IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.445 of 2009 (O&M) Date of decision: 19.8.2009 Commissioner of Income Tax, Patiala. -----Appellant Vs. Mandeep Singh. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MRS. JUSTICE DAYA CHAUDHARY Present:- Mr. Rajesh Katoch, Standing Counsel for the Revenue. ----- ORDER: 1. The Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against order dated 31.12.2008 of the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’, Chandigarh passed in I.T.A. No.754/ Chandi/2008 for the assessment year 2004-05, proposing to raise following substantial questions of law:- “(i) Whether or not on the facts and in the circumstances of the case, the ITAT was right in upholding CIT(A)’s action in deleting the addition of Rs.8,86,957/-, made on account of unsecured loans, ignoring the fact that the assessee had failed to discharge the onus of proving the creditworthiness of the alleged loan ITA No.445 of 2009 creditors, whereas due to assessee’s failure in producing the alleged creditors, the AO was justified in taking an adverse view in terms of Sec.114 of the Indian Evidence Act. (ii) Whether on the facts and in the circumstances of the case, the ITAT was right in upholding CIT (A)’s action in deleting the addition of Rs.18,77,779/- by following the principle of consistency, ignoring the mandate of the Hon’ble Supreme Court as per decision dated 21.07.2007 in Civil Appeal No.5210-5216 of 2002 in the case of C.KI. Gangadharan & Another vs. CIT, Cochin and ignoring the fact that the assessee had failed to reconcile such difference with supporting evidence in the shape of any agreement with Spice Communication Ltd. to prove that it was obliged to pay commission to sub-dealers.” (iii) Whether on the facts and in the circumstances of the case, the ITAT was right in upholding CIT (A)’s action in deleting the addition of Rs.8,08,003/- made on account of disallowance of discount debited to P&L Account, ignoring that the assessee had failed to discharge its onus of producing documentary evidence in the form of agreement made with the dealers or to furnish the complete addresses of the dealers together with the percentage of such commission paid, when asked to do so.” 2. The assessee deals in electronic items and is distributor of Spice mobile connections. During assessment, the 2 ITA No.445 of 2009 Assessing Officer made additions on account of unsecured loans and other deficiencies including discount debited to P&L account. The CIT(A) upheld the plea of the assessee, which order has been affirmed by the Tribunal. As regards unsecured loans, it was observed that the Assessing Officer failed to call the alleged creditors for evidence inspite of request of the assessee. Other deficiencies were also held to have been duly explained. The observations of the Tribunal are as under:- “Admittedly, Spice Company confirmed the position, which is as per the explanation of the assessee. There is no dispute by the Revenue that the relevant vouchers and details were furnished during the assessment proceedings and there is no instance of non-payment of commission to the dealers. Even in the previous year, the assessment order was framed under section 143(3) and no addition was made on this account. We have perused the certificate from Spice dated 18.3.2008 (page 61) of the paper book, details of commission paid to the dealers (page 29 to 33 of the paper book), details of commission received during assessment year 2003-04 and 2004-05 (page 99 of the paper book) and the submissions of the assessee during assessment proceedings (page 101 to 103) of the paper book. If all these evidences are analyzed, firstly, it can be said that the Assessing Officer cannot deviate from his earlier decisions since the facts are identical. Even otherwise, the issue of reconciliation of the total commission received and its break-up and also the commission given by the assessee to its dealers. If all these facts are analyzed, we have not seen any unjustifiability in the 3 ITA No.445 of 2009 impugned order. Even the factual finding that the payment of commission of the impugned amount to the dealers is provided, on which the necessary tax has also been deducted has not been controverted by the Revenue, consequently, the stand of the learned first appellate authority is upheld, therefore, this round of the Revenue is also having no merit. 5. The last ground raised by the Revenue is that on the facts and in the circumstances of the case the learned first appellate authority erred in deleting the addition of Rs.8,08,003/- made on account of disallowance on discount debited to profit and loss account ignoring the fact that assessee failed to produce documentary evidence in the form of any agreement made with the dealer or to furnish the complete addresses of dealer together with the percentage of commission paid. The learned Sr. D.R. took identical arguments as raised in the grounds by further adding that for want of details, the impugned disallowance was rightly made. On the other hand, the learned counsel for the assessee defended the impugned order by contending that all necessary details were furnished before the learned Assessing Officer as well as before the Ld. CIT(A) and no defect was pointed out during assessment proceedings. Our attention was also invited to certain pages of the paper book. We have considered the rival submissions and perused the material available on the file. Brief facts are that during assessment proceedings, on perusal of profit and loss account, the learned Assessing Officer noticed that the assessee has claimed deduction of Rs.8,08,003/- on account of commission. The assessee was asked to justify the 4 ITA No.445 of 2009 payment of such commission alongwith documentary evidence. The assessee explained as has mentioned in para 5 (pages 5 & 6) of the assessment order. Ultimately the learned Assessing Officer was of the view that assessing neither filed the details of persons to whom the discount was paid nor furnished any documentary evidence in the shape of any agreement with these persons. Therefore, the impugned amount was added to the returned income of the assessee. On appeal, the Ld. CIT(A) deleted the addition which is under challenge before the Tribunal. The claim of the assessee is that the discount of the impugned amount was given to the customers in order to boost the sales of post paid connections due to tough competitions with other companies like Airtel and BSNL etc. who pays sufficient discounts to their customers in the form of free of cost connections or under different schemes. There is no dispute to the fact that the list of such connections was furnished to the Assessing Officer and no independent inquiry was made by the Assessing Officer disapproving the claim of the assessee. Even in the assessment order, the learned Assessing Officer has not controverted that any discount was not given. Even the book result of the assessee has been accepted. Another point pertinent to mention here is that no disallowance was made in earlier years, while framing order under section 143(3), the claim of the assessee was accepted.” 3. We have heard learned counsel for the appellant. 5 ITA No.445 of 2009 4. The findings of the Tribunal on the questions raised are findings of fact based on evidence and are not shown to be perverse. No substantial question of law arises. 5. The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE August 19, 2009 ( DAYA CHAUDHARY ) ashwani JUDGE 6