M/s. Laxmi Petrochem, Ahmedabad V. The Dy.CIT.,Circle-10, Ahmedabad

ITA 70/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 72866 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 22-01-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J P JHANGID
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ITA NO.70/AHD/2011 A.Y. 2007-08 M/S. LAXMI PETROCHEM, 25, GENERAL BANK CHAMBERS, OPP. MUNI. MARKET, CG ROAD, AHMEDABAD PAN: AACFL 3468K V/S. DCIT, CIRCLE-10, AHMEDABAD. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI J.P. JHANGID, SR.D.R. ASSESSEE(S) BY : SHRI S.N. DIVETIA, A.R. / DATE OF HEARING : 22/01/2014 / DATE OF PRONOUNCEMENT: 23/01/2014 O R D E R PER SHRI MUKUL KUMAR SHRAWAT, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE ARISING FRO M THE ORDER OF LEARNED CIT(A)-XVI, AHMEDABAD DATED 22.10.2010. NUM BER OF GROUNDS HAVE BEEN RAISED BEFORE US, HOWEVER THE MAI N GROUND IS GROUND NO.1.1 REPRODUCED BELOW: THE ORDER PASSED U/S.250 ON 22.10.2010 FOR A.Y. 200 7-08 BY LEARNED CIT(A)-XVI, AHMEDABAD, CONFIRMING THE DISALLOWANCE OF COMMISSION OF RS.2,52,984/- PAID TO SHRI N.K. GANDHI, IS WHOLLY I LLEGAL, UNLAWFUL AND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 2. AT THE OUTSET, LEARNED AR MR. S.N. DIVETIA HAS R EFERRED A PARAGRAPH FROM THE STATEMENT OF FACTS REPRODUCED BE LOW: THE APPELLANT SUBMITTED TO CIT(A) THAT IT HAD FURN ISHED DETAILS OF COMMISSION AS PER THE CHART ENCLOSED WITH REPLY DAT ED 24.11.2009. THEREAFTER, THE AO VIDE LETTER DATED 30.11.2009 CAL LED FURTHER DETAILS AS TO THE NATURE OF SERVICES AND JUSTIFICATION FOR SAID C OMMISSION. THE APPELLANT ITA NO.70/AHD/2011 M/S. LAXMI PETROCHEM V/S. DCIT, CIRCLE-10, AHMEDABA D A.Y. 2007-08 - 2 - SUBMITTED COPIES OF CREDIT NOTES AND AFTER EXAMININ G THE SAME, THE AO VIDE LETTER DATED 4.12.2009 ASKED THE APPELLANT TO PRODUCE ALL THE COMMISSION AGENTS WITH COPIES OF RETURN OF INCOME O N 14.12.2009. THOUGH, THERE WERE FOUR PARTIES TO WHOM COMMISSION WAS PAID AND TIME ALLOWED WAS SHORT, THE APPELLANT MADE ALL EFFORTS T O PRODUCE ALL OF THEM BUT SHRI N.K. GANDHI DID NOT RESPOND ON THE GROUND THAT HE WAS NOT ISSUED ANY LETTER BY AO. HOWEVER, AFTER THE SERVICE OF IMPUGNED ASSESSMENT ORDER, THE APPELLANT ONCE AGAIN REQUESTE D HIM TO CO-OPERATE IN VIEW OF DISALLOWANCE MADE BY AO. AT LAST, THE SA ID PARTY HAS PROVIDED THE DETAILS AS REQUIRED BY AO, I.E., COPY OF HIS RE TURN OF INCOME WITH COMPUTATION FOR A.Y.2007-08, PAN CARD, CONFIRMATION OF LEDGER A/C. ETC., WHICH ARE ENCLOSED HEREWITH. THE APPELLANT WOULD AL SO LIKE TO POINT OUT THAT ALONGWITH REPLY DATED 4.12.2009, IT HAD FILED COPY OF THE TDS A/C. WITH CHALLANS ETC., WHICH INCLUDES TDS OF RS.14,192 MADE IN RESPECT OF COMMISSION OF RS.2,52,984 TO SHRI N.K. GANDHI. THE BALANCE AMOUNT WAS ALSO PAID TO HIM BY CHEQUE NO.215955 DATED 11.1.200 7 OF HDFC BANK. THUS, THERE IS COMPLETE PROOF OF THE NATURE OF SERV ICES, PAYMENT ETC., IN RESPECT OF THESE EXPENDITURE. 2.1 AN ASSESSMENT WAS MADE U/S.143(3) OF IT ACT ON 22 ND OF DECEMBER, 2009 WHEREIN IT WAS NOTED THAT THE ASSESSEE FIRM IS IN THE BUSINESS OF TRADING OF SPIRIT & CHEMICALS. IT WAS NOTED BY THE AO THAT THE ASSESSEE HAD PAID COMMISSION TO VARIOUS PARTIES TOTALING RS.10,5 3,793/-. THE ASSESSEE WAS CALLED UPON TO FURNISH THE DETAILS OF THE COMMI SSION EXPENDITURE. THE ASSESSEE WAS ASKED TO PRODUCE THE COMMISSION AGENTS . IN RESPECT OF N.K. GANDHI, IT WAS NOTED BY THE AO THAT THE ASSESSEE HA D FAILED TO PRODUCE THE SAID PARTY AND THE PAYMENT OF COMMISSION WAS NOT SU PPORTED BY THE AGREEMENT. THE AO HAD DOUBTED THE GENUINENESS OF TH E COMMISSION PAYMENT OF RS.2,52,984/- PAID TO SHRI N.K. GANDHI. THE SAME WAS DISALLOWED. THE MATTER WAS CARRIED BEFORE LEARNED C IT(A). 3. LEARNED CIT(A) HAS AFFIRMED THE ACTION OF THE AO PRIMARILY ON THE GROUND THAT THE ASSESSEE HAD FAILED TO PRODUCE SAID COMMISSION AGENT. AS FAR AS THE NATURE OF SERVICES RENDERED BY THE SAID COMMISSION AGENT; AFTER REFERRING LAXMIRATTAN COTTON MILLS, 73 ITR 634 (SC) AND LACHMINARAYAN MADANLAL, 86 ITR 439 (SC), LEARNED CIT(A) HAS CONFI RMED THE ADDITION. ITA NO.70/AHD/2011 M/S. LAXMI PETROCHEM V/S. DCIT, CIRCLE-10, AHMEDABA D A.Y. 2007-08 - 3 - 4. HEARD BOTH THE PARTIES. THE MAIN EMPHASIS OF THE APPELLANT BEFORE US IS THAT THE SAID PARTY TO WHOM THE COMMIS SION WAS PAID IS A GENUINE PARTY AND THE LEDGER ACCOUNT WAS VERY MUCH PLACED BEFORE THE AO ALONG WITH OTHER INFORMATION. HOWEVER, DUE T O SHORTAGE OF TIME THAT PARTY COULD NOT BE PRODUCED BEFORE THE AO . IN SUPPORT OF THIS CONTENTION, THE ASSESSEE HAS PLACED STRONG REL IANCE ON THE STATEMENT OF FACTS, RELEVANT PORTION ALREADY REPROD UCED ABOVE. THUS, LEARNED AR, MR. S.N. DIVETIA HAS REQUESTED THAT AN ANOTHER OPPORTUNITY MAY PLEASE BE GRANTED SO THAT THE SAID COMMISSION AGENT CAN NOW BE PRODUCED BEFORE THE AO ALONG WITH OTHER REQUISITE EVIDENCES. CONSIDERING THE PRINCIPLE OF NATURAL JUS TICE, WE HEREBY DEEM IT PROPER AND REASONABLE TO RESTORE THIS ISSUE OF DISALLOWANCE OF COMMISSION BACK TO THE STAGE OF THE AO TO BE DECIDE D DE NOVO AS PER LAW. WE HEREBY ALSO INSTRUCT THIS APPELLANT TO FULL Y CO-OPERATE WITH THE REVENUE DEPARTMENT BY SUO MOTU APPEARING BEFORE THE AO WITHIN 30 DAYS ON RECEIPT OF THIS ORDER ALONG WITH EVIDENC ES/INFORMATION SO THAT THIS ISSUE MAY SET AT REST BEING TRIFLE IN NAT URE, AT AN EARLY DATE. RESULTANTLY, THIS GROUND BE SET ASIDE FOR AFRESH CO NSIDERATION; HENCE, MAY BE TREATED AS ALLOWED ONLY FOR STATISTICAL PURP OSE. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED BUT FOR STATISTICAL PURPOSE ONLY. SD/- SD/- (ANIL CHATURVEDI) (MUKU L KR. SHRAWAT) ACCOUNTANT MEMBER JUD ICIAL MEMBER AHMEDABAD; DATED 23/01/2014 PRABHAT KR. KESARWANI, SR. P.S. / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. ITA NO.70/AHD/2011 M/S. LAXMI PETROCHEM V/S. DCIT, CIRCLE-10, AHMEDABA D A.Y. 2007-08 - 4 - 3. / CONCERNED CIT 4. ( ) / THE CIT(A)-III, AHMEDABAD 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE. / BY ORDER, / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD