GAYA PRASAD BAJAJ, ALLAHABAD V. ITO, ALLAHABAD

ITA 375/ALLD/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8887 (ITAT-ALLAHABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-05-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 29-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Principle of natural justice; TDS; Set aside
• Section: 143(3); 64; 43

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ALLAHABAD SMC BENCH, ALLAHABAD (THROUGH VIRTUAL COURT) BEFORE SHRI.VIJAY PAL RAO, JUDICIAL MEMBER ITA NO.375/ALLD/2018 ASSESSMENT YEAR: 2012-13 GAYA PRASAD BAJAJ, 34-A, CHAK ZERO ROAD, ALLAHABAD, U.P. PAN-AAMPB9895N V. INCOME TAX OFFICER, WARD-1(2) ALLAHABAD, U.P. (APPELLANT) (RESPONDENT) APPELLANT BY: MR. ABHINAV MEHROTRA, C.A. RESPONDENT BY: MR. A.K. SINGH, SR. DR DATE OF HEARING: 05.07.2021 DATE OF PRONOUNCEMENT: 04.08.2021 O R D E R PER SHRI VIJAY PAL RAO, JUDICIAL MEMBER: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 19.09.2018 OF CIT(A) FOR THE ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. BECAUSE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) IS PERVERSE IN AS MUCH AS THERE WAS NO CONSENT FOR WITHDRAWAL OF GROUND OF APPEAL NO 2 RAISED BY THE ASSESSEE BEFORE THE CIT (A), CONCERNING THE DISALLOWANCE OF INTEREST PAYMENT TO THE TUNE OF RS. 3, 77,803/-, WHEREAS THERE WAS NO CONCESSION GIVEN TO SUCH AN EXTENT BY THE ASSESSEE. IT APPEARS THAT THE COUNSEL OF THE ASSESSEE WAS INDUCED BY THE CIT (A), IN ACCORDING SUCH CONSENT. IT IS SETTLED PRINCIPLE OF LAW THAT NOTIONAL DISALLOWANCE OF INTEREST IS IMPERMISSIBLE UNDER LAW. FURTHER THE ASSESSEE, HAD FREE RESERVES AND A SUBSTANTIAL PART OF LOAN/ADVANCE WAS NOT MADE DURING THE YEAR UNDER CONSIDERATION. 2. BECAUSE ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE, THE CIT (A) HAS MANIFESTLY ERRED IN LAW AND IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF ITA NO.375/ALLD/2018 GAYA PRASAD BAJAJ 2 COMMISSION EXPENDITURE, INCURRED BY THE ASSESSEE, FOR SUM OF RS. 14,58,107/- FOR PROCURING SALE FROM DIFFERENT CUSTOMERS. THE DISALLOWANCE MADE IS PATENTLY ILLEGAL AND CONTRARY TO THE TRUE AND CORRECT FACTS AND CIRCUMSTANCES OF THE CASE AND LIABLE TO BE DELETED. 3. BECAUSE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) AS ALSO THAT OF THE ASSESSING OFFICER, IS UNSUSTAINABLE AND BAD IN LAW AS THE RIGHT OF THE ASSESSEE, TO CROSS-EXAMINE THE EVIDENCE AND DEPOSITION OF WITNESSES, ETC. GATHERED BEHIND HIS BACK HAS BEEN ILLEGALLY DENIES. THE ENTIRE CASE OF THE REVENUE RESTS ON CERTAIN STATEMENTS/CONFIRMATIONS [THAT TOO OF IRRELEVANT PERSONS], THAT HAVE NOT BEEN ADMITTEDLY CONFRONTED TO THE INSTANT ASSESSEE, BEFORE BEING USED AGAINST HIS INTEREST, AS EVIDENCE. IT IS SETTLED THAT UN-CONFRONTED STATEMENTS/MATERIAL DO NOT HAVE ANY EVIDENTIARY VALUE AND CANNOT BE UTILIZED FOR CONCLUDING ADVERSE INFERENCES. THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF ANDAMAN TIMBERS STANDS FLOUTED BY SUCH AN ACT OF THE AUTHORITIES BELOW. 4. BECAUSE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS FURTHER ERRED IN FOSTERING THE THEORY OF THE ASSESSING OFFICER, THAT PAYMENT OF COMMISSION IS UNJUSTIFIED, WITHOUT ACKNOWLEDGING OR PAYING ANY HEED TO THE FACT THAT: A. PAYMENT OF COMMISSION HAS BEEN MADE TO UN-RELATED PERSONS. B. THERE IS NOT ALLEGATION OF PAYMENT OF COMMISSION BEING EXCESSIVE OR UNREASONABLE. C. THE PAYMENT OF COMMISSION HAS RESULTED IN ESCALATED SALES. D. PROPER TDS HAS BEEN EFFECTED ON SUCH COMMISSION PAYMENT. E. PAYMENT OF COMMISSION HAS BEEN ACCEPTED BY THE SAME CIT (A) IN CASE OF SON OF THE ASSESSEE ON LIKE FACTS AND ANALOGUES CIRCUMSTANCES AND ON SIMILAR CONSIDERATIONS. F. THE PERSONS WHO HAVE BEEN PAID THE COMMISSION HAVE NOT BEEN INTERROGATED OR EXAMINED. THERE IS NO DENIAL OF RECEIPT OF COMMISSION INCOME BY THE SAID COMMISSION AGENTS, WHO ARE ALSO TAXPAYERS. G. THE PURCHASERS OF THE COMMODITY MAY NOT BE AWARE OF THE EXISTENCE OF THE COMMISSION AGENT. TO CITE AN EXAMPLE IN MULTI-LEVEL MARKETING COMPANIES, THERE IS RAMPANT PAYMENT OF COMMISSION, HOWEVER THE PURCHASER TO THE PRODUCT MAY NOT BE AWARE OF ANY SUCH PERSON. SIMILAR IS THE CASE HERE. H. SINCE PAYMENT OF COMMISSION TO SOME AGENTS HAVE BEEN ACCEPTED, IT SANCTIFIED THE BUSINESS MODEL OF THE ASSESSEE AND CORROBORATES THE FACT THAT ASSESSEE WAS UTILIZING THE SERVICES OF COMMISSION AGENTS. ITA NO.375/ALLD/2018 GAYA PRASAD BAJAJ 3 5. BECAUSE ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER PASSED BY THE LD. ASSESSING OFFICER IS PLAIN ARBITRARY AND PURELY BASED ON CONJECTURES AND SURMISES AND THE SAME IS LIABLE TO BE QUASHED. 6. BECAUSE THE IMPUGNED ORDER PASSED IS BAD IN LAW AND DESERVES TO BE QUASHED AS NO DUE AND PROPER OPPORTUNITY OF HEARING WAS AFFORDED TO THE ASSESSEE, PRIOR TO THE PASSING OF THE IMPUGNED ORDER AND THE PRINCIPLES OF NATURAL JUSTICE HAVE BEEN PATENTLY VIOLATED. 7. THE HUMBLE ASSESSEE, CRAVES FOR LEAVE TO ADD/AMEND ANY OTHER GROUND WITH THE PRIOR PERMISSION OF THE HONBLE TRIBUNAL. 2. THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S BAJAJ TRADERS. THE ASSESSEE FILED E-RETURN ON 30 TH SEPTEMBER, 2012 DECLARING TOTAL INCOME OF RS. 6,56,690/-. THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS VIDE NOTICE UNDER SECTION 143(2). WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3), THE ASSESSING OFFICER MADE VARIOUS ADDITIONS AND ASSESSED THE TOTAL INCOME OF THE ASSESSEE AT RS. 27,32,000/-, AS AGAINST THE RETURN INCOME OF RS. 6,56,690/-. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFFICER BEFORE CIT(A) WHO HAS GRANTED PARTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE IMPUGNED ORDER OF THE CIT(A), THE ASSESSEE FILED THE PRESENT APPEAL AND RAISED VARIOUS GROUNDS REPRODUCED ABOVE. 3. AT THE TIME OF HEARING, THE LEARNED AR OF THE ASSESSEE HAS ALSO RAISED AN ADDITIONAL GROUND CHALLENGING THE VALIDITY OF THE ASSESSMENT PASSED UNDER SECTION 143(3) DUE TO LACK OF JURISDICTION OF THE ASSESSING OFFICER, INCOME TAX OFFICER, WARD 1(2), ALLAHABAD. THE LEARNED AR HAS SUBMITTED THAT THE JURISDICTION OF THE ASSESSEE WAS TRANSFERRED FROM INCOME TAX OFFICER, WARD 1(2), ALLAHABAD TO JCIT, VIDE ORDER DATED 8.10.2013 PASSED UNDER SECTION 127 OF THE INCOME TAX ACT BY THE CIT. THEREAFTER, THE JCIT AFTER CONDUCTING SOME PROCEEDINGS OF THE ASSESSMENT VIDE LETTER DATED 22.12.2014 SENT BACK THE FILE TO THE INCOME TAX OFFICER, WARD 1(2), ALLAHABAD WHO HAS COMPLETED THE ASSESSMENT. THUS, THE LEARNED AR HAS CONTENDED THAT ONCE THE JURISDICTION OF THE ASSESSEE WAS TRANSFERRED VIDE ORDER DATED 8.10.2013 PASSED UNDER SECTION 127 FROM INCOME TAX OFFICER, WARD 1(2), ALLAHABAD TO JCIT THE TRANSFER OF THE JURISDICTION BY JCIT TO INCOME TAX OFFICER, WARD 1(2), ALLAHABAD, VIDE ORDER DATED ITA NO.375/ALLD/2018 GAYA PRASAD BAJAJ 4 22.12.2014 IS INVALID IN THE ABSENCE OF ANY FURTHER ORDER PASSED UNDER SECTION 127 OF THE INCOME TAX ACT. THUS, HE HAS FORCEFULLY CONDUCTED THAT THE INCOME TAX OFFICER, WARD 1(2), ALLAHABAD WHO HAS PASSED THE ASSESSMENT ORDER WAS NOT HAVING THE JURISDICTION TO FRAME THE ASSESSMENT. IN SUPPORT OF HIS CONTENTION, HE HAS RELIED UPON VARIOUS DECISIONS AS UNDER: 1. COMMISSIONER OF INCOME TAX-I, LUCKNOW V/S DALIPUR CONSTRUCTION (P) LTD. ITA NO. 43 OF 2015 2. KUSUM GOYAL V/S COMMISSIONER OF INCOME TAX (CALCUTTA HIGH COURT), {2010} 329 ITR 283 3. ACIT-2(3), MUMBAI VS. M/S TATA SONS LTD., BOMBAY, ITA NO. 2519/MUM./2019 (ITAT MUMBAI) 4. L.P. MOHAMMED SALIM VS. COMMISSIONER OF INCOME TAX, COCHIN (SC). CIVIL APPEAL NOS. 2946-2956 OF 2008 4. THE LEARNED AR HAS ALSO REFERRED TO A SERIES OF OTHER DECISIONS ON THE POINT THAT IN THE ABSENCE OF THE JURISDICTION FROM JCIT TO INCOME TAX OFFICER, WARD 1(2), ALLAHABAD. THE ORDER PASSED UNDER SECTION 127 FOR TRANSFERRING BY THE ASSESSING OFFICER IS INVALID BECAUSE NO POWER IS VESTED WITH THE JCIT TO TRANSFER THE CASE. 5. ON THE OTHER HAND, THE LEARNED DR HAS SUBMITTED THAT THE ASSESSEE HAS FILED A RETURN WITH THE JURISDICTION OF INCOME TAX OFFICER, WARD 1(2), ALLAHABAD WHO HAS ALSO INITIATED THE ASSESSMENT PROCEEDINGS BY ISSUING THE NOTICE UNDER SECTION 143(2). THEREAFTER, THE CASE WAS TRANSFERRED FROM INCOME TAX OFFICER, WARD 1(2), ALLAHABAD TO JCIT UNDER THE CENTRALIZATION OF JURISDICTION VIDE ORDER DATED 8.10.2013 UNDER SECTION 127. THE LEARNED DR HAS POINTED OUT THAT THEREAFTER THE CBDT VIDE NOTIFICATIONS DATED 27.10.2014 AND 13.11.2014 ISSUED UNDER SECTION 120 OF THE INCOME TAX ACT ASSIGNED JURISDICTION TO PERFORM FUNCTIONS OF AN AO TO ITOS EXCEPT IN THE CASES WHERE THE ACIT OR THE JCIT ARE AUTHORIZED BY THE PR. CIT OR THE CIT AS THE CASE MAY BE TO EXERCISE THE POWER AND PERFORM THE FUNCTIONS OF THE ASSESSING OFFICER. IN CONSEQUENCE OF THIS NOTIFICATION OF CBDT, REORGANIZING THE JURISDICTION OF THE TAXING AUTHORITY, THE JCIT TRANSFERRED THE CASE OF THE ASSESSEE TO THE INCOME TAX OFFICER, ITA NO.375/ALLD/2018 GAYA PRASAD BAJAJ 5 WARD 1(2), ALLAHABAD. THE LEARNED DR HAS SUBMITTED THAT ONCE THE ASSESSING OFFICER HAS SURRENDERED TO THE JURISDICTION OF THE INCOME TAX OFFICER WITHOUT RAISING ANY OBJECTION WITHIN THE TIME PERIOD PROVIDED UNDER SECTION 124 AND THE ASSESSING OFFICER WAS OTHERWISE HAVING JURISDICTION OVER THE ASSESSEE. THE OBJECTION RAISED BY THE ASSESSEE AGAINST THE JURISDICTION OF THE ASSESSING OFFICER IS NOT TENABLE. HE HAS GIVEN MUCH EMPHASIS ON THE POINT THAT THE JCIT HAS NOT TRANSFERRED THE CASE ON ITS OWN BUT IT WAS IN COMPLIANCE OF THE CBDT DIRECTION ISSUED UNDER SECTION 120 OF THE ACT THEREFORE, THE CASE WAS TRANSFERRED TO THE INCOME TAX OFFICER WHO WAS VESTED WITH THE JURISDICTION TO COMPLETE THE ASSESSMENT. 6. THE LEARNED DR RELIED UPON VARIOUS DECISIONS AS UNDER:- B.R. INDUSTRIES VS CIT 255 ITR 593 CIT VS. BRITISH INDIA CORPORATION LTD. (2011) 337 ITR 64 CIT VS. ALL INDIA CHILDREN CARE AND EDUCATIONAL DEVELOPMENT SOCIETY (2014) 357 ITR 134 (ALLD.) HINDUSTAN TRANSPORT CO. VS. IAC (1991) 289 ITR 326, 331 (ALLD.) AGAINST WHICH SLP WAS DISMISSED BY THE HONBLE SUPREME COURT IN (1991) 188 ITR (ST) 84 (SC) KANJI MAL & SONS VS. CIT (1982) 138 IRT 391 (DEL.) DELHI CLOTH & GENERAL MILLS CO. LTD. VS. R.R. GUPTA (1976) 38 STC 113,117 (SC) SANT BABA MOHAN SINGH VS. CIT 91973) 90 ITR 197, 199 (ALLD.) SITARAM RATHORE VS. CIT 91981) 130 ITR 699 (ALLD.) WEST BENGAL STATE ELECTRICITY BOARD VS. DY. CIT (2005) 278 ITR 218 (CAL.) ABHISHEK JAIN VS. ITO (2018) 94 TAXMAN.COM 355 (DEL.) 7. I HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT RECORD. BOTH THE PARTIES HAVE ARGUED AT LENGTH ON THE LEGAL ISSUE RAISED BY THE ASSESSEE CHALLENGING THE JURISDICTION OF THE ASSESSING OFFICER TO COMPLETE THE ASSESSMENT UNDER SECTION 143(3). IT IS PERTINENT TO NOTE THAT THE ISSUE REGARDING THE JURISDICTION OF THE ASSESSING OFFICER WAS UNDISPUTEDLY NOT RAISED BY THE ASSESSEE EITHER BEFORE THE ASSESSING OFFICER BEFORE THE COMPLETION OF THE ASSESSMENT OR EVEN BEFORE THE CIT(A). IT IS ALSO A MATTER OF RECORD THAT THE ASSESSEE HAS NOT RAISED THIS ISSUE IN THE FORM NO. 36 OR EVEN AS AN ADDITIONAL GROUND IN WRITING. HOWEVER, SINCE THE ISSUE IS PURELY LEGAL IN NATURE AND ITA NO.375/ALLD/2018 GAYA PRASAD BAJAJ 6 GOES TO THE ROOT OF THE MATTER, THEREFORE, THE LEGAL ISSUE RAISED BY THE ASSESSEE FIRST TIME BEFORE THE TRIBUNAL CANNOT BE REJECTED ON TECHNICAL GROUND. SINCE THE ASSESSEE HAS RAISED THIS ISSUE FIRST TIME BEFORE THE TRIBUNAL AND THAT TOO IN COURSE OF ARGUMENT WITHOUT PRIOR LEAVE OF THE BENCH IN WRITING THEREFORE, HAVING REGARD TO THE FACTS AND CIRCUMSTANCES AND IN THE INTEREST OF JUSTICE, THE ASSESSEE IS ALLOWED TO RAISE THIS ISSUE BEFORE THE CIT(A) SO THAT A VIEW OF THE FIRST APPELLATE AUTHORITY WOULD BE AVAILABLE BASED ON THE RELEVANT FACTS ON RECORD. ACCORDINGLY, WITHOUT EXPRESSING ANY VIEW ON THE MERITS OF THE ISSUE, THE SAME IS SET ASIDE TO THE RECORD OF THE CIT(A) FOR ADJUDICATION AFTER CONSIDERING VARIOUS LEGAL POINTS RAISED BY BOTH THE PARTIES AND AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. SINCE THE LEGAL ISSUE RAISED BY THE ASSESSEE GOES TO THE ROOT OF THE MATTER THEREFORE, THE OTHER GROUNDS RAISED BY THE ASSESSEE ON THE MERITS OF THE ADDITION ARE KEPT OPEN WHICH WERE OTHERWISE NOT ARGUED BY THE LD. AR. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 04.08.2021 THROUGH VIDEO CONFERENCING. SD/- [VIJAY PAL RAO] JUDICIAL MEMBER DATED: 04/08/2021 SH COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) , ALLAHABAD 4. CIT 5. DR - BY ORDER ASSISTANT REGISTRAR