Sarita Motors, North Lakhimpur V. Income Tax Officer, Ward-North Lakhimpu, North Lakhimpur

ITA 355/GTY/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 7512 (ITAT-GUWAHATI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 18-12-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: H R SINGH
• Assessee Lawyers: ANIL KUMAR AGARWAL
• Keywords: Business expenditure; Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI ECOURT, AT KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.355/GAU/2018 ( / ASSESSMENT YEAR: 2012-13) M/S SARITA MOTORS, NORTH LAKHIMPUR TOWN BANTOW, P.O. NORTH LAKHIMPUR, DISTRICT-LAKHIMPUR VS. ITO, WARD-NORTH LAKHIMPUR ./ ./PAN/GIR NO.: ABRFS 5727 Q (APPELLANT) .. (REVENUE) APPELLANT BY : SHRI ANIL KUMAR AGARWAL, FCA RESPONDENT BY : SHRI H. R. SINGH, ACIT / DATE OF HEARING : 14/05/2019 /DATE OF PRONOUNCEMENT : 26/07/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE , PE RTAINING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-1, GUWAHATI, WHICH IN TURN ARISES OUT OF A N ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 28/03/2015. 2. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE A S FOLLOWS: 1. FOR THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE ORDER OF T HE ASSESSING OFFICER DISALLOWING THE CLAIM OF BUSINESS EXPENSES AMOUNTIN G TO RS. 10,30,000/- CLAIMED AS COMMISSION PAID TO CUSTOMERS. M/S SARITA MOTORS ITA NO.355/GAUL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 2. FOR THAT THE LEARNED CIT(A) ERRED IN UPHOLDING A DDITION OF RS. 3,50,000/- MADE BY THE ASSESSING OFFICER TREATING THE BALANCE STANDING ON ACCOUNT OF A TRADE CREDITOR AS INGENUINE. 3. FOR THAT THE APPELLANT URGES LEAVE TO RAISE ANY FURTHER / ADDITIONAL GROUND AT THE TIME OF HEARING OF THE APPEAL. 3. GROUNDS NO. 1 RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF CLAIM OF BUSINESS EXPENSES AMOUNTING TO RS. 10,30,000/- CLAI MED AS COMMISSION PAID TO CUSTOMERS. 4. AT THE OUTSET ITSELF THE LD. COUNSEL FOR THE ASS ESSEE SUBMITTED BEFORE US THAT DURING THE ASSESSMENT PROCEEDINGS, ASSESSEE PRODUCE D BEFORE THE ASSESSING OFFICER THE CASH BOOK AND LEDGER BOOK OF M/S SARITA MOTORS FOR ASSESSMENT YEAR 2012-13, WHICH WERE VERIFIED BY THE ASSESSING OFFIC ER ON TEST CHECK BASIS. HOWEVER, IT WAS NOTED BY THE ASSESSING OFFICER THAT SUBSTANTIAL AMOUNT OF COMMISSION WERE PAID TO PARTNERS IN SPITE OF THE FA CT THAT NOTHING WITH REGARD TO PAYMENT OF SUCH COMMISSION IS MENTIONED IN THE PART NERSHIP DEED. THEREFORE, THE ASSESSING OFFICER MADE THE ADDITION TO THE TUNE OF RS. 10,30,000/-. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSE E HAS PRODUCED CASH BOOK, LEDGER ACCOUNTS OF M/S SARITA MOTORS AND OTHER EVID ENCES TO SUBSTANTIATE HIS CLAIM HOWEVER ASSESSING OFFICER HAS NOT EXAMINED THEM AND THE ASSESSING OFFICER HAD DISALLOWED THE SAME THEREFORE THE LD. COUNSEL REQUE STED THE BENCH TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER FOR EXAMINATION OF THE CASH BOOK, LEDGER ACCOUNTS, VOUCHERS AND THE PARTNERSHIP DEED . THE LD. DR FOR THE REVENUE DID NOT HAVE ANY OBJECTION IF THE MATTER IS REMITT ED BACK TO THE FILE OF THE ASSESSING OFFICER FOR NECESSARY EXAMINATION. 5. WE NOTE THAT BEFORE US, THE ASSESSEE SUBMITTED T HE COPY OF AGREEMENT, CASH BOOK, LEDGER ACCOUNTS OF M/S SARITA MOTORS PARTNERS HIP DEED. WE NOTE THAT THE ASSESSEE SUBMITTED A DETAILED NOTE DURING THE APPEL LATE PROCEEDINGS EXPLAINING THE RECEIPT OF COMMISSION OF PARTNERS. WE NOTE THAT THE ASSESSEE FIRM HAS DEBITED RS. 10,30,000/- IN THE PROFIT AND LOSS ACCOUNT AS AN EX PENDITURE TOWARDS PAYMENT OF COMMISSION TO CUSTOMERS. THE COUNSEL SUBMITTED THAT SINCE THE TERM OF AGREEMENT M/S SARITA MOTORS ITA NO.355/GAUL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 WITH M/S MAHINDRA & MAHINDRA DOES NOT ALLOW FOR MAK ING SUCH PAYMENT OF DISCOUNT OR INCENTIVE THE SAME WAS PAID TO CUSTOMER AS COMMISSION. THIS FACT HAS NOT BEEN VERIFIED BY THE ASSESSING OFFICER. THE COU NSEL ALSO PRODUCED BEFORE US THE DEBIT VOUCHERS IN SUPPORT OF COMMISSION PAID TO CUSTOMERS AND ALSO INVOICES IN SUPPORT OF SALES. HOWEVER, THE ASSESSING OFFICER DI SALLOWED THE CLAIM OF THE ASSESSEE MERELY BECAUSE THE SOME DEBIT VOUCHERS DID NOT COMPLIMENT ANY SALE AND SIMILARLY SOME SALES INVOICES DID NOT COMPLIMENT AN Y DEBIT VOUCHERS. THE LD. COUNSEL SUBMITTED THAT BECAUSE OF SMALL MISMATCHES BETWEEN THE DEBIT VOUCHERS AND SALES DOES NOT MEAN THAT THE ASSESSEES CLAIM IS FALSE. THE LD. COUNSEL HAS SUBMITTED BEFORE US THE INVOICES OF M/S SARITA MOTO RS LTD. (VIDE PB-PAGE 31) AND THE DEBIT VOUCHERS OF THE COMMISSION (VIDE PB PAGE 32), WE NOTE THAT THESE DOCUMENTS HAVE NOT BEEN VERIFIED BY THE ASSESSING OFFICER. THE LD. COUNSEL SUBMITTED BEFORE US THAT THIS MISMATCH OF THE DEBIT VOUCHERS AND SALES INVOICES HAD ARISEN BECAUSE OF SERIAL NO OF DEBIT VOUCHERS A ND DATE MENTIONED IN THE SALES INVOICES. THEREFORE WE ARE OF THE VIEW THAT THIS IS A FIT CASE TO REMIT THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE CASH BOOK, LEDGER ACCOUNT , SALES INVOICES AND DEBIT NOTES AND ALLOW THE CLAIM OF THE ASSESSEE IN ACCORDANCE WITH LAW. THEREFORE WE SET ASIDE THE ORDER OF THE LD. CI T(A) AND REMIT ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE DOC UMENTS MENTIONED ABOVE. STATISTICAL PURPOSES THE APPEAL OF THE ASSESSEE ON THIS ISSUE IS TREATED TO BE ALLOWED. 6. GROUNDS NO. 2 RAISED BY THE ASSESSEE RELATES TO ADDITION OF RS. 3,50,000/- MADE BY THE ASSESSING OFFICER TREATING THE BALANCE OUTST ANDING ON ACCOUNT OF TRADE CREDITOR AS NOT GENUINE. 7. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE AS SESSEE SUBMITTED BEFORE US THAT THE ASSESSEE FIRM HAD CLAIMED A SUM OF RS. 3,50,000/- A S PAYABLE TO ONE M/S VISWAKARMA AGRICULTURAL UDYOG BEING CREDITOR AS SHO WN IN ANNEXURE TO AUDIT REPORT. IT WAS ALSO STATED BY THE ASSESSEE THAT CRE DITOR WAS SUPPLIERS OF TROLLEYS TO THE ASSESSEE FIRM. DURING THE ASSESSMENT PROCEEDING S A LETTER WAS ISSUED TO THE SAID CUSTOMER FOR CONFIRMATION OF THE AMOUNT OF RS. 3,50,000/-, HOWEVER LETTER WAS RETURNED UNSERVED BY THE POSTAL DEPARTMENT WITH REM ARK AS INSUFFICIENT ADDRESS M/S SARITA MOTORS ITA NO.355/GAUL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 THEREFORE THE ASSESSING OFFICER MADE ADDITION TO TH E TUNE OF RS. 3,50,000/-. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMITTED TH AT THE CLAIM OF THE ASSESSEE IS VAGUE IN NATURE, SINCE THE CREDITOR DID NOT EXIST THEREFORE GENUINENESS OF EXISTENCE OF SUCH CREDITOR REMAINS UNDER SUSPICION AND THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE SUBMITTED CASH MEMOS, VOU CHERS OF PURCHASES OF M/S VISWAKARMA AGRICULTURAL UDYOG. THE ASSESSEE ALSO SU BMITTED THE ADDRESS OF THE CREDITORS, BANK STATEMENT. WE NOTE THAT THE ASSESSI NG OFFICER HAS USED ONE SIDED APPROACH AND DID NOT TAKE INTO ACCOUNT, THE BANK ST ATEMENT, CASH MEMOS AND VOUCHERS OF PURCHASES. THE GENUINENESS OF THESE DOC UMENTS HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. WE NOTE THAT THE ASSESSEE HAS SUBMITTED BEFORE US THE LEDGER ACCOUNT OF M/S VISWAKARMA AGRICULTURAL UDYOG VIDE PB PAGE 44; THE SAID LEDGER ACCOUNT HAS NOT BEEN VERIFIED BY THE ASSESS ING OFFICER. THEREFORE WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THIS IS SUE BACK TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE THE ISSUE AFRESH IN ACCORDANCE WITH LAW. STATISTICAL PURPOSES GROUND NO. 2 RAISED BY THE ASSESSEE IS ALL OWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 26.07.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 26/07/2019 ( SB, SR.PS ) M/S SARITA MOTORS ITA NO.355/GAUL/2018 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 COPY OF THE ORDER FORWARDED TO: 1. M/S SARITA MOTORS, NORTH LAKHIMPUR 2. ITO, WARD-NORTH LAKHIMPUR 3. C.I.T(A)- 4. C.I.T.- GUWAHATI. 5. CIT(DR), GAUHATI BENCH, GUWAHATI. 6. GUARD FILE. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY / DDO / H.O.O ITAT, GAUHA TI BENCH