TMI Blog2009 (4) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... ltant in the field of shipping industries and derives income from rendering professional services mainly to M/s Garware Shipping Corporation Ltd. and imparted training and consultancy in the field of shipping at his Kolkata office. He was an ex-employee of M/s Shipping Corporation of India Ltd. and retired from service on and from 30th Aug., 2001. He claimed consultancy income from shipping and others and also income from other sources like interest from bank, MIS and NSC. The AO made some disallowances and altered some heads of income on which the assessee went in first appeal before the CIT(A). The CIT(A) gave part relief to the assessee. Against the said order of the CIT(A), now the assessee is in second appeal before the Tribunal. 3. The assessee's learned Authorised Representative' has filed a paper book containing 28 pages which was filed before the lower authorities except item No. 6 in the paper book i.e. copy of the trade licence of the assessee. In the paper book, he has filed copy of one order of the Tribunal in ITA No. 2246/Kol/2005 in the case of Bijan Guha Chowdhury where "C" Bench of the Tribunal, Kolkata in a case of contractual work has adopted at 31 per cent pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al fees of Rs. 7,24,554 from M/s Garware Shipping Corporation and to that effect tax has been deducted to the tune of Rs. 38,04l. Your attention in this regard is drawn that the assessee in his return of income disclosed the entire gross amount of Rs. 7,24,554 and not the net amount of Rs. (7,24,554 - 38,041) 6,86,513. The objection of the AO in this regard is that as from the bank statement of IOB, Mumbai branch it transpired that the assessee had received an amount of Rs. 7,06,680 from M/s Garware Shipping Corporation but as per TDS certificate the assessee had received an amount of Rs. 6,86,513 and the difference amount i.e., Rs. (7,06,680 - 6,86,513) 20,167 should have offered for taxation. It is humbly stated that in that case the assessee should have been offered tax for an amount of Rs. (6,86,513 + 20,167) i.e., on 7,06,680 but to avoid unnecessary litigation the assessee had disclosed the gross amount of Rs. 7,24,554 in place of Rs. 7,06,680 and as a result of that the assessee had disclosed an excess amount of Rs. (7,24,554 - 7,06,680) 17,874 in his return of income and from the above explanation it is evident the assessee had not suppressed any income in connection wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal charges were paid to the assessee: Sl. No. Date of Amount paid/credited payment/credit 1. 30-04-2002 Rs. 95,000 2. 31-05-2002 Rs. 95,000 3. 13-06-2002 Rs. 41,167 4. 31-08-2002 Rs. 67,419 5. 30-09-2002 Rs. 95,000 6. 31-10-2002 Rs. 95,000 7. 30-11-2002 Rs. 95,000 8. 31-12-2002 Rs. 95,000 9. 15-01-2003 Rs. 45,968 ------------ Total Rs. 7,24,554 ------------ 5. As regards the consultancy from others amounting to Rs. 30,000 and consultancy and training receipts Rs. 20,000 the assessee could not give names and addresses of the parties from whom the said amounts were received. He also could not give details of consultancy service on account of which the said sum was received and the mode of receipt of such amount. The AO, therefore, considered Rs. 50,000 as income from other sources and not income from professional service. 6. The AO required the assessee to furnish details of expenses of Rs. 3,87,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... revealed that the assessee could have gone to Bombay only twice during the period when he was rendering services to the GSC Ltd., the AO allowed expenses for two returns air fares from Kolkata to Bombay amounting to Rs. 26,620. He also allowed uniform expenses of Rs. 30,000 and expenses on books and periodicals amounting to Rs. 10,000. Thus, the total expenses of Rs. 66,620 was allowed by him. The AO held that rest of the expenses totalling Rs. 3,20,380 was not related to professional income shown by the assessee and the same was not supposed by bills and vouchers. Therefore, he disallowed this amount as bogus expenses claimed by the assessee. 8. The AO also noted the following credits in the assessee's bank account: Sl.No. Bank Account Amount 1. SBI (5525) Rs. 2,000 (Cleared on 13-2-2003) 2. UBI (30198) Rs. 10,000 (Deposited on 29-1-2003) IOB, Mumbai (SB 98808) Rs. 126 (Being undisclosed interest income) (Deposit as per bank Rs. 7,06,680 + Rs. 20,167 - Rs. 6, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. As regards the AO's decision that Rs. 50,000 was chargeable to tax under the head other sources and not as professional income, the assessee furnished a copy of letter dated nil purported to have been filed before the AO to support his contention that the names of the parties from whom such income was received was furnished before the AO. The learned CIT(A) verified the assessment record and found that such letter was not in the assessment record. He, therefore, considered the same as fresh evidence. However, as the assessee only furnished the names and addresses of three parties, from whom the professional receipt of Rs. 50,000 was received, but could not bring on record any thing to show that the said amount was consultancy receipt and as the assessee failed to give any explanation for not furnishing the above evidence before the AO, the learned CIT(A) upheld the finding of the AO that the impugned amount of Rs. 50,000 was assessable under the head 'Income from other sources' and not under the head 'Business and profession'. 12. As regards the addition of Rs. 32,293 on account of unexplained deposit in the bank accounts the learned CIT(A) upheld the addition of Rs. 20,16 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per book pp. 16-18 are not being considered by me. Even if I consider the same, it does not help the assessee in as much as the assessee has not shown as to what services were rendered to such parties. As such no evidence has been brought on record by the assessee to show that the impugned amount was received for rendering professional services to such parties. The assessee has merely made bald claim without supporting the same with any admissible evidence. In the above circumstances, I am of the considered opinion that the learned CIT(A) has rightly held that impugned income of Rs. 50,000 is required to be taxed under the head 'Income from other sources' and not income under the head 'Business or profession'. Hence, this ground taken by the assessee is rejected. 17. Now I take up ground No. 1 taken by the appellant, which relates to confirmation of disallowance of expenses of Rs. 3,20,380 by the learned CIT(A). The facts and circumstances in which the same was disallowed by the AO and confirmed by the learned CIT(A) has been noted in earlier para of this order. It is observed that the assessee did not take the opportunity to cross-examine the employees during the assessment pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e considered opinion that the impugned amount of Rs. 20,167 has been, rightly confirmed by the learned CIT(A) as unexplained investment made by the assessee. 18.1 As regards the interest income of Rs. 126 the assessee has not made any submission before us. Thus this addition of Rs. 126 is also confirmed. 18.2 As regards the deposit of Rs. 2,000 in SBI account No. 5525 cleared on 13th Feb., 2003, the assessee has not made any specific submissions either before the authorities below or before us. Thus, we do not find any reason to interfere with the order of the learned CIT(A) on this addition. The addition of Rs. 2,000 confirmed by the learned CIT(A) under the head 'Unexplained investment' is held to be justified. This ground of the assessee is, therefore, rejected. 19. In the result, the appeal filed by the assessee is dismissed. REFERENCE UNDER S. 255(4) OF THE IT ACT, 1961 3rd Oct., 2008 Since there is a difference of opinion between the Members of the Tribunal, we state the following point of difference and refer the same to the Hon'ble President of the Tribunal. The point of difference is as under: "Whet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ef to the assessee against which the assessee came in appeal before the Tribunal agitating the following disallowance/addition sustained by the CIT(A): (i) Disallowance of expenses under different heads Rs. 3,20,380 (ii) Addition as 'income from other sources' by altering the heads of income claimed by the assessee as 'professional income'. Rs. 50,000 (iii) Addition on account of unexplained investment. Rs. 22,293 3. In regard to first dispute, i.e., disallowance of expenditure of Rs. 3,20,380 out of total expenditure claimed at Rs. 3,87,000 under several heads of expenditure, r find that the learned AM in his proposed order vide para 3 has given the head-wise details of such expenditure claimed by the assessee. The authorities below disallowed the expenditure to the extent of Rs. 3,20,380 on the ground that the expenditure to the above extent under different heads were not relatable to earning of professional income from M/s Garware Shipping Corpn. Ltd. (GSC). The expenditure allowed to the extent of Rs. 66,620 comprises of (i) uniform expenses Rs. 30,000; (ii) books and publication of R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty to the assessee for cross-examination before taking any adverse view against the assessee." 6. The learned AM disagreed with the said view of learned JM and proposed a separate order. He held that the assessee did not cross-examine the employees and also failed to give comments on the Inspector's report during the assessment proceedings despite opportunities given. He, therefore, upheld the disallowance of expenditure of Rs. 3,20,380 with the following observation: "17......... It is observed "that the assessee did not take the opportunity to cross-examine the employees during the assessment proceedings. The Inspector's report was furnished to the assessee and the assessee was required to give his comment on the same. But the assessee did not avail such opportunity. It is also not disputed that the assessee was required to render professional services in Bombay and not in Kolkata. In para 16, I have held that the assessee did not have any professional income in Kolkata. It has also not been controverted by the assessee by producing any evidence that during the relevant previous year there was any office maintained by the assessee at 44/6 Raja Ram Mohan Roy Road, Kolkata-8. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as professional income. But in both these cases. assessees are assessed under the same head "Income from business and profession", In the case of Ryan Guha Chowdhury, the Tribunal has accepted the net profit at 31 per cent, whereas in the case of the assessee, the net profit shown by him was 50 per cent of the total receipts. The learned counsel further submitted that the learned AM basing on the order of the AO and without considering the papers submitted in the paper book has observed that the assessee has not furnished any details in support of the expenses incurred. Referring to pp. 1 to 15 of the assessee's paper book, he submitted that income and expenditure account, balance sheet, salary register of employees were produced before the lower authorities, wherein the Signature of the respective employees are appearing in confirmation of their receipt of salary for each month. Air tickets were also produced. In view of the above, he submitted that the entire addition should have been deleted. However, as the learned JM has sent the issue back to the file of the AO, he has no other alternative but to support that direction. 8. The learned Departmental Representative, on the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the assessee may maintain his office for professional purposes. The assessee claimed to have incurred total expenditure of Rs. 3,87,000 under different heads as mentioned in the proposed order of learned AM to earn income from profession and business, out of which expenditure of Rs. 66,620 under a few heads has been allowed and the balance expenditure of Rs. 3,20,380 has been disallowed for lack of evidence. It, inter alia, includes salary claimed to have been paid to employees of Rs. 1,45,000. The assessee has furnished copy of salary register showing disbursement of salary month-wise to his employees and produced before the AO four persons. According to the AO, one of the employees Smt. Anjali Ghosh, to whom payment of Rs. 1,400 per month was claimed to have been made, has denied having worked under the assessee. Regarding other persons produced before the AO, it was observed by the AO that they were not conversant about the assessee's nature of business, which prompted him to come to the conclusion that there had been no expenditure on account of salary. Regarding other expenditure, it was held by the AO that those were not related to assessee's professional income. Further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a written reply before the AO giving therein the names and addresses of the parties to whom consultancy services were rendered by him. The same is placed on pp. 16 to 18 of the paper book. The AO denied to have received such evidence. The CIT(A) also denied to have accepted this additional evidence which was undated and unsigned. On the above facts, the learned AM did not consider the said evidence in deciding the issue and upheld the orders of the authorities below. Considering the totality of the facts and circumstances of the case and the submissions of the parties, it would have been proper if this issue was also restored back to the file of AO. However, being a Third Member I have to agree with one of the learned Members constituting the Bench. In this case, none of the learned Members have set aside the matter back to the file of AO. The learned JM has accepted the assessee's contention that it is a professional income, while the learned AM agreed with the views of the Revenue that it is income from other sources. The facts of the case are that the assessee is an engineer and earlier he was in employment with Shipping Corpn. of India Ltd. After retirement, he is rendering pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 38,041 on such receipt. Therefore, the net receipt was amounted to Rs. 6,86,513 (Rs. 7,24,554 - Rs. 38,041). On verification of bank statement, the AO found that the assessee had received an amount of Rs. 7,06,680 from M/s Garware Shipping Corpn. Ltd., but as per TDS certificate the assessee had received an amount of Rs. 6,86,513. The AO, therefore, treated the balance of Rs. 20,167 (Rs. 7,06,680 - Rs. 6,86,513) as unexplained investment. The learned counsel submitted that if the receipt as per TDS of Rs. 6,86,513 is taken and further sum of Rs. 20,167 is added, then total income comes to Rs. 7,06,680, whereas the assessee had disclosed in the return the gross receipt of Rs. 7,24,554 which was before deducting TDS of Rs. 38,041. He, therefore, submitted that an excess amount of Rs. 17,874 (Rs. 7,24,554 - Rs. 7,06,680) has been disclosed by the assessee and there had been no suppression of income, as alleged by the AO. After considering the arguments of both the sides and the facts of the case, I am unable to agree with the above contention of the learned counsel. The gross receipt is to be shown as receipt and not the net receipt after deduction of TDS. The assessee gets the cre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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