Ita/232/2009 Of The Commissioner Of Income Tax, Cochin v. Sri.e.s.jose, Cochin

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR &THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE TUESDAY, THE 22ND DAY OF OCTOBER 2013/30TH ASWINA, 1935 ITA.No. 232 of 2009 ( ) ------------------------ AGAINST THE ORDER IN ITA 126/2000 of I.T.A.TRIBUNAL,COCHIN BENCHDATED 30-09-2003 APPELLANT:--------- THE COMMISSIONER OF INCOME TAX, COCHIN. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT:----------- SRI.E.S.JOSE,PROP.A2Z TILES & FLOORINGS, P.T.USHA ROAD, COCHIN - 682 011. THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 22-10-2013, ALONG WITH ITA. 486/2009, THE COURT ON THE SAME DAY DELIVEREDTHE FOLLOWING: APPENDIX TO I.T.A.NO.232 OF 2009 APPELLANT'S EXHIBITS: ANNEXURE A: COPY OF THE ASSESSMNET ORDER U/S.143(3) DTD.22/3/1999ISSUED BY THE ASSESSING OFFICER. ANNEXURE B: COPY OF THE ORDER DATED 15/12/1999 OF THE COMMISSIONEROF INCOME TAX (APPEALS). ANNEXURE C: CERTIFIED COPY OF THE ORDER DTD. 30/09/2003 OF THE INCOMETAX APPELLATE TRIBUNAL, COCHIN BENCH IN ITANO.126/COCH/2000. RESPONDENT'S EXHIBITS: NIL // True Copy// PA to Judge MANJULA CHELLUR, CJ & A.M.SHAFFIQUE, J. * * * * * * * * * * * * * I.T.A.Nos.232 of 2009 and 486 of 2009 ---------------------------------------- Dated this the 22[nd] day of October 2013 J U D G M E N T SHAFFIQUE,J I.T.A.No.232/2009 is filed against the order passed by theIncomeTaxAppellateTribunalin I.T.A.No.126/Coch/2000. The order is with respect to theassessment year 1996-1997. 2.The issue involved was with reference to thedisallowance of commission paid to various agents for thepurpose of business. The assessee debited a sum ofRs.10,45,066/- towards commission and discount, out ofwhich the discount was Rs.2,12,994/-. The balance amountof Rs.8,32,072/- was treated as commission which works outto 2.75% of the total sales turn over. As per the AssessingOfficer, the vouchers produced did not contain the signatureor complete address of the recipients of the commission. The Assessing Officer restricted the commission at 1% of thetotal sales turn over at Rs.3,02,389/- and the balance ofRs.5,29,683/- is disallowed. The petitioner preferred anappeal before the CIT (Appeals) who by order dated07/09/1998 allowed the claim of the assessee at 2.5% anddisallowed the balance. The Revenue preferred an appealbefore the Tribunal and the Tribunal concurred with the viewexpressed by the CIT (Appeals). 3.In I.T.A.No.486 of 2009 also, the issue involved issimilar. That was also a case in which, for the assessmentyear 2001-2002, the Assessing Officer restricted thecommission at 1% of the sales transaction. The CIT(Appeals) enhanced the same to 2.5% against which therevenue filed appeal before the Tribunal. The Tribunalbased on the assessee's own case for the earlier two yearsi.e. 1995-96 and 1996-97 had allowed sales commission atthe rate of 2.5% of the total sales turn over in the place of1%. 3.In I.T.A.No.486 of 2009 also, the issue involved issimilar. That was also a case in which, for the assessmentyear 2001-2002, the Assessing Officer restricted thecommission at 1% of the sales transaction. The CIT(Appeals) enhanced the same to 2.5% against which therevenue filed appeal before the Tribunal. The Tribunalbased on the assessee's own case for the earlier two yearsi.e. 1995-96 and 1996-97 had allowed sales commission atthe rate of 2.5% of the total sales turn over in the place of1%. 4.The short question to be considered in the aboveappeals is with reference to the disallowance of commissionpaid. With reference to the assessment year 1995-96, anappeal came to be filed by the Revenue asI.T.A.No.1451/2009. Similar situation had arisen in the saidcase as well wherein the appellate authorities had increasedthe commission from 1% to 2.5%. We have found that onfacts there was no material to delete the said commissionand refix the same at 2.5%. In fact, the Assessing Officerhad relied upon the fact that no material was produced toprove the payment of commission and the vouchersproduced were unsigned. In the absence of any evidencethe Assessing Officer permitted disallowance of 1% ascommission. In order to increase the said commission to2.5%, necessarily some additional materials should havebeen available with the appellate authorities. In theabsence of any material to arrive at such a conclusion, thefinding is perverse and not substantiated by any materials on record. It is needless to state that a perverse findingwithout any basis gives rise to a substantial question of law.Under these circumstances, we are of the view that theappeals are to be allowed setting aside the finding of the CIT(Appeals) and the Appellate Tribunal in respect of thedeletion of 2.5% of the turn over as commission andsustaining the order of the Assessing Officer in regard to thesame. (sd/-) (MANJULA CHELLUR, CHIEF JUSTICE) (sd/-) (A.M.SHAFFIQUE, JUDGE)