9911796707
TMI Blog2015 (6) TMI 424X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer is Rs. 31,41,645 as against gross total income/business income disclosed by the assessee of Rs. 8,55,068. It was in this backdrop that I requested the parties to address me on whether this matter can be heard by this single member bench or should it be referred to a division bench. The matter was thus adjourned on the first day of hearing. On the next date of hearing, learned representatives made specific submissions on this issue. 3. Shri Surendra Kumar, learned Departmental Representative, invited my attention to Section 255(3) of the Act and submitted that this section specifically enables the hearing of any appeal, which pertains to an assessee whose total income as computed by the Assessing Officer does not exceed Rs. 5,00,000, by a bench consisting of any member of the Tribunal, authorized in this behalf by the Central Government. He submits that the reference is to the total income computed by the Assessing Officer, and, therefore, quantum of dispute seems to be irrelevant. It was thus submitted that he has no objection to the hearing of these appeals by this single member bench. He, however, hastened to add that as for the question of propriety of whether this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been used as a sole parameter to decide whether a case should be heard by a SMC bench or by a Division Bench, even though the limit of assessed income, which started with Rs. 5,000 in 1922 and is Rs. 5,00,000 as on now, has increased over a period of time. It was also pointed out that this limit is now proposed to be pegged at Rs. 15,00,000 with effect from 1st June 2015 and the stated object of this enhancement in the limit is that "(t)his will help in quicker disposal of appeals before the Tribunal". I am thus urged to act in harmony with the purpose of the creation of the SMC bench by taking up the appeal which this SMC bench is allowed to dispose of on the basis of the assessed income of the assessee being less than Rs. 5,00,000. Learned counsel urges me to hear the appeals and the COs and dispose of the same on merits. 5. I find that in the case of Mahakuteshwar Oil Industries (supra), the question which fell for consideration of Hon'ble Karnataka High Court was "whether the single member bench of the Tribunal had jurisdiction to decide the appeal when the subject matter of appeal was exceeding Rs. 5,00,000". While dealing with this specific question, Their Lordships gave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or perform all or any of the powers and functions conferred on or assigned to an AO under this Act.' 12. From the definition of AO, we cannot come to the conclusion that if the income computed by the AO is enhanced by the CIT(A), the said order has to be treated as an order passed by an AO. It has to be treated as an order passed by the appellate authority and not by the original authority. 13. We would have appreciated the arguments of the Revenue, provided in sub-s. (3) of s. 255 of the Act instead of using the word, "AO" the total income as computed in the case does not exceed five hundred thousand rupees. But unfortunately, the said word is missing. When the legislature in their wisdom have used the word "AO", we cannot take a different view than that of the plain reading of the section. When the word, "AO" is used in s. 255, we cannot hold the orders of the appellate authority as an order of the AO. In the circumstances, point No. 1 has to be held against the Revenue. Accordingly, we answer the question No. 1 against the Revenue and we hold that a Single Member of the Tribunal can exercise his power if the income computed by the AO is less than Rs. 5,00,000 even thou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the SMC bench, is concerned is only with respect to the assessed income, i.e., total income as computed by the Assessing Officer. In my considered view, this bench has the powers to hear any case, which is otherwise in the jurisdiction of this bench, pertaining to an assessee whose total income as computed by the Assessing Officer does/not exceed Rs. 5,00,000- irrespective of the quantum of the additions or disallowances impugned in that appeal. Once I come to the conclusion that this bench has the powers to hear such an appeal, it is only a corollary to these powers that this bench has a duty to hear such appeals as well. The reason, in my considered view, is simple. All the powers of someone holding a public office are powers held in trust for the good of public at large There is, therefore, no question of discretion to use or not to use these powers. It is so for the reason that when a public authority has the powers to do something, he has a corresponding duty to exercise these powers when circumstances so warrant or justify. Having held that a SMC bench has the power, as indeed the corresponding duty, to decide appeals arising out of an assessment in which income assessed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... books of account. However, as, according to the AO, the assessee did not fully comply with this requisition and it did not produce the books of account, the Assessing Officer proceeded to frame the assessment without benefit of these inputs. However, when matter travelled in appeal before the CIT(A), the assessee moved a petition under rule 46A which, inter alia, stated as follows: "With reference to the hearing of above captioned appeal fixed for 30th May, 2013, the assessee firm is filing herewith a paper compilation comprising of 127 pages to defend its case properly & judiciously. From the perusal of the assessment order dated 20th March, 2006 passed u/s 413(3) of I.T. Act, 1961, it is quite evident that on account of severe ailment of Senior Partner (Late) Mr. M.P. Jain, who was well conversant with the accounting & taxation matters and in the absence of the accountant, despite of the best possible efforts made, some of the details, informations and documents could not be furnished before the AO during the course of assessment proceedings. The assessee firm had duly apprised the learned AO about the sufficient cause/reasons which had prevented it from making proper complian ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der was served on the assessee on 24th March 2006. It was in this backdrop that the C1T(A) held that the additional evidence should be admitted and the AO should also be given reasonable opportunity of being heard in respect of the same. Learned CIT(A), in coming to this conclusion, held as follows: "After considering the reply of the Ld. AR filed vide his letter dated 19.11.2013 and the argument put before me, I have found that the supporting documents relating to expenses and other claims made by the assessee in the return of income are essential to be considered for deciding the grounds of appeal and these evidences have already been filed during the assessment proceeding about the same were not considered because of delay in filing of these details and such details/documents were not filed before the AO during the hearing of the assessment proceeding but in a Dak Counter. For such delay in filing of details/documents, the Ld. AR has explained quite fairly in his written submission as reproduced above that the assessee (appellant) was prevented by sufficient cause in filing these details/documents because of severe illness of the senior partner (Late) Mr. M.P. Jain. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We also find that Hon'ble Orissa High Court in the case of B.L. Choudhury v. CIT [1976] 105 ITR 371 have observed that by the virtue of s. 250 wide provision has been made conferring jurisdiction on the first appellate authority to make such inquiry as he deem fit and that CIT(A) does not exceed his jurisdiction if he asks or allows the appellant to file additional evidence in the matter he thinks fit. Hon'ble Bombay High Court, in the case of Smt. Prabhavati S. Shah v. CIT [1998] 231 ITR 1, have observed that r. 46A does fetter the right of the assessee to produce evidence but it does not restrain ClT(A)'s powers under s. 250(4) or 250(5) of the IT Act and that this rule appears to ensure that evidence is primarily led before the AO. In view of this judgment of the Hon'ble Bombay High Court, if prima facie an information is necessary to examine the claim of the assessee, the CIT(A) should consider the necessary evidence in exercise of his powers under sub-ss. (4) and (5) of s. 250. It is trite that Rules have to be framed within the scope of main, provision and that a rule, which travels beyond or is inconsistent with or is repugnant to the provisions in the statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t furnished any evidence to justify the same. In appeal, however, CIT(A) restricted this disallowance to 5% of the sales commission paid, i.e. Rs. 55,534, by observing as follows: "I have considered all the arguments taken by the Ld. AR with regard to the payment of commission. It has been shown to me that payment of commission on sale of handicraft items to guides, drivers, company babu etc. is integral part of the business of the assessee and every year such commission expenses are being incurred in the range of about 25% of the total sale. Such commission expenses were examined by the department in earlier assessment years also and ad-hoc disallowances were made in view of non-verifiability from the persons to whom such commission was paid. The Ld. AR explained that the nature of business carried on by the assessee (appellant) is such that it is not possible to produce the persons to whom such commission has been paid because they only come along with the tourist and thereafter, it is not possible to trace them out to produce them for verification. However, it has been shown that payment of commission to these persons have been mentioned on the sale bills and detailed list for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le, the total amount of commission paid remained in the range of 25%, however, in absence of non-verifiability of payment of such commission to a large number of persons for a single sale, it is difficult to accept that for one sale, commission would have been paid to many drivers because the tourist would have come in one or two buses and hence, there cannot be a more than two drivers but in same cases, payments are shown to more than two drivers. In earlier year also, ad-hoc addition out of commission expenses has been sustained and in A.Y. 2005-06, while deciding the appeal of the same assessee, I have sustained the disallowance of Rs. 25,000/- out of Rs. 4,97,658/- which comes to be about 5%. Therefore, in absence of non-verifiability of commission, this year also, 1 sustain the disallowance of commission expenses up to 5% of total amount of Rs. 11,10,688/- shown by the assessee, which comes to Rs. 55,534/-. Accordingly, out of the total disallowance of Rs. 8,33,016/- made by the AO out of commission expenses, the disallowance is sustained up to Rs. 55,534/- and hence, the assessee gets a relief of Rs. 7,77,482/- and therefore. Ground No. 7 & 8 are partly allowed." 19. The Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, admission of additional evidence and the AO has also been heard in respect of the same. No specific defects are pointed out in the supporting evidences so submitted. In view of these discussions, and the impugned relief having been granted consistent with the past case history, I confirm the action of the AO and decline to interfere in the matter. 26. Ground no. 3 is also dismissed. 27. In ground no. 4, the Assessing Officer is aggrieved that the CIT(A) has erred in deleting the addition of Rs. 2,31,368 and Rs. 1,90,173 made by the AO in respect of losses of Jaipur and Delhi branches respectively. 28. In the course of the assessment proceedings, the Assessing Officer disallowed these losses with his brief observations to the effect "the assessee has shown loss of Rs. 2,31,368 from Jaipur branch and loss of Rs. 1,90,173 from Delhi branch but in the absence of details and supporting evidences, losses shown in respect of the above branches is disallowed". Aggrieved, assessee carried the matter in appeal before the CIT(A) and also submitted, by way of additional evidences, all the necessary supporting evidences. It was in this background that the CIT(A) deleted these disallow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , I am not inclined to disturb the very well reasoned findings and conclusions of the CIT(A) on this aspect either. I have also noted that all the evidences admitted as additional evidences under rule 46A were duly confronted to the AO and his remand report was called in respect of the same, and that the AO has not raised any issues about the defects in these evidences. In view of these discussions, as also bearing in mind entirety of the case, I approve the conclusions arrived at on this issue as well and decline to interfere in the matter. 31. Ground no. 4 is dismissed. 32. In ground no. 5, the grievance of the AO is that the CIT(A) has erred in deleting the additions of Rs. 29,961 and Rs. 1,15,220 made by the AO in respect of expenses of Pleasure Tours Varanasi branch and Agra branch. 33. The facts with respect to these disallowances also are more or less similar. During the course of the assessment proceedings, these ad hoc disallowances were made for want of supporting evidence but, at the first appellate stage, all the necessary evidences were submitted as additional evidence, AO was duly confronted with the same, and, satisfied with these evidence, the CIT(A) deleted the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
