M/S Milap Industiral Corporation, Ludhiana V. JCIT, Ludhiana

ITA 443/CHANDI/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8388 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 04-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 27-04-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAVI SARANGA L
• Keywords: Assessment record
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.733/CHD/2012 (ASSESSMENT YEAR :2009-10) AND ITA NO.443/CHD/2015 (ASSESSMENT YEAR :2010-11) M/S MILAP INDUSTRIAL CORPORATION, VS. THE J.C.I.T., 436, INDUSTRIALL AREA-B, RANGE IV, LUDHIANA. LUDHIANA. PAN: AABFM2806K (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ASHWANI KUMAR RESPONDENT BY : SHRI RAVI SARANGAL, DR DATE OF HEARING : 04.01.2017 DATE OF PRONOUNCEMENT : 12.01.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : BOTH THE APPEALS FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF COMMISSIONER O F INCOME TAX (APPEALS)-2, LUDHIANA DATED 10.5.2012 AN D 20.3.2015 PERTAINING TO ASSESSMENT YEARS 2009-10 AN D 2010-11 RESPECTIVELY. SINCE THE ISSUE INVOLVED IN BOTH THE APPEALS IS IDENTICAL, THEY WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY THIS COMMON ORDER. 2 2. FOR THE SAKE OF CONVENIENCE, WE WILL TAKE UP T HE APPEAL OF THE ASSESSEE IN ITA NO.733/CHD/2012 AND T HE DECISION GIVEN IN THIS APPEAL WILL APPLY TO OTHER A PPEAL OF THE ASSESSEE IN ITA NO.443/CHD/2015 MUTATIS MUTANDI S. ITA NO.733/CHD/2012 : AY-2009-10 2. THE ONLY GROUND RAISED BY ASSESSEE READS AS UNDER : THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT , 1961 BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-LL, LU DHIANA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH HE WAS NOT JUSTIFI ED TO ARBITRARILY UPHOLD THE ACTION OF THE LD.ASSESSING OFFICER IN D ISALLOWING COMMISSION AMOUNTING TO RS.23,31,537/-AS BUSINESS E XPENDITURE. 3. THE ONLY ISSUE IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF RS.23,31,537/- OUT OF COMMISSIO N EXPENSES. 4. BRIEF FACTS RELATING TO THE CASE ARE THAT DURIN G ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD CLAIMED EXPENSES AMOUNTING TO RS.23,31,537/- ON ACCOUNT OF COMMISSION PAID ON SA LE OF POWER PRESS MACHINES. THE ASSESSEE WAS ASKED TO JU STIFY THE EXPENSES. ON SCRUTINY OF THE DETAILS AND EVIDE NCES FILED THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD PAID COMMISSION TO 15 PERSONS. THE ASSESSING OFFICE R ISSUED SUMMONS U/S 131 TO THE AGENTS IN RESPONSE TO WHICH 11 APPEARED AND THEIR STATEMENTS WERE RECORDE D. FROM THE STATEMENT RECORDED THE ASSESSING OFFICER 3 CONCLUDED THAT THE COMMISSION PAID WAS BOGUS SINCE NONE OF THE PERSONS HAD ANY EXPERIENCE IN THE LINE OF SE LLING MACHINES, HAD NO KNOWLEDGE OF POWER PRESS MACHINES, DID NOT KNOW THE PURCHASING PARTIES, GOT HEAVY COMMISSI ON FOR NO SERVICES EXCEPT FOR ONE TIME INTRODUCING THE M TO THE ASSESSEE, THERE WAS NO WRITTEN AGREEMENT AND ALL TH E PURCHASING PARTIES WERE REPUTED WHO HAD NO REASON T O BUY THESE MACHINES THROUGH UNKNOWN PERSONS WHEN THEY COULD HAVE VERY WELL BOUGHT IT DIRECTLY FROM THE AS SESSEE AND WERE PURCHASING MACHINES FROM THE ASSESSEE IN EARLIER YEARS ALSO. THE ASSESSING OFFICER ALSO FOU ND THAT THREE PERSONS NAMELY SH. ANGREJ SINGH, SURINDER KUM AR SOOD AND NIRMAL SINGH HAD ADMITTED THAT THEY HAD NO T RECEIVED ANY COMMISSION AND ONLY TO MAKE CAPITAL FO R FILING RETURNS OF INCOME THEY GOT CHEQUES OF COMMIS SION FROM THE ASSESSEE AND RETURNED BACK THE AMOUNT IN C ASH. THE AO THEREFORE CONCLUDED THAT NO SERVICES HAD BEE N RENDERED BY THE AGENTS AND NO COMMISSION HAD ACTUAL LY BEEN PAID BY THE ASSESSEE. HE THEREFORE DISALLOWED THE COMMISSION EXPENSE OF RS.23,31,537/- TREATING THE S AME TO BE BOGUS EXPENSES. THE LD. CIT (APPEALS) UPHE LD THE DISALLOWANCE MADE HOLDING THE EXPENSES TO BE BOGUS IN THE ABSENCE OF ANY EVIDENCE OF SERVICES RENDERED BY THE AGENTS AND FURTHER SINCE THE ASSESSEE COULD NOT REB UT THE FINDINGS OF THE ASSESSING OFFICER. 5. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE CIT (APP EALS) 4 AND STATED THAT THE COMMISSION EXPENSES WERE GENUIN E SINCE IT WAS SHOWN IN THE INCOME TAX RETURN OF THE AGENT AND TDS HAD BEEN DEDUCTED THEREON. HE FURTHER STATE D THAT ONLY THREE AGENTS HAD DENIED RECEIVING COMMISS ION AND THEY HAD NOT PROVED THE GENUINENESS OF THEIR STATEMENT BY WAY OF ANY DOCUMENTARY EVIDENCE. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON HEAVILY ON THE ORDER OF THE ASSESSING OFFICER AS WE LL AS THAT OF THE LD. CIT (APPEALS). 7. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF THE AUTHO RITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECO RD. 8. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CI T (APPEALS) CONFIRMING THE DISALLOWANCE MADE ON ACCOU NT OF COMMISSION. THE RELEVANT FINDINGS OF THE CIT (APPEA LS) UPHOLDING THE DISALLOWANCE AT PARA 3.3 OF THE ORDER IS AS UNDER: 3.3 I HAVE CAREFULLY PERUSED THE WRITTEN SUBMISSION A ND THE ASSESSMENT ORDER. THE AO HAS HELD THAT THE COMMIS SION EXPENSES CLAIMED WERE BOGUS AND THAT NO SERVICES WE RE RENDERED BY THE PERSONS TO WHOM COMMISSION HAVE BEEN PAID. IN THIS REGARD, THE FOLLOWING FACTS MAY BE MENTIONED ONCE AGAIN:- I) THE APPELLANT INSPITE OF REPEATED OPPORTUNIT IES DID NOT GIVE ANY EVIDENCE OF SERVICES RENDERED BY THESE PER SONS IN LIEU OF WHICH THE COMMISSION WAS PAID. II) THE APPELLANT FAILED TO PRODUCE THE PERSONS TO WHOM THE COMMISSION WAS PAID, BEFORE THE AO. 5 III) IN RESPONSE TO SUMMONS U/S 133, ONLY 11 OUT OF 15 PERSONS APPEARED. IV) IN THE STATEMENT RECORDED U/S 131, THREE PERSONS ADMITTED THAT THEY RETURNED CASH TO THE APPELLANT A GAINST THE CHEQUES RECEIVED BY THEM ON ACCOUNT OF COMMISSI ON PAYMENTS. V) NONE OF THE PERSON HAVE KNOWLEDGE ABOUT THE POWE R PRESS MACHINES NOR ANY EXPERIENCE IN THE LINE OF SELL ING THESE MACHINES. VI) ALL THE PERSONS STATED THAT THEY HAD NO LINKS WI TH THE PURCHASING PARTIES AND MET THEM INCIDENTALLY. VII) THE PERSONS TO WHOM COMMISSION EXPENSES CLAIMED TO HAVE BEEN PAID STATED THAT THEY MERELY INTRODUCED TH E PURCHASING PARTIES TO THE APPELLANT. THEREAFTER NO SERV ICE WERE RENDERED BY THEM. VIII) MOST OF THE PURCHASING PARTIES WERE ALREADY KNO WN TO THE APPELLANT. AS SUCH THEY DID NOT REQUIRE ANY INTRODUCT ION WITH THE APPELLANT. EVEN DURING THE COURSE OF APPELLATE PROCEEDINGS, THE APPELLANT HAS NOT GIVEN ANY DETAILS OF SERVICES RENDERED BY TH ESE PERSONS FOR WHICH COMMISSION HAS BEEN CLAIMED. THE APPELLANT HAS ALSO NOT BEEN ABLE TO REBUT THE FINDIN GS OF THE AO DISCUSSED AT PAGES 2 TO 4 OF THIS ORDER, OR GIVE ANY EXPLANATION AS TO HOW IN SPITE OF THESE FINDINGS, TH E COMMISSION PAYMENTS CAN BE HELD TO GENUINE. THE APPELLA NT HAS MERELY CLAIMED THAT THE AO WAS BIASED AND THAT H E PRESSURIZED THE PERSONS WHOSE STATEMENTS WERE RECOR DED. PERUSAL OF THE ASSESSMENT RECORDS SHOWS THAT THE AO HAS RECORDED THE DETAILED STATEMENTS U/S 131 IN ORDER TO ESTABLISH THE GENUINENESS OR OTHERWISE OF THE COMMISSION EXPE NSES. THE CLAIM OF THE APPELLANT THAT THE AO WAS BIASED IS T OTALLY INCORRECT. THE DETAILED STATEMENTS CLEARLY ESTABLIS H THAT 6 COMMISSION PAYMENTS WERE A SHAM ARRANGEMENT TO REDU CE INCOME OF APPELLANT. THE APPELLANT HAS ALSO SUBMITTED THAT ALL THE DOCUMENTARY EVIDENCE SUBMITTED BY IT BEFORE THE AO WERE IGNORED. THIS STATEMENT IS ALSO FACTUALLY INCORRECT. THE AO HAS MENTIONED ABOUT ALL THE DETAILS SUBMITTED BY THE APPELLANT AND GIVEN DETAILED JUSTIFICATION AS TO WH Y THE SUBMISSIONS ARE NOT SATISFACTORY. THE AO HAS CLEARLY POINTED OUT THAT NO EVIDENCE WITH REGARD TO THE SERVICES RE NDERED BY THESE PERSONS WAS SUBMITTED DURING THE COURSE OF AS SESSMENT PROCEEDINGS. AS MENTIONED ABOVE, EVEN DURING THE COUR SE OF APPELLATE PROCEEDINGS NO SUCH EVIDENCE WAS SUBMITTED TO SUBSTANTIATE ITS CLAIM. FROM ALL THE FACTS DISCUSSED ABOVE, IT IS MY CONSID ERED VIEW THAT THE AO WAS FULLY JUSTIFIED IN DISALLOWING THE COMMI SSION OF RS.23,31,537/-. THIS GROUND OF APPEAL OF THE APPELLA NT IS ACCORDINGLY DISMISSED. 9. WE FIND THAT THE LD.CIT(A),ON APPRECIATION OF T HE EVIDENCE ON RECORD HAS GIVEN A CATEGORICAL FINDING OF FACT THAT NO WORK WAS DONE BY THE AGENTS FOR THE ASSES SEE WARRANTING PAYMENT OF COMMISSION. THIS FACT HAS NO T BEEN CONTROVERTED BY THE LD.COUNSEL FOR THE ASSESSE E BEFORE US. NO EVIDENCE WHATSOEVER HAS BEEN PRODUCED BEFORE US CONTRADICTING THIS FINDING OF THE CIT(A). THE ONLY EVIDENCES ON WHICH THE LD. AR PLACES RELIANCE UPON IS THE INCOME TAX RETURNS OF THE AGENTS WHICH DO NOT ESTAB LISH THAT THEY HAD DONE ANY WORK FOR THE ASSESSEE. FURT HER THE STATEMENT OF THE THREE AGENTS ADMITTING IN SO M ANY WORDS THAT THE COMMISSION PAID WAS MERELY AN ACCOMMODATION ENTRY, EXPLAINING THE MANNER OF EXECU TION 7 ALSO COUPLED WITH THE ABOVE FACTS AS FOUND BY THE AO THAT NO EVIDENCE OF SERVICES RENDERED BY THE AGENTS WAS FILED BY THE ASSESSEE, THE AGENTS HAD NO KNOWLEDGE OF THE PRODUCT SOLD, HAD NO LINKS WITH THE PURCHASERS, HAD CLAIMED RECEIPT OF COMMISSION ONLY FOR INTRODUCING THE BUYERS AND THE FACT THAT MOST OF THE BUYERS WERE KN OWN TO THE ASSESSEE AND DID NOT REQUIRE ANY INTRODUCTION, SEALS THE MATTER AGAINST THE ASSESSEE. 10. IN VIEW OF THE SAME, WE UPHOLD THE ORDER OF TH E CIT(A) CONFIRMING THE DISALLOWANCE OF COMMISSION EXPENSES PAID AMOUNTING TO RS.23,31,537/- AND THUS DISMISS THE GROUND OF APPEAL RAISED BY THE ASSESSEE . 11. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSE E ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 12 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH