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TMI Blog2021 (7) TMI 949X X X X Extracts X X X X X X X X Extracts X X X X ..... t Member For the Assessee : Shri Sidharth Toshnival For the Revenue : Shri A. Sitarama Rao ORDER PER L.P. SAHU, A.M.: These are cross appeals filed by the assessee as well as revenue directed against CIT(A) - 1, Hyderabad s order dated 13/05/2019 for AY 2015-16 involving proceedings u/s 143(3) of the Income- Tax Act, 1961; in short the Act . 2. Briefly, the facts of the case are that the assessee company engaged in the business of manufacturing, e-filed its return of income for the AY 2015-16 on 19/10/2015 admitting an income of ₹ 2,55,87,581/- under normal provisions and book profit of ₹ 2,36,82,588/- under the provisions of section 115JB. Subsequently, the case was taken up for limited scrutiny under CASS and notices u/s 143(2) and 142(1) were issued and duly served on the assessee. In responses to the notices, the AR of the assessee furnished the details. 2.1 During the scrutiny proceedings, on perusal of P L Account, the AO noticed that under the head Administrative and selling Expenses, assessee claimed 'commission expenses' of ₹ 2,74,76,118/-. The AR of the assessee was asked to submit the details of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved back the letter In correct address 6 AP Coop., Oilseeds Growers Federation Ltd. Mrs. Deepa Rathi Yes No transactions with the assessee 7 Shree Sai Ganesh Enterprises Sri Borule Narsing Tulsiram Ramanjaneya No No Response 8 Haier Appliances India Pvt. Ltd. Sri Borule Narsing Tulsiram Yes No transactions with the assessee 9 Vikas Plastics Pvt. Ltd. Sri Ashish Bharat Shah Received back the letter In correct address 2.3 The AO issued a show cause letter to assessee as to why commission expenses claimed of ₹ 2,74,76,118/- should not be treated as expenditure not related to business and added to the returned income. In response to the said letter, the assessee submitted that the debtors where address is not mentioned are not current debtors and these debtors we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e CIT(A) in his order at page 8. 5. After considering the submissions of the assessee, the CIT(A) allowed the commission paid by the to the extent of ₹ 1,95,07,448/- and sustained the addition to the extent of ₹ 68,68,670/- on the ground that the assessee was not proved either by returns or by any justification of evidence, by observing as under: 4.3 With regard to the above ground, I have carefully considered the facts of the case, assessment order and submissions of the appellant. On verification of the details, it is found that the appellant flied returns of income for the AY 2015-16 of the following parties : S.No. Name 1. Ms. Deepa Rathi 2. Manivanan 3. Meghraj 4. Renuka Polymers 5. S.N.suvitha 6. Subramanyam 7. Riddi Enterprises - Rajesh Rathi The returns of the above parties were filed before the due date and before the completion of scrutiny assessment of the appellant. Therefore, when once the other parties have disclosed the income in their respective returns, the disallowance of the same in the appellant's case is not justified. Hence the submissions of the appellant in this regard, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) is erroneous on facts as well as in law. 2. The Ld. CIT(A) erred in directing the A() to delete the disallowance or ₹ 2.06.07'-+-IX towards commission paid to some parties without examining commission agreements. correlation between sales made and commission paid, sales actually made by concerned commission agents, reasonableness or commission paid. 3. The Ld.CIT(A) has erred in law in not providing the opportunity to AO to examine the evidences filed by the assessee before the Ld. CIT(A) under Rule 46A. 7. Before us, the ld. AR of the assessee filed written submissions, which are as under: 7. The Appellant submits that the commission expenditure is wholly and necessarily incurred for the Business of Appellant. The service of Agents is absolutely necessary for the Business of Appellant. There are thousands of customers spread across India and Agents are the link between Appellant and the customers. The Appellant had submitted list of customers represented by the agents with address of the customers (Paper Book page 85 to 119). The Appellant had submitted complete details of agent including their Permanent Account Numbers and full addres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he last hearing was also submitted. Further information was asked on 24.07.20 J 7 and the same was submitted on 02.08.2017 (Paper Book page 43), 11. The explanation of Appellant that high depreciation expenditure resulted in low net profit and the low net profit was not at all attributable to commission expenditure was not disputed by Assessing Officer. Hence the Assessing Officer ought to have completed Limited Scrutiny assessment but instead he expanded the scope of the Limited Scrutiny by asking Appellant to produce Agents with the copies of their Income lax Returns, Bank Statements, etc. The Assessing Officer travelled beyond the realm of scrutiny jurisdiction i.e. limited scrutiny was converted into complete scrutiny. This apparently was done without seeking approval from Principal Commissioner of Income Tax. Therefore the assessment made was in violation of limited scrutiny norms issued by Board Instruction No.20 of2015 dated 29.12.2015 and 5 of2016 dated 14.07.2016 (Copy enclosed in Paper Book at Page 208 210). Such an assessment is liable to be quashed as held in the following decisions: (i) Suresh Jugraj Mutha v Addl. CIT, Range-3, Dhule, ITA No. 5/Pun/20 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore Ld. CIT (A) vide impugned order dated 20/10/2016 wherein the matter was concluded in the following manner: - 5.2 I have considered the facts and circumstances of the case, gone through the assessment order of the A.O and the submissions of the appellant and also discussed the case with the AR of the appellant. The contentions and submissions of the appellant are being discussed and decided here in under: i. The appellant stared that in preceding years' department has accepted its return and hence AO should have been consistent and allowed exemption u/s. 11 in this year also. In this regard it is mentioned that, in the case of M.M. Ipoh Ors v. CIT (SC) 67 ITR 106 Hon'ble Apex court has observed that res judicata is not applicable as each assessment year is a separate proceeding. Similar observations were made by Hon'ble Supreme Court in the case of New Jehangir Vakil Mills Co Ltd. v. CIT (SC) 49 ITR 137, and Bharat Sanchar Nigam Ltd. v. Union of India [2006] 282 ITR 273. Further in the case of CIT v. Seshasayee Industries Ltd. (Madras) 242 ITR 691, It was held by the Hon'ble Madras High Court that the fact that if claim was questioned in e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crutiny Assessment orders for AYs 2010-11 2011-12 as placed on record vouch for the fact that the assessee has been granted deduction u/s. 11 by Ld. AO and its claim has not been doubted by the revenue. The Hon'ble Bombay High Court, in a recent decision of Pr. CIT v. Quest Investment Advisors (P.) Ltd. [2018] 96 taxmann.com 157/257 Taxman 211, after considering judicial pronouncements of higher authorities, held as under:- 7. We note that the impugned order of the Tribunal records the fact that the Revenue Authorities have consistently over the years i.e. for the 10 years years prior to Assessment Years 2007-08 and 2008-09 and for 4 subsequent years, accepted the principle that all expenses which has been incurred are attributable entirely to earning professional income. Therefore, the Revenue allowed the expenses to determine professional income without any amount being allocated to earn capital gain. In the subject assessment year, the Assessing Officer has deviated from these principles without setting out any reasons to deviate from an accepted principle. Moreover, the impugned order of the Tribunal also records that the Revenue was not able to point out any disti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wanted to change the practice without any change in law or change in facts therein, the basis for the change in practice should have been mentioned either in the assessment order or at least pointed out to the Tribunal when it passed the impugned order. None of this has happened. In fact, all have proceeded on the basis that there is no change in the principle which has been consistently applied for the earlier assessment years and also for the subsequent assessment years. Therefore, the view of the Tribunal in allowing the respondent's appeal on the principle of consistency cannot in the present facts be faulted with, as it is in accord with the Apex Court decision in Bharat Sanchar Nigam Ltd. (supra). 10. Accordingly, the question as proposed do not gives rise to any substantial question of law. Thus, not entertained. We have no reason to deviate from the conclusion that there being no change in material facts or circumstances, the revenue is debarred from taking flickering stands on the same issue taken in assessee's own case in earlier years. In the present case in hand, the revenue is unable to point out any change in facts or circumstances which warrant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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