SUSHIL BANSAL, CHANDIGARH V. ITO Ward 2(3), Chandigarh

ITA 177/CHANDI/2020

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 2496 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2016-2017
• Appeal Filed On: 16-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DA
• Assessee Lawyers: PRITISH GOYAL
• Keywords: Opportunity of being heard; Fair market value; TDS; Set aside

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एकल सद यीय’, च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH ‘SMC’ CHANDIGARH ीमती दवा संह, या#यक सद य BEFORE: SMT. DIVA SINGH, JM आयकर अपील सं./ ITA No. 177/CHD/2020 नधा रण वष / Assessment Year : 2016-17 Sushil Bansal, SCO 65, Sector 17-C, Chandigarh. बनाम VS The ITO , Ward 2(3), Chandigarh. थायी लेखा सं./PAN No: AAPPB4791A अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Pritish Goyal,C.A. राज व क! ओर से/ Revenue by : Dr. Ranjit Kaur, Sr.DA स ु नवाई क! तार&ख/Date of Hearing : 18.04.2022 उदघोषणा क! तार&ख/Date of Pronouncement : 12.05.2022 आदेश/ORDER The present appeal has been filed by the assessee wherein the correctness of the order dated 19/11/2019 of CIT(A)-1 Chandigarh pertaining to 2016–17 A.Y. is assailed on the following grounds: 1. Whether the impugned order is against facts and law. 2. Whether the CIT(A) has grossly erred in upholding the the addition of Rs. 8,46,111/- made by the Ld. Assessing Officer? 3. Whether the CIT (A) erred in upholding combining of the expenses incurred on one business (Garments Wholesale) with the other business (retail sale of the cosmetics and Body Products under Brand 'The Body Shop') by the assessee? 4. Whether the CIT (A) erred in upholding the additions made u/s 40(A)(2b) of the Income Tax Act 1961 without fulfilling the requirements of the section by the Ld. AO? i.e. without determining that the expenditure incurred is excessive or unreasonable having regard to the fair market value of the goods, services or facilities for which the ITA 177/CHD/2020 A.Y. 2016-17 Page 2 of 7 payment is made or the legitimate needs of the business or profession of the assessee or the benefit derived by or accruing to him therefrom? 5. Because the CIT(A) has erred in upholding the addition in complete ignorance of the principle of consistency as similar expenses had been allowed by the AO in the previous years? Because the principle of inconsistency would be applicable in the absence on any positive findings by the Ld AO and Worthy CIT(A) regarding change in the circumstances during the AY in consideration which has not been done by Ld AO and Worthy CIT(A) in the present case. And also the judgments on which reliance was placed by the Worthy CIT(A) are inapplicable to the facts of the present case. 6. Because the CIT(A) and Ld. AO have completely erred in misinterpreting the agreement, despite the admitted position in records by the Ld. AO that the assessee is carrying on two types of businesses, i.e. (Garments Wholesale) with the other business (retail sale of the cosmetics and Body Products under Brand 'The Body Shop') and the expenses of the Body Shop were bourn by the QRPL and of garments business it was bourn by the assessee. 7. Because the CIT(A) erred in upholding the addition in haste without giving proper opportunity of being heard to the assessee or his counsel by confronting with any cogent evidence against the assessee. As the appellant had clearly discharged his onus before the Ld. AO and CIT (A) by clarifying that the appellant has two businesses and the expenses such as salaries and commissions were relate to the garment business and also by producing evidence such as ledger accounts, bank statements and TDS returns in which the payment it was clearly evident that the payment was made by the appellant and not by the QRPL. The appellant has clearly rebutted and discharged his onus by producing the relevant evidence in support of the same before the ld. AO during the assessment proceedings. However, the Ld. AO had neither rebutted on the same nor he relied upon or confronted the assessee with any cogent evidences to the contrary to dislodge the onus. And the worthy CIT (A) without giving proper opportunity of being heard to the appellant has relied on the decisions of the Ld. AO which was based on the mere assumptions, surmises and conjecture. No concrete evidences or findings were recorded. Hence, the CIT(A) erred in fixing the onus on the appellant which was clearly dislodged by the appellant. Hence the said addition was based on the mere assumptions, surmises and conjecture. 8. Because the judgments on which reliance was placed by the Worthy CIT(A) are inapplicable to the facts of the present case. 9. The appellant craves leave to amend or alter the grounds of appeal before the same are heard and disposed off. It is prayed that an appropriate relief may kindly be given. 2. Before addressing the grievance posed by the assessee in the grounds raised, it is relevant to first address the delay of 9 days pointed out by the Registry in the filing of the present appeal by the assessee. ITA 177/CHD/2020 A.Y. 2016-17 Page 3 of 7 3. The ld. AR drew attention to the Condonation of Delay application placed on record. Relying upon the said application, it was his submission that initially the assessee did not notice that the impugned order had been received on e- mail. It was pleaded that the assessee is technically not updated and does not periodically view his e-mail. However, despite this shortcoming, the appeal documents had been prepared by the assessee well within time and were handed over for filing to his office employee Shri Shankar Bhagat. Mr. Shankar Bhagat was competent to make the fees payments compliance etc. online. However, the said employee on account of some emergency in his native town, suddenly proceeded on leave without informing the assessee. On his return back on query, it was noticed that a delay has occurred. The delay, it was submitted, is only of 9 days and relying upon the prayer set out in paras 4 to 7 of the application, it was his submission that at the end of the assessee, all formalities stood completed within time and on account of reasons beyond his control, the delay has occurred. In the circumstances it was his prayer that the delay may be condoned. 4. The ld. DR considering the record did not oppose the prayer of condonation of delay. 5. Considering the submissions of the parties before the Bench and the material available on record, I am of the view ITA 177/CHD/2020 A.Y. 2016-17 Page 4 of 7 that the minor delay of 9 days is satisfactorily explained by the assessee. It is seen that no advantage has been derived by the assessee by filing the appeal late and no disadvantage is visited upon the Revenue in case the delay of 9 days is condoned. Accepting the explanation of the assessee, the delay is condoned. Ordered accordingly. 6. The parties were, accordingly, directed to argue the appeal on merits. 7. The arguments of the parties were confined to ground No. 7 and 5 which have been captured in the earlier part of this order. 8. The ld. AR relying upon the said ground pleaded that there was a lack of proper opportunity. It was also pleaded that the facts on record have been ignored by the CIT(A) and the impugned order has been passed in haste. Referring to ground No.5 it was also pleaded that even on the principle of consistency, the impugned order deserves to be set aside. The ld. AR relying upon the past history of the assessee submitted that the CIT(A) has passed the order ignoring the past history and has not properly either considered the facts or got confused on the nature of the two businesses. It was his submission that had an opportunity be provided, the assessee would have been able to clarify the facts. The order having ITA 177/CHD/2020 A.Y. 2016-17 Page 5 of 7 been passed in haste, it was his prayer may be set aside. It was clarified that all along the assessee had two different lines of business. Reading from the representation made before the respective authorities captured in the orders of the Tax Authorities, it was his submission that whereas qua the business of ladies garments, the assessee's business is in the name and style of Rupika Fashion and from the very same premises, the assessee is also having business of retail sale of cosmetics and body products with Quest Retail Pvt. Ltd. In terms of the Agreement dated 04.09.2010 entered into with Quest Retail Pvt.Ltd. available and considered by the Tax Authorities in the past. The terms and conditions for expenses and the display products having all visuals, pictures, panels etc. were set out where even the cash till etc. and all materials for advertisement etc. and reimbursement for electricity, water, house keeping charges etc. were settled including the engaging of the employees for display. The sale and display etc. was to be handled by the assessee. The expenses incurred were in terms of the said agreement and the two lines of business were distinct and separate though running from the same premises. The past history of the assessee on this issue was relied upon. The said facts, it was submitted, had not been possibly understood by the First Appellate Authority and had an opportunity of being heard been provided, the issues would ITA 177/CHD/2020 A.Y. 2016-17 Page 6 of 7 have been clarified. In the circumstances, it was his prayer that the additions either may be deleted or the impugned order may be set aside to the CIT(A) for a proper consideration on facts. 9. The ld. Sr.DR considering the record though objected to the deletion of the additions at this stage, however, had no objection if the issues are remanded back. 10. Accordingly, after hearing the parties and considering the record, it was deemed appropriate to set aside the impugned order back to the file of the CIT(A) with direction to pass a speaking order in accordance with law after giving the assessee an effective and reasonable opportunity of being heard. While so directing, it is necessary to also set out the legal principle that consistency cannot be allowed to be easily discarded on the plea that res-judicata does not apply to Income Tax proceedings. Reference to these principles is being made in the context of the observations made in the impugned order holding that res-judicata does not apply to the Income Tax proceedings. The legal issue is well settled that if the facts, circumstances and position of law remains the same and the order relied upon has been passed fairly considering the facts then consistency is a principle which cannot be discarded whimsically or arbitrarily on the specious plea that another view is possible unless and until some relevant facts or provision of law which ITA 177/CHD/2020 A.Y. 2016-17 Page 7 of 7 stood ignored is brought on record and confronted to the assessee. Accordingly, the issue is restored back with the aforesaid direction. Said order was pronounced in the Open Court at the time of hearing itself. 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the Open Court on 12 th May,2022. Sd/- ( दवा संह ) (DIVA SINGH) या#यक सद य/Judicial Member “प ू नम” आदेश क! त-ल.प अ/े.षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant - 2. यथ / The Respondent - 3. आयकर आय ु 0त/ CIT 4. आयकर आय ु 0त (अपील)/ The CIT(A) 5. .वभागीय त न3ध, आयकर अपील&य आ3धकरण, च5डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar