COMMISSIONER OF INCOME TAX Vs. R N GOEL

JUDGEMENT

(1.) THIS is an appeal under Section 260a of the Income Tax Act, 1961 (hereinafter referred to as ?the Act?) against a common judgment dated 23/12/2005 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the "tribunal") in ITA No. 180/del/2000 and ITA No. 598/del/2000, in respect of, assessment year 1996-97. Before the Tribunal both the assessee, as well as, revenue had preferred appeals against the order of the Commissioner of Income tax (Appeals) (hereinafter referred to as ?cit (A)? ). Before the Tribunal the appeal filed by the assessee was numbered as ITA No. 180/del/2000, whereas the appeal filed by the Revenue was numbered as ITA No. 598/del/2000. By the impugned judgment, the appeal of the Revenue has been dismissed and that of the assessee has been allowed in respect of issues raised in grounds 1 to 6 raised in his appeal filed before the Tribunal. In this Court the Revenue has filed two appeals being ITA No. 631/2007 and ITA No. 632/2007 against the impugned judgment.

(2.) IN order to dispose of the two appeals following facts require to be noted:-

(3.) ON 30. 10. 1996 the assessee filed his return of income declaring an income of Rs 18,97,440/ -. The return was processed under Section 143 (1) (a) of the Act. The return was picked up for scrutiny. A statutory notice under section 143 (2) of the Act was issued to the assessee. During the course of the assessment proceedings queries were raised, inter-alia, in respect of receipt of commission in the sum of Rs. 30,39,710/- and service charges of Rs. 8,21,621/-paid by the assessee to one Chemline India Ltd (hereinafter referred in short as cil ). During the course of the assessment proceedings the assessee filed a letter dated 19. 1. 1999, wherein the assessee disclosed that CIL was appointed by the assessee as a consignment agent under an agreement dated 01. 4. 1995. The assessee further informed the Assessing Officer that the said consignment agent had been appointed to market its products and also undertake development of its products in the market. It was also disclosed that CIL was a public limited company in which the assessee held 39% shares and, was also, one of the three directors, managing CIL. It was further disclosed that due to the efforts of the consignment agent i. e. , CIL, the turnover of the assessee had increased over the past few years. The figures disclosed by the assessee to the Assessing officer were as follows:-A. Y. Turnover (Rs)1994-95 Rs. 92,47,736. 40 1995-96 Rs. 1,01,79,754. 08 1996-97 Rs. 2,14,46,562,28