S. Gopinath, Bangalore V. DCIT, Bangalore

ITA 992/BANG/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 8589 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 19-06-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P S SREEDHARA MURTHY C A MRS
• Keywords: Income from undisclosed sources; Search and seizure; Revised return; Revenue expenditure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI ABRAHAM P GEORGE, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER I.T.A. NO. 992 /BANG/201 5 (ASSESSMENT YEAR : 2009-10) SHRI S. GOPINATH, NO.88, NANDI DURGA ROAD, BANGALORE-560 046 PAN ABYPG 8572C VS. DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(2)(1), BANGALORE. APPELLANT RESPONDENT. APPELLANT BY : SHRI P S SREEDHARA MURTHY, C.A. RESPONDENT BY : MRS. S. PRAVEENA, ADDL. CIT(DR) DATE OF HEARING : 9.2.2016. DATE OF PRONOUNCEMENT : 30.03.2016. O R D E R PER SHRI VIJAY PAL RAO, J.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DT. 9.1.2015 OF COMMISSIONER OF INCOME TAX(APPEALS)-11, BANGALORE F OR THE ASSESSMENT YEAR 2009-10. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS : AN AMOUNT OF RS.47 LAKHS RECEIVED IN CASH HAS BEE N TREATED AS INCOME. HENCE THE EXPENSES INCURRED, IN CONNECTION WITH THIS 2 ITA NO.992/BANG/2015 INCOME SHOULD BE TREATED AS REVENUE EXPENDITURE. R S.47 LAKHS HAS BEEN RECEIVED AS COMMISSION INCLUDING THE EXPENSES TO VACATE THE TENANTS. AN AMOUNT OF RS.18,10,000 PAID IN CASH FO R VACATING THE TENANTS SHOULD BE TREATED AS AN EXPENDITURE. 3. THERE WAS A SEARCH UNDER SECTION 132 OF THE I NCOME TAX ACT, 1961 (IN SHORT 'THE ACT') IN THE CASE OF M/S. DAVANAM CONSTRUCTION S PVT. LTD. ( DCPL ) ON 2.9.2010. DURING THE SEARCH AND SEIZURE OPERATION, CERTAIN TRANSACTIONS BETWEEN THE ASSESSEE AND M/S. DCPL WERE FOUND SHOWI NG RECEIPT OF UNACCOUNTED INCOME OF THE ASSESSEE. THE ASSESSEE I N ITS REVISED RETURN OF INCOME DECLARED INCOME OF RS.19,73,210. IN THE REA SSESSMENT PROCEEDINGS, THE ASSESSING OFFICER PROPOSED TO ASSESS THE AMOUNT OF RS.47 LAKHS RECEIVED BY THE ASSESSEE IN CASH FROM M/S. DCPL. THE ASSESSEE CONT ENDED BEFORE THE ASSESSING OFFICER THAT THOUGH HE RECEIVED RS.47 LAKHS FOR GET TING THE PROPERTY CLEARED FROM THE ENCROACHERS/OCCUPANTS HOWEVER, HE HAS SPEN T RS.18,10,000 FOR VACATING THE OCCUPANTS OF PROPERTY IN QUESTION AND THEREFORE THIS EXPENDITURE SHOULD BE ALLOWED AGAINST THE RECEIPT OF RS.47 LAKH S. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE THAT THE PAYME NTS MADE WERE ALL IN CASH AND NOT VERIFIABLE AS THE ASSESSEE HAS FAILED TO PR ODUCE THE PARTIES. THE ASSESSEE CHALLENGED THE ACTION OF THE ASSESSING OFF ICER BEFORE THE CIT (APPEALS) 3 ITA NO.992/BANG/2015 BUT COULD NOT SUCCEED. THE CIT (APPEALS) HAS CONFI RMED THE ACTION OF THE ASSESSING OFFICER REJECTING THE CLAIM OF EXPENDITUR E OF RS.18,10,000/-. 4. BEFORE US, THE LEARNED AUTHORISED REPRESENTA TIVE SUBMITTED THAT THE ASSESSEE IS DEALING IN REAL ESTATE AND RECEIVED A S UM OF RS.47 LAKHS FROM M/S. DCPL WHICH TOOK THE PROPERTY ON LEASE FROM M/S. RAO BAHADUR B.P. ANNASAMY MUDALIAR CIES PUBLIC CHARITIES TRUST. THE ASSESSEE CLAIMED TO HAVE NEGOTIATED THE SETTLEMENT BETWEEN THE PARTIES AND SINCE THERE WERE ILLEGAL TENANTS WHO WERE RUNNING SMALL TIME BUSINESSES FOR LONG TIME, M /S. DCPL ENTERED INTO A CONTRACT WITH THE ASSESSEE TO GET THE VACANT LAND P OSSESSION OF THE PROPERTY. CONSEQUENTLY, THE ASSESSEE NEGOTIATED WITH THE TENA NTS AND RECEIVED RS.47 LAKHS FROM M/S. DCPL. THE ASSESSEE HAS IN TURN PAI D A SUM OF RS.18,10,000 TO THE TENANTS AS A COMPENSATION TO VACATE THE PROPERT Y ILLEGALLY OCCUPIED BY THESE TENANTS. THUS THE LEARNED AUTHORISED REPRESEN TATIVE HAS SUBMITTED THAT THE SAID EXPENDITURE IS ALLOWABLE AGAINST RS.47 LAK HS AS THE ASSESSEE HAS RECEIVED ONLY NET AMOUNT AFTER PAYMENT OF RS.18,10, 000 TO THE TENANTS. THE ASSESSING OFFICER INSTEAD OF VERIFYING THE CLAIM BY SUMMONING THE PERSONS AS WELL AS OTHER RELEVANT PARTIES HAS REJECTED THE CLA IM OF THE ASSESSEE ON THE GROUND THAT THE CLAIM IS NOT VERIFIABLE AS THE ASSE SSEE DID NOT PRODUCE THE 4 ITA NO.992/BANG/2015 PARTIES BEFORE THE ASSESSING OFFICER. THE LEARNED AUTHORISED REPRESENTATIVE SUBMITTED THAT IT IS BEYOND THE CONTROL OF THE ASSE SSEE TO PRODUCE THESE THIRD PARTIES BEFORE THE ASSESSING OFFICER. THUS THE LEA RNED AUTHORISED REPRESENTATIVE HAS SUBMITTED THAT WHEN THE ASSESSEE HAS FURNISHED ALL THE RELEVANT DETAILS INCLUDING THE RECEIPTS OF THE PAYM ENTS, THEN THE ASSESSING OFFICER SHOULD HAVE ALLOWED THIS CLAIM OF EXPENDITU RE. HE HAS RELIED UPON THE RELEVANT DETAILS AS WELL AS RECEIPTS ISSUED BY THES E PARTIES. 5. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUBMITTED THAT THE ENTIRE PAYMENT IS IN CASH AND TH E ASSESSEE HAS FAILED TO PRODUCE THESE PARTIES FOR VERIFICATION. THEREFORE THE PAYMENT IN QUESTION IS NOT VERIFIABLE FROM THE RECORD PRODUCED BY THE ASSE SSEE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AS WELL AS CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS CLAIMED TO HAV E BEEN PAID RS.18,10,000 TO TEN TENANTS WHO WERE OCCUPYING THE PROPERTY IN QUES TION ILLEGALLY. THE SAID PAYMENT WAS CLAIMED BY THE ASSESSEE TO HAVE BEEN MA DE ON BEHALF OF M/S. DCPL FOR GETTING THE PROPERTY VACATED FROM THE TENA NTS AND THEREFORE THE 5 ITA NO.992/BANG/2015 ASSESSEE RECEIVED TOTAL AMOUNT OF RS.47 LAKHS FOR T HIS PURPOSE. THE ASSESSEE PRODUCED THE DETAILS OF THESE PAYMENTS AND NAME OF THE PARTIES AS UNDER : SL. NO. NAME RS. 1. A.D. BHASKAR 2,00,000 2. RAMA REDDY 1,50,000 3. RAMACHANDRA GOWDA 1,80,000 4. LIYAZ AHMED 1,75,000 5. AMALAMMA 1,60,000 6. PUTTASWAMY 1, 95,000 7. PRABHAKARAN 1,90,000 8. SATTAR 2,00,000 9. PURUSHOTTAMAN 1,60,000 10. SELVARAJ 2,00,000 18,10,000 WE FURTHER NOTE THAT THE ASSESSEE HAS FILED RECEIPT S FROM ALL THE TEN PERSONS AS WELL AS CONFIRMATION FROM PERSON NAMELY MR. SATTAR WHO HAS RECEIVED RS.2 LAKHS. ONCE THE ASSESSEE HAS CLAIMED TO HAVE PAID THESE AMOUNTS TO THE ALLEGED TENANTS FOR VACATING THE PROPERTY IN QUESTI ON THEN IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO CONDUCT A FURTHER ENQ UIRY TO VERIFY THE CLAIM OF THE ASSESSEE. WE FIND SUBSTANCE IN THE CONTENTION OF THE ASSESSEE THAT THE PRODUCTION OF THESE PARTIES IS BEYOND THE CONTROL O F THE ASSESSEE AND THEREFORE THE ASSESSING OFFICER WAS REQUIRED TO SUMMON THESE PARTIES PROVIDED THE ASSESSEE FURNISHED THE RELEVANT DETAILS AND ADDRESS ES OF THESE PARTIES. SINCE A 6 ITA NO.992/BANG/2015 PROPER ENQUIRY HAS NOT BEEN CONDUCTED BY THE ASSESS ING OFFICER IN THIS REGARD, THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, WE SET ASIDE THIS ISSUE TO THE RECORD OF THE ASSESSING OFFICER FOR CONDUCTING A PROPER ENQUIRY SUBJECT TO FURNISHING OF ALL THE RELEVANT DETAILS (ADDRESSES O F THESE PARTIES) BY THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSING OFFICER S HALL AFFORD AN OPPORTUNITY OF HEARING TO THE ASSESSEE BEFORE PASSING A FRESH ORD ER ON THIS ISSUE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30 TH DAY MARCH, 2016. SD/ - (ABRAHAM P GEORGE) ACCOUNTANT MEMBER SD/ - (VIJAY PAL RAO) JUDICIAL MEMBER DATED, THE 30 TH MARCH, 2016. *REDDY GP / DS / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE.