ACIT, Hyderabad V. Smt. Anu Parakh, Secunderabad

ITA 699/HYD/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9747 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 22-03-2011
• Assessment Year: 2001-2002
• Appeal Filed On: 06-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VP & SHRI CHANDRA POOJARI, AM I.T.A. NO. 698/HYD/2010 (ASSESSMENT YEAR 2000-01) I.T.A. NO. 699/HYD/2010 (ASSESSMENT YEAR 2001-02) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 10(1) HYDERABAD VS. SMT. ANU PARAKH SECUNDERABAD PAN: AGIPP1602A APPELLANT RESPONDENT APPELLANT BY: SHRI K.V.N. CHARYA RESPONDENT BY: SHRI SUNIL KUMAR JAIN O R D E R PER CHANDRA POOJARI, AM: BOTH THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINST THE SEPARATE ORDERS OF THE CIT(A)-VI, HYDER ABAD DATED 1 ST FEBRUARY, 2010 FOR ASSESSMENT YEARS 2000-01 AND 2001-02. SINCE COMMON ISSUES ARISE IN BOTH THE SE APPEALS, THESE WERE HEARD TOGETHER AND ARE BEING DI SPOSED OF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE . 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE FOR THE A.Y. 2000-01 ARE AS UNDER: 1. THE DECISION TAKEN BY THE CIT(A) APPEARS NOT TO BE GOOD IN LAW. 2. I PLACE MY RELIANCE ON CIT VS. MCDOWELL & CO. LTD. (KAR.) 291 ITR 107 WHEREIN THE HIGH COURT HAS STAYED IN ABSENCE OF ANY EVIDENCE TO PROVE COMMISSION AGENTS RENDERED SERVICES. I.T.A. NOS. 698 & 699/HYD/2010 SMT. ANU PARAKH ======================== 2 3. FURTHER I PLACE MY RELIANCE IN THE CASE OF SCHNEIDER ELECTRIC INDIA LTD. VS. CIT (DEL) 304 ITR 360 WHEREIN THE HIGH COURT HAS STATED THAT IN ABSENCE OF DETAILS OF SERVICES RENDERED BY THE SELLING AGENTS AND ALSO NO CONFIRMATION OF ANY ARRANGEMENTS BETWEEN PARTIES AND NO LONG STANDING RELATIONSHIP BETWEEN ASSESSEE AND SELLING AGENTS THE COMMISSION PAYMENTS BE DISALLOWED. 3. AFTER HEARING BOTH THE PARTIES, WE ARE OF THE OPINI ON THAT SIMILAR ISSUE WAS CONSIDERED BY THIS TRIBUNAL IN ASSESSEES OWN CASE VIDE ORDER DATED 28.8.2009 IN I .T.A. NO. 52/HYD/2006 FOR A.Y. 2002-03 AND THE TRIBUNAL I N PARA 8 HELD AS FOLLOWS: WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE POINT IN DISPUTE RELATES TO THE GENUINENESS OF THE COMMISSION PAYMENTS MADE BY THE ASSESSEE TO THE MIDDLEMEN. IT IS NO DOUBT TRUE THAT THE ASSESSEE HAS NOT ENTERED INTO ANY AGREEMENTS WITH THE PERSONS APPOINTING THEM AS HER AGENTS, OR IN ACCORDANCE WITH WHICH THE SO CALLED COMMISSION PAYMENTS WERE CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE. TO VERIFY THE GENUINENESS OF THE COMMISSION PAYMENTS CLAIMED TO HAVE BEEN MADE BY THE ASSESSEE, ASSESSING OFFICER ADDRESSED LETTERS TO THE CUSTOMERS OF THE ASSESSEE WHO MADE PURCHASES FROM THE ASSESSEE, BUT THE QUESTIONS PUT BY THE ASSESSING OFFICER WAS TO SEEK CLARIFICATIONS, AS STATED IN PARA 2.2 OF THE ASSESSMENT ORDER ON PAGE 3 THEREOF, WITH REGARD TO (1) THE PROCESS OF PURCHASE, (2) WHETHER THERE WERE ANY MIDDLEMEN AND WHETHER ANY COMMISSION WAS PAID BY THE PURCHASER INDEPENDENTLY, IF MIDDLEMEN EXIST. THESE QUESTIONS PUT RATHER SEEK TO ASCERTAIN ENGAGEMENT OF ANY MIDDLEMEN BY THE CUSTOMERS OF THE ASSESSEE, AND TO ASCERTAIN WHETHER THOSE CUSTOMERS HAVE PAID ANY COMMISSION INDEPENDENTLY TO SUCH MIDDLEMEN. DUE TO INCORRECT NATURE OF THE QUESTIONS PUT, THE REPLIES RECEIVED BY THE I.T.A. NOS. 698 & 699/HYD/2010 SMT. ANU PARAKH ======================== 3 ASSESSING OFFICER WERE ALSO NOT RELEVANT TO THE POINT OF DETERMINING THE GENUINENESS OF THE COMMISSION PAYMENTS CLAIMED BY THE ASSESSEE. IT IS EVIDENT FROM THE MATERIAL AVAILABLE ON RECORD THAT SUCH COMMISSION PAYMENTS HAVE BEEN MADE BY WAY OF ACCOUNT PAYEE CHEQUES AND RECIPIENTS OF SUCH COMMISSION AMOUNTS HAVE NOT ONLY ACCOUNTED FOR THE SAME, BUT EVEN OFFERED THE SAME FOR ASSESSMENT IN THE RETURNS FILED BY THEM. IT APPEARS THAT EVEN ASSESSMENTS APPEAR TO HAVE BEEN COMPLETED IN RELATION TO THE COMMISSION PAYMENTS IN THE HANDS OF THE AGENTS. IT IS IMMATERIAL WHETHER THE INCOMES RETURNED BY THE SO CALLED AGENTS ARE NEGLIGIBLE OR NIL, AND THE ONLY QUESTION IS WHETHER THE COMMISSION AMOUNTS RECEIVED BY THEM FROM THE ASSESSEE HAVE BEEN OFFERED TO TAX OR NOT. AS OBSERVED BY THE CIT(A), IN THE IMPUGNED ORDER, IT IS NOT NECESSARY FOR THE CUSTOMERS OF THE ASSESSEE TO KNOW THE EXISTENCE OR OTHERWISE OF AGENTS IN THE PURCHASE MADE BY THEM FROM THE ASSESSEE. THE PERSON DEALING WITH THE CUSTOMER OF THE ASSESSEE MAY BE EITHER AN EMPLOYEE OR AN AGENT OF THE ASSESSEE, WHICH FACT MAY NOT NECESSARILY BE TO THE KNOWLEDGE OF THE CUSTOMER, SINCE BOTH OF THEM ARE ACTING ON BEHALF OF THE ASSESSEE SEEKING TO PROMOTE THE SALES OF THE ASSESSEE. MERELY BECAUSE THERE WERE NO WRITTEN AGREEMENTS APPOINTING MIDDLEMEN OR AUTHORISING PAYMENTS BY WAY OF COMMISSION, GENUINENESS OF SUCH COMMISSION PAYMENTS CANNOT BE DOUBTED. IN ANY EVENT, IT IS CLEARLY EVIDENT FROM THE MATERIAL ON RECORD THAT THE CUSTOMERS OF THE ASSESSEE HAVE BEEN INTRODUCED TO THE ASSESSEE BY SOME ENTITIES, AND THEY HAVE NOT DIRECTLY APPROACHED THE ASSESSEE. CONSIDERING TOTALITY OF FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THE DISALLOWANCE MADE B Y THE ASSESSING OFFICER IS BASED ON MERE SUSPICION, SURMISES AND CONJECTURES AND THE CIT(A) WAS THEREFORE, JUSTIFIED IN DELETING THE ADDITION MADE BY THE ASSESSING OFFICER. WE ACCORDINGLY UPHOLD THE ORDER OF THE CIT(A), AND REJECT THE GROUNDS OF THE REVENUE IN THIS APPEAL. 4. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE OF THE OPINION THAT THE ISSUE IS SQUARELY COVERED IN F AVOUR OF I.T.A. NOS. 698 & 699/HYD/2010 SMT. ANU PARAKH ======================== 4 THE ASSESSEE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A) AND THE SAME IS UPHELD. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE STAN D DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH MARCH, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 25 TH MARCH, 2011 TPRAO COPY FORWARDED TO: 1. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 10(1), ROOM NO. 515, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 2. SMT. ANU PARAKH, PROF. ARHAM STEEL UDYOG, 309, DIAMOND TOWERS, S.D. ROAD, SECUNDERABAD. 3. THE CIT(A)-VI, HYDERABAD 4 THE CIT-V, HYDERABAD 5. THE DR A BENCH, ITAT, HYDERABAD