ACIT 10(1), MUMBAI vs. ANATEK SERVICES P LTD, MUMBAI

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ITA 1345/MUM/2013Status: DisposedITAT Mumbai11 May 2016AY 2009-106 pages

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

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) admitted the additional evidence, finding that TDS was deducted and paid, and the payee had filed its return of income. The Tribunal upheld the CIT(A)'s decision, finding no reason to doubt the evidence provided by the assessee.

What were the facts?

The Assessing Officer disallowed commission expenses of Rs. 30,06,856/- for lack of confirmation. The assessee provided additional evidence, including TDS certificates and return of income for the payee, M/s. AIC Technologies, during the appellate proceedings.

What were the issues?

Whether commission expenses are allowable when the payee has filed its return of income and TDS has been deducted and paid, despite initial lack of confirmation.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 143(2),Section 142(1),Section 133(6)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH, MUMBAI

Before: S/SHRI B.R.BASKARAN & AMARJIT SINGH

For Appellant: Shri Haridas Bhat
Hearing: 14.01.2016Pronounced: 11.05.2016

Assessee by: Shri Haridas Bhat Department by: Shri Somanath S. Ukkali सुनवाई क" तार"ख / Date of Hearing: 14.01.2016 घोषणा क" तार"ख /Date of Pronouncement: 11.05.2016 आदेश / O R D E R PER AMARJIT SINGH, JM:

This is an appeal filed by the revenue against the order dated 07.11.2012 passed by the Commissioner of Income Tax (Appeals)-21, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year 2009-10.

2.

The assessee filed the return of income on 23.09.2009 declaring total income to the tune of Rs.1,96,43,420/-. The return was processed u/s. 143(1) of the Income Tax Act, 1961 ( in short “the Act”). The case Assessment Year: 2009-10 was selected for scrutiny and statutory notice u/s.143(2) of the Act was issued on 24.08.2010, which was duly served upon the assessee. Subsequently, notices u/s. 142(1) of the Act along with a questionnaire was issued and served upon the assessee. The assessee paid certain commission to the different parties. The confirmation of the commission paid to the tune of Rs.30,06,856/- was not received therefore the Assessing Officer disallowed the said commission and added to the income of the assessee. Subsequently the assessee filed an appeal before the learned CIT(A) and the learned CIT(A) allowed the appeal of the assessee and allowed the said commission therefore the revenue has filed the present appeal before us.

3.

We have heard the arguments advanced by the learned representative of the parties and have gone through the record carefully. The sole point which has been argued before us is that the learned CIT(A) has wrongly allowed the commission which is based on non- establishing exigency / nexus with business. The assessee company is a private limited company dealing in sale and service of analytical instruments and apparatus. The company had incurred various business expenses during the year. The Assessing Officer sought the confirmation regarding commission expenditure incurred by the appellant during the year. Certain confirmations were also received u/s.133(6) of the Act but the Assessing Officer failed to received the confirmation with regard to the some contentions. The name of the parties are hereby mentioned below:-

2 Assessment Year: 2009-10 Name of the Party Amount in Confirmation Rs. given or not M/s. Deeksha Instruments 33,52,385 Yes Shri Chinmay Malwe 2,22,964 No Ms. Bhuvaneshwari 1,11,483 No Ms. S. Lakshmi 1,22,660 Yes Ms. Bhagvati 3,00,000 No Shri T. Ramesh 81,625 Yes Shri Nemade 55,741 No M/s. AIC Technologies 25,00,000 Yes However, the assessee failed to give the rate of commission. To verify the details given by the assessee notice u/s.133(6) was sent to M/s. Deeksha Instruments Corporation was received confirming the payment. However, the reply of M/s. AIC Technologies was not received. Therefore, it is established that the assessee has shown certain bogus payments on account of commission expenses. Out of the total commission expense of Rs.58,52,385/- for which notice u/s.133(6) was sent the commission expenses of Rs.25,00,000/- were found to be bogus. Therefore, out of total commission expenses of Rs.70,38,912/- an amount of Rs.30,06,856/- is disallowed. Thereafter, appeal was filed and during the appellate proceedings the assessee furnished the confirmation of M/s. AIC Technologies to the Assessing Officer and also submitted the letter of postal authorities, TDS certificated of M/s. AIC Technologies, return of income of M/s. AIC Technologies and statement of account in his accounts for M/s. AIC Technologies. The learned CIT(A) sought the remand report in view of the additional evidence furnished by the appellant. However, the Assessing Officer 3 Assessment Year: 2009-10 was of the view that the additional evidence was not liable to be considered. In view of the additional evidence adduced by the assessee the learned CIT(A) allowed the commission and deleted the demand. The finding of the learned CIT(A) is hereby mentioned below for ready reference:-

“I have considered the facts and circumstances of the case. The appellant has incurred and paid the commission payment during the year. The A.O. disallowed certain part of the commission expenses as confirmation was not received. In the interest of justice and it is also main evidence required for the appellate proceedings for deciding the appeal, I admit the additional evidence of the appellant though these are all in the nature of public records. The evidences filed i.e. TDS payments, return of income, postal letter of M/s. AIC Technologies are public records, so I am accepting the evidence of the appellant. After examination of the appellant’s evidence it is undisputed fact that TDS was deducted from M/s. AIC Technologies and same was paid to the Government account which can be clearly verified from the Income-tax department’s computer net work. Similarly in the case of Shri Chinmay Malwe, Ms. Bhuvaneshwari, Ms. Bhagvati, Shri Nemade the appellant had filed the TDS certificates, the payment on which are available in the Income Tax department’s computer net work. After considering all the above evidences, it is clear that appellant has deducted tax for the commission payments and especially in the case of M/s. AIC 4 Assessment Year: 2009-10 Technologies they have filed the return of income and also submitted the postal authority letter. Postal authorities which is a government department letter on M/s. AIC Technologies letter cannot be ignored. TDS certificate issued to M/s. AIC Technologies, on the commission payment TDS is deducted and paid, proof available in the Income tax computer record cannot be ignored. Similarly return filed by M/s. AIC Technologies shows that on the commission received by M/s. AIC Technologies as income, TDS deducted. This income is accounted at Income tax department by filling the return of income by M/s. AIC Technologies. Hence commission for which TDS certificate were furnished cannot be treated as bogus. In view of the above recorded evidences available in the public records, the A.O.’s addition for disallowance of commission is deleted. This ground of appeal is allowed.

3.2 However, the assessee also furnished the above said evidence before us such as remand report, confirmation of Ms/ AIC Technologies, TDS certificated of M/s. AIC Technologies, reply to the notice u/s. 133(6) of the Act, the confirmation and copy of delivery sheet from the post office department. There are the documents on the basis of which the claim of assessee was allowed. Why these documents should not be relied upon is not on record. There is nothing on record that these documents are false and farivolous Nothing came into the notice as to why the claim of the assessee should not be admitted. No material has been produced before us to falsify the case of 5 Assessment Year: 2009-10 the assessee. Therefore in view of the said circumstances that the learned CIT(A) has decided the matter of controversy judiciously and correctly which does not require to be interference at this appellate stage.

6.

In result the appeal of the Revenue is hereby dismissed accordingly.

Order pronounced in the open court on 11th May, 2016 (AMARJIT SINGH) (B.R.BASKARAN) लेखा सद"य / ACCOUNTANT MEMBER "या"यक सद"य/JUDICIAL MEMBER मुंबई Mumbai; "दनांक Dated : 11th May, 2016 MP MP MP MP

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