ASST CIT 19(3), MUMBAI V. DEV NANIK WADHAWANI, MUMBAI

ITA 824/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93033 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 05-02-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' D ' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI SANJAY ARORA , ACCOUNTANT MEMBER ITA NO. 824/ MUM/2014 (ASSESSMENT YEAR: 2009 - 10 ) A C I T - 19(3) VS. SHRI DEV NANIK WADHAWANI ROOM NO. 305, 3RD FLOOR PIRAMAL CHAMBERS, PAREL MUMBAI 400012 FLAT NO. 1B, SANJANA APTS. 66, CARTER ROAD, BANDRA (W) MUMBAI 400050 PAN - AAIPW0562D APPELLANT RESPONDENT APPELLANT BY: SHRI SANJEEV KASHYAP RESPONDENT BY: NONE DATE OF HEARING: 16.07.2015 DATE OF PRONOUNCEMENT: 16.07.2015 O R D E R PER D. MANMOHAN, V.P. THIS IS AN APPEAL FILED AT THE INSTANCE OF THE REVENUE AND IT PERTAINS TO A.Y. 2009 - 10. 2. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER: - (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWANCE OF RS.13,48,260/ - OUT OF CREDIT CARD PAYMENTS HOLDING THAT THE SAME WERE MADE BY THIRD PARTY WHEREAS NO EVIDENCE WAS PRODUCED BEFORE THE ASSESSING OFFICER IN SUPPORT OF SUCH CLAIM. 3. FACTS NECESSARY FOR DISPOSAL OF THE APPEAL ARE STATED IN BRIEF. ASSESSEE IS ENGAGED IN THE BUSINESS OF CHAIN MARKETING. FOR THE YEAR UNDER CONSIDERATION HE DECLARED TOTAL INCOME OF ` 28,74,908/ - WHEREAS THE ASSESSMENT WAS COMPLETED BY DETERMINING THE TOTA L INCOME AT ` 55,69,770/ - WHICH INCLUDES ADDITION REFERABLE TO CREDIT CARD PAYMENTS OF ` 13,48,260/ - . ASSESSEE MAINTAINED FOUR CREDIT CARDS. IN RESPECT OF DEUTSCHE BANK CARD ASSESSEE CLAIMED TO HAVE MADE PAYMENT TO THE TUNE OF ` 15,68,262/ - WHEREAS AS PER THE AIR INFORMATION THE SUM WORKS OUT TO ` 29,16,522/ - . THE ITA NO. 824/ ITA NO. 824/MUM/ A C I T - 19(3) 2 DIFFERENTIAL AMOUNT OF ` 13,48,360/ - WAS SOUGHT TO BE ADDED BY THE AO. IN RESPONSE TO THE SHOW CAUSE NOTICE THE ASSESSEE SUBMITTED THAT SOME PAYMENTS WERE MADE BY THIRD PARTIES. EVIDENCE IN THE FORM OF LETTER DATED 22.12.2011 FROM QNET LIMITED, HONGKONG WAS FILED STATING THAT MR. DEV NANIK WADHWANI IS AN INDEPENDENT REPRESENTATIVE OF ITS COMPANY AND DURING THE PERIOD 01.04.2008 TO 31.03.2009 HE HAD MADE PURCHASES ON BEHALF OF HIS CLIENTS AMOUNTING TO US D 29310 AND THE FIGURE OF ` 13,48,260/ - REPRESENTS SUCH PAYMENTS. ACCORDING TO THE AO THE LETTER DID NOT ESTABLISH THAT THE PAYMENTS IN RESPECT OF THESE PURCHASES ARE MADE BY THE CLIENTS AND, THEREFORE, ADDED THE SUM TO THE TOTAL INCOME OF THE ASSESSEE. 4. A GGRIEVED, ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE ASSESSEE MADE PURCHASES FOR HIS CLIENTS (THIRD PARTIES) THROUGH CREDIT CARDS AND THE CLIENTS IN TURN REIMBURSE D DIRECTLY TO HIS CREDIT CARD. CONFIRMATION OF PURCHASES MADE BY THE ASSESSEE WERE PLACED BEFORE THE CIT(A). IT WAS SUBMITTED THAT THE ASSESSEE WAS A COMMISSION AGENT FOR THE DIRECT MARK ET ING COMPANY M/S. QNET LIMITED, HONGKONG AND MA RKETS PRODUCTS OF THE COM PAN IES THROUGH CHAIN NETWORK. IN ORDER TO ENLIST THE ENTRANTS TO THE NETWORK, I.E. TO PERSUADE THE CLIENTS TO PURCHASE THE PRODUCTS OF THE COMPANY ASSESSEE MADE PAYMENTS THROUGH CREDIT CARD INITIALLY SO THAT THE PURCHAS ER CAN MAKE THE PAYMENT AT A LATTER POI NT OF TIME, I.E. AFTER THE PRODUCT IS RECEIVED BY THE CUSTOMER. 5. THE LEARNED CIT(A) OBSERVED THAT THE PAYMENTS WERE MADE BY THE APPELLANT AS PART OF HIS BUSINESS OPERATIONS, I.E. PAYMENTS WERE MADE ON BEHALF OF HIS CLIENTS THROUGH CREDIT CARD WHILE SELLING THE GOODS OF A FOREIGN COMPANY CALLED M/S. Q N ET LTD., HONGKONG TO THE INDIAN CLIENTS. UPON DELIVERY OF THE GOODS THE CUSTOMERS HAD TO MAKE THE PAYMENT. HE ALSO OBSERVED THAT THE FOREIGN COMPA N IES HAVE CONFIRMED THAT THE APPELLANT MADE PURCHASES ON BEHA LF OF THE CLI ENTS USING HIS CREDIT CARD AND THUS THE INITIAL ONUS WAS DISCHARGED BY THE ASSESSEE. IF THE AO HAD ANY DOUBT HE COULD HAVE MADE CROSS VERIFICATION FROM SUCH CLIENTS REGARDING THE PAYMENT MADE BY THEM. SINCE THE AO SIMPLY PROCEEDED TO REJECT TH E EVIDENCE PLACED ON ITA NO. 824/ ITA NO. 824/MUM/ A C I T - 19(3) 3 RECORD WITHOUT ANY FURTHER ENQUIRY, THE LEARNED CIT(A) ARRIVED AT A CONCLUSION THAT THE ADDITION MADE BY THE AO IS NOT IN ACCORDANCE WITH LAW. 6. AGGRIEVED, REVENUE IS IN APPEAL BEFORE US. WE HAVE HEARD THE LEARNED DR WHO SOLELY RELIED UP ON THE ORDER PASSED BY THE AO. WE HAVE ALSO CAREFULLY GONE THROUGH THE RECORD. THERE IS NO MATERIAL ON RECORD TO INDICATE THAT THE AO HAS MADE ANY EFFORT TO INVESTIGATE THE CONTENTIONS OF THE ASSESSEE. ADMITTEDLY, THE ASSESSEE PURCHASED GOODS THROUGH CREDI T CARD ON BEHALF OF THE CLIENTS. THE AO HAS NOT DISPUTED THIS QUESTION AND IN FACT THE CLAIM OF THE ASSESSEE WAS SUPPORTED BY THE CONFIRMATION LETTER ISSUED BY M/S. QNET LIMITED, HONGKONG, WHO ARE THE PRINCIPALS OF THE ASSESSEE. UNDER THESE CIRCUMSTANCES W E ARE OF THE VIEW THAT THE ONUS, WHICH WAS SHIFTED UPON THE REVENUE, HAS NOT BEEN DISCHARGED PROPERLY. WE, THEREFORE, AFFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JULY, 2015. SD/ - SD/ - ( SANJAY ARORA ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 16 TH JULY, 2015 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 29 , MUMBAI 4. THE CIT 19 , MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI