Hotel Texas India (P) Ltd., New Delhi V. ITO, New Delhi

ITA 4702/DEL/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4734 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-08-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 27-10-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: MRS SHINKA NAGPAL
• Keywords: Principle of natural justice
• Section: 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C: NEW DELHI) BEFORE SHRI S.V.MEHROTRA,ACCOUNTANT MEMBER VS. SHRI I.C. SUDHIR, JUDICIAL MEMBER ITA NO.4702 /DEL/ 2011 (ASSESSMENT YEAR :2006-07) HOTEL TEXAS INDIA (P) LTD. VS. ITO C/O C.S. ANAND , ADVOCATE WARD-12(4) 104, PANKAJ TOWER, NEW DELHI 10, LSC, SAVITA VIHAR NEW DELHI AABCH0499J (APPELLANT) (RESPONDENT) ASSESSEE BY :SHRI C.S.ANAND & MRS. SHINKA NAGPAL, ADV REVENUE BY : SHRI SATPAL SINGH, SR. DR ORDER PER I. C. SUDHIR, JUDICIAL MEMBER: THE ASSESSEE HAS QUESTIONED FIRST APP ELLATE ORDER ON THE FOLLOWING GROUNDS:- 1. (A) THAT ON THE FACTS OF THE CASE AND UNDER TH E LAW, THE LD. CIT(A) HAS ERRED IN UPHOLDING THE LD. A.OS ILLEGAL ACTION APROPOS MAKING DISALLOWANCE @ 35% OF TH E TOTAL COMMISSION EXPENSES, INCURRED & CLAIMED BY THE ASSESSEE . (B) THAT THE AUTHORITIES BELOW HAVE FAILED TO P ROPERLY APPRECIATE THE FACTS/CIRCUMSTANCES OF THE CASE AND THE DOCUMENTS AVAILABLE ON RECORD. (C) THAT THE NATURAL JUSTICE HAS BEEN DENIED TO THE ASSESSEE, IN AS MUCH AS THE ASSESSEE HAS BEEN NEITHER CONF RONTED WITH THE ITA NO. 4702.DEL.2011 2 MATERIAL REFERRED TO BY THE LD. A.O IN THE AS SESSMENT ORDER, NOR PROVIDED ANY OPPORTUNITY TO CROSS EXAMINE THE COMMI SSION AGENT (WHO HAD BEEN STATED TO BE EXAMINED BY LD. A. O AND WHOSE STATEMENTS HAD BEEN STATED TO BE RECORDED BY THE LD. A.O). (D) THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE T HE FACTS OF THE CASE AND THE SUBMISSIONS MADE BY THE ASSESSEE DURIN G THE COURSE OF APPELLATE PROCEEDINGS, IN AS MUCH AS IT W AS THE ASSESSEE AND NOT THE COMPANIES LIKE MMTC LTD. AND T ITAN INDUSTRIES, WHO HAD PAID COMMISSION TO THE AGENTS. 2. THAT ON THE FACTS OF THE CASE AND UNDER THE LAW, CHARGING OF INTEREST U/S 234-B OF THE I.T ACT 1961, WAS UNJUSTI FIED. 2. WE HAVE HEARD AND CONSIDERED THE ARGUM ENTS ADVANCED BY THE PARTIES IN VIEW OF ORDERS OF THE AUTHORITIES BELOW, MATERIAL A VAILABLE ON RECORD AND THE DECISIONS RELIED UPON. GROUND NO-1 3. IN GROUND NO-1, THE ISSUE INVOLVED IS AS TO WHETHER LD. CIT(A) WAS JUSTIFIED IN UPHOLDING DISALLOWANCE MADE BY THE A.O @30% OF THE CLAIMED COMMISSION EXPENSES AND WHILE DOING SO AS TO WHETHE R THE LD. CIT(A) HAS FAILED TO APPRECIATE THAT THERE WAS VIOLATION OF THE PRINC IPLE OF NATURAL JUSTICE BY THE A.O? 4. THE RELEVANT FACTS ARE THAT THE ASSE SSEE IN THE HOTEL BUSINESS HAD CLAIMED PAYMENT OF COMMISSION OF RS.29,11,636/- TO 22 PARTIES FOR EARNING THE ROOM RENT RECEIPTS OF RS.1,16,28,540/- DURING THE Y EAR. THE A.O RESTRICTED THE CLAIM TO 65% OF RS.29,11,636/- RESULTING INTO DISAL LOWANCE OF RS.10,19,726/- I.E ITA NO. 4702.DEL.2011 3 35% OF THE TOTAL CLAIM WAS DISALLOWED. THE LD. CIT (A) HAS UPHELD THE SAME, WHICH HAS BEEN QUESTIONED BY THE ASSESSEE BEFORE TH E TRIBUNAL. 5. THE CONTENTION OF THE LD. AR IN SUPPOR T OF THE GROUND REMAINED THAT THE AUTHORITIES BELOW HAVE NOT APPRECIATED THE FACTS AN D CIRCUMSTANCES OF THE CASE AND THE DOCUMENTS AVAILABLE ON RECORD. HE CONTENDE D THAT THE ASSESSEE WAS NEITHER CONFRONTED WITH THE MATERIAL REFERRED TO BY THE A.O IN THE ASSESSMENT ORDER NOR ANY OPPORTUNITY TO CROSS-EXAMINE THE COMM ISSION AGENTS WAS PROVIDED TO THE ASSESSEE WHILE USING THOSE STATEMENTS OF THE COMMISSION AGENTS AGAINST THE ASSESSEE. THE AUTHORITIES BELOW HAVE ALSO FAILED T O APPRECIATE THAT IT WAS THE ASSESSEE AND NOT THE COMPANIES LIKE MMTC LTD. AND T ITAN INDUSTRIES, WHO HAD PAID COMMISSION TO THE AGENTS. HE SUBMITTED FURTHE R THAT THE A.O HAS ALSO USED STATEMENTS OF SHRI RAJIV MEHRA AND SHRI SURENDER KU MAR AGAINST THE ASSESSE WHEREAS THERE IS NOTHING ON RECORD TO SUGGEST THAT THESE PERSONS WERE SUMMONED BY THE A.O OR THEIR STATEMENTS MERE EVER RECORDED B Y HIM. STATEMENTS OF SHRI RAVINDER JEET SINGH IS THERE BUT NO QUESTION WAS RA ISED TO HIM AS TO WHICH PARTY HE INTRODUCED IN THE HOTEL. THE LD. AR POINTED OUT FURTHER THAT THERE IS NO AFFIDAVIT OF SHRI SURENDER KUMAR ON RECORD WHICH HA S BEEN REFERRED BY THE A.O AGAINST THE ASSESSEE. 6. THE LD. DR ON THE OTHER HAND PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW WITH THIS SUBMISSION THAT ONUS AL WAYS LIES UPON THE CLAIMANT TO ITA NO. 4702.DEL.2011 4 ESTABLISH THE GENUINENESS OF CLAIM MADE BY IT TO WH ICH THE ASSESSEE HAS THOROUGHLY FAILED TO. THE THREE PROMINENT CLIENTS OF THE ASSESSEE LIKE MMTC LTD., TITAN INDUSTRIES AND M/S WIPRO INFOTECH WERE REQUESTED BY THE A.O TO FURNISH INFORMATION SOUGHT FROM THEM U/S 133(6) OF THE ACT. LETTER ADDRESSED TO WIPRO INFOTECH WAS RECEIVED BACK WITH REMARK LEFT A ND MMTC AS WELL AS TITAN INDUSTRIES INFORMED THAT THEIR COMPANIES HAD NOT AP PROACHED THE HOTEL MANAGEMENT THROUGH COMMISSION AGENT BUT HAD DEALT W ITH THE ASSESSEE DIRECTLY. THE OTHER THREE ALLEGED COMMISSION AGENTS NAMELY SH RI RAVINDER JEET SINGH, SHRI RAJIV MEHRA AND SHRI SURENDER KUMAR WERE SUMMONED A ND IN RESPONSE THEY APPEARED BEFORE THE A.O. OUT OF THESE THREE AGENTS SHRI RAVINDER JEET SINGH & SHRI SURENDER KUMAR IN THEIR STATEMENTS CLAIMED TO HAVE INTRODUCED CLIENTS TO THE ASSESSEE WHEREAS SHRI RAJIV MEHRA CLAIMED TO HAVE I NTRODUCED MMTC, TITAN INDUSTRIES, WIPRO INFOTECH AND MAHINDRA & MAHINDRA. SHRI RAVINDER JEET SINGH DID NOT FURNISH NAMES OF THE CLIENTS PROVIDED TO TH E ASSESSEE. SHRI SURENDER KUMAR SUBMITTED AN AFFIDAVIT WITHOUT SPECIFYING THE REASON AND HAD STATED THAT HE HAD NOT RENDERED ANY SERVICES IN LIEU OF THE PAYMEN TS RECEIVED BY HIM. 7. CONSIDERING THE ABOVE SUBMISSION, WE FIND THAT THERE IS NO DISPUTE THAT PAYMENT OF COMMISSION TO THE AGENT IS A COMMON PRAC TICE IN HOTEL BUSINESS. THE ONLY DISPUTE IS ABOUT THE GENUINENESS OF THE CLAIM ED COMMISION PAYMENT MADE IN THIS REGARD BY THE ASSESSEE AT RS.29,11,636/-. CLAIMED PAYMENT WAS MADE TO ITA NO. 4702.DEL.2011 5 22 PARTIES OUT OF WHICH AS A TEST CHECK THE A.O TRI ED TO EXAMINE THREE COMMISSION AGENTS NAMELY SHRI RAVINDER JEET SINGH, SHRI RAJIV MEHRA & SHRI SURENDER KUMAR, TWO OUT OF THESE ADMITTED, THE CLAI M OF THE ASSESSEE REGARDING THE PAYMENT OF COMMISSION PAYMENT. THE AO HAS ALSO MENTIONED THAT SHRI SURENDER KUMAR IN HIS AFFIDAVIT STATED THAT HE HAD NOT RENDERED ANY SERVICES IN LIEU OF THE PAYMENTS RECEIVED BY HIM. IN RESPONSE TO THE INFORMATION SOUGHT U/S 133 (6) BY THE A.O FROM ASSESSEES THREE PROMINENT CLIENTS LIKE MMTC LTD, TITAN INDUSTRIES AND WIPRO INFOTECH, MMTC LTD AND T ITAN INDUSTRIES INFORMED THAT THEY HAD NOT APPROACHED THE HOTEL MANAGEMENT T HROUGH COMMISSION AGENT. KEEPING ALL THESE FACTS IN MIND THE AO HAD DISALLOW ED 35% OF THE CLAIMED COMMISSION PAYMENT WHICH HAS BEEN UPHELD BY THE LD. CIT (A). WE, HOWEVER, FIND SUBSTANCE IN THE CONTENTION OF THE LD. AR AS T HERE IS NOTHING EMERGING FROM THE RECORD THAT THE ASSESSEE WAS AFFORDED WITH THE OPPORTUNITY TO CROSS-EXAMINE THESE PERSONS WHOSE STATEMENTS HAVE BEEN USED ADVER SELY AGAINST THE ASSESSEE OR WAS CONFRONTED WITH OTHER MATERIALS USED AGAINST TH E ASSESSEE, WHICH WAS AN APPARENT VIOLATION OF THE PRINCIPLE OF NATURAL JUST ICE. WE THUS WHILE SETTING ASIDE THE ORDERS OF THE AUTHORITIES BELOW DIRECT THE AO T O DELETE THE DISALLOWANCE OF RS.10,19,726/- MADE OUT OF THE CLAIMED PAYMENT TO T HE COMMISSION AGENT IN THE HOTEL BUSINESS. THE GROUND NO-1 IS THUS ALLOWED. GROUND NO-2 ITA NO. 4702.DEL.2011 6 8. IN THIS GROUND, THE ASSESSEE HAS Q UESTIONED CHARGING OF INTEREST U/S 234 B OF THE ACT WHICH IS CONSEQUENTIAL IN NATURE. HEN CE, DOES NOT NEED SEPARATE ADJUDICATION. 9. IN RESULT, APPEAL IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 25/9/2013. SD/- SD/- (S.V.MEHROTRA) (I.C. SUDHIR) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) DATED THE 25 TH DAY OF SEPTEMBER , 2013 R. NAHEED COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. CIT(ITAT), NEW DELHI. AR,ITAT NEW DE LHI.