HIGH COURT OF DELHI
Commissioner of Income-tax
versus
Indeo Airways (P.) Ltd.
IT APPEAL NOS. 1620 & 1622 OF 2010
C.M. NO. 18588 OF 2010
AUGUST 31, 2012
ORDER
S. Ravindra Bhat, J.
The Revenue in the present appeals directed against the common order of the ITAT in ITA Nos.229/Del/2004 and 321/Del/2004 concerning the block period 01.04.1998 to 20.08.1998, claims to be aggrieved by its order dated 11.09.2009. The following questions of law arise for consideration, i.e., (i) correctness of the impugned order directing the addition of Rs. 3,68,31,145/- to be withdrawn, by virtue of the impugned order; (ii) correctness of the ITAT’s order so far as disallowance of the sum of Rs. 1,93,76,463/- for AY 1998-99 and Rs. 46,35,660/- (AY 1999-2000) towards “green box expenses”; (iii) correctness of the Tribunal’s order with regard to deletion of the sum originally disallowed by the AO on account of remuneration expenses and (iv) correctness of the impugned order deleting the disallowance of amounts paid towards commission by the assessee.
2. The brief facts necessary to decide the case are that search and seizure operation was carried out under Section-132 on 20.08.1998 in the premises of the assessee and the punchnama was drawn in the name of its Director Shri Naveen Gera. Block assessment was completed in respect of Shri Naveen Gera under Section-158 BC. The Revenue alleged that during the course of assessment proceedings in the case of Shri Naveen Gera, certain documents pertaining to the assessee were found. The assessee company was incorporated on 28.02.1997. Its business was to charter and operate flights for transportation of goods. Aircrafts were generally chartered from various foreign airlines and the assessee operated them on the Delhi-Moscow sector. The appellant used to consolidate cargo for transportation from Delhi to various foreign destination for which payment was made by Indian exporter either at Delhi or at the destination. After the completion of block assessment in respect of Shri Naveen Gera and on the basis of the material seized, an assessment was separately framed in respect of the assessee company under Section 158BD on 29.08.2002. The sum of Rs. 3,68,31,145/- added under Section-68 was on account of credit entries of cash allegedly received from non-existing people. The AO on the basis of materials seized and marked as Annexure A-95 to A-100, held that the genuineness, identity and credit worthiness of the depositors was doubtful. The amount was, therefore, directed to be added back in the hands of the assessee. In the assessee’s appeal, the Commissioner -CIT (A) after considering the materials on record held that the total sum of Rs. 2,48,11,926/- i.e. the substantive expenditure under the head “green box expenses” could not be held to be illegal. The CIT (A) was of the opinion that once the undisclosed income of the assessee to the tune of Rs. 3 Crores – i.e. the receipts was brought to tax, expenditure – also revealed in the same books of accounts – had to be deducted. The reasoning of the CIT (A) can be gathered from the following extracts of the order in appeal: –
