N.R.Elango, CHENNAI V. ACIT, CHENNAI

ITA 2135/CHNY/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7797 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 02-03-2016
• Assessment Year: 2012-2013
• Appeal Filed On: 09-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH IRS
• Assessee Lawyers: T BANUSEKAR
• Section: 142(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI . , . , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBE R AND SHRI. G. PAVAN KUMAR, JUDICIAL MEMBER ./ I.T.A. NO. 2135/MDS/2015 / ASSESSMENT YEAR : 2012-2013 SHRI. N.R. ELANGO, S-2, SECOND FLOOR, J-BLOCK, NO.893, 18 TH STREET, VAIGAI COLONY, ANNA NAGAR WEST, CHENNAI 600 040. [PAN AAAPE 3637K ] VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 7(1) CHENNAI. ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. T. BANUSEKAR, C.A. $% ! ' # /RESPONDENT BY : SHRI. A.V. SREEKANTH, IRS, JCIT & ' ' ( /DATE OF HEARING : 02-03-2016 ) ' ' ( /DATE OF PRONOUNCEMENT : 17-03-2016 / O R D E R PER G. PAVAN KUMAR, JUDICIAL MEMBER: THE APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-7, CHENNAI IN ITA NO.84/CIT(A)-7/2014-15, DATED 29.10.2015 FOR THE AS SESSMENT YEAR ITA NO.2135/MDS/2015 :- 2 -: 2012-2013 PASSED U/S.143(3) AND 250 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT). 2. THE ASSESSEE RAISED ONLY SUBSTANTIVE GROUND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFI RMING THE ADDITION OF AO BEING ADVANCE RECEIVED FROM CLIENTS WITHOUT APPRECIATING THE SUBMISSIONS AND EXPLANATIONS OFFER ED IN THE PROCEEDINGS. 3. THE BRIEF FACTS OF THE CASE THAT THE ASSESSEE IS A N ADVOCATE AND FILED E-RETURN OF INCOME ON 11.03.20.13 ADMITTI NG TOTAL INCOME OF >20,56,706/-. SUBSEQUENTLY, UNDER SCRUTINY NORMS N OTICE WAS ISSUED U/S 143(2) AND 142(1) OF THE ACT. IN COMPLIANCE TO NOTICES, THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME PRODUCED RECORDS AND FILED DETAILS. THE ASSESSING OFFICER PERUSED THE BANK STATEMENTS AND DISALLOWED UNEXPLAINED DEPOSITS . THE ISSUE IN DISPUTE BEING ASSESSEE HAS RECEIVED ADVANCE FROM VA RIOUS CLIENTS AGGREGATING TO >16,00,000/- THROUGH HDFC AND UNION BANK OF INDIA ACCOUNT. THE ASSESSEE IDENTIFIED THE DEPOSITS IN B ANK ACCOUNTS RECEIVED BY CHEQUES. THE LD. AUTHORISED REPRESENTA TIVE EXPLAINED THAT THE SAID ADVANCES ARE RECEIVED FROM THE CLIEN TS AND ROUTED THROUGH BANK ACCOUNTS. THE ASSESSING OFFICER ALLEG ED THAT EXPLANATIONS ARE NOT LOGICAL AS THE ASSESSEE COULD NOT ESTABLISH THE ITA NO.2135/MDS/2015 :- 3 -: SUPPORT OF DEPOSITS WITH NAME AND ADDRESS OF THE CL IENTS IN THE ASSESSMENT PROCEEDINGS. SINCE THE ADVANCES ARE REF LECTED IN THE BOOKS OF ACCOUNTS AND NO SATISFACTORY EXPLANATION W AS OFFERED, THE ASSESSING OFFICER COMPLETED ASSESSMENT U/S.143(3) O F THE ACT BY ADDING BANK CREDITS AS UNEXPLAINED DEPOSITS ALONGW ITH OTHER DISALLOWANCE AND ASSESSED TOTAL INCOME. AGGRIEVED BY THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). 4. IN THE APPELLATE PROCEEDINGS, THE LD.AR OF THE ASSE SSEE REITERATED HIS SUBMISSIONS MADE BEFORE THE ASSESSIN G OFFICER AND ARGUED THE GROUNDS RAISED AGAINST THE ACTION OF THE ASSESSING OFFICER. THE LD. COMMISSIONER OF INCOME TAX (APPEALS) PERUSE D THE FINDINGS OF THE ASSESSING OFFICER AND WRITTEN SUBMISSIONS FILED ON 28.10.2015. THE ASSESSEE HAS EXPLAINED THE AGGREGATE ADVANCES OF >1 6,00,000/- RECEIVED FROM CLIENTS WITH CHEQUE DETAILS. THE A SSESSEE BEING AN ADVOCATE RECEIVED ADVANCES AMOUNT FROM CLIENTS FOR SERVICES TO BE RENDERED IN FUTURE. SUCH ADVANCE ARE SHOWN AS LIA BILITY TO BE ADJUSTED AGAINST SERVICES TO BE RENDERED. THE LD. AUTHORISED REPRESENTATIVE RELIED ON THE DECISION OF DELHI BE NCH TRIBUNAL IN THE CASE OF K.K. KHULLAR (2009) 116 ITD 301 AND ALSO JURISDICTIONAL TRIBUNAL DECISION IN THE CASE OF R.S. SURIYA VS. DCIT IN ITA NOS.596 & 597/MDS/2009 AND SUBSTANTIATED HIS ARGUMENTS THAT THE ASSESSING ITA NO.2135/MDS/2015 :- 4 -: OFFICER HAS MADE ADDITION AS THE EXPLANATIONS FURNI SHED BY THE ASSESSEE ARE NOT SATISFACTORY. THE LD. COMMISSIONE R OF INCOME TAX (APPEALS) VERIFIED THE BANK ACCOUNT CREDITS AND PRESUMED THAT ASSESSEE HAS NOT EXPLAINED OR FURNISHED DETAILS IN THE ASSESSMENT PROCEEDINGS OR IN THE APPELLATE PROCEEDINGS AND DI STINGUISHED THE JUDICIAL DECISION CITED BY THE ASSESSEE. FURTHER AS SESSEE COULD NOT FURNISH CONFIRMATION OF PRIMARY DETAILS OF NAME, A DDRESS AND PAN NUMBERS OF THE CLIENTS WHO HAVE ADVANCED THE MONEY. WITH THESE OBSERVATIONS THE COMMISSIONER OF INCOME TAX (APPEAL S) CONCURRED WITH THE FINDINGS OF THE ASSESSING OFFICER AND CONF IRMED THE ORDER OF THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF T HE COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE ASSAILED AN APPE AL BEFORE TRIBUNAL. 5. BEFORE US, THE LD. AUTHORISED REPRESENTATIVE REITER ATED HIS SUBMISSIONS MADE BEFORE ASSESSING OFFICER AND COMMI SSIONER OF INCOME TAX (APPEALS) AND ARGUED THAT THE ASSESSEE B EING A ADVOCATE RECEIVED ADVANCE FEES IN RESPECT OF LEGAL ISSUES AN D SUCH ADVANCE FEES IS OFFERED TO TAX IN SUBSEQUENT ASSESSMENT YEAR. T HE ASSESSEE IS REGULARLY ASSESSED TO INCOME TAX IN FILING INCOME T AX RETURN AND PAYING TAXES WHICH ARE ACCEPTED BY THE DEPARTMENT. THE AS SESSING OFFICER NOT SATISFIED WITH THE EXPLANATIONS OF THE ADVANCES RECEIVED FROM THE CLIENTS ARBITRATELY BROUGHT TO TAX IN FINANCIAL Y EAR 2011-12 IRRESPECTIVE ITA NO.2135/MDS/2015 :- 5 -: OF ASSESSEE SUPPORTING DEPOSITS WITH MATERIAL EVID ENCE. IN APPELLATE PROCEEDINGS, THE LD. AUTHORISED REPRESENTATIVE EXPL AINED THE SOURCES WITH WRITTEN SUBMISSION DATED 28.10.2015 BUT LD. CO MMISSIONER OF INCOME TAX (APPEALS) HAS DISTINGUISHED THE FACTS AN D DECISIONS RELIED BY THE ASSESSEE AND CONCURRED WITH THE FINDINGS OF THE ASSESSING OFFICER. THE LD. AUTHORISED REPRESENTATIVE SUBMITTE D THAT THERE IS NO SUPPRESSION OF INCOME AS THE AMOUNT WAS OFFERED TO THE INCOME TAX IN SUBSEQUENT YEARS AND PRODUCED STATEMENT OF SCHED ULE OF ADVANCE FEES WITH DETAILS OF BANK ACCOUNT, NAME OF CLIENTS, BANK BRANCH AND CHEQUE NOS TO SUBSTANTIATE THE CREDIT ROUTED IN BA NK ACCOUNT AND ESTABLISHMENT OF IDENTITY WITH INFORMATION OF BANKS AND PRAYED FOR DELETION OF ADDITION BY ASSESSING OFFICER IN ASSESS MENT PROCEEDINGS. 6. CONTRA, LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE LOWER AUTHORITIES AND OPPOSED THE GROUNDS OF THE ASSESSEE. 7. WE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATE RIAL ON RECORD AND JUDICIAL DECISIONS CITED. THE ASSESSEE B EING AN ADVOCATE IN PROFESSION AND IT IS COMMON FOR THE ADVOCATES TO COLLECT ADVANCE FEES IN RESPECT OF CASES TO BE REPRESENTED IN FUTUR E AND ADVANCE FEES ARE RECEIVED THROUGH BANK ACCOUNT AND ASSESSEE HAS OFFERED TO TAX IN SUCCEEDING ASSESSMENT YEAR. THE LD. AUTHORISED REP RESENTATIVE DREW OUR ATTENTION TO THE SCHEDULE OF ADVANCE FEE RECEIP TS WITH IDENTITY OF ITA NO.2135/MDS/2015 :- 6 -: CLIENTS/PARTY, FEES AMOUNTS, BANK ACCOUNT DETAILS TO SUBSTANTIATE THE GROUNDS OF OFFERING INCOME IN FUTURE. THE ADVANCE FEE RECEIVED BY THE ADVOCATE CANNOT BE TREATED AS INCOME FOR THE RELEVA NT ASSESSMENT YEAR, EVEN IF THE ASSESSEE IS MAINTAINING HIS BOOKS OF ACCOUNTS UNDER CASH SYSTEM OF ACCOUNTING. THEREFORE, WE HEREIN DI RECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF ADVANCE FEE RECEI VED BY ASSESSEE FROM CLIENTS SUBJECT TO VERIFICATION THAT ADVANCE FEE RE CEIVED IS OFFERED AS INCOME IN SUBSEQUENT YEARS OR RETURNED OR IF STILL REMAIN AS ADVANCE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE ALLOWED A S INDICATED HEREINABOVE. ORDER PRONOUNCED ON THURSDAY, THE 17 TH DAY OF MARCH, 2016 AT CHENNAI. SD/ - (! . '#$ %' ) (A. MOHAN ALANKAMONY) ' () / ACCOUNTANT MEMBER SD/ - ( * . + , ' ) (G. PAVAN KUMAR) - () / JUDICIAL MEMBER *& / CHENNAI + / DATED:17TH MARCH, 2016. KV , ' $'./ 0/' / COPY TO: 1 . ! / APPELLANT 2. $% ! / RESPONDENT 3. 1' () / CIT(A) 4. 1' / CIT 5. /4 5 $'6 / DR 6. 5 7 8 & / GF