We Heard The Learned Standing Counsel For Therevenue And The Learned Counsel Appearing For The Assessee v. Union Of India(257 Itr 202), Which Was Confirmed By The Apex Court In Itsjudgment In Cit V. Ahmedabad Stamp Vendors Association (348Itr 378

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC & THE HONOURABLE MR. JUSTICE ANIL K.NARENDRAN FRIDAY, THE 4TH DAY OF APRIL 2014/14TH CHAITHRA, 1936 ITA.No. 26 of 2012 () ---------------------- AGAINST THE ORDER/JUDGMENT IN ITA 153/2011 of I.T.A.TRIBUNAL,COCHIN BENCHDATED 30-06-2011 APPELLANT/RESPONDENT: ------------------------------------------ THE COMMISSIONER OF INCOME TAX KOTTAYAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S)/APPELLANT: ------------------------------------------------ M/S. KOOTTUMMAL GROUPS PERUNNA WEST, CHANGANACHERRY - 686 102. R1 BY ADV. SRI.RAMESH CHERIAN JOHN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 04-04-2014,THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: APPENDIX APPELLANT(S) EXHIBITS ANNEXURE-A:ASSESSMENT ORDER U/S.143(3) DATED 21-12-2009.ANNEXURE-B:CIT(A)'S ORDER IN APPEAL NO.ITA NO.55/TVL/09-10DT.22.12.210.ANNEXURE-C:ITAT'S ORDER IN APPEAL NO.ITA NO.153/COCH/2011 $SPCOCH/2011 DT.30-6-2011. RESPONDENTS' EXHIBITS NIL//True Copy//PA TO JUDGE Rp ANTONY DOMINIC & ANIL K. NARENDRAN, JJ. ============================== I.T.A. No. 26 of 2012 ==================== Dated this the 4[th]day of April, 2014 J U D G M E N T Antony Dominic, J. This appeal is filed by the Commissioner of Income Tax aggrieved by the order passed by the Income Tax AppellateTribunal in an appeal filed by the respondent. 2.In relation to the assessment year 2007-08,respondent had effected total purchase of `2,31,689,032/- fromM/s. Reliance Communication against cash payment. In AnnexureA assessment order, applying the provisions of Section 40A(3) ofthe Income Tax Act, 1961, the expenditure claimed wasdisallowed. In an appeal filed by the assessee before theCommissioner of Income Tax, the assessment order wasconfirmed. Assessee went in appeal before the Tribunal, which,by Annexure C order, allowed the appeal and held that therelationship between the assessee and M/s. RelianceCommunication was that of agent and principal and therefore,Section 40A(3) of the Income Tax Act was inapplicable. It is this order which is under challenge before us at the instance of theRevenue. 3.We heard the learned standing counsel for theRevenue and the learned counsel appearing for the assessee. 4.According to the learned counsel for the Revenue, itwas without any material before the Tribunal that the Tribunalconcluded that the relationship was of principal and agent andthat Section 40A(3) was inapplicable. Therefore, it was contendedthat the order passed by the Tribunal was illegal. On the otherhand, learned counsel for the respondent assessee referred us tothe assessment order which showed that the assessee hadproduced original TDS certificate from M/s. RelianceCommunication. Referring to Section 194H of the Act and itsexplanation, learned counsel contended that the question of TDScan arise only in a case of agency. In support of his contention,counsel invited our attention to the judgment of the Gujarat HighCourt in Ahmedabad Stamp Vendors Association v. Union of India(257 ITR 202), which was confirmed by the Apex Court in itsjudgment in CIT v. Ahmedabad Stamp Vendors Association (348ITR 378). : 3 : 5.Counsel also contended that the existence of anagency between the assessee and M/s. Reliance Communicationwas found by the First Appellate Authority and that the saidfinding was not disputed by the Revenue either before theTribunal or until now. Therefore, according to him, this contentioncannot be raised for the first time in an appeal filed under Section260A of the Income Tax Act. In support of this contention,learned counsel relied on the judgment of the Punjab and HaryanaHigh Court in CIT v. Bank of Punjab Ltd. (286 ITR 630) and that ofthe Delhi High Court in CIT v. Jayshree Gems and Jewellery (362ITR 272). : 3 : 5.Counsel also contended that the existence of anagency between the assessee and M/s. Reliance Communicationwas found by the First Appellate Authority and that the saidfinding was not disputed by the Revenue either before theTribunal or until now. Therefore, according to him, this contentioncannot be raised for the first time in an appeal filed under Section260A of the Income Tax Act. In support of this contention,learned counsel relied on the judgment of the Punjab and HaryanaHigh Court in CIT v. Bank of Punjab Ltd. (286 ITR 630) and that ofthe Delhi High Court in CIT v. Jayshree Gems and Jewellery (362ITR 272). 6.We have considered the submissions made by bothsides. 7.The main issue that arises for consideration is whetherthe Tribunal was justified in accepting the contention that thereexisted an agency between the assessee and M/s. RelianceCommunication to justify its conclusion that Section 40A(3) wasinapplicable. A reading of Annexure C, the Tribunal's order,shows that in para 3.6 of its order, the Tribunal held that the factsand circumstances of the assessee's business are identical to thatin the case of S.Rahumathulla v. CIT (Asst.) {127 ITD 440 : 4 : (Cochin)}, in which the Tribunal held that the relationshipbetween M/s. Vodafone Essar Cellular Limited and the assesseetherein was one of principal and agent. This finding of theTribunal therefore shows that it was entirely on its conclusion inthe case of Rahumathulla that the Tribunal held that thereexisted an agency between the assessee and M/s.RelianceCommunication and that this conclusion of the Tribunal was notbased on any material that was available before it. 8.The question of agency is a question on fact and thatfactual question cannot be resolved merely applying thereasoning adopted by the Tribunal in some other case. Instead,such an issue has to be answered with reference to the facts andcircumstances of each case and with reference to the materialavailable before the Tribunal. Therefore, this conclusion of theTribunal that there existed an agency between the assessee andReliance Communications, arrived at entirely relying on theTribunal's reasoning in its order in Rahumathulla's case, cannotbe sustained. In this context, it is also to be mentioned that in ITA315/10, by judgment dated 6/3/12, this Court has set aside theorder of the Tribunal in Rahumathulla's case also. 9.However, if as a matter of fact, there existed anagency between the assessee and M/s Reliance CommunicationLimited, there is no reason why the assessee should be denied anopportunity to produce materials disclosing the agency and alsoForm 16A before the Tribunal so that the Tribunal can reconsiderthe claim of the assessee that they were an agent of M/s.RelianceCommunication. In fact, such a course was adopted by this Courtin Rahumathulla's case also vide judgment in ITA 315/10. 10.During the course of the submissions, learned counselfor the respondent contended that the question of agency israised for the first time and that the same is impermissible in anappeal filed under Section 260A of the Income Tax Act. In ourview, if the Tribunal had relied on the appellate authority's orderor the assessment order and had decided the question of agency,the appellant could not have raised such a contention. As we havealready stated, the Tribunal arrived at its conclusions not on thebasis of the assessment order or the appellate order, but on thebasis of its own previous order, which may have been referred toduring the course of hearing. In such a case, the appellant couldnot have disputed the issue of agency before the Tribunal.Therefore, we do not find any substance in the contention now urged that the appellant did not dispute the issue of agencybefore the Tribunal and therefore should be precluded fromraising that issue before this Court. urged that the appellant did not dispute the issue of agencybefore the Tribunal and therefore should be precluded fromraising that issue before this Court. 11.Therefore, we set aside Annexure C order passed bythe Tribunal in ITA No.153/11 and remit the matter to the IncomeTax Appellate Tribunal, Cochin Bench. The Tribunal is directed toreconsider the matter with notice to the parties and giving therespondent an opportunity to produce additional materials beforeit to prove its case of agency and on that basis, the Tribunal shallpass fresh orders, as expeditiously as possible, at any rate within3 months of receipt of a copy of this judgment. We also direct thatin the meanwhile, the balance amount, if any, due from therespondent under the assessment order in question, shall not berecovered. I.T.A. is disposed of as above. Sd/- ANTONY DOMINICJUDGE Rp Sd/-JUDGE ANIL K. NARENDRAN //True Copy//PA TO JUDGE