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TMI Blog2012 (7) TMI 618X X X X Extracts X X X X X X X X Extracts X X X X ..... 61." 2. We have heard both the parties and perused the material placed before us. We find that this issue is squarely covered in favour of the assessee by the decision of ITAT in assessee's own case for AY 2004- 05 & 2005-06. In AY 2004-05 also, the Assessing Officer disallowed the commission paid to directors under Section 36(1)(ii) on the similar ground which was deleted by learned CIT(A) and the Department had filed the appeal before the ITAT. The ITAT, in ITA No.3473/Del/2007, upheld the order of the CIT(A) and held as under:- "The revenue is in appeal before us against the order of Learned CIT(Appeals) dated 23.5.2007 passed for assessment year 2004-05. In the first ground of appeal, the grievance of revenue is that the learned CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation increased by 109% as compared to the last year. The commission on sales was also paid in earlier years which were allowed to the assessee even in an assessment made under sec. 143(3) by the Assessing Officer. It was also pointed out that the assessee has proposed dividend of Rs. 9,16,500/- as against paid up capital of Rs. 6,11,000/-. It is 150% of the paid up capital. Similar dividend was also proposed in the last year. The tax on dividend in the current year and in earlier years has been disclosed in the P & L account. According to the assessee, the commission paid to both the directors was wholly and exclusively based on performance of assessee's business and commercial expediency. There is no violation to sec. 36(1)(ii) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed CIT(A) and dismiss the Revenue's appeal. ITA No.3581/Del/2010:- 4. The only ground raised in this appeal by the Revenue reads as under:- "The ld.CIT(A) has erred in law and on facts in holding reopening the assessment u/s 147 as invalid and consequently annulling order u/s 143(3)/147, considering the fact that ratios of decision of the Hon'ble Supreme Court in Phool Chand Bajrang Lal V. CIT (1993) 203 ITR 456 are applicable in this case." 5. At the time of hearing before us, it is stated by the learned DR that in the original assessment passed under Section 143(3), the issue of payment of commission to the directors was not examined. Since the commission paid to directors was not allowable under the provisions of Section 36(1)(ii), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The assessment year under consideration is AY 2003-04 and notice under Section 148 was issued on 31st March, 2009. Thus, admittedly, the notice under Section 148 was issued after more than four years from the end of the relevant assessment year. It is also not in dispute that original assessment was completed under Section 143(3). Section 147 reads as under:- "If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was failure on the part of the assessee to disclose fully and truly all material facts. The copy of reasons recorded is placed at page 19 of the assessee's paper book in which Assessing Officer has mentioned that from a perusal of the assessment record for AY 2003-04 (i.e. the year under appeal), it is revealed that the assessee company had paid commission and bonus of Rs. 29,29,948/- to the directors of the company who are also major shareholders of the company. He also observed that on similar ground, addition has been made in AY 2006-07. Therefore, he formed an opinion that there was escapement of income. From these reasons recorded, it is evident that there was no failure on the part of the assessee to disclose any material fact. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the Hon'ble Jurisdictional High Court has considered this issue in the case of Haryana Acrylic Manufacturing Co. (supra) wherein the assessment year under consideration was 1998-99. Therefore, the law applicable in the case of the assessee is similar to the law applicable before the Hon'ble Delhi High Court. The Hon'ble Jurisdictional High Court held as under:- "Allowing the petition, (i) that the reasons recorded did not indicate the failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year 1998-99. While in the reasons supplied to the petitioner there was no mention of the allegation that there was a failure on the part of the assessee to disclose fully an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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