CORPORATE LAW CHAMBERS INDIA, MUMBAI V. DCIT CIR 15(1), MUMBAI

ITA 3742/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78901 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-06-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 07-04-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 25-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIKAS AGARWAL
• Keywords: Business income

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C B ENCH, MUMBAI . . , , !'# , $ % BEFORE SHRI I.P. BANSAL, JM AND SHRI N.K. BILLAI YA, AM ./ I.T.A. NO.3742/MUM/2012 ( & & & & / ASSESSMENT YEAR :2007-08 M/S. CORPORATE LAW CHAMBERS INDIA, 8 TH FLOOR, CHANDER MUKHI, NARIMAN POINT, MUMBAI-400 021 / VS. THE DCIT, CIRCLE 15(1), MUMBAI ' $ ./ () ./ PAN/GIR NO. : AAEFC 3535E ( '* / APPELLANT ) .. ( +,'* / RESPONDENT ) '* - / APPELLANT BY: SHRI VIJAY MEHTA +,'* . - / RESPONDENT BY: SHRI VIKAS AGARWAL . /0$ / DATE OF HEARING :04.06.2014 12& . /0$ / DATE OF PRONOUNCEMENT :06.06.2014 3 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS PREFERRED AGAINST T HE ORDER OF THE LD. CIT(A)-26, MUMBAI DT.16.11.2012 PERTAINING TO A.Y. 2007-08. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 12 LAKHS BEING ADVAN CE RECEIVED BEFORE COMMENCEMENT OF PROFESSIONAL WORK. ITA NO. 3742/M/2012 2 3. THE ASSESSEE IS IN THE BUSINESS OF LEGAL CONSULT ANCY SERVICES FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. FOR THE YEAR UNDER CONSIDERATION, THE RETURN OF INCOME WAS FILED ON 29 .2.2008 DECLARING TOTAL INCOME AT RS. 65,04,000/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT AND STATUTORY NOTICES WERE ISSUED AND SE RVED UPON THE ASSESSEE. 4. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED ADV ANCES FROM FIVE PARTIES TOTALING TO RS. 12 LAKHS. THE ASSESSEE CLAIMED THA T THE FEES WERE PAID IN ADVANCE FOR FUTURE CONSULTANCY. IT WAS FURTHER EXP LAINED THAT IF THE ASSESSEE DECIDED NOT TO TAKE UP THE MATTER OF THE 5 PARTIES, THE SAID ADVANCE WILL BE REFUNDED. THE ASSESSEE WAS TO REPR ESENT BEFORE THE SEBI IN RELATION TO SOME IPO SCAM. THE AO WAS OF THE OP INION THAT NO RECEIPT/BILL FOR RS. 12 LAKHS HAS BEEN PRODUCED. T HE AO WAS OF THE FIRM BELIEF THAT NO CLIENT WILL PAY ADVANCE TO THE ADVOC ATE UNLESS SOME WORK HAS BEEN DONE BY THE ADVOCATE. NO CORRESPONDENCE F ROM THESE PARTIES WAS PRODUCED, THE AO WENT ON TO TREAT RS. 12 LAKHS AS RECEIPT FOR THE YEAR UNDER CONSIDERATION. 5. AGGRIEVED BY THIS, THE ASSESSEE CARRIED THE MATT ER BEFORE THE LD. CIT(A). IT WAS STRONGLY CONTENDED BEFORE THE LD. C IT(A) THAT THE AO DID NOT GIVE SUFFICIENT TIME TO FILE EVIDENCE ACCORDING LY, THE ASSESSEE FILED SOME DOCUMENTARY EVIDENCES BEFORE THE LD. CIT(A) IN TERMS OF RULE 46A. THE SUBMISSION OF THE ASSESSEE ALONGWITH DOCU MENTARY EVIDENCE SUBMITTED BY THE ASSESSEE WERE FORWARDED TO THE AO BY THE LD. CIT(A). THE AO SUBMITTED A REMAND REPORT VIDE LETTER DT. 2 9.2.2012. IT WAS SUBMITTED BY THE AO THAT THE ASSESSEE NEVER ATTEND ED THE REMAND ITA NO. 3742/M/2012 3 PROCEEDINGS. THE AO ALSO DOUBTED THE GENUINENESS O F THE DOCUMENTS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A). 5.1. AFTER CONSIDERING THE FACTS AND THE SUBMISSION S AND THE REMAND REPORT, THE LD. CIT(A) CAME TO THE CONCLUSION THAT THE ASSESSEE HAS RECEIVED THE AMOUNT OF RS. 12 LAKHS DURING THE COUR SE OF ITS BUSINESS THEREFORE, THE AO HAS CORRECTLY TAXED THESE RECEIPT S AS BUSINESS RECEIPTS. 6. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 7. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THAT THESE 5 PARTIES BELONGING TO THE SAME GROUP APPROACHED THE ASSESSEE IN RELATION TO SOME MATTER PENDING BEFORE THE SEBI WITH RESPECT TO SOME IPO SCAM. IT WAS CONTENDED BY THE LD. COUNSEL THAT SINCE THE MATTER BEFORE THE SEBI WAS TAKEN UP ONLY IN 2009 AND THE PROCEEDINGS BEFORE TH E SEBI CONCLUDED BY ITS ORDER DT. 23.4.2010, THE ASSESSEE BOOKED THE AD VANCE RECEIVED RS. 12 LAKHS AS INCOME FOR FINANCIAL YEAR 2009-10 PERTAINI NG TO A.Y. 2010-11. THE LD. COUNSEL ALSO SUBMITTED THAT THIS RECEIPT HA S BEEN SHOWN AS INCOME IN A.Y. 2010-11 AND HAS BEEN ASSESSED AS SUC H VIDE ORDER DT. 28.2.2013. THE LD. COUNSEL CONCLUDED BY STATING THA T THE ASSESSEE HAS RIGHTLY SHOWN RS. 12 LAKHS AS ITS INCOME IN THE YEA R WHEN THE ASSESSEE HAD ACTUALLY BOOKED THE FEES. THEREFORE, THE FINDI NGS OF THE REVENUE AUTHORITIES ARE ERRONEOUS. 8. PER CONTRA, THE LD. DEPARTMENTAL REPRESENTATIVE STRONGLY SUPPORTED THE FINDINGS OF THE LOWER AUTHORITIES. 9. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW AND THE RELEVANT MATERIAL EVIDENCE BROUGHT BEFORE US. IT APPEARS THAT THE AO ITA NO. 3742/M/2012 4 HAS NOT CONSIDERED THE CHRONOLOGICAL EVENTS OF THIS CASE. THE AO HAS SIMPLY ADDED RS. 12 LAKHS ON THE BELIEF THAT NO CLI ENT WOULD GIVE MONEY TO AN ADVOCATE UNLESS SOME WORK IS DONE BY THAT ADV OCATE. THE LD. CIT(A) HAS CONFIRMED THE ADDITION STATING THAT THE AO HAS DOUBTED THE GENUINENESS OF THE EVIDENCE FILED BEFORE HIM. IN O UR CONSIDERED VIEW, THIS ISSUE NEEDS READJUDICATION AT THE ASSESSMENT L EVEL. WE, THEREFORE, RESTORE THIS ISSUE BACK TO THE FILE OF THE AO. THE ASSESSEE IS DIRECTED TO FILE THE DETAILS OF CHRONOLOGICAL EVENTS WHICH TOOK PLACE BEFORE THE SEBI ALONGWITH CONFIRMATIONS FROM THE PARTIES. THE AO I S DIRECTED TO VERIFY THESE DOCUMENTS AFRESH AFTER GIVING REASONABLE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. 10. BEFORE CLOSING, THE AO IS ALSO DIRECTED TO VERI FY WHETHER THE SAME INCOME HAS BEEN OFFERED FOR TAX IN A.Y. 2010-11 AND DECIDE ACCORDINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 6TH JUNE, 20 14 . 3 . 2& $ 4 56 06.06.2014 2 . 7 SD/- SD/- (I.P. BANSAL ) (N.K. BILLAIYA) /JUDICIAL MEMBER $ / ACCOUNTANT MEMBER MUMBAI; 5 DATED 6 TH JUNE, 2014 . . ./ RJ , SR. PS ITA NO. 3742/M/2012 5 3 3 3 3 . .. . +/ +/ +/ +/ 8 &/ 8 &/ 8 &/ 8 &/ / COPY OF THE ORDER FORWARDED TO : 1. '* / THE APPELLANT 2. +,'* / THE RESPONDENT. 3. 9 ( ) / THE CIT(A)- 4. 9 / CIT 5. :7 +/ , , / DR, ITAT, MUMBAI 6. 7; < / GUARD FILE. 3 3 3 3 / BY ORDER, , / +/ //TRUE COPY// = == = / > > > > ( ( ( ( (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI