The Commissioner Of Income Tax-Ii, Amritsar v. M/S V. M. Reality Pvt. Ltd., Amritsar

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 294 of 2014 Date of Decision : July 08, 2016 The Commissioner of Income Tax-II, Amritsar vs. M/s V. M. Reality Pvt. Ltd., Amritsar ....Appellant ....Respondent CORAM :HON'BLE MR. JUSTICE S. J. VAZIFDAR, ACTING CHIEF JUSTICE.HON'BLE MR. JUSTICE DEEPAK SIBAL. * * * To be referred to Reporters or not ? Whether the judgment should be reported in the digest ? * * * Present :Mr. Denesh Goyal, Advocatefor the appellant. Mr. Sunil Mukhi, Advocate and Ms. Prerna, Advocatefor the respondent. * * * DEEPAK SIBAL, J. : Invoking the provision of Section 260-A of the Income TaxAct, 1961 (hereinafter referred to as – the Act), the Revenue has preferredthe instant appeal laying a challenge therein to the order dated 12.02.2014(Annexure A-3) passed by the Income Tax Appellate Tribunal, AmritsarBench, Amritsar (hereinafter referred to as – the Tribunal). The issue raised in the present appeal pertains to the assessment year 2007-08 and seeks to raise the following questions of law :- “1.On the facts and the circumstances ofthe case whether the ld. ITAT is right in law indeleting the addition of Rs. 70 lacs made by theA.O. and confirmed by the Ld. CIT (A) ignoringthe fact that the A.O. had sufficient evidence andreasons to make the addition. 2.On the facts and the circumstances ofthe case whether the Hon'ble Tribunal is right inlaw in deleting the enhancement made by the CIT(A) on account of commission accrued to theassessee and ignoring the fact brought out by theCIT (A) that the assessee himself had beendeclaring commission income on accrual basis.” In order to appreciate the issue involved in this appeal, it isnecessary to set out the relevant facts in brief. For the assessment year inquestion, the assessee had filed his return showing therein a carried forwardloss of Rs. 17,68,144/-. Such return was processed under Section 143(1) ofthe Act. However, later on, during the course of proceedings, under Section132-A of the Act, in the case of one Vipin Verma, certain documentsincluding an agreement dated 30.09.2006 between the assessee and one M/sSplender Land Base Ltd., New Delhi (hereinafter referred to as – theCompany) came in the knowledge of the Department. According to theAssessing Officer, this agreement pertained to sale and purchase of about68.45 acres of land and according to the same, in pursuance thereof, theassessee had received Rs. 5 crores from the Company, out of which Rs. 70MONIKAlacs had been received in cash. Resultantly, notice under Section 143-C of2016.07.12 17:50I attest to the accuracy andauthenticity of this document the Act was issued to the assessee, in response to which, a reply was filed.The books of accounts of the Company were compared with that of theassessee and the Assessing Officer, finding the afore-referred amount of Rs.70 lacs to be unaccounted for, ordered addition of the same to the incomeof the assessee. The order to make such addition was taken up in appealby the assessee before the Commissioner of Income Tax (Appeals),Amritsar (hereinafter referred to as – the Commissioner), who dismissed thesame. While dismissing the appeal, the Commissioner further directedenhancement to the already assessed income of the assessee to the tune ofRs.8.60 lacs on account of commission, found to have been earned by theassessee @ 2% on the transaction of sale and purchase of land on behalf ofthe Company for Rs.4.30 crores, which amount was admittedly received bythe assessee from the Company for that purpose. On the passing of afore-referred order by the Commissioner, the assessee knocked the doors of theTribunal, which, on the consideration of the entire record and argumentsadvanced before it on behalf of the contesting parties, came to a categoricconclusion that the agreement, on the basis of which the addition had beenordered to be made by the Assessing Officer to the income of the assessee,was half baked as it had admittedly not been signed by the Company andthus, could not be relied upon. It was further found that the amount of Rs.70 lacs had been denied to have been paid by the Company and had alsobeen denied to have been accepted by the assessee. In this regard, therebeing no further evidence brought on the record by the Revenue, findingsMONIKArecorded by the Assessing Officer, as also the Commissioner, were found to2016.07.12 17:50I attest to the accuracy andauthenticity of this document be presumptuous and conjectural. It was further held by the Tribunal thateven if the cash had been received by the assessee, the same had beenreceived for and on behalf of the Company and had been paid to the farmersand such receipt could, at the most, be treated as a capital receipt, but in nocircumstance, the same could be added to the income of the assessee,especially when the same had already been added to the income of theCompany. The Tribunal further noticed that the agreement, which had beenrecovered from the afore-referred Vipin Verma, between the Company andthe assessee, was for a total amount of Rs. 5 crores, out of which, theCommissioner held that for Rs. 4.30 crores, the assessee had purchased landon behalf of the Company and accordingly ordered the addition ofcommission @ 2% on Rs. 4.30 crores to the already assessed income of theassessee. It was held that once the Commissioner came to such aconclusion, then qua the same agreement, for a part amount thereof i.e. Rs.70 lacs, no contrary opinion could have been formed to hold this amount tobe the income of the assessee. The Tribunal further noted that theCommissioner had not denied that the assessee was not maintaining booksof accounts on mercantile system. It was further found that the assessee hadduly declared on behalf of the Company the completion of the transactionsregarding sale and purchase of land with the money received from theCompany and the commission received in pursuance to such deals in thereturns filed for the following assessment year i.e. 2008-09, which fact wasnot disputed by the Department. 70 lacs to the income of the assessee and the enhancement to the alreadyassessed income of the assessee for having received commission to the tuneof Rs. 8.60 lacs for the assessment year 2007-08 was not justified andresultantly, these additions were directed to be deleted. 70 lacs to the income of the assessee and the enhancement to the alreadyassessed income of the assessee for having received commission to the tuneof Rs. 8.60 lacs for the assessment year 2007-08 was not justified andresultantly, these additions were directed to be deleted. On going through the record of the case, we are of the view thatthe decision of the Tribunal, which is impugned before us, essentiallydecides questions of fact and does not raise for our consideration anyquestion of law, much less a substantial question of law, and therefore,requiring no interference on our part. Resultantly, the present appeal isdismissed with no order as to costs. ( S. J. VAZIFDAR ) ACTING CHIEF JUSTICE July 08, 2016monika ( DEEPAK SIBAL )JUDGE