIATED PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE ACT. DURING THE COURSE OF PENALTY PROCEEDINGS U/S. 271(1)(C) OF T HE ACT, THE ASSESSING OFFICER NOTICED THAT N O NEW EVIDENCE OR ARGUMENT HAS BEEN BROUGHT BY ASSESSEE IN ITS SUBMISSION. HE ALSO OBSERVED THAT H AD THE CASE NO T BEEN SELECTED FOR SCRUTINY , VERIFICATION THE REAL INCOME OF THE ASSESSEE WOULD HAVE REMAIN UNDET ECTED. CONSEQUENTLY, THE ASSESSING OFFICER CONCLUDED THAT ASSESSEE HAS FURNISHED INACCURATE PARTICULARS OF INCOME AND CONCEALED THE INCOME WITHIN THE MEANIN G OF EXPLANATION 1 TO SECTION 271(1)(C) OF THE ACT. ACCORDINGLY, ASSESSING OFFICER HAS LEVIED PENAL TY OF RS. 96,000/ - U/S. 271(1)(C) OF THE ACT. 5 . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS SUSTAINED THE PENALTY LEVIED BY THE ASSESSING OFFICER. THE RELEVANT PART OF THE FINDINGS OF LD. CIT(A) IS REPRODUCED AS UN DER: - 5. I HAVE CONSIDERED THE FACTS OF THE CASE, SUBMISSION OF THE APPELLANT AND THE AO'S OBSERVATIONS. THE SUBMISSION OF AR OF THE APPELLANT AS REPRODUCED IN EARLIER PARAGRAPHS IS NOT FOUND TO BE TENABLE. THE FACT IS THAT THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS FAILED TO PROVE GENUINENESS OF PAYMENT OF COMMISSION. IN THIS REGARD THE. RELEVANT PART OF DECISION OF LD. CIT(A) (I.E. MY PREDECESSOR) AS GIVEN BY HIM WHILE DECIDING THE QUANTUM ADDITION IN HIS APPEAL ORDER IN APPEAL NO. CAB/I - 2 71/11 - 12 DATED 30/11/2012 IS REPRODUCED HEREUNDER FOR REFERENCE: 'THE REPLY OF THE ASSESSES IS CONSIDERED BUT IT CANNOT BE ACCEPTED THAT ASSESSES FAILED TO PROVE ITS GENUINENESS OF PAYMENT OF COMMISSION WHERE THE KARTA OF HUF HAS ALREADY DIED IN I.T.A NO. 303 /AHD/20 15 A.Y. 2009 - 10 PAGE NO AMARSHIV CONSTRUCTION PVT. LTD. VS. DCIT 3 MARCH 2000 . IN THIS REGARD, IT IS WORTHWHILE TO MENTION HERE THAT THE ADDITION SO MADE IN THE ASSESSEE'S OW N CASE FOR THE AY: 2004 - 05, THE LD. CIT(A) - I, BARODA, HAS UPHELD THE ADDITION MADE BY THE AO VIDE APPELLATE ORDER IN APPEAL NO. CAB - I/185/08 - 09 DATED 17.03.201 0, AND THE FINDING OF THE LD. CIT(A) IN THIS REGARD IS REPRODUCED AS UNDER: 'I HAVE CONSIDERED THE SUBMISSION O F THE LD. A.R. AND THE FACTS OF THE CASE. IT IS NOTEWORTHY THAT THE KARTA OF THE HUF (COMMISSION AGENT) WAS SHRI ASHOK M. PATEL, WHO IN TH E PAST INDIVIDUALLY TOOK EFFORTS TO PROCU RE BUSINESS FOR THE ASSESSEE. HOWEVER, SHRI PATEL DIED IN MARCH, 2000. SUBSEQUENTLY, THE PAYMENTS OF COMMISSION HAVE CONTINUED TO BE MADE TO THE HUF, ALTHOUGH THE KEY PERSON NO LONGER EXISTED. FOR EARNING COMMISSION CERTA IN SERVICE S MUST BE PROVIDED WHICH SHOULD HAVE SOME COMMERCIAL VALUE FOR THE ASSESSEE. IT IS NOT UNDERSTOOD WHAT WAS THE NATURE OF THE SERVICES PROVIDED WHEN THE AGENT HIMSELF WAS DECEASED. NO LIGHT HAS BEEN SHED ON THIS ASPECT BY THE APPELLANT. ACCORDINGL Y, IT IS HELD THAT THE AO HAD RIGHTLY DISALLOWED THE COMMISSION PAYMENT OF RS. 1,96,629/ - , WHICH IS UPHELD.' IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO TAKING INTO CONSIDERATION THE DECISION OF THE LD. - CIT(A), AS REPRODUCED ABOVE, T HE COMMISSION PAID TO SAMRAT TRADING CORPORATION, PROP. ASHOK M. PATEL (HUF) OF RS. 2,81,124/ - IS HEREBY DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSE E. PENALTY PROCEEDINGS U/S 271(1 )(C) OF THE I.T. ACT HAS ALSO BEEN INITIATED SEPARATELY ON THIS POINT FOR FURNISHING INACCURATE PARTICULARS OF INCOME WITHIN MEANING O F EXPLANATION - 1 TO SECTION 271(1 )(C) OF THE I.T. ACT.' 5.1 AS CAN BE SEEN FROM THE ABOVE THAT THE SIMILAR ADDITION MADE IN THE CASE OF APPELLANT FOR AY 2004 - 05 HAS BEEN UPHELD BY T HE THEN LD. CIT(A) - I, BARODA IN HIS APPEAL ORDER DATED 17/03/2010. IN THIS APPEAL ORDER DATED 17/03/2010 IT HAS BEEN OBSERVED BY THE THEN LD. CIT(A) - I, BARODA THAT THE KARTA OF HUF (COMMISSION AGENT) IN THE PAST USED TO TAKE EFFORT TO PROCURE BUSINESS FOR THE APPELLANT. HOWEVER, KARTA OF HUF DIED IN MARCH 2000 AND STILL SUBSEQUENTLY THE PAYMENT OF COMMISSION WAS CONTINUED TO BE MADE TO THE HUF ALTHOUGH THE KEY PERSON NO LONGER EXISTED. THE APPELLANT ALSO FAILED TO ESTABLISH BEFORE THE AO AS WELL AS BEFORE T HE LD. CIT(A) THAT ANY SERVICES WERE ACTUALLY RENDERED BY THE HUF. IT IS OBSERVED BY THE THEN LD. CIT(A) IN HIS APPEAL ORDER DATED 17/03/2010 THAT IT WAS NOT UNDERSTOOD WHAT WAS THE NATURE OF SERVICES PROVIDED WHEN THE AGENT HIMSELF WAS DECEASED. NO LIGHT WAS SHED ON THIS ASPECT BY THE APPELL ANT. ALL THESE FACTS CLEARLY ESTABLISH THAT THE APPELLANT HAS FILED INACCURATE PARTICULARS OF INCOME FOR WHICH IT IS LIABLE FOR PENALTY. IN MY OPINION , EXPLANATION 1 TO SECTION 271(1 )(C) IS APPLICABLE TO THE APPELLANT. IN VIEW OF THIS THE PENALTY OF RS. 96,000 / - AS LEVIED BY THE AO U/S 271(1 )(C) OF THE IT ACT IS HEREBY CONFIRMED. 6 . WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD CAREFULLY. THE ASSESSEE WAS ASKE D TO PROVE GENUINENESS OF THE COMMISSION PAYMENTS MADE TO SAMRAT TRADING CORPORATION, PROP. ASHOK M. PATEL (HUF) OF RS. 2,81,124/ - . WE OBSERVE THAT THE ASSESSEE FAILED TO FURNISH SUPPORTING RELEVANT MATERIAL BEFORE THE ASSESSING OFFICER TO DEMONSTRATE THA T SAMRAT TRADING CORPORATION, PROP. ASHOK M. PATEL (HUF) HAS RENDERED THE SERVICES FOR WHICH THE COMMISSION WAS PAID. AT SECOND STAGE BEFORE THE LD. CIT(A) THE ASSESSEE HAS ALSO FAILED TO PROVE THE SERVICES RENDERED BY THE RECIPIENT OF COMMISSION WITH THE RELEVANT MATERIAL.. EVEN, THE ASSESSEE HAS NOT FURNISHED ANY CONFIRMATION FROM THE SALE PARTIES TO DEMONSTRATE THAT SALES WERE MATERIALIZED THROUGH THOSE PERSONS TO WHOM THE COMMISSION PAYMENTS WERE MADE. AFTER CONSIDERING THESE FACTS AND FINDINGS ELA BORATED IN THE ORDER OF THE LD. CIT(A), WE OBSERVED THAT I.T.A NO. 303 /AHD/20 15 A.Y. 2009 - 10 PAGE NO AMARSHIV CONSTRUCTION PVT. LTD. VS. DCIT 4 ASSESSEE HAS FILED INACCURATE PARTICULARS OF INCOME IN RESPECT OF ITS CLAIM OF COMMISSION OF RS. 2,81,124/ - THEREFORE, WE JUSTIFY THE DECISION OF THE LD. CIT(A) IN SUSTAINING THE PENALTY OF RS. 96,0 00/ - LEVIED BY THE ASSESSING OFFICER. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 7 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD : DATED 20 /03 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,