Pravin Kumar Hetamsaria, V. ACIT, Cir-3, Asansol, Asansol

ITA 314/KOL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5895 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2010-2011
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH KUMAR CIT SRDR
• Assessee Lawyers: KHETRA MOHAN ROY
• Keywords: Business expenditure
• Section: 133(6); 37(1)

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 314 / KOL / 20 15 ASSESSMENT YEAR :2010-11 PRAVIN KUMAR HETAMSARIA, PROPRIETOR PRATIK AUTOMOBILES, OLD H.B. ROAD, NR. GOVT. BUS STAND, PATEL CHOWK, RANCHI-834001 [ PAN NO.AAYPH 0545 F ] V/S . ACIT, CIRCLE-3, GROUND FLOOR, PARMAR BUILDING, 54, G.T. ROAD(WEST), ASANSOL-71334 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI KHETRA MOHAN ROY, FCA /BY RESPONDENT SHRI SAURABH KUMAR, ADDL. CIT-SR-DR /DATE OF HEARING 09-07-2018 /DATE OF PRONOUNCEMENT 25-07-2018 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2010-11 AGAINST CHALLENGES CORRECTNESS OF COMMISSIONER OF INCOME TA X (APPEALS)-ASANSOLS ORDER DATED 28.01.2015, PASSED IN CASE NO.122/C.I.T (A)/ASL/CIR-3/ASL/13-14, UPHOLDING ASSESSING OFFICERS ACTION DISALLOWING IT S COMMISSION EXPENDITURE OF 26,86,047/- PAID TO SHRI SHYAM SUNDER HETAMSARIA, R AJIV CHAKRABORTY, INVOLVING SUM OF 8,94,971/-, 8,95,072/-; RESPECTIVELY IN ASSESSMENT ORDER DATED 20.03.2013 INVOLVING IN PROCEEDINGS U/S. 143( 3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ITA NO.314/KOL/2015 A.Y. 20 10-11 PRAVIN KR. HETASMSARIA VS. ACIT, CIR-3 ASL. PAGE 2 2. WE STRAIGHTWAY COME TO THE RELEVANT FACTS REGAR DING THE ABOVE SOLE ISSUE OF COMMISSION EXPENDITURE DISALLOWANCE. THERE IS NO DISPUTE THAT THE ASSESSEE HAD CLAIMED TO HAVE INCURRED THE IMPUGNED EXPENDITURE IN RESPECT OF HIS AUTOMOBILE AGENCY UNDER THE NAME AND STYLE O F M/S PRATIK AUTOMOBILES. THE ASSESSING OFFICER ISSUED U/S 133(6) NOTICES TO ELEVEN PARTIES ON TEST CHECK BASIS. THIS ENQUIRY IN FURTHERANCE THEREOF RE VEALED THAT THE CORRESPONDING CUSTOMERS DENIED TO HAVE ENGAGED ANY COMMISSION SERVICES OF THE RELEVANT PAGES THE ASSESSING OFFICER THEREFO RE TREATED THE IMPUGNED EXPENDITURE AS NON GENUINE TO DISALLOW THE SAME IN HIS ASSESSMENT ORDER. 3. CIT(A) UPHOLDS ASSESSMENT FINDINGS AS UNDER:- 12. GROUND 3 IS AGAINST DISALLOWANCE OF COMMISSION. THE ASSESSEE HAS DEBITED COMMISSION PAYMENT TO MRS. ITU CHAKRABORTY OF RS.8,96,004/-, SHRI RAJIV CHAKRAABAORTY OF RS.8,95,072/- AND SHRI SHYAM SUNDER HETAMSARIA RS.8,94,971/-. THE LAST IS FATHER OF APPELLANT, THE SECOND PERSON IS AN ACTIVE EMPLOYEE OF ASSESSEE AND FIRST ONE WIFE OF SHRI RAJ IV CHAKRABORTY. 13. AS PART OF ENQUIRY IN RESPECT OF SHRI SHYAM SUN DER HETMSARIA, ON BASIS OF INFORMATION FURNISHED BEFORE ASSESSING OFFICER, NOT ICES WERE ISSUED TO SOME PURCHASERS, THE EXTRACT OF SAME FROM AS ORDER IS AS UNDER:- TO VERIFY THE VERACITY OF THE CLAIM OF THE ASSESSE E, NOTICE UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 WAS ISSU ED TO SOME OF THE PARTIES ON TEST CHECK BASIS WHO HAVE BEEN CLAIMED T O HAVE BEEN INTRODUCED BY THE ASSESSEE WITH M/S PRATIK AUTOMOBI LES FOR THE PURCHASE OF VEHICLES. REPLIES RECEIVED FROM MAXIMUM PARTIES. BUT TWO OF T HEM RETURNED UNSERVED. THE DETAILS OF THE REPLY ARE REPRODUCED H ERE UNDER:- SL. NO NAME REMARKS 1 VISHAL SINGH LT. COL NO COMMISSION AGENT INVOLVED VEHICLE PURCHASED THROUGH CANTEEN STORE DEPARTMENT, MINISTRY OF DEFENCE, PURCHASE ORDER ISSUED BY CSD DEPOT. 2 RAMESH KUMAR MOHTA I HAVE NOT ENGAGED ANY COMMISS ION AGENT FOR THE SAID TRANSACTION 3 INDRAJEET SINGH DIRECT PURCHASED. (THERE WAS NO A NY AGENT ETC.) 4 SRI ABHAY KUMAR SINGH NO BROKER/AGENT, NO COMMISS ION HAS BEEN PAID 5 MD. SAMIM THERE IS NOT ANY COMMISSION AGENT INVOL VED IN THE TRANSACTION. THERE WAS NOTHING ANY BY ME TO ANY BROKER/AGENT/INTERMEDIARY OR ANY OTHER PERSON 6 SHYAM PRASAD GUPTA NO COMMISSION AGENT OR BROKER 7 PAWAN KUMAR SINGH NO BROKER/AGENT, NO COMMISSION HAS BEEN PAID 8 SRI HUSSAIN KHAN LETER RETURN UNDELIVERED 9 SRI CHANDRA BHUSAN LETTER RETURNED UNDELIVERED 10 SHRI SAMEER KR MONDAL NO COMMISSION AGENT INVOLV ED 11 MONICA MINZ NO COMMISSION AGENE INVOLVED ITA NO.314/KOL/2015 A.Y. 20 10-11 PRAVIN KR. HETASMSARIA VS. ACIT, CIR-3 ASL. PAGE 3 THE MATTER WAS PUT TO ASSESSEE BY ASSESSMENT ORDER AND EXPLANATION OFFERED BEFORE THE ASSESSING OFFICER WAS TAKEN IN R ECORD. THE ASSESSING OFFICER MADE DETAILED ANALYSIS IN ASSESSM ENT ORDER AND DISALLOWED THE SUM. 14. STATEMENT WAS RECORDED FROM SHRI RAJIV CHAKRABO TRY AND SMT. ITU CHAKRABORTY AS PART OF ENQUIRY INTO GENUINENESS OF PAYMENT MADE TO THEM. THEY DEPOSITED THAT THEY DID ARRANGE FOR TRANSACTIO N AND FOR SERVICE RENDERED, THE COMMISSION WAS RECEIVED BY THEM. TO A QUESTION ON TDS SMT. ITU CHAKRABORTY STATED THAT COMMISSION IS PAID TO SUB-A GENTS AT ABOUT RS.500/- AND IF TRUE THEN SHE HAS ARRANGED SALE OF NEARLY 19 72 VEHICLES, WHICH LACKS BELIEF. FURTHER SHE DOES NOT HAVE ANY DETAILS ON WH O THE COMMISSION AGENTS WERE. SHRI RAJIV CHAKRABORTY DEPOSED THAT HE HAS NO EVIDENCE ON HIS BUSINESS ACTIVITY MAINLY PROOF OF HIS BUSINESS EXPE NSE. IT IS NOTED THAT INDIVIDUALLY BOTH SHRI RAJIV CHAKRABORTY AND SMT. I TU CHAKRABORTY HAS DISCLOSED ONLY A SMALL PART OF CLAIMED RECEIPTS FRO M THE APPELLANT AND DOES CLAIM BUSINESS EXPENSES, UNPROVEN. 15. THE FACTUAL AND CIRCUMSTANTIAL ASPECTS OF COMMI SSION PAYMENT IS AVAILABLE IN ASSESSMENT ORDER AND HENCE NOT REPEATE D IN TOTO. FOR AN EXPENSE TO BE ALLOWED AS A GENUINE BUSINESS EXPENDITURE, IT HAS TO BE ESTABLISHED TO BE WHOLLY AND EXCLUSIVELY FOR BUSINESS. HERE THE FA CT THAT SUM WAS DEBITED AND PAID IS RECORDICALLY CORRECT AS FAR AS APPELLAN T IS CONCERNED. MERE PAYMENT DOES NOT MAKE THE SAME AN EXPENDITURE THAT CAN BE ALLOWED IT HAS TO BE ESTABLISHED TO BE EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS. WHEN THE PAYEE IS NOT ABLE TO ESTABLISH T HAT SERVICE WAS RENDERED OR WHEN AN EXPLANATION IS OFFERED, WHICH LACKS CRED ENCE, THE NATURAL INFERENCE IS THAT THE SAME IS NOT INCURRED WERE FOR BUSINESS. ESTABLISHING GENUINENESS WITH REASONABLE PRECISION THAT PAYMENT WAS MADE FOR SERVICE RENDERED IS SINCE QUA NON FOR ALLOWING THE CLAIM. SUCH EXPENDIT URE DEBITED, NOT HAVING SUBSTANCE OR CREDENCE HAS TO BE DISALLOWED BY ASSES SING OFFICER AND I HOLD THAT THE ACT OF ASSESSING OFFICER IS IN ORDER. 16. THE APPELLANT ALSO INFORMED THAT IN CASE OF SHR I SS HETAMSARIA, THE CLAIM OF COMMISSION RECEIPT WAS ACCEPTED BY ASSESSING OFF ICER. THE MATER BEING HANDLED IN THIS APPEAL IS GENUINENESS IS IN HANDS O F APPELLANT. IN IT PROCEEDINGS, THE PRINCIPLE OF RES JUDICATE DOES NOT APPLY. FURTHER THE FOLLOWING CASE DECISION WHEN CONSIDERED DEMONSTRATES THAT ON GROUND THAT ASSESSMENT MADE IN HANDS OF SHRI SHYAM SUNDAR HETAMSARIA DOES NOT MAKE ME ALTER THE VIEW. IF THE PREVIOUS DECISION IS PLAINLY ERRONEOUS, TH ERE IS A DUTY OF THE COURT TO REVIEW IT AND NOT PERPETUATE THE MISTAKE I .E. A VITAL POINT WAS NOT CONSIDERED OR WHEN AN EARLIER RELEVANT STATUTOR Y PROVISION HAD NOT BEEN BROUGHT TO THE NOTICE OF COURT [UNION OF INDIA & ANR. VS. RAGHUBIR SINGH (SC) 178 ITR 548, SRI AGASTHYAR TRUST VS. CIT 236 ITR 23] TO PERPETUATE AN ERROR IS NO HEROISM [DISTRIBUTORS (BOARODA) P LTD. VS UNION OF INDIA & ORS. (SC) 155 ITR 120] ITA NO.314/KOL/2015 A.Y. 20 10-11 PRAVIN KR. HETASMSARIA VS. ACIT, CIR-3 ASL. PAGE 4 TRIBUNAL NEED NOT BLINDLY FOLLOW EARLIER DECISION O F IT IF IT DID NOT REFLECT THE CORRECT POSITION OF LAW [CIT VS. HI-TECH ARAI L TD. (MAD) 321 ITR 477] THUS FILING OF AN INCORRECT RETURN BY SHRI SHYAM SU NDER HETAMSARIA IN NO WAY JUSTIFIES ALLOWING OF A DEDUCTION CLAIMED NOT ESTAB LISHED TO BE GENUINE OR INCORRECT WHOLLY AND EXCLUSIVELY FOR BUSINESS. 17. THE APPELLANT ALSO HAS GIVEN A LONG LIST OF CAS E LAWS. NONE OF THEM ADDRESS ISSUES RAISED IN PRECEDING PARAGRAPH NOTABL Y NOT ESTABLISHED TO BE ONE OF PAYMENT OF COMMISSION FOR ACTUAL RENDERING O F SERVICE SO THAT CONDITION IN SECTION 37(1) IS MET. 18. IN VIEW OF DISCUSSION IN PARAGRAPH 14,5, 16 AND 17 OF THIS ORDER GROUND 3 STANDS DISMISSED. 4. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO RI VAL CONTENTIONS. THE SOLE QUESTION ARISE FOR OUR APT ADJUDICATION OF GEN UINENESS OF ASSESSEES COMMISSION EXPENDITURE CLAIMED AS PAID TO THE ABOVE THREE PARTIES. LEARNED DEPARTMENTAL REPRESENTATIVE PLACES STRONG RELIANCE UPON THE CIT(A)S ABOVE EXTRACTED FINDINGS. 5. IT EMERGES FIRST OF ALL THAT THE ASSESSEES SALE IN THE IMPUGNED ASSESSMENT YEAR READ FIGURES OF 31,42,93,631/- AS AGAINST THE CORRESPONDING AMOUNTS OF 114,57,07,778/- AND 106,447,47,845/- IN THE TWO SUCCEEDING ASSESSMENT YEARS. HE HAS BOOKED CORRESPONDING COMMI SSION EXPENDITURE OF 26,86,047/- (IN DISPUTE), 41,00,079/- AND 20,95,883/-; RESPECTIVELY. THE REVENUE FAILS TO DISPUTE THAT THE ABOVE LATTER TWO COMMISSION AMOUNTS STAND ACCEPTED IN CASE OF FIRST PAYEE TO BE GENUINE AND C ORRECT. IT STRONGLY ARGUES THAT EVERY ASSESSMENT YEAR IS DIFFERENCE SINCE RES JUDICATE PRINCIPLES DOES NOT APPLY IN CASE OF INCOME TAX PROCEEDINGS. THERE CAN HARDLY BE ANY DISPUTE ABOUT THIS SETTLED LEGAL POSITION. THE FACT ALSO RE MAINS THAT REVENUE AUTHORITIES THEMSELVES HAVE ACCEPTED SIMILAR CLAIM; ALMOST PROP ORTIONATE IN TWO CONSECUTIVE LATTER ASSESSMENT YEARS. WE THEREFORE C ONCLUDE THAT THE IMPUGNED EXPENDITURE WHICH HAS BEEN CLAIMED AS IN V IEW OF ALL THE DOCUMENTARY EVIDENCE CANNOT BE DISREGARDED JUST BEC AUSE SOME OF THE CUSTOMERS HAVE DEPOSED AGAINST THE ASSESSEE AS SUCH COMMISSION EXERCISES ITA NO.314/KOL/2015 A.Y. 20 10-11 PRAVIN KR. HETASMSARIA VS. ACIT, CIR-3 ASL. PAGE 5 MAY OR MAY NOT BE IN THEIR KNOWLEDGE. WE ACCORDINGL Y DIRECT THE ASSESSING OFFICER TO DELETE THE IMPUGNED ADDITION. IT IS MADE CLEAR THAT OUR INSTANT FINDINGS IN THE IMPUGNED ASSESSMENT YEAR SHALL NOT BE TREATED AS PRECEDENT. 6. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 25/07/2018 SD/- SD/- ( %) (' %) (DR. A.L. SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP, SR.P.S (- 25 / 07 /201 8 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-PRAVIN KR. HETAMSARIA, PROP. PRATIK AUTO MOBILES, OLD. H.B. ROAD NR. GOVT. BUS ST AND, PATEL CHOWK, RANCHI, 834001 2. /RESPONDENT-ACIT,CIRCLE-3,GR.FL, PARMAR BLDG. 54, G .T. ROAD(W), ASANSOL-713304 3. 3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5. 7 ''3, 3, / DR, ITAT, KOLKATA 6. < / GUARD FILE. BY ORDER/ , /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3,