ACIT, Jaipur V. M/S PUSHP ENTERPRISES, Jaipur

ITA 715/JPR/2012

• Counselvise Citation: 71523114 RSA 2012
• Duration Of Justice: 2 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2004-2005
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S L PODDAR
• Keywords: Opportunity of being heard; Commercial expediency; Onus to prove
• Section: 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH VH-VKJ-EHUK] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI T.R. MEENA, AM VK;DJ VIHY LA- @ ITA NO. 715/JP/2012 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2004-05 THE A.C.I.T. CIRCLE-4, JAIPUR CUKE VS. M/S PUSHP ENTERPRISES, H-780-A, ROAD NO. 13, VKI AREA, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AABFP 2279 F VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI AJAY MALIK, (ADDL.CIT) FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI S.L. PODDAR, (ADVOCATE) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 25/11/2014 ?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/01/2015 VKNS'K @ ORDER PER: T.R. MEENA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 03/05/2012 PASSED BY THE LEARNED CIT(A)-II, JAIPUR FOR A.Y. 2004-05. THE SOLE GROUND OF APPEAL IS AGAINST DELETING THE AD DITION OF RS. 12,29,368/- ON ACCOUNT OF DISALLOWANCE OF COMMISSION PAID TO M/S CITIZEN ALLOYS & PIPES PVT. LTD.. ITA 715/JP/2012_ ACIT VS. M/S PUSHP ENTERPRISES 2 2. THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING, TRADING AND JOB WORK OF BEARING COMPONENTS. IT IS OBSERVED BY THE AS SESSING OFFICER THAT THE ASSESSEE HAD DEBITED COMMISSION EXPENSES I N P&L ACCOUNT AT RS. 12,29,368/- AND RS. 9,22,026/- TO M/S CITIZEN A LLOYS & PIPE PVT. LTD. AND M/S AMBA POLYTUBE PVT. LTD. RESPECTIVELY WHEREAS AS PER CONFIRMATION FROM THEM, THEY HAD RECEIVED THE COMMI SSION AMOUNTING TO RS. 11,67,900/- AND RS. 8,75,924/- RESPECTIVELY. THE ASSESSING OFFICER GAVE REASONABLE OPPORTUNITY OF BEING HEARD ON DISCR EPANCY FOUND IN CONFIRMATION AND COMMISSION EXPENSE DEBITED. THE ASS ESSEE SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE APPELLANT HAD CONTRACT WITH TWO PARTIES NAMELY M/S CITIZEN ALLOYS & PIPE PVT. LTD. AND M/S AMBA POLYTUBE PVT. LTD. AND THEY HAD AGREED TO WORK ON BEHALF OF THE APPELLANT FOR PROCURING THE ORDER, GET TESTED THE M ATERIAL AND PAYMENT OF THE JOB WORK ON BEHALF OF THE APPELLANT. THE APPEL LANT WAS PAYING COMMISSION @ 2% TO M/S CITIZEN ALLOYS & PIPE PVT. L TD. AND 1.5% TO M/S AMBA POLYTUBE PVT. LTD. AND CLAIMED THAT BOTH WE RE PROTECTING APPELLANTS INTEREST IN DEALING WITH M/S SKF INDIA P VT. LTD.. DURING THE YEAR UNDER CONSIDERATION, THE APPELLANT HAD PAID CO MMISSION OF RS. 8,75,924/- TO M/S AMBA POLYTUBE PVT. LTD. @ 1.5% ON TOTAL SALE OF RS. 6,14,68,400/- AND RS. 11,67,900/- TO M/S CITIZEN AL LOYS & PIPE PVT. LTD. THE LEARNED ASSESSING OFFICER HELD THAT THE APPELLAN T HAD FAILED TO ITA 715/JP/2012_ ACIT VS. M/S PUSHP ENTERPRISES 3 JUSTIFY THE SERVICES RENDERED BY BOTH THE PARTIES. HE ISSUED SUMMONS U/S 131 OF THE INCOME TAX ACT, 1961 (IN SHORT THE AC T) TO M/S AMBA POLYTUBE PVT. LTD. WHO HAD CONFIRMED THE COMMISSION PAYMENT OF RS. 9,22,026/- ON TOTAL SALE OF RS. 6,14,18,400/- WHEREA S M/S CITIZEN ALLOYS & PIPE PVT. LTD. HAD REFUSED TO RECEIVE THE LETTER, WHICH HAD TO BE SERVED THROUGH POSTAL AUTHORITY AND SAME WAS RETURNE D BACK WITH THE POSTAL REMARK REFUSED. THEREFORE, THE LEARNED ASS ESSING OFFICER HELD THAT COMMISSION PAYMENT TO M/S CITIZEN ALLOYS & PIP E PVT. LTD. OF RS. 12,29,368/- WAS THE EXPENDITURE NOT LET OUT OR EXPEN DED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THE ASS ESSEE HAD FAILED TO DISCHARGE HIS ONUS TO PROVE THAT THE EXPENDITURE IN CURRED WAS WHOLLY AND EXCLUSIVELY FOR THE BUSINESS PURPOSES. HE RELIE D UPON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CAS E OF JASWANT TRADING CO. VS. CIT (1995) 212 ITR 24. 3. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT( A), WHO HAD ALLOWED THE APPEAL PARTLY BY OBSERVING THAT THE APPELLANT H AD FILED CONFIRMATION IN RESPECT OF COMMISSION PAYMENT FROM BOTH THE PART IES NAMELY M/S CITIZEN ALLOYS & PIPE PVT. LTD. AND M/S AMBA POLYTU BE PVT. LTD. VIDE LETTER DATED 29/11/2011. THE APPELLANT HAD EXPLAINED THE SERVICES RENDERED BY BOTH THE PARTIES BEFORE THE ASSESSING O FFICER, DIFFERENT RATE ITA 715/JP/2012_ ACIT VS. M/S PUSHP ENTERPRISES 4 OF COMMISSION WAS FIXED WITH THE PARTIES AS PER CONTR ACT. THE LEARNED ASSESSING OFFICER ALLOWED THE COMMISSION IN CASE OF M/S AMBA POLYTUBE PVT. LTD. THE PAYMENT OF COMMISSION WAS MADE TO M/S C ITIZEN ALLOYS & PIPE PVT. LTD. THROUGH ACCOUNT PAYEE CHEQUE NO. 514 665 DATED 27/03/2004 DRAWN ON PUNJAB NATIONAL BANK. THE RECIPI ENT ALSO ASSESSED TO TAX WITH ITO, WARD-1, SANGRUR, PUNJAB. THE NATURE OF SERVICES RENDERED BY IT RANGING FROM PROCURING ORDE R OF JOB WORK, QUALITY CONTROL AND TIMELY PAYMENT FROM THE PRINCIP AL WAS ALSO EXPLAINED. THE APPELLANT COULD NOT HAVE ENFORCED THE COMPLIANCE OF THE COMMISSION AGENT BEFORE THE A.O AFTER LAPSE OF 7 YE ARS OF TRANSACTION. THE APPELLANT HAD ALSO DEDUCTED TDS OF RS. 61,468/- ON THE COMMISSION PAYMENT TO M/S CITIZEN ALLOYS & PIPE PVT . LTD. HE RELIED UPON THE DECISION IN THE CASE OF MOBILE COMMUNICATI ON (INDIA) P. LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX (007 ITR TRIB. 219). THE APPELLANT FIRM HAD SUBMITTED COMPLETE DETAILS OF CO MMISSION PAYMENT ALONGWITH RELEVANT MATERIAL. THE COMMISSION WAS PAID A S PER BUSINESS PRACTICES AND OUT OF COMMERCIAL EXPEDIENCY. THE APPE LLANT FIRM HAD DULY DISCHARGED ITS BURDEN TO PROVE THE GENUINENESS OF COMMISSION EXPENDITURE. THEREFORE, HE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. ITA 715/JP/2012_ ACIT VS. M/S PUSHP ENTERPRISES 5 4. NOW THE REVENUE IS IN APPEAL BEFORE US. THE LEARNE D D.R. ARGUED VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFF ICER. AT THE OUTSET, THE LEARNED A.R. FOR THE ASSESSEE REITERATED THE AR GUMENT MADE BEFORE THE LEARNED CIT(A) AND HEAVILY RELIED UPON THE FIND INGS GIVEN BY HIM. 5. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE APPELLANT HAD DI SCHARGED HIS ONUS BY FILING THE CONFIRMATION, PAYMENT OF COMMISSION T HROUGH ACCOUNT PAYEE CHEQUE, TDS HAS BEEN DEDUCTED. THE RECIPIENT IS ASSESSED TO TAX IN SANGRUR, PUNJAB. THE APPELLANT PAID THIS COMMISSI ON FOR BUSINESS EXPEDIENCY AS PER MARKET PRACTICE. THE LEARNED DR HA S NOT CONTROVERTED THE FINDING GIVEN BY THE LEARNED CIT(A ). ACCORDINGLY, WE UPHOLD THE ORDER OF THE LEARNED CIT(A). 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . ORDER PRONOUNCED IN THE OPEN COURT ON 16/01/2015. SD/- SD/- VKJ-IH-RKSYKUH VH-VKJ-EHUK (R.P.TOLANI) (T.R. MEENA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 16 TH JANUARY, 2015 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: ITA 715/JP/2012_ ACIT VS. M/S PUSHP ENTERPRISES 6 1. VIHYKFKHZ @ THE APPELLANT- THE ACIT, CIRCLE-4, JAIPUR 2. IZR;FKHZ @ THE RESPONDENT- M/S PUSHP ENTERPRISES, JAIPUR. 3. VK;DJ VK;QDRVIHY @ THE CIT(A)-II, JAIPUR. 4. VK;DJ VK;QDR @ CIT, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 715/JP/2012) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR