M/s. Dharmendra Pukhraj, Ahmedabad v. The Dy.CIT.,Circle-10,, Ahmedabad

ITA 3166/AHD/2009 | 2004-2005
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 316620514 RSA 2009
Assessee PAN AABFD5606L
Bench Ahmedabad
Appeal Number ITA 3166/AHD/2009
Duration Of Justice 1 year(s) 11 month(s) 29 day(s)
Appellant M/s. Dharmendra Pukhraj, Ahmedabad
Respondent The Dy.CIT.,Circle-10,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-11-2011
Date Of Final Hearing 17-11-2011
Next Hearing Date 17-11-2011
Assessment Year 2004-2005
Appeal Filed On 26-11-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE S/SHRI D.K.TYAGI JM AND A. MOHAN ALANKAMON Y AM. M/S.DHRAMENDRA PUKHRAJ 1 ASHIYANA APARTMENTS NAVRANGPURA AHMEDABAD. VS. DEPUTY COMMISSIONER OF INCOME TAX CCIRCLE-10 NARAYAN CHAMBER AHMEDABAD. (APPELLANT) .. (RESPONDENT) PAN NO.AABFD 5606L APPELLANT BY :- SHRI S.N.DIVATIA. RESPONDENT BY:- SHRI D.V.SINGH SR.D.R. DATE OF HEARING : 17/11/2011 DATE OF PRONOUNCEMENT : 25/11/2011 O R D E R PER D. K. TYAGI JUDICIAL MEMBER . THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE O RDER OF LD. CIT (A)-XVI AHMEDABAD IN APPEAL NO. CIT (A)XVI/DC/CIR. /10/199/06-07 DATED 18-1-2008 RAISING THE FOLLOWING GROUNDS:- 1.1. THE ORDER PASSED U/S.250 OF THE ACT ON 18-1-2008 FOR A.Y. 2004- 05 BY CIT (A)-XVI AHMEDABAD BY UPHOLDING THE DISAL LOWANCE OF ITA NO.3166/AHD/2009 ASST. YEAR :2004-05 ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 2 2 COMMISSION PAYMENT OF RS.13 55 909/- MADE BY AO IS WHOLLY ILLEGAL UNLAWFUL AND AGAINST THE PRINCIPLES OF NAT URAL JUSTICE. 1.2. THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN UPHOLDING T HE DISALLOWANCE OF RS.13 55 909/- WITHOUT CONSIDERING FULLY AND PROPERLY THE EXPLANATION OFFERED AND EVIDENCE PRODU CED BY THE APPELLANT. 1.3. THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN LAW AND/OR ON FACTS IN UPHOLDING THE DISALLOWANCE OF COMMISSION EXPENSES O F RS. 13 55 909/- ON THE GROUND OF FAILURE TO PROVE THAT SERVICES WERE RENDERED BY M/S. CALCUTTA GENERAL STORES. 2.1. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) OUGHT NOT TO HAVE UPHELD THE DISALLOWANCE. 2. THE ONLY EFFECTIVE GROUND TAKEN BY THE ASSESSEE READS AS UNDER:- 1.2. THE LD. CIT (A) HAS GRIEVOUSLY ERRED IN UPHO LDING THE DISALLOWANCE OF RS.13 55 909/- WITHOUT CONSIDERING FULLY AND PROPERLY THE EXPLANATION OFFERED AND EVIDENCE PRODU CED BY THE APPELLANT. 3. THE BRIEF FACTS OF THE CASE AS THEY MERGED FROM THE ORDER OF LD. CIT (A) ARE THAT DURING THE ASSESSMENT PROCEEDINGS A.O. OBSERVED THAT COMMISSION PAYMENT HAS BEEN MADE TO M/S. CALCUTTA G ENERAL AGENT @ 1% OF THE SALE. THE AO INQUIRED ABOUT THE SERVICES RENDERED BY M/S. CALCUTTA GENERAL AGENT VIDE ITS LETTER DATED 19-10- 2006 AND 80-11- 2006.HOWEVER M/S. CALCUTTA GENERAL AGENT REMAINED SILENT ON THE NATURE OF SERVICES RENDERED INSPITE OF THESE OPPORT UNITIES GIVEN BY THE AO. THE ASSESSEES CLAIM ON THE OTHER HAND WAS THAT SALES HAVE INCREASED FROM 4030 COTTON BALES TO 12800 COTTON BALES TO M/S . GINNI FILAMENTS LTD. DUE TO THE SERVICES RENDERED BY M/S. CALCUTTA GENERAL AGENT. ACCORDING TO THE ASSESSEE THE SERVICES WERE RENDERE D AS FOLLOWS:- I) QUALITY CHECK OF THE COTTON ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 3 3 II) FIXATION OF THE RATES OF TRANSPORTATION WITH THE RE SPONSIBILITY TO SEE THAT THE GOODS REACH TO THE MILL IN TIME AND GOOD CONDITION. III) TIMELY RECEIPT OF PAYMENT FROM THE MILL. IV) ISSUANCE AND DISPATCH OF C FORM FOR SALES-TAX PURPO SES. 4. THE ASSESSEES CLAIM WAS THAT COMMISSION IS NOT FIXED AND IS DECIDED MUTUALLY. IT WAS ALSO STATED THAT M/S. CALC UTTA GENERAL AGENT WERE NO RELATED TO THE ASSESSEE IN ANY MANNER. IT W AS ALSO CLAIMED THAT DURING THE FINANCIAL YEARS 1999-2000 2000-01 2002 -03 AND 2003-04 COMMISSION PAYMENT WAS @ 1%. THE ASSESSEE FURTHER C LAIMED THAT THE RECIPIENTS HAS ADMITTED THE COMMISSION PAYMENT AND FURNISHED COPY OF ACCOUNT ALSO. THE AO AFTER CONSIDERING THE CONTENTI ON OF THE ASSESSEE HELD THAT BURDEN OF PROVING THE SERVICES RENDERED B Y THE COMMISSION AGENT TO THE ASSESSEE WAS ON THE ASSESSEE AND FOR T HIS HE RELIED ON THE VARIOUS CASE-LAWS. THE AO FURTHER STATED THAT NEITH ER THE ASSESSEE NOR THE CALCUTTA AGENT HAVE BEEN ABLE TO GIVE ANY EVIDENCE THAT SERVICES WERE RENDERED BY THE COMMISSION AGENT INSPITE OF REPEATE D LETTERS. THIS SALES AGENT WAS FILING THE RETURN OF LOSS AND WAS IN THE LINE OF BUSINESS OF FLOUR MILL. IT WAS ALSO POINTED OUT BY THE AO THAT COMMIS SION IN THIS LINE OF BUSINESS WAS 0.5% WHILE ASSESSEE HAS MADE PAYMENT @ 1%.THE SALES WERE MADE TO M/S. GINNI FILAMENTS OF NEW DELHI AND M/S. CALCUTTA GENERAL AGENT IS BASED IN CALCUTTA. THEREFRORE THE AO STATED THAT THE SERVICES OF ABOVE MENTIONED NATURE CLAIMED TO HAVE BEEN RENDERED BY THE AGENT ARE NOT POSSIBLE. IT WAS ALSO STATED BY AO TH AT BUYERS WERE ALREADY KNOWN TO THE ASSESSEE AND NO SUCH COMMISSION WAS PA ID DURING F.Y. 2000-01 AND 2001-02. IN VIEW OF THESE FACTS OF THIS CASE IT WAS HELD BY THE A.O. THAT ASSESSEE HAS NOT BEEN ABLE TO PROVE T HE SERVICES RENDERED AND COMMISSION PAYMENT OF RS. 13 55 909/- WAS DISAL LOWED AND ADDED TO THE INCOME OF THE ASSESSEE. ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 4 4 5. DURING APPEAL THE ASSESSEES CONTENTION BEFORE THE LD. CIT (A) WAS THAT COMMISSION PAYMENT HAS BEEN MADE TO M/S. C ALCUTTA GENERAL STORES AND NOT TO CALCUTTA GENERAL AGENT AS MENTION ED BY THE A.O. ACCORDING TO THE ASSESSEE IT WAS IMMATERIAL WHETHER THE COMMISSION AGENT HAS PAID THE TAXES OR NOT IT WAS MENTIONED TH AT ABOVE AGENT HAS HELPED THE ASSESSEE IN INCREASING THE SALES AND HAS RENDERED SERVICES AND WAS NOT RELATED TO THE ASSESSEE. COMMISSION PAID TO THIS AGENT HAS NOT BEEN RECEIVED BACK BY THE ASSESSEE IN ANY FORM. IT WAS ALSO MENTIONED THAT IT CANNOT BE SAID THAT AGENT COULD NOT DEVELOP EXPERTISE IN THE AGENCY BUSINESS AS THE CALCUTTA GENERAL AGENT IS A UNIT OF CALCUTTA MILLS LTD. IT WAS STATED THAT CALCUTTA GENERAL STORES IS SEPARATE LY ASSESSES TO INCOME TAX AND IS DOING THE BUSINESS OF COMMISSION AGENT. IT WAS ALSO MENTIONED THAT THE PURCHASE PARTY COULD BE AT NEW DELHI AND C OMMISSION AGENT CAN BE AT CALCUTTA IN THIS LINE OF BUSINESS AND THIS CA NNOT BE THE REASON FOR DISALLOWANCE OF SALES AS MOST OF THE BUSINESS WAS DONE ONLY ON TELEPHONE AND INTERNET OR FAX AND BASED ON TRUST AND PROMISES . THE ASSESSEES FURTHER CONTENTION WAS THAT PAYMENT HAS BEEN MADE B Y BANK DRAFT AND CALCUTTA GENERAL STORES IS ASSESSED TO INCOME TAX A ND THE PAYMENT HAS NOT BEEN RECEIVED BACK. AFTER TAKING INTO CONSIDERA TION THESE SUBMISSIONS OF THE ASSESSEE THE LD. CIT (A) DISMISSED THE APPE AL OF THE ASSESSEE BY OBSERVING AS UNDER :- 2.3. I HAVE CAREFULLY CONSIDERED THE ASSESSMENT ORD ER AND THE CONTENTIONS MADE BY THE APPELLANT AT THE ASSESSMENT STAGE AND DURING THE APPELLATE STAGE ALSO. THE BASIC ISSUE IS REGARDING THE GENUINENESS OF THE SERVICES RENDERED BY THE COMMISS ION AGENT VIZ. M/S. CALCUTTA GENERAL STORE FOR WHICH THE PAYMENT W AS MADE. THE APPELLANT IS IN THE BUSINESS OF SALES OF COTTON BAL ES. THE SALES ARE CLAIMED TO HAVE BEEN MADE THROUGH CALCUTTA GENERAL STORES BASED AT CALCUTTA TO M/S. GINNI FILAMENTS BASED AT NEW DE LHI. THE AO HAS SPECIFICALLY INQUIRED ABOUT THE SERVICES RENDER ED BY THE ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 5 5 COMMISSION AGENT TO SAID COMMISSION AGENT TWICE BUT THE COMMISSION AGENT REMAINED SILENT ABOUT THE NATURE O F SERVICES RENDERED. THE APPELLANT HAS STATED THAT COMMISSION AGENT WAS SUPPOSED TO DO QUALITY CHECK OF THE COTTON BALES F IXING THE RATE OF TRANSPORTATION OF MATERIAL TIMELY RECEIPT OF PAYME NT FROM THE MILL AND ISSUANCE AND DISPATCH OF C FORM. HOWEVER NO EVIDENCE IN THIS REGARD HAS BEEN SUBMITTED BY THE APPELLANT AS TO WHEN THE COMMISSION AGENT VISITED THE SUPPLIER FOR MAKING TH E QUALITY CHECK OF COTTON BALES WHO WAS THE TRANSPORTER WHAT WAS THE RATE FIXED FOR TRANSPORTATION WHAT CORRESPONDENCE WAS MADE RE GARDING RECEIPT OF PAYMENTS FROM M/S. GINNI FILAMENTS AND W HAT CORRESPONDENCE OR EFFORTS WERE MADE FOR THE ISSUANC E AND DISPATCH OF C FORM. THE APPELLANT HAS STATED THAT BUSINESS OF MORE THAN 1.35 CRORES HAS BEEN DONE THROUGH THE ABOVE SALES A GENT. HOWEVER EVEN NOT A SINGLE DOCUMENT REGARDING THE S ERVICES RENDERED HAS BEEN PRODUCED EITHER AT THE ASSESSMENT STAGE OR AT THE APPELLATE STAGE. THE APPELLANT HAS MERELY STATE D THAT BUSINESS WAS HANDLED BY TELEPHONES INTERNET OR FAX. EVEN RE GARDING THIS NO DETAILS OR COPIES OF CORRESPONDENCE HAVE BEEN SUBMI TTED IN SPITE OF THE FACT THAT EVEN SUCH MODE OF CORRESPONDENCE LEAV ES THE TRAILS AND EVIDENCES. THIS IS A MATTER OF FACT AS IS CLEAR LY EVIDENT FROM THE ASSESSMENT ORDER. IF THE SERVICES WERE RENDERED T HERE WILL BE AMPLE OF PROOF OF CORRESPONDENCE AVAILABLE BOTH WIT H THE COMMISSION AGENT ESPECIALLY WHEN THE APPELLANT IS B ASED AT AHMEDABAD SALES AGENT IS AT CALCUTTA AND PURCHASER OF GOODS IS AT NEW DELHI. IT IS NOT POSSIBLE TO CARRY OUT THE ABOV E AMOUNT OF TURNOVER WITHOUT ANY EVIDENCE BEING LEFT OF SUCH CO RRESPONDENCE. AS FAR AS THE CASE-LAWS WHICH HAVE BEEN CITED IT M AY BE MENTIONED THAT IN THE CASE OF CIT VS. GOODLAC NEROLAC PAINTS LTD. IT WAS HELD THAT PAYMENT OF COMMISSION HAS BEEN MADE IN THE CAS E OF A PUBLIC LIMITED COMPANY UNDER THE INSTRUCTION AND DIRECTION OF TOP EXECUTIVES OF THE COMPANY AND WAS APPROVED BY THE B OARD OF DIRECTORS AT THE END OF EVERY MONTH. AS SUCH THERE WAS EVIDENCE IN THE CASE OF ABOVE COMPANY WHICH IS NOT THERE IN THE APPELLANTS CASE AND IN THE CASE OF CIBA DYES CHEM VS. CIT. TH E ISSUE WAS WHETHER IT SHOULD BE PROVED THAT AGENT HAS FURTHER SPENT THE AMOUNT FOR THE PURPOSE FOR WHICH THE SUM WAS PAID T O HIM WHICH IS NOT THE CASE OF THE APPELLANT. THE ABOVE DECISIONS ARE NOT APPLICABLE TO THE PRESENT CASE. NONE OF ABOVE CASES DECIDE THE PRINCIPLE THAT ASSESSEE CAN CLAIM THE DEDUCTION FOR PAYMENTS MADE TO COMMISSION AGENT. THE ONUS LIES ON THE APPELLANT TO PROVE THE SERVICES WERE RENDERED FOR CARRYING OUT THE BUSINES S FOR WHICH ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 6 6 DEDUCTION HAS BEEN CLAIMED. THE FACTUM OF RENDERING SERVICES IS TO BE PROVED BY CONTEMPORARY AND CORROBORATIVE EVIDENC E WHICH IS SHEERLY LACKING IN THE APPELLANTS CASE. IN VIEW OF ABOVE DISCUSSION AND THE REASONS GIVEN BY THE AO THE ADDITION OF RS .13 55 909/- IS UPHELD. 6. FURTHER AGGRIEVED NOW THE ASSESSEE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING LD. COUNSEL OF THE ASSESS EE BESIDES REITERATING THE SUBMISSIONS MADE BEFORE THE LOWER A UTHORITIES FURTHER SUBMITTED THAT SERVICES RENDERED BY THE COMMISSION AGENT WERE OF REFERRAL NATURE AND THEREFORE THE ASSESSEE HAS RIG HTLY PAID COMMISSION TO THE COMMISSION AGENT. CONCLUDING HIS ARGUMENT HE SU BMITTED THAT THE ORDER PASSED BY THE LOWER AUTHORITIES BE SET ASIDE AND THE ADDITION OF RS.13 55 909/- MAY KINDLY BE DELETED. 8. THE LD. DR ON THE OTHER HAND RELIED ON THE ORDER OF THE LOWER AUTHORITIES AND FURTHER SUBMITTED THAT THERE IS NO EVIDENCE THAT PURCHASER WAS REFERRED TO THE ASSESSEE BY THE COMMISSION AGEN T. ON THE CONTRARY THERE IS A FINDING OF THE A.O. THAT PURCHASER WAS A LREADY KNOWN TO THE ASSESSEE AND THEREFORE THERE WAS NO NEED OF PAYING ANY COMMISSION TO THE COMMISSION AGENT. HE THEREFORE PRAYED THAT THE ORD ER PASSED BY THE LOWER MAY KINDLY BE CONFIRMED. 9. HEARD BOTH THE PARTIES AND PERUSED THE RECORD A ND WE FIND THAT THIS COMMISSION OF RS.13 55 909/- PAID TO M/S. CALCUTTA GENERAL STORES WAS DISALLOWED BY THE A.O. AS THE ASSESSEE FAILED TO PR OVE THE GENUINENESS OF THE TRANSACTION BY WAY OF GIVING ANY EVIDENCE IN R ESPECT OF SERVICES RENDERED BY THE COMMISSION AGENT TO THE ASSESSEE. T HE LD. CIT (A) HAS ALSO CONFIRMED THIS DISALLOWANCE BY DISCUSSING IN D ETAIL AS TO HOW THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE HIM WERE NO T CONVINCING. BEFORE US ALSO THE ASSESSEE HAS NOT FILED ANY EVIDE NCE OR DETAILS WORTH THE ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 7 7 NAME TO SHOW THAT ANY SERVICES WERE RENDERED BY M/S . CALCUTTA GENERAL STORES TO THE ASSESSEE FOR WHICH COMMISSION PAYMENT OF 1% OF SALES COULD BE JUSTIFIED. WE FIND NO FORCE IN THE SUBMISS ION OF LD. COUNSEL OF THE ASSESSEE THAT COMMISSION WAS PAID TO M/S. CALCU TTA GENERAL STORES FOR REFERRING M/S. GINNI FILAMENTS TO ASSESSEE IN VIEW OF CATEGORICAL FINDING OF THE A.O. THAT ASSESSEE WAS KNOWN TO M/S. GINNI F ILAMENTS AND NO COMMISSION ON SALES TO HIM WAS PAID BY ASSESSEE TO M/S. CALCUTTA GENERAL STORES DURING THE FINANCIAL YEAR 2000-01 AN D 2001-02. SINCE THE FINDING OF THE LD. CIT (A) REMAINED UNCONTROVER TED AT THE TIME OF HEARING BEFORE US WE FEEL NO NEED TO INTERFERE WITH THE ORDER PASSED BY LD. CIT (A) AND THE SAME IS HEREBY UPHELD. 5. IN THE RESULT ASSESSEES APPEAL IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 25-11-11. SD/- SD/- (A. MOHAN ALANKAMONY) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD PATKI. COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT (APPEALS)- XVI AHMEDABAD. 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITA NO.3166/AHD/2009 ASST. YEAR 2004-05 8 8 ITAT AHMEDABAD 1.DATE OF DICTATION 22 /11/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 23 /11/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S 24-1-2011. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 25-11-11. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 25-11-11 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 25 -11-11. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..