DCIT CENTRAL CIRCLE-4, NEW DELHI V. EASY TRIP PLANNER PVT.LTD., NEW DELHI

ITA 1623/DEL/2022

AI Insights

The case involves multiple appeals by the revenue against M/s. Easy Trip Planner Pvt. Ltd., concerning alleged suppression of sales and inflated commission expenditures over several assessment years. The primary legal issues revolved around the validity of additions made by the Assessing Officer under sections 153A and 143(3) of the Income-tax Act, 1961, following a search and seizure operation. The Tribunal examined whether the Commissioner of Income Tax (Appeals) was justified in deleting these additions, considering the lack of concrete evidence and the procedural lapses in the assessment orders.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 36884 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Other Referred Cases: CIT vs Dhanrajgiri Raja Narasingirji
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: ANUP MEHTA
• Keywords: Business income; Principle of natural justice; Search and seizure; Bogus
• Section: 132; 153A; 43; 13

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., JUDICIAL MEMBER ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 (Assessment Years: 2012-13 to 2017-18) DCIT, Central Circle-4, New Delhi Vs. M/s. Easy Trip Planner Pvt. Ltd, 223, FIE, Patparganj Industrial Area, Delhi-110092 (Appellant) (Respondent) PAN: AABCE9859P CO Nos. 117 to 120/Del/2022 (In ITA Nos. 1621 to 1624/Del/2022) (Assessment Year: 2012-13 to 2014-15 and 2017-18) M/s. Easy Trip Planner Pvt. Ltd, 223, FIE, Patparganj Industrial Area, Delhi-110092 Vs. DCIT, Central Circle-4, New Delhi (Appellant) (Respondent) PAN: AABCE9859P Assessee by : Shri Anup Mehta, CA Shri Nirbhay Mehta, Adv Revenue by: Shri Surender Pal, CIT DR Date of Hearing 09/01/2025 Date of pronouncement 12/03/2025 O R D E R PER BENCH: 1. The appeals in ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 for AYs. 2012-13 to 2017-18 and Cross Objections Filed by the assessee in CO Nos. 117 to 120/Del/2022 in ITA Nos. 1621 to 1624/Del/2022 for AYs. 2012-13 to 2014-15 and 2017-18 arises out of the order of the Commissioner of Income Tax (Appeals)-23, New Delhi [hereinafter referred to as „ld. CIT(A)‟, in short] dated 27.04.2022, ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 2 02.06.2022 against the order of assessment passed u/s 153A r.w.s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as „the Act‟) dated 27.12.2019 by the Assessing Officer, DCIT, Central Circle-4, New Delhi (hereinafter referred to as „ld. AO‟). 2. Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. 3. At the outset, there is a delay in filing of appeals by the revenue by 7 days for the Asst Years 2017-18, 2014-15, 2013-14 and 2012-13. Considering the reasons adduced in the condonation petition, the delay is hereby condoned and appeals of the revenue are admitted for adjudication. 4. The first identical issue to be decided in this appeal is as to whether the Learned CITA was justified in deleting the addition made on account of suppression of sales for the years under consideration. 5. We have heard the rival submissions and perused the materials available on record. The relevant facts are that the assessee company is engaged in the business of online travel portal for flight, hotel and bus booking through its website “www.easemytrip.com”. During the year under consideration, services provided by the assessee company include domestic and international airline ticketing, hotels booking, selling customized holiday packages, booking of taxis, buses and vehicles for tourism etc. For providing the above services online through internet, the assessee company has registered its website by the name “www.easemytrip.com”. ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 3 6. A search and seizure action u/s 132 of the Act was carried out on the assessee company on 10.08.2017. In the course of search, the following documents and records were seized:- a) Busy ERP Accounting Software Records b) Date from online booking portal c) Booking through IATA d) Booking through Authorized Agency Debit Memos called as ADM 7. Pursuant to search action, notice under section 153A stood issued to the assessee for the Assessment Years 2012-13 to 2017-18. The ld AO detected discrepancies in booking of sales between portal and accounting software and proposed an addition of Rs. 39,81,00,000 as suppression of sales for the 6 assessment years 2012-13 to 2017-18 in the following manner:- Sl. No. Nature of Transaction A.Y.2012- 13 A.Y.2013- 14 A.Y.2014- 15 A.Y.2015- 16 A.Y.2016-17 A.Y.2017- 18 1 Suppression of sales- difference between portal sales and accounting software Busy 30,00,000 36,00,000 46,00,000 64,00,000 47,00,000 30,00,000 2 Suppression of sales- difference between PNR/Ticket booked in portal and Busy server 1,30,00,00 0 1,73,00,000 5,26,00,000 3,57,00,000 50,00,000 88,00,000 3 Suppression of sales- difference between ticket booked in portal and sales return shown in books of accounts 26,00,000 66,00,000 1,00,00,000 1,71,00,000 64,00,000 35,00,000 4 Suppression of sales- difference between ticket booked in IATA data not found in /BUSY ERP data 4,11,00,00 0 8,00,000 71,00,000 2,41,00,000 10,90,00,000 - 5 Suppression of sales- difference between ADMS entries found in IATA could not found in Busy ERP Data 32,00,000 4,00,000 36,00,000 13,00,000 36,00,000 - ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 4 Total suppression of sales 6,29,00,00 0 2,87,00,000 7,79,00,000 8,46,00,000 12,87,00,000 1,53,00,00 0 8. The reasoning adopted in the assessment order for above tabulated differences between the sales of tickets as per books of accounts and various other parameters as tabulated above are briefly discussed as below :- A. Difference in total sales as per ETPPL portal and accounting software BUSY: The ld AO in the order while making disallowance had observed that there was difference between the amounts of sales as found in portal data and accounting software BUSY. The PNR Wise Sales was higher in Portal Data as compared to accounting software Busy for various assessment years as tabulated under:- A.Y. Portal Data Sales Busy ERP sales Difference No. of PNR 2012-13 1,67,00,000 1,37,00,000 30,00,000 1023 2013-14 2,43,00,000 2,07,00,000 36,00,000 1055 2014-15 2,78,00,000 2,32,00,000 46,00,000 1026 2015-16 2,99,00,000 2,35,00,000 64,00,000 1440 2016-17 7,12,00,000 6,65,00,000 47,00,000 6340 2017-18 3,08,00,000 2,78,00,000 30,00,000 1467 Total 20,07,00,000 17,54,00,000 2,53,00,000 12351 The Ld AO also quoted 10 instances wherein the difference in sales was worked out at Rs 39,740/- to justify the aforesaid addition of Rs 2,53,00,000/- for all the years put together. B. The ld AO in the order observed that on comparing PNR/Ticket No. booked in portal with PNR/Ticket No. booked in Busy ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 5 server, it was found that in some cases tickets shown as booked on portal were not shown as sales in Busy server. The total addition made on this account for the six years was Rs. 13,24,00,000/- In the assessment order, only 3 instances have been quoted and no other working or details provided for making addition of Rs. 13,24,00,000/-. C. The ld AO observed that in some instances sales return were shown on the Busy software in the books of accounts, whereas on the portal, the same was shown as booked. The ld AO observed that the assessee has reversed the actual sales in its books of account and shown lesser sales. The total addition made on this account for the six years was Rs. 4,62,00,000/-. In the assessment order for all the six years, 23 instances were quoted in the assessment order and no other workings or details were provided for making addition of Rs. 4,62,00,000/- which is evident from Page 15 of the assessment order for the Assessment Year 2012-13. D. The ld AO has observed that during the post search proceedings, the data related to all parties booked by assessee through IATA (International Air Transport Association) was collected. The data was analyzed and compared with the available data in Busy Software. During the comparison of data received from IATA with Busy ERP, it was noted that certain tickets were available in IATA data but not present in Busy Software data. The total addition made on this account for the six years was Rs. 18,21,00,000/-. This addition was proposed by the ld AO without bringing any instances of differences in the sales figure thereon, which is evident from page 17 of the assessment order for the Assessment Year 2012-13. ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 6 E. ADMS (Agency Debit Memo) is issued by airlines to collect the amount due from the agent in relation to ticket issued or other dues as per the airlines ADMS Policy. It was found that the ADMS entries shown by IATA was not reflected in the portal data and the total amount of debit memo not recorded in portal for the Assessment Years 2012-13 to 2017-18 was Rs.1,21,00,000/-. This addition was proposed by the ld AO without bringing any instances of differences in the sales figure thereon, which is evident from page 17 of the assessment order for the Assessment Year 2012-13. 9. During the course of appellate proceedings, submissions were made before the ld CITA stating that the ld AO had not provided any workings for arriving at the figure of additions. Further, the ld AO in the order for all the 6 years had quoted certain instances mentioning discrepancies, the instances quoted were common to the assessment order for all the 6 years. These instances never formed part of the show cause notice dated 15/12/2019 issued during the course of assessment proceedings. Hence to buttress the same, the assessee furnished the purchase and sales invoices before the ld CITA in support of the contentions of the assessee to prove the point that the third party invoices do not reveal any discrepancy at all and hence it becomes all the more necessary to understand the basis of arriving at the figure of addition made by the ld AO. This point was appreciated by the ld CITA and accordingly a remand report was sought for from the ld AO. The ld AO furnished the remand report dated 09-12- 2021. The relevant portion of the remand report furnished by the AO is quoted as under:- “During assessment proceedings, the assessee had sought back up details of data along with working copy of amount arrived in relation to the suppression of sales. Accordingly, a letter was written to DDIT (Inv.), Unit-4(2), New Delhi for clarification and for seeking the working copy of the amount arrived as proposed ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 7 in the addition in the case of Easy Trip Planners Pvt. Ltd. In response to the same, email was received from the office of DDIT (Inv.), Unit-4 (2), New Delhi on 06.12.2019 along with an attachment. As per the email, it was mentioned that all the working copies of seized data have already been handed over to the AO with original hard disk and as regards the calculation of the amount proposed by the addition, the AO was asked to contact one Mr. Manoj of M/s. E&Y since the extraction of data was carried out by M/s E & Y. The present AO then contacted Mr. Tridip Kumar Munshi who was the ACIT, Central Circle-4 who had passed the assessment order. In response to the same, he said Mr Munshi had replied through email that during the course of assessment proceedings, Mr. Manoj of M/s E & Y was contacted over mobile number and he came to the office of the ACIT, Central Circle-4 and on being asked to provide working copy of the same, he informed that all the seized data was handed over to the Investigation Wing, Delhi. Mr. Manoj was not in possession of the detailed working copy of suppression of sales. The present AO then wrote email to the office of DDIT (Inv.), Unit-4(2), New Delhi on 29.11.2021 to retrieve/provide the working copies of amount arrived in relation to suppression of sales. However, no reply was received from the office of DDIT (Inv.), Unit-4 (2), New Delhi. Based on the above discussion, the AO in the Remand Report stated that the addition made on account of suppression of sales were made based on appraisal report wherein the modus operandi of suppression of sales have been discussed in detail. However, for the detailed working of the amount, efforts were made by the then ACIT, Central Circle-4 in order to get the same and efforts are also being made currently to provide the same at the remand report stage, but the same are not provided till date by the DDIT (Inv.), Unit-4 (2), New Delhi.” 10. After considering the remand report and submissions made, the ld CITA deleted the additions made for all the assessment years. The findings of the ld CITA are summarized as under:- a) Apart from making arithmetical comparisons in the assessment order based on accounting data, portal data and data received from airlines and IATA, no further enquiries have been made either during post search investigations or during assessment proceedings. This is evident from Para 37 of the appellate order. b) No bank accounts have been found that could furnish evidence of diversion of money received on online sale of tickets. This is evident from Para 38 of the appellate order. ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 8 c) From the remand report of the ld AO, it is abundantly clear that while making the addition, the ld AO did not have any evidence in hand. The addition was made based on appraisal report of the DDIT (Inv). Further the DDIT (Inv.) himself did not have any evidence against the assessee. The DDIT (Inv.) relied upon the work of E&Y and they also did not have any evidence. This proves that the addition was made without any application of mind and without any cogent material. This is evident from Para 40 of the appellate order. d) The law requires the ld AO to reach a conclusion after independently examining the facts and the provisions of laws in force. Being a quasi-judicial authority, the ld AO is supposed to independently verify the facts and take a decision. However, in the instant case, the ld AO did not carry out any investigation (as there was no evidence) and reach a conclusion independently. This is evident from Para 41 of the appellate order. e) Even if indeed, there was evidence, then why the same was not made available to the DDIT (Inv.) or the ld AO. The entire addition has been made based on some unknown mathematical analysis. Even if some analysis of data is made, the discrepancies together with its basis must be made part of the assessment order and the assessee be given a chance of rebuttal. At no point of time, the assessee was given opportunity to furnish rebuttal to the findings of the fact. It was required that all the evidence against the assessee be confronted to him. In this case, there was no evidence against the assessee, therefore he was not provided with the opportunity to examine the same in violation of the principles of natural justice. This is evident from Paras 42 and 43 of the appellate order. ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 9 f) In any event, even if the company had suppressed it sales, then some corresponding evidence of equivalent amount of asset in the form of undisclosed bank account or evidence of cash would have been detected during search or post search enquiries. However, during the search or post search, no undisclosed bank account of the assessee company or significant amount of cash was found as the allegation is only about suppression of sales. 11. The ld DR before us took us to the instances quoted by the ld AO for justifying the addition made on account of suppression of sales by the ld AO. He vehemently relied on the order of the ld AO for all the years. We find that from the modus operandi and the business model adopted by the assessee, there cannot be any suppression of sales as the sale of airline tickets is carried out online through the registered website. The payment for airline tickets from customers is settled through digital mode i.e. debit/credit card or internet banking. Hence we find lot of force in the argument of the ld AR before us. Therefore, when there is no involvement of cash component in sale of airline tickets, the question of any suppression would not arise. It is also not the case of the ld AO that the assessee company had any undisclosed bank account or any hidden payment gateway which is not reflected in the books of accounts. Even the search action, which has got an element of surprise, did not detect any such undisclosed bank account or payment gateway. Looking at it from another dimension, airline tickets are never sold in cash outside the books of accounts by the assessee. The business activity of the assessee company is such that it only earns commission on sale of airline tickets between the respective airline and the ultimate consumer. There is a one- to-one correlation between the tickets purchased from the airline and sold to the customer. Under such business structure, there is no possibility of ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 10 sales of tickets outside the books of accounts leading to alleged suppression of sales. Since the sales were done electronically online then if the same has been received in some bank account, then how the same was accounted for in the books of accounts. If the sales were received in a separate bank account, then the same has not been brought on record. The receipt of suppressed sales in a different bank account is not possible since the entire payment towards sale will be credited in a single bank account and it is not possible to receive the proceeds of sales in 2 separate bank accounts. The data taken from IATA has been compared with Busy data, but the IATA data was never provided at any stage to the assessee. The addition in respect of ADM (Agency Debit Memo) has been made based upon entirely incorrect understanding of facts. ADM is an expense for the company and is not in the nature of income. Hence if the contention of the ld AO is accepted, then difference between ADMS entries found in IATA and not recorded in Busy software would result in increase of expenditure and not sales. This itself proves the fallacy in understanding of the entire gamut of the case by the ld AO and also proves that the additions have been made without any cogent material and without any basis. Further we find that there is no dispute that the ld AO during assessment proceedings has not carried out any independent investigation and solely relied upon the appraisal report for making the addition and no details regarding mode and method of computation of suppressed sales are available, the same has been confirmed in the remand report furnished. In the absence of basic details like the method and mode of computation and PNR wise details of suppression of sales and absence of mode of receipt of the alleged suppressed sales, the addition made is not justified. ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 11 12. In view of the aforesaid observations, we do not find any infirmity in the order of the ld CITA deleting the additions made on account of alleged suppression of sales for all the years under consideration. 13. The second identical issue involved in these appeals is challenging the deletion of disallowance on account of inflated commission expenditure. 14. We have heard the rival submissions and perused the materials available on record. The ld AO has observed that the assessee charges commission on sale of tickets on a percentage basis on base fare of ticket plus passenger service fee charged by Airline. The assessee duly furnished the complete list of parties to whom the commission was paid by it together with the amounts thereon for all the years under consideration. The ld AO observed that the general rate of commission rate on sale of tickets is 5%. The ld AO‟s contention was that 10% commission is considered as Arm‟s Length Rate and hence commission paid in excess of 10% was sought to be treated as inflated commission expenses. Based on this, the ld AO observed that in 6 years from AYs 2012-13 till 2017-18 in a number of cases, the assessee has paid commission in excess of 10% and disallowed the excess commission paid in all the 6 years as under: A.Y. Amount of Commission disallowed 2012-13 1,54,00,000 2013-14 1.65,00,000 2014-15 1,17,00,000 2015-16 85,00,000 2016-17 54,00,000 2017-18 34,00,000 Total 6,09,00,000 ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 12 15. During the course of appellate proceedings before the ld CITA, it was submitted that since the method and mode of computation of disallowance of excess commission paid was never confronted to the assessee, the same may be called from the ld AO to enable assessee to furnish pointed and specific reply. Submission of the assessee was forwarded to the ld AO for his remand report. The ld has furnished his remand report dated 09-12-2021. 16. After considering the remand report and submissions made, the findings of the ld CITA are summarized as under :- a) From the contents of the remand report, it emerges that the working for computing the quantum of disallowance is not available with the ld AO. This is evident from Para 56 of the appellate order. b) The basis adopted in the assessment order for making the disallowance defies logic. The assessment order states that the normal rate of commission charged was 5%, but there are instances where commission charged from the assessee was more than 10%, the assessment order concludes that the commission paid in excess of 10% is being disallowed. But no instances have been given in the assessment order or the remand report for the same. This is evident from Para 57 of the appellate order. c) The order is silent about the recipient of the commission. If the ld AO finds any expense to be excessive and if the recipient of the commission is a related party, then disallowance can be made u/s 40A(2)(b). As the order does not specify as to whether the recipient of the commission are related party or not, then provisions of section 40A(2)(b) do not apply. This is evident from para 58 of the appellate order. ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 13 d) It has not been established by the ld AO as to how the commission paid at the rate above 10% is excessive. This is evident from Para 60 of the appellate order. e) The assessee has not claimed any expenditure on account of commission in the Profit & Loss Account. When no commission expense is appearing in the Profit & Loss Account, then there is no question of any disallowance of excessive commission expenditure. This is evident from Para 61 of the appellate order. 17. The ld DR vehemently relied on the order of the ld AO for justification of disallowance of commission expenditure. We find that there is no basis or details provided by the ld AO either at the assessment stage or at the appellate stage as to how the figures were even worked out by the ld AO for framing the addition. It is not the case of the ld AO that the commission was paid to related persons, or the company received back the commission paid in form of cash or the commission paid was not genuine or bogus. The only allegation is that the commission paid in excess of 10% is not justified. No basis was reflected by the ld AO even to arrive at the Arm‟s length rate of commission at 10% or 5%, as the case may be. It is pertinent to note that the commission percentage obviously would vary from party to party depending upon the volume of sales sourced by the said agents. The rate at which commission is to be paid is solely the prerogative of the company if the same is not bogus. In this case, the genuineness has not been challenged by the department. Hence the ld AO was not justified in holding that commission expenditure upto 10% would be at Arm‟s length and any percentage over and above the same, would be excessive or unreasonable. Either way, the business prudence need to be looked into from the point of view of the ITA Nos. 1621, 1622, 1623, 2121, 2122, 1624/Del/2022 CO Nos. 117 to 120/Del/2022 M/s. Easy Trip Planner Pvt. Ltd Page | 14 businessman and not from the point of view of the revenue. The law is very well settled on this aspect by the decision of Hon‟ble Supreme Court in the case of CIT vs Dhanrajgiri Raja Narasingirji reported in 91 ITR 544 (SC). Further no deduction was claimed towards commission expenditure and hence there is no question of any disallowance thereon. 18. In view of the aforesaid observations, we do not find any infirmity in the order of the ld CITA deleting the additions made on account of alleged commission expenditure for all the years under consideration. 19. In the result, all the appeals of the revenue are dismissed. 20. Since the revenue appeals are dismissed on merits, the grounds raised by the assessee in its Cross Objections need not be adjudicated upon and they are left open. Hence they are dismissed as infructuous. 21. To sum up, all the appeals of the revenue are dismissed and cross objections of the assessee are dismissed as infructuous. Order pronounced in the open court on 12/03/2025. -Sd/- -Sd/- (YOGESH KUMAR U.S.) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 12/03/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "