GANGA PRASAD GOEL,DELHI vs. JCIT, NEW DELHI

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ITA 1494/DEL/2016Status: DisposedITAT Delhi09 January 2017AY 2011-128 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that commission payments made by account payee cheque for business purposes are genuine and allowable. It also found that an addition of Rs. 2 lacs to Saurabh Goyal was wrongly made by the CIT(A) as it was already allowed by the AO.

What were the facts?

The assessee, engaged in manufacturing construction equipment, debited commission expenses of Rs. 17,32,400/-. The Assessing Officer (AO) disallowed a portion of these expenses, and the CIT(A) partly allowed the assessee's appeal. The assessee appealed to the ITAT.

What were the issues?

Whether commission expenses paid by account payee cheque for business purposes are deductible. Whether an addition made by the CIT(A) was already allowed by the AO.

Which sections of the Income-tax Act were involved?

Section 143(2),Section 142(1),Section 143(3),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH “SMC-3”, NEW DELHI

Before: SHRI H.S. SIDHU

Assessee has filed this Appeal against the impugned Order dated 30.12.2015 passed by the Ld. CIT(A)-32, New Delhi relevant to assessment year 2011-12 on the following grounds:-

1.

For that the Learned Commissioner of Income Tax

(Appeals) is not justified in disallowing the commission paid amounting to Rs. 12,32,000/- to the following persons:

Name Amount paid Ashima jain 3,00,000/- Usha 1,50,000/- Ratna 2,17,000/- Khushbu Aggarwal 1,75,000/- Saurabh Goel 2,00,000/- Jyotsna 1,90,000/-

2. For that the Ld. CIT(A) is not justified in partly

confirming the assessment order of Joint Commissioner of Income Tax.

3. For that the Ld. CIT(A) is not justified in confirming a sum of Rs. 25,000/- which was a debit not issued to M/s

Laxmi Fabrics.

4. For that the Ld. CIT(A) is not justified in adding a sum of Rs. 2,00,000/-, which was paid to Saurabh Goyal.

The same was not the matter of appeal and was already allowed by the Joint Commissioner of Income Tax in the original assessment order.

5.

For that the Commission paid to Saurabh Goyal

amounting to Rs. 2,00,000/- was disallowed by mistake.

Hence it should be allowed.

6. For that the Joint Commissioner of Income Tax is not justified in initiating penalty proceedings u/s. 271(1)© of the Income Tax Act, 1961.

7. For that any other grounds of appeal may be allowed

to be urged at the time of hearing.

2.

The brief facts of the case are that assessee filed the return of income on 29.7.2011 declaring income of Rs. 5,58,670/-. Subsequently, the case was selected for scrutiny under CASS. Notice u/s. 143(2) of the Income Tax Act, 1961 dated 31.7.2012 was issued. After change of jurisdiction, notice u/s. 142(1) of the I.T. Act dated 27.11.2013 alongwith a questionnaire was issued. The assessee is engaged in the business of manufacturing of civil construction related equipments under the name of Kamal Enterprises.

Against the turnover of Rs. 4,67,70,746/- the assessee has declared a gross profit of Rs. 37,69,204/- giving a GP rate of 8.06%. From the perusal of P&L account furnished by the 3 assessee, it was observed by the AO that the assessee has debited commission expenses at Rs. 17,32,400/-. The assessee was asked to furnish the details of the parties to whom these commission expenses were debited and in response thereto the assessee submitted the details as called for. Thereafter, the AO vide his order dated 24.2.2014 passed u/s. 143(3) of the I.T. Act, 1961 has assessed the income of the assessee at Rs. 21,76,370/- and made various additions.

3.

Against the order of the Ld. AO, assessee appealed before the Ld. CIT(A), who vide impugned order dated 30.12.2015 has partly allowed the appeal of the assessee.

4.

Aggrieved with the impugned order dated 30.12.2015 passed by the Ld. CIT(A), Assessee is in appeal before the Tribunal.

5. With regard to ground no. 1 relating to disallowance of commission amounting to Rs. 12,32,000/- is concerned, Ld. Counsel of the asssessee stated that AO has brush aside / ignored the plethora of evidence produced before him by the assessee. He further stated that the payment has been made by the assessee by way of account payee cheque. It was 4 further stated that the expenses incurred for business purpose are allowable deductions from the income of the assessee.

Therefore, the commission paid may be allowed and addition in dispute may be deleted.

5.1 With regard to ground no. 3 relating to addition of Rs. 25,000/-, Ld. Counsel of the assessee stated that the this amount was a debit not issued to M/s Laxmi Fabrics and is a difference in the account of M/s Laxmi Farbrics, hence, the same is liable to be deleted.

5.2 With regard to ground no. 4 relating to addition of Rs. 2 lacs which was paid to Saurabh Goyal. Ld. Counsel of the assessee stated that this addition was not the matter of appeal and was already allowed by the AO in the assessment order, hence, the same may be deleted.

5.3 Ld. Counsel of the assessee further stated that as regards ground no. 5 relating to addition of Rs. 2 lacs on account of commission paid to Saurabh Goyal was disallowed by mistake, hence, the same may be deleted.

6.

On the other hand, Ld. DR has heavily relied upon the order of the authorities below.

7.

I have heard both the parties and perused the records.

As regards ground no. 1 is concerned, I find that the payment of commission has been made by the assessee by way of account payee cheque and expenses incurred for business purpose, hence, the same are genuine and accordingly allowed.

7.1 With regard to ground no. 3 relating to addition of Rs. 25,000/-, I find that this amount was a debit not issued to M/s Laxmi Fabrics and is a difference in the account of M/s Laxmi Farbrics. Therefore, the same is deleted.

7.2 With regard to ground no. 4 & 5 relating to addition of Rs. 2 lacs which was paid to Saurabh Goyal. I find considerable cogency in the assessee’s counsel contention that this addition was not the matter of appeal and was already allowed by the AO in the assessment order, I find that the same was allowed by AO vide para no.

3. According to AO order total commission expenses was Rs. 17,32,400/-, but AO disallowed only Rs. 15,32,400/- and has given the relief to assessee for Rs. 2 lacs only. However, Ld. CIT(A) wrongly added the same, hence, the same is deleted.

8.

In the result, the Appeal filed by the Assessee stands allowed.

Order pronounced in the Open Court on 09/01/2017.

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