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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 ..... 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 2,24,45,752/- made by the Assessing Officer on account of variation in commission even though the assessee had failed to produce any supporting documentation as evidence, details of developers/builders, transactions, accounts, or any other documentation that could support this claim despite granting number of opportunities to the assessee which resulted into addition on account of variation in commission. 3. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred on facts and in law in deleting the addition of Rs. 64,13,493/- made by the Assessing Officer on account of commission discount expenses claimed to be paid by the assessee even though the assessee had failed to substantiate the veracity of expenses and deleted the addition without discussing the disallowance on the ground of genuineness of payment in question in his appeal order which go to the very root of the matter. 4. That the appellant craves for the permission to add, delete or amend the grounds of appeal before or at the time of hearing of appeal. &nb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was made by AO merely on the ground that the details of TDS and expenses etc. were not supported by vouchers and commission paid. There was non compliance of section 40(a)(ia), assessment was, however, framed u/s 143(3). 2.3. Aggrieved assessee preferred 1st appeal before CIT(A) and filed application for additional evidence as the same could not be filed before AO. Petition for additional evidences was also moved citing the reason of fire and consequent destruction of records and producing the compiled information and documents gathered from external sources also. It was pleaded that the evidences could not be submitted before AO due to destruction of record by this fire in his premises. Evidence from Fire Authorities certifying this fire incidence was also filed. CIT(A) forwarded the assessee's petition and additional evidence to AO for his counter comments and remand report, the same was duly filed by AO. After considering the material available on record and AOs counter submissions, CIT(A) admitted the additional evidence by following observations: "11. Once the incidence of fire is accepted, the nonproduction of books of accounts and other relevant documents b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -2010, I proceed to decide the various grounds of appeal as below." 2.4. After admission of additional evidence, CIT(A) considered the merits of the additions/disallowances. It was held that books of accounts were lost in fire and not available to the assessee. The income was to be estimated on the basis of audited statements of accounts, informations, additional evidence and supporting material, filed by assessee. The reconciliation filed by the assessee explaining the deference between the figures of commission in his P and L a/c and TDS certificates was verified and accepted by CIT(A). Various additions were deleted relevant extracts of his order are as under: "20. I have carefully considered the contentions of the Ld. AR and perused the impugned order of assessment along with the assessment records and all the material produced in the shape of additional evidence as well as the collated information gathered by the Ld. AR and placed on record from the available resources and documents at the behest of the appellant. It is observed that the AO has not commented on the admissibility and genuineness of the evidences submitted u/r 46A. Although the AO has been consta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... booked as commission in the PandL account is shown at Rs. 2,39,70,651/-. The first difference of Rs. 5,00,000/- has occurred due to credit of TDS certificates wrongly claimed this year, which is evidenced from the claim of TDS at Rs. 28,050/- twice as per the certificate issued by M/s Triveni Infrastructure Development Company enclosed in the PB, and hence needs to be excluded from the credits reached as per the ITR TDS certificates. The other factors causing such difference are the following items included in TDS certificates but do not constitute income for the year under context:- (i) Service Tax component in billing of assessment year 2007-08 Rs. 28,66,619/- (ii) Advances received from Triveni infrastructure development company Rs. 1,32,29,686/- (iii) Outstanding (closing balances of A.Y. 2006-07 received in A.Y. 2007-08 Rs. 44,30,198/- (iv) Commission reversed during the year on which TDS deducted. Rs. 12,29,345/- (v) Commission Discount received from BPTP Rs. 19,26,640/- 22. I have verified the bills raised showing service tax component, their copies, copy of service tax ledger along with entries in the TDS certificates showing deduction of TDS on gros ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... commission having been reversed. Since the TDS has already been made on such reversed commission and claimed in the return of income, it should also be excluded from the credits of TDS as per the ITR. 24. I have studied the copy of account of BPTP in the books of the assessee for the financial year 2007-08 pertaining to the assessment year 2008-09 and the copy of the bills raised to BPTP by the assessee in financial year 2007-08 (pages 269 to 271). I find that the contentions of the Ld. AR in this regard are not correct and hence not tenable. The said amount of Rs. 19,26,640/- had accrued as income in the year under consideration and since the appellant is following the mercantile system of accounting regularly in the previous years also, the credits of Rs. 19,26,640/- as per the TDS certificates from BPTP should be accounted for in the income of the present year assessment year 2007-08, whatever be the circumstances, e.g. as outlined by the Ld. AR above. Therefore, the addition to that extent stands upheld. Hence the amount of Rs. 2,24,45,752/- (Rs. 2,43,72,392 - Rs.19,26,640) having been fully explained as above, the addition to that extent deserves to be cancelled." &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld have been accomplished by CIT(A) by conducting relevant enquiries. In this case except considering the AOs remand report, no independent enquiry has been conducted by CIT(A). 5. Assessee by oral written submissions contends that assesses books of accounts are duly audited u/s 44AB, the return of income for this year was accompanied by all the relevant statements and TDS certificates. During the course of assessment the inability to produce books of accounts consequent to fire was made known to AO. On various queries raised by him about reconciliation of commission same could not be complied, collected and collated before the assessment proceedings. and that adequate opportunity was not given in as much as the show cause was given on 03/12/2009 and Assessment Order was passed 23.12.2009 and the details were complied on the basis of last years ledgers, cheque books, copy of bank statements, copy of TDS certificates, TDS return, booking records of developers companies. Before CIT(A) it was submitted that in any case these evidence go to the root of the matter and in view of peculiar circumstances these should be admitted. 5.1. Whatever information and evidence coul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ification in the stand of the Revenue. Hence ground no. 1 of the Revenue's appeal is dismissed. 6.1. In view thereof we uphold the order of CIT(A) on admission of additional evidence. 7. Coming to revenue's ground no. 2, it relates the addition of Rs.2,24,45,752/- made by Ld. A.O. on account of alleged difference in the commission shown i.e. i) Commission as per TDS certificates at a figure of =Rs.4,83,43,043/- ii) commission income in profit and loss account =Rs.2,39,70,651/- iii) The difference comes to =Rs.2,43,72,392/- iv) Out of above an addition of Rs. 19,26,640/- has been sustained by Ld. CIT(A) and the balance amount of Rs.2,24,45,752/- has been deleted. 7.1. Revenue is an appeal against the relief of Rs.2,24,45,752/- whereas assessee is in cross objection for the balance amount of Rs.19,26,640/- 7.2. Assessee's reconciliation of difference in TDS a/c is as under:. i) Difference due to mistakenly claimed twice = Rs. 5,00,000/- TDS certificate issued by Triveni Infrastructure Development Com. Ltd. (PB 46) deducting TDS on 5,00,000 on 15/01/2007, was typed twice in Computation of Income, by mistake which was r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was in effect income of the succeeding year. 7.4. Assessee submitted each and every detail before CIT(A) which was forwarded to AO for remand report. AO has made comments thereon. CIT(A) has deleted the addition after due verification. 8. Revenue's Ground no. 3 relates to the addition of Rs.64,13,493/- made by A.O. on account of commission and discount expenses deleted by Ld. CIT(A) 8.1. Ld. A.O. has made the addition by following observations "7. Commission discount: During the year the assessee claimed an expenses of Rs. 6413493/- on account of commission discount. Vide this office letter dated 03-12-2009 (Q. No. 12) the assessee was asked to furnish details of commission discount expenses claimed in the Income and Expenditure account. The assessee has not furnished names and addresses of the parties/persons to whom commission discount was paid. Even the assessee has not submitted any explanation in this regard. The assessee furnished three letters dated 15.12.2009, 17.12.2009 and 18.12.2009 in response to letter dated 03-12-2009 but on the point of commission discount the assessee kept mum. In these circumstances it is presumed that the assessee has nothing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed a sum of Rs. 64,13,493/- on account of "commission discount" expense on the ground that such expenses remained unverifiable and no explanation was submitted by the assessee and there could be disallowance u/s 40(a)(ia) also. It is respectfully submitted that as submitted above appellant does bookings for the developers in their projects against the commission to be received from the developers. As a matter of trade practice and also as a understanding with the customers, a discount is required to be passed to those customers and the aggregate amount of Rs. 64,13,493/- represents such kind of discount expenses passed on to the customers themselves. Enclosed in the paper book is the complete details of such expenses, confirmations, bank statement showing payments made, TDS returns and evidence of the booking (application for allotment) made by these customers with the developer through the appellant, e-mail communications with the applicants pressing for discount. All these evidences would show that impugned expense was an expense incurred wholly and exclusively for the purpose of the business of the appellant and is thus allowable. Regarding the disallo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and explanation, the relief has been given on just and proper consideration. Order of CIT(A) is relied on. 8.9. Ld DR in rejoinder replies that the main case of the revenue rests on the fact that so far assessee has not produced books of account and in the name destruction of books of accounts by fire he has not allowed the proper enquiries to take place. Consequently the matter may be set aside back to the file of AO to make in-depth enquiries and frame a fresh assessment. Alternatively it is pleaded that that the relief given by CIT(A) is excessive the same may be reduced. 10. We have considered the respective arguments, the orders passed by the authorities below, remand report and counter comments submitted by AO before the ld CIT(A) and written submissions and contents of paper book. We proceed to dispose the merits about the appeal of the revenue and the cross objection of the assessee in the following terms: 11. The first issue raised by revenue challenges the CIT(A)'s finding that the assessee's books were destroyed in fire and this is an after thought of assessee to avoid scrutiny of books. In our considered opinion, CIT(A) has given a finding of fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the amount of Rs. 5 lacs based on double typing of figure of TDS of Rs. 28050/- in the computation of income. Consequently, no addition can be made in this behalf. 12.2. Other difference as explained by the assessee and examined by CIT(A) based on the evidences in the paper book is attributed to service tax component included in the billing resulting into the difference of Rs. 2866619/-. This has been amply demonstrated that in assessee's accounts service tax is separately credited and not included in commission account. Assessee has filed proper reconciliation in this behalf hence, this difference also stands reconciled by assessee. 12.3. Other reason of difference is a sum of Rs. 13229686/- which is claimed to be received as advance from Triveni Infrastructure Development company on which TDS was deducted by the said company on payment basis while paying the amount as per the requirement of section 194H. However this income, according to assessee pertained to next year and is factually offered to tax by the assessee in next year. This was matter of record as by the time remand report was submitted by AO the return for next asst. year was already on record. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the case of real estate agent allowed similar claim by following observations: "7. We have heard the rival contentions and perused the material on record. We find merit in the arguments of the learned counsel for the assessee. The deals of discount clearly show that against the booking of builders, assessee gave a portion by way of discount to the consumers/customers. The assessee has maintained proper details in respect of subbrokerage on which TDS has been deducted and discount to consumers i.e. impugned payments. The same being discount is not liable for TDS as held by the Assessing Officer. In our view, the CIT(A) has given proper reasons for accepting the assessee's plea. We find no infirmity in the order of CIT(A) and the same is upheld." 13.2. In our view department except pointing out some suspicion, and raising a specious plea that AO should be given opportunity to enquire it again and CIT(A) should have conducted further enquiries and called these persons, which in our view cannot be acceded. Consequently, this ground of revenue is dismissed. 14. We may like to observe that the Income Tax Act is a complete code in itself. It prescribes adequate p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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