HARIKISHAN P. SUREKA HUF, MUMBAI V. ITO 32(1)(5), MUMBAI

ITA 7606/MUM/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0550 (ITAT-MUMBAI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 28-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K KARDA M
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH SMC, MUMBAI BEFORE SHRI G.S.PANNU, ACCOUNTANT MEMBER ITA NO.7606/MUM/2016 (ASSESSMENT YEAR 2012-13) SHRI HARIKISHAN P. SUREKA HUF, A-8, SUGANDH BLDG., B P ROAD, DAHISAR (W), MUMBAI 400 068. PAN:AABHH0245P ...... APPELLANT VS. THE INCOME TAX OFFICER -32(1)(5), MUMBAI -400 020 .... RESPONDENT APPELLANT BY : SHRI VIMAL PUNMIYA RESPONDENT BY : SHRI A.K.KARDAM DATE OF HEARING : 11/05/2017 DATE OF PRONOUNCEMENT : 24/05/2017 ORDER THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERT AINING TO ASSESSMENT YEAR 2012-13 IS DIRECTED AGAINST AN ORDER PASSED BY CIT(A)-44, MUMBAI DATED 25/11/2016, WHICH IN TURN, ARISES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE I NCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 30/03/2015. 2. IN THIS APPEAL, THE ONLY GRIEVANCE OF THE ASSES SEE IS AGAINST THE ACTION OF THE CIT(A) IN UPHOLDING AN ADDITION OF RS.39,01, 826/- AS 1% COMMISSION ON THE TRANSACTIONS OF PURCHASES EFFECTED FROM M/S. BE LMONTE UNIFORMITY AND M/S. BELMONTE FANCY. 2 ITA NO.7606/MUM/2016 (ASSESSMENT YEAR 2012-13) 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE ASSESS EE HUF IS CARRYING ON BUSINESS IN TRADING OF TEXTILES COMMISSION AGENT AN D OTHER ALLIED ACTIVITIES UNDER THE PROPRIETARY CONCERN IN THE NAME OF M/S. HARI SUREKHA & CO. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED A RETURN OF INCOME DECLARING A TOTAL INCOME OF RS.8,24,200/-, WHICH WA S SUBJECT TO SCRUTINY ASSESSMENT. IN THE COURSE OF ASSESSMENT PROCEEDING S, ASSESSING OFFICER NOTED THAT ASSESSEE HAD MADE PURCHASES FROM M/S. BE LMONTE UNIFORMITY - RS.22,49,94,630/- AND M/S. BELMONTE FANCY RS.24,2 7,84,943/-, BOTH THE ENTITIES BEING DIVISIONS OF M/S. S. KUMARS NATIONW IDE. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO SUBMIT THE EVIDENCE OF REC EIPT OF MATERIAL FROM M/S. BELMONTE UNIFORMITY AND M/S. BELMONTE FANCY AN D, THEREAFTER, THE DISPATCH OF MATERIAL TO PARTIES TO WHOM IT HAS BEEN SOLD. THE CLAIM OF THE ASSESSEE WAS THAT THE TRANSACTIONS WERE IN THE COU RSE OF NORMAL ACTIVITY CARRIED OUT BY THE ASSESSEE, WHERE THE PRODUCTS ARE DIRECTLY DELIVERED BY THE SUPPLIERS OF THE ASSESSEE TO THE ULTIMATE CUSTOMERS OF THE ASSESSEE AS PER INSTRUCTIONS OF THE ASSESSEE. THE ASSESSING OFFICE R HOWEVER, DID NOT TREAT THE ASSESSEE AS A TRADER AND INSTEAD CONCLUDED THAT ASS ESSEE WAS DOING COMMISSION AGENT ACTIVITY AND RECEIVING COMMISSION FROM M/S. BELMONTE UNIFORMITY AND M/S. BELMONTE FANCY. THE ASSESSING OFFICER PROCEEDED TO ESTIMATE THE COMMISSION FROM THE TRANSACTIONS MADE WITH THE AFORESAID TWO CONCERNS @1%, WHICH WO RKED OUT TO RS.46,77,796/-, AND AFTER REDUCING THE INCOME FROM BUSINESS ALREADY DECLARED BY THE ASSESSEE, THE BALANCE OF RS.39,01,8 26/- WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. THE SAID ADDITION H AS ALSO BEEN SUSTAINED BY THE CIT(A). 3 ITA NO.7606/MUM/2016 (ASSESSMENT YEAR 2012-13) 4. BEFORE ME, THE LD.REPRESENTATIVE FOR THE ASSESSE E POINTED OUT THAT THE ADDITION HAS BEEN MADE ON MERE CONJECTURES AND SURMISES IN AN ADHOC MANNER AND, THEREFORE, DESERVES TO BE DELETED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE HAS MERELY REITERATED THE STAND OF THE ASSESSING OFFICER, WHIC H I HAVE ALREADY NOTED IN EARLIER PARAS AND THE SAME IS NOT BEING REPEATED FO R THE SAKE OF BREVITY. 6. HAVING CONSIDERED THE RIVAL STANDS, I FIND NO JU STIFICATION FOR THE ACTION OF THE ASSESSING OFFICER TO ESTIMATE THE COMMISSION INCOME @1% AS AGAINST INCOME DECLARED BY THE ASSESSEE IN ITS ACCOUNT BOOK S. NOTABLY, THE DISCUSSION IN THE ASSESSMENT ORDER ALSO REVEALS THA T ASSESSING OFFICER MADE CERTAIN ENQUIRIES WITH M/S. S.KUMARS NATIONWIDE, AN D IF, ASSESSING OFFICER HAD ANY DOUBT WITH REGARD TO THE LEVEL OF COMMISSIO N EARNED BY THE ASSESSEE, AN APPROPRIATE ENQUIRY COULD HAVE BEEN PU T TO M/S. S.KUMARS NATIONWIDE. SO HOWEVER, SUCH AN APPROACH IS CONS PICUOUS BY ITS ABSENCE AND, THEREFORE, THE ESTIMATION MADE @1% BY THE ASSE SSING OFFICER IS WITHOUT ANY BASIS AND THE SAME IS LIABLE TO BE SET-ASIDE. I HOLD SO AND THE ASSESSING OFFICER IS DIRECTED TO DELETE THE ADDITION MADE BY HIM OF RS.39,01,826/-. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED , AS ABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 24/05/2017 SD/- (G.S. PANNU) ACCOCUNTANT MEMBER MUMBAI, DATED 24/05/2017 VM , SR. PS 4 ITA NO.7606/MUM/2016 (ASSESSMENT YEAR 2012-13) COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT , 2. THE RESPONDENT. 3. THE CIT(A)- 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI