PRADIP SADANAND SHETTY, MUMBAI V. ITO WD 20(2)1, MUMBAI

ITA 1073/MUM/2014

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3844 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2016
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2014
• Court: TRIBUNAL
• Department Lawyers: S R KIRTHEY
• Keywords: Opportunity of being heard
• Section: 68; 37; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, MUMBAI BEFORE SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER I.T.A. NO.1073/M/2014 (ASSESSMENT YEAR: 2006 - 20 07 ) I.T.A. NO.1074/M/2014 (ASSESSMENT YEAR: 2006 - 2007 ) MR. PRADIP SADANAND SHETTY, 303, SARITA APARTMENT CHS LTD, CROSS ROAD NO.5, I.C. COLONY, BORIVALI WEST, MUMBAI 400 103. / VS. ITO, WARD 20(2) - 1, MUMBAI. ./ PAN : AAZPS8034R ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MEHUL SHAH / RESPONDENT BY : SHRI S.R. KIRTHEY, DR / DATE OF HEARING : 1 7 .02.2016 / DATE OF PRONOUNCEMENT : 17 .02.2016 / O R D E R PER D. KARUNAKARA RAO, AM: THERE ARE TWO APPEALS UNDER CONSIDERATION FOR THE AY 2006 - 07. APPEAL ITA NO.1073/M/2014 IS ON MERITS OF QUANTUM ADDITIONS AND APPEAL ITA NO.1074/M/2014 RELATES TO PEN ALTY U/S 271(1)(C) OF THE ACT. SINCE, THE ISSUES RAISED IN BOTH THE APPEALS ARE CONNECTED, THEREFORE, FOR THE SAKE OF CONVENIENCE THEY ARE CLUBBED, HEARD COMBINEDLY AND DISPOSED OF IN THIS CONSOLIDATED ORDER. APPEAL WISE ADJUDICATION IS GIVEN IN THE FOLL OWING PARAGRAPHS OF THIS ORDER. ITA NO.1073/M/2014 2. THIS APPEAL FILED BY THE ASSESSEE ON 17.2.2014 IS AGAINST THE ORDER OF THE CIT (A) - 35, MUMBAI DATED 18.12.2013 FOR THE ASSESSMENT YEAR 2006 - 2007. IN THIS APPEAL, ASSESSEE IS AGGRIEVED AGAINST THE CONFIRMATION OF AN ADDITION OF RS. 4,43,879/ - . BRIEFLY STA TED RELEVANT FACTS ARE THAT THE ASSESSEE IS A REAL ESTATE BROKER AND ARRANGES PROPERTIES FOR RENT AND EARNS COMMISSION. ASSESSEE FILED THE RETURN OF 2 INCOME DECLARING TH E TOTAL INCOME OF RS. 1,30,972/ - FOR THE ASSESSMENT YEAR 2006 - 07. THE ASSESSMENT WAS C OMPLETED U/S 144 OF THE ACT AND THE ASSESSED INCOME WAS DETERMINED AT RS. 11,35,190/ - . ONE OF THE ADDITIONS MADE BY THE AO RELATES TO CASH CREDITS U/S 68 OF THE ACT AMOUNTING TO RS. 8,12,538/ - . DURING THE SCRUTINY PROCEEDINGS, AO STUDIED THE BANK ACCOUNT S OF THE ASSESSEE AND FOUND THE CREDITS IN THE ACCOUNTS AND THE TOTAL OF THE SAME WORKS OUT TO RS. 8,12,538/ - . AFTER COMPARING THE ABOVE WITH THE PROFIT AND LOSS ACCOUNT (PAGE 214 OF THE PAPER BOOK), AO NOTICED THAT THE GROSS RECEIPTS DECLARED WERE ONLY, RS.3,68,659/ - AND NOT RS. 8,12,539/ - FOUND IN THE BANK ACCOUNTS OF THE ASSESSEE. ACCORDINGLY, AO MADE ENTIRE ADDITION OF RS. 8,12,539/ - , WHEREAS THE CIT (A) RESTRICTED THE ADDITION TO THE DIFFERENCE BETWEEN THE ABOVE FIGURES IE RS. 4,43,878 / - (RS. 8,12,53 8 RS. 3,68,659/ - ). AGGRIEVED WITH THE ABOVE DECISION OF THE CIT (A), ASSESSEE FILED THE PRESENT APPEAL BEFORE US. 3. DURING THE PROCEEDINGS BEFORE US, LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE SAID DIFFERENCE OF RS. 4,43,878/ - IS THE AMOUNT PAID TO THE SAID BROKERS WHO PARTICIPATED IN EARNING OF THE RENTAL COMMISSIONS AND MOST OF THEM ARE JOINT OPERATIONS INVOLVING OTHER BROKERS. IN THIS REGARD, HE BROUGHT OUR ATTENTION TO A LETTER DATED 20.1.2012 ADDRESSED TO THE AO AND MENTIONED THAT SUM OF RS. 3 ,58,455/ - WAS PAID TO THE OTHER BROKERS NAMELY (I) ASIF SHAIKH (RS. 1,86,250/ - ); (II) DN PROPERTY SOLUTION (RS. 38,830/ - ); (III) MAHENDRA TEMBE (RS. 43,500/ - ); (IV) MAHESH GITE (RS. 46,375/ - ) AND (V) SATTAR KHAN (RS. 43,500/ - ). HE FURTHER SUBMITTED THAT V ARIOUS SMALL PAYMENTS OF COMMISSION WERE ALSO PAID TO VARIOUS OTHER BROKERS WHO HELPED IN BRINING THE CUSTOMERS TO THE ASSESSEE. THE BENCH INQUIRED INTO THE ASSESSMENT DETAILS OF THESE RECIPIENTS OR CONFIRMATIONS, IF ANY. IN RESPONSE, LD COUNSEL FOR THE ASSESSEE DEMONSTRATED FROM THE LEDGER EXTRACTS AND BANK ACCOUNTS THAT THE MOST OF THE PAYMENTS ARE BY WAY OF CHEQUES INVOLVING BANKING CHANNELS. IN THIS REGARD, BOTH THE PARTIES MENTIONED THAT THIS ISSUE MAY BE REMANDED TO THE FILE OF THE AO FOR FRESH EXA MINATION BY THE AO. 4. AFTER HEARING BOTH THE PARTIES, WE FIND IT NECESSARY TO REMAND THIS ISSUE TO THE FILE OF THE AO FOR FRESH EXAMINATION AFTER GRANTING A REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE AS PER THE SET PRINCIPLES OF NATURAL JUSTI CE. AO IS UNDER 3 OBLIGATION TO FILE RELEVANT DETAILS TO DEMONSTRATE THAT THE PAYMENTS MADE ARE GENUINE AND ARE INCURRED FOR BUSINESS PURPOSES AND DEDUCTIONS ARE ALLOWABLE OTHERWISE TO SECTION 37 OF THE ACT. AO IS DIRECTED TO EXAMINE THE ABOVE FACTS AND AP PLY THE CORRECT LAW BEFORE DECIDING THE ISSUE BY PASSING A SPEAKING ORDER . ACCORDINGLY, GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.1074/M/2014 6 . THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) IN CONNECTION WITH THE PENALTY LEVIED U/S 271(1)(C) OF THE ACT. THIS PENALTY WAS LEVIED BY THE AO IN CONNECTION WITH THE ADDITION MADE U/S 68 OF THE ACT, WHICH IS THE SUBJECT MATTER O F APPEAL BEFORE THE TRIBUNAL VIDE ITA NO.1073/M/2014. AFTER HEARING BOTH THE PARTIES, WE SET ASIDE THE ORDER OF THE CIT (A) AND REMANDED THE ISSUE TO THE FILE OF THE AO FOR FRESH ADJUDICATION. IN EFFECT, THUS, THE BASIS ON WHICH THE PENALTY IS LEVIED STA NDS REMANDED. THEREFORE, THIS APPEAL GETS DISMISSED. AO IS FREE TO INITIATE PENALTY, IF ANY, AS PER LAW AFTER COMPLETING THE REMANDING PROCEEDINGS ON QUANTUM PROCEEDINGS. ACCORDINGLY, GROUNDS RAISED IN THIS APPEAL ARE DISMISSED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. 8. CONCLUSIVELY, QUANTUM APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES AND THE PENALTY APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 7 TH FEBRUARY, 2016. S D / - S D / - ( PAWAN SINGH ) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 17 .2.2016 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 4 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI