SUNIL C. SHAH,MUMBAI vs. ITO WD 21(3)(2), MUMBAI

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ITA 59/MUM/2014Status: DisposedITAT Mumbai25 September 2018AY 2009-106 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal found that the lower authorities had not properly examined the evidence submitted by the assessee regarding commission payments and depreciation. Therefore, the Tribunal set aside the orders and restored the issues to the AO for fresh adjudication.

What were the facts?

The assessee, a proprietor of a jewellery business, claimed commission expenses and depreciation on a motor car. The Assessing Officer (AO) disallowed both claims, and the CIT(A) confirmed these disallowances. The assessee appealed to the ITAT.

What were the issues?

Whether the disallowance of commission expenses and depreciation on a motor car by the AO and CIT(A) was justified without proper examination of evidence. Whether the AO failed to pass a speaking order considering the submissions and evidence.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(2),Section 142(1),Section 271(1)(c),Section 234B,Section 234C,Section 234D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI R. C. SHARMA, AM & SHRI AMARJIT SINGH, JM

For Appellant: Shri Ketan L. Vajani
Hearing: 29.06.2018Pronounced: 25.09.2018

O R D E R

PER AMARJIT SINGH, JM:

1.

The assessee has filed the present appeal against the order dated 03.10.2013 passed by the Commissioner of Income Tax (Appeals)-22, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the A.Y. 2009-10.

2.

The assessee has raised the following grounds: - 1. The Ld. Assessing Officer has erred in Disallowing the commission paid of Rs.11,40,008/- & it's reasonableness to various parties on sales and making charges. The Ld. A.O has not appreciated the commission paid is vital for ITA. No.59/M/2014 A.Y. 2009-10 carrying on Business particularly in proprietorship. The Ld. CIT (A), has also confirm the same without considering the submission of an assessee, 2. The Ld. AO as well as Ld. CIT (A), failed to appreciate the fact that the commission and Brokerage is the essential element of the business and it is required to pay many time according to market condition. And the volume of payment is also reasonable.

3. The Id. AX) as well as the Ld. CIT (A), failed to appreciate the fact that the commission paid us parties are less than the G.P. Margin of the business. The payment made to the parties are by Account payee / Cross Cheque and the TDS where ever applicable was properly deducted and paid to the government treasury time to time. And the TDS return was also tiled time lo time, 4. The Ld. A.O as well as Ld. CIT (A), failed to appreciate that the details called for was submitted along with the documentary evidence i,e. Sales Invoice, making charges voucher, Bank book, Ledger Account of the commission paid, more over the information asked for U/s.l33(6) directly to the various parties were also presented. Response to the summonsed the various parties presented personally with their return of Income Bank statement, computation of Income and Identity proof also provided to the Ld. A.O. The Ld. Income Tax Officer has erred in disallowing 1/5th 5. of depreciation on motorcar Rs.16,804/-. The Ld. CIT(A) has also not appreciated with the submission.

6.

The order of Ld. AO is Excessive, Arbitrary, and against the Law of Natural justice and Equity.

7. The Ld. ITO failed to pass a speaking order and consider various citations, which are similar to the nature of the claim of the commission and Brokerage payment and Disallowance of Depreciation on motor car.

8.

The Ld. AO has erred in levying of Interest u/s 234B, 234C and 234D, and has wrongly initiated penalty proceedings u/s 271(1)(c) of the I.T. Act, 1961. 9 Your honours appellant prays as under ITA. No.59/M/2014 A.Y. 2009-10

a) That Commission disallowed of Rs.11.40,008/- should be deleted. B) That Depreciation disallowed of Rs.16,804/- also to be deleted. Or some other relief may be given as your honour think most proper and appropriate.” The brief facts of the case are that the assessee filed his return 3. of income on 21.09.2009 declaring total income to the tune of Rs.18,97,450/-. The return was processed u/s 143(1) of the I.T. Act, 1961. Thereafter the case was selected for scrutiny, hence, notice u/s 143(2) of the Act dated 20.08.2010 and notice u/s 142(1) of the Act dated 24.06.2011 were issued and served upon the assessee. The assessee is the proprietor of M/s. C.M. Jewellers and engaged in the business of trading and gold & Diamond jewellery and has declared his income from business & other sources. On verification, it was found that the assessee has debited the commission to the tune of Rs.11,40,008/- in his P&L Account. Notice was given and finding no justifiable reason to allow the same, the said commission was added to the income of the assessee. The assessee has also claimed the depreciation to the extent of 1/5th in motor car but the same was also disallowed and the income of the assessee was assessed to the tune of Rs.30,54,260/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who confirmed the addition raised by the AO, therefore, the assessee has filed the present appeal before us. ISSUES Nos. 1 to 4:-

ITA. No.59/M/2014 A.Y. 2009-10

4.

Under these issues the assessee has challenged the confirmation of the disallowance of commission in sum of Rs.11,40,008/-. The contention of the Ld. Representative of the assessee is that the claim of the assessee has not been examined properly because the evidence given in support of the claim was not examined by the AO as well as the CIT, therefore, in the said circumstances and in view of the evidence adduced before them as well as before the ITAT, the claim of the assessee is liable to be allowed in the interest of justice. However, on the other hand, the Ld. Representative of the Department has refuted the said contention. We have heard argument and advanced by the Ld. Representative of the parties and perused the record available on the file in connection with the payment of commission. The assessee has produced the debit notes before the AO which lies at page no. 25 to 33 of the paper book. The assessee has also produced the confirmation letter of the parties who received the commission which lies at page no. 43 to 53 of the paper book. The assessee has also deducted the TDS upon the payment and in this regard the copy of Form no. 16A has been produced on record which lies at page no. 34 to 42 of the paper book. On appraisal of the order passed by the authority below, we nowhere find any discussion about these documents for the consideration of the claim of the assessee. Further, we noticed that the claim of the assessee has been allowed in the subsequent assessment year i.e. 2010-11. The evidence given by the assessee nowhere verified and considered, therefore, in the said

ITA. No.59/M/2014 A.Y. 2009-10 circumstances, we are of the view that the finding of the CIT(A) is not justifiable, therefore, we set aside the same and restore the issue before the AO to decide the matter afresh in view of the evidence discussed above and by giving an opportunity of being heard to the assessee in accordance with law. Accordingly, these issues are decided in favour of the assessee against the revenue. ISSUE NO. 5:- 5. Under this issue the assessee has challenged the confirmation of disallowance to the extent of 1/5th upon the depreciation of motor car of Rs.16,804/-. On appraisal of the record, we noticed that in this regard the AO has allowed the claim of the assessee against subsequent year also and copy of which has been lies at page no. 62 of the paper book. The claim of the assessee in this regard is also required to be examined at the end of AO, therefore, in this regard, we set aside the finding of the CIT(A) on this issue and restored the issue before the AO to decide the issue afresh in accordance with law by giving an opportunity of being heard to the assessee. Accordingly, this issue is decided in favour of the assessee against the revenue. ISSUE NOs. 6 & 7:- 6. Issue nos. 6 & 7 are generally in nature which nowhere required for any adjudication. ISSUE NO. 8:-

ITA. No.59/M/2014 A.Y. 2009-10

7.

Issue no. 8 is consequential in nature which nowhere required for adjudication.

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