Anshul Agarwal, Delhi V. ITO, Ward- 34(3), New Delhi

ITA 4275/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4574 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 04-06-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: AAKRITI DHAWAN
• Keywords: Business income; TDS
• Section: 133(6); 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SH. R. K. PANDA, ACCOUNTANT MEMBER ITA NO.4275/DEL/2018 ASSESSMENT YEAR: 2011-12 ANSHUL AGARWAL A-48, WAZIRPUR INDUSTRIAL AREA DELHI-110052 PAN NO.ADCPA3590N VS INCOME TAX OFFICER WARD 34 (3) NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY MS. AAKRITI DHAWAN, ADVOCATE RESPONDENT BY SHRI S. L. ANURAGI, SR. DR DATE OF HEARING: 30/07/2019 DATE OF PRONOUNCEMENT: 27/08/2019 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 08.03.2018 OF THE CIT(A)-12, NEW DELHI RELATING TO A. Y. 2011-12. 2. THE ASSESSEE IN ITS VARIOUS GROUNDS OF APPEAL HA S CHALLENGED THE ORDER OF THE CIT(A) IN CONFIRMING TH E ADDITION OF RS.21,35,426/- MADE BY THE ASSESSING OFFICER ON ACC OUNT OF DISALLOWANCE OF COMMISSION. PAGE | 2 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF TRADING O F POLYESTER. SHE FILED HER RETURN OF INCOME ON 30.09.2011 DISCLO SING TOTAL INCOME OF RS.13,74,200/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE ASSESSING OFFICER NOTED THAT THE AS SESSEE HAS PAID COMMISSION OF RS.21,31,426/- TO THE FOLLOWING PARTIES, THE DETAILS OF WHICH ARE AS UNDER :- SUMIT GOEL : RS.117488/- PARMOD MITTAL : RS.436052/- SAURABH GARG (HUF) : RS.518005/- SURESH GOEL :RS. 141725/- MADHU BASIA : RS.126170/- ANUJ JAIN : RS.407359/- ANUJ JAIN (HUF) : RS.388667/- 4. HE ISSUED NOTICE U/S. 133(6) TO WHICH THE PARTIE S CONFIRMED THAT THEY HAVE RECEIVED COMMISSION. THE ASSESSING OFFICER NOTED FROM THE RECORDS THAT THE ASSESSEE HA D NOT PAID ANY SUCH COMMISSION IN THE IMMEDIATELY PRECEDING AS SESSMENT YEAR WHEREAS ASSESSEE HAS PAID SUBSTANTIAL COMMISSI ON DURING THIS YEAR TO VARIOUS PARTIES. FROM THE REPLIES RECE IVED, FROM VARIOUS PARTIES TO WHOM COMMISSION WAS PAID, THE AS SESSING OFFICER NOTED THE FOLLOWING : I) M/S ANUJ JAIN & ANUJ JAIN (HUF) HAS CLAIMED COMMISSI ON ON A/C OF SALE EFFECTED TO M/S AMBIKA SALES (WRONGLY WRITTEN AS AMB IKA INDUSTRIES) & M/S LALANI INDUSTRIES AMONGST OTHER PARTIES. IT WAS ALS O SEEN FROM THE DETAILS OF THE SALE FURNISHED BY THE ASSESSEE DURING SCRUTINY PROC EEDINGS THAT THE ASSESSEE PAGE | 3 HAD BUSINESS TRANSACTIONS WITH BOTH THE PARTIES IN THE IMMEDIATELY PRECEDING YEAR AND NO SUCH COMMISSION WAS PAID BY THE ASSESSE E COMPANY TO ANY BROKER. THE OP BAL SHOWN BY THE ASSESSEE AGAINST AMBIKA SAL ES AND M/S LALANI INDUSTRIES IS RS 9215280/- AND RS - 3137148/- MEANING THEREBY THE ASSESSEE HAD GOOD BUSINESS TRANSACTIONS WITH BOTH OF THEM AN D IT DID NOT REQUIRE ANY BROKER FOR INTRODUCTION OF PARTIES OR EFFECTING SAL ES OR OBTAINING ORDERS. II) IN THE CASE OF SAURABH GARG (HUF) THE COMMISSION WA S CLAIMED TO HAVE BEEN RECEIVED FOR EFFECTING SALES TO MULTIPAC INDUS TRIES OF RS.27703996/- AND RS.19387385/-. HOWEVER, THE TOTAL SALES DURING THE YEAR TO MULTIPACK IS 27703996/- ONLY. THERE IS NO SALE OF RS.19387385/- AGAINST ANY PARTY AS PER THE SALE DETAILS FILED WITH THIS OFFICE. III) SHRI SUMIT GOEL IN HIS REPLY HAS STATED THAT HE HAS OBTAINED ORDERS FOR THE ASSESSEE FROM LALANI INDUSTRIES & OTHER PARTIES. BU T IT HAS ALREADY BEEN STATED THAT M/S ANUJ JAIN HAS ALREADY CLAIMED THAT THE ENTI RE SALES OF RS 22888593/- HAS BEEN EFFECTED BY HIM AND COMMISSION @ 9% H AS BEEN CLAIMED BY HIM. SO, IT W>AS NEVER CLEAR AS TO HOW SHRI SUMIT GOEL CAN AGAI N CLAIM COMMISSION ON THE SAME SALE. IV) SHRI SURESH GOEL IN HIS REPLY HAS STATED THAT HE H AS RECEIVED COMMISSION FOR OBTAINING ORDERS FOR KETAN POLYMERS AND SHRI RA M TRADERS. 5. IN VIEW OF THE ABOVE THE ASSESSING OFFICER HELD THAT THE LETTERS RECEIVED FROM THE ABOVE PARTIES ARE NOT REL IABLE FOR WHICH HE ISSUED LETTERS TO VARIOUS PARTIES TO WHOM SALES WERE CLAIMED TO HAVE BEEN EFFECTED. MOST OF THE LETTERS CAME BAC K UN-SERVED HOWEVER, REPLIES WERE RECEIVED FROM M/S. KETAN POLY MERS & M/S. MULTIPAC INDUSTRIES. M/S. KETAN POLYMERS STAT ED THAT THE TRANSACTIONS WITH THE ASSESSEE TOOK PLACE DIRECTLY WITHOUT INVOLVEMENT OF ANY THIRD PARTY AND M/S. MULTIPAC IN DUSTRIES ALSO STATED THAT TRANSACTION WAS MADE WITH THE ASSE SSEE DIRECTLY. THE ASSESSING OFFICER, THEREFORE, CONFRON TED THE SAME TO PAGE | 4 THE ASSESSEE. IT WAS SUBMITTED THAT TDS HAS BEEN DU LY DEDUCTED FROM THE COMMISSION SO PAID AND THE PARTIE S HAVE CONFIRMED TO HAVE RECEIVED THE COMMISSION. SO FAR A S THE REPLY OF M/S. KETAN POLYMERS AND M/S. MULTIPAC INDUSTRIES ARE CONCERNED IT WAS SUBMITTED THAT IT MAY BE DUE TO LO SS MEMORY FOR WHICH THEY MIGHT HAVE STATED SO. 6. HOWEVER, THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE REPLY GIVEN BY THE ASSESSEE AND REJECTED THE SAME O N ACCOUNT OF THE FOLLOWING :- A. COMMISSION IS BEING CLAIMED BY MORE THAN ONE BROKER FOR OBTAINING ORDER FROM THE SAME COMPANY. B. COMMISSION IS BEING CLAIMED ON AN AMOUNT WHICH IS M UCH MORE THAN THE SALE EFFECTED. C. PAYMENT ON ACCOUNT OF COMMISSION HAS NOT BEEN MADE BY THE ASSESSEE COMPANY DURING THE WHOLE YEAR IN MANY CASE S ONLY TDS HAS BEEN MADE. D. LASTLY THE DENIAL OF INVOLVEMENT OF ANY THIRD PARTY IN THE TRANSACTIONS MADE BY M/S. KETAN POLYMERS AND M/S. MULTIPAC INDUS TRIES HAS MADE THE WHOLE STORY CLEAR. 7. THE ASSESSING OFFICER ACCORDINGLY MADE ADDITION OF RS.21,35,426/- TO THE TOTAL INCOME OF THE ASSESSEE. 8. IN APPEAL THE LD. CIT(A) CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER BY OBSERVING AS UNDER :- 6.1 I HAVE GONE THROUGH THE ASSESSMENT ORDER, THE REASO NING ADVANCED BY PAGE | 5 THE ASSESSING OFFICER WHILE DISALLOWING THE CLAIM OF COMMISSION AND THE WRITTEN SUBMISSION FILED BY THE APPELLANT. 6.2 THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM O F COMMISSION BY MAKING AN ENQUIRY FROM PARTIES TO WHOM SALES HAD PURPORTE DLY BEEN EFFECTED BY THE COMMISSION AGENTS. MOST OF THE LETTERS ISSUED BY TH E ASSESSING OFFICER TO THE PARTIES COME BACK UN-SERVED AND REPLIES WERE RECEIV ED FROM M/S. KETAN POLYMER, M/S. MULTIPAC INDUSTRIES BOTH OF WHOM STAT ED THAT THE TRANSACTION WITH THE APPELLANT DID NOT INVOLVE ANY THIRD PARTY AND T HEY HAVE MADE TRANSACTION DIRECTLY WITH THE APPELLANT. 6.3 THE ASSESSING OFFICER CONFRONTED THE APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS WITH HIS FINDINGS. THE APPEL LANT REPLIED IN GENERAL, VAGUE TERMS THAT THE PARTIES MAY HAVE STATED THAT T HEY HAD DIRECT DEALINGS WITH THE APPELLANT DUE TO LOSS OF MEMORY. THE APPELLANT DID NOT FURNISH ANY SATISFACTORY REPLY TO THE QUERIES OF THE ASSESSING OFFICER AND REPLIED IN GENERAL TERMS THAT IT HAD MADE TDS, PAID COMMISSION BY CHEQ UE AND THE RECIPIENT HAD DECLARED THE RECEIPTS IN THEIR RETURN OF INCOME ETC . 6.4 I FIND FROM THE REPLIES AND THE WRITTEN SUBMISS IONS MADE DURING THE COURSE OF ASSESSMENT AND APPELLATE PROCEEDINGS, THE APPELLANT HAS NOT BEEN ABLE TO JUSTIFY THE BUSINESS EXIGENCY OF COMMISSION PAID BY HIM DURING THE YEAR. 6.5 THE APPELLANT HAS NOT BEEN ABLE TO BRING ON RE CORD THE JUSTIFICATION FOR PAYMENT OF COMMISSION NOR HAVE THE PURCHASER PARTIE S CONFIRMED THE INVOLVEMENT OF COMMISSION AGENTS. THE ASSESSING OFFI CER HAS ALSO POINTED OUT INCONSISTENCIES IN THE CLAIM OF COMMISSION WHEREIN CERTAIN SELLER PARTIES AS PER DETAIL FURNISHED IN THE ASSESSMENT ORDER SEEM TO HA VE ACCOUNTED FOR IN ORDER BOOKING BY MORE THAN ONE AGENT, FOR EXAMPLE, MR. AN UJ JAIN IS SUPPOSED TO HAVE RECEIVED COMMISSION ON ENTIRE SALES @ .9% WHEREAS M R. SUMIT GOYAL IS STATED TO HAVE BEEN PAID COMMISSION FOR SALES ORDER RECEIVED FROM M/S. LALANI INDUSTRIES AND OTHER PARTIES. 6.6 SIMILARLY, THERE ARE DIFFERENCES IN THE QUANTU M OF SALES AS PER PARTY WISE DETAIL OF SALES FURNISHED AND AMOUNT ON WHICH SALES COMMISSION WAS CLAIMED BY THE APPELLANT. 6.7 KEEPING IN VIEW THE TOTALITY OF THE FACTS AND FINDINGS OF THE ASSESSING OFFICER, WHICH HAVE NOT BEEN REBUTTED BY THE APPELL ANT EITHER IN ASSESSMENT OR IN APPELLATE PROCEEDINGS, 1 FIND THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THE CLAIM OF COMMISSION FOR RENDERING SERVICES IN FURTH ERANCE OF ITS BUSINESS AS PAGE | 6 CLAIMED BY IT. I FIND THERE IS NO NEXUS BETWEEN PAY MENT OF COMMISSION AND THE BUSINESS OF THE APPELLANT IN VIEW OF WHICH I SUSTAI N THE ADDITION OF RS. 21,35,426/- MADE BY THE ASSESSING OFFICER BY DISALLO WING THE CLAIM OF COMMISSION. IN THE RESULT, THE APPEAL GROUNDS ARE D ISMISSED AND THE ADDITION MADE BY THE ASSESSING OFFICE IS SUSTAINED. 9. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 10. THE LD. COUNSEL FOR THE ASSESSEE STRONGLY CHALL ENGED THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION SO M ADE BY THE ASSESSING OFFICER. HE SUBMITTED THAT THE COMMISSIO N WAS PAID BY CHEQUE AND DUE TDS HAS BEEN DEDUCTED FROM SUCH COMMISSION. THE PARTIES HAVE CONFIRMED TO HAVE RECE IVED SUCH COMMISSION FROM THE ASSESSEE BEFORE THE ASSESSING O FFICER. SHE SUBMITTED THAT THE LD. CIT(A) WHILE SUSTAINING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER HAS NOT APPLIED HIS I NDEPENDENT MIND AND WITHOUT APPRECIATING THE VARIOUS SUBMISSIO NS MADE BY THE ASSESSEE. SHE SUBMITTED THAT ASSESSMENTS IN THE CASE OF THE COMMISSION RECIPIENTS HAVE BEEN COMPLETED U/S. 143 (3) AND THEREFORE, THE SAME SHOULD NOT HAVE BEEN DOUBTED BY THE CIT(A). FURTHER THE ASSESSING OFFICER WHILE MAKING THE ADDI TION HAS NOT ISSUED ANY SHOW CAUSE NOTICE TO THE ASSESSEE AND MA DE THE ADDITION AT HIS OWN WHIMS AND FANCIES. SHE SUBMITT ED THAT NO MEANINGFUL ENQUIRY WAS CONDUCTED BY THE ASSESSING O FFICER WHICH IS SUFFICIENT TO STRIKE DOWN THE ADDITIONS SO MADE BY THE ASSESSING OFFICER. FURTHER THE VARIOUS DOCUMENTS F ILED BY THE ASSESSEE ON 06.08.2018 ON THE COUNTER WERE NOT APPR ECIATED BY PAGE | 7 THE CIT(A) WHO SUSTAINED THE ADDITION. SHE ACCORDI NGLY SUBMITTED THAT THE ADDITION SO MADE BY THE ASSESSIN G OFFICER AND SUSTAINED BY THE CTI(A) SHOULD BE DELETED. 11. THE LD. DR ON THE OTHER HAND HEAVILY RELIED ON THE ORDER OF THE AO AND CIT(A). HE SUBMITTED THAT THE ASSESSING OFFICER HAD BROUGHT ON RECORD CLEARLY AS TO HOW THE ASSESSEE HA S PAID COMMISSION TO VARIOUS PARTIES DURING THE YEAR WHERE AS NO SUCH COMMISSION WAS PAID IN THE IMMEDIATELY PRECEDING AS SESSMENT YEAR. FURTHER COMMISSION HAS BEEN CLAIMED BY MORE THAN 1 BROKER FOR OBTAINING ORDERS FROM THE SAME PARTY. S OME OF THE SUPPLIERS HAVE DENIED TO HAVE ANY INVOLVEMENT OF AN Y THIRD PARTY. HE ACCORDINGLY SUBMITTED THAT THE ORDER OF THE CIT(A) BEING IN ACCORDANCE WITH LAW SHOULD BE UPHELD. 12. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. I FIND THE ASSESSING OFFICER IN THE INSTANT CASE DISALLOWED THE COMMISSI ON OF RS.21,35,426/- PAID BY THE ASSESSEE ON THE GROUND T HAT SUCH COMMISSION HAS BEEN CLAIMED BY MORE THAN 1 BROKER F OR OBTAINING ORDERS FROM THE SAME COMPANY. IN CERTAIN CASES THE COMMISSION HAS BEEN CLAIMED ON AMOUNT WHICH IS MUCH MORE THAN THE SALES EFFECTED. FURTHER SOME OF THE PARTI ES HAVE DENIED TO THE INVOLVEMENT OF ANY THIRD PARTY. THE ASSESSI NG OFFICER HAS FURTHER NOTED THAT ALTHOUGH TDS HAS BEEN DEDUCTED B UT THE COMMISSION HAS NOT BEEN PAID DURING THE YEAR. HE, T HEREFORE, PAGE | 8 DISBELIEVED THE COMMISSION SO PAID DURING THE YEAR SINCE NO SUCH COMMISSION WAS PAID DURING THE PRECEDING ASSES SMENT YEAR. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE PAYMENT HAS BEEN MADE THROUGH ACCOUNT PAYE E CHEQUE AFTER DEDUCTION OF TDS AND THE PARTIES HAVE CONFIRM ED TO HAVE RECEIVED COMMISSION FROM THE ASSESSEE. IT IS ALSO H ER SUBMISSION THAT THE VARIOUS DETAILS FURNISHED BY TH E ASSESSEE WERE NOT PROPERLY APPRECIATED EITHER BY THE ASSESSI NG OFFICER OR BY THE CIT(A). IT IS ALSO HER SUBMISSION THAT NEITH ER THE CIT(A) NOR THE ASSESSING OFFICER HAS PROPERLY CONSIDERED T HE VARIOUS SUBMISSIONS MADE BY THE ASSESSEE FROM TIME TO TIME. IT IS THE SETTLED PROPOSITION OF LAW THAT FOR CLAIMING ANY EX PENDITURE AS AN ALLOWABLE DEDUCTION THE ONUS IS ALWAYS ON THE AS SESSEE TO SUBSTANTIATE WITH EVIDENCE TO THE SATISFACTION OF T HE ASSESSING OFFICER. HOWEVER, IN THE INSTANT CASE THE ASSESSIN G OFFICER HAD MADE CERTAIN OBSERVATIONS WHICH ACCORDING TO HIM CO ULD NOT BE EXPLAINED SATISFACTORILY BY ASSESSEE. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE AND IN THE INTEREST OF JUSTIC E I DEEM IT PROPER TO RESTORE THE ISSUE TO THE FILE OF THE ASSE SSING OFFICER WITH A DIRECTION TO GIVE ONE MORE OPPORTUNITY TO TH E ASSESSEE TO SUBSTANTIATE THE ALLOWABILITY OF SUCH COMMISSION AN D DECIDE THE ISSUE AS PER FACT AND LAW. I HOLD AND DIRECT ACCOR DINGLY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLO WED FOR STATISTICAL PURPOSES. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. PAGE | 9 ORDER PRONOUNCED IN THE OPEN COURT ON 27.08.2019. SD/- (R.K PANDA) ACCOUNTANT MEMBER *NEHA* DATE:- 27.08.2019 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/ PS 27.08.2019 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT 27.08.2019 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH FILE GOES TO THE HEAD CLERK. THE DATE ON WHICH FILE GOES TO THE ASSISTANT REGIST RAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER