DEEPAK DHANRAJ MURPANA, MUMBAI V. ASST CIT 23(1), MUMBAI

ITA 3608/MUM/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 0489 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 25-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V VIDHYADHAR
• Keywords: Opportunity of being heard; Principle of natural justice
• Section: 143(3); 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 3608/MUM/2016 ASSESSMENT YEAR: 2012 - 13 SHRI DEEPAK DHANRAJ MURPANA PLOT NO. C - 23, 5 TH FLOOR, SOMDHAN BUILDING, PERRY CROSS ROAD, BANDRA (W), MUMBAI - 400050. VS. ACIT - 23(1) ROOM NO. 113, MATRU MANDIR, MUMBAI - 400007 PAN NO. AEWPM2902D APPELLANT RESPONDENT ASSESSEE BY : MS. RITIKA AGARWAL , AR REVENUE BY : MR. V. VIDHYADHAR , SR. DR DATE OF HEARING : 25 /01/2018 DATE OF PRONOUNCEMENT : 31/01/2018 ORDER PER N.K. PRADHAN, AM THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2012 - 13 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISS IONER OF INCOME TAX (APPEALS) - 32 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE GROUND OF APPEAL RAISED BY THE ASSESSEE IN THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN LAW AND ON FACTS IN UPHOLDING THE DISALLOWANCE OF COMMISSION EXPENSES PAID TO 13 PARTIES TOTAL AGGREGATING TO RS.61,18,826/ - IGNORING PLETHORA OF EVIDENCE PRODUCED. SHRI DEEPAK DHANRAJ MURPANA ITA NO. 3608/MUM/2016 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEE HA D PAID RS.61,18,826/ - AS COMMISSION TO 13 PARTIES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (AO) ISSUED NOTICE U/S 142(1) TO THE ASSESSEE ASKING TO FILE DETAILS OF COMMISSION PAID IN A FORMAT INCORPORATING (I) NAME AND ADDRESS OF THE PERSON WHOM COMMISSION PAID, (II) AMOUNT, (III) TDS, (IV) SERVICE FOR WHICH COMMISSION PAID AND (V) AMOUNT OF COMMISSION PAID IN AY 2011 - 12. THE AO NOTICED THAT THE ASSESSEE HAD FILED DETAILS OF COMMISSION PAID SAVE AND EXCEPT THE NATURE OF SERVICES. AS PER THE AO, THE ASSESSEE HAD NOT ADDUCED ANY EVIDENCE TO SHOW THAT THE ASSESSEE PROCURED BUSINESS WITH THE HELP OF THE SERVICE OF THESE AGENTS. IT WAS ALSO THE SUBMISSION OF THE ASSESSEE BEFORE THE AO THAT THERE WAS NO WRITTEN AGRE EMENT FOR PAYMENT OF COMMISSION. THE AO THUS CAME TO A FINDING THAT (I) NO EVIDENCE HAS BEEN FURNISHED BY THE ASSESSEE SUGGESTING THAT THE ORDERS WERE BROUGHT SPECIFICALLY BY THESE AGENTS, (II) THE ASSESSEE HAS IN FACT SPLIT THE TOTAL EXPORTS INTO FOUR PARTS AND FURTHER CALCU LATED COMMISSION @ 3%, 4% AND 5% AND PAID TO THE 13 PARTIES, (III) THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH AND CO - RELATE THE INVOICES IN RELATION TO WHICH THE COMMISSION PAYMENTS ARE MADE, (IV) THE ASSESSEE FAILED TO FURNISH EVIDENCE REGARDING THE CLAIM THAT THE ENTIRE EXPORT SALES WERE MADE POSSIBLE ONLY BECAUSE OF THE CONTRIBUTIONS OF THESE COMMISSIO N AGENTS. IN VIEW OF THE ABOVE FACTS, THE AO CONCLUDED THAT THE ASSESSEE FAILED TO ESTABLISH THE EXACT NATURE OF SERVICES PROVIDED BY THE COMMISSION AGEN TS AND THEREFORE, HE MADE AN ADDITION OF RS.61,18,826/ - . SHRI DEEPAK DHANRAJ MURPANA ITA NO. 3608/MUM/2016 3 4. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HELD THAT (I) THERE IS NO EVIDENCE TO DEMONSTRATE THE FACT THAT THE EXPORT SALES ARE INDEED TH ROUGH THESE COMMISSION AGENTS, (II) THE CONTROVERSY HERE IS NOT REGARDING THE FACT OF PAYMENTS BUT IN RESPECT OF THE PURPOSE FOR WHICH THESE PAYMENTS ARE MADE, (III) THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE ANY EVIDENCE TO SHOW THE NATURE OF SERVICES REND ERED BY THE SO - CALLED COMMISSION AGENTS, (IV) APART FROM MAKING GENERAL STATEMENT, LINKING SOME EXPORT TURNOVER TO THE COMMISSION PAID, THERE IS NO EVIDENCE TO SHOW THAT THESE AGENTS ACTUALLY FACILITATED EXPORT SALE OF THE ASSESSEE. THEREFORE, THE LD. CI T(A) CONFIRMED THE DISALLOWANCE OF RS.61,18,826/ - MADE BY THE AO. 5. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE FILES A PAPER BOOK CONTAINING INTER ALIA COPIES OF CONFIRMATIONS BY COMMISSION AGENTS, EXPORT SALES LEDGER, COMMISSION ACCOUNT LEDGER, TDS AC COUNT LEDGER, COPIES OF SAMPLE EXPORT INVOICES AND COMPARATIVE TURNOVER CHART. THE LD. COUNSEL SUBMITS THAT THE AO FAILED IN NOT ACCEPTING THE CONFIRMATION OF THE PARTIES TO WHOM COMMISSION PAYMENTS WERE MADE, WHICH WAS A SUFFICIENT EVIDENCE TO SHOW THAT THE ASSESSEE PROCURED EXPORT BUSINESS WITH THE HELP OF THE PARTIES TO WHOM THE COMMISSION PAYMENTS WERE MADE. HENCE IT IS STATED BY HIM THAT THE CLAIM OF COMMISSION PAYMENT OUGHT TO BE FULLY ALLOWED. 6. PER CONTRA , THE LD. DR RELIES ON THE ORDER PASSED B Y THE LD. CIT(A). IT IS STATED BY HIM THAT NEITHER BEFORE THE AO NOR BEFORE THE LD. CIT(A), THERE WAS EVIDENCE TO DEMONSTRATE THE FACT THAT EXPORT SALES WERE INDEED THROUGH THESE COMMISSION AGENTS. AS THE ASSESSEE FAILED SHRI DEEPAK DHANRAJ MURPANA ITA NO. 3608/MUM/2016 4 TO FILE ANY EVIDENCE TO SHOW THE NA TURE OF SERVICES RENDERED BY THE COMMISSION AGENTS, IT IS PLEADED BY HIM THAT THE ORDER PASSED BY THE LD. CIT(A) BE CONFIRMED. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISION ARE GIVEN BELOW. THE CONTROVERSY IN THE INSTANT CASE IS NOT REGARDING THE FACT OF PAYMENTS BUT IN RESPECT OF THE PURPOSE FOR WHICH THESE PAYMEN TS WERE MADE. THE DISPUTE RELATES TO THE NATURE OF SERVICES RENDERED BY THE COMMISSION AGENTS. WE ARE OF THE CONSIDERED VIEW THAT THE DISPUTE COULD BE RESOLVED THROUGH A PROPER HEARING. A PROPER HEARING MUST ALWAYS INCLUDE A FAIR OPPORTUNITY TO THOSE WHO ARE PARTIES IN THE CONTROVERSY FOR CORRECTING OR CONTRADICTING ANYTHING PREJUDICIAL TO THEIR VIEW. CROSS - EXAMINATION IS ALLOWED BY PROCEDURAL RULES AND EVIDENTLY ALSO BY THE RULES OF NATURAL JUSTICE. ANY WITNESS WHO HAS BEEN SWORN ON BEHALF OF ANY PARTY IS LIABLE TO BE CROSS - EXAMINED ON BEHALF OF THE OTHER PARTY TO THE PROCEEDINGS. THE HON'BLE SUPREME COURT IN STATE OF KERALA VS. K.T. SHADULI GROCERY DEALER AIR 1977 SC 1627, RECOGNISED THE IMPORTANCE OF ORAL EVIDENCE BY HOLDING THAT THE OPPORTUNITY TO PROVE THE CORRECTNESS OR COMPLETENESS OF THE RETURN NECESSARILY CARRY WITH IT THE RIGHT TO EXAMINE WITNESSES AND THAT INCLUDES EQUALLY THE RIGHT TO CROSS - EXAMINE WITNESSES. IN VIEW OF THE ABOVE POSITION OF LAW, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RE STORE THE MATTER TO THE FILE OF THE AO TO MAKE A FRESH ASSESSMENT AFTER EXAMINING THE COMMISSION AGENTS AND GIVING OPPORTUNITY OF CROSS - EXAMINATION TO THE ASSESSEE. WE DIRECT THE SHRI DEEPAK DHANRAJ MURPANA ITA NO. 3608/MUM/2016 5 ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE AND CORRECT ADDRESS OF THE C OMMISSION AGENTS BEFORE THE AO. NEEDLESS TO SAY, THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING THE ASSESSMENT ORDER. 8. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31/01/2018. SD/ - SD/ - ( D.T. GARASIA) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 31/01/2018 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI