KITTEN ENTERPRISES P. LTD, MUMBAI V. DCIT 10(2), MUMBAI

ITA 4434/MUM/2010

• Counselvise Citation: 443419914 RSA 2010
• Duration Of Justice: 1 year(s) 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 31-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIM KUMAR MODI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: MUMBAI BEFORE SHRI G.E. VEERABHADRAPPA, PRESIDENT AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER ITA NO.4434/MUM/2010 (ASSESSMENT YEAR: 2006-07) M/S. KITTEN ENTERPRISES PVT. LTD., 203, MALWA, PATANWALA ESTATE, L.B.S. MARG, GHATKOPAR (WEST), MUMBAI -400 086 ...... APPELLANT VS DCIT 10(2), MUMBAI ..... RESPONDENT PAN: AACCK 3065 G APPELLANT BY: SHRI PRAMOD KUMAR PARIDA MRS. SUNJUKTA CHOWDHURY RESPONDENT BY: SHRI ASHIM KUMAR MODI DATE OF HEARING: 30.11.2011 DATE OF PRONOUNCEMENT: 25.01.2012 O R D E R PER R.S. PADVEKAR, JM : IN THIS APPEAL THE ASSESSEE HAS CHALLENGED THE IMPU GNED ORDER OF THE LD. CIT (A)-21, MUMBAI DATED 08.03.2010 FOR THE A.Y. 2006-07. 2. THE FIRST ISSUE IS IN RESPECT OF DISALLOWANCE OF COMMISSION OF ` 17,60,865/-. 3. THE FACTS IN BRIEF ARE AS UNDER. THE ASSESSEE I S IN THE TRADING OF INDUSTRIAL FILTERS AND HOSPITAL PRODUCTS. THE ASSE SSEE FILED THE RETURN OF INCOME DECLARING INCOME OF ` 64,05,688/-. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE FURNISHED CONFI RMATION LETTERS FROM THE PARTIES TO WHOM IT WAS CLAIMED THAT THE CO MMISSION HAD BEEN PAID. THE DETAILS OF THE PARTIES ARE GIVEN IN THE ASSESSMENT ORDER ON PAGE NO.2 WHICH ARE AS UNDER:- ITA 4434/M/2010 M/S. KITTEN ENTERPRISES PVT. LTD. 2 AMT. IN ` S.N. NAME OF THE PARTY COMMISSION PAID 1 JAINAM J. DOSHI 1,52,802 2 KISHORE A. SHAH 1,42,240 3 KARAN N. SHAH 1,05,000 4 MANUBHAI G. MOBH 1,12,730 5 NARESH A. SHAH 1,10,058 6 RAJNIKANT M. DOSHI 2,58,789 7 SANDEEP P. SHAH 88,698 8 UDAY S. PAREKH 2,01,322 9 BHARAT M. BHAT 1,05,785 10 PARIN B. DOSHI 1,05,000 11 VIJAY TRIVEDI 86,124 12 ABHISHEK PACKAGING 1,17,749 13 BANUSHALI & CO. 1,05,684 4. THE A.O. ASKED THE ASSESSEE TO PRODUCE THE PARTI ES FOR VERIFICATION. AS NOTED IN THE ASSESSMENT ORDERS, T HE A.O. WAS INSISTING FOR THE PERSONAL ATTENDANCE OF THE PARTIES TO WHOM THE COMMISSION WAS PAID. THE ASSESSEE TRIED TO CONVENIENCE THE A. O. THAT THE COMMISSION PAYMENT WAS GENUINE. THE ASSESSEE COULD PRODUCE ONLY ONE PERSON I.E. MR. PARIN B. DOSHI ON 8.2.2008 TO W HOM THE ASSESSEE CLAIMED TO HAVE PAID THE AMOUNT OF ` 1,05,000/-AS COMMISSION. THE A.O. RECORDED THE STATEMENT OF THE SAID PERSON ON O ATH U/S.131 OF THE ACT. THE A.O. HAS REPRODUCED THE PART OF THE STATE MENT IN THE ASSESSMENT ORDER. THE SAID PARTY CONFIRMED THAT TH EY HAVE RECEIVED THE COMMISSION FROM THE ASSESSEE COMPANY FOR INTROD UCING THE PARTIES. THE SAID PERSON ALSO STATED THAT HE USED TO INTRODUCE THE PARTIES TO THE ASSESSEE COMPANY AND THE SALE WAS ST RICTLY DONE BY THEM. IN RESPECT OF ONE OF THE PARTIES TO WHOM IT WAS CLAIMED THAT SHRI PARIN DOSHI INTRODUCED TO THE ASSESSEE COMPANY , THE QUESTION WAS PUT (Q. NO.7). IN REPLY SHRI PARIN DOSHI STATE D THAT HE HAS NEVER VISITED THE SAID COMPANY AND HE DOES NOT KNOW ANYBO DY FROM SAID COMPANY. THE A.O. MADE THE DISALLOWANCE OF THE ENT IRE COMMISSION CLAIMED BY THE ASSESSEE TREATING THE SAME AS NON-GE NUINE. THE ASSESSEE CARRIED THE ISSUE BEFORE THE LD. CIT (A) B UT WITHOUT SUCCESS. THE OPERATIVE PART OF THE FINDINGS OF THE FINDINGS OF THE LD. CIT (A) IS AS UNDER: ITA 4434/M/2010 M/S. KITTEN ENTERPRISES PVT. LTD. 3 2.3 ..I HAVE CONSIDERED THE FACTS OF THE CASE. THE APPELLANT CLAIMED PAYMENT OF COMMISSION TOTALLING TO RS.17,60 ,865/- TO 13 PARTIES. SINCE, IT WAS THE APPELLANTS CLAIM THEREF ORE, THE PRIMARY ONUS WAS ON APPELLANT TO EXPLAIN THE DETAILS AND NA TURE OF SERVICES RENDERED BY THESE 13 PERSONS TO THE APPELL ANT COMPANY. IT WAS TRUE THAT THE APPELLANT FILED CONFIRMATIONS OF THOSE 13 PARTIES, BUT FILING OF CONFIRMATION ONLY DID NOT PR OVE THE FACT OF RENDERING OF SERVICES BY THOSE PERSONS. DURING ASSE SSMENT PROCEEDINGS, THE A.O. RECORDED THE STATEMENT OF ONE SHRI PARIN DOSHI TO WHOM COMMISSION OF RS.1,05,783/- WAS PAID, THE STATEMENT OF SHRI PARIN DOSHI HAS BEEN REPRODUCED I N PARS 2.2 ABOVE. THE PERUSAL OF STATEMENT RECORDED SHOWS THAT MR. PARIN DOSHI THOUGH ADMITTED TO HAVE RECEIVED THE COMMISSI ON, BUT HE WAS NOT AWARE OF THE ADDRESSES OF THE PARTIES, THEI R FACTORY / OFFICE PREMISES, PERSONS TO WHOM CONTACTED, ETC. HE ONLY ADMITTED THAT HE SUGGESTED THE NAMES OF THOSE PARTIES TO THE DIRECTOR OF APPELLANT COMPANY. HOWEVER, THIS CLAIM OF MR. PARIN DOSHI WAS ALSO NOT ACCEPTABLE IN VIEW OF THE FACT THAT HE WAS NOT KNOWING ANYTHING ABOUT THOSE PARTIES SUGGESTED BY HIM TO TH E APPELLANT. THE FACTS RECORDED DURING THE STATEMENT UNDISPUTEDL Y PROVES THAT NO SERVICES WERE RENDERED BY MR. PARIN DOSHI ENTITL ING HIM FOR EARNING THE COMMISSION. IT IS TRUE THAT THE A.O DID NOT ISSUE SUMMONS TO OT HER PARTIES, HOWEVER, IT CANNOT BE ACCEPTED THAT APPELLANT WAS N OT IN A POSITION TO PRODUCE SOME OTHER PARTIES ALSO. DURING ASSESSMENT PROCEEDINGS, AS WELL AS DURING APPELLATE PROCEEDING S, THE APPELLANT HAD NOT TAKEN A GROUND THAT HE PERSUADED OTHER PARTIES, BUT THOSE PARTIES CHOOSE NOT TO APPEAR BEF ORE A.O. IN ANY OTHER CASE, THE A.O. HAS MENTIONED THAT EACH COMMIS SION AGENT WERE SHOWN TO HAVE EFFECTED SALES TO A NUMBER OF CO MPANIES WHICH WERE SPEARED ALL OVER INDIA. IN THE FACTS AND CIRCUMSTANCES, IT COULD NOT HAVE BEEN POSSIBLE FOR THESE AGENTS TO CONTACT AND PERSUADE VARIOUS COMPANIES SPREAD ALL O VER INDIA FOR ITA 4434/M/2010 M/S. KITTEN ENTERPRISES PVT. LTD. 4 MAKING PURCHASES FROM THE APPELLANT COMPANY, ESPECI ALLY WHEN ALL THESE COMMISSION AGENTS WERE PERSONS OF LITTLE MEANS. .. LD. CIT(A) CONFIRMED DISALLOWANCE MADE BY THE A.O.. NOW, THE ASSESSE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD . THE LD. COUNSEL SUBMITS THAT THE A.O. DID NOT ISSUE SUMMONS TO ANY OF THE PARTY, THOUGH HE HAD AUTHORITY TO DO BY ISSUING SUM MONS UNDER SEC.131 OF THE ACT THAT BUT PUT THE RESPONSIBILITY ON THE ASSESSEE TO PRODUCE THE PARTIES AND THAT WAS NOT POSSIBLE AS TH E ASSESSEE CANNOT FORCE ANY PARTY TO ATTEND BEFORE A.O. HE PLEADED T HAT THE MATTER MAY BE RESTORED TO THE FILE OF THE A.O. AND THE A.O. SH OULD BE DIRECTED TO ISSUE SUMMONS TO THE PARTIES U/S.131 TO VERIFY THE GENUINENESS OF THE CLAIM. HE, THEREFORE, SUBMITS THAT THE ASSESSEE WIL L FILE THE ADDRESSES AVAILABLE WITH THEM TO THE A.O. WE HAVE HEARD THE LD. D.R. WHO HAS NO OBJECTION TO RESTORE THE MATER TO THE FILE OF TH E A.O. 6. WE FIND THAT ADMITTEDLY IN THIS CASE THE A.O. DI D NOT ISSUE ANY SUMMONS U/S.131 TO ANY OF THE PARTIES. THE ASSESSE E COULD NOT PRODUCE THE PARTIES SAVE ONE. THE SAID PARTY THOUG H CONFIRMED THAT HE HAS RECEIVED THE COMMISSION BUT THERE WERE CONTR ADICTIONS IN HIS STATEMENT IN RESPECT OF PAYMENT OF COMMISSION I.E. HE WAS NOT AWARE OF THE ADDRESSES OF THE PARTIES, THEIR FACTORY/OFFI CE PREMISES, PERSONS TO WHOM CONTACTED, ETC. IN OUR OPINION, THIS MATTE R NEEDS RECONSIDERATION. WE, ACCORDINGLY, RESTORE THE ISSU E TO THE FILE OF THE A.O. WITH THE DIRECTION TO DECIDE THE SAME AFRESH. THE A.O. SHOULD ISSUE SUMMONS UNDER SEC.131, IF HE DESIRES SO, TO T HE PARTIES FOR VERIFYING THE GENUINENESS. THE ASSESSEE SHOULD FUR NISH THE ADDRESSES OF ALL THE PARTIES TO WHOM PAYMENT OF COMMISSION IS CLAIMED. WE, ACCORDINGLY, SET ASIDE THE ORDER OF THE LD. CIT (A) ON THIS ISSUE AND RESTORE THE ISSUE TO THE FILE OF THE A.O. 7. SO FAR AS GROUND NO.2 IS CONCERNED, THE LD. COUN SEL SUBMITS THAT THE SAME IS CONSEQUENTIAL. WE, ACCORDINGLY, D IRECT THE A.O. RE- ITA 4434/M/2010 M/S. KITTEN ENTERPRISES PVT. LTD. 5 COMPUTE THE INTEREST ONLY AFTER PASSING THE FRESH A SSESSMENT ORDER AS PER LAW. 8. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR THE STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 25TH JANUARY, 2012 SD/- ( G.E. VEERABHADRAPPA ) PRESIDENT SD/- ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 25TH JANUARY, 2012 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) -21, MUMBAI. 4) THE CIT, M.C.-X, MUMBAI. 5) THE D.R. A BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN