Gulshan Kumar Mehdiratta, Saharanpur V. ITO, Ward- 3(2), Saharanpur

ITA 7824/DEL/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3187 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 28-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S L ANURAGI
• Assessee Lawyers: PRATIYUS H JAIN
• Keywords: Opportunity of being heard
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : SMC : NEW DELHI BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.7824/DEL/2017 ASSESSMENT YEAR: 2014-15 GULSHAN KUMAR MEHDIRATTA, C/O M/S BHAGWATI TRADING CO., 1, KISHANPURA, SAHARANPUR, UTTAR PRADESH. PAN: AHBPM5404A VS. ITO, WARD-3(2), SAHARANPUR. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRATIYUSH JAIN, CA REVENUE BY : SHRI S.L. ANURAGI, SR.DR DATE OF HEARING : 21.02.2019 DATE OF PRONOUNCEMENT : 26.02.2019 ORDER THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 1 ST SEPTEMBER, 2017 OF THE CIT(A), MUZAFFARNAGAR, RELATING TO ASSE SSMENT YEAR 2014-15. 2. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DERIVES INCOME FROM THE BUSINESS OF DISTRIBUTION OF TELECOM AND FMCG PRODUCTS IN CITY AND RURAL AREAS OF SAHARANPUR. HE FILED HIS RETURN OF INCOME ON 30 TH NOVEMBER, 2014 DECLARING THE TOTAL INCOME AT RS.7,91,350/-. THE C ASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND THE ASSESSING OFFICER COMPLETED THE AS SESSMENT U/S 143(3) ON 21 ST ITA NO.7824/DEL/2017 2 DECEMBER, 2016 DETERMINING THE TOTAL INCOME AT RS.1 2,14,125/- WHEREIN THE ASSESSING OFFICER MADE CERTAIN DISALLOWANCES/ADDITIONS. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) DELETED THE ADDITION O F RS.2,12,775/-, BUT, SUSTAINED AN ADDITION OF RS.60,000/- ON ACCOUNT OF DISALLOWANCE OF EXPENSES. HOWEVER, WHILE PASSING THE ORDER, LD.CIT(A) OBSERVED THAT THE ASSE SSEE HAS NOT SHOWN RECEIPT OF RS.31,61,205/- ON ACCOUNT OF COMMISSION/INCENTIVES RECEIVED FROM TELECOM OPERATORS AND HAS NOT SHOWN ANY PAYMENT MADE ON THIS ACCOUNT TO THE RETAILERS/SUB-DEALERS IN THE PROFIT & LOSS ACCOUNT. HE, THEREFORE, ISSUED ENHAN CEMENT NOTICE TO THE ASSESSEE AS PER THE PROVISIONS OF SECTION 251(1) OF THE ACT. R EJECTING THE VARIOUS EXPLANATIONS GIVEN BY THE ASSESSEE AND AFTER CONSIDERING THE AMO UNT OF RS.7,97,230/- PAID BY THE ASSESSEE TO SUB-DEALERS/RETAILERS AS INCENTIVES, MA DE AN ADDITION OF RS.23,63,975/- IN THE HANDS OF THE ASSESSEE. THUS, HE ENHANCED THE IN COME OF THE ASSESSEE BY RS.23,63,975/- U/S 251(1) OF THE ACT. 3. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASSESS EE IS IN APPEAL RAISING THE FOLLOWING GROUNDS:- L. THE LD. CIT (A) HAS GROSSLY ERRED IN LAW AND ON FACTS BY ENHANCING THE ASSESSMENT AFTER ASSUMING AN AMOUNT OF RS 31,61,205/- AS THE B USINESS INCOME OF THE APPELLANT. 2. THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY EN HANCING THE ASSESSMENT AFTER RESTRICTING THE DEDUCTION FOR PAYMENT OF 31,61,205/ - TO RETAILERS/ DEALERS TO ONLY RS 7,97,230/- 3. THE LD. CIT (A) HAS ERRED IN ENHANCING THE ASSESSME NT ON CONJECTURES AND SURMISES AND WITHOUT CONSIDERING THE SUBMISSIONS OF THE APPELLANT. 4. THE APPELLANT CRAVES FOR LEAVE TO ADD, AMEND, MODI FY OR WITHDRAW ANY OF THE GROUNDS OF APPEAL. ITA NO.7824/DEL/2017 3 4. THE LD. COUNSEL FOR THE ASSESSEE FILED TWO PAPER BO OKS CONTAINING TOTAL 521 PAGES AND SUBMITTED THAT THE AUTHORITIES BELOW HAVE NOT PROPERLY APPRECIATED THE FACTS OF THE CASE. HE SUBMITTED THAT THE ASSESSEE, NO DO UBT, HAS RECEIVED THE INCENTIVES/COMMISSION FROM THE TELECOM OPERATORS. HOWEVER, THESE WERE PASSED ON TO THE RETAILERS AS PER THE POLICY OF THE PRINCIPALS A S WELL AS THAT OF THE ASSESSEE. HE SUBMITTED THAT THE INCOME ENHANCED BY THE CIT(A) IS NOT PROPER AND IS LIABLE TO BE DELETED. IN HIS ALTERNATE CONTENTION, HE SUBMITTED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF THE ASSESSING OFFICER WI TH A DIRECTION TO GIVE ANOTHER OPPORTUNITY TO THE ASSESSEE TO SUBSTANTIATE HIS CAS E THAT WHATEVER INCENTIVE/COMMISSION HAS BEEN RECEIVED HAS BEEN DULY TRANSFERRED TO THE RETAILERS/CUSTOMERS AND THE SURPLUS, IF ANY, HAS BEEN OFFERED TO TAX. 5. THE LD. DR, ON THE OTHER HAND, HEAVILY RELIED ON THE ORDER OF THE CIT(A). HE SUBMITTED THAT THE ASSESSEE HAS NOT DISCLOSED THE A MOUNT OF INCENTIVE/COMMISSION RECEIVED IN THE P&L ACCOUNT AND HAS ALSO NOT SHOWN THE PAYMENT TO ANY SUCH INCENTIVE/COMMISSION TO THE RETAILERS/CUSTOMERS. T HEREFORE, THE ORDER OF THE CIT(A) BEING IN ACCORDANCE WITH THE LAW SHOULD BE UPHELD A ND THE GROUNDS RAISED BY THE ASSESSEE SHOULD BE DISMISSED. 6. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BO TH THE SIDES AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE IN THE PROFIT & LOSS ACCOUNT HAS NOT DISCLOSED THE AMOUNT OF RS.31, 61,205/- RECEIVED BY HIM ON ACCOUNT OF COMMISSION/INCENTIVE FROM THE TELECOM OP ERATORS AND HAS ALSO NOT SHOWN ITA NO.7824/DEL/2017 4 ANY PAYMENT MADE ON THIS ACCOUNT TO THE RETAILERS/S UB-DEALERS IN THE PROFIT & LOSS ACCOUNT. THE LD.CIT(A), THEREFORE, ISSUED ENHANCEM ENT NOTICE AND MADE ADDITION OF RS.23,63,975/- AFTER ALLOWING RS.7,97,230/- AS BUSI NESS EXPENSES ON ACCOUNT OF AMOUNT PAID TO SUB-DEALERS/RETAILERS FOR INCENTIVE. IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT WHATEVER COMMISSION/I NCENTIVE HAS BEEN RECEIVED HAVE BEEN PASSED ON TO THE CUSTOMERS AND, THEREFORE, THE RE WAS NO NECESSITY OF ENHANCING THE INCOME OF THE ASSESSEE. IT IS ALSO HIS SUBMISS ION THAT THE VOLUMINOUS DOCUMENTS FILED IN THE PAPER BOOK WERE NOT CONSIDERED BY THE CIT(A) WHILE ENHANCING THE INCOME OF THE ASSESSEE. CONSIDERING THE TOTALITY OF THE FA CTS AND CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, I DEEM IT APPROPRIATE T O RESTORE THIS ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY TH E VARIOUS DETAILS FURNISHED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH AND IN ACCORDA NCE WITH THE LAW, AFTER GIVING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. I HOLD AND DIRECT ACCORDINGLY. THE GROUNDS RAISED BY THE ASSESSEE IS ACCORDINGLY ALLOW ED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, THE APPEAL FILED BY THE ASS ESSEE IS ALLOWED FOR STATISTICAL PURPOSES. THE DECISION WAS PRONOUNCED IN THE OPEN COURT ON 26.02.2019. SD/- ( R.K. PANDA) ACCOUNTANT MEMFBE R DATED: 26 TH FEBRUARY, 2019 DK ITA NO.7824/DEL/2017 5 COPY FORWARDED TO 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASSTT. REGISTRAR, ITAT, NEW DELHI