Dy. Commissioner of Income Tax -6, Kanpur V. M/s Deep Management & Eco Consultant Pvt. Ltd., Kanpur

ITA 97/LKW/2012

• Counselvise Citation: 9723714 RSA 2012
• Duration Of Justice: 3 year(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-03-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PUNIT KUMAR
• Keywords: Assessment record
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO. 97/LKW/2012 ASSESSMENT YEAR: 2006 - 07 DCIT 6 KANPUR V. M/S DEEP MANAGEMENT & ECO CONSULTANT PVT. LTD. 15/212-B, CIVIL LINES KANPUR T AN /PAN : AABCD0652P (APP ELL ANT) (RESPONDENT) APP ELL ANT BY: SHRI. PUNIT KUMAR, D.R. RESPONDENT BY: SHRI. RAKESH GARG, ADVOCATE DATE OF HEARING: 17 03 201 5 DATE OF PRONOUNCEMENT: 26 0 3 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE REVENUE AGAINST TH E ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I I, KANPUR, HAS ERRED IN LAW AND ON FACTS BY IGNORING THE FACTS AND FINDINGS OF THE ASSESSING OFFICER THAT ASSESSEE COMPANY COUL D NOT FURNISH THE COMPLETE ADDRESSES OF THE ALLEGED PERSO NS AND THEIR CONFIRMATIONS WITH PAN TO WHOM COMMISSION HAS BEEN PAID. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-I I, KANPUR, HAS ERRED IN LAW AND ON FACTS BY ACCEPTING ADDITION AL EVIDENCES OR FRESH EVIDENCES DURING APPELLATE PROCEEDINGS WHE REAS THE SAME SHOULD NOT TAKE INTO ACCOUNT ANY, EVIDENCE PRO DUCED UNDER SUB-RULE (1) OF RULE 46A UNLESS THE ASSESSING OFFICER HAS BEEN ALLOWED A REASONABLE OPPORTUNITY. :-2-: 3. THAT THE ORDER OF ID. COMMISSIONER OF INCOME TAX (A PPEALS) BEING ERRONEOUS, IN LAW AND ON FACTS DESERVES TO BE VACATED AND THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 2. THE MAIN ISSUE INVOLVED IN THIS APPEAL IS WITH REGA RD TO THE DISALLOWANCE OF COMMISSION PAID TO DIFFERENT PERSON S AND BROKERS FROM TIME TO TIME DEPENDING UPON THE BUSINESS PROCURED THROUG H THEM. 3. THE FACTS IN BRIEF BORNE OUT FROM THE RECORD ARE TH AT THE ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MUTUAL FUND FROM DIFFERENT CLIENTS AND ON THE BUSINESS SO PROCURED, ASSESSEE COMPANY EARNS COMMISSION INCOME. THE ASSESSEE HAS RECEIVED A TOT AL COMMISSION OF RS.2,37,84,016/- AS AGAINST RS.1,03,44,625/- WHICH SHOWS A 130% INCREASE IN THE TOTAL BUSINESS. AGAINST THE AFORESAID RECEI PT, THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS.2,06,81,369/- ON ACCOU NT OF COMMISSION PAID TO THE BROKERS AND DIFFERENT PERSONS FROM TIME TO T IME DEPENDING UPON THE BUSINESS PROCURED THROUGH THEM. THE ASSESSEE WAS R EQUIRED TO FURNISH THE LIST OF ALL THE PERSONS TO WHOM COMMISSION WAS PAID . THE DETAILS WERE FURNISHED BEFORE THE ASSESSING OFFICER AND ON ACCOU NT OF INCOMPLETE ADDRESS OF CERTAIN COMMISSION AGENTS, THE ASSESSING OFFICER HAS MADE DISALLOWANCE OF 10% OF THE TOTAL COMMISSION PAID AN D MADE ADDITION OF RS.20,68,140/-, AGAINST WHICH AN APPEAL WAS FILED B EFORE THE LD. CIT(A) AND THE LD. CIT(A) RE-EXAMINED THE CLAIM IN THE LIGHT O F EVIDENCE FILED BY THE ASSESSEE. 4. THE LD. CIT(A) HAS ALSO MADE TEST CHECK AND SUMMONS WERE ALSO ISSUED TO FEW PERSONS FOR CONFIRMATION OF THE TRAN SACTION TO THE COMMISSION PAID. COMPLIANCE WAS RECEIVED AND THE S AME WAS ANALYZED BY THE LD. CIT(A). BEING CONVINCED WITH THE EXPLANATI ONS AND EVIDENCE PLACED BEFORE THE LD. CIT(A), HE DELETED THE ADDITION. 5. NOW THE REVENUE HAS FILED AN APPEAL BEFORE THE TRIB UNAL WITH THE SUBMISSION THAT NEW EVIDENCE WAS FILED BEFORE THE L D. CIT(A) AND THE LD. :-3-: CIT(A) HAS ADMITTED THE SAME IN GROSS VIOLATION OF RULE 46A OF THE RULES. THEREFORE, THE ORDER PASSED BY THE LD. CIT(A) IS IN GROSS VIOLATION OF THE PROVISIONS OF RULE 46A OF THE RULES. 6. PER CONTRA, THE LD. COUNSEL FOR THE ASSESSEE HAS SU BMITTED THAT NO NEW EVIDENCE WAS FILED BY THE ASSESSEE BEFORE THE L D. CIT(A) AND ON THE AVAILABLE EVIDENCE THE LD. CIT(A) HAS MADE AN ENQUI RY BY ISSUING SUMMONS TO VERIFY THE CORRECTNESS OF THE PAYMENT OF COMMISS ION. THEREFORE, THERE IS NO VIOLATION OF THE PROVISIONS OF RULE 46A OF THE R ULES. IN ORDER TO VERIFY THE CORRECT FACTUAL POSITION, THE LD. D.R. WAS DIRECTED TO PRODUCE THE LD. CIT(A)S FOLDER AND THE ASSESSMENT RECORD. THESE D IRECTIONS WERE GIVEN FIRST TIME ON 7.1.2015 AND THEREAFTER THE MATTER WA S LISTED FOR HEARING ON 10.2.2015; 19.2.2015; 27.2.2015 AND 17.3.2015. PUR SUANT TO THE DIRECTIONS OF THE TRIBUNAL, THE LD. D.R. HAS ALSO WRITTEN LETT ERS TO THE ASSESSING OFFICER AND THE LD. CIT(A) FOR PRODUCTION OF THE LD. CIT(A) S FOLDER AND ASSESSMENT RECORD. BUT DESPITE VARIOUS OPPORTUNITIES GRANTED TO THE REVENUE, NEITHER THE LD. CIT(A)S FOLDER NOR THE ASSESSMENT RECORD W AS PRODUCED BEFORE THE TRIBUNAL. UNDER THESE CIRCUMSTANCES, WE HAVE NO OP TION BUT TO ACCEPT THE FINDINGS GIVEN BY THE LD. CIT(A) IN HIS ORDER WITH REGARD TO THE AVAILABILITY OF EVIDENCE ON RECORD. 7. ON A CAREFUL PERUSAL OF THE ORDER OF THE LD. CIT(A) , WE FIND THAT THE LD. CIT(A) HAS CATEGORICALLY MENTIONED IN HIS ORDER THAT THE ASSESSING OFFICER HAS MADE AD-HOC DISALLOWANCE AND NEED WAS F ELT TO DECIDE THE ISSUE ON TEST CHECK BASIS. THE LD. CIT(A) ISSUED SUMMONS ON TEST CHECK BASIS TO FEW PERSONS FOR THE PURPOSE OF CONFIRMATION OF THE TRANSACTION PAID TO THE COMMISSION AGENTS AND CONFIRMATION RECEIVED BY THE LD. CIT(A) WAS ANALYZED AND BEING CONVINCED WITH IT, HE DELETED TH E ADDITION. THE RELEVANT OBSERVATIONS OF THE LD. CIT(A) ARE EXTRACTED HEREUN DER FOR THE SAKE OF REFERENCE:- :-4-: 3.4.1 THE RECORDS WERE CALLED FOR. THE SAME ARE IN TWO VOLUMES AND WERE EXAMINED. I FIND THAT THE ASSESSEE HAD FURNISH ED COMPLETE DETAILS OF THE COMMISSION PAID. THE DETAILS INCLUDE THE NAME, ADDRESSES AND THE AMOUNT OF THE COMMISSION PAID. TH E CONFIRMATIONS FROM THE PARTIES TO WHOM COMMISSION H AD BEEN PAID HAS ALSO BEEN FILED ALONGWITH THE SAID LIST. THE SA ME IS AVAILABLE ON THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OF FICER HAS NOT POINTED OUT ANY DEFECT OR DISCREPANCY IN THE SAME. IT APPEARS THAT ON RECEIPT OF THE DETAILS AND LIST OF COMMISSION PA ID THE AO PROCEEDED TO COMPLETE THE ASSESSMENT. THE SAME IS A PPARENT FROM THE ORDER SHEET ALSO. THE RELEVANT PORTION OF THE O RDER SHEET IS REPRODUCED BELOW. 11.12.2008 TO FILE DETAILS/NAMES WITH COMPLETE ADD RESS OF THE PERSONS TO WHOM COMMISSION HAS BEEN PAID WI TH CONFIRMATION. 19.12.2008 SHRI HK, FCA ATTENDS FOR THE ASSESSEE A ND FILES LETTER OF DATE 15.12.2008 WITH REQUIRED DETAILS WHICH ARE SEEN. BOOKS OF ACCOUNTS ARE ALSO PRODUCED WHICH ARE PUT TO TEST CHECK. CASE DISCUSSED WITH HIM. ' 3.5 THEREAFTER THERE IS NO OTHER ENTRY IN THE ORDER SHEET WITH REFERENCE TO THE ABOVE. THE ASSESSMENT ORDER CAME T O BE PASSED ON 19.12.2008 ITSELF. THE AO DID NOT EVEN MAKE ANY FUR THER ENQUIRY BY ISSUE OF ANY NOTICE U/S 131 OR 133(6). MEANING THER EBY THE AO HAD NO DOUBTS ABOUT THE GENUINENESS OF THE PAYMENTS. ON CE WHEN THE DETAILS WERE FILED, HOW THE AO HAS MENTIONED THAT I NSPITE OF REPEATED REQUESTS THE DETAILS WERE NOT FILED IS NOT UNDERSTA NDABLE. ALSO WHEN THE DETAILS WERE FILED, AND IF THE AO WAS NOT SATIS FIED WITH THE EXPLANATION OR THE DETAILS FILED THE AO WAS DUTY BO UND TO MAKE FURTHER INQUIRIES BEFORE MAKING ANY DISALLOWANCE. F IRST THE AO CALLED FOR THE DETAILS AND WHEN THE DETAILS WERE PROVIDED, FAILED TO MAKE ANY INQUIRY AND THEREAFTER SIMPLY PROCEEDED TO MAKE THE ADDITION ON :-5-: ADHOC BASIS. THE FAILURE ON THE PART OF THE AO TO M AKE FURTHER INQUIRY, ITSELF HAS MADE THE ADDITION WITHOUT JURIS DICTION. THIS IS NOT DONE. 3.6 IN ABSENCE OF THE VERIFICATION BY THE A.O BEFOR E REACHING TO THE CONCLUSION OF ADDITION OF COMMISSION OF RS.20,68,14 0/- (@ 10% OF THE TOTAL COMMISSION PAID ON ADHOC BASIS, IT WAS FE LT NECESSARY TO DECIDE THE ISSUE FURTHER ON TEST CHECK BASIS BEFORE ARRIVING ON ANY DECISION IN THE COURSE OF APPELLATE PROCEEDINGS. AC CORDINGLY, THE OFFICE OF THE UNDERSIGNED ISSUED SUMMONS ON TEST CH ECK BASIS TO FEW PERSONS FOR THE PURPOSE OF CONFIRMATION OF THE TRAN SACTIONS OF THE COMMISSION PAID. THE COMPLIANCES RECEIVED, IN RESPO NSE TO THE SUMMONS ISSUED, HAVE BEEN ANALYSED AND FOUND THE CO NFIRMATIONS OF TRANSACTIONS BY THEM. UNDER THESE PERSPECTIVES OF C ONFIRMATIONS OF TRANSACTIONS OF PAYMENT OF COMMISSION BY THE RECIPI ENTS, THE DISALLOWANCE MADE BY THE A.O DOES NOT HOLD GOOD. TH E A.R OF THE ASSESSEE HAD ALREADY ARGUED BEFORE THAT THE CONFIRM ATIONS FROM THE PERSONS WHOM THE COMMISSION CLAIMED TO HAVE BEEN PA ID HAVE ALREADY BEEN FILED DURING THE ASSESSMENT PROCEEDING S BEFORE THE A.O. IN SPITE OF CONFIRMATIONS FROM THESE PERSONS L YING IN THE ASSESSMENT RECORD, DISALLOWANCE OF RS.20,68,1407- H AS BEEN REACHED BY THE A.O ON AHOC BASIS. THEREFORE, IT WAS NEEDED TO HAVE INDEPENDENT VERIFICATIONS OF FEW OF THEM TO REACH T O THE DECISION AS PER THE PROVISIONS OF RULE 46A(4) WHICH HAS RESULTE D INTO CONFIRMATION OF THE SAID TRANSACTIONS. THEREFORE, DISALLOWANCE O F THE COMMISSION BY THE A.O DESERVES TO BE DELETED. ON CONSIDERATION OF THE WHOLE PERSPECTIVE OF THE CASE AND THE CIRCUMSTANCES, THE ADDITION OF COMMISSION IS HEREBY DELETED. 8. SINCE THE REVENUE HAS NOT BROUGHT OUT ANY MATERIAL ON RECORD TO REBUT THE FINDINGS GIVEN BY THE LD. CIT(A), WE HAD NO OPTION BUT TO ACCEPT THE FINDINGS OF THE LD. CIT(A). MOREOVER, WHILE AD JUDICATING THE ISSUE THE LD. CIT(A) HAS ALSO ISSUED SUMMONS TO ASCERTAIN THE CORRECTNESS OF THE PAYMENT OF COMMISSION. THE CONFIRMATION RECEIVED B Y THE LD. CIT(A) WAS :-6-: ALSO ANALYZED BY HIM AND BEING CONVINCED WITH THE E XPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) DELETED THE ADDITION. SIN CE NO INFIRMITY HAS BEEN POINTED OUT BY THE LD. D.R. IN THE ORDER OF THE LD. CIT(A), WE CONFIRM HIS ORDER. ACCORDINGLY, THE APPEAL OF THE REVENUE STAN DS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE STANDS DISMISS ED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED ON THE CAPTIONED PAGE. SD/ - SD/ - [ A. K. GARODIA ] [ S UNIL KUMAR Y ADAV ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 26 TH MARCH, 2015 JJ:1703 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR