ACIT, CHENNAI V. A..M.Sujatha, Kerala

ITSSA 21/CHNY/2014

• Counselvise Citation: [2015] 122 COUNSELVISE.COM (IT) 0626 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 17-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: misc
• Appeal Filed On: 11-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G T VENKATESWARA RAO
• Keywords: Revision of order; Block assessment
• Section: 143(3); 263; 132

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , ! , ' #$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ I.T(SS).A NO.21/MDS/2014 ( ) THE ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE 1(1), CHENNAI ( %& /APPELLANT) VS SMT. A.M. SUJATHA MANIAMCHERA HOUSE MUDICODE, PATTIKADU P.O. KERALA 680 654. [PAN: AAAPU 6032G] ( !'%& /RESPONDENT) ! ' # / APPELLANT BY : G.T. VENKATESWARA RAO, CIT. %& ! ' # / RESPONDENT BY : NONE ' ()* ' +,- /DATE OF HEARING : 17.03.2015 ./01 ' +,- /DATE OF PRONOUNCEMENT : 17.03.2015 ( / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDE R OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, CHENNAI, D ATED 23.09.2014, RAISING THE FOLLOWING GROUND:- I.T(SS) A.NO.21/MDS/2014. :- 2 -: THE LEARNED CIT(A) HAS ERRED IN RELYING ON THE OR DERS OF THE HONBLE ITAT IN NO. 24/MDS/2013 DATED 19.05.2014 ( IN RESPECT OF OTHER EMPLOYEES OF M/S. SREE GOKULAM CHI TS AND FINANCE COMPANY P. LTD) AND IT(SS)A NO.16/MDS/2012 DATED 13.03.2013 ( IN THE CASE OF MR. K. VENUGOPAL), SETT ING ASIDE THE ORDER OF THE CIT PASSED U/S. 263 OF THE INCOME TAX ACT. 2. NONE APPEARED ON BEHALF OF THE ASSESSEE. WE TAKE UP THE APPEAL TO ADJUDICATE AFTER HEARING THE LD. DEPARTME NTAL REPRESENTATIVE. THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A COMMISSION AGENT WITH SHRI GOKULAM CHITS AND FINANC E COMPANY PRIVATE LTD. SEARCH ACTION U/S 132 WAS CARRIED OUT IN THE CASE OF M/S. SREE GOKULAM CHITS & FINANCE COMPANY PVT. LTD. ON 2 8-11-2000. THE SEARCH REVEALED THAT EMPLOYEES AND / OR AGENTS OF S RI GOKULAM CHITS & FINANCE COMPANY PVT. LTD. WERE IN RECEIPT OF COMMIS SION, A PART OF WHICH HAS NOT BEEN ADMITTED BEFORE THE DEPARTMENT. THE A.O. ISSUED NOTICE U/S 158BD AND THE CASE WAS TAKEN UP FOR SCRU TINY. THE A.O. VIDE ORDER DATED 30-04-2009 ALLOWED 50% AD-HOC EXPE NDITURE AGAINST THE COMMISSION RECEIPTS AS ALSO THE BASIC EXEMPTION TO THE EXTENT THE INCOME WAS NOT TAXABLE IN THE RESPECTIVE ASSESSMENT YEARS AND ARRIVED AT AN UNDISCLOSED INCOME OF G95,000/-. SUBSEQUENTL Y, COMMISSIONER OF INCOME TAX, CENTRAL-I, CHENNAI PASSED ORDER U/S 263 AND SET ASIDE THE ORDER DATED 29/05/2009 WITH A DIRECTION TO THE A.O. TO BRING TO TAX THE BALANCE 50% OF COMMISSION RECEIPTS AND ALSO CON SIDER THE I.T(SS) A.NO.21/MDS/2014. :- 3 -: WITHDRAWAL OF THE BASIC EXEMPTION GRANTED EARLIER. ACCORDINGLY, THE A.O. VIDE ORDER U/S 263/158 BD R.W.S. 143(3) DATED 20-3-2013 TREATED THE ENTIRE AMOUNT OF COMMISSION AT G5,24,399/- AS UNDISCLOSED INCOME AND WITHDREW THE BASIC EXEMPTION GRANTED BY THE EARLIER ORDER. AGGRIEVED BY THIS ACTION OF THE ASSESSING O FFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCO ME TAX (APPEALS). 3. THE COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED O N APPEAL THAT THE ISSUE IS COVERED BY THE ORDER OF THE TRIBU NAL IN IT(SS)A NO.16/MDS/2012 DATED 13 TH MARCH, 2013 IN THE CASE OF MR. K. VENUGOPAL AND HE HAS OPINED THE SAME BY SETTING AS IDE THE ORDER U/S.263, WHICH IS AS UNDER:- 6. I HAVE PERUSED THE HON'BLE ITAT ORDER IN THIS REGARD. IT IS CLEAR FROM THE ABOVE THAT THE HON'BL E ITAT HAS OBSERVED THAT THE A.O., IN THE ABSENCE OF EXACT DETAILS AND PARTICULARS WITH REGARD TO EXPENDITURE, MADE A REASONABLE ESTIMATE OF 50% OF THE GROSS COMMISSION RECEIVED. THEREFORE, THE HON'BLE ITAT HAS OPINED THAT THERE IS NO INFIRMITY OR ERROR IN THE ORDER PASSED BY THE A.O. IN THE INSTA NT CASE, THE ISSUE INVOLVED IS THE SAME AND HENCE THE OBSERVATIONS MADE BY THE HON'BLE ITAT ARE SQUARELY APPLICABLE. EVEN THOUGH THE APPELLANT HAS NOT CONTESTED AGAINST THE ORDER U/S 263 OF THE CIT, CENTRAL-I, THE FACTS OF THE INSTANT CASE ARE IDENTI CAL WITH THAT OF THE CASES DECIDED BY THE HON'BLE ITAT, CHENNAI A BENCH. I.T(SS) A.NO.21/MDS/2014. :- 4 -: THUS, THE COMMISSIONER OF INCOME TAX (APPEALS) OBSE RVED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE . AGAINST THIS, THE REVENUE IS IN APPEAL. 4. WE HAVE HEARD THE DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORDS. IN OUR OPINION, THE ISSUE IS SQUARELY COVERED BY THE ORDER OF THE ITAT CITED (SUPRA) WHERE IT IS OBSERVED THA T:- THIS APPEAL IS FILED BY THE ASSESSEE. THE APPEAL I S DIRECTED AGAINST THE REVISION ORDER PASSED BY THE COMMISSIONER OF INCOME-TAX, CENTRAL-I AT CHENNAI ON 30-3- 2012. THE REVISION ORDER UNDER SECTION 263 OF THE INCOME-TAX ACT, 1961 HAS BEEN PASSED IN THE CONTEXT OF THE BLO CK ASSESSMENT ORDER DATED 29-5-2009, PASSED UNDER SECT ION 143(3) READ WITH SECTION 158BD OF THE INCOME-TAX AC T, 1961. 2. ON EXAMINATION OF THE RECORDS, THE COMMISSIONER OF INCOME-TAX FOUND THAT THE ASSESSING OFFICER HAS ALL OWED 50% AS COMMISSION EXPENDITURE AGAINST THE COMMISSION IN COME RETURNED BY THE ASSESSEE. ACCORDING TO COMMISSIONE R OF INCOME TAX, THE UNDISCLOSED INCOME INCLUDES ANY MON EY WHICH HAS NOT BEEN OR WOULD NOT HAVE BEEN DISCLOSED AND H ENCE THE ENTIRE COMMISSION AMOUNT IS TO BE TREATED AS UNDISC LOSED INCOME. IT IS THE CASE OF THE COMMISSIONER THAT TH E COMMISSION RECEIVED BY THE ASSESSEE CONSTITUTED THE UNDISCLOSED INCOME AND, THEREFORE, THERE WAS NO GRO UND FOR THE ASSESSING OFFICER TO ALLOW EXPENDITURE AT 50% OF TH E TOTAL RECEIPTS. THE COMMISSIONER OF INCOME TAX HOLDS THE VIEW THAT THE ASSESSING OFFICER SHOULD NOT HAVE ALLOWED 50% O F THE COMMISSION AS PROBABLE EXPENDITURE THAT MIGHT HAVE BEEN INCURRED BY THE ASSESSEE TO EARN SUCH COMMISSION. IT IS TO MAKE GOOD THE ABOVE ERROR COMMITTED BY THE ASSESSIN G OFFICER THAT THE COMMISSIONER OF INCOME TAX HAS SET ASIDE T HE ASSESSMENT ORDER AND DIRECTED THE ASSESSING OFFICER TO REDO THE ASSESSMENT IN ACCORDANCE WITH HIS DIRECTIONS. 3. THE ASSESSEE IS AGGRIEVED AGAINST THE ABOVE REVISION ORDER PASSED BY THE COMMISSIONER OF INCOME TAX AND THEREFORE, THIS APPEAL BEFORE US. I.T(SS) A.NO.21/MDS/2014. :- 5 -: 4. ON HEARING BOTH SIDES, WE FIND THAT THE REASON POINTED OUT BY THE COMMISSIONER OF INCOME TAX TO SE T ASIDE THE ASSESSMENT IS NOT JUSTIFIED. THE ASSESSEE HAS RETU RNED INCOME BY WAY OF COMMISSION IN THE BLOCK RETURN FIL ED BY HIM. WHILE COMPLETING THE BLOCK ASSESSMENT, IN THE ABSEN CE OF DETAILS, THE ASSESSING OFFICER HAS ALLOWED 50% THER EOF AS PROBABLE EXPENDITURE TO EARN SUCH COMMISSION. IT I S A WELL SETTLED PROPOSITION OF FACT THAT EARNING OF INCOME IS ALWAYS AT THE COST OF EXPENDITURE. OTHERWISE, THE INCOME MUS T BE A WINDFALL OR GRATUITOUS. IN THE PRESENT CASE, THE A SSESSEE EARNED INCOME BY WAY OF COMMISSION. COMMISSION INC OME CANNOT BE EARNED WITHOUT ANY EFFORTS AND EXPENDITUR E. THE FACT BEING SO, IT WAS IN THE INTERESTS OF JUSTICE THAT T HE ASSESSING OFFICER HAD TO ALLOW CERTAIN AMOUNT BY WAY OF EXPEN DITURE IN THE HANDS OF THE ASSESSEE TO EARN THE COMMISSION IN COME RETURNED BY IT. THE ASSESSING OFFICER, IN THE ABSE NCE OF EXACT DETAILS AND PARTICULARS, MADE A REASONABLE ESTIMATE AND HELD THAT 50% OF THE GROSS COMMISSION INCOME COULD BE RE ASONABLY TREATED AS THE CORRESPONDING EXPENDITURE. ACCORDIN GLY, HE ALLOWED 50% OF THE GROSS COMMISSION AS EXPENDITURE. 5. WE DO NOT FIND ANY INFIRMITY OR ERROR IN ABOVE ORDER PASSED BY THE ASSESSING OFFICER. AT ANY RATE THE V IEW TAKEN BY THE ASSESSING OFFICER IS ALWAYS POSSIBLE. THEREFOR E, IT IS NOT POSSIBLE TO HOLD THAT THE IMPUGNED BLOCK ASSESSMENT ORDER IS ERRONEOUS TO THE EXTENT POINTED OUT BY THE COMMISSI ONER OF INCOME TAX. 6. AS THE ORDER PASSED BY THE ASSESSING OFFICER CA NNOT BE HELD TO BE ERRONEOUS, WE NEED NOT GO INTO THE NE XT LIMB OF SECTION 263 OF THE ACT, TO SEE WHETHER THE ORDER WA S PREJUDICIAL OR NOT. THIS IS BECAUSE THE JURISDICTION TO INVOKE SECTION 263 IS VESTED ON THE COMMISSIONER OF INCOME TAX ONLY ON TH E SATISFACTION OF THE TWIN CONDITIONS OF ERROR AS WEL L AS PREJUDICE. IF ANY OF THE ELEMENT IS MISSING, THE COMMISSIONER OF INCOME TAX CANNOT REVISE AN ASSESSMENT ORDER. 7. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE SET ASIDE THE REVISION ORDER PASSED BY THE COMMISSIONER OF INCOME TAX. 8. IN RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. . 5. IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, W E ARE OF THE I.T(SS) A.NO.21/MDS/2014. :- 6 -: OPINION THAT THE LD. CIT(A) IS JUSTIFIED IN DELET ING THE ADDITION. ACCORDINGLY, WE CONFIRM THE ORDER OF THE LD. CIT(A) . 6. IN THE RESULT, THE IT(SS) NO.21/MDS/2014 IS DISMISS ED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIM E OF HEARING ON TUESDAY, THE 17TH OF MARCH, 2015 AT CHENNAI SD/- SD/- ( ! ) (CHALLA NAGENDRA PRASAD) ' / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER 23(* /CHENNAI. 45( /DATED:17.03.2015. KV 56 ' %7+89 :90+ /COPY TO: 1. !; APPELLANT 2. %& ! / RESPONDENT 3. ' <+ ( )/CIT(A) 4. ' <+ /CIT 5. 9)=> %7+7(?@ /DR 6. >AB C* /GF.