ACIT 12(1), MUMBAI V. CAPT. SANTOSH SHARMA, MUMBAI

ITA 3065/MUM/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9690 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 03-08-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR A K NAYAK DR MR D B SHAH
• Keywords: Additional evidence
• Section: 143(3); 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH E, MU MBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 3065/MUM/2013 (ASSESSMENT YEAR- 2009-10) ACIT-12(1), R NO. 117, 1 ST FLOOR, AAYAKAR BHAVAN, M.K. MARG, MUMBAI-400020. VS. CAPT. SANTOSH SHARMA PROP. HINDUSTAN SECURITY FORCE, 172/174, HORNBY BUILDING, DR. D.N. ROAD, FORT, MUMBAI-400001. PAN: AMJPS9703K (APPELLANT) (RESPONDENT) REVENUE BY : DR. A.K. NAYAK (DR) ASSESSEE BY : MR. D.B. SHAH (AR) DATE OF HEARING : 21.06.2017 DATE OF PRONOUNCEMENT : 31.07.2017 ORDER UNDER SECTION 254(1) OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER: 1. THIS APPEAL BY REVENUE U/S. 253 OF THE INCOME-TAX A CT (THE ACT) IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-23 [THE CIT(A)], MUMBAI DATED 01.01.2013 FOR THE ASSESSMENT YEAR 200 9-10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ' ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) WAS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.1, 31,31,177/- WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE FAILED TO P ROVE THAT THE NET AMOUNT OF RS. 1,31,31,177/ - HAS BEEN PAID IN CASH AS OVERTIME TO THE SECURITY GUARDS AND INCLUDED IN THE WAGES'. 2. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS.96,650 /-, RS.39,200/- AND RS.93,744/- UNDER THE HEAD HOUSE PROPERTY INCOME.' ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 2 3. 'ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD.CIT(A) ERRED IN ACCEPTING ADDITIONAL EVIDENCE UNDER RULE 46A IN RESPECT OF LETTER FILED FOR THE FIRST TIME BY THE ASSESSEE THAT WAS RECEIVED FR OM THE BUILDER IN CONNECTION WITH POSSESSION OF PROPERTY, WITHOUT GIVING OPPORTU NITY TO A.O.' 4. 'THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A ) ON THE ABOVE GROUND(S) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER RESTORE D.' 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF PROVIDING SECURITY GUARDS AND IS RUNNING ITS CONCERN IN THE N AME OF M/S HINDUSTAN SECURITY FORCE. THE ASSESSEE FILED ITS RETURN OF INCOME FOR RELEVANT ASSESSMENT YEAR (AY) ON 25.09.2010 DECLARING TOTAL INCOME OF RS. 2,10,44 ,560/-. THE ASSESSMENT WAS COMPLETED ON 14.12.2011 U/S 143(3) OF THE ACT. THE ASSESSING OFFICER (AO) WHILE FRAMING ASSESSMENT ORDER BESIDES THE OTHER ADDITION /DISALLOWANCE MADE THE ADDITION OF RS. 1,31,31,177/- ON ACCOUNT OF OVERTIM E PAYMENT TO SECURITY GUARDS AND FURTHER ADDED INCOME FROM HOUSE PROPERTY OF RS. 96,650/-, RS. 39,200/- AND RS. 93,744/- FOR DIFFERENT PROPERTIES UNDER THE HEA D INCOME FROM HOUSE PROPERTY. ON APPEAL BEFORE THE LD. CIT(A), BOTH TH E ADDITION WAS DELETED. THUS, AGGRIEVED BY THE ORDER OF LD. CIT(A), THE REVENUE H AS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIVE ( DR) FOR THE REVENUE AND LD. AUTHORIZED REPRESENTATIVE (AR) FOR THE ASSESSEE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUND NO.1 RELATES TO DELETIN G THE ADDITION OF RS. 1,31,31,177/-, ADDED ON ACCOUNT OF OVERTIME PAID IN CASH TO THE SECURITY GUARDS. THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF A O. IT WAS ARGUED THAT ASSESSEE HAS NOT PAID AMOUNT OF OVERTIME TO THE SECURITY GUA RDS. THE ASSESSEE MERELY BOOKED SUCH OVERTIME EXPENSES AND DID NOT HAND OVER THE CASH TO THE SECURITY ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 3 GUARDS. NO SEPARATE REGISTER WAS MAINTAINED BY THEM SHOWING THE PERIOD OF OVERTIME, THE BASIS AND MANNER ON THE BASIS OF OVER TIME WAS PAID TO THE SECURITY GUARDS. THE ASSESSEE HAS NOT PROVIDED ANY DIRECT EV IDENCE OF PAYMENT OF CASH TO SECURITY GUARDS. NO VALID JUSTIFICATION WAS PROVIDE D BY ASSESSEE AS TO WHY THE OVERTIME PAYMENT WAS NOT INCLUDED IN THE NET WAGE. THE ASSESSEE HAS NOT MAINTAINED SEPARATE VOUCHER OR CASH RECEIPT FOR THE PAYMENT OF CASH TO THE SECURITY GUARDS. THE LD. CIT(A) DELETED THE ADDITIO N WITHOUT CONSIDERING THE FACT THAT ASSESSEE FAILED TO SUBSTANTIATE HIS CONTENTION WITH DOCUMENTARY EVIDENCE. THE LD. DR FOR THE REVENUE PRAYED THAT THE ORDER OF LD. CIT(A) BE REVERSED AND THE ORDER OF AO MAY BE RESTORED. ON THE OTHER HAND, LD. AR OF THE ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). IT WAS FURTHER ARGUED THAT THE ADDITION WAS MADE BY AO WITHOUT PROPERLY APPRECIATING THE FAT AND THE DOCUM ENTARY EVIDENCE PLACED BEFORE HIM DURING THE ASSESSMENT PROCEEDING. IT WAS ARGUED THAT NO ADDITION WAS MADE IN SUBSEQUENT AY IN 2010-11, 2011-12, 2012-13, 2013-14 & 2014-15. THOUGH THE ASSESSMENT ORDER WAS PASSED U/S 143(3) OF THE ACT E XCEPT FOR THE AY 2010-11. THE LD. AR OF THE ASSESSEE FILED A LIST/DETAILS OF SUBS EQUENT ASSESSMENT ORDER PASSED U/S 143(3) OR U/S 143(1). IT WAS ARGUED THAT NO ADDITIO N ON ACCOUNT OF OVERTIME WAS MADE, THOUGH THE ASSESSEE RELIED ON SIMILAR EVIDENC ES IN ALL SUBSEQUENT YEAR. IT WAS FURTHER ARGUED THAT THE ASSESSEE DURING THE ASS ESSMENT PROVIDED ALL RECORD RELEVANT TO THE ATTENDANCE, WAGE AND OVERTIME PAYME NT REGISTER SHOWING THE PAYMENT MADE IN CASH. DURING THE COURSE OF ASSESSME NT PROCEEDING, THE ASSESSEE ASKED THAT THEY CAN PRODUCE THE GUARDS WHO HAVE BEE N PAID OVERTIME AND THEIR STATEMENT MAY BE RECORDED BY THE AO. IT WAS FURTHER ARGUED THAT THE ASSESSEE IS ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 4 COMPLYING ALL STATUTORY PROVISIONS VIZ. LIKE PF, ES IC, GRATUITY, OVERTIME AS PER GOVERNMENT RULES & REGULATION. THE ASSESSEE IS RETI RED AS COMMISSIONED OFFICER FROM DEFENSE SERVICES AND IS LAW ABIDING CITIZEN. T HE ASSESSEE IS MAINTAINING ALL RECORDS OF OVERTIME PAYMENT WHICH IS DULY SIGNED BY SECURITY GUARDS. IN THESE CASES, THE OVERTIME PAYMENT ARE NOT INCLUDED IN THE NET WAGE ONLY NET WAGE HAS BEEN PAID BY CHEQUE WHICH HAS BEEN DULY ACCEPTED/RE CEIVED UNDER THE SIGNATURE OF SECURITY GUARD. IT WAS FURTHER ARGUED THAT LD. CIT( A) APPRECIATED THE CONTENTION OF ASSESSEE AND GRANTED RELIEF TO THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO MADE THE ADDITI ON ON ACCOUNT OF OVERTIME PAID IN CASH TO THE SECURITY GUARDS HOLDING THAT TH ERE IS NO JUSTIFICATION AS TO WHY THE OVERTIME WAS PAID IN CASH, WHEN THE SALARY IS B EING PAID BY CHEQUE. IF THE SIGNATURE WERE OBTAINED FOR THE SALARY PAID BY CHEQ UES, THEN WHY SIGNATURE CANNOT BE OBTAINED FOR RECEIVING THE OVERTIME PAYMENT. THE RE IS NO JUSTIFICATION FOR INCLUDING OVERTIME UNDER THE HEAD NET WAGE PAID W HERE THE OVERTIME PAYMENT IS MADE IN CASH. WHEREAS THE NET PAID DOES NOT INCL UDE THE OVERTIME IN SOME OF THE CASES. THE ASSESSEE FAILED TO PROVIDE THE DIRECT EV IDENCE OF PAYMENT OF CASH OF RS.1,31,31,177/- PAID TO SECURITY GUARDS ON ACCOUNT OF OVERTIME. THE LD. CIT(A) DELETED THE ADDITION HOLDING THAT THE GUARDS WERE P AID OVERTIME AS PER THE ESTABLISHED FACT AND THE NORMS IN THE LINE OF BUSIN ESS OF SECURITY SERVICES. THE AO MADE THE DISALLOWANCE ON THE BASIS OF CONJECTURE AN D SURMISES AND NOT BROUGHT ANY EVIDENCE ON RECORD THAT THE OVERTIME PAYMENT IS BOGUS. THE AO HAS NOT BROUGHT OUT ANY DEFECTS IN THE DOCUMENTS MAINTAINED BY THE ASSESSEE AND DELETED ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 5 THE ADDITION. WE HAVE SEEN THAT THE ASSESSEE HAS PL ACED ON RECORD THE COPY OF PAYMENT REGISTER (PAGE NO. 1 TO 5 OF PB), COPY OF O VERTIME PAYMENT REGISTER, COPY OF ESI RETURNED, LIST OF PAYMENT MADE TO GUARD S, THE DATE ON WHICH THE PAYMENT MADE TO THE GUARDS. CASH-BOOK ALONG WITH CO RRESPONDING ENTRY, THE REPORT OF SECURITY GUARDS BOARD FOR BRIHAN MUMBAI AND THANE DISTRICT (PAGE NO. 82 TO 85 OF PB), COPY OF SALARY SLIP CONSISTING OF OVERTIME PAYMENT (PAGE NO. 86 TO 97 OF PB), REPORT OF PROVIDENT FUND DEPARTMENT DATE D 27.06.2008 CERTIFYING THAT OVERTIME PAYMENT WERE MADE TO GUARDS. THE ASSESSEE HAS FILED HIS CERTIFICATE THAT ALL THESE DOCUMENTS WERE FILED BEFORE THE LOWER AUT HORITIES. THE PERUSAL OF ALL THE ABOVE REFERRED DOCUMENTS SHOWS THAT THE GUARDS WERE PAID OVERTIME AGAINST THEIR SIGNATURE. WE HAVE FURTHER NOTICED THAT ASSESSEE DU RING THE ASSESSMENT PROCEEDING CATEGORICALLY CONTENDED THAT HE CAN PHYSICALLY PROD UCE THE GUARDS WHO HAVE BEEN PAID OVERTIME AND THEIR STATEMENT CAN BE RECORDED A S AN EVIDENCE FOR THE SATISFACTION OF THE AO. THE ASSESSEE FURTHER CONTEN DED THAT SEPARATE OVERTIME REGISTER IS MAINTAINED, WHICH IS SIGNED BY THE GUAR DS WHILE TAKING OVERTIME PAYMENT IN CASH. HOWEVER, THE AO FAILED TO CONSIDER THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE, RATHER THE AO CONCLUDED T HAT ASSESSEE FAILED TO PROVIDE THE DIRECT EVIDENCE OF PAYMENT OF CASH AMOUNTING TO RS. 1,31,31,177/- TO SECURITY GUARDS. IN OUR CONSIDERED VIEW, THE ASSESSEE DISCHA RGED HIS ONUS BY FILING DOCUMENTARY EVIDENCE AND DISCHARGED HIS ONUS. THE A O HAS NOT BROUGHT ON RECORD ANY MATERIAL TO SHOW THAT OVERTIME PAYMENT IS BOGUS . WE HAVE FURTHER NOTICED THAT NO SUCH DISALLOWANCE WAS MADE IN THE ASSESSMENT FOR ASSESSMENT YEAR 2011-12, 2012-13, 2013-14 & 2014-15 DESPITE THE FACT THAT AS SESSMENT ORDER WAS PASSED ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 6 UNDER SECTION 143(3) OF THE ACT. CONSIDERING, THE F ACT AND THE EVIDENCE PLACED ON RECORD BEFORE US, WE DO NOT FIND ANY ILLEGALITY OR INFIRMITY IN THE ORDER PASSED BY LD. CIT(A). 5. GROUND NO.2 RELATES TO DELETING THE ADDITION OF RS. 96,650/-, RS. 39,200/- AND RS. 93,744/- UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE LD. DR FOR THE REVENUE ARGUED THAT ARGUED THAT ASSESSEE OWNED THRE E FLATS AT VASHI, BELAPUR MUMBAI, A RESIDENTIAL PROPERTY AT SANCHIANI CITY AN D AT JOGINDER NAGAR, HIMACHAL PRADESH. BESIDES THE RESIDENTIAL PROPERTY THE ASSES SEE OWNED A COMMERCIAL PROPERTY AT FULL STOCK MALL. THE ASSESSEE HAS NOT S HOWN ANY RENTAL INCOME FROM THE SAID PROPERTIES. THE AO AFTER CONSIDERING THE F AIR MARKET VALUE ASSESSED THE ANNUAL LETTING VALUE (ALV) OF TWO RESIDENTIAL FLATS AT VASHI BELAPUR, ONE FLAT AT SANCHIANI CITY AND LAND AND BUILDING AT JOGINDER NA GAR, HIMACHAL PRADESH AND SHOP (COMMERCIAL PROPERTY) AT FULL STOCK MALL. THE ASSESSING OFFICER BROUGHT ALL THE PROPERTY UNDER THE INCOME TAX ON THE BASIS OF N OTIONAL VALVE. THE LD. CIT(A) DELETED THE ADDITION OF INCOME FROM HOUSE PROPERTY WITHOUT PROPER APPRECIATING THE FACT OF THE CASE. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE ARGUED THAT THE ASSESSEE OWNED THREE RESIDENTIAL UNIT AT VASHI BELA PUR ARE ADJOINING TO EACH OTHER AND THE AREA IS LESS THAN 51 SQ. METER. ALL THE PRO PERTIES ARE USED FOR RESIDENTIAL AS WELL AS PERSONAL OFFICE. ALL THE PROPERTIES ARE ADJ OINING TO EACH OTHER NONE OF THE PORTION IS LET OUT BY ASSESSEE. FOR PROPERTY AT SAN CHIANI CITY BELAPUR, IT WAS ARGUED THAT THE PROPERTY IS UNDER LITIGATION WITH T HE BUILDER, THERE ARE NO BASIC AMENITIES LIKE ELECTRICITY AND WATER IS PROVIDED, T HE FLAT IS LYING VACANT. FOR PROPERTY AT JOGINDER NAGAR, HIMACHAL PRADESH, IT WA S ARGUED THAT THIS PROPERTY IS ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 7 SITUATED IN RURAL AREA AND IS LYING VACANT AS A BAR REN LAND, AS ASSESSEE IS RESIDING IN BOMBAY. FOR COMMERCIAL PROPERTY AT FULL STOCK MALL, IT WAS ARGUED THAT THE POSSESSION OF THIS PROPERTY WAS GIVEN AFTER THE FIN ANCIAL YEAR AND CANNOT BE ASSESSED IN THE YEAR UNDER CONSIDERATION. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE AO WHILE FRAMING T HE ASSESSMENT ORDER OBSERVED THAT ASSESSEE OWNED FOUR FLATS AT VASHI, SECTOR-6 B EARING FLAT NO. C6/1/4.1, C6/1/4.2 AND C6/1/4.3 AND THE FLAT AT SANCHIANI CIT Y BELAPUR AND PLOT AT JOGINDER NAGAR, AND A SHOP AT FULL STOCK MALL. THE ASSESSEE WAS ASKED TO FURNISH THE STATUS OF INCOME FROM HOUSE PROPERTY ALONG WITH THE DOCUME NTARY EVIDENCE. THE ASSESSEE IN ITS REPLY CONTENDED THAT THE THREE FLAT S AT VASHI, SECTOR 6 BELAPUR ARE SELF-OCCUPIED FOR RESIDENTIAL PURPOSE. ALL FLATS AR E LOCATED ONE FLOOR AND ADJOINING TO EACH OTHER AND NONE OF THE SPACE FROM THESE FLAT S IS LET OUT. THE PROPERTY AT SANCHIANI CITY WAS PURCHASED IN AY 2009-10 AND IS U NDER LITIGATION. REGARDING LAND AND BUILDING AT JOGINDER NAGAR, HIMACHAL PRADE SH, THE ASSESSEE CONTENDED THAT IT IS ONLY ONE ROOM AND REMAINING LAND IS LYIN G VACANT AND NO INCOME FROM HOUSE PROPERTY IS DECLARED. THE CONTENTION OF THE A SSESSEE WAS NOT ACCEPTED BY AO AND THE AO CALCULATED THE ALV WORKED OUT THE INCOME FROM HOUSE PROPERTY AT BELAPUR AT RS. 96,650/-, FOR JOGINDER NAGAR PROPERT Y AT RS. 39,200/- AND SHOP AT FULL STOCK MALL AT RS. 93,744/-. THE LD. CIT(A) DUR ING THE FIRST APPELLATE STAGE CONCLUDED THAT THE FLAT AT BELAPUR ARE LOCATED IN T HE SAME BUILDING AND CAN BE USED TOGETHER. IT WAS FURTHER CONCLUDED THAT THE AO HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT THESE FLATS ARE NOT BEING USED AS A SI NGLE UNIT AND DELETED THE ADDITION ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 8 ON ACCOUNT OF INCOME FROM HOUSE PROPERTY. FOR FLAT AT SANCHIANI CITY, THE LD. CIT(A) CONCLUDED THAT DUE TO THE LITIGATION AND NO AMENITIES ARE AVAILABLE, THE AO IS WRONG IN CALCULATING ALV OF THE FLAT. THE FLAT I S NOT FIT FOR OCCUPATION UNDER THOSE CIRCUMSTANCES THERE IS NO QUESTION OF BEING L ET OUT AND DELETED THE ADDITION. FOR PROPERTY AT JOGINDER NAGAR HIMACHAL PRADESH, TH E LD. CIT(A) CONCLUDED THAT AO HAS NOT BROUGHT ANY MATERIAL ON RECORD THAT PROP ERTIES IS HABITABLE OR IN A POSITION FOR LET OUT. FOR SHOP AT FULL STOCK MALL, THE LD. CIT(A) OBSERVED THAT THE POSSESSION OF THE PROPERTY WAS GIVEN IN JULY 2010. THUS, THE ASSESSEE WAS NOT IN THE POSITION OF SHOP. HENCE, THERE IS NO QUESTION O F RENTAL INCOME DURING THE YEAR UNDER CONSIDERATION. WE HAVE SEEN THAT THE LD. CIT( A) DELETED THE ADDITION ON ACCOUNT OF INCOME FROM HOUSE PROPERTY AFTER APPRE CIATING THE FACT AVAILABLE ON RECORD. THUS, WE DO NOT FIND ANY ILLEGALITY OR INFI RMITY IN THE ORDER PASSED BY LD. CIT(A). IN THE RESULT, GROUND NO.2 OF THE APPEALS R AISED BY REVENUE IS DISMISSED. 7. GROUND NO.3 RELATES TO ACCEPTING THE ADDITIONAL EVI DENCE UNDER RULE 46A DURING THE FIRST APPELLATE STAGE. THE LD. DR FOR THE REVEN UE HAS NOT ARGUED ANYTHING. THUS, THIS GROUND IS CONSIDERED AS NOT PRESSED AND THE SAME IS DISMISSED AS NOT PRESSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST DAY OF JULY 2017. SD/- SD/- (G.S. PANNU) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 31/07/2017 S.K.PS ITA NO.3065/M/201 3- CAPT. SANTOSH SHARMA 9 COPY OF THE ORDER FORWARDED TO : BY ORDER, (ASSTT.REGISTRAR) ITAT, MUMBAI 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY/