Shri K. Janardhan, CHENNAI V. The Joint CIT, CHENNAI

ITSSA 24/CHNY/2013

• Counselvise Citation: [2014] 122 COUNSELVISE.COM (IT) 0130 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 21 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 19-05-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-05-2014
• Assessment Year: misc
• Appeal Filed On: 28-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S SRIDHAR
• Keywords: Block assessment
• Section: 263

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . . . , !' , # $! % BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T(SS)A. NO. BLOCK PERIOD '& APPELLANT '('& RESPONDENT 21/MDS/2013 1991-92 TO 2001-02 SHRI K.GOPALAKRISHNAN, NO.66, ARCOT ROAD, KODAMBAKKAM, CHENNAI-600 024 [PAN: AFNPG 9151 N] THE JOINT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(1), CHENNAI 22/MDS/2013 1991-92 TO 2000-01 SHRI G.VISALAN, BISHOP JEROME NAGAR, CHINNA KADAI, KOLLAM-691 001 KERALA [PAN: AHCPG 3156 E] THE JOINT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(1), CHENNAI 23/MDS/2013 1991-92 TO 2000-01 & 2001-02 (PART) SHRI S.V.SUBRAMANIAM, NO.49, ARCOT ROAD, KODAMBAKKAM, CHENNAI-600 024 [PAN: ABCPS 0634 D] THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(1), CHENNAI 24/MDS/2013 1991-92 TO 2001-02 SHRI K.JANARDHAN, NO.23, PRINCE PLAZA APARTMENTS 3 RD FLOOR, 10 TH CROSS, THILLAI NAGAR, TRICHY-620 018 [PAN: ABXPV 0904 C] THE JOINT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-I(1), CHENNAI / APPELLANT BY : SHRI S.SRIDHAR , ADVOCATE / RESPONDENT BY : SHRI PRAMOD NANGIA,CIT / DATE OF HEARING : 19-05-2014 / DATE OF PRONOUNCEMENT : 19-05-2014 $) / O R D E R PER VIKAS AWASTHY, J.M: THESE FOUR APPEALS HAVE BEEN FILED BY THE ASSESSEES AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(CEN TRAL-I), IT(SS)A. NOS. 21, 22, 23 & 24/MDS/2013 2 CHENNAI PASSED U/S.263 OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) FOR THE BLOCK ASSESSMENT YEARS (AYS) 1991-92 TO 2001-02 IN THEIR RESPECTIVE CASES. ALL T HE FOUR ASSESSEES ARE COMMISSION AGENTS WITH SREE GOKULAM C HITS AND FINANCE COMPANY PVT. LTD. A SEARCH ACTION U/S.132 WAS CARRIED OUT BY THE DEPARTMENT AT THE BUSINESS/BRANCH OFFICE S OF M/S. SREE GOKULAM CHITS AND FINANCE COMPANY PVT. LTD. AND AT THE RESIDENCE OF SHRI A.M.GOPALAN ON 28-11-2000. DURIN G SEARCH ACTION, IT TRANSPIRED THAT EMPLOYEES AND AGENTS OF SREE GOKULAM CHITS AND FINANCE COMPANY PVT. LTD. WERE IN RECEIPT OF COMMISSION THAT WAS NOT DISCLOSED FOR TAX PAYMENT. CASES OF THE AGENTS/EMPLOYEES WERE NOTIFIED TO THE ASSESSING OFF ICER, CENTRAL-I, CHENNAI FOR COMPLETING BLOCK ASSESSMENTS. IN PURSU ANCE THEREOF, NOTICE U/S.158BD OF THE ACT WERE ISSUED TO THE ASSE SSEES, AND THE ASSESSEES WERE REQUIRED TO FILE RETURN OF UN-DISCLO SED INCOME. THE ASSESSEES OFFERED COMMISSION RECEIPTS ON ACTUAL RECEIPT BASIS. THE ASSESSING OFFICER ALLOWED 50% DEDUCTION TOWARDS INCIDENTAL EXPENDITURE FROM THE GROSS COMMISSION RE CEIVED BY THE RESPECTIVE ASSESSEES. THE COMMISSIONER OF INCOME T AX INITIATED PROCEEDINGS U/S.263 AND DIRECTED THE ASSESSING OFFI CER TO BRING TO TAX BALANCE 50% OF THE COMMISSION RECEIPTS ALLOWED AS EXPENDITURE FOR EARNING THE COMMISSION. IT(SS)A. NOS. 21, 22, 23 & 24/MDS/2013 3 AGGRIEVED BY THE ORDER OF COMMISSIONER OF INCOME TA X, THE ASSESSEES HAVE COME IN APPEAL BEFORE THE TRIBUNAL. 2. SHRI S.SRIDHAR, APPEARING ON BEHALF OF THE ASSES SEES SUBMITTED THAT, THE CO-ORDINATE BENCH OF THE TRIBUN AL IN THE CASE OF ONE OF THE SIMILARLY SITUATED ASSESSEE HAS SET ASID E THE REVISION ORDER U/S.263 PASSED BY COMMISSIONER OF INCOME TAX. THE LD.AR PLACED ON RECORD A COPY OF THE ORDER IN IT(SS)A NO.16/MDS/2012 IN THE CASE OF SHRI K.VENUGOPAL VS. JCIT DECIDED ON 13 TH MARCH, 2013 . 3. ON THE OTHER HAND, SHRI PRAMOD NANGIA, APPEARING ON BEHALF OF THE REVENUE SUPPORTED THE IMPUGNED ORDER. HOWEV ER, THE LD.DR WAS UNABLE TO CONTROVERT THE SUBMISSIONS MADE BY THE LD.AR. 4. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BEL OW, AS WELL AS THE DECISION OF THE CO-ORDINATE BENCH OF THE TRIBUN AL RELIED UPON BY THE LD.COUNSEL PERUSED. WE FIND THAT THE ISSUE IN PRESENT APPEALS IS IDENTICAL TO THE ONE ADJUDICATE BY THE CO-ORDINA TE BENCH OF THE IT(SS)A. NOS. 21, 22, 23 & 24/MDS/2013 4 TRIBUNAL IN THE CASE OF SHRI K.VENUGOPAL VS. JCIT (SUPRA). THE RELEVANT EXTRACT OF THE SAID ORDER IS RE-PRODUCED H EREIN BELOW: 4. ON HEARING BOTH SIDES, WE FIND THAT THE REASON POINTED OUT BY THE COMMISSIONER OF INCOME-TAX TO SET ASIDE THE ASSESSMENT IS NOT JUSTIFIED. THE ASSESSEE HAS RETUR NED INCOME BY WAY OF COMMISSION IN THE BLOCK RETURN FILED BY H IM. WHILE COMPLETING THE BLOCK ASSESSMENT, IN THE ABSENCE OF DETAILS, THE ASSESSING OFFICER HAS ALLOWED 50% THEREOF AS PROBAB LE EXPENDITURE TO EARN SUCH COMMISSION. IT IS A WELL SETTLED PROPOSITION OF FACT THAT EARNING OF INCOME IS ALWAY S AT THE COST OF EXPENDITURE. OTHERWISE, THE INCOME MUST BE A WI NDFALL OR GRATUITOUS. IN THE PRESENT CASE, THE ASSESSEE EARN ED INCOME BY WAY OF COMMISSION. COMMISSION INCOME CANNOT BE E ARNED WITHOUT ANY EFFORTS AND EXPENDITURE. THE FACT BEIN G SO, IT WAS IN THE INTERESTS OF JUSTICE THAT THE ASSESSING OFFICER HAD TO ALLOW CERTAIN AMOUNT BY WAY OF EXPENDITURE IN THE HANDS O F THE ASSESSEE TO EARN THE COMMISSION INCOME RETURNED BY IT. THE ASSESSING OFFICER, IN THE ABSENCE OF EXACT DETAILS AND PARTICULARS, MADE A REASONABLE ESTIMATE AND HELD TH AT 50% OF THE GROSS COMMISSION INCOME COULD BE REASONABLY TRE ATED AS THE CORRESPONDING EXPENDITURE. ACCORDINGLY, HE ALL OWED 50% OF THE GROSS COMMISSION AS EXPENDITURE. 5. WE DO NOT FIND ANY INFIRMITY OR ERROR IN ABOVE O RDER PASSED BY THE ASSESSING OFFICER. AT ANY RATE THE VIEW TAKEN BY THE ASSESSING OFFICER IS ALWAYS POSSIBLE. THEREFORE, 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. IT(SS)A. NOS. 21, 22, 23 & 24/MDS/2013 5 6. AS THE ORDER PASSED BY THE ASSESSING OFFICER CAN NOT BE HELD TO BE ERRONEOUS, WE NEED NOT GO INTO THE NEXT LIMB OF SECTION 263 OF THE ACT, TO SEE WHETHER THE ORDER WAS PREJUD ICIAL OR NOT. THIS IS BECAUSE THE JURISDICTION TO INVOKE SECTION 263 IS VESTED ON THE COMMISSIONER OF INCOME-TAX ONLY ON THE SATIS FACTION OF THE TWIN CONDITIONS OF ERROR AS WELL 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 S ET ASIDE THE REVISION ORDER PASSED BY THE COMMISSIONER OF INCOME -TAX. RESPECTFULLY FOLLOWING THE SAME, THE APPEALS OF TH E ASSESSEES ARE ALLOWED AND THE IMPUGNED ORDERS IN TH E RESPECTIVE APPEALS ARE SET ASIDE. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON MONDAY, THE 19 TH MAY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( !' ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) / VICE PRESIDENT ! '# / JUDICIAL MEMBER $ /CHENNAI, %'& /DATED: 19 TH MAY, 2014 TNMM ''(!)*+* /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ' ' ,-. /CIT(A) 4. ' ' , /CIT 5. */0!!12 /DR 6. 0345 /GF