M/S CURRENT ELECTRICALS LTD, CHENNAI V. ACIT (OSD) CORPORATE RANGE 1, CHENNAI

ITA 818/CHNY/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6571 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 07-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN
• Assessee Lawyers: B RAMAKRISHNAN
• Keywords: Set aside
• Section: 40(a)(ia); 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.818/CHNY/2018 ( )( / ASSESSMENT YEAR : 2014-15 M/S CURRENT ELECTRICALS LTD., NO.202, SHIVALAYA BLOCK C, NO.16, ETHIRAJ SALAI, EGMORE, CHENNAI - 600 008. PAN : AAACC 2990 A V. THE ASSISTANT COMMISSIONER OF INCOME TAX (OSD), CORPORATE RANGE 1, CHENNAI - 600 034. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH. B. RAMAKRISHNAN, CA -.+, / 0 / RESPONDENT BY : SHRI B. SAGADEVAN, JCIT 1 / 2% / DATE OF HEARING : 01.04.2019 3') / 2% / DATE OF PRONOUNCEMENT : 30.04.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -1, CHENNA I, DATED 31.01.2018 AND PERTAINS TO ASSESSMENT YEAR 2014-15. 2 I.T.A. NO.818/CHNY/18 2. THE FIRST ISSUE ARISES FOR CONSIDERATION IS DISA LLOWANCE OF 4,20,000/- MADE UNDER SECTION 37 OF THE INCOME-TAX ACT, 1961 (IN SHORT 'THE ACT'). 3. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISA LLOWED A COMMISSION PAYMENT OF 4,20,000/- UNDER SECTION 37 OF THE ACT. ON APPEAL BY THE ASSESSEE, ACCORDING TO THE LD. REP RESENTATIVE, THE CIT(APPEALS) FOUND THAT THE TOTAL COMMISSION PAID W AS 13.2 LAKHS, THEREFORE, THE ASSESSING OFFICER WAS FOUND TO BE NO T JUSTIFIED IN DISALLOWING ONLY 4,20,000/-. ACCORDINGLY, THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO DISALLOW 13.2 LAKHS INSTEAD OF 4,20,000/-. ON A QUERY FROM THE BENCH WHETHER ANY NOTICE WAS ISSUED FOR ENHANCEMENT OF ASSESSMENT? THE LD. REPR ESENTATIVE SUBMITTED THAT NO NOTICE WAS ISSUED FOR ENHANCEMENT OF ASSESSMENT. 4. WE HEARD SHRI B. SAGADEVAN, THE LD. DEPARTMENTAL REPRESENTATIVE ALSO. ACCORDING TO THE LD. D.R., TH E ASSESSING OFFICER ADMITTEDLY DISALLOWED ONLY 4,20,000/-. THE ASSESSEE PAID 4,20,000/- TO ONE SHRI M. SARAVANAN, WHO IS THE EXE CUTIVE DIRECTOR OF THE ASSESSEE-COMPANY. ACCORDING TO THE LD. D.R. , THE ASSESSEE 3 I.T.A. NO.818/CHNY/18 CLAIMS THAT IT WAS COMMISSION PAYMENT, HOWEVER, NO DOCUMENTARY EVIDENCE WAS FILED. THE ASSESSING OFFICER DISALLOW ED THE CLAIM OF THE ASSESSEE. ACCORDING TO THE LD. D.R., WHEN THE APPEAL WAS HEARD BY THE CIT(APPEALS), THE CIT(APPEALS) FOUND T HAT WHAT WAS PAID TO THE EXECUTIVE DIRECTOR SHRI SARAVANAN IS 13.2 LAKHS AND NOT 4,20,000/-. THEREFORE, ACCORDING TO THE LD. D.R., THE CIT(APPEALS) DIRECTED THE ASSESSING OFFICER TO DISA LLOW 13.2 LAKHS INSTEAD OF 4,20,000/-. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. EVEN THOUGH THE ASSESSING OFFICER DISALLOWED 4,20,000/-, THE ASSESSEE CLARIFIED BEFORE THE CIT(APPEALS) THAT WHAT WAS PAID IS 13,20,000/- AND NOT 4,20,000/-. THE CIT(APPEALS) CONFIRMED THE ADDITIO N WITHOUT REFERENCE TO THE COMMISSION ACTUALLY PAID TO SHRI S ARAVANAN. THE FACT REMAINS THAT NO NOTICE WAS ISSUED BY THE CIT(A PPEALS) FOR ENHANCEMENT OF ASSESSMENT. THEREFORE, THIS TRIBUNA L IS OF THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RE-E XAMINED BY THE ASSESSING OFFICER. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW ARE SET ASIDE AND THE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE 4 I.T.A. NO.818/CHNY/18 MATTER IN THE LIGHT OF THE MATERIAL THAT MAY BE FIL ED BY THE ASSESSEE AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANC E WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 6. THE ASSESSEE HAS TAKEN ONE MORE GROUND WITH REGA RD TO DISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER SE CTION 40(A)(IA) OF THE ACT TO THE EXTENT OF 50,470/- TOWARDS LABOUR CHARGES. 7. SH. B. RAMAKRISHNAN, THE LD. REPRESENTATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSING OFFICER DISA LLOWED 1,26.955/- UNDER SECTION 40(A)(IA) OF THE ACT TOWAR DS PAYMENT MADE TO THE LABOURERS. ACCORDING TO THE LD. REPRES ENTATIVE, THE PAYMENT WAS MADE TO MULTIPLE LABOURERS. THE INDIVI DUAL PAYMENT TO EACH LABOURER DOES NOT EXCEED THE PRESCRIBED LIMIT OF 20,000/-. EVEN THOUGH NECESSARY MATERIAL WAS PLACED BEFORE TH E CIT(APPEALS), ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) RESTRICTED THE DISALLOWANCE TO 50,470/- INSTEAD OF 1,26,955/- DISALLOWED BY THE ASSESSING OFFICER. ACCORDING TO THE LD. REPRESENTATIVE, THE CIT(APPEALS) OUGHT TO HAVE DELE TED THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER. 5 I.T.A. NO.818/CHNY/18 8. WE HEARD SHRI B. SAGADEVAN, THE LD. D.R. ALSO. THE ASSESSING OFFICER DISALLOWED 1,26,955/-. HOWEVER, THE CIT(APPEALS) RESTRICTED THE DISALLOWANCE TO 50,470/-. THE ASSESSEE CLAIMS THAT INDIVIDUAL PAYMENT DOES NOT EX CEED THE PRESCRIBED LIMIT OF 20,000/- IN VIEW OF THE ABOVE, THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED. ACCORDINGLY, ORDERS OF BOTH THE AUTHORITIES BELOW A RE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF TH E ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE-EXAMINE THE MATTER I N THE LIGHT OF THE MATERIAL THAT MAY BE FILED BY THE ASSESSEE AND THER EAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE COURT ON 30 TH APRIL, 2019 AT CHENNAI. SD/- SD/- (. !'# ! ) ( . . . ) (A. MOHAN ALANKAMONY) (N.R.S. GANESA N) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 30 TH APRIL, 2019. 6 I.T.A. NO.818/CHNY/18 KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A)-1, CHENNAI 4. PRINCIPAL CIT, CHENNAI-1, CHENNAI 5. 7: -2 /DR 6. ;( < /GF.