Barahi Marketing P.Ltd, New Delhi V. ITO, Ward-4(2), Nedw Delhi

ITA 8127/DEL/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 3810 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 21-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MITHUN SETHY
• Keywords: Opportunity of being heard; Additional evidence; TDS

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI A BEN CH, NEW DELHI BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER, AND SHRI AMIT SHUKLA, JUDICIAL MEMBER, ITA NO.8127/DEL/2018 [ASSESSMENT YEAR: 2013-14] BARAHI MARKETING PVT LTD. G-12, DRONACHARYA APARTMENTS, MAYUR VIHAR, PHAE-I, EXTN. DELHI - 110091 ITO, WARD-4(2), NEW DELHI PAN - AADCB6888P APPELLANT RESPONDENT APPELLANT BY SHRI C.S. ANAND RESPONDENT BY SHRI MITHUN SETHY DATE OF HEARING 14 /08 /2019 DATE OF PRONOUNCEMENT 14 /08 /2019 ORDER PER T.S. KAPOOR, ACCOUNTANT MEMBER THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A)-02, NEW DELHI, DATED 17/08/2018. THE GRO UNDS TAKEN BY THE ASSESSEE ARE AS UNDER:- 1. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, TH E ID. CIT(A) HAS ERRED IN DISMISSING THE APPELLANT'S PETI TION MOVED U/R 46A SEEKING ADMISSION OF FEW EVIDENCES AS ADDITIONA L EVIDENCES. AFTER RECEIVING THE APPELLANT'S PETITION U/R 46A AN D ALSO AFTER GOING THROUGH THE FACTS OF THE CASE, THE ID. CIT(A) HAD T AKEN A CONSCIOUS DECISION TO CALL FOR THE REMAND REPORT FROM THE ID. A.O. WHEN THE ID. CIT(A) HAD RECEIVED THE FINAL REMAND REPORT DT. 11. 06.2018 FROM THE ID. A.O., HE HAS TAKEN A U-TURN AND HELD THAT THE APPEL LANT DO NOT FULFILL THE CONDITIONS LAID DOWN U/R 46A. 2. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, TH E EXPENSES OF RS. 36,06,289/- INCURRED BY THE APPELLA NT ON SALES 2 PROMOTION (WHICH WERE REIMBURSED BY THE PRINCIPAL N AMELY EATON) OUGHT TO HAD BEEN ALLOWED. THE ID. A.O., VIDE FINAL REMAND REPORT DT. 11.06.20 18, HAD ADMITTED TO HAD EXAMINED THE EXPENSES WITH THE HELP OF SUPPORTI NG DOCUMENTS, DURING THE COURSE OF REMAND PROCEEDINGS. 3. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, TH E EXPENSES OF RS. 26,99,360/- INCURRED BY THE APPELLA NT ON TRAVELLING (WHICH WERE REIMBURSED BY THE PRINCIPAL NAMELY EATON) OUGHT TO HAD BEEN ALLOWED. THE ID. A.O., VIDE FINAL REMAND REPORT DT. 11.06.20 18, HAD ADMITTED TO HAD EXAMINED THE EXPENSES WITH THE HELP OF SUPPORTI NG DOCUMENTS, DURING THE COURSE OF REMAND PROCEEDINGS. 2. AT THE OUTSET, THE LD. AR SUBMITTED THAT THE ASS ESSEE COMPANY WAS WORKING AS SERVICE PROVIDER AND AS PER TERMS OF THE AGREEMENT, THE ASSESSEE WAS TO BE REIMBURSED SALARIES & MANAGEMENT CHARGES AT ACTUALS AND FOR THAT PURPOSE, ASSESSEE HAD RAISED M ONTHLY INVOICES IN RESPECT OF SERVICES PROVIDED BY IT. IT WAS SUBMITTE D THAT THE ASSESSEE HAD BEEN REGULARLY MAINTAINING ITS BOOKS OF ACCOUNT S, BILLS, ETC. AND WAS GETTING THE SAME AUDITED BY CHARTERED ACCOUNTANTS A ND DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD INCURRED EXPE NSES ON SALES PROMOTION AND TRAVELLING EXPENSES ON BEHALF OF THE ASSESSEE, WHICH WERE REIMBURSED BY THE M.N.C. COMPANY AND WHICH WAS INCLUDED IN THE GROSS RECEIPTS REFLECTED IN THE PROFIT & LOSS ACCOU NT AND THEREFORE, THE ACTION OF THE AUTHORITIES BELOW FOR MAKING ADDITION S WAS NOT WARRANTED. THE LD. AR FURTHER SUBMITTED THAT THE LD. CIT(A) HA D REQUIRED ASSESSING OFFICER TO SUBMIT REMAND REPORT ON THE ADDITIONAL E VIDENCES FILED BY THE ASSESSEE AND THE ASSESSING OFFICER IN THE REMAND RE PORT HAD STATED THAT 3 ADDITIONAL EVIDENCES SHOULD NOT BE ADMITTED AND THE REFORE, THE LD. CIT(A) AGAIN DIRECTED THE ASSESSING OFFICER TO SUBM IT REMAND REPORT ON MERITS OF THE EVIDENCES. IT WAS SUBMITTED THAT IN T HE SECOND REMAND REPORT, THE AO HIMSELF AGREED WITH THE CONTENTIONS OF ASSESSEE AND OUR ATTENTION WAS INVITED TO COPY OF REMAND REPORT DATE D 11/06/2018 PLACED IN PAPER BOOK PAGE-96. THE LD. AR SUBMITTED THAT AS SESSING OFFICER IN HIS REMAND REPORT HAS ACCEPTED THAT THE DOCUMENTS W ERE EXAMINED ON TEST CHECK BASIS AND HAD FOUND THEM IN ORDER AND TH EREFORE IT WAS PRAYED THAT APPEAL OF THE ASSESSEE BE ALLOWED. 3. THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORD ER OF THE AUTHORITIES BELOW. 4. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSING OFFICE R DURING THE ASSESSMENT PROCEEDINGS, HAS MADE ADDITION OF RS.63, 05,649/- ON ACCOUNT OF DISALLOWANCES OF SALE PROMOTION EXPENSES AND TRAVELLING EXPENSES BY HOLDING AS UNDER:- 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSAL OF DETAILS FILED BY THE ASSESSEE COMPANY, IT WAS OBSER VED THAT THE COMPANY HAS INCURRED AND CLAIMED RS.36,06,289/- AS SALES PROMOTION EXPENSES AS COMPARE TO RS.1,52,733/- IN THE IMMEDIA TE PRECEDING YEAR AND RS.26,99,360/- AS TRAVELLING EXPENSES AS C OMPARE AS TO RS.2,63,464/- IN THE IMMEDIATE PRECEDING YEAR. ASSE SSEE WAS ASKED TO FILE THE PARTY WISE DETAILS OF SALES PROMOTION E XPENSES WITH COPIES OF FORM 16A ISSUED TO THEM AND DETAILS OF TRAVELLING E XPENSES WITH PLACE OF TRAVEL, PERIOD OF TRAVEL AND NAME OF THE PERSON TRAVEL WITH JUSTIFICATION FOR BUSINESS PURPOSES ALONG WITH COPI ES OF BILLS. 4 IN SUPPORT OF WHICH ASSESSEE COMPANY HAD FILED THE LEDGER ACCOUNT OF THE EXPENSES CLAIMED AND VIDE LETTER DAT ED 24/02/2016 REGARDING JUSTIFICATION OF SALES PROMOTION EXPENSES THAT:- THE COMPANY IS ENGAGED IN DOING SALES PROMOTION ACT IVITIES FOR AND ON BEHALF OF PRODUCT OF M/S EATON AUTOMOTIVE IN DUSTRIES LTD. FOR DOING SO THE COMPANY HAS EMPLOYED SOME SALES EXECUT IVE PROCEDURE FOLLOWED FOR SALES PROMOTION EXPENSES ARE AS UNDER: - THE COMPANY (BMPL) ISSUE ADVANCE TO ITS SALES EXECU TIVES. THE ADVANCE IS TRANSFERRED TO SALES EXECUTIVES BANK AC COUNT. SALES EXECUTIVE COLLECTS THE COUPONS FROM THEIR ARE A OF OPERATION AND SENDS THE DETAILS TO BMPL ON WEEKLY OR MONTHLY BASIS AND THESE COUPONS ARE DISPATCHED TO EATON AUTOMOTIVE INDUSTRI ES LTD BY BMPL BASED ON WHICH AMOUNT IS RE-IMBURSED. COUPONS ARE COLLECTED FROM MECHANICS /REBORERS. THIS IS THE MAIN FUNCTION OF SALES EXECUTIVE AND AF FECTIVELY OF THE SAME HELPS TO GROW THE DEMAND AND IN TURN SALES OF THE COMPANY. THE COUPONS CHARGES PAID TO THE END USER OF PRODUCT OF EATEN BY THE BMPL HAVE BEEN DEBITED TO SALES PROMOTION EXPEN SES IN THE BOOKS OF ACCOUNT. THIS COUPON CHARGES ARE RE-IMBURSED BY THE EATON TO BMPL. THIS COUPON CHARGES ARE GIVEN BY EATON TO END USER THROUGH BMPL AS AN INCENTIVE TO PURCHASE LARGE QTY. IN REPLY TO THE TRAVELLING EXPENSES VIDE LETTER DAT ED 08.12.2015, IT WAS SUBMITTED THAT THE LEDGER ACCOUNT OF EXPENSE S IS ENCLOSED AND THESE EXPENSES WERE RE-IMBURSABLE EXPENSES SO, DETA ILS ARE WITH CLIENT CUSTOMER. REPLY OF THE ASSESSEE COMPANY IS CONSIDERED BUT NOT ACCEPTABLE AS THE ASSESSEE COMPANY HAS NOT FILED THE COPIES OF BILLS AND EVIDENCE OF TDS DEDUCTED THEREON WHEREAS INCOMPLETE DETAILS OF TRAVELLING AND SALES PROMOTION EXPENSES WERE FILED WHICH DOES NOT HAVE THE NAME., ADDRESS, PLACE OF TRAVELLING, PERIOD OF TRAVEL AND JUSTIFICATION FOR BUSINESS PURPOSES. MOREOVER DURING THE ASSESSMENT P ROCEEDINGS ASSESSEE COMPANY HAD ACCEPTED THAT THESE EXPENSES W ERE INCURRED ON BEHALF OF P/S EATON AUTOMOTIVE INDUSTRIES LIMITED A ND THE SAME ARE REIMBURSABLE FROM THE SAID COMPANY. NO JUSTIFICATIO N HAS BEEN FILED BY THE ASSESSEE COMPANY SINCE THE EXPENSES ARE REIMBUR SABLE, THEN HOW THE SAME ARE CLAIMED IN PROFIT & LOSS ACCOUNT. IN VIEW OF INCOMPLETE DETAILS , WHICH ARE NOT SUPPO RTED WITH THE BILLS AND VOUCHERS AND CONSIDERING THE FACT THAT TH ESE EXPENSES ARE REIMBURSABLE FROM M/S EATON AUTOMOTIVE INDUSTRIES L IMITED ON WHOSE BEHALF THESE EXPENSES WERE INCURRED, WHICH IS ACCEP TED BY THE ASSESSED COMPANY, I HEREBY DISALLOW RS. RS. 36,06,2 89/- AS SALES PROMOTION EXPENSES AND RS.26,99,360/- AS TRAVELING EXPENSES CLAIMED BY THE ASSESSEE COMPANY AND ADD THE SAME TO THE, INCOME OF THE ASSESSEE COMPANY. I AM ALSO SATISFIED THAT THE ASSESSEE COMPANY HAD FURNISHED INACCURATE PARTICULARS OF INCOME, FOR WHICH PENALTY PROCEEDINGS UNDER SECTION 271(1)(C)) ARE BEING INIT IATED SEPARATELY. 5 5. AGAINST THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AND FILED CERTAIN ADDI TIONAL EVIDENCES. THE ASSESSING OFFICER OBJECTED TO THE ADMISSION OF ADDI TIONAL EVIDENCES AND HIS OBJECTIONS AGAINST ADMISSION OF ADDITIONAL EVID ENCES IS PLACED AT PAPER BOOK PAGE 93 TO 94 OF THE PAPER BOOK. HOWEVER , THE LD. CIT(A) VIDE LETTER DATED 01/06/2018 PLACED IN PAPER BOOK P AGE 95, AGAIN DIRECTED THE ASSESSING OFFICER TO SUBMIT HIS COMMEN TS ON THE DOCUMENTS ON MERITS AND IN VIEW OF SUCH DIRECTIONS, THE ASSES SING OFFICER, VIDE LETTER DATED 11/06/2018, PLACED IN PAPER BOOK PAGE 96 STATED THAT HE HAD VERIFIED ON TEST CHECK BASIS THE BILLS AND BANK STA TEMENTS PERTAINING TO SALES PROMOTION EXPENSES AND TRAVELLING EXPENSES AN D HAS FOUND TO BE THEM IN ORDER. THE LD. CIT(A), ON RECEIPT OF SECOND REMAND REPORT DATED 11/06/2018, HOWEVER, DISMISSED THE APPEAL OF THE AS SESSEE BY HOLDING THAT THE ADDITIONAL EVIDENCES CANNOT BE ACCEPTED. T HIS FINDINGS OF THE LD. CIT(A) ARE CONTRARY TO HIS EARLIER DIRECTIONS WHERE BY HE HAS DIRECTED THE ASSESSING OFFICER TO FILE HIS OBSERVATIONS AND COMM ENTS ON MERITS OF THE ADDITIONAL EVIDENCES. FROM THE CONTENTS OF THE ASSE SSMENT ORDER AS REPRODUCED IN OUR ORDER, WE FIND THAT THE ASSESSING OFFICER HAD MADE THE DISALLOWANCE OF EXPENSES AS HE HELD THAT THESE EXPE NSES WERE REIMBURSABLE FROM THE COMPANY. THE ASSESSING OFFICE R IN THE REMAND REPORT DATED 11/06/2018 HAS NOT COMMENTED ON THIS A SPECT. THEREFORE, THE SECOND REMAND REPORT IS ALSO NOT SPECIFIC TO TH E ISSUE AND IS NON- 6 SPEAKING. THEREFORE, KEEPING IN VIEW, ALL THESE FA CTS AND CIRCUMSTANCES, WE DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO T HE OFFICE OF THE ASSESSING OFFICER, WHO SHOULD READJUDICATE ON THE I SSUE REGARDING DISALLOWANCES ON THE BASIS OF DOCUMENTS SUBMITTED B Y THE ASSESSEE. THE ASSESSING OFFICER IS ALSO DIRECTED TO VERIFY TH E CONTENTIONS OF THE ASSESSEE THAT THE ASSESSEE HAD RECEIVED THE REIMBUR SEMENTS FROM THE COMPANY WHICH HAD INCLUDED IN THE GROSS RECEIPTS DE CLARED BY IT. NEEDLESS TO SAY THAT THE ASSESSEE WILL BE PROVIDED SUFFICIENT OPPORTUNITY OF BEING HEARD. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 14/08/2019. SD/- SD/- [AMIT SHUKLA] [T.S. KAPOOR] JUDICIAL MEMBER ACCOUNTANT MEMBER DELHI; DATED: 14/08/2019. F{X~{T? F{X~{T? F{X~{T? F{X~{T? FA FA FA FA P.S P.SP.S P.S COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI