THE DY CIT CIR 18(1), MUMBAI V. MRS. TEJASWINI T. RAUL, MUMBAI

ITA 5775/MUM/2007

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 5055 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2010
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: J
• Next Hearing Date: 18-08-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 06-09-2007
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SUMIT KUMAR
• Assessee Lawyers: REEPAL TRALSHAWALA
• Keywords: Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI R.S.SYAL, AM AND SHRI V.DURGA RAO, JM ITA NO.5775/MUM/2007 : ASST.YEAR 2003-2004 DY.COMMISSIONER OF INCOME-TAX CIRCLE 18(1) MUMBAI. VS. MRS.TEJASWINI T.RAUL 2, MATRUCHAYA 304 VEER SAVARKAR ROAD, DADAR (WEST) MUMBAI 400 028. PA NO.AACPR2892R. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUMIT KUMAR RESPONDENT BY : SHRI REEPAL TRALSHAWALA O R D E R PER R.S.SYAL (AM) : THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON 01.06.2007 IN RELATION TO THE ASSESSMENT YEAR 2003-2004. 2. GROUND NO.1 IS AGAINST THE DELETION OF ADDITION OF RS.12,00,000 MADE BY THE ASSESSING OFFICER. BRIEFLY STATED THE FACTS OF THIS GROUND ARE THAT THE ASSESSEE WAS ENGAGED IN THE BUSINESS OF CLEARING, FORWARDING AND ACTING AS SHIPPING AGENT. A SURVEY ACTION WAS TAKEN AGAINST THE ASSESSEE ON 07. 03.2005. STATEMENT OF THE ASSESSEE WAS RECORDED IN WHICH SHE ADMITTED THAT CO MMISSION PAID TO SHRI P.K.B.KURUP AND M/S.VORA INTERNATIONAL WAS NOT PROP ERLY SUBSTANTIATED WITH DOCUMENTARY EVIDENCE. THE ASSESSEE CLAIMED DEDUCTIO N ON ACCOUNT OF MARKETING COMMISSION OF RS.35,49,149 IN THIS YEAR WHICH CONSI STED OF RS.6 LAKHS EACH PAID BY THE ASSESSEE TO THE ABOVE REFERRED TWO PARTIES. THE ASSESSING OFFICER MADE ADDITION INTER ALIA FOR THESE RS.12 LAKHS. HOWEVER, THE LEARNED CIT(A) DELETED THE SAID ADDITION. ITA NO.5775/MUM/2007 MRS.TEJASWINI T.RAUL. 2 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD. PAGE NO.25 ONWARDS IS THE COPY OF STATEMENT OF THE ASSESSEE RECORDED BY THE SURVEY PARTY ON 07.03.2005. IN RESPONSE TO QUESTION NO.4 THE ASSESSEE NAMED THE PARTIES TO WHOM SHE HAD PAID COMMISSION. THIS LIST IS FOR A TOTAL SUM OF RS.28.50 LAKHS COMPRISING OF COMMISSION PAID TO THE ABOVE RE FERRED TWO PARTIES AT RS.6 LAKHS EACH IN THE PREVIOUS YEAR RELEVANT TO THE ASS ESSMENT YEAR UNDER CONSIDERATION AND RS.9 LAKHS (RS.8 + RS.1 LAKH) PAID TO THEM IN A SSESSMENT YEAR 2004-2005. THE ASSESSEE AGREED TO SURRENDER THE SAID SUM OF RS.28. 50 LAKHS ALONG WITH CERTAIN AMOUNTS WHICH HAVE BEEN DISCUSSED IN SUBSEQUENT REL EVANT QUESTIONS, FOR TAXATION AS CURRENT INCOME. ALL THESE AMOUNTS WHICH ASSESSEE AGREED TO SURRENDER TOTALED AT RS.55 LAKHS. SINCE THE SURVEY WAS CARRIED OUT ON 07 .03.2005 RELEVANT TO THE ASSESSMENT YEAR 2005-2006, THE ASSESSEE UNDERTOOK TO SURRENDER SUCH SUM OF RS.55 LAKHS. COPY OF THE ASSESSMENT ORDER FOR ASSES SMENT YEAR 2005-2006 HAS BEEN MADE AVAILABLE AT PAGES 51 TO 53 OF THE PAPER BOOK, FROM WHICH IT TRANSPIRES THAT THE ASSESSEE DID NOT INCLUDE THE SAID SUM OF RS.55 LAKHS IN THE RETURN VOLUNTARILY FILED BUT THE ASSESSING OFFICER MADE ADDITION FOR T HE SAID SUM. TO A POINTED QUERY THE LEARNED A.R. HAS MADE A STATEMENT AT BAR THAT T HE SAID SUM OF RS.55 LAKHS ADDED IN THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2005-20 06 HAS BEEN ACCEPTED BY THE ASSESSEE AND NO FURTHER APPEAL IS FILED AGAINST SUC H ASSESSMENT ORDER. IN VIEW OF THESE FACTS IT BECOMES APPARENT THAT THE COMMISSION OF RS.12 LAKHS CLAIMED AS DEDUCTION BY THE ASSESSEE IN THE ASSESSMENT YEAR UN DER CONSIDERATION TOWARDS COMMISSION PAID TO ABOVE NOTED TWO PARTIES HAS BEE N TAXED BY THE REVENUE AUTHORITIES IN ASSESSMENT YEAR 2005-2006. IF THE SA ME ADDITION IS AGAIN MADE IN THE ASSESSMENT YEAR UNDER CONSIDERATION IT WOULD AMOUNT TO DOUBLE TAXATION OF THE SAME INCOME. IN VIEW OF THESE FACTS WE ARE SATISFIE D THAT THE IMPUGNED ORDER DOES NOT WARRANT ANY INTERFERENCE ON THIS GROUND. THIS G ROUND FAILS. 4. GROUND NO.2 IS AGAINST DELETION OF DISALLOWANCE OF RS.2,07,870 MADE ON ACCOUNT BAD DEBT. THE ASSESSEE CLAIMED BAD DEBT OF RS.2.07 LAKHS. DETAIL OF SUCH ITA NO.5775/MUM/2007 MRS.TEJASWINI T.RAUL. 3 BAD DEBT WRITTEN OFF WAS FURNISHED TO THE ASSESSING OFFICER. HOWEVER, THE ASSESSING OFFICER CHOSE TO MAKE THE ADDITION ON THE GROUND THAT THE ASSESSEE HAD NOT ESTABLISHED WITH SUPPORTING EVIDENCE AS TO HOW THE DEBT BECAME BAD. THE LEARNED CIT(A) PREFERRED TO DELETE THE SAID ADDITIO N. 5. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSIN G THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THIS ISSUE IS NO MORE RES INTE GRA IN VIEW OF SEVERAL JUDGMENTS INCLUDING THAT OF THE HONBLE SUPREME COURT IN - T.R.F. LTD. VS. CIT (2010) 323 ITR 397 (SC), IN WHICH IT HAS BEEN HELD THAT AFTER 1.4.1989, THE ASSESSEE IS NOT REQUIRED TO ESTABLISH THAT DEBT BECOME BAD IN THE P REVIOUS YEAR AND HENCE DEDUCTIONS U/S 36(1)(VII) IS ALLOWABLE ON SIMPLE W RITE OFF. SIMILAR VIEW HAS BEEN TAKEN IN CIT VS. STAR CHEMICALS (BOM) P. LTD. (200 9) 313 ITR 126 (BOM) . WE, THEREFORE, APPROVE THE VIEW TAKEN BY THE LD. CIT(A) ON THIS ISSUE. THIS GROUND FAILS. 6. GROUND NO.3 IS AGAINST THE DELETION OF ADDITION OF RS.1,00,000 ON ACCOUNT OF CUSTOM HOUSE EXPENSES. THE FACTS APROPOS THIS GROUN D ARE THAT THE ASSESSEE CLAIMED CUSTOM HOUSE EXPENSES AMOUNTING TO RS.17,90,555. TH E ASSESSEE WAS CALLED UPON TO FURNISH THE EVIDENCE IN SUPPORT OF SUCH EXPENSES . THE ASSESSEE SUBMITTED REPLY VIDE HER LETTER DATED 20.03.2003, WHICH HAS BEEN R EPRODUCED ON PAGE 4 OF THE ASSESSMENT ORDER STATING THAT THERE WAS STANDARD PR ACTICE IN CUSTOM CLEARING BUSINESS FOR GIVING IMPREST CASH TO CUSTOMS AND DOC KS STAFF TOWARDS INCIDENTAL EXPENSES FOR CLEARANCE AND DELIVERY OF THE JOB. NOT CONVINCED WITH THE ASSESSEES EXPLANATION AND FURTHER THE FAILURE TO PRODUCE ANY DOCUMENTARY EVIDENCE IN FORM OF BILLS AND VOUCHERS IN SUPPORT OF THESE EXPENSES, TH E ASSESSING OFFICER MADE DISALLOWANCE AT RS.1 LAKH. THE LEARNED CIT(A), IN T HE FIRST APPEAL, REDUCED THIS ADDITION TO RS.25,000 THEREBY ALLOWING RELIEF OF RS .75,000. ITA NO.5775/MUM/2007 MRS.TEJASWINI T.RAUL. 4 7. WE HAVE HEARD BOTH SIDES AND PERUSED THE RELEVAN T MATERIAL ON RECORD. THE GROUND HAS BEEN WRONGLY DRAFTED ASSAILING ADDITION OF RS.1 LAKH WHEREAS ACTUALLY THE RELIEF HAS BEEN ALLOWED TO THE EXTENT OF RS.75, 000 ONLY. BOTH THE PARTIES AGREED THAT THE GROUND BE CONSIDERED AS REVISED TO THAT EX TENT. IT IS NOTICED THAT THE ASSESSING OFFICER MADE ADDITION OF RS.1 LAKH ON THE GROUND THAT THE ASSESSEE COULD NOT SUBSTANTIATE THE CLAIM OF EXPENSES BY WAY OF DO CUMENTARY EVIDENCE IN THE FORM OF BILLS AND VOUCHERS. NO SUCH EVIDENCE HAS BEEN FI LED BEFORE US AS WELL. IN VIEW OF THESE FACTS IT BECOMES APPARENT THAT RESTRICTING AD DITION TO RS.25,000 OUT OF ALREADY A VERY REASONABLE DISALLOWANCE OF RS.1 LAKH, WAS NO T JUSTIFIED AT THE END OF THE LEARNED FIRST APPELLATE AUTHORITY. OVERTURNING THE IMPUGNED ORDER ON THIS ISSUE WE RESTORE THE ACTION OF THE ASSESSING OFFICER. THIS G ROUND IS ALLOWED AND THE ADDITION OF RS.1 LAKH IS SUSTAINED. 8. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF AUGUST, 2010. SD/- SD/- ( V. DURGA RAO ) ( R.S.SYAL ) JUDICIAL MEMBER ACC OUNTANT MEMBER MUMBAI : 25 TH AUGUST, 2010. DEVDAS* ITA NO.5775/MUM/2007 MRS.TEJASWINI T.RAUL. 5 COPY TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT CONCERNED 4. THE CIT(A) - XVIII, MUMBAI. 5. THE DR/ITAT, MUMBAI. 6. GUARD FILE. TRUE COPY. BY ORDER ASSISTANT REGISTRAR, ITAT, MUMBAI.