M/s Lalchand Laxminarayan, Kolkata V. I.T.O.,Ward-44(2), Kolkata

ITA 664/KOL/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 8787 (ITAT-KOLKATA)
• Duration Of Justice: 7 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 03-04-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK
• Keywords: Business expenditure; TDS
• Section: 143(1); 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH A KOLKATA BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND DR. A.L. SAINI, ACCOUNTANT MEMBER ITA NO. 664 / KOL / 2019 ASSESSMENT YEAR :2014-15 M/S LALCHAND LAXMINARAYAN, 67/47, STRAND ROAD, KOLKATA-700 007 [ PAN NO.AABFL 1632 L ] V/S . INCOME TAX OFFICER WARD-44(2), 3 GOVT. PLACE (WEST), KOLKATA-700 001 /APPELLANT .. / RESPONDENT /BY APPELLANT SHRI SOUMITRA CHOUDHURY, ADVOCATE /BY RESPONDENT DR. A.K.NAYAK, CIT-DR /DATE OF HEARING 04-09-2019 /DATE OF PRONOUNCEMENT 20-11-2019 / O R D E R PER S.S.GODARA, JUDICIAL MEMBER:- THIS ASSESSEES APPEAL FOR ASSESSMENT YEAR 2014-15 ARISES AGAINST THE PRINCIPAL COMMISSIONER OF INCOME TAX-15 KOLKATAS O RDER DATED 11.02.2019 PASSED IN M.NO.PCIT-15/KOL/U/S.263/12/118-19/7305-0 7, INVOLVING PROCEEDINGS U/S 263 OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. WE ADVERT TO THE RELEVANT BASIC FACTS. THIS ASSE SSEE IS A PARTNERSHIP FIRM ENGAGED IN TRADING IN SUGAR AND CARRYING OUT C OMMISSION AGENT BUSINESS. IT FILED ITS RETURN ON 24.09.2014 DECLARING TAXABLE INCOME OF 7,82,590/- WHICH STOOD PROCESSED U/S. 143(1) OF THE ACT. THE ASSESSI NG OFFICER THEREAFTER FRAMED REGULAR ASSESSMENT ON 30.11.2016 DISALLOWING 20% OF THE ASSESSEES BUSINESS EXPENSES OF 3,03,873/-; COMING TO 60,774/-. ITA NO.664/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S LALCHAND LAXMINARAYAN VS. ITO WD-44(2), KOL . PAGE 2 3. CASE FILE SUGGESTS THAT THE PCIT THEREAFTER ISSU ED HIS SHOW CAUSE NOTICE DATED 12.07.2018 THAT THE ABOVE REGULAR ASSE SSMENT WAS ERRONEOUS CAUSING PREJUDICE TO INTEREST OF THE REVENUE ON THE GROUND THAT THE ASSESSEE HAD PAID COMMISSION / BROKERAGE OF 21 LAKH AND ALTHOUGH THE ASSESSING OFFICER HAD CALLED FOR PARTY-WISE DETAILS REGARDING BROKERAGE(S), THE ASSESSING OFFICER ISSUED U/S133(6) NOTICE(S) TO THREE PARTIES TOTALING COMMISSION / BROKERAGE AMOUNT OF 4.05 LAKH ONLY. AND HE DID NOT ISSUE SUMMONS TO ANY OF THE PAYEE PARTIES IN ORDER TO VERIFY GENUINENESS OF THE COMMISSION PAYMENTS. HE WAS FURTHER OF THE VIEW THAT ONE OF THE PAYEE S HRI KAILASH NATH SINGH (HUF) INVOLVING OF 151,023/- HAD DENIED TO HAVE RECEIVED ANY BROKERAGE / COMMISSION. AND THE ASSESSING OFFICER HAD RAISED AN Y QUERY IN RESPECT OF THE SAID PARTY(IES). 4. THE ASSESSEE APPEARS TO HAVE FILED ITS REPLY CON TESTING THE PCITS SHOW-CAUSE NOTICE. IT SOUGHT TO EXPLAIN THAT THE AB OVE REGULAR ASSESSMENT WAS NEITHER ERRONEOUS NOR IT CAUSED PREJUDICE TO IN TEREST TO THE REVENUE. IT SUBMITTED ON MERITS THAT IT HAD PAID BROKERAGE AMOU NT OF 1,51,023/- NOT TO THE INDIVIDUAL BUT HUF IN THE NAME AND STYLE OF SHR I KAILASH NATH SINGH. AND ALSO THAT ALL THE RELEVANT DETAILS TO THIS EFFECT F ORMED PART OF RECORD. THE PCIT HAS DECLINED THE SAID EXPLANATION BY QUOTING VARIOU S JUDICIAL PRECEDENTS I.E. MALABAR INDUSTRIAL CO. LTD. VS. CIT REPORTED IN (2000) 243 ITR 83 (SC) RAMPYARI DEVI SARAOGI VS. CIT (1968) 67 ITR 84 (SC), SMT. TARA DEVI AGGARWAL VS. CIT (1973) 88 ITR 323 (SC), GEE VEE ENTERPRISE VS. ADDL . CIT (1975) 99 ITR 375 (DEL) THAT SINCE THE ASSESSING OF FICER HAD NOT CONDUCTED THE DUE ENQUIRIES REGARDING ASSESSEES BROKERAGE PA YMENTS OF SHRI KAILASH NATH SINGH HUF AS WELL AS SITA TIWARI, THE SAME IS LIABLE TO BE REVISED AS ERRONEOUS CAUSING PREJUDICE TO INTEREST OF REVENUE AS PER SEC. 263 AS AMENDED BY WAY OF EXPLANATION WITH EFFECT FROM 01.06.2015. THIS LEAVES THE ASSESSEE AGGRIEVED. ITA NO.664/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S LALCHAND LAXMINARAYAN VS. ITO WD-44(2), KOL . PAGE 3 5. LEARNED COUNSEL VEHEMENTLY CONTENDS DURING THE C OURSE OF HEARING THAT THE PCIT HAS ERRED IN LAW AND ON FACTS IN REVISING THE ABOVE REGULAR ASSESSMENT WITH A DIRECTION TO THE ASSESSING OFFICE R TO FRAME AFRESH ONE. HE INVITES OUR ATTENTION TO PAPER BOOK PAGE 28 ONWARDS INDICATING THE ASSESSEES TURNOVER OF 275 CRORES AS AGAINST THE COMMISSION OF 21 LAKH IN ISSUE PAID TO TWENTY TWO PARTIES IN ALL CASES. IT HAD NOT ONLY DE DUCTED TDS BUT ALSO OBTAINED PAN AND EVIDENCE OF PAYMENTS FOLLOWED BY CORRESPOND ING LEDGER ACCOUNT(S). HE BUTTRESSES THE POINT THAT THE ASSESSEES PROFIT RATIO IN ALL ASSESSMENT YEAR THROUGHOUT HAVE REMAINED ALMOST THE SAME LEAVING OU T ANY CHANCE AND BOGUS BROKERAGE EXPENDITURE IN ISSUE. 6. LEARNED CIT-DR HAS CHOSEN TO PLACE A STRONG RELI ANCE ON THE PCITS DIRECTION UNDER CHALLENGE SINCE THE ASSESSING OFFIC ER HAD NOT CARRIED OUT DUE ENQUIRIES DURING SCRUTINY AND THEREFORE, THE IMPUGN ED REVISION PROCEEDINGS ARE LIABLE TO BE UPHELD. HE FURTHER STATES THAT THE ASSESSEE HAS CLAIMED IMPUGNED BROKERAGE AMOUNT IN ORDER TO REDUCE ITS TA XABLE INCOME WHICH DESERVES TO BE EXAMINED AFRESH. 7. WE HAVE HEARD BOTH THE PARTIES AT LENGTH AGAINST AND IN SUPPORT OF PCITS REVISION ORDER UNDER CHALLENGE. SUFFICE TO S AY, LEARNED PCIT HAS INVOKED HIS REVISION JURISDICTION VESTED U/S. 263 O F THE ACT ON THE ASSESSING OFFICERS ACTION ACCEPTING THE ASSESSEES BROKERAGE PAYMENTS WITHOUT MAKING DUE ENQUIRIES. HIS MAIN THRUST IS THAT ONE OF THE P AYEE, SHRI KAILASH NATH SINGH (SUPRA) DENIED TO HAVE RENDERED ANY BROKERAGE SERVICES TO THE ASSESSEE. THE FACTS ALSO REMAINS THAT THE ASSESSEE HAS NOT CLAIMED THE IMPUGNED BROKERAGE SUM IN CASE OF SHRI KAILASH NATH SINGH (SUPRA) ARE NOT THROUGH AN INDIVIDUAL HUF AND DENIAL ALSO CAME FROM SAID INDIVIDUALS SIDE ONLY. IT HAS NOT ONLY DEDUCTED TDS ON THE IMPUGNED PAYMENTS BUT ALSO MAINTAINED ALL SUPPORTIVE EVIDENCE (SUPRA) IN RESPE CT OF ITS BROKERAGE PAYMENTS. HON'BLE JURISDICTIONAL HIGH COURTS DECIS ION IN ITAT NO. 225 OF 2013 GA NO. 3825 OF 2013 COMMISSIONER OF INCOME TAX, KOLKATA-I VS. M/S INBUI LT ITA NO.664/KOL/2019 ASSESSMENT YEAR: 2014-15 M/S LALCHAND LAXMINARAYAN VS. ITO WD-44(2), KOL . PAGE 4 MERCHANT PVT. LTD. HOLDS THAT A COMMISSION EXPENDITURE CLAIM RAISED B Y AN ASSESSEE AND SUPPORTED BY ALL SUCH EVIDENCE CANNOT BE DISALLOWED ON THE GROUND THAT THE SAME IS NOT GENUINE. WE HOLD IN VIE W THEREOF THAT EVEN IF THE ASSESSING OFFICER HAS NOT DISALLOWED THE ASSESSEES BROKERAGE PAYMENTS OR NOT CONDUCTED DUE ENQUIRIES, THE IMPUGNED PAYMENT C OULD NOT HAVE BEEN DISALLOWED SINCE SUPPORTED BY ALL COGENT EVIDENCE. HON'BLE APEX COURTS DECISION IN MALABAR INDUSTRIAL CO. LTD. (SUPRA) HOLDS THAT THE CITS ASSUMPTION OF REVISION JURISDICTION HAS TO BE UPHELD IN CASE T HE ASSESSMENT IN ISSUE IS NOT ONLY ERRONEOUS BUT ALSO CAUSES PREJUDICE TO INTERES T OF REVENUE; SIMULTANEOUSLY. WE ARE OF THE OPINION THAT THE PCIT S ACTION DOES NOT SATISFY THE TWIN CONDITIONS SIMULTANEOUSLY IN VIEW OF HON'B LE JURISDICTIONAL HIGH COURTS DECISION THAT COMMISSION PAYMENT CANNOT BE DISALLOW ED IF SUPPORTED BY ALL NECESSARY EVIDENCE. WE THEREFORE REVERSE LEARNED CI TS ORDER UNDER CHALLENGE IN THIS FACTUAL AND LEGAL BACKGROUND. 8. THIS ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT 20/ 11/2019 SD/- SD/- ( &) (( &) ( A.L.SAINI) (S.S.GODARA) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) KOLKATA, *DKP )- 20 / 11 /201 9 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-M/S LALCHAND LAXMINARAYAN 67/47, STRAND ROAD, KOLKATA-007 2. /RESPONDENT-ITO WARD-44(2), 3, GOVT. PLACE (WEST), KOLKATA-001 3. 4 5 / CONCERNED CIT KOLKATA 4. 5- / CIT (A) KOLKATA 5. 8 ((4, 4, / DR, ITAT, KOLKATA 6. = / GUARD FILE. BY ORDER/ , /TRUE COPY/ 4,