ITO, New Delhi V. M/s. Shiva Telecom, New Delhi

ITA 4843/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59042 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: SHI V RATAN
• Keywords: Audit objection; Reassessment proceedings
• Section: 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G DELHI) BEFORE SHRI A.D. JAIN AND SHRI K.G. BANSAL ITA NO. 4843(DEL)2011 ASSESSMENT YEAR: 2006-07 INCOME TAX OFFICER, M /S. SHIVA TELECOM, WARD 29(4), NEW DELHI. V. 3557, MORI GATE, DELHI-110 006. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. NEGI, DR RESPONDENT BY: SHRI SHI V RATAN, AR ORDER PER A.D. JAIN, J.M. THIS IS DEPARTMENTS APPEAL FOR THE ASSESSMENT YEAR 2006-07, CONTENDING THAT THE LEARNED CIT(A) HAS ERRED IN DEL ETING THE ADDITION OF ` 49,94,576/- MADE BY THE AO U/S 154 OF THE INCOME TA X ACT. 2. THE ASSESSEE IS A PARTNERSHIP FIRM CONSISTING OF THREE PARTNERS, NAMELY, SHRI SHIV RATAN BHAUKA @ 25%, SHRI VISHAL KUMAR BHA UKA @ 25% AND SHRI DINESH KUMAR AGGARWAL @ 50%. THE FIRM IS IN THE BUSINESS OF PURCHASE AND SALE OF RECHARGE COUPONS OF MTNL. FOR THE YEAR UNDER CONSIDERATION THE ASSESSEE FILED A RETURN OF INCOME SHOWING INCOME AT ` ITA 4843(DEL)2011 2 2,20,560/-. THE MATTER WAS PROCESSED U/S 143(1) OF THE ACT. SUBSEQUENTLY, THE AO RECORDED THE REASONS, ON 9.01.2008, REGARDIN G ALLEGED ESCAPEMENT OF COMMISSION INCOME OF ` 49,94,576/- FROM MTNL AND CLAIM OF TDS CREDIT OF ` 1,61,868/- AGAINST SUCH INCOME. THE REOPENED ASSE SSMENT WAS COMPLETED VIDE ORDER DATED 10.11.2008. THEREIN, T HE ISSUE OF COMMISSION INCOME OF ` 49,94,576/- WAS EXAMINED BY THE AO. HOWEVER, THE R ETURNED INCOME OF ` 2,20,560/- WAS ACCEPTED, MAKING NO ADDITION ON THE ISSUE OF COMMISSION INCOME. THEREAFTER, THE REVENUE AUDIT RAISING AUDIT OBJECTION REGARDING THE CLAIM OF TDS OF ` 1,61,868/- AND THE ESCAPEMENT OF COMMISSION INCOME OF ` 49,94,576/-. THERE-UPON, THE AO PASSED ORDER DATED 28.10.2010 U/S 154 OF THE ACT, MAKING ADDITIO N OF THE AFORESAID AMOUNT OF ` 49,94,576/-. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE ADDITION, BRINGING THE DEPARTMENT IN APPEAL BEFORE US. 4. CHALLENGING THE IMPUGNED ORDER, THE LD. DR HAS C ONTENDED THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION CORRECTLY MADE BY THE AO U/S 154 OF THE I.T. ACT; THAT WHILE DOING SO, THE LD. CIT(A ) HAS ILLEGALLY IGNORED THE ITA 4843(DEL)2011 3 FACT THAT THE AUDIT SCRUTINY REVEALED THAT THE ASSE SSEE HAD NOT SHOWN COMMISSION INCOME OF ` 49,94,576/- RECEIVED BY THE ASSESSEE FROM MTNL, WHEREAS THE ASSESSEE HAD CLAIMED TDS OF ` 1,61,868/-; THAT IN RESPONSE TO THE NOTICE ISSUED BY THE AO U/S 154 OF THE ACT, TH E ASSESSEE HAD MERELY STATED THAT THERE WAS NO MISTAKE APPARENT IN THE AS SESSMENT ORDER; THAT THE LD. CIT(A) HAS FURTHER FAILED TO MEET THE OBSERVATIONS OF THE AO THAT THE ASSESSEE HAD FAILED TO FILE ANY CONCRETE EVIDENCE T O SHOW AS TO WHY THE COMMISSION INCOME RECEIVED FROM MTNL HAD NOT BEEN I NCLUDED IN ITS TOTAL INCOME, EVEN THOUGH IT HAD CLAIMED TDS OF ` 1,61,868/- DEDUCTED BY MTNL ON THIS COMMISSION, WHICH FACT WAS EVIDENT FRO M FORM NO. 16-A SUBMITTED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION U/S 154 OF THE ACT, SINCE THERE WAS NO MISTAKE APPARENT FROM RECORD; THAT THE MATTER HA D BEEN DULY EXAMINED IN THE REASSESSMENT PROCEEDINGS AND THE RETURNED INCOM E OF THE ASSESSEE HAD BEEN ACCEPTED BY THE AO, BEING FULLY SATISFIED WITH THE EXPLANATION OFFERED BY THE ASSESSEE. ITA 4843(DEL)2011 4 6. THE ASSESSEE, IT IS SEEN, IS A WHOLE-SALE DEALER OF MTNL FOR PURCHASE OF RECHARGE COUPONS. ON PURCHASE OF SUCH COUPONS, IT SELLS THE SAME TO THE RETAILERS. THE ASSESSEE RECEIVES COMMISSION FROM M TNL, PASSES ON THE MAXIMUM COMMISSION TO THE RETAILS AS PER THE AGREEM ENT WITH THE MTNL AND RETURNS ONLY THE NOMINAL COMMISSION. ONLY THE DISCOUNTED PRICE OF PURCHASE IS ACCOUNTED FOR IN THE PROFIT AND LOSS AC COUNT. THE PROFIT AND LOSS ACCOUNT IS DEBITED BY THIS DISCOUNTED PRICE ON LY AND NOT THE MRP. THIS IS SO, SINCE THE ASSESSEE MIX THE PAYMENT FOR THE DISCOUNTED PRICE ONLY. MTNL, ON THE OTHER HAND, MAKES TDS ON THE ENTIRE MR P AND NOT ON THE DISCOUNTED PRICE. THE SALE MADE BY THE ASSESSEE D URING THE YEAR WAS OF ` 4,80,84,002/-. THE GROSS PROFIT WAS OF ` 6,87,442/-. THE NP WAS OF ` 2,18,906/-. THE INCOME RETURNED BY THE ASSESSEE, WHICH WAS, FINALLY IN THE REASSESSMENT PROCEEDINGS, ACCEPTED WAS OF ` 2,20,560/-. THE GROSS PURCHASE OF THE ASSESSEE WAS OF ` 5,42,50,823/-. THE DISCOUNTED PURCHASE PRICE WAS OF ` 4,97,08,067/-. AS SUCH, THE ASSESSEE, RATHER THAN DEBITING GROSS AMOUNT IN THE PROFIT AND LOSS ACCOUNT, HAD DE BITED THE AMOUNT OF ` 4,97,08,067/-. THE DIFFERENCE BETWEEN THE GROSS A MOUNT OF PURCHASE AND ITA 4843(DEL)2011 5 THE DISCOUNTED PRICE OF THE PURCHASE WAS OF ` 45,42,756/-. THE ASSESSEE HAD OFFERED COMMISSION INCOME OF ` 4,51,820/-. THE TOTAL COMMISSION CAME TO ` 49,94,576/-. IT WAS THIS AMOUNT WHICH WAS TAKEN IN TO CONSIDERATION AND ACCEPTED BY THE AO IN THE REASSESSMENT PROCEEDINGS. THUS, THERE WAS NO MISTAKE APPARENT FROM THE RECORD, WHICH COULD HAVE BEEN RECTIFIABLE U/S 154 OF THE ACT. 7. ALL THESE FACTS HAVE RIGHTLY BEEN TAKEN INTO CON SIDERATION BY THE LD. CIT(A) WHILE DELETING THE ADDITION WRONGLY MADE. WE, ACCORDINGLY, DO NOT FIND ANY ERROR IN THE ORDER OF THE LD. CIT(A). 8. IN VIEW OF THE ABOVE, THE GRIEVANCE SOUGHT TO BE RAISED BY THE ASSESSEE IS FOUND TO CARRY NO FORCE WHATSOEVER AND IT IS, AS SUCH, REJECTED. 9. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30.03.2012 . SD/- SD/- (K.G. BANSAL) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30.03.2012 *RM ITA 4843(DEL)2011 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR TRUE COPY BY ORDER ASSISTANT REGISTRAR