P.M.Nanoo, Mumbai V. ACIT, CHENNAI

ITSSA 15/CHNY/2013

• Counselvise Citation: [2013] 121 COUNSELVISE.COM (IT) 9667 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 05-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-12-2013
• Assessment Year: misc
• Appeal Filed On: 17-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: VENUGOPAL C NAIR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI S. S. GODARA, JUDICIAL MEMBER] I.T.(SS)A.NO.15/MDS/2013 BLOCK PERIOD 1.4.1999 TO 28.11.2000 SHRI P.M.NANOO 401-402 ASIANA CHS KALPAK ESTATE 14, S.M. ROAD, ANTOP HILLS MUMBAI 400 037 VS THE ASSTT. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE I(1) CHENNAI [PAN AGIPP 1636M ] (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI VENUGOPAL C. NAIR, CA RESPONDENT BY : SHRI SHAJI P. JACOB, ADDL. CIT DATE OF HEARING : 03-12-2013 DATE OF PRONOUNCEMENT : 05-12-2013 O R D E R PER S.S.GODARA, JUDICIAL MEMBER THIS APPEAL FILED BY THE ASSESSEE FOR THE BLOCK PERIOD 1.4.1999 TO 28.11.2000, IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX-I, CHENNAI, DATED 30.3.2 012, PASSED IN C.NO.1523/17/C-I/2011-12, IN PROCEEDINGS UNDER 263 OF THE INCOME- TAX ACT, 1961 (IN SHORT THE ACT). I.T.(SS)A.NO.15/13 :- 2 -: 2. IN THE COURSE OF HEARING, THE ASSESSEE STRONGLY AR GUES THAT THE CIT HAS WRONGLY REVISED THE ASSESSMENT DATED 2 9.5.2009 FRAMED BY THE ASSESSING OFFICER AFTER TERMING IT AS ERRON EOUS CAUSING PREJUDICE TO THE INTEREST OF THE REVENUE. IT HAS B EEN SUBMITTED BY THE ASSESSEE THAT SINCE THE CIT(A) HAD ALREADY DECLARED 158BD NOTICE DATED 24.5.2005 SERVED ON HIM ON 21.5.2007 AS ILLEG AL AND THAT THERE WAS NO UNDISCLOSED INCOME IN HIS CASE, THE CIT CO ULD NOT HAVE REVISED THE ASSESSMENT FRAMED U/S 158BD OF THE ACT . ACCORDINGLY, HE PRAYS FOR ACCEPTANCE OF THE APPEAL. 3. THE REVENUE SEEKS TO JUSTIFY THE ORDER PASSED BY TH E CIT BY EXERCISING JURISDICTION U/S 263 OF THE ACT. 4. THE ASSESSEE IS AN INDIVIDUAL. HE IS AN EMPLOYE E OF M/S SREE GOKULAM CHITS & FINANCE COMPANY PVT. LTD. THE ASSESSEE HAD BEEN RECEIVING COMMISSION IN LIEU OF SERVICES RENDE RED TO THE AFORESAID FINANCE COMPANY. 5. ON 28.11.2000, A SEARCH HAD BEEN CONDUCTED IN THE BUSINESS/OFFICE/RESIDENCE/BRANCH OFFICE OF SHRI A.M .GOPALAN AND M/S SREE GOKULAM CHITS & FINANCE COMPANY PVT. LTD. IN COURSE THEREOF, THE DEPARTMENT CAME TO KNOW THAT THE EMPLOYEES OF T HE AFORESAID I.T.(SS)A.NO.15/13 :- 3 -: FINANCE COMPANY HAD BEEN RECEIVING COMMISSIONS AND DID NOT OFFER THE SAME AS INCOME. THEREAFTER, ON 31.7.2003, ASSESSME NT U/S 158BC WAS FRAMED IN THE CASE OF THE COMPANY. ON 24.5.200 5, A NOTICE U/S 158BD OF THE ACT STOOD ISSUED TO THE ASSESSEE WHIC H WAS SERVED ON HIM ON 21.5.2007. 6. IT IS TO BE SEEN FROM THE CASE FILE THAT AFTER SERV ICE OF 158BD NOTICE, THE ASSESSING OFFICER FRAMED ASSESSMENT IN ASSESSEES CASE U/S 158BD R.W.S 144 VIDE ORDER DATED 29.5.2009 HOLD ING THAT SINCE HE HAD NOT FILED NECESSARY DETAILS OF COMMISSION RECEI VED, THE UNDISCLOSED INCOME IN QUESTION HAD TO BE COMPUTED AT ` 2,55,750/-. THE AO ALSO ALLOWED 50% ADHOC EXPENDITURE AGAINST T HE AFORESAID COMMISSION RECEIPTS. 7. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL ON 29.7.2 009 BEFORE THE CIT(A). IN COURSE THEREOF, HE NOT ONLY CHALLENGED THE ADDITION OF UNDISCLOSED INCOME ON MERITS, BUT ALS O LEGALITY OF SECTION 158BD NOTICE. ON 27.2.2012, THE ASSESSEES BOTH C ONTENTIONS STAND ACCEPTED BY THE CIT(A) AS UNDER: 5. THE LD. A.R. S/SHRI S. PIRANANAYAGAM AND P.V.PA DMANABHAN APPEARED FOR THE APPELLANT. TWO ISSUES WERE RAISED. THE FIRST BEING THAT YEARWISE INCOME HAD NOT BEEN CONSIDERED BY THE ASSESSING OFFICER AND THE SECOND BEING THAT THE NOT ICES U/S 158BD WAS ISSUED ON 24.5.2005 BUT SERVED ON HIM ON 21.5.2 007 WHICH IS AFTER 2 YEARS. THEREFORE THE NOTICE IS BAD IN LAW A ND CONSEQUENTLY I.T.(SS)A.NO.15/13 :- 4 -: THE ORDER U/S 158BD IS ALSO VOID. A REMAND REPORT W AS CALLED FOR VIDE LETTER DATED. 8.3.2011. THE REMAND REPORT WAS RECEIVED ON 14.3.2011WHEREIN THE ASSESSING OFFICER HAD ARRIVED AT A TOTAL UNDISCLOSED INCOME OF RS.1,18,450/-. A COPY OF THIS REMAND REPORT WAS GIVEN TO SHRI P. V.PADMANABAN ON 30.8.2011. IN RESPONSE TO THIS REMAND REPORT, THE LD. A. R. AS WELL AS SHRI P .V.PADMANABAN APPEARED ON 10.2.2012 AND 27.2.2012. ACCORDING TO T HEM EVEN THE ASSESSMENT ORDER INDICATES THAT THE APPELL ANT IS ONLY A COMMISSION AGENT AND THERE IS NO OTHER INCOME. THE INCOME RECEIVED FALLS WITHIN THE EXEMPTION LIMITS FOR EACH YEAR. IN ADDITION, THEY ALSO SUBMITTED THAT THE REPORT IS SILENT ON T HE ISSUE REGARDING NOTICE. 6. I HAVE CONSIDERED THE FACTS OF THE CASE AND THE SUBMISSIONS OF THE LD. ARS. AS THE ASSESSING OFFICER HIMSELF STA TES, THE APPELLANT IS ONLY A COMMISSION AGENT AND FOR THESE 5 ASSESSME NT YEARS IF THE EXEMPTION LIMITS ARE TAKEN INTO CONSIDERATION T HERE WILL BE NO TAXABLE INCOME. THIS APART, THE ARGUMENTS RELATING TO THE ISSUES OF NOTICES WERE ALSO VALID. 7. THEREFORE THE APPEAL IS ALLOWED AND THE UNDISC LOSED INCOME DETERMINED AS PER THE ASSESSMENT ORDER IS HEREBY DI RECTED TO BE DELETED. IN THIS MANNER, THE ASSESSEE HAS SUCCEEDED IN ASSES SMENT PROCEEDINGS AND ONCE THE NOTICE U/S 158BD ITSELF H AS BEEN DECLARED AS NULL AND VOID, THE ENTIRE ASSESSMENT STANDS QUA SHED IN THE LOWER APPELLATE PROCEEDINGS. 8. COMING TO SECTION 263 PROCEEDINGS, IT TRANSPIRES TH AT ON 28.2.2012, THE CIT FORMED AN OPINION THAT SINCE THE ASSESSEES COMMISSION INCOME WAS IN THE NATURE OF UNDISCLOSED INCOME, AS PER ASSESSMENT ORDER DATED 29.5.2009(SUPRA), THE ASSESS ING OFFICER HAD WRONGLY ALLOWED 50% OF THE COMMISSION AS ADHOC EXPE NSES. I.T.(SS)A.NO.15/13 :- 5 -: ACCORDINGLY, HE ISSUED NOTICE TO THE ASSESSEE FOR REVISING ASSESSMENT U/S 263 OF THE ACT. A PERUSAL OF THE ORDER UNDER C HALLENGE REVEALS THAT THE ASSESSEE DID NOT APPEAR IN SECTION 263 PROCEED INGS AND THE CIT HAS DIRECTED THE ASSESSING OFFICER TO TAX THE BALAN CE 50% OF THE COMMISSION RECEIPTS ALSO AS ASSESSEES UNDISCLOS ED INCOME. THEREFORE, THE ASSESSEE IS IN APPEAL. 9. WE HAVE HEARD BOTH PARTIES AND PERUSED THE CASE FIL E. THE FACTUAL BACKDROP OF THE CASE ALREADY STANDS NARRATE D IN THE PRECEDING PARAS. WE REITERATE THAT IN THE PRESENT CASE, THE ASSESSMENT IN ASSESSEES CASE HAD BEEN FRAMED U/S 158BD R.W.S 14 4 AND IN APPEAL, THE CIT(A) HAS NOT ONLY HELD THAT THERE IS NO UNDI SCLOSED INCOME IN ASSESSEES CASE BUT ALSO THE VERY NOTICE U/S 158BD STANDS DECLARED AS NOT NULL AND VOID. THE ARGUMENT OF THE REVENUE THA T FINDINGS RE VALIDITY OF NOTICE ARE NOT VERY ELABORATE ARE NO R EASON TO DISCARD THE SAME MERELY BECAUSE THEY ARE NOT IN SO MANY WORDS. THE NET EFFECT OF THE CIT(A)S ORDER, IN OUR VIEW, IS THAT THE ASSESS MENT ITSELF STANDS NULLIFIED. THAT BEING THE CASE, NOTHING SURVIVES FOR THE CIT TO REVISE THE ASSESSMENT IN VIEW OF SECTION 263(1)(C) OF THE ACT. ACCORDINGLY, WE ACCEPT THE CONTENTIONS OF THE ASSESSEE AND HOLD THAT THE ORDER I.T.(SS)A.NO.15/13 :- 6 -: UNDER CHALLENGE PASSED BY THE CIT CANNOT BE SUSTAIN ED IN THE EYES OF LAW. 10. ASSESSEES APPEAL STANDS ALLOWED. ORDER PRONOUNCED ON THURSDAY, THE 5 TH OF DECEMBER, 2013, AT CHENNAI SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (S. S. GODARA) JUDICIAL MEMBER DATED: 5 TH DECEMBER, 2013 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR