Major Surinder Singh, Mohali V. Addl. CIT, Mohali

ITA 369/CHANDI/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68608 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 28-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 29-03-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 234B; 133(6); 145; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 419/CHD/2012 ASSESSMENT YEAR : 2008-09 D.C.I.T. CIRCLE 6(1) VS. MAJOR SURINDER SINGH MOHALI 2237, SECTOR 61, MOHALI ACXPM 4355L ITA NO. 369/CHD/2012 ASSESSMENT YEAR : 2008-09 MAJOR SURINDER SINGH VS. ADDL C.I.T. RANGE -VI 2237, SECTOR 61, MOHALI MOHALI ACXPM 4355L (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI AKHILESH GUPTA ASSESSEE BY: SHRI TEJ MOHAN SINGH DATE OF HEARING 28.11.2013 DATE OF PRONOUNCEMENT 23.12.2013 O R D E R PER T.R.SOOD, A.M THESE ARE CROSS APPEALS AND ARE DIRECTED AGAINST T HE ORDER DATED 31.1.2012 OF THE LD. CIT(A), CHANDIGAR H. SOME OF THE ISSUES IN THESE APPEALS ARE COMMON AND THEREFOR E, THESE APPEALS ARE HEARD TOGETHER AND ARE BEING DISPOSED O FF BY THIS COMMON ORDER. ITA NO. 419/CHD/2012 REVENUES APPEAL 2 IN THIS APPEAL THE REVENUE HAS RAISED FOLLOWING G ROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSE SSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF COMMISSION PAID WHICH DID NOT PERTAIN TO THE RELEVA NT ASSESSMENT YEAR ALTHOUGH THE ASSESSEE WAS MAINTAINING HIS ACCOUNTS ON MERCANTILE BASIS. 2 3. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. ITA NO. 369/CHD/2012 ASSESSEES APPEAL 3 IN THIS APPEAL THE ASSESSEE HAS RAISED FOLLOWING GROUNDS: 1. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS ERRED IN LAW AS WELL AS ON FACTS IN UPHOLDING THE CHANGE IN THE METHOD OF ACCOUNTING MADE BY THE ASSESSING OFFICER TO CASH AS AGAINST MERCANTILE SYSTEM REGULARLY FOLLOWED AND ACCEPTED IN THE PAST WHICH IS ILLEGAL, ARBITRARY & UNJUSTIFIED. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN SUSTAINING AN ADDITION OF RS. 27,34,148/- OUT OF TOTAL ADDITION OF RS. 34,44,848/- MADE BY DISALLOWING THE EXPENSES PA YABLE CLAIMED ON MERCANTILE BASIS BY CHANGING OF METHOD OF ACCOUNTIN G TO CASH ON A HYPOTHETICAL BASIS WHICH IS ARBITRARY & UNJUSTIFIED . 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN UPHOLDING THE ADDITION OF RS. 20,99,500/- ON ACCOUNT OF COMMISSION PAID IN CASH ONLY ON SUSPICION, CONJECTU RES AND SURMISES IN UTTER DISREGARD OF THE EXPLANATIONS RENDERED AND EV IDENCE PLACED ON RECORD DURING THE COURSE OF ASSESSMENT AS WELL AS A PPELLATE PROCEEDINGS WHICH IS ILLEGAL, ARBITRARY & UNJUSTIFIED. 4. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN SUSTAINING AN ADDITION OF RS. 1,47,450/- O UT OF TOTAL ADDITION OF RS. 6,83,592/- ON ACCOUNT OF DISALLOWANCE OF SALARY CLAIMED AT RS. 9,36,312/- IN UTTER DISREGARD OF THE EXPLANATIONS R ENDERED AND EVIDENCE PLACED ON RECORD DURING THE COURSE OF ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS ONLY ON A HYPOTHETICAL BASIS WHICH IS A RBITRARY & UNJUSTIFIED. 5. THAT THE LD. COMMISSIONER OF INCOME TAX(APPEAL) HAS FURTHER ERRED IN UPHOLDING THE ADHOC DISALLOWANCE OF RS. 1, 73,639/- BEING 15% OF THE EXPENSES CLAIMED UNDER THE HEADS STAFF WELF ARE, TELEPHONE, CAR RUNNING AND MAINTENANCE AND BUSINESS PROMOTION A GGREGATING RS. 11,57,594/- FOR ALLEGED PERSONAL USE WHICH IS ARBIT RARY & UNJUSTIFIED. 6. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS ) HAS FURTHER ERRED IN UPHOLDING THE CHARGING OF INTEREST UNDER S ECTION 234-B & 234-C OF THE ACT WHICH IS NOT CHARGEABLE IN THE FACTS OF THE CASE. 4 OUT OF ABOVE GROUND NO. 5 WAS NOT PRESSED BEFORE US AND THEREFORE, THE SAME IS DISMISSED AS NOT PRESSED. 5 IN ITA NO. 419/CHD/2012 THE LD. DR FOR THE REVENUE POINTED OUT THAT ONLY DISPUTE RAISED BY THE REVENUE IS REGARDING DELETION OF ADDITION ON ACCOUNT OF COMMI SSION. 6 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURIN G ASSESSMENT PROCEEDINGS THE AO NOTICED THAT THE ASSE SSEE HAS PAID COMMISSION AMOUNTING TO RS. 2,08,74, 748/-. T O VERIFY THE GENUINENESS OF THE CLAIM THE ASSESSING OFFICER MADE ENQUIRIES FROM THESE PERSONS U/S 133(6). HOWEVER, IN CASE OF FOLLOWING PERSONS THE LETTERS WERE RECEIVED BACK: 3 ASSESSING OFFICER PG 10 - S.NO. NAME OF THE PARTY AMOUNT OF COMMISSION 1. SH. NAVJOT SAINI 20,00,000/- 2. SH. SIMRANJIT SINGH 20,00,000/- 3. SH. JAGTAR SINGH 20,00,000/- 4. SH. DILWAR SINGH 20,00,000/- 5. SH. DAVINDER SINGH 20,00,000/- 6. SH. KARAN SINGH 5,00,000/- 1,05,00,000/- THE MATTER WAS CONFRONTED TO THE LD. COUNSEL OF THE ASSESSEE. IT WAS ONLY STATED THAT TDS HAS ALREADY BEEN DEDUCT ED FROM THESE AMOUNTS AND THE AMOUNT HAS BEEN PAID THROUGH ACCOUNT PAYEE CHEQUES, THEREFORE, THE ASSESSEE HAD RIGHTLY CLAIMED THE COMMISSION. HOWEVER, SINCE THE LETTERS WRITTEN BY THE ASSESSING OFFICER WERE RETURNED FROM THESE PERSONS, COMMISSION TO THIS EXTENT WAS NOT ALLOWED. FURTHER SINCE THE ASSESSEE HAD ALSO PROVIDED FOR A SUM OF COMMISSION ON MERCANTILE SYSTEM OF ACCOUNTING WHEREAS RECEIPTS WE RE SHOWN ON CASH BASIS. THE ASSESSING OFFICER AFTER DISCUSS ION HELD THAT SYSTEM OF ACCOUNTING OF THE ASSESSEE HAS TO BE TAKEN AS ON CASH BASIS AND THEREFORE, THE AMOUNT OF COMMISS ION WHICH WAS SHOWN PAYABLE, WAS ALSO HELD TO BE NOT ALLOWABL E. THEREFORE, ULTIMATELY TWO ADDITIONS AMOUNTING TO R S. 34,44,848/- AND RS. 78,48,140/- WERE MADE. 7 ON APPEAL BEFORE THE LD. CIT(A) THE ASSESSEE FILE D WRITTEN SUBMISSIONS WHICH HAS BEEN EXTRACTED BY THE LD. CIT (A) AT PARA 3.2 WHICH ARE AS UNDER: PR 3.2 OF LD. CIT(A) - 3.2 PARA CIT(A) THE ASSESSING OFFICER HAS OBSERVED IN PARA 8.3 THA T THE PAYMENT OF SAID COMMISSION HAS NOT BEEN PROVED AND MADE AN ADDITION OF RS. 78,48,140/- (RS. 1,05,00,000/-) MINUS RS. 26,51,860 /- AFTER GIVING BENEFIT OF THE ADDITION MADE IN RESPECT OF COMMISSION PAYAB LE WHICH IS UNDER CHALLENGE IN GROUND NO. 2). IT IS SUBMITTED THAT TH E ENTIRE ADDITION HAS BEEN MADE ON SUSPICION, SURMISES AND CONJECTURES. I T IS AN ADMITTED POSITION THAT THE ASSESSEE HAS BEEN PAYING COMMISSI ON TO PERSONS WHO HAD BEEN HELPING THE ASSESSEE TO IDENTIFY LAND FOR HIS PRINCIPALS M/S EMAAR MGF. THE ASSESSEE FILED A REPLY DATED 16.12.2 010 WHEREIN THE ANNEXED BANKERS CONFIRMATION IN RESPECT OF PAYMENT HAVING BEEN MADE TO THESE PERSONS THROUGH ACCOUNT PAYEE CHEQUES, COP IES OF THE CHEQUES ISSUED TO THEM AS WELL AS THEIR CONFIRMATIONS. COPY OF THE REPLY ALONGWITH ANNEXURES IS PLACED AT PAGE 99-104 OF THE PAPER BOOK. IT IS ALSO AN ADMITTED FACT THAT TAX HAS BEEN DEDUCTED IN RESPECT OF THE PAYMENTS SO MADE AND COPIES OF FORM 16A ISSUED ARE ALSO ON RECORD. AN AFFIDAVIT HAS ALSO BEEN PLACED ON RECORD OF THE ASS ESSEE WHEREBY HE DEPOSED HAVING MADE THE ABOVE PAYMENTS. THIS WAS AN NEXED WITH REPLY 4 DATED 15.12.2010 WHICH IS PLACED IN THE PAPER-BOOK AT PAGES 105-106. THUS, THE ASSESSEE HAS PLACED ON RECORD ALL SUPPORT ING DOCUMENTS IN THIS REGARD. IT IS AGAIN REITERATED THAT THE ENTIRE ADDITION IS MADE ON THE BASIS OF SUSPICION. IT IS A TRITE LAW THAT SUSPICIO N HOWSOEVER GRAVE CANNOT TAKE THE PLACE OF PROOF. RELIANCE IS PLACED ON THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. RA M NARAIN GOEL REPORTED IN 224 ITR 180 FOR THE SAID PROPOSITION. E VEN OTHERWISE, THE ASSESSING OFFICER IN A WAY HAS ACCEPTED THE COMMISS ION HAVING BEEN PAID TO THESE PERSONS FOR THE REASONS THAT SHE GIVE S BENEFIT OF ADDITION MADE IN RESPECT OF COMMISSION PAYABLE OF RS. 26,51, 860/-. THIS BENEFIT IS IN REGARD TO COMMISSION PAYABLE HAVING BEEN DISA LLOWED ONLY FOR THE CHANGE OF METHOD OF ACCOUNTING MEANING THEREBY THAT THE PAYMENT MADE IS GENUINE BUT NOT ALLOWED FOR A DIFFERENT REASON. THUS, THE ASSESSING OFFICER IS BLOWING HOT AND COLD IN THE SAME BREATH WHICH IS NOT PERMISSIBLE UNDER THE LAW. THUS, KEEPING INTO VIEW THE NATURE OF TRADE AND EVIDENCE ON RECORD, IT IS PRAYED THAT THE ADDIT ION MADE MAY PLEASE BE DELETED. IN VIEW OF ABOVE, THE LD. CIT(A) IN ORDER TO VERIFY THE GENUINENESS OF THE PAYMENTS, SUMMONED THE SAID PERS ONS WHO APPEARED BEFORE HIM AND THESE PERSONS CONFIRMED THE RECEIPT OF COMMISSION. IN VIEW OF ABOVE ADDITION THE EXTEN T OF RS. 78,48,140/- ON ACCOUNT OF COMMISSION WAS DELETED. 8 BEFORE US, THE LD. DR FOR THE REVENUE RELIED ON T HE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD . COUNSEL OF THE ASSESSEE SUPPORTED THE IMPUGNED ORDER. 9 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT DISALLOWANCE ON ACCOUNT OF COMMISSION WAS MAINLY M ADE BECAUSE CERTAIN PERSONS DID NOT RESPOND TO THE QUER IES MADE BY THE ASSESSING OFFICER IN TERMS OF SECTION 133(6) . HOWEVER, THESE PERSONS WERE PRODUCED BEFORE THE LD. CIT(A). THE TDS HAS ALREADY BEEN DEDUCTED BY THE ASSESSEE ON THESE PAYMENTS AND THE PARTIES ALSO CONFIRMED THE PAYMENTS. THERE FORE, IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY DELETED T HE ADDITION. 10 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO. 369/CHD/2012 ASSESSEES APPEAL 11 GROUND NO. 1 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT I N THE NOTES FORMING PART OF THE ACCOUNTS IT WAS STATED TH AT THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUN TING AND WAS RECOGNIZING THE INCOME ON ACCRUAL BASIS EXCEPT COMMISSION INCOME WHICH WAS ACCOUNTED FOR ON CASH RECEIPT 5 BASIS. THIS SYSTEM ACCORDING TO THE ASSESSING OFFI CER, WAS NOT CORRECT AND THEREFORE, THE ASSESSEE WAS REQUESTED T O EXPLAIN THE SITUATION. NO SPECIFIC REPLY WAS GIVEN. THE A SSESSING OFFICER OBSERVED THAT IN VIEW OF SECTION 145 THE A SSESSEE COULD ADOPT ONLY ONE SYSTEM OF ACCOUNTING FOR RECEI PT AS WELL AS EXPENDITURE AND IT WAS NOT POSSIBLE TO ADOPT MER CANTILE SYSTEM OF ACCOUNTING FOR EXPENSES AND CASH SYSTEM O F ACCOUNTING FOR INCOME. SINCE THE COMMISSION RECEIP T WAS BEING ACCOUNTED FOR ON CASH SYSTEM OF ACCOUNTING HE HELD THAT THE ASSESSEE WAS ADOPTING CASH SYSTEM OF ACCOUNTING . 12 ON APPEAL IT WAS MAINLY SUBMITTED THAT THE ASSES SEE HAS BEEN FOLLOWING SAME SYSTEM OF ACCOUNTING CONSISTENT LY THEREFORE, THE SAME SHOULD BE ACCEPTED. THE LD. C IT(A) DID NOT FIND MERIT IN THE CONTENTIONS AND DECIDED THE I SSUE AGAINST THE ASSESSEE. 13 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER AND T HE LD. CIT(A). ON THE OTHER HAND, THE LD. DR FOR THE REVE NUE SUPPORTED THE IMPUGNED ORDER. 14 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY THE LD. CIT(A) IN PARA 2. 3 WHICH H IS AS UNDER: PARA 2.3 OF LD. CIT(A) - I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSELS FOR THE APPELLANT. AS PER THE AMENDED PROVISIONS OF SECTION 145 OF THE ACT, THE INCOME FROM BUSINESS OF PROFESS ION IS TO BE COMPUTED IN ACCORDANCE WITH THE CASH OR MERCANTILE SYSTEM OF ACCOUNTING AND HYBRID SYSTEM OF ACCOUNTING IS NOT ALLOWED. IN THE AUDIT REPORT, THE METHOD OF ACCOUNTING HAS BEEN REPORTED AS MERCANTIL E SYSTEM, BUT IT IS SEEN THAT THE RECEIPTS HAVE BEEN SHOWN ON CASH BASI S WHEREAS THE LIABILITIES HAVE BEEN TAKEN ON MERCANTILE BASIS AND SO THE SYSTEM OF ACCOUNTING FOLLOWED BY THE APPELLANT IS ACTUALLY H YBRID SYSTEM, WHICH IS NOT ALLOWED U/S 145 OF THE ACT. HENCE, IT IS HELD T HAT THE ASSESSING OFFICER WAS RIGHT IN REJECTING THE SYSTEM OF ACCOUN TING ADOPTED BY THE APPELLANT AND IN ASSESSING THE INCOME OF THE APPELL ANT ON CASH BASIS AND HER ACTION IN THIS REGARD IS UPHELD. SECTION 145 READS AS UNDER: 145. (1) INCOME CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' OR 'INCOME FROM OTHER SOURCES' SHALL, SUBJECT TO TH E PROVISIONS OF SUB-SECTION (2), BE COMPUTED IN ACCORDANCE WITH EITHER CASH OR MERCANTI LE SYSTEM OF ACCOUNTING REGULARLY 56 EMPLOYED BY THE ASSESSEE. 6 (2) THE CENTRAL GOVERNMENT MAY NOTIFY IN THE OFFICI AL GAZETTE 57 FROM TIME TO TIME ACCOUNTING STANDARDS TO BE FOLLOWED BY ANY CLASS OF ASSESSEES OR IN RESPECT OF ANY CLASS OF INCOME. (3) WHERE THE ASSESSING OFFICER IS NOT SATISFIED AB OUT THE CORRECTNESS OR COMPLETENESS OF THE ACCOUNTS OF THE ASSESSEE, OR WHERE THE METHOD O F ACCOUNTING PROVIDED IN SUB-SECTION (1) OR ACCOUNTING STANDARDS AS NOTIFIED UNDER SUB-S ECTION (2), HAVE NOT BEEN REGULARLY FOLLOWED BY THE ASSESSEE, THE ASSESSING OFFICER MAY MAKE AN ASSESSMENT IN THE MANNER PROVIDED IN SECTION 144 .] THE ABOVE MAKES IT CLEAR THAT AFTER THE INTRODUCTIO N OF THE ABOVE PROVISION W.E.F. 1.4.1997 THE ASSESSEE CAN AD OPT ONLY ONE SYSTEM OF ACCOUNTING I.E. EITHER CASH OR MERCAN TILE SYSTEM OF ACCOUNTING FOR DETERMINATION OF INCOME UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR PROFESSION. T HUS THE ASSESSEE CANNOT ADOPT ONE SYSTEM OF RECEIPT AND ANO THER FOR EXPENDITURE. THEREFORE, IN OUR OPINION, THE LD. C IT(A) HAS CORRECTLY DECIDED THIS ISSUE. 15 GROUND NO. 2 AFTER HEARING BOTH THE PARTIES WE FIND THAT THE ASSESSING OFFICER AFTER HAVING HELD THAT ASSESS EES SYSTEM OF ACCOUNTING IS TO BE TREATED AS CASH SYSTEM OF AC COUNTING, OBSERVED THAT BECAUSE OF THIS REASON THE EXPENDITUR E ON ACCOUNT OF COMMISSION PAYABLE AND CERTAIN OTHER AM OUNTS PAYABLE, CAN NOT BE ALLOWED AND ACCORDINGLY HE MAD E DISALLOWANCE OF RS. 34,44,848/- VIDE PARA 7.3 WHICH IS AS UNDER: 7.3 OF ASSESSING OFFICER - IN VIEW OF THE ABOVE, AN AMOUNT OF RS. 27,06,914/- SHOWN AS PAYABLE IN BALANCE SHEET UNDER THE HEAD DUE TO SUNDRY PARTIES IS DISALLOWED. FURTHER, IN HIS RETU RN OF INCOME, THE ASSESSEE HAS ADDED BACK U/S 43B OF THE I.T. ACT, 1961 RS. 28 ,47,634/- BEING NOT PAID. DURING THE ASSESSMENT PROCEEDING, HOWEVER, NO PROOF REGARDING PAYMENT OF BALANCE PAYMENTS AMOUNTING RS. 7,10,700/- SHOWN AS PAYABLE HAS BEEN FURNISHED BY THE ASSESSEE. I FURTHER DISALLOW PAYAB LE SERVICE TAX WHICH WAS NOT PAID TILL FILING OF THE RETURN OF INCOME AMOUNT ING RS. 7,10,700/- (RS. 35,58,334/- MINUS 28,47,634/- ALREADY ADDED BACK BY ASSESSEE IN HIS COMPUTATION OF INCOME). FURTHER RS. 18,710/- PAYABL E ON ACCOUNT OF ELECTRICITY & WATER CHARGES AND RS. 8524/- PAYABLE ON ACCOUNT OF TELEPHONE EXPENSES ARE ALSO DISALLOWED. ACCORDINGLY, AGGREGAT E AMOUNT OF RS. 34,44,848/- IS ADDED TO THE INCOME OF THE ASSESSEE BEING CLAIMED ON PAYABLE BASIS, SINCE THE ASSESSEE IS HELD TO BE FOL LOWING THE CASH BASIS OF ACCOUNTING. 16 ON APPEAL THE LD. CIT(A) DELETED THE ADDITION OF ONE OF THE ITEMS AMOUNTING TO RS. 7,10,700/- VIDE PARA 2.3 .3. WHICH IS AS UNDER: PR 2.3.3 OF LD. CIT(A) - REGARDING THE ADDITION MADE OF RS. 7,10,700/- U/S 43B, IT IS SEEN THAT THIS AMOUNT HAS BEEN REFLECTED AS AN ASSET IN THE BALANCE SHEET AS ON 31.03.2008 UNDER T HE HEAD SERVICE TAX (INPUT SERVICES), MEANING THEREBY THAT THIS AMOUNT IS TO BE DEDUCTED 7 FROM SERVICE TAX PAYABLE NAD THE APPELLANTS CONT ENTION IN THIS REGARD IS CORRECT. HENCE, ADDITION MADE OF RS. 7,10,700/- IS DELETED. HE CONFIRMED THE REST OF THE ADDITIONS BECAUSE HE H AS ALSO CONFIRMED THE METHOD OF ACCOUNTING OF THE ASSESSEE HAS TO BE TAKEN AS CASH SYSTEM OF ACCOUNTING. 17 BOTH THE PARTIES WERE HEARD. 18 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT SINCE WE HAVE ALREADY UPHELD THE ORDER OF THE ASSESSING O FFICER REGARDING SYSTEM OF ACCOUNTING WHICH WAS TAKEN BY T HE ASSESSING OFFICER AS CASH SYSTEM OF ACCOUNTING. IN THE CASH SYSTEM OF ACCOUNTING ONLY CASH OUTGOINGS CAN BE ALL OWED AND THE EXPENDITURE WHICH HAS SIMPLY ACCRUED BUT NOT PA ID, CANNOT BE ALLOWED. THEREFORE, WE FIND NOTHING WRONG IN T HE ORDER OF THE LD. CIT(A) AND CONFIRM THE SAME. 19 GROUND NO. 3 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO FURTHER NOTICE D THAT THE ASSESSEE HAS PAID COMMISSION AMOUNTING TO RS. 20,99 ,500/- IN CASH. THE ASSESSEE WAS CONFRONTED VIDE ORDER SHEE T DATED 19.11.2010 AS TO WHY THE SAME SHOULD NOT BE DISALLO WED. IN RESPONSE IT WAS STATED VIDE LETTER DOTED 6.12.2010 WHICH IS AS UNDER: THE COPY OF ACCOUNT OF COMMISSION PAID BY THE ASSE SSEE DURING THE FINANCIAL YEAR 2007-08 HAS ALREADY BEEN FURNISHED. MOST OF THE PAYMENTS HAVE BEEN MADE THROUGH CHEQUE AND TDS AMOUNT HAS AL SO BEEN DEDUCTED. IT ALSO INCLUDES COMMISSION PAID IN CASH AMOUNTING TO RS. 20.90 LACS TO THE VARIOUS PERSONS WHO HAVE RENDERED SERVES TO THE ASSESSEE DURING THE YEAR. SINCE THE AMOUNT PAID TO THESE PERSONS WAS LESS THAN RS. 20,000/- NO TDS WAS REQUIRED TO BE DE DUCTED ON THESE AMOUNT ONE MORE OPPORTUNITY WAS GIVEN TO THE ASSESSEE TO F ILE COMPLETE NAMES AND ADDRESSES OF THE PERSONS OR THE NATURE OF SERVICE FOR WHICH THIS AMOUNT WAS PAID BUT NOTHING WAS FILED, THEREFORE, HE ADDED THE SUM OF RS. 20,99,500/- TO THE INCOME OF THE ASSESSEE. 8 20 ON APPEAL THE ASSESSEE COULD NOT IMPROVE HIS CAS E AND THE LD. CIT(A) DECIDED THE SAME AGAINST THE ASSESSE E VIDE PARA 4.3 WHICH IS AS UNDER: 4.3 OF LD. CIT(A) - I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSELS FOR THE APPELLANT. THE APPELLANT HAD NOT F URNISHED EVENT THE NAMES AND ADDRESSES OF THE PERSONS TO WHOM THE COMM ISSION WAS PAID IN CASH. THE PLEA OF THE APPELLANT THAT NO TDS WAS DEDUCTED BECAUSE COMMISSION PAID TO EACH OF THESE PERSONS WERE LESS THAN RS. 20,000/- CANNOT BE ACCEPTED SINCE AS PER THE PROVISIONS OF S ECTION 194H, TDS WAS REQUIRED TO BE DEDUCTED ON COMMISSION PAYMENTS EXCEEDING RS. 2500/- AND NOT RS. 20,000/-. AS THE TDS HAS NOT BEE N SO DEDUCTED, THE COMMISSION PAID IS DISALLOWABLE U/S 40(A)(IA) ITSEL F. THE APPELLANT HAS ALSO NOT GIVEN NAMES AND ADDRESSES OF THE PERSONS T O WHOM THE COMMISSION HAS BEEN PAID IN CASH, RAISING A SERIOUS DOUBT ABOUT THE GENUINENESS OF THE PAYMENTS. HENCE, THE DISALLOWANC E MADE IN RESPECT OF THE COMMISSION CLAIMED OF RS. 20,99,500/- IS UP HELD. 21 BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMI TTED THAT THE ASSESSEE WAS IN THE BUSINESS OF PROCURING AND A RRANGING THE LAND FOR M/S EMAAR MGF. AND THEREFORE, SERVICE S OF THE BROKERS WERE REQUIRED. SOMETIMES SMALL BROKERS HAV E TO BE PAID IN CASH, THEREFORE, CLAIM WAS JUSTIFIED. 22 ON THE OTHER HAND, THE LD. DR FOR THE REVENUE S TRONGLY SUPPORTED THE ORDER OF THE LD. CIT(A). 23 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE ARE U NABLE TO AGREE WITH THE SUBMISSIONS OF THE LD. COUNSEL OF TH E ASSESSEE. IT IS A SETTLED POSITION OF LAW THAT FOR ANY CLAIM OF EXPENDITURE, THE BURDEN IS ON THE ASSESSEE TO PROVE THE GENUINEN ESS OF THE CLAIM THEREFORE, THE ASSESSEE WAS DUTY BOUND TO GIV E THE NAMES AND ADDRESSES OF THE PARTIES TO PROVE THAT TH E COMMISSION HAS BEEN PAID IN CASH. IN CASE OF COMM ISSION THE ASSESSEE WAS FURTHER REQUIRED TO PROVE THE NATURE O F SERVICES PROVIDED BY SUCH PERSONS. THIS HAS NOT BEEN DONE A ND ONLY GENERAL REPLY HAS BEEN MADE WHICH CAN NOT SUBSTITUT E FOR EVIDENCE. THEREFORE, IN THE ABSENCE OF ANY DETAIL ED EVIDENCE IN RESPECT OF CLAIM OF THESE AMOUNTS ON ACCOUNT OF COMMISSION, HAS BEEN RIGHTLY REJECTED BY THE LD. CI T(A) AND ACCORDINGLY WE CONFIRM HIS ORDER. 24 GROUND NO. 4 AFTER HEARING BOTH THE PARTIES WE FIND THAT DURING ASSESSMENT PROCEEDINGS THE AO NOTICED THAT A SURVEY WAS CONDUCTED IN THE PREMISES OF THE ASSESSEE. DUR ING SURVEY 9 A PROFIT AND LOSS ACCOUNT WAS GENERATED FOR THE PER IOD 1.4.2007 TO 13.2.2008. THIS PROFIT AND LOSS ACCOUNT SHOWED THE SALARY OF RS. 2,10,600/-. THIS PROFIT AND LOSS ACCOUNT WA S AUTHENTICATED BY THE ASSESSEE. HOWEVER, LATER ON I T WAS SEEN THAT FOR THE COMPLETE YEAR THE CLAIM OF SALARY HAS BEEN SHOWN AT RS. 9,36,312/-. ACCORDING TO THE ASSESSING OFFI CER THIS SHOWS THAT THE ASSESSEE HAS INFLATED THE CLAIM OF T HE SALARY. HE CALCULATED THE AVERAGE SALARY ON THE BASIS OF R S. 2,10,600/- FOR 10 MONTHS AND ALLOWED THE CORRESPOND ING CLAIM OF RS. 2,52,720/- AND DISALLOWED THE BALANCE CLAIM OF RS. 6,83,592/-. 25 ON APPEAL IT WAS MAINLY STATED THAT THE ASSESSIN G OFFICER WAS NOT RIGHT IN DISALLOWING THE CLAIM BECAUSE THE TDS HAS BEEN DEDUCTED IN CASE OF 4 EMPLOYEES OUT OF 8 EMPLO YEES. THE LD. CIT(A) HAD ALLOWED PART RELIEF VIDE PARA 5. 3 WHICH IS AS UNDER: PR 5.3 OF LD. CIT(A) - I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSELS AND HAVE GONE THROUGH THE COPIES OF FORM N O. 16 FILED BY THEM. THE DISALLOWANCE OUT OF SALARY HAD BEEN MADE BY THE ASSESSING OFFICER BECAUSE THE SALARY CLAIMED BY THE APPELLANT WAS MORE THAN THE SALARY AS PER THE PROFIT AND LOSS ACCOUNT GENERATED DURING THE COURSE OF SURVEY. AS PER DETAILS SUBMITTED NOW, THE APPELLANT HAD DULY DEDUCTED TAX AT SOURCE ON THE TOTAL SALARY PAID OF RS. 6,88, 862/- OUT OF TOTAL AMOUNT CLAIMED OF RS. 9,36,312/-. AS THE TAX HAS BE EN DEDUCTED IN RESPECT OF SALARY PAID TO FOUR PERSONS, THE SALARY PAID TO THESE FOUR PERSONS CANNOT BE DISALLOWED. REGARDING REST OF THE AMOUNT OF RS. 2,47,450/- (9,36,312-6,88,862) OF SALARY, IT IS SEE N THAT THIS AMOUNT HAS BEEN PAID TO FOUR PERSONS. THE APPELLANT HAS NOT SU BMITTED ANY DETAILS (ADDRESSES ETC.) IN RESPECT OF THESE FOUR PERSONS B UT AN OFFICE CANNOT BE RUN WITHOUT OFFICE BOYS, TO WHOM SALARY OF RS. 4,00 0/- TO RS. 5,000/- PER MONTH IS TO BE PAID. ASSUMING THAT THERE WERE TWO O FFICE BOYS, SALARY OF APPROXIMATELY RS. 1,00,000/- IS FURTHER ALLOWABLE. THUS, OUT OF TOTAL SALARY CLAIMED OF RS. 9,36,312/-, SALARY OF RS. 7,8 8,862/- (6,88,862+1,00,000) IS ALLOWED AND THE DISALLOWANCE ON THIS ACCOUNT WOULD WORK OUT TO RS. 1,47,450/- (9,36,312-7,88,862 ). AS DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS OF RS. 6,83,952/- , THE APPELLANT GETS RELIEF OF RS. 5,36,502/- (6,83,952/- 1,47,450). GRO UND OF APPEAL NO. 5 IS PARTLY ALLOWED. 26 BEFORE US THE LD. COUNSEL OF THE ASSESSEE REITER ATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). ON THE OTH ER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF T HE ASSESSING OFFICER. 10 27 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND THAT THE LD. CIT(A) HAS ALREADY ALLOWED MORE THAN REASONABLE AMO UNT OF RELIEF AND THEREFORE, NO FURTHER INTERFERENCE IS R EQUIRED. 28 GROUND NO. 6 - THIS GROUND IS IN RESPECT OF LEV Y OF INTEREST U/S 234B AND 234C WHICH IS CONSEQUENTIAL IN NATURE AND THE ASSESSING OFFICER IS DIRECTED TO LEVY THE I NTEREST IN ACCORDANCE WITH LAW. 29 IN THE RESULT, BOTH THE APPEALS OF THE REVENUE A ND THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.12.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 23.12.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR