N Venkata Ramana, Hyderabad v. ITO, Hyderabad

ITA 226/HYD/2009 | 2005-2006
Pronouncement Date: 30-04-2010 | Result: Allowed

Appeal Details

RSA Number 22622514 RSA 2009
Bench Hyderabad
Appeal Number ITA 226/HYD/2009
Duration Of Justice 1 year(s) 2 month(s) 11 day(s)
Appellant N Venkata Ramana, Hyderabad
Respondent ITO, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 30-04-2010
Date Of Final Hearing 20-04-2010
Next Hearing Date 20-04-2010
Assessment Year 2005-2006
Appeal Filed On 17-02-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B HYDERABAD BEFORE SHRI N.R.S. GANSAN JUDICIAL MEMBER AND SHRI A. AKBER BASHA ACCOUNTANT MEMBER ITA.224/HYD/2009 A.Y. 2001-2002 ITA.225/HYD/2009 A.Y. 2004-2005 ITA.226/HYD/2009 A.Y. 2005-2006 SHRI N. VENKATA RAMANA HYDERABAD (ABZPN 7624 D) VS ITO WARD 6(4) HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI C. SUBRAMANYAM RESPONDENT BY : SHRI E.S. NAGENDRA PRASAD D R O R D E R PER SHRI N.R.S. GANESAN JUDICIAL MEMBER: THESE THREE APPEALS HAVE BEEN PREFERRED BY THE AS SESSEE ARISING OUT OF THREE INDEPENDENT ORDERS OF THE CIT( A) FOR THE ASSESSMENT YEARS 2001-2002 2004-05 AND 2005-06. SINCE COMMON ISSUES ARISE FOR CONSIDERATION IN ALL THESE APPEALS WE HAVE HEARD T HE SAME TOGETHER AND DISPOSING OFF THE SAME BY THIS COMMON ORDER. 2. SHRI C. SUBRAMANIYAM THE LEARNED REPRESENTAT IVE FOR THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE IS A COMMI SSION AGENT IN REAL ESTATE BUSINESS. IN THE COURSE OF HIS BUSINESS ACT IVITY HE ENGAGED SEVERAL AGENTS AND PAID PART OF THE COMMISSION RECEIVED BY THE ASSESSEE. ACCORDING TO THE LEARNED REPRESENTATIVE THE COMMISSION AGENT S ENGAGED BY THE ASSESSEE ARE SCATTERED IN VARIOUS PLACES AND THEY D O NOT HAVE A PARTICULAR PLACE OF RESIDENCE. ACCORDING TO THE LEARNED REPRE SENTATIVE THEY ARE PETTY LABOURERS; THEREFORE THEY DO NOT HAVE ANY INCOME FO R ASSESSMENT. THE AGENTS ENGAGED BY THE ASSESSEE DO NOT HAVE ANY PERM ANENT PLACE OF RESIDENCE. ACCORDING TO THE LEARNED REPRESENTATIVE THE COMMISSION AGENCY IN REAL ESTATE BUSINESS IS IN THE UNORGANISED SECTO R. THEREFORE IT IS VERY DIFFICULT TO PROVE THE PAYMENTS MADE BY THE ASSESSE E TO THE AGENTS. ACCORDING TO THE LEARNED REPRESENTATIVE THOUGH AT THE INITIAL STAGE THE ASSESSEE COULD NOT GIVE THE ENTIRE ADDRESSES OF THE COMMISSION AGENTS THE ASSESSEE HAS FILED AN AFFIDAVIT FROM THE COMMISSION AGENT BEFORE THE CIT(A) AND BEFORE THIS TRIBUNAL IN THE COURSE OF APPELLATE PROCEEDINGS. HOWEVER THE CIT(A) DID NOT ADMIT THE ADDITIONAL EVIDENCE FI LED BY THE ASSESSEE. ACCORDING TO THE LEARNED REPRESENTATIVE WHEN THE A SSESSEE HAS FILED ADDITIONAL EVIDENCE IT IS THE DUTY OF THE CIT(A) T O ADMIT THE SAME IN ACCORDANCE WITH LAW. THE LEARNED COUNSEL FURTHER S UBMITTED THAT CERTAIN CONFIRMATION LETTERS FROM THE AGENTS COULD NOT BE F URNISHED BEFORE THE ASSESSING OFFICER BECAUSE THE ASSESSEE COULD NOT LO CATE THE AGENTS AT THAT TIME. ACCORDING TO THE LEARNED REPRESENTATIVE THE AGENTS SHIFT THEIR RESIDENCE OFTEN AND IT WOULD BE VERY DIFFICULT TO L OCATE THE AGENTS. THE LEARNED REPRESENTATIVE SUBMITTED THAT THOUGH THE AD DRESSES OF THE SIX AGENTS WERE NOT FURNISHED EARLIER THE SAME WERE FURNISHED NOW BEFORE THE CIT(A) AND BEFORE THIS TRIBUNAL. SOME OF THE AGENTS HAD N OT CONFIRMED THE RECEIPT OF COMMISSION EARLIER HOWEVER THEY HAVE NOW CONFIR MED THE RECEIPT OF THE COMMISSION BY WAY OF FILING AN AFFIDAVIT. THE AGE NTS IN RESPECT OF WHOM THE LETTERS WRITTEN BY ASSESSING OFFICER WERE RETUR NED EARLIER CONFIRMATION LETTERS ARE NOW FILED FROM THE RESPECTIVE COMMISSIO N AGENT. IN THOSE FACTUAL OF THE SITUATION THE LEARNED REPRESENTATIVE SUBMIT TED THAT THE ADDITION MADE BY THE ASSESSING OFFICER FOR ALL THE THREE ASSESSME NT YEARS HAS TO BE DELETED. 3. ON THE CONTRARY SHRI E.S. NAGENDRA PRASAD T HE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ADDI TIONAL EVIDENCE SAID TO BE FILED BEFORE THE CIT(A) WAS NOT FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE FOR THE FIRST TIME FILED THE SAME BEFORE THE CIT(A). PLACING RELIANCE ON THE JUDGMENT OF THE ANDHRA PRADESH HIGH COURT IN THE CASE OF A.K. BABU KHAN VS. COMMISSIONER OF WEALTH TAX (1974) 102 ITR 757 THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT SI NCE THE ASSESSING OFFICER HAS GIVEN ADEQUATE OPPORTUNITY TO PRODUCE THE MATER IAL THE SAME CANNOT BE ADMITTED AT THIS STAGE. THEREFORE ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE THE CIT(A) HAS RIGHTLY REJECTED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. 4. REFERRING TO THE JUDGEMENT OF THE ANDHRA PRADE SH HIGH COURT IN THE CASE OF CIT VS. TRANSPORT CORPORATION OF INDIA (2002) (256 ITR 701) THE LEARNED DEPARTMENTAL REPRESENTATIVE POINTED OUT THA T MERE PAYMENT BY ITSELF WOULD NOT ENTITLE THE ASSESSEE DEDUCTION OF EXPENDI TURE UNLESS THE SAME WAS PROVED TO BE PAID FOR COMMERCIAL CONSIDERATION. W HEN THE ASSESSEE CLAIMED EXPENDITURE AS PAYMENT OF COMMISSION IT IS FOR THE ASSESSEE TO PRODUCE SUFFICIENT MATERIAL TO SUPPORT THE PAYMENT. IN THE ABSENCE OF ANY MATERIAL TO PROVE THE PAYMENT OF COMMISSION ACCORDING TO THE L EARNED DEPARTMENTAL REPRESENTATIVE THE LOWER AUTHORITIES HAVE RIGHTLY DISALLOWED THE CLAIMED MADE BY THE ASSESSEE. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EI THER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY THE ASSESSEE IS A COMMISSION AGENT IN THE REAL ESTATE BUSINESS. IN T HE COURSE OF HIS BUSINESS ACTIVITY THE ASSESSEE APPEARS TO HAVE ENGAGED SEVE RAL OTHER PERSONS AS AGENT AND PAID COMMISSION. THE ASSESSEE CLAIMED BE FORE THE LOWER AUTHORITIES THAT HE HAS ENGAGED ABOUT 20 PERSONS AN D PAID COMMISSION. FROM THE ORDER OF THE LOWER AUTHORITIES IT APPEARS THAT THE ASSESSEE HAS NOT FURNISHED THE ADDRESSES OF SEVEN PERSONS TO WHOM TH E COMMISSION WAS SAID TO BE PAID. ONE PERSON HAS DENIED THE FACT OF RECE IVING ANY COMMISSION. WITH RESPECT TO FIVE PERSONS THE ASSESSING OFFICE R HAS NOT RECEIVED ANY REPLY. HOWEVER THE ASSESSEE HAS FILED CONFIRMATION LETTERS FROM FOUR PERSONS. THE ASSESSING OFFICER HAS NOT RECEIVED AN Y CONFIRMATION FROM ONE SHRI APPA RAO. 6. THE ASSESSEE APPEARS TO HAVE FILED AFFIDAVIT AND CONFIRMATION LETTERS DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE THE CIT(A). THE CIT(A) HAS REJECTED THE CONFIRMATION LETTERS AND AF FIDAVIT FILED BY THE ASSESSEE ON THE GROUNDS THAT THERE WAS NO REASON FO R THE ASSESSEE FOR NOT FILING THE SAME EARLIER BEFORE THE ASSESSING OFFICE R. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORDER OF THE CIT(A) ON THE BASIS OF THE JUDGEMENT OF THE ANDHRA PRADESH HIGH COURT IN THE C ASE OF A.K. BABU KHAN (SUPRA). WE HAVE CAREFULLY GONE THROUGH THE JUDGEM ENT IN THE CASE OF AK BABU KHAN. IN THE CASE BEFORE THE ANDHRA PRADESH HI GH COURT THE LEGAL REPRESENTATIVE OF THE ASSESSEE PRODUCED ADDITIONAL EVIDENCE BEFORE THE TRIBUNAL IN THE COURSE OF APPELLATE PROCEEDINGS UND ER THE WEALTH TAX ACT. THE HIGH COURT AFTER EXAMINING THE RULE 29 OF THE IT AT RULE 1963 FOUND THAT RULE 29 IS NOT INTENDED TO ALLOW PARTIES TO PA TCH UP THE WEAK PARTS OR TO FILL UP THE OMISSION. THE ASSESSEE WAS GIVEN AMPLE OPPORTUNITY YEAR AFTER YEAR TO PRODUCE THE MATERIAL IN SUPPORT OF HIS CLAI M. THEREFORE THE ASSESSEE WAS IN GROSS NEGLIGENCE IN NOT PRODUCING THE MATERI AL BEFORE THE LOWER AUTHORITIES. IN THOSE FACTUAL SITUATION THE HIGH COURT HAS FOUND THAT THE ASSESSEE IS NOT ENTITLED TO FILE ANY ADDITIONAL EVI DENCE BEFORE THE TRIBUNAL. RULE 29 OF THE ITAT RULES IS NOT APPLICABLE IN RESP ECT OF ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE CIT(A). THE ADDIT IONAL EVIDENCE FILED BEFORE THE CIT(A) HAS TO BE DEALT WITH AS PER THE PROVISIO NS OF RULE 46A OF THE IT RULES 1962. THEREFORE THE JUDGEMENT OF ANDHRA PRA DESH HIGH COURT IN A.K. BABU KHAN (SUPRA) MAY NOT BE OF ANY ASSISTANCE TO T HE REVENUE. 7. RULE 46A ENABLES THE ASSESSEE TO PRODUCE THE A DDITIONAL EVIDENCE BEFORE THE CIT(A) IN CASE THE SAME COULD NOT BE PRODUCED BEFORE THE ASSESSING OFFICER. IN THE CASE BEFORE US THE CONTENTION OF THE ASSESSEE IS THAT THE COMMISSION AGENTS WERE SCATTERED IN VARIOU S PLACES AND THEY SHIFT THEIR RESIDENCE VERY OFTEN. IT IS ALSO THE CONTENT ION OF THE ASSESSEE THAT THE COMMISSION AGENTS HAVE NO FIXED PLACE OF RESIDENCE. IT IS A FACT THAT THE COMMISSION AGENTS WERE SCATTERED IN VARIOUS PLACES AND THEY HAVE NO FIXED PLACE OF RESIDENCE. MOREOVER THEY ARE LIVING BELO W THE POVERTY LINE AND THEY USED TO SHIFT RESIDENCE VERY OFTEN. THEREFORE IT IS VERY DIFFICULT TO LOCATE THE COMMISSION AGENTS WHO ARE DEALING IN REAL ESTATE BU SINESS. ALL PERSONS WHO ENGAGE IN REAL ESTATE BUSINESS ARE NOT INCOME TAX A SSESSEES. THIS TRIBUNAL CANNOT LOSE ITS SIGHT TO THE REALITY WHICH EXISTS I N THE SOCIETY. THERE ARE BIG COMPANIES LIKE DLF ETC. WHO ARE DEALING IN REAL EST ATE BUSINESS IN A BIGGER WAY. SIMILARLY PETTY LABOURERS WHO ARE SHIFTING T HE PLACES OF RESIDENCE OFTEN ARE ALSO ACTING AS AGENTS FOR PETTY COMMISSION AND CLAIMING THEMSELVES TO BE IN THE REAL ESTATE BUSINESS. IN THE CASE BEFORE US THE COMMISSION SAID TO BE PAID IS VERY SMALL AMOUNT. THIS TRIBUNAL CANNOT EX PECT SUCH AN AGENT TO BE INCOME TAX ASSESSEES. THEREFORE MERELY BECAUSE TH E RECIPIENTS OF THE COMMISSION WAS NOT ASSESSED TO INCOME TAX THE PAYME NT OF COMMISSION CANNOT BE DOUBTED. HOWEVER WHEN THE ASSESSEE CLAIM S THAT COMMISSION WAS PAID TO THE AGENTS IT IS THE OBLIGATION OF THE ASSESSEE TO PROVE THE IDENTITY OF THE INDIVIDUAL TO WHOM IT WAS PAID BES IDES GENUINENESS AND COMMERCIAL EXPEDIENCY AS HELD BY THE ANDHRA PRADES H HIGH COURT IN TRANSPORT CORPORATION OF INDIA (SUPRA). SINCE THE COMMISSION PAID TO THE AGENTS ARE SCATTERED IN VARIOUS PLACES SHIFTING TH EIR RESIDENCE VERY OFTEN THE ASSESSEE MIGHT NOT BE IN A POSITION TO PRODUCE SUFFICIENT MATERIAL BEFORE THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEED INGS. IN OUR OPINION THERE WAS SUFFICIENT CAUSE ON THE PART OF THE ASSES SEE IN NOT PRODUCING THE MATERIAL EVIDENCE BEFORE THE ASSESSING OFFICER AT T HE ASSESSMENT STAGE. THEREFORE THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A) HAS TO BE ADMITTED AND IT NEEDS TO BE EXAMINED IN ACCORDANCE WITH LAW. 8. SINCE THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A) WAS NOT EXAMINED BY THE ASSESSING OFFICER IN OUR OPINION IN THE INTEREST OF JUSTICE THE ASSESSING OFFICER HAS TO RE-EXAMINE THE ENTIRE ISSUE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE FILED BEFORE THE CIT(A). B Y ADMITTING THE ADDITIONAL EVIDENCE THE INTEREST OF THE REVENUE MAY NOT BE PR EJUDICED IN ANY WAY. ACCORDINGLY WE SET ASIDE THE ORDERS OF THE LOWER A UTHORITIES AND THE ENTIRE ISSUE OF PAYMENT OF COMMISSION IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE EXAMINE TH E ISSUE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFOR E THE CIT(A) AND THEREAFTER DECIDE THE SAME IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. 9. THE ASSESSEE HAS TAKEN TWO MORE GROUNDS REGARD ING REOPENING OF THE ASSESSMENT U/S 147 AND DISALLOWANCES OF SITE EXPENSES. DURING THE COURSE OF HEARING THE LEARNED REPRESENTATIVE FOR T HE ASSESSEE SUBMITTED THAT THESE TWO GROUNDS ARE NOT PRESSED. ACCORDINGL Y THE SAME ARE DISMISSED AS NOT PRESSED. 10. IN THE RESULT THE THREE APPEALS OF THE ASSES SEE ARE ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT 30 TH APRIL 2010 SD/- SD/- A. AKBER BASHA N.R.S. GANESAN ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 30 TH APRIL 2010 COPY FORWARDED TO: 1. SHRI N. VENKATA RAMANA 8-3-833/A/4 5 6&7 F.NO. 102 NAVODAYA COLONY YELLAREDDYGUDA HYDERABAD. 2. ITO WARD 6(4) HYDERABAD 3. CIT(A)-IV HYDERABAD 5 CIT HYDERABAD 6. THE D.R. ITAT HYDERABAD. NP