Shri Deba Prasad Mukherjee, Sonepat V. DCIT, Sonepat

ITA 3400/DEL/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 3205 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 29-12-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHNA PAUL
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 3400/DEL/2016 A.Y. : 2009-10 SH. DEBA PARSAD MUKHERJEE C/O M/S VIMLESH INDUSTRIES PVT. LTD., DELHI ROAD, SONEPAT (HARYANA) (PAN: AENPM4281L) VS. DCIT, SONEPAT CIRCLE, SONEPAT, HARYANA (APPELLANT) (RESPONDENT) ASSESSEE BY : SH.V. RAJA KUMAR, ADV. DEPARTMENT BY : MS. ASHNA PAUL, SR. DR ORDER PER H.S. SIDHU, JM ASSESSEE HAS FILED THE APPEAL AGAINST THE ORDER D ATED 22.3.2016 PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEA LS), FARIDABAD PERTAINING TO ASSESSMENT YEAR 2009-10 ON THE FOLLOW ING GROUNDS:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTI ON OF THE AO IN HOLDING THE ASSESSEE GUILTY OF FAILING TO DISCLOSE HIS TRUE INCOME AND FURNISHING INACCURATE PARTICULARS OF INCOME AND THEREBY CONFIRMING THE PENALTY U/S. 271(1)(C) OF THE INCOME TAX ACT, 1961. THE 2 ACTION BEING ARBITRARY, ERRONEOUS, MISCONCEIVED AND UNJUST MUST BE QUASHED WITH DIRECTIONS FOR RELIEF. 2. THE FACTS IN BRIEF ARE THAT ASSESSEE FILED HIS R ETURN OF INCOME AND THE SAME WAS ASSESSED ON 25.11.2011 AT AN INCOME O F RS. 18,01,480/- BY MAKING AN ADDITION OF RS.12,49,344/- ON ACCOUNT OF COMMISSION EXPENSES AS CLAIMED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE ASSESSEE WAS AN EMPLOYEE IN THE M/S VIMLESH IND USTRIES PVT. LTD., DELHI ROAD, BAHALGARH, SONEPAT. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE AO HAD NOTICED THAT THE ASSESSEE H AD CLAIMED COMMISSION EXPENSES OF RS. 12,49,344/-. THE COMMIS SION EXPENSES OF RS. 12,49,344/- AS CLAIMED BY THE ASSESSEE COULD NO T BE VERIFIED AS DISCUSSED IN THE ASSESSMENT ORDER. ACCORDINGLY, THE PENALTY PROCEEDINGS WERE INITIATED AGAINST THE ASSESSEE BY ISSUING PENA LTY NOTICE U/S. 274 READ WITH SECTION 271 OF THE INCOME TAX ACT, 1961 O N 28.1.2013 FOR FURNISHING INACCURATE PARTICULARS OF INCOME AND IN RESPONSE TO SHOW CAUSE NOTICE NO REPLY WAS RECEIVED AND AGAIN NOTICE DATED 11.2.2014 WAS SERVED AND IN RESPONSE THERETO, A LETTER DATED 17.2 .2014 FROM THE A.R. OF THE ASSESSEE WAS RECEIVED STATING THEREIN THAT THE APPEAL IS PENDING WITH ITAT. AO OBSERVED THAT ASSESSEE HAD MADE /CLAIMED C OMMISSION EXPENSES WHICH REMAINED UNEXPLAINED AND UNVERIFIED AND IT IS CLEAR THAT THE ASSESSEE HAS CONCEALED HIS TRUE INCOME BY CLAIM ING HUGE COMMISSION EXPENSES JUST TO REDUCE HIS TAX. IN VIEW OF THE ABO VE, THE AO IMPOSED THE PENALTY U/S. 271(1) OF THE ACT VIDE ORDER DATE D 18.3.2014 AMOUNTING TO RS. 4,24,652/-. 3 3. AGGRIEVED WITH THE PENALTY ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A), WHO VIDE HIS IMPUGNED ORDER 22.3.2016 HAS DISMISSED THE APPEAL OF THE ASSESSEE AND CONFIRMED THE PENALTY OF RS. 4,24,652/-. 4. AT THE TIME OF HEARING, LD. AUTHORISED REPRESENT ATIVE OF THE ASSESSEE, STATED THAT THE QUANTUM ADDITION ON WHI CH THE PENALTY HAS BEEN IMPOSED, HAS ALREADY BEEN DELETED BY THE ITAT, B BENCH, NEW DELHI IN ITA NO. 1103/DEL/2013 (AY 2009-10) VIDE O RDER DATED 18.08.2017. IN THIS BEHALF HE FILED THE COPY OF TH E TRIBUNALS ORDER DATED 18.08.2017 IN ASSESSEES OWN CASE AND REQUESTED TH AT PENALTY IN DISPUTE MAY BE DELETED. 5. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSION S AND PERUSED THE RECORDS. I FIND THAT AO HAS LEVIED THE PENALTY U/ S. 271(1) OF THE ACT AMOUNTING TO RS. 4,24,652/-. I FURTHER NOTE THAT IN ASSESSEES OWN CASE IN ITA NO. 1103/DEL/2013 (AY 2009-10) VIDE ORDER DATE D 18.08.2017, THE TRIBUNAL HAD ADJUDICATED THE ISSUES VIDE PARA NO. 4 TO 6 AT PAGES 3 TO 5 AND DELETED THE QUANTUM ADDITION. FOR THE SAKE O F CONVENIENCE, I AM REPRODUCING THE RELEVANT FINDING OF THE TRIBUNAL OR DER DATED 18.8.2017 AS UNDER:- 4. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE RELEVANT MATERIAL ON RECORD. THERE IS NO 4 DISPUTE ON THE FACT THAT THE ASSESSEE RECEIVED COMMISSION OF RS.32.49 LAC FROM M/S SHANGHAI DERUI MACHINERY MANUFACTURING CO. LTD., 338, YUELUO ROAD, SHANGHAI, FOR MAKING SALE OF SIX DRAWING MACHINES. SINCE THE CUSTOMERS WERE FOUND BY THE ASSESSEE WITH THE HELP OF FOUR PARTIES, THE ASSESSEE PARTED WITH 40% OF SUCH COMMISSION RECEIVED FROM M/S SHANGHAI DERUI MACHINERY MANUFACTURING CO. LTD. TO THEM AS A QUID PRO QUO OF THEIR RESPECTIVE SERVICES. THE ASSESSING OFFICER ISSUED NOTICES U/S 133(6) TO THESE FOUR PARTIES WHO ACCEPTED TO HAVE RENDERED SERVICES AND OBTAINED COMMISSION FROM THE ASSESSEE. THE RELEVANT EXTRACTION FROM PAGE 4 OF THE ASSESSMENT ORDER IS AS UNDER:- AMT PARVEEN AHUJA 2,44,153/- COMMISSION HAS BEEN PAID BEING 40% OF THE COMMISSION RECEIVED BY MR. MUKHERJEE ON THE DEAL MENTIONED BELOW, I.E., 40% OF 6,10,381/- =2,44,153/-, TOTAL AMT. OF RS.16,36,982/- AS FROM CHINESE FIRM WHICH WAS NEGOTIATED THROUGH US OF RS.6,54,793/-. I HAVE RECEIVED COMMISSION FROM D.B. MUKHERJEE ON SUPPLY OF MACHINES IMPORTED 5 FROM CHINA AND SOLD THROUGH ME TO CHANDRA METAL, ALLAHABAD. T.N. SALUJA - HUF 1,06,735/- MR. MUKHERJEE RECEIVED A COMMISSION OF RS.266837/- AND 40% OF THIS AMOUNT I.E., RS.1,06,735/- WAS PAID TO US. WE HAVE RECEIVED COMMISSION FROM MR. MUKHERJEE ON SUPPLY OF MACHINES IMPORTED FROM CHINA AND SOLD THROUGH US TO VIDYA METAL BHIWANI. WE HELPED MR. MUKHERJEE IN IDENTIFICATION OF CUSTOMER, PROCUREMENT OF ORDER AND ASSISTED HIM AND HIS TEAM IN FOLLOW UP. SURINDER KUMAR 2,43,663/- I RECEIVED A COMMISSION OF RS.2,43,663/- FROM D.P. MUKHERJI BEING 40% OF RS.6,09,156/- I.E. TOTAL COMMISSION RECEIVED FROM CHINA. I HAVE WORKED FOR D.B. MUKHERJI ON COMMISSION BASIS FOR PROCUREMENT OF ORDER FOR SUPPLY OF MACHINES IMPORTED FROM OUTSIDE INDIA AND SOLD TO DIFFERENT PARTIES. HINDALCO RUBBER 6,54,793/- WE HAVE BEEN PAID COMMISSION OF RS.6,54,793/- BEING 40% OF THE TOTAL AMT. OF RS.16,36,982/- RECEIVED AS COMMISSION FROM CHINESE FIRM ON THE DEAL WHICH WAS NEGOTIATED THROUGH US. COMMISSION WAS PAID TO FIRM FOR REFERRING AND 6 ASSISTING MUKHERJEE AND HIS STAFF IN PROCURING ORDER FOR CHINESE MACHINES IMPORTED INTO INDIA FOR SCR BANGALORE. 5. IT IS OBVIOUS THAT ALL THE FOUR PERSONS ACCEPTED TO HAVE RECEIVED COMMISSION FROM THE ASSESSEE FOR MAKING SALES WITH THEIR ASSISTANCE. THESE REPLIES WERE DIRECTLY RECEIVED BY THE ASSESSING OFFICER, WHICH HAVE NOT BEEN CONTROVERTED. WHEN THE POSITION IS SO CLEAR THAT THE ASSESSEE RECEIVED COMMISSION AND PARTED 40% OF THE SAME WITH OTHER PARTIES WHO ARRANGED FOR THE CUSTOMERS, WE FAIL TO APPRECIATE AS TO HOW ANY DISALLOWANCE CAN BE MADE, MORE SO WHEN RECIPIENTS HAVE DULY ADMITTED TO HAVE RECEIVED THE COMMISSION AND THE ASSESSEE MADE PAYMENT TO THEM AFTER DUE DEDUCTION OF TAX AT SOURCE. THE MERE FACT THAT THERE WAS NO AGREEMENT ETC. WITH THESE PARTIES, CANNOT COME IN THE WAY OF THE DEDUCTIBILITY, WHICH IS OTHERWISE A GENUINE EXPENSE INCURRED BY THE ASSESSEE IN DOING HIS BUSINESS. OVERTURNING THE IMPUGNED ORDER ON THIS ISSUE, WE ORDER FOR THE DELETION OF ADDITION. 7 6. IN THE RESULT, THE APPEAL IS ALLOWED. 6.1 KEEPING IN VIEW OF THE FACTS AND CIRCUMSTANC ES OF THE CASE, I AM OF THE CONSIDERED VIEW THAT THE ADDITIONS ON WHICH THE PENALTY IN DISPUTE WAS LEVIED, HAS ALREADY BEEN DELETED BY THE ITAT V IDE ORDER DATED 18.8.2017 PASSED IN ITA NO. 1103/DEL/2013 (AY 2009 -10) IN ASSESSEES OWN CASE AS AFORESAID, HENCE, THE PENALTY IN DISP UTE WILL NOT SURVIVE. ACCORDINGLY, WE CANCEL THE ORDERS OF THE AUTHORITIE S BELOW AND DELETE THE PENALTY IN DISPUTE BY ALLOWING THE APPEAL FILED BY THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/11/2017. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE 23/11/2017 SRBHATNAGAR COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY OR DER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES