Ropar Distt. Cooperative Milk Producers Union Ltd., Mohali V. DCIT, Mohali

ITA 624/CHANDI/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6939 (ITAT-CHANDIGARH)
• Duration Of Justice: 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Opportunity of being heard; Initiation of penalty proceedings
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH B BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO 624/CHD/2017 ASSESSMENT YEARS: 2010-11 ROPAR DISTT. COOPERATIVE MILK VS. THE DCIT, CIRCL E 6(1), PRODUCERS UNION LTD., MOHALI MILK PLANT, MOHALI PAN NO. AAAAT5977G (APPELLANT) (RESPONDENT) APPELLANT BY : SH. M.R. SHARMA RESPONDENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 18.08.2017 DATE OF PRONOUNCEMENT : 28.08.2017 ORDER PER DR. B.R.R. KUMAR, AM: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2 , DT. 25/01/2017. 2. ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROU NDS OF APPEAL : 1. THAT THE ORDER OF THE ASSESSING OFFICER AS UPHELD B Y THE CIT(A) IS BAD IN LAW AND IS AGAINST ALL THE CANNONS OF LAW AN D JUSTICE. 2. THAT THE ORDER OF THE ASSESSING OFFICER IMPOSING PE NALTY UNDER SECTION 271(1)(C) AMOUNTING TO RS. 84,17,314/- AND THE ORDER OF LEARNED CIT(A)-2 CHANDIGARH DISMISSING THE APPEAL M ORE SO WHEN THE ORDER ON THE QUANTUM IS NOT IN EXISTENCE A S ADMITTED BY THE CIT(A) WHILE PASSING THE ORDER APPEALED AGAI NST WHICH IS CONTRARY TO THE JUDICIAL DECISIONS AND THUS IS BAD IN LAW AND NEEDS TO BE SET ASIDE. 2 3. BRIEF FACTS OF THE CASE ARE THAT DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, ON PERUSAL OF SCHEDULE 25 (FINANCIAL E XPENSES) OF THE P&L ACCOUNT OF THE ASSESSEE, ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAS DEBITED EXPENSES UNDER THE HEAD OF 'COMMISSION PAID TO OTHER UNIONS''. WHICH WERE DISALLOWED AND BROUGH T TO TAXATION. DURING THE APPELLATE PROCEEDINGS THE DISALLOWANCE M ADE ON ACCOUNT OF COMMISSION PAYMENTS TO MILK UNIONS WERE CONFIRMED BY THE LD. CIT(A) IN APPEAL NO. 184/13-14 VIDE ORDER D ATED 15.10.2014. 4. BEFORE US THE LD. AR SUBMITTED THE ORDER OF THE ITAT FOR THE AY 2010-11. THE COORDINATE BENCH OF ITAT, CHANDIGARH I N ITA NO. 1127/CHD/2014 DT. 23/05/2016 HELD THAT THE ASSESSING OFFICER HAS ALSO POINTED OUT TH AT AS PER THE ORDER OF ADDITIONAL M.D., MILK FED., THE ASSESSEE WAS NOT SUPPOSED TO MAKE COMMISSION PAYMEN T TO MP, CHANDIGARH, EXCEPT THE PAYMENT OF TRADEMARK EXPENSES, BUT STILL HUGE COMMISSION WAS PAID TO THE SAID PARTY. THE ASSESSING OFFICER HAS CATEGORICALLY OBS ERVED THAT THE MILK FED. HAS NOT PROVIDED ANY INFORMATION TO HIM. THE ASSESSING OFFICER HAS ALSO OBSERVED THAT INSPITE OF REPEATED REMINDERS AND REQUESTS, THE INFORMATION SOUGHT FROM MILK FED. WAS NOT FURNISHED . THE ONLY PLEA TAKEN BY THE LEARNED COUNSEL FOR THE ASSE SSEE IS THAT TDS HAS BEEN DEDUCTED AND THE ABOVE PARTIES HAVE SHOWN THE COMMISSION INCOME. ALTERNATIVELY, T HE LOWER AUTHORITIES SUBMITTED THAT THE AUTHORITIES BE LOW HAVE NOT GIVEN SUFFICIENT OPPORTUNITY TO THE ASSESS EE TO EXPLAIN THE EXACT NATURE OF ITS CLAIM. ACCORDING T O HIM, THE ASSESSEE HAD SUFFICIENT EVIDENCE TO PROVE THAT THE EXPENDITURE CLAIMED BY IT HAD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR ITS BUSINESS PURPOSES. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE THINK IT APPROPRIATE TO SET ASIDE THE FINDINGS OF T HE LEARNED CIT (APPEALS) ON THIS ISSUE AND REMAND THE MATTER TO THE ASSESSING OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFT ER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. IT IS ALSO MADE CLEAR THAT THE ASSESSEE IS FREE TO PRODUCE RELEVANT EVIDENCE IN SU PPORT OF ITS CLAIM. WE MAY ALSO ADD HERE THAT THE PLEA T AKEN BY THE ASSESSEE THAT TDS HAS BEEN DEDUCTED ON THE DISPUTED PAYMENTS, IS OF NO CONSEQUENCE, SINCE DEDUCTION OF TAX AT SOURCE OF ANY AMOUNT DOES NOT NECESSARILY ENABLE THE ASSESSEE TO CLAIM THAT AMOUN T AS EXPENDITURE. AS WE HAVE ALREADY OBSERVED HEREINABO VE THAT UNDER SECTION 37(1) OF THE ACT ONUS IS ON THE ASSESSEE, CLAIMING SUCH DEDUCTION TO ESTABLISH THAT SUCH PAYMENTS WERE MADE FOR SERVICES RENDERED. THE MERE DEDUCTION OF TDS IS NOT SUFFICIENT TO PROVE THAT TH E AMOUNT IN QUESTION WAS INCURRED WHOLLY AND EXCLUSIV ELY FOR THE BUSINESS PURPOSES. WE DIRECT THE ASSESSING OFFICER TO PASS A SPEAKING ORDER IN ACCORDANCE WITH LAW. 3 5. SINCE THE ASSESSING OFFICER AND THE LD. CIT(A) H ELD THAT THE ASSESSEE FAILED TO DISCHARGE ITS OBLIGATION TO SUBSTANTIATE ITS CLAIM, THE MATTER WAS REMANDED BACK TO THE ASSESSIN G OFFICER WITH A DIRECTION TO DECIDE THE ISSUE AFRESH IN ACCO RDANCE WITH LAW, AFTER AFFORDING DUE AND REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. SINCE THE QUANTUM ADDITION HAS BEEN SET ASIDE, THE PENALTY LEVIED WOULD NOT SURVIVE IN THE EYES OF THE LAW. HO WEVER IF THE ASSESSING OFFICER AFTER EXAMINATION OF THE ISSUE IN SET ASIDE PROCEEDINGS COMES TO A CONCLUSION THAT IT IS A FIT CASE FOR INITIATION OF PENALTY PROCEEDINGS ALSO THE ASSESSIN G OFFICER WOULD BE AT LIBERTY TO INITIATE PENALTY PROCEEDING AFRESH. 6. IN THE RESULT, THE PENALTY LEVIED BY THE ASSESSI NG OFFICER STANDS DELETED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/08/2017. SD/- SD/- (SANJAY GARG) (DR.B.R.R.KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28.08.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR