Susil Kumar Kothari, Bangalore V. Income Tax Office, Ward-8(3), Bangalore

ITA 1648/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 5036 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 18-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNA DASS
• Assessee Lawyers: SUNIL D SURANA
• Keywords: Opportunity of being heard
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCH B BEFORE SHRI N.V VASUDEVAN , JUDICIAL MEMBER SHRI JASON P BOAZ, ACCOUNTANT MEMBER ITA NO.1648/BANG /2018 (ASST. YEAR 2 009-10) SHRI SUSIL KUMAR KOTHARI, #643, MAHAVEER KUNJ, 1 ST FLOOR, OPP. MUNIGANGA KALYANMANTAP, BASAVESHWARANAGAR, BENGALURU. . APPELLANT PAN AWGPK 81752. VS. INCOME-TAX OFFICER, WARD-8(3), BENGALURU. . RESPONDENT APPELLANT BY : SHRI SUNIL D SURANA , C.A RESPONDENT BY : SHRI SWAPNA DASS, JCI T DATE OF HEARING : 26-6-2018 DATE OF PRONOUNCEMENT : -8-2018 O R D E R PER SHRI JASON P BOAZ, ACCOUNTANT MEMBER : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) -6, BANGALORE DATED 27/2/2018 FOR A.Y. 2009- 10. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE AS UND ER:- ITA NO.1648/B/18 2 2.1 THE ASSESSEE IS AN INSURANCE AGENT AND EARNS IN COME IN THE FORM OF COMMISSION FROM VARIOUS INSURANCE COMPANIES LIKE TATA AIG INSURANCE CO., LTD., IFFCO TOKIO GENERAL INSURANCE CO., LTD. FOR ASST YEAR 2009-10, THE ASSESSEE FILED THE RETURN OF INCOME ON 10/11/2009 DECLARING TAXABLE INCOME OF RS. 2,41,160 /-. THE RETURN WAS PROCESSED U/S 143(1) OF THE INCOME TAX ACT, 196 1 (IN SHORT THE ACT) AND THE CASE WAS TAKEN UP FOR SCRUTINY. THE A SSESSING OFFICER (AO) OBSERVED THAT ITS DATA RECEIVED IN THIS CASE W AS THAT THERE WERE CASH DEPOSITS, OF RS. 29,30050/- IN THE ASSESSEES ACCOUNT IN KOTAK MAHINDRA BANK LTD., IN RESPECT OF WHICH THE ASSESSE E WAS QUERIED. AFTER CONSIDERING THE REPLIES AND DETAILS FILED BY THE ASSESSEE, THE AO FIRSTLY OBSERVED THAT THE COMMISSION RECEIVED BY TH E ASSESSEE AS AGENT FOR POLICIES WITH TATA AIG INSURANCE CO., LTD., IFF CO TOKIO GENERAL INSURANCE CO., LTD., AND PAMAC FINE SERVE LTD., WAS OFFERED TO TAX BASED ON TDS CERTIFICATES ISSUED BY THE RESPECTIVE COMPANIES. 2.2 THE AO FURTHER NOTED THAT ON GOING THROUGH THE ASSESSEES BANK ACCOUNT EXTRACT WITH KOTAK MAHINDRA BANK LTD., HE FOUND THAT MAJORITY OF THE DEBITS & CREDITS PERTAIN TO ICICI L OMBARD GIC LTD., ON BEING QUERIED IN THIS REGARD, THE ASSESSEE SUBMI TTED THAT THE CASH ITA NO.1648/B/18 3 DEPOSITS PERTAIN TO INSURANCE PREMIUM RECEIVED FROM POLICY HOLDERS, MOSTLY AUTO & LORRY OWNERS FOR THIRD PARTY INSURANC E AND THAT NO COMMISSION IS RECEIVED BY HIM IN THIS REGARD, IN VI EW OF THE IRDA GUIDANCE/CIRCULAR WHICH MANDATES THAT NO COMMISSION SHALL BE PAID ON MOTOR THIRD PARTY INSURANCE. THE AO REJECTED THE ASSESSEES EXPLANATIONS AND HOLDING THAT THE TOTAL CREDITS IN THE ASSESSEES ACCOUNT WITH KOTAK MAHINDRA BANK AMOUNTED TO RS.1,16,65,049/-, HELD THAT THE ASSESSEE WOULD HAVE EARNED COMMISSION OF 15% THEREON, OF RS.17,49,760/- AND A CCORDINGLY PROCEEDED TO BRING TO TAX IN THE ASSESSEES HAND AN AMOUNT OF RS.7,19,750/- AS UNDISCLOSED COMMISSION INCOME FROM THIRD PARTY INSURANCE CASES. THE ASSESSMENT WAS ACCORDINGLY CON CLUDED U/S 143(3) OF THE ACT VIDE ORDER DATED 28/12/2011 WHERE IN THE ASSESSEES INCOME WAS DETERMINED AT RS.9,60,910/-. 2.3 ON APPEAL, THE CIT(A) 6, BANGALORE DISMISSED T HE ASSESSEES APPEAL VIDE IMPUGNED ORDER DATED 27/2/2018. 3 AGGRIEVED BY THE ORDER OF THE CIT(A)-6, BANGALORE DATED 27/2/2018, THE ASSESSEE HAS FILED THIS APPEAL BEFOR E THE TRIBUNAL, WHEREIN IT HAS RAISED THE FOLLOWING GROUNDS. ITA NO.1648/B/18 4 1. THE LEARNED CIT (APPEALS), BENGALURU-6 HAS ERRE D IN PASSING THE ORDER IN THE MANNER PASSED BY HER. THE ORDER BEING BAD IN LAW IS LIABLE TO BE QUASHED. 2. THE LEARNED CIT (APPEALS), BENGALURU-6 HAS ERRED IN ASSUMING THAT THE BROKERAGE OF,151/O IS PAYABLE ON ALL TYPES OF POLICIES SUCH ASSUMPTION IS CONTRARY TO THE FACTS A ND IS LIABLE TO BE DELETED. 3. THE LEARNED CIT (APPEALS), BENGALURU-6 HAS ERRED IN NOT APPRECIATING THE EXPLANATION OF THE APPELLANT THAT THERE IS NO BROKERAGE RECEIVED ON ILL PARTY LIABILITIES POLICIE S. 4. IN VIEW OF THE ABOVE AND ON THE GROUNDS TO BE AD DUCED AT TIME OF HEARING, IT IS REQUESTED THAT THE IMPUGNED ORDER BE I. QUASHED II. THE INTEREST CHARGED UNDER SECTION 234A, 234B & BE DELETED. 4 GROUNDS NOS. 1 TO 3 - COMMISSION/BROKERAGE ON THIRD PARTY INSURANCE POLICIES 4.1 ON A PERUSAL OF THE GROUNDS (SUPRA), IT APPEARS THAT THERE IS ONLY ONE ISSUE RAISED BY THE ASSESSEE IN THIS APPEAL FOR CONSIDERATION AND ADJUDICATION, I.E., COMMISSION ON THIRD PARTY INSUR ANCE POLICIES. ITA NO.1648/B/18 5 4.2.1 IN THESE GROUNDS, (SUPRA), THE ASSESSEE ASSAI LS THE ACTION OF THE AUTHORITIES BELOW IN ASSUMING THAT BROKERAGE/COMMIS SION OF 15% IS PAYABLE ON ALL TYPES OF POLICIES AND IN REJECTING T HE ASSESSEES SUBMISSIONS THAT NO BROKERAGE/COMMISSION IS RECEIVE D ON THIRD PARTY INSURANCE POLICIES. ACCORDING TO THE LD AR OF THE A SSESSEE THIRD PARTY INSURANCE BUSINESS WAS DONE FOR AUTO AND LORRY OWNE RS THROUGH ICICI LOMBARD GIC LTD., FOR WHICH NO COMMISSION/BROKERAGE IS RECEIVABLE AND THIS FACT IS VERY CLEAR FROM PERUSAL OF IRDA C IRCULAR NO. 033/IRDA/BROK-COMM/DEC-06 DATED 4/12/2006 WHEREIN I T IS CLEARLY STATED THAT NO COMMISSION/BROKERAGE SHALL BE PAID ON THIRD PARTY INSURANCE (COPY PLACED AT PGS 74-75 OF PAPER BOOK) . IN THIS REGARD, THE AOS ESTIMATION THAT THE ASSESSEE WOULD EARN 15 % COMMISSION IS BASELESS AND REQUIRES TO BE DELETED. IT IS FURTHER ARGUED THAT WHILE THE AO HAS TAKEN THE TOTAL OF CREDITS, HE HAS IGNORED T HE FACT THAT THERE WERE SIMULTANEOUS DEBITS IN FAVOUR OF ICICI LOMBARD GIC LTD., ON ACCOUNT OF THIRD PARTY INSURANCE PAYMENTS. IT IS FU RTHER SUBMITTED THAT IT IS NOT KNOWN AS TO HOW THE AO TOOK THE TOTAL FIG URE OF CREDITS IN THE KOTAK MAHINDRA BANK ACCOUNT AT RS.1,16,65,049/-, WH EN ACTUALLY THE FIGURE OF CREDITS IN THE SAID BANK ACCOUNT SHOULD B E RS.46,01,469/- IN ITA NO.1648/B/18 6 THE YEAR UNDER CONSIDERATION AS WORKED OUT AND RECO NCILED AT PG 55 TO 73 OF PAPER BOOK. ON BEING QUERIED BY THE BENCH WH ETHER THESE DETAILS WERE BEFORE THE AO, THE LD AR SUBMITTED THA T THE SUMMARY OF BANK TRANSACTIONS IN KOTAK MAHINDRA BANK AND IRDA C IRCULAR DATED 4/12/2006 WERE NOT FILED BEFORE THE AO, BUT WERE FI LED BEFORE THE LD CIT(A) WHO IGNORED THE SAME WHILE PASSING THE IMPUG NED ORDER. IT IS PRAYED THAT THE ASSESSEES CLAIM BE ALLOWED. 4.3 PER CONTRA, THE LD DR FOR REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4.4.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH P ARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD. TH E ISSUE FOR CONSIDERATION BEFORE US IS WHETHER THE ASSESSEE EAR NED COMMISSION ON THIRD PARTY INSURANCE FROM AUTO AND LORRY OWNERS. I T IS NOT DISPUTED THAT THE TRANSACTIONS PERTAINING TO THIRD PARTY INS URANCE WERE CARRIED OUT THROUGH ICICI LOMBARD GIC LTD., AND THE ENTRIES THEREOF WERE ROUTED THROUGH THE ASSESSEES BANK ACCOUNT WITH KOT AK MAHINDRA BANK. THE AOS CASE IS THAT THE ASSESSEE HAS EARNED COMMISSION FROM THIRD PARTY INSURANCE CASES OUT OF THE TOTAL CREDIT S APPEARING IN THE ASESSEES BANK ACCOUNT WITH KOTAK MAHINDRA BANK AMO UNTING TO RS. ITA NO.1648/B/18 7 1,16,65,049/-. ON THE OTHER HAND, ACCORDING TO THE ASSESSEE, HE HAS NOT RECEIVED ANY COMMISSION ON THIRD PARTY INSURANCE IN ACCORDANCE WITH THE MANDATE OF THE IRDA CIRCULAR DT 4/12/06 (SUPRA) WHICH STIPULATES THAT NO COMMISSION IS TO BE PAID FOR THIRD PARTY IN SURANCE. THE ASSESSEE FURTHER SUBMITS THAT THE TOTAL CREDITS IN THE ASSESSEES AFORESAID BANK ACCOUNT FOR THE YEAR UNDER CONSIDERA TION IS NOT RS.1,16,65,049/- AS NOTED BY THE AO, BUT RS.46,01,4 69/- AS PER THE DETAILS THEREOF FILED AT PAGES 55 TO 73OF PAPER BOO K. WE FIND THAT THESE DETAILS I.E., THE BANK SUMMARY (AT PGS 55 TO 37 OF PAPER BOOK) AND THE IRDA CIRCULAR DT 4/12/2006 (AT PG 74-75 OF PAPER BO OK) ADMITTEDLY WERE NOT BEFORE THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS BUT WERE FILED BEFORE THE LD CIT(A) WHO CHOSE TO IGNORE THEM. WE ALSO OBSERVE THAT THE AO HAS NOT ADDRESSED THE ASSESSEE S SUBMISSIONS THAT WHILE THERE WERE CREDITS IN ITS BANK ACCOUNT, THERE WERE ALSO SIMULTANEOUS DEBITS THEREIN, ALL PERTAINING TO THE THIRD PARTY INSURANCE TRANSACTIONS WITH ICICI LOMBARD GIC LTD., WHICH THE AO HAS NOT TAKEN INTO ACCOUNT. 4.4.2 IN THIS FACTUAL MATRIX OF THE CASE, AS DISCUS SED ABOVE, WE ARE OF THE CONSIDERED VIEW AND DEEM IT APPROPRIATE TO SET ASIDE THE AOS ITA NO.1648/B/18 8 ESTIMATION OF COMMISSION EARNED BY THE ASSESSEE @ 1 5% ON THIRD PARTY INSURANCE CASES THROUGH ICICI LOMBARD GIC LTD ., REFLECTED IN THE BANK ACCOUNT WITH KOTAK MAHINDRA BANK LTD., AND RESTORE THIS ISSUE TO THE FILE OF THE AO FOR FRESH EXAMINATION A ND VERIFICATION BY TAKING INTO ACCOUNT OUR AFORESAID OBSERVATIONS, THE IRDA CIRCULAR DT 4/12/2006, THE BANK SUMMARY OF ASSESSEES ACCOUNT D RAWN UP BY THE ASSESSEE FROM OUT OF THE TRANSACTIONS IN KOTAK MAHI NDRA BANK LTD., AND TO TAKE INTO ACCOUNT BOTH THE DEBITS AS WELL AS THE CREDITS THEREIN. NEEDLESS TO ADD, THE AO WILL AFFORD THE ASSESSEE AD EQUATE OPPORTUNITY OF BEING HEARD AND TO FILE SUBMISSIONS/DETAILS REQU IRED WHICH SHALL BE DULY CONSIDERED BEFORE DECIDING THIS ISSUE. WE HOLD AND DIRECT ACCORDINGLY. 5 IN THE RESULT, THE ASSESSEES APPEAL FOR ASST. YE AR 2009-10 IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 10TH AUGUST, 2018 . SD/- SD/- (N.V VASUDEVAN) ( JASON P BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMB ER BANGALORE DATED : 10/8/2018 VMS ITA NO.1648/B/18 9 COPY TO :1. THE ASSESSEE 2. THE REVENUE 3.THE CIT CONCERNED. 4.THE CIT(A) CONCERNED. 5.DR 6.GF BY ORDER SR. PRIVATE SECRETARY, ITAT, BANGAL ORE. 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR. ITA NO.1648/B/18 10 P.S... 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT.. 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. ..