Smt. Anita Sunil Sathaye, Pune V. Income-tax Officer,

ITA 1736/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0941 (ITAT-PUNE)
• Duration Of Justice: 1 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2009-2010
• Appeal Filed On: 16-08-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMITRA BANERJI
• Keywords: Corroborative evidences
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, PUNE . . , BEFORE SHRI R.K. PANDA, AM . / ITA NO.1736/PN/2016 / ASSESSMENT YEAR : 2009-10 SMT. ANITA SUNIL SATHAYE, C/O. MOHAN L. PARANJAPE, B/3, SARITA SOCIETY, BEHIND KOTHRUD PETROL PUMP, KOTHRUD, PUNE 411 038 PAN : AUPPS5462H . / APPELLANT V/S ITO, WARD - 3 (4), PUNE . / RESPONDENT / APPELLANT BY : SHRI PRAYAG JHA / RESPONDENT BY : SMT. SUMITRA BANERJI / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE O RDER DATED 17-06-2016 OF THE CIT(A)-III, PUNE RELATING TO ASS ESSMENT YEAR 2009-10. 2. ALTHOUGH A NUMBER OF GROUNDS HAVE BEEN TAKEN BY TH E ASSESSEE THEY ALL RELATE TO THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION OF RS.14,98,810/- MADE BY THE AO U/S.68 R.W.S. 69 OF THE I.T. ACT. 3. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED HER RETURN OF INCOME ON 28-03-2011 DECLARING TOT AL INCOME AT RS.11,13,260/-. THE ASSESSEE IS RUNNING MULTI LEVEL MARKING B USINESS OF A COMPANY NAMED QUESTNET ENTERPRISES INDIA PVT. LTD . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE AO NOTED THAT TH E ASSESSEE IS HAVING A SAVINGS BANK ACCOUNT BEARING NO.3455 IN SARASWA T / DATE OF HEARING :21.09.2016 / DATE OF PRONOUNCEMENT:23.09.2016 2 ITA NO.1736/PN/2016 COOPERATIVE BANK LTD., PAUD ROAD BRANCH, PUNE AND DURING THE IMPUGNED ASSESSMENT YEAR SHE HAS DEPOSITED CASH OF RS.2 1,36,000/- IN THE SAID BANK ACCOUNT. THE AO, THEREFORE, ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF THE CASH DEPOSITS MADE IN THE BANK ACCOUNT. 4. THE ASSESSEE SUBMITTED THE LEDGER EXTRACT OF THE C ASH BOOK FOR THE PERIOD 01-04-2008 TO 31-30-2009 TO EXPLAIN THE SOU RCE OF CASH DEPOSITS. FROM THE DETAILS FURNISHED BY THE ASSESSEE TH E AO NOTED THAT ON 15-04-2008 AN AMOUNT OF RS. 2 LAKHS AND ON 25- 07-2008 AND AMOUNT OF RS.12,98,810/- WAS CREDITED IN THE CASH BOOK BE ING COMMISSION FROM QUESTNET ENTERPRISES INDIA PVT. LTD. THE ASSESSEE SUBMITTED THE LEDGER EXTRACT OF QUESTNET ENTERPRISES IN DIA PVT. LTD SHOWING THE COMMISSION OF RS.35,15,790/- WHICH INCLUDED THE ABOVE COMMISSION OF RS.14,98,810/- RECEIVED IN CASH. THE AO, THERE FORE, ASKED THE ASSESSEE TO PRODUCE THE CONFIRMATION LETTER O F QUESTNET ENTERPRISES INDIA PVT. LTD. REGARDING PAYMENT OF COMMISSIO N IN CASH AND LEDGER EXTRACT OF THE ASSESSEES ACCOUNT IN THE BO OKS OF THE SAID PARTY. THE AO ALSO ASKED THE ASSESSEE TO EXPLAIN WHETH ER TDS HAS BEEN DEDUCTED ON THE COMMISSION RECEIVED IN CASH. FROM THE REPLY GIVEN BY THE ASSESSEE THE AO CAME TO THE CONCLUSION TH AT ASSESSEE HAS NO DOCUMENTARY EVIDENCE TO PRODUCE IN CONNECTION WITH T HE COMMISSION RECEIVED IN CASH FROM QUESTNET ENTERPRISES IND IA PVT. LTD. SINCE THE ASSESSEE HAS RECEIVED AN AMOUNT OF RS.20,16,980 /- BY CHEQUE AS COMMISSION FROM QUESTNET ENTERPRISES INDIA PV T. LTD. AND NO REASON WAS ADVANCED BY THE ASSESSEE FOR RECEIVING T HE BALANCE COMMISSION OF RS.14,98,810/- IN CASH AND SINCE NO TAX HAS B EEN DEDUCTED ON THE AMOUNT OF RS.14,98,810/- FROM THE COMMISS ION RECEIVED IN CASH AND NO OTHER DETAILS COULD BE PRODUCED BY THE ASSESSEE, THE AO DISBELIEVED THE COMMISSION RECEIVED IN CAS H. THE AO 3 ITA NO.1736/PN/2016 BY APPLYING PROVISIONS OF SECTION 68 R.W.S. 69 MADE ADDITION OF RS.14,98,810/- ON ACCOUNT OF FAILURE OF THE ASSESSEE TO PRO VE THE RECEIPT OF CASH COMMISSION OF RS.14,98,810/- FOR EXPLAINING THE DEPOSIT IN THE BANK ACCOUNT. 5. IN APPEAL THE LD.CIT(A) UPHELD THE ACTION OF THE AO BY OBSERVING AS UNDER : 4.2 THE APPELLANT'S EXPLANATION REGARDING THE CASH R ECEIPT OF RS.14,98,810/- IS THAT IN THE KIND OF BUSINESS RUN BY IT VIZ. MULTI LEVEL MARKETING SCHEME, IT IS NOT POSSIBLE TO PRODUCE SUPPORT ING DOCUMENTS AS ALL TRANSACTIONS ARE INTERNET BASED; THAT IT WAS FACING NUMEROUS COURT CASES AND HENCE IT WAS NOT POSSIBLE TO ARRANGE CONFIRMATIONS FROM THE PARTIES DEPOSITING THE CASH AND THAT THIS AMOUNT WAS ALREADY DI SCLOSED AS COMMISSION. IT IS TO BE NOTED THAT EVEN THOUGH APPELLA NT HAD APPEARED BEFORE MY PREDECESSOR ON 15/05/2014 AND 23/07/2014 AN D HAS MADE WRITTEN SUBMISSIONS WHICH ARE ON RECORD, NO RESPONSE WAS MADE TO HEARING, FIXED ON 22/09/2015 BEFORE THE UNDERSIGNED. THEREFORE, THIS MATTER IS FINALIZED ON THE BASIS OF WRITTEN SUBMISSIONS ON LY. 4.3 THE APPELLANT HAS STATED THAT IT IS FINDING IT DIF FICULT TO OBTAIN THE SUPPORTING DOCUMENTS FROM QUESTNET DUE TO COURT PROCEE DINGS AGAINST ITSELF. THIS SHOWS THAT IT WOULD HAVE BEEN POSSIBLE TO OB TAIN SUCH CONFIRMATIONS, IN CASE THERE WERE NO COURT MATTERS PEN DING BETWEEN THE TWO PARTIES. THIS IS DIRECTLY CONTRADICTORY TO THE ASSER TION OF THE APPELLANT THAT IN A MULTI LEVEL MARKETING BUSINESS MODEL IT IS NO T POSSIBLE TO PRODUCE SUPPORTING DOCUMENTS. IN FACT, IN MY HUMBLE O PINION, BEING AN ENTIRELY INTERNET BASED BUSINESS DOES NOT MEAN THAT THE DUTY TO MAINTAIN PROPER RECORDS AND DOCUMENTARY EVIDENCES CAN BE OVER LOOKED. 4.3.1 THE ASSESSING OFFICER RECORDS THAT INSPITE OF OPPOR TUNITIES THE ASSESSEE FAILED TO PROVIDE ANY DOCUMENTARY EVIDENCE. 'T HE ASSESSEE HAS UNAMBIGUOUSLY ADMITTED THAT SHE HAS NO DOCUMENTARY EVI DENCE TO PRODUCE IN CONNECTION WITH THE COMMISSION RECEIVED IN CASH FROM QUESTNET ENTERPRISES PVT. LTD.' (PARA 5.2 ASSESSMENT ORDE R). 4.3.2 IT IS ALSO SEEN THAT, THE APPELLANT HAS ACCEPTED THAT THERE ARE NO CREDIT NOTES RAISED ON QUESTNET BY THE ASSESSEE AND THAT THEY HAVE NO INFORMATION WHETHER THE SAID COMPANY HAS DEDUCTED TAX ON COMMISSION RECEIVED IN CASH OR NOT. IT IS ALSO NOTED THAT THE COM PANY HAD FURTHER PAID COMMISSION OUT OF THE COMMISSION RECEIVED AND THAT THER E ARE PURCHASES MADE FROM QUESTNET. THEREFORE, I AM INCLINED TO AGRE E WITH THE ASSESSING OFFICER THAT THE REQUIREMENTS OF SECTION 68/69 ARE NO T DISPENSED AWAY WITH MERELY BECAUSE THE APPELLANT IS RUNNING A BUSINESS ON THE INTERNET FOR WHICH NO SUPPORTING EVIDENCE COULD BE SUBMITTED B Y THE APPELLANT. THE APPELLANT HAS RECEIVED THIS COMMISSION IN CASH AND, THEREFORE, THE ASSERTION THAT ALL THE TRANSACTIONS ARE INTERNET BASED I S ALSO FOUND HOLLOW. 4.4 IN VIEW OF THE ABOVE FACTS, GROUNDS NO.2, 3 AND 4 ARE DISMISSED. 4 ITA NO.1736/PN/2016 6. AGGRIEVED WITH SUCH ORDER OF THE CIT(A) THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 7. I HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES AND PERUSED THE ORDERS OF THE AO AND THE CIT(A). I FIND THE ASSESSEE IN THE INSTANT CASE HAS DECLARED COMMISSION OF RS.35,15,790/- FROM QUESTNET ENTERPRISES INDIA PVT. LTD. OUT OF WHICH AN AMO UNT OF RS.20,16,980/- WAS RECEIVED IN CHEQUE AND RS.14,98,810/- RE CEIVED IN CASH. SINCE THERE WAS CASH DEPOSIT OF RS.21,36,000/- IN T HE BANK ACCOUNT MAINTAINED BY THE ASSESSEE THE AO ASKED THE A SSESSEE TO EXPLAIN THE SOURCE OF THIS CASH DEPOSIT. WHILE EXPLAINING THE SOURCE OF THE ABOVE CASH DEPOSIT THE ASSESSEE SUBMITTED BEFORE T HE AO THAT AN AMOUNT OF RS.14,98,810/- WAS RECEIVED AS COMMISSION IN CASH FROM QUESTNET ENTERPRISES INDIA PVT. LTD. SINCE THE AMOUNT WAS RECEIVED FROM QUESTNET ENTERPRISES INDIA PVT. LTD. IN CASH AND SIN CE NO TAX HAS BEEN DEDUCTED FROM THE ABOVE AMOUNT BY QUESTNET ENTERPRISES INDIA PVT. LTD. AND SINCE NO CONFIRMATION WHATSOEVER WAS PRODUCED BY THE ASSESSEE THAT IT HAS INFACT RECEIVED COMMISSION OF RS.1 4,98,810/- IN CASH THE AO HELD THAT ASSESSEE COULD NOT EXPLAIN THE SOURCE OF RECEIPT OF CASH COMMISSION OF RS.14,98,810/- AND THEREFORE T HE DEPOSIT OF CASH TO THIS EXTENT HAS REMAINED UNEXPLAINED. THE AO ACCORDINGLY APPLIED THE PROVISIONS OF SECTION 68 R.W.S. 69 A ND MADE ADDITION OF RS.14,98,810/- WHICH HAS BEEN UPHELD BY THE CIT (A). IT IS THE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE THAT A N AMOUNT OF RS.14,98,810/- HAS ALREADY BEEN OFFERED TO TAX BY INCREASIN G THE COMMISSION WHICH WAS SHOWN AT RS.35,15,790/-. IF ACCORDING TO THE REVENUE, THE COMMISSION INCOME IS ONLY RS.21,36,000/- THEN THE BALANCE AMOUNT OF RS.14,98,810/- BEING ALREADY OFFERED TO TA X WHILE DISCLOSING THE COMMISSION INCOME AT RS.35,15,790/-, FURTHER AD DITION 5 ITA NO.1736/PN/2016 CANNOT BE MADE TO THE TOTAL INCOME OF THE ASSESSEE. I FIND MERIT IN THE ABOVE SUBMISSION OF THE LD. COUNSEL FOR THE ASSESSEE. S INCE ACCORDING TO THE REVENUE THE COMMISSION FROM QUESTNET ENTERPRISES INDIA PVT. LTD. IS ONLY RS.21,36,000/- AND SINCE THE ASSESSEE HAS ALR EADY DISCLOSED COMMISSION OF RS.35,15,790/- FROM THE SAID COMPANY BY SHOWING CASH COMMISSION OF RS.14,98,810/-, THEREFORE, ADDITION OF RS.14,98,810/- AGAIN IN THE HANDS OF THE ASSESSEE IN MY O PINION AMOUNTS TO DOUBLE ADDITION OF THE SAME AMOUNT, I, THEREFOR E, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION OF RS.14,98,810/-. GROUNDS RAISED BY THE ASSESSEE ARE ACCO RDINGLY ALLOWED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23-09-2016. SD/- ( R.K. PANDA ) ACCOUNTANT MEMBER PUNE ; DATED : 23 RD SEPTEMBER, 2016. '# $# / COPY OF THE ORDER FORWARDED TO : / BY ORDER , // $ % / TRUE COPY // // TRUE COPY // &' % * / SR. PRIVATE SECRETARY *, / ITAT, PUNE 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT (A) - III , PUNE 4. THE CIT-III, PUNE 5. $ %%* , * , SMC BENCH / DR, ITAT, SMC BENCH PUNE; 6. 2 / GUARD FILE.