Maya Machinery (P.) Ltd. vs Deputy Commissioner of Income Tax

The present appeal is filed by the assessee against the impugned order dated 09.02.2004, passed by the Income Tax Appellate Tribunal, Delhi in I.T.A. No. 1463/Del/2000 for the assessment year 1996-97.

1.1 On 03.08.2009, the appeal was admitted by a Co-ordinate Bench on the following substantial question of law:--

"Whether the Tribunal''s order is liable to be legally vitiated on the ground that the Tribunal has merely disbelieved and rejected the assessee''s claim without giving any independent findings on the merits of the case based on the facts and circumstances of the case?"

1.2 The brief facts of the case are that assessee''s company, during the assessment year under consideration, drives income from manufacture and sale of sugar machinery and equipments. In the books of account, the assessee has shown the liability of Rs. 1,85,800/- to be payable in favour of Mr. Ashok Bhardwaj (Building Architect), proprietor of M/s. Bhardwaj and Associates, Saharanpur. The A.O. opined that no service was rendered by Mr. Bhardwaj for installing any plant and machinery for sugar factory. However, he allowed the claim to Rs. 60,000/- and made the addition for remaining amount of Rs. 1,25,800/-. The C.I.T.(A), after examining the entire materials, has accepted the claim of the assessee and deleted the remaining addition of Rs. 1,25,800/-. In other words, the CLT.(A) has accepted the payment of Rs. 1,85,800/- to M/s. Bhardwaj associates. Being aggrieved, the department has filed the appeal before the Tribunal, who has restored the addition of Rs. 1,85,800/-. Being aggrieved, the assessee has filed the present appeal.

With this background, heard Sri R.S. Agarwal, learned counsel for the assessee, who submits that the A.O. has made the addition of Rs. 1,25,800/-, but the Tribunal has restored the entire liability of Rs. 1,85,800/- which is patently wrong and the Tribunal cannot do so.

On merit, the learned counsel submits that the details regarding the payment was already furnished. Sri Ashok Bhardwaj was never examined by the A.O. The genuineness of the payment was accepted by C.I.T.(A), so he made the request to delete the addition.

On the other hand, learned counsel for the department had justified the impugned order. He submits that the A.O. has already given the relief of Rs. 60,000/-. There is no further scope to give any relief.

We heard both the parties at length and gone through the materials available on record. From the record, it appears that the C.I.T.(A) has examined the entire materials and observed that the consultancy charges to the tune of Rs. 1,85,800/- are genuine because the same have been received by Sri Ashok Bhardwaj. The payment was made against the bills raised on different dates.

Needless to mention that the power of the appellate Commissioner is co-terminus with the power of A.O. The appellate authority has all the powers which the original authority has subject to condition/restriction, if any, prescribed by law as per the ratio laid down in the following cases:

"(I) Jute of Corporation of India Ltd. Vs. Commissioner of Income Tax and another, ; and

(II) Commissioner of Income Tax, M.P., Bhopal Vs. M/s. Nirbheram Deluram, ."

By considering the totality of the facts and circumstances, we are of the view that when the A.O. has accepted the genuineness, he might have allowed the entire claim of the assessee. But there was no reason to give the partial relief. In these circumstances, we uphold the order of the appellate authority who has rightly deleted the addition. Hence, the impugned order is set-aside and the order of the first appellate authority is hereby sustained alongwith the reasons mentioned therein. The assessee will get the relief accordingly.

Answer to substantial question of law is in favour of the assessee and against the department. In the result, the appeal filed by the assessee is allowed.