M/s. Vamendu,, Ahmedabad v. The ACIT, Gandhinagar Circle,, Gandhinagar

ITA 356/AHD/2015 | 2010-2011
Pronouncement Date: 28-11-2017 | Result: Dismissed

Appeal Details

RSA Number 35620514 RSA 2015
Assessee PAN AAHFM6685J
Bench Ahmedabad
Appeal Number ITA 356/AHD/2015
Duration Of Justice 2 year(s) 9 month(s) 8 day(s)
Appellant M/s. Vamendu,, Ahmedabad
Respondent The ACIT, Gandhinagar Circle,, Gandhinagar
Appeal Type Income Tax Appeal
Pronouncement Date 28-11-2017
Appeal Filed By Assessee
Tags No record found
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 28-11-2017
Assessment Year 2010-2011
Appeal Filed On 19-02-2015
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD B BENCH BEFORE: SHR I RAJPAL YADAV JUDICIAL MEMBER AND SHRI AMARJIT SINGH ACCOUNTANT MEMBER M/S. VAMENDU A - 54 GIDC SECTOR - 15 GANDHINAGAR PAN: AAHFM6685J (APPELLANT) VS THE ACIT GANDHINAGAR CIRCLE GANDHINAGAR (RESPONDENT) REVENUE BY : S H RI MUDIT NAGPAL SR. D . R. ASSESSEE BY: S H RI ABHIMANYU SINGH BHATI A.R. DATE OF HEARING : 22 - 11 - 2 017 DATE OF PRONOUNCEMENT : 28 - 11 - 2 017 / ORDER P ER : AMARJIT SINGH ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2010 - 11 AR IS ES FROM ORDER OF THE CIT(A) GANDHINAGAR DATED 15 - 12 - 2014 IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1.0 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN LAW AND ON FACTS IN DISMISSING THE APPEAL OF THE APPELLANT. 2.0 THE LEARNED COMMISSIONER OF INCOME - TAX (APPEALS) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF COMMISSION ON SALES AMOUNTING TO R S.9 20 958/ - . I T A NO . 356 / A HD/20 15 A SSES SMENT YEAR 2010 - 11 I.T.A NO. 356 /AHD/20 15 A.Y. 2010 - 11 PAGE NO M/S. VAMENDU VS. ACIT 2 3. THE ASSESSEE HAS FILED RETURN OF INCOME DECLARING INCOME OF RS. 43 40 780/ - ON 15 TH SEPTEMBER 2010. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAS PAID COMMISSION OF RS. 9 20 598/ - TO SHRI MUKESH L. PATEL HUF @ 3% ON SALE OF RS . 3 06 86 585/ - MADE TO RAJASTHAN ELECTRONICS & INSTRUMENTS LTD. THE ASSESSING OFFICER ALSO OBSERVED THAT ASSESSEE HAS BEEN SELLING GOODS TO THE AFORESAID CONCERN FOR THE LAST SEVERAL YEARS WITHOUT MAKING ANY PAYMENT OF COMMISSION . TO EXAMINE AND T O PROVE THE GENUINENESS OF T HE COMMISSION EXPENSES THE ASSESSING OFFICER HAS RECORDED THE STATEMENTS OF SHRI MUKESH L. PATEL U/S. 131 .THE FO LLOWING FACTS WERE IMMERGED FROM THE ABOVE STATEMENT: - 1 AS PER ANSWER NO.4 SHRI MUKESH PATEL KARTA OF HUF HAS GONE TO RAJASTHAN ONLY ONCE THAT TOO BEFORE THREE YEAR. 2 AS PER ANSWER - 5 HE HAS GIVEN PHONE CALL TO RAJASTHAN ONLY ONCE OR TWICE IN THE YEAR. 3 AS PER ANSWER 6 HE REPLIED THAT HE TALKED TO EMPLOYEE OF RAJASTHAN ELECTRONICS & INSTRUMENT LTD. ONCE OR TWICE ONLY IN A YEAR. 4 HE HAD VISITED OFFICE OF M/S. VAMENDU ONLY TWICE OR THRICE IN A YEAR. 5 AS PER ANSWER 110.8 HE ADMITTED THAT HE IS NOT HANDLING DAY TO DAY AFFAIRS. HE DON'T KN OW WHAT IS THE ORDERS. HOW IT IS TO BE SENT ETC. 6 IN ANSWER TO QUESTION NO.9 HE REPLIED THAT HE IS MAKING SALARY PAYMENT OUT OF COMMISSION RECEIVED TO DHARMESH SANJAY KAKADIA RAJIV SUREJA ETC. BUT IN SUBSEQUENT ANSWERS HE ADMITTED THAT MONEY CLAIM ED AS GIVEN FOR SALARY HAS RECEIVED BACK TO HIM IN FORM OF LOAN. THUS THERE WAS NO ACTUAL OUT FLOW ON ACCOUNT OF SALARY. 7 ON THE TOP OF ALL THE ASSESSEE IS DOING BUSINESS WITH THIS COMPANY SINCE LONG & COMMISSION IS PAID ONLY FROM A.Y. 2009 - 10. DURING T HE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE COULD NOT ESTABLISH THE SERVICES RENDERED BY THE PARTY TO WHOM THE COMMISSION WAS PAID. THE REFORE THE ASSESSING OFFICER CONCLUDED THAT CLAIM OF THE ASSESSEE FOR COMMISSION PAYMENT WAS ONLY AN ARRANGEMENT M ADE WITH THE PAYEE OF THE COMMISSION WITHOUT DOING ANYTHING FOR I.T.A NO. 356 /AHD/20 15 A.Y. 2010 - 11 PAGE NO M/S. VAMENDU VS. ACIT 3 THE ASSESSEE .CONSEQUENTLY THE ASSESSING OFFICER HAS DISALLOWED THE COMMISSION PAYMENT OF RS. 9 20 598/ - . AGGRIEVED ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A) AGAINST THE IMPUGNED DISALLO WANCE. THE LD.CIT(A) HAS SUSTAIN THE DISALLOWANCE BY OBSERVING AS UNDER: - 4.3 I HAVE CONSIDERED THE FACTS OF THE CASE ASSESSMENT ORDER AND THE SUBMISSION MAD E BY THE APPELLANT. THE AO'S MAIN OBJECTION FOR NOT ALLOWING THE SUBMISSION MADE BEFORE HIM WAS THE STATEMENT RECORDED OF SHRI SHRI MUKESH PATEL KARTA OF HUF HE HAD SPECIFICALLY STATED THAT HE IS NOT HANDLING DAY TO DAY AFFAIRS AND HE DO NOT KNOW MUCH ABOUT THE BUSINESS OF THE APPELLANT. IT HAS BEEN CONFIRMED BY HIM THAT THE MONEY CLAIMED AS SA LARY BEING PAID IS RECEIVED BACK BY HIM IN THE FORM OF LOAN AND THAT THERE WAS NO ACTUAL OUT FLOW OF MONEY INVOLVED. HE HAD ALSO STATED THAT HE HAD VISITED THE OFFICE OF THE APPELLANT ONLY TWICE OR THRICE IN A YEAR AND HAD ALSO GIVEN PHONE CALL TO RJASTH AN ELECTRONICS & INSTRUMENTS LTD. ONCE OR TWICE. THE A.O. IS OF THE VIEW THAT APPELLANT WAS HAVING BUSINESS WITH RAJASTHAN ELECTRONICS & INSTRUMENTS LTD SINCE MANY YEARS BUT NO COMMISSION HAS BEEN PAID IN THE PAST. THE A.O. HAS HELD THAT AS PER SECTION 3 7 ONLY THOSE EXPENSES WHICH ARE INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS ARE TO BE ALLOWED FROM THE FACTS OF THE CASE IT WAS INFERRED BY THE A.O. THAT HE COMMISSION EXPENSE WAS ONLY AN ARRANGEMENT AND NOT INCURRED HOLLY AND EXCLUSIVELY F OR BUSINESS AS THE PERSON TO WHOM COMMISSION IS PAID HARDLY DOES ANYTHING FOR THE APPELLANT. ON THE OTHER HAND - - APPELLANT ; HAS PROCEEDINGS THAT ONE OF THE PARTNER SHRI D EEPAK V. PATEL OF THE FIRM WHO WAS LOOKING AFTER THE FUNC TIONS FELL ILL AND HE C OULD NOT LOOK AFTER THE BUSINESS OF THE FIRM. IN SUCH CIRCUMSTANCES IT HAD APPOINTED MUKESH L. PATEL (HUF) TO DEAL WITH RAJASTHAN ELECTRONICS & INSTRUMENTS LTD. I.E. FOR PROCURING SUPERVISING PRODUCTION STAFF AT FACTORY AND TO FOLLOW SPECIFICATION OF B UYER PROCESSING AND TO LOOK AFTER SALES SERVICES FOR RAJASTHAN ELEC TRONICS & INSTRUMENTS LTD. IT IS ALSO CONTENDED THAT APPELLANT HAD DEDUCTED T DS @ 10% ON THE SALES COMMISSION PAID TO MUKESH L. PATEL (HUF) AND PAID TO THE ACCOUNT OF CENTRAL GOVERNMENT AN D ALSO FILED IDS RETURNS. ON CAREFUL EXAMINATION OF THE WHOLE FACTS IT IS SEEN THAT SHRI MUSH L PATEL WAS PAID COMMISSION @ 3% ON TOTAL SALES TO RAJASTHAN ELECTRONICS & INSTRUMENTS LTD. APPELLANT IN BOTH THE SUBMISSIONS MADE BEFORE ME APPELLANT HAS NOT REBUTTED THE FACTS NARRATED BY THE AO IN PARA.5 OF THE ORDER. FURTHER IT IS A FACT THAT APPELLANT IS A PARTNERSHIP FIRM AND APART FROM THIS AS CONTENDED BY THE APPELLANT ONE OF THE PARTNER WHO GOT ILL OTHER PARTNERS COULD WELL HAVE TAKEN CARE OF THE B USINESS INSTEAD OF APPOINTING SHRI MUKESH L. PATEL TO LOOK AFTER THE SALES OF RAJASTHAN ELECTRONICS & INSTRUMENTS LTD AND PAYING 3% OF THE COMMISSION ON THE TOTAL SALES MADE. BUSINESS WAS BEIG DONE WITH RAJASTHAN ELECTRONICS &. INSTRUMENTS LTD SINCE MANY YEARS AND NECESSITY OF APPOINTING SHRI MUKESH L. PATEL IS NOT GIVEN BY THE APPELLANT TO THE SATISFACTION OF THE UNDERSIGNED. FURTHER IT IS ALSO A FACT THAT THE NATURE OF PAYMENT LIKE COMMISSION ALWAYS COMES INTO PICTURE FOR EITHER ENHANCING OF BUSINESS TURNOVER OR FOR BRINGING NEW CUSTOMERS/CLIENTS. HERE IN THE CASE OF THE APPELLANT THERE IS NO SUCH CASE AS DISCUSSED BY THE AO IN TH E ASSESSMENT ORDER. THERE IS NO SUCH SUBSTANTIAL INCREASE IN TURNOVER AND THE SALES MADE TO RAJASTHAN ELECTRONICS & INSTRU MENTS LTD IS ONE OF THE O LDEST CLIENT OF THE APPELLANT. FURTHER IT IS ALSO NOTED THAT THE APPELLANT HAS NOT SUBMITTED REBUTTAL ON THE 7 POINTS OF THE AO NARRATED IN THE ASSESSMENT ORDER WHICH ARE BASED ON THE STATEMENT RECORDED U/S 131 OF THE ACT OF SHRI MUKESH L PATEL (HUF) TO WHOM COMMISSION WAS PAID. APPELLANT HAS SUBMITTED REBUTTAL ONLY ON 2 POINTS IN HIS SUBMISSION DATED I.T.A NO. 356 /AHD/20 15 A.Y. 2010 - 11 PAGE NO M/S. VAMENDU VS. ACIT 4 18/11/2014 WHICH ARE INTERLINED WITH ONE ANOTHER AND ON THE OTHER POINTS APPELLANT HAS REMAINED SILENT. HERE IT IS VERY IMPORTA NT TO MENTION THAT SHRI MUKESH L. PATEL (HUF) HAS VERY CATEGORICALLY ACCEPTED IN REPLY TO QUESTION NO. 4 THAT HE HAS GONE TO RAJASTHAN ONLY ONCE; THAT TOO BEFORE 3 YEARS AND IN REPLY TO Q.NO.5 HE HAS STATED THAT HE HAS GIVEN PHONE CALL TO RAJASTHAN ONLY O NCE OR TWICE IN THE YEAR. FURTHER IN REPLY TO Q.9 IT IS CATEGORICALLY STATED THAT HE WAS MAKING SALARY PAYMENT OUT OF COMMISSION RECEIVED TO DHARMESH SANJAY KAKADIA RAJIV SUREJA ETC. AND HAS ADMITTED IN SUBSEQUENT ANSWERS THAT THE MONEY CLAIMED AS GIVE N FOR SALARY HAS BEEN RECEIVED BACK TO HIM IN THE FORM OF LOAN AND THAT THERE WAS NO ACTUAL OUTFLOW ON ACCOUNT OF SALARY. IN VIEW OF THE ABOVE FACTS OF THE MATTER THE ACTION OF THE AO IN MAKING THE DISALLOWANCE OF RS.9 20 598/ - TO SHRI MUKESH L PATEL (HUF ) IS HELD JUSTIFIED AND THE ADDITION MADE IS CONFIRMED. THE RELEVANT GROUND OF APPEAL IS REJECTED. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US THE LD. COUNSEL SUBMITTED PAPER BOOK CONTAINING INFORMATION PERTAINING TO SUBMISSION MADE BEFOR E THE LD. CIT(A) AND THE ASSESSING OFFICER COPY OF LEDGER ACCOUNT OF THE PARTIES COPY OF TAX AUDIT REPORT ETC. ON THE OTHER HAND LD. DEPARTMENTAL REPRESENTATIVE HAS CONTENDED THAT ASSESSEE HAS NOT PROVED WITH RELEVANT EVIDENCES THAT COMMISSION PAYMENT WAS MADE AGAINST THE SERVICES RENDERED BY THE PERSON TO WHOM COMMISSION WAS PAID. HE ALSO SUPPORTED THE ORDER OF THE LD. CIT(A). 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD CAREFULLY. W E OBSERVED THAT ASSESSEE HAS BEEN SELLING GO ODS TO M/S RAJASTHAN ELECTRONICS & INSTRUMENTS LTD. FOR THE LAST SEVERAL YEARS WITHOUT ANY COMMISSION PAYMENT TO SHRI MUKESH L. PATEL HUF . THEREFORE T O V ERIFY THE GENUINENESS OF THE COMMISSION PAYMENT THE ASSESSING OFFICER HAS EXAMINED SHRI MUK ESH L. PA TEL BUT HE COULD NOT DEMONSTRATE SATISFACTORILY THE KINDS OF SERVICES HE HAS RENDERED AGAINST WHICH COMMISSION WAS PAID BY THE ASSESSEE. WE HAVE NOTICED FROM THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE I.T.A NO. 356 /AHD/20 15 A.Y. 2010 - 11 PAGE NO M/S. VAMENDU VS. ACIT 5 FAILED TO SUBSTANTIATE WITH RELEVANT DOCUM ENTARY EVIDENCE THAT ANY SERVICES HAD BEEN RENDERED BY THOSE PERSONS TO WHOM COMMISSION WAS PAID. IN VIEW OF THESE FACTS AND FINDINGS WE DO NOT FIND ANY REASON TO INTERFERE IN THE FINDINGS OF THE LD. CIT(A). THEREFORE THE APPEAL O F THE ASSESSEE IS DIS MISSED. 6. I N THE RESULT THE APPEAL OF THE ASSESSEE IS DISMISSED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 28 - 11 - 201 7 SD/ - SD/ - ( RAJPAL YADAV ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMED ABAD : DATED 28 /11 /2017 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER/ /