Appeal Details
Counselvise Citation
[2018] 121 COUNSELVISE.COM (IT) 5064 (ITAT-CHENNAI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
3 month(s) 16 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
21-06-2018
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
A
Assessment Year
2012-2013
Appeal Filed On
06-03-2018
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' . #$ , % & BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I.T.A.NOS.788, 778 & 779/CHNY/2018 ( / ASSESSMENT YEARS: 2012-13, 2013-14 & 2014-15) SMT. SARIKA JAIN, 30/1, GREEN AVENUE, FLOWERS ROAD, CHENNAI 600 010. VS THE DEPUTY COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 10(1), CHENNAI -34. PAN: AKSPS5624E ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT /DATE OF HEARING : 14.06.2018 /DATE OF PRONOUNCEMENT : 21.06.2018 / O R D E R PER A. MOHAN ALANKAMONY, AM:- THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDERS PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-12, CHENNAI, DATED 30.01.2018 IN ITA NO.37/CIT(A)/15-16 FOR THE ASSESSMENT YEAR 2012-13 AND DATED 31.01.2018 IN ITA NOS. 142/CIT(A)/15-16 & 129/CIT(A )/16-17 FOR 2 ITA NO.788, 778 & 779/CHNY /2018 THE ASSESSMENT YEARS 2013-14 & 2014-15 RESPECTIVELY , ALL PASSED U/S. 250(6) R.W.S. 143(3) OF THE ACT. 2. THE ASSESSEE HAS RAISED SEVERAL IDENTICAL GROUND S IN HER APPEALS HOWEVER THE CRUXES OF THE ISSUE ARE THAT (I) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDIT ION MADE BY THE LD.AO AMOUNTING TO RS.1,00,23,609/-, RS.1,93,77,593/- & RS. 30,15,948/- FOR THE ASSESSME NT YEARS 2012-13, 2013-14 & 2014-15 RESPECTIVELY, WITH RESPECT TO THE DISALLOWANCE OF COMMISSION PAID TO M /S. SAPRA LIMITED TOWARDS EXPORT ORDERS U/S. 37 OF THE ACT. (II) THE LD.CIT(A) HAS ERRED IN CONFIRMING THE ADDI TION MADE BY THE LD.AO AMOUNTING TO RS.13,61,354/- TOWARDS DISALLOWANCE OF DEDUCTION CLAIMED AS DISCOUNT U/S.40A(2)(B) OF THE ACT FOR THE ASSESSMENT YEAR 20 14-15. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF LEATHER CHEMI CALS, DYES AND PIGMENTS AS DEALER, FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEARS 2012-13, 2013-14 & 2014-15 ON 03.10.2013, 28. 09.2013 & 11.12.2014 ADMITTING TOTAL INCOME OF RS.38,59,260/- , 3 ITA NO.788, 778 & 779/CHNY /2018 RS.56,42,920/- & 73,18,8740/- RESPECTIVELY. THE CAS E WAS SELECTED FOR SCRUTINY AND FINALLY ASSESSMENT ORDER WAS PASSED U/S.143(3) OF THE ACT ON 16.03.2015, 29.02.2016 & 2 9.12.2016 FOR THE ASSESSMENT YEARS 2012-13, 2013-14 & 2014-15 RES PECTIVELY WHEREIN THE LD.AO MADE SEVERAL ADDITIONS. 4. GROUND NO. 2(I) : DISALLOWANCE OF COMMISSION PAID T O M/S. SAPRA LIMITED TOWARDS EXPORT ORDERS ( ASSESSME NT YEARS 2012-13, 2013-14 & 2014-15):- DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDI NGS, IT WAS OBSERVED BY THE LD.AO THAT THE ASSESSEE HAS PA ID A SUM OF RS.1,00,23,609/-, RS.1,93,77,593/- & RS. 30,15,948/ - TO M/S. SAPRA LIMITED, DUBAI, TOWARDS COMMISSION FOR PROCUR ING EXPORT ORDERS. IT WAS FURTHER NOTICED THAT SHRI D. NANDA K ISHORE WAS THE DIRECTOR IN M/S. SAPRA LIMITED. MOREOVER MANY OF TH E EXPORT ORDERS WERE DATED AFTER THE DATE OF SALE. THERE WER E ALSO LACK OF CORRESPONDENCE BETWEEN THE ASSESSEE AND THE EXPORT AGENT FROM WHICH IT WAS INFERED THAT THERE WERE NO SERVICES RE NDERED BY THE EXPORT AGENT TO THE ASSESSEE. BASED ON THE ABOVE FI NDING AND OBSERVATIONS, THE LD.AO DOUBTING THE GENUINENESS OF THE COMMISSION EXPENDITURE INCURRED TOWARDS EXPORT ORDE RS, 4 ITA NO.788, 778 & 779/CHNY /2018 DISALLOWED THE SAME AS ALLOWABLE DEDUCTION FOR ALL THE THREE ASSESSMENT YEARS. AGREEING WITH THE VIEW OF THE LD. AO, THE LD.CIT(A) UPHELD THE ORDERS OF THE LD.AO. 4.1 BEFORE US THE LD.AR SUBMITTED THAT THE OBSERVAT ION MADE BY THE LD.AO THAT THE EXPORT ORDERS WERE DATED SUBS EQUENT TO THE DATE OF SALES ARE ERRONEOUS. HE FURTHER PLEADED THA T ONE MORE OPPORTUNITY MAY BE PROVIDED BEFORE THE LD.AO IN ORD ER TO ESTABLISH THE GENUINENESS OF THE CLAIM OF EXPENDITU RE INCURRED TOWARDS EXPORT COMMISSION. THE LD.AR HAS ALSO FILED THREE VOLUMINOUS PAPER-BOOKS IN ORDER TO ESTABLISH THE FI NDINGS OF THE LD.REVENUE AUTHORITIES TO BE ERRONEOUS. THE LD.DR O N THE OTHER HAND VEHEMENTLY OPPOSED TO THE SUBMISSION OF THE LD .AR. 4.2 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFUL LY PERUSED THE MATERIALS ON RECORD. THE ASSESSEE HAS FILED THR EE VOLUMINOUS PAPER-BOOKS CONTAINING COMMISSION AGREEMENT BETWEEN ASSESSEE AND M/S. SAPRA LIMITED, LEDGER ACCOUNTS, S TATEMENT OF EXPORT SALES COMMISSION, EXPORT SHIPPING BILL, PAYM ENT ADVICE AND COPY OF THE SALES REGISTER WITH RESPECT TO THE RELE VANT ASSESSMENT YEARS TO ESTABLISH THE GENUINENESS OF THE CLAIM OF THE ASSESSEE. 5 ITA NO.788, 778 & 779/CHNY /2018 SINCE THE LD.AR HAS CLAIMED BEFORE US THAT THE BASI C FACTS OBSERVED BY THE LD.AO ARE INCORRECT AND ALSO HAS FI LED VOLUMINOUS PAPER-BOOK TO PROVE THE ERRONEOUS FINDIN GS OF THE LD.REVENUE AUTHORITIES, WE ARE OF THE CONSIDERED VI EW THAT THE ENTIRE ISSUE IS REQUIRED TO BE EXAMINED AFRESH. MOR EOVER THE LD.AR HAS ALSO PLEADED BEFORE US THAT THE MATTER MA Y BE REMITTED BACK TO THE FILE OF LD.AO FOR FRESH CONSIDERATION. THEREFORE IN THE INTEREST OF JUSTICE, WE HEREBY REMIT THE MATTER BAC K TO THE FILE OF LD.AO FOR DE-NOVA CONSIDERATION WITH DIRECTIONS TO ADMIT ANY EVIDENCE PRODUCED. WE ALSO HEREBY DIRECT THE ASSESS EE TO PROMPTLY CO-OPERATE BEFORE THE LD.REVENUE AUTHORITI ES IN THEIR PROCEEDINGS FAILING WHICH THE LD.REVENUE AUTHORITIE S SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDERS IN ACCORDANCE WI TH MERIT AND LAW BASED ON THE MATERIALS ON RECORD. 5. GROUND NO.2(II) : DISALLOWANCE OF DEDUCTION CLAIMED AS DISCOUNT U/S.40A(2)(B) OF THE ACT FOR THE ASSESSME NT YEAR 2014-15:- ON EXAMINING THE STATEMENT OF ACCOUNTS, IT WAS OB SERVED BY THE LD.AO THAT THE ASSESSEE HAD CLAIMED DEDUCTIO N UNDER THE HEAD DISCOUNT TO THE TUNE OF RS.28,01,551/-, OUT OF WHICH AN 6 ITA NO.788, 778 & 779/CHNY /2018 AMOUNT OF RS.27,22,709/- PERTAINS TO DISCOUNT GIVEN TO M/S. CHENITAN COLOR CHEM PVT. LTD., BEING 4% OF THE TURN OVER OF RS.6.81 CRORE. NO SUCH DISCOUNT WAS GIVEN IN THE EA RLIER ASSESSMENT YEARS BY THE ASSESSEE. SINCE THE ASSESSE E COULD NOT EXPLAIN THE REASON FOR GRANTING SUCH DISCOUNTS DURI NG THE RELEVANT ASSESSMENT YEAR, THE LD.AO DISALLOWED AN AMOUNT OF RS.13,61,354/- BEING 2% ON THE TURNOVER OF RS.6.81 CRORES. ON APPEAL, THE LD.CIT(A) UPHELD THE ORDER OF THE LD.AO BY AGREEING WITH HIS VIEW. 5.1 AT THE OUTSET, WE DO NOT FIND THE ORDERS OF THE LD.REVENUE AUTHORITIES APPROPRIATE ON THIS ISSUE. IT IS THE PR EROGATIVE OF THE ASSESSEE TO EXTEND DISCOUNT TO THEIR CLIENTS. FURTH ER 4% DISCOUNT ON THE TURNOVER IS NOT AN EXORBITANT AMOUNT FOR DOU BTING THE GENUINENESS OF THE TRANSACTION. THEREFORE WE HEREBY DIRECT THE LD.AO TO DELETE THE ADDITION MADE BY DISALLOWING TH E DISCOUNT GRANTED ON THE TURNOVER TO THE ASSESSEES CLIENTS B Y THE ASSESSEE. 6. IN THE RESULT, THE APPEALS FILED BY THE ASSESSEE FOR THE ASSESSMENT YEARS 2012-13 & 2013-14 ARE ALLOWED FOR STATISTICAL 7 ITA NO.788, 778 & 779/CHNY /2018 PURPOSES AND APPEAL FOR THE ASSESSMENT YEAR 2014-15 IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 21 ST JUNE, 2018 AT CHENNAI. SD/- SD/- ( ! ' . #$ ) ( . ) ( DUVVURU RL REDDY ) ( A. MOHAN ALANKAMONY ) ' #$ /JUDICIAL MEMBER #$ / ACCOUNTANT MEMBER %' /CHENNAI, &# /DATED 21 ST JUNE, 2018 RSR # )* +* /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. . ( )/CIT(A) 4. . /CIT 5. */0 1 /DR 6. 02 /GF
