Rajinder Kumar Jain, New Delhi V. ACIT, New Delhi

ITA 328/DEL/2013

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 8909 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 19-02-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 17-01-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY SENIOR
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) BEFORE SHRI B.C. MEENA, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NOS.328 & 329/DEL./2013 ASSESSMENT YEARS : 2004-05 & 2009-10 SHRI RAJINDER KUMAR JAIN, VS. ACIT, CIRCLE 27 (1) , 8/149, AIRPORT HOTEL & RESTAURANT, NEW DELHI. MEHRAM NAGAR, DELHI CANTT., NEW DELHI. (PAN : AAFPJ2465B) ITA NOS.634 & 633/DEL./2013 ASSESSMENT YEARS : 2004-05 & 2009-10 ACIT, CIRCLE 27 (1), VS. SHRI RAJINDER KUMAR JAIN, NEW DELHI. 8/149, AIRPORT HOTEL & RESTAURANT, MEHRAM NAGAR, DELHI CANTT., NEW DELHI. (PAN : AAFPJ2465B) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI VED JAIN, CA REVENUE BY : SHRI VIKRAM SAHAY, SENIOR DR ORDER PER BENCH : ITA NO.328/DEL/2013 FILED BY THE ASSESSEE AND ITA N O.634/DEL/2013 FILED BY THE REVENUE, WHICH ARE CROSS APPEALS FOR T HE ASSESSMENT YEAR 2004-05, EMANATE FROM THE ORDER OF THE CIT (APPEALS)-XXIV, N EW DELHI DATED 20.11.2012. ITA NO.329/DEL/2013 FILED BY THE ASSES SEE AND ITA 2 ITA NOS.328, 329, 633 & 634/DEL/2013 NO.633/DEL/2013 FILED BY THE REVENUE, WHICH ARE CRO SS APPEALS FOR THE ASSESSMENT YEAR 2009-10, EMANATE FROM THE ORDER OF THE CIT (APPEALS)-XXIV, NEW DELHI DATED 20.11.2012. 2. FIRST WE TAKE UP THE APPEALS FOR THE ASSESSMENT YEAR 2004-05. THE RETURN OF INCOME FOR THE YEAR WAS FILED ON 05.10.2004 DECL ARING INCOME OF RS.2,54,244/-. THE ASSESSMENT WAS FINALIZED AT AN INCOME OF RS.45,87,460/-. THE CIT (A) HAS GRANTED PART RELIEF AGAINST WHICH A SSESSEE AND REVENUE ARE IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS :- ITA NO.328/DEL/2013 (ASSESSEES APPEAL) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE CONT ENTION OF THE APPELLANT THAT THE REOPENING OF THE ASSESSMENT AND CONSEQUENT REAS SESSMENT PROCEEDINGS WITHOUT COMPLYING WITH THE STATUTORY CONDITIONS PRE SCRIBED UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT ARE BAD IN LAW AND LIABLE TO BE QUASHED. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE CONT ENTION OF THE ASSESSEE THAT THE REASONS RECORDED FOR REOPENING THE ASSESSMENT ARE V AGUE AND IN THE ABSENCE OF A LIVE NEXUS IT DOES NOT MEET WITH THE REQUIREMENTS OF SECTION 147 OF THE ACT. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN IGNORING THE CONT ENTION OF THE ASSESSEE THAT THE REOPENING OF THE ASSESSMENT AND THE REASSESSMENT OR DER IS BAD AND LIABLE TO BE QUASHED BEING BARRED BY LIMITATION AS THE REASONS R ECORDED FOR REOPENING HAS BEEN PROVIDED AFTER THE END OF SIX YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN SUSTAINING THE DI SALLOWANCE OF 10% OF SERVICE CHARGES PAID BY THE ASSESSEE TO ITS EMPLOYEES. 6. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. 3 ITA NOS.328, 329, 633 & 634/DEL/2013 ITA NO.634/DEL/2013 (REVENUES APPEAL) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW CIT (A) HAS ERRED IN (I) DELETING THE ADDITION OF RS.34,58,352/- MADE ON ACC OUNT OF DISALLOWANCE OF COMMISSION EXPENSES. (II) DELETING THE ADDITION OF RS.7,87,374/- MADE ON ACCO UNT OF DISALLOWANCE OF SERVICE CHARGES. (III) THE APPELLANT CRAVES THE RIGHT TO ADD ANY OTHER GRO UND(S) OF APPEAL DURING THE COURSE OF HEARING OF THIS APPEAL. 3. GROUND NOS.1 & 6 IN ASSESSEES APPEAL AND GROUND NO.(III) IN REVENUES APPEAL ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 4. GROUND NOS.2 TO 4 IN THE ASSESSEES APPEAL WERE NOT PRESSED, HENCE THE SAME ARE DISMISSED AS NOT PRESSED. 5. THE ONLY GROUND REMAINED FOR ADJUDICATION IN ASS ESSEES APPEAL IS GROUND NO.5 IN WHICH THE ASSESSEE HAS CHALLENGED THE SUSTE NANCE OF ADDITION OF 10% OF SERVICE CHARGES PAID BY THE ASSESSEE TO ITS EMPLOYE ES. GROUND NO.(II) IN REVENUES APPEAL IS ALSO WITH REGARD TO THE DELETIO N OF ADDITION OF SERVICE CHARGES OF RS.7,87,374/-. 6. AT THE OUTSET OF THE HEARING, LD. AR SUBMITTED T HAT THIS ISSUE HAS TRAVELLED TO THE ITAT IN ASSESSEES OWN CASE IN THE ASSESSMEN T YEAR 2008-09 IN ITA NO.2777/DEL/2011 AND ITA NO.3109/DEL/2011 AND THE I TAT VIDE ITS ORDER DATED 22.08.2014 RESTRICTED THE DISALLOWANCE OF 10% OF THE ACTUAL PAYMENTS OF SERVICE CHARGES. THE RELEVANT PARA 14 OF THIS ORDE R IS REPRODUCED BELOW :- 14. WE FIND THAT THE PRACTICE OF PAYMENT OF SERVI CE CHARGES TO STAFF PREVAILING IN THE TRADE HAS NOT BEEN DISPUTED BY TH E ASSESSING OFFICER. THE ONLY DISPUTE WAS THE GENUINENESS OF THE CLAIMED PAYMENT. THE ASSESSING OFFICER 4 ITA NOS.328, 329, 633 & 634/DEL/2013 DOUBTED THE GENUINENESS OF THE ACTUAL PAYMENT OF SE RVICE CHARGES AND DISALLOWED THE ENTIRE CLAIM' RESULTING IN THE ADDIT ION OF RS.37,80,412. LEARNED CIT(APPEALS), HOWEVER, KEEPING IN VIEW THE PRACTICE FOLLOWED BY THE ASSESSEE OVER THE YEARS WHICH WERE ACCEPTED BY THE ASSESSING OFFICER IN THE PAST IN THE ASSESSMENT FRAMED UNDER SEC. 143(3) OF THE INCOME-T AX ACT, 1961 AND KEEPING IN MIND OTHER FACTORS, AS DISCUSSED ABOVE, HAS GIVE N RELIEF BY RESTRICTING THE DISALLOWANCE TO 10% OF ACTUAL PAYMENT OF SERVICE CH ARGES RESULTING IN RESTRICTION OF DISALLOWANCE TO RS.3,78.041. AS DISC USSED ABOVE, WE FIND THAT THE SAID ACTION OF THE FIRST APPELLATE AUTHORITY IN GIV ING SUBSTANTIAL RELIEF TO THE ASSESSEE IS BASED ON SUFFICIENT REASONS DISCUSSED B Y HIM IN HIS FINDINGS REPRODUCED ABOVE TO WHICH WE FULLY CONCUR WITH. WE, THUS, DO NOT FIND ANY REASON TO INTERFERE THEREWITH. THE SAME IS UPHELD. GROUND NO.3 OF THE APPEAL PREFERRED BY THE ASSESSEE AND GROUND NO.2 OF THE AP PEAL FILED BY THE REVENUE ARE THUS REJECTED. 7. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ISSUE HAS ALREADY BEEN DECIDED BY THE ITAT IN THE ASSESSEES OWN CASE IN A SSESSMENT YEAR 2008-09. FACTS AND CIRCUMSTANCES REMAIN THE SAME, RESPECTFUL LY FOLLOWING THE AFORESAID DECISION OF THE ITAT, WE DISMISS THIS ISSUE IN THE ASSESSEES APPEAL AS WELL AS REVENUES APPEAL. ACCORDINGLY, GROUND NO.5 OF ASSE SSEES APPEAL AND GROUND NO.(II) OF REVENUES APPEAL ARE DISMISSED. 8. GROUND NO.1 IN REVENUES APPEAL IS WITH REGARD T O THE DELETION OF ADDITION OF RS.34,58,352/- MADE ON ACCOUNT OF COMMISSION EXP ENSES. 9. AT THE OUTSET, IT IS SUBMITTED THAT THIS ISSUE I S ALSO COVERED BY THE DECISION OF ITAT, CITED SUPRA, IN ASSESSEES OWN CASE IN THE ASSESSMENT YEAR 2008-09. IN ASSESSMENT YEAR 2008-09, THE CIT (A) HAS RESTRICTED THE DISALLOWANCE TO 10% OF THE ACTUAL PAYMENT OF COMMISSION TO TAXIWALAS AS AG AINST 40% ESTIMATED BY THE ASSESSING OFFICER. THE ITAT VIDE PARA 9 UPHELD THE ORDER OF THE CIT (A)S ESTIMATION OF DISALLOWANCE TO 10% OF THE ACTUAL PAY MENT OF COMMISSION TO 5 ITA NOS.328, 329, 633 & 634/DEL/2013 TAXIWALAS AS AGAINST 40% DISALLOWED BY THE ASSESSIN G OFFICER. THE PARA 9 OF THE AFORESAID ITAT ORDER IS REPRODUCED BELOW :- AS DISCUSSED ABOVE, THE FIRST APPELLATE ORDER ON T HE ISSUE IS COMPREHENSIVE AND REASONED ONE, HENCE, WE ARE NOT INCLINED TO INT ERFERE THEREWITH. LEARNED CIT(APPEALS)'S ESTIMATION OF DISALLOWANCE TO 10% OF ACTUAL PAYMENT OF COMMISSION TO TAXIWALAS AS AGAINST 40% DISALLOWED B Y THE ASSESSING OFFICER IS BASED ON THE REASONS DISCUSSED BY HIM TO WHICH WE F ULLY CONCUR WITH. THE FIRST APPELLATE ORDER IN THIS REGARD IS THUS UPHELD. GROU ND NO.2 OF THE APPEAL PREFERRED BY THE ASSESSEE AND GROUND NO.1 OF THE AP PEAL FILED BY THE REVENUE ON THE ISSUE ARE THUS REJECTED. FACTS AND CIRCUMSTANCES REMAIN THE SAME IN THIS ASS ESSMENT YEAR, RESPECTFULLY FOLLOWING THE SAME, WE ALLOW REVENUES APPEAL TO TH AT EXTENT. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED AND THE APPEAL OF THE REVENUE IS PARTLY ALLOWED. 11. NOW WE TAKE UP THE APPEALS FOR THE ASSESSMENT Y EAR 2009-10. THE RETURN OF INCOME FOR THE YEAR WAS FILED ON 29.09.2009 DECL ARING INCOME OF RS.28,80,410/-. THE ASSESSMENT WAS FINALIZED AT AN INCOME OF RS.1,80,40,620/-. THE CIT (A) HAS GRANTED PART RELIEF AGAINST WHICH A SSESSEE AND REVENUE ARE IN APPEAL BEFORE US TAKING THE FOLLOWING GROUNDS :- ITA NO.329/DEL/2013 (ASSESSEES APPEAL) 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A )] IS BAD BOTH IN THE EYE OF LAW AND ON FACTS. 2(I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE, T HE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN RESTRICTING THE C OMMISSION EXPENSES TO THE EXTENT OF 50% OF ROOM RENT AND DISALLOWING THE BALA NCE AMOUNT. (II) THAT THE ABOVESAID DISALLOWANCE HAS BEEN CONF IRMED IGNORING THE EXPLANATION AND EVIDENCES SUBMITTED BY THE ASSESSEE IN SUPPORT OF ITS CONTENTION. 6 ITA NOS.328, 329, 633 & 634/DEL/2013 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(A) HAS ERRED BOTH ON FACTS AND IN LAW IN SUSTAINING THE DI SALLOWANCE OF 10% OF SERVICE CHARGES PAID BY THE ASSESSEE TO ITS EMPLOYEES. 4. THAT THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE GROUNDS OF APPEAL. ITA NO.634/DEL/2013 (REVENUES APPEAL) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW CIT (A) HAS ERRED IN (I) DELETING THE ADDITION OF RS.1,27,93,719/- MADE ON ACCOUNT OF DISALLOWANCE OF COMMISSION EXPENSES. (II) DELETING THE ADDITION OF RS.29,66,832/- MADE O N ACCOUNT OF DISALLOWANCE OF SERVICE CHARGES. (III) THE APPELLANT CRAVES THE RIGHT TO ADD ANY OTH ER GROUND(S) OF APPEAL DURING THE COURSE OF HEARING OF THIS APPEAL. 12. GROUND NOS.1 & 4 IN ASSESSEES APPEAL AND GROUN D NO.(III) IN REVENUES APPEAL ARE GENERAL IN NATURE AND DO NOT REQUIRE ANY ADJUDICATION. 13. GROUND NOS.2 (I) & (II) IN THE ASSESSEES APPEA L AND GROUND NO.(I) IN REVENUES APPEAL ARE WITH REGARD TO THE PAYMENT OF COMMISSION AS PERCENTAGE OF THE ROOM RENT. 14. THE SAME ISSUE HAS BEEN CONSIDERED BY THE ITAT IN ASSESSMENT YEAR 2008-09, CITED SUPRA, WHEREIN THE ESTIMATION OF DIS ALLOWANCE TO 10% OF THE COMMISSION TO TAXIWALAS HAS BEEN CONFIRMED. THE FA CTS BEING THE SAME, WE RESTRICT THE DISALLOWANCE TO 10% OF ACTUAL COMMISSI ON PAID. ACCORDINGLY, THE ASSESSEES GROUND NO.2(I) & (II) IS PARTLY ALLOWED AND THE REVENUES GROUND NO.(I) IS DISMISSED. 7 ITA NOS.328, 329, 633 & 634/DEL/2013 15. GROUND NO.3 IN ASSESSEES APPEAL AND GROUND NO. (II) IN REVENUES APPEAL ARE IN SUSTAINING THE DISALLOWANCE OF 10% OF SERVIC E CHARGES PAID BY THE ASSESSEE TO ITS EMPLOYEES. 16. THIS ISSUE HAS ALSO BEEN DECIDED BY THE ITAT IN ASSESSMENT YEAR 2008- 09, CITED SUPRA, WHEREIN THE DISALLOWANCE HAS BEEN RESTRICTED TO 10% OF THE ACTUAL SERVICE CHARGES. FOLLOWING THE SAME, WE RES TRICT THE DISALLOWANCE TO 10% AND DISMISS THE GROUND OF ASSESSEE AS WELL AS REVEN UE ON THIS ISSUE. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED AND THE APPEAL OF THE REVENUE IS DISMISSED. 18. TO SUM UP : THE ASSESSEES APPEAL FOR ASSESSMEN T YEAR 2004-05 (ITA NO.328/DEL/2013) IS DISMISSED AND FOR ASSESSMENT YE AR 2009-10 (ITA NO.329/DEL/2013) IS PARTLY ALLOWED AND THE REVENUE S APPEAL FOR ASSESSMENT YEAR 2004-05 (ITA NO.634/DEL/2013) IS PARTLY ALLOWE D AND FOR ASSESSMENT YEAR 2009-10 (ITA NO.633/DEL/2013) IS DISMISSED ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF FEBRUARY, 2015. SD/- SD/- (C.M. GARG) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 24 TH DAY OF FEBRUARY, 2015 TS 8 ITA NOS.328, 329, 633 & 634/DEL/2013 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXIV, DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.