ACIT, New Delhi v. Vimal Kant, New Delhi

ITA 2816/DEL/2011 | 2007-2008
Pronouncement Date: 31-10-2013 | Result: Dismissed

Appeal Details

RSA Number 281620114 RSA 2011
Assessee PAN AANPK8743M
Bench Delhi
Appeal Number ITA 2816/DEL/2011
Duration Of Justice 2 year(s) 5 month(s)
Appellant ACIT, New Delhi
Respondent Vimal Kant, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 31-10-2013
Appeal Filed By Department
Order Result Dismissed
Bench Allotted H
Tribunal Order Date 31-10-2013
Date Of Final Hearing 24-10-2013
Next Hearing Date 24-10-2013
Assessment Year 2007-2008
Appeal Filed On 31-05-2011
Judgment Text
ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI I.C. SUDHIR JUDICIAL MEMBER AND SHRI SHAMIM YAHYA ACCOUNTANT MEMBER I.T.A. NO. 2816/DEL/2011 A.Y. : 2007-08 ACIT CIRCLE - 23 (1) ROOM NO. 190 CR BLDG. IP ESTATE NEW DELHI VS. SH. VIMAL KANT 545 HANUMAN MANDIR ROAD CHIRAG DELHI NEW DELHI (PAN/GIR NO. : AANPK8743M) AND C.O. NO. 204/DEL/2011 (IN ITA NO. 2816/ DEL/2011) A.Y. 2007-08 SH. VIMAL KANT VS. ACIT CIRCLE 23(1) 545 HANUMAN MANDIR ROAD NEW DELHI CHIRAG DELHI NEW DELHI (PAN/GIR NO. : AANPK8743M) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SH. H.K. CHAUDHARY CA DEPARTMENT BY : SH. SAMEER SHARMA D.R. ORDER ORDER ORDER ORDER PER PER PER PER SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM SHAMIM YAHYA : AM THIS APPEAL BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE EMANATE OUT OF ORDER OF THE LD. CIT(A) DATED 17.3.2 011 AND PERTAINS TO ASSESSMENT YEAR 2007-08. 2. THE GROUNDS OF APPEAL RAISED IN THE REVENUES AP PEAL READ AS UNDER:- ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 2 (I) ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 29 65 711 /- OUT OF TOTAL ADDITION MADE BY AO ON ACCOUNT OF COMMISSION EXPENSES. (II) THE APPELLANT CRAVES LEAVE TO ADD ALTER OR AM END ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF HEARING OF THE APPEAL. 3. THE GROUND RAISED IN THE ASSESSEES CROSS OBJECT ION IS THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE THE LD . CIT(A) HAS ERRED IN RETAINING THE ADDITION OF RS. 5 40 364/- O UT OF TOTAL ADDITION MADE BY AO OF RS. 35 16 075/- ON ACCOUNT OF COMMISSION AND BROKERAGE PAID IGNORING THE SUBMISSIONS MADE. 4. THE BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A REAL ESTATE AGENT AND HAD SHOWN GROSS COMMISSION RECEIVED DURING THE Y EAR TO THE TUNE OF RS. 92 14 159/- AGAINST WHICH AN AMOUNT OF RS. 4 5 16 075/- WAS CLAIMED AS COMMISSION PAID. THE ASSESSING OFFICER EXA MINED THE ISSUE OF ALLOWABILITY OF COMMISSION CLAIMED TO HAVE BEEN PA ID BY THE ASSESSEE AND OBSERVED THAT:- (I) THE ASSESSEE ONLY SUBMITTED A LIST OF PARTIES TO WHOM COMMISSION TOTALING RS. 42 22 172/- HAD BEEN PAID; (II) THE DETAILS SUBMITTED IN RESPECT OF THE ABOVE ME NTIONED AMOUNT WAS INCOMPLETE WITH REFERENCE TO THE ADDRESSES TOTALING AN AMOUNT OF RS. 3 56 891/-. (III) NO TDS HAD BEEN DEDUCTED IN RESPECT OF AN AMOUN T OF RS. 1 50 000/-. ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 3 4.1 THE LD. AO THEREFORE MADE AN INITIAL IMPRESSIO N THAT ENTIRE CLAIM OF PAYMENT OF COMMISSION MADE IN THE PROFIT AN D LOSS ACCOUNT WAS DOUBTFUL. THE DETAILS SO CALLED FOR WERE SUBMIT TED BY THE ASSESSEE IN THE FORM OF CONFIRMATION OF COMMISSION PAID TO THE TUNE OF RS. 13 38 229/- BY 8.12.2009 AND FURTHER TIME WAS SOUGHT TO COLLECT REST OF THE CONFIRMATIONS. THE LD. AO REJECTED THE REQUEST O F THE ASSESSEE ON THE GROUND THAT SUFFICIENT OPPORTUNITY HAD BEEN GIV EN AND THE ASSESSEE HAD BEEN DELAYING THE SUBMISSION OF DETAILS REGARDING PAYMENT OF COMMISSION AND WAS SPECIFICALLY ASKED BY THE AO TO FILE CONFIRMATION OF PERSONS TO WHOM COMMISSION HAD BEEN PA ID ON 19.11.2009. THE LIST OF PARTIES WERE FINALLY FILED BY THE ASSESSEE ON 4.12.2009 WHICH WAS COMPLETE IN TERMS OF NAMES AND A DDRESSES OF THE PERSONS CONCERNED EXCEPT IN RESPECT OF AN AMOUN T OF RS. 7 97 794/- AS DETAILED ABOVE IN PARA (4). BY 8.12.2 009 THE ASSESSEE HAD FILED THE CONFIRMATION FOR COMMISSION PAID TOTALI NG RS. 13 38 229/-. THE LD. AO THEREFORE CONCLUDED THAT ASSESSEE WAS DELIBERATELY AVOIDING TO FILE THE DETAIL IN THIS REGARD IN ORDE R TO PREVENT THE AO FROM CARRYING OUT ANY CROSS-VERIFICATIONS. IN VIEW OF THIS THE AO REJECTED THE BOOKS OF ACCOUNTS AND ALLOWED COMMISSI ON ONLY TO THE EXTENT OF RS. 10 LACS AS AGAINST THE CLAIM OF RS. 45 67 045/-. 5. BEFORE LD. CIT(A) ASSESSEE SUBMITTED ELABORATE S UBMISSIONS AND ADDITIONAL EVIDENCES. LD. CIT(A) ACCEPTED THE ADD ITIONAL EVIDENCES AND THE MATTER WAS REFERRED TO THE LD. AO FOR HIS RE MAND REPORT. CONSIDERING THE ADDITIONAL EVIDENCES SUBMITTED BY TH E ASSESSEE REMAND REPORT FROM THE LD. AO LD. CIT(A) DELETED T HE ADDITION TO THE EXTENT OF RS. 29 65 711/- AND CONFIRMED THE ADDITION TO THE TUNE OF RS. 5 40 364/-. ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 4 6. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEA L AND ASSESSEE FILED THE CROSS OBJECTION IN THIS REGARD. 7. WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE COMPLET E DETAILS AS SOUGHT BY THE LD. AO HAS NOT BEEN SUBMITTED BY THE A SSESSEE. HE FURTHER SUBMITTED THAT NO EVIDENCE HAS BEEN BROUGHT ON RECORD TO SHOW THAT THE RECIPIENT OF COMMISSION HAS PROVIDED AN Y SERVICE TO THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ONUS WAS UP ON THE ASSESSEE TO PROVE THAT THE EXPENSES ARE ALLOWABLE. HE FURTH ER SUBMITTED THAT ASSESSEE HAS NOT BEEN ABLE TO ESTABLISH THAT EXPEN DITURE IN THIS REGARD WAS ALLOWABLE U/S. 37(1) OF THE I.T. ACT. I N THIS REGARD LD. D.R. RELIED UPON THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. MODI STONE LTD. 203 TAXMANN 123 AND ANOTHE R DECISION OF THE DELHI HIGH COURT IN CASE OF SCHNEIDER ELECTRIC INDIA LTD. VS. C.I.T. 171 TAXMANN 177 (DEL.). 7.1 LD. COUNSEL OF THE ASSESSEE ON THE OTHER HAND S UBMITTED THAT ASSESSEE HAS GENUINELY INCURRED EXPENDITURE OF COMMI SSION. HE SUBMITTED THAT ASSESSEE IS IN THE BUSINESS OF REAL ESTATE BROKERAGE. ASSESSEE RECEIVES COMMISSION FROM THE BUILDERS AND R ECEIVES CERTAIN COMMISSION THEREON. OUT OF THE SAID COMMISSION THE A SSESSEE SHARES A SMALL PERCENTAGE OF IT WITH THE CUSTOMERS. HE SUBM ITTED THAT THE LD. AO HAS TOTALLY FAILED TO UNDERSTAND THE NATURE OF T HE COMMISSION IN THIS REGARD. FURTHER HE SUBMITTED THAT ASSESSEES BOOKS OF ACCOUNTS HAS BEEN DULY AUDITED NO DEFECT HAS BEEN POINTED OUT T HEREON. ASSESSEE HAS COMPLIED WITH ALL THE DETAILS WHICH WERE REQUIRE D AND UNDER SUCH CIRCUMSTANCES HE PLEADED THAT NO DISALLOWANCE IN TH IS REGARD SHOULD HAVE BEEN SUSTAINED BY THE LD. CIT(A). ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 5 7.2 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS AN D PERUSED THE RECORDS. WE FIND THAT ASSESSEE IN THIS CASE HAS INC URRED COMMISSION EXPENSE OF RS. 45 16 075/-. LD. AO HAS ALLOWED ON LY RS. 10 LACS ON THE REASONING THAT THIS AMOUNT OF COMMISSION CAN BE SAID TO HAVE BEEN NORMALLY INCURRED IN BUSINESS OF THE ASSESSEE. TH E LD. AO HAS DISALLOWED THE OTHER AMOUNTS ON THE GROUND THAT A SSESSEE HAS NOT PROVED THE VERACITY OF THE EXPENDITURE. WE FURTHER FIND THAT ASSESSEE HAS SUBMITTED CERTAIN DETAILS BEFORE THE LD. AO. HOW EVER DUE TO PAUCITY OF TIME THE COMPLETE DETAILS COULD NOT BE F URNISHED. ASSESSEE HAS FURNISHED THE REMAINING DETAILS BEFORE THE LD. CIT(A). LD. CIT(A) HAS OBTAINED THE REMAND REPORT FROM THE LD. AO. LD. CIT(A) HAS ALSO SOUGHT REJOINDER FROM THE ASSESSEE. 7.3 FROM THE DETAILS SUBMITTED THE LD. CIT(A) HAS GIVE N A FINDING THAT A SUM OF RS. 1 93 699/- HAS BEEN PAID BY THE ASSESS EE TO ITS STAFF AND DEBITED UNDER THE HEAD COMMISSION AND THE SAME BECAU SE OF ITS NATURE WAS NOT SUBJECTED TO THE PROVISIONS OF TAX DE DUCTION AT SOURCE. FOR THE GENUINENESS OF THESE PAYMENTS VOUCHERS WERE DULY PREPARED IN THIS REGARD THE CONFIRMATION WITH REGARD TO AMO UNT OF RS. 23 09 633/- REPRESENTING 24 PERSONS WAS VERIFIED BY THE LD. AO AND FOUND GENUINE. FURTHER AN AMOUNT OF RS. 7 76 238/ - REPRESENTING 11 PERSONS HAS ALSO BEEN VERIFIED AND THE DIFFERENCE O N ACCOUNT OF TDS IN DIFFERENT FINANCIAL YEAR IN WHICH THE RECIPIENT H AS SHOWN THE PAYMENT HAVE BEEN RECONCILED AND LD. CIT(A) HAS GIVEN A FI NDING THAT THEY ARE ACCEPTABLE. ANOTHER AMOUNT OF RS. 6 01 899/- IN RES PECT OF 09 PERSONS COULD NOT BE VERIFIED AS THESE PERSONS DID NOT REP LY TO THE NOTICE U/S. 133(6) ISSUED BY THE LD. AO. EVEN THOUGH THE CONF IRMATIONS FROM THEM WERE DULY FILED BY THE ASSESSEE. LD. CIT(A) HA S FOUND IN THIS REGARD THAT ALL THE PAYMENTS HAVE BEEN MADE BY CHEQ UE AND TDS HAS ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 6 BEEN DEDUCTED. HE ALSO FOUND THAT IN THIS REGARD T HAT THERE IS NO DENIAL OF RECEIPT OF PAYMENT BY THEM AND LACK OF RES PONSE IN RESPONSE TO STATUTORY NOTICE ISSUED BY THE LD. AO CANNOT BE TAKEN AS ADVERSE EVIDENCE AGAINST THE ASSESSEE. THEREFORE THIS AMOUN T OF RS. 6 01 898/- WAS FOUND BY THE LD. CIT(A) TO HAVE BEEN PROPERLY EXPLAINED AND NO EVIDENCE TO DISPROVE THE CONFIRMATIONS HAS B EEN BROUGHT ON RECORD. 7.4 LASTLY AN AMOUNT OF RS. 5 40 364/- REPRESENTIN G 18 PERSONS IS ON ACCOUNT OF THOSE CASES WHERE NEITHER CONFIRMATION C OULD BE FILED NOR ANYONE RESPONDED TO THE STATUTORY NOTICE ISSUED BY THE ASSESSING OFFICER. HENCE LD. CIT(A) HAS AFFIRMED THE AOS A CTION TO THE TUNE OF RS. 5 40 364/-. 7.5 CONSIDERING THE DISCUSSION IN THE PRECEDING PA RAGRAPHS WE ARE OF THE OPINION THAT LD. CIT(A) HAS PASSED A FAIR R EASONABLE AND COGENT ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. ALL THE SUBMISSIONS OF THE ASSESSEE HAVE BEEN DULY ANALYZED BY THE LD. CIT(A) AND PROPER FINDING HAVE BEEN GIVEN IN THIS REGARD. 8. AS REGARDS LD. DEPARTMENTAL REPRESENTATIVES CON TENTION THAT THERE IS NO GENERAL NORMS IN THE BUSINESS OF THE AS SESSEE TO GIVE COMMISSION IS NOT ACCEPTABLE. THE PAYMENT ON COMMISS ION IS QUITE PREVALENT IN THE REAL ESTATE BROKERAGE BUSINESS. T HE LD. AO HAS HIMSELF ALLOWED RS. 10 LACS ON ESTIMATE BASIS WHILE OBSERVING THAT SUCH AMOUNT CAN BE SAID TO HAVE BEEN INCURRED IN THE BUSI NESS OF THE ASSESSEE. THE DECISION RELIED UPON THE BY LD. COU NSEL OF THE ASSESSEE IN THE CASE OF MODI STONE LTD.S CASE (SUPRA) IS NO T APPLICABLE ON THE FACTS OF THE CASE. IN THE MODI STONES CASE (SUPRA) LD. CIT(A) HAS ALLOWED THE SUBSTANTIAL PART OF THE CLAIM IN VIEW OF THE PAST RECORD ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 7 AND NATURE OF COMMISSION. AS AGAINST THIS WE FIND THAT IN THIS CASE THE COMMISSION HAS BEEN ALLOWED AFTER DULY ANALYZING THE CONFIRMATION SUBMITTED BY THE PARTIES; TDS DEDUCTED IN THIS REGAR D AND VARIOUS OTHER DETAILS BROUGHT ON RECORD BY THE LD. CIT(A). 8.1 THE CASE OF SCHNEIDER ELECTRIC INDIA LTD. VS. C IT RELIED BY THE LD. DR IS ALSO NOT APPLICABLE ON THE FACTS OF THE CASE. IN THIS CASE THE ASSESSEES CLAIM OF SALES COMMISSION WAS DISALLOWED BY THE LD. AO ON THE GROUND THAT THERE WAS NO AGREEMENT BETWEEN THE ASSESSEE AND THERE WERE NO DOCUMENT ON THE BASIS WHICH IT COULD BE SAID THAT COMMISSION WAS DUE AND PAYABLE. WE FIND THAT THE AB OVE CASE IS NOT APPLICABLE TO THE PRESENT CASE BEFORE US. IN THE PR ESENT CASE THERE IS NO ISSUE OF ANY FORMAL AGREEMENT HAVING BEEN ENTERED BY THE ASSESSEE AND THE RECIPIENT OF THE COMMISSION. THE P AYMENT OF COMMISSION WAS QUITE PREVALENT IN THE NATURE OF BUSI NESS CONDUCTED BY THE ASSESSEE. THE NATURE OF COMMISSION AS ELABOR ATED BY THE ASSESSEES COUNSEL HEREINABOVE ALSO SUPPORTS THIS VIEW. 8.2 ASSESSEE HAS SUBMITTED THE CONFIRMATIONS NAMES A DDRESSES OF THE COMMISSION RECIPIENTS. THE RECIPIENTS WHO DID NO T RESPOND TO THE AOS NOTICE U/S. 133(6) OF THE I.T. ACT ON WHICH TH ERE WAS NO CONFIRMATION HAVE ALREADY BEEN DISALLOWED BY THE LD. CIT(A). HENCE THE LD. CIT(A)S ACTION IN THIS REGARD NEEDS TO BE SUSTAINED. WE FURTHER FIND THAT IN THIS CASE LD. CIT(A) HAS NOTED THAT NO INDEPENDENT ENQUIRY HAS BEEN CONDUCTED BY THE LD. AO IN ORDER TO CHECK THE VERACITY AND CONFIRMATION FILED BY THE ASSESSEE BEFORE COMING TO T HE CONCLUSION THAT THERE WAS NO GENUINENESS. ALMOST ALL THE PAYMENTS WERE THROUGH CHEQUE AND TDS HAVE BEEN DEDUCTED FROM THEM. ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 8 9. IN THIS REGARD WE REFER THE DECISION OF THE HO NBLE APEX COURT IN THE CASE OF C.I.T. VS. ORISSA CORPORATION PVT. LTD. 159 ITR 78 WHEREIN IT HAS HELD THAT IN THIS CASE THE RESPONDENT HAD GIVEN THE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT WAS IN THE K NOWLEDGE OF THE REVENUE THAT THE SAID CREDITORS WERE INCOME TAX ASS ESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE R EVENUE APART FROM ISSUING NOTICES UNDER SECTION 131 AT THE INSTAN CE OF THE RESPONDENT DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CRE DITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE THE SO CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTA NCES THE RESPONDENT COULD NOT DO ANY THING FURTHER. IN THE PREMISES IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE RESPONDENT HAS DISCHARGED THE BURDEN THAT LAY ON IT THEN IT COULD NOT BE SAID THAT SUCH A CONCLU SION WAS UNREASONABLE OR PERVERSE OR BASED ON NO EVIDENCE. I F THE CONCLUSION WAS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COU LD BE ARRIVED AT NO QUESTION OF LAW AS SUCH AROSE. THE HIGH COU RT WAS RIGHT IN REFUSING TO STATE A CASE. 10. THUS WE FIND THAT THE ASSESSEE HAS SUBMITTED ALL THE NECESSARY DOCUMENTS WHICH WERE REQUIRED. AS IS EVIDENT FROM T HE HONBLE APEX COURT DECISION NON-TURNING UP OF THE COMMISSION REC IPIENTS ON ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 9 ASSESSING OFFICERS SUMMONS CANNOT BE FATAL TO MAKE THE COMMISSION BOGUS. FURTHERMORE IN CASES WHERE THERE WAS NO RESP ONSE TO AOS NOTICES AND THERE WAS ALSO NO CONFIRMATION THE ADD ITION HAS BEEN SUSTAINED BY THE LD. CIT(A). ACCORDINGLY IN THE B ACKGROUND OF THE AFORESAID DISCUSSIONS AND PRECEDENT WE AFFIRM THE O RDER OF THE LD. CIT(A). 11. IN THE RESULT THE APPEAL FILED BY THE REVENUE AS WELL AS CROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2013. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR I.C. SUDHIR] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE:- 31/10/2013 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT DELHI BENCHES ITA NO. 2816/DEL/2011 & CO NO. 204/DEL/2011 10