Commissioner of Income Tax Delhi IV v. International Travel House Ltd

MANMOHAN, J September 13, 2010 nm

* HIGH COURT OF DELHI AT NEW DELHI Judgment Reserved on : 5th August, 2010 % Judgment Pronounced on: 13th September, 2010 + ITA 94/2010 COMMISSIONER OF INCOME TAX DELHI-IV ..... Appellant Through Mr.Sanjeev Sabharwal, Advocate versus INTERNATIONAL TRAVEL HOUSE LTD. ..... Respondent Through Mr.Ajay Vohra and Ms.Kavita Jha, Advocates CORAM: HON'BLE THE CHIEF JUSTICE HON'BLE MR. JUSTICE MANMOHAN 1. Whether reporters of the local papers be allowed to see the judgment? 2. To be referred to the Reporter or not? 3. Whether the judgment should be reported in the Digest? DIPAK MISRA, CJ The present appeal preferred under Section 260A of the Income Tax Act, 1961 (for brevity "the Act") is directed against the order dated 19th November, 2008 in ITA No.2113/Del/2008 pertaining to the assessment year 2003-04 and has been admitted on the following substantial question of law: "Whether the Income Tax Appellate Tribunal was correct in law in cancelling the order under Section 263 of the Income Tax Act, 1961 passed by the Commissioner of Income Tax?" 2. The facts which are requisite to be stated for adjudication of the appeal are that the assessee filed its return on 28th November, 2003 declaring income of Rs.3,37,35,806/- and long term capital gain of Rs.7,788/-. The return filed by the assessee was processed under Section 143(1) of the Act on 28th June, 2004 and the return was revised on 31st March, 2005, after reducing its income by Rs.20,19,111/-, declaring income at Rs.3,17,16,695/-. A notice under Section 143(2) of the Act was issued on 8th October, 2004. The assessee company, a travel agent and tour operator, incurred expenditure of Rs.4,02,421/- on foreign travel and the assessee submitted a letter dated 20th January,2006 submitting the details of foreign travelling undertaken. The assessing officer came to hold that the assessee had not filed any details which would confirm the fact that it had obtained business in result of the above foreign travelling and, accordingly, opined that the expenditure would not come within the exemption provisions. The assessing officer disallowed 50%, i.e., Rs.2,01,210/- and added the same to the total income of the assessee. After so assessing, the assessing officer charged interest under Sections 234B, 234C and 234D and directed initiation of penalty proceeding under Section 271(1)(C) of the Act for concealment of income or furnishing inaccurate particulars of income. 3. After the assessment order was passed, the Commissioner of Income Tax examined the record and noticed that the assessment order was prima facie erroneous and prejudicial to the interests of the revenue and accordingly, issued show cause notice under Section 263 of the Act. The assessee filed its show cause / reply. It was contended by the assessee that the assessee had merely claimed credit of TDS; that the assessee had booked tickets in various airlines for its customers for which it received commission from the airlines @ 7% on international air tickets and 5% on domestic air tickets purchased; that the assessee received performance linked bonus and overriding commission on sale of air tickets; that a part of the commission is passed on to the customers by way of discounts and the net commission was shown in the books of accounts and offered to tax by the assessee; and that the assessment made under Section 143 (3) of the Act was not erroneous and prejudicial to the interests of the revenue so as to attract any action under Section 263 of the Act. The Commissioner came to hold that as per the TDS certificate, the total amount credited was Rs.27,46,18,000/-. However, in the P&L account, the assessee had credited only Rs.11,93,39,485/- and that had led to a mistake committed by the assessing officer which had eventually resulted in underassessment of income to the extent of Rs.15,52,78,515/- for the assessment year 2003-04. The CIT had opined that in order to take a final view on the issue, further examination of books of accounts wou