Smt. Shafali Jain, New Delhi V. ITO, New Delhi

ITA 3989/DEL/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6408 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 3
• Next Hearing Date: 19-10-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 11-07-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Section: 143(3); 37

Judgement Text

1 N THE INCOME TAX APPELATE TRIBUNAL DELHI BENCH SMC-3: NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER ITA NO. 3989/DEL/2016 A.Y. : 2012-13 SMT. SHAFALI JAIN, VS. ITO, WARD 35(4), 43/9, RAJPUR ROAD, NEW DELHI NEW DELHI 110 054 (PAN: AICPJ1658D) (ASSESSEE ) (RESPONDENT) ASSESSEE BY : SH. R.S. SINGHVI, CA & SH. S ATYAJIT GOEL, CA DEPARTMENT BY : SH. F.R. MEENA, SR. DR O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-12, NEW DELHI DA TED 23.5.2016 PERTAINING TO ASSESSMENT YEAR 2012-13. 2. THE GROUNDS OF APPEAL READ AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE CIT(A) WAS NOT JUSTIFIED IN CONFIRMING DISALLOWANCE OF CLAIM OF COMMISSION AMOUNTING TO RS. 2,62,480/- EVEN THOUGH THE GENUINE NESS AND JUSTIFICATION OF THE SAME WAS ESTABLISHED. 2. THAT ORDERS OF THE LOWER AUTHORITIES ARE NOT JUST IFIED ON FACTS AND SAME ARE BAD IN LAW. 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED HER E-RETURN ON 15.9.2012 DECLARING TOTAL INCOME OF RS. 8,62,240/-. IT WAS PROCESSED U/S. 143(1) OF THE I.T. ACT, 1961 AND LATER ON PICKED UP FOR SCRUTI NY THROUGH CASS. NOTICE U/S. 143(2) OF THE ACT WAS ISSUED. IN RESPONSE THERETO TH E AR OF THE ASSESSEE ATTENDED THE HEARING ON BEHALF OF THE ASSESSEE. VARIOUS DET AILS WERE CALLED FOR AND WERE FILED AND THE SAME HAS BEEN EXAMINED BY THE AO. A O OBSERVED THAT ASSESSEES P&L ACCOUNT REVEALS THAT COMMISSION ON SALES HAS BEE N PAID AT RS. 2,62,480/- TO ONE SH. ANKUSH JAIN (HUF). COMMISSION IS FOR SERVI CES RENDERED BY A PERSON. NORMALLY HUF EARNS INCOME FROM PROPERTY OWNED BY IT RENDERING OF SERVICES IS AN INDIVIDUAL ACTIVITY. TRANSFERRING OF AN ACCOUNT TO A NOTHER PERSON THROUGH BANKING CHANNELS DOES NOT NECESSARILY MEAN THAT THIS IS AN EXPENSE ALLOWABLE UNDER THE ACT, 1961. AO FURTHER OBSERVED IF AN EXPENSE IS FOR BUSINESS EARNING THE HUF OF A PERSON TO EARN COMMISSION IS A MILLION DOLLAR QUEST ION. THE ASSESSEE HAS NOT COME OUT WITH ANY AGREEMENT WITH SHRI ANKUSH JAIN HUF AN D THE TYPE OF SERVICES OBTAINED BY THE ASSESSEE IS ALSO NOT KNOWN. THE BASIS OF QUAN TUM OF COMMISSION HAS ALSO NOT BEEN SUBMITTED. OSTENSIBLY THIS COMMISSION IS PAID BY THE ASSESSEE TO LESSER THE BURDEN OF TAX. THIS TRANSACTION IS IN THE NATURE OF APPLICATION OF INCOME. THE ASSESSEE IS AT LIBERTY TO UTILIZE FUNDS, THE WAY SH E LIKES BUT AN OUTGOING IS ALLOWABLE U/S 37 IF IT HAS NEXUS WITH BUSINESS EARNING ACTIVI TY. AO OBSERVED THAT THIS EXPENSE 3 ON COMMISSION OF SALES IS NOT FOR BUSINESS PURPOSE AND HENCE THIS SUM OF RS.2,62,480/- WAS DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE BY ASSESSING THE SAME AT RS. 11,88,820/- U/S. 143(3) O F THE I.T. ACT, 1961 VIDE ORDER DATED 23.3.2015. 4. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 23.3.2 015, ASSESSEE APPEALED BEFORE THE LD. CIT(A), WHO VIDE IMPUGNED ORDER DATED 23.5.2014 HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE BY CONFIRMING TH E ADDITION OF RS. 2,62,480/-. 5. AGAINST THE AFORESAID ORDER OF THE LD. CIT(A), TH E ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 6. LD. COUNSEL OF THE ASSESSEE HAS STATED THAT TH E ASSESSEE HAS PAID COMMISSION TO SH. ANKUSH JAIN (HUF) AFTER DEDUCTION OF TAX. THE BASIS OF PARTICULARS OF COMMISSION HAVE BEEN DULY GIVEN IN THE DEBIT NO TE OF ANKUSH JAIN (HUF). HE FURTHER STATED THAT SH. ANKUSH JAIN (HUF), THE PAY EE IS A REGULAR INCOME TAX ASSESSEE AND PAYMENT OF COMMISSION HAS DULY BEEN S UBJECTED TO TAX IN THE CASE OF SH. ANKUSH JAIN (HUF). HENCE, HE STATED THAT THE GE NUINENESS OF THE COMMISSION IS FULLY SUPPORTED AND CORROBORATED FROM VARIOUS DOCUM ENTARY EVIDENCES SUBMITTED TO THE AO DURING THE ASSESSMENT PROCEEDINGS, THEREFORE , THE ADDITION IN DISPUTE MAY BE DELETED. 7. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORDS AVAILABLE WITH ME, ESPECIALLY THE ORDERS OF THE REVENUE AUTHORITIES. I FIND THAT THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING OF CLOTH AND ACCORDING T O NATURE OF BUSINESS OF THE 4 ASSESSEE, GOODS ARE NORMALLY SOLD THROUGH BROKERS, ON WHICH COMMISSION IS PAID. THE PURCHASE IS ALSO MADE THROUGH BROKER, THEREFORE, IT REQUIRES TO PAID COMMISSION TO MIDDLE MAN WHO MAKE AVAILABLE OF GOODS FROM THE MARKET AND ALSO GUARANTEED THE AMOUNT IS TO BE RECOVERED AND PAID. I FURTHER FI ND THAT ANKUSH JAIN (HUF) IS THE REGULAR COMMISSION AGENT OF THE M/S. GAURAV ENTERPR ISES PROP. SHAFALI JAIN, 43/9, RAJPUR ROAD, NEW DELHI-L 10054. GOODS IS BEING SOLD THOUGH ANKUSH JAIN(HUF) TO M/S. G &J EXIM PVT.LTD. AND DINODIA FASHIL DURING TH E YEAR 2011-12 AND 2012-13. ANKUSH JAIN (HUF) GUARANTEED THAT THE AMOUNT SOLD T HROUGH ANKUSH JAIN (HUF) WILL- BE RECOVERED BY ANKUSH JAIN (HUF) IS NOT THE RELATI VE OF THE ASSESSE. THE IDENTITY OF M/S. ANKUSH JAIN (HUF CANNOT BE DISPUTED AS THE ANK USH JAIN (HUF) IS A REGULAR INCOME TAX ASSESSE AND ASSESSED UNDER TAX UNDER PAN : AAMHA2943L. FURTHER, GENUINENESS OF TRANSACTION IS DULY SUPPORTED FROM C OPY OF BILL AND CONFIRMATION OF PAYMENT. THE CONFIRMATION OF PAYMENTS HAS ALREADY BE EN FILED DURING THE COURSE OF ASSESSMENT PROCEEDING AND IS PART OF YOUR RECORD. WE ARE ALSO FILING COPY OF INCOME TAX RETURN OF M/S. ANKUSH JAIN (HUF) FROM WH ICH IT IS CLEAR THAT THE COMMISSION INCOME WAS DULY DISCLOSED BY M/S. ANKUSH JAIN (HUF) IN ITS RETURN OF INCOME AND AS SUCH GENUINENESS OF TRANSACTION CANNO T BE DOUBTED. 8.1 FURTHER, THE ASSESSEE HAS DEDUCTED TDS ON COMMIS SION PAID TO M/S. ANKUSH JAIN(HUF) AND AS SUCH THERE IS NO CASE OF ANY DEFAU LT ULS. 40A(IA) OF THE INCOME TAX ACT, 1961. THE PAYMENT TO THE ANKUSH JAIN (HUF) IS MA DE VIDE THROUGH ACCOUNT PAYEE CHEQUES I.E. ON THE SAME BASIS AS TO THE OTHE R BROKERS/COMMISSION AGENT AND GENUINENESS OF THE PAYMENT IS NOT IN DISPUTE. 8.2 FURTHER, WE ARE ENCLOSING FOLLOWING DOCUMENTS I N SUPPORT OF GENUINENESS OF TRANSACTION : 5 I. COPY OF DEBIT NOTE/ BILL OF ANKUSH JAIN (HUF) II. COPY OF INCOME TAX RETURN OF A.Y. 2012-13 OF ANK USH JAIN (HUF) ILL. COPY OF COMPUTATION OF INCOME OF A.Y, 2012-13 O F ANKUSH JAIN (HUF) IV. COPY OF TDS CERTIFICATE OF A.Y. 2012-13, A.Y. 20 13-14 OF ANKUSH JAIN(HUF). 8.3 I NOTE THAT THESE SUBMISSIONS HAVE BEEN TOTALLY DISREGARDED BY THE ASSESSING OFFICER. IT MAY FURTHER BE CLARIFIED THAT ASSESSEE I S ENGAGED IN THE BUSINESS OF WHOLE SALE TRADING OF CLOTHS AND TEXTILES. IT IS A COMMON PRACTICE IN THE TEXTILE TRADE THAT THE BUSINESS IS CARRIED THROUGH THE HELP OF COMMISSION AGENTS. IN FACT, THE ASSESSEE HAS PAID COMMISSION ON PURCHASES AND SALES BOTH. THE AS SESSING OFFICER HAS DULY ALLOWED PAYMENT OF COMMISSION IN RESPECT OF PURCHAS ES. HOWEVER, THE COMMISSION ON SALE WAS DISALLOWED. IT IS SELF EVIDENT THAT ASSE SSING OFFICER HAS NOT CONSIDERED FACTS IN CORRECT PERSPECTIVE. 8.4 THE ASSESSE HAS PAID COMMISSION TO ANKUSH JAIN ( HUF) AFTER DEDUCTION OF TAX. THE BASIS AND PARTICULARS OF COMMISSION HAVE BEEN DU LY GIVEN IN THE DEBIT NOTE OF ANKUSH JAIN (HUF). IT IS ALSO RELEVANT TO SUBMIT THA T SH. ANKUSH JAIN (HUF), THE PAYEE IS A REGULAR INCOME TAX ASSESSE AND PAYMENT OF COMM ISSION HAS DULY BEEN SUBJECTED TO TAX IN THE CASE OF SH. ANKUSH JAIN (HU F). THE GENUINENESS OF COMMISSION IS FULLY SUPPORTED AND CORROBORATED FROM VARIOUS DOCUMENTARY 6 EVIDENCES SUBMITTED TO THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS. THE COMMISSION AGENT HAS ALSO PROVIDED THE NAMES OF THE PARTIES IN RESPECT OF WHOM THE CLAIM OF COMMISSION WAS MADE. I ALSO FIND THAT THE ASSESSING OFFICER HAS NOT MADE ANY COMMENTS IN RESPECT OF THE DOCUMENTARY EVIDENCES OR EVEN MADE ANY ENQUIRY FROM THE CONCERNED PARTIES AND AS SUCH ADVERSE INFERENCE WAS DRAWN ON ILLEGAL AND ARBITRARY BASIS. THE PAYMENT BEING I N RESPECT OF GENUINE BUSINESS REQUIREMENT AFTER DEDUCTION OF TAX AND THE FACT THA T THE PAYEE WAS ALSO SUBJECTED TO TAX IN RESPECT OF SUCH PAYMENT OF COMMISSION, THERE IS NO GROUND OR BASIS FOR ANY DISALLOWANCE, HENCE, THE ADDITION IN DISPUTE IS DEL ETED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE S TANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26/12/20 16. SD/- [H.S. SIDHU] JUDICIAL MEMBER DATE: 26/12/2016 SRBHATNAGAR COPY FORWARDED TO: - 1. ASSESSEE 2. RESPONDENT 3. CIT 4.CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES 7