M/s. Priyanka Developers, Pune V. DCIT, Circle-3, Pune

ITA 878/PUN/2013

• Counselvise Citation: 87824514 RSA 2013
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 23-07-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Assessee Lawyers: S N DOSHI
• Keywords: Principle of natural justice
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.878/PN/2013 (A.Y: 2006-07) M/S. PRIYANKA DEVELOPERS 38, VIJAY NAGAR COLONY, SADASHIV PETH, PUNE 411030. PAN: AABFP2838E APPELLANT VS. DCIT, CIRCLE-3, PUNE RESPONDENT APPELLANT BY : SHRI S.N. DO SHI RESPONDENT BY : SHRI B.C. MALAKAR DATE OF HEARING: 23.07.2014 DATE OF ORDER : 30.07.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEAL)-II, PUNE, DA TED 05.12.2012 FOR A.Y. 2006-07 ON THE FOLLOWING GROUND S. 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE CIT( A) HAS ERRED IN SUSTAINING THE DISALLOWANCE OF RS.24,60,000/- OUT OF THE TOTAL COMMISSION OF RS.45,00,000/- PAID TO MR. ROHIT TILAK AS COMMISSIO N FOR ENABLING THE APPELLANT TO SELL ITS PLOT FOR RS.6.8 0 CRORE RESERVED FOR EDUCATIONAL PURPOSE ONLY. 2. THE ABOVE GROUND OF APPEAL MAY KINDLY BE ALLOWED TO BE AMENDED, ALTERED, MODIFIED ETC., IN THE INTEREST OF NATURAL JUSTICE. 2. THE ASSESSEE IS A FIRM ENGAGED IN THE CONSTRUCTI ON BUSINESS AND DEALING IN LAND. THE ISSUE BEFORE US IS WITH R EGARD TO THE DISALLOWANCE OF CLAIM OF EXPENDITURE ON COMMISSION. THE 2 ITA NO.878 OF 13 M/S. PRIYANKA DEVELOPERS ASSESSING OFFICER HAD DISALLOWED RS.45 LACS PAID BY WAY OF COMMISSION BY THE ASSESSEE TO MR. ROHIT TILAK. IT IS UNDISPUTED FACT THAT THE ASSESSEE HAD SOLD LAND FOR A TOTAL CO NSIDERATION OF RS.6.80 CRORES TO SINHAGAD TECHNICAL EDUCATIONAL IN STITUTE. THE ASSESSEE HAS PAID COMMISSION OF RS.45 LACS TO SHRI. TILAK AND WHICH WAS CONFIRMED BY SHRI TILAK DURING THE COURSE OF STATEMENT RECORDED BY THE ASSESSING OFFICER U/S. 13 1 OF THE ACT DURING THE ASSESSMENT PROCEEDINGS AND ALSO THAT THE COMMISSION RECEIVED WAS ALSO OFFERED FOR TAXATION BY SHRI. TIL AK IN THE REGULAR RETURN FILED. THUS, THE ROLE OF SHRI TILAK IN GETTI NG THE LAND SOLD IS NOT IN DISPUTE WHICH IS EVIDENT FROM THE MATERIAL B ROUGHT ON RECORD. THE ASSESSING OFFICER HAS OBSERVED THAT TH E PAYMENT OF COMMISSION WAS ON HIGHER SIDE. THE ASSESSING OFFIC ER DID NOT APPRECIATE THE FACT THAT SHRI TILAK WAS PAID COMMIS SION FOR TRANSACTION OF PROPERTY IN QUESTION WHICH WAS RESER VED FOR PRIMARY SCHOOL AND PLAYGROUND. THE ASSESSING OFFIC ER HAS ALSO LOSS SITE TO THE FACT THAT FOR THE PAST MANY YEARS WAS NOT ABLE TO SELL THE LAND ADMEASURING 73,000 SQ.FT OF AREA AND FETCH A REASONABLE FAIR PRICE. EVEN THOUGH THE COMMISSION WAS PAID BY ACCOUNT PAYEE CHEQUE AND ACCOUNTED FOR IN THE RETUR N OF INCOME, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN NEGATING THE SAME ON THE GROUND THAT THERE WAS NO AGREEMENT FOR THE SAID COMMISSION. THERE MAY BE AN ORAL AGREEMENT AS PER PREVAILING CI RCUMSTANCES AT THE RELEVANT POINT OF TIME. THE ASSESSING OFFIC ER HAS NOT DISPUTED THE GENUINENESS OF THE EXPENDITURE BUT HE HAS DISPUTED THE QUANTUM OF COMMISSION. THE STAND OF THE ASSESS ING OFFICER HAS BEEN THAT THE COMMISSION SHOULD NOT BE AT 6%. THERE IS NO BASIS FOR THE ASSESSING OFFICER TO ARRIVE THE ABOVE CONCLUSION. THE ASSESSING OFFICER HAS ALSO BROUGHT NOTHING ON R ECORD TO SUGGEST THAT THE SAID TILAK WAS RELATED TO THE ASSE SSEE IN ANY MANNER. 2.1 IN APPEAL, THE CIT(A) SUSTAINED TO RS.24.60 LAC S OUT OF RS.45 LACS PAID TO SAID SHRI TILAK AS COMMISSION FOR ENAB LING THE 3 ITA NO.878 OF 13 M/S. PRIYANKA DEVELOPERS ASSESSEE TO SELL ITS PLOT FOR RS.6.80 CRORES WHICH WAS RESERVED FOR EDUCATIONAL INSTITUTE PURPOSE ONLY. AGAIN THE CIT( A) HAS NOT GIVEN COGENT REASONING FOR SUSTAINING THE ADDITION OF RS.24.60 LACS. THE REVENUE OFFICERS SHOULD NOT STEP INTO TH E BUSINESS OF THE ASSESSEE. THEY ARE NOT SUPPOSED TO SUGGEST THE ASSESSEE TO DO THE BUSINESS IN A WISER MANNER ESPECIALLY WHEN T HERE IS NO DEVISE FOR EVADING TAX BY MAKING PAYMENT OF ABOVE S AID COMMISSION. IN VIEW OF ABOVE, THE CIT(A) WAS NOT J USTIFIED IN RESTRICTING TO RS.24.60 LACS OUT OF TOTAL COMMISSIO N OF RS.45 LACS PAID TO SHRI ROHIT TILAK FOR ENABLING THE ASSESSEE TO SELL ITS PLOT FOR RS.6.80 CRORES WHICH WAS RESERVED FOR EDUCATION AL PURPOSE ONLY. ACCORDINGLY, DISALLOWANCE IN QUESTION IS DEL ETED. THE ASSESSING OFFICER IS DIRECTED ACCORDINGLY. 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED AS INDICATED ABOVE. PRONOUNCED IN THE OPEN COURT ON THIS THE 30 TH DAY OF JULY, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 30 TH JULY, 2014 GCVSR COPY TO:- 1) ASSESSEE 2) DEPARTMENT 3) THE CIT(A)-II, PUNE 4) THE CIT-II, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY, I.T.A.T., PUNE