Case Law Details

Case Name : DCIT Haldwani Vs Shri Om Prakash Bhargava (ITAT Delhi)
Appeal Number : ITA No. 3633/Del. /2008
Date of Judgement/Order : 11/03/2011
Related Assessment Year : 2004- 05
Courts : All ITAT (4430) ITAT Delhi (983)

DCIT Haldwani Vs Shri Om Prakash Bhargava (ITAT Delhi) – Assessing Officer estimated the income on the basis of general information from Chief Agriculture Officer which was never confronted with assessee. Further such general information was with respect of earning from grain crop. But assessee was growing flowers and decorative plants which have been accepted by the revenue in past years. The assessee is holding the land of 24 bighas. Income of Rs.4,26,000/- have been accepted in the immediate preceding year, i.e. 2004-05. In this year, income from agriculture is only Rs.2,50,000/-. Considering all these relevant facts and the pleadings of the assessee, we find that the CIT(A) has rightly accepted the claim of the assessee and we sustain the same on the issue.

IN THE INCOME TAX APPELLATE TRIBUNAL
(DELHI BENCH ‘E’: NEW DELHI)

ITA No. 3633/Del. /2008
(Assessment year: 2005- 06)

DCIT, Circle, Haldwani. vs. Shri Om Prakash Bhargava

CO No.108/Del/2009
(in ITA No. 3633/Del./2008)
(Assessment year : 2005- 06)

Shri Om Prakash Bhargava, vs.  DCIT, Circle,

ORDER

PER B.C. MEENA, ACCOUNTANT MEMBER :

The appeal filed by the revenue and the cross objection filed by the assessee arise out of the order of the CIT (Appeals)-II, Dehradun dated 25.9.2008. The grounds of revenue’s appeal read as under:-

“1. Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.2,00,000/- on account of rejection of claim of agricultural income without appreciating the fact that assessee failed to produce any record, bank pass book etc. to substantiate the agricultural income declared by him. Ld. CIT (A) failed to appreciate every year is a new year and agricultural income cannot be accepted on the basis of past history.

2. Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,00,000/- on account of dis allowance from commission expenditure without appreciating the fact that necessary evidence were not produced before the Assessing Officer to substantiate his claim of commission expenditure. A general reply without the supporting documentary evidences does not discharge the onus laid on the assessee to substantiate the claim of any expenditure.”

2. The assessee is an individual and indulged in the business of trading of vehicles. The return of income was filed declaring income of Rs. 11,10,230/- plus agricultural income of Rs.2,50,000/- on 29.10.2005. The case was selected for scrutiny.
3. In the ground no.1, the issue involved is deleting the addition of Rs.2 lacs on account of rejection of claim of agricultural income and sustaining the addition only to Rs.50,000/-.

4. Learned DR relied on the order of the Assessing Officer. While the learned AR relied on the order of the CIT (A) and submitted that the assessee was deriving agricultural income on account of growing flowers and ornamental plants which had been accepted by the department in the earlier years. The assessee was having agricultural land of more than 24 bighas. The Assessing Officer estimated income at Rs.50,000/- on the basis of information received from Chief Agriculture Officer which was never provided to assessee. It was also pointed out that such estimates were for growing of grains not for the flowers and decorative plants. The revenue had accepted the agricultural income to the tune of Rs.4,26,000/- in assessment year 2004-05. He relied on the order of the CIT (A) and pleaded to sustain the same.

5. After hearing both the sides, we find that Assessing Officer estimated the income on the basis of general information from Chief Agriculture Officer which was never confronted with assessee. Further such general information was with respect of earning from grain crop. But assessee was growing flowers and decorative plants which have been accepted by the revenue in past years. The assessee is holding the land of 24 big has. Income of Rs.4,26,000/- have been accepted in the immediate preceding year, i.e. 2004-05. In this year, income from agriculture is only Rs.2,50,000/-. Considering all these relevant facts and the pleadings of the assessee, we find that the CIT
(A) has rightly accepted the claim of the assessee and we sustain the same on the issue. Accordingly, ground no.1 of revenue’s appeal is dismissed.

6. In the ground no.2, the issue involved is deleting the addition of Rs.9 lacs made out of the commission paid to the assessee.
7. Learned DR relied on the order of the Assessing Officer. Learned AR relied on the order of the CIT (A) and also submitted that the commission paid was for business purposes. The commission was paid on the sales to various parties. The Assessing Officer accepted part of the payment of commission as genuine and balance as non-genuine. The assessee has submitted all the relevant details including the assessment record of persons to whom the commission was paid. Even the statement was recorded of Ms. Monica Bhargav to whom commission was paid. She had categorically stated that she was working for the assessee company and was receiving the commission. The commission income has been assessed in her hands by the order u/s 143(3) of the Income-tax Act for the same assessment year. The copy of the assessment order of Monika Bhargav is placed on record. He finally submitted that the commission has been paid for the business purposes of the assessee. Complete details of persons to whom commission paid was submitted which includes, full address, amount of TDS, commission paid and PAN. Therefore, the order of the CIT (A) may be sustained.
8. After hearing both the sides, we hold that assessee submitted all relevant information in respect of persons to whom commission was paid. The name and full address along with their I.T. returns and PAN were provided to Assessing Officer. The basis on which commission was paid was also  explained. The total commission paid by the assessee was Rs. 13,29,300/-. The statement of Monica Bhargav, one of the persons to whom commission paid, shows that she has worked for the business of the assessee and confirmed the receipt of the commission. She has also narrated the style of working in her statement by stating that she had direct contacts with the prospective purchasers which were mainly transport companies. She has also stated that she operated from the office of the assessee. She has stated that she had contacted the Government agencies for making sales effective. Her commission income had been assessed u/s 143(3) of the Income-tax Act by the DCIT located at Haldwani itself. We also note that the payment of the commission is business requirement in such type of business. The business of selling vehicles is of competitive nature and personal contacts are required to be made with prospective customers. Further, the assessee had deducted necessary TDS on commission paid. The copies of the income-tax returns of the persons to whom the commission were paid were also filed on the record. These persons to whom commission paid are assessed to income-tax. All relevant details including the names and address, details of TDS and PAN numbers of these persons to whom the commission was paid were filed on record. They are assessed to income-tax. Revenue is not able to prove that the payment of commission was not genuine and were not for business purposes. Keeping all these facts in view, we uphold the order of the CIT (A) on this issue and dismiss this ground of revenue’s appeal.
9. Learned AR for the assessee has not pressed the issues raised in the cross objection, therefore, the same is dismissed for non-prosecution.
10. In the result, the appeal of the revenue and cross objection filed by the assessee are dismissed.

Order pronounced in open court on this 11th day of March, 2011.

Sd!-                                                             sd!-

(RAJPAL YADAV)                                  (B.C. MEENA)

JUDICIAL MEMBER                     ACCOUNTANT MEMBER

Dated the 11th day of March, 2011

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