ACIT, BHILWARA V. M/s. Sharda Spuntex, BHILWARA

ITA 359/JODH/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9437 (ITAT-JODHPUR)
• Duration Of Justice: 9 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 11-02-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 24-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VARUN BESAL
• Keywords: Set aside
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI S.V. MEHROTRA, A.M. AND SHRI V. DURGA R AO, J.M. ITA NO. 359/JU/2010 ASSESSMENT YEAR: 2003-04 ASSTT. COMMISSIONER OF INCOME-TAX, APPELLANT CIRCLE, BHILWARA VS. M/S SHARDA SPUNTEX, RESPONDENT LAXMI BHAWAN, BAZAR NO.3, BHILWARA. (PAN AADCS1740F) APPELLANT BY : MR. AMIT NIGAM RESPONDENT BY : MR. VARUN BESAL . ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), AJMER, PASSED ON 19/03/2010 FOR THE ASSESSM ENT YEAR 2003- 04 WHEREIN THE REVENUE HAS RAISED THE FOLLOWING GR OUND OF APPEAL:- 1. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CA SE THE LD. CIT(A), AJMER ERRED IN DELETING THE ADDITION OF RS. 7,09,682/- MADE ON ACCOUNT OF PAYMENT OF COMMISSION AS THE ASS ESSEE ADOPTED MERCANTILE SYSTEM OF ACCOUNTING. THE PAYMEN T OF COMMISSION IS PRIOR PERIOD EXPENSES I.E. RELATED TO AY 2002-03. 2. BRIEFLY THE FACTS RELATING TO RAISE THIS GROUND ARE THAT THE AO COMPLETED THE ASSESSMENT, ORIGINALLY, ON 28/02/2006 U/S 143(3) OF THE ACT MAKING AN ADDITION OF RS. 7,84,209/- BY DIS ALLOWING COMMISSION EXPENSES HOLDING THE SAME PRIOR YEAR EXP ENSES. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE. AGAINS T THE ORDER OF CIT(A), DEPARTMENT PREFERRED AN APPEAL BEFORE THE I TAT AND THE ITAT RESTORED THE ISSUE TO AO WITH THE FOLLOWING DIRECTI ONS:- ITA NO. 359/JU/2010 SHARDA SPUNTEX 2 IT IS NOT, HOWEVER DEMONSTRATED BEFORE THE TRIBUNA L THAT WHETHER THE DOCUMENTS PLACED BY THE ASSESSEE IN THE PB BEFO RE THE LD. CIT(A) ARE MADE AVAILABLE TO THE AO OR NOT. AS THE LD. CIT(A) HAS RELIED ON THE SAID DOCUMENTS FILED BEFORE HIM IN TH E PB FORGIVING RELIEF TO THE ASSESSEE AGAINST WHICH THE DEPARTMENT IS IN THE APPEAL BEFORE THE TRIBUNAL, WE RE OF THE CONSIDERED OPINION THAT THIS IS THE FIT CASE TO BE RESTORED THE FILE OF THE AO FOR DE NOVO CONSIDERATION OF ISSUES RAISED BY THE DEPARTMENT HE REIN AND PASSING NECESSARY CONSEQUENTIAL ORDERS AS PER LAW, HOWEVER, STRICTLY FOLLOWING THE PRINCIPLES OF NATURAL JUSTIC E. 3. IN THE SET ASIDE PROCEEDINGS, THE ASSESSEE FILED THE DOCUMENTS PLACED BEFORE THE CIT(A) TO ESTABLISH THAT THE EXPE NSES CLAIMED IS NOT A PRIOR PERIOD EXPENSES. HOWEVER, THE AO AGAIN MADE THE ADDITION BY DISALLOWING THE PAYMENT OF COMMISSION MADE TO RITSP IN SYNTHETICS LTD. OF RS. 6,19,238/- AND SHAH YARN PVT. LTD. OF R S. 90,444/-, TOTALING TO RS. 7,09,682/-. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE CIT(A). 4. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT H ONBLE ITAT HAS SET ASIDE THE MATTER, SINCE ACCORDING TO THEM DOCUM ENTS FILED BEFORE CIT(A) WAS NOT AVAILABLE TO AO. HOWEVER, IN SET ASI DE PROCEEDINGS, THE AO EVEN AFTER HAVING THESE DOCUMENTS COULD NOT UNDE RSTAND BETWEEN AN ERROR/OMISSION AND CRYSTALLIZATION OF LIABILITY BECAUSE OF OCCURRENCE OF AN EVENT. THE ASSESSEE CONTENDED THAT WITHOUT FOLLOWING THE DIRECTION OF HONBLE ITAT FOR THE VERIFICATION OF DOCUMENTS FILED BEFORE CIT(A), THE AO HAS REPEATED THE ORDER IN THE SAME MANNER. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE CIT(A) DELETED THE ADDITION OF RS. 7,09,682/- BY OBSERVING AS UNDE R:- 4.3 FROM THE PERUSAL OF RECORDS, IT IS OBSERVE THAT APPELLANT IS COMMISSION AGENT. APPELLANT COMPANY IS SELLING AGEN T OF M/S RITSPIN SYNTHETICS LTD. APPELLANT HAS AGREEMENT WIT H THIS COMPANY THAT IT IS RESPONSIBLE FOR REALIZATION OF P AYMENT. FOR NON-RECEIPT OF PAYMENT OR DELAYED RECEIPTS, INTERES T HAS TO BE RECOVERED FROM APPELLANT. THE SETTLEMENT WITH THESE PARTIES TOOK PLACE DURING THE YEAR AND THEREFORE, AS PER AS-5 GU IDE LINES ISSUED BY THE ICAI, APPELLANT CLAIMED THE AMOUNT IN P&L ACCOUNT FOR THIS YEAR. APPELLANT FURNISHED DOCUMENTS IN SUP PORT OF THE CLAIM BEFORE THE AO THAT THE EXPENSES WERE SETTLED DURING THE YEAR. IN SUCH A CASE AO IS NOT JUSTIFIED TO REJECT CLAIM THAT THE SAME ARE EXPENSES FOR CURRENT YEAR. DISALLOWANCE OF RS. ITA NO. 359/JU/2010 SHARDA SPUNTEX 3 7,09,682/- IS NOT JUSTIFIED AND THE SAME IS DIRECTE D TO BE DELETED. GROUND NO. 1 OF THE APPEAL IS THUS ALLOWED. 5. AGGRIEVED BY THE ORDER OF THE CIT(A), THE REVENU E IS IN APPEAL BEFORE THE ITAT. 6. THE LEARNED DR HAS PLACED RELIANCE ON THE ORDER OF THE AO WHEREAS THE ASSESSEE HAS STRONGLY RELIED UPON THE O RDER OF THE CIT(A) AND ALSO RELIED UPON THE JUDGMENT IN THE CASE OF SA URASHTRA CEMENT & CHEMICAL INDUSTRIES LTD. VS. CIT [1995] 213 ITR 5 23 (GUJ) IN SUPPORT OF HIS CASE. 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES AND PERUSED THE RECORD. WE FIND THAT THE AO MADE THE AD DITION OF RS. 7,09,682/- ON ACCOUNT OF PAYMENT OF COMMISSION MADE AS PRIOR PERIOD EXPENSES WHEREAS THE CIT(A) HELD THAT THE COMMISSIO N PAYMENTS MADE BY THE ASSESSEE DURING THE YEAR UNDER CONSIDER ATION AFTER VERIFYING THE DOCUMENTS FURNISHED BY THE ASSESSEE I N SUPPORT OF HIS CLAIM. WE FIND THAT THE CLAIM OF THE ASSESSEE IS BO NAFIDE AS THE PAYMENTS MADE BY THE ASSESSEE DURING THE YEAR AND SETTLEMENT WITH THE PARTIES TOOK PLACE IN THE CURRENT YEAR, FOR WHI CH THE ASSESSEE HAS FILED DOCUMENTARY EVIDENCE. THEREFORE, WE FIND NO I NFIRMITY IN THE ORDER OF THE CIT(A) IN DIRECTING THE AO TO DELETE T HE DISALLOWANCE MADE BY HIM. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT (A) AND DISMISS THE GROUND RAISED BY THE REVENUE ON THIS COUNT. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. PRONOUNCED ON 22 ND MARCH, 2011. SD/- SD/- (S.V. MEHROTRA) (V. DU RGA RAO) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 22 ND MARCH, 2011. ITA NO. 359/JU/2010 SHARDA SPUNTEX 4 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., JOD HPUR . BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI. KV S.NO. DESCRIPTION DATE INTLS 1. DRAFT DICTATED ON 01/03/11 SR.P.S./P.S 2. DRAFT PLACED BEFORE AUTHOR 02/03/11 SR.P.S/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.P.S./PS SR.P.S./P.S 6. KEPT FOR PRONOUNCEMENT ON SR. P.S./P.S. 7. FILE SENT TO THE BENCH CLERK SR.P.S./P.S 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER