ACIT 25(1), MUMBAI V. AMOL N. DALAL, MUMBAI

ITA 5671/MUM/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5824 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 20-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M L PERUMAL
• Section: 143(3); 133(6)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI . .. . . . . . , ,, , !'# !'# !'# !'# $ $ $ $ %&. ! !! !. .. .' '' '. .. . . . . . $( $( $( $(, ,, , ) !'# ) !'# ) !'# ) !'# !* !* !* !* BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM !./ I.T.A. NO. 5671/MUM/2012 ( )( , $-, )( , $-, )( , $-, )( , $-, / / / / ASSESSMENT YEAR : 2008-09 ) ACIT - 25(1), C - 11, PRATYAKSHAKAR BHAVAN, R.NO.202, BANDRA KURLA COMPLEX, BANDRA(E), MUMBAI-400051 ( ( ( ( / VS. AMOL N. DALAL, GR. FLOOR, AMIRAJ APARTMENTS, MARWADI BUNGLOW, S.V.P. ROAD, BORIVALI(W), MUMBAI-68 #. ! ./ PAN : AAGPD5150L ( ./ / // / ASSESSEE ) .. ( 01./ / RESPONDENT ) ASSESSEE BY : SHRI M.L.PERUMAL 01./ 7 8 ! / RESPONDENT BY : SHRI VIPUL JOSHI ! ($ 7 / // / DATE OF HEARING : 19/03/2014 9:- 7 / DATE OF PRONOUNCEMENT : 28/03/2014 '; / O R D E R PER P.M.JAGTAP, AM :- . .. . . .. . , ,, , !'# !'# !'# !'# THIS APPEAL IS PREFERRED BY THE REVENUE AS AGAINST THE ORDER OF THE LD. CIT(A) -35, MUMBAI DATED 05/06/2012 WHEREBY HE DELETED THE ADDITION OF RS.46,23,107/- MADE BY THE AO TO THE TO TAL INCOME OF THE ASSESSEE ON ACCOUNT OF ALLEGED RECEIPT OF INCOME AS PER THE TDS CERTIFICATE. 2. THE ASSESSEE IN THE PRESENT CASE IS AN INDIVIDUA L WHO IS ENGAGED IN THE BUSINESS OF TRADING IN PREPAID CARDS OF M/S BHARTI AIRTEL LTD. UNDER THE NAME AND STYLE OF HIS PROPRIETARY CONCERN M/S SANYA 2 ITA NO.5671/MUM/2012 AMOL N. DALAL TELECOM & TRADING. THE RETURN OF INCOME FOR THE YE AR UNDER CONSIDERATION WAS FILED BY HIM ON 30/09/2008 DECLAR ING TOTAL INCOME OF RS.16,20,791/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THERE WAS NO COMPLIANCE ON THE PART OF THE ASSESSEE TO THE VARIOUS NOTICE ISSUED BY THE AO. THE AO THEREFORE, PROCEED ED TO COMPLETE THE ASSESSMENT U/S 143(3) COMPUTING THE INCOME OF THE A SSESSEE ON THE BASIS OF DETAILS AVAILABLE ON RECORD BEFORE HIM. I N THE ASSESSMENT SO COMPLETED, HE ESTIMATED THE INCOME OF THE ASSESSEE FROM BUSINESS BY APPLYING NET PROFIT RATE OF 8% TO THE TOTAL TURNOVER . HE ALSO FOUND FROM THE COPY OF TDS CERTIFICATE ISSUED BY THE M/S BHARTI AIRTEL LTD. THAT THE ASSESSEE HAD RECEIVED INCOME OF RS.46,23,0 17/- AS COMMISSION ON SALE OF PREPAID CARDS. SINCE THE SAI D COMMISSION INCOME, ACCORDING TO THE AO, WAS NOT OFFERED BY THE ASSESSEE TO TAX, HE MADE AN ADDITION OF RS.46,23,017/- TO THE BUSINE SS INCOME OF THE ASSESSEE. 3. AGAINST THE ORDER PASSED BY THE AO U/S 143(3), A N APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) DIS PUTING INTER-ALIA ADDITION MADE ON ACCOUNT OF COMMISSION INCOME AS PE R THE TDS CERTIFICATE RECEIVED FROM M/S BHARTI AIRTELL LTD. IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) THAT N O SUCH COMMISSION INCOME WAS ACTUALLY RECEIVED BY THE ASSESSEE FROM M /S BHARTI AIRTEL LTD. AND THE TAX WAS DEDUCTED AT SOURCE BY M/S BHAR TI AIRTEL LTD. ON ACCOUNT OF SUCH INCOME ON NOTIONAL BASIS AS ABUNDAN T PRECAUTION. KEEPING IN VIEW THIS SUBMISSION MADE ON BEHALF OF T HE ASSESSEE, THE MATTER WAS REMANDED BY THE LD. CIT(A) TO THE AO TO VERIFY THE STAND OF THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROC EEDINGS A NOTICE U/S 133(6) OF THE ACT WAS ISSUED BY THE AO TO M/S B HARTI AIRTEL IN RESPONSE TO WHICH A LETTER DATED 25 TH APRIL 2011 WAS FILED BY M/S BHARTI AIRTEL LTD. OFFERNG ITS EXPLANATION IN THE M ATTER AS UNDER:- 3 ITA NO.5671/MUM/2012 AMOL N. DALAL THE TRANSACTION BETWEEN THE COMPANY AND THE DISTRIB UTOR IS NOT LIABLE TO TDS BUT OUT OF ABUNDANT CAUTION, TDS WAS DEDUCTE D UNDER SECTION 194H. THE TDS WAS THUS DEDUCTED ON A NOTIONAL FIGU RE I.E. DIFFERENCE BETWEEN M.S.C. AND THE DISTRIBUTOR PRICE, HOWEVER T HE DISTRIBUTOR EARNS INCOME WHEN IT FURTHER SELLS THESE ITEMS TO THE RET AILERS AND THE GROSS DISCOUNT I.E. THE DIFFERENCE BETWEEN M.S.C. AND THE DISTRIBUTOR PRICE WHICH IS REFLECTED IN THE TDS CERTIFICATE WAS NEVER PAID TO THE DISTRIBUTOR BY THE COMPANY. 4. KEEPING IN VIEW THE EXPLANATION OFFERED BY M/S B HARTI AIRTEL LTD. BY LETTER DATED 25 TH APRIL 2011, THE LD. CIT(A) HELD THAT THE ADDITION OF RS.46,23,017/- MADE BY THE AO TO THE TOTAL INCOME OF THE ASSESSEE WAS NOT SUSTAINABLE AS IT WAS A CASE OF NOTIONAL IN COME ON WHICH TAX WAS DEDUCTED AT SOURCE BY M/S BHARTI AIRTEL LTD. OU T OF ABUNDANT CAUTION AND NO SUCH INCOME HAD ACTUALLY ACCRUED TO THE ASSESSEE. HE ACCORDINGLY DELETED THE ADDITION MADE BY THE AO ON THIS ISSUE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE REVEN UE HAS PREFERRED THIS APPEAL BEFORE US. 5. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBS ERVED THAT ADDITION OF RS.46,23,017/- MADE BY THE AO ON ACCOUNT OF COMM ISSION INCOME ALLEGEDLY RECEIVED BY THE ASSESSEE ON THE BASIS OF TDS CERTIFICATE ISSUED BY THE M/S BHARTI AIRTEL WAS DELETED BY THE LD. CIT(A) AFTER HAVING FOUND ON THE BASIS OF EXPLANATION OFFERED BY M/S BHARTI AIRTEL LTD. IN WRITING VIDE LETTER DATED ON 25 TH APRIL 2011 THAT THE AMOUNT OF COMMISSION MENTIONED IN THE RELEVANT TDS CERTIFICAT E WAS A NOTIONAL FIGURE ON WHICH TAX WAS DEDUCTED OUT OF ABUNDANT CA UTION. ACTUALLY NO SUCH INCOME WAS ACCRUED TO THE ASSESSEE AND WHAT EVER INCOME THAT HAD ACCRUED TO THE ASSESSEE AS A RESULT OF PUR CHASE AND SALE OF PREPAID CARDS OF M/S BHARTI ARITEL LTD. WAS ALREADY OFFERED TO TAX BY THE ASSESSEE. KEEPING IN VIEW OF THESE FINDINGS OF FACTS RECORDED BY 4 ITA NO.5671/MUM/2012 AMOL N. DALAL THE LD. CIT(A), WHICH HAVE REMAINED UNCONTROVERTED BY THE LD. DR AT THE TIME OF HEARING BEFORE US, WE ARE OF THE VIEW T HAT THE ADDITION OF RS.46,23,107/- MADE BY THE AO ON ACCOUNT OF COMMISS ION INCOME ALLEGEDELY RECEIVED BY THE ASSESSEE WAS NOT SUSTAIN ABLE AND THE LD. CIT(A) WAS FULLY JUSTIFIED IN DELETING THE SAME. I N THAT VIEW OF THE MATTER, WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT (A) GIVING RELIEF TO THE ASSESSEE ON THIS ISSUE AND DISMISS THE APPEAL O F THE REVENUE. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH MARCH 2014. '; 7 9:- <'(= 28TH B, ,2014 : 7 SD/- SD/- ( DR. S.T.M. PAVALAN ) ( P.M. JAGTAP ) ) !'# / JUDICIAL MEMBER !'# / ACCOUNTANT MEMBER MUMBAI; <'( DATED.- 28 /03/2014 F{X~{T? P.S/. )(.!. '; 7 0)CD ED- '; 7 0)CD ED- '; 7 0)CD ED- '; 7 0)CD ED-/ COPY OF THE ORDER FORWARDED TO : 1. ./ / THE APPELLANT 2. 01./ / THE RESPONDENT. 3. F ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. F / CIT CONCERNED, MUMBAI 5. D$I 0))( , , / DR, ITAT, MUMBAI E BENCH 6. %, J / GUARD FILE. ';( ! ';( ! ';( ! ';( ! / BY ORDER, !1D 0) //TRUE COPY// K KK K/ // /!L !L !L !L (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI