Venkateswarlu Paduchuri, Hydeabad, Hyderabad V. ITO, Ward-4(2), Hyderabad, Hyderabad

ITA 990/HYD/2017

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8418 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 04-02-2020
• Assessment Year: 2006-2007
• Appeal Filed On: 09-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Reopening of assessment
• Section: 143(3); 143(1); 88E; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B - SMC, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO.990/HYD/2017 ASSESSMENT YEAR:2006 - 07 VENKATESWARLU PADUCHURI, HYDERABAD. PAN: AFKPP 0927 J VS. INCOME TAX OFFICER, WARD - 4(2), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SMT. S. SANDHYA REVENUE BY: SRI RAVI BABU, DR DATE OF HEARING: 04/02/2020 DATE OF PRONOUNCEMENT: 02 /07/2020 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT(A) - 1, HYDERABAD IN APPEAL ITA NO.0522/CIT(A) - 1/HYD/2014 - 15/2016 - 17, DATED 01/02/2017 PASSED U/S. 143(3) R.W.S 147 & U/S. 250(6) OF THE ACT FOR THE AY: 2006 - 07. 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HIS APPEAL HOWEVER, THE CRUXES OF THE ISSUES ARE AS FOLLOWS: - (I) THE LD. CIT (A) HAS ERRED IN UPHOLDING THE REOPENING OF THE ASSESSMENT U/S. 147 OF THE ACT. 2 (II) THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ADDITION MADE BY THE LD. AO FOR RS. 2,87,028/ - BEING THE AMOUNT RECOVERED FROM THE CLIENT OF THE ASSESSEE AND PAID TO THE MAIN BROKER WHICH WAS INCLUDED IN THE COMMISSION RECEIVED FROM THE MAIN BROKER. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE BUSINESS OF SHARE BROKING AS SUB - BROKER FILED HIS RETURN OF INCOME FOR THE AY 2006 - 07 ON 27/10/2006 DECLARING TOTAL INCOME OF RS. 31,91,733/ - . INITIALLY THE RETURN WAS PROCESSED U/S. 143(1) OF THE ACT ON 27/06 /2007. SUBSEQUENTLY, IT WAS REVEALED THAT THE INCOME OF THE ASSESSEE HAD ESCAPED TAX AND THEREFORE ASSESSMENT WAS REOPENED U/S. 147 R.W.S 148 OF THE ACT AND FINALLY THE ASSESSMENT WAS COMPLETED U/S. 143(3) R.W.S 147 OF THE ACT ON 30/12/2011 WHEREIN THE LD . AO MADE ADDITION OF RS. 2,87,028/ - BE ING THE AMOUNT DEBITED TO THE PROFIT & LOSS A/C. , OF THE ASSESSEE . THE FINDING OF THE LD. AO WAS THAT THE EXPENSES INCURRED BY THE ASSESSEE FOR RS. 2,87,028/ - WAS TOWARDS SECURITY TRANSACTION TAX (STT) AGAINST WHICH DEDUCTION U/S. 88E OF THE ACT IS ALLOWABLE AND THEREFORE ONCE AGAIN IT CANNOT BE CLAIMED AS DEDUCTION BY DEBITING TO THE P & L ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD EXPLAINED BEFORE THE LD. AO THAT THE AMOUNT OF RS. 2,87,028/ - WAS STT CHARGED BY THE MA IN BROKER WITH RESPECT TO THE TRANSACTION MADE ON BEHALF OF THE CLIENT OF THE ASSESSEE AND THE ASSESSEE HAS RECOVERED 3 THE SAME FROM HIS CLIENTS AND PAID TO THE MAIN BROKER. THE ASSESSEE HA D FURTHER EXPLAINED THAT SINCE THE AMOUNT OF RS. 2,87,028/ - WAS INCLUDED AS COMMISSION RECEIVED BY THE ASSESSEE FROM THE CLIENTS OF THE ASSESSEE AND CREDIT TO THE P&L ACCOUNT OF THE ASSESSEE, THE SAME WAS TREATED AS EXPENDITURE ON PAYMENT MADE TO THE MAIN BROKER AND ACCORDINGLY DE BITED TO THE P & L ACCOUNT. THE ASSESSEE HAD FURTHER EXPLAINED THAT HE HAD NOT CLAIMED ANY DEDUCTION U/S. 88E OF THE ACT FOR THE AMOUNT RS. 2,87,028/ - AS THE SAME WAS CLAIMED BY THE MAIN SHARE BROKER . HOWEVER, THE LD. AO WAS OF THE VIEW THAT THE AMOUNT PA ID BY THE ASSESSEE WAS TOWARDS STT AND THEREFORE DISALLOWED THE SAME AS DEDUCTION. ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BECAUSE THE ASSESSEE DID NOT FILE ANY DETAILS REGARDING THE PAYMENT MADE TO THE MAIN BROKER IN RESPECT OF COMMI SSION, STT AND SERVICE TAX TO SUBSTANTIATE HIS CLAIM. AGGRIEVED BY THE ORDER OF THE LD. CIT (A) THE ASSESSEE IS NOW ON APPEAL BEFORE US. 4. BEFORE ME, THE LD. AR REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE LD. REVENUE AUTHORITIES AND PLEADE D THAT THE ADDITION MADE BY THE LD. AO WHICH WAS FURTHER SUSTAINED BY THE LD. CIT (A) MAY BE DELETED. THE LD. DR ON THE OTHER HAND VEHEMENTLY ARGUED IN SUPPORT OF THE ORDER OF THE LD. REVENUE AUTHORITIES AND FURTHER REITERATED THAT THE ASSESSEE HAD NOT FU RNISHED ANY DETAILS TO JUSTIFY HIS CLAIM EVEN BEFORE THE LD. CIT (A) DURING THE COURSE OF FIRST 4 APPELLATE PROCEEDINGS. IT WAS THEREFORE PLEADED THAT THE APPEAL OF THE ASSESSEE MAY BE DISMISSED. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED TH E MATERIALS ON RECORD. AS FAR AS THE GROUND WITH RESPECT TO REOPENING OF ASSESSMENT , I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) BECAUSE PRIM - FACIA IT WAS REVEALED THAT THE ASSESSEE HAD CLAIMED DEDUCTION TOWARDS EXPENDITURE INCURRED WITH R ESPECT TO STT AS IT WAS DEBITED TO THE P & L ACCOUNT OF THE ASSESSEE. THEREFORE, THE REVENUE HAD EVERY REASON TO SCRUTINIZE THE TRANSACTION AND THE CLAIM OF THE ASSESSEE. THEREFORE, THE GROUND NO.1 RAISED BY THE ASSESSEE WITH RESPECT TO REOPENING OF THE ASSESSMENT IS DEVOID OF MERITS. AS FAR AS THE OTHER GROUND RAISED BY THE ASSESSEE, EVEN BEFORE US NO PARTICULARS WERE FILED TO ESTABLISH THAT THE AMOUNT OF RS. 2,87,028/ - WAS RECOVERED BY THE ASSESSEE FROM HIS CLIENT TOWARDS THE STT PAID BY THE MAIN BROKER ON BEHALF OF THE CLIENT OF THE ASSESSEE AND THE SAME WAS INCLUDED IN THE COMMISSION INCOME CREDIT TO THE P & L ACCOUNT OF THE ASSESSEE. SINCE THESE ASPECTS ARE FACTUAL WHICH ARE TO BE VERIFIED FROM THE BOOKS OF ACCOUNTS OF THE ASSESSEE AND SINCE THE SAM E ARE NOT BEFORE ME, I AM UNABLE TO DECIDE WITH RESPECT TO THE MERITS OF THE APPEAL. THEREFORE, I HEREBY REMIT THE MATTER BACK TO THE FILE OF THE LD. AO WITH DIRECTIONS TO VERIFY THE FACT OF THE CASE AND IF IT IS FOUND THAT THE ASSESSEE HAD INCLUDED THE AMOUNT OF RS. 2,87,028/ - AS INCOME 5 RECEIVED OR RECEIVABLE FROM HIS CLIENTS AND DISCLOSED THE SAME IN THE BO OKS OF ACCOUNTS AS AMOUNT PAID /PAYABLE TO THE MAIN BROKER THEN IT SHOULD BE ALLOWED AS DEDUCTION, I.E., THE AMOUNT OF RS. 2,87,028/ - SHOULD BE NETTED OFF FROM THE COMMISSION INCOME CREDITED TO THE PROFIT & LOSS A/C., AND IF FOUND OTHERWISE PASS APPROPRIATE ORDER IN ACCORDANCE WITH LAW AND MERIT AFTER AFFORDING PROPER OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. AT THE SAME TIME, I ALSO HEREBY DIRECT THE ASSESSEE TO PROMPTLY CO - OPERATE BEFORE THE LD. REVENUE AUTHORITIES IN THEIR PROCEEDINGS FAILING WHICH THEY SHALL BE AT LIBERTY TO PASS APPROPRIATE ORDERS BASED ON THE MATERIALS BEFORE THEM. 6. THE ORDER IN THIS APPEAL COULD NOT BE PASSED WITHIN 90 DAYS FROM THE DATE OF HEARING DUE TO COVID - 19 NATIONAL LOCK - DOWN. HOWEVER FOLLOWING THE DECISION OF THE MUMBAI T RIBUNAL IN THE CASE OF DCIT VS. JSW LTD., IN ITA NO.6264/MUM/2018 & 6103/MUM/2018, AY.2013 - 14, DT.14 - 05 - 2020, I FIND IT APPROPRIATE TO PRONOUNCE THIS ORDER THOUGH IT IS BEYOND THE PERIOD OF 90 DAYS. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FOR S TATISTICAL PURPOSES AS INDICATED HEREIN ABOVE. PRONOUNCED IN THE OPEN COURT ON 02 ND JULY, 2020. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER 6 HYDERABAD, DATED: 02 ND JULY, 2020. OKK COPY TO: - 1) P. VENKATESWARLU , D.NO.1 - 8 - 430/17/8, CHIKKADAPALLY, HYDERABAD. 2) INCOME TAX OFFICER, WARD - 4(2), INCOME TAX TOWERS, AC GUARDS, HYDERABAD. 3) THE CIT (A) - 1, HYDERABAD. 4) THE PRINCIPAL COMMISSIONER OF INCOME TAX - 1, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE