Commissioner Of Income Tax, Rohtak v. Ita

ITA No. 815 of 2010 (O&M) and other connected matters IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH Date of Decision: February 05, 2013 1.ITA No. 815 of 2010 (O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Smt. Kamlesh …Respondent 2.ITA No. 816 of 2010(O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Sh. Lakhmi Chand …Respondent 3.ITA No. 817 of 2010(O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Sh. Vikram …Respondent 4.ITA No. 39 of 2011(O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Sh. Baldev Raj …Respondent 5.ITA No. 40 of 2011(O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Surinder Kapoor …Respondent 6.ITA No. 41 of 2011(O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Sanjay Kumar …Respondent 7.ITA No. 42 of 2011(O&M) Commissioner of Income Tax, Rohtak …Appellant Versus Bhushan Kumar …Respondent 1To be referred to the Reporters or not?2Whether the Judgment should be reported in theDigest HEMANT GUPTA, J. (Oral) This order shall dispose of afore-mentioned 17 appealsarising out of order dated 31.03.2010 passed by the Income TaxAppellate Tribunal, Delhi Bench 'D' New Delhi (for short 'theTribunal') in respect of the assessment year 2006-07. The Revenue has claimed the following substantialquestions of law: “1.Whether the Ld. ITAT has erred in deletingadditions made in the hands of the assessee on the protective basis, while substantive additionsmade in the hands of M/s PACL India Ltd., NewDelhi in the assessment year 2006-07 are stillpending at appellate stage. 2.Whether on the facts and circumstances ofthe case and in law, the ld. ITAT was right ingiving a finding that the profit of the assesseeshould be restricted to 8% of the receipts fromM/s PACL India Ltd., New Delhi, whereas theincome received by the assessee is not related tocontract receipts and the entire receipts areliable to be taxed.” The assessees in the present cases, had filed return ofincome under the head 'Income from business or profession' afterapplying the provisions of Section 44-AD of the Income Tax Act,1961 (for short 'the Act'). However, during the course ofassessment proceedings, it was found that the assessees havenot done any contract work of PACL India Limited. Since no workhas been done by the assessees, therefore, no expense can beallowed. Thus, the receipts of the assessees from PACL IndiaLimited were treated as income of the assessees under the head'Income from business or profession' on protective basis. Suchorder passed by the Assessing Officer was challenged before theCommissioner of Income Tax (Appeals), Rohtak. Commissioner of Income Tax (Appeals) returned afinding that the amounts of receipts appearing in the bankaccounts, are not from the contract business. The assessees haveshown net profit @ 8% of the receipts. Therefore, the incomedeserves to be assessed at 8% of the receipts because theassessees must not have allowed their name to be used withoutany consideration. It was held that such income to be assessed as income from other sources and credit of tax deduction sourcebe given. In further appeal by the assessees before the Tribunal,the Tribunal returned a finding that if the Assessing Officer was ofthe view that no work has been done by any of the contractor, theamount received itself cannot be considered to be income of theassessees but only the profit from such receipts can be brought totax. The assessees herein being found to be name lenders couldhave charged only the commission for lending the name.Therefore, the income of the present assessees are only to theextent of receiving commission. Since all these persons haveoffered 8% of their income, no further amount is taxable. as income from other sources and credit of tax deduction sourcebe given. In further appeal by the assessees before the Tribunal,the Tribunal returned a finding that if the Assessing Officer was ofthe view that no work has been done by any of the contractor, theamount received itself cannot be considered to be income of theassessees but only the profit from such receipts can be brought totax. The assessees herein being found to be name lenders couldhave charged only the commission for lending the name.Therefore, the income of the present assessees are only to theextent of receiving commission. Since all these persons haveoffered 8% of their income, no further amount is taxable. Learned counsel for the revenue has vehementlyargued that the substantive assessment of PACL India Limited isstill pending before the Tribunal, therefore, protective assessmentin the hands of the assessees should not have been finalized. Having heard learned counsel for the parties, we donot find that any substantial question of law arises forconsideration. On account of the finding recorded by theTribunal, the amount disclosed by the assessees as their incomehas been assessed to tax as income in terms of Section 44-AD ofthe Act. If in the proceedings against PACL India Limited, afinding is recorded that the transactions were not genuine, thenthe same would be liable to be added back to the income of PACLIndia Limited but if finding is recorded that the transaction isgenuine, the order of assessment passed by the Tribunal wouldrequire no interference so far as the assessees in the presentappeal are concerned. The finalization of the assessment ITA No. 815 of 2010 (O&M) and other connected matters proceedings against the assessees has, thus, no effect in respectof the assessment of PACL India Ltd. In view of the above, we do not find that anysubstantial question of law arises for consideration by this Courtin the present appeals. Consequently, the appeals are dismissed. (HEMANT GUPTA) JUDGE 05.02.2013Atul/Vimal (RITU BAHRI) JUDGE