Sh. Imran, New Delhi V. ITO, Ghaziabad

ITA 6849/DEL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 6728 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 23-08-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ABHISHEK MANAV
• Keywords: Opportunity of being heard
• Section: 142(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC-1 NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO.-6849/DEL/2014 (ASSESSMENT YEAR-2009-10) IMRAN, C/O-M/S.RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-1, NEW DELHI-110049. PAN-AASPI9611B (APPELLANT) VS ITO, WARD-1(3), GHAZIABAD (RESPONDENT) ASSESSEE BY SH.TARUN KUMAR, ADV. & SH. ABHISHEK MANAV, ADV. REVENUE BY SH.N.K.BANSAL, SR.DR ORDER THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A SSAILING THE CORRECTNESS OF THE ORDER DATED. 12.09.2014 OF CIT(A), GHAZIABAD PE RTAINING TO 2009-10 AY ON VARIOUS GROUNDS. HOWEVER, THE PARTIES WERE HEARD ONLY IN R ESPECT OF GROUND NO.4 WHICH READS AS UNDER:- 4. THAT IN ANY CASE AND ANY VIEW OF THE MATTER, AC TION OF LD.CIT(A) IN CONFIRMING THE ACTION OF LD.AO IN MAKING THE IMPUGN ED ADDITION AND FRAMING THE IMPUGNED ASSESSMENT ORDER IS CONTRARY TO LAW AN D FACTS, VOID AB INITIO, BEYOND JURISDICTION, AND WITHOUT GIVING ADEQUATE OP PORTUNITY OF HEARING, BY RECORDING INCORRECT FACTS AND FINDINGS AND THE SAM E IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSE SSEE RETURNED AN INCOME OF RS.1,64,560/- ON 17.04.2009. THE SAID RETURN WAS SE LECTED FOR SCRUTINY THROUGH CASS ON THE BASIS OF AIR INFORMATION THAT THE ASSESSEE HAD DEPOSITED CASH OF RS.14,89,500/-, RS.34,31,000/- IN HIS SB A/C WITH AXIS BANK LIMITED , NEHRU NAGAR & INDIRAPURAM AND RS.23,49,825/- IN ICICI BANK SB A/C. ACCORDINGLY AF TER ISSUANCE OF NOTICE UNDER SECTION 143(2) ETC AND SHOW CAUSE AND QUESTIONNAIRE ETC. U/ S 142(1) THE ASSESSEE WAS REQUIRED TO EXPLAIN THE SAME. NOT CONVINCED WITH THE EXPLAN ATION OFFERED THE ASSESSMENT WAS CONCLUDED AT AN INCOME OF RS.20,63,240/-. THESE ADD ITIONS WERE CHALLENGED IN APPEAL BEFORE THE CIT(A). A PERUSAL OF THE SAME SHOWS THA T THE LD. CIT(A) AFTER EXTRACTING THE DATE OF HEARING 23.08.2016 DATE OF PRONOUNCEMENT 07.11.2016 PAGE 2 OF 4 I.T.A .NO.-6849/DEL/2014 IMRAN VS ITO ASSESSMENT ORDER FROM PAGE 2 TO 4 HAS PROCEEDED TO REPRODUCE THE WRITTEN SUBMISSIONS OF THE ASSESSEE UPTO PAGE 11 OF HIS ORDER AND PROCE EDED TO UPHOLD THE ADDITION MADE. INVITING ATTENTION TO THE FOLLOWING SUBMISSIONS EXT RACTED AT PAGE 6 OF THE IMPUGNED ORDER THAT THE ASSESSEE IS CARRYING THE BUSINESS AS RETA ILERS AS WELL AS COMMISSION AGENT OF FRUITS & VEGETABLES IN THE NAME AND STYLE OF M/S IM RAN TOMATO COMPANY AT SA-38, SUBZI MANDI, SAHIBABAD. GHAZIABAD. HE IS ALSO THE L ICENSE HOLDER OF UTTAR PRADESH KRISHI UTTPADAN MANDI SAMITI GOVERNED BY UTTAR PRAD ESH UTTAPDAN MANDI SAMITI ADHINIYAM. 1964. IT WAS SUBMITTED THAT THE CIT(A) HAS ALSO NOT CON SIDERED THE FOLLOWING CLAIM NAMELY THE ASSESSEE WAS ENTITLED TO OPT THE PRESUMTIVE PROFIT U/S 44AF OF THE INCOME TAX ACT, 1961 AND HE DID SO. IT WAS ACCORDIN G TO THE LAW AND NO VIOLATION OF EITHER ACT NOR ASSESSEE DECLARED LESS PROFIT AGAINS T THE PRESUMTIVE PROFIT I.E. 5%. IT WAS SUBMITTED THE ARGUMENT IS RECORDED BY THE CIT(A) THAT THE AS SESSEE HE IS ALSO DOING WORK AS COMMISSION AGENT FOR WHICH HE IS HOLDING TH E LICENSE FROM UP KRISHI UTTPADAN MANDI SAMITI. GHAZIABAD. THE DEFINITION OF AGRICULTURAL PRODUCE KACHHA ARH ATIYA OR COMMISSION AGENT IN UTTAR PRADESH KIRSHI UTTPADAN M ANDI ADHINIYAM, 1964 HAD BEEN REFERRED TO AND REFERENCE WAS MADE TO SECTION 39( 2) OF THE UTTAR PRADESH KIRSHI UTPADAN MANDI SAMITI ADHINIYAM, 1964 WHERE THE RATE OF COMMISSION IS FIXED FOR ARHATIYA OR COMMISSION AGENT. COPY OF ORDER OF RAJ YA KRISHI UTAPDAN MANDI PARISHAD, UTTAR PRADESH IN WHICH THE RATES OF COMMISSION ARE MENTIONED WAS SUBMITTED AS UNDER:- A. 1.50% IN THE CASE OTHER THAN CROPS, FRUITS & VEG ETABLES; B. 2.50% IN THE CASE OF CROPS; C. 3.00% IN THE CASE OF FRUITS AND VEGETABLES. 3. THESE ARGUMENTS IT WAS STATED WERE BEFORE THE AO AND THE CIT(A), IT HAD BEEN ARGUED THAT THE AO NEITHER CONSIDERED THESE DEFINITION NOR CONSIDE RED THE VERSION OF ASSESSEE. HE DID NOT ACCEPT THE REQUEST OF ASSESSEE TO SUMMON THE RECORD OF KRISHI UTPADAN MANDI SAMITI. IN THIS REGARD, LEARNED AO VI EWS WAS THAT THE CASE IS GOING TO BE TIME BARRED, THEREFORE IT IS NOT POSSIBLE TO CALL T HE KRISHI UTPADAN MANDI SAMITI FOR PAGE 3 OF 4 I.T.A .NO.-6849/DEL/2014 IMRAN VS ITO VERIFYING THERE RECORDS. IT WAS ALSO SUBMITTED THAT SINCE THE ASSESSEE ADMI TTEDLY WAS A KACHHA ARHATIYA, THEREFORE, SALE AND PURCHASE MADE BY HIM DOES NOT COVERED UNDER SALE. AS PER CIRCULAR 452 DATED 17/03/1986, THE BOA RD IS ADVISED THAT SO FAR AS KACHHA ARHATIYAS ARE CONCERNED, THE TURNOVER DOES NOT INCL UDE THE SALES EFFECTED ON BEHALF OF THE PRINCIPALS AND ONLY THE GROSS COMMISSION HAS TO BE CONSIDERED FOR THE PURPOSE OF SECTION 44AB. BUT THE POSITION IS DIFFERENT WITH RE GARD TO PACCA ARLIATIYAS. A PACCA ARHATIYA IS NOT IN THE PROPER SENSE OF THE WORD, AN AGENT OR EVEN DEL CREDERE AGENT. THE RELATION BETWEEN HIM AND HIS CONSTITUENT IS SUBSTAN TIALLY THAT BETWEEN THE TWO PRINCIPALS. THE FOLLOWING SETTLED LEGAL POSITION, IT WAS SUBMIT TED WAS RELIED UPON TO ADDRESS THE DISTINCTION BETWEEN A KACHHA ARHATIYA AND A PACCA A RHATIYA:- (1) A KACHHA ARHATIYA ACTS ONLY AS AN AGENT OF HIS CONSTITUENT AND NEVER ACTS AS A PRINCIPAL. A PACCA ARHATIYA, ON THE OTHER HAND , IS ENTITLED TO SUBSTITUTE HIS OWN GOODS TOWARDS THE CONTRACT MADE FOR THE CONSTIT UENT AND BUY THE CONSTITUENT'S GOODS ON HIS PERSONAL ACCOUNT AND THU S HE ACTS AS REGARDS HIS CONSTITUENT. (2) A KACHHA ARHATIYA BRINGS A PRIVITY CONTRACT BET WEEN HIS CONSTITUENT AND THE THIRD PARTY SO THAT EACH BECOMES LIABLE TO THE OTHER. THE PACCA ARHATIYA, ON THE OTHER HAND, MAKES HIMSELF LIABLE UPON THE CO NTRACT NOT ONLY TO THE THIRD PARTY BUT ALSO TO HIS CONSTITUENT. (3) THOUGH THE KACHHA ARHATIYA DOES NOT COMMUNICATE THE NAME OF HIS CONSTITUENT TO THE THIRD PARTY, HE DOES COMMUNICATE THE NAME OF THE THIRD PARTY TO THE CONSTITUENT. IN OTHER WORDS, HE IS AN AGENT FOR AN UNNAMED PRINCIPAL. THE PACCA ARHATIYA, ON THE OTHER HAND, D OES NOT INFORM HIS CONSTITUENT AS TO THE THIRD PARTY WITH WHOM HE HAS ENTERED INTO A CONTRACT ON HIS BEHALF. (4) THE REMUNERATION OF A KACHHA ARHATIYA CONSISTS SOLELY OF COMMISSION AND HE IS NOT INTERESTED IN THE PROFITS AND LOSSES MADE BY HIS CONSTITUENT AS IS NOT THE CASE WITH THE PACCA ARHATIYA. . (5) THE KACHHA ARHATIYA, UNLIKE THE PACCA ARHATIYA, DOES NOT HAVE ANY DOMINION OVER THE GOODS. (6) THE KACHHA ARHATIYA HAS NO PERSONAL INTEREST OF HIS OWN WHEN HE ENTERS INTO TRANSACTION AND HIS INTEREST IS LIMITED TO THE COMMISSION AGENT'S CHARGES AND CERTAIN OUT OF POCKET EXPENSES WHEREAS A PACCA ARHATIYA HAS A PERSONAL INTEREST OF HIS OWN WHEN HE ENTERS INTO A TRANSACTI ON. (7) IN THE EVENT OF ANY LOSS, THE KACHHA ARHATIYA I S ENTITLED TO BE INDEMNIFIED BY HIS PRINCIPAL AS IS NOT THE CASE WITH PACCA ARHA TIYA. 4. ACCORDINGLY, IT WAS HIS SUBMISSION THAT THE CIT( A) MAY BE DIRECTED TO PASS AN ORDER CONSIDERING THE FACTS AND THE LEGAL POSITION AS CANVASSED AS THE CONCLUSION ARRIVED AT WITHOUT ADDRESSING THE ARGUMENTS MAY NOT BE UPHE LD. PAGE 4 OF 4 I.T.A .NO.-6849/DEL/2014 IMRAN VS ITO 5. THE LD.SR.DR CONSIDERING THE ABOVE MENTIONED AR GUMENTS RECORDED IN THE IMPUGNED ORDER ITSELF WAS UNABLE TO SHOW WHERE THEY HAVE BEEN CONSIDERED BY THE FIRST APPELLATE AUTHORITY. ACCORDINGLY, IT WAS HIS SUBMI SSION THAT HE HAS NO OBJECTION IF THE ISSUE IS RESTORED. 6. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED T HE MATERIAL AVAILABLE ON RECORD. ON A CONSIDERATION OF THE SAME, I AM OF THE VIEW TH AT THE CONCLUSION ARRIVED AT WITHOUT CONSIDERING THE FACTUAL AND LEGAL SUBMISSION ON REC ORD CANNOT BE UPHELD. ACCORDINGLY THE IMPUGNED ORDER IS SET ASIDE AND THE ISSUE IS RE STORED BACK TO THE FILE OF THE CIT(A) WITH A DIRECTION TO PASS A SPEAKING ORDER IN ACCORD ANCE WITH LAW AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEARD. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 07 TH OF NOVEMBER, 2016. (DIVA SINGH) JUDICIAL MEMBER *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI