KANAYALAL T. PURSNANI, MUMBAI V. ITO 19(1)(1)), MUMBAI

ITA 6492/MUM/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 8114 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 02-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Keywords: Business expenditure; Opportunity of being heard
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A MUMBAI BEFORE SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO. 6492 /MUM/ 2014 ASSESSMENT YEAR: 2009 - 10 MR. KANAYALAL T. PURS NANI M/S JYOTI TRAVELS SHOP NO. 1, SWANEY NIWAS, 3 RD ROAD, KHAR (W) MUMBAI - 400052 VS. ITO - 19(1) 319, PIRAMAL CHAMBER LALBAUG MUMBAI - 400012. PAN NO. AABPP9188P APPELLANT RESPONDENT ASSESSEE BY : MR. SAMEER DALAL , AR REVENUE BY : MR. RAJESH KUMAR YADAV , DR DATE OF HEARING : 03/10/2017 DATE OF PRONOUNCEMENT : 14/12/2017 ORDER PER N.K. PRADHAN, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 2009 - 10 . THE APPEAL IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) - 30 , MUMBAI AND ARISES OUT OF THE ASSESSMENT COMPLETED U/S 143(3) OF THE INCOME TAX ACT 1961, (THE ACT). 2. THE FIRST ISSUE IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE ACTION OF THE ASSE SSING OFFICER (AO) WHEREIN HE HAS DISALLOWED COMMISSION OF THE BROKERAGE PAID TO THE FOLLOWING PARTIES: MR. KANAYALAL T. PURSNANI ITA NO. 6492/MUM/2014 2 A. M/S DREAM ESCAPE RS.1,25,484/ - B. M/S AMIGO TRAVELS RS.48,783/ - C. M/S METROLINES RS.7,75,400/ - D. M/S MARUTI AIR TRAVELS RS.59,028/ - E. MS. SHIVANI GHANDI RS.1,72,215/ - 2.1 THE LD. COUNSEL OF THE ASSESSEE SUBMITS BEFORE US THAT THE APPELLANT WOULD NOT PRESS THE GROUND OF APPEAL IN THE CASE OF MS. SHIVANI GANDHI. ACCORDINGLY, THE APPEAL IN RESPECT OF MS. SHIVANI GANDHI IS DISMISSED. 2.2 BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE AO MADE AN ADDITION OF RS.55,10,357/ - TO THE INCOME OF THE ASSESSEE IN RESPECT OF COMMISSION/BROKERAGE PAID TO SUB - AGENTS. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) EXAMINED THE REMAND REPORT SUBMITTED BY THE AO AND FOUND THAT THE AO VIDE LETTER DATED 18.10.2012 CALLED FOR INFORMATION U/S 133(6) FROM THE FOLLOWING SUB - AGENTS: 1. M/S JEWELEX 2. M/S AMIGO TRAVELS 3. M/S MRUTI TRAVELS 4. M/S FLYOVER TRAVELS 5. M/S B.J. SERVICE COMPANY 6. M/S ADVENTURE TOURS & TRAVELS 7. M /S GRACE TRAVELS 8. M/S STAR TRAVELS 9. M/S M.K. TRAVELS 10. LETS GO TRAVELS 11. M/S PRIME FLIERS PVT. LTD. 12. M/S METROLINE 13. KARUNA GURSAHANI 14. NARENDRA GURSAHANI MR. KANAYALAL T. PURSNANI ITA NO. 6492/MUM/2014 3 15. MS. SHIVANI GANDHI 16. M/S DREAM ESCAPE THE LD. CIT(A) FOUND PROBLEM WITH THE FOLLOWING THREE PARTIES WHO DID NOT RESPOND TO THE NOTICE RECEIVED : 1. M/S DREAM ESCAPE GROSS COMMISSION RS.1,25,4848/ - . TDS RS.14,214/ - . NET COMMISSION RS.1,11,270/ - . 2. M/S AMIGO TRAVELS OFFICE GROSS COMMISSION RS.48,783/ - TDS RS.5,541/ - . NET COMMISSION RS.43,252/ - . 3. M/S METROLINE S OFFICE GROSS COMMISSION RS.7,75,400/ - TDS RS.87,861/ - . NET COMMISSION RS.6,87,539/ - . AS THE PARTIES HAVE NOT RESPONDED TO THE NOTICE U/S 133(6) ISSUED BY THE AO AND THE ASSESSEE TOO FAILED TO FURNISH DETAILS OF THESE PARTIES OR PRODUCE THEM DURING TH E COURSE OF ASSESSMENT PROCEEDINGS, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.9,49,667/ - MADE BY THE AO. ALSO HE CONFIRMED THE ADDITION OF RS.59,028/ - MADE BY THE AO IN THE CASE OF M/S MARUTI AIR TRAVELS, AS THE ASSESSEE FAILED TO FURNISH THE DETAILS OF THE PARTY OR PRODUCE THE AUTHORIZED PERSON FROM THE SAID CONCERN BEFORE THE AO AS THE NOTICE ISSUED U/S 133(6) WAS RETURNED UNSERVED BY THE POSTAL AUTHORITIES. THUS THE LD. CIT(A) RESTRICTED THE DISALLOWANCE TO RS. 10,08,695/ - . 2.3 BEFORE US, THE LD. COU NSEL OF THE ASSESSEE SUBMITS THAT THE LD. CIT(A) FAILED TO APPRECIATE THAT THE COMMISSION/BROKERAGE WERE PAID TO THE ABOVE PARTIES THROUGH BANKING CHANNEL AND TAX WAS ALSO DEDUCTED AT SOURCE FROM THE PAYMENTS MADE. IT IS ALSO STATED BY HIM THAT NOTICE U/S 133(6) ISSUED BY THE AO WAS DULY SERVED ON M/S DREAM ESCAPE, M/S AMIGO TRAVEL AND M/S METROLINES. IT IS THUS SUBMITTED BY HIM THAT THE COMMISSION/BROKERAGE PAID TO THE ABOVE PARTIES WAS A GENUINE MR. KANAYALAL T. PURSNANI ITA NO. 6492/MUM/2014 4 BUSINESS EXPENDITUR E INCURRED IN NORMAL COURSE OF ASSESSEES BUSINESS AND IT SHOULD BE ALLOWED. 2.4 ON THE OTHER HAND, THE LD. DR SUPPORTS THE ORDER PASSED BY THE LD. CIT(A). 2.5 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE FACT REM AINS THAT THE THREE PARTIES VIZ. M/S DREAM ESCAPE, M/S AMIGO TRAVELS OFFICE AND M/S METROLINES OFFICE HAVE NOT RESPONDED TO THE NOTICE U/S 133(6) ISSUED BY THE AO. THE ASSESSEE TOO FAILED TO FURNISH THE DETAILS OF THESE PARTIES AND PRODUCE THEM DURING THE COURSE OF ASSESSMENT PROCEEDINGS BEFORE THE AO. ALSO WE FIND THAT THE NOTICE U/S 133(6) ISSUED BY THE AO COULD NOT BE SERVED UPON M/S MARUTI AIR TRAVELS ON THE ADDRESS GIVEN BY THE ASSESSEE AND THE SAME WAS RETURNED BY THE POSTAL AUTHORITY. IN VIEW OF TH E ABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO TO MAKE A FRESH ORDER AFTER VERIFYING THE TRANSACTION OF THE ASSESSEE WITH THE ABOVE FOUR PARTIES. WE DIRECT THE ASSESSEE TO FILE THE RELEVANT DOCUMENTS/EVIDENCE BEFORE THE AO. NEEDLESS TO SAY, THE AO WOULD GIVE REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE BEFORE FINALIZING THE ASSESSMENT ORDER. THUS THE 1 ST GROUND RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 3. THE 2 ND GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE ORDER OF THE LD. CIT(A) CONFIRMING THE DISALLOWANCE OF SALES PROMOTION EXPENSES OF RS.1,28,316/ - AND STAFF WELFARE EXPENSES OF RS.65,593/ - MADE BY THE AO. THE LD. CIT(A) CONFIRMED THE ABOVE DISALLOWANCE MADE MR. KANAYALAL T. PURSNANI ITA NO. 6492/MUM/2014 5 BY THE AO ON THE REASON T HAT THE ASSESSEE FAILED TO PRODUCE THE SUPPORTING BILLS IN THE CASE OF SALES PROM OTION EXPENSES OF RS.1,28,316/ - . THE LD. CIT(A) ALSO CONFIRMED THE AD - HOC DISALLOWANCE OF ONE FOURTH OF STAFF WELFARE EXPENSES WHICH COMES TO RS.65,593/ - . 3.1 WE HAVE HEAR D THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. WE FIND FROM THE LEDGER ACCOUNT THAT THE SALES PROMOTION EXPENSES AND STAFF WELFARE EXPENSES WERE GENUINE BUSINESS EXPENSES INCURRED BY THE ASSESSEE IN THE NORMAL COURSE OF ITS BUSINESS. THEREFORE, THE DISALLOWANCE OF THE ABOVE EXPENSES MADE BY THE AO ARE DELETED. THUS THE 2 ND GROUND OF APPEAL IS ALLOWED. 4. IN THE RESULT, THE APPEAL IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14/12/2017. SD/ - SD/ - ( D.T. GARASIA ) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 14/12/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI