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TMI Blog2016 (2) TMI 168X X X X Extracts X X X X X X X X Extracts X X X X ..... on. Hence, the advance paid by M/s Adampur Distributors Pvt. Ltd. to M/s Mustafa Gold Mart cannot be construed either as loan or advance. Therefore, this Tribunal is of the considered opinion that the provisions of Section 2(22)(e) of the Act cannot be applied to a business transaction. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is confirmed. - Decided in favour of assessee Disallowance under Section 40A(2)(b) commission paid to Shri Ishtiaq Ahmed - CIT(A) deleted the disallowance - Held that:- It is for the assessee to decide whether commission is to be paid to any particular individual or not. In the interest of the assessee and for promoting the business, if the assessee comes to a conclusion that payment of commission is required, then the Assessing Officer cannot step into the shoes of the assessee and say that the payment of commission is not required. In this case, it is not the case of the Revenue that the payment of commission is not required. The only contention of the Assessing Officer is that the payment is unreasonable and excessive. As rightly submitted by the Ld.cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would have received gifts on the occasions like marriage, birthday, etc. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer - Decided in favour of assessee Disallowance of expenses - Held that:- In the absence of proper vouchers, the CIT(A) has correctly restricted the disallowance to 20% claimed by the assessee. Disallowance made in respect of exemption claimed under Section 10 - assessee has also claimed travelling allowance as exempted - Held that:- The uniform allowance and conveyance allowance to the extent of ₹ 42,000/- and ₹ 9,600/- respectively have to be allowed since it is for the purpose of business or the employment carried out by the assessee. In respect of travelling expenses, the claim of the assessee was that he had to travel for advertisement at many places in the city of Chennai. This Tribunal is of the considered opinion that while claiming expenditure for the commission, the assessee has claimed salary and other expenses for making advertisement. Therefore, it may not be correct to say that the assessee had to travel for advertisement purpose. In other wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rores. The Assessing Officer further found that funds were transferred from M/s Adampur Distributors Pvt. Ltd. to M/s Mustafa Gold Mart on various dates. The Assessing Officer further found that transaction between M/s Mustafa Gold Mart, the proprietary concern of the assessee and M/s Adampur Distributors Pvt. Ltd. was not a business transaction and it was a loan and advance. Therefore, the Assessing Officer treated the funds advanced to the assessee as deemed dividend under Section 2(22)(e) of the Act. In fact, for the assessment year 2009-10, a sum of ₹ 3,55,851/- was treated as deemed dividend under Section 2(22)(e) of the Act. Similarly, for the assessment year 2010-11, a sum of ₹ 68,46,548/- was treated as deemed dividend. For the assessment year 2011- 12, a sum of ₹ 34,06,371/- was treated as deemed dividend. According to the Ld. counsel, in the absence of any business transaction between the proprietary concern of the assessee and M/s Adampur Distributors Pvt. Ltd., the sum advanced by M/s Adampur Distributors Pvt. Ltd. has to be construed as deemed dividend, therefore, the CIT(Appeals) is not justified in deleting the addition made by the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan or advance. The ledger extract of M/s Adampur Distributors Pvt. Ltd. clearly establishes that M/s Adampur Distributors Pvt. Ltd. purchased gold from M/s Mustafa Gold Mart, a proprietary concern of the assessee. It is also not in dispute that upto 2007-08, M/s Adampur Distributors Pvt. Ltd. engaged in the business of jewellery and later on, the business was diversified. To revive the gold jewellery business, M/s Adampur Distributors Pvt. Ltd. advanced money to M/s Mustafa Gold Mart for purchasing gold jewellery. In fact, M/s Mustafa Gold Mart delivered gold jewellery to M/s Adampur Distributors Pvt. Ltd. In those circumstances, it is obvious that the transaction between M/s Adampur Distributors Pvt. Ltd. and M/s Mustafa Gold Mart, is a business transaction. Hence, the advance paid by M/s Adampur Distributors Pvt. Ltd. to M/s Mustafa Gold Mart cannot be construed either as loan or advance. Therefore, this Tribunal is of the considered opinion that the provisions of Section 2(22)(e) of the Act cannot be applied to a business transaction. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission is not disputed. The question is whether it is excessive or unreasonable. According to the Ld. counsel, after payment of commission, the profit of the assessee has increased considerably and Shri Ishtiaq Ahmed created awareness about the genuine product of Mustafa Gold Mart. In other words, the fair dealings of Mustafa Gold Mart were propagated among the customers and therefore the general public had awareness about the product of the assessee. Furthermore, when the recipient has paid the tax, there is no reason to disallow the claim in the hands of the assessee. 10. We have considered the rival submissions on either side and perused the relevant material available on record. Admittedly, Shri Ishtiaq Ahmed is none other than brother of the assessee. It is not in dispute that in the earlier assessment years, Shri Ishtiaq Ahmed was paid only salary. During the years under consideration, namely, assessment years 2010-11 and 2011-12, the assessee paid commission to Shri Ishtiaq Ahmed. Therefore, the Assessing Officer doubted the correctness of the payment. As rightly submitted by the Ld.counsel for the assessee, the payment itself is not doubted. The question is whether it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Ld.counsel for the assessee, submitted that the sundry credit exists from assessment year 2005-06. In fact the credit was accepted for the assessment year 2005-06 and no addition was made. Since the Assessing Officer admitted that the sundry credit existed from assessment year 2005-06, no addition can be made for the assessment year under consideration. According to the Ld. counsel, if at all any addition can be made, it has to be made for assessment year 2005- 06 in which the sundry credit appeared in the books for the first time. The Ld.counsel further submitted that the assessee has produced confirmation letters from some of the creditors. However, the assessee could not furnish confirmation letters from all the creditors since they are in abroad. According to the Ld. counsel, the assessee has established identity of the creditors and admittedly, the liability to repay the amount remains. The Assessing Officer disallowed the claim of the assessee only on the ground that the seven years period has expired. The assessee accepted the liability in the books and therefore, the liability does not cease to exist. All these trade credits existed in the books. Therefore, according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them. In those circumstances, the CIT(Appeals) has rightly deleted the addition. This Tribunal do not find any reason to interfere with the order of the lower authority. According, the order of the CIT(Appeals) is confirmed. 17. Now coming to the appeal in the case of Shri Ishtiaq Ahmed in I.T.A. No.1680/Mds/2013, the first ground of appeal is with regard to addition made on account of unexplained jewellery to the extent of ₹ 21.49 lakhs. 18. Shri A.B. Koli, the Ld. Departmental Representative, submitted that during the course of search operation, the Revenue authorities found a locker in Andhra Bank, Neelangani Branch, Chennai, and gold jewellery to the extent of 803.400 grms was also found. At the residence of the assessee, the Revenue authorities found gold jewellery to the extent of 342 grms. When the assessee was examined on 22.12.2010, the assessee explained that he had no purchase bill for the jewellery found at the residence and in the locker. The assessee also explained that in the absence of any purchase bill and other documentary evidence to explain the source, he will pay the tax on the value of unexplained Jewellery. Therefore, the Assessing Officer mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property like land, then registration of document is compulsory. In the case of property like gold jewellery, it is only the statement of the individual that has to be relied upon. Other than this, this Tribunal is of the considered opinion that the assessee would not be able to produce any documentary evidence to establish that the parents of the assessee s wife presented the gold jewellery to her daughter at the time of marriage. The customary practice that prevails in this part of the country cannot be brushed aside by the Assessing Officer to disbelieve the claim of the assessee. By taking into consideration the customary practice prevails in the country and the society of the assessee where he resides, this Tribunal is of the considered opinion that the assessee s wife would have received gold jewellery as Sthreedhan property during her marriage and also would have received gifts on the occasions like marriage, birthday, etc. Therefore, this Tribunal is of the considered opinion that the CIT(Appeals) has rightly deleted the addition made by the Assessing Officer. Accordingly, the order of the CIT(Appeals) is confirmed. 21. The next ground of appeal is with regard to disal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertisement in various part of the city by using loud speakers on the vehicle. As rightly pointed out by the Ld. D.R., no proper vouchers were maintained by the assessee. In the absence of proper vouchers, the CIT(A) has restricted the disallowance to 20% claimed by the assessee. This Tribunal is of the considered opinion that the CIT(Appeals) has rightly restricted the claim to 20% by taking into consideration the material facts available on record. Therefore, this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly, the order of the CIT(Appeals) is confirmed. 25. The next ground of appeal arises for consideration is with regard to disallowance made in respect of exemption claimed under Section 10 of the Act. 26. Sh. A.B. Koli, the Ld. Departmental Representative, submitted that the assessee claims a sum of ₹ 1,68,000/- as exempted under Section 10 of the Act. In the absence of any details, the Assessing Officer disallowed the claim of the assessee. However, the CIT(Appeals) without any reason allowed the same. 27. On the contrary, Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that the assessee claimed a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment means the assessment made under Section 143(3) of the Act, therefore, the original return filed under Section 139(1) of the Act has to be considered for the purpose of levy of interest under Section 234B of the Act. 31. On the contrary, Sh. N. Devanathan, the Ld.counsel for the assessee, submitted that after filing of return consequent to the notice issued under Section 153A of the Act, the return filed by the assessee has to be treated as if the return was filed under Section 139(1) of the Act. Hence, the return has to be filed under Section 139(1) of the Act and date of filing of return under Section 153A has to be taken for the purpose of computing interest. In fact, a similar view was taken by this Bench of the Tribunal in Kalyani Jayakumar in I.T.A. Nos.526 to 590/Mds/2010 dated 04.02.2011. The CIT(Appeals) directed the Assessing Officer only to follow the order of this Tribunal, therefore, no interference is called for. 32. We have considered the rival submissions on either side and perused the relevant material available on record. The question arises for consideration is levy of interest under Section 234B of the Act. In other words, whether interest has to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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