ANITA L GHADGE, MUMBAI V. DCIT 21(3), MUMBAI

ITA 5960/MUM/2014

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0833 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 23-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATISH CHANDRA RAJORE
• Section: 271(1)(c)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI C.N. PRASAD, HON'BLE JUDICIAL MEMBER AND SHRI N.K. PRADHAN , HON'BLE ACCOUNTANT MEMBER ITA NO. 5959 & 5960 /MUM/201 4 (A.Y: 2007 - 08 & 2008 - 09 ) SHRI ANITA L. GHADGE 33/D, KAMNAG NAGAR, SWAPNAPURTI, KURLA (E) MUMBAI 400 024 PAN: AFQPG 3328 A V. D.C.I.T. CIRCLE 21(3) MUMBAI (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MANI JAIN DEPARTMENT BY : SHRI SATISHCHANDRA RAJ ORE DATE OF HEARING : 31.10.2018 DATE OF PRONOUNCEMENT : 30 .11 .2018 O R D E R PER C. N. PRASAD (JM) 1. THESE TWO APPEALS ARE FILED BY THE ASSESSEE AGAINST THE SEPARATE ORDERS OF THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) - 32, MUMBAI [HEREINAFTER IN SHORT LD.CIT(A)] DATED 01.11.2012 FOR THE ASSESSMENT YEARS 2007 - 08 & 2008 - 09 RESPECTIVELY. 2. BRIEFLY STATED THE FACTS ARE THAT, ASSESSEE IS ENGAGED IN THE BUSINESS OF EARNING COMMISSION INCOME ON PROVIDING SERVICES TO M/S. TWINKLE ENVIRO - TECH (P.) LTD. , THE M/S. TWINKLE ENVIRO - TECH (P.) LTD. IS ENGAGED 2 ITA NO.5959 & 5960/MUM/2014 SHRI ANITA L. GHADGE IN THE BUSINESS OF SELLING HOLIDAY S ON TIME SHARE BASIS AND IT LAUNCHES VARIOUS SCHEMES WITH DIFFERENT SPECIFICATIONS AND SCHEMES SOLD TO CUSTOMERS THROUGH AGENTS. ASSESSEE IS ONE OF THE AGENT TO THE COMPANY. ASSESSEE BRINGS BUSINESS TO M/S. TWINKLE ENVIRO - TECH (P.) LTD. AND IN TURN RECEIVES COMMISSION FROM THE COMPANY. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOT ICED THAT ASSESSEE EARNED COMMISSION OF .1.95 CRORES FROM THE SAID COMPANY AND ALSO INCURRED EXPENSES OF .1.17 CRORES FOR EARNING SUCH COMMISSION. THE ASSESSING OFFICER DISALLOWED 70% OF COMMISSION AND 30% OF OTHER EXPENSES ON AN ESTIMATE BASIS FOR NOT MAINTAINING PROPER ACCOUNTS AND ACCORDING TO THE ASSESSING OFFICER ASSESSEE DID NOT PROVE AND ESTABLISH THE EXPENSE S FOR EARNING THE COMMISSION INCOME. THE LD. CIT(A) RESTRICTED THE ADHOC DISALLOWANCE TO 40% OF COMMISSION INCOME AND SUSTAINED THE 30% FROM OTHER EXPENSES. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS AND L EVIED PENALTY U/S. 271(1)(C) OF THE ACT WHICH WAS SUSTAINED BY THE LD. CIT(A). 3. BEFORE US, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS TO INCUR EXPENSES FOR SEMINARS ETC., TO PROMOTE THE BUSINESS OF M/S. TWINKLE ENVIRO - TECH (P.) LTD. AND FO R THAT PURPOSE ASSESSEE INCURS EXPENSES FOR VARIOUS SUB - AGENTS IN MOBILIZING THE CUSTOMERS FOR THE COMPANY WITHOUT WHICH ASSESSEE CANNOT EARN ANY 3 ITA NO.5959 & 5960/MUM/2014 SHRI ANITA L. GHADGE COMMISSION INCOME. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT IT IS ONLY AN ADHOC DISALLOWANCE MADE BY THE A SSESSING OFFICER WHICH WAS FURTHER REDUCED BY THE LD. CIT(A) FOR WANT OF PROPER ACCOUNTS AND THE EXPENSES CANNOT BE SAID TO HAVE BEEN INCURRED FOR NON - BUSINESS PURPOSE OF THE ASSESSEE AND THEREFORE, NOT ADMISSIBLE. THE COMMISSION COULD NOT HAVE BEEN EARNE D BY THE ASSESSEE WITHOUT INCURRING THESE EXPENSES . SINCE THE ASSESSING OFFICER MADE AN ADHOC DISALLOWANCE ON ESTIMATE BASIS WHICH WAS FURTHER REDUCED BY LD.CIT(A) THERE CANNOT BE ANY PEN ALTY U/S. 271(1)(C) OF THE ACT. 4. LD. DR VEHEMENTLY SUPPORTED THE ORD ERS OF THE ASSESSING OFFICER. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED THE ORDERS OF THE AUTHORITIES BELOW. ON A PERUSAL OF T HE ASSESSMENT ORDER AND THE LD. CIT(A) ORDER, WE FIND THAT THE ASSESSING OFFICER DISALLOWED THE COMMISSION AS WELL AS THE EXPEN SES ON AN ESTIMATE BASIS WHICH WAS FURTHER REDUCED BY THE LD.CIT(A). NONE OF THE AUTHORITIES BELOW HAVE CONCLUSIVELY PROVED THAT THERE IS NEITHER CONCEALMENT OF INCOME NOR FURNISHING OF INACCURATE PARTICULARS BY THE ASSESSEE . IT IS ONLY A MERE DISALLOWAN CE OF EXPENSES ON ESTIMATES ON AN ADHOC BASIS. PENALTY U/S. 271(1)(C) OF THE ACT IS NOT ATTRACTED WHEN THERE IS AN ADHOC ESTIMATION OF DISALLOWANCE O F EXPENSES. HENCE, WE DIRECT THE ASSESSING OFFICER TO DELETE THE PENALTY LEVIED U/S. 271(1)(C) OF THE ACT. THIS GROUND IS ALLOWED. 4 ITA NO.5959 & 5960/MUM/2014 SHRI ANITA L. GHADGE 6. ASSESSEE RAISED ADDITIONAL GROUND S OF APPEAL FOR BOTH THE ASSESSMENT YEARS WHICH READ AS UNDER: - (I) ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW, THE NOTICE ISSUED UNDER SECTION 274 READ WITH SECTION 271(1)(C) BY THE LD. ASSESSING OFFICER IN A MECHANICAL MANNER WITHOUT RECORDING ANY SATISFACTION IS BAD IN LAW AND THE CONSEQUENTIAL PE NALTY ORDER PASSED UNDER SECTION 271(1)(C) OF THE ACT IS BAD IN LAW AND NOT SUSTAINABLE IN THE EYES OF LAW. 7. HOWEVER, SINCE WE HAVE DECIDED THE ISSUE AND DELETED THE PENALTY ON MERITS, WE ARE NOT INCLINED TO GO INTO THE ADDITIONAL GROUNDS RAISED BY THE ASS ESSEE . 8. IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 30 TH NOVEMBER , 2018 SD/ - SD/ - ( N.K. PRADHAN ) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI / DATED 30 / 11 / 2018 GIRIDHAR , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY// BY ORDER (ASSTT. REGISTRAR) ITAT, MUM