Narayanpet Shakeel Ahmed, Adoni V. Income Tax Officer, Ward-1, Nirmal

ITA 1519/Hyd/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8750 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 10 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 09-07-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 29-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V APARNA
• Assessee Lawyers: S RAMA RAO
• Keywords: Opportunity of being heard; Reasonable cause
• Section: 44AD; 142(1); 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B ', HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN , ACCOUNTANT MEMBER ITA NO. 1519 / HYD/201 7 ASSESSMENT YEAR: 20 1 0 - 1 1 NARAYANPET SHAKEEL AHMED, ADONI PAN A FPPA6528P VS. INCOME - TAX OFFICER, WARD 1 , ADONI. A PPELLANT RESPONDENT ASSESSEE BY: S H RI S. RAMA RAO REVENUE BY: S MT. V. APARNA DATE OF HEARING: 0 9 / 0 7 / 201 9 DATE OF PRONOUNCEMENT: 12 / 0 7 /201 9 O R D E R PER S. RIFAUR RAHMAN , AM: T H IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A), KURNOOL , DATED, 2 9 / 05 /201 7 FOR AY 20 1 0 - 1 1 . 2. ON PERUSAL OF RECORD, WE FIND THAT THERE IS A DELAY OF 1 5 DAYS IN FILING THIS APPEAL BEFORE US. TO THIS EFFECT, THE ASSESSEE FILED AN AFFIDAVIT AFFIRMING THERE IN THAT HE WAS SUFFERING INFECTIVE HEPATITIS (JAUNDICE) AND WAS UNDERGOING MEDICAL TREATMENT AT THE RELEVANT POINT OF TIME, HENCE, THE DELAY OCCURRED. AS THE ASSESSEE WAS PREVENTED BY REASONABLE CAUSE IN NOT FILING THE APPEAL WITHIN THE DUE DATE, WE CONDONE THE DELAY AND ADMIT THE APPEAL FOR HEARING AND ADJUDICATION. 3. BRIEF FACTS OF THE CASE ARE, ASSESSEE FILED HIS RETURN OF INCOME FOR THE AY 2010 - 11 ON 22/11/2010 ADMITTING TOTAL INCOME OF RS. 2,40,650/ - , WHICH WAS PROCESSED U/S 143(1) OF THE INCOME - TAX ACT, 1961 (IN SHORT THE ACT). SUBSEQUENTLY, I.T.A. NO. 1519/ HYD/1 9 NARAYANPET SHAKEEL AHMED, ADONI. 2 THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS TO EXAMINE THE SOURCE OF CASH DEPOSIT MADE BY THE ASSESSEE IN SB ACCOUNT. ACCORDINGLY, NOTICES U/S 143(2) AND 142(1) WERE ISSUED AND IN RESPONSE, THE AR OF THE ASSESSEE APPEARED AND FURNISHED THE INFORMATION AS CALLED FOR. 3.1 DURING THE ASSESSMENT PROCEEDI NGS, AO NOTICED THAT AS PER AIR/CIB, ASSESSEE HAS MADE DEPOSITS TO THE EXTENT OF RS. 1,39,93,200/ - , WHEREAS, ASSESSEE FILED A COPY OF HIS SB ACCOUNT AND HE COULD NOT OFFER OR SUBMIT SATISFACTORY EXPLANATION BEFORE THE AO SINCE THE ASSESSEE HAS NOT MAINTAIN ED ANY BOOKS OF ACCOUNT REGARDING COMMISSION INCOME DERIVED FROM SHC GLOBAL SECURITIES LTD., NEW DELHI. ACCORDINGLY, AO ESTIMATED THE INCOME U/S 44AD ON THE BASIS OF AIR/CIB DATA I.E. ESTIMATED 8% ON THE VALUE OF DEPOSIT MADE BY THE ASSESSEE IN HIS BANK AC COUNT, WHICH COMES TO RS. 11,19,456/ - . SINCE THE ASSESSEE HAS DECLARED AN AMOUNT OF RS. 1,41,000/ - , THE DIFFERENCE IS ADDED AS INCOME FROM COMMISSION BUSINESS TO THE EXTENT OF RS. 9,78,560/ - . 4. AGGRIEVED WITH THE ABOVE ORDER, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), WHO CONFIRMED THE ORDER OF AO. 5. AGGRIEVED WITH THE ABOVE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1) THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ESTIMATING THE INCOME AT 8% ON THE AMOUNT OF RS.1,39,93,200 / - 3) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE COMMISSION ON PURCHASE AND SALE OF SHARES WOULD NOT BE AS HIGH AS 8% AND, I.T.A. NO. 1519/ HYD/1 9 NARAYANPET SHAKEEL AHMED, ADONI. 3 THEREFORE, THE ASSESSING OFFICER'S ESTIMATION IS NOT JUSTIFIED. 4) THE LEARNED CO MMISSIONER OF INCOME TAX (APPEALS) ERRED IN NOT DECIDING THE APPEAL WITH REGARD TO CHARGING OF INTEREST U/ S 2348 OF THE I. T. ACT. 5) ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 6. BEFORE US, LD. AR OF THE ASSESSEE SUBMITTED T HAT ASSESSEE HAS COMMISSION BUSINESS AND TRACTOR TROLLIES BUSINESS . A SSESSEE HAS DECLARED BOTH THE INCOMES IN HIS RETURN OF INCOME. HE SUBMITTED THAT ASSESSEE IS IN BUSINESS OF STOCK BROKING AND HE IS SUB - BROKER WORKING FOR SHC GLOBAL SECURITIES LTD., NEW DELHI. SINCE THE DEPOSITS WERE FOUND BY THE AO IN HIS BANK ACCOUNT, AO ESTIMATED THE COMMISSION INCOME @ 8% ON THE ABOVE DEPOSITS. HE SUBMITTED THAT THESE PROCEEDS WERE DEPOSITED/REMITTED ON BEHALF OF THE CLIENTS. HE SUBMITTED THAT GENERALLY COMMISSION IS ABOUT 2 TO 3% ON THE VALUE OF INVESTMENT AND AO HAS ESTIMATED WRONGLY BY APPLYING SECTION 44AD. HE SUBMITTED THAT THE ASSESSEE HAS BROUGHT ON RECORD STATEMENT FROM SHC GLOBAL SECURITIES LTD., NEW DELHI FOR THE WHOLE AY AND ALSO THE SUBSEQUENT AY, WHICH IS PLACED ON RECORD. HE PRAYED THAT THE ISSUE MAY BE REMITTED BACK TO AO TO VERIFY THE SAME AND DETERMINE PROPER PROFIT EARNED BY THE ASSESSEE. 7. LD. DR, ON THE OTHER HAND, RELIED ON THE ORDERS OF REVENUE AUTHORITIES AND SUBMITTED THAT T HE INFORMATION SUB MITTED BEFORE THE BENCH WAS NOT FILED BEFORE THE AO, THEREFORE, IT MAY BE REMITTED TO THE FILE OF AO. 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE NOTICE THAT AO HAS ESTIMATED COMMISSION INCOME OF THE ASSESSEE @ 8% U/S 44AD. NOW, I.T.A. NO. 1519/ HYD/1 9 NARAYANPET SHAKEEL AHMED, ADONI. 4 BEFORE US, ASSESSEE HAS BROUGHT ON RECORD THE ACCOUNT STATEMENT FROM SHC GLOBAL SECURITIES LTD., NEW DELHI, TO SUBSTANTIATE THE CLAIM THAT ASSESSEE HAS EARNED ONLY COMMISSION INCOME TO THE EXTENT OF INCOME CERTIFIED BY THE M . SINCE AO HAS ESTIMATED CO MMISSION INCOME @ 8%, WE NOTICE THAT ASSESSEE IS A SUB - BROKER WORKING FOR SHC GLOBAL SECURITIES LTD., NEW DELHI. IN THE NORMAL CASE, SUB - BROKERS ARE EARNING COMMISSION DEPENDING UPON THE SERVICE PROVIDED TO THEIR CLIENT. THESE SERVICES CAN BE CLASSIFIED AS FULL SERVICE I.E. BUYING, SELLING AND DELIVERY OR DISCOUNT BROKING AND BROKERAGE CHARGES ARE CHARGED TO THE CLIENT BASED ON AVERAGE INVESTMENT OR PERCENTAGE ON TOTAL INVESTMENT. THESE ARE OF CONSOLIDATED BROKERAGE CHARGED TO THE CLIENT AND NORMALLY THESE BROKERAGE COMMISSION IS SHARED BY THE MAIN BROKER AND SUB - BROKER. THEREFORE, SUB - BROKER IS RECEIVING A PORTION OF THE COMMISSION CHARGED TO THE CLIENT. BEFORE US, ASSESSEE ALSO BROUGHT ON RECORD, ACCOUNT STATEMENT FROM THE MAIN BROKER, THEREFORE, IN OUR CO NSIDERED VIEW, WE REMIT THIS ISSUE BACK TO THE FILE OF AO TO VERIFY THE COMMISSION RECEIVED BY THE ASSESSEE AND IF THERE IS ANY AGREEMENT BETWEEN MAIN BROKER AND SUB - BROKER ON THE BASIS OF SPLIT UP BROKERAGE AND EVEN OTHERWISE, AO HAS TO ESTIMATE THE COM MISSION BASED ON THE TRADE PRACTICE, WHICH IS WITHIN THE RANGE OF 2.5% TO 3%. AO CANNOT ESTIMATE BASED ON SECTION 44AD I.E. FOR THE PROFIT ON TURNOVER. THEREFORE, WITH THE ABOVE DIRECTIONS, WE REMIT THIS ISSUE TO THE AO TO ESTIMATE PROPER COMMISSION AFTER PROVIDING REASONABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. ACCORDINGLY, GROUND NOS. 2 & 3 ARE ALLOWED FOR STATISTICAL PURPOSES. 9. GROUND NOS. 1 & 5 ARE GENERAL IN NATURE. GROUND NO. 4 IS REGARDING CHARGING INTEREST U/S 234B, WHICH IS CONSEQUENTIA L IN NATURE, HENCE, THE AO IS DIRECTED ACCORDINGLY. I.T.A. NO. 1519/ HYD/1 9 NARAYANPET SHAKEEL AHMED, ADONI. 5 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ` PRONOUNCED IN THE OPEN COURT ON 12 TH JU LY , 2019. S D/ - ( P. MADHAVI DEVI ) JUDICIAL MEMBER SD/ - ( S. RIFAUR RAHMAN ) ACCOUNTANT MEMBER HYDERABAD, DATED 12 TH JULY , 201 9. KV COPY FORWARDED TO: 1. NARAYANA SHAKEEL AHMED, PROP. NAAZ AUTO ENGG. WORKS, 2 - 1224 - 22, OPP. KAREPPA HOSTEL, ADONI 518 301 2 . I TO, WARD 1 , ADONI 518 301 . 3 . CIT (A) , KURNOOL. 4. PR. CIT , KURNOOL. 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE