Smt. Mani Bai (Now Deceased) Proprietrix of: Visakha Marketing, Visakhapatnam V. ACIT, Circle -1(1), Visakhapatnam

ITA 355/VIZ/2017

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8862 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 13-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMAN MALIK
• Assessee Lawyers: C SANJEEVA RAO

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO. 355 / VIZ /201 7 (ASST. YEAR : 20 11 - 12 ) DINESH KUMAR L/R OF SMT. MANI BAI (DECEASED), PROP. M/S. VISAKHA MARKETING, 30 - 9 - 5, SARADA STREET, DABAGARDENS, OPP. SHYAMALA PARADISE HOTEL, VISAKHAPATNAM. V S . ADDL. CIT, RANGE - 1, VISAKHAPATNAM. PAN NO. AGIPM 2404 N (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C. SANJEEVA RAO ADV. DEPARTMENT BY : SMT. SUMAN MALIK SR. DR DATE OF HEARING : 1 4 / 1 1 /201 8 . DATE OF PRONOUNCEMENT : 20 / 1 2 /201 8 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER TH IS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 1 , VISAKHAPATNAM , DATED 23 /0 3 /201 7 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2. FACTS OF THE CASE, IN BRIEF, ARE THAT ASSESSEE IS A PROPRIETOR OF M/S. VISAKHA MARKETING , WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN REFRIGERATORS, TELEVISIONS, WASHING MACHINES ETC. 2 ITA NO. 355/VIZ/2017 ( DINESH KUMAR L/R OF SMT. MANI BAI ) DURING THE YEAR UNDER CONSIDERATION , THE ASSESSEE HAS CLAIMED COMMISSION PAID OF RS. 10,77,000/ - UNDER SCHEDULE - 13 IN THE PROFIT & LOSS ACCOUNT. THE ASSESSIN G OFFICER HAS ASKED THE ASSESSEE TO SUBMIT SUPPORTIVE DOCUMENTS IN RESPECT OF THE ABOVE COMMISSION EXPENSES. THE ASSESSEE HAS FILED CERTAIN DETAILS BEFORE THE ASSESSING OFFICER. THE ASSESSING OFFICER AFTER VERIFYING THE SAME OBSERVED THAT THE ABOVE EXPEN SES WERE NOT RELATING TO THE BUSINESS OF THE ASSESSEE AND THE ASSESSEE ALSO COULD NOT EXPLAIN THE REASONS, PURPOSE AND BASIS FOR THE PAYMENT. ACCORDINGLY, THE ASSESSING OFFICER DISALLOWED THE ENTIRE EXPENSES CLAIMED BY THE ASSESSEE OF RS. 10,77,000/ - AND ADDED TO THE INCOME OF THE ASSESSEE. 3 . ON APPEAL BEFORE THE LD. CIT(A), THE ASSESSEE HAS FILED THE DETAILS IN RESPECT OF PAYMENT S MADE TO THE COMMISSION AGENTS AND AGREEMENT S WHICH ARE PLACED AT PAGE NOS. 7 TO 33 OF THE PAPER BOOK. THE LD. CIT(A) BY CONSIDERING THE DETAILS FILED BY THE ASSESSEE OBSERVED THAT THERE ARE FOUR AGENTS WHO ARE RESIDING AT VIJAYAWADA , NAMELY JAWERILAL, VIKRAM KUMAR CHOUHAN , KAILASH KUMAR AND DINESH K U MAR , HOW THEY ARE THE AGENTS OF THE ASSESSEE WHO IS CARRYING THE BUSINESS AT VISAKHAPATNAM AND SELLING THE GOODS IN THE REMOTE AREAS. INSOFAR AS PAYMENT TO SMT. PINKY JAIN , IT IS OBSERVED THAT SHE IS A FAMILY MEMBER, THEREFORE 3 ITA NO. 355/VIZ/2017 ( DINESH KUMAR L/R OF SMT. MANI BAI ) COMMISSION CANNOT BE ALLOWED. SO FAR AS COMMISSION PAYMENT IN RESPECT OF MR. PARASMAL KAPOOR JAIN IS CONCERNED, THE LD. CIT(A) HAS OBSERVED THAT THE AGENT WHO IS RESIDING AT VISAKHAPATNAM, COMMISSION PAID IN RESPECT OF SALES MADE TO HAPPY HOME DEALER AT PARVATHIPURAM , WHICH IS IN REMOTE AREA, THERE FORE , HE DOUBTED THE ENTIRE PAYMENTS AND CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4 . ON APPEAL BEFORE US, LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS IN DISTRIBUTION BUSINESS OF REFRIGERATORS, TELEVI SIONS, WASHING MACHINES ETC. CARRYING ITS OPERATION FROM VISAKHAPATNAM AND TO BE EFFECTIVE FUNCTION AND ENGAGED VARIOUS AGENTS AND COMMISSION IS PAID. ALL THE DETAILS ARE PLACED BEFORE THE ASSESSING OFFICER AS WELL AS LD. CIT(A), WHO SIMPLY DISALLOWED WIT HOUT EXAMI NI NG THE SAME. 5. LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 6 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 7 . THE ASSESSEE IS A PROPRIETOR OF M/S. VISAKHA MARKETING, WHICH IS ENGAGED IN THE BUSINESS OF TRADING IN REFRIGERATORS, TELEVISIONS, WASHING MACHINES ETC. T HE ASSESSEE CARRY TO HER BUSINESS, ENGAGED SERVICES OF VARIOUS PEOPLE AND THE DETA I LS OF THEM ARE PLA CED AT PAGE NOS. 7 TO 33 OF THE PAPER BOOK AND 4 ITA NO. 355/VIZ/2017 ( DINESH KUMAR L/R OF SMT. MANI BAI ) ACCORDING TO THE ASSESSEE, SHE PAID COMMISSION TO THEM . SOME OF THE DETAILS OF COMMISSION PAYMENTS HAVE BEEN PLACED BEFORE THE ASSESSING OFFICER AND THE REMAINING DETAILS ARE PLACED BEFORE THE LD. CIT(A). THE ASSESSING OFFICER SIMPLY DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE ON THE GROUND TH A T THE ASSESSEE HAS FAILED TO PROVE THAT THE EXPENDITURE INCURRED FOR THE PURPOSE OF THE BUSINESS, T HE SAME WAS CONFIRMED BY THE LD. CIT(A) BY OBSERVING THAT MOST OF THE AGENTS ARE RESIDING AT VIJAYAWADA & VISAKHAPATNAM AND SALES MADE TO THE REMOTE AREA S , THEREFORE, THEY CANNOT CARRY THE BUSINESS ACTIVITIES OF THE ASSESSEE. WE FIND THAT THE ASSESSEE HAS FILED ALL THE DETAILS BEFORE THE ASSESSING OFFICER AND BEFOR E THE LD. CIT(A) . I F THE LD. CIT(A) IS HAVING ANY DOUBT, HE SHOULD HAVE BEEN CALLED REMAND REPORT FROM THE ASSESSING OFFICER OR HE SHOULD HAVE BEEN DIRECTED THE ASSESSING OFFICER TO ISSUE SUMMON S TO THE PARTIES AND EXAMINE THE PARTIES AND THEREAFTER DECIDE THE ISSUE IN ACCORDANCE WITH LAW . THE ASSESSING OFFICER AS WELL AS LD. CIT(A) WITHOUT EXAMINING THE PARTIES, TO WHOM THE ASSESSEE PAID COMMISSION, SIMPLY DISALLOWED THE EXPENDITURE ON THE BASI S OF SUSPICION . THE ASSESSEE HAS FILED ALL THE DETAILS, IF THE ASSESSING OFFICER OR LD. CIT(A) HAVE DOUBTED ABOUT THE PAYMENTS, IT IS THE DUTY OF THE AUTHORITIES TO EXAMINE THE PARTIES. IN OUR OPINION, THE ASSESSEE HAS DISCHARGED THE 5 ITA NO. 355/VIZ/2017 ( DINESH KUMAR L/R OF SMT. MANI BAI ) BURDEN CASTED UPON HI M BY FILING THE RELEVANT DETAILS, WHICH ARE PLACED AT PAGE NOS. 7 TO 33 OF THE PAPER BOOK. THEREFORE, SIMPLY ON THE BASIS OF DOUBT, EXPENDITURE CANNOT BE DISALLOWED. IN VIEW OF THE ABOVE, WE FIND THAT THE ORDER OF THE LD. CIT(A) HAS TO BE REVERSED. ACCOR DINGLY, WE REVERSE THE ORDER PASSED BY THE LD.CIT(A) AND THE APPEAL OF THE ASSESSEE IS ALLOWED. 8 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 20 TH DAY OF DEC . , 201 8 . SD/ - SD/ - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20 TH DEC. , 201 8 . VR/ - COPY TO: 1. THE ASSESSEE DINESH KUMAR L/R OF SMT. MANI BAI (DECEASED), PROP. M/S. VISAKHA MARKETING, 30 - 9 - 5, SARADA STREET, DABAGARDENS, OPP. SHYAMALA PARADISE HOTEL, VISAKHAPATNAM. 2. THE REVENUE ADDL. CIT, RANGE - 1, VISAKHAPATNAM. 3. THE PR. CIT - 1, VISAKHAPATNAM. 4. THE CIT(A) - 1, VISAKHAPATNAM. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.