M/s Shantilal Dugar (HUF), Kolkata V. I.T.O. Wd.- 50(3), Kolkata, Kolkata

ITA 482/KOL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100057 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 08-03-2013
• Court: TRIBUNAL
• Department Lawyers: DEBASISH ROY
• Assessee Lawyers: V N PUROHIT; HARSHVARDHAN
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA [BEFORE SHRI MAHAVIR SINGH, JM & SHRI WASEEM AHMED , AM] I.T.A NO. 482/KOL/2013 ASSESSMENT YEAR: 2007-08 M/S. SHANTILAL DUGAR (HUF) VS. INCOME-TAX OFFICER , WD-50(3), KOLKATA (PAN: AAJHS9759R) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 10.11.2015 DATE OF PRONOUNCEMENT: 20.11.2015 FOR THE APPELLANT: SHRI V. N. PUROHIT, FCA & SHRI HARSH VARDHAN FOR THE RESPONDENT: SHRI DEBASISH ROY, JCIT ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXII, KOLKATA IN APPEAL NO.19/XXXII/12-13/KOL DATED 06.12.2012. ASSE SSMENT WAS FRAMED BY ITO, WARD-50(3), KOLKATA U/S. 143(3) OF THE INCOME-TAX A CT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2007-09 VIDE ITS ORDER DATED 23.1 2.2009. 2. THE FIRST ISSUE IN THIS APPEAL OF ASSESSEE IS AG AINST THE ORDER OF CIT(A) CONFIRMING THE ADDITION MADE BY AO ON ACCOUNT OF UNDERSTATEMEN T OF BROKERAGE TO THE EXTENT OF RS.87,458/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWI NG GROUND NO.1: 1. THAT ON THE CIT(A) HAS ERRED IN CONFIRMING ADD ITION TO THE EXTENT OF RS.87,458/- OUT OF TOTAL ADDITION OF RS.98,264/- MADE BY AO. 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS MADE THIS ADDITION O F RS.98,264/- BEING UNDERSTATEMENT OF BROKERAGE FOR THE REASON THAT IN REPLY TO NOTICE U/ S. 133(6) OF THE ACT EUREKA STOCKS & SHARE BROKING SERVICES LTD., THE GROSS BROKERAGE PA ID WAS AT RS.18,43,637/- INCLUDING SERVICE TAX AND AS PER COPY OF AGREEMENT AND SERVIC E TAX CHALLANS, THE BROKERAGE WAS AT RS.17,45,373/-. ACTUALLY THE BROKERAGE WAS RS.18,4 3,637/- BECAUSE AS PER AGREEMENT, SERVICE TAX IS TO BE PAID BY THE SUB-BROKER. ACCOR DINGLY, THE AO TREATED THE DIFFERENTIAL COMMISSION AT RS.98,264/- AS UNDERSTATEMENT AND ADD ED TO THE RETURNED INCOME OF THE ASSESSEE. THE AO AFTER CONSIDERING THE SUBMISSIONS AND REMAND REPORT OF THE AO VIDE REMAND REPORT NO. CIT(A)-XXXII/REMAND REPORT/12-13/ KOL/492 DATED 18.09.2012 AND 2 ITA NO.482/K/2013 M/S. SHANTILAL DUGAR (HUF) AY 2007-08 NO. ITO.WD-40(3)/REMAND/KOL/2012-13/501 DATED 19.11 .2012 DELETED UNDERSTATEMENT AND COMMISSION TO THE EXTENT OF RS.10,716/- BUT SUS TAINED THE BALANCE ADDITION OF RS.87,458/-. THAT THE ASSESSEE HAS NOT SHOWN THE R ECEIPT OF MARCH BUT THE MARCH BROKERAGE ONLY RS.87,450/-. ACCORDINGLY, HE RESTRI CTED THE ADDITION AT THAT AMOUNT. AGGRIEVED, ASSESSEE IS IN SECOND APPEAL BEFORE TRIB UNAL. 4. WE FIND FROM THE FACTS OF THE CASE THAT TWO ITEM S OF RS.38,888/- AND RS.1,53,562/- ARE THE COMMISSION RECEIVED BUT PERTAINED TO MARCH, 2006 BUT OFFERED FOR TAXATION IN FY 2006-07 RELEVANT TO AY 2007-08. LD. COUNSEL FOR TH E ASSESSEE DREW OUR ATTENTION TO PAGE 24 WHEREIN SUB-BROKERS BILL NOS. 24 AND 27, WHICH C LEARLY NARRATES THAT THESE TWO AMOUNTS ARE OFFERED FOR TAXATION IN AY 2007-08. FURTHER, W E FIND FROM THE FACTS AS NARRATED BY LD. COUNSEL FOR THE ASSESSEE I.E. DETAILS OF BROKERAGE BILLS OFFERED FOR TAXATION IN AY 2008-09 I.E. THE FIRST THREE BILLS GIVEN AT PAGE 73 OF ASSE SSEES PAPER BOOK FOR A SUM OF RS.7,038/-, PAGE 19 FOR A SUM OF RS.54,627/- AND RS.25,882/- AT PAGE 22 MADE ON 18.04.2007 BUT RELATES TO MARCH, 2006 TOTALING TO RS.87,048/- BUT OFFERED FOR TAXATION AND ALREADY ASSESSED IN AY 2008-09. THE ASSESSEE IS FOLLOWING T HIS PRACTICE CONSISTENTLY AND OFFERING MARCH AMOUNT IN APRIL I.E. IN IMMEDIATELY NEXT YEAR . WE FIND THAT THE ASSESSEE IS CONSISTENTLY FOLLOWING THIS SYSTEM AND THERE IS NO HARM IN DISCLOSING THIS INCOME DESPITE THE FACT THAT THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. ACCORDINGLY, WE DELETE THE ADDITION AND DIRECT THE AO TO RE-COMPUTE THE INCOME. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 5. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISALLOWING COMMISSION OF RS.55 ,000/- OUT OF THE TOTAL COMMISSION DISALLOWED BY AO AT RS.3,95,988/-. FOR THIS, ASSES SEE HAS RAISED FOLLOWING GROUND NO.2: 2. THAT THE CIT(A) HAS FURTHER ERRED IN CONFIRMIN G ADDITION TO THE EXTENT OF RS.55,000/- OUT OF TOTAL INCENTIVE/COMMISSION DISALLOWED AT RS. 395,988/- BY AO. 6. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BRIEFLY STATED FACTS ARE THAT THE AO MADE AD DITION ON ACCOUNT OF DISALLOWANCE OF COMMISSION PAID TO BROKERS AT RS.3,95,988/- FOR THE REASON THAT THE ASSESSEE COULD NOT FURNISH AS TO WHY SUCH DISPROPORTIONATE AND HIGHER RATE OF COMMISSION WAS PAID. THEREFORE, THE AO AFTER ADOPTING THE COMMISSION AT 13.09% DISALLOWED THE COMMISSION DEBITED TO THE P&L ACCOUNT FOR LACK OF SUPPORTING D OCUMENTS AND EVIDENCE AT RS.3,95,988/-. AGGRIEVED, ASSESSEE PREFERRED APPEA L BEFORE CIT(A), WHO RESTRICTED THE 3 ITA NO.482/K/2013 M/S. SHANTILAL DUGAR (HUF) AY 2007-08 DISALLOWANCE AT RS.55,000/- IN RESPECT TO COMMISSIO N PAID TO SUMITRA BAJAJ BY OBSERVING AS UNDER: I HAVE DULY CONSIDERED THE MATERIAL BEFORE ME. I FOUND THAT THE APPELLANT DEBITED INCENTIVE RS.6,00,000/- AS COMPARE TO THE LAST YEAR AMOUNT OF RS.3,00,000/-. DURING THE COURSE OF REMAND REPORT PROCEEDINGS, THE AO ISSUED THE NOTICE U/S. 133(6) OF THE I. T. ACT FOR THE PERSONS TO WHOM INCENTIVE COMMISSIONS SHOWN . MOST OF THEM CONFIRMED THE INCENTIVE AMOUNT AND THEY ARE ALL FILING THE RETURN OF INCOME. AFTER VERIFICATION FROM THE AMOUNT RECEIVED I FOUND THAT THEY DEPOSITED THEIR C ONFIRMATION LETTER ACCEPTING THE SAID INCENTIVE COMMISSION PAID TO THEM. THE DETAILS ARE AS UNDER ON THE BASIS OF THE CONFIRMATION. (I) SANGEETA MOR RS.2,50,000/- (II) ANITA AGARWAL RS.2,25,000/- (III) RAMESH KUMAR MOR (HUF) RS. 50,000/- (IV) RAM NIWAS AGARWAL RS. 50,000/- THEY ALL ARE ASSESSED TO TAX. THE APPELLANT DID NO T FILE THE CONFIRMATION OF SUMITRA BAJAJ WHOM THE INCENTIVE AND COMMISSION SHOWN RS.55,000/- . HENCE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE I CONFIRM THE PAYMENT SHO WN TO SUMITRA BAJAJ OF RS.55,000/- THAT IS NOT GENUINE AND BALANCE AMOUNTS IS DELETED. HEN CE THIS GROUND IS PARTLY ALLOWED. WE FIND THAT EVEN NOW ASSESSEE COULD NOT FILE CONFI RMATION OF SUMITRA BAJAJ TO WHOM INCENTIVE AND COMMISSION WAS PAID AT RS.55,000/-. DESPITE OPPORTUNITIES WERE GIVEN TO THE LD. COUNSEL, HE FAILED TO FURNISH ANY EVIDENCE IN SUPPORT OF ITS CLAIM. ACCORDINGLY, WE CONFIRM THIS ADDITION AND THIS ISSUE OF ASSESSEE S APPEAL IS DISMISSED. 7. THE NEXT ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISALLOWING THE INTEREST PAYMEN T OF RS.30,896/-. FOR THIS, ASSESSEE HAS RAISED FOLLOWING GROUND NO.3: 3. THAT THE CIT(A) HAS FURTHER ERRED IN CONFIRMING ADDITION TO THE EXTENT OF RS.30,796/- AGAINST INTEREST PAYMENT DISALLOWED BY AO AT RS.30, 896/-. 8. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE AO HAS DISALLOWED AND CIT(A) CONFIRMED NOTIONAL DISALLOWANCE OF INTEREST ON LOAN GIVEN TO M/S. MADHUSHREE CREATIONS OF WHICH ASSESSEES DAUGHTER IS PROPRIETOR. THE ASSESSEE ADVANCED INTEREST FREE LO AN OF RS.3.75 LACS DURING FY 2005-06 AND FILED COPIES OF CONFIRMATION FOR THE FYS 2005-0 6 AND 2006-07 RELEVANT TO AYS 2006- 07 AND 2007-08 WHICH ARE NOW FURNISHED AT PAGES 46 AND 47 OF ASSESSEES PAPER BOOK. THE ASSESSEE HAS ONLY CLAIMED INTEREST PAYMENT OF R S.14,332/- WHICH WAS PAID TO PRITHIVI RAJ DUGAR (HUF). THE ASSESSEE BEFORE US CONTENDED THAT IT HAS OWN SUFFICIENT FUNDS AVAILABLE WHICH IS MORE THAN THE AMOUNT ADVANCED OF RS.3.75 LACS AND OUT OF WHICH THE ASSESSEE HAS ADVANCED THIS LOAN AND NOT THE LOAN TA KEN FROM PRITHVI RAJ DUGAR (HUF) 4 ITA NO.482/K/2013 M/S. SHANTILAL DUGAR (HUF) AY 2007-08 AMOUNTING TO RS.60,000/-. WE FIND THAT THE EXPLANA TION OF THE ASSESSEE IS QUITE REASONABLE AND ACCORDINGLY, WE DELETE THE ADDITION. THIS ISSU E OF ASSESSEES APPEAL IS ALLOWED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. 10. ORDER IS PRONOUNCED IN THE OPEN COURT ON 20.11. 2015 SD/- SD/- (WASEEM AHMED) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20TH NOVEMBER, 2015 JD. SR. P.S COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT M/S. SHANTILAL DUGAR (HUF), C/O V. N. P UROHIT & CO., CHARTERED ACCOUNTANTS, DIAMOND CHAMBERS, UNIT-III, 4 TH FLOOR, SUITE NO. 4G, 4, CHOWRINGHEE LANE, KOLKATA-700 016.. 2 RESPONDENT ITO, WARD-50(3), KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .