Suvro Mukherjee, Howrah V. ACIT, Circle-46, Kolkata, Kolkata

ITA 765/KOL/2012

• Counselvise Citation: [2013] 119 COUNSELVISE.COM (IT) 2952 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Assessee
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 14-05-2012
• Court: TRIBUNAL
• Department Lawyers: L K S DEHIYA
• Keywords: Principle of natural justice; Assessment record
• Section: 143(3); 131; 263

Judgement Text

, B , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE . . . . . . . . , ! /AND ' #!' , ) [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM] !$ !$ !$ !$ / I.T.A NO. 765/KOL/2012 #% &' #% &' #% &' #% &'/ // / ASSESSMENT YEAR: 2007-08 SUVRO MUKHERJEE VS. ASSISTANT COMMISSIONER OF INCOME-TAX (PAN: AFCPM0891C) CIRCLE-46, KOLKATA. ()* /APPELLANT ) (+,)*/ RESPONDENT ) DATE OF HEARING: 14.02.2013 DATE OF PRONOUNCEMENT: 15.03.2013 FOR THE APPELLANT: SHRI SUBASH AGARWAL, ADVO CATE FOR THE RESPONDENT: SHRI L. K. S. DEHIYA, CIT(DR) - / ORDER PER BENCH: THIS APPEAL BY ASSESSEE IS ARISING OUT OF REVISION ORDER OF CIT-XVI, KOLKATA IN M. NO. CIT-XVI/263/11-12/3631-3633 DATED 28/30.03.2012. AS SESSMENT WAS FRAMED BY ACIT, CIRCLE- 46, KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DATED 31.12. 2009. 2. THE ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE REVISION ORDER PASSED U/S. 263 OF THE ACT BY CIT. FOR THIS, ASSESSEE HAS RAISED FOLLOWIN G EFFECTIVE GROUND NOS. 1, 2 AND 3: 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME-TAX IS BAD IN LAW AND ON FACTS OF THE CASE. 2. THAT THE LD. COMMISSIONER OF INCOME-TAX ERRED IN ISSUING DIRECTIONS U/S. 263 ON TE ISSUE THAT THE ASST. COMMISSIONER OF INCOME TAX FAI LED TO INVESTIGATE COMMISSION PAID BY THE ASSESSEE WHEREAS IT IS ON RECORD THAT EXTENSIVE INVESTIGATION INCLUDING ISSUE OF NOTICES U/S. 131 AND COMPLIANCE THEREOF WAS CONDUCTED BY LD . ASST. COMMISSIONER OF INCOME TAX. 3. THAT THE LD. COMMISSIONER OF INCOME-TAX ALSO ERR ED IN ISSUING THE DIRECTIONS REGARDING GENUINENESS OF COMMISSION PAID AFTER INIT IATING THE SAME ON THE GROUND AS TO WHY TDS WAS NOT DEDUCTED ON THE COMMISSION, THEREBY DEPRIVING THE ASSESSEE TO EXPLAIN HIS CASE IN RESPECT OF PROVING GENUINENESS OF COMMI SSION PAYMENT. 2 ITA NO.765/K/2012 SHRI SUVRO MUKHERJEE 2007-08 3. BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE THAT THE ASSESSMENT WAS FRAMED U/S. 143(3) FOR THE RELEVANT ASSESSMENT YEAR 2007-08 VIDE ORDER DAT ED 31.12.2009 BY ACIT, CIRCLE-46, KOLKATA. ACCORDING TO CIT, THE ASSESSMENT FRAMED U /S. 143(3) OF THE ACT IS PREJUDICIAL TO THE INTEREST OF REVENUE AS WELL AS ERRONEOUS FOR THE RE ASON THAT THE ASSESSEE HAS DEBITED SALES COMMISSION PAID TO THE FOLLOWING THREE PARTIES: I. EMINENT VYAPAAR PVT. LTD. RS. 3,80,000/- II. ANAM MERCHANTS PVT. LTD. RS. 3,80,000/- III. PAJERO TRADERS PVT. LTD. RS. 3,80,000/- RS.11,40,000/- ACCORDING TO CIT, THE ASSESSEE HAS NOT DEDUCTED ANY TDS WHILE MAKING SUCH PAYMENT AND THIS IS IN VIOLATION OF SECTION 194H OF THE ACT. HENCE, THE AMOUNT OF RS.11.40 LACS AS NOTED ABOVE SHOULD HAVE BEEN ADDED TO THE ASSESSEES TOTAL INCO ME WHILE COMPLETING ASSESSMENT U/S. 143(3) OF THE ACT BY INVOKING THE PROVISIONS OF SECTION 40 (A)(IA) OF THE ACT AS THERE IS NO DEDUCTION OF TDS. THE CIT TREATED THE ASSESSMENT FRAMED BY AO U /S. 143(3) AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE. HE ALSO NO TED THAT THERE IS NOTHING ON RECORD TO SHOW THAT AO HAS GONE INTO THE VERACITY OF THE CLAIM. ACCORD ING TO HIM, NO CROSS VERIFICATION HAS BEEN DONE ON THE ALLOWANCE OF COMMISSION. ACCORDINGLY, HE DIRECTED THE AO TO ENQUIRE INTO THE RECEIPT AND PAYMENT OF COMMISSION, EXAMINED ALL REL EVANT ISSUES, CONDUCT APPROPRIATE ENQUIRIES/CROSS VERIFICATION AND COMPLETE THE ASSES SMENT AFRESH DE NOVO. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE BEF ORE US PRODUCED COPIES OF ORDER SHEET ENTRY FROM ASSESSMENT RECORD, WHEREIN HE REFERRED TO THE ORDER SHEET ENTRY DATED 03.07.2009 AT PAGE 46 OF ASSESSEES PAPER BOOK, WHICH READS AS UNDER: 03.07.2009 : SHRI N. K. GOYAL C.A ATTENDED THE CAS E AND FILLED WRITTEN REPLY. ASKED TO PRODUCE/FURNISH - COPIES OF A/C OF COMMISSION RECEIVED AND PAID AND A LSO PARTIES. - BOOKS OF A/C AND RELEVANT DOCUMENT. - CASE FOR 15.07.09. FURTHER, HE REFERRED TO ORDER SHEET ENTRY DATED 16. 07.2009, WHICH READS AS UNDER: 16.07.2009: SHRI N. K. GOYAL CA ATTENDED THE CASE AND FILED OF COPIES OF A/C. ASKED TO FURNISH/PRODUCE - DETAILS AND REASONABILITY/WORKING OUT OF COMMISSION RECEIVED AND PAID PARTY WISE. - BOOKS OF A/C AND RELEVANT DOCUMENTS. 3 ITA NO.765/K/2012 SHRI SUVRO MUKHERJEE 2007-08 - CASE FOR 23.07.09. FURTHER, HE REFERRED TO NOTICE ISSUED U/S. 131 TO T HE THREE PARTIES AND THE RELEVANT ENTRY DATED 02.09.2009 READS AS UNDER: 02.09.2009 NOTICE REFIXATION ISSUED. SUMMONS U/S. 131 ISSUED TO 1. EMINENT VYAPAAR PVT. LTD. 2. ANAAM MERCHANTS PVT. LTD. 3. PAJERO TRADERS PVT. LTD. FURTHER, HE REFERRED TO ORDER SHEET ENTRY DATED 18. 12.2009, WHICH READS AS UNDER: 18.12.2009: SHRI SUBHRA MUKHERJEE AND SHRI N. K. GO YAL CA ATTENDED THE CASE AND FILLED WRITTEN REPLY. BOOKS OF A/C PRODUCED WHICH HAVE BE EN TEST CHECKED. STATEMENT OF SRI SUVRO MUKHERJEE RECORDED. ASKED TO PRODUCE/EXPLAIN- - REASONABILITY OF RENT PAYMENT - DETAILS OF COMMISSION RECEIVED AND PAID FOR LAST 5 YEARS - DETAILS OF SALARY - COPY OF TRAVELLING A/C - BOOKS OF A/C HE REFERRED TO THE DETAILS WHICH WERE FILED BEFORE THE AO I.E. THE COMMISSION PAYMENT MADE FROM ASSESSMENT YEARS 2004-05 TO 2008-09. THE DETA ILS OF COMMISSION PAID IN EACH OF THE YEAR READ AS UNDER: ASSESSMENT YEAR COMMISSION PAID TO COMMISSION AMO UNT (INR) 2004-05 2005-06 2006-07 2007-08 2008-09 PRIYA VINCOM PVT. LTD. PRIYA VINCOM PVT. LTD. EMINENT VYAPAAR PVT. LTD. PAJERO TRADERS PVT. LTD. ANAAM MERCHANTS PVT. LTD. EMINENT VYAPAAR PVT. LTD. PAJERO TRADERS PVT. LTD. ANAAM MERCHANTS PVT. LTD. EMINENT VYAPAAR PVT. LTD. PAJERO TRADERS PVT. LTD. ANAAM MERCHANTS PVT. LTD. 1498216.00 1747645.00 380000.00 380000.00 380000.00 380000.00 380000.00 380000.00 383000.00 385000.00 382000.00 5. HE STATED THAT THE AO EVEN ISSUED NOTICE U/S. 131 O F THE ACT AND THE SAME WERE COMPLIED BY FILING FOLLOWING DETAILS AND AO HAS VER IFIED AS WELL AS CROSS VERIFIED AND AFTER 4 ITA NO.765/K/2012 SHRI SUVRO MUKHERJEE 2007-08 VERIFYING THE SAME HE HAS TAKEN A DECISION. EVEN O THERWISE LD. COUNSEL FOR THE ASSESSEE STATED THAT THIS IS A HIGHLY DEBATABLE ISSUE AND SPECIAL B ENCH OF VIZAG IN THE CASE OF MERILYN SHIPPING & TRANSPORTS VS. ADDL. CIT (VISAKHAPATNAM)(SB) REPO RTED IN (2012) 136 ITD 23 (SB), WHEREIN IT HAS BEEN HELD THAT ONLY COMMISSION WILL BE DISALLOWED IN CASE THESE ARE NOT PAID DURING THE YEAR AND IT REMAINS PAYABLE. HE STATED THAT THE ENTIRE COMMISSION WAS PAID DURING THE YEAR AND THE ISSUE IS HIGHLY DEBATABLE. 6. ON THE OTHER HAND, THE LD. CIT(DR) SHRI L. K. S. DE HIYA STATED THAT THE ASSESSMENT FRAMED U/S. 143(3) OF THE ACT IS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF REVENUE FOR THE REASON THAT NO TDS WAS DEDUCTED ON SALES COMMIS SION PAID TO VARIOUS PARTIES BY THE ASSESSEE. HE ARGUED THAT THE DISALLOWANCE U/S. 40( A)(IA) OF THE ACT IS MANDATORY AND THE STATUTE HAS PROVIDED FOR DISALLOWANCE IN CASE TDS IS NOT DE DUCTED AND IT IS A FACT THAT THE ASSESSEE HAS NOT DEDUCTED TDS. IN THE PRESENT CASE BEFORE US, T HE ASSESSEE HAS FILED COMPLETE DETAILS IN RESPECT TO COMMISSION PAYMENT AND ALSO ISSUED SUMMO NS U/S. 131 OF THE ACT FOR CALLING OF DETAILS AND IN RESPONSE TO THE SAME ASSESSEE FILED COMPLETE DETAILS BEFORE THE AO AS NOTED IN THE ORDER SHEET ENTRY REPRODUCED ABOVE. EVEN OTHERWISE THE ISSUE IS DEBATABLE BEING COMMISSION PAYMENT BY THE DECISION OF THIS ITAT SPECIAL BENCH OF VIZAG IN THE CASE OF MERILYN SHIPPING & TRANSPORTS (SUPRA), WHEREIN IT IS HELD THAT THE D ISALLOWANCE WILL BE CARRIED OUT IN CASE THERE IS A PAYABLE SUM AT THE END OF THE YEAR AND NO DISALLO WANCE WILL BE MADE IN CASE THE AMOUNTS ARE ALREADY PAID. IN THIS CASE, THE FACT IS THAT THE A MOUNTS ARE PAID WITHIN THE RELEVANT FINANCIAL YEAR AND NOTHING REMAINS PAYABLE AS ON 31.03.2007. IN ENTIRETY OF THE FACT, THIS IS A HIGHLY DEBATABLE ISSUE AND ONCE THE ISSUE IS DEBATABLE, TH E CIT CANNOT REVISE THE ASSESSMENT BY INVOKING THE PROVISIONS OF SECTION 263 OF THE ACT A S HELD BY HONBLE SUPREME COURT IN THE CASE OF MALABAR INDUSTRIAL CO. LTD. VS. CIT (2000) 243 I TR 83 (SC), WHEREIN IT HAS BEEN HELD AS UNDER: 7. A BARE READING OF THIS PROVISION MAKES IT CLEAR THA T THE PREREQUISITE TO THE EXERCISE OF JURISDICTION BY THE COMMISSIONER SU O MOTU UNDER IT, IS THAT THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTERESTS OF THE REVENUE. THE COMMISSIONER H AS TO BE SATISFIED OF TWIN CONDITIONS, NAMELY, (I) THE ORDER OF THE ASSES SING OFFICER SOUGHT TO BE REVISED IS ERRONEOUS ; AND (II) IT IS PREJUDICIAL T O THE INTERESTS OF THE REVENUE. IF ONE OF THEM IS ABSENT-IF THE ORDER OF THE INCOME-TAX OFFICER IS ERRONEOUS BUT IS NOT PREJUDICIAL TO THE REVENUE OR IF IT IS NOT ERRONEOUS BUT IS PREJUDICIA L TO THE REVENUE-RECOURSE CANNOT BE HAD TO SECTION 263(1) OF THE ACT. 8. THERE CAN BE NO DOUBT THAT THE PROVISION CANNOT BE INVOKED TO CORRECT EACH AND EVERY TYPE OF MISTAKE OR ERROR COMMITTED B Y THE ASSESSING OFFICER, IT IS ONLY WHEN AN ORDER IS ERRONEOUS THAT THE SECTION WILL BE ATTR ACTED. AN INCORRECT ASSUMPTION OF FACTS OR 5 ITA NO.765/K/2012 SHRI SUVRO MUKHERJEE 2007-08 AN INCORRECT APPLICATION OF LAW WILL SATISFY THE RE QUIREMENT OF THE ORDER BEING ERRONEOUS. IN THE SAME CATEGORY FALL ORDERS PASSED WITHOUT APPLYI NG THE PRINCIPLES OF NATURAL JUSTICE OR WITHOUT APPLICATION OF MIND. 9. THE PHRASE PREJUDICIAL TO THE INTERESTS OF THE REV ENUE IS NOT AN EXPRESSION OF ART AND IS NOT DEFINED IN THE ACT. UN DERSTOOD IN ITS ORDINARY MEANING IT IS OF WIDE IMPORT AND IS NOT CONFINED TO LOSS OF TAX. THE HIGH COURT OF CALCUTTA IN DAWJEE DADABHOY AND CO. V. S. P. JAIN [1957] 31 ITR 872, THE HIGH COURT OF KARNATAKA IN CIT V. T. NARAYANA PAI [1975] 98 ITR 422, THE HIGH COURT OF BOMBAY IN CIT V. GABRIEL IND IA LTD [1993] 203 ITR 108 AND THE HIGH COURT OF GUJARAT IN CIT V. SMT. MI NALBEN S. PARIKH [1995] 215 ITR 81 TREATED LOSS OF TAX AS PREJUDICIAL TO TH E INTERESTS OF THE REVENUE. FURTHER, THE ASSESSEE HAS FILED COMPLETE DETAILS AN D AO HAS TAKEN A VIEW AFTER GOING THROUGH THE DETAILS AND ELABORATE EXAMINATION OF ALLOWABILI TY OF COMMISSION, IN SUCH CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE ASSESSMENT FRAMED U/S. 143 (3) OF THE ACT BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. HENCE, WE QUASH THE REVISION ORDER PASSED BY CIT U/S. 263 OF THE ACT. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 15.03.2013 . SD/- SD/- . . . . . . . . , ' ' ' ' #!' #!' #!' #!' , (P. K. BANSAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( . . . .) )) ) DATED : 15 TH MARCH, 2013 /0 #12 #3 JD.(SR.P.S.) 6 ITA NO.765/K/2012 SHRI SUVRO MUKHERJEE 2007-08 - 4 +##5 65&7- COPY OF THE ORDER FORWARDED TO: 1 . )* / APPELLANT SHRI SUVRO MUKHERJEE, 90/6/1, SHIBPUR R OAD, MANDIRTALA, HOWRAH-711102. 2 +,)* / RESPONDENT ACIT, CIRCLE-46, KOLKATA. 3 . #- ( )/ THE CIT(A), KOLKATA 4. 5. #- / CIT KOLKATA 5 <#= +# / DR, KOLKATA BENCHES, KOLKATA ,5 +#/ TRUE COPY, ->/ BY ORDER, ' !2 /ASSTT. REGISTRAR .