M/s. Sre Amman Arul Spinners Ltd., Karur v. ACIT, Trichy

MA 204/CHNY/2011 | 2004-2005
Pronouncement Date: 25-11-2011 | Result: Dismissed

Appeal Details

RSA Number 20421724 RSA 2011
Assessee PAN AABCS0157Q
Bench Chennai
Appeal Number MA 204/CHNY/2011
Duration Of Justice 1 month(s) 4 day(s)
Appellant M/s. Sre Amman Arul Spinners Ltd., Karur
Respondent ACIT, Trichy
Appeal Type Miscellaneous Application
Pronouncement Date 25-11-2011
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted A
Tribunal Order Date 25-11-2011
Assessment Year 2004-2005
Appeal Filed On 21-10-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH CHENNAI BEFORE SHRI HARI OM MARATHA JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE ACCOUNTANT MEMBER .. M.P. NO. 204/MDS/2011 (IN I.T.A. NO. 1691/MDS/2005) ASSESSMENT YEAR : 2004-05 M/S SRE AMMAN ARUL SPINNERS LTD. NO.9-D-3 RAMAKRISHNAPURAM KARUR. PAN : AABCS0157Q (PETITIONER) V. THE ASSISTANT COMMISSIONER OF INCOME TAX COMPANY CIRCLE I TRICHY. (RESPONDENT) PETITIONER BY : SHRI N. QUADIR HOSEYN ADVOCATE RESPONDENT BY : SHRI SHAJI P. JACOB SR-AR DATE OF HEARING : 18.11.2011 DATE OF PRONOUNCEMENT: 25.11.2011 O R D E R PER ABRAHAM P. GEORGE ACCOUNTANT MEMBER : THROUGH THIS MISCELLANEOUS PETITION ASSESSEE SUBM ITS THAT OUT OF TWO CONTENTIONS RAISED BY IT ONE WAS NOT CONSID ERED BY THE TRIBUNAL WHILE DECIDING THE APPEAL. AS PER THE ASS ESSEE IT WAS EXCLUSIVELY CONCENTRATING IN THE MANUFACTURING ASPE CT AND MARKETING OF THE MANUFACTURED PRODUCT WAS DONE BY M/S SURYA & CO. WHICH IN M.P. NO. 204/MDS/11 2 TURN SAVED THE ASSESSEE FROM INCURRING ANY MARKET EXPENSES AND THEREFORE THE COMMISSION PAID TO M/S SURYA & CO. W AS JUSTIFIED. 2. WE HAVE PERUSED THE ORDER OF THE TRIBUNAL AND HE ARD CONTENTION OF LEARNED A.R. THE QUESTION BEFORE THE TRIBUNAL WAS WITH REGARD TO DISALLOWANCE OF AGENCY COMMISSION ` 43 84 869/- PAID TO ONE M/S SURYA & CO. FINDING IN THIS REGARD OF THE TRIBUNAL AS GIVEN IN PARAS 8 AND 9 OF THE ORDER DATED 9.9.2011 IS REPRO DUCED HEREUNDER :- 8. AFTER HAVING HEARD BOTH THE SIDES AND CONSIDERI NG THE MATERIAL ON RECORD AS WELL AS PRECEDENT RELIED UPON WE FIND THAT THE ASSESSEE HAS BORROWED LOAN AMOUNTING TO ` 47.00 LAKHS FROM THE MANAGING DIRECTOR SHRI DHANDAPANI AND PAID AN A GENCY COMMISSION OF ` 43 84 869/- TO A PARTNERSHIP CONCERN BY NAME AND STYLE OF M/S. SURYA AND CO. CONSEQUENTLY THE STAT EMENT OF THE MANAGING DIRECTOR OF THE COMPANY SHRI DHANDAPANI HAS BEEN RECORDED WHERE HE DECLARED THAT THE ABOVE LOAN WAS ADVANCED FROM AMOUNT OF LOAN TAKEN FROM FINANCE COMPANIES AN D EXPORTERS. TO ASCERTAIN THE VERACITY OF THE ABOVE TWO CLAIMS V ARIOUS DETAILS WERE CALLED FOR FROM THE ASSESSEE. THE ASSESSEE DID NOT SUBMIT THE DETAILS IN TIME SO THE DRAFT PROPOSAL WAS SENT TO THE ASSESSEE CALLING UPON THE ASSESSEE TO ESTABLISH ITS CLAIM WITH REGARD TO AGENCY COMMISSION. THE ASSESSEE IN HIS OBJ ECTION TO THE DRAFT PROPOSAL HAS STATED THAT PARTNER OF THE FIRM M/S. SURYA & CO. NAMELY S. DHANDAPANI P.M. KARUPPANNAN AND P. SE LVAN HAD 20 YEARS OF EXPERIENCE IN THIS LINE OF BUSINESS. THEIR EXPERIENCE AND GOODWILL HAD MADE THE COMPANY TO CREATE A REASONABLY GOOD MARKET BESIDES THEY STATED THAT THE COMPANY PERFORM ED VERY WELL. THE ASSESSING OFFICER FURTHER NOTED THAT THE SOURCES OF INCOME FOR THIS FIRM ARE INTEREST AND COMMISSION RE CEIVED FROM THE ASSESSEE. THERE IS NO OTHER SOURCE FOR THIS FIR M AND IF M.P. NO. 204/MDS/11 3 EXPENSES SIDE OF THE FIRM IS SEEN THE FIRM WHILE PAYING INTEREST MOSTLY TO THE DIRECTORS OF THE COMPANY PARTNERS OF T HE FIRM AND FAMILY MEMBERS OF THE DIRECTOR AND PARTNER OF THE CO MPANY AND FIRM RESPECTIVELY. THE BALANCE SHEET OF THE ASSESSEE FIRM HAS STATED LOANS FROM THE FINANCIERS TO THE TUNE OF ` 2.97 CRORES. THE ASSESSING OFFICER FURTHER NOTED THAT THE GENUIN ENESS OF THE CREDIT ARE EXTREMELY DOUBTFUL AND GIVEN DETAILED REA SONS FOR THE SAME. 9. AFTER CONSIDERING ALL THESE FACTS AND CIRCUMSTAN CES AND SPECIFIC OBSERVATIONS OF THE ASSESSING OFFICER WHI CH HAVE NOT BEEN REFUTED BY THE ASSESSEE BEFORE THE ASSESSING OF FICER OR BEFORE THE LD. CIT(A) NOR ANY DETAIL OR FURTHER CLAR IFICATIONS HAVE BEEN FILED BEFORE THIS BENCH AND THE LD. COUNS EL FOR THE ASSESSEE HAS JUST STATED THAT IF THE MATTER GOES BA CK TO THE ASSESSING OFFICER HE SHOULD BE DIRECTED TO ASCERTA IN THE FACTS AS TO WHETHER THE COMMISSION AMOUNT RECEIVED FROM T HE ASSESSEE HAS BEEN OFFERED FOR ASSESSMENT IN EARLIER YEAR OR SUBSEQUENT YEAR. THEREFORE GIVING CAREFUL THOUGHT OVER THE MAT ERIAL ON RECORD AND SUBMISSIONS MADE BEFORE THE LOWER AUTHOR ITIES AND BEFORE THIS BENCH IN THE LIGHT OF PRECEDENTS WE AR E OF THE VIEW THAT THE ASSESSEE HAS MISERABLY FAILED TO ESTABLISH ABOUT THE GENUINITY OF THE COMMISSION AMOUNT OR ESTABLISHING T HAT THE SAME IS FOR ACHIEVING ANY BENEFIT. THEREFORE WHILE CONCU RRING WITH THE FINDING OF THE AUTHORITIES BELOW WE UPHOLD THE ACT ION OF THE LOWER AUTHORITIES AND DISMISS THE APPEAL OF THE ASS ESSEE BEING DEVOID OF ANY MERITS. 3. IT IS CLEAR FROM THE ABOVE THAT THE TRIBUNAL HAD HELD THE ASSESSEE TO HAVE FAILED IN ESTABLISHING THE GENUINE NESS OF THE COMMISSION AMOUNT OR ESTABLISHING ANY BENEFIT RECEI VED THEREFROM. THE FIRST REASON ITSELF WAS SUFFICIENT FOR NOT ACCE PTING THE CLAIM OF THE ASSESSEE. THE CLAIM WAS NOT BONAFIDE AND MADE ONLY TO REDUCE THE M.P. NO. 204/MDS/11 4 TAX INCIDENCE WHICH WAS OTHERWISE LAWFULLY PAYABLE. IT IS CLEAR THAT THE TRIBUNAL HAD CONSIDERED ALL THE ASPECTS OF THE CASE BEFORE COMING TO A CONCLUSION THAT THE PAYMENT OF COMMISSION WAS CORRECTLY DISALLOWED BY THE LOWER AUTHORITIES. ASSESSEE IS S EEKING NOW A REVIEW OF THE ORDER OF THIS TRIBUNAL IN THE GUISE O F RECTIFICATION PETITION. THIS TRIBUNAL IS NOT VESTED WITH ANY POWERS UNDER S ECTION 254(2) OF INCOME-TAX ACT 1961 FOR REVIEWING ITS ORDER. THER E IS NO MISTAKE MUCH LESS ANY MISTAKE WHICH IS APPARENT ON THE RECO RD WHICH WARRANT AN INTERFERENCE UNDER SECTION 254(2) OF I.T . ACT. 4. IN THE RESULT THE MISCELLANEOUS PETITION BEING DEVOID OF MERITS STANDS DISMISSED. THE ORDER WAS PRONOUNCED IN THE COURT ON 25 TH NOVEMBER 2011. SD/- SD/- (HARI OM MARATHA) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI DATED THE 25 TH NOVEMBER 2011. KRI. COPY TO: PETITIONER/RESPONDENT/CIT(A)/CIT/D.R./GUA RD FILE