New User   Login      
Tax Management India .com TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (12) TMI 1459 - ITAT MUMBAI

2015 (12) TMI 1459 - ITAT MUMBAI - [2015] 44 ITR (Trib) 46 (ITAT [Mum]) - Addition as undisclosed income in respect of commission expenses treated as non-genuine - Held that:- Assessing Officer has made addition purely on the basis of statement made during the course of survey under section 133A, which was later on retracted by the assessee, therefore, we are of the considered view that any addition made on the basis of these statements is without any basis and deserves to be deleted as there is .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

vour of assessee.

Disallowance of transportation expenses under section 40(a)(ia) - appellant has not deducted tax at source from such payments - Held that:- The transportation expenses on which no TDS has been stated to be deductible and also the transportation charges stands paid before March 31, 2006. However, the issue is being restored back to the file of the Assessing Officer to verify the claim of the assessee whether the amount was paid or payable at the end of the year and if .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

espondent. ORDER The order of the Bench was delivered by 1. Rajesh Kumar (Accountant Member).-These two appeals by two different assessees are directed against the orders of the Commissioner of Income-tax (Appeals) (hereinafter referred to as (the CIT(A)) of even dated December 28, 2010 for the assessment year 2006-07. Since the main issue involved in both these appeals is common, therefore, the same are clubbed together, heard together and disposed of by this consolidated order for the sake of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

treated as non-genuine, relying purely upon the statements made at the time of/in connection with the survey under section 133A, though validly retracted subsequently, without any cogent/corroborating material to support and also ignoring/ not appreciating in right perspective the appellant's submissions as well as the evidence produced. The appellant prays that since the said commission expenses are genuine and are incurred wholly and exclusively for the purposes of the appellant's bus .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he total repairs and maintenance expenses of ₹ 1,76,344. The appellant prays that since ad hoc disallowance is impermissible in law and since all the repairs and maintenance expenses are genuine and are supported by proper vouchers/evidence, the above ad hoc disallowance of ₹ 20,000 be deleted. 3. Ad hoc disallowance out of travelling expenses-Rs. 25,000 On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in not disposi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

88,405 On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in not disposing of the concerned ground of appeal and thereby erred in upholding the disallowance of ₹ 13,88,405 under section 40(a)(ia) in respect of trans portation expenses on the ground that the appellant has not deducted tax at source from such payments. The appellant prays that since tax was either not deductible or was properly deducted and paid into the Gover .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

oc disallowance of ₹ 1,00,000 from out of transportation and octroi expenses. The appellant prays that since ad hoc disallowance is impermissible in law and since all the transportation and octroi expenses are genuine and are supported by proper vouchers/evidence, the above ad hoc disallowance of ₹ 1,00,000 be deleted. 6. Deduction under section 80G On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in not directing th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessee engaged companies for doing liasioning on its behalf. One such company was M/s. Litaka Pharmaceuticals Ltd. A survey under section 133A was conducted on October 30, 2006 on M/s. Litaka Pharmaceuticals Ltd. and its sister-concern M/s. Twilight Mercantile Ltd. at 206, Shiva Industrial Estate, 89, Andheri Kurla Road, Sakinaka, Andheri(E), Mumbai 72 and a statement of Shri Gopal Ramourti, director of the above companies was recorded under section 131 of the Act on the same day which is exhib .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y under section133A was conducted on branch office Bombay of the assessee on November 28, 2006 whereas no such proceedings were conducted on the head office at Nagpur. Two statements of Shri Kiran Wasudeo Somalwar partner of the assessee was recorded on November 28, 2006 and November 29, 2006 under section 131 of the Income-tax Act, which are exhibited at pages 46 to 58 of the paper book No. 1, filed by the assessee. During the course of survey, the partner of the assessee admitted that during t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

a Pharmaceuticals Ltd. and the payments were only book entries. In reply to question No. 9 of the said statement Mr. Somalwar replied that the commission paid through account payee cheques were received back in cash. He replied to question No. 10 that commission to Litaka Pharmaceuticals Ltd. was not genuine as the same were book entries. He further stated that commission was paid by cheques, TDS was deducted and deposited. It was also stated that Litaka Pharmaceuticals Ltd. used to take 3 per c .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Ltd. were not genuine and the recipient had not rendered any services. On January 16, 2007, Shri Vijay Wasudeo Somalwar, another partner of the assessee and its sister concerns retracted the statements by Shri Kiran Somalwar on November 28, 2006 and November 29, 2006 by stating that the survey team of the Department put undue pressure, misguided the partner of the assessee and compelled him to confess the commission to be bogus. Mr. Somalwar was threatened that if the confession in the statemen .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

accepted by the parties on which TDS has been deducted and also the service tax was duly paid. 6. The learned Assessing Officer disallowed the commission of ₹ 2,04,84,477 to M/s. Litaka Pharmaceuticals Ltd. on the ground that the same was bogus and non-genuine for which no services were rendered by M/s. Litaka Pharmaceuticals Ltd. He referred to replies of Mr. Kiran Wasudeo Somalwar to various queries put to him during the course of survey in the statement recorded on November 28 and 29, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r, the assessee carried the matter in appeal before the learned Commissioner of Income- tax (Appeals). 8. The learned Commissioner of Income-tax (Appeals) observed that the assessee, who was engaged in supplying and distribution of pharmaceuticals products since 1987, has entered into an agreement with M/s. Litaka Pharmaceuticals Ltd. only in the financial year 2005-06 and no such commission was paid to the said company either prior or subsequent to the financial year 2005-06 and rejected the co .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d during survey, therefore, the Commissioner of Income-tax (Appeals) dismissed the appeal of the assessee. 9. The learned authorised representative of the assessee submitted before us that the order of the Assessing Officer and the Commissioner of Income-tax (Appeals) are bad in law and perverse on the ground that the disallowance solely based upon the two statements recorded during the course of survey under section 133A. Learned counsel further submitted that though the partner of the assessee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

icer brought on record any corroborative evidences and materials during the course of assessment proceedings on record. Learned counsel for the assessee drew our attention towards memorandum of understanding exhibited at pages 67 and 68, debits notes with details of sales by Litaka Pharmaceuticals exhibited at pages 71 to 75, bank statements evidencing the payments exhibited at pages 76 to 93, receipts for payment received pages 94 to 99 and other documents such TDS certificates, challans for de .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ns v. CIT [2003] 263 ITR 101 (Ker) ; (iii) Deputy CIT v. Premsons [2010] 130 TTJ (Mum) 159; (iv) B. Ramakrishnaiah v. ITO [2010] 39 SOT 379 (Hyd) ; (v) Asst. CIT v. Smt. Usha Rani Talla [2010] 6 ITR (Trib) 37 (Delhi) ; and (vi) Unitex Products Ltd. v. ITO [2008] 22 SOT 429 (Mumbai). 10. The learned authorised representative further argued that the survey was conducted on the assessee on November 28, 2006 and November 29, 2006 after a survey on M/s. Litaka Pharmaceuticals Ltd. on October 30, 2006 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s no such fact was mentioned in the statement of Mr. Gopal Ramourti. He contended that a general statement without taking the name of the assessee cannot be made basis for disallowance by placing reliance upon the following judicial pronouncements : (i) Shri Kirti Chandulal Oswal v. Deputy CIT [2009] 317 ITR (AT) 285 (Pune) ; (ii) CIT v. Uttamchand Jain [2010] 320 ITR 554 (Bom) ; (iii) CIT v. M. K. Brothers [1987] 163 ITR 249 (Guj) ; (iv) ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC) ; (v) C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e said statement of Mr. Gopal Ramourti nowhere stated the name of the assessee. Learned counsel for the assessee strongly placed reliance on the following decisions : (a) Kishinchand Chellaram v. CIT [1980] 125 ITR 713 (SC) ; (b) CIT v. Land Development Corporation [2009] 316 ITR 328 (Karn) ; (c) CIT v. Ashwani Gupta [2010] 322 ITR 396 (Delhi) ; (d) Ashok Lalwani v. ITO [2010] 328 ITR 272 (Delhi) ; and (e) CIT v. Sanjeev Kumar Jain [2009] 310 ITR 178 (P&H). 12. The learned authorised represe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

M/s. Litaka Pharmaceuticals Ltd., copies of debit notes with details of sales by Litaka Pharmaceuticals, bank statements evidencing the payments, receipts for payment received, TDS certificates, challans for deposit of TDS, service tax receipts and correlation of commission paid which increased turnover, etc. The learned authorised representative relied on the following judgments : (i) CIT v. Jamnadevi Agrawal [2010] 328 ITR 656 (Bom) ; (ii) CIT v. Uttamchand Jain [2010] 320 ITR 554 (Bom) ; and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on namely Mobile Communication (India) P. Ltd. v. Deputy CIT [2011] 7 ITR (Trib) 219 (Delhi), Radhasoami Satsang v. CIT [1992] 193 ITR 321 (SC), CIT v. Neo Poly Pack P. Ltd. [2000] 245 ITR 492 (Delhi) and others. 14. He also referred to the Central Board of Direct Taxes Instruction F. No. 286/2/2003/IT-(Inv.) 3, dated March 10, 2003 which provided that no surrender or addition should be made during the course of survey which was not based on the concrete evidences. 15. The learned Departmental r .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d representative. We first refer to the relevant queries and answers to the statement recorded on November 28, 2006. In reply to question No. 8, the partner of the assessee replied that the commission charges paid to M/s. Litaka Pharmaceuticals Ltd. were not genuine and no services were rendered by the said company and these were only book entries. In the second statement recorded on November 29, 2006, in reply to question No. 2, the partner of the assessee reiterated the commission was bogus an .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r Kiran Agencies 51, Gnereal Merchant Market, Gandhibbag, Nagpur PAN : AADFK8570A Reference : Survey under section 133A conducted at our branch office at A-40, Kalayaji Morarjee Warehousing Ltd., Prem Estate, Mazgoan, Mumbai-400010 Dear Sir, With reference to the survey conducted and statement recorded of Mr. Kiran Wasudev Somalwar partner of M/s. Kiran Agencies on November 28, 2006 and again recorded on November 29, 2006, I the undersigned partner of Kiran Agencies wish to state as under in vie .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Kiran M. Somalwar is a diabetic patient and survive on insulin. As the survey team was in our office till 11.00 p.m. he was fully exhausted. 2. That the official of the survey team carried out extensive verification of our books of account, records, etc., to find out any irregularity, errors or concealment of our income and no discrepancies were found in the books of account nor in the stock. In the course of survey he was co-operating though he was extensively tired and exhausted. 3. The surve .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

as non-genuine and bogus in his statement recorded on the day of survey on November 28, 2006 and again on November 29, 2006. He was not at all in a proper state of mind due to 11 Income-tax executives in our office threatening him of dire consequences like raid and search at our Nagpur office and residence. Our mother who is 82 years old is diabetic and cardiac patient could not have stood of even hearing the news of raid. Hence we wanted to avoid it at all cost and decided to concede to all th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

uld be treated as binding on us or the said firms. That all the commission is paid through account payee cheques and the same was accepted by the parties. That M/s. Litaka Pharmaceuticals has nowhere mentioned that the commission paid was bogus and nor they have mentioned that the commission paid is not genuine. We have deducted and paid TDS and also paid service tax on the commission paid. 7. Therefore we hereby request that you may send inferences of your investigations to the competent Income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of survey under section 133A and retraction of the said statements as referred to above meaning thereby that the statements recorded made on November 28, 29, 2006 under section 131 stands withdrawn on the various allegation undue influence, coercion and pressure by the survey team. Now the issue before us for adjudication is whether a statement made during the survey proceedings can solely form the basis of assessment without any cogent and corroborative material being brought on record to stre .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he concurrent finding of fact. The hon'ble High Court in the case of CIT v. S. Khader Khan Son (supra) has held that in view of the scope and ambit of material collected during the course of survey action under section 133A shall not have any evidentiary value. It could not be said solely on the basis of the statement given by one of the assessee-firm that disclosed income was assessable as lawful income of the assessee. 20. In the case of Paul Mathews and Sons v. CIT [2003] 263 ITR 101 (Ker .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

wer to examine a person on oath is specifically conferred on the authorised officer only under section 132(4) of the Income-tax Act in the course of any search and seizure. Thus, the Income-tax whenever it thought fit and necessary to confer such power to examine a person on oath, the same has been specifically provided whereas section 133A does not empower the Assessing Officer to examine any person on oath. On the other hand, whenever the statement recorded under section 133A of the Income-tax .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ion cannot be made when surrender is retracted. 22. Further it was held in the case of Pullangode Rubber Produce Co. Ltd. v. State of Kerala [1973] 91 ITR 18 (SC), that an admission is an extremely important piece of evidence but it cannot be said that it is a conclusive and it is open to person who made the admission to show that it is incorrect. 23. Vide Central Board of Direct Taxes Circular F. No. 286/2/2003/IT-(Inv.) dated March 10, 2003 it has been made clear that no attempt should be made .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

me with such statement. 24. In view of the above judgment of the hon'ble Supreme Court and hon'ble courts and in view of the Central Board of Direct Taxes Instruction (supra), section 133A of the Act does not empower any authority to examine any person on oath, any such statement has no evidentiary value and any admission made during such statement cannot by itself, be made the basis for addition unless the Assessing Officer has corroborative material in hand to make such addition. We al .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on the basis of statement made during the course of survey under section 133A, which was later on retracted by the assessee, therefore, we are of the considered view that any addition made on the basis of these statements is without any basis and deserves to be deleted as there is no corroborative materials on record. It seems that addition has been made merely on the basis of statement/presumptive basis and no corroborative material has been brought on record. Presumption cannot take the shape .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

not pressed. 26. Ground No. 4 is against the disallowance of transportation expenses under section 40(a)(ia) on the ground that the appellant has not deducted tax at source from such payments. 27. The facts of the case are that the assessee paid transportation charges to the tune of ₹ 1,93,66,966 out of which, no TDS was deducted on ₹ 13,88,405, therefore, the Assessing Officer disallowed the said amount under section 40(a)(ia) of the Income-tax Act. 28. The Commissioner of Income-t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version