Addl. CIT, Karnal v. Anand Pharma, Karnal

CO 278/DEL/2009 | 2006-2007
Pronouncement Date: 12-03-2010 | Result: Dismissed

Appeal Details

RSA Number 27820123 RSA 2009
Assessee PAN AAKFA1454E
Bench Delhi
Appeal Number CO 278/DEL/2009
Duration Of Justice 6 month(s) 19 day(s)
Appellant Addl. CIT, Karnal
Respondent Anand Pharma, Karnal
Appeal Type Cross Objection
Pronouncement Date 12-03-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 12-03-2010
Date Of Final Hearing 22-02-2010
Next Hearing Date 22-02-2010
Assessment Year 2006-2007
Appeal Filed On 24-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : A NEW DELHI) BEFORE SHRI R.P. TOLANI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER ITA NO.2982/DEL./2009 (ASSESSMENT YEAR : 2006-07) ANAND PHARMA VS. ADDL. CIT C/O SHRI GIRISH ANAJA C.A. KARNAL. 796 SECTOR 143 URBAN ESTATE KARNAL-132001. (HARYANA) (PAN/GIR NO.AAKFA1454E) AND C.O. NO.278/DEL./2009 (IN ITA NO.2982/DEL./2009) ASSESSMENT YEAR : 2006-07 ADDL. CIT VS. ANAND PHARMA KARNAL. KARNAL. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GIRISH ANEJA CA REVENUE BY : MS. PRATIMA KAUSHIK SR.DR ORDER PER A.K. GARODIA AM THIS IS AN ASSESSEES APPEAL AND THE C.O. IS FILED BY THE REVENUE. BOTH ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME-TAX (APPEALS) KARNAL DATED 09.04.2009 FOR AY 2006-07. BOTH ARE BEING DISPOSED BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. IN THE C.O. FILED BY THE REVENUE THE AO HAS SIMPLY SUPPORTED THE ORDER OF THE CIT(A) AND SINCE ALL THE THREE ISSUES RAISED IN THE C.O. WILL BE DECIDED WHILE DECIDING THE APPEAL OF THE ASSESSEE NO SEPARATE AD JUDICATION IS CALLED FOR REGARDING THE C.O. FILED BY THE REVENUE. HENCE THE SAME IS DISMI SSED AS INFRUCTUOUS. 2. REGARDING ASSESSEES APPEAL GROUND NO.1 OF THE APPEAL READS AS UNDER: THAT THE A.O. HAS ERRED IN LAW & FACTS IN MISCONCE IVING THE TOTAL ADDITIONS OF RS.200000/- MADE BY THE PARTNERS IN THEIR CAPITAL A /CS AS INCOME OF THE ASSESSEE FIRM FROM UNDISCLOSED SOURCES AND THE LD.CIT(APPEAL S) HAS WITHOUT ANY SUBSTANTIVE BASIS CONFIRMED THE SAME. I.T.A. NO.2982/DEL./2009 & C.O. NO.278/DEL./2009 (AY : 2006-07) 2 3. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO ON PA GE 2 PARAGRAPH 2 OF THE ASSESSMENT ORDER THAT THE ASSESSEE FIRM HAS SHOWN ADDITION TO PARTNERS CAPITAL ACCOUNT TO THE EXTENT OF RS.90 000/- IN THE NAME OF SMT. POONAM RANI RS.60 000/- IN THE NAME OF SMT. SWEETY ARORA AND RS.50 000/- IN THE NAME OF SHRI ANAND MOH AN. THE AO HAS STATED THAT THESE DEPOSITS IN THE PARTNERS CAPITAL ACCOUNT COULD NOT BE EXPLAINED PROPERLY AND HENCE THE AO TREATED THE SAME AS UNEXPLAINED CASH CREDIT AND MAD E ADDITION OF RS.2 LAKH BEING THE TOTAL ADDITION IN PARTNERS CAPITAL A/C OF ALL THESE THREE PARTNERS. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THIS ADDITION ON THE BASIS THAT ALTHOUGH THE ASSESSEE HAS ESTABLISHED TH E IDENTITY BUT COULD NOT ESTABLISH THE CREDITWORTHINESS OF THE THREE PARTNERS AND BY MAKIN G THESE OBSERVATIONS HE HAS CONFIRMED THE ASSESSMENT ORDER ON THIS ISSUE. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE THA T THE CAPITAL ACCOUNT OF ALL THE THREE PARTNERS AS APPEARING IN THE BOOKS OF THE ASS ESSEE IS AVAILABLE ON PAGES 14-16 OF THE PAPER BOOK. IT IS POINTED OUT THAT THERE ARE VARIO US CREDITS IN THE ACCOUNT OF SHRI ANAND MOHAN AND SMT. SWEETY ARORA BUT ONLY REGARDING CAS H DEPOSIT OF RS.50 000/- IN THE ACCOUNT OF SHRI ANAND MOHAN AND RS.60 000/- IN THE ACCOUNT OF SMT. SWEETY ARORA THE AO WAS NOT SATISFIED BECAUSE THE SAME WAS IN CASH. IT WAS ALSO SUBMITTED THAT IN THE ACCOUNT OF SMT. POONAM ARORA THERE ARE ONLY TWO DE POSITS IN CASH OF TOTAL AMOUNT OF RS.90 000/- AND THE SAME WAS NOT ACCEPTED BY THE AO BECAUSE IT IS IN CASH. AFTER POINTING OUT THESE FACTS HE RELIED UPON THE JUDGME NT OF HONBLE PUNJAB & HARYANA HIGH COURT RENDERED IN THE CASE OF CIT VS. RAMESHWAR DAS S SURESH PAL CHEEKA REPORTED IN 163 TAXMAN 270 (P&H) IN SUPPORT OF THIS CONTENTION THAT WHERE THERE IS CREDIT IN THE ACCOUNT OF THE PARTNER NO ADDITION CAN BE MADE IN THE HANDS OF THE FIRM EVEN IF DEPOSITS MADE WITH FIRM BY PARTNER WERE UNEXPLAINED INCOME O F THE PARTNER. IT IS SUBMITTED THAT IN THE PRESENT CASE ALSO THE DEPOSITS IN QUESTION ARE DEPOSITED BY THE PARTNERS AND HENCE AS PER THIS JUDGMENT OF JURISDICTIONAL HIGH COURT ADDI TION MADE BY THE AO HAS TO BE DELETED. LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AU THORITIES BLOW. I.T.A. NO.2982/DEL./2009 & C.O. NO.278/DEL./2009 (AY : 2006-07) 3 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAV E GONE LTHROUGH THE ORDERS OF THE AUTHORITIES BELOW AND THE JUDGMENT OF HONBLE J URISDICTIONAL HIGH COURT CITED BY THE LD.AR OF THE ASSESSEE. WE FIND THAT IN THE PRESENT CASE IT IS UNDISPUTED POSITION THAT THE CREDITS IN DISPUTE ARE CREDITS IN THE CAPITAL ACCOU NTS OF THREE PARTNERS. HENCE IDENTITY OF THE CREDITORS ARE NOT IN DISPUTE. ADDITIONS WERE M ADE BY THE AO AND CONFIRMED BY THE CIT(A) ON THIS BASIS THAT CREDITWORTHINESS WAS NOT ESTABLISHED. WE FIND THAT ALL THESE THREE PARTNERS ARE INCOME-TAX ASSESSEE AND THEY HAV E GIVEN CONFIRMATION REGARDING ADVANCING OF THESE THREE AMOUNTS TO THE PRESENT ASS ESSEE I.E. PARTNERSHIP FIRM AS PER THE CONFIRMATION AVAILABLE ON PAGES 37-39 OF THE PAPER BOOK. UNDER THESE FACTS WE FIND THAT THE JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT R ENDERED IN THE CASE OF CIT VS. RAMESHWAR DASS SURESH PAL CHEEKA(SUPRA) IS SQUARELY APPLICABLE. IN THAT CASE ALSO THE AO FOUND THAT SMT. KAMLESH RANI PARTNER INTRODUCED A SUM OF RS.40 000/- IN HER CAPITAL ACCOUNT. IN THAT CASE ALSO THE AO MADE ADDITION O N THIS ACCOUNT WHICH WAS DELETED BY THIS TRIBUNAL ON THE BASIS THAT ONCE SMT. KAMLESH R ANI PARTNER HAS ACCEPTED TO HAVE MADE DEPOSIT AND HENCE NO ADDITION CAN BE MADE IN T HE INCOME OF THE FIRM. THAT TRIBUNAL ORDER IN THAT CASE WAS UPHELD BY THE HONB LE P&H HIGH COURT I.E. THE JURISDICTIONAL HIGH COURT IN THE PRESENT CASE. SIN CE IN THE PRESENT CASE ALSO CREDITS ARE GIVEN BY THE PARTNERS AND THEY HAVE CONFIRMED THE S AME AND THEY ARE INCOME-TAX ASSESSEE WE FEEL THAT NO ADDITION CAN BE MADE ON T HIS ACCOUNT IN THE HANDS OF THE PRESENT ASSESSEE I.E. FIRM AND EVEN IF THE PARTNERS COULD N OT EXPLAIN THESE SOURCE OF THESE DEPOSITS ADDITION MAY BE MADE IN THE HANDS OF THE PARTNERS BUT NOT IN THE HANDS OF THE FIRM I.E. THE PRESENT ASSESSEE. WE THEREFORE DELETE THIS ADDIT ION BY RESPECTFULLY FOLLOWING THIS JUDGMENT OF HONBLE P&H HIGH COURT. GROUND NO.1 OF THE ASSESSEE IS ALLOWED. 6. GROUND NOS.2 & 3 ARE INTER CONNECTED WHICH READ AS UNDER: 2. THAT THE A.O. HAS ERRED IN LAW & FACTS IN ERRONE OUSLY DISALLOWING A COMMISSION EXPENDITURE OF RS.331227/- INCURRED WHOL LY & EXCLUSIVELY FOR THE PURPOSE OF THE BUSINESS IGNORING THE MATERIAL EVID ENCES BROUGHT ON RECORD AND THE LD. CIT(APPEALS) HAS ILLOGICALLY CONFIRMED THE SAME. 3. THAT THE A.O. WITHOUT PURSUING A PROPER & REASON ABLE ENQUIRY HAS DRAWN ADVERSE INFERENCE IN DISALLOWING COMMISSION EXPENDI TURE OF RS.162075/- WHICH WAS INCURRED WHOLLY & EXCLUSIVELY FOR THE PUR POSES OF BUSINESS ONLY AND THE LD. CIT(APPEALS) HAS ILLOGICALLY AND IGNORI NG THE ADDITIONAL EVIDENCE BROUGHT ON RECORD CONFIRMED THE DISALLOWANCE. I.T.A. NO.2982/DEL./2009 & C.O. NO.278/DEL./2009 (AY : 2006-07) 4 7. BRIEF FACTS ARE THAT IT IS NOTED BY THE AO IN PA RA. 3 OF THE ASSESSMENT ORDER THAT THE ASSESSEE DURING THIS YEAR HAS CLAIMED EXPENSES OF R S.118167/- UNDER THE HEAD COMMISSION ON SALE. THE AO ASKED THE ASSESSEE TO J USTIFY THE EXPENSES. IN REPLY IT WAS SUBMITTED BY THE ASSESSEE BEFORE THE AO THAT THE AS SESSEE APPOINTED AGENTS TO SELL GOODS ON COMMISSION BASIS AND THE RATE OF COMMISSION DURI NG THIS YEAR WAS 1.5% OF THE TOTAL SALES MADE BY THE AGENTS. THE ASSESSEE PRODUCED SH RI GAURAV KHURANA SHRI DINESH SINGH AND JASMEET SINGH PROPRIETOR OF M/S JJ ENTER PRISES TO JUSTIFY THE COMMISSION PAID TO THESE AGENTS. IT IS FURTHER OBSERVED BY THE AO THAT SHRI JASMEET SINGH IS BASICALLY AN AGRICULTURIST. IT IS ALSO NOTED BY THE AO THAT ALT HOUGH HE ADMITTED OF DOING COMMISSION WORK FOR THE PRESENT ASSESSEE BUT HE IS HAVING NO KNOWLEDGE ABOUT THE MEDICINES OR THE BUSINESS. IT WAS STATED BY HIM BEFORE THE AO THAT HE EMPLOYED A PERSON FOR THIS PURPOSE ON SALARY BUT NEITHER HE COULD PRODUCE ANY EVIDENC E IN SUPPORT OF HIS STATEMENT NOR HE HAD PRODUCED THE BOOKS OF ACCOUNT OR DOCUMENTARY EV IDENCE WHICH HE WAS ASKED TO PRODUCE. IT IS FURTHER OBSERVED BY THE A.O. THAT T HE ENTIRE COMMISSION WAS PAID TO M/S JJ ENTERPRISES IN CASH. THE AMOUNT OF COMMISSION PAID TO M/S JJ ENTERPRISES IS OF RS.331227/- WHICH WAS DISALLOWED BY THE AO ON THE B ASIS THAT IN THE ABSENCE OF PROPER EVIDENCE PRODUCED BY SHRI JASMEET SINGH ABOUT RECEI PT OF COMMISSION THESE EXPENSES CANNOT BE ALLOWED. 8. REGARDING COMMISSION PAYMENT OF RS.162075/- TO S HRI GAURAV VERMA IT IS OBSERVED BY THE AO THAT THE ASSESSEE FAILED TO PROD UCE ANY EVIDENCE FOR PAYMENT OF COMMISSIONS TO SHRI GAURAV VERMA. IT IS ALSO NOTED BY THE AO THAT THE ASSESSEE FAILED TO GIVE DETAILS ABOUT THE WHEREABOUTS OF SHRI GAURAV V ERMA AND HE COULD NOT PRODUCE HIM FOR VERIFICATION. IT IS ALSO NOTED BY THE AO THAT PAYMENT OF COMMISSION TO SHRI GAURAV VERMA IS ALSO MADE IN CASH AS PER THE BOOKS OF THE ASSESSEE AND IN THE ABSENCE OF PROPER DOCUMENTS ABOUT THE PAYMENTS OF COMMISSION TO SHRI GAURAV VERMA THE SAME IS ALSO DISALLOWED. BEING AGGRIEVED THE ASSESSEE CARRIED T HE MATTER IN APPEAL BEFORE THE CIT(A) FOR BOTH THESE DISALLOWANCES BUT WITHOUT SUCCESS AN D NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. I.T.A. NO.2982/DEL./2009 & C.O. NO.278/DEL./2009 (AY : 2006-07) 5 9. IT IS SUBMITTED BY THE LD.AR OF THE ASSESSEE THA T THE STATEMENT OF SHRI JASMEET SINGH IS AVAILABLE ON PAGES 55-59 OF THE PAPER BOOK AND IT IS ALSO SUBMITTED THAT THIS IS THE FIRST YEAR OF COMMISSION PAYMENT AND SINCE SHRI JASMEET SINGH WAS PRODUCED BEFORE THE AO AND HE HAS CONFIRMED REGARDING COMMISSION PA YMENT NO DISALLOWANCE IS JUSTIFIED. REGARDING MR. GAURAV VERMA IT WAS SUBM ITTED THAT THE COMMISSION WAS PAID DURING FINANCIAL YEAR 2005-06 WHEREAS HE WAS ASKED TO BE PRODUCED BY THE AO DURING THE FAG END OF 2008 AND AT THAT POINT OF TIME WHEREABO UTS OF SHRI GAURAV VERMA WAS NOT KNOWN TO THE ASSESSEE AND FOR THIS THE ASSESSEE CA NNOT BE BLAMED AND HENCE FOR THIS PAYMENT TO GAURAV VERMA ALSO NO DISALLOWANCE IS JUSTIFIED. AS AGAINST THIS LD.DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. IT IS ALSO SUBMITTED THAT THERE IS NO AGREEMENT AND NO EVIDENCE REGARDING RENDERING OF ANY SERVICES AND THE PAYMENTS ARE IN CASH AND HENCE THE ORDER OF THE CIT(A) SHOUL D BE CONFIRMED. 10. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT APART FROM STATEMENT RECORDED BY THE AO OF SHRI JASMEET SINGH PARTNER O F M/S JJ ENTERPRISES NO OTHER EVIDENCE IS PRODUCED BY THE ASSESSEE BEFORE THE AUT HORITIES BELOW OR BEFORE US REGARDING THE SERVICES RENDERED BY M/S JJ ENTERPRISES OR BY M R. GAURAV VERMA. IN THE STATEMENT ALSO SHRI JASMEET SINGH HAS STATED THAT HE HAS REC EIVED COMMISSION FROM THE ASSESSEE BUT HE COULD NOT THROW ANY LIGHT REGARDING SERVICES RENDERED BY HIM FOR EARNING THIS COMMISSION. IT IS ACCEPTED BY HIM THAT THERE IS NO WRITTEN AGREEMENT. HE ALSO SAYS THAT HE HAS KEPT AN EMPLOYEE FOR DOING THIS JOB AND THE NAME OF THE EMPLOYEE WAS STATED TO BE MR. SACHIN. IT IS ALSO STATED BY HIM THAT THE F IRM DID NOT HAVE ANY OFFICE ACCOMMODATION AND THE FIRM DID NOT HAVE ANY OTHER P ERIPHERY AND THE ENTIRE RECORDS ARE WITH THE CA. THIS STATEMENT OF SHRI JASMEET SINGH DOES NOT INSPIRE CONFIDENCE REGARDING RENDERING OF ANY SERVICES BY HIM TO THE ASSESSEE. THERE IS NO DETAILS FURNISHED ABOUT NAME OF PARTIES TO WHOM SALES WERE MADE FOR EARNIN G COMMISSION. REGARDING PAYMENT TO SHRI GAURAV VERMA ALSO IT IS NEVER POINTED OUT AS TO REGARDING SALES TO WHICH PARTIES COMMISSION WAS PAID TO HIM. PAYMENT TO HIM IS ALSO IN CASH AND THERE IS NO WRITTEN AGREEMENT WITH HIM AND CONSIDERING ALL THESE FACTS WE FIND NO REASON TO INTERFERE IN THE ORDER OF THE CIT(A) REGARDING DISALLOWANCE OF THESE TWO COMMISSION PAYMENTS. WE THEREFORE UPHOLD THE SAME. GROUND NOS.2 & 3 ARE R EJECTED. HENCE THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. I.T.A. NO.2982/DEL./2009 & C.O. NO.278/DEL./2009 (AY : 2006-07) 6 11. IN THE COMBINED RESULT THE C.O. OF THE REVENUE IS DISMISSED AND THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 12. ORDER PRONOUNCED IN OPEN COURT ON 12 TH MARCH 2010. SD/- SD/- (R.P. TOLANI) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: MARCH 12 2010. *SKB* COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) KARNAL. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. AR/ITAT