PEACEFORT CHEM-IND. ENGG. P.LTD, MUMBAI V. DCIT 10(3), MUMBAI

ITA 5760/MUM/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8489 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL LD
• Assessee Lawyers: MANDAR VAIDYALD
• Keywords: Onus to prove
• Section: 143(3); 37

Judgement Text

ITA.NO.5760/MUM/2015 PEACEFORT CHEM INDIA PRIVATE LIMITED ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI , , BEFORE SHRI MAHAVIR SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM ./I.T.A. NO.5760/MUM/2015 ( / ASSESSMENT YEAR: 2011-12) PEACEFORT CHEM INDIA PRIVATE LIMITED (CIN : U74999MH1971PTC015360) 104, SUMERKENDRA PANDURANG BUDHKAR MARG WORLI , MUMBAI - 40 0 018 / VS. DEPUTY COMMISSIONER OF INCOME TAX 10(3) AAYKAR BHAWAN MUMBAI ./ ./PAN/GIR NO. : AABCP-7161-P ( /APPELLANT ) : ( !' / RESPONDENT ) A SSESSEE BY : MANDAR VAIDYA, LD. AR RE VENUE BY : RAJAT MITTAL, LD. DR / DATE OF HEARING : 10/10/2017 / DATE OF PRONOUNCEMENT : 08/11 /2017 / O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. THE CAPTIONED APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 ASSAILS THE ORDER OF THE LD. COMMISSIONER O F INCOME-TAX (APPEALS)-24 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-22/DCIT-10(3)/IT- 343/2013-14 DATED 16/02/2015. THE ASSESSMENT FOR IMPUGNED AY WAS ITA.NO.5760/MUM/2015 PEACEFORT CHEM INDIA PRIVATE LIMITED ASSESSMENT YEAR-2011-12 2 FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-10(3), MUMBAI [AO] U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 19/02/201 4. THE SOLITARY ISSUE INVOLVED IN THE APPEAL IS ADDITION OF COMMISSION EX PENDITURE FOR RS.27,16,364/-. 2. THE REGISTRY HAS NOTED THAT THE APPEAL HAS BEEN FIL ED WITH A DELAY OF 237 DAYS AND THE ASSESSEE VIDE CONDONATION PETIT ION DATED 29/09/2017 ALONG WITH AFFIDAVIT OF THE DIRECTOR OF THE ASSESSEE COMPANY HAS PLEADED FOR CONDONATION OF DELAY. THE DELAY HAS BEEN ATTRIBUTED TO THE ONGOING LITIGATION BEING FACED BY THE CONCERNED DIRECTOR OF THE ASSESSEE COMPANY WHO WAS HANDLING TAX MATTERS ON BE HALF OF THE COMPANY. UPON PERUSAL OF THE SAME, PRIMA FACIE, WE FIND STRENGTH IN THE SAME AND THEREFORE, IN TERMS OF RATIO OF DECISION O F HONBLE APEX COURT RENDERED IN MST. KATIJI 167 ITR 471 , WE CONDONE THE DELAY AND TAKE UP THE APPEAL ON MERITS. 3. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- 1. THE LD. CIT(APPEALS) ERRED IN HOLDING THAT COMM ISSION EXPENDITURE OF AN AMOUNT OF RS.27,16,364/- IS NOT ALLOWABLE AS DEDUCT ION ON THE GROUND THAT THE APPELLANT/ASSESSE FAILED TO PROVE THE EXACT NATURE OF THE SERVICES RENDERED BY THE RECIPIENTS. 2. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE APP ELLANT/ASSESSE HAD DEDUCTED TAX AT SOURCE WHILE MAKING THE PAYMENT OF COMMISSION AN D CONFIRMATIONS WERE GIVEN BY THE RECIPIENTS. 3. THE LD. CIT(A) ERRED IN NOT CONSIDERING THE FACT S THAT THE RECIPIENTS HAD FILED THEIR RESPECTIVE RETURNS AND OFFERED FOR TAX, THE A MOUNTS OF COMMISSION RECEIVED FROM THE APPELLANT/ASSESSE. 4.1 FACTS LEADING TO THE SAME ARE THAT THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE ENGAGED IN THE BUSINESS OF TRADING OF IRON PLATES WAS ASSESSED FOR IMPUGNED AY U/S 143(3) ON 19/02/20 14 AT RS.2,84,91,370/- AS AGAINST RETURNED INCOME OF RS.2 ,30,16,040/- E-FILED BY THE ASSESSEE ON 23/09/2011. THE ASSESSE HAS SUFF ERED DISALLOWANCE ITA.NO.5760/MUM/2015 PEACEFORT CHEM INDIA PRIVATE LIMITED ASSESSMENT YEAR-2011-12 3 OF BROKERAGE & COMMISSION FOR RS.37,72,164/- AND THE SAME IS THE SOLE SUBJECT MATTER OF THIS APPEAL. 4.2 DURING ASSESSMENT PROCEEDINGS, IT WAS NOTED THA T THE ASSESSEE DEBITED AN AMOUNT OF RS.42,14,118/- AS BROKERAGE & COMMISSION EXPENSES IN THE PROFIT & LOSS ACCOUNT . THE LD. AO NOTED THAT THE ASSESSEE FAILED TO PROVIDE THE REQUISITE DETAILS IN THE PRESCRIBED FORMAT. FURTHER, COMMISSION PAYMENTS AGGREGATING TO RS.27,1 6,364/- WERE ACCOUNTED TOWARDS THE END OF THE YEAR AND FEW COMMI SSIONS WERE PAID IN ROUND FIGURES WHICH AGGREGATED TO RS.10,55,800/- . THE LD. AO ALSO NOTED THAT THE ASSESSEE FAILED TO PROVIDE THE SALES DETAILS ON WHICH BROKERAGE WAS PAID. FINALLY, THE COMMISSION AGGREGA TING TO RS.37,72,164/- WAS DISALLOWED WHICH COMPRISED OF CO MMISSION OF RS.27,16,364/- PAID TOWARDS YEAR END AND AN AMOUNT OF RS.10,55,800/- BEING COMMISSION PAID IN ROUND FIGURES. 5. AGGRIEVED, THE ASSESSEE CONTESTED THE SAME WITH PARTIAL SUCCESS BEFORE LD. CIT(A) VIDE IMPUGNED ORDER DATED 16/02/2 015 WHERE THE ASSESSEE CONTENDED THAT DUE TAX AT SOURCE WAS DEDUC TED FROM THE COMMISSION PAYMENTS AND ALSO DREW ATTENTION TO THE FACT THAT THE COMMISSION FIGURES OF RS.10,55,800/- HAS BEEN ADDED TWICE ERRONEOUSLY BY LD. AO. THE LD. CIT(A) NOTED THAT THE ASSESSEE C OULD FILE ONLY DEBIT NOTES RAISED AGAINST THE COMMISSION PAYMENT AND COULD NO T POINT OUT THE NATURE OF SERVICES BEING RENDERED BY THE AGENTS AND THEREFORE, FAILED TO DISCHARGE THE BURDEN OF PROVING THE GENUINENESS OF THE COMMISSION PAYMENTS. HOWEVER, THE LD. CIT(A) AGREED WITH THE C OMPUTATIONAL ERROR BEING MADE BY LD. AO AND RESTRICTED THE IMPUGNED AD DITIONS TO RS.27,16,364/-. AGGRIEVED, THE ASSESSEE IS IN FURTH ER APPEAL BEFORE US. ITA.NO.5760/MUM/2015 PEACEFORT CHEM INDIA PRIVATE LIMITED ASSESSMENT YEAR-2011-12 4 6. THE LD. COUNSEL FOR ASSESSEE [AR], WHILE DRAWING OUR ATTENTION TO THE PAPER-BOOK, CONTENDED THAT THE ASSESSEE PROCURED ORDERS FROM CUSTOMERS THROUGH AGENTS AND PAID COMMISSION TO THE M. FURTHER, THE ASSESSEE HAS DEDUCTED DUE TAX AT SOURCE AGAINST IMP UGNED PAYMENTS AND THE SAME ARE DULY REFLECTED BY THE RESPECTIVE P AYEES IN THEIR RETURN OF INCOME AND HENCE, DISALLOWANCE WAS NOT JUSTIFIED . PER CONTRA , LD. DEPARTMENTAL REPRESENTATIVE [DR] DREW ATTENTION TO THE FACT THAT THE ASSESSEE COULD NOT PROVE FACTUM OF RECEIPT OF ANY SERVICES FROM THE PAYEES SINCE NO CONFIRMATION IN THIS REGARD COULD E VER BE FILED BY THE ASSESSEE AND THEREFORE, THE IMPUGNED DISALLOWANCE W AS JUSTIFIED. 7. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD. WE FIND THAT THE PRIME CONDITIO N OF CLAIMING AN EXPENDITURE AS PER SECTION 37 IS THAT THE EXPENDITU RE HAS BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF ASSESSEE S BUSINESS. THE ONUS TO PROVE THE RECEIPT OF SERVICES FROM THE COMMISSIO N AGENT WAS SQUARELY ON THE ASSESSEE. 8. ON GOING THROUGH DOCUMENTS PLACED IN THE PAPER-BOOK, WE FIND THAT AS EVIDENT FROM PAGE NO. 69 , THE ASSESSEE HAS PAID IMPUGNED COMMISSION TO SEVEN PARTIES. THE COMMISSION HAS BEE N PAID AT UNIFORM RATE OF 2%. PRIMA FACIE, DUE TAX HAS BEEN DEDUCTED FROM THE SAID PAYMENTS AS EVIDENT FROM DETAILS AND COPIES OF FORM 16 PLACED ON RECORD. THE ASSESSEE HAS ALSO PLACED DETAILS OF COM MISSION PAID TO AN ENTITY NAMELY VICHARA ENTERPRISES ON PAGE NOS. 83 TO 88 OF THE PAPER- BOOK WHICH INTER-ALIA, CONTAINS DETAILS OF BILLS AGAINST WHICH COMMISSION HAS BEEN PAID BUT NO SUCH DETAILS ARE AVAILABLE ON RECORD IN RESPECT OF OTHER PARTIES. AS RIGHTLY POINTED OUT BY LOWER AUTH ORITIES, THE ONUS TO ITA.NO.5760/MUM/2015 PEACEFORT CHEM INDIA PRIVATE LIMITED ASSESSMENT YEAR-2011-12 5 PROVE THE FACTUM OF RECEIPT OF SERVICES HAS NOT BEEN DISCHARGED BY T HE ASSESSEE WHICH WAS THE PRIMARY CONDITION TO CLAIM D EDUCTION U/S 37. HENCE, ON THE FACTS OF THE CASE, WE DEEM IT FIT TO PROVIDE ANOTHER OPPORTUNITY TO THE ASSESSEE AND HENCE, RESTORE THE MATTER BACK TO THE FILE OF LD. AO FOR THE LIMITED PURPOSE OF VERIFYING ASSESSEES CLAIM IN THIS REGARD AND DECIDE AS PER LAW. THE ASSESSEE, IN TURN , IS DIRECTED TO DEMONSTRATE FULFILLMENT OF CONDITIONS AS ENUMERATED IN SECTION 37 TOWARDS HIS CLAIM. 9. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 08 TH NOVEMBER, 2017. SD/- SD/- (MAHAVIR SINGH) (MAN OJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; DATED : 08.11 .2017 SR.PS:- THIRUMALESH ! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) ( ) / THE CIT(A) 4. ) / CIT CONCERNED 5. !$, , , , / DR, ITAT, MUMBAI 6. -. / GUARD FILE / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI