Sukhbir Singh, V. DCIT NA Circle 24 (1),

ITA 4129/DEL/2007

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5516 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-02-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 08-02-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 16-10-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KISHORE B
• Keywords: Unexplained expenditure; Business income
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : G: NEW DELHI BEFORE SHRI G.E. VEERABHADRAPPA, VICE PRESIDENT AND SHRI I.P. BANSAL, JUDICIAL MEMBER ITA NO.4129/DEL/2007 ASSESSMENT YEAR : 2002-03 SHRI SUKHBIR SINGH, C-1/D, GREEN PARK EXTN., NEW DELHI. PAN : AAWPS8063M VS. DCIT, NA CIRCLE, 24 (1), NEW DELHI. (APPELLANT) (RESPONDENT) ASSESSEE BY : NONE REVENUE BY : SHRI KISHORE B., SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS DI RECTED AGAINST THE ORDER CIT (A) DATED 23 RD JULY, 2007 FOR ASSESSMENT YEAR 2002-03. GROUNDS OF APPEAL READ AS UNDER:- 1. THAT THE LD. ASSESSING OFFICER ASSESSMENT ORDER IS AGAINST THE FACTS AND CONTRARY TO LAW. 2. THAT LOWER AUTHORITY HAS NOT OFFERED PROPER OPP ORTUNITY TO REPRESENT THE CASE IT IS AGAINST THE NATURAL JUSTIC E HENCE BAD IN LAW. 3. THAT THE LD. ASSESSING OFFICER ERRED IN TAXING THE COMMISSION INCOME OF RS.218500/- WITHOUT ALLOWING EXPENDITURE CLAIMED, INCURRED BY THE ASSESSEE. 4. THAT THE LD. ASSESSING OFFICER HAS ERRED IN TAX ING ON LOAN AMOUNT FROM RELATING BY THE ASSESSEE. 5. THAT THE LD. AO HAS ALSO ERRED IN CHARGING INTE REST U/S 234A AND 234B, RS.7710/- AND RS.44147/- RESPECTIVELY. ITA NO.4129/DEL/2007 2 2. THIS IS A RECALLED MATTER. IT WAS RECALLED VIDE TRIBUNAL ORDER DATED 1 ST JANUARY, 2010 AND THE APPEAL WAS DIRECTED TO BE LIS TED FOR HEARING ON 8 TH FEBRUARY, 2010. NOTICE OF HEARING WAS SENT TO THE ASSESSEE. HOWEVER, ON THE FIXED DATE OF HEARING NONE WAS PRESENT. IN THE CIR CUMSTANCES, WE PROCEED TO DECIDE THE PRESENT APPEAL AFTER HEARING LD. DR 3. IN THE COMPUTATION OF INCOME, THE ASSESSEE HAD D ECLARED COMMISSION INCOME OF RS.1,43,500/-. VIDE LETTER DATED 20 TH SEPTEMBER, 2004 SUBMITTED TO AO, IT WAS STATED BY THE ASSESSEE THAT HE HAS BEEN DOING SALE AND PURCHASE OF OLD AND NEW VEHICLES ON COMMISSION BASIS AND HIS TU RNOVER OF SUCH RECEIPTS WAS BELOW RS.10 LAC, THEREFORE, HE IS NOT REQUIRED TO M AINTAIN ANY BOOKS. HE STATED THAT HE HAS DECLARED HIS COMMISSION INCOME ON ESTIM ATE BASIS ON GROSS RECEIPT AT RS.1,43,500/- @ RS.12,000/- PER MONTH. THE AO COLLECTED THE INFORMATION U/S 133 (6) OF THE INCOME TAX ACT, 1961 (ACT) FROM M/S HIMGIRI SALES PVT. LTD., WHO CONFIRMED THAT A SUM OF RS.4 LAC WAS PAID TO ASSESS EE AS COMMISSION. ON 10 TH JANUARY, 2005, THE ASSESSEE SUBMITTED A REVISED COM PUTATION OF INCOME WHERE COMMISSION RECEIPT WAS SHOWN AT RS.4 LAC AND AFTER TAKING INTO ACCOUNT THE EXPENSES INCURRED DURING THE YEAR OF RS.2,56,500/-, THE INCOME FROM COMMISSION WAS DECLARED AT RS.1,43,500/-. VIDE ORDER SHEET EN TRY DATED 10 TH JANUARY, 2005, THE ASSESSEE WAS REQUIRED TO EXPLAIN THE COMMISSION RECEIVED FROM M/S HIMGIRI SALES PVT. LTD AND IT WAS MENTIONED THAT THE ASSESS EE EARLIER HAD STATED THAT THE COMMISSION INCOME WAS CALCULATED ON THE BASIS OF ES TIMATED GROSS RECEIPTS IN THE COMPUTATION AND AS AGAINST THAT THE GROSS RECEI PTS OF THE ASSESSEE WERE RS.4 LAC. THE ASSESSEE WAS REQUIRED TO GIVE EVIDEN CE IN RESPECT OF EXPENSES CLAIMED. THE ASSESSEE DID NOT FILE THE DETAILS. A NOTE WAS FILED WHEREIN IT WAS STATED THAT RS.4 LAC WAS RECEIVED FROM M/S HIMGIRI SALES PVT. LTD. AS COMMISSION. IT WAS SUBMITTED THAT THE ASSESSEE HAD INCURRED CERTAIN OTHER EXPENSES FOR MAINTENANCE, COLLECTION CHARGES, HOUSE TAX, SMALL AND MISCELLANEOUS EXPENSES ESTIMATED AT RS.2,56,500/- A ND AFTER TAKING ALL THESE EXPENSES, THE NET INCOME OF THE ASSESSEE FROM COMMI SSION WAS ARRIVED AT RS.1,43,500/-. THE ASSESSEE WAS REQUIRED TO SUBMIT THE EVIDENCE AND IT WAS ITA NO.4129/DEL/2007 3 STATED THAT IF HE IS NOT ABLE TO SUBMIT THE EVIDENC E, THEN, THE AMOUNT WILL BE DISALLOWED. THE CASE WAS ADJOURNED ON TWO OCCASION S. ON 27 TH JANUARY, 2005 THE ASSESSEE SUBMITTED THAT TOTAL EXPENSES OF RS.2, 56,500/- COMPRISED OF RS.74,000/- TOWARDS SALARY TO EMPLOYEES, RS.1,57,50 0/- TOWARDS REPAIR AND MAINTENANCE AND RS.25,000/- TOWARDS GENERAL EXPENSE S. ACCORDING TO THE AO, THE ASSESSEE COULD SUBMIT THE VOUCHER OF ONLY RS.38 ,000/-IN RESPECT OF SALARY PAID TO ONE EMPLOYEE, NAMELY, DHARMENDER SINGH AND NO EVIDENCE WHATSOEVER IN RESPECT OF OTHER EXPENSES WAS FILED. IN THE ABS ENCE OF SUCH EVIDENCE, THE AO ADDED THE UNEXPLAINED EXPENDITURE OF RS.2,18,500/- AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A). DURING THE COU RSE OF APPELLATE PROCEEDINGS, IT WAS SUBMITTED BY THE ASSESSEE THAT ON 5 TH JULY, 2006 BOOKS OF ACCOUNT AND VOUCHERS WERE PRODUCED (DURING THE COURSE OF APPELL ATE PROCEEDINGS), BUT THE AO REFUSED TO ACCEPT THE SAME. ON THIS SUBMISSION OF THE ASSESSEE THE CIT (A) AGAIN WROTE A LETTER TO THE AO DATED 15 TH SEPTEMBER, 2006 AND ACCORDINGLY COMMENTS WERE SUBMITTED BY THE AO VIDE HIS LETTER N O.489 DATED 27 TH SEPTEMBER, 2006 AND FINALLY VIDE LETTER DATED 624 D ATED 5 TH FEBRUARY, 2007 IN WHICH IT WAS STATED BY THE AO THAT ASSESSEES COUNS EL SHRI CHAUHAN PRODUCED COMPUTER GENERATED BOOKS OF ACCOUNT AND VOUCHERS AN D PATTERNS OF EXPENSES CLAIMED BY THE ASSESSEE WERE ALL SELF-DRAWN VOUCHER S WITHOUT SUPPORTING BILLS AND PARTICULARS, ETC. IT WAS SUBMITTED BY THE AO T HAT CLAIM OF THE ASSESSEE WAS THAT HE WAS RENDERING SUPPORT SERVICES TO HIS TENAN T FOR PROMOTION OF HIS SALES ALSO WHICH WAS NOT APPARENT FROM RECORD. IT WAS FU RTHER STATED THAT THE ASSESSEE WAS REQUIRED TO FURNISH THE ADDRESS OF THE TENANT, SO THAT THE MATTER COULD BE VERIFIED FROM HIM. THE ADDRESS OF THE TENANT WAS A LSO NOT GIVEN. THUS, IT WAS STATED BY THE AO THAT THE ASSESSEE WAS NOT ABLE TO PRODUCE ANY DOCUMENT TO ESTABLISH THE FACTUM OF THE ASSESSEES BUSINESS NEX US WITH THAT OF TENANT. THE ASSESSEE DID NOT HAVE BUSINESS NEXUS WITH THAT OF E RSTWHILE TENANT IN PROMOTION OF SALES, THUS, THE CLAIM OF THE ASSESSEE WAS NOT A DMISSIBLE. ACCORDING TO THE AO, THE ASSESSEE SOUGHT TO ESTABLISH THAT AGREEMENT DATED 28 TH OCTOBER, 2000 BETWEEN THE ASSESSEE AND M/S HIMGIRI SALES PVT. LTD WAS IN THE NATURE OF RENT OR PROPERTY LEASE AGREEMENT, BUT WAS ESSENTIALLY AN EV IDENCE OF EXISTENCE OF ITA NO.4129/DEL/2007 4 COMMERCIAL AGREEMENT BETWEEN THE TWO. ON GOING THR OUGH ALL THESE AGREEMENTS, THE OBSERVATIONS OF THE AO WAS THAT THE INCOME EARNED BY THE ASSESSEE WAS HAVING THE NATURE OF PROPERTY INCOME A ND ON THESE SUBMISSIONS ANALYZING THE AGREEMENT AND OTHER DOCUMENTS IT IS C ONCLUDED BY CIT (A) THAT THE AMOUNT RECEIVED BY THE ASSESSEE OF A SUM OF RS.4 LA C WAS IN THE NATURE OF INCOME FROM HOUSE PROPERTY AND NOT AS INCOME FROM B USINESS AND, THUS, HE DIRECTED THE AO TO GIVE THE NECESSARY DEDUCTIONS PR ESCRIBED U/S 24 AFTER THE REBATE OF MUNICIPAL TAX PAID FOR A SUM OF RS.66,800 /-. AGAINST THESE FINDINGS OF THE CIT (A), THE ASSESSEE IS AGGRIEVED, HENCE, IN A PPEAL. 4. AFTER NARRATING THE FACTS, IT WAS SUBMITTED BY L D. DR THAT A NEW CASE HAS BEEN MADE OUT BY THE CIT (A) REGARDING NATURE OF IN COME AND THE DECISION OF CIT (A) IS BASED ON THE ANALYSIS OF DOCUMENTS PRODUCED BY THE ASSESSEE DURING THE COURSE OF APPELLATE PROCEEDINGS AND REFERRING TO TH E FACTS AND ANALYSIS DONE BY THE CIT (A) IT WAS SUBMITTED BY HIM THAT THERE IS N O INFIRMITY IN THE ORDER OF CIT (A) AND HIS ORDER SHOULD BE UPHELD AND THE APPEAL F ILED BY THE ASSESSEE SHOULD BE DISMISSED. 5. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF LD. DR IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. ALL ALONG IT HAS BEEN T HE CASE OF THE ASSESSEE THAT THE NATURE OF INCOME WAS BUSINESS INCOME. THE ONLY ISSUE WHICH WAS LEFT TO BE DETERMINED WAS THE QUANTUM OF INCOME. DURING THE C OURSE OF ASSESSMENT PROCEEDINGS, THE AO DETECTED THAT WHAT WAS STATED B Y THE ASSESSEE IN THE EARLIER COMPUTATION OF INCOME WAS NOT CORRECT AND THE ASSES SEE IN FACT HAD RECEIVED A SUM OF RS.4 LAC AS COMMISSION FROM M/S HIMGIRI SALE S PVT. LTD. THERE IS A REFERENCE OF NAME OF PROPERTY IN THE ORDER OF THE C IT (A), NAMELY, 2000 SQ. FEET ON GROUND FLOOR BEARING NO.C-1/D, GREEN PARK EXTN., NEW DELHI, BUT IT HAS NOT BEEN MADE CLEAR THAT WHO IS THE OWNER OF THE PROPER TY. IT HAS NEVER BEEN STATED ANYWHERE THAT THE SAID PROPERTY BELONG TO THE ASSES SEE. UNLESS THE SAID PROPERTY IS OWNED BY THE ASSESSEE, ITS NATURE OF IN COME CANNOT BE DETERMINED. THE FACTS MENTIONED BY CIT (A) ARE NOT COMPLETE AS FROM THEM IT CANNOT BE ITA NO.4129/DEL/2007 5 DETERMINED THAT WHETHER OR NOT THE INCOME RECEIVED BY THE ASSESSEE COULD BE CHARACTERIZED AS INCOME FROM HOUSE PROPERTY IN PLAC E OF THE CLAIM OF THE ASSESSEE OF ITS BEING BUSINESS INCOME. THOUGH LD. CIT (A) HAS REMANDED THE ISSUE TO THE FILE OF AO, BUT IT APPEARS THAT IT IS NOT EVEN THE CASE OF AO THAT THE SAME SHOULD BE ASSESSED AS INCOME FROM HOUSE PROPE RTY. KEEPING IN VIEW ALL THESE FACTS AND KEEPING IN MIND THAT THE ASSESSEE A LSO EXPRESSED HIS GRIEVANCE IN GROUND NO.2 REGARDING NON-GRANT OF PROPER OPPORT UNITY, WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF AO FOR DENOVO DETERMINATION AFTER BRINGING ALL THE FACTS ON RECORD. THE AO WILL GIVE REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE AND, THEREAFTER, TO DECIDE THAT WHETHER THIS INCOME COULD BE CHARACTERIZED AS INCOME FROM HOUSE PROPERTY AN D IF IT CANNOT BE CHARACTERISED AS INCOME FROM HOUSE PROPERTY, THEN, TO DETERMINE THE NET INCOME THEREFROM AS PER PROVISIONS OF LAW AFTER BRINGING THE NECESSARY EVIDENCE ON RECORD. WE DIRECT ACCORDINGLY. AS SUCH, GROUND NO .1, 2 AND 3 ARE ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. AS WE HAVE RESTORED THIS ISSUE REGARDING GROUND NO.1, 2 AND 3 TO THE FILE OF AO, W E RESTORE THE ISSUE RAISED IN GROUND NO.4 ALSO TO THE FILE OF AO FOR HIS DENOVO C ONSIDERATION AND THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 6. SO AS IT RELATES TO LEVY OF INTEREST U/S 234A AN D 234B, WE MAY MENTION THAT IT IS CONSEQUENTIAL AND IT WILL BE LEVIED IN A CCORDANCE WITH THE PROVISIONS OF LAW AFTER DETERMINING THE ASSESSABLE INCOME OF THE ASSESSEE. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID.. THE ORDER PRONOUNCED IN THE OPEN COURT ON 12.02.20 10. SD/- SD/- [G.E. VEERABHADRAPPA] [I.P. BANSAL] VICE PRESIDENT JUDICIAL MEMBER DATED, 12/02/2010. ITA NO.4129/DEL/2007 6 DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES