ACIT - 17 (1), MUMBAI V. AGROMACH SPARES CORPORATION, MUMBAI

ITA 6970/MUM/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3326 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 06-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MICHAEL JERALD
• Keywords: Additional evidence; Reassessment proceedings; TDS
• Section: 143(3); 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A, BENCH MUM BAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEM BER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBE R ITA NO.6970/MUM/2018 ( ASSESSMENT YEAR: 2008-09 ) ACIT-17(1) ROOM NO.117 AAYKAR BHAWAN M.K.ROAD MUMBAI-400 020 VS AGROMACH SPARES CORPORATION 194-D, GAIWADI COMPOUND GIRGAUM ROAD GIRGAUM MUMBAI-400 004 PAN/GIR NO. A AAFA0607K ( APPELLANT ) .. RESPONDENT ) REVENUE BY SHRI MICHAEL JERALD, DR ASSESSEE BY SHRI VIJAY MEHTA, AR DATE OF HEARING 10 /02 /2020 DATE OF PRONOUNCEME NT 04 / 0 3 /20 20 / O R D E R PER G.MANJUNATHA (A.M) : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)28, MUMBAI, DATED 21/09/2018 AND IT PERTAINS TO ASSESSMENT YEAR 2008-09. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, WHETHER THE LEARNED. C I.T.(A) WAS CORRECT IN ADMITTING THE ADD ITIONAL EVIDENCES BEFORE HIM DURING THE APPELLATE PROCEEDINGS, WHICH WAS NOT SUBMITTED BEFORE THE AO DURING THE ASSESSMENT PROCEEDINGS, WI THOUT CALLING FOR REMAND REPORT BY VIOLATING PROVISIONS OF RULE 46A O F THE INCOME LAD RULES 1962.' 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS ENGANGED IN THE BUSINESS OF DEALING IN SPARE PARTS OF HEAVY EARTH MOVING EQUIPMENTS AND DIESEL ENGINES ETC, FILED ITS RETURN OF INCOME FOR AY ITA NO.6970/MUM/2018 AGROMACH SPARES CORPORATION 2 2008-09 ON 29/09/2008, DECLARING TOTAL INCOME AT RS . 4,13,96,922/-. THE ASSESSMENT HAS BEEN COMPLETED U/S 143(3) OF THE I.T.ACT, 1961 ON 09/12/2010, DETERMINING THE TOTAL INCOME AT RS. 4,13,96,922/-. THE CASE HAS BEEN SUBSEQUENTLY, REOPENED U/S 147 OF THE I.T.ACT, 1961, FOR THE REASONS RECORDED, AS PER WHICH INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT ON ACCOUNT OF NON D ISCLOSURE OF COMMISSION INCOME OF RS. 2,61,53,040/-. ACCORDINGLY , NOTICE U/S 148, DATED 31/03/2015 WAS ISSUED AND SERVED ON THE ASSESSEE. THE CASE HAS BEEN SELECTED FOR SCRUTINY AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO NOTICED THAT THE ASSESSEE HAS FAILED TO DECLARE COMMISSION INCOME OF RS. 2,61,53, 040/-, EVEN THOUGH, IT HAS CLAIMED TDS DEDUCTED ON SAID COMMISS ION AND THEREFORE, AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE COMPLETED ASSESSMENT U/S 143(3) R.W.S 147 OF THE I. T.ACT, 1961 BY MAKING ADDITIONS OF RS. 2,61,53,040/- TO TOTAL INCO ME DECLARED FOR THE YEAR. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE PREFERRED AN APPEAL BEFORE THE LD.CIT(A). BEFORE TH E LD.CIT(A), THE ASSESSEE SUBMITTED THAT THE LD. AO WAS ERRED IN NOT APPRECIATING THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE F OR ACCOUNTING COMMISSION RECEIVED FROM TWO PARTIES, EVEN THOUGH, IT HAS FILED NECESSARY DETAILS, INCLUDING SUMMARY OF PURCHASES, WHERE THE COMMISSION HAS BEEN CREDITED TO PURCHASES ACCOUNT A ND NET PURCHASE HAS BEEN TAKEN INTO ACCOUNT IN THE PROFIT AND LOSS ACCOUNT. THE LD.CIT(A) AFTER CONSIDERING RELEVANT SUBMISSION OF THE ASSESSEE AND ALSO TAKEN NOTE OF VARIOUS EVIDENCES FILED DURI NG APPELLATE PROCEEDINGS, CAME TO THE CONCLUSION THAT THE LD. AO HAS FAILED TO APPRECIATE THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE FOR ITA NO.6970/MUM/2018 AGROMACH SPARES CORPORATION 3 ACCOUNTING COMMISSION RECEIVED FROM CERTAIN PARTIES , EVEN THOUGH NECESSARY EVIDENCES HAS BEEN PLACED BEFORE HIM, VID E WRITTEN SUBMISSIONS, DATED 14/07/2015. THE LD.CIT(A), FURTH ER OBSERVED THAT ALTHOUGH, THE ASSESSEE HAS FOLLOWED A PECULIAR METHOD AND REDUCED COMMISSION RECEIVED FROM THE TOTAL PURCHA SES, BUT WHEN FACTS AND EVIDENCES CLEARLY SHOWS THAT COMMISSION H AS BEEN CONSIDERED IN BOOKS OF ACCOUNTS, THE LD. AO OUGHT T O HAVE NOT MADE ANY ADDITIONS TOWARDS COMMISSION INCOME. THEREFORE, HE OPINED THAT THERE IS A MERIT IN THE CONTENTIONS OF THE ASS ESSEE AND ACCORDINGLY, DELETED ADDITIONS MADE TOWARDS COMMISS ION INCOME OF RS. 2,61,53,040/-. AGGRIEVED BY THE LD.CIT(A) ORDER , THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DR SUBMITTED THAT THE LD.CIT(A) HAS ERRE D IN ADMITTING THE ADDITIONAL EVIDENCES WITHOUT CALLING FOR A REMAND REPORT BY VIOLATING PROVISIONS OF RULE 46A OF THE I.T.RULE S, 1962, WHILE DELETING THE ADDITIONS MADE BY THE LD. AO TOWARDS C OMMISSION INCOME OF RS. 2,61,53,040/-. 6. THE LD. AR FOR THE ASSESSEE, ON THE OTHER HAND S TRONGLY SUPPORTING ORDER OF THE LD.CIT(A) SUBMITTED THAT TH E ASSESSEE HAS NOT FILED ANY ADDITIONAL EVIDENCES BEFORE THE LD.CI T(A) AND WHATEVER, EVIDENCES CONSIDERED DURING APPELLATE PRO CEEDINGS ARE ALREADY FURNISHED BEFORE THE LD. AO DURING THE ORIG INAL ASSESSMENT PROCEEDINGS, AS WELL AS DURING REASSESSMENT PROCEED INGS. THEREFORE, THERE IS NO MERIT IN GROUNDS RAISED BY T HE REVENUE CHALLENGING THE FINDINGS OF THE LD.CIT(A). THE LD. AR, FURTHER SUBMITTED THAT BE THAT AS IT MAY, BUT FACT REMAINS THAT THERE IS NO ESCAPEMENT OF INCOME, IN RESPECT OF COMMISSION RECE IVED, BECAUSE ITA NO.6970/MUM/2018 AGROMACH SPARES CORPORATION 4 THE ASSESSEE HAS ACCOUNTED COMMISSION INCOME IN BOO KS OF ACCOUNTS AND REDUCED SAID COMMISSION INCOME FROM PU RCHASE ACCOUNT, BECAUSE IT HAS BEEN RECEIVED FROM TWO MAJO R PARTIES FROM WHOM PURCHASE HAVE BEEN MADE. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIAL AVAILABLE ON RECORD AND GONE THROUGH ORDERS OF THE AUTHORITIE S BELOW. HAVING CONSIDERED ARGUMENTS OF COUNSELS FOR THE ASSESSEE, AS WELL AS THE REVENUE, WE FIND NO MERIT IN GROUNDS TAKEN BY THE R EVENUE CHALLENGING VIOLATION OF RULE 46A OF I.T.RULES, 196 2, BECAUSE THE ASSESSEE, NEITHER FURNISHED ADDITIONAL EVIDENCES BE FORE THE LD.CIT(A), NOR THE LD.CIT(A) HAS CONSIDERED ANY ADD ITIONAL EVIDENCES, WHILE ADJUDICATING THE ISSUE BEFORE HIM. WE FURTHER NOTED THAT THE FACTS WITH REGARD TO COMMISSION INCOME REC EIVED FROM TWO PARTIES AND ACCOUNTING OF SUCH COMMISSION INCOME IN THE BOOKS OF ACCOUNTS BY REDUCING THE SAME FROM PURCHASES HAS BE EN INFORMED TO THE LD. AO DURING THE ORIGINAL ASSESSMENT PROCEE DINGS, VIDE LETTER DATED 04/06/2013. FURTHER, DURING THE REASSESSMENT PROCEEDINGS, THE ASSESSEE HAS FILED NECESSARY DETAILS, VIDE WRIT TEN SUBMISSIONS DATED 14/07/2015 AND FILED SUMMARY OF PURCHASES, WH ERE THE COMMISSION INCOME HAS BEEN CREDITED TO PURCHASES AC COUNT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THERE IS NO MERIT IN GROUNDS TAKEN BY THE REVENUE CHALLENGING VIOLATION OF RULE 46A OF I.T.RULES, 1962. BE THAT AS IT MAY, BUT FACT REMAIN S THAT THE COMMISSION INCOME RECEIVED FROM TWO PARTIES HAS BEE N VERY MUCH ACCOUNTED IN BOOKS OF ACCOUNTS, WHICH IS EVIDENT FR OM THE FACT THAT THE ASSESEE HAS CREDITED AGENCY COMMISSION INTO PU RCHASE ACCOUNT AND NET PURCHASE AMOUNT HAS BEEN TAKEN INTO PROFIT AND LOSS ACCOUNT. THE LD.CIT(A) AFTER CONSIDERING RELEV ANT DETAILS HAS ITA NO.6970/MUM/2018 AGROMACH SPARES CORPORATION 5 RIGHTLY DELETED ADDITIONS MADE BY THE LD. AO TOWARD S COMMISSION INCOME OF RS. 2,61,53,040/-. THEREFORE, WE ARE OF T HE CONSIDERED VIEW THAT THERE IS NO ERROR IN THE FINDINGS RECORDE D BY THE LD.CIT(A), WHILE DELETING ADDITIONS MADE TOWARDS COMMISSION IN COME AND HENCE, WE ARE INCLINED TO UPHOLD THE FINDINGS OF TH E LD.CIT(A) AND DISMISSED APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 04 /03 /2020 SD/- (SAKTIJIT DEY) SD/- (G. MANJUNATHA) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED 04/03/2020 THIRUMALESH SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT. REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//