Surya Buildhome Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 4296/DEL/2012

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2690 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 21-06-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 07-08-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAUSHLENDRA TIWARI
• Keywords: Unexplained expenditure; Search and seizure; Revenue expenditure
• Section: 153A; 234B; 132; 28

Judgement Text

IN THE INCOME - TAX APPELLATE TRIBUNAL, DELHI BENCH G , NEW DELHI BEFORE : SHRI BHAVNESH SAINI , JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 4296/DEL./2012 ASSESSMENT YEAR: 2008 - 09 SURYA BUILDHOME PVT. LTD., B - 67, SARITA VIHAR, NEW DELHI. PAN AAKCS 1954 L (APPELLANT) VS. A.C.I.T., CENTRAL CIRCLE 10 NEW DELHI. (RESPONDENT) APPELLANT BY SH. M.P. RASTOGI, ADVOCATE RESPONDENT BY SH. KAUSHLENDRA TIWARI, SR. DR ORDER PER L.P. SAHU, A.M.: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A) - XXXII, DELHI DATED 27.06.2012 FOR THE ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUNDS : 1. IT IS CONTENDED THAT THE ORDER FRAMED U/S. 153C/143(3) OF THE ACT AND CONFIRMED BY CIT(APPEALS) IS WITHOUT JURISDICTION. 2. THE CIT(APPEALS) HAS ERRED IN HOLDING THAT PROCESSING OF RETURN OF INCOME U/S. 143(1) OF THE ACT DOES NOT AMOUNT TO ASSESSMENT. HE HAS ERRED IN HOLDING THAT ASSESSMENT IS NOT CONCLUDED BY PROCESSING OF RETURN OF INCOME U/S. 143(1) OF THE ACT. THESE FINDINGS ARE OPPOSED TO THE LEGAL MANDATE OF 2 ND PROVISO TO SEC. 153A OF THE ACT. 3. THE LOWER AUTHORITIES HAVE ERRED IN DISALLOWING THE COMMISSION & BROKERAGE EXPENDITURE OF RS.8,39,062/ - . THE FINDINGS OF THE LOWER DATE OF HEARING 21.06.2017 DATE OF PRONOUNCEMENT 31 .07.2017 ITA NO. 4296/DEL./2012 2 AUTHORITIES THAT THE SAME IS UNEXPLAINED EXPENDITURE IS OPPOSED TO EVIDENCES ON RECORD. 4. THE CIT(APPEALS) HAS ERRED IN HOLDING AS PER ACCOUNTING PRINCIPLES, CLAIM OF REVENUE EXPENSES CANNOT BE ALLOWED IF THE CORRESPONDING RECEIPT S ARE NOT RECOGNIZED IN THE ACCOUNTS IN THE SAME YEAR . 5. IT IS CONTENDED THAT THE IMPUGNED SUM OF RS.8,39,062/ - IS AN ALLOWABLE DEDUCTION U/S. 28 OF THE ACT. 6. THE CIT(APPEALS) HAS ERRED IN HOLDING THAT LEVY OF INTEREST U/S 234B IS NOT APPEALABLE U/ S. 246A OF THE ACT. 2. OUT OF ABOVE GROUNDS OF APPEAL, THE ASSESSEE DID NOT PRESS GROUNDS NOS. 1 & 2. THE SAME ARE ACCORDINGLY DISMISSED AS NOT PRESSED. GROUNDS NOS. 3 TO 5 CHALLENGE THE SUSTENANCE OF DISALLOWANCE OF RS.8,39,062/ - ON ACCOUNT OF UNEXPL AINED EXPENDITURE BOOKED FOR COMMISSION & BROKERAGE. 3. THE BRIEF FACTS OF THE ISSUE ARE THAT THE APPELLANT COMPANY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT & CONSTRUCTION OF REAL ESTATE PROJECTS. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT U/S. 132 O N 29.01.2009 IN THE CASES OF M/S. SAAMAG GROUP OF CASES, IN WHICH THE BUSINESS PREMISES OF ASSESSEE WAS ALSO COVERED. ACCORDINGLY, NOTICE U/S. 153C WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH RETURN OF INCOME WAS FILED ON 05.10.2010 DECLARING AN INCOM E OF RS.8,14,280/ - . ON SCRUTINY OF ACCOUNTS, THE AO NOTICED THAT THE ASSESSEE HAD SHOWN WORK IN PROGRESS AT RS.8,39,062/ - IN PROFIT AND LOSS ACCOUNT ON ACCOUNT OF ITA NO. 4296/DEL./2012 3 COMMISSION & BROKERAGE. ON BEING ASKED THE ASSESSEE FURNISHED THE DETAILS SHOWING PAYMENT OF BROKERAGE AND COMMISSION OF RS. 8,22,158/ - TO JAI MATADI BUILDCON (P) LTD. AND RS.16,904/ - TO JYOTI ESTATES, TOTALING TO RS.8,39,062/ - . ON PERUSAL OF THE BILLS RAISED FOR COMMISSION BY THE ABOVE PARTIES, THE AO OBSERVED THAT ALL THE BILLS WERE RAISED AGAIN ST BOOK ING OF PLOTS FOR S A GA SPRING ON NH - 24 HAPUR PROJECT. THE ASSESSEE, HOWEVER, HAS NOT SHOWN ANY ADVANCES RECEIVED AGAINST THESE BOOKING OF PLOTS NOR THE BILLS FOR COMMISSION WERE RAISED BY THE ABOVE PARTIES TO THE ASSESSEE. THE AO ACCORDINGLY, DID NOT ACCEPT THE BOOKING OF EXPENSES FOR COMMISSION AGAINST THE ABOVE TWO PARTIES SHOWN AS WORK IN PROGRESS AND DISALLOWED THE CLAIM OF RS.8,39,062/ - ADDING THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. THE APPELLANT CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE DOCUMENTARY EVIDENCES FURNISHED BEFORE, SUSTAINED THE ADDITION VIDE IMPUGNED ORDER. AGGRIEVED BY THIS ORDER, THE APPELLANT IS IN APPEAL BEFORE THE TRIBUNAL. 4. REITERATING THE SUBMISSIONS MADE BEFORE THE LD. CIT(A), THE LD. AR SUBMITTED THAT A CONSORTIUM AGREEMENT WAS ENTERED AMONGST 16 COMPANIES, INCLUDING THE APPELLANT COMPANY TO DEVELOP A REAL ESTATE PROJECT IN HAPUR AND THE SAID PROJECT WAS CARRIED OUT BY APP ELLANT IN ASSOCIATION WITH OTHER MEMBERS OF THE CONSORTIUM, CONSISTING OF COMPANIES BELONGING TO THE ONE GROUP KNOWN AS SAAMAG GROUP. THE ITA NO. 4296/DEL./2012 4 APPELLANT WAS ASSIGNED TO ARRANGE FINANCE AND THE SALE OF PLOTS WERE UNDERTAKEN THROUGH VARIOUS REAL ESTATE AGENTS/BRO KERS WHO ID ENTIFIED THE PROSPECTIVE BUYERS AND THE APPELLANT HAD PAID COMMISSION TO THEM. IT WAS SUBMITTED THAT THOUGH THE BILLS OF COMMISSION WERE RAISED IN THE NAME OF OTHER COMPANIES, BUT THEIR PAYMENT WAS DIVERTED TO THE APPELLANT COMPANY AND THE APPEL LANT HAD MADE PAYMENTS TO THE BROKERS OUT OF ITS AVAILABLE MONIES, AS IS EVIDENT FROM BOOKS OF ACCOUNT AND BANK STATEMENT. ON THE STRENGTH OF THESE CONTENTIONS, THE APPELLANT URGED TO DELETE THE DISALLOWANCE. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE APPELLANT HAS NOT SHOWN TO HAVE RECEIVED ANY REVENUE, WHEREAS CORRESPONDING EXPENDITURE HAVE BEEN BOOKED IN THE PROFIT AND LOSS ACCOUNT. HE, THEREFORE, SUBMITTED THAT THE LD. AUTHORITIES BELOW HAVE R IGHTLY DISALLOWED THE EXPENDITURE CLAIMED BY THE ASSESSEE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD AND WE FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE FIRST APPELLATE AUTHORITY. IT IS AN ADMITTED FACT THAT THE BILLS PERTAINING TO ALLEGED COMMISSION/BROKERAGE WERE RAISED BY THE BROKERS IN THE NAME OF M/S. MAX BUILDTECH PVT. LTD. AND NOT TO THE APPELLANT. THEREFORE, AS PER COMMISSION ITA NO. 4296/DEL./2012 5 BILL S , THE APPELLANT WAS NOT LIABLE TO MAKE PAYM ENT OF COMMISSION. THE DIVERSION OF LIABILITY TO PAY THE COMMISSION FROM OTHER COMPANY OF THE CONSORTIUM TO THE APPELLANT IS NOT ESTABLISHED BY ANY DOCUMENTARY EVIDENCES OR BY REFERRING TO ANY SUCH CLAUSE OF THE CONSORTIUM AGREEMENT. MOREOVER, IT STANDS P ROVED ON RECORD THAT THE BOOKING AMOUNTS TOO WERE NOT RECEIVED BY THE APPELLANT BUT BY M/S. MAX BUILDTECH PVT. LTD. AND M/S. BUILDTECH PVT. LTD. REPAID THE BOOKING AMOUNTS TO THE CUSTOMERS AFTER DISSOLUTION OF CONSORTIUM , AS IS ALSO EVIDENT FROM THE BANK STATEMENT OF M/S. BUILDTECH PVT. LTD. PLACED AT PAGES 95 TO 105 OF THE PAPER BOOK . THEREFORE, THE LD. CIT(A) APPEARS TO HAVE COMMITTED NO ERROR WHILE OBSERVING THAT THE APPELLANT HAS DEBITED THE ENTIRE SUM OF RS.8,39,062/ - TO THEIR PROFIT AND LOSS ACCOUNT AS REVENUE EXPENDITURE WITHOUT CREDITING THE CORRESPONDING RECEIPTS TO THEIR PROFIT AND LOSS ACCOUNT AND AS SUCH, THE CLAIM OF REVENUE EXPENSES CANNOT BE ALLOWED IF THE CORRESPONDING RECEIPTS ARE NOT RECOGNIZED IN THE ACCOUNTS OF THE SAME YEAR. THE DECISIO N IN THE CASE OF BIRLASOFT (INDIA) LTD. VS. DCIT OF ITAT NEW DELHI , 44 SOT 664, RELIED BY THE ASSESSEE DOES NOT RENDER ANY HELP TO THE ASSESSEE AS IN THAT CASE THE QUESTION OF FOREIGN TRAVELING EXPENSES WERE CONSIDERED TO HAVE BEEN INCURRED FOR THE PURPOS E OF BUSINESS AND IN THAT CIRCUMSTANCES, THE TRIBUNAL OBSERVED THAT SUCH EXPENDITURE DO NOT REQUIRE PRESENCE OF RECEIPTS. IN THE INSTANT CASE, THE BROKERAGE EXPENSES HAVE DIRECT NEXUS WITH THE BOOKING AMOUNTS OF PLOTS AND THEREFORE, THE LD. CIT(A) WAS QUIT E JUSTIFIED TO OBSERVE THAT FOR WANT OF ITA NO. 4296/DEL./2012 6 RECOGNITION OF CORRESPONDING RECEIPTS, THE BROKERAGE EXPENSES DEBITED BY ASSESSEE CANNOT BE ACCEPTED AS REVENUE EXPENDITURE. 7. APART FROM THE ABOVE WE HAVE ALSO GONE THROUGH THE STATEMENT OF ASSESSABLE INCOME PLACE D BY ASSESSEE AT PAGE 10 OF THE PAPER BOOK AND WE FIND THAT WHILE COMPUTING THE INCOME FROM BUSINESS, THE ASSESSEE ITSELF HAS ADDED BACK COMMISSION OF RS.8,22,158/ - PAID TO JAI MATADI BUILD CON LTD., TREATING IT AS INCOME FROM OTHER SOURCES AND THE COMMISSI ON OF RS.16,904/ - PAID TO JYOTI ESTATES AS EXPENSES DISALLOWED BY ASSESSEE ITSELF. FURTHER THE ASSESSEE HAS SHOWN TO HAVE RECEIVED INTEREST INCOME OF RS. 14,20,274/ - , FROM WHICH HE HAS DEDUCTED THE ALLEGED BROKERAGE OF RS.8,22,158/ - PAID TO JAI MATADI BUIL DTECH PVT. LTD. HOWEVER, NO NEXUS OF THIS EXPENDITURE HAS BEEN ESTABLISHED BY THE ASSESSEE WITH THE INTEREST INCOME RECEIVED . THEREFORE, THE ASSESSABLE INCOME RETURNED BY THE ASSESSEE DOES NOT APPEAR JUSTIFIED. IN THE TOTALITY OF FACTS, CIRCUMSTANCES AND A BOVE DISCUSSION, WE , THEREFORE, FIND NO JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LD. CIT(A). 7. THE LAST GROUND PERTAINS TO CHARGING OF INTEREST U/S. 234B OF THE ACT, WHICH ACCORDING TO THE ASSESSEE IS CHARGEABLE @ 1% FOR THE PERIOD FROM 30.09.20 09, THE LAST DATE OF INTIMATION U/S. 143(1) TILL 28.12.2010, THE DATE OF ASSESSMENT ORDER U/S. 153C/143(3) OF THE ACT, WHICH COMES TO 15 MONTHS. IT WAS SUBMITTED THAT THE ITA NO. 4296/DEL./2012 7 AMOUNT OF INTEREST @ 1% FOR THIS PERIOD , THUS, COMES TO RS.38,107/ - WHEREAS THE INTER EST OF RS.83,836/ - HAS BEEN CHARGED IN ITNS 150 WHICH IS WRONG. SINCE THE LD. CIT(A) HAS DIRECTED THE AO TO EXAMINE THIS CLAIM OF THE ASSESSEE FOR WORKING OUT CORRECT AMOUNT OF INTEREST U/S. 234B CHARGEABLE, WE DO NOT FIND ANY INCONGRUITY IN THIS FINDING OF THE LD. CIT(A). AS PER THIS DIRECTION, THE ASSESSEE MAY PUT ITS CLAIM BEFORE THE AO. GROUND NO. 6 OF APPEAL IS ACCORDINGLY DISPOSED OFF. 8 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31.07.2017 . SD/ - SD/ - ( BHAVNESH SAINI ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31.07.2017 *AKS* COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES, NEW DELHI