Rathinn M Mehta, Hyderabad, Hyderabad V. ACIT, Circle-16(2), Hyderabad, Hyderabad

ITA 1550/HYD/2016

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 7555 (ITAT-HYDERABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-04-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 21-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 18-11-2016
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B-SMC HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMEBR ITA NO. 1550/HYD/2016 ASSESSMENT YEAR: 2008-09 RATHINN M MEHTA, HYDERABAD. PAN ADQPM5788C VS. ACIT, CIRCLE 16(2) HYDERABAD. (APPLICANT) (RESPONDENT) ASSESSEE BY : SRI A.V. RAGHURAM REVENUE BY : SRI R. MOHAN KUMAR DATE OF HEARING : 21-01-2019 DATE OF PRONOUNCEMENT : 18-04-2019 ORDER PER P. MADHAVI DEVI, J.M.: THIS IS ASSESSEES APPEAL FOR THE A.Y 2008-09 AGAINST THE ORDER OF THE CIT(A)-4, HYDERABAD DATED 24.08.2016. AT THE TIME OF HEARING IT IS SEEN THAT THERE IS A DELAY OF FOUR DAYS IN FILING OF APPEAL AND THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATION EXPLAINING THE REASONS FOR DELAY. TAKING THE SAME INTO CONSIDERATION AND BEING SATISFIED BY THE REASONABLE CAUSE SHOWN BY THE ASSESSEE, WE CONDONE THE SAID DELAY AND PROCEED TO DISPOSAL OF THE APPEAL AS UNDER. 2. BRIEF FACTS OF THE CASE ARE THAT, THE ASSESSEE, AN INDIVIDUAL AND DIRECTOR IN M/S. MAHALAXMI MOTORS LTD., DID NOT FILE THE RETURN OF INCOME FOR THE A.Y 2008-09. THE A.O 2 ITA.NO. 1550/HYD/2016 RATHINN M MEHTA., HYD. RECEIVED INFORMATION THAT THE ASSESSEE HAS RECEIVED PROFESSIONAL FEES AND BROKERAGE AMOUNTING TO RS. 17,38,506/- FROM M/S. NCC URBAN INFRASTRUCTURE LTD. OBSERVING THAT EVEN THOUGH THE INCOME RECEIVED EXCEEDED THE MINIMUM AMOUNT NOT CHARGEABLE TO TAX, THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME, THE ASSESSMENT WAS REOPENED U/S 147 OF THE ACT AFTER RECORDING REASONS FOR REOPENING. THE A.O RECORDED THAT THOUGH THE ASSESSEE WAS ISSUED NOTICES, THE ASSESSEE DID NOT APPEAR. THEREFORE, THE ASSESSMENT WAS COMPLETED U/S 144 OF THE ACT BASED ON THE DETAILS / MATERIAL AVAILABLE ON RECORD. OBSERVING THAT THE ASSESSEE HAS RECEIVED PROFESSIONAL FEES AND BROKERAGE OF RS. 17,38,506/- WHICH IS LIABLE TO TAX, THE A.O BROUGHT THE ENTIRE AMOUNT TO TAX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) SEEKING ESTIMATION OF INCOME IN THE RANGE OF 12 TO 15% AND NOT TO BRING ENTIRE AMOUNT TO TAX. THE CIT(A), HOWEVER CONFIRMED THE ORDER OF THE A.O. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE LD. CIT(A) IS PERVERSE, ILLEGAL AND AGAINST THE PROVISIONS AND THE INCOME TAX ACT. 2. THE LD. CIT(A) ERRED IN SUSTAIN THE ASSESSMENT ORDER IN SPITE OF THE FACT THAT APPELLANT WAS NOT SERVED WITH NOTICES UNDER SECTION 142(1) AND / OR SECTION 143(1) OF THE ACT. 3. THE LD. CIT(A) WHILE UPHOLDING ORDER OF ASSESSMENT FAILED TO APPRECIATE THAT THE ALTERNATIVE MODE OF SERVICE PRESCRIBED UNDER THE INCOME TAX ACT CANNOT BE RESORTED TO UNLESS THE REGULAR MODE OF SERVICE IS EXHAUSTED. 4. THE LD. CIT(A) ERRED IN SUSTAINING THE ADDITION OF RS. 17,38,506/- IN ENTIRELY WITHOUT ALLOWING THE EXPENDITURE. 3 ITA.NO. 1550/HYD/2016 RATHINN M MEHTA., HYD. 5. THE LD. CIT(A) OUGHT TO HAVE ESTIMATED THE INCOME RATHER THAN TAXING ENTIRE INCOME. 3. HOWEVER, AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE DOES NOT WISH TO PRESS THE GROUNDS OF APPEAL NO. 2 & 3. THEY ARE ACCORDINGLY REJECTED. 4. AS REGARDS GROUND OF APPEAL NO. 4, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE TDS RETURN FILED BY M/S. NCC URBAN INFRASTRUCTURE SHOWED THAT THE ASSESSEE HAS BEEN PAID A SUM OF RS. 17,38,508/- DURING THE RELEVANT FINANCIAL YEAR AND THAT THE A.O HAS BROUGHT THE ENTIRE AMOUNT TO TAX. HE SUBMITTED THAT THE ASSESSEE HAS ALSO INCURRED EXPENDITURE FOR EARNING OF SUCH INCOME AND SINCE THE ASSESSEE HAS NOT BEEN ABLE TO PRODUCE SUCH EVIDENCE, THE A.O/CIT(A) OUGHT TO HAVE ESTIMATED THE INCOME AND ALLOWED SOME EXPENDITURE FOR EARNING OF SUCH INCOME. 5. THE LD. DR, HOWEVER, SUBMITTED THAT THE ASSESSEE HAS TO FILE PROOF OF INCURRING OF SUCH EXPENDITURE AND WITHOUT ANY PROOF IN SUPPORT OF HIS CONTENTION, NO ALLOWANCE FOR ANY EXPENDITURE IS CALLED FOR. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, WE FIND THAT THE GROSS RECEIPTS OF THE ASSESSEE FROM M/S NCC URBAN INFRASTRUCTURE LTD., IS RS. 17,38,506/- TOWARDS PROFESSIONAL FEE AND BROKERAGE. THE NATURE OF SERVICES RENDERED BY THE ASSESSEE ARE KNOWN BUT THE EXPENDITURE INCURRED BY THE ASSESSEE ARE NOT KNOWN. WE AGREE WITH THE LD. COUNSEL FOR THE ASSESSEE THAT THE ENTIRE AMOUNT CANNOT BE BROUGHT TO TAX BUT IN THE ABSENCE OF THE RELEVANT DETAILS, INCOME CAN ONLY BE ESTIMATED. THEREFORE, 4 ITA.NO. 1550/HYD/2016 RATHINN M MEHTA., HYD. WE DIRECT THE A.O TO TREAT 20% OF THE GROSS RECEIPTS AS INCOME OF THE ASSESSEE. THE ASSESSEE GETS RELIEF ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18 TH APRIL, 2019 SD/- SD/- (S. RIFAUR RAHMAN) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 18 TH APRIL, 2019 KRK 1) SRI RATHINN M MEHTA, C-404, FORTUNE ENCLAVE, ROAD NO. 12, BANJARA HILLS, HYDERABAD 500 034. 2) ACIT, CIRCLE 16(2) HYDERABAD. 3) CIT(A)-4, HYDERABAD. 4) PR.CIT-4, HYDERABAD. 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE.