Ruchira Bandyopadhyay, Kolkata V. ITO, Ward-30(3), Kolkata, Kolkata

ITA 1206/KOL/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83054 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 17-08-2012
• Court: TRIBUNAL
• Department Lawyers: ATHAR H CHAUDHURY JDI T
• Assessee Lawyers: SOUMITRA CHOW DHURY
• Keywords: Business income; Depreciation; Additional evidence
• Section: 142(1); 144

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , ! ) [BEFORE SHRI MAHAVIR SINGH, JM & SHRI SHAMIM YAHYA, AM] ' / I.T.A NO.1206/KOL/2012 #$ %&/ ASSESSMENT YEAR: 2008-09 RUCHIRA BANDYOPADHYAY VS. INCOME-TAX OFFICER, W D- 30(3), KOLKATA (PAN: AEBPB8519C) (() /APPELLANT ) (*+()/ RESPONDENT ) DATE OF HEARING: 11.08.2014 DATE OF PRONOUNCEMENT: .08.2014 FOR THE APPELLANT: SHRI SOUMITRA CHOWDHURY ADVOCAT E FOR THE RESPONDENT: SHRI ATHAR H. CHAUDHURY, JDI T / ORDER PER SHRI MAHAVIR SINGH, JM : THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIV, KOLKATA IN APPEAL NO. 219/CIT(A)-XIV/10-11 DATED 17.05.2012. ASSESSMENT W AS FRAMED BY ITO, WARD-30(3), KOLKATA U/S. 144 OF THE INCOME-TAX ACT, 1961 (HEREI NAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2008-09 VIDE HIS ORDER DATED 13.12. 2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE ACTION OF AO IN DISALLOWING THE EXPENSES CLAIMED FR OM COMMISSION INCOME IN TOTALITY. THE RELEVANT GROUND IS GROUND NO.2, WHICH READS AS UNDE R: 2. THAT THE LD. CIT(A) WITHOUT GOING THROUGH APPEL LANTS SUBMISSION AND FACTS SIMPLY REPRODUCED THE ASSESSMENT ORDER AND THEREBY MISDIRE CTED HIMSELF TO THE ERRONEOUS CONCLUSION IN CONFIRMING THE LD. AOS ORDER ASSESSI NG AT RS.37,50,532/- U/S. 144 OF THE ACT WHICH DESERVES TO BE CANCELLED. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE HAS D ECLARED GROSS COMMISSION INCOME OF RS.38,42,652/- IN THE AUDITED ACCOUNTS FILED WITH T HE RETURN OF INCOME. IN THE PROFIT AND LOSS ACCOUNT, THE ASSESSEE CLAIMED VARIOUS EXPENSES AND DECLARED NET COMMISSION AT RS.4,84,684/-. ASSESSEE HAS INCOME FROM OTHER SOURCES I.E. INTERES T INCOME AT RS.293/- AND INCOME FROM HOUSE PROPERTY AT RS.7587/- AS COMPUTED BY THE AO IN THE COMPUTATION OF TOTAL INCOME. AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS REQUIRED THE A SSESSEE TO FURNISH DOCUMENTARY EVIDENCE IN SUPPORT OF CLAIM OF EXPENSES TO EARN THIS COMMISSIO N INCOME. AS THE ASSESSEE FAILED TO 2 ITA NO.1206/K/2012 RUCHIRA BANDYOPADHYAY AY 2008-09 PRODUCE THE BOOKS OF ACCOUNT AND OTHER DOCUMENTARY EVIDENCE TO SUPPORT THE CLAIM OF EXPENSES, THE AO INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT AND REJECTED THE BOOKS OF ACCOUNT BY OBSERVING AS UNDER: SINCE THE BOOKS OF PRIMARY ENTRY LIKE BILLS AND VO UCHERS, DOCUMENTARY EVIDENCE IN SUPPORT OF YOUR CLAIM OF PROFESSIONAL INCOME AS WEL L AS EXPENDITURE UNDER THE HEAD PROFESSIONAL CHARGES AND ALL OTHER EXPENSES AS CL AIMED IN YOUR P&L A/C. WERE NOT PRODUCED FOR VERIFICATION AND EXAMINATION. I AM NO T SATISFIED ABOUT THE CORRECTNESS AND GENUINENESS OF YOUR P&L A/C AND BALANCE SHEET SUBMI TTED. IN VIEW OF THE ABOVE, YOU ARE DIRECTED TO SHOW CAUSE AS TO WHY THE SAID P&L A/C. AND BALANCE SHEET SHOULD NOT BE REJECTED U/S. 145(3) OF THE I. T. ACT, 1961. THE AO AFTER ALLOWING REASONABLE OPPORTUNITIES DISA LLOWED THE EXPENSES CLAIMED LIKE ACCOUNTING CHARGES, AUDIT FEES, BANK CHARGES, BONUS , CAR HIRE CHARGES, COMMISSION, ELECTRIC CHARGES, ENTERTAINMENT EXPENSES, LEGAL EXPENSES, OF FICE EXPENSES, OFFICE MAINTENANCE PRINTING & STATIONERY, PROFESSIONAL TAX, SALARY, SA LES PROMOTION TELEPHONE CHARGES, TRADE LICENCE, TRAVELLING & CONVEYANCE, DEPRECIATION ON A QUAGUARD, COMPUTER, ELECTRICAL FITTINGS, FURNITURE & FITTINGS, MOBILE AND TREATED THE ENTIRE COMMISSION INCOME AS INCOME FROM OTHER SOURCES AT RS.38,42,652/-. AGGRIEVED, ASSESSEE PRE FERRED APPEAL BEFORE CIT(A), WHO CONFIRMED THE ACTION OF THE AO IN FRAMING THE BEST JUDGMENT A SSESSMENT U/S. 144 OF THE ACT. ASSESSEE FAILED TO COMPLY WITH THE TERMS OF NOTICE ISSUE U/S . 142(1) OF THE ACT AND ALSO MADE ADDITION OF ENTIRE COMMISSION INCOME IN THE ABSENCE OF DOCUMENT ARY EVIDENCE FOR CLAIM OF EXPENSES INCURRED FOR EARNING THIS COMMISSION INCOME. ASSESS EE BEFORE CIT(A) PRODUCED ADDITIONAL EVIDENCE BUT THE SAME WAS NOT ADMITTED AS THE SAME WAS NOT PRODUCED BEFORE THE AO. FOR THIS, CIT(A) OBSERVED AS UNDER: SINCE THE APPELLANT HAD NOT PRODUCED THE EVIDENCES IN RESPECT OF THE EXPENDITURE DEBITED IN THE PROFIT & LOSS A/C BEFORE THE ASSESSING OFFIC ER AND NO ADDITIONAL EVIDENCES HAVE BEEN ADMITTED FOR THE REASONS STATED IN THE PRECEDI NG PARAS, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING OFFICER WAS RIGHT IN LAW IN MAKI NG DISALLOWANCE OF EXPENDITURE CLAIMED. IN THE RESULT GROUND NO. 3 OF THE CONCISE GROUNDS OF APPEAL IS DISMISSED ALONGWITH THE RELATED GROUNDS OF ORIGINAL GROUNDS O F APPEAL. AGGRIEVED, NOW ASSESSEE IS IN APPEAL BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. AT THE OUTSET, LD. COUNSEL FOR THE ASSESSEE SHRI SO UMITRA CHOWDHURY, ADVOCATE DREW OUR ATTENTION TO THE FOLLOWING CONCISE GROUNDS RAISED B EFORE CIT(A): 1. FOR THAT THE BEST JUDGMENT ASSESSMENT FRAMED B Y THE AO U/S. 144 IS NOT PROPER. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. A.O. ERRED IN TREATING THE COMMISSION INCOME RECEIVED AS INCOME FROM OTHER SOURCES IN PLACE OF PROFITS AND GAINS OF BUSINESS OR PROFESSION. 3 ITA NO.1206/K/2012 RUCHIRA BANDYOPADHYAY AY 2008-09 3. FOR THAT THE LD. AO ERRED IN DISALLOWING VARIOUS EXPENSES CLAIMED IN THE PROFIT & LOSS ACCOUNT AGAINST THE COMMISSION INCOME RECEIVED . BUT HE AGREED THAT NO EVIDENCE WERE PRODUCED BEFORE THE AO AND AO HAS RIGHTLY MADE BEST JUDGMENT ASSESSMENT U/S. 144 OF THE ACT. BUT HE CON TESTED THAT THE COMMISSION INCOME IS BUSINESS INCOME OF THE ASSESSEE BECAUSE ASSESSEE IS CARRYING OUT THIS BUSINESS AND MAINTAINING COMPLETE BOOKS OF ACCOUNT AUDITED BY CHARTERED ACCO UNTANT U/S. 44AB OF THE ACT BUT THE SAME COULD NOT BE PRODUCED BEFORE THE AO AND DUE TO HER INDISPOSITION AND ABSENCE FROM KOLKATA FROM TIME TO TIME. ACCORDINGLY, HE REQUESTED THE B ENCH TO TREAT THIS AS BUSINESS INCOME EVEN THOUGH THIS IS NOT TREATED AS BUSINESS INCOME AND T HE SAME IS TREATED AS INCOME FROM OTHER SOURCES. CONSEQUENTLY EXPENSES ARE TO BE ALLOWED. SECONDLY, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE DISALLOWANCE OF ALL THE EXPENSES IS NOT AT ALL WARRANTED. HE FILED COMPLETE PAPER BOOK INCLUDING EVIDENCE AND AUDITED ACCOUNTS BEFORE US. ON QUERY FROM THE BENCH, LD. SR. DR AS WELL AS LD. COUNSEL FOR THE ASSESSEE AGREED THAT A REASONABLE AND FAIR ESTIMATE OF INCOME I.E. NET INCOME CAN BE MADE BECAUSE TO EARN THIS MUCH OF COMMISSION THE ASSESSEE HAS INCURRED EXPENSES BUT THE SAME CANNOT BE QUANTIFIED AT THIS STAGE. HE STATED THAT SALARY, COMMISSION EXPENSES TO EARN THIS COMMISSION WAS INCURRED AND Q UA THAT COMPLETE BANK ACCOUNT AND VOUCHERS ARE BEING PRODUCED NOW IN ASSESSEES PAPER BOOK. LD. COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO THE ASSESSMENT ORDER WHEREIN FEW O F THE DOCUMENTS PROVE THAT THE COMMISSIONS WERE PAID BY ASSESSEE TO VARIOUS PARTIES, WHO HAVE ADMITTED TO HAVE RECEIVED THIS COMMISSION. THE ASSESSEE HAS EARNED COMMISSION INCOME AND SUBMI TTED BASIC DOCUMENTS LIKE RECEIPTS AND COPIES OF FIRC (FOREIGN INWARD REMITTANCE CERTIFICA TE) IN SUPPORT OF COMMISSION RECEIPTS. THE ASSESSEE HAS SUBMITTED THE FOLLOWING EVIDENCE I N SUPPORT OF CARRYING ON COMMISSION BUSINESS, WHICH ARE AS UNDER: I) TRADE LICENCE ISSUED BY THE KOLKATA MUNICIPAL CORPORATION II) DETAILS OF COMMISSION RECEIPTS III) DETAILS OF FIRC WITH THE NAME AND ADDRESS OF THE REMITTER IV) COPIES OF CERTIFICATE OF FOREIGN INWARD REMITTA NCE, COPIES OF THE COMMISSION BILLS/DEBIT NOTES ISSUED WITH DESCRIPTIO N OF THE COMMISSION CHARGES AND THE BASIS OF COMPUTATION OF COMMISSION INCOME. V) COPIES OF BANK STATEMENTS SHOWING CREDIT OF COMM ISSION RECEIVED THROUGH BANKING CHANNELS. IN ANY CASE, THE AO HAS TO ASSESS THE CORRECT INCOM E AND IS NOT SUPPOSED TO ASSESS THE ENTIRE COMMISSION RECEIPT AS INCOME OF THE ASSESSEE. ADMI TTEDLY, THE ASSESSEE IS CARRYING ON THE BUSINESS AND EARNED COMMISSION INCOME FROM FOREIGN PARTIES. ADMITTEDLY, THE ASSESSEE MIGHT HAVE INCURRED EXPENSES AND IN THE ABSENCE OF BOOKS OF ACCOUNT OR VOUCHERS, WHICH WERE NOT PRODUCED BEFORE THE AO, A REASONABLE ESTIMATE OF IN COME CAN BE MADE. ON THIS, BOTH LD. SR.DR 4 ITA NO.1206/K/2012 RUCHIRA BANDYOPADHYAY AY 2008-09 AS WELL AS LD. COUNSEL FOR THE ASSESSEE FAIRLY AGRE ED THAT A REASONABLE ADDITION OF RS. 8 LACS WILL MEET THE END OF JUSTICE BECAUSE IT WILL CONSTITUTE ABOUT 20% OF THE TOTAL COMMISSION. IN COMMISSION BUSINESS I.E. AGENCY BUSINESS THE PROFIT CAN BE ESTIMATED AT 20% TO WHICH LD. COUNSEL FOR THE ASSESSEE AGREED. IN TERM OF THE AB OVE, WE MAKE A FAIR ESTIMATE OF RS. 8 LACS WHICH SHOULD BE ASSESSED BY AO AS INCOME OF THE ASS ESSEE. WE DIRECT THE AO ACCORDINGLY. APPEAL OF ASSESSEE IS PARTLY ALLOWED. 5. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLO WED. 6. ORDER IS PRONOUNCED IN THE OPEN COURT ON 13.08.2 014. SD/- SD/- , ! , (SHAMIM YAHYA ) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 13TH AUGUST, 2014 ,- #./ 0 JD.(SR.P.S.) 1 *2 3 2%4- COPY OF THE ORDER FORWARDED TO: 1 . () / APPELLANT SMT. RUCHIRA BANDYOPADHYAY, 46/7B, BALL YGUNGE PLACE, KOLKATA-700 019. . 2 *+() / RESPONDENT ITO, WARD-30(3), KOLKATA. 3 . # ( )/ THE CIT(A), KOLKATA 4. 5. # / CIT KOLKATA 2:; *# / DR, KOLKATA BENCHES, KOLKATA +2 */ TRUE COPY, #