ANJALI PRODUCTS, MUMBAI V. ACIT CIR 24(1), MUMBAI

ITA 4861/MUM/2010

• Counselvise Citation: 486119914 RSA 2010
• Duration Of Justice: 1 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-05-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-02-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 11-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P K B MENON
• Assessee Lawyers: BHARAT K PATEL
• Keywords: Bogus purchase; Additional evidence
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES A, MUMBAI BEFORE SHRI N.V. VASUDEVAN, J.M. AND SHRI RAJENDRA SINGH, A.M. ITA NO. : 4861/MUM/2010 ASSESSMENT YEAR : 2006-07 M/S. ANJALI PRODUCTS M/S. BHARAT K. PATEL & CO. 402, RISHIKESH APT. S.V. ROAD, OPP. N.L. HIGH SCHOOL MALAD(W) MUMBAI-400 064. PAN NO.:AAAFA 6826 E ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 24(1) C-13, PRATYAKSHAKAR BHAVAN BANDRA KURLA COMPLEX MUMBAI-400 051. (APPELLANT) VS. (RESPONDENT) APPELLANT BY : SHRI BHARAT K. PATEL RESPONDENT BY : SHRI P.K.B. MENON DATE OF HEARING : 17.5.2012 DATE OF PRONOUNCEMENT : 17.5.2012 O R D E R PER RAJENDRA SINGH, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 30.3.2010 OF CIT(A) FOR THE ASSESSMENT YEAR 2006-07. T HE ASSESSEE IN THIS APPEAL HAS RAISED DISPUTES REGARDING DISALLOWANCE OF PURCHASES AND VARIOUS EXPENSES UNDER SECTION 40(A)(IA) ON THE GROU ND OF NON DEDUCTION OF TAX AT SOURCE. ITA NO.4861/M/10 A.Y.06-07 2 2. THE FACTS IN BRIEF ARE THAT THE AO DURING THE ASSES SMENT PROCEEDINGS NOTED THAT ASSESSEE HAD PAID SALES COMMISSION OF RS.2,53,884/- TO SEVEN PARTIES INCLUDING A SUM OF RS.61, 750/- TO AMRISH ENTERPRISES AND RS.9,375/- TO URMIL SHAH ON WHICH NO TAX HAD BEEN DEDUCTED AT SOURCE. THE AO THEREFORE, DISALLOWED EXPENSES UNDER SECTION 40(A)(IA). ASSESSEE HAD ALSO INCURRED ADVERTISEMENT EXPENSES OF RS.6,64,616/- PAYMENT FOR WHICH HAD BEEN MADE TO F OUR PARTIES WHICH INCLUDED A SUM OF RS.2,90,000/- TO M/S. SANJAY & CO. AND RS.1,68,266/- TO INTREX INDIA PVT. LTD. AND RS.25,000 /- TO TAO PUBLISHING P. LTD. ON WHICH ALSO NO TAX HAD BEEN DEDUCT ED AT SOURCE. THE AO THEREFORE DISALLOWED THESE EXPENSES ALSO UNDER SECT ION 40(A)(IA). SIMILARLY ASSESSEE MADE PAYMENTS OF RS.2,99,5 48/- TO FIVE PARTIES AS SALES PROMOTION EXPENSES AND RS.2,51,000/- TO M AHAVIR ENTERPRISES (I) PVT. LTD. AS EXHIBITION EXPENSES ON WHI CH NO TDS HAD BEEN DONE. AO, THEREFORE ALLOWED THESE EXPENSES ALSO UN DER SECTION 40(A)(IA). ASSESSEE HAD ALSO CLAIMED PURCHASES FROM FOUR PA RTIES AGGREGATING TO RS.21,39,235/- INCLUDING A SUM OF RS.4,3 8,190/- FROM KUSHAL KITCHENWARE APPLIANCES ABOUT WHICH AO ON VERIFICA TION UNDER SECTION 133(6) FOUND THAT NOTICES WERE ISSUED AND RETURN ED UNDELIVERED. THE ASSESSEE NEITHER COULD PRODUCE THE PART IES NOR ANY CONFIRMATION WAS FILED. THE AO THEREFORE, ADDED THE SUM OF RS.21,39,235/- AS BOGUS PURCHASES. ITA NO.4861/M/10 A.Y.06-07 3 2.1 IN APPEAL, ASSESSEE SUBMITTED VARIOUS DETAILS AND E VIDENCES AS ADDITIONAL EVIDENCE BEFORE CIT(A) WHICH WERE REMANDED BY THE LATER TO AO FOR EXAMINATION AND REPORT. 3. CIT(A) AFTER CONSIDERING THE REMAND REPORT OBSERVED THAT THE PURCHASES OF RS .4,38,190/- FROM SHRI KUSHAL KITCHENWARE APPLIANCES REMAINED UNPROVED EVEN AT THE STAGE OF REMAND PROCEED INGS. HE, THEREFORE, CONFIRMED ADDITION ON ACCOUNT OF PURCHASES TO THE ABOVE EXTENT. IN RESPECT OF OTHER EXPENSES, CIT(A) OBSERVED TH AT EXCEPT IN CASE OF COMMISSION PAYMENT OF RS.9,375/- TO URMIL SHAH, ASSESSEE COULD NOT PRODUCE ANY EVIDENCE REGARDING TDS. CIT(A) T HEREFORE, CONFIRMED THE DISALLOWANCE UNDER SECTION 40(A)(IA). AGGR IEVED BY SAID DECISION ASSESSEE FILED PRESENT APPEAL IN WHICH THE FOLLOWI NG ADDITIONS CONFIRMED BY THE CIT(A) HAVE BEEN DISPUTED. I) DISALLOWANCE OF PURCHASES OF RS.4,38,190/- II) DISALLOWANCE OF COMMISSION OF RS.61,750/- ON ACCOUNT OF PAYMENT TO AMRISH ENTERPRISES III) DISALLOWANCE OF ADVERTISEMENT OF RS.2.90 LACS PAID TO M/S. SANJAY & CO.; RS .1,68,266/- PAID TO INTREX INDIA PVT. LTD. AND RS.25,000/- PAID TO TAO PUBLISHING P. LTD. IV) DISALLOWANCE OF SALES PROMOTION OF RS.2,99,548/- PAID TO VARIOUS PARTIES AND V) DISALLOWANCE OF EXHIBITION EXPENSES OF RS.2,51,000/- PAI D TO MAHAVIR ENTERPRISES (I) PVT. LTD. 3.1 BEFORE US LD. AR FOR THE ASSESSEE DID NOT PRESS THE DI SALLOWANCE OF ADVERTISEMENT EXPENSES OF RS.2.90 LACS TO SANJAY & CO. AND ITA NO.4861/M/10 A.Y.06-07 4 RS.1,68,266/- TO INTREX INDIA (P.) LTD. IN RESPECT OF OTHER ADDITIONS, IT WAS SUBMITTED THAT CIT(A) HAS NOT PASSED A DETAILED AND REASONED ORDER AND HAS NOT CONSIDERED VARIOUS IMPORTANT SUBMISSION S MADE BEFORE HIM. IT WAS POINTED OUT THAT THE ASSESSEE HAD GIV EN COPY OF LEDGER ACCOUNT AND DETAILS OF PAYMENT BY CHEQUE IN CASE OF PURCHASES FROM M/S. KUSHAL KITCHENWARE APPLIANCES WHICH WAS NOT CONSI DERED BY CIT(A). FURTHER IMPORTANT SUBMISSION IN RELATION TO OTHER EXPENSES THAT THESE WERE ONLY SALES INCENTIVES / REIMBURSEMENT EXP ENSES ON WHICH NO TDS WAS REQUIRED TO BE MADE HAD NOT BEEN CONSI DERED BY CIT(A). DETAILS OF THESE SUBMISSIONS HAS BEEN GIVEN AT PAG E 1-6 OF THE PAPER BOOK. IT WAS ACCORDINGLY URGED THAT THE ORDER O F CIT(A) SHOULD BE SET ASIDE AND CLAIM OF THE ASSESSEE SHOULD BE ALLOWED. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND STRONG LY SUPPORTED THE ORDER OF CIT(A) AND PLACED RELIANCE ON THE FINDINGS GI VEN IN THE APPELLATE ORDER. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDING DISALLOWANCE OF PURCH ASES FROM ONE PARTY AS BOGUS AND DISALLOWANCE OF OTHER EXPENSES ON THE GROUND OF NON DEDUCTION OF TAX AT SOURCE. AO HAD MADE DISALLOWAN CE FOR WANT OF EVIDENCE IN CASE OF PURCHASE AND FOR WANT OF TDS IN CASE OF OTHER EXPENSES ON THE GROUND OF NON DEDUCTION OF TAX AT SOURCE . AO HAD MADE DISALLOWANCE FOR WANT OF EVIDENCE IN THE CASE OF PU RCHASES AND ITA NO.4861/M/10 A.Y.06-07 5 FOR WANT OF TDS IN CASE OF OTHER EXPENSES. ASSESSEE HAD FI LED FURTHER DETAILS AND EVIDENCE AND MADE DETAILED SUBMISSION BEFO RE CIT(A) WHICH WERE REMANDED BY THE LATTER TO THE AO AND ON T HE BASIS OF REMAND REPORT HE HAS CONFIRMED THE DISALLOWANCE WHICH A RE DISPUTED IN THE PRESENT APPEAL DETAILS OF WHICH HAVE BEEN GIVE N EARLIER. WE FIND THAT THE CIT(A) HAS NOT DISCUSSED THE REMAND REPORT IN DETAIL. NONE OF THE PARTIES HAS PRODUCED COPY OF REMAND REPORT AND, THE REFORE CONTENT OF THE REMAND REPORT IS NOT KNOWN AT THIS STAGE. WE A LSO FIND THAT CIT(A) HAS NOT PASSED A VERY DETAILED AND REASON ORDER. HE HAS DISALLOWED THE ENTIRE PURCHASES FROM THE PARTY WITHOUT MAKING ANY COMPARATIVE STUDY OF EXPENSES IN THE EARLIER YEAR OR GR OSS PROFIT RATE DECLARED BY THE ASSESSEE. HE HAS NOT EXAMINED THAT IN CASE SOME PURCHASES ARE NOT FOUND VERIFIABLE WHETHER ENTIRE PURCH ASES HAVE TO BE DISALLOWED OR ONLY A PORTION FOUND EXCESSIVE COMPARED TO EARLIER YEAR. IN RELATION TO OTHER EXPENSES, ASSESSEE HAD SUBMITTE D BEFORE CIT(A) THAT COMMISSION PAYMENT TO AMRISH ENTERPRISES WAS O NLY TARGET INCENTIVE AND NOT SALES COMMISSION WHICH HAS NOT BE EN EXAMINED BY CIT(A). SIMILARLY ASSESSEE HAD SUBMITTED TH AT SALES PROMOTION EXPENSES OF RS.2,99,548/- AND EXEMPTION EXPE NSES OF RS.2,51,000/- WERE ONLY REIMBURSEMENT OF EXPENSES CONTAI NING NO ELEMENT OF INCOME AND, THEREFORE NO TDS WAS REQUIRED. ASSESSEE HAD ALSO PLACED RELIANCE ON CERTAIN JUDGMENTS TO SUPPORT THE PLEA. THESE ITA NO.4861/M/10 A.Y.06-07 6 ASPECTS HAVE NOT BEEN CONSIDERED BY CIT(A). SIMILARLY ASSE SSEE SUBMITTED THAT PAYMENT OF RS .25,000/- TO TAO PUBLISHING P. LTD. WAS FOR PRINTING OF DIARIES AND IT WAS NOT WORKS CONTRACT BU T A SALES CONTRACT IN RESPECT OF WHICH NO TDS WAS REQUIRED. IN SUPPO RT ASSESSEE, HAD RELIED ON CERTAIN JUDGMENTS. CIT(A) HAD IGNORED T HESE ASPECTS. IN OUR VIEW FOR THE VARIOUS REASONS GIVEN ABOVE MATTER RE QUIRES FRESH CONSIDERATION AT THE LEVEL OF CIT(A) FOR PASSING A REASO NED ORDER AFTER CONSIDERING ALL ASPECTS. WE, THEREFORE, SET ASIDE THE ORD ER OF CIT(A) AND RESTORE ALL THE ADDITIONS EXCEPT THOSE NOT PRESSED AN D THUS CONFIRMED BY US BACK TO HIM FOR PASSING A FRESH ORDER AF TER NECESSARY EXAMINATION IN THE LIGHT OF OBSERVATIONS MADE ABOVE AND AFTER ALLOWING OPPORTUNITY OF HEARING TO THE ASSESSEE. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOW ED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17.5.2012. SD/- SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER (RAJENDRA SINGH ) ACCOUNTANT MEMBER MUMBAI, DATED: 17.5.2012. JV. ITA NO.4861/M/10 A.Y.06-07 7 COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.