KUMUD K . SHROFF, MUMBAI V. ITO 17(3)(2), MUMBAI

ITA 6414/MUM/2013

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 2051 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 1998-1999
• Appeal Filed On: 31-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAGHUVEER MADNAPPA
• Assessee Lawyers: K G MURALI
• Keywords: Wrong claim
• Section: 143(3)

Judgement Text

, , , , A AA A IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH A, MUMBAI !, ' #$ % % % % &&, ' #$ ( BEFORE SHRI RAJENDRA, ACCOUNTANT MEMBER AND SHRI SANJAY GARG, JUDICIAL MEMBER ./ ITA NO.6414/M/2013 ( '+ , '+ , '+ , '+ , / ASSESSMENT YEAR: 1998-99) SMT. KUMUD K. SHROFF, C/O. M/S. CHARAK PHARMACEUTICALS, 2 ND FLOOR, EVERGREEN INDUSTRIAL ESTATE, SHAKTI MILL LANE, DR. E. MOESS ROAD, MAHALAXMI, MUMBAI - 400011 PAN: AYOPS6159B + + + + / VS. I NCOME TAX OFFICER - 17(3)(2), PIRAMAL CHAMBERS, LALBAUG, MUMBAI ( -. / APPELLANT) ( /0-. /RESPONDENT) PRESENT FOR: ASSESSEE BY : SHRI K.G. MURALI, A.R. REVENUE BY : SHRI RAGHUVEER MADNAPPA, D.R. + 1 2' / DATE OF HEARING : 15.09.2015 34, 1 2' / DATE OF PRONOUNCEMENT : 11.12.2015 # 5 / O R D E R PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 29.08.2013 OF THE COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS THE CIT(A)] AGITATING THE CONFIRMATI ON OF PENALTY LEVIED BY THE ASSESSING OFFICER (HEREINAFTER REFERRED TO AS THE A O) UNDER SECTION 271(1)(C) OF THE ACT. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS IN THE BUSINESS OF DISTRIBUTOR OF PHARMACEUTICAL PRODUCTS. THE ADDITI ON TO THE INCOME OF THE ITA NO.6414/M/2013 SMT. KUMUD K. SHROFF 2 ASSESSEE WAS MADE BY THE AO FOR WANT OF CONFIRMATIO NS FROM THE RESPECTIVE PARTIES I.E. DISTRICT SALES AGENCIES (DSAS) ABOUT THE COMMISSION AND INCENTIVES PAID TO THEM. AGAINST THE ABOVE ADDITION MADE BY THE AO, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A), WHO VI DE ORDER DATED 23/03/2007 GRANTED CERTAIN RELIEFS AGAINST THE DISALLOWANCES M ADE ON ACCOUNT OF THE COMMISSION AND INCENTIVES PAID TO THE DSAS. THE AS SESSEE FURTHER CONTESTED THE MATTER BEFORE THE ITAT, MUMBAI AND THE ITAT VID E ORDER DATED 27/01/2010 CONFIRMED THE DISALLOWANCES MADE TO THE EXTENT OF RS.12,60,824/- IN RESPECT OF THE COMMISSION AND INCENTIVES TO DSA' S. THE ITAT FURTHER RESTORED THE MATTER BACK TO THE FILE OF THE AO FOR FRESH ADJUDICATION FOR VERIFICATION AND CONFIRMATION OF BALANCE AMOUNT OF COMMISSION PAID TO THE DSAS. IN COMPLIANCE OF THE ORDER OF THE ITAT, THE AO MADE FRESH ASSESSMENT DURING WHICH THE AO MADE CERTAIN DISALLOWANCES IN R ESPECT OF COMMISSION AND INCENTIVES PAID TO THE DSAS FOR WANT OF CONFIRMATI ON FROM THE RESPECTIVE PARTIES. HE ALSO INITIATED THE PENALTY PROCEEDINGS UNDER SECTION 271(1)(C) OF THE ACT AND LEVIED THE IMPUGNED PENALTY. THE LD. C IT(A) ALSO CONFIRMED THE PENALTY. BEING AGGRIEVED, THE ASSESSEE HAS COME IN APPEAL BEFORE US. 3. BEFORE US THE LD. A.R. OF THE ASSESSEE HAS SUBMI TTED THAT ALMOST 12 YEARS HAD PASSED FROM THE FINANCIAL YEAR IN WHICH T HE TRANSACTION HAD BEEN CARRIED OUT TILL THE ASSESSMENT PROCEEDINGS UNDER S ECTION 143(3) R.W.S. 256 OF THE ACT WERE CARRIED OUT BY THE AO. FURTHER, IT IS SUBMITTED THAT APPROX 90% OF THE TOTAL CONFIRMATION FOR THE AMOUNT OF THE COM MISSION PAID WAS SUBMITTED TO THE AO. HOWEVER, DUE TO THE LAPSE OF APPROX 12 YEARS FROM THE YEAR IN WHICH THE TRANSACTION HAD BEEN CARRIED OUT, THE ASS ESSEE WAS NOT ABLE TO SUBMIT THE REMAINING CONFIRMATIONS. FURTHER IT IS SUBMITT ED THAT ALL THE PAYMENTS WERE MADE THROUGH THE ACCOUNT PAYEE CHEQUES/ DEMAND DRAF TS AND THE BANK CONFIRMATIONS HAVE BEEN SUBMITTED DURING THE ASSESS MENT PROCEEDINGS. FURTHER IT IS SUBMITTED THAT TDS ON THE COMMISSION PAID HAD ALSO BEEN DEDUCTED FOR THE ITA NO.6414/M/2013 SMT. KUMUD K. SHROFF 3 SAID YEAR UNDER CONSIDERATION. FURTHER THERE HAS BE EN ALLOWANCE OF THE SAID COMMISSION PAID IN THE EARLIER AS WELL AS SUBSEQUEN T YEARS ASSESSMENT PROCEEDINGS. FURTHER IT IS SUBMITTED THAT IN THE M EANWHILE AND DURING THE LONG TENURE OF 12 YEARS THE BUSINESS OF THE ASSESSEE HAS CLOSED DOWN. HE, THEREFORE, HAS SUBMITTED THAT IT WAS DIFFICULT FOR THE ASSESSE E TO GET THE CONFIRMATION FROM THE PARTIES TO THE TRANSACTION MADE DURING THE YEAR UNDER CONSIDERATION. HOWEVER, THE ASSESSEE HAS PROVIDED MAJORITY OF THE CONFIRMATION AND OTHER DETAILS FROM THE PARTIES TO WHOM THE COMMISSION WAS PAID FOR THE YEAR UNDER CONSIDERATION. HE, THEREFORE, HAS SUBMITTED THAT I T IS NOT A CASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. THE LD. D.R., ON THE OTHER HAND, HAS RELIED UPON T HE FINDINGS OF THE LOWER AUTHORITIES. 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORDS. AFTER CONSIDERATION OF THE OVERALL FACTS A ND CIRCUMSTANCES OF THE CASE, WE ARE OF THE VIEW THAT THE PRESENT CASE IS NOT A C ASE OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR CONCEALMENT OF INCOME. TH E DISALLOWANCES IN QUESTION WERE MADE BECAUSE OF NON FURNISHING OF THE CONFIRMATIONS/EVIDENCES IN RESPECT OF COMMISSION AND INCENTIVES PAID TO THE MEDICAL REPRESENTATIVES/AGENCIES. THE TDS WAS DULY DEDUCTE D ON SUCH PAYMENTS AND DEPOSITED. A LONG TIME OF 12 YEARS HAS PASSED FROM THE DATE OF TRANSACTION. THE ASSESSEE HAD CONFIRMED THE MAJOR PART OF THE TR ANSACTIONS BUT DUE TO CERTAIN CIRCUMSTANCES HE COULD NOT PROVIDE THE CONF IRMATION IN RESPECT OF A FEW TRANSACTIONS. THE DISALLOWANCES HAVE BEEN MADE FOR LACK OF EVIDENCE AND NOT ON ACCOUNT OF FURNISHING OF INACCURATE PARTICULARS OF INCOME OR ON THE BASIS OF ANY DETECTION OF WRONG CLAIM. WE THEREFORE DO NOT FIND ANY JUSTIFICATION ON THE PART OF THE LOWER AUTHORITIES IN LEVYING THE PENALT Y UNDER SECTION 271(1)(C) OF THE ACT AND THE SAME IS THEREFORE ORDERED TO BE DEL ETED. ITA NO.6414/M/2013 SMT. KUMUD K. SHROFF 4 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS HER EBY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.12.2015. # 5 1 34, ' 6 7#+811.12.2015 4 1 & SD/- SD/- ( ! / RAJENDRA) ( && / SANJAY GARG) ' #$ / ACCOUNTANT MEMBER ' #$ / JUDICIAL MEMBER /MUMBAI ; 7#+ / DATED 11.12.2015 * KISHORE # 5 1 /'2HI J I,2 # 5 1 /'2HI J I,2 # 5 1 /'2HI J I,2 # 5 1 /'2HI J I,2/COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED COPY OF THE ORDER FORWARDED TO TOTO TO : :: : 1. -. / THE APPELLANT 2. /0-. / THE RESPONDENT. 3. [2 () / THE CIT(A)- 4. [2 / CIT 5. IA& /'2'+ , , / DR, ITAT, MUMBAI 6. &C D / GUARD FILE. # 5+ # 5+ # 5+ # 5+ / // / BY ORDER, 0I2 /'2 //TRUE COPY// I II I/ // /J J J J ( DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI / ITAT, MUMBAI