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Income Tax Appellate Tribunal, VIRTUAL COURT
Before: SHRI S. RIFAUR RAHMAN, HONBLE & SHRI RAVISH SOOD, HONBLEShri Sachin Lalji Shah Shri Milind Sheth Shri K. Shiddaramappa
O R D E R PER S. RIFAUR RAHMAN, AM
This appeal is filed by the revenue against order of the Learned Commissioner of Income Tax (Appeals)–30, Mumbai [hereinafter in short “Ld.CIT(A)”] dated 09.08.2019 for the A.Y. 2012-13.
Brief facts of the case are that, assessee filed his return of income on 29.09.2012 declaring total income of ₹.2,69,65,480/-. The return was (A.Y: 2012-13) Shri Sachin Lalji Shah processed u/s. 143(1) of the Income-tax Act, 1961 (in short “Act”). The case was selected for scrutiny and notices u/s. 143(2) and 142(1) of the Act were issued and served on the assessee. Since there is no response from the assessee show cause notice u/s. 271(1)(b) of the Act was issued and served on the assessee and even for such show cause notice there was no response from the assessee. On several follow up authorized representative of the assessee attended and filed certain details before the Assessing Officer. Assessing Officer by going through ITS details, found that assessee has deposited cash of ₹.13,00,000/- in his Canara bank account and other bank accounts. In support of the above cash deposits, assessee furnished monthly cash summery and according to Assessing Officer it was not matching with the cash deposited in the account. Accordingly, he made the addition u/s. 68 of the Act. However, ongoing through the ITS details, Assessing Officer observed that assessee has made time deposits of ₹.3,62,62,000/- during the year. He observed that assessee has shown FD with Canara Bank in his balance sheet to the extent of ₹.2,88,92,288/-, therefore, the difference of ₹.1,44,81,961/- was remained unexplained, accordingly, he made the addition u/s. 69 of the Act. Further, on a perusal of the Profit and Loss Account he observed that assessee has debited commission of ₹.31,25,650/- which was paid to (A.Y: 2012-13) Shri Sachin Lalji Shah Shri Lalji Hemraj Shah who is the father of the assessee. The Assessing Officer disallowed the above said commission by observing that assessee failed to explain for what purpose commission was paid to Shri Lalji Hemraj Shah. Not convinced with the submissions of the assessee the Assessing Officer disallowed the commission paid to his father.
Aggrieved assessee preferred an appeal before the Ld.CIT(A) and filed detailed submissions before him. After considering the detailed submissions Ld.CIT(A) remanded the matter to the Assessing Officer and after considering the remand report from Assessing Officer and additional evidences filed under Rule 46A of the I.T. Rules by the assessee, it was admitted by him and after considering the information on record, he deleted the additions proposed by the Assessing Officer with the following observations: - Point 1: With regard to cash deposits of ₹.13,00,000/- “5.2.3. The AR submitted vide Paper Book dt 03.10.2016 in pp 37 which is a confirmation dt 27.09.2016 that the deposits in FY 11-12 in account of Universal Exports, account no 0108256810579, Canara Bank is Rs 6,50,000/-. Please see Annexure. The appellant has explained the same from the opening balance for the year of Rs.17,78,051/ and has furnished a copy of monthly summary of cash for the period 1.04.2011 to 31.3.2012 at pp 34. The cash deposits in Canara Bank are explained from the cash book. In view of the above, ground of appeal no 1 is allowed.”
Point No.2: With regard to fixed deposits of ₹.1,44,81,961/-
(A.Y: 2012-13) Shri Sachin Lalji Shah “5.3.3 A certificate from Canara Bank is at pp 50 of Paper Book dt 03.10.2016; this certifies that the closing balance of all FDs inclusive of interest and net of TDS is Rs 2,88,24,799.62. ITS details at pp 9-11 of Paper Book dt 03.10.2016 indicate total term deposits during the year with Canara Bank is Rs 3,20,12,000. However, Canara Bank has confirmed term deposits of Rs 2,88,24;799.62 only. A perusal of the ITS details and a comparison to the certificate issued by Canara Bank clearly reveals that the ITS details have duplicate entries. This deposit of Rs.2,88,24,799.62 is reflected in the balance sheet for YE 31.3.2012.
Point No. 3 With regard to commission expenses of ₹.31,25,650/-
“5.4.2 The appellant submitted in the ‘Statement of Facts’ that it is engaged in ‘business through proprietary business namely UNIVERSAL EXPORTS, a Government Recognised Star Export House. The concern is dealing in export of readymade garments, imitation jewelry, cosmetics etc . The appellant has filed return of income for Assessment Year: 2012-13 on 29th September, 2012 vide acknowledge no. 502833631290912 and has declared taxable income of Rs 2,69,65,480/. The income comprises, income from business viz; a proprietary concern, Universal Exports, and income from Other Sources i.e. Bank Interest. During the assessment proceedings, the appellant was asked to explain details of commission paid Rs.31,25,650/-. The commission was paid to appellant's father, Shri. Lalji Shah, who has gained over more than 3 decades wide experience in the same business. The commission was paid for various services rendered-in execution of export orders during the year under consideration. The assessee has also deducted tax at source and filed quarterly statement of T.D.S. Further the same was duly disclosed in the return of income filed by appellant's father. The copy of return along with Balance Sheet and Profit & Loss Account’ was placed on records during assessment proceedings. The Assessing Offi¢er has not appreciated these facts and disallowed the commission expenses of Rs. 31,25,650/stating that said amount was not reflected in Shri. Lalji Shah's personal Balance Sheet & Profit & Loss account. 5.4.3 The appellant has furnished at pp 52 of Paper Book dt 03.10.2016, a copy of debit note: dt 31.03.2012 raised by Shri Lali Hemraj Shah for an amount of Rs. 31,25,659/- comprising ‘commission of Rs 28,33,770/- and Service Tax @.10.3 % of Rs.2,91,880/-. The TRACES Form 26 AS of Shri Lalji Nemraj Shah in pp 53 of Paper Book dt 03.10.2016 also reflects Rs,28,33,770/-. The return of income of Shri Lalji Hemraj Shah in pp 55-57 of Paper Book dt 03.10.2016 also reflects Rs. 39,47,588/- as commission received. Accordingly, ground of appeal is allowed.”
(A.Y: 2012-13) Shri Sachin Lalji Shah 4. Aggrieved revenue is in appeal before us raising the following grounds of appeal: - “1. Whether on the facts and in the circumstance of the case and in law, the Ld. CITA) is justified in accepting the additional evidences u/s 46A of the IT Rule 1962 ignoring the fact that the assessee failed to substantiate its claim and did not avail the opportunities provided by the AO during the course of assessment proceedings?” 2. “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of Rs.13,00,000/- on account of cash deposit in the bank ignoring the fact that monthly cash summary furnished by the assessee was not matched with the cash deposit in the account?” 3. “On the facts and circumstances of the case and in law, the Ld. CITA) erred in deleting the addition of Rs. 1,44,81,961/- on account of additions to fixed deposit ignoring the fact that the assessee failed to show balance FD amount of Rs. 1,44,81,961/- in the balance sheet?” 4. “On the facts and circumstances of the case and in law, the Ld. CITA) erred in deleting the addition of Rs. 31,25,650/on account of disallowance of commission expenses ignoring the fact that the assessee failed to substantiate its claim of expenses during the course of assessment proceedings?”
5. The appellant craves leave to amend or alter or add a new ground which may be necessary.”
5. Considered the rival submissions and material placed on record, with regard to Ground No. 1, Ld. DR submitted that Ld.CIT(A) accepted the additional evidences u/s. 46A of the I.T. Rules ignoring the fact that assessee did not file those informations before the Assessing Officer during the course of assessment proceedings. We observe from the record that assessee has filed certain information during the course of the assessment proceedings and other information before the Ld.CIT(A) and (A.Y: 2012-13) Shri Sachin Lalji Shah Ld.CIT(A) before accepting the additional evidences, he remanded the matter to the Assessing Officer and after hearing and considering remand report he accepted the additional evidences which is within his power. Therefore, we do not see any reason to interfere with the findings of appellate proceedings of the Ld.CIT(A). Therefore, we dismiss the ground raised by the revenue.
6. With regard to Ground No. 2, we observe from the record that assessee has filed cash flow statement as per which assessee has an opening balance of cash to the extent of ₹.17,78,061/- and also assessee has filed confirmations from M/s. Universal Exports to the extent of cash deposit in Canara Bank to the extent of ₹.6,50,000/-. The information clearly indicates that the assessee had enough cash balances to make deposits in the bank account, therefore, we do not see any reason to interfere with the findings of the Ld.CIT(A). Accordingly Ground No. 2 is dismissed.
7. With regard to Ground No. 3, we noticed that Assessing Officer made addition of ₹.1,44,81,961/- on account of additions in fixed deposits. We observe from the certificate from Canara Bank which is placed at Paper Book, as per which the closing balance of all FDs shown
(A.Y: 2012-13) Shri Sachin Lalji Shah at ₹.2,88,24,799/-. It clearly shows that the bank had confirmed the bank deposits and it matches with the Fixed deposits disclosed by the assessee in the Balance Sheet. We observe that Ld.CIT(A) held that the information contained in ITS have duplicate entries. This was not controverted by Ld.DR. Therefore, there is a clear mistake in the observation of the Assessing Officer to make the addition of fixed deposits therefore we do not see any reason to interfere with the findings of the Ld.CIT(A). Accordingly Ground No. 3 is dismissed.
With Regard to Ground No. 4, we observe from the record that assessee has paid ₹.31,25,659/- as commission to his father for various services rendered by Shri Lalji Hemraj Shah in execution of export orders during the year. It is fact on record that Shri Lalji Hemraj Shah also declared the same amount in his return of income and paid the relevant tax as applicable, the relevant information was also filed in the Paper Book. Based on the above fact on record, Ld.CIT(A) deleted the addition. At the time of hearing, Ld. DR submitted that assessee has not established the expenses claimed and he prayed that it should be remitted back to the Assessing Officer for fresh verification especially considering the fact that it is related party transaction. Since the assessee has already
(A.Y: 2012-13) Shri Sachin Lalji Shah established the purpose of making commission payment and also the receiver also declared such income in his return of income, since this transaction is already explained we do not see any reason to interfere with the findings of the Ld.CIT(A). Accordingly, this ground of appeal is dismissed.
In the result, appeal of the Revenue is dismissed.
Order pronounced on 30.11.2021 as per Rule 34(4) of ITAT Rules by placing the pronouncement list in the notice board.