Income Tax Appeal Case ITA No. 916/DEL/2022 Judgment Summary

Income Tax Appellate Tribunal: A Detailed Analysis on ITA No. 916/DEL/2022

Background

This case involved the appellant, Mohd Javed, resident of 736, Gali Fazal Pura, Daryaganj, Sui Walan, Delhi-110062, who challenged the order of the ld CIT(A)-3, National Faceless Appeal Centre (NFAC), Delhi dated 29.03.2022, before the Income Tax Appellate Tribunal, Delhi Bench ‘E’. The respondent in this case was the Income Tax Officer, Ward-48(5), Delhi. The appeal was centered around the assessment year 2017-18.

Appellant’s Plea

The appellant raised several grounds of appeal, contesting the appellate order’s justification in law, the appreciation of facts by the CIT (Appeal), the appeal of penalty in abeyance, and the liability under Section 44AB. The crux of the appeal was a dispute over the nature of cash/receipts deposited in the regular bank account of the appellant, which were argued not to be sales in the hands of the appellant but were related to the principal concern with a nominal fixed commission agreement for the appellant.

Tribunal’s Observation

Upon reviewing the materials presented, the Tribunal noted the appellant was a commission agent for Gujarat Milk Cooperative Federation, operating a milk booth in Darya Ganj, Delhi, and earning a commission margin ranging from 0.55% to 12.16% per unit on various dairy products. The Tribunal found the imposition of penalty u/s 271B, considering the deposits of Rs.4.3 Cr. as turnover, to be misplaced as the appellant was merely earning a commission.

Final Judgment

The Tribunal, after careful consideration, allowed Mohd Javed’s appeal, finding that the penalty levied under Section 271B was not justified. The decisive factor for the Tribunal was the clarification that the appellant’s income was strictly from commissions as a mediator, and not from sales turnover. The judgment was pronounced in open court on 03/03/2023, marking a significant decision in favor of the appellant.

Conclusion

The case of ITA No. 916/DEL/2022 serves as a pertinent example of the nuances involved in tax laws and the importance of accurate interpretation of facts and laws. The Tribunal’s decision underscores the necessity for tax authorities to carefully consider the actual nature of transactions before levying penalties under various sections of the Income Tax Act.

Income Tax Appeal Case ITA No. 916/DEL/2022 Judgment Summary