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TMI Blog2011 (12) TMI 408X X X X Extracts X X X X X X X X Extracts X X X X ..... d in favor of assessee. Regarding difference in commission in P and L a/c and TDS certificates - held that:- CIT(A) has considered the explanation, reconciliation and has given adequate factual findings explaining this discrepancy and as a consequence thereof sustained the addition to the tune of Rs. 1926640/-. In the absence of any contrary comments in remand report or the revenue arguments we see no infirmity in the order of CIT(A) in allowing part relief. Assessee is following mercantile system of accounting and thus the sum of Rs. 1926640/- having accrued in the year is to be taxed as the income of the assessee for the year under appeal. Claim of expenditure on account of commission and discount - dis allowance u/s 40(1)(is) - held that:- The material/information and confirmations have not been disputed to be of the business of the assessee i.e. real estate brokerage business. TDS is deducted and paid as per law which is substantiated. Revenue has not raised the ground of section 40(a)(ia) in its ground of appeal. Revenue except raising suspicions could not indicate any valid basis to reject these documentary evidences. - Decided in favor of assessee. - ITA No. 3874/Del/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly as made by Ld. AO and has further erred in sustaining the addition to the extent of Rs. 19,26,640/- on account of alleged difference between commission as per TDS certificate and commission as shown in the profit and loss account. 2. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in making a disallowance of Rs. 72,770/- out of commission expenses paid to Sh. Surinder Gupta, allegedly on account of the same being non verifiable. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in not deleting the addition fully as made by Ld. AO and has further erred in sustaining the addition to the extent of Rs. 5,20,023/- out of commissions expenses on account of the same being non verifiable. 4. That the cross objector craves the leave to ad, amend, modify, delete any of the ground(s) of cross objection before or at the time of hearing." 2. Brief facts are: Assessee is engaged in the business of real estate and claims to earn income by way of commission on booking of flats constructed by real estate developers. During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e their loss. The Ld. A/R has made all out attempts to produce the remaining documents and details in the application under clauses (b), (c) and (d) of rule 46A(1) after compiling, collecting and collating them from various quarters from page 38 to 799 of P.B. Since the AO had asked for such necessary evidences during the course of assessment proceedings, the appellant could not produce them on account of the fire accident which stands testified as above. Therefore, the appellants case falls under the clause (b) of Rule 46A(1). Similarly, such additional evidences are generic for disposal of all the grounds of appeal and thus are covered under the provisions of Rule 46A(1)(c). In submitting these documents at the appellate stage, sufficient opportunities were not provided during the regular assessment and as per clause (d) of Rule 46A(1), the principles of natural justice remain violated. All things considered then, the conditions prescribed under rule 46A(1)(b), (c) and (d) stand satisfied under the given facts and circumstances. Hence, as per my powers under Rule 46A(4) of the I.T. Rules, 1962, all of them are admitted for adjudication under those clauses of Rule 46A(1). 12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in reconciling the difference on account of commission declared in the PandL Account and collected as per the TDS certificates, and even though the appellant through his Ld. AR has submitted the requisite books of accounts and supportive documents to meet the AO's such objections, yet I am of the considered and firm view that such documentary evidences produced in the shape of books of accounts under Rule 46A, are not in themselves indispensable in determining and reconciling the difference of Rs. 2,43,72,392/-, simply because the TDS certificates are in themselves the authentic evidences (and those have not been found defective or unreliable by the AO herself either) and all of them were duly annexed with the return of income filed u/s 139(1). The AO has not declared them in genuine and has rather relied upon them herself in reaching out the impugned difference.. and thus the requisite and necessary reconciliation could possibly and cogently be made from such documents already on record. The very fact that the AO had made verifications of the assessee's transactions as revealed from the TDS certificates acquired from the realtors like M/s RPS Associates and M/s Omaxe Limited u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36 to 76 of the P.B. read with the figures of sales tax shown in the PandL account and computation of income for the assessment year 2006-07. I find the contentions of the Ld. AR in this context to be quite appropriate and hence dependable. Further, I have examined the confirmed copies of account of Triveni Infrastructure along with the letter dated 15-12-2009 at pages 114-120 of the P.B. along with computation of income, acknowledgement of return balance-sheet and profit and loss account of assessment year 2008-09 reflecting the income of Rs. 146 lacs from M/s Triveni Infrastructure in financial year 2007-08 at pages 138 of the P.B. I have also studied the MOU with M/s Triveni Infrastructure along with sample booking from (PB 139-140) and the details of allotment with allotment letter made in the financial year 2007-08 (pages 141-250 of the P.B.). All these documentary evidences on record show that income by virtue of such advances from M/s Triveni Infrastructure did not crystallize in the year under reference, though TDS was made as per the provisions of section 194H of the Income tax Act, 1961. Since the appellant has shown such income in the assessment year 2008-09, the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are before us, revenue has come up in appeal and the assessee is in cross objection on respective grievances. 3. Ld counsel for the assessee at the outset contended that revenue has not raised any specific ground challenging action of CIT(A) u/r 46A admitting the additional evidence and they have challenged his orders on merits only. Ld DR in the counter contends that the first ground raised by revenue talk about the AOs objection to the additional evidence, this amounts to raising the ground against admission of additional evidence. Though in specific terms a separate ground has not been taken, the overall ground 1 may be construed to agitate the admission of additional ground. 3.1. After hearing both the parties we are inclined to accept the contention of ld CIT (DR) that the issue of additional evidence is built in the ground taken. Revenue should have been diligent in taking a specific ground about additional evidence. 4. Adverting to merits, ld. CIT (DR) contends that assessee was deliberately avoiding the production of a/c books and incident of fire is a make believe story to avoid the scrutiny of books. The report from fire brigade was not produced before the AO, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course of assessment proceedings. Thereafter by hectic follow-up and efforts additional evidence was procured from third parties which was filed as additional evidence. CIT(A) justifiably held that the assessee, was thus prevented by sufficient cause in producing the required compliance before AO due to the fire which is certified by fire authorities of Faridabad. 5.2. Along with the applications for additional evidence assessee submitted the bill raised by the Fire Department for extinguishing the fire, memorandum issued by the fire station office, receipt issued by fire station dept. and all these details were obtained with great efforts on 04/05/2010 5.3. There is no justification in revenues raising doubts about the authenticity of report. AO neither cross verified the fire report not conducted any further enquiry. By way of surmises doubts has been raised on Fire Department's report to create prejudice about the veracity of report. The report being from competent Fire authority which is a Govt. agency, same can not be held to unreliable without bringing on record adequate material. CIT(A) relying on this report and after considering the AOs objections and remand report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i) Service tax-due to accounting difference between assessee and deductors =Rs. 28,66,619 (a) Assessee submitted bill wise detail (PB 48) showing gross amount of bill, service tax included thereon, the net billing amount which tallies with the amount shown in the PandL A/c (PB 36) (b) Copies of all bills (PB 49-73) (c) Copies of service tax ledger account (PB 74-75),showing service tax payable during the year amounting to Rs. 28,66,619/-. (d) Detail relating to a few bills correlated with TDS certificates to show that TDS has been deducted on gross amount of the bill including service tax (PB 76) (e) Amount of Rs. 44,30,198/- is attributable to income of previous years on which TDS has been deducted in this year. The income has been already (f) Party-wise reconciliation of income as per TDS certificates and as per PandL A/c for the year ended 31.03.2007 showing TDS deducted on opening balances of parties amounting to Rs. 44,30,198/- (PB 37) (g) Copies of ledger account of M/s Omaxe RPS, Omaxe and BPTP for the year ended 31.03.2006 showing balances outstanding for the receipt, which were received during the year and on which TDS was deducted (PB 107-110). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the company, the assessee has failed to complied with the provisions of chapter XVII of the I.T. Act, therefore, the allowability of expenses on account of commission discount payment in view of provisions of section 40a(ia) of the I.T. act puts a question mark on the payment on this account. The assessee has failed to produce the books of accounts for verification of expense. In that situation the claim of the assessee regarding expenses on account of commission discount payment remained unverified. In view of the above, the expenses of Rs. 64,13,493/- on account of commission discount paid are disallowed and added to the income of the assessee for the year under consideration. For the reasons discussed above, penalty proceedings u/s 271(1) of the I.T. act are initiated for concealment of particulars of income and furnishing inaccurate particulars of income. 8.2. Ld. CIT(A) considered this issue as under "31. I have carefully considered the contentions of the Ld. AR and perused the impugned order of assessment. I have also gone into the nature of real estate business carried on by the realtors. The Ld. AR has very cogently explained the nature of commission discount allowe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with in definition "commission or brokerage" as defined u/s 194H. Without prejudice to above, it is submitted that if it is held that section 40(a)(ia) is applicable, a sum of Rs. 12,81,316/- would be the sum in respect of which the tax was not deducted/deposited. In fact all these details and evidences could not be filed before Ld. AO due to various reasons as submitted in petition for admission for additional evidences also. One of the reasons was that Ld. AO asked about these details vide her questionnaire dated 03-12-2009 and assessment was framed on 23-12-2009 and thus time allowed was not sufficient. The other reason was that due to part of the books of accounts having been destroyed, it was not possible to compile/collate all the details and data to be furnished before Ld. AO with in such short span of time. Your goodself would kindly appreciate that when books of accounts were not available, there is no option with the assessee except to compile the record with the help of last year's ledger, copy of cheque books, copy of bank statement, copy of TDS Certificate and TDS returns, booking records of the developer companies and that is what has been done by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The fire department officer could have been called. AO has not carried out any enquiry from his side. The report of a govt. department which is substantiated by payment of corresponding service charges cannot be brushed aside unless there is material against it. In these circumstances, CIT(A)'s finding being based on the facts is to be upheld. 11.1. Besides, non-production of books do not stop the process of Income tax Act; in this eventuality best judgment assessment u/s 144 is the alternative. AO in any case relied on the assessee's audit statements and passed the order u/s 143(3). Consequently, no interference is called in the order of CIT(A), who decided the issue on merits after considering the material available on record. 11.2. CIT(A) having properly admitted the additional evidence and forwarded to AO for remand has followed a proper process prescribed by the Act. 11.3. It cannot be assumed by revenue that CIT (A) should have carried out this or that kinds of investigation. Having followed the due course prescribed by the law, we are unable to hold that CIT(A) did not conduct proper enquiries. 11.4. No useful purpose will be served in setting aside the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he profit and loss account for the A.Y. 2008-09. 12.4. It is further seen that an aggregate amount of Rs. 4430198/- was the amount received in the year under appeal but which was pertaining to earlier year and that is why there was no question of this amount accounting for as income in the year under appeal. 12.5. Other component of Rs. 1229345/- represents initial commission received by the assessee on booking, due to cancellation of such bookings, such commission was to be reversed. This commission was not be accounted for as income in such peculiar facts and circumstances due to cancellation; this fact has not been controverted by AO is his remand report. CIT(A) has considered the explanation, reconciliation and has given adequate factual findings explaining this discrepancy and as a consequence thereof sustained the addition to the tune of Rs. 1926640/-. In the absence of any contrary comments in remand report or the revenue arguments we see no infirmity in the order of CIT(A) in allowing part relief. Assessee is following mercantile system of accounting and thus the sum of Rs. 1926640/- having accrued in the year is to be taxed as the income of the assessee for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3). It is not the case of department that during the assessment assessee did not co-operate, documents in his possession were filed and assessment record of A.Y. 2006- 07 was available.. From record it emerges that assessee submitted possible evidence, reconciliation and third party confirmations, which could be obtained before assessment. 15. The evidence and information is forwarded by CIT(A) to AO. The income tax act contemplates that the AO being entrusted with the job of assessment will verify the information from departmental record, summoning third parties and examining the evidence. If further time is needed it would have been allowed by CIT(A), in this case no such request for time has been made by AO. The revenue's plea is that though AO did not discharge these functions, CIT(A) should have summoned the witnesses and conducted further enquiries. CIT(A) is an appellate authority and law has conferred co-terminus powers like AO, this does not mean that CIT(A) will go on making assessments while disposing the appeals. If the evidence, remand report, comments and assesses explanation enable him to decide the issue, law allows him to decide the issues in appeal. A powe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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