DEEPAK RAMESH KARNIK, THANE V. ACIT CIR 1, THANE

ITA 4647/MUM/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 3272 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2016
• Appeal Filed By: Assessee
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 10-08-2015
• Court: TRIBUNAL
• Department Lawyers: SOBODH KUMAR
• Assessee Lawyers: SUBODH RATNAPARKHI
• Section: 69C

Judgement Text

, - , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC, MUMBAI , ! ' , BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER, ITA NO.4647/MUM/2015 ASSESSMENT YEAR: 2009-10 DEEPAK RAMESH KARNIK, PROP. M/S ALLWIN PRINTS & M/S KARNIK PROPERTIES, 202, ETERNITY RESIDENCY COMPLEX, TEEN HATH NAKA, LBS MARG, THANE(W)-400602 / VS. ACIT, CIRCLE-1, 6 TH FLOOR, ASHAR I.T. PARK, ROAD NO.16Z, WAGALE IND. ESTTE, THANE(W)-4000604 / ASSESSEE / REVENUE P.A. NO . ACJPK2648F $ % & / ASSESSEE BY SHRI SUBODH RATNAPARKHI $ % & / REVENUE BY SHRI SOBODH KUMAR CIT-DR / DATE OF HEARING 06/09/2016 & / DATE OF ORDER: 06/09/2016 & / O R D E R THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 12/06/2015 OF THE LD. FIRST APPELLATE AUTHORITY, MU MBAI. THE ONLY GROUND RAISED IN THE PRESENT APPEAL PERTAI NS TO ITA NO.4647/MUM/2015 DEEPAK RAMESH KARNIK 2 CONFIRMING THE ADDITION OF RS.11,44,030/- MADE U/S 69C OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) ON A CCOUNT OF MARKETING COMMISSION PAID TO M/S SIDHANT CONCEPT SOLUTIONS, IGNORING THE FACTUAL MATRIX AND THE REMA ND REPORT SUBMITTED TO THE LD. COMMISSIONER OF INCOME TAX (AP PEAL) BY THE ASSESSING OFFICER. 2. DURING HEARING THE LD. COUNSEL FOR THE ASSESSEE , SHRI SUBODH RATNAPARKHI, ADVANCED ARGUMENTS, WHICH IS IDENTICAL TO THE GROUND RAISED BY SUBMITTING THAT T HE PAYMENTS WERE MADE THROUGH CHEQUE AND EVEN THE COMMISSION TO THE EXTENT OF 2% WAS ALLOWED AND THE REMAINING 13% WAS DISALLOWED WITHOUT ASSIGNING ANY VALID REASON. MY ATTENTION WAS ALSO INVITED TO THE VARIOU S PAGES OF THE PAPER BOOK, REMAND REPORT (PAGE-33 & 34) AND MO U (PAGES 35 TO 41 OF THE PAPER BOOK) ALONG WITH AFFID AVIT OF M/S SANTOSH PISHARODY AND CERTIFICATE DATED 07/12/2011 CONFIRMING THE PAYMENTS MADE TO M/S SIDHANT CONCEPT SOLUTIONS. ON THE OTHER HAND, THE LD. DR, SHRI SUMI T KUMAR DEFENDED THE ADDITION BY ARGUING THAT SUCH ADDITION WAS RIGHTLY MADE AS THE ASSESSEE COULD NOT SUBSTANTIATE THE SAME. 2.1. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACT S, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL, PROP. OF KA RNIK PROPERTIES, ENGAGED IN THE BUSINESS OF DEVELOPMENT AND SALE OF PLOTS, BANGLOWS IN THE PROJECT CALLED GREEN PARK IN RAIGAD DISTRICT. THE ASSESSEE ENTERED INTO AN MOU DATED ITA NO.4647/MUM/2015 DEEPAK RAMESH KARNIK 3 04/01/2008 WITH M/S SIDHANT CONCEPT SOLUTIONS (PAGE S 35 TO 41 OF THE PAPER BOOK) TO CARRY OUT CERTAIN ACTIV ITIES AS MENTIONED AT PAGE 37 OF THE PAPER BOOK LIKE MARKETI NG RESEARCH WORK, MARKETING PLANNING, PRICING STRUCTUR E, COMMUNICATION DESIGN, ADVERTISEMENT, ETC. FOR THESE ACTIVITIES, THE ASSESSEE PAID THROUGH CHEQUE, A COM MISSION AT 15% (CLAUSE NO.B/PAGE 39 OF THE PAPER BOOK). THE LD . ASSESSING OFFICER EXAMINED SHRI SANTOSH, PARTNER OF M/S SIDHANT CONCEPT SOLUTIONS, AS PER REVENUE, WHO COUL D NOT EXPLAIN THE RECEIPT OF MARKETING CHARGES DUE TO CON FUSION BETWEEN FINANCIAL YEAR AND ASSESSMENT YEAR AND RESU LTANT INTO ADDITION. BEFORE THE LD. COMMISSIONER OF INCOM E TAX (APPEAL), AN AFFIDAVIT DATED 18/08/2012 WAS FILED ( PAPER BOOK PAGES 42 TO 44) AND AFFIRMED ON OATH THAT HE RECEIV ED THE AMOUNT OF RS.13,20,035/- AND CONTRADICTED THE STATE MENT TENDERED BEFORE THE ASSESSING OFFICER. THE LD. COMM ISSIONER OF INCOME TAX (APPEAL) SOUGHT A REMAND REPORT FROM THE ASSESSING OFFICER. THE LD. ASSESSING OFFICER EXAMIN ED SHRI SANTOSH AS WELL AS THE ASSESSEE, EXAMINED VARIOUS DOCUMENTS, CONFIRMATION OF PAYMENT AND THEREAFTER, HE INFORMED THE LD. COMMISSIONER OF INCOME TAX (APPEAL ) THAT PAYMENTS MADE TO M/S SIDHANT CONCEPT SOLUTIONS WERE CORRECT (COPY OF THE REMAND REPORT IS AVAILABLE AT PAGE 33 & 34 OF THE PAPER BOOK). THE LD. COMMISSIONER OF INCO ME TAX (APPEAL) ALLOWED THE COMMISSION PAYMENT TO THE EXTE NT OF 2% AND DISALLOWED THE REMAINING 13% BY HOLDING THE SAM E TO BE EXCESSIVE, WHICH RESULTED INTO CONFIRMATION OF RS.1 1,44,030/- ITA NO.4647/MUM/2015 DEEPAK RAMESH KARNIK 4 . THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL FO R THE REMAINING DISALLOWANCE OF MARKETING COMMISSION. 2.2. IF THE OBSERVATION MADE IN THE ASSESSMENT ORD ER, LEADING TO ADDITION MADE TO THE TOTAL INCOME, CONCL USION DRAWN IN THE IMPUGNED ORDER, MATERIAL AVAILABLE ON RECORD, ASSERTIONS MADE BY THE LD. RESPECTIVE COUNSEL, IF K EPT IN JUXTAPOSITION AND ANALYZED, THERE IS NO DISPUTE TO THE FACT THAT COMMISSION AT THE RATE OF 15% WAS PAID TO M/S SIDHANT CONCEPT SOLUTIONS BY CHEQUE. THIS FACTUAL MATRIX EV EN WAS NOT DISPUTED BY THE REVENUE. THE ONLY REASON OF DIS ALLOWANCE BY THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS T HAT EXCESSIVE COMMISSION WAS PAID BY THE ASSESSEE. I AM OF THE VIEW THAT FIRSTLY THE ASSESSEE IS THE BEST JUDGE WI TH RESPECT TO PAYMENT OF PERCENTAGE AND SECONDLY IT IS NOT THE CA SE THAT ANY UNDER HAND DEALING WAS ENTERED INTO BETWEEN THE PARTIES OR ANY CASH PAYMENT WAS MADE IN CONTRAVENTION OF TH E PROVISION. THE RECIPIENT OF THE COMMISSION HAS ALSO FILED AN AFFIDAVIT DATED 18/08/2012 CONFIRMING RECEIPT OF TH E IMPUGNED COMMISSION (PAGE 42 TO 44 OF THE PAPER BOO K), A CERTIFICATE DATED 07/12/2011 WAS ALSO ISSUED BY THA NE JANTA SAHKARI BANK LTD. CONFIRMING THAT PAYMENTS WERE MAD E TO M/S SIDHANT CONCEPT SOLUTION BY CHEQUES (PAGE 45 OF THE PAPER BOOK). AT PAGES 46 & 47, THE WORKING OF MARKE TING CHARGES BILL RAISED BY M/S SIDHANT CONCEPT SOLUTION IS ALSO AVAILABLE ALONG WITH ITS LEDGE ACCOUNT IN THE BOOKS OF THE ASSESSEE (PAGE 48 OF THE PAPER BOOK). THE COPIES OF BILLS RAISED BY M/S SIDHANT CONCEPT SOLUTIONS ALONG WITH ITA NO.4647/MUM/2015 DEEPAK RAMESH KARNIK 5 ANNEXURES AND VOUCHERS CONFIRMING RECEIPT OF PAYMEN T IS ALSO AVAILABLE ON RECORD (PAGES 49 TO 72 OF THE PAP ER BOOK). FINANCIAL STATEMENT OF THE ASSESSEE, COMPUTATION OF INCOME AND ACKNOWLEDGMENT OF INCOME FOR THE YEAR UNDER APP EAL IS ALSO AVAILABLE AT PAGES 73 TO 97 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO FILED A CERTIFICATE THAT ALL THES E DOCUMENTS WERE DULY AVAILABLE BEFORE THE ASSESSING OFFICER DU RING ASSESSMENT/REMAND PROCEEDINGS AND BEFORE THE LD. COMMISSIONER OF INCOME TAX (APPEAL) AT THE APPROPRI ATE STAGE. THE TOTALITY OF FACTS CLEARLY INDICATES THAT THE PAYMENT OF COMMISSION WAS DULY MADE TO M/S SIDHANT CONCEPT SOLUTIONS. IT SEEMS THAT THE LD. ASSESSING OFFICER/ CIT(A) TOOK THE COMMISSION AS HIGHLY EXCESSIVE ON PRESUMPTIVE B ASIS AND IT IS NOT LIKE A PROPERTY BROKING COMMISSION RATHER VARIOUS ACTIVITIES WERE INVOLVED AS DETAILED IN THE MOU. TH US, CONSIDERING THE TOTALITY OF FACTS, THE LD. ASSESSIN G OFFICER IS DIRECTED TO DELETE THE ADDITION. APPEAL OF THE ASSE SSEE IS THEREFORE ALLOWED. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. THIS ORDER WAS PRONOUNCED IN THE OPEN IN THE PRESEN CE OF LD. REPRESENTATIVE FROM BOTH SIDES AT THE CONCLU SION OF THE HEARING ON 06/09/2016. SD/- (JOGINDER SINGH) ! ' / JUDICIAL MEMBER MUMBAI; DATED : 06/09/2016 F{X~{T? P.S / ! ITA NO.4647/MUM/2015 DEEPAK RAMESH KARNIK 6 & $ )!*+ ,&+-* / COPY OF THE ORDER FORWARDED TO : 1. '#$%& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ) ) * / THE CIT, MUMBAI. 4. ) ) * / CIT- , MUMBAI 5. +,- ' , ) '#$ ' / , / DR, ITAT, MUMBAI 6. -0 1$ / GUARD FILE. & / BY ORDER, (+# ' //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI