RAJINDER KUMAR JAIN,NEW DELHI vs. ACIT, NEW DELHI

Date of Hearing : 11-08-2016 Date of Order : 05-09-2016

ORDER PER H.S. SIDHU : JM Assessee has filed these 4 Appeals against the respective impugned Orders all of dated 31.1.2014 passed by the Ld. CIT(A)-XXIV, New Delhi relevant to assessment years 2005-06 to 2007-08 & 2010-11 respectively. Since the issues involved in these appeals are common and identical, hence, the appeals were ITA NOS.2485-2488/Del/2014 heard together and are being disposed of by this common order for the sake of convenience. The grounds raised by the assessee are more or less similar and identical, therefore, we are reproducing only the grounds raised in (AY 2005-06) as under, and dealing with that Appeal only, for the sake of brevity.

“1. On the facts and circumstances of the case, the order passed by the learned Commissioner of Income Tax (Appeals) [CIT(A)] is bad both in the eye of law and on facts.

2. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in confirming the action of the AO in initiating the proceedings under Section 147, read with Section 148, rejecting the contention of the assessee that the same was bad in the eye of law as the condition and procedure prescribed under the statute have not been satisfied and complied with.

3. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the reassessment proceedings initiated by the learned A.O. are bad in the eye of law as the reasons recorded for the issue of notice under Section 148 are bad in the eye of law and are contrary to the facts.

4(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in ITA NOS.2485-2488/Del/2014 rejecting the contention of the assessee that the order passed by the learned AO is bad both in the eye of law and on- facts as the same has been reopened on the basis of reasons without there being any whisper that the income has escaped due to the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment, as the same has been reopened after a period of four years from the end of relevant assessment year and the assessment has already been made under Section 143(3).

(ii) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in rejecting the contention of the assessee that the order passed by the learned AO is bad both in the eye of law and on facts, as the assessee had already disclosed fully and truly all material facts necessary for the assessment under Section 143(3).

5(i) On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in restricting the commission expenses to the extent of 50% of room charges and confirming the disallowance of the balance amount.

(ii) The above-said disallowance has been confirmed rejecting the detailed explanation and evidences submitted by the assessee.

6. On the facts and circumstances of the case, the learned CIT(A) has erred, both on facts and in law, in ITA NOS.2485-2488/Del/2014

confirming the disallowance to the extent of 10% of service charges paid by the assessee to its employees.

7. That the appellant craves leave to add, amend or alter any of the grounds of appeal.”

ITA NOS.2485-2488/Del/2014 New Delhi in assessee’s own case passed in & ors. (AY 2008-09) and ITA No.3109/Del/2011.

5.1 With regard to ground no. 5 relating to restriction of commission expenses is concerned, we find that this issue is covered by the decision of ITAT, cited supra, in assessee’s own case in the assessment year 2008-09. In assessment year 2008-09, the CIT(A) has restricted the disallowance to 10% of the actual payment of commission to taxiwalas as against 40% estimated by the Assessing Officer. The ITAT vide para 9 upheld the order of the CIT(A)’s estimation of disallowance to 10% of the actual payment of commission to taxiwalas as against 40% disallowed by the Assessing Officer. The para 9 of the aforesaid ITAT order is reproduced below :-

“9. As discussed above, the first appellate order on the issue is comprehensive and reasoned one, hence, we are not inclined to interfere therewith. Learned

CIT(Appeals)'s estimation of disallowance to 10% of actual payment of commission to taxiwalas as against

40% disallowed by the Assessing Officer is based on the reasons discussed by him to which we fully concur with.

The first appellate order in this regard is thus upheld.

ITA NOS.2485-2488/Del/2014

Ground No.2 of the appeal preferred by the assessee and ground No.1 of the appeal filed by the revenue on the issue are thus rejected.”

5.2 Facts and circumstances remain the same in this assessment year also, hence, respectfully following the above ITAT decision, the ground no.5 of assessee’s appeal is rejected.

5.3 With regard to ground no. 6 relating to service charges is concerned, we find that this issue has travelled to the ITAT in assessee’s own case in the assessment year 2008-09 in and ITA No.3109/Del/2011 and the ITAT vide its order dated 22.08.2014 restricted the disallowance of 10% of the actual payments of service charges. The relevant para 14 of the ITAT order is reproduced below :-

“14. We find that the practice of payment of service charges to staff prevailing in the trade has not been disputed by the Assessing Officer. The only dispute was the genuineness of the claimed payment. The Assessing

Officer doubted the genuineness of the actual payment of service charges and disallowed the entire Claim resulting in the addition of Rs.37,80,412. Learned

CIT(Appeals), however, keeping in view the practice

ITA NOS.2485-2488/Del/2014 followed by the assessee over the years which were accepted by the Assessing Officer in the past in the assessment framed under sec. 143(3) of the Income-tax

Act, 1961 and keeping in mind other factors, as discussed above, has given relief by restricting the disallowance to 10% of actual payment of service charges resulting in restriction of disallowance to Rs.3,78,041. As discussed above, we find that the said action of the first appellate authority in giving substantial relief to the assessee is based on sufficient reasons discussed by him in his findings reproduced above to which we fully concur with. We, thus, do not find any reason to interfere therewith. The same is upheld.

Ground No.3 of the appeal preferred by the assessee and ground No.2 of the appeal filed by the revenue are thus rejected.”

5.4 Facts and circumstances remain the same in the present assessment year, hence, respectfully following the aforesaid decision of the ITAT, we reject the issue no. 6 in the assessee’s appeal.

ITA NOS.2485-2488/Del/2014

Order pronounced in the Open Court on 05/09/2016.