M/s Falcon Air, Kanpur V. Income Tax Officer-1(1), Kanpur

ITA 385/LKW/2014

• Counselvise Citation: 38523714 RSA 2014
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 01-04-2015
• Assessment Year: 2005-2006
• Appeal Filed On: 15-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y P SRIVASTAV
• Keywords: Opportunity of being heard

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.385/LKW/2014 ASSESSMENT YEAR:2005-06 M/S FALCON AIR 25/3, THE MALL KANPUR V. INCOME TAX OFFICER 1(1) KANPUR TAN/PAN:AAAFF7271L (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. RAKESH GARG, ADVOCATE RESPONDENT BY: SHRI. Y. P. SRIVASTAV, D.R. DATE OF HEARING: 01 04 2015 DATE OF PRONOUNCEMENT: 16 04 2015 O R D E R PER SUNIL KUMAR YADAV: THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A), INTER ALIA, ON THE FOLLOWING GROUNDS:- 1. BECAUSE THE LEARNED CIT(A) IN GROSS VIOLATION OF SPECIFIC MANDATE LAID DOWN BY SECTION 251(2) OF INCOME TAX ACT 1961 THAT CIT(APPEALS) SHALL NOT ENHANCE AN ASSESSMENT OR PENALTY OR REDUCE THE AMOUNT OF REFUND UNLESS THE APPELLANT HAS HAD REASONABLE OPPORTUNITY OF SHOW CAUSE AGAINST SUCH ENHANCEMENT OR REDUCTION, MADE ENHANCEMENT TO THE ASSESSED INCOME BY MAKING DISALLOWANCE OF RS. 345960.00 U/S 40(A)(IA) OF INCOME TAX ACT FOR REASON OF TAX NOT DEDUCTED ON COMMISSION PAID IN EXCESS OF RS. 20000.00 TO SPECIFIED PAYEE'S AS STATED IN ORDER UNDER APPEAL WHICH AGGREGATED TO RS. 345960.00 AND SUCH COMMISSION IS DEBITED TO PROFIT AND LOSS ACCOUNT UNDER THE HEAD OF 'COMMISSION RECALL ACCOUNT' AT FIGURE OF RS. 581827.00. 2. BECAUSE THE ADDITION OF RS. 345960.00 U/S 40(A)(IA) OF INCOME TAX ACT AS ABOVE IS NOT WARRANTED ON FACTS OF THE INSTANT :- 2 -: ADDITION, IN VIEW OF THE FACT THAT TRUE NATURE OF THE ADDITION MADE U/S 40(A)(IA) OF INCOME TAX ACT AS MADE BY CIT(A) INSTEAD OF BEING COMMISSION PAID TO SPECIFIED PERSONS IS CREDIT TO THE ACCOUNT OF THAT PASSENGER FOR THE AMOUNT REFUNDED/RETURNED FROM THE AIRWAYS ON CANCELLATION OF HIS AIR TICKETS. THE CREDITED AMOUNT IS TO THE PASSENGERS ACCOUNT IS ADJUSTED WITH AIR FARE OF SUBSEQUENT BOOKING FAILING WHICH IT IS REFUNDED TO HIM. SINCE THERE IS NO PAYMENT OF THE COMMISSION THE ASSESSEE WAS NOT LIABLE FOR THE TDS THEREON. ACCORDING TO CORRECT METHOD OF ACCOUNTANCY THE AMOUNT CREDITED TO THE PARTY UNDER THE HEAD OF 'COMMISSION RECALL ACCOUNT' HAVE BEEN DEBITED TO SALES ACCOUNT OR SALES RETURN. AS SUCH IT WILL HAVE REDUCING EFFECT ON AGGREGATE FIGURE OF INTERNATIONAL/DOMESTIC SALES CREDITED TO TRADING ACCOUNT. HOWEVER WITHIN ACCOUNT BOOKS IT HAS INCORRECTLY BEEN DEBITED WITHIN THE PROFIT AND LOSS ACCOUNT ON RECASTED TRADING AND PROFIT AND LOSS ACCOUNT.NET PROFIT AS DERIVED IN PROFIT AND LOSS ACCOUNT IN UNCHANGED. 3. BECAUSE THERE IS NO CONCEALMENT OF INCOME IN RESPECT OF ADDITION OF RS. 345960.00 MADE BY CIT(A) U/S 40(A)(IA) OF INCOME TAX ACT BUT ONLY IMPROPER ACCOUNTING AS STATED IN GROUND NO. 2 MOREOVER, THERE IS NO FURNISHING OF INACCURATE PARTICULARS WITH CULPABLE INTENTION TO CONCEAL HIS INCOME. AS SUCH THE CIT(A) HAS ERRED IN INITIATING THE PENALTY U/S 271(L)(C) OF INCOME TAX ACT. 4. BECAUSE THE ADDITION OF RS. 345960.00 MADE BY THE CIT(A) U/S 251(2)/40(A)(IA) OF INCOME TAX ACT IS CONTRARY TO FACTS AND LAW AS SUCH IS INVALID AND LIABLE TO BE DELETED. 2. DURING THE COURSE OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS DEDUCTED TDS ON THE COMMISSION PAYMENT, BUT IT WAS NOT ACCEPTED BY THE ASSESSING OFFICER. WHEN THE ASSESSEE FURNISHED AN APPEAL BEFORE THE LD. CIT(A), THE LD. CIT(A) HAS ENHANCED THE DISALLOWANCE TO RS.3,45,960/- WITHOUT TAKING INTO ACCOUNT THE FACT THAT TDS WAS DEDUCTED IN TIME AND PAID. :- 3 -: 3. THE LD. D.R., ON THE OTHER HAND HAS SUBMITTED THAT BEFORE THE LD. CIT(A) NONE APPEARED ON BEHALF OF THE ASSESSEE. AT ONE POINT OF TIME, HIS ACCOUNTANT APPEARED TO WHOM THE LD. CIT(A) HAS EXPLAINED MATTER AND HAS GIVEN TIME TO FURNISH THE INFORMATION, BUT HE DID NOT MAKE COMPLIANCE AND THE LD. CIT(A) WAS FORCED TO PASS THE ORDER. 4. IN REBUTTAL, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT(A) HAS INCREASED THE INCOME WITHOUT ISSUING A SHOW CAUSE NOTICE TO THE ASSESSEE. THEREFORE, THE ENHANCEMENT IS BAD. 5. HAVING CAREFULLY EXAMINED THE ORDER OF THE LD. CIT(A) IN THE LIGHT OF THE RIVAL SUBMISSIONS, WE FIND THAT BEFORE THE LD. CIT(A), NONE APPEARED ON BEHALF OF THE ASSESSEE IN THE BEGINNING AND AT ONE POINT OF TIME HIS ACCOUNTANT APPEARED, BUT THEREAFTER HE ALSO DID NOT APPEAR AND THE LD. CIT(A) HAS ENHANCED THE INCOME. HAVING CAREFULLY PERUSED THE ORDER OF THE LD. CIT(A), WE FIND THAT THE ISSUE WAS NOT PROPERLY ADJUDICATED BY THE LD. CIT(A) AND IT REQUIRES A FRESH ADJUDICATION INCLUDING THE ISSUE OF ENHANCEMENT. WE, THEREFORE, SET ASIDE HIS THE ORDER OF THE LD. CIT(A) AND RESTORE THE MATTER TO HIS FILE WITH A DIRECTION TO RE-ADJUDICATE THE ISSUES INVOLVED ALONG WITH THE ISSUE OF ENHANCEMENT AFRESH AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 16 TH APRIL, 2015 JJ:104 :- 4 -: COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR