SWAPNIL CHANDRAKANT JOSHI, MUMBAI V. ITO 16(3)(3), MUMBAI

ITA 5981/MUM/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 3815 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2009-2010
• Appeal Filed On: 09-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Principle of natural justice; Additional evidence
• Section: 143(3); 11

Judgement Text

E IN THE INCOME TAX APPELLATE TRIBUNAL E BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER ./ I.T.A. NO. 5981 /MUM/2013 ( / ASSESSMENT YEAR : 2009-10) MR. SWAPNIL CHANDRAKANT JOSHI, 9 A R BLOCK, SIKKA NAGAR, S.V.P. ROAD, GIRGAON, MUMBAI 400 004. / V. ITO 16(3)(3), MUMBAI. ./ PAN : ABSPJ9363L ( / APPELLANT ) .. ( / RESPONDENT ) ASSESSEE BY SHRI DEVENDRA JAIN REVENUE BY : SHRI SUNIL KUMAR AGARWAL- DR / DATE OF HEARING : 24-2-2016 / DATE OF PRONOUNCEMENT : 06-05-2016 / O R D E R PER RAMIT KOCHAR, ACCOUNTANT MEMBER THIS APPEAL, FILED BY THE ASSESSEE, BEING ITA NO. 5981/MUM/2013, IS DIRECTED AGAINST THE ORDER DATED 15-07-2013 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS)- 27, MUMBAI (HEREINAFTER CA LLED THE CIT(A) ), FOR THE ASSESSMENT YEAR 2009-10, THE APPELLATE PROCEEDINGS BEFORE THE CIT(A) ARISING FROM THE ASSESSMENT ORDER DATED 30.12.2011 PASSED B Y THE LEARNED ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT,1961(HEREI NAFTER CALLED THE ACT). ITA 5981/MUM/2013 2 2. THE GROUNDS RAISED BY THE ASSESSEE IN THE MEMO OF APPEAL FILED WITH THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI (HEREINAF TER CALLED THE TRIBUNAL) READS AS UNDER:- 1. THE CIT(A) HAS ERRED IN CONFIRMING THE ACTION OF A.O. OF ADDING COMMISSION OF RS. 18,45,793/- AS UNDISCLOSED INCOME WHICH MAY PLEASE BE DELETED. 2 2. THE EXPENSES ON ACCOUNT OF COMMISSION PAID TO SUB -DISTRIBUTORS AND RELATIVES MAY PLEASE BE ALLOWED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF FOOD PRODUCTS AND TELECOM. THE A SSESSEE IS ALSO AN LIC AGENT. 4. DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143(3) R.W.S. 143(2) OF THE ACT, IT WAS OBSERVED BY THE A.O. THAT THE ASSES SEE HAS EARNED TOTAL COMMISSION FROM IDEA CELLULAR LIMITED OF RS. 18,45, 793/- AS APPEARING IN THE TDS CERTIFICATE ISSUED BY THE IDEA CELLULAR LTD. H OWEVER, IT WAS OBSERVED BY THE AO FROM THE AUDITED PROFIT & LOSS ACCOUNT AND T HE WORKING OF TOTAL INCOME SUBMITTED DURING THE COURSE OF ASSESSMENT PR OCEEDINGS THAT THERE WAS NO COMMISSION INCOME EARNED FROM THE IDEA CELLU LAR LTD. WHICH WAS OFFERED FOR TAXATION IN THE RETURN OF INCOME FILED WITH THE REVENUE. THE ASSESSEE WAS GIVEN AN OPPORTUNITY BUT THE ASSESSEE WAS NOT ABLE TO PROVE THE ACCOUNTING OF THE INCOME HAVING SUFFERED TAXATION. THE ASSESSEE HAD ALSO CLAIMED CREDIT OF TAX DEDUCTED AT SOURCE AGAINST TH E SAID COMMISSION INCOME. THE A.O. ACCORDINGLY TREATED THE SAID INCOME OF RS. 18,45,793/- AS UNDISCLOSED INCOME BY THE ASSESSEE AND ADDED RS. 18 ,45,793/- TO THE TOTAL INCOME OF THE ASSESSEE VIDE ASSESSMENT ORDER DATED 30.12.2011 U/S 143(3) OF THE ACT. 5. AGGRIEVED BY THE ASSESSMENT ORDER DATED 30.12.20 11 PASSED U/S 143(3) OF THE ACT BY THE A.O. THE ASSESSEE FILED FIRST APPE AL BEFORE THE CIT(A). ITA 5981/MUM/2013 3 6. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFOR E THE CIT(A), THE ASSESSEE SUBMITTED THAT THE ASSESSEE OBTAINED DISTR IBUTORSHIP OF IDEA CELLULAR LTD. VIDE AGREEMENT DATED 18.8.2008 FOR SALE OF SIM CARD ETC. THE COPY OF THE AGREEMENT WAS ENCLOSED. THE ASSESSEE SUBMITTED THAT THE ASSESSEE DID NOT HAVE SUFFICIENT TIME TO EXPLAIN THE ACCOUNTING AND HOW THE COMMISSION INCOME WAS OFFERED AS INCOME IN THE P&L ACCOUNT HAV ING SUFFERED TAXATION. THE ASSESSEE SUBMITTED THAT THE COMMISSION INCOME O F RS.18,45,793/- WAS INTIMATED IN THE FORM OF PURCHASE INVOICES WHICH IN CLUDED COMMISSIONS OF THE DISTRIBUTOR AS WELL AS RETAILER. THE ASSESSEE SUBM ITTED THAT THE COMMISSION INCOME OF RS.18,45,793/- HAS BEEN REDUCED FROM THE PURCHASES MADE FROM IDEA CELLULAR LIMITED AND THE NET PURCHASES ARE CLA IMED AS BUSINESS EXPENDITURE. THUS, IT WAS SUBMITTED THAT COMMISSION INCOME OF RS.18,45,793/- IS ALREADY TAXED IN THE HANDS OF THE ASSESSEE AND THERE IS NO CONCEALMENT OF INCOME. PURCHASE ANALYSIS WAS SUBMI TTED BEFORE THE CIT(A) GIVING DETAILS OF GROSS PURCHASES AND COMMISSION BE ING CREDITED TO ARRIVE AT NET PURCHASE AMOUNT. ADDITIONAL EVIDENCES FILED BY THE ASSESSEE WERE NOT ACCEPTED BY THE CIT(A) AS THE SAME DID NOT FALL WI TH IN PARAMETERS OF RULE 46A OF INCOME TAX RULES, 1962. IN THE REMAND REPOR T, THE A.O. HAS NOT MADE ANY COMMENTS ON MERITS AND THE APPEAL OF THE ASSESS EE WAS DISMISSED ON ACCOUNT OF COMMISSION INCOME FROM IDEA CELLULAR LIM ITED NOT BEEN ACCOUNTED IN THE RETURN OF INCOME FILED BY THE ASSESSEE WITH THE REVENUE AS ALSO DUE TO SOME PURPORTED DIFFERENCE AS PER CIT(A) IN ACCOUNTI NG OF PURCHASES BY THE ASSESSEE VIS--VIS IDEA CELLULAR LIMITED AS DETAILE D IN THE CIT(A) ORDERS DATED 15-07-2013. 7.AGGRIEVED BY THE ORDERS DATED 15-07-2013 OF THE C IT(A) , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ITA 5981/MUM/2013 4 8. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS A DISTRIBUTOR OF FOOD PRODUCTS AND TELECOM. THE COMM ISSION INCOME OF RS. 18,45,793/- WAS EARNED FROM IDEA CELLULAR LIMITED. DUE TAX WAS DEDUCTED AT SOURCE BY THE AFORE-STATED IDEA CELLULAR LIMITED. THE LD. COUNSEL SUBMITTED THAT THE INCOME HAS BEEN DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNTS AND DULY OFFERED FOR TAXATION IN THE RETURN OF INCOME F ILED WITH THE REVENUE. THE ASSESSEE HAS CREDITED THE SAID AMOUNT OF COMMISSION INCOME OF RS.18,45,793/- IN PURCHASES ACCOUNT WHEREBY THE PUR CHASES WERE REDUCED AS COMMISSION INCOME WAS RELATED TO THE PURCHASES M ADE BY THE ASSESSEE OF THE TELECOM PRODUCTS FROM IDEA CELLULAR LIMITED. T HE ASSESSEE HAS PRODUCED THE TRADING AND PROFIT AND LOSS ACCOUNT FOR IMPUGNE D ASSESSMENT YEAR WHEREBY THE COMMISSION INCOME OF RS. 18,45,793/- EA RNED FROM IDEA CELLULAR LIMITED WERE SHOWN TO BE CREDITED TO PURCHASES ACCO UNT AND THE SAME WAS REDUCED FROM THE PURCHASES OF RS. 2,07,70,722/- AND NET PURCHASES OF RS. 1,89,24,929/- WAS ACCOUNTED FOR IN THE AUDITED PROF IT AND LOSS ACCOUNT. THE COPY OF TRADING, PROFIT AND LOSS A/C FOR THE PREVIO US YEAR ENDED 31 ST MARCH, 2009 IS PLACED IN THE PAPER BOOK PAGE 1 & 3 FILED W ITH THE TRIBUNAL. THE ASSESSEE HAS ALSO FILED THE COPY OF LEDGER ACCOUNT OF M/S AKSHAY AGENCIES- IDEA TO CONTEND THAT THE COMMISSION INCOME ARE REDU CED WHILE ACCOUNTING FOR THE PURCHASES MADE WHICH IS ALSO PLACED IN PAPER BO OK PAGE 6 TO 11. THUS THE LD. COUNSEL SUBMITTED THAT IT HAS DULY ACCOUNTE D FOR THE COMMISSION INCOME IN THE BOOKS OF ACCOUNT AND THE INCOME WAS D ULY OFFERED FOR TAXATION AND DUE TAXES HAVE BEEN PAID TO THE REVENUE. THE C ONTENTION OF THE ASSESSEE WAS REJECTED BY THE AUTHORITIES BELOW. THE ADDITIO NAL EVIDENCES FILED BEFORE THE CIT(A) WERE ALSO NOT ADMITTED. THE ASSESSEE RE LIED UPON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF SMT. PRABH AVATI S. SHAH V. CIT [1998] 100 TAXMAN 404 (BOM.) AND THE DECISION OF IT AT, MUMBAI BENCH IN THE CASE OF SHAHRUKH KHAN V. DCIT, [2007] 13 SOT 61 (MUM) AND SUBMITTED THAT BY MAKING THIS ADDITION OF RS. 18,45,793/-, TH E REVENUE HAS BROUGHT TO TAX THE SAME INCOME TWICE WHICH IS NOT PERMISSIBLE. ITA 5981/MUM/2013 5 9. THE LD. D.R. SUBMITTED THAT THE ASSESSEE HAS EAR NED COMMISSION INCOME WHICH IS NOT REFLECTED IN THE BOOKS OF ACCOU NT. THE ASSESSEE HAS NOT DECLARED THE SAME IN THE RETURN OF INCOME FILED WIT H THE REVENUE. HE FURTHER RELIED UPON THE ORDERS OF AUTHORITIES BELOW. 10. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND AL SO PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING CASE LAWS RELIED UPON . WE HAVE OBSERVED THAT THE ASSESSEE IS DISTRIBUTOR OF FOOD PRODUCTS AND TE LECOM PRODUCTS. THE ASSESSEE HAS EARNED COMMISSION INCOME OF RS. 18,45, 793/- DURING THE IMPUGNED ASSESSMENT YEAR ON WHICH DUE TAXES HAVE BE EN DEDUCTED AT SOURCE BY IDEA CELLULAR LIMITED. THE REVENUE HAS ADDED TH E SAID COMMISSION INCOME ON THE CONTENTION THAT THE SAME HAS NOT BEEN OFFERE D FOR TAXATION. WHILE THE CONTENTION OF THE ASSESSEE IS THAT THE SAID COMMISS ION INCOME OF THE ASSESSEE WAS DULY OFFERED FOR TAXATION BY WAY OF REDUCTION F ROM THE PURCHASES WHICH HAS BEEN PLACED IN THE PAPER BOOK PAGE NO. 1 &3 AND SUBMITTED THAT THE COMMISSION INCOME HAS BEEN DULY OFFERED FOR TAXATIO N AND DUE TAXED PAID TO REVENUE. IT WAS SUBMITTED THAT THE CIT(A) HAS NOT ADMITTED THE ADDITIONAL EVIDENCES AND IT HAS LED TO THE ADDITION OF THE SAM E AMOUNT AS THE INCOME OF THE ASSESSEE TWICE WHICH IS NOT PERMISSIBLE UNDER T HE ACT ONCE AT THE BEHEST OF THE ASSESSEE WHEREBY THE SAID COMMISSION INCOME HAS SUFFERED TAX BY WAY OF REDUCTION FROM PURCHASES IN THE RETURN OF INCOME FILED WITH THE REVENUE AND ON THE OTHER HAND THE REVENUE HAS ALSO ADDED TH E SAME WHILE FRAMING ASSESSMENT U/S 143(3) OF THE ACT VIDE ORDERS DATED 30-12-2011 WHICH HAS LED TO DOUBLE TAXATION. THE ACCOUNTS OF THE ASSESSEE AR E STATED TO BE AUDITED U/S 44AB OF THE ACT WHEREIN THE COMMISSION INCOME IS ST ATED TO BE CREDITED TO PURCHASES ACCOUNT AND SUFFERED TAXATION IN THE RETU RN OF INCOME FILED WITH THE REVENUE. IN OUR CONSIDERED VIEW, INTEREST OF JU STICE WILL BE BEST SERVED IF THE ADDITIONAL EVIDENCES SUBMITTED BY THE ASSESSEE ARE ADMITTED AND THE INCOME IS COMPUTED ON MERITS IN ACCORDANCE WITH LAW AFTER CONSIDERATION OF ITA 5981/MUM/2013 6 ADDITIONS EVIDENCES TO BE FILED BY THE ASSESSEE IN HIS DEFENSE FOR WHICH THE MATTER NEEDS TO BE SET ASIDE TO THE FILE OF THE AO FOR DE-NOVO DETERMINATION OF THE ISSUE RELATING TO CHARGEABILITY OF COMMISSION I NCOME OF RS. 18,45,793/- TO TAX AS SET OUT ABOVE. ACCORDINGLY, WE SET ASIDE TH E MATTER TO THE FILE OF THE A.O. FOR DE NOVO DETERMINATION OF THE ISSUE AFTER C ONSIDERING THE ADDITIONAL EVIDENCES FILED BY THE ASSESSEE ON MERITS AND IN AC CORDANCE WITH LAW AFTER GIVING PROPER AND ADEQUATE OPPORTUNITY OF THE HEARI NG TO THE ASSESSEE IN ACCORDANCE WITH THE PRINCIPLES OF NATURAL JUSTICE. WE ORDER ACCORDINGLY. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA N0. 5981/MUM/2013 FOR THE ASSESSMENT YEAR 2009-10 IS AL LOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 6 TH MAY , 2016. # $% &' 06-05-2016 ( ) SD/- SD/- (SAKTIJIT DEY) (RAMIT KOCHAR) JUDICIAL MEMBER ACCOUNTANT MEMBER $ MUMBAI ; & DATED 06-05-2016 [ .9../ R.K. R.K. R.K. R.K. , EX. SR. PS !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. : ( ) / THE CIT(A)- CONCERNED, MUMBAI 4. : / CIT- CONCERNED, MUMBAI 5. =>( 99?@ , ?@ , $ / DR, ITAT, MUMBAI E BENCH 6. (BC D / GUARD FILE. / BY ORDER, = 9 //TRUE COPY// / ( DY./ASSTT. REGISTRAR) , $ / ITAT, MUMBAI