Income Tax Appellate Tribunal - Kolkata
Calminore Sales Pvt. Ltd., Kolkata vs Department Of Income Tax on 2 March, 2012
आयकर अपीलीय अधीकरण, Ûयायपीठ - " बी ", कोलकाता,
IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH "B", KOLKATA
(सम¢)Before ौी महावीर िसंह, Ûयायीक सदःय, एवं/and
Shri Mahavir Singh, Judicial
Member.
ौी सी.
सी.डȣ.
डȣ.राव, लेखा सदःय
Shri C.D.Rao, Accountant Member
आयकर अपील संÉया /
ITA No.982/Kol/2010
िनधॉरण वषॅ/Assessment Year : 1989-90
(अपीलाथȸ/APPELLANT ) (ू×यथȸ/RESPONDENT)
I.T.O., Ward-6(1), Kolkata M/s.Calminore Sales
Pvt.Ltd., Kolkata
(GIR No.CX-4076)_
अपीलाथȸ कȧ ओर से/ For the Appellant: Shri R.K.Saha
ू×यथȸ कȧ ओर से/For the Respondent: Shri Subash Aarwal
सुनवाई कȧ तारȣख/Date of Hearing : 02.03.2012.
घोषणा कȧ तारȣख/Date of Pronouncement : 04.04.2012.
आदे श/ORDER
सी.
सी.डȣ.
डȣ.राव, लेखा सदःय
Per Shri C.D.Rao, AM
The above appeal is filed by the Revenue against order dated 15.02.2010 of the ld. CIT-(A)-VI, Kolkata pertaining to A.Yr. 19898-90.
2. The only issue raised by the revenue in this appeal is relating to deletion of Rs.11,97,884/- on account of commission paid to different companies.
3. The brief facts of this issue are that while passing the consequential order u/s 254 of the IT Act on the directions of ITAT the AO has disallowed commission paid to the following three parties :-
1. M/s. Kashipur Steels Ltd., New Delhi : Rs.6,94,540 2
2. M/s. Asian Industrial Corporation, Calcutta Rs.1,56,817/-
3. M/s. Indo Chemical Corporation, Calcutta Rs.3,46,527/-
By mainly observing that "M/s Asian Industrial Corporation M/s Indo Chemical Corporation, departmental Inspector was deputed to make the 'on the spot enquiry' at the addresses supplied by the assessee. However, as per her report, the said companies were not traceable at the addresses given by the assessee.
(a) Further inquiries were made at the. instance of the A/R with the following persons at the addresses supplied by him. It was found out from Shri Anil Dugar at 19,.
Synagogue Street that M/s Indo-Chemical Corporation have discontinued their business long ago. and that the parties as well as the records are not traceable and no Income-tax return has also been filed by this concern for a long time. Shri A K Chakraborty, at 7B Pretoria• Street also stated that. M/s Asian Industrial Corporation have discontinued their business long ago and that the parties as well as the records are not traceable and no income-tax return has also been filed by this concern for a long time. During the earlier assessments also, departmental Inspector reported after making inquiries at the addresses supplied by the assessee that the above concerns were not traceable at the given address.
(b) Regarding the fact that the commission charges were accepted by the department in the preceding and subsequent years, it is stated that the principle of Res-judicata does not apply to fiscal proceedings. Also during the earlier assessments, departmental Inspector reported after examining assessment records of M/s Asian Industrial Corpn. and M/s. Indo-Chemical Corpn. that no such transaction of receipt of commission was disclosed in the statement of accounts filed by the said concerns along with their return of income for the relevant Assessment year, i.e.A.Y.2002-03.
(c) Lastly, the fact that the payments were made through A/s Payee Cheques do not signify in any way that the payments were related to commission and liaison payment or that they were for the relevant financial year itself."
3.1. On appeal the ld. CIT(A) has deleted the same by observing that "I have perused the submissions of the appellant and also the Order of the A.O The. Hon'ble ITAT in their order dated 19.03.2004 observed "that the assessment was framed after it was set aside by the Tribunal. The documents filed by the assessee along with the paper book were not examined by the A.O. nor by the CT(Appeals). No further query was made by the A O from the assessee regarding the present address of the assessee because the parties are Income Tax Assesses and the place of business which is apparent from the correspondences with the assessee. Therefore, in our opinion, no proper enquiry was made by the A.O before coming to his conclusion." Accordingly the Hon'ble ITAT set aside the impugned order and restored the matter back to A.O. for deciding afresh.
As seen from record, the A.O. wrote letters to M/s Kashipur Steel Ltd. & M/s Tayal Ispat Udyog Limited at New Delhi and Mr. C.R. Panjabi at Mumbai u/s 133(6) of the Act. For local parties , Inspector was deputed to make enquiries Letters addressed to M/s Kashipur Steel Ltd. and C.R. Punjabi were returned with the comments "Not Known". The A.O. mentioned in the order that as per ITI Report the said local companies were not traceable at the address given by Assessee. The A.O. in his order mentioned that "further enquiries were made at the instance of the A/R with the following persons at the address given by him. It was found out that Sri Anil 3 Dugar at 19, Synagogue Street that M/s Indo -- Chemical Corporation have discontinued their business long ago and the parties and as well as records are not traceable and no income tax return was filed by this concern for a long time. The AO. also made similar observation regarding M/s Asian Industrial Corporation. The A.O. mentions here that during the earlier assessments also, departmental Inspector reported after making inquiries at the addresses supplied by the assessee that the above concerns were not traceable at the given address.
The ITO ward-6(1) in his report on 16.1.2009 mentioned that Inspector visited the office of both the local parties for inspecting their records. It was reported that both the parties could not produce .the old register for her inspection into the alleged payment of commission. As seen from ITI Report dt. 14.2.2005, ITI went several times to the companies (a) M/s Indo-Chemical Corporation at 19-Synagogue St. Kolkata-1 and (b) M/s Asian Industrial Corporation at 7B, 2' floor, Pretoria St.,Kolkata, but the said companies fail to trace out the old register and was unable to extract information. The ITI was able to trace the concerns at the given address. There was no attempt to ascertain whether the parties received the commission. No statement was recorded from any of these parties on this issue. However, the AO. in the order stated that the companies were not traceable at the addresses given by the assessee which is factually incorrect. Further, AO. has not stated in the order how enquiries were made from Sri Anil Dugar and Sri A.K. Chakraborty, AO. has not examined the document filed before him, showing the services rendered i.e. the amount of Silico Managanese and Ferro Manganese sold by each of these parties. The A.O. has not brought on record any adverse inference regarding commission payments. The parties may not be able to produce the records of 1988-89 during the enquiries made in 2005. The persons Sri Anil Dugar & Sri A.K. Chakraborty should have been enquired regarding the commission payment to bring out the facts.
The Ld. A/R filed details of cheque payments along with the dates and amounts. The Balance Sheet details of M/s Kashipur Steels Ltd. showed M/s Calminore Sales Pvt. Ltd. as debtor on 31.3.1989. The A/R submitted that all these details were filed before A.O. The A.O. has not commented on the details furnished by the appellant before him. The A.R. has proved the genuineness of payment to M/s Kashipur Steels Ltd., M/s Indo-Chemical Corporation and M/s Asian Industrial Corporation. The existence of local parties is confirmed from ITI Report. The basis of commission payments was also explained by A/R with the necessary bills and documents. The l.T.I Report dt. 26.3.2002 shows that M/s Indo-Chemical Corporation, 19-Synagogue St. and M/s Asian Industrial Corporation is not traceable at the given address. The ITI report on 14.2.2005 shows that the companies were existing at the given address. The department in the preceding assessment year and succeeding assessment years has accepted the commission payments. In my opinion the AO should have followed the instruction of the Hon'ble ITAT in coming to conclusion. The disallowance of sales commission amounting to Rs. 11,97,884/- therefore, is not sustained."
3.2. Aggrieved by this now the revenue is in appeal before us.
4. At the time of hearing before us the ld. DR appearing on behalf of Revenue has submitted that even at the time of re-assessment on the instructions of this Tribunal assessee has failed to produce the parties nor able to establish that the payment of 4 commission is a genuine expenditure. The ld. CIT(A) has deleted the same by applying the legal position without going into the factual aspects of the case and without examining the Inspector's reports to the effect that in the case of M/s. Indo Chemical Corporation the Inspector's report dated 22.03.2002 which was placed at page 2 specifically stated that nobody could give any whereabouts of the said company. As regarding the Inspector's report dated 24.03.1992 in respect of M/s. Asian Industrial Corporation which was placed at page-3 he confirmed that from the assessment records of the above concerns bearing PAN.11-010-FY-4905/CAL/Ward- 5(2) that no commission income amounting to Rs.1,56,816.45 paid by Calminore Sales (P) Ltd to Asian Industrial Corporation, Calcutta has been disclosed in the statement of Accounts and other connected documents. Similarly in the case of M/s.Indo Chemical Corporation it has been found that commission of Rs.346527.30 received from M/s.Calminore Sales Ltd. was not disclosed in the P&L account or balance sheet. Therefore he requested to set aside the order of the ld. CIT(A) and restore that of AO.
5. On the other hand, the ld. Counsel appearing on behalf of assessee submitted that it is an established fact that these companies are existing at the time of main assessment years and subsequently their whereabouts are not known. Since the department could not trace the whereabouts they cannot doubt the genuineness of the payments which were paid by Account payee cheques. Therefore he requested to upheld the order of ld. CIT(A).
6. After hearing the rival submissions and on careful perusal of materials available on record, it is observed that in the case of Indo Chemical Corporation in view of the categorical observations of the Inspector dated 26.03.2002 that nobody could trace any whereabouts of assessee's concern and similarly in the case of M/s.Asian Industrial Corporation since the Inspector subsequently commented on the said report that no commission income amounting to Rs.1,56,817/- is paid to the assessee company. Similarly in the case of M/s.Indo Chemical Corporation the Inspector's report dated 27.03.1992 which was placed at page 4 stated that xerox copies of accounts of M/s.Indo Chemcial Corporation are collected from the concerned Assessing Officer and the same are enclosed which are placed at page 5 nos.5,6 and 7 of the paper book. On careful perusal of the copies of account it is observed that M/s. Indo Chemical Corporation has not accounted for any commission received from the assessee company. The commission shown of Rs.346527.30 being shown by the assessee has paid to M/s.Indo Chemical Corporation. The action of the AO is confirmed in respect of these two disallowances.
6.1. In respect of other concern M/s.Kashipur Steels Ltd as the revenue has failed to establish anything about the mispayment since the assessee has filed the balance sheet along with necessary bills and documents and the revenue could not bring any contrary material to this a benefit of doubt should be given to assessee. Therefore we confirm the action of the ld. CIT(A) in respect of M/s. Kashipur Steels Ltd. only.
7. In the result the appeal of the revenue is allowed in part.
Order pronounced in the court on 04.04.2012.
Sd/- Sd/-
महावीर िसंह, Ûयाियक सदःय सी.
सी.डȣ.
डȣ.राव,
राव, लेखा सदःय,
सदःय
Mahavir Singh, Judicial Member C.D.Rao, Accountant Member.
(तारȣख)
तारȣख)Date: 04.04.2012.
R.G.(P.S.)
आदे श कȧ ूितिलǒप अमेǒषतः-
Copy of the order forwarded to:
1. M/s.Calminore Sales Pvt. Ltd., 23/24, Radha Bazar Street, Kolkata-700001.
2 I.T.O., Ward-6(1), Kolkata.
3. The C.I.T. 4. CIT(A)-VI, Kolkata.
5. The CIT(DR), Kolkata Benches, Kolkata स×याǒपत ूित/True Copy, आदे शानुसार/ By order, Deputy /Asst. Registrar, ITAT, Kolkata Benches 6