TMI Blog2020 (10) TMI 1183X X X X Extracts X X X X X X X X Extracts X X X X ..... companies on procuring order from Government Health Departments Hospital Municipal Corporation and the assessee being individual cannot move from one place to another place for enhancement of business. Different persons received commission against work brought by them and these commission agents against receipt of commission provides services not only to procure orders but also see that proper delivery of goods are made in time and also look after that payments are received from the consignee in time. These facts have not been negated by the ld. Pr. CIT in any manner, thus, we hold that the payment of commission has direct nexus with the services rendered by the recipient of commission and it was paid against their contribution in the enhancement of business of assessee. Thus, it was to be held that the commission has been paid for the business purpose and the AO was right in allowing the same after due verification and examination through proper enquiry. Introduction of capital - AO show caused the assessee regarding eight amounts including amount i.e. introduction of capital by the assessee and from the copy of bank statements, which shows that the assessee introduced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . On verification of audited profit and loss account, he noticed that the assessee had claimed expenditure of ₹ 5,87,407/- towards incentive to nine persons of ₹ 5,87,407/- in procuring orders from Government Hospital and Municipal offices. Ld. Pr. CIT observed that payment to above persons as incentive is not correct as they are not the employees of the assessee. Even otherwise, the DTD was not deducted from the said payment under section 194H of the Act. 5. Furthermore, Ld. Pr CIT noticed that the assessee had claimed ₹ 49,96,750/- towards commission and out of the said payment, ₹ 40,50,000/- was paid to persons (relatives) specified under section 40A(2)(b) of the Act. The Assessing Officer has accepted the payment of commission without verifying the nature of work done by the relatives. In respect of balance amount of ₹ 9,46,150/- paid to persons other than those covered under section 40A(2)(b) of the Act, the AO ought to have verified about the nature of work done by the related persons for the assessee and whether they are qualified to do such work. Hence, the AO has mechanically accepted the claim of the assessee. 6. Further, the Ld. Pr. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... attempt on the part of the assessee to substantiate his claim by furnishing distorted facts. Ld. counsel vehemently pointed out that such kind of remark should not be made against any sincere and honest taxpayer, when he is ready to cooperate to the revenue authorities by way of submitting detailed facts and relevant documentary evidence. Ld. counsel drew our attention towards assessment proceedings and also revisional proceedings on the issue of notice u/s. 142(1) of the Act alongwith questionnaires vide dated 26.5.2016, which was replied by the assessee vide letter dated 7.7.2016 and the assessee submitted entire details regarding payment of commission to the related and unrelated persons and showing that it was payment of commission and TDS @ 2% as applicable, was also deducted by the payer-assessee and replying to Q. No. 31, the assessee submitted that detailed reply alongwith details of commission deducted thereto was submitted before the AO, was also verified and examined before allowing the claim of the assessee regarding payment of commission. Therefore, it cannot be alleged that the AO has not made enquiry in this regard. 10. Ld. counsel also drew our attention towards ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 77; 3 lakhs on 27.3.2014, and ₹ 12 lakhs on 15.11.2013 has been credited from the account of the assessee firm Gandhi Agencies, which clearly establish the fact of banking channel capital transfer. Ld. counsel submitted that from entry on 31.12.2013 in the bank statement, it is clear that the assessee withdrew ₹ 1 lakh in cash, ₹ 8,00,036.90 was the opening capital brought from financial year 2012-13 and amount of gift of ₹ 4,00,000/- from the daughter and ₹ 17,51,000/- from the mother totalling to ₹ 21,51,000/- is more than the amount of ₹ 13 lakhs which was introduced in the capital account of the assessee in cash. Therefore, after examining and verifying the above details, the AO was right in accepting the claim of the assessee regarding introduction of capital to the firm. Ld. counsel vehemently pointed out that the AO also went into deep while examining the issue of introduction of capital during the relevant financial period by way of issuing show cause notice and receiving reply and relevant materials in support of the receiving of gifts. Therefore, it is not a case of insufficient or inadequate enquiry, hence, the impugned assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue and in these circumstances, Ld. Pr. CIT is empowered and entitled to invoke revisional power available u/s. 263 of the Act. 15. Ld. CIT DR also relied on the judgment of Hon'ble Gauhati High Court in the case of CIT vs Jawahar Bhattacharjee, 342 ITR 74 (Gau) in support of his contention. 16. Placing rejoinder to above submission of ld. CIT DR, Ld. counsel submitted that in the case of D.G. Housing Project (supra), Hon'ble High Court has made distinction in para 18 between the two types of cases and Their Lordships have held that where the AO conduct enquiry, the Commissioner cannot direct the AO to conduct further enquiry to verify and find out whether the assessment order is erroneous or not. In the case no enquiry or inadequate enquiry, the Commissioner is required to make himself required to enquiry the allegedly assessment order as alleged, which has not been done by Pr. CIT, therefore, impugned order has to be held as bad in law and all consequential proceedings should be quashed. 17. On careful consideration of the rival submissions, from the copy of the show cause notice available at pages 1 to 5 of assessee's paper book, it is ample clear that Ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s replied by the assessee regarding payment of commission alongwith required confirmations which shows that the commission payment has been made after deducting TDS @ 10% and it is not a case of Pr. CIT that payment of commission has been made by the assessee without making any TDS. This show cause notice and questionnaire issued by the AO and replied filed by the assessee alongwith relevant documents shows that the AO also made enquiry on the issue on payment of commission and TDS thereon and thereafter allowed the claim of the assessee pertaining to payment of commission. Therefore, it cannot be alleged that the AO has not made any enquiry before allowing payment of commission to the related and unrelated parties. 20. In reply to show cause notice u/s. 263 of the Act, the assessee categorically explained that the assessee earns commission from different companies on procuring order from Government Health Departments Hospital Municipal Corporation and the assessee being individual cannot move from one place to another place for enhancement of business. Therefore, the assessee appoints different middlepersons to represent him and gets the business for him. These different pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 263 of the Act. 22. We also peruse the decision of Hon'ble Gauhati High Court in the case of Jawahar Bhattacharjee (supra) relied upon by ld. CIT DR, which is rendered in respect of section 54F of the Act. In this case, it was held that not applying mind to the relevant material would certainly be 'erroneous' assessment warranting exercise and revisional jurisdiction. But in the present case, on the basis of foregoing discussion, we are compelled to hold that the AO had conducted sufficient and adequate enquiry on all three issues and it is not a case of no enquiry or insufficient enquiry. Thus, we respectfully hold that the benefit of the ratio of judgment of Hon'ble High Court of Gauhati in the case of Jawahar Bhattacharjee (supra) is not available for the revenue in the present case having distinct and distinguishable facts and circumstances. Therefore, this decision will not help to the revenue in the present case. 23. In view of the aforesaid facts, we are of the view that the revisionary order passed by the Ld. Pr. CIT(A) is without jurisdiction and has to be quashed on merit. Accordingly, we quash the revisionary order passed under section 263 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 25. We find that the aforesaid issue after exhaustive deliberations had been answered by a coordinate Bench of the Tribunal viz; ITAT, Mumbai 'F' Bench in DCIT, Central Circle-3(2), Mumbai vs JSW Limited ors (ITA No. 6264/Mum/18 dated 14.5.2020, wherein, it was observed as under: 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon'ble Prime Minister of India took the bold step of imposing a nationwide lockdown, for 21 days, to prevent the spread of Covid 19 epidemic, and this lockdown was extended from time to time. As a matter of fact, even before this formal nationwide lockdown, the functioning of the Income Tax Appellate Tribunal at Mumbai was severely restricted on account of lockdown by the Maharashtra Government, and on account of strict enfo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster Management Act 2005, is causing unprecedented disruption in the functioning of our justice delivery system. Undoubtedly, in the case of Otters Club Vs DIT [ (2017) 392 ITR 244 (Bom)], Hon'ble Bombay High Court did not approve an order being passed by the Tribunal beyond a period of 90 days, but then in the present situation Hon'ble Bombay High Court itself has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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