ITO, New Delhi V. Smt. Archana Jain, New Delhi

ITA 3497/DEL/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6625 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-12-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC 1
• Next Hearing Date: 05-12-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Keywords: Gift; Business expenditure; Additional evidence; Corroborative evidences
• Section: 143(3); 142(1); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.3497/DEL/2015 ASSESSMENT YEAR : 2010-11 ITO, WARD 60(1), NEW DELHI VS. ARCHANA JAIN, A-2, 3 RD FLOOR, SHIV ARCADE, ACHARYA NIKETAN, MAYUR VIHAR, PHASE-I, NEW DELHI. PAN : AEGPJ 6039 L (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI F. R. MEENA, SR.DR RESPONDENT BY : SHRI SANJAY KUMAR, CA DATE OF HEARING : 05-12-2016 DATE OF PRONOUNCEMENT : 08-12-2016 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 17.03.2015 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-19, NEW DELHI, U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) RELATING TO ASSESSMENT YEAR 2010-11. 2. BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE CARRIED ON BUSINESS OF SALE OF MOBILE PHON E AND PREPAID COUPONS IN THE NAME & STYLE OF PROPRIETORSHIP FIRM M/S PERFECT ENTERPRISE, BESIDES EARNING OF COMMISSION FROM AIRCEL COMPANY. SHE HAD FILED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.7,02,548/-. TH E ASSESSING OFFICER NOTICED THAT COMMISSION RECEIVED AS PER PROFIT & LO SS ACCOUNT WAS 2 ITA NO.3497/DEL/2015 RS.64,34,944/- AND COMMISSION PAID UNDER THE HEAD DEALERS COMMISSION WAS AT RS.35,37,914/- AND COMMISSION AT RS.1,87,650 /-. HE, FURTHER, NOTICED THAT ASSESSEE HAD CLAIMED BUSINESS PROMOTION EXPENS ES OF RS.72,840,/-. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO FURNISH EVIDENCE FOR COMMISSION AND DEALERS COMMISSION. THE ASSESSEE FILED ITS RE PLY DATED 15.02.2013 WHICH HAS BEEN REPRODUCED AT PAGE 2 OF THE ASSESSME NT ORDER IN WHICH ASSESSEE REQUESTED FOR 15 DAYS TIME FOR SUBMISSION OF EVIDENCE. THE ASSESSING OFFICER BEING NOT SATISFIED WITH THE ASSE SSEES REPLY IN REGARD TO CLAIM OF DEALERS COMMISSION, DISALLOWED THE SAME. 3. HE ALSO DISALLOWED A SUM OF RS.1,87,650/- BEING OTHER COMMISSION FOR WHICH ONLY COPY OF THE LEDGER ACCOUNT WAS FILED BY ASSESSEE. AS REGARDS BUSINESS PROMOTION OF RS.72,840/-, THE ASSESSING OF FICER DISALLOWED THE SAME IN THE ABSENCE OF ANY EVIDENCE REGARDING GIFT ITEMS PURCHASED EVERY MONTH WHICH WAS DEBITED TO THE LEDGER ACCOUNT AND T HE NAMES OF PERSONS TO WHOM THE SAME WERE GIFTED, REJECTING THE ASSESSEES CONTENTION THAT THE GIFTS WERE PROVIDED TO RETAILERS AND DEALERS FOR SALES. BEFORE LD. CIT(A) IT WAS POINTED OUT THAT THE ASSESSEE BEING AUTHORIZED DIST RIBUTOR OF M/S AIRCEL LIMITED SOLD RECHARGE COUPONS THROUGH 387 DEALERS I N AND AROUND DELHI. THE ASSESSEE HAD FILED ADDITIONAL EVIDENCE UNDER RU LE 46A WHICH WAS ADMITTED BY LD. CIT(A), INTER-ALIA, OBSERVING AS UNDER :- 3 ITA NO.3497/DEL/2015 5. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT FILED ADDITIONAL EVIDENCE UNDER RULE 46A OF THE I.T. RULE AND THE SAME WAS AD MITTED AS THE APPELLANT IN GROUND OF APPEAL NO.5 HAD STATED THAT THE ASSESSING OFFICER HELD THAT THE APPELLANT HAD NOT INCURRED ANY EXPENDITURE DURING T HE YEAR UNDER THE HEADS 'DEALER'S COMMISSION', 'COMMISSION FOR ACHIEVING SA LES TARGETS' AND 'BUSINESS PROMOTION EXPENSES'. IT IS SURPRISING TO NOTE THAT THE ASSESSING OFFICER HAD CONCLUDED IN THE ASSESSMENT ORDER THAT NONE OF THE EXPENDITURE INCURRED BY THE APPELLANT TOWARDS DEALER'S COMMISSION AND BUSINESS PROMOTION EXPENSES ETC. WERE ALLOWABLE, THOUGH THE APPELLANT BEING THE DIST RIBUTOR OF M/S. AIRCEL LTD. HAD NUMBER OF DEALERS AND ALSO RECEIVED A COMMISSION OF RS. 64,34,944/- DURING THE YEAR. THE ASSESSING OFFICER HAD STATED IN THE ASSES SMENT ORDER THAT NO SATISFACTORY EVIDENCE WAS SUBMITTED DURING THE ASSE SSMENT PROCEEDINGS AND THAT ALSO ONLY LEDGER ACCOUNT WAS SUBMITTED TO DENY THE ENTIRE EXPENDITURE UNDER THE ABOVE HEADS DEBITED IN THE PROFIT & LOSS ACCOUNT. A S PER THE APPELLANT, DURING THE APPELLATE PROCEEDINGS, SHE WAS ASKED TO SUBMIT THE DETAILS OF DEALER'S COMMISSION PAID BY THE APPELLANT IN FORM NO. 16A RE CEIVED FROM M/S. AIRCEL LTD. THE APPELLANT HAD PAID DEALER COMMISSION DIRECTLY T O THEIR DEALERS AND THEREFORE, THE LOGIC OF SEEKING CONFIRMATION IN FORM NO. 16A F ROM A THIRD PARTY NAMELY, M/S. AIRCEL LTD., THAT TOO IN FORM NO. 16A IS NOT M ADE CLEAR ANYWHERE IN THE ASSESSMENT ORDER. 4. THE ASSESSEE HAD FILED CONFIRMATION FROM ALL THE 387 DEALERS FOR THE ENTIRE EXPENDITURE OF RS.35,37,914/-. THE ASSESSEE ALSO POINTED OUT THAT DURING THE ASSESSMENT PROCEEDINGS SHE WAS NEVER REQ UIRED TO FURNISH THE DETAILS OF COMMISSION FOR ACHIEVING SALES TARGETS A ND/OR TO FURNISH THE DETAILS OF BUSINESS PROMOTION EXPENSES. LD. CIT(A) CALLED FOR A REMAND REPORT FROM ASSESSING OFFICER, WHO COMMENTED AS UNDER :- THE APPELLANT FILED ADDITIONAL EVIDENCE/CONFIRMATI ON IN SUPPORT OF COMMISSION PAID AND GENUINENESS OF THE COMMISSION TO DEALERS, WHICH ARE NOT CONCRETE SATISFACTORY EVIDENCE TO SUPPORT OF GENUINENESS OF THE TRANSACTIONS. IN VIEW OF THE ABOVE DISCUSSIONS, IT IS CLEAR THAT THE APPELLANT IN THE INSTANT CASE HAD SQUARELY FAILED TO PROVE THE GENUINENESS OF IN SUPPORT OF COMMISSION AND BUSINESS EXPENSES BY WAY OF ADDUCING ANY CORROBORAT IVE EVIDENCE DURING THE COURSE OF ASSESSMENT PROCEEDINGS TO AVOID DETAILED SCRUTINY OF THE CASE. THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE CIT(A) ARE AFTERTHOUGHT AND CANNOT BE RELIED UPON. 4 ITA NO.3497/DEL/2015 5. LD. CIT(A) ALLOWED THE ASSESSEES CLAIM REGARDIN G COMMISSION PAID TO DEALERS AGGREGATING TO RS.35,37,914/-, INTER-ALIA, OBSERVING THAT THE ASSESSING OFFICER DISALLOWED THE ENTIRE CLAIM OF AS SESSEE WITHOUT UNDERSTANDING THE NATURE OF ASSESSEES DISTRIBUTION BUSINESS OF RECHARGE COUPONS THROUGH NUMEROUS DEALERS IN AND AROUND DELH I. 6. AS REGARDS DISALLOWANCE OF COMMISSION OF RS.1,87 ,650/- PAID TO DEALERS FOR ACHIEVING THEIR SALES TARGETS, LD. CIT( A) OBSERVED THAT DURING THE APPELLATE PROCEEDINGS ASSESSEE FILED ADDITIONAL EVI DENCE IN THE FORM OF LIST OF 90 DEALERS WITH THEIR NAMES AND ADDRESSES WITH T HE DATE OF PAYMENT AND THEIR SIGNATURES TO PROVE THE PAYMENT OF RS.1,87,65 0/- AS COMMISSION TO THEM FOR ACHIEVING THEIR SALES TARGETS. HOWEVER, T HE ASSESSING OFFICER OBJECTED TO THIS EVIDENCE. LD. CIT(A) ALLOWED THE ASSESSEES CLAIM, INTER- ALIA, OBSERVING AS UNDER :- I AM OF THE VIEW THAT THIS OBJECTION IS NOT VALID AS HE HAD FAILED TO MENTION WHETHER ANY SUPPORTING EVIDENCE WAS ASKED FOR DURIN G THE ASSESSMENT PROCEEDINGS. SINCE THE ASSESSING OFFICER HAD NOT OB JECTED TO THE MERITS OF THE ADDITIONAL EVIDENCE SUBMITTED BY THE APPELLANT REGA RDING COMMISSION PAID TO DEALERS ON ACHIEVING SALES TARGETS, I AM CONSTRAINE D TO DELETE THE DISALLOWANCE OF RS.1,87,650/- MADE BY THE ASSESSING OFFICER ON THE ENTIRE COMMISSION EXPENDITURE FOR ACHIEVING SALES TARGETS DEBITED IN THE PROFIT & LOSS ACCOUNT. 7. AS REGARDS THE DISALLOWANCE OF RS.72,840/- IN RE GARD TO BUSINESS PROMOTION EXPENSES, LD. CIT(A) ALLOWED THE SAME AFT ER CONSIDERING THE ADDITIONAL EVIDENCE IN THE FORM OF PURCHASE BILLS O F ALL THE GIFTS TOTALING TO RS.72,840/- AND THE LIST OF DEALERS TO WHOM THESE G IFTS WERE GIVEN WITH THEIR 5 ITA NO.3497/DEL/2015 ADDRESSES, DATE OF GIVING THE GIFTS WITH THEIR SIGN ATURES, INTER-ALIA, OBSERVING AS UNDER :- THE ASSESSING OFFICER IN HIS REMAND REPORT DATED 1 7.02.2015 DUTIFULLY OBJECTED TO THIS ADDITIONAL EVIDENCE AND I AM OF THE VIEW TH AT THE OBJECTION IS NOT VALID AS HE HAD FAILED TO MENTION WHETHER ANY SUPPORTING EVI DENCE WAS ASKED FOR DURING THE ASSESSMENT PROCEEDINGS. BUT AS THE ASSESSING O FFICER HAD NOT OBJECTED TO THE MERITS OF THIS ADDITIONAL EVIDENCE SUBMITTED BY THE APPELLANT REGARDING THE GIFTS GIVEN BY HER AS BUSINESS PROMOTION EXPENSES, I AM C ONSTRAINED TO DELETE THE DISALLOWANCE OF RS.72,840/- MADE BY THE ASSESSING O FFICER ON THE ENTIRE BUSINESS PROMOTION EXPENSES DEBITED IN THE PROFIT & LOSS ACC OUNT THE APPELLANT. 8. BEING AGGRIEVED WITH THE ORDER OF THE LD. CIT(A) , THE DEPARTMENT IS IN APPEAL BEFORE THE TRIBUNAL AND HAS TAKEN FOLLOWI NG GROUNDS OF APPEAL :- 1. THE ORDER OF THE LD. CIT(A) IS BAD IN LAW AND N OT IN CONSONANCE WITH THE FACTS OF THE CASE. 2. THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ADDITI ONAL EVIDENCE SUBMITTED BY THE ASSESSEE, WHEN THE CASE OF THE ASSESSEE DOES NOT FALL IN ANY OF THE CONDITIONS MENTIONED IN RULED 46A OF THE INCOME TAX RULES, 1962. 3. THE CIT(A) ERRED IN ADMITTING THE ADDITIONAL EVI DENCE ON THE GROUND THAT DURING ASSESSMENT PROCEEDINGS, AO HAD NOT ASKED FOR CONFIRMATION FROM THE DEALERS TO WHOM COMMISSION WAS PAID WHEN THE AO VID E NOTICE U/S 142(1) OF THE INCOME TAX ACT, 1961 DATED 21.02.2013 SPECIFICALLY ASKED TO PROVIDE CONFIRMATION OF COMMISSION AND DEALER'S COMMISSION. 4. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 35,37,914/- WHICH WAS CLAIMED BY ASSESSEE UNDER THE HEAD 'DEALERS COM MISSION', BY ADMITTING ADDITIONAL EVIDENCES WHICH SHOULD NOT HAVE BEEN ACC EPTED IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 5. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 1,87,650/-, WHICH WAS CLAIMED BY ASSESSEE UNDER THE HEAD 'COMMISSION', BY ADMITTING ADDITIONAL EVIDENCES WHICH SHOULD NOT HAVE BEEN ACCEPTED IN VI EW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS. 72,840/-, WHICH WAS CLAIMED BY ASSESSEE UNDER THE HEAD BUSINESS PROMOT ION', BY ADMITTING ADDITIONAL EVIDENCES WHICH SHOULD NOT HAVE BEEN ACC EPTED IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 7. THE APPELLANT CRAVES LEAVE TO ADD, ALLOW OR AMEN D ANY/ ALL THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF TH E APPEAL. 6 ITA NO.3497/DEL/2015 9. LD DR SUBMITTED THAT PRIMARILY THE DEPARTMENT IS IN APPEAL WITH THE ORDER OF LD. CIT(A) IN DELETING THE DISALLOWANCE ON THE BASIS OF ADDITIONAL EVIDENCE WITHOUT AFFORDING OPPORTUNITY TO ASSESSING OFFICER. 10. LD. COUNSEL POINTED OUT THAT THE ASSESSING OFFI CER HAD NOT GIVEN SUFFICIENT TIME TO FURNISH NECESSARY EVIDENCE. THE REFORE, BEFORE LD. CIT(A) ENTIRE EVIDENCE WAS FURNISHED IN REGARD TO VARIOUS CLAIMS MADE BY ASSESSEE. HE POINTED OUT THAT THE ASSESSING OFFICER IN HIS RE MAND REPORT CONSIDERED THE EVIDENCE FILED BY ASSESSEE AND CONCLUDED THAT T HEY WERE NOT SATISFACTORY. THEREFORE, HE HAS CONSIDERED THE MERITS OF EVIDENCE AND, THEREFORE, LD. CIT(A)S OBSERVATIONS IN REGARD TO MERITS HAVE TO B E CONSIDERED BEING GIVEN AFTER AFFORDING OPPORTUNITY TO ASSESSING OFFICER. 11. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND PERUSED THE RECORD OF THE CASE. I FIND CONSIDERABLE FORCE IN T HE ARGUMENT OF THE LD. COUNSEL FOR THE ASSESSEE THAT LD. CIT(A) HAD DULY P ROVIDED OPPORTUNITY TO ASSESSING OFFICER TO COMMENT UPON THE ADDITIONAL EV IDENCE FILED BY ASSESSEE IN THE FORM OF CONFIRMATIONS FROM DEALERS, ETC., AS NOTED IN THE OBSERVATIONS OF THE LD. CIT(A), REPRODUCED EARLIER. ONCE LD. CIT(A) HAS GIVEN DUE OPPORTUNITY TO ASSESSING OFFICER TO EXAMI NE THE ADDITIONAL EVIDENCE FURNISHED BEFORE HIM AND THE ASSESSING OFF ICER ALSO COMMENTS UPON THE EVIDENCE THEN IT CANNOT BE SAID THAT THE A SSESSING OFFICER WAS NOT AFFORDED DUE OPPORTUNITY BY LD. CIT(A). THE NATURE OF ASSESSEES BUSINESS 7 ITA NO.3497/DEL/2015 WAS SUCH WHERE WITHOUT GIVING DEALERS COMMISSION, THE SAME COULD NOT BE CARRIED ON. NECESSARY CONFIRMATIONS HAVE BEEN FILE D BY ASSESSEE. THEY HAVE NOT AT ALL BEEN ADVERSELY COMMENTED BY ASSESSI NG OFFICER EXCEPT MAKING A GENERAL OBSERVATION THAT THE SAME ARE NOT GENUINE. IN VIEW OF THE ABOVE DISCUSSION, I DO NOT FIND ANY REASON TO INTER FERE WITH THE ORDER OF LD. CIT(A). AS REGARDS OTHER TWO DISALLOWANCES ALSO I FIND THAT LD. CIT(A), AFTER DUE APPRECIATION OF EVIDENCE, ALLOWED THE ASS ESSEES CLAIM. DEPARTMENT HAS NOT CONTROVERTED THE FINDINGS OF LD. CIT(A) ON MERITS. 12. IN THE RESULT, THE APPEAL OF THE DEPARTMENT IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 TH DAY OF DECEMBER, 2016. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 08-12-2016. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT; 2) THE RESPONDENT; 3) THE CIT; 4) THE CIT(A)-, NEW DELHI; 5) THE DR, I.T.A.T., NEW DELHI; BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI