ITO WD 21(3)(4), MUMBAI v. INDRAJEET SINGH JAGAT SINGH THAKUR, MUMBAI

ITA 4010/MUM/2010 | 2007-2008
Pronouncement Date: 02-11-2011 | Result: Allowed

Appeal Details

RSA Number 401019914 RSA 2010
Assessee PAN ACEPT9498I
Bench Mumbai
Appeal Number ITA 4010/MUM/2010
Duration Of Justice 1 year(s) 5 month(s) 15 day(s)
Appellant ITO WD 21(3)(4), MUMBAI
Respondent INDRAJEET SINGH JAGAT SINGH THAKUR, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 02-11-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted I
Tribunal Order Date 02-11-2011
Date Of Final Hearing 31-10-2011
Next Hearing Date 31-10-2011
Assessment Year 2007-2008
Appeal Filed On 18-05-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH I MUMBAI BEFORE SHRI B.R. MITTAL (JUDICIAL MEMBER) AND SHRI P.M. JAGTAP (ACCOUNTANT MEMBER) ITA NO. 4010/MUM/2010 ASSESSMENT YEAR-2007-08 THE ITO WARD-21(3)(4) PRATYAKSH KAR BHAVAN BKC BANDRA (E) MUMBAI-400 051 VS. M/S. INDRAJEET SINGH JAGAT SINGH THAKUR FLAT NO. 702 B-WING SAKI VIHAR ROAD SHANTI COMPLEX TUNGA VILLAGE GATE NO.7 POWAI ANDHERI (E) MUMBAI-400 072 PAN-ACEPT 9498 I (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI O.A. MAO RESPONDENT BY: SHRI K.P. KAPADIA DATE OF HEARING :31.10.2011 DATE OF PRONOUNCEMENT: 2.11.2011 O R D E R PER B.R. MITTAL JM : THE DEPARTMENT HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2007-08 AGAINST ORDER OF LD. CIT(A) DT.05.01.2010 ON FOLLOW ING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN DELETING THE ADDITION OF RS . 50 LAKHS MADE BY THE AO. 2. BY DIRECTING THE AO TO TREAT ONLY RS. 11 LAKHS A S INCOME FOR THE YEAR OUT OF RS. 50 LAKHS RECEIVED AS ADVANCE DURING THE YEAR THE LD. CIT(A) HAS IGNORED THE FOLLOWING FACTS: I) THAT THE ASSESSEE FOLLOWS CASH SYSTEM OF ACCOUNTING . II) THAT THE ASSESSEE COULD NOT FURNISH SUPPORTING EVID ENCE GIVING THE YEAR-WISE QUANTIFICATION OF WORK VIS--V IS THE RECEIPT. ITA NO. 4010/M/2010 2 III) AND IN DOING SO THE LD. CIT(A) HAS IGNORED THE INTE NTION OF THE ASSESSEE TO POSTPONE HIS CURRENT TAX LIABILI TY TO BE SPREAD OUT OVER A NUMBER OF YEARS IN FUTURE. 2. THE RELEVANT FACTS GIVING RISE TO THIS APPEAL AR E THAT ASSESSEE IS AN INDIVIDUAL AND IS A PRACTICING ADVOCATE. THE ASSESS EE FILED THE RETURN DECLARING TOTAL INCOME AT RS. 9 04 835/-. THE ASSESSEE HAS S HOWN SUNDRY CREDITORS AND CURRENT LIABILITIES OF RS. 39 84 607/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS STATED THAT ASSESSEE RECEIVED D EPOSIT FROM M/S. K.K. MANKESHWAR & CO. OF RS. 50 LAKHS FOR HANDLING VARIO US LEGAL MATTERS OF THEIR CLIENT NAMELY SHRI R.N. BIYANI. IT WAS STATED THAT THE SAID ASSIGNMENT INVOLVED A PROLONGED SERIES OF REPRESENTATIONS BEFO RE TRIBUNALS AND OTHER AUTHORITIES PERSONS AND COURTS AND TO HAVE VARIOUS CONFERENCES WITH REGARD TO PROPERTY CONCERN. THEREFORE THE ASSIGNMENT WAS TO LAST FOR A PERIOD OF MORE THAN 4 YEARS. IT WAS STATED THAT OUT OF SAID D EPOSIT OF RS. 50 LAKHS A SUM OF RS. 11 LAKHS HAD BEEN CONSIDERED AS REVENUE FOR THE FINANCIAL YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT OF RS. 39 LAKHS HAD BEEN CARRIED FORWARD AS UNEXPIRED BENEFIT UNDER THE HEAD CURRENT LIABILITIES. IT WAS TO BE APPROPRIATED PROP ORTIONATELY SUBSEQUENTLY. HOWEVER THE AO DID NOT ACCEPT THE SAID CONTENTION OF ASSESSEE. THE AO STATED THAT ASSESSEE FOLLOWS CASH SYSTEM OF ACCOUNT ING. THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE ABOUT THE AMOUNT OF WORK DONE AND THE AMOUNT OF WORK PENDING AND ALSO DID NOT SUBSTANTIATE THE B ASIS OF QUANTIFYING FEES RECEIVED FOR VARIOUS YEARS. THE AO TREATED THE ENT IRE AMOUNT OF RS. 50 LAKHS AS INCOME OF ASSESSEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION. BEING AGGRIEVED ASSESSEE FILED APPEAL BEFORE FIRST APPELL ATE AUTHORITY. 3. ON BEHALF OF ASSESSEE A WRITE-UP WAS FILED BEFO RE THE LD. CIT(A) GIVING THE BREAK UP AS TO HOW FEE HAD BEEN ACCOUNTE D FOR IN DIFFERENT PERIODS. IT WAS ALSO STATED THAT RS. 11 LAKHS STOOD APPROPRIA TED AS PROFESSIONAL FEE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION I.E. ASSESS MENT YEAR 2007-08 FOR RENDERING FOLLOWING SERVICES. ITA NO. 4010/M/2010 3 NUMBER OF MEETINGS AND CONFERENCES THE ASSESSEE HA D WITH DIRECTORS OF M/S. NEXUS PROPERTY AND DEVELOPERS PVT . LTD. KUL MR. ASHWIN K. MANKESHWAR OF M/S. K.K. MANKESHWAR & CO. A CHARTERED ACCOUNTANT MR. MANSOOR MEHBOOB KHAN ETC. THE DETAI LS AS TO THE DATES ARE AS UNDER: DATE DATE DATE 4.12.2006 6.12.2006 9.12.2006 11.12.2006 14.12.2006 16.12.2006 18.12.2006 19.12.2006 21.12.2006 23.12.2006 23.1.2007 25.1.2007 22.2.2007 26.2.2007 1.3.2007 7.3.2007 12.3.2007 15.3.2007 22.3.2007 28.3.2007 29.3.2007 APPROXIMATELY RS. 25 000/- PER MEETING WERE CONSIDE RED CHARGEABLE TO THE CLIENT TOTALING TO RS. 5 25 000/ -. OVER AND ABOVE MR. MN. PIMPLE ADVOCATE HIGH COURT A SENIOR ADVOC ATE OF M/S. SCAN ADVOCATES WAS ALSO RETAINED FOR THIS ASSIGNMENT AND HE WAS PRESENT IN ALL THESE MEETINGS. A SUM OF RS. 5 00 000/- WAS AL SO PAID TO HIM BY VARIOUS CHEQUES IN THIS CONNECTION. A COPY OF THE RECEIPT DT. 17.3.2007 ISSUED BY SCAN ADVOCATES IS ENCLOSED HEREWITH. 4. THE LD. CIT(A) ACCEPTED THE SAID CONTENTION OF A SSESSEE AND STATED THAT THE ENTIRE DEPOSIT OF RS. 50 LAKHS COULD NOT B E CONSIDERED AS INCOME OF ASSESSEE FOR ASSESSMENT YEAR UNDER CONSIDERATION. HE OBSERVED THAT ASSESSEE ALREADY ACCOUNTED FOR A SUM OF RS. 23 LAKH S OUT OF RS. 50 LAKHS EVEN BEFORE SUBSTANTIVE HEARING HAVE BEGUN IN THE COURTS . THAT THE LITIGATION IN QUESTION IS A PROLONGED ONE. THEREFORE LD. CIT(A) ALLOWED THE APPEAL OF ASSESSEE BY DIRECTING THE AO TO TREAT THE SUM OF RS . 11 LAKHS ONLY AS ASSESSEES PROFESSIONAL INCOME FOR THE ASSESSMENT Y EAR UNDER CONSIDERATION. HENCE DEPARTMENT IS IN APPEAL BEFORE TRIBUNAL. 5. DURING THE COURSE OF HEARING LD. DEPARTMENTAL R EPRESENTATIVE SUBMITTED THAT ASSESSEE FOLLOWS CASH SYSTEM OF ACCO UNTING AND AS SUCH THE ENTIRE AMOUNT OF RS. 50 LAKHS RECEIVED BY ASSESSEE IS TO BE CONSIDERED AS ITA NO. 4010/M/2010 4 PROFESSIONAL FEE OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. HE SUBMITTED THAT NO EVIDENCE WERE FILED BY ASSESSEE B EFORE THE AO THAT THE SAID AMOUNT OF RS. 50 LAKHS WAS RECEIVED BY ASSESSEE AS A DEPOSIT AND OUT OF WHICH HOW ASSESSEE HAD APPROPRIATED THE PROFESSIONA L FEE IN PROPORTION TO THE PROFESSIONAL WORK. HE SUBMITTED THAT ASSESSEE H AS FILED PAPER BOOK AND ANNEXURE NO. VII I.E. PAGES 39 TO 42 OF THE PAPER BOO K GIVING THE BREAK-UP OF LEGAL WORK WAS NOT FILED BEFORE AO AND WAS FILED ON LY BEFORE LD. CIT(A). HE SUBMITTED THAT LD. CIT(A) ACCEPTED THE CONTENTION O F ASSESSEE WITHOUT SEEKING COMMENTS OF AO. HE SUBMITTED THAT THERE WA S NO AGREEMENT OR ANY OTHER DOCUMENT FILED BY ASSESSEE TO SUBSTANTIATE TH AT THE SAID SUM OF RS. 50 LAKHS RECEIVED BY ASSESSEE IN THE ASSESSMENT YEAR U NDER CONSIDERATION WAS NOT PROFESSIONAL FEE OF THE ASSESSEE. HE SUBMITTED THAT LD. CIT(A) CONSIDERED ADDITIONAL EVIDENCES AND THEREAFTER DELETED THE ADD ITION MADE BY AO. 6. ON THE OTHER HAND LD. AR REFERRED ANNEXURE-V OF THE PAPER BOOK WHICH IS THE COPY OF LETTER DT. 23.11.2009 ADDRESSE D TO AO WHICH IS AT PAGES 35 TO 37 OF PAPER BOOK AND SUBMITTED THAT ASSESSEE STATED BEFORE THE AO THAT THE SAID AMOUNT OF RS. 50 LAKHS WAS RECEIVED F ROM M/S. K.K. MANKESHWAR & CO CHARTERED ACCOUNTANT FOR HANDLING VARIOUS LEG AL MATTERS OF THEIR CLIENT SHRI R.N. BIYANI WHO IS NOT A RESIDENT OF MUMBAI. HE SUBMITTED THAT IT WAS ALSO STATED IN THE SAID LETTER A SUM OF RS. 11 LAKH S WAS CONSIDERED AS REVENUE FOR THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE BALANCE AMOUNT OF RS. 39 LAKHS WAS CARRIED FORWARD AS UNEXP IRED BENEFITS. THE LD. AR SUBMITTED THAT THE SAID AMOUNT OF RS. 50 LAKHS W AS GIVEN TO ASSESSEE TO CONTEST VARIOUS LITIGATION IN RESPECT OF PROPERTY W HICH WAS PROPOSED TO BE PURCHASED BY SHRI R.N. BIYANI. HOWEVER LD. AR CO NCEDED THAT THE DETAILS OF DATES OF HOLDING VARIOUS MEETINGS AND THE BASIS OF APPROPRIATION OF THE AMOUNT OUT OF SAID RS. FIVE LAKHS THE DETAILS OF WHICH ARE GIVEN IN ANNEXURE- VII OF THE PAPER BOOK I.E. PAGES 39 TO 42 WERE NOT PL ACED BEFORE AO AND WERE FILED BEFORE LD. CIT(A). THE LD. AR ALSO CONC EDED IN REPLY TO A QUERY FROM THE BENCH THAT DETAILS OF CHEQUES ETC. IN RESP ECT OF PAYMENT OF RS. 50 LAKHS TO ADVOCATE SHRI M.N. PIMPLE WERE NEITHER FUR NISHED BEFORE THE AO NOR ITA NO. 4010/M/2010 5 BEFORE LD. CIT(A) AND LD. CIT(A) ACCEPTED THE SAID PAYMENT ALLEGEDLY MADE BY ASSESSEE TO SHRI PIMPLE OF RS. 5 LAKHS ON THE BA SIS OF RECEIPT DT. 17.3.2007 PLACED AT PAGE 42 OF PAPER BOOK. THE LD. AR ALSO C ONCEDED THAT ASSESSEE COULD NOT FURNISH THE DOCUMENTS TO SUBSTANTIATE THA T THE SAID SUM OF RS. 50 LAKHS WAS RECEIVED BY ASSESSEE AS DEPOSIT AND OUT O F WHICH HOW ASSESSEE HAS APPROPRIATED THE AMOUNT IN PROPORTION TO THE WORK D ONE BY HIM. HE CONCEDED THAT IF THE MATTER IS RESTORED TO AO ASSE SSEE WILL FURNISH REQUISITE DETAILS TO AO. 7. CONSIDERING THE ABOVE SUBMISSION OF THE REPRESEN TATIVES OF THE PARTIES AND THE FACTS OF THE CASE WE CONSIDER IT PRUDENT T O SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND RESTORE THE MATTER TO THE FIL E OF AO WITH A DIRECTION TO RE-EXAMINE THE ISSUE ON THE BASIS OF EVIDENCE AND T HE DETAILS AS MAY BE FURNISHED BY ASSESSEE AND AFTER GIVING DUE OPPORTUN ITY OF HEARING IN ACCORDANCE WITH LAW. HENCE WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND ALLOW GROUND OF APPEAL FOR STATISTICAL PURPOSE BY RESTORING THE MATTER TO THE FILE OF AO FOR FRESH CONSIDERATION AS PER LAW. 8. IN THE RESULT APPEAL FILED BY THE DEPARTMENT IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THIS 2 ND DAY OF NOVEMBER 2011 SD/- SD/- ( P.M. JAGTAP ) ( B.R. MITTAL ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI DATED 2 ND NOVEMBER 2011 RJ ITA NO. 4010/M/2010 6 COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR I BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR I.T.A.T MUMBAI ITA NO. 4010/M/2010 7 DATE INITIALS 1. DRAFT DICTATED ON: 31.10.2011 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 31.10.2011 SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: SR. PS/PS 6. ORDER PRONOUNCED ON: SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: SR. PS/PS 9. DATE ON WHICH FILE GOES TO AR 10. DATE OF DISPATCH OF ORDER: