ITO, New Delhi V. Sh. Ram Avtar Gupta, Delhi

ITA 4039/DEL/2010

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58760 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 07-03-2012
• Assessment Year: 2003-2004
• Appeal Filed On: 31-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SURESH K GUPTA
• Keywords: Corroborative evidences
• Section: 143(3); 133A; 147; 148

Judgement Text

ITA NO. 4039/DEL/2010 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 4039/DEL/2010 A.Y. : 2003-2004 ITO, WARD 29(1), ROOM NO. 103, DRUM SHAPE BUILDING, IP ESTATE, NEW DELHI 2 VS. SH. RAM AVTAR GUPTA, PROP. OF M/S KAMDHENU ENTERPRISES, 2658/61, 2 ND FLOOR, NAYA BAZAR, DELHI 110 006 (PAN/GIR NO. : ABHPG9916H) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSESSEE BY : S HRI SURESH K. GUPTA, CA DEPARTMENT BY : SHRI PRADEEP KUMAR, C.I.T. (D.R.) ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 25.5.2 010 PERTAINING TO ASSESSMENT YEAR 2003-04. 2. THE GROUNDS RAISED READ AS UNDER:- (I) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION TO THE TUNE OF ` 37,76,297/- ON ACCOUNT OF EXPENSES CLAIMED AGAINST BROKERAGE INCOME RELYIN G ON THE DECISION OF HONBLE ITAT ALLAHABAD IN THE CASE OF SMT. ITA NO. 4039/DEL/2010 2 USHA TRIPATHI VS. ACIT (66 TTJ 508) IGNORING THAT O NUS TO PROVE THE ALLOWABILITY OF THE EXPENSES WAS ON THE A SSESSEE WHICH HE FAILED TO PROVE. (II) THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 3. IN THIS CASE THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE, AN INDIVIDUAL, IS ENGAGED IN THE BUSINESS AS A BROK ER IN THE FOOD GRAIN MARKET OF DELHI. HE IS WRITING HIS BOOKS ON CASH MET HOD AND FOR INCOME TAX PURPOSES ALSO ON CASH BASIS ONLY THE INCOME IS O FFERED. THE SAME HAS BEEN MENTIONED IN THE ASSESSMENT ORDER ALSO. HE HAS FILED RETURN OF INCOME ORIGINALLY ON 21/1/2004 WITH ITO WARD 6(1 ), JAIPUR DECLARING A TOTAL INCOME OF RS.1,47,803/-. IN ADDITION TO THA T AGRICULTURAL INCOME OF RS.51,375/- WAS ALSO SHOWN. IN SUPPORT OF THIS I NCOME AN INCOME AND EXPENDITURE ACCOUNT WAS ENCLOSED WITH THE RETUR N OF INCOME AS PER WHICH THE TOTAL RECEIPT ON ACCOUNT OF COMMISSION IS RS. 4,47,219/-. AGAINST SAME THERE ARE EXPENSES TO THE EXTENT OF RS. 2,99,416/- AND RS. 1,47,803/- IS NET SURPLUS BEING INCOME OF THE Y EAR. A SURVEY U/S 133A WAS CONDUCTED ON 7/10/2004 AT THE BUSINESS PRE MISES OF THE APPELLANT AND IN THE COURSE OF SURVEY CERTAIN DOCUM ENTS PERTAINING TO THE YEAR UNDER APPEAL WERE IMPOUNDED. ACCORDINGLY AS SESSMENT WAS ITA NO. 4039/DEL/2010 3 REOPENED U/S 147 OF THE ACT AND NOTICE U/S 148 OF T HE ACT WAS ISSUED ON 6/6/2006. THE APPELLANT IN RESPONSE TO THIS NOTI CE, HAS REQUESTED TO TREAT THE RETURN FILED ORIGINALLY AS RETURN IN RESP ONSE TO THIS NOTICE. THE AO. DURING ASSESSMENT PROCEEDINGS U/S. 143(3) R EAD WITH SECTION 147 HAS ISSUED A QUESTIONNAIRE ON 16/11/200 7 TO THE APPELLANT IN WHICH HE HAS REFERRED THE IMPOUNDED DOCUMENTS. ON APPRECIATION OF ENTRIES RECORDED IN THE IMPOUNDED DOCUMENT (ANNEXURE A-10 BEING KACHHI ROKAD) HE WAS OF THE OPINION THAT THE APPELL ANT HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNTS. HE ALSO REFERR ED THIS IMPOUNDED MATERIAL (ANNEXURE A-10 BEING KACCHI ROKAD) TO OBSER VE THAT IN THE SAID IMPOUNDED MATERIAL GROSS COMMISSION OF RS.45,10, 874/ HAS BEEN SHOWN. HE ALSO NOTED THAT THERE ARE EXPENSES OF RS.39,02,298/RECORDED IN THIS IMPOUNDED DOCUMENT. H E ALSO REFERRED THE SAME IMPOUNDED DOCUMENT WHEREIN THERE IS A MENTIO N THAT BROKERAGE FROM M/S KNR TRADING COMPANY, GURDAYALMAL AN D SONS, SHRI KRISHANA RICE MILL, AND MIS UJJAGAR MAL SATPAL N AKODAR AMOUNTING TO RS.4,62,558/- HAS NOT BEEN RECEIVED. HOWEVER, HE ASKED THE APPELLANT TO JUSTIFY THE CLAIM OF THE EXPENSES TO TH E EXTENT OF RS.39,02,898/- IN ABSENCE OF EVIDENCE. AT THE SAME T IME, HE ALSO ASKED THE APPELLANT TO PROVIDE CONFIRMED COPIES OF THE ACCOUNTS OF THE ITA NO. 4039/DEL/2010 4 PARTIES AS MENTIONED ABOVE TO SUPPORT HIS CLAIM THA T BROKERAGE HAS ACTUALLY NOT BEEN RECEIVED FROM THEM. THE ASSESSEE HAS FURNISHED A DETAILED SUBMISSION BEF ORE THE AO. IT WAS THE SUBMISSION OF THE APPELLANT BEFORE AO THA T HE HAD UNDERTAKEN DURING THE YEAR ONE JOB OF LOOKING ALTER HANDLING OF FCI STOCK FROM DIFFERENT LOCATIONS (FCI GODOWNS) FOR VAR IOUS PARTIES, THE JOB INCLUDED OVER SEEING LOADING OF MATERIAL FOR ONWARD TRANSPORTATION AT THE PLACES OF BUYERS UNDER MY SUPERVISION. SINCE WO RK WAS TO BE CARRIED OUT IN VARIOUS CITIES THEREFORE, HE HAD TO TAKE SERVICES OF OTHER BROKERS WHO COULD MANAGE THE FUNCTION AT RESPECTIVE GODOWN. FOR THE PARTICULAR STOCK HE HAD INCURRED CERTAIN EXPENSES AS WERE REQUIRED FOR HANDLING OF THE STOCK. EXPENSES WERE REIMBURSED THRO UGH INCLUSIVE IN DALALI. IN THE COURSE OF CARRYING OUT THE ABOVE HAN DLING JOB, THERE MAY ARISE ANY NECESSITY OF INCURRING SOME EXPENSES OF TH E NATURE LIKE PROVIDING TRIPAL FOR SAFETY OF THE MATERIAL, LOADIN G AND UNLOADING CHARGES PAID ON BEHALF OF THE PARTIES, WHICH IS NOT COVERED IN THE AGREED SERVICES, SUCH EXPENSES ARE CLAIMED FOR REIMB URSEMENT FROM THE PARTIES. THESE EXPENSES HAVE TO BE INCURRED JUS T FOR THE SAKE OF EXPEDITIOUS COMPLETION OF THE JOB FOR WHICH HIS SERVI CES HAVE BEEN TAKEN AND HAD SUCH EXPENSES NOT BEEN INCURRED, THE COMPLETION OF JOB WOULD HAVE DEFERRED WHICH WOULD HAVE INCREASED THE COST AT ITA NO. 4039/DEL/2010 5 ASSESSEES END BESIDES, THE DELAYING THE COMPLETION OF THE PROJECT, WHICH IS NOT INTEREST OF THE PROSPECTIVE FUTURE BUS INESS. THE IMPOUNDED DOCUMENT NAMELY ANNEXURE A-10 (KACCHI ROKAD ) AS REFERRED BY THE AO IS BASICALLY A BOOK SHOWING TRAN SACTION OF RECEIPT AND PAYMENTS PERTAINING TO GROUP OF BROKERS WHO WERE OPERATING IN COLLABORATION WITH THE APPELLANT. IT IS THE COMPREHE NSIVE RECORD OF BUSINESS TRANSACTIONS ENTERED INTO BY HIM AND IT IS A CASH BOOK WHICH CONTAINS DAY TO DAY RECORD OF CASH AND OTHER TRANSA CTIONS AND BALANCE OF CASH HAS BEEN WORKED OUT PERIODICALLY. IT IS THE BOOK MAINTAINED WITH SYSTEMATIC REGULARITY. IT CONTAINS COMPLETED REC ORD OF THE BUSINESS TRANSACTIONS ENTERED INTO BY HIM. HE HAS N OT DENIED THAT IN THIS IMPOUNDED DOCUMENT (ANNEXURE A-10) THE TOTAL COMMI SSION RECEIVED IS REFLECTED AT RS.45,10,874/-. BUT IT WAS CONTENDED THAT AGAINST SUCH COMMISSION RS.4,62,558/- HAS NOT BEEN R ECEIVED WHICH HAS BEEN MENTIONED IN THE SAID CASH BOOKS VIZ ANNEX URE A-10 ITSELF AND THE EXPENSES OF RS.39,02,898/- HAS ALSO BEEN RE CORDED IN THE SAME WHICH ARE EXPENSES IN RELATION TO THE RECEIPTS RECORDED. THUS, THE NET INCOME BASED ON THIS IMPOUNDED MATERIAL IS ON LY RS.1,45,418/-. THE INCOME ALREADY OFFERED IS RS. 1,47,803/- FROM TH E SAME DALALI (COMMISSION) BUSINESS. THEREFORE, BASED ON THIS IMPOUN DED MATERIAL NO ADDITION IS CALLED FOR. ITA NO. 4039/DEL/2010 6 THE A.O. HOWEVER WAS NOT CONVINCED WITH THE REPLY O F THE APPELLANT. ACCORDING TO HIM ASSESSEE HAS NOT DISCLOS ED COMPLETE ACCOUNT OF HIS COMMISSION INCOME IN THE INCOME AND EX PENDITURE ACCOUNT ATTACHED WITH THE RETURN OF INCOME AS IN TH E INCOME AND EXPENDITURE ACCOUNT ATTACHED WITH THE RETURN OF INC OME, THE COMMISSION SHOWN IS ONLY RS.4,47,219/- WHEREAS AS PE R IMPOUNDED MATERIAL COMMISSION IS RS.45,10,874/-. AGAINST THIS C OMMISSION CLAIM OF EXPENSES IS MADE BASED ON THE ENTRIES CONTAINED IN IMPOUNDED DOCUMENTS BUT THESE EXPENSES ARE NOT SUPPORTED BY AN Y KIND OF VOUCHERS. THE CLAIM OF 'COMMISSION NOT RECEIVED' IS A LSO NOT SUPPORTED BY THE EVIDENCES. ACCORDINGLY HE TREATED THE GROSS COMMISSION OF RS.45,10,874/- IN THE HANDS THE APPELL ANT AND AGAINST THE SAME, EXPENSES AS SHOWN IN THE INCOME AND EXPEN DITURE ACCOUNT ATTACHED WITH THE RETURN OF INCOME TO THE EXTENT RS. 2,99,416/- WAS ONLY ALLOWED. THUS, HE WORKED OUT TOTAL INCOME RS.4 2,11,455/-. AS APPELLANT HAS ALREADY OFFERED INCOME OF RS.1,47,800/ - FN THE SAME COMMISSION BUSINESS, HE MADE AN ADDITION OF RS.40,63, 655/-. 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) NOTED THAT HE AGREED WITH THE ARGUMENTS T HAT THE ASSESSING OFFICER HAS RELIED ONLY UPON THE IMPOUNDED MATERIA L VIZ. ANNEXURE A- 10 BEING KACCHI ROKAD TO ARRIVE AT THE CONCLUSION THAT THE COMMISSION ITA NO. 4039/DEL/2010 7 EARNED BY THE ASSESSEE IS ` 45,10,874/-. THERE IS NO OTHER MATERIAL REFERRED BY HIM TO COME TO THIS CONCLUSION. HE ALSO DOES NOT DISPUTE THAT THE EXPENSES CLAIMED BY THE ASSESSEE TO THE E XTENT OF ` 39,02,898/- ARE ALSO RECORDED IN THE SAME IMPOUNDED D OCUMENT. THE AMOUNT OF COMMISSION NOT RECEIVED TO THE EXTENT OF ` 4,62,558/- IS ALSO MENTIONED IN THE SAME IMPOUNDED DOCUMENT. TO TH AT EXTENT ALSO, THE ASSESSING OFFICER IS NOT HAVING ANY DISP UTE. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVE D THAT HE HAS NOT ALLOWED THESE EXPENSES AND HAS NOT GIVEN CREDIT OF COMMISSION NOT RECEIVED ON THE GROUND THAT SUPPORTING EVIDENCES LI KE VOUCHERS ETC. AND CONFIRMATION OF THE PARTIES FROM WHOM COMMISSION H AS NOT BEEN RECEIVED, IS NOT FILED. BUT LD. COMMISSIONER OF IN COME TAX (APPEALS) OPINED THAT SAME IS THE POSITION ABOUT THE RECEIPT OF COMMISSION INCOME ALSO. EXCEPT THE NOTING IN THE IMPOUNDED DO CUMENT ANNEXURE A-10, THERE IS NO OTHER EVIDENCE THAT THE ASSESSEE HAS EARNED COMMISSION TO THAT EXTENT. THEREFORE, IF ASSESSING OFFICER IS TREATING THE ENTRIES RECORDED IN THIS DOCUMENT FOR TAKING A PARTICULAR AMOUNT AS RECEIPT THEN AS A NATURAL COROLLARY HE HAS TO TREAT THE EXPENSES OR COMMISSION NOT RECEIVED RECORDED IN THIS DOCUMENT ALSO AS CORRECT WITHOUT ANY CONFIRMATION / SUPPORTING MATERIALS. I N THIS REGARD, LD. COMMISSIONER OF INCOME TAX (APPEALS) REFERRED TO TH E DECISION OF THE ITA NO. 4039/DEL/2010 8 ITAT, ALLAHABAD CITED BY THE ASSESSEE IN THE CASE O F SMT. USHA TRIPATHI VS. ACIT REPORTED IN 66 TTJ 508. THE ITAT HAS CAT EGORICALLY OBSERVED IN THIS CASE THAT IT IS WELL SETTLED PRINCIPLE OF A CCOUNTANCY THAT IN CASE A RECEIPT IN A DOCUMENT IS CONSIDERED AS INCOME, THEN THE EXPENSES RECORDED AGAINST THAT RECEIPT SO FAR AS THEY ARE LE GITIMATE AND ARE NOT OF PERSONAL NATURE, SHOULD BE ALLOWED. SUCH EXPENS ES CAN, HOWEVER, BE DISALLOWED IF THERE IS NO EVIDENCE FOR HAVING IN CURRED THE EXPENSES BUT THIS CONDITION APPLIES ONLY WHEN THE ADDITION O F INCOME IS BEING MADE ON THE BASIS OF EVIDENCE FOR HAVING EARNED TH E INCOME. WHEN BOTH RECEIPTS AND EXPENSES ARE RECORDED IN A DOCUME NT, THEN IF THE ENTRIES IN THE DOCUMENTS ARE RELIED UPON FOR THE PU RPOSES OF RECEIPTS WITHOUT BRINGING ANY FURTHER EVIDENCE, THEN THE JUDI CIAL PROPRIETARY REQUIRES THAT THE DOCUMENT SHOULD BE RELIED ON WITH RESPECT TO EXPENSES ALSO AND THE ASSESSEE SHOULD NOT BE BURDE NED WITH THE ONUS OF BRINGING EVIDENCE FOR HAVING INCURRED THE EXPEND ITURE. THEREFORE, ON THE BASIS OF THE ABOVE DISCUSSIONS AND JUDICIAL RULINGS, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE B ASIS OF ASSESSING OFFICER OF REJECTING THE CLAIM OF EXPENSES OF ` 39, 02,598/- AND UNREALIZED COMMISSION OF ` 4,62,558/- IS NOT CORRECT . 4.1 FINALLY IN THIS CASE LD. COMMISSIONER OF INCOME T AX (APPEALS) DIRECTED THE ASSESSING OFFICER TO MAKE ADDITION O F ` 2,87,358/- BASED ITA NO. 4039/DEL/2010 9 ON THE IMPOUNDED DOCUMENT. HE FURTHER DIRECTED TH AT THIS WILL BE OVER AND ABOVE THE INCOME OF ` 1,47,803/- ALREADY D ECLARED IN THE ORIGINAL RETURN OF INCOME. THUS THE ASSESSEE GOT RELIEF OF ` 37,76,297/- 5. AGAINST THIS ORDER THE REVENUE IS IN APPEAL BEF ORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. 6.1 WE FIND THAT THE COMMISSION EARNED AND THE EXPE NDITURE INCURRED BOTH EMANATE OUT OF THE IMPOUNDED DOCUMENTS . THERE WAS NOT ANY OTHER MATERIAL ON THE BASIS OF WHICH THE IN COME RECEIVED WAS ACCOUNTED FOR. HENCE, THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) IS QUITE CORRECT IN HOLDING THAT WHEN THE INCOME IS BEING RECOGNIZED ON THE BASIS OF ENTRIES IN THE IMPUGNED BOOKS, EX PENDITURE INCURRED MENTIONED IN THE IMPUGNED BOOKS SHOULD ALSO BE RECOG NIZED. IN THIS REGARD, A CASE LAW FROM THE ITAT, ALLAHABAD IN THE CASE OF SMT. USHA TRIPATHI VS. ACIT REPORTED IN 66 TTJ 508 IS VERY RE LEVANT. IT WAS HELD IN THAT CASE THAT WHEN BOTH RECEIPTS AND EXPENSES ARE RECORDED IN A DOCUMENT, THEN IF THE ENTRIES IN THE DOCUMENTS ARE RE LIED UPON FOR THE PURPOSES OF RECEIPTS WITHOUT BRINGING ANY FURTHER E VIDENCE, THEN THE JUDICIAL PROPRIETARY REQUIRES THAT THE DOCUMENT SHO ULD BE RELIED ON WITH RESPECT TO EXPENSES ALSO AND THE ASSESSEE SHO ULD NOT BE BURDENED WITH THE ONUS OF BRINGING EVIDENCE FOR HAV ING INCURRED THE EXPENDITURE. THE ABOVE PROPOSITION IS ALSO SUPPO RTED BY COMMON LAW MAXIM OF APROBATE AND REPROBATE WHICH MANDATES THAT WHEN A DOCUMENT IS RELIED IT HAS TO BE RELIED IN FULL. TH E REVENUE CANNOT PICK AND CHOOSE CERTAIN PART OF THE DOCUMENT AND DISBELIE F THE OTHER PART OF ITA NO. 4039/DEL/2010 10 THE DOCUMENT. IN OUR CONSIDERED OPINION, LD. COMMISS IONER OF INCOME TAX (APPEALS) HAS PASSED A REASONABLE ORDER WHICH D OES NOT NEED ANY INTERFERENCE ON OUR PART. ACCORDINGLY, WE UPHOLD T HE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/3/2012, U PON CONCLUSION OF HEARING. SD/- SD/- [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [RAJPAL YADAV] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 07/3/2012 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES