PRINCIPAL COMMISSIONER OF INCOME-TAX- 13 vs. RAKESH GUPTA,
What did the High Court hold?
The Tribunal upheld the CIT(A)'s reduction of commission from 5.67% to 2%, finding no infirmity in the order. The High Court found the ITAT's reasoning, including the use of fictitious bills, to be not perverse.
What were the facts?
The Assessing Officer (AO) determined the assessee's commission at 5.67% after examining accommodation entries. The Commissioner of Income Tax (Appeals) reduced this to 2%, a decision upheld by the ITAT.
What were the issues?
Whether the ITAT erred in upholding the reduction of gross commission from 5.67% to 2% by the CIT(A) in the given circumstances.
AI-generated summary — verify with the full judgment below
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r $~ * IN THE HIGH COURT OF DELHI AT NEW DELHI 14. 15 & 16 + ITA 929/2016 PRINCIPAL COMMISSIONER OF INCOME-TAX-13 Appellant Through: Mr Dileep Shivpuri, Senior Standing Counsel with Mr Sanjay Kumar, Junior Standing Counsel versus RAKESH GUPTA Respondent Through: None + ITA 930/2016 PRESfCIPAL COMMISSIONER OF INCOME-TAX-13 Appellant Through; MrDileep Shivpuri, Senior Standing Counsel withMr Sanjay Kumar, JuniorStanding Counsel versus RAKESH GUPTA, Respondent Through: None + ITA 931/2016 PRINCIPAL COMMISSIONER OF INCOME-TAX-13 Appellant Through: Mr Dileep Shivpuri, Senior Standing Counsel with Mr Sanjay Kumar, Junior Standing Counsel versus RAKESH GUPTA Respondent Through: None ITA 929, 930&931/2016 Page lofS Digitally Signed By:AMULYA Signature Not Verified
CORAM: JUSTICE S.MURALIDHAR JUSTICE CHANDER SHEKHAR ORDER o/o 25.04.2017 CM 47013/2016 (exemption^ in ITA 929/2016 CM 47014/2016 (exemption) in ITA 930/2016 Allowed, subject to alljust exceptions. ITA 929/2016 ^ ITA 930/2016 ITA 931/2016 1. On 24^^ January, 2017 while admitting these appeals, the following question oflaw was framed: "Did the IT AT fall into error in upholding the reduction of gross commission from 5.67% to 2%, calculated by the CIT (A), in the circumstances ofthe case." 2. ITAT on appeal by the Revenue upheld the finding of CIT(A) by observing that there is no infirmity in the order of Ld. CIT(A) for the Assessment Years ('AYs') 2008- 2009to 2009- 2010. 3. The AO in this case undertook a detailed exercise of examining every accommodation entry and came to the conclusion that the commission earned by the Assessee would be around 5.67 %. The Commissioner of Income Tax (Appeals) gave detailed reasons for not agreeing with the AO and observed that "there is no set formula or fixed rate of commission in accommodation entries and such rates are varying based on the practices and the need." The CIT(A) reduced the commission to 2% and this was affirmed by the ITAT. ITA 929, 930&931/2016 Page2 of3
V __y 4. The Court has heard the submissions of Mr Dileep Shivpuri, Senior Standing Counsel appearing for the Revenue at length and has examined the orders ofthe AO, the CIT (A) and the ITAT. 5. It is seen that the ITAT in the impugned order has while affirming the order ofthe CIT (A) given detailed reasons. Although Mr. Shivpuri sought to persuade this Court that the said reasoning by the ITAT was perverse, the Court is not so persuaded to agree. Amongst the reasons thatweighed with the ITAT were that the Assessee purchased the goods onthe fictitious bills. Further, the Assessee submitted the purchase letter as well as the sale bill. The Assessee was earning commission from bogus entries of issuing sales bills and then buying purchase bills. In the circumstances, the reduction of by the ITAT ofthe percentage ofcommission from 5.67% as determined by AO to 2% could not be said to be so improbable or perverse so as to warrant interference by this Court. 6. The question is answered in the negative i.e., in favour of the Assessee and against the Revenue. 7. The appeals are, accordingly, dismissed S.MURALIDHAR, J GRANDER SHEKHAR, J APRIL 25, 2017 rd ITA 929, 930 &931/2016 Page3 of3
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