ARULMANI MICHEAL, KRISHNAGIRI V. ITO WARD-1, KRISHNAGIRI

ITA 1714/CHNY/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1324 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 17-06-2021
• Assessment Year: 2010-2011
• Appeal Filed On: 30-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 44AD

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO: 1714/CHNY/2019 [ [ / ASSESSMENT YEAR : 2010-11 ARULMANI MICHAEL, 344, NETHAJI ROAD, KURUKKU CHANDU, OLDPET, KRISHNAGIRI 635 001. [PAN:ANKPM 4387K ] VS. THE INCOME TAX OFFICERM WARD -1, 46-I, 2 ND FLOOR, KRN COMPLEX, K-THEATRE ROAD, KRISHNAGIRI -1. ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI. I. DINESH, ADVOCATE / RESPONDENT BY : SHRI. SURESH PERIASAMY, JCIT /DATE OF HEARING : 17.06.2021 /DATE OF PRONOUNCEMENT : 01.07.2021 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)- SALEM IN ITA NO. 94/2017-18 DATED 22.03.2019 FOR THE ASSESSMENT YEAR 2010-11. :-2-: ITA NO.1714/CHNY/2019 2. SHRI. ARULMANI MICHAEL, THE ASSESSEE, AN INDIVIDUAL DID NOT FILE HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2009-10, BASED ON THE INFORMATION THAT THE ASSESSEE MADE CASH DEPOSIT OF RS. 1,44,96,025/- IN THE SAVINGS BANK ACCOUNT MAINTAINED BY ICICI BANK, THE AO ISSUED NOTICE U/S. 147. IN RESPONSE, THE ASSESSEE FILED A RETURN OF INCOME ON 07.12.2017 DECLARING TOTAL INCOME OF RS. 1,53,530/- FROM OTHER SOURCES. WHILE MAKING THE ASSESSMENT, THE ASSESSING OFFICER TREATED 8% OF THE TOTAL TURNOVER OF RS. 1,44,96,025/- AS THE ASSESSEES INCOME AT RS. 11,59,682/- AND AFTER DEDUCTING THE INCOME ALREADY ADMITTED AT RS. 1,53,530/-, ADDED THE DIFFERENCE OF RS. 10,06,152/- TO THE RETURNED INCOME AND COMPLETED THE ASSESSMENT. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A). THE LD. CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER THE ASSESSEE FILED THIS APPEAL. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD. AR SUBMITTED THAT THE ASSESSEE JOINED IN SCHEME OF FINE INDIA SALES PRIVATE LIMITED, AND ULTRA HOLIDAYS WHICH WAS LAUNCHED UNDER THE GUISE OF MULTILEVEL MARKETING, IN WHICH GOES ON CHAIN LINK. IN THIS SCHEME, IF ONE MEMBER WAS MADE TO JOIN BY DEPOSITING THE SUM OF RS. 10,000/- WHICH WILL RUN 60 MONTHS WITH A INCOME OF 10%. THE ASSESSEE DEPOSITED A SUM OF RS. 10,000/- THROUGH ICICI BANK TO FINE INDIA SALES PRIVATE LIMITED, AFTERWARDS HE ALSO JOINED IN THE SCHEME SOME PERSONS, AND INTRODUCED THEM ALSO. SINCE, THOSE PERSONS DID NOT HAVE SAVINGS BANK ACCOUNT IN ICICI BANK, THE ASSESSEE UTILISED HIS SB ACCOUNT AND :-3-: ITA NO.1714/CHNY/2019 THEY ALSO GOT 10% INCOME. THOSE PERSONS WERE MADE TO ADMIT SOME MORE MEMBERS IN THE BUSINESS AND SUCH AMOUNT WERE DEPOSITED IN THE ASSESSEES BANK ACCOUNT AND IT WAS TRANSMITTED TO FINE INDIA SALES PRIVATE LIMITED AND ULTRA HOLIDAYS, SUCH DETAILS WERE AVAILABLE IN THE BANK ACCOUNT. THE ASSESSEE AFTER LAPSE OF SO MANY YEARS DID NOT HAVE ANY DETAILS. ULTIMATELY, THE ASSESSEE ADMITTED THE AMOUNTS WITHDRAWN FROM THE BANKS OF RS. 8.41,341/- AS HIS COMMISSION RECEIPTS AND INTEREST RECEIPTS. AFTER CLAIMING VARIOUS EXPENSES, THE ASSESSEE ADMITTED AN INCOME OF RS. 1,53,530/-. THE ASSESSING OFFICER PROPOSED TO TREAT RS. 8,41,341/- AS ASSESSEES INCOME AND REQUIRED THE ASSESSEE TO SHOW CAUSE IN THIS REGARD. WHEN THE ASSESSEE PLEADED THAT AFTER A LONG GAP OF YEARS, HE IS NOT HAVING THE REQUIRED DOCUMENTS FOR THE EXPENDITURE CLAIMED TO HAVE BEEN INCURRED AT RS. 6,69,041/- ETC, THE AO WITHOUT CONSIDERING THE MATERIAL PLACED BEFORE HIM, SIMPLY REJECTED THE ASSESSEES EXPLANATION HOWEVER, AGAINST HIS CONSIDERED VIEW THAT RS. 8,41,341/- WAS ASSESSEES INCOME, ONCE AGAIN TREATED THE ENTIRE CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT AS TURNOVER AND ASSESSED 8% OF IT AS AN INCOME. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A) PLEADING THAT THE AO DID NOT CONSIDER THE MATERIAL AVAILABLE BEFORE THE ASSESSING OFFICER PROPERLY AND MADE THE IMPUGNED ASSESSMENT. SINCE, THE ASSESSEE EARNED COMMISSION FROM THE GROSS RECEIPTS, INVOKING SECTION 44AD IS NOT CORRECT. THE ASSESSEE HAD TO SPEND ON TRAVELLING, SUB-COMMISSION, SALARY, STATIONERY ETC, THE EXPENSES INCURRED WERE RS. 6,69,041/-, SECTION 44AD WAS :-4-: ITA NO.1714/CHNY/2019 NOT APPLICABLE WHEN GROSS RECEIPTS EXCEEDS 40 LAKHS. ONE OF THE TWO COMPANIES M/S. ULTRA HOLIDAYS CONFIRMED THAT THE AMOUNT EARNED THROUGH WAS COMMISSION U/S. 194AH AND DEDUCTED TDA OF RS. 5,419/- ETC. THE LD. CIT(A) WITHOUT DULY CONSIDERING THE MATERIAL, PLEA ETC MERELY DISMISSED THE APPEAL. 4. INVITING OUR ATTENTION TO THE MATERIALS IN THE PAPER BOOK, THE LD. AR FURTHER SUBMITTED THAT THE ASSESSEE, AN INDIVIDUAL WAS MERELY EARNING COMMISSION THROUGH MULTILEVEL MARKETING. HE WAS UNAWARE THAT THE RECORDS WERE TO BE MAINTAINED FOR SO MANY YEARS. INSPITE OF IT, WHATEVER MATERIALS WAS AVAILABLE WITH HIM HAS PLACED THEMBEFORE THE ASSESSING OFFICER. THE LD. AR INVITED OUR ATTENTION TO THE PAPER BOOK WHEREIN, THE ASSESSEES LETTER DATED 08.11.2017 ACKNOWLEDGED BY THE ITO ON 10.11.2017 IS PLACED IN PAGE NO. 55 AND SUBMITTED THAT THE LD. AO HAS NOT EXTRACTED THE FOLLOWING PORTION IN PAGE 2 OF THE ASSESSMENT ORDER: I SUBMIT HEREWITH THE LIST OF PERSONS WHO JOINED IN THE CHAIN, THEIR ID NO., NAME AND ADDRESS AND THE BANK ACCOUNT FOR THE OBTAINING THE PROFIT AMOUNT. THUS, THE AO WITHOUT CONSIDERING THE MATERIAL PROPERLY, WITHOUT RECORDING FULL FACTS PASSED THE ASSESSMENT ORDER. ALTHOUGH, THE AO ORIGINALLY PROPOSED TO ASSESS THE RECEIPTS OF RS. 8,41,341/- AS INCOME, VIDE PARA 3.2 OF HIS ORDER AND SOUGHT EVIDENCES TOWARDS THE EXPENDITURE CLAIMED BY THE ASSESSEE AT RS. 6,69,041/- AND WHEN THE ASSESSEE PLEADED THAT HE HAD TO SPEND ON TRAVELLING, SUB-COMMISSION, SALARY, STATIONERY ETC., FOR WHICH THE ASSESSEE WAS NOT :-5-: ITA NO.1714/CHNY/2019 HAVING THE CONTEMPORANEOUS MATERIAL, WITHOUT CONSIDERING THE FACTS AND CIRCUMSTANCES OR COMPARABLE CASES FROM THE SAME LINES OF BUSINESS, THE AO ONCE AGAIN TOOK A STAND THAT THE INCOME WILL BE ASSESSED AT 8% ON THE TURNOVER AND ASSESSED ACCORDINGLY. THESE ASPECTS WERE NOT CONSIDERED BY THE LD. CIT(A) AND HENCE PLEADED THAT SINCE THE LOWER AUTHORITIES HAVE NOT DULY CONSIDERED THE MATERIAL ETC BEFORE THE LD. AO, THE LD. AR PRAYED THAT SUITABLE DIRECTIONS BE GIVEN TO THE AO. PER CONTRA, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. IT IS CLEAR FROM THE ASSESSMENT ORDER THAT ON DUE CONSIDERATION OF MATERIAL, ASSESSEES SUBMISSION ETC THAT THE AO ORIGINALLY PROPOSED THE CASH WITHDRAWALS FROM THE ASSESSEES BANK ACCOUNT AS ASSESSEES INCOME WHICH THE ASSESSEE ALSO ADMITTED AS COMMISSION AND INTEREST BY HIS LETTER DATED 22.12.2017 TO ACCEPT RECEIPTS AT RS. 8,41,341/- AS HIS RECEIPTS AND REQUIRED THE ASSESSEE TO PRODUCE THE PROOF TOWARDS THE EXPENDITURE CLAIMED BY THE ASSESSEE AT RS. 6,69,041/- AGAINST SUCH RECEIPTS. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE AO REQUIRED THE ASSESSEE TO EXPLAIN WITHIN ONE DAY FROM THE RECEIPT OF HIS LETTER AND THEREAFTER HE CONCLUDED THAT THE ASSESSEE DID NOT EXPLAIN AND COMPLETED THE ASSESSMENT ON 29.12.2017 TAKING A DIFFERENT TURN. THE ASSESSEE HAD PLACED WHATEVER MATERIAL AVAILABLE WITH HIM AND MADE AN ATTEMPT TO SUBSTANTIATE HIS CLAIM. IT APPEARS THAT THE AO WAS :-6-: ITA NO.1714/CHNY/2019 INCONSISTENT IN HIS APPROACH AND COMPLETED THE ASSESSMENT WITHOUT APPRECIATING THE MATERIAL PLACED BEFORE THE AO. THEREFORE, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THE ISSUES ARE REMITTED BACK TO THE AO FOR A FRESH EXAMINATION AND DUE ASSESSMENT. WHILE DOING THE CONSEQUENTIAL ASSESSMENT, THE AO MAY REFER COMPARABLE CASES, IF ANY, IN THE SAME LINE OF BUSINESS AND CONSIDER THEM SUITABLY. BASED ON SUCH MATERIAL, AFTER AFFORDING DUE OPPORTUNITY ON SUCH MATERIAL, MAY ASSESS THE TRUE AND FAIR INCOME OF THE ASSESSEE IN ACCORDANCE WITH LAW. THE GROUNDS OF THE ASSESSEE ARE TREATED AS ALLOWED. 6. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON 01 ST JULY , 2021 AT CHENNAI. SD/- ( . ) (DUVVURU RL REDDY) /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 01 ST JULY , 2021 JPV /COPY TO: 1. / APPELLANT 2. /RESPONDENT 3. ) ( /CIT(A) 4. /CIT 5. /DR 6. [ /GF