DCIT 15(2)(3), MUMBAI V. PRIYADARSHAN COMTECH & DEVELOPERS LTD, KALYAN

ITA 3908/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7803 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-09-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 23-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARJU GARODIA
• Assessee Lawyers: DR P DANIAL
• Keywords: Revenue expenditure
• Section: 133(6)

Judgement Text

, , , , IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI . . , , BEFORE SHRI C.N. PRASAD, JM AND SHRI RAJESH KUMAR, AM ITA NO.3908/MUM/2015 ( / ASSESSMENT YEAR: 2010-11) DY.COMMISSIONER OF INCOME TAX-15(2)(4), ROOM NO.360, 3 RD FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI-400020 / VS. M/S PRIYADARSHAN COMTECH AND DEVELOPERS, 9, SWAMIRAJ BLDG, SHELAR O PARK, KHADAKPADA, KALYTAN (W) -421301 ( /APPELLANT) : ( / RESPONDENT) ./PAN : AADCP9893Q / REVENUE BY : MS.ARJU GARODIA / ASSESSEE BY : DR.P.DANIAL /DATE OF HEARING : 25.9.2017 /DATE OF PRONOUNCEMENT : 22.12.2017 / O R D E R PER RAJESH KUMAR, A. M: THIS IS AN APPEAL FILED BY THE REVENUE CHALLENGING THE ORDER DATED 31.3.2015 OF LD.CIT(A)-2, THANE, FOR THE ASSESSMENT YEAR 2010-11. 2 ITA NO.3908/MUM/2015 2. THE ISSUES RAISED BY THE REVENUE ARE : A) DELETION OF DISALLOWANCE OF COMMISSION AND BROKER AGE ON ACCOUNT OF INCOMPETENT ADDRESS AMOUNTING TO RS.12,1 7,000/- AND B) DELETION OF DISALLOWANCE OF COMMISSION AND BROKER AGE ON ACCOUNTING TO RS.72,16,500/- ON ACCOUNT OF NON-VERI FICATION. 3. FACTS OF THE CASE ARE THAT THE AO OBSERVED THA T THE ASSESSEE HAS NOT FURNISHED COMPLETE ADDRESSES OF 8 PERSONS INVOL VING THE BROKERAGE AMOUNT OF RS.12,17,000/- TO WHOM THE COMMISSION WAS PAID AND THEREFORE NO INQUIRY COULD BE MADE FROM THESE PARTIES AND ACC ORDINGLY, THE AO DISALLOWED AND ADDED A SUM OF RS.12,17,000/- TO THE TOTAL INCOME OF THE ASSESSEE BEING UNVERIFIED COMMISSION. PERTINENT TO MENTION HERE THAT THE ASSESSEE SUPPLIED PAN, COPIES OF LEDGER ACCOUNTS AN D DETAILS OF PAYMENT AND ALSO DETAILS OF COMMISSION PAYMENT. SIMILARLY, THE AO ADDED A SUM OF RS.72,16,500/- ON ACCOUNT OF NON-VERIFICATION FOR WA NT OF COMPLETE DETAILS AND ADDRESSES WHICH COMPRISED AN AMOUNT OF RS.37,44, 000/- ON ACCOUNT OF COMMISSION PAID TO 11 PERSONS TO WHOM THE AO HAS ISSUED NOTICE U/S 133(6) BUT THEY DID NOT PROVIDE ANY INFORMATION AS CALLED FOR BY THE AO. WITH REGARD TO THE COMMISSION OF RS.34,72,500/- COM MISSION PAID TO 9 PERSONS, DESPITE ISSUE OF SERVICE OF NOTICE U/S 133 (6) OF THE ACT THESE 9 3 ITA NO.3908/MUM/2015 PERSONS DID NOT APPEAR BEFORE THE AO NOR THEY HAVE PROVIDED ANY INFORMATION. HENCE, THE AO DISALLOWED AND ADDED A SU M OF RS.72,16,500/- TO THE TOTAL INCOME OF THE ASSESSEE ON THE GROUND T HAT THE SAME WAS NOT PROVED WITH THE ADEQUATE EVIDENCES AND THE ASSESSEE FAILED TO DISCHARGE ONUS CAST UPON IT . 4. IN THE APPELLATE PROCEEDINGS, THE FAA ALLOWED THE APPEAL OF THE ASSESSEE AFTER CONSIDERING THE DETAILED SUBMISSIONS AND DOCUMENTS SUBMITTED BY THE ASSESSEE. AGGRIEVED BY THE ORDER O F THE FAA, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR SUBMITTED BEFORE US THAT THE ORDER OF THE LD.CIT(A) IS NOT CORRECT AS THE SUBSTANTIAL PART OF THE COMMISSION WA S PAID TO THE TWO DIRECTORS OF THE ASSESSEE-COMPANY. THE LD. DR ALSO SUBMITTED THAT THE ORDER PASSED BY THE LD.CIT(A) IS HIGHLY CRYPTIC AND LACKS REASONING AND BASED UPON THE WRONG FACTS. THE LD. DR STATED THAT TH E VERIFICATION OF COMMISSION OF RS.37,44,000/- AND RS.34,72,500/- COU LD NOT BE MADE DUE TO NON-SERVICE OF COMMUNICATIONS/NON-ATTENDANCE BY THE RECIPEINTS AND THEREAFTER THE ASSESSEE WAS REQUESTED TO PRODUCE THE SE PARTIES FOR VERIFICATION WHICH THE ASSESSEE FAILED TO DO. THE LD . DR CONTENDED THAT THE CIT(A) HAS NOT GIVEN ANY FINDING AND REASONING FOR ALLOWING APPEAL OF THE ASSESSEE AND THEREFORE, THE ORDER PASSED BY THE FAA IS COMPLETELY AGAINST 4 ITA NO.3908/MUM/2015 THE SPIRIT OF LAW. FINALLY, THE LD. DR PRAYED THAT THE ORDER OF LD.CIT(A) DESERVED TO BE REVERSED ON THE GROUND THAT IT IS WIT HOUT REASONING AND NON-SPEAKING AND ALSO IN VIEW OF THE FACTS THAT THE SAID PAYMENT COULD NOT BE VERIFIED DURING THE COURSE OF ASSESSMENT PROCEED INGS. ON THE CONTRARY, THE LD.AR SUBMITTED THAT THIS WAS THE FIRST YEAR OF OPERATION AND NO STAFF WAS APPOINTED IN THE ASSESSEE COMPANY AS A RESULT OF WHICH NO REVENUE EXPENDITURE WAS INCURRED ON THE RUNNING AND MAINTENA NCE OF THE BUSINESS OF THE COMPANY. THE LD.AR SUBMITTED THAT IN THE SU BSEQUENT TWO YEARS I.E. ASSESSMENT YEARS 2011-12 AND 2012-13 THE REVENUE HA S ACCEPTED THE SIMILAR PAYMENT BY REFERRING TO THE ASSESSMENT ORDE R DATED 7.3.2014, 17.3.2015, WHICH WAS PLACED AT PAGES 173 TO 178 OF TH E PAPER BOOK. THE LD. AR ALSO DREW OUR ATTENTION TO PAGE 169 OF THE P APER BOOK WHICH CONTAINED THE COMPARATIVE DETAILS OF TURNOVER AND C OMMISSION PAID AND PERCENTAGE OF COMMISSION TO SALES AND BOOK PERCENTA GE TO SALES AND THE PERCENTAGE TO COMMISSION FOR THE ASSESSMENT YEAR 20 10-11 AND THE SALES WERE 59%, WHEREAS IN THE ASSESSMENT YEARS 2011-12 AN D 2012-13, THE SAID PERCENTAGE WAS 50.46% AND 45% WHEREAS THE CORRE SPONDING NET PROFIT PERCENT WAS 1.81% IN ASSESSMENT YEAR 2010-11, 1.79% IN AY 2011- 12 AND 2.65% FOR ASSESSMENT YEAR 2012-13. THE LD. A R SUBMITTED THAT THESE RESULTS WERE ACCEPTED BY THE REVENUE FOR THE A SSESSMENT YEARS 5 ITA NO.3908/MUM/2015 2010-11 AND 2012-13 ESPECIALLY IN THE SCRUTINY PROC EEDINGS. THE LD. AR FURTHER STATED THAT THE LD. CIT(A) HAS CALLED FOR T HE DETAILS OF COMMISSION PAID ALONG WITH ALL THE NECESSARY DETAILS AND ONLY T HEREAFTER CONSIDERING THE EVIDENCES PRODUCED BY THE ASSESSEE WHICH INCLUD ED THE DETAILS OF ADDRESSES OF THE PARTIES, PAN, TDS DEDUCTED FROM TH E SAID COMMISSION AND DEPOSITED IN THE GOVERNMENT TREASURY. THE LD. A R FINALLY SUBMITTED THAT DESPITE ALL THESE EVIDENCES, ON RECORD THE AO DISALLOWED THE COMMISSION WHICH WAS RIGHTLY ALLOWED BY THE FAA. 6. IN DEFENCE, THE LD. AR RELIED ON THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V/S B M S PROJECTS P L TD REPORTED IN (2014) 361 ITR 195(GUJ). 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIO NS AND PERUSED THE MATERIAL PLACED BEFORE US INCLUDING THE ORDERS OF A UTHORITIES BELOW AND CASE RELIED UPON BY THE ASSESSEE. THE AO DISALLOWED THE COMMISSION AND BROKERAGE BY STATING THE REASONS THAT THE NECESSARY VERIFICATION OF THE SAID PAYMENTS COULD NOT BE CARRIED OUT EITHER BY DUE TO SUBMISSION OF NON- DETAILS AS TO THE ADDRESSES OF THE RECIPIENT OR THE PARTIES DID NOT RESPOND TO THE NOTICE ISSUED U/S 133(6) OF THE ACT AND THE ASSESSEE ALSO COULD NOT PRODUCE THE SAID PARTIES FOR VERIFICATION. THE UNDI SPUTED FACTS ARE THAT THE ASSESSEE SUPPLIED THE PAN, LEDGER ACCOUNTS, MODE OF PAYMENTS, DETAILS OF 6 ITA NO.3908/MUM/2015 TDS DEDUCTED FROM THESE PARTIES AND DEPOSITED INTO THE GOVERNMENT TREASURY ALONG WITH THE TDS RETURN FILED AND THE RE VENUE HAS ACCEPTED THE SIMILAR PAYMENTS IN THE SUBSEQUENT YEARS I.E. A Y 2011-12 AND 2012-13 IN THE SCRUTINY PROCEEDINGS. THOUGH THE LD. CIT(A) HA S PASSED THE CRYPTIC ORDER BUT THE FACTS ON RECORDS JUSTIFIED THAT THE A SSESSEE HAS INCURRED THE EXPENSES AND HAS ALL THE NECESSARY EVIDENCES IN ITS POSSESSION AND MERE NON-PRODUCTION OF RECIPIENT BY THE ASSESSEE COULD N OT BE A VALID GROUND TO REJECT THE CLAIM OF THE ASSESSEE OF LEGITIMATE EXPE NSES. THE CASE OF THE ASSESSEE FINDS SUPPORT FROM THE DECISION OF HONBLE HIGH COURT OF GUJARAT IN THE CASE OF CIT V/S BMS PROJECTS P LTD (SUPRA), WHERE IN THE SIMILAR DISALLOWANCE DUE TO NON PRODUCTION OF PARTIES WAS DIS CUSSED AND THE DELETION WAS MADE ON THE GROUND THAT THERE WAS NO REA SONS TO DISBELIEVE THE EVIDENCES FURNISHED BY THE ASSESSEE. THE HIGH C OURT DISMISSED THE APPEAL OF THE REVENUE ON THE GROUND THAT THE ENTIRE ISSUE WAS BASED ON FACTUAL MATRIX AND THE ISSUE WAS DECIDED ON THE BASI S OF SUFFICIENT EVIDENCES. IN VIEW O THE FACTS, THE RATIO LAID DO WN IN THE ABOVE SAID DECISION, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A). ACCORDINGLY, WE CONFIRM THE SAME. RESULTANTLY, APPE AL OF THE REVENUE STANDS DISMISSED. 7 ITA NO.3908/MUM/2015 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND DEC, 2017. SD/- SD/- (C.N. PRASAD) (RAJESH KUMAR) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 22 ND DEC.2017 SRL,SR.PS /COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. ( ) / THE CIT(A) 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI