M/s. Gujarat Borosil Ltd., Bharuch V. The Dy.CIT., Bharuch Circle, Bharuch

ITA 355/AHD/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6358 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2000-2001
• Appeal Filed On: 09-02-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Question of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND D. C. AGRAWAL , AM) ITA NO.355/AHD/2011 A. Y.: 2000-01 M/S. GUJARAT BOROSIL LTD., VILLAGE GOVALI, TALUKA JHAGADIA, DIST. BHARUCH, BHARUCH VS THE D. C. I. T., BHARUCH CIRCLE, BHARUCH PA NO. AAACG 8440 M (APPELLANT) (RESPONDENT) APPELLANT BY SHRI SUNIL TALATI, AR RESPONDENT BY SHRI H. K. LAL, DR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-VI , BARODA DATED 02 ND DECEMBER, 2010, FOR ASSESSMENT YEAR 2000-01, CHALL ENGING THE DISALLOWANCE OF RS.2,30,961/- BEING EXPORT COMMISSI ON. 2. THE LEARNED CIT(A) NOTED THAT IN THE ORIGINAL AS SESSMENT DISALLOWANCE WAS MADE DUE TO ASSESSEES FAILURE TO FURNISH SUPPORTING DOCUMENTARY EVIDENCES. THE TRIBUNAL SET ASIDE THE ISSUE TO THE AOS FILE TO RE-EXAMINE THE ISSUE. IN THE AS SESSMENT UNDER APPEAL, DISALLOWANCE WAS MADE ON THE GROUND THAT TH E ASSESSEE FAILED TO FURNISH NAME AND ADDRESSES OF THE PERSONS . BEFORE THE LEARNED CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE W AS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND CLAIM WAS RIGHT LY MADE DURING ITA NO.355/AHD/2011 M/S. GUJARAT BOROSIL LTD. VS DCIT, BHARUCH CIRCLE, BHARUCH 2 THE YEAR. THE LEARNED CIT(A) CONSIDERING THE SUBMIS SION OF THE ASSESSEE CONFIRMED THE ADDITION. THE FINDINGS OF TH E LEARNED CIT(A) IN PARA 5.2 ARE REPRODUCED AS UNDER: 5.2. I HAVE CONSIDERED THE MATTER. THE DETAILS FILE D BY THE APPELLANT BEFORE ASSESSING OFFICER DID NOT CONT AIN COMPLETE ADDRESS OF THE THREE COMMISSION PARTIES. T HE DETAILS FURNISHED WERE AS UNDER: VR. NO. DATE AMOUNT NAME OF PARTY & ADDRESS INVOICE NO. 30BP1415 08.03.2000 36,764/- M/S. PRASHANT TRADING CO., MUMBAI EX-921- 923,928- 929 41DU1075 31.03.2000 74,005/- 17,444/- M/S. FLORENCE TENYWA/JOSEP H TENYAWA, KAMPALA UGANDA EX- 849,870,8 75,878- 880,930,9 31 EX- 901-902, 926-927 30BP1540 31.03.2000 11,255 M/S. HOGHLA B. V. P. O. BOX 31, 2800, AAGOUDA, NETHERLANDS EX-552- 553 THESE DETAILS THUS LACK COMPLETE ADDRESS AND ALSO T HE PURPOSE I.E. DETAILS OF UNDERLYING TRANSACTIONS FOR WHICH COMMISSION WAS PAID. APPELLANT, THEREFORE, FAILED T O PROVE THAT EXPENSES WERE INCURRED WHOLLY AND EXCLUSIVELY FOR APPELLANTS BUSINESS, ONUS FOR WHICH WAS OF THE APP ELLANT. DISALLOWANCE OF RS.2,30,961/- IS CONFIRMED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE FILED COPY OF THE EARLIER ORDER OF THE TRIBUNAL DATED 12-11-2008 THROUGH WHIC H THE MATTER WAS RESTORED TO THE AO WITH DIRECTION TO THE ASSESSEE T O SUBSTANTIATE THEIR CLAIM FOR COMMISSION. HE HAS REFERRED TO REPLY DATE D 30-11-2009 FILED ITA NO.355/AHD/2011 M/S. GUJARAT BOROSIL LTD. VS DCIT, BHARUCH CIRCLE, BHARUCH 3 BEFORE THE AO ALONG WITH WHICH THE NAMES OF THE PAR TIES AND INVOICE NUMBERS ALONG WITH OTHER DETAILS WERE FILED. HE HAS , THEREFORE, SUBMITTED THAT THE ASSESSEE FILED DEBIT NOTES, DETA ILS OF PAYMENT AND BANK PAYMENT VOUCHERS IN SUPPORT OF THE EXPLANATION . THEREFORE, THE ADDITION SHOULD NOT HAVE BEEN MADE ON THIS GROUND. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT THE COMMISSION PAYMENT WAS CLAIMED IN RESPECT OF THREE PARTIES (PB -2) TOTAL OF WHICH COMES TO RS.1,39,468/-. THEREFORE, ADDITION OF RS.2 ,30,961/- IS WITHOUT ANY BASIS. 4. ON THE OTHER HAND, THE LEARNED DR RELIED UPON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT NO EVIDENCE HA S BEEN FILED BEFORE THE AUTHORITIES BELOW TO PROVE AS TO WHAT SE RVICES HAVE BEEN RENDERED BY THE ALLEGED COMMISSION AGENTS FOR THE A SSESSEE. THEREFORE, ADDITION HAS BEEN RIGHTLY MADE. THE LEAR NED DR SUBMITTED THAT DESPITE THE MATTER REMANDED BY THE TRIBUNAL, T HE ASSESSEE FAILED TO SUBSTANTIATE ITS CLAIM THROUGH EVIDENCE. THEREFO RE, ADDITION WAS RIGHTLY MADE. THE LEARNED DR RELIED UPON THE DECISI ON OF THE HONBLE DELHI HIGH COURT IN THE CASE OF SCHNEIDER ELECTRI C INDIA LTD. VS CIT, 304 ITR 360 IN WHICH THE HON DELHI HIGH COURT RELY ING UPON THE DECISION OF LACHMINARAYAN MADAN LAL VS CIT, 86 ITR 439 HELD AS UNDER: THE ASSESSEE, ENGAGED IN THE BUSINESS OF TRADING IN INDUSTRIAL AND ELECTRONIC ITEMS, CLAIMED DEDUCTI ON ON ACCOUNT OF COMMISSION PAID TO R FOR SALES PROCURED. THE ASSESSING OFFICER HELD THAT THE WAS NO AGREEMENT BETWEEN THE ASSESSEE AND R AND THERE WAS NO DOCUMEN T ON THE BASIS OF WHICH IT COULD BE SAID THAT COMMISS ION ITA NO.355/AHD/2011 M/S. GUJARAT BOROSIL LTD. VS DCIT, BHARUCH CIRCLE, BHARUCH 4 WAS DUE AND PAYABLE TO R AND THEREFORE HE DISALLOWE D THE AMOUNT CLAIMED BY THE ASSESSEE. THE COMMISSIONE R (APPEALS) HELD THAT THOUGH THERE WAS NO WRITTEN AGREEMENT BETWEEN THE ASSESSEE AND R THERE WAS AN INTERNAL NOTE OF THE ASSESSEE REGARDING PAYMENT OF COMMISSION AND PAYMENTS WERE MADE BY ACCOUNT PAYEE CHEQUES AND THERE WAS NO REASON TO DOUBT THE GENUINENESS OF THE TRANSACTIONS BETWEEN THE PARTIES AND ASSET ASIDE THE ORDER OF THE ASSESSING OFFICER. THE TRIBUNAL ALLOWED THE APPEAL FILED BY THE REVENUE. O N APPEAL: HELD, DISMISSING THE APPEAL, THAT THE ASSESSING OFFICER AS WELL AS THE TRIBUNAL EXAMINED THE ENTIRE CASE OF THE ASSESSEE BUT WERE NOT SATISFIED WITH THE EXPLANATION GIVEN. APART FROM THE INTERNAL NOTE, TH ERE WAS NO EVIDENCE OF ANY CORRESPONDENCE OR ANY PERSONAL MEETINGS BETWEEN THE ASSESSEE AND R TO SUGGEST THAT THERE WAS ANY RELATIONSHIP ON THE BASIS OF WHICH R PROCURED SOME ORDERS FOR THE ASSESSEE FOR WHICH IT WAS ENTITLED TO RECEIVE COMMISSION. THE UNDERSTANDING BETWEEN THE PARTIES WAS AN ORAL UNDERSTANDING AND I T WAS DOUBTFUL THAT SUCH AN ORAL UNDERSTANDING COULD HAVE BEEN ARRIVED AT WITHOUT ANY LONGSTANDING RELATIONSHIP HA VING BEEN ESTABLISHED BETWEEN THE ASSESSEE AND R INVOLVI NG SUCH HUGE AMOUNTS OF MONEY OVER A PERIOD OF TIME. N O SUBSTANTIAL QUESTION OF LAW AROSE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIAL AVAILABLE ON RECORD. THE TRIBUNAL IN THE EARLIER OR DER DATED 12-11-2008 RESTORED THE MATTER BACK TO THE FILE OF THE AO WITH DIRECTIONS TO RE-EXAMINE THE ISSUE IN ACCORDANCE WI TH LAW AFTER ALLOWING SUFFICIENT OPPORTUNITY TO THE TAX PAYER TO SUBSTANTIATE THEIR CLAIM OF COMMISSION. THE AO NOTED THAT THE ASSESSEE HAS NOT FURNISHED REQUIRED DETAILS CALLED FOR LIKE NAME AND ADDRESSES OF THE PERSONS TO WHOM PAYMENT OF COMMISSION WAS MADE AND FURTHER ITA NO.355/AHD/2011 M/S. GUJARAT BOROSIL LTD. VS DCIT, BHARUCH CIRCLE, BHARUCH 5 EVIDENCE IN RESPECT OF PAYMENT HAVE NOT BEEN FILED. THE ASSESSEE FILED REPLY BEFORE THE AO THROUGH WHICH THE NAME OF THE PARTIES, INVOICE NUMBERS, AMOUNTS ETC. WERE FILED AND IN THE PAPER BOOK, THE ASSESSEE FURNISHED FURTHER CHART, DEBIT NOTE AND BA NK PAYMENT VOUCHERS TO SHOW THAT PAYMENTS HAVE BEEN MADE TO TH E THREE PARTIES. THE TOTAL OF THE PAYMENT COMES TO RS.1,39, 468/-. THE DETAILS OF THE SAME IS ALSO NOTED BY THE LEARNED CIT(A) IN HIS FINDINGS AS REPRODUCED ABOVE. THE DETAILS NOTED BY THE LEARNED CIT(A) SUPPORT THE FINDINGS OF THE AUTHORITIES BELOW THAT NO COMPL ETE ADDRESS HAVE BEEN FURNISHED. THE ASSESSEE HAS ALSO NOT FURNISHED ANY EVIDENCE TO SHOW AS TO WHAT SERVICES HAVE BEEN RENDERED BY THES E ALLEGED THREE COMMISSION AGENTS FOR THE PURPOSE OF BUSINESS OF TH E ASSESSEE. NO EVIDENCE WAS FILED AS TO WHETHER THESE EXPENSES WER E INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. NO EVIDENCE WAS FILED ON THE BASIS OF WHICH IT COULD BE SAID THAT C OMMISSION WAS DUE AND PAYABLE TO THESE PARTIES. NO EVIDENCE WAS FURNI SHED AS TO WHETHER THESE PARTIES PROCURED SOME ORDERS FOR THE ASSESSEE AND AS TO WHAT SERVICES HAVE BEEN RENDERED BY THEM FOR THE BUSINESS OF THE ASSESSEE. IN THE ABSENCE OF COMPLETE DETAILS, THE A SSESSEE HAS NOT BEEN ABLE TO SUBSTANTIATE ITS CLAIM BEFORE THE AUTH ORITIES BELOW. THUS, THE ASSESSEE FAILED TO DISCHARGE ONUS UPON IT TO PR OVE GENUINENESS OF THE EXPENDITURE IF INCURRED FOR THE PURPOSE OF I TS BUSINESS. THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF SCHNEIDER ELECTRIC INDIA LTD. (SUPRA) SQUARELY APPLIES TO THE CASE OF THE ASSESSEE. THE AUTHORITIES BELOW WERE, THEREFORE, NO T RIGHTLY SATISFIED WITH THE CLAIM OF THE ASSESSEE. WE, THEREFORE, DO N OT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDERS OF THE A UTHORITIES BELOW. WE ITA NO.355/AHD/2011 M/S. GUJARAT BOROSIL LTD. VS DCIT, BHARUCH CIRCLE, BHARUCH 6 CONFIRM THEIR FINDINGS AND DISMISS THIS GROUND OF A PPEAL OF THE ASSESSEE. HOWEVER, WE MAY NOTE THAT THE ASSESSEE MA DE A CLAIM OF DEDUCTION IN RESPECT OF THREE PARTIES NOTED ABOVE I N A SUM OF RS.1,39,468/- WHICH TALLY FROM THE FIGURE GIVEN IN THE PAPER BOOK BY THE ASSESSEE AT PAGE 2 AS WELL AS IN THE FINDINGS G IVEN BY THE LEARNED CIT(A). WE, THEREFORE, DIRECT THE AO TO VERIFY THE DETAILS OF THESE THREE PARTIES AND RESTRICT THE ADDITION TO RS.1,39, 468/- AFTER DUE VERIFICATION AS AGAINST ADDITION OF RS.2,30,961/-. WITH THESE OBSERVATIONS AND DIRECTION THE APPEAL OF THE ASSESS EE IS DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05-07-2011 SD/- SD/- (D. C. AGRAWAL) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 05-07-2011 LAKSHMIKANT/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD