Commissioner of Income Tax (TDS) vs Gulf Air Company

The revenue is aggrieved by an order dated 31-5-2006 passed by Income Tax Appellate Tribunal, Delhi Bench E in ITA Nos. 317 & 318/Delhi/2002 relevant for the financial years 1998-99 and 1999-2000.

During survey proceedings, it appeared that the assessee was not deducting tax at source in respect of the salary paid to one Mr. Anwar Shaban, Station Manager of the assessee. The statement of Anwar Shaban was recorded in respect of his salary and perquisites etc. and he stated that he was being paid a salary of Bahrain Dinar 638 by way of salary and station allowance of Bahrain Dinar of 304. We are told that at the relevant time the exchange rate was 1 Bahrain Dinar equals Rs. 113. The salary plus station allowance received by Anwar Shaban was, therefore, a little over Rs. 1 lakh per month. Anwar Shaban also gave his expenditure incurred such as annual fees for the education of his children etc.

During assessment proceedings, the assessing officer required the assessee to produce some material to indicate the salary paid to Anwar Shaban but despite several opportunities, the assessee did not do so. Accordingly an order was passed u/s 201(1) and 201(1A) read with Section 192 of the Income Tax Act, 1961 estimating the salary of Anwar Shaban for the financial year 1998-99 at Rs. 10 lakhs per month and for the financial year 1999-2000 at Rs. 11 lakhs per month.

Feeling aggrieved, the assessee preferred an appeal before the Commissioner (Appeals) where full details of the salary paid to the expatriate employee were furnished by the assessee. From a perusal of paragraph 5 of the order passed by the Commissioner (Appeals), it appears that a salary certificate issued by the assessee to Anwar Shaban was also produced before the Commissioner (Appeals) who then directed the assessing officer to adopt the salary as per the salary certificate and to work out the details on that basis.

It was also held that the estimate of Rs. 10 lakhs and 11 lakhs per month by way of salary taken by the assessing officer was not based on any evidence but was based on an estimate, conjecture and presumption. The appeal filed by the assessee was allowed.

The revenue then preferred an appeal before the Tribunal, which dismissed the appeal on the basis that there was no material shown as to how the assessing officer had come to the estimate of Rs. 10 lakhs and 11 lakhs per month as the salary paid to Anwar Shaban in the face of the salary certificate produced by the assessee.

The submissions before us, by learned Counsel for the revenue, are more or less to the same effect, namely, that during the assessment proceedings, no material was produced by the assessee before the assessing officer to indicate the salary paid to the expatriate employee. While this may be so, it does appear that the statement of Anwar Shaban was recorded on oath during the survey proceedings and he indicated the salary of about Rs. 1 lakh per month. The salary certificate produced by the assessee before the Commissioner (Appeals) also shows the salary paid to the expatriate employee at about Rs. 1 lakh per month. There is absolutely no material to show the basis on which the assessing officer came to the conclusion that the salary of Anwar Shaban was Rs. 10 lakhs and 11 lakhs per month.

Under the circumstances, in our opinion both the Commissioner (Appeals) as well as the Tribunal were correct in law in dismissing the appeal filed by the revenue.

No substantial question of law arises for consideration. Dismissed.