Income Tax Officer-II(3), Lucknow V. M/s Shikhaum Pharmacals, Lucknow

ITA 667/LKW/2014

• Counselvise Citation: 66723714 RSA 2014
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2015
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-08-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 14-08-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH MISHRA
• Keywords: Business income; Opportunity of being heard; Additional evidence

Judgement Text

1 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.667/LKW/2014 ASSESSMENT YEAR: 2010 11 ITO II (3), LUCKNOW VS. M/S SHIKHAUM PHARMACEUTRICALS, 45, PURANA QUILA, LUCKNOW 226001. PAN:AAPFS7135P (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI RAKESH MISHRA, ADVOCATE REVENUE BY SHRI AMIT NIGAM, SR. DR DATE OF HEARING 19/08/2015 DATE OF PRONOUNCEMENT 1 8 /09/2015 O R D E R PER A. K. GARODIA, A.M. THIS IS REVENUES APPEAL DIRECTED AGAINST THE ORDER OF LEARNED CIT (A) I LUCKNOW DATED 30.05.2014 FOR A.Y. 2010 11. 2. GROUND RAISED BY THE REVENUE ARE AS UNDER: - 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW WHILE GRANTING RELIEF TO THE ASSESSEE BY ADMITTING ADDITIONAL EVIDENCE BUT WITHOUT GIVING A SPECIFIC OPPORTUNITY OF BEING HEARD TO THE A.O. TO REBUT THE SAME IS IN CONTRAVE NTION OF RULE 46A(3). THEREFORE, THE ORDER OF LEARNED CIT(A) IS LIABLE TO BE SET - ASIDE TO THE A.O. FOR FRESH EXAMINATION IN THE LIGHT OF THE RATIO OF GUJARAT HIGH COURT IN CIT VS. VALIMOHMED AHMEDBHAI (1982) 134 ITR 214 (GUJ.). 2. WHETHER ON THE FACTS AN D CIRCUMSTANCES OF THE CASE, THE LD CIT(A) HAS ERRED IN ALLOWING RELIEF CONTRARY TO THE FINDINGS OF THE A.O. IN SO FAR AS THE PAYMENT OF THE COMMISSION WAS ALSO EXCESSIVE AND INGENUINE. 2 3. LEARNED DR OF THE REVENUE SUPPORTED THE ASSESSMENT ORDER AND HE ALSO SUBMITTED THAT THERE IS NO JUSTIFICATION OF COMMISSION PAYMENT TO THE EXTENT OF 52.52% OF TOTAL SALES IN THE PRESENT YEAR AS AGAINST 29 % IN THE PRECEDING YEAR. LEARNED AR OF THE ASSESSEE SUPPORTED THE ORDER OF CIT(A). 4. WE HAVE CONSIDERED THE R IVAL SUBMISSIONS. WE FIND THAT IT IS NOTED BY THE A.O. ON PAGE NO. 2 OF THE ASSESSMENT ORDER THAT AS PER NOTICE U/S 142 (1) DATED 09.08.2012, THE ASSESSEE WAS ASKED TO FURNISH COPIES OF ACCOUNTS OF THE PERSONS TO WHOM COMMISSION HAD ALLEGEDLY BEEN PAID ALO NG WITH THEIR PAN AND PARTICULAR OF A.O. BUT THERE WAS NO RESPONSE AND IN REPLY OF ANOTHER NOTICE DATED 08.02.2013, THE ASSESSEE FURNISHED THE LIST OF ABOUT 30 NAMES AS LATE AS 11.03.2013. THEREAFTER, THE A.O. ON 11.03.2013, ASKED THE ASSESSEE TO PRODUCE A LL PERSONS TO WHOM COMMISSION IS STATED TO HAVE BEEN PAID AND THE HEARING WAS FIXED ON 20.03.2013 BUT NONE WAS PRODUCED ON THAT DATE. THE A.O. ALLOWED COMMISSION EXPENDITURE TO THE EXTENT OF 25% OF TOTAL SALES AND DISALLOWED THE BALANCE. THIS DISALLOWANCE WAS DELETED BY CIT (A) BY STATING THAT 52% COMMISSION IS NOT EXCESSIVE OR ABNORMAL WITHOUT INDICATING ANY VALID BASIS FOR SAYING SO. ONE REASONING IS GIVEN BY CIT (A) ON PAGE 6 OF HIS ORDER THAT THE A.O. HAS NOT TAKEN INTO ACCOUNT THE FACT THAT THERE WAS S HARP INCREASE IN TURNOVER IN THE PRESENT YEAR AS COMPARED TO A.Y. 2009 10 AND TO BOOST THE TURNOVER, EXTRA COMMISSION WAS PAID AS AN INCENTIVE BUT THIS BASIS OF CIT (A) IS INCORRECT BECAUSE THE TURNOVER OF THE PRESENT YEAR WAS RS. 151.91 LACS AS AGAINST RS. 96.93 LACS IN A.Y. 2009 10. FOR AN INCREASE IN TURNOVER OF APPROX RS. 55 LACS, EXTRA COMMISSION PAYMENT OF RS. 35 LACS APPROX BEING 23 % OF RS. 151.91 LACS CANNOT BE ACCEPTED AS AN INCENTIVE FOR EXTRA TURNOVER. HENCE, IN OUR CONSIDERED OPINION, THE O RDER OF CIT (A) IS NOT SUSTAINABLE. HOWEVER, WE FEEL THAT IN THE INTEREST OF JUSTICE, THE MATTER SHOULD GO BACK TO CIT (A) FOR A FRESH DECISION AFTER OBTAINING REMAND 3 REPORT FROM THE A.O. AND BY WAY OF PASSING A REASONED AND SPEAKING ORDER. ACCORDINGLY, WE SET ASIDE THE ORDER OF CIT (A) AND RESTORE THE MATTER BACK TO HIM FOR A FRESH DECISION AS PER ABOVE DISCUSSION AFTER AFFORDING REASONABLE OPPORTUNITY OF BEING HEARD TO BOTH SIDES. 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PUR POSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 8 /09/2015 COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR