The ITO, Ward-5(1),, Baroda v. Anshul S.Marchant, Baroda

ITA 1809/AHD/2009 | 2006-2007
Pronouncement Date: 09-09-2011 | Result: Dismissed

Appeal Details

RSA Number 180920514 RSA 2009
Bench Ahmedabad
Appeal Number ITA 1809/AHD/2009
Duration Of Justice 2 year(s) 3 month(s) 11 day(s)
Appellant The ITO, Ward-5(1),, Baroda
Respondent Anshul S.Marchant, Baroda
Appeal Type Income Tax Appeal
Pronouncement Date 09-09-2011
Appeal Filed By Department
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 09-09-2011
Date Of Final Hearing 01-09-2011
Next Hearing Date 01-09-2011
Assessment Year 2006-2007
Appeal Filed On 29-05-2009
Judgment Text
- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH B AHMEDABAD BEFORE S/SHRI G. D. AGRAWAL VP AND D.K. TYAGI JM INCOME-TAX OFFICER WARD-5(1) BARODA. ANSHUL S. MERCHANT 42/B TRILOKNAGAR SOCIETY OUTSIDE PANIGATE BARODA. APPELLANT VS. RESPONDENT APPELLANT BY :- SHRI SAMIR TEKRIWAL SR.DR RESPONDENT BY:- SHRI M. G. PATEL AR DATE OF HEARING 1/9/2011 DATE OF PRONOUNCEMENT - O R D E R PER D.K. TYAGI JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A) DATED 13.03.2009 RAISING FOLLOWING GROUNDS: (1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS .29 32 286/- BEING UNACCOUNTED RECEIPTS FROM KOTAK MAHINDRA MANA GEMENT. (2) THE LD. CIT(A) HAS FURTHER ERRED IN NOT CONSIDERING THE LETTER DATED 24.10.2008 ISSUED BY KOTAK MAHINDRA BOMBAY STATING INTER ALIA THAT THE LETTER ISSUED BY THEIR BARODA O FFICE EARLIER WAS ERRONEOUS AND PERSON SIGNING THE SAID LETTER HAD NO AUTHORITY TO SIGN SUCH LETTERS. ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 2 (3) HAD THE SAID LETTER BEEN CONSIDERED IN CORRECT PERS PECTIVE THE CONCLUSION OF THE AO THAT INCORRECT GROSS RECEIPTS WERE ACCOUNTED FOR BY THE ASSESSEE COULD HAVE BEEN CONF IRMED. 2. THE ONLY ISSUE INVOLVED IN THIS CASE IS REGARDIN G DELETION OF ADDITION OF RS.29 32 286/- MADE BY AO. 3. THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A CHARTERED ACCOUNTANT CARRYING ON SERVICES AS RETAINER TO DOS HI ACCOUNTING SERVICES (P) LTD. AND ALSO AS FUND MANAGER TO KOTAK MAHINDRA BANK IN RESPECT OF PERSONAL AND CAR LOANS. THE ASSESSEE FIL ED HIS RETURN OF INCOME ON 21/02/2007 DECLARING TOTAL INCOME AT RS.3 33 638 /- AND THE SAME WAS PROCESSED U/S 143(1) OF THE IT ACT. AS THE CASE WAS SELECTED FOR SCRUTINY A NOTICE U/S 143(2) OF THE IT ACT WAS ISSUED ON 26/ 10/2007 AND SERVED UPON THE ASSESSEE. SUBSEQUENTLY A NOTICE U/S 142(1 ) OF THE ACT DATED 16/6/2008 ALONG WITH QUESTIONNAIRE WAS ISSUED AND D ULY SERVED UPON THE ASSESSEE. THE AO FINALIZED THE ASSESSMENT U/S 143( 3) OF THE ACT AND DETERMINED THE INCOME OF THE ASSESSEE AT RS.32 65 9 24/- AND RAISED DEMAND OF RS.13 33 220/-. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS THE AO OBSERVED THAT THE ASSESSEE HAD RECEIVED BROK ERAGE OF RS.31 63 306/- FROM KOTAK MAHINDRA BANK AND KOTAK M AHENDRA PRIME BUT ADMITTED INCOME OF RS.2 31 020/- ONLY. THE AO C ALLED UPON THE ASSESSEE TO PRODUCE THE PROOF THEREOF. IN RESPONSE THE ASSESSEE PRODUCED THE STATE OF AFFAIRS IN AN ABRIDGED FORM FROM KOTAK MAHENDRA BANK BARODA WITH THE PARTICULARS OF GROSS RECEIPTS TDS DEDUCTED TOTAL INCOME SUBJECT TO TAX ETC. NOT SATISFIED WITH THIS THE AO CONTACTED THE VICE PRESIDENT OF KOTAK MAHENDRA BANK AND KOTAK MAHENDRA PRIME AT BOMBAY AND OBTAINED THE CONCERNED STATEMENTS OF AMO UNTS PAID TO THE ASSESSEE. SINCE THE ASSESSEE HAD EQUATED NET INCOME OF RS.2 31 020/- IN THE STATEMENT OF INCOME BUT NOT THROUGH A PROFIT AN D LOSS ACCOUNT THE AO ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 3 CONCLUDED THAT FULL DETAILS OF INCOME OF RS.2 31 02 0/- WERE WITHHELD AND THOUGHT IT FIT TO DISALLOW EXPENSES OF RS.29 32 286 /- ON THE GROUND THAT THESE WERE NOT DISCLOSED AND THAT FULL DETAILS WERE FILED ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 4. AGGRIEVED THE ASSESSEE WENT IN APPEAL BEFORE TH E FIRST APPELLATE AUTHORITY WHEREIN IT WAS SUBMITTED THAT ALL DETAILS INCLUDING THE EXPENSES OF RS.29 32 286/- WHICH WERE PAID THROUGH CHEQUE W ERE FILED BEFORE THE AO. IN THE DETAILS FILED BEFORE THE AO ALL DETAILS OF INCOME OF RS.2 31 020/- INCLUDING GROSS RECEIPTS TDS DEDUCTE D VARIOUS EXPENSES INCURRED WERE REFLECTED. NO FURTHER QUESTIONS WERE ASKED BY THE AO REGARDING VARIOUS EXPENSES INCURRED BY THE ASSESSEE . SINCE THE GROSS RECEIPTS ARE NOT TAXABLE AND ONLY NET INCOME OF RS. 2 31 020/- IS TAXABLE FROM THE BROKERAGE UNDERTAKEN BY THE ASSESSEE THE SAME IS ADMITTED IN THE STATEMENT OF INCOME. ACCORDINGLY IT WAS REQUES TED THAT THE ACTION OF THE AO IS NOT AS PER THE LAW AND FACTS OF THE CASE AND NEEDS TO BE QUASHED. FURTHER IT WAS SUBMITTED THAT IN REPLY TO SHOW CAUSE NOTICE DATED 7.10.2008 THE ASSESSEE SUBMITTED HIS REPLY DATED 11 .11.2008 STATING THAT SUB-BROKERAGE INCOME PAID BY THE BANK WAS ONLY GROS S INCOME AND TOWARDS EARNING OF THE SAID INCOME THE ASSESSEE HAD TO INCUR VARIOUS EXPENSES LIKE SALARY TELEPHONE BANK CHARGES FUND EXPENSES SERVICE TAX AND OFFICE RENT AMOUNTING TO RS.29 32 286/- WHICH WERE DEDUCTED FROM THE GROSS SUB-BROKERAGE INCOME AND THE SAME WAS SHO WN AT NET FIGURE VIZ. 2 31 020/-. THE ASSESSEE STATED THAT HE MAINTA INED SEPARATE SET OF ACCOUNTS IN RESPECT OF SUB-BROKERAGE INCOME AND COP IES OF INCOME & EXPENDITURE ACCOUNT BALANCE SHEET AND DETAILED ACC OUNTS OF THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS SUB-BR OKERAGE INCOME WERE SUBMITTED. HOWEVER THE AO DISALLOWED THE EXPENDITU RE OF RS.29 32 286/- CLAIMED BY THE ASSESSEE AGAINST SUB- BROKERAGE INCOME ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 4 FROM KOTAK MAHINDRA BANK TREATING THE SAME AS UNDIS CLOSED RECEIPTS OF THE ASSESSEE THOUGH THE EXPENSES INCURRED BY THE AS SESSEE WERE DULY SHOWN IN THE ACCOUNTS MAINTAINED BY THE ASSESSEE AN D COPIES THEREOF SUBMITTED TO THE AO. 5. AFTER CONSIDERING THE ASSESSMENT ORDER AND THE S UBMISSIONS OF ASSESSEE THE LD. CIT(A) DELETED THE IMPUGNED ADDIT ION WITH THE FOLLOWING OBSERVATIONS :- 3.4 I HAVE SEEN THE MANNER IN WHICH THE AO HAS MAD E THE ADDITION AND THE SUBMISSIONS OF THE AR. IT IS AN ADMITTED FACT T HAT THE APPELLANT HAS EARNED SUB BROKERAGE FROM KOTAK MAHENDRA BANK AND K OTAK MAHENDRA PRIME FOR THE SERVICES RENDERED BY HIM. THE PAYMENT S TO THE APPELLANT WERE MADE THROUGH CHEQUE AFTER DEDUCTING TDS. IN OR DER TO MANAGE THESE PORTFOLIOS THE APPELLANT WAS TO INCUR EXPENS ES LIKE SALARY INCENTIVE AND COMMISSION TO STAFF TELEPHONE EXPENSES IN THE OFFICE BANK CHARGES OFFICE EXPENSES SERVICE TAX AND RENT AMOUNTING TO RS.29 32 286/- ALL THESE PAYMENTS WERE MADE THROUGH CHEQUE AND NO MATE RIAL WAS BROUGHT ON RECORD BY THE AO TO DISPROVE THE APPELLANTS CLA IM. EVEN THOUGH THE STATEMENT FROM KOTAK MAHENDRA BANK BARODA BRANCH W AS AN ADBRIDGED ONE IT HAS CONTAINED CORRECT AMOUNTS OF RECEIPTS TDS DEDUCTED AND OTHER EXPENSES INCURRED BY THE APPELLANT. THE VICE PRESIDENT KOTAK MAHENDRA BANK BOMBAY HAS PROVIDED THE SAME INFORMA TION AS WAS CONTAINED IN THE DETAILS SUPPLIED BY THE BARODA BRA NCH. AS RIGHTLY POINTED OUT BY THE LD. AR THE GROSS RECEIPTS CANNO T BE TAXED BUT ONLY THE NET INCOME IS TO BE TAXED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE THE EXPENSES AT RS.29 32 286/- CANNOT BE TAXE D AS OPINED BY THE AO AND IS DIRECTED TO DELETE THE SAME. AGGRIEVED BY THIS ORDER OF THE LD. CIT(A) THE REVE NUE IS IN APPEAL BEFORE THE TRIBUNAL. 6. THE LD. DR SUPPORTED THE ORDER OF AO AND SUBMITT ED THAT THE AO CALLED UPON THE ASSESSEE TO PRODUCE THE PROOF OF BR OKERAGE OF RS.31 63 306 AND HIS INCOME OF RS.2 31 020/-. IN RE SPONSE THE ASSESSEE PRODUCED THE STATE OF AFFAIRS IN AN ABRIDGED FORM F ROM KOTAK MAHENDRA ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 5 BANK BARODA WITH THE PARTICULARS OF GROSS RECEIPTS TDS DEDUCTED TOTAL INCOME SUBJECT TO TAX ETC. NOT SATISFIED WITH THIS THE AO CONTACTED THE VICE PRESIDENT OF KOTAK MAHENDRA BANK AND KOTAK MAH ENDRA PRIME AT BOMBAY AND OBTAINED THE CONCERNED STATEMENTS OF AMO UNTS PAID TO THE ASSESSEE. SINCE THE ASSESSEE HAD EQUATED NET INCOME OF RS.2 31 020/- IN THE STATEMENT OF INCOME BUT NOT THROUGH A PROFIT AN D LOSS ACCOUNT THE AO CONCLUDED THAT FULL DETAILS OF INCOME OF RS.2 31 02 0/- WERE WITHHELD AND THOUGHT IT FIT TO DISALLOW EXPENSES OF RS.29 32 286 /- ON THE GROUND THAT THESE WERE NOT DISCLOSED. ACCORDINGLY THE AO HAD R IGHTLY DISALLOWED THE EXPENSES OF RS.29 32 286/- AND MADE THE ADDITION. T HE LD. CIT(A) HAS NOT CONSIDERED THE LETTER DATED 24.10.2008 ISSUED BY KO TAK MAHINDRA BOMBAY STATING INTER ALIA THAT THE LETTER ISSUED BY THEIR BARODA OFFICE EARLIER WAS ERRONEOUS AND PERSON SIGNING THE SAID L ETTER HAD NO AUTHORITY TO SIGN SUCH LETTERS. HAD THE SAID LETTER BEEN CONS IDERED IN CORRECT PERSPECTIVE THE CONCLUSION DRAWN BY THE AO THAT INC ORRECT GROSS RECEIPTS WERE ACCOUNTED FOR BY THE ASSESSEE COULD HAVE BEEN CONFIRMED. THUS HE PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AN D THAT OF THE AO BE RESTORED. 7. ON THE OTHER HAND THE LD. COUNSEL OF THE ASSESS EE REITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND RELIED O N HIS ORDER. HE STATED THAT ALL THE DETAILS OF RS.29 32 286/- WHICH WERE P AID THROUGH CHEQUE WERE FILED BEFORE THE AO. IN THE DETAILS INCOME OF RS.2 31 020/- INCLUDING GROSS RECEIPTS TDS DEDUCTED VARIOUS EXPENSES INCU RRED WERE REFLECTED. NO FURTHER QUESTIONS WERE ASKED BY THE AO REGARDING VARIOUS EXPENSES INCURRED BY THE ASSESSEE. THE ONLY NET INCOME OF RS .2 31 020/- IS TAXABLE FROM THE BROKERAGE UNDERTAKEN BY THE ASSESSEE AND T HE SAME HAS BEEN ADMITTED IN THE STATEMENT OF INCOME. THUS LD. CIT(A ) HAS CORRECTLY ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 6 APPRECIATED THE FACTS OF THE CASE AND DELETED THE I MPUGNED ADDITION. HIS ORDER MAY KINDLY BE UPHELD. 8. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE MATERIAL ON RECORD WE ARE OF THE CONSIDERED VIEW THAT THE L D. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION. THE LD. CIT(A) HAS O BSERVED THAT ASSESSEE HAS EARNED SUB BROKERAGE FROM KOTAK MAHINDRA BANK A ND KOTAK MAHENDRA PRIVE FOR THE SERVICES RENDERED BY HIM. TH E PAYMENTS TO THE ASSESSEE WERE MADE THROUGH CHEQUE AFTER DEDUCTING T DS. THE ASSESSEE HAD TO INCUR EXPENSES LIKE SALARY INCENTIVE AND CO MMISSION TO STAFF TELEPHONE EXPENSES IN THE OFFICE BANK CHARGES OFF ICE EXPENSES SERVICE TAX AND RENT AMOUNTING TO RS.29 32 286/-. ALL THESE PAYMENTS WERE MADE THROUGH CHEQUES. THE ONLY REASON GIVEN BY THE AO WH ILE DISALLOWING THESE EXPENSES IS THAT FULL DETAILS OF THESE EXPENS ES WERE GIVEN ONLY DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND NOT ALONG WITH THE RETURN OF INCOME. THIS ACTION OF THE AO WAS NOT PROPER AS ONCE THE DETAILS OF EXPENSES WERE BEFORE HIM HE COULD NOT DISALLOW THE SE EXPENSES WITHOUT BRINGING ANY MATERIAL ON RECORD TO DISPROVE THE CLA IM OF THE ASSESSEE. THE NET INCOME IS TAXABLE AND NOT THE GROSS RECEIPTS. T HUS WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A) AND WE CONFIRM THE SAME. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 9/9/2011. SD/- SD/- (G. D. AGRAWAL) (D.K. TYAGI) VICE PRESIDENT JUDICIAL MEMBER AHMEDABAD DATED : 9/9/2011. ITA NO.1809/AHD/2009 ASST. YEAR 2006-07 7 MAHATA/- COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR ITAT AHMEDABAD 6. GUARD FILE. BY ORDER DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD 1.DATE OF DICTATION 2/9/11. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 6/9/11. /OTHER MEMBER. 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..