M/s Awadh Wood Products, Kanpur V. The ACIT Cent. Circle-3, Kanpur

MA 59/LKW/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 7863 (ITAT-LUCKNOW)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 22-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 16-03-2012
• Assessment Year: 2001-2002
• Appeal Filed On: 16-12-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C MISHRA
• Keywords: Onus to prove

Judgement Text

[ 1 ] IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH, LUCKNOW BEFORE SHRI S. K. YADAV, JUDICIAL MEMBER AND SHRI B. R. JAIN, ACCOUNTANT MEMBER M.A. NO. 59 /LKW/11 (ARISING OUT OF I.T.A. NO.6 54 /LKW/ 06 ) ASSESSMENT YEAR: 200 1 - 200 2 M/S AWADH WOOD PRODUCTS, VS. A.C.I.T. - 3, KANPUR. KANPUR. (APPLICANT) (RESPONDENT) APPLICANT BY : SHRI RAKESH GARG, ADVOCATE RESPONDENT BY : S HRI K. C. MISHRA, D. R. DATE OF HEARING : 16 / 03 /201 2 DATE OF PRONOUNCEMENT : 2 2 / 0 3 / 2 0 1 2 ORDER PER B. R. JAIN: IN THE APPLICATION BY ASSESSEE INSTITUTED ON 16/12/2011 AGAINST THE TRIBUNAL ORDER DATED 20/12/2007 IN I.T.A. NO.654/LKW/06 IT IS CONTENDED THAT THERE IS MISTAKE IN THE ORDER OF THE APPELLATE TRIBUNAL IN UPHOLDING DISALLOWANCE OF ` 1,02,165/ - ON ACCOUNT OF COMMISSION PAID TO M/S KRISHNA ENTERPRISES, KANPUR AS IT HAS NOT GIVEN ANY REASON AS TO WHY THE ADDITION MADE OF ` 1,02,165/ - SUSTAINED BY LEARNED CIT(A) HAS BEEN UPHELD BY IT. 2. THE LEARNED COUNSEL FOR THE ASSESSEE DREW ATTENTION TO INTERNAL PARA 6 AND 7 OF THE AFORESAID TRIBUNAL ORDER AS ARE ALSO REPRODUCED IN THE APPLICATION [ 2 ] FILED BY HIM. FOR A BETTER UNDERSTANDING THE SAME ARE AGAIN REPRODUCED AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. REGARDING AUTHORITIES REFERRED TO BY THE ID. D.R., WE NOTICE THAT IN THE CASE OF CIT VS. CHANDRAVILAS HOTEL (SUPRA), THE ASSESSING OFFICER HAD COLLECTED MATERIAL BY PRIVATE ENQUIRY. THE HON'BLE GUJARAT HIGH COURT DIRECTED THAT SUCH MATERIAL MUST BE SHOWN TO THE ASSESSEE AND HE SHOULD BE GIVEN ADEQUATE OPPORTUNITY TO EXPLAIN IT. IN THAT CASE THE PERSON WHO STATED TO HAVE RECEIVED COMMISSION HAS GIVEN STATEMENT THAT HE HAD NOT RECEIVED PAYMENT BUT IN THE PRESENT CASE IT IS NOT SO. THERE IS NO MATERIAL BEFORE THE ASSESSING OFFICER TO THIS EFFECT. THE CASE OF CIT VS. TRANSPORT CORPN. OF INDIA LTD. (SUPRA) RELATED TO PAYMENT OF SECRET COMMISSION. THOUGH BURDEN OF PROOF IS ALWAYS ON THE ASSESSEE TO PROVE THAT PAYMENT OF COMMISSION IS MADE FOR COMMERCIAL CONSIDERATION. IN THE PRESENT CASE, IT IS NOT DISPUTED THAT SALES OF THE ASSESSEE HAS INCREASED ON ACCOUNT OF SERVICES RENDERED BY COMMISSION AGENTS. ACCORDINGLY FACT THAT PAYMENT WAS OF BUSINESS PURPOSES CANNOT BE DOUBTED. IN THE CASE OF LACHMINARAYAN M ADAN LAL VS. CIT (SUPRA) THE FACT WAS THAT AGREEMENT FOR PAYMENT OF COMMISSION WAS A MAKE BELIEF ARRANGEMENT. THERE IS NO SUCH FACT IN THE PRESENT CASE. ACCORDINGLY RATIO OF THESE DECISIONS WOULD NOT APPLY ON THE FACTS OF THE PRESENT CASE. 7. THE FACT O F PAYMENT OF COMMISSION IS NOT DENIED. THE FAD OF AFFECTING SALES THROUGH THOSE PARTIES IS ALSO NOT IN DISPUTE. EVEN THOUGH THE REVENUE HAS CONTENDED THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE JUSTIFICATION OF THE COMMISSION PAYMENT, BUT IN THE ABSENCE OF AN Y MATERIAL TO THE CONTRARY THAT SALES WERE NOT AFFECTED THROUGH THESE PARTIES OR THAT ASSESSEE HAS MANIPULATED DOCUMENTS FOR MAKING PAYMENT OF COMMISSION TO THESE PARTIES, ARGUMENTS OF THE REVENUE CANNOT BE UPHELD. ACCORDINGLY PAYMENT O F COMMISSION IS HELD TO BE FOR BUSINESS PURPOSES. HOWEVER, ONCE PAYMENT OF COMMISSION IS MADE @ 1% TO BALAII STORES, JAIPUR, THEN THERE IS NO REASON WHY IT SHOULD BE MADE @ 3% TO KRISHNA ENTERPRISES, KANPUR. REASONS HAVE BEEN ADVANCED BY THE ASSESSEE AS TO WHY COMMISSION HAS BE EN PAID @3% TO KRISHNA ENTERPRISES, KANPUR WHEREAS IT HAS BEEN PAID @1% TO BALAJI STORES, JAIPUR. THEREFORE, DISALLOWANCE MADE BY THE LD. CIT(A) @50% FROM THE COMMISSION PAID TO KRISHNA ENTERPRISES, K ANPUR IS JUSTIFIED AND IS THEREFORE UPHELD. FURTHER, SIN CE THE LD. CIT(A) WAS SATISFIED THAT PAYMENT OF [ 3 ] COMMISSION TO OTHERS WAS REASONABLE AND PROPER AND THERE IS NO MATERIAL TO THE CONTRARY, WE UPHOLD THE ORDER OF THE ID. CIT(A) IN RESPECT OF OTHERS. ACCORDINGLY THIS GROUND OF REVENUE AS WELL AS SIMILAR GROUN D OF THE ASSESSEE ON THIS POINT ARE REJECTED . ' 3. THE LEARNED COUNSEL FOR THE ASSESSEE FURTHER CONTENDS THAT THERE APPEARS TO BE SOMETHING MISSING IN THE AFORESAID ORDER AND AS ADEQUATE REASONS HAVE NOT BEEN RECORDED BY THE TRIBUNAL FOR SUSTAINING THE DISALLOWANCE AND THE ORDER BEING CONTRARY TO THE FACTS AND FINDING, THEREFORE, NEEDS RECTIFICATION. 4. ON THE OTHER HAND LEARNED D.R. CONTENDS THAT THERE IS NO MISTAKE APPARENT FROM RECORD WHICH IS RECTIFIABLE U/S 254(2) OF THE ACT AS THE APPELLATE TRIBUN AL HAS AGREED WITH THE REASONING OF LEARNED CIT(A) AND DISALLOWANCE HAS BEEN FOUND JUSTIFIED. 5. WE HAVE HEARD PARTIES AND HAVE CAREFULLY PERUSED THE TRIBUNAL ORDER DATED 20/12/2007 WITH REFERENCE TO THE APPLICATION OF THE ASSESSEE AND THE MATERIAL ON REC ORD. AT INTERNAL PARA 7 OF ITS ORDER , THE APPELLATE TRIBUNAL HAS FOUND THAT THE ASSESSEE HAS PAID COMMISSION @1% TO M/S BALAJI STORES, JAIPUR AND THUS THERE IS NO REASON THAT THE ASSESSEE SHOULD MAKE PAYMENT @3% TO M/S KRISHNA ENTERPRISES, KANPUR. THIS B EING SO AND A FTER CONSIDERING THE REASONING TAKEN BY THE ASSESSEE FOR MAKING PAYMENT AT A HIGHER RATE OF 3% TO M/S KRISHNA ENTERPRISES, KANPUR, IT FOUND THE DISALLOWANCE SUSTAINED BY LEARNED CIT(A) FOR 50% OF THE COMMISSION PAID WHICH WAS EQUAL TO 1.5 % OUT OF THE AFORESAID 3% RATE OF COMMISSION TO M/S KRISHNA ENTERPRISES AS JUSTIFIED . IT, THEREFORE, CANNOT BE SAID THAT THE APPELLATE TRIBUNAL DID NOT ASSIGN REASONS FOR [ 4 ] UPHOLDING THE DECISION TAKEN BY LEARNED CIT(A) TO BE JUSTIFIED. IF THE APPLICANTS CASE IS THAT THE APPELLATE TRIBUNAL DID NOT GIVE ADEQUATE REASONS, THEN ALSO THE ABSENCE OF ADEQUATE REASONS IN ORDER IS NOT TO BE TAKEN AS A MISTAKE APPARENT FROM RECORD . ITS ORDER , THEREFORE, CANNOT BE REVIEWED UNDER THE PECULIAR FACT FINDING REACHED BY TH E APPELLATE TRIBUNAL WHICH OTHERWISE IS NOT SHOWN TO BE PERVERSE BY MAKING REFERENCE TO ANY MATERIAL ON RECORD WITHIN THE MEANING OF SUB RULE (6) OF RULES 18 OF APPELLATE TRIBUNAL RULES 1963. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF POPULAR ENGINEERING CO. VS INCOME - TAX APPELLATE TRIBUNAL [2001] 248 ITR 577 (P&H) HAS ALSO ENTERTAINED A VIEW THAT ABSENCE OF ADEQUATE REASONS IN ORDER IS NOT A MISTAKE APPARENT FROM RECORD AND THUS ORDER CANNOT BE REVIEWED U/S 254(2) OF THE ACT. WE, THEREFORE, FINDING NO MISTAKE WITHIN THE MEANING OF SECTION 254(2) OF THE ACT IN THE ORDER DATED 20/12/2007 BY THE APPELLATE TRIBUNAL, REJECT THE APPLICATION. 6. IN THE RESULT, THE ASSESSEES MISC. APPLICATION STANDS REJECTED. (THE ORDER PRONOUNCED IN THE OPEN COUR T ON 2 2 / 0 3 / 2 0 1 2 ) SD/. SD/. ( S. K. YADAV ) ( B. R. JAIN ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 2 / 0 3 / 2 0 1 2 *SINGH 1603 COPY FORWARDED TO THE: 1. APPELLANT. 2. RESPONDENT. 3. CIT (A) 4. CIT 5. DR. ASSISTANT REGISTRAR