DCIT, Rohtak V. Sh. Satya Parkash Aggarwal, Mumbai

ITA 4124/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5102 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 24-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: US AGGARWAL
• Keywords: Depreciation; TDS
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.4124/DEL/2015 ASSESSMENT YEAR: 2011-12 DCIT, ROHTAK CIRCLE, ROHTAK. VS SH. SATYA PRAKASH AGGARWAL, 45- ARCADIA, 195, NARIMAN POINT, MUMBAI. PAN: AALPA5384L ASSESSEE BY: SHRI U.S. AGGARWAL, ADVOCATE REVENUE BY: MS ASHIMA NEB, SR. DR ORDER PER K. NARASIMHA CHARY, JM CHALLENGING THE ORDER DATED 24.4.2015 IN APPEAL NO. 37/14-15 PASSED BY THE LD. COMMISSIONER OF INCOME-TAX (APPEA LS), ROHTAK (FOR SHORT LD. CIT(A)}, REVENUE PREFERRED THIS APPEAL. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A DEALER IN BULLION I.E. GOLD, SILVER, DEALING IN FUTURE TRADING AND RE AL ESTATE BY MAINTAINING REGULAR BOOKS OF ACCOUNTS WHICH HAVE BEEN AUDITED A S PER THE PROVISIONS OF THE INCOME-TAX ACT, 1961 (THE ACT). ASSESSEE HAD FILED HIS RETURN OF DATE OF HEARING 30.4.2019 DATE OF PRONOUNCEMENT 13.5.2019 2 INCOME ON 30.9.2011 FOR THE ASSTT. YEAR 2011-12 DEC LARING A TOTAL INCOME OF RS.8,46,420/-. ASSESSMENT WAS COMPLETED BY AN ORDER DATED 28.3.2014 U/S 143(3) OF THE ACT ASSESSING THE INCOM E OF THE ASSESSEE AT RS.1,70,69,305/- BY MAKING FOUR ADDITIONS, NAMELY, RS.1,42,58,987/- BY DISALLOWING THE TRADING LOSS, RS.3,07,642/- ON ACCO UNT OF DISALLOWING THE COMMISSION EXPENSE, RS.14,35,276/- BEING THE ESTIMA TED INTEREST ON AN OLD ADVANCE AND RS.1,38,600/- BY DISALLOWING 20% OF THE CAR EXPENSES, DEPRECIATION AND INTEREST ON CAR LOAN. 3. IN APPEAL, LEARNED CIT(A) DELETED ALL THE ADDITI ONS EXCEPT THE ADDITION OF RS.1,38,600/- ON ACCOUNT OF CAR EXPENSE S, DEPRECIATION AND INTEREST ON CAR LOAN. 4. HENCE, THE REVENUE IS IN THIS APPEAL BEFORE US C HALLENGING THE DELETION OF TWO ADDITIONS, NAMELY, RS.1,42,58,987/- MADE BY THE LEARNED AO BY DISALLOWING THE TRADING LOSS AND RS.3,07,642/ - MADE BY THE LD. AO BY DISALLOWING THE COMMISSION EXPENSE. 5. IN SO FAR AS THE FIRST ADDITION OF RS.1,42,58,98 7/- IS CONCERNED, LEARNED AO MADE THE SAID ADDITION STATING THAT THE GROSS PROFIT FOR THE CURRENT YEAR IS FAR LESS THAN THE GROSS PROFIT OF T HE PRECEDING YEAR, NO STOCK REGISTER IS MAINTAINED, STOCK WAS NOT REPORTE D IN THE AUDIT REPORT AND THERE WAS A DIFFERENCE IN WEIGHT OF SILVER BARS PURCHASED AND THE SILVER BARS SOLD. 6. IMPUGNED ORDER SPEAKS THAT LD. CIT(A) CALLED FOR THE REMAND REPORT DURING THE FIRST APPELLATE PROCEEDINGS AND A FTER CONSIDERING THE SAME THOUGHT IT FIT TO DELETE THE ADDITION. IT IS THE ARGUMENT OF THE LEARNED AR THAT DURING THE FIRST APPELLATE PROCEEDI NGS THE ENTIRE RECORD IS 3 PRODUCED BEFORE THE LEARNED CIT(A) WHO CALLED FOR T HE REMAND REPORT FROM THE AO. IT IS HIS FURTHER SUBMISSION THAT AFT ER CONSIDERING THE BOOKS OF ACCOUNTS OF THE ASSESSEE, AO SATISFIED HER SELF ABOUT THE CORRECTNESS OF THE CLAIM OF THE ASSESSEE AND ACCEPT ED THE SAME. LEARNED AR, THEREFORE, SUBMITS THAT IT IS NOT OPEN NOW FOR THE REVENUE TO CONTEND THAT THE FINDINGS OF THE LEARNED CIT(A) BASING ON S UCH REMAND REPORT ARE UNTENABLE. 7. PER CONTRA, IT IS THE SUBMISSION OF THE LEARNED DR THAT THE LD. CIT(A) IS NOT JUSTIFIED IN SIMPLY RELYING UPON THE SUBMISSIONS OF THE ASSESSEE AND TO IGNORE THE FACT THAT THE GROSS LOSS OF RS.1,42,58,987/- HAS NEVER BEEN ADJUSTED AGAINST OTHER INCOME OF THE ASS ESSEE UNDER DIFFERENT HEADS AND THEREBY THERE IS A FAILURE ON THE PART OF THE LD. CIT(A) IN PROPER EXERCISE OF THE CO-TERMINUS POWER VESTED IN HIM TO REACH THE CORRECTNESS OF THE DISALLOWANCE. 8. PAGE 4 & 5 OF THE PAPER BOOK ARE THE COPY OF THE REMAND REPORT SUBMITTED BY THE LD. AO PURSUANT TO THE LETTER DATE D 7.1.2015 OF THE LD. CIT(A) SEEKING REMAND REPORT. IN THIS REPORT, LEAR NED AO WHILE REFERRING TO THE DIFFERENT ADDITIONS MADE, STATED I N RESPECT OF THE ADDITION OF RS.1,42,58,987/- ON ACCOUNT OF DISALLOWANCE OF GROSS LOSS IN TRADING ACCOUNT THAT THE DETAILS FILED BY THE ASSESSEE WERE TEST CHECKED AND NO ADVERSE INFERENCE WAS DRAWN REGARDING THE DEFECTS I N THE BOOKS OF ACCOUNTS. LD. CIT(A) WHILE RELYING UPON THIS REMAN D REPORT REACHED A CONCLUSION THAT THE DISALLOWANCE CANNOT BE SUSTAINE D AND IT HAS TO BE DELETED. 9. IN THIS SET OF CIRCUMSTANCES, WE ARE OF THE CONS IDERED OPINION THAT IT IS NOT OPEN FOR THE LD. AO TO REPORT IN THE REMA ND REPORT THAT ON TEST 4 CHECK OF THE DETAILS FILED BY THE ASSESSEE, NO ADVE RSE INFERENCE COULD BE DRAWN AND NOW TO CONTEND THAT LD. CIT(A) IS NOT JUS TIFIED IN RELYING UPON THE SAME. THIS APPEAL IS PREFERRED BY THE AO REPRE SENTINGREVENUE AND, THEREFORE, THE LD. AO IS BOUND BY THE CONTENTS OF T HE REMAND REPORT AND CANNOT APPROBATE OR REPROBATE. WE, THEREFORE, DO NO T FIND ANY INFIRMITY IN THE FINDINGS OF THE LD. CIT(A) IN DELETING THIS DISALLOWANCE. WE ACCORDINGLY DISMISS GROUND NOS. 1 & 2 OF REVENUES APPEAL. 10. NOW TURNING TO GROUND NO.3 RELATING TO THE DISA LLOWANCE OF RS.3,07,642/- ON ACCOUNT OF COMMISSION PAID BY THE ASSESSEE, THE FACTS ARE THAT THE LD. AO FOUND AN AMOUNT OF RS.1,79,28,2 22/- CREDITED ON ACCOUNT OF GAIN ON BULLION IN THE PROFIT AND LOSS A CCOUNT OF M/S AD OVERSEAS (AHMEDABAD) AND OUT OF THIS AMOUNT A SUM O F RS.45,68,878/- WAS RECEIVED FROM ONE M/S R.P. JEWELLERS NET OF COM MISSION PAID TO THEM TO T6HE TUNE OF RS.3,07,642/-. LEARNED AO IS OF THE OPINION THAT SINCE NO COMMISSION WAS PAID BY THE ASSESSEE IN RES PECT OF THE REMAINING TRADING MARGIN ON ACCOUNT OF BULLION GAIN THROUGH OTHER ENTITIES, THERE WAS NO JUSTIFICATION FOR THE ASSESS EE TO PAY THE SAME TO R.P. JEWELLERS. LEARNED AO FURTHER RECORDED THAT A SSESSEE FAILED TO PRODUCE BILLS RAISED BY THE SAID R.P. JEWELLERS AND , THEREFORE, SUCH PAYMENT OF COMMISSION CANNOT BE CONSIDERED FOR BUSI NESS EXPENDITURE. 11. IT COULD BE SEEN FROM THE REMAND REPORT THAT LE ARNED AO HAD TAKEN A PLEA THAT THE ASSESSEE MADE THIS COMMISSION PAYME NT TO HIS RELATED PARTY AND WHEN THERE IS NO SUCH PAYMENT TO THE NON RELATED PARTIES, THIS PAYMENT TO THE RELATED PARTIES CANNOT BE TAKEN A BO NAFIDE OR GENUINE ONE. LD. AO REPORTED THAT THIS PAYMENT WAS IN CONTRAVENT ION OF SECTION 40A(2)(B) OF THE ACT. 5 12. IN THE IMPUGNED ORDER, LD. CIT(A) WHILE REFERRI NG TO THE SUBMISSION OF THE ASSESSEE THAT THE PAYMENT OF COMM ISSION OF RS.3,07,642/- WAS SPENT TO EARN THE PROFIT OF RS.48 ,45,756/- AND SUCH PAYMENT IS ALSO AT LOW RATE WHEN COMPARED TO THE PR EVAILING MARKET RATES. WE DO NOT FIND ANY ABNORMALITY IN PAYMENT OF RS.3,07,642/- BY THE ASSESSEE TO EARN THE PROFIT OF RS.48,45,756/- A ND TO OFFER TO TAX A SUM OF RS.45,68,878/- MERELY BECAUSE THE COMMISSION WAS PAID TO M/S R.P. JEWELLERS. FURTHER THE CONFIRMATION AT PAGE NO.14 OF THE PAPER BOOK SHOWS THAT DURING THE PERIOD BETWEEN 1.4.2010 AND 3 1.3.2011, THE SALES WERE TO THE TUNE OF RS.2,83,10,63,457/- AND THE COM MISSION CHARGES WERE RS.3,07,642/- WHEREUPON TDS @ 10% WAS DEDUCTED . THERE IS NO REASON FOR US NOT TO BELIEVE THIS DOCUMENT AND THE AO DID NOT TAKE ANY STEPS TO EXAMINE THIS ENTITY. WE, THEREFORE, DO NO T FIND ANY JUSTIFICATION TO INTERFERE WITH THE FINDING OF THE LEARNED CIT(A) ON THIS ASPECT AND THE FINDING OF THE LD. CIT(A) PERFECTLY FITS IN THE ORD ER OF THINGS AND PROBABILITY OF BUSINESS EVENTS. WE, THEREFORE, DIS MISS GROUND NO.3 OF THE APPEAL. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH MAY, 2019. SD/- SD/- (G.D. AGARWAL) (K. NARASIMHA CHARY) VICE PRESIDENT JUDICIAL MEMBER DATED: 13 TH MAY, 2019 VJ 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 30.4.2019 DRAFT PLACED BEFORE AUTHOR 30.4.2019 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 30 .4.2019 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 30.4.201 9 APPROVED DRAFT COMES TO THE SR.PS/PS 30.4.2019 KEPT FOR PRONOUNCEMENT ON 30.4.2019 DATE OF UPLOADING ORDER ON THE WEBSITE FILE SENT TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.