GUNJAN NIKHIL CHANDNA, MUMBAI V. ITO 23(2)(3), MUMBAI

ITA 2411/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92351 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 12-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 28-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Keywords: Unexplained cash credit; Unexplained expenditure; Bad and doubtful debts
• Section: 69C; 143(3); 234B; 68

Judgement Text

SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G, MUMBAI . . , , BEFORE SHRI B R BASKARAN , ACCOUNTANT MEMBER AND SHRI VIVEK VARMA, JUDICIAL MEMBER ITA ITA NO. : 2411 /MUM/20 1 1 (ASSESSMENT YEAR: 2007 - 0 8 ) SHRI GUNJAN NIKHIL CHANDNA , SHOP NO 3, VASANT NIWAS, M G ROAD, MULUND (WEST), MUMBAI - 400 080 .: PAN: AEYPC 0538 B VS IT O - 2 3 ( 2 ) (3) , MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K GOPAL RESPONDENT BY : SHRI PAVAN KUMAR BEERLA /DATE OF HEARING : 12 - 0 2 - 201 5 / DATE OF PRONOUNCEMENT : 21 - 0 4 - 201 5 ORDER , : PER VIVEK VARMA, JM: INSTANT APPEAL S ARE FILED BY THE ASSESSEE AGAINST THE ORDER S OF CIT(A) - 3 3 , MUMBAI, DATED 2 4. 01 .201 1 , RAISING THE FOLLOWING GROUNDS: THE LD. COMMISSIONER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS 'LD. CIT(A)] ERRED IN PASSING THE ORDER DATED 24.01.2011 CONFIRMING THE ASSESSMENT ORDER PASS ED UNDER SECTION 143(3) OF THE I.T. ACT, 1961 WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT OBJECTS TO THE FOLLOWING ADDITIONS/ DISALLOWANCES MADE IN THE ASSESSMENT ORDER : SR. NO. PARTICULARS AMOUNT (RS.) A ADDITIONS ON ACCOU NT OF GROSS RECEIPTS 21,20,714 B DISALLOWANCE ON ACCOUNT OF BAD DEBTS 6,13,413 C DISALLOWANCE OF COMMISSION PAID 4,08,872 D DISALLOWANCE U/S 40(A)(IA) 40,000 E ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT CREDIT UNDER SECTION 68 OF THE ACT 31,427 F ADDITION ON ACCOUNT OF UNEXPLAINED UNDER EXPENDITURE U/S 69C OF THE ACT 68,941 A. ADDITIONS ON ACCOUNT OF GROSS RECEIPTS - R21,20,714/ - SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 2 2. THE LD. CIT(A) ERRED IN UPHOLDING THE ACTION OF THE A.O. IN MAKING ADDITION OF R21,20,714/ - BY ALLEGING THAT THE SA ME HAS BEEN ACCRUED TO THE APPELLANT FROM M/S. STANDARD CHARTERED STCI CAPITAL MARKETS LTD. THE ADDITION OF R S 21,20,714/ - IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 3. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AMOUNT OF R S 21,20,714/ - HAS BE EN RETAINED BY M/S. STANDARD CHARTERED - STCI CAPITAL MARKETS LTD FOR NON CLEARANCE OF DUES BY VARIOUS CLIENTS REGISTERED THROUGH THE APPELLANT. THE APPELLANT, THEREFORE PRAYS THAT THE ADDITION OF R S 21,20,714/ - IS NOT AT ALL JUSTIFIED AND HENCE, THE SAME MAY BE DELETED. 4. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AMOUNT OF R21,20,714/ - RETAINED BY M/S. STANDARD CHARTERED - STCI CAPITAL MARKETS LTD IS IRRECOVERABLE. THE APPELLANT, THEREFORE, PRAYS THAT THE SAME MAY BE ALLOW ED AS BAD DEBT. 5. WITHOUT PREJUDICE TO THE ABOVE, THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AMOUNT OF R21,20,714/ - RETAINED BY M/ S. STANDARD CHARTERED - STCI CAPITAL MARKETS LTD IS A LOSS SUFFERED BY THE APPELLANT IN THE COURSE OF BUSINESS OF THE APPELL ANT. THE APPELLANT, THEREFORE, PRAYS THAT THE SAME MAY BE ALLOWED AS BUSINESS LOSS. B. DISALLOWANCE ON ACCOUNT OF BAD DEBTS - R 6,13,413/ - 6. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING THE BAD DEBTS CLAIMED AMOUNTING TO R S 6,13, 413/ - WITHOUT APPRECIATING THE FACT THAT THE SAME HAS BECOME IRRECOVERABLE. THE APPELLANT THEREFORE PRAYS THAT THE DISALLOWANCE OF BAD DEBT AMOUNTING TO R S 6,13,413/ - IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 7. WITHOUT PREJUDICE TO THE ABOVE, T HE LD. CIT(A) FAILED TO APPRECIATE THAT THE BAD DEBTS HAS BEEN GENERATED IN THE NORMAL COURSE OF BUSINESS ACTIVITY OF THE APPELLANT. THE APPELLANT, THEREFORE, PRAYS THAT THE BAD DEBTS AMOUNTING TO R S 6,13,413/ - MAY BE ALLOWED AS BUSINESS LOSS. C. DISALLOWA NCE OF COMMISSION PAID RS 4,08,872/ - 8. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING AN AMOUNT OF R S 4,08,872/ - OUT OF THE TOTAL COMMISSION PAID DURING THE IMPUGNED ASSESSMENT YEAR WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCE S OF THE CASE. THE APPELLANT, THEREFORE, PRAYS THAT THE DISALLOWANCE OF COMMISSION PAID AMOUNTING TO R S 4,08,872/ - IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. 9. THE LD. CIT(A) ERRED IN DIRECTING THE LD. A.O. TO DISALLOW ENTIRE AMOUNT OF R13,08,87 2/ - U/S.40(A)(IA) WITHOUT APPRECIATING THE FACT THAT THE APPELLANT HAS DEDUCTED TDS ON THE COMMISSION AND PAID THE SAME BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. HENCE, THE LD. CIT(A) IS NOT AT ALL JUSTIFIED IN MAKING DISALLOWANCE OF R S 13,08,872/ - AND HENCE THE SAME MAY BE DELETED. D. DISALLOWANCE UNDER SECTION 40(A)(IA) R S 40,000/ - 10. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN DISALLOWING AN AMOUNT OF R40,000/ - BY INVOKING THE PROVISIONS OF SECTION 40(A)(IA) OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF R S 40,000/ - IS NOT AT ALL JUSTIFIED AND HENCE, THE SAME MAY BE DELETED. 11. THE LD. CIT(A) FAILED TO APPRECIATE THAT THE AMOUNT OF R40,000/ - REPRESENTS THE P AYMENT MADE TO THE MR. R. SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 3 VISHWANATHAN ONE OF THE EMPLOYEE OF THE APPELLANT. THE APPELLANT THEREFORE PRAYS THAT THE PROVISIONS OF SECTION 40(A)(IA) IS NOT AT ALL ATTRACTED TO THE FACTS OF THE APPELLANT'S CASE. HENCE, THE DISALLOWANCE OF R40,000/ - UNDER SE CTION 40(A)(IA) IS NOT AT ALL JUSTIFIED AND THE SAME MAY BE DELETED. E. ADDITION ON ACCOUNT OF UNEXPLAINED CASH CREDIT UNDER SECTION 68 OF THE ACT R S 31,427 / - 12. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF R31,427/ - TRE ATING THE SAME AS UNEXPLAINED CASH CREDIT UNDER THE PROVISIONS OF SECTION 68 OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT PRAYS THAT THE ADDITION OF R31,427/ - IS NOT AT ALL JUSTIFIED AND HENCE, THE SAME MAY BE DELE TED. F. ADDITION ON ACCOUNT OF UNEXPLAINED EXPENDITURE UNDER SECTION 69C OF THE ACT - RS 68,941/ - 13. THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN MAKING AN ADDITION OF R S 68,427/ - TREATING THE SAME AS UNEXPLAINED EXPENDITURE UNDER THE PROVISIO NS OF SECTION 690 OF THE ACT WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES OF THE CASE. THE APPELLANT PRAYS THAT THE ADDITION OF R S 68,941/ - IS NOT AT ALL JUSTIFIED AND HENCE, THE SAME MAY BE DELETED. 14. THE APPELLANT DENIES ANY LIABILITY TO PAY INTERE ST UNDER SECTION 234A, 234B AND 2340 OF THE ACT. HENCE, THE SAME ARE NOT LEVIABLE. 15. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, RESCIND OR AMEND ANY OF THE GROUNDS OF APPEAL. 2. THE ASSESSEE IS AN INDIVIDUAL, HAVING SUB BROKER BUSINESS FOR UTI SECURITI ES LTD (PRESENTLY STANDARD CHARTERED - STCI CAPITAL MARKETS LIMITED). 3. IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE DECLARED HER DECLARED HER TURNOVER AT RS. 46,41,123/ - AND INCOME, AFTER ALL EXPENSES AT RS. 9.44 LACS. 4. IN THE COURSE OF ASSESSMENT P ROCEEDINGS, THE ASSESSEE SUBMITTED HER TDS CERTIFICATES FROM TDS CERTIFICATE, THE AO CAME TO A CONCLUSION THAT THE ASSESSEE RETURN OVER SHOULD HAVE BEEN RS. 67,33,211/ - AND NOT RS. 46,12,513/ - (RS. 46,41,123 - RS. 28,610). 5. HE, THEREFORE, ASKED THE ASSESS EE FOR THE REASONS OF DIFFERENCE. THE ASSESSEE EXPLAINED VIDE LETTER DATED 23.11.2009 THAT THE ASSESSEE DID NOT DECLARE RS. 21,20,714/ - , AS THAT WAS THE RETENTION MONEY, RETAINED BY STCI CAPITAL MARKETS LTD., BECAUSE THE ASSESSEE WAS UNABLE TO COLLECT THIS AMOUNT FROM HIS CLIENTS. THE ASSESSEE SUBMITTED BEFORE THE AO THAT THIS AMOUNT SHALL REMAIN IRRECOVERABLE. SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 4 6. THE AO DISREGARDED THE EXPLANATION AND OBSERVED THAT SINCE THE BOOKS HAVE BEEN MAINTAINED UNDER MERCANTILE SYSTEM OF ACCOUNTING, THE AMOUNT, WHI CH HAS ACCRUED AS INCOME SHALL BE TAKEN AS INCOME AND TAXED ACCORDINGLY. THE AO, THEREFORE, ADDED RS. 21,20,714/ - TO THE INCOME OF THE ASSESSEE. 7. THE ASSESSEE APPROACHED THE CIT(A), BEFORE WHOM THE ASSESSEE REITERATED THE SUBMISSIONS AS MADE BEFORE THE AO. THE ASSESSEE ALSO SUBMITTED MONTH WISE DETAILS OF COMMISSION RECEIVED FROM STCI AND SUBMITTED THAT THE SHE H A D DECLARED WHAT WAS ACTUALLY RECEIVED BY HER. 8. THE CIT(A) ALSO REJECTED THE CLAIM AS MADE BY THE ASSESSEE AND SUSTAINED THE ORDER OF THE AO. 9. AGGRIEVED BY THE ORDER OF THE CIT(A), THE ASSESSEE IS NOW BEFORE THE ITAT. 10. BEFORE US, THE AR SUBMITTED THAT THE FACTUM AND QUANTUM OF ACTUAL MONEY RECEIVED BY THE ASSESSEE IS NOT DISPUTED. THE DISPUTE IS WITH REGARD TO MONEY NOT RECEIVED. THE ASS ESSEE HAS BEEN PLEADING THAT STCI RETAINED THE MONEY IN LINE OF MONEY NOT PAID TO THEM BY THE ASSESSEE. THE ASSESSEE SAYS THAT SHE COULD NOT PAY THE MONEY BECAUSE THIS MONEY WAS NOT RECEIVED BY THE ASSESSEE FROM CLIENTS AND NOW THESE MONIES HAVE BECOME UNR ECOVERABLE. 11. THE REVENUE AUTHORITIES ON THE OTHER HAND ARE OF THE VIEW THAT SINCE THE AMOUNT HAD BECOME DUE AND ACCRUED TO THE ASSESSEE FOR WHICH EVEN THE TDS CERTIFICATE IS ALSO SUBMITTED TO THE CURRENT YEAR, HAS TO BE BROUGHT TO TAX IN THE CURRENT YE AR. THE AR SUBMITTED THAT BEING A SUB BROKER, THE ASSESSEE HAD ENTERED INTO BOOKING FRANCHISE AGREEMENT DATED 02.12.2003 BETWEEN UTI SECURITIES LTD. (NOW STANDARD CHARTERED SECURITIES (INDIA) LTD.) AND MR. GUNJAN N THAKKAR (ASSESSEE), WHEREIN CLAUSE 6 PERT AINED TO OBLIGATIONS OF FRANCHISEE AND SUB CLAUSE 6.4 READS AS UNDER SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 5 6. IMMEDIATELY ON SIGNING OF THE AGREEMENT TO REGISTER HIMSELF/HERSELF/ITSELF WITH NSF AND BSE AS SUB - BROKER BY COMPLETING ALL NECESSARY FORMALITIES AND BY COMPLYING ALL NECESSARY LEGAL . AND OPERATIONAL FORMALITIES AS REQUIRED BY THE FRANCHISORS. 6.2 THAT THE ENTIRE COST OF THE HARDWARE INVOLVED SUCH AS COMPUTERS CABLING, FURNITURE AND FITTINGS REQUIRED AT THE FRANCHISEE CENTRE ETC. AS WELL AS MAINTENANCE OF THE SAME AND OTHER COSTS, CHA RGES AND EXPENSES SHALL BE BORNE BY THE FRANCHISEE 6.3 TO BEAR AND PAY ALL RECURRING COSTS CONTINUE THE INFLOW OF EXCHANGE FEEDS FROM THE EXCHANGES AND OTHER RECURRING COSTS LIKE EXCHANGE CHARGES, OFFICE EXPENSES, RENT, WATER AND ELECTRICAL CHARGES ETC. 6.4 FRANCHISEE SHALL ENSURE FULL COMPLIANCE OF MARGIN COLLECTIONS FROM CLIENTS, AS MAY BE IMPOSED BY THE REGULATORY AUTHORITIES AND FRANCHISOR FROM TIME TO TIME. 12. CLAUSE 18 SPECIFIES INDEMNITY THE FRANCHISEE HEREBY AGREES TO FULLY AND EFFECTIVELY I NDEMNIFY AND KEEP INDEMNIFIED AND HOLD HARMLESS THE FRANCHISOR AGAINST ALL PROCEEDINGS, COSTS, CLAIMS, DAMAGES AND EXPENSES (INCLUDING COUNSELS FEES AND OTHER LEGAL EXPENSES) OF WHATSOEVER NATURE HOWSOEVER SUFFERED OR INCURRED BY THE FRANCHISOR ARI S ING OU T OF OR BY REASON OF ANY OMISSION OR COMMISSION OF THE FRANCHISEE OR ITS OFFICERS AND OTHER EMPLOYEES OR AUTHORIZED PERSONS IN CARRYING ON THE BUSINESS PURSUANT HERETO. 13. THE EXISTING AGREEMENT WAS AMENDED ON 01.04.2004, WHICH SPECIFIED, (A) THE FRANC HISOR AND THE FRANCHISEE HAVE ENTERED INTO A BROKING FRANCHISE AGREEMENT ON 2ND DAY OF DECEMBER 2003; (B) THE FRANCHISOR AND FRANCHISEE AFTER FURTHER DISCUSSIONS AND IN VIEW OF THE SEBI (STOCK - BROKERS AND SUB - BROKERS) (AMENDMENT) REGULATIONS, 2003 CONSIDERED I T NECESSARY TO AMEND THE ABOVE AGREEMENT IN THE MANNER AS HEREINAFTER APPEARING . 14. CLAUSE 6.15 OF THE AMENDMENT AGREEMENT READ AS, TO MAKE GOOD TO FRANCHISOR, THE DEFAULTS MADE BY CLIENTS INTRODUCED BY OR DOING BUSINESS THROUGH THE FRANCHISEE UPON DEM AND IN THAT BEHALF MADE BY THE FRANCHISOR AND UNTIL THE FRANCHISEE PAYS SUCH AMOUNTS OR CAUSES THE CLIENTS TO PAY SUCH AMOUNTS, THE FRANCHISOR MAY, WITHOUT PREJUDICE TO ITS RIGHTS AND REMEDIES UNDER LAW AS AGAINST THE CLIENT AND THE FRANCHISEE AND IN ITS SOLE DISCRETION, WITHHOLD EITHER IN FULL OR IN PART ANY SERVICE CHARGES, BROKERAGE AND OTHER SUMS DUE AND PAYABLE BY IT TO THE FRANCHISEE UNDER THESE PARTS AND/OR ADJUST SUCH AMOUNTS IN DEFAULT AGAINST THE SAID AMOUNTS PAYABLE BY FRANCHISOR TO THE FRANCHIS EE. IT IS AGREED THAT THE WITHHOLDING OR NON - PAYMENT OF THE SERVICE CHARGES, BROKERAGE AND OTHER AMOUNTS PURSUANT TO THIS CLAUSE SHALL BE REGARDED AS BREACH OF FRANCHISORS OBLIGATIONS HEREUNDER. SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 6 UNDER THESE CIRCUMSTANCES, THE AR SUBMITTED THAT NEITHER T HE DUE AMOUNTS WERE RECOVERED NOR WERE THEY RECOVERABLE FROM CLIENTS. ON THESE GROUNDS, THE FRANCHISOR FORFEITED THE PAYMENT THAT WAS DUE TO THE ASSESSEE. THE AR SUBMITTED THAT THE ASSESSEE HAD SHOWN THE INCOME WHICH HAS ACTUALLY RESULTED IN INCOME TO HER. IN SO FAR AS THE EXCLUSION OF RETENTION MONEY WAS CONCERNED, HE PLACED RELIANCE ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS ASSOCIATED CABLES (P) LTD., REPORTED IN 286 ITR 596, WHEREIN THE HONBLE COURT HELD, RETENTION MONEY WITHH ELD BY CONTRACTEE PENDING COMPLETION OF CONTRACT WORK DOES NOT ACCRUE TO THE ASSESSEE - CONTRACTOR IN THE YEAR IN WHICH THE AMOUNT IS RETAINED. 15. THE AR THEREFORE SUBMITTED THAT THE MONEY/BROKERAGE HELD BACK BY THE FRANCHISOR CANNOT BE TAKEN TO BE THE IN COME OF THE YEAR, AS HAS BEEN HELD BY THE HONBLE BOMBAY HIGH COURT. 16. THE DR RELIED ON THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT THE SUM WAS RIGHTLY BROUGHT TO TAX. 17. WE HAVE HEARD THE FACTS OF THE CASE AND HAVE PERUSED THE AGREEMEN T AND THE CASE LAW AS CITED BY THE AR. 18. AT THE OUTSET, WE AGREE WITH THE REVENUE AUTHORITIES THAT SINCE THE AMOUNT BECAME DUE AND/OR ACCRUED TO THE ASSESSEE, THE INCOME HAS EMERGED AND THEREFORE HAD TO BE TAKEN AS INCOME OF THE ASSESSEE. THE CASE CITED BY THE AR HAS DIFFERENT FACTS, AND TILL THEN IT WOULD REMAIN CONTINGENT. BUT IN THE CASE IN HAND, THE WORK WAS COMPLETED AND IT WAS THE ASSESSEE WHO FAILED TO HAVE A PROPER COLLECTION FROM HER CLIENTS TO BE PAID TO SC - STCI, ON THIS DEFAULT BY THE ASSESSEE , THE AMOUNT THOUGH DUE WAS NOT PAID TO HER, THEREFORE, IT WAS HER INCOME AND THE REVENUE AUTHORITIES HAVE CORRECTLY BROUGHT THE SAME TAX. AS A RESULT, WE SUSTAIN THE ORDERS OF THE REVENUE AUTHORITIES . SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 7 19. GROUND NO. A2, 3 & 4 ARE THEREFORE REJECTED. 20. COMING TO GROUND B5, WE FIND THAT THE ASSESSEE ACTUALLY SUFFERED LOSS, NOT ONLY FROM THE CLIENTS, WHO DID NOT HONOUR THEIR COMMITMENTS, BUT FROM HER PRINCIPAL, I.E. SC - STCI, AS WELL WHO DID NOT PAY HER IN LINE OF THEIR RECEIPTS FROM BUSINESS AND AS PER CLAUSE 6.15. WE, THEREFORE, HOLD THAT IT WAS A BUSINESS LOSS FOR THE YEAR UNDER CONSIDERATION. 2 1 . WE, THEREFORE, DIRECT THE REVENUE AUTHORITIES TO ALLOW RS. 21,20,714/ - AS BUSINESS LOSS AND CONSEQUENTIAL BENEFITS ATTACHED TO IT. 2 2 . GROUND NO. B5 IS TH EREFORE ALLOWED. 2 3 . GROUND NO. B 6 PERTAINS TO CLAIM OF RS. 6,13,413/ - AS BAD DEBT. 2 4 . THE CLAIM OF THE ASSESSEE HAD BEEN THAT THE MONEY COULD NOT BE RECOVERED FROM HER CLIENTS, WHICH WERE DUE TO BE PAID TO SC - STCI. 2 5 . THE ASSESSEE CLAIMED THE SUM A B AD DEBT. THE AO DISALLOWED THE SAME. THE CIT(A ) ALSO SUSTAINED THE ORDER OF THE AO. 2 6 . THE ASSESSEE IS NOW BEFORE THE ITAT. 2 7 . BEFORE US, THE AR REITERATED HIS SUBMISSIONS AND SUBMITTED THAT THE CLAIM OF BAD DEBTS WAS RIGHTLY MADE BY THE ASSESSEE. ON T HE OTHER HAND, THE DR SUPPORTED THE ORDERS OF THE REVENUE AUTHORITIES AND SUBMITTED THAT AT FIRST THE ASSESSEE IS TO SHOW THE BAD DEBT AS INCOME DUE. UNLESS THE INCOME IS NOT SHOWN, THE BAD DEBT CANNOT BE CLAIMED. SINCE THE ASSESSEE HAS SHOWN THE AMOUNTS I RRECOVERABLE FROM CLIENTS DURING THE YEAR ITSELF, CANNOT AMOUNT TO BAD DEBT. 2 8 . WE HAVE HEARD THE ARGUMENTS AND HAVE PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. WE FIND THAT THE ISSUE IN QUESTION IS EXACTLY THE SAME WAS THAT IN GROUND NO. A 1, 2, 3 & 4. BUT NEITHER SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 8 THE ASSESSEE NOR THE DR HAS MADE ANY ATTEMPT EITHER TO RECONCILE OR T O DIFFERENTIATE THE AMOUNTS INVOLVED IN GROUND A AND B. IT IS APPARENT THAT THE FIGURES TOO WOULD TALLY. IN SUCH A CASE IT WOULD BE BETTER THAT THE AO GIVE AN EXACT FINDING OF FACT. WE, THEREFORE, SET ASIDE THE ORDERS OF THE REVENUE AUTHORITIES ON THIS ISSUE AND DIRECT THE AO TO ADJUDICATE AFRESH. 2 9 . GROUND NO. B6 & B 7 ARE THUS ALLOWED FOR STATISTICAL PURPOSES. 30 . GROUND S NO. C8 & C9 & D10 & D11 PERTAINS TO DISALLOWANCE OF COMMISSION PAID . 3 1 . THOUGH THE GROUNDS MAY BE PARTLY LINKED TO GROUND NO. A, BUT HERE THE DISPUTE PERTAINS TO PAYMENT OF COMMISSION BY THE ASSESSEE TO ITS CONSTITUENTS. 3 2 . THE FACT THAT THE ASSESSEE WAS IN BUSINESS AND HAS SHOWN BROKERAGE RECEIVED AT RS. 42,28,330/ - HAS NOT BEEN DISPUTED OR DISTURBED BY THE REVENUE AUTHORITIES. IT IS ALSO A FACT THAT AS PER THE AO, THE ASSESSEE WOULD HAVE RECEIV ED INCOME F ROM BROKERAGE AT RS. 67,33,211/ - , BUT DECLARED ONLY RS. 42,28,330/ - WHICH WAS ACTUALLY RECEIVED . TO EARN THAT MUCH BROKERAGE, THE ASSESSEE WHO IN THE BUSINESS MUST HAVE PAID THE COMMISSION TO HER BROKERS/AGENTS AND ALSO EMPLOYED CERTAIN STAFF . ON THE OTHER HAND, THE REVENUE AUTHORITIES HAVE DISALLOWED THE PAYMENT OF COMMISSION U/S 40(A)(IA), WHICH P ATENTLY MEANS THAT THE ASSESSEE HAS PAID THE COMMISSION AND HAS PAID SALARY TO H ER EMPLOYEE AS WELL . 3 3 . SINCE THE REVENUE AUTHORITIES HAVE DISALLOWED THE PAYMENTS OF RS. 4,08,872/ - AND RS. 13,08,872/ - , FOR NON - DEDUCTION OF TAS, THE ISSUE HAS CREATED A M AJOR BLOCK TO COME TO A LOGICAL CONCLUSION. 3 4 . IN THESE CIRCUMSTANCES, WE ARE OF THE OPINION THAT THESE ISSUES NEED TO BE ADJUDICATED AFRESH IN LINE WITH LEGAL PROVISIONS OF SECTION 40(A)(IA). SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 9 3 5 . WE, THEREFORE SET ASIDE THE ORDER OF THE REVENUE AUTHORI TIES ON THE PAYMENTS OF RS. 40,000/ - AND DIRECT THE AO TO EXAMINE THE DEDUCTION OF TAS AND IF THE CONTENTIONS OF THE ASSESSEE ARE CORRECT, ALLOW THE EXPENSE. 3 6 . GROUNDS NO. C8 & C9 & D10 & D11 ARE THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 3 7 . GROUNDS NO. E12 & F13 PERTAIN CASH CREDIT U/S 68 OF RS. 31,427/ - AND UNEXPLAINED EXPENDITURE OF RS. 68,941/ - U/S 69C. 3 8 . FROM THE RECITAL OF THE ASSESSMENT ORDER, WE ARE UNABLE TO FIND OUT AS TO HOW THE AO REACHED THESE TWO FIGURES FROM THE DETAILS AS PROVIDED B Y THE ASSESSEE. THE CIT(A) HAS ALSO SUSTAINED THE ADDITION. 3 9 . AS MENTIONED ABOVE, WE HAVE NOT BEEN ABLE TO FIND OUT AS TO HOW THE TWO FIGURES WERE DERIVED BY THE AO. IN SUCH A CIRCUMSTANCE, MOST APPROPRIATE VIEW WOULD BE THAT THE ORDERS OF THE REVENUE A UTHORITIES BE SET ASIDE WITH THE DIRECTIONS TO THE AO TO RE - ADJUDICATE THE ISSUES, IF REQUIRED. 40 . GROUNDS NO. E & F ARE THEREFORE ALLOWED FOR STATISTICAL PURPOSES. 41 . GROUND NO. 14 PERTAINS TO LIABILITY OF INTEREST U/S 234A, 234B & 234C. THE COMPUTATI ON OF INTEREST IS CONSEQUENTIAL, WHICH SHALL DEPEND ON THE FINAL FIGURE OF ASSESSED INCOME. 4 2 . GROUND NO. 15 IS GENERAL. 4 3 . IN THE RESULT, THE APPEAL AS FILED BY THE ASSESSEE IS PARTLY ALLOWED. SHRI GUNJAN NIKHIL CHANDNA ITA 2411 /M/201 1 10 ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL , 2015. SD/ - SD/ - ( . . ) ( ) ( B R BASKARAN ) ( VIVEK VARM A ) ACCOUNTANT MEMB ER JUDICIAL MEMBER MUMBAI, DATE: 21ST APRIL , 2015 / COPY TO: - 1) / THE APPELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 3 3 , MUMBAI. 4) THE CIT - 2 3 , MUMBAI/CIT - 2 3 , MUMBAI . 5) , , / THE D.R. G BENCH, MUMBAI. 6) COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS