JCIT 25(1), MUMBAI V. SADANAND S SUKHIJA, MUMBAI

ITA 4986/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6658 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 8 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 26-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK SURI
• Keywords: Accommodation entries
• Section: 143(3); 133(6); 2

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI . , , , BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDI CIAL MEMBER . / ITA NO. 4986 / MUM./ 2012 ( / ASSESSMENT YEAR : 20 09 10 ) ASSTT. COMMISSIONER OF INCOME TAX RANGE 25(1), PRATYAKSHAKAR BHAVAN C 11, BANDRA KURLA COMPLEX BANDRA (E), MUMBAI 400 067 .. / APPELLANT V/S MR. SADANAND S. SUKHIJA PROP. M/S. S. CRANE ENGINEERING WORKS 39, PIRANI COMPOUND, AMBAWADI DAHISAR (E), MUMBAI 400 068 .... / RESPONDENT . / PERMANENT ACCOUNT NUMBER AADPS6457L / R EVENUE BY : MR. ASHOK SURI / ASSESSEE BY : MR. SUNIL NAHTA / DATE OF HEARING 24 . 0 3 .201 4 / DATE OF ORDER 11.04.2014 / ORDER , / PER AMIT SHUKLA , J.M. THE PRESENT APPEAL HAS BEEN PREFERRED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER DATED 22 ND MAY 2012 , PASSED BY THE MR. SADANAND S. SUKHI JA 2 LEARNED COMMISSIONER (APPEALS) XXXV, MUMBAI, FOR THE QUANTUM OF ASSESSMENT PASSED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 19 61 (FOR SHORT 'THE ACT' ) FOR THE ASSESSMENT YEAR 20 09 10 , VIDE WHICH, FOLLOWING GROUNDS HAVE BEEN RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E A ND I N LAW , THE LD . CIT (A) ERRED IN LAW AND IN FACT IN CON C LUD I N G THAT THE ASSESSEE HAS PAID COMMISSION ON THE BASIS OF I . T. ACKNOWLEDGEMENT, PASS BOOK ETC . OF TH E PAR TIE S WI TH O U T APPRECIATING THE FACT THAT THE PARTIES WER E NOT A BL E TO EXPLAIN THE NATURE OF SERV I CES RENDERED B Y THEM TO TH E A SS E S SEE IN EARNING COMMISSION IN RESPONSE TO TH E NOTIC E S I S SU ED S S] S 133(6) OF THE I . T . ACT , 1961' ' 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CA S E AN D IN LAW , THE LD . CIT (A) ERRED IN LAW AND IN FACT T H AT ASSESSE E WAS NOT ABLE TO ELABORATE ON THE NATURE OF SER VICES R ENDERED BY THE SIX PARTIES ENTITLING THESE PARTIES T O G E T CO MM ISSION FROM THE ASSESSEE . ' 2 . FACTS IN BRIEF : THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF MANUFACTURING OF CRANES AND ITS SPARE PARTS FROM HIS PROPRIETORSHIP CONCERN M/S. S. CRANE ENGINEERING WORKS. THE ASSESSING OFFIC ER NOTED THAT THE ASSESSEE HAS PAID TOTAL COMMISSION OF ` 21,38,072 TO THE FOLLOWING SIX PARTIES. 1. MEET ENTERPRISES ` 4,87,530 2. JAYSUKH R. RAMANI HUF ` 1,82,107 3. PARESH J. HARIA ` 2,94,245 4. RIDDHI SIDDHI MARKETING ` 5,50,299 5. PRAKASH M. BH AVSAR ` 2,57,987 6. NIMIT ENTERPRISES ` 3,65,904 TOTAL: ` 21,38,072 MR. SADANAND S. SUKHI JA 3 3 . THE ASSESSING OFFICER ISSUED NOTICES UNDER SECTION 133(6) TO ALL THE ABOVE SIX PARTIES ASKING THEM TO FURNISH DETAILS AND DOCUMENTS REGARDING RENDERING OF SERVICES. IN RESPONSE, ALL T HE SIX PARTIES FILED REPLY BEFORE THE ASSESSING OFFICER AFTER ENCLOSING THEIR COPY OF PROFIT & LOSS ACCOUNT, BALANCE SHEET, BANK PASSBOOK, RETURN OF INCOME TAX AND DEBIT NOTES ISSUED BY THEM TO THE ASSESSEE. FROM THE SAID DETAILS FURNISHED BY THEM, THE ASS ESSING OFFICER OBSERVED THAT NONE OF THESE PARTIES HAVE EXPLAINED THE NATURE OF SERVICES RENDERED BY THEM. FROM THEIR BANK ACCOUNTS, HE ALSO NOTED THAT ALL OF THEM HAVE WITHDRAWN THE AMOUNT EQUIVALENT TO THE COMMISSION IN CASH AFTER THE RECEIPTS OF COM M ISS ION THROUGH CHEQUES FROM THE ASSESSEE. MOST OF THEM DO NOT HAVE ANY CUSTOMER OTHER THAN THE ASSESSEE. IN RESPONSE TO THE SHOW CAUSE NOTICE, THE ASSESSEE SUBMITTED THAT HE HAS MADE THE PAYMENT TO THESE PERSONS THROUGH ACCOUNT PAYEE CHEQUE S ON THE BASIS OF C ERTAIN PERCENTAGE OF THE TURNOVER AND ALL THE PAYMENT ARE FULLY VERIFIABLE. THE ASSESSING OFFICER DID NOT ACCEPT THE ASSESSEES EXPLANATION AND HELD THAT THE ASSESSEE HAS NOT ELABORATED THE NATURE OF SERVICES RENDERED BY THESE PARTIES FOR THE PROCUREMENT O F SALES ORDER AND MERELY MAKING THE PAYMENT THROUGH CHEQUE CANNOT JUSTIFY THE EXPENDITURE. HE ALSO REFERRED TO THE FOLLOWING CASE LAWS AND HELD THAT THE CLAIM FOR DEDUCTION OF COMMISSION FOR SUMS AGGREGATING TO ` 21,38,072 IS NOT ALLOWABLE : I) ASSAM PEST ICIDES AND AGRO CHEMICALS V/S CIT, 227 ITR 846; II) CHEMAUX PVT. LTD. V/S CIT, 109 ITR 705; III) RAMANAND SAGAR V/S DCIT, 256 ITR 134; IV) CIT V/S TRANSPORT CORPORATION OF INDIA LTD., 256 ITR 701. MR. SADANAND S. SUKHI JA 4 4 . BEFORE THE LEARNED COMMISSIONER (APPEALS), THE ASSESSEE FU RNISHED A DETAILED CHART GIVING THE NAME AND ADDRESS OF THE PARTIES TO WHOM COMMISSION HAS BEEN PAID ALONG WITH THE IR PAN, INVOICE NUMBER, DEBIT NOTE, DATE OF PAYMENT, AMOUNT PAID , RATE OF COMMISSION, DETAILS OF TDS DEDUCTED AND THE NET AMOUNT PAID. THESE DETAILS HAVE BEEN MENTIONED AT PAGE 3/PARA 4.1 OF THE APPELLATE ORDER. THE ASSESSEE ALSO FILED SUPPORTING DOCUMENTS WHICH WERE FILED BEFORE THE ASSESSING OFFICER BY THESE PARTIES IN THE CASE OF ALL THE SIX PARTIES , WHICH INCLUDED ; (I) DEBIT NOTE S ALONG WIT H THE ANNEXURE OF COMMISSION PAYMENT AND LIST OF CUSTOMERS TO WHOM SALES WERE MADE ; (II) ACKNOWLEDGEMENT OF FILING OF INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2009 10 IN RESPECT OF ALL THE PARTIES; (III) COMPUTATION OF INCOME FOR THE ASSESSMENT YEAR 2009 10; (IV) BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31 ST MARCH 2009 ; AND (V) COPY OF LEDGER ACCOUNT. ALL THESE DETAILS HAVE BEEN ELABORATED FROM PAGE 4 TO 7 OF THE APPELLATE ORDER. THE ASSESSEE FURTHER REITERATED THAT THE TDS HAVE BEEN DED UCTED O N ALL THE PAYMENTS AND HAVE ALSO BEEN DEPOSITED IN THE GOVERNMENT ACCOUNT. IT WAS SUBMITTED THAT THE COMMISSION WAS PAID ON SALES AS THE ASSESSEE WAS A SENIOR CITIZEN OF MORE THAN 74 YEARS, HENCE, HE WAS UNABLE TO LOOK AFTER THE SALES AND HE HAD ENG AGED THE SERVICE S OF THE AGENTS. 5 . THE LEARNED COMMISSIONER (APPEALS), AFTER CONSIDERING THE ENTIRE MATERIAL PLACED BEFORE HIM, NOTED THAT THE INVOICES SUBMITTED BY THE ASSESSEE CLEARLY SHOWS THAT THE COMMISSION AGENTS HAVE FURNISHED THE DETAILS OF THE PAR TIES WITH WHOM THEY HAD DONE THE BUSINESS ON BEHALF OF THE ASSESSEE. HE FURTHER OBSERVED THAT THESE PERSONS HAVE REPORTED MR. SADANAND S. SUKHI JA 5 DIRECTLY TO THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE UNDER SECTION 133(6) AND THEY HAD ALSO SUBMITTED THE ENTIRE DETAILS AND EV IDENCE AS STATED ABOVE. BESIDES THIS, THESE COMMISSION AGENTS HAVE BEEN WORKING ON BEHALF OF THE ASSESSEE FOR GETTING THE BUSINESS AS THE ASSESSEE WAS A SENIOR CITIZEN FO 74 YEARS OLD AND WITH OUT THEIR HELP H E WAS ABLE TO ACHIEVE SUCH A HIGH TURNOVER. REGA RDING ASSESSING OFFICERS OBSERVATION ON THE PLEA OF WITHDRAWING CASH FROM THE BANK ACCOUNT, HE HELD THAT IT IS FOR THESE PERSONS TO TAKE DECISION TO WITHDRAW MONEY FOR MEETING THEIR PERSONAL AND FAMILY EXPENSES AND IT DOES NOT BREACH ANY LAW. EVEN OTHERWI SE ALSO, THE ASSESSEE CANNOT BE HELD RESPONSIBLE FOR THEIR WITHDRAWAL OF MONEY FROM THE BANK ACCOUNT. THE ASSESSING OFFICER HAD NOT MADE OUT ANY CASE THAT THE CASH WITHDRAWN BY SIX PERSONS HAVE FINALLY REACHED TO THE HANDS OF THE ASSESSEE. ON THESE FACTS A ND REASONS, HE DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALLOWANCE. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, REFERRING TO THE OBSERVATIONS MADE BY THE ASSESSING OFFICER SUBMITTED THAT NONE OF S IX PARTIES HAVE ACTUALLY EXPLAINED THE NATURE OF SERVICE S RENDERED BY THEM TO THE ASSESSEE AND ALSO THERE IS NO PROPER EXPLANATION AS TO WHY THE CASH OF EQUIVALENT AMOUNT HAS BEEN WITHDRAWN BY THE COMMISSION AGENT FROM THEIR BANK ACCOUNT. THIS LEADS TO A DOUBT WITH REGARD TO THE GENUINENESS OF THE ENTIRE TRANSA CTION. HE FURTHER SUBMITTED THAT OUT OF SIX PARTIES, THREE OF THEM ARE FROM THE SAME FAMILY AND ONE OF THE PARTIES IS THE NEIGHBOR OF THE ASSESSEE. THESE FACTS ALSO LEAD TO SERIOUS DOUBT WHETHER SUCH A TRANSACTION WAS FOR ACCOMMODATION ENTRY OR NOT. THUS, ON THESE FACTS, HE SUBMITTED THAT THE ORDER OF THE ASSESSING OFFICER SHOULD BE CONFIRMED. MR. SADANAND S. SUKHI JA 6 7 . THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT NONE OF THE PARTIES ARE RELATED TO THE ASSESSEE IN ANY MANNER AND IF SOME OF THE PARTIES ARE RELATED TO EACH OTHER AMONG THEMSELVES, IS NOT THE CONCERN OF THE ASSESSEE OR CAN LEAD TO ANY ADVERSE INFERENCE. INSOFAR AS THE NATURE OF SERVICES RENDERED BY THEM, IT IS CLEAR FROM THE DEBIT NOTES ISSUED BY THEM ALONG WITH THE LIST OF CUSTOMERS THAT THESE WERE ON ACCOUNT OF PROCUREMENT OF CUSTOMERS TO WHOM SALES HAVE BEEN MADE THROUGH THEM AND THE DETAILS OF INVOICES OF SALE BILL IS ALSO MENTIONED , WHICH GOES TO SHOW THAT THE COMMISSION HAS BEEN PAID FOR EFFECTING THE SALES. TO PROVE THE GENUINENESS OF PAY MENT, THE ASSESSEE HAD FURNISHED NOT ONLY THE DEBIT NOTES BUT ALSO THEIR INCOME TAX RETURN, COMPUTATION OF INCOME, BALANCE SHEET AND PROFIT & LOSS ACCOUNT THEIR BANK STATEMENTS AND AMOUNT OF TDS DEDUCTED. THUS, THE ONUS OF THE ASSESSEE WAS FULLY DISCHARGED AND, THEREFORE, NO SUCH DISALLOWANCE CAN BE MADE. HE STRONGLY RELIED UPON THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS). 8 . WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW AND THE MATERIAL AVAILABLE ON RE CORD. FROM THE RECORDS, IT IS SEEN THAT THE ASSESSEE HAS SHOWN SALES OF ` 5,90,07,377 UP TO 31 ST MARCH 2009, AS PER THE PROFIT & LOSS ACCOUNT. MOST OF THESE SALES HAVE BEEN EFFECTED THROUGH THE SIX AGENTS WHICH IS EVIDENT FROM THE COPY OF ANNEXURE ALONG WI TH DEBIT NOTE WHICH SHOWS THE QUANTUM OF SALES MADE TO VARIOUS CUSTOMERS. BASED ON THESE SALE AMOUNTS, COMMISSION AMOUNT HAS BEEN WORKED OUT @ 4.5% TO 5%. THE IDENTITY OF THE PERSONS AND THE GENUINENESS OF THE TRANSACTIONS IS MR. SADANAND S. SUKHI JA 7 BORNE OUT FROM THE FOLLOWING E VIDENCE / DOCUMENTS WHICH HAS BEEN FILED IN RESPECT OF ALL THE SIX PARTIES: I ) DEBIT NOTE ISSUED BY THESE PARTIES ALONG WITH ANNEXURE OF COMMISSION ON THE SALES EFFECTED BY THEM AND INVOICE NUMBERS; ; II ) COPY OF INCOME TAX RETURN FOR THE ASSESSMENT YEAR 2009 1 0 FILED BY THE SE PARTIES / AGENTS; III ) COMPUTATION OF INCOME FILED ALONG WITH THE RETURN OF INCOME; IV ) COPY OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT FOR THE YEAR ENDING 31 ST MARCH 2009 WHEREIN THIS AMOUNT OF COMMISSION RECEIVED HAS BEEN RECOVERED AS THEIR INC OME; V ) COPY OF LEDGER ACCOUNT AND THE BANK ACCOUNTS; AND VI ) DETAILS OF TDS DEDUCTED AND ALSO THE DATE OF DEPOSIT OF THE TDS AMOUNT; MOST OF THESE EVIDENCES WERE FILED BY THE SIX PERSONS DIRECTLY TO THE ASSESSING OFFICER IN RESPONSE TO THE NOTICE UNDER SECTIO N 133(6). FROM THESE DETAILS AND EVIDENCES, THE NATURE OF PAYMENT AND THE GENUINENESS OF THE ENTIRE TRANSACTION CANNOT BE DOUBTED. INSOFAR AS THE NATURE OF SERVICES RENDERED BY THE PARTIES IS CONCERNED, IT IS SEEN FROM THE DEBIT NOTES AND ANNEXURE THAT THESE PA RTIES HAVE MAINTAINED CUSTOMER WISE DETAILS TO WHOM SALES HAVE BEEN MADE ALONG WITH THE INVOICE NUMBER AND WORKING OF COMMISSION. COMING TO THE OBSERVATION OF THE ASSESSING OFFICER THAT THESE PERSONS HAVE WITHDRAWN THE CASH IMMEDIATELY FROM THE BANK ACCOUN T AND, THEREFORE, SUCH PAYMENT CANNOT BE TREATED AS GENUINE . THE SAID OBSERVATION OR FINDING CANNOT BE HELD TO BE CONCLUSIVE OR DECISIVE FACTOR FOR DOUBTING THE PAYMENT OF MR. SADANAND S. SUKHI JA 8 COMMISSION , FIRSTLY FOR THE REASON THAT THERE IS NO ENQUIRY OR MATERIAL PLACED ON RE CORD BY THE ASSESSING OFFICER THAT THESE PERSONS WERE INVOLVED IN GIVING ACCOMMODATION ENTRIES OR WERE ACTING AS A CONDUIT FOR SHOWING FALSE COMMISSION INCOME AND, SECONDLY, IT HAS NOT BEEN ENQUIRED BY THE ASSESSING OFFICER THAT THE CASH WITHDRAWN BY THESE PERSONS WERE ACTUALLY GIVEN BACK THE ASSESSEE. IF WHAT IS APPARENT IS NOT REAL, THEN SOME FACT FINDING ENQUIRY HAS TO BE CONDUCTED TO COUNTER THE EVIDENCE AND DOCUMENTS FILED BY THE ASSESSEE, BECAUSE INSOFAR AS THE ASSESSEE IS CONCERNED, THE ONUS WAS COMP LETELY DISCHARGED WHEN THESE PERSONS GAVE CONFIRMATION TO THE ASSESSING OFFICER AND NOT ONLY THAT THEY HAVE ALSO FILED ALL THE RELEVANT EVIDENCE THAT THEY HAD RECEIVED THE COMMISSION INCOME AND HAVE ALSO SHOWN THE SAME IN THEIR INCOME TAX RETURN. IT IS NOT A CASE THAT THE GENUINENESS IS PROVED BY EXPLAINING THAT THE MONEY HAS BEEN PAID THROUGH ACCOUNT PAYEE CHEQUE, THEREFORE, THE SAME SHOULD BE ACCEPTED , BUT THE SAID PAYMENT IS ALSO CORROBORATED BY VARIOUS OTHER EVIDENCES AS STATE ABOVE . THUS, THE FINDING R EGARDED BY THE LEARNED COMMISSIONER (APPEALS) IS UPHELD. COMING TO THE ARGUMENTS OF THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THREE PARTIES WERE FROM THE SAME FAMILY AND ONE OF THEM WAS LIVING NEXT DOOR TO THE ASSESSEE, WILL ALSO NOT STRENGTHEN THE CASE OF THE REVENUE , BECAUSE THESE INCIDENCES CAN CREATE SOME DOUBT BUT THE SAME HAS TO BE PROPERLY REBUTTED BY THE ASSESSING OFFICER THROUGH SOME MATERIAL ON RECORD OR ENQUIRY . OTHERWISE, THE EVIDENCE AND DOCUMENTS PLACED BY THE ASSESSEE ARE SUFFICIENT TO HOL D THE GENUINENESS OF THE PAYMENT. THUS, WE DO NOT FIND ANY REASON TO DEVIATE FROM THE FINDINGS OF THE LEARNED COMMISSIONER (APPEALS) . THUS, THE GROUND RAISED BY THE REVENUE STAND DISMISSED. MR. SADANAND S. SUKHI JA 9 9 . 9 . IN THE RESULT, REVENUES APPEAL IS DISMISSED. 11 TH APRIL 2014 ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH APRIL 2014 SD / - . D. KARUNAKARA RAO ACCOUNTANT MEMBER SD / - AMIT SHUKLA JUDICIAL MEMBER MUMBAI, DATED : 11 TH APRIL 2014 / COPY OF THE ORDER FORWARDED TO : ( 1 ) / THE ASSESSEE ; ( 2 ) / THE REVENUE; ( 3 ) ( ) / THE C IT(A ) ; ( 4 ) / THE CIT, MUMBAI CITY CONCERNED ; ( 5 ) , , / THE DR, ITAT, MUMBAI ; ( 6 ) / GUARD FILE . / TRUE COPY / BY ORDER . / PRADEEP J. CHOWDHURY / SR. PRIVATE SECRETARY / / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI