TMI Blog2016 (1) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... rson who desires to remain in gainful avocation appoints his son as an agent to render necessary help. In our considered view the agreement cannot be ignored on ifs and buts; the same clearly stipulates the relationship between the principal and agent which cannot be ruled out on implication more so when transactions are on day to day basis. The purchases and sales are not in any way doubted and fully held to be genuine by both the authorities below. Thus in view of the facts and circumstances of the case, we hold that the assessee and his son were acting in the relationship of principal and agent and the impugned cash payments are clearly covered under exception carved out by rule 6DD(k). Respectfully following the decision of Hon'ble Rajasthan High Court in the case of Smt. Harshila Chordia vs. ITO (2006 (11) TMI 117 - RAJASTHAN HIGH COURT ) we delete the addition confirmed by the ld. CIT(A). - Decided in favour of assessee - ITA No. 472/JP/2013 - - - Dated:- 10-11-2015 - SHRI R.P. TOLANI, JM SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri S.L. Poddar, Advocate, For The Revenue : Shri Raj Mehra, JCIT ORDER PER R.P. TOLANI, JM:- This is assessee s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (ii) Since parties were not produced, it could not be verified that there was principal and agent between assessee and his son. (iii) The agreement does not reflect that there was any condition which amounts to an exception as provided under Rule 6DD of the Income-tax Rules. The assessee explained before the ld. CIT(A) that assessee and his son were unable to remain present before the AO the as the assessee is old person aged about 80 years and during the period of proceeding he was very sick and bedridden, son Ramavatar Gupta was also struggling with gastro surgery problems consequently they were not able to attend before the AO. It was also contended that both the persons are assessed with the same AO and their transactions were verifiable from respective books and returns of income. The assessee being old could not go to market off and on and it is natural that the son will offer to help the father by acting as an agent; the agreement was executed to avoid any legal problem with market and law. It was contended before the ld. CIT(A) that existence and the validity of this agreement is not denied the only issue raised by AO is to the effect that the as they did not att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts. The reliance is placed by the ld. AR of the assessee in the case of Smt. Harshila Chordia vs. ITO (2007) 2008 CTR 208 (Raj.) wherein Hon'ble High Court held that 14. In these circumstances, we are of the opinion that the conclusion reached by the CIT (A) was correct and the Tribunal by ignoring the scope of cl. (j) of r.6DD as explained by the Board s Circular has erred in reversing the finding reached b the CIT (A) on hyper-technical view. We therefore, allow this appeal and set aside the order of the Tribunal to the extent it sustains the addition of ₹ 40,13,000/- u/s 40A(3). The ld. AR of the assessee further relied on following case laws:- (i) Kanti Lal Purshottam Co. vs. CIT, (1985), 155 ITR 519 (Raj.) (ii) CIT vs. Nikko Auto Ltd. (2002) 256 ITR 476 (P H) (iii) Janambhumi Vs. CIT (1977) 225 ITR 517 (Gau.) The ld. AR further contends that Hon'ble Finance Minister while introducing Section 40A(3) has declared its purpose by following speech as under:- Tax liability is something artificially reduced by diverting profits to relatives and associate concerns in the form of excessive payments for goods and services. Claims a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by exception carved out in Section 6DD (k) cannot be added u/s 40A(3)of the Act. 2.5 The ld. DR relied on the orders of the authorities below and contended that when the AO in remand proceedings asked the assessee to remain present but they did not avail of the opportunity. Therefore, adverse inference had been drawn and the addition made is justified. 2.6 The ld. Counsel for the assessee in rejoinder contends that the assessee before the AO only explained his inability for attendance due to medical illness which has not been disputed by any of the lower authorities. Besides all the transactions as to relationship being principal and agent are evident from the other material available on record which was verifiable in the original proceedings u/s 143(3) of the Act nad has not been objectively controverted. 2.7 We have heard the rival contentions and perused the materials available on record. The fact as emerge from the record are that the assessee is an aged person of around 80 years and was doing business of Iron and Steel, his son was also in the same trade; both are assessed to income tax. Except drawing an assumed adverse inference due to the nonattendance of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
