DCIT, New Delhi V. M/s Saga Departmental Stores Ltd, New Delhi

ITA 2812/DEL/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87193 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 9 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-03-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 07-06-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G, NEW DELHI) BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO. 2812/DEL/2010 ASSESSMENT YEAR : 2005-06 DCIT, CIRCLE 7(1), VS. M/S. SAGA DEPARTMENTAL STO RES LTD., NEW DELHI B-5, JANGPURA, MATHURA ROAD, NEW DELHI. GIR / PAN:AAACS4171P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI BRR KUMAR, SR. DR RESPONDENT BY : SHRI AJAY VOHRA, SR. ADV. SHRI ROHIT GARG, ADV. DATE OF HEARING : 25.03.2015 DATE OF PRONOUNCEMENT : 31.03.2015 ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORD ER OF LD. CIT(A) DATED 31.03.2010. THE REVENUE IS AGGRIEVED WITH TH E ACTION OF LD. CIT(A) BY WHICH HE HAD DELETED THE PENALTY IMPOSED BY A.O. U/S 271(1)(C) OF THE ACT. 2. LD. D.R. AT THE OUTSET SUBMITTED THAT A CONNECTE D MATTER IN THE CASE OF ASSESSEE ITSELF HAS BEEN HEARD AND ORDER HAS ALREAD Y BEEN PASSED IN THAT APPEAL AND, THEREFORE, THE ORDER PASSED IN THAT APP EAL SHOULD BE CONSIDERED BEFORE PASSING THE ORDER IN THE PRESENT APPEAL. 3. LD. A.R. EXPLAINED THE FACTS OF THE CASE AND FIL ED A COPY OF A TRIBUNAL ORDER DATED 08.08.2013. EXPLAINING THE FACTS, THE LD. A.R. SUBMITTED THAT ITA NO.2812/DEL/2010 2 THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRADING AND EXPORT OF GARMENTS AND HANDICRAFTS ETC. AND DURING THE YEAR UNDER CONSIDER ATION, IT HAD DECLARED GROSS TURNOVER OF RS.55.65 CRORES AND HAD CLAIMED C OMMISSION EXPENSES OF RS.11.45 CRORES. THE A.O. HAD DISALLOWED A SUM OF RS.10.24 CRORES OUT OF TOTAL CLAIMED COMMISSION OF RS.11.45 CRORES. ON AP PEAL, LD CIT(A) HELD THAT COMMISSION AS AN EXPENSE BE ALLOWED TO THE ASS ESSEE TO THE EXTENT OF 14% OF TURNOVER. NOT SATISFIED WITH THE DECISION O F LD. CIT(A), THE ASSESSEE TOOK THE MATTER TO THE TRIBUNAL AND ITAT ENHANCED T HE AMOUNT OF COMMISSION TO THE EXTENT OF 16% OF TURNOVER. IT WA S SUBMITTED THAT THE A.O. ISSUED NOTICE U/S 154 BECAUSE HE PROPOSED TO RECTIF Y A MISTAKE OF CALCULATION OF TOTAL ALLOWANCE OF COMMISSION. LD. A.R. SUBMITT ED THAT THE CONTENTION OF REVENUE WAS THAT THE COMMISSION HAS TO BE RESTRICTE D TO 16% OF TURNOVER WHICH SHOULD INCLUDE THE ALREADY ALLOWED COMMISSION OF RS.1,21,55,213/- ALLOWED BY A.O. AND THAT IS WHY THE REVENUE MADE RE CTIFICATION U/S 154 AND THE MATTER TRAVELLED TO ITAT, WHO VIDE ORDER DATED 08.08.2013 HAD SET ASIDE THE ISSUE TO THE OFFICE OF A.O. FOR DETERMINATION O F TOTAL ALLOWABLE COMMISSION. IN VIEW OF ABOVE, LD. A.R. SUBMITTED T HAT SINCE THE ISSUE HAS BEEN REMITTED BACK TO A.O. FOR DETERMINATION OF ALL OWABLE COMMISSION AND THEREFORE, THE ONLY EFFECT IF DECIDED AGAINST THE A SSESSEE, WILL BE THAT PENALTY IMPOSED WILL INCREASE. THEREFORE, HE SUBMITTED THA T THE PENALTY IMPOSED BY A.O. DOES NOT SURVIVE AS AFTER DETERMINATION OF AMO UNT OF ALLOWABLE COMMISSION, THE A.O. CAN AGAIN INITIATE PENALTY PRO CEEDINGS FOR THE EXACT AMOUNT OF DISALLOWANCE. IN VIEW OF ABOVE, IT WAS S UBMITTED THAT THE CASE NEEDS TO BE REMITTED BACK TO A.O. 4. WE HAVE HARD RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT THE ASSESSEE HAD CLAIMED T O HAVE PAID COMMISSION ITA NO.2812/DEL/2010 3 OFRS.11.45 CRORES AGAINST THE TURNOVER OF RS.55.65 CRORES OUT OF WHICH THE ASSESSEE HAD DEDUCTED TAX AT SOURCE ON COMMISSION E XPENSE OF RS.1,21,55,213/-. THEREFORE, THE A.O. HAD ALLOWED THE CLAIM OF COMMISSION OF THIS AMOUNT. FOR THE REMAINING AMOUNT, THE A.O. HAD MADE THE ADDITION BUT ITAT ENHANCED THE AMOUNT OF COMMISSION PAYABLE @ 16% OF THE TURNOVER. REVENUE BY WAY OF RECTIFICATION HELD TH AT 16% COMMISSION ARRIVED SHOULD HAVE INCLUDE THE COMMISSION OF RS.1, 21,55,213/- WHICH WAS ALREADY ALLOWED BY A.O., THEREFORE, THE MATTER REAC HED TO THE TRIBUNAL WHICH VIDE ORDER DATED 08.08.2013 IN I.T.A. NO. 3317 HAS REMITTED THE ISSUE BACK TO THE A.O. WE FIND THAT THE PENALTY AROSE ON ACCO UNT OF THIS ADDITION ON ACCOUNT OF COMMISSION ONLY AND SINCE THE QUANTUM OF DISALLOWANCE OF COMMISSION HAS NOT YET BEEN DECIDED BY A.O., THEREF ORE, THE PRESENT CASE ALSO NEEDS TO BE REMITTED BACK TO THE OFFICE OF A.O . WHO IS AT LIBERTY TO AGAIN INITIATE PENALTY PROCEEDINGS AND IMPOSE PENALTY U/S 271(1)(C) ON THE CORRECT AMOUNT OF DISALLOWANCE OF COMMISSION. NEEDLESS TO SAY THAT THE ASSESSEE WILL BE PROVIDED SUFFICIENT OPPORTUNITY OF BEING HE ARD. 5. IN VIEW OF ABOVE, APPEAL FILED BY REVENUE IS ALL OWED FOR STATISTICAL PURPOSES. 6. ORDER PRONOUNCED IN THE OPEN COURT ON 31SST MAR CH, 2015. SD./- SD./- ( DIVA SINGH) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE:31.03.2015 SP ITA NO.2812/DEL/2010 4 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 26/3 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 27, SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 31/3 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 31/3 SR. PS/PS 7 FILE SENT TO BENCH CLERK 31/3 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER