DCIT, New Delhi v. M/s K.S. Infosystems Pvt. Ltd.,, New Delhi

ITA 2876/DEL/2013 | 2009-2010
Pronouncement Date: 14-10-2016 | Result: Partly Allowed

Appeal Details

RSA Number 287620114 RSA 2013
Assessee PAN AABCK5340D
Bench Delhi
Appeal Number ITA 2876/DEL/2013
Duration Of Justice 3 year(s) 5 month(s) 5 day(s)
Appellant DCIT, New Delhi
Respondent M/s K.S. Infosystems Pvt. Ltd.,, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 14-10-2016
Appeal Filed By Department
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 14-10-2016
Date Of Final Hearing 10-10-2016
Next Hearing Date 10-10-2016
Assessment Year 2009-2010
Appeal Filed On 09-05-2013
Judgment Text
IN THE INCOME TAX APPELLA TE TRIBUNAL DELHI BENCH: D NEW DELHI BEFORE SHRI R. S. SYAL ACCOUNTANT MEMBER AND MS SUCHITRA KAMBLE JU DICIAL MEMBER I.T.A .NO.- 2876/DEL/2013 (ASSESSMENT YEAR 2009-10) DCIT CIRCLE-5(1) NEW DELHI (APPELLANT) VS K. S. INFOSYSTEMS PVT. LTD. 316 IIIRD FLOOR LSC SAINIK VIHAR PITAMPURA NEW DELHI-110 034 AABCK5340D (RESPONDENT) APPELLANT BY SH. UMESH CHANDRA DUBEY SR. DR RESPONDENT BY SH. K. P. GARG ADV ORDER PER SUCHITRA KAMBLE JM THIS APPEAL IS FILED AGAINST THE ORDER DATED 25/02/ 2013 PASSED BY CIT(A) -VIII NEW DELHI 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) DELETED THE DISALLOWANCE OF COMMISSION TO TH E TUNE OF RS. 60 08 192/- IGNORING THE FACT THAT THE ASSES SEE COULD NOT PROVE THE GENUINENESS OF THE EXPENDITURE DATE OF HEARING 10.10.2016 DATE OF PRONOUNCEMENT 14.10.2016 CLAIMED AS IT COULD NOT SUBSTANTIATE ANY RENDERING THE SERVICES IN LIEU OF WHICH COMMISSION WAS PAID OR GI VE ANY JUSTIFICATION OR BASIS FOR PAYMENT OF COMMISSION. 2. THE LD. CIT(A) ERRED IS NOT APPRECIATING THE FAC T THAT THE ASSESSEE WAS INTO THE BUSINESS OF COMMISSION AGENT IN INFORMATION TECHNOLOGY SECTOR AS IT RECEIVED COMMIS SION INCOME MAINLY FROM HCL INFO SYSTEMS LTD. AND ESCORT LTD. BUT IT CLAIMED TO HAVE PAID COMMISSION TO COMPANIES ENGAGED IN THE BUSINESS OF MANUFACTURING OF M S IGN OTS. 3. THE LD. CIT(A) ERRED IS ADMITTING THE EVIDENCES FURNISHED BY THE ASSESSEE WITHOUT PROVIDING OPPORTUNITY TO TH E ASSESSING OFFICER IN VIOLATION OF RULE 46A OF THE I . T. RULES. 4. THE LD. CIT(A) ERRED IN ACCEPTING THE GENUINENES S OF THE PAYMENT OF COMMISSION ONLY ON THE BASIS OF DETAILS OF PAYMENT CONFIRMATION OF THE RECIPIENT AND DEDUCTIO N OF TDS WITHOUT APPRECIATING THAT NO JUSTIFICATION WHAT SOEVER FOR THE PAYMENT OF COMMISSION NOR THE CAPACITY OF THE RECIPIENT FOR RENDERING OF SERVICES IN THE IT FIELD NOR THE VERIFICATION OF ACTUAL RENDERING THE OF SERVICE WAS PLACED ON RECORD BY THE ASSESSEE. 5. THE APPELLANT CRAVES LEAVE TO ADD TO ALTER OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE EITHER BEFORE OR AT THE TIME OF THE HEARING. 3. THE ASSESSEE HAD DEBITED COMMISSION EXPENSES IN THE P&L A/C UNDER THE HEAD OFFICE AND ADMINISTRATIVE EXPENS ES. ON BEING ASKED TO FURNISH THE DETAILS THE ASSESSEE SUB MITTED THAT THE COMMISSION WAS PAID TO THE FOLLOWING PERSONS:- NAME AMOUNT (RS.) M/S. ARTI ENGINEERING CO. 37 50 000/ - M/S. SEWA CASTING (P) LTD. 15 00 000/ - MR. SUBODH KUMAR 7 00 000/ - OUT OF POCKET EXPENSES 41 200/ - OTHERS 16 992/ - THE ASSESSEE WAS REQUIRED BY THE ASSESSING OFFICER TO SUBMIT THE COMPLETE DETAILS OF THE PERSONS TO WHOM COMMISS ION HAD BEEN PAID ALONG WITH THE NATURE OF SERVICES RENDERE D AND PROOF OF TDS IN FORM 16A. THE ASSESSING OFFICER HAS OBSER VED THAT THE ASSESSEE HAD FILED THE DETAILS CALLED FOR ALONG WITH COPIES OF FORM 16A. THE ASSESSING OFFICER HAS FURTHER OBSERVE D THAT FROM THE PERUSAL OF THE RECORDS IT WAS OBSERVED THA T THE SALES OF THE ASSESSEE HAD FALLEN CONSIDERABLY AS COMPARED TO THE EARLIER YEARS BUT THE PAYMENT OF COMMISSION HAD GON E UP ABNORMALLY. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE PERCENTAGE OF COMMISSION OF SALES WAS 0.1% DURING A Y 2008- 09 WHEREAS IT WAS 20% DURING AY 2009-10. IN VIEW OF THE ABOVE FACTS THE ASSESSING OFFICER OBSERVED THAT A S HOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AS TO WHY THE COM MISSION SHOULD NOT BE DISALLOWED. THE APPELLANT FILED THE C OPIES OF AUDITED ACCOUNTS ALONG WITH AUDIT REPORT IN THE CAS ES OF M/S. ARTI ENGINEERING CO. AND M/S. SEWA CASTING (P) LTD. AND A COPY OF FORM 16A REGARDING PROOF OF PAYMENT OF COMM ISSION TO VARIOUS PARTIES. HOWEVER THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT NO EXPLANATION REGARDING THE JUSTIFIC ATION OF PAYMENT OF COMMISSION AND THE SERVICES FOR WHICH IT HAD BEEN PAID WERE FILED BY THE ASSESSEE. THE ASSESSING OFFI CER OBSERVED THAT M/S. ARTI ENGINEERING CO. AND M/S. SEWA CASTIN G (P) LTD. WERE ENGAGED IN THE BUSINESS OF MANUFACTURING AND T RADING OF M. S. INGOTS WHEREAS THE ASSESSEE WAS ENGAGED IN TH E BUSINESS OF TRADING AND GENERAL COMMISSION AGENT. S INCE IN THE OPINION OF THE ASSESSING OFFICER THERE WAS NO CO-RELATION BETWEEN THE BUSINESS CARRIED OUT BY THE ASSESSEE AN D THAT CARRIED OUT BY THE ABOVE TWO COMPANIES THE ASSESS ING OFFICER HELD THAT PROBABILITY OF ANY TRANSACTION BETWEEN TH E ASSESSEE AND THE OTHER TWO COMPANIES WAS TOTALLY RULED OUT. THE ASSESSING OFFICER HAS FURTHER OBSERVED THAT M/S. AR TI ENGINEERING CO. AND M/S. SEWA CASTING (P) LTD. HAD NOT SHOWN ANY INCOME ON ACCOUNT OF COMMISSION IN THEIR ACCOUNTS. IN VIEW OF THE ABOVE FACTS THE ASSESSING OFFICER HELD THAT THE PAYMENT OF THE COMMISSION WAS NOT GENUINE TRANSACTION. IT HAS ALSO BEEN HELD BY THE ASSESSING OFFICER THAT THE RATES AT WHICH THE COMMISSION HAD BEEN SHOWN TO HAVE BEEN PAID WAS VERY HIGH. IT HAS ALSO BEEN HELD BY T HE ASSESSING OFFICER THAT THE DEDUCTION OF TDS WAS NOT HING BUT A DEVICE TO GIVE THE COLOUR OF GENUINENESS TO A TRANS ACTION WHICH WAS NOT GENUINE. IN VIEW OF THE FINDINGS THE ASSES SING OFFICER DISALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE ON ACCOUNT OF PAYMENT OF COMMISSION OF RS. 60 08.192/-. 4. AGGRIEVED BY THIS THE ASSESSEE FILED APPEAL BEF ORE THE CIT(A). THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY HO LDING THAT THE ASSESSEE HAD SUBMITTED THE DETAILS OF PAYMENT O F COMMISSION WHICH IS SUPPORTED BY DOCUMENTARY EVIDEN CES IN THE FORM OF CONFIRMATION FROM THE PARTIES WHO HAD R ECEIVED COMMISSION PAYMENT FROM THE ASSESSEE AND COPIES OF FORM 16A REGARDING DEDUCTION OF TDS. THE RECEIPT OF COMM ISSION HAS BEEN SHOWN BY THE PERSONS WHO HAVE RECEIVED COM MISSION FROM THE ASSESSEE IN THEIR INCOME. THE NATURE OF SE RVICES RENDERED ALONG WITH THE BENEFIT WHICH THE ASSESSEE HAD DERIVED FROM THE SERVICES HAD ALSO BEEN SUBMITTED D URING THE ASSESSMENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT BROUGHT ANY FACTS ON RECORD TO SHOW THE COMMISSION HAD NOT BEEN PAID AND HAS ALSO NOT BROUGHT ANY EVIDENCES ON RECORD TO SHOW THAT THE EXPENDITURE WAS NOT RELATED TO THE BU SINESS OF THE ASSESSEE. THE REVENUE IS BEFORE US. 5. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAS RIGHTLY DISALLOWED THE COMMISSION TO THE TUNE OF RS. 60 08 192/-. THE CIT(A) FAILED TO LOOK INTO THE SAME. 6. THE LD. AR SUBMITTED THAT THE CIT(A) RIGHTLY CON SIDERED ALL THE ASPECTS AND TAKEN COGNISANCE OF THE DOCUMENTS AND E VIDENCES PRODUCED BEFORE THE ASSESSING OFFICER WHICH THE ASS ESSING OFFICER HAS OVERLOOKED. THUS THE LD. AR SUBMITTED T HAT THE ORDER OF THE CIT(A) IS JUST AND PROPER. 7. WE HAVE PERUSED ALL THE RECORDS AND HEARD BOTH T HE PARTIES. THE ASSESSEE FILED THE COPIES OF AUDITED ACCOUNTS ALONG WITH AUDIT REPORT IN THE CASES OF M/S. ARTI ENGINEERING CO. AND M/S. SEWA CASTING (P) LTD. AND A COPY OF FORM 16A R EGARDING PROOF OF PAYMENT OF COMMISSION TO VARIOUS PARTIES. THE ASSESSEE HAD SUBMITTED THE DETAILS OF PAYMENT OF CO MMISSION WHICH IS SUPPORTED BY DOCUMENTARY EVIDENCES IN THE FORM OF CONFIRMATION FROM THE PARTIES WHO HAD RECEIVED COMM ISSION PAYMENT FROM THE ASSESSEE AND COPIES OF FORM 16A RE GARDING DEDUCTION OF TDS. THE RECEIPT OF COMMISSION HAS BEE N SHOWN BY THE PERSONS WHO HAVE RECEIVED COMMISSION FROM TH E ASSESSEE IN THEIR INCOME. THE NATURE OF SERVICES RE NDERED ALONG WITH THE BENEFIT WHICH THE ASSESSEE HAD DERIV ED FROM THE SERVICES HAD ALSO BEEN SUBMITTED DURING THE ASSESSM ENT PROCEEDINGS. THE ASSESSING OFFICER HAS NOT BROUGHT ANY FACTS ON RECORD TO SHOW THE COMMISSION HAD NOT BEEN PAID AND HAS ALSO NOT BROUGHT ANY EVIDENCES ON RECORD TO SHOW TH AT THE EXPENDITURE WAS NOT RELATED TO THE BUSINESS OF THE ASSESSEE. 8. IN THE RESULT APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 14 TH OF OCTOBER 2016. SD/- SD/- (R.S. SYAL) (SUC HITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 14/10/2016 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT R EGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON .10.2016 PS 2. DRAFT PLACED BEFORE AUTHOR .10.2016 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2016 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 14.10.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 14.10.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER.