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TMI Blog2023 (10) TMI 611X X X X Extracts X X X X X X X X Extracts X X X X ..... u/s 143(3) without disallowance. Also decided for the assessment year 2001-02 in HUF is a person defined u/s 2(31)(ii) of the Act. Therefore, the findings of the AO that the HUF being non-living person cannot perform any duty are findings with a non-application of mind. Whereas the HUF can perform the duties as any other person can do under Income Tax Act. Decided in favour of assessee. Low withdrawal of household expenses - HELD THAT:- As during the course of hearing, AR could not advance any satisfactory reply controverting the order of the CIT(A). In this situation, the Bench has no other alternative except to confirm the order of the ld. CIT(A). Ground No. 2 of the assessee is dismissed. 10% disallowance of DG Fuel Expenses claimed by the proprietary firm - addition made as said payment was made in cash hence not verifiable - HELD THAT:- As during the course of hearing, the ld. AR could not advance any satisfactory reply controverting the order of the ld.CIT(A). In this situation, the Bench has no other alternative except to confirm the order of the ld. CIT(A). Thus Ground No. 3 of the assessee is dismissed. - HON'BLE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubts were raised about services rendered and genuineness of commission claimed. 3.3.2 In this year, the Assessing Officer raised serious doubts about the services rendered by any recipient. Thus, the facts are different this year. Further the assessee filed copy of return of income of recipient. Merely because they filed returns showing incentive received does not absolve assessee of proving the genuineness of services rendered by the recipients. Also they are closely related to the assessee and out of 6 persons, 2 persons were ladies namely Smt. Vandana Goyal (Incentive of Rs. 4,58,497/- paid against sales to 43 parties located at different area). In case of Bharti Bansal, incentive of Rs. 7,09,166/- was paid for sales to 58 parties located at various places. Their return of income show residence at Sawai Madhopur, Rajasthan and it is surprising to see that no expense was claimed against the sales incentive by any of them. These parties to whom sales were made were located outside Sawai Madhopur. Thus assessee tried to book bogus expenses in the shape of sales incentive to related parties to avoid tax liability. 3.3.3 Assessee's contention that incentive was paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.32 0.39% 2012-13 35.58 1930.53 159.94 8.28% 12.96 0.67% 2013-14 30.31 2104.57 93.42 4.44% 22.25 1.06% 1.2 It is submitted that in the cement market there is a very stiff competition. The Sales agents are required to constantly watch the market, keep in touch with the retailers, provide better pricing and offers then the competitors, assist in realization payments. 1.3 It is further submitted that the assessee has furnished complete details and basis of payment of Sales Inventive, paid to different persons during the year. The assessee has submitted party-wise detailed charts showing the different buyers, their respective locations, the quantity purchased, the rate per kg, the invoice amount per buyer and his total sales. (PB 12-42) 1.4 Lastly , important aspect to be considered is that there has been no substantial loss to revenue in as much as all the payees have already d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Kar), CIT v/s Udhoji Shrikrishnadas (1983) 139 ITR 827 (MP), JK Woolen Manufacturers 72 ITR 612 (SC). This is evident from the following submissions. 2.2 It needs to be clarified that the services of the agents appointed for ensuring the procurement of the orders with regard to sale, the purpose was not only to get a boost and increase in the sales of the firm but firstly, was to ensure that the existing buyers keep on making purchases from the assessee firm itself instead of diverting to others and thereafter, also to get an increased amount of sale with the help of these agents who were to hand around 200 dealers. With the changing economic scenario and entry of the buyers from outside India/ outside state in the market and because of various other social/ technological/ other factors, the fact cannot be denied that in every walk, be it the business of trading or manufacturing of any sort/ type or even in the profession, the entrepreneur / professional, is not only fighting for getting more business/work but rather for its survival and continuance in the field. There can t be any guarantee/ or an entrepreneur like the present assessee firm who cannot be so confident and rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s rendered by them and the department never questioned the same. In the immediately preceding year, the assessee paid Sales inventive at Rs. 30.74 lacs to the subjected persons, and the department itself accepted the same, thereby acknowledging the services rendered by the subjected persons. The assessment for AY 2010-11, AY 2011-12, AY 2012-13 were completed u/s143(3) (PB II 89-106) without disallowance. Kindly refer chart enclosed with this Written Statement. 5.2 It is submitted that the assessee was being paying Sales incentives to the subjected related persons for more than 20 years now. A reference can be made to the assessment of A.Y. 2001-02, wherein the AO disallowed the Sales Incentive paid by the assessee to HUFs parties, on the ground that HUFs are non living persons and thus, cannot perform any duties for which payment as incentive is based on work done. The ld. CIT(A) and the Hon ble ITAT (PB II 79-88) gave a concurrent finding in the favour of the assessee stating that HUF s can perform the duties as any other person can do under the Income Tax Act. 5.3 It may be submitted that it is not the objection of the AO that the assessee has paid excess sales incentive o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipur, is nothing but a suspicion, more particularly when electronic and social media is such a strong weapon in the hands of the businessman that even without going, he may convince the targeted customers and the lockdown period during COVID-19 is the best example where the concept of work from home strongly and successfully worked and rather even continues till date. The admitted fact of past experience together with the strong electronic media had made it possible for the payees, dealers have reached the customers for getting the sales effected. The Hon ble Courts have already that the totality of facts and circumstances as also the human probabilities and surrounding circumstances are all important factors to be considered in the cases of CIT V Rameshwar Prasad Bagla (1968) 68 ITR 653 (All), CIT V Durga Prasad More (1971) 82 ITR 540 (SC)and Sumati Dayal V CIT (1995) 214 ITR801. On the other hand, interestingly, there is absolutely no contrary evidence brought on record to show that if any of the buyer party was enquired who denied any contact with the agents thus, the AO made the disallowance on mere suspicion. It is well settled that suspicion howsoever strong, cannot take plac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or it and without giving any opportunity to the assessee to act upon the same, is totaling arbitrary capricious in nature. 7.5 Another allegation which is not in nature of suspicion is that the rate of commission/incentive increased from Rs. 60 per unit to Rs. 80 per unit this year without any basis. The learned CIT (A) without knowing the correct facts/ without confronting the appellant proceeded on the mere surmises conjectures. A perusal of chart (PB 13) which shows that these agents were appointed for different geographical areas being Tonk, Sawai Madhopur, Karauli etc. and the payment of commission varied from Rs. 15 to Rs. 80 per unit for the reason of the particular areas assigned, the distance from the headquarter, the presence of the level of the competition being the strong competitor against whom, the agent was supposed to get order for the dealers under the increased competitive market. Businessman being the best judge the revenue should not to interfere. 8. The genuineness and bonafide of payments established: 8.1 It is admittedly undisputed fact that the payments were made through banking channels only and even amount of due TDS, was made and depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le to show that it has paid brokerage and commission to the commission agents for the purpose of the business of the assessee and is entitled to deduction. Thus considering the entirety of the facts and the alternative ground No. 5 of the assessee and the possible leakage disallowance of Rs. 25.00 lakhs is sustained out of total disallowance of Rs. 4,56,22,058/- and the balance disallowance of Rs. 4,31,22,058/- is directed to be deleted. XXXXXXXXX 16. We have heard the counsel for the parties. 17. The contentions which are raised by the department is required to be considered and the same has been considered at length. The basic contention is that the Tribunal while discussing the matter has observed that in the previous year the department itself has accepted it and was not challenged. Apart from that, the commission which has been paid was paid by account payee and the same was verified. The commission which has been paid from accounts was also verified by the department. In that view of the matter, we are of the opinion that books of account are not rejected and the same is accepted. Thus the view taken by the Tribunal is just and proper and the first issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 09.03.2016 asked the assessee to furnish the relevant detail regarding the commission paid. In response, the assessee provided the AO requisite details. However, the AO feeling dissatisfied with the details so submitted by the assessee, disallowed the whole amount of Rs. 30,31,765/- which has been confirmed by the ld. CIT(A) on the following grounds:- 1. Assessee could not substantiate the nature of services rendered. 2. No confirmation of the buyer filed 3. The assessee has not submitted documentary evidence to justify the geniuses of the claim. It is noted from the submissions of the assessee that the assessee paid the sales incentives of Rs. 30,31,765/- as against Rs. 35,58,079/- claimed by the assessee in the preceding year. It is also noted that the assessee was able to achieve increase in turn of Rs. 174.04 lacs (2104.57 minus 1930.53) thereby resulting into net profit of Rs. 2.25 lacs as compared to 12.96 lacs. It is noted that the books of account were not rejected by the AO. It is also noted from the records that the assessee had furnished complete details and basis of payment of sales incentive paid to different persons during the year and payments were m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concur with the findings of the ld.CIT(A) and thus the Ground No. 1 of the assessee is allowed. 3.1 Apropos Ground No. 2 of the assessee, brief facts of the case are the AO has dealt with this aspect at page 5 para 8 and 8.1 of his order wherein he alleged that for the family of four-members household withdrawal of Rs. 1,11,007/- is low and the assessee had failed to provide details and hence, estimated the same for Rs. 2,00,000/- for the year. Accordingly, difference of Rs. 88,993/- (2,00,000- 1,11,007), was added. The learned CIT(A) also confirmed the same by observing as under:- 6.3 I have perused the facts of the case, the assessment order and the submissions of the appellant. Addition of Rs. 88,993/- was made on account of lower household expenses. Assessee has declared Rs. 1,11,007/- as house hold expenses which was estimated at Rs. 2,00,000/- by the Assessing Officer. The assessee stated that other family members were assessed to tax and made withdrawals too. But no details of contribution made by other family members, was given except return of income/computation of income. Therefore, this pleas cannot be accepted. Addition made by the Assessing Officer is upheld, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... observing as under:- 7.3 I have perused the facts of the case, the assessment order and submissions of the appellant. Assessing Officer disallowed 20% of DG fuel expenses out of Rs. 2,86,910/- in M/s. Bajrang Filing Station. It is seen that payment for DG fuel was made in cash. The Assessing Officer rightly made disallowance but being higher side, the same is restricted to 10%. Assessee gets relief. This ground of appeal is partly allowed. 4.2 During the course of hearing, the ld.AR of the assessee has prayed that the lower authorities have erred in confirming the disallowance to the extent of Rs. 28,691/- with following written submission. Firstly, we strongly rely upon the submission made before the CIT(A) reproduced at page 14 para 7.1. It is not denied that the subjected expenditure has incurred for business purposes. Mere allegation of cash payment is baseless and mere suspicious more particularly when S. 40(3) is there take care. No disallowance was made under that provision which permits cash payment upto a limit. On one hand NP are much better than the past which fact impliedly justified the claimed DG fuel expenses. Hence, this disallowance may kindly be del ..... X X X X Extracts X X X X X X X X Extracts X X X X
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