PRADEEP POKRA, BUNDI V. ACIT, Kota

ITA 539/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5000 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-11-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 01-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P BATEJA CIT DHK
• Assessee Lawyers: TANUJ AGARWAL
• Keywords: Depreciation; Business expenditure
• Section: 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO ] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO.539/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2010-11 SHRI PRADEEP POKRA POP. M/S POKRA AGRO INDUSTRIES, 3-A-18, VIKASH NAGAR, BUNDI CUKE VS. THE ACIT, CIRCLE-1, KOTA LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AZXPP 7935 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI TANUJ AGARWAL (ADV.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI O.P. BATEJA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 31.10.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 02/11/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), KOTA DATED 31.03.2015 PERTAINING TO ASSESSMENT YEA R 2010-11 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (1) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 1565043/- UNDER THE HEAD OF COMMISSION EXPENSES MADE BY THE LD. AO WITHOUT CONSIDERING ALL THE FACTS AND EVIDENCED PLACES BEFO RE HIM DURING THE COURSE OF APPEAL PROCEEDINGS. (2) THE LOW AUTHORITIES HAS ERRED IN DISALLOWING T HE COMMISSION EXPENSES OF RS.1565043/- ONLY ON THE GROUND THAT THERE WAS NO N EED TO INCUR SUCH EXPENSES BY THE ASSESSEE. ITA NO. 539/JP/15 SHRI PRADEEP POKRA, BUNDI VS. ACIT, CIRCLE-1, KOTA 2 (3) THE LOWER AUTHORITIES WERE NOT JUSTIFIED IN MAK ING THE ADDITION OF RS. 1565043/- UNDER THE HEAD OF COMMISSION PAID ON THE GROUND THAT SUCH EXPENSES WAS PAID TO PERSON SPECIFIED U/S 40A(2B) I N FACTS THERE WAS NO PAYMENT MADE TO PERSON SPECIFIED 40A2(B). (4) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 24768/- UNDER THE HEAD OF VEHICLE RUNNING EXPENSES, BEING PERSONAL US ED OF VEHICLE ETC. (5) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 9696/- UNDER THE HEAD OF TELEPHONE EXPENSES, BEING PERSONAL TELEPHO NE. (6) THE LD. CIT(A) ERRED IN CONFIRMING THE PARTLY ADDITION OF RS. 17693/- OUT OF TOTAL ADDITION OF RS.35386/- UNDER THE HEAD OF T RAVELLING EXPENSES BEING PERSONAL ELEMENT. (7) THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 12371/- UNDER THE HEAD OF DEPRECIATION ON MARUTI CAR, BEING PERSONAL USE OF CAR. 2. IN RESPECT OF GROUND NO. 1-3, THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLANT IS A TRADER OF RICE AND DURING THE YEAR U NDER CONSIDERATION, HE HAS PAID BROKERAGE TO THE FOLLOWING PARTIES: SURESH KUMAR GHANSHYAM LAL, HUF RS. 3,75,065/- RAMESHWAR DAYAL GHANSHYAMLAL, HUF RS. 4,83,330/- SHRI GOVINDA CORPORATION RS. 3,78,995/- BRIJGOPAL GHANSHAYMLAL HUF RS. 3,21,873/- PARTH FOODS RS. 5,7 80/- RS. 15,65,043/- THE AO CONCLUDED THAT SINCE THE APPELLANT HAD DECLA RED AROUND 65% OF PURCHASES AND SALES DIRECTLY WITHOUT THE HELP OF AN Y BROKER, HENCE HE IS VERY MUCH CAPABLE TO PURCHASE AND SALE HIS COMMODITY DIR ECTLY. THE LD. AO HELD THAT OWN FUNDS WERE PARKED BY THE APPELLANT IN OTH ER SISTER CONCERNS AS COMMISSION THEREBY DISALLOWING THE ENTIRE BROKERAGE PAID AMOUNTING TO RS. 15,65,043/- AS BOGUS. THE LD. AO FURTHER HELD THAT THE APPELLANT HAD DEDUCTED ITA NO. 539/JP/15 SHRI PRADEEP POKRA, BUNDI VS. ACIT, CIRCLE-1, KOTA 3 TAX AT SOURCE (TDS) ON BROKERAGE PAYMENT IN ORDER TO SHOW THAT ALL TRANSACTIONS WERE GENUINE SO THAT NO ONE COULD PROV E ANY MANIPULATION BEHIND THIS MOTIVE. HE DISALLOWED THE ENTIRE BROKE RAGE AS BOGUS, DESIGNED, FABRICATED AND NON-BUSINESS EXPENDITURE U/S 37 OF T HE IT ACT, 1961. THE LD. CIT(A) UPHELD THE FINDINGS OF THE LD. AO THEREBY SU STAINING THE ENTIRE DISALLOWANCE OF BROKERAGE. HENCE, THE PRESENT APPE AL BEFORE US. 2.1 THE LD. AR OF THE ASSESSEE HAS SUBMITTED THAT B OTH THE LOWER AUTHORITIES FAILED IN PROPERLY APPRECIATING THE FACTS OF THE CA SE AND ANALYZING THE RELEVANT PROVISIONS OF LAW. ALL MATERIAL EVIDENCES IN THE FO RM OF BROKERAGE BILLS, CONFIRMATIONS, AFFIDAVITS ETC. WERE TOTALLY IGNORED BY THE LOWER AUTHORITIES WHO MERELY ACTED ON SURMISES AND CONJECTURES. NO ENQUIR Y WAS CONDUCTED FROM ANY OF THE BROKERS BEFORE DISALLOWANCE. PAYMENT OF BROKERAGE TO THE BROKERS IS A PREVALENT TRADE CUSTOM IN FOOD GRAIN BUSINESS (KNOWN AS ARATHIYA) WHICH IS ALSO EVIDENT FROM THE PURCHASE BILLS ISSUED BY OTHE R PARTIES. TAX WAS ALSO DEDUCTED AT SOURCE (TDS) ON BROKERAGE PAYMENTS. BUS INESS EXPEDIENCY HAS TO BE CONSIDERED FROM BUSINESSMAN POINT OF VIEW. APPEL LANT SATISFIED ALL CONDITIONS OF SECTION 37 FOR ALLOWABILITY OF EXPEND ITURE, HOWEVER AO STILL DISALLOWED ENTIRE BROKERAGE WITHOUT EXPLAINING HOW DISALLOWANCE IS JUSTIFIED U/S 37 OF THE ACT. BROKERAGE PAYMENT TO ALLEGED S ISTER CONCERNS OF THE APPELLANT DO NOT FALL UNDER THE PROVISIONS OF SECTI ON 40(A)(2)(B) OF THE ACT. FOR MINOR DEFECT/DISCREPANCIES, ADDITION/DISALLOWANCE C ANNOT BE MADE AS HELD BY HONBLE RAJASTHAN HIGH COURT IN CASE OF UTTAM CHUNA UDYOG VS ITO 192 ITR 56. PAST AND SUBSEQUENT HISTORY OF THE APPELLANT SHOWS THAT BROKERAGE WAS ALLOWED IN PAST AS WELL AS SUBSEQUENT ASSESSMENT YE ARS UNDER SIMILAR CIRCUMSTANCES TO SAME PARTIES. LD. CIT(A) ALSO ALL OWED BROKERAGE PAYMENT IN CASE OF ANOTHER ASSESSEE IN SAME BUSINESS FOR THE S AME ASSESSMENT YEAR UNDER SIMILAR CIRCUMSTANCES. ITA NO. 539/JP/15 SHRI PRADEEP POKRA, BUNDI VS. ACIT, CIRCLE-1, KOTA 4 2.2 THE LD DR WAS HEARD WHO HAS RELIED UPON THE ORD ER OF THE LOWER AUTHORITIES. 2.3 AFTER HEARING CONTENTIONS OF BOTH THE PARTIES, IT IS OBSERVED THAT THE AO HAS ASKED SPECIFIC QUESTIONS DURING THE COURSE OF A SSESSMENT PROCEEDINGS REGARDING NATURE OF SERVICES RENDERED BY THESE COMM ISSION AGENTS TO THE ASSESSEE. THE LD AR HAS SUBMITTED THAT IN RESPONSE , THE ASSESSEE HAS SUBMITTED ALL MATERIAL EVIDENCES IN THE FORM OF BRO KERAGE BILLS, CONFIRMATIONS, AFFIDAVITS ETC BEFORE THE ASSESSING OFFICER. ON PE RUSAL OF THE ASSESSMENT ORDER, WE DONOT FIND ANY FINDINGS/OBSERVATIONS OF THE ASSE SSING OFFICER IN RESPECT OF DOCUMENTS SUBMITTED BY THE ASSESSEE. IN THE INTERE ST OF JUSTICE AND FAIR PLAY, WE SET ASIDE THE MATTER TO THE FILE OF THE ASSESSIN G OFFICER TO EXAMINE THE MATTER A FRESH AFTER AFFORDING SUITABLE OPPORTUNITY TO THE ASSESSEE. 3. IN RESPECT OF GROUND NOS. 4 TO7, THE ASSESSEE HA S CHALLENGED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE DISALLOWANCE OF 20% OF THE VEHICLE EXPENSES, TELEPHONE EXPENSES AND DEPRECIATION ON CAR; AND 10% OF TRAVELLING EXPENSES CONSIDERING THE FACT THAT PERSONAL USE OF THESE ASS ETS/FACILITIES CANNOT BE RULED OUT. 3.1 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD AND WE DO NOT FIND ANY INFIRMITY IN THE O RDER OF LD CIT(A) WHERE HE HAS CONFIRMED THE DISALLOWANCE ON ACCOUNT OF PERSON AL USAGE OF ASSETS/FACILITIES. THE GROUND NO. 4-7 ARE THUS DISM ISSED. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 539/JP/15 SHRI PRADEEP POKRA, BUNDI VS. ACIT, CIRCLE-1, KOTA 5 ORDER PRONOUNCED IN THE OPEN COURT ON 02/11 /2016. SD/- SD/- ( KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 02/11/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI PRADEEP POKRA, BUNDI 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE-1, KOTA 3. VK;DJ VK;QDR@ CIT KOTA 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-KOTA 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.539 /JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR