TMI Blog2017 (8) TMI 1063X X X X Extracts X X X X X X X X Extracts X X X X ..... he Revenue being ITA No. 4671/Mum/2014, is directed against the appellate order dated 18th March, 2014 passed by learned Commissioner of Income Tax (Appeals)-24, Mumbai (hereinafter called the CIT(A) ), for assessment year 2009-10, the appellate proceedings before the learned CIT(A) has arisen from the assessment order dated 02-12-2011 passed by the learned Assessing Officer, Mumbai (Hereinafter called the AO ) u/s 143(3) of the Income-tax Act, 1961 (Hereinafter called the Act ). 2. The grounds of appeal raised by the Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- 1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), has erred in deleting the addition of ₹ 2,50,000/- made by the AO. on account of low gross profit. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A), has erred in deleting the addition of ₹ 34,00,000/- made by the A.O. on account of Brokerage/ commission. 3. The appellant prays that the order of CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2008-09 has gone up twice(nearly thrice) as compared to preceding year turnover i.e. for A.Y. 2007-08, the GP rate had also gone up from 9.82% to 10.62%. The A.O. analysed the purchases as compared with the sales in the following way:- For example, from April, 2008 upto the month of November, 2008, the total sales are shown to be ₹ 9,57,32,953/- and after reducing the GP component (8.88%) the cost of sales comes to ₹ 8,72,31,866/-. But, from April, 2008 upto November, 2008 the purchases and the opening stock totally come to ₹ 8,42,15,936/- only. Besides this, upto the month of February 2009, the total sales are shown to be ₹ 10,59,10,550/- and the cost of the sales (by reducing GP) comes to ₹ 9,65,05,693/- whereas the purchases upto February, 2009 together with opening stock totally comes to ₹ 8,96,91,449/- only. Thus, the A.O. came to the conclusion that the books results were not reliable for the reason that the day to today stock register had not been maintained. The AO observed that the tax audit report only shows the quantity of purchases, sales and balance in the closing stock. Against these observations of the A.O., the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lhi:- i) Sanjeev Datta ii) Varun Datta iii) Dipika Grover iv) Geetanjali Thakur v) Neelam Bhatia The assessee was asked by the AO to prove claim of the brokerage paid to Delhi based parties. However, photocopies of credit notes issued by the assessee and confirmations of some of the recipients of brokerage were submitted by the assessee. The details of some brokers of New Delhi who were paid brokerage by the assessee are as under:- Sr No. Name address of recipient of brokerage Name and address of the supplier of goods Value of goods involved Brokerage 1 N.K. Jain Sons HUF, 199/2B Street No. 10, Tansingh Nagar, Anand M/s Kothari Steel Syndicate, 202 Gupta Bhavan, Ahmedabad Street, ₹ 96,49,834 ₹ 1,20,000 Prabat, New Delhi Mumbai 400009 2 Geetanjali Thakur, 4C/20 Rajendra Nagar, New Delhi a) Uttam Galva Steels LKtd.,69, P.D. Mellow Road, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.4,00,000 (3.33%) 11 Ghanshyamdas Chemical Goyal, HUF, Giriraj, Jaina, Maharashtra Western India Shipyard, Goa Rs.5,99,34,476 Rs.8,70,000 (1.45%) TOTAL Rs.34,00,000 The assessee claimed that all the details with respect to these brokers were submitted like addresses, PAN etc. It was submitted that merely because the parties were based in New Delhi, cannot be a ground for disallowing the same. It was submitted that perusal of details will clearly reveal the nature of services rendered which were both for purchases/sales effected, specifying the quantum of the goods and the persons from whom said purchases and to whom sales were made. The assessee submitted that it has no power to enforce attendance of these parties before the Revenue and it was submitted that the AO has all the powers to enforce the attendance of these parties before Revenue. The A.O. after considering the explanations of the assessee observed that the assessee carried its business from the premises 505, Gupta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31/- with the forwarding charges of ₹ 15,34,914/- and shown sales at ₹ 9,92,48,745/- and has taken the VAT billed to parties of ₹ 24,28,727/- separately to the VAT account. Thus, basically, the difference in purchases and sales amount in the registers of the assessee and the P L Account is because the VAT in the purchases bills and VAT in the sales bills have been taken to a separate account in the balance sheet for effecting its VAT payments. Thus, the difference in the purchase and sales figures are basically due to accounting of VAT and nothing else and that was not understood by the Assessing Officer while examining the books of account vis-a-vis the P L Account. Moreover, this did not call for rejection of books of account under section 145(3) of IT. Act, 1961 to justify the addition of ₹ 2,50,000/- on account of lower gross profits. In nutshell, the rejection of books under section 145(3) of IT. Act, 1961 and the addition of ₹ 2,50,000/- by the Assessing Officer are not justified at all in the facts of the case and in law and the same is deleted. Assessee's grounds of appeal no. 1 2 are allowed. With respect to second issue of disa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IM IN RESPECT OF SALES 5 Neelam Bhatia, C- 716, NFS, New Delhi a)Utkarsh Steel Corporation, 40 Carnac Siding Road, Carnac Bunder, Mumbai 400009 ₹ 58,50,717 Rs.5,00,000 (8.55%) 6 Punit Gupta, A-4, 442, Pachim Vihar, New Delhi a)Ganon Dunkerly Co, Mumbai b)Remi Metals, Gujarat Rs.12,39,152 ₹ 18,73,030 Rs.160,000 (5.15%) 7 Deepak Grover, H11, West Patel Nagar, New Delhi Kamal Trading Corpn. Hubli Rs.44,18,981 Rs.150,000 (3.39%) 8 Deepak Grover, H11, West Patel Nagar, New Delhi -do- -do- Rs.150,000 (3.39%) 9 Sanjeev Datta, A269, Sarita Vihar, New Delhi Goa Shipyard, Vasco De Gama, Goa Rs.3,00,65,158 Rs.5,00,000 (3.33%) 10 Varun Datta, A-269, Sarita Vihar, New Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission/brokerage in the earlier and subsequent years vis-a-vis turnover of the assessee. The assessee during the appellate proceedings submitted this data which is as under:- A.Y. Turnover Commission/brokerage 2007-08 1,71,60,423 10,48,623 2008-09 4,94,11,685 27,89,709 2009-10 9,92,48,745 36,29,799 2010-11 1,82,35,031 41,744 2011-12 2,30,08,541 2,99,272 5.3.3 The above details indicate that the assessee had maximum turnover during the previous year relevant to the AY 2009-10 and also maximum payment commission/brokerage during this year only. The assessee had paid ₹ 27.89 lacs when the turnover was only ₹ 4.94 crore in the A.Y. 2008-09. Similarly, for the AY 2010-11 2011-12 also the commission/brokerage payments are corresponding to turnover only. Thus, from the comparison, I do not fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned CIT(A) such a plea is taken. It is submitted that additional evidences were submitted before learned CIT (A), while additional evidences were admitted by learned CIT(A) without forwarding the same to the AO for examination/verification and no remand report was called by ld. CIT(A) from the AO. which is in violation of Rule 46A of the Income-tax Rules, 1962. It was submitted that their was a disallowance of ₹ 34 lacs on account of brokerage and commission which was allowed by the ld. CIT(A) by accepting the contentions of the assessee without any evidence. It was submitted that some confirmations were produced by the assessee. It was submitted that no party was produced by the assessee before the AO. It is submitted that the learned CIT(A) granted relief to the assessee by holding that the AO did not made any enquiry with the said brokers as no notices u/s 133(6) nor any summons u/s 131 of the 1961 Act were issued by the AO, but it is contended that learned CIT(A) could have issued the notices u/s 133(6) or summons u/s 131 of the 1961 Act as the power of learned CIT(A) is co-terminus with powers of the AO. It is submitted that brokers are different in each year altho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deleting additions made by the AO by accepting contention of the assessee that the difference in the amount of purchase and sales were basically due to accounting in the VAT which is taken to separate account. Thus altogether different plea is taken by the assessee before learned CIT(A) and additional evidences were filed before learned CIT(A) as is emerging from records as well arguments of learned DR, which additional evidences were admitted by learned CIT(A) without forwarding the same to the AO for examination/verification by the AO and no remand report was called by learned CIT(A) from the A.O. which is in clear breach of Rule 46A of the Income-tax Rules,1962. The Rule 46A of the 1962 Rules is not an empty formality and cannot be given a complete go bye by learned CIT(A) in a lighter manner as fresh material before learned CIT(A) has to stood the test of examination and verification by the AO who is both an investigator and adjudicator. In our considered view keeping in view factual matrix of the case, this matter need to be set aside to the file of the AO for denovo determination of the issue on merits afresh in accordance with law. Since, It is on record that the assessee f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 Geetanjali Thakur, 4C/20 Rajendra Nagar, New Delhi e) Uttam Galva Steels LKtd.,69, P.D. Mellow Road, Carnac ₹ 21,62,284 (1.29%) ₹ 1,50,000 Bunder, Mumbai 400009 f) Bharatkumar Indrasen Trading Pvt. Ltd., Devji Ratanshi Marg, Carnac Bunder, Mumbai 400009 ₹ 92,54,239 (1.44%) 3 Marendra Thakur, 4C/20 Rajendra Nagar, New Delhi E) Jasmine Industrial Corpn., 505 Giriraj, S.T.Road, Mumbai 400009 Rs.59,98,516 ₹ 1,50,000 F) Steel Rolling Mill of Maharashtra, Kholsa Bunder, Darukhana, Mumbai 400010 ₹ 20,33,936 4 Rajendra Kumar HUF, A-4/442, Paschim Vihar, New Delhi Executive Trading Co. Pvt. Ltd., 59E, Baroda Street, Carnac Bunder, Mumbai 400009 Rs.1,23,71,585 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re Revenue. The A.O. after considering the explanations of the assessee observed that the assessee carried its business from the premises 505, Gupta Shawan, Ahmedabad Street, Carnac Bunder, Mumbai, and the purchases mentioned in the above cases were by and large from the same locality where office of the assessee is situated. The AO observed that purchases mentioned against Sr. No. (1) above is from a concern located in the same building (Viz.Gupta Bhavan) where the assessee is located. It was observed by the AO that the transaction of purchase from that concern was also stated to be done through a broker of New Delhi. The other purchases from Carnac Bunder locality near to the assesee s business premises were all claimed to be done through New Delhi brokers and also the address of most of the broker parties are one and same. The AO observed that the assessee was asked to produce the brokers but the said brokers were not produced by the assessee. The assessee was also asked to produce the detail and nature of service rendered by the Delhi parties but nothing was brought on record to prove this factual aspect. It was observed by the AO that details of occupation/antecedent. PAN, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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