Shri Sunit S.Shah, Ahmedabad v. The ACIT., Circle-9,, Ahmedabad

ITA 2732/AHD/2005 | 2002-2003
Pronouncement Date: 18-02-2010 | Result: Partly Allowed

Appeal Details

RSA Number 273220514 RSA 2005
Assessee PAN AFLPS9242Q
Bench Ahmedabad
Appeal Number ITA 2732/AHD/2005
Duration Of Justice 4 year(s) 1 month(s) 23 day(s)
Appellant Shri Sunit S.Shah, Ahmedabad
Respondent The ACIT., Circle-9,, Ahmedabad
Appeal Type Income Tax Appeal
Pronouncement Date 18-02-2010
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 18-02-2010
Date Of Final Hearing 04-02-2010
Next Hearing Date 04-02-2010
Assessment Year 2002-2003
Appeal Filed On 26-12-2005
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL : D BENCH : A HMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA J.M. & HONBLE SH RI D.C. AGRAWAL A.M.) I.T.A. NO. 2732/AHD./2005 ASSESSMENT YEAR : 2002-2003 SHRI SUNIT S. SHAH AHMEDABAD -VS.- ASSISTANT COMMISSIONER OF INCOME TAX (PAN : AFLPS 9242 Q) CIRCLE-9 AHMEDABA D (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI DHIREN SHAH RESPONDENT BY : SHRI C.K. MISHRA SR. D.R. O R D E R PER SHRI T.K. SHARMA JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE O RDER DATED 30.09.2005 OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-XV AHMEDABAD F OR THE ASSESSMENT YEAR 2002-03. 2. BRIEFLY STATED THE FACTS ARE THAT THE ASSESSEE I S AN ADVOCATE. HE IS A PARTNER IN A LEGAL FIRM KNOWN AS M/S. SHAH RAJU & ASSOCIATES. FOR THE ASSES SMENT YEAR UNDER APPEAL HE FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.5 48 233/- O N 29.10.2002. IN THIS RETURN OF INCOME HE DECLARED 50% SHARES OF PROFIT IN LEGAL FIRM NAMELY M/S. SHAH RAJU & ASSOCIATES WHEREIN HE IS A PARTNER WHICH INTER ALIA INCLUDES REMUNERATION A MOUNTING TO RS.2 10 624/-. APART FROM THIS IN HIS PERSONAL CAPACITY THE ASSESSEE DECLARED TOTAL PROFESSIONAL RECEIPT OF RS.4 45 081/- AND CLAIMED THE FOLLOWING EXPENSES AMOUNTING TO RS.1 19 169/- AS UNDER :- (I) INCIDENTAL EXPENSES I.E. ADVOCATE FEES BOOKS CONVEYANCE STATIONERY BANK CHARGES SALARY ETC. RS. 68 715/- (II) COST OF ACQUISITION- OFFICE PREMISES AT WORLD BUSINESS CENTRE ACTUAL COST RS.5 04 541/- ACQUIRED BEFORE 30.09.1997 DEPRECIATION AT 10% RS. 50 454/- T O T A L RS.1 19 169/- 2 ITA NO. 2732/AHD/2005 3. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O. CALLED FOR INFORMATION UNDER SECTION 133(6) OF THE INCOME TAX ACT FROM THE REGIS TRAR INFRASTRUCTURE & IT GUJARAT HIGH COURT REGARDING ATTENDANCE OF ADVOCATE BEFORE VARIO US BENCHES OF HIGH COURT BY FILING THEIR VAKALATNAMA. THE REGISTRAR HON'BLE GUJARAT HIGH CO URT FORWARDED REPORT TO THE A.O. REGARDING THE DETAILS OF FILING OF VAKALATNAMA BEFORE VARIOUS BENCHES OF HIGH COURT. AS PER THIS INFORMATION VIDE LETTER DATED 28.02.2005 THE A.O. WROTE TO THE ASSESSEE THAT IN THE DETAILS OF PROFESSIONAL FEES SUBMITTED HE HAS GIVEN THE DETAIL S OF 25 CLIENTS ONLY. ON RECEIPT OF THIS LETTER THE ASSESSEE ASKED THE A.O. TO SUPPLY THE COPY OF L ETTER RECEIVED FROM THE REGISTRAR. THE A.O. ACCORDINGLY FORWARDED THE REQUIRED INFORMATION TO A SSESSEE ON 08.03.2005. THEREAFTER THE A.O. FRAMED THE ASSESSMENT ON 18.03.2005 WHEREIN HE ESTI MATED THE PROFESSIONAL RECEIPT AT RS.17 46 338/- AND DISALLOWED DEPRECIATION CLAIM OF RS.50 454/-. SINCE THE ASSESSEE DISCLOSED PROFESSIONAL INCOME OF RS.3 76 366/- IN HIS INDIVID UAL CAPACITY THE A.O. MADE THE ADDITION OF RS.13 69 972/- BEING THE DIFFERENCE BETWEEN PROFESS IONAL RECEIPT ESTIMATED AT RS.17 46 338/- MINUS INCOME DECLARED IN THE RETURN AT RS.3 76 366/ -). 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL AND IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALLOWED RELIEF OF RS.1 00 000/- OUT OF TOTAL ADDITION OF RS.13 69 972/- TOWARDS PROFESSIONAL INCOME. THE LEA RNED COMMISSIONER OF INCOME TAX(APPEALS) RESTORED THE ISSUE REGARDING DISALLOWA NCE OF DEPRECIATION IN RESPECT OF OFFICE PREMISES AMOUNTING TO RS.50 454/- TO THE FILE OF A. O. AGGRIEVED BY THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) THE ASSESSEE I S IN APPEAL BEFORE US ON THE FOLLOWING GROUNDS :- 1. THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS BAD IN LAW SINCE IT IS CONTRARY TO THE PROVISIONS OF THE LAW AND THE FACTS OF YOUR APPELLANTS CASE. IT IS S UBMITTED THAT IT BE SO HELD NOW. 2. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN QUASHING THE ORDER FRAMED BY THE ASSESSING OFFICER. THE ORDER FRAMED BY THE ASSESSING OFFICER WAS VOID AB-INITO AND IT O UGHT TO HAVE BEEN CANCELLED. 2.1. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS ) ERRED IN UPHOLDING THE ADDITIONS OF RS.12 69 973/- BEING INC OME ESTIMATED BY THE ASSESSING OFFICER. 3 ITA NO. 2732/AHD/2005 2.2. THE APPELLANT SUBMITS THAT NEITHER ANY INCOME WAS RECEIVED BY YOUR APPELLANT NOR ANY INCOME WAS DEEMED TO HAVE BE EN RECEIVED AND THEREFORE ENTIRE ADDITION OF RS.13 69 973/- MADE B Y THE ASSESSING OFFICER OUGHT TO HAVE BEEN DELETED. IT IS SUBMITTED THAT IT BE SO HELD NOW. 2.3. THE APPELLANT WITHOUT PREJUDICE TO ABOVE FURTH ER SUBMITS THAT IN ANY EVENT RELIEF ALLOWED BY THE LEARNED COMMISSIONE R OF INCOME TAX(APPEALS) IS INADEQUATE. IT IS SUBMITTED THAT SU BSTANTIAL RELIEF BE ALLOWED. 3. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN NOT ALLOWING DEPRECIATION OF RS.50 454/- BY WAY OF DEPRECIATION. THE APPELLANT SUBMITS THAT THE OFFICE WAS OWNED BY THE APPELLANT AND THE OFFICE WAS USED BY THE APPELLANT FOR THE PURPOSE OF THE PROFESSION. DEPRECIATION IS ACCORDINGLY DEDUCTIBLE IN COMPUTATI ON OF TOTAL INCOME. THE DEDUCTION BE DIRECTED TO BE ALLOWED. 4. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ERRED IN NOT PROPERLY COMPUTING THE DEMAND IN THE CASE OF TH E APPELLANT. THE APPELLANT SUBMITS THAT THE ASSESSING OFFICER BE DIR ECTED TO DELETE INTEREST CHARGED BY INVOKING PROVISIONS OF SECTIONS 234B 234C AND 234D. IT IS SUBMITTED THAT APPROPRIATE RELIEF BE AL LOWED AS PER THE PROVISIONS OF LAW. 5. ON THE DATE FIXED FOR HEARING BEFORE US THE ASS ESSEE HIMSELF ALONGWITH HIS COUNSEL SHRI DHIREN SHAH APPEARED. THE PAPER BOOK CONTAINING 89 PAGES WAS FILED WHICH INTER ALIA INCLUDE RETURN OF INCOME SUBMITTED VARIOUS DETAILS SUBMITT ED BEFORE THE A.O. AND A COPY OF RETURN OF INCOME FURNISHED BY THE FIRM IN WHICH THE ASSESSEE IS A PARTNER NAMELY M/S. SHAH RAJU & ASSOCIATES ALONGWITH TAX AUDIT REPORT IS ALSO FURN ISHED. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS MAINTAINING HIS ACCO UNTS ON CASH BASIS. VARIOUS POWER OF ATTORNEY WERE SUBMITTED BEFORE THE VARIOUS BENCHES OF HIGH COURT INCLUDE THE POWER OF ATTORNEY SUBMITTED IN RESPECT OF CASES OF FIRM NAM ELY M/S. SHAH RAJU & ASSOCIATES WHEREIN THE ASSESSEE IS A PARTNER. THE LD. COUNSEL OF THE ASSES SEE SUBMITTED THAT THE A.O. HAS NOT ALLOWED ADEQUATE OPPORTUNITY OF BEING HEARD BECAUSE IN THE MONTH OF MARCH 2005 THE ASSESSING OFFICER PROVIDED INFORMATION RECEIVED FROM THE REGISTRAR G UJARAT HIGH COURT TO THE ASSESSEE WHICH INTER ALIA INCLUDE LIST OF CASES OBTAINED FROM THE HON'BLE GUJARAT HIGH COURT AND ALSO FORMED THE ASSESSMENT. THE LD. COUNSEL OF THE ASSESSEE SUBMITT ED THAT RE-CONCILIATION OF ALL THE POWER OF 4 ITA NO. 2732/AHD/2005 ATTORNEY CAN BE FURNISHED. HE SUBMITTED THAT BOTH T HE DEPARTMENTAL AUTHORITIES BELOW HAS NOT APPRECIATED THE MODUS OPERANDI ADOPTED BY THE ASSES SEE. THE ASSESSEE HIMSELF EXPLAINED THAT IT IS NOT NECESSARY THAT IN ALL THE CASES IN WHICH POWER OF ATTORNEY IS FILED FEES IS RECEIVED IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER APPEAL. SOMETIMES IN ONE CASE MORE THAN ONE POWER OF ATTORNEY IS REQUIRED TO BE FURNISHED. IN SOME CASES NO FEES WERE RECEIVED IN THE ASSESSMENT YEAR UNDER APPEAL WHEREAS IN OTHER CASE S FEES IS RECEIVED IN SUBSEQUENT YEARS. PROFESSIONAL FEE IN RESPECT OF CASES ATTENDED ON BE HALF OF PARTNERSHIP FIRM M/S. SHAH RAJU & ASSOCIATES IS SHOWN BY THE PARTNERSHIP FIRM. FURTHE R THERE IS NO PRESUMPTION THAT IN ALL CASES FEES IS RECEIVED AT THE TIME OF FILING VOKALATNAMA. BEFORE US THE ASSESSEE ALSO HAS SUBMITTED THE DETAILS IN THE PAPER BOOK WHICH IS AS UNDER :- (1) STATEMENT OF RECONCILIATION OF 164 CASES REFERR ED BY THE A.O. IN THE ASSESSMENT ORDER ON THE BASIS OF LETTER OF REGISTRY OF HON'BLE GUJARAT HIGH COURT VIS A-VIS DETAILS OF COMPUTER DATA OF CASES WITH NARRATION PR OCURED BY THE APPELLANT FROM REGISTRY OF HON'BLE GUJARAT HIGH COURT AND THE PROF ESSIONAL FEES RECEIVED DURING THE YEAR IN THE ACCOUNT OF M/S. SHAH RAJU & ASSOCIA TES AND IN THE ACCOUNT OF SHRI SUNIT S. SHAH (INDIVIDUAL) AND ALSO THE CASES WHERE NO FEES CHARGED OR NOT RECEIVED OR NOT APPLICABLE WITH REASONS WHICH IS A PPEARING AT PAGES 2 TO 34 OF THE PAPER BOOK. (2) PROFESSIONAL FEES ACCOUNT OF THE ASSESSEE (INDI VIDUAL) WHICH IS APPEARING AT PAGES 35 TO 37 OF THE PAPER BOOK (3) PROFESSIONAL FEES ACCOUNT OF M/S. SHAH RAJU & A SSOCIATES WHEREIN ASSESSEE IS A PARTNER WHICH IS APPEARING AT PAGES 38 TO 46 OF THE PAPER BOOK. THE ASSESSEE CONTENDED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE FILE OF A.O. SO THAT HE MAY VERIFY THE VARIOUS DETAILS WHICH ARE N OW BEING SUBMITTED AND REFRAME THE ASSESSMENT IN ACCORDANCE WITH LAW AFTER PROVIDING P ROPER OPPORTUNITY OF BEING HEARD TO HIM. 6. ON THE OTHER HAND SHRI C.K. MISHRA SR. D.R. AP PEARING ON BEHALF OF THE REVENUE CONTENDED THAT ADEQUATE TIME WAS ALLOWED TO THE ASS ESSEE FOR FURNISHING VARIOUS DETAILS. THE ASSESSEE COULD HAVE FURNISHED THE VARIOUS DETAILS B EFORE THE A.O. ADMITTEDLY THESE WERE NOT FURNISHED. THEREFORE THE VIEW TAKEN BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) BE UPHELD. 5 ITA NO. 2732/AHD/2005 7. WE HAVE GIVEN OUR CAREFUL CONSIDERATION TO THE R IVAL SUBMISSIONS MADE BEFORE US AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. IT AP PEARS THAT THE A.O. REQUIRED THE ASSESSEE TO EXACTLY CLARIFY IN WHICH CASES OUT OF 116 CASES OF APPEARANCE HE HAS NOT RECEIVED FEES OR HE HAS RECEIVED LESS FEES OR FEES HAVE BEEN RECEIVED BY TH E FIRM M/S. SHAH RAJU & ASSOCIATES. IT IS PERTINENT TO NOTE THAT NOW BEFORE US THE ASSESSEE HAS SUBMITTED THE COMPLETE DETAILS. FROM THE ASSESSMENT ORDER WE ARE CONVINCED THAT THE A.O. HA S NOT ALLOWED ENOUGH TIME TO FURNISH RECONCILIATION/ DETAILS. IN THESE CIRCUMSTANCES IN OUR OPINION IT WILL MEET THE ENDS OF JUSTICE IF THE CONTROVERSY REGARDING ESTIMATION OF PROFESSIONA L RECEIPT IS RESTORED BACK TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION THAT HE MAY VE RIFY THE RECONCILIATION SUBMITTED BEFORE HIM. THE A.O. MAY MAKE CROSS VERIFICATION DIRECTLY FROM THE FEW CLIENTS AND RE-ADJUDICATE THE GROUND RELATING TO ESTIMATION OF PROFESSIONAL RECEIPT IN A CCORDANCE WITH LAW AFTER GIVING PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 8. COMING TO THE ISSUE REGARDING ALLOWANCE OF DEPRE CIATION OF RS.50 454/- IN OUR OPINION NO INTERFERENCE IS CALLED FOR. BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IT WAS CONTENDED THAT THE OFFICE PREMISES WERE USED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. IT WAS PURCHASED IN THE YEAR 1997-98. IN EARLIER YE AR ALSO IT WAS USED FOR THE PURPOSE OF PROFESSION. DEPRECIATION WAS ALLOWED. IN THESE CIRC UMSTANCES IN OUR OPINION THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS LEGALLY AND FACTUALLY CORRECT IN DIRECTING THE A.O. TO VERIFY THE PAST RECORDS AND ALLOW THE DEPRECIATION ON THE BASIS OF PAST RECORDS. WE THEREFORE INCLINED TO UPHOLD THE ORDER OF LEARNED COMMISSIONE R OF INCOME TAX(APPEALS). THIS GROUND OF APPEAL IS REJECTED. 9. THE ISSUE IN GROUND NO. 4 REGARDING THE LEVY OF INTEREST UNDER SECTION 234B AND 234C OF THE ACT IS CONSEQUENTIAL IN NATURE THEREFORE A.O. MAY ALLOW CONSEQUENTIAL RELIEF TO THE ASSESSEE. REGARDING CHARGING OF INTEREST UNDER SECTION 234D LEARNED AR SUBMITTED THAT SECTION 234D IS INSERTED BY THE FINANCE ACT 2003 WITH EFFE CT FROM 1 ST JUNE 2003. HE SUBMITTED THAT ITAT DELHI BENCH IN THE CASE OF VAN OORD DREDGING AND MARINE CONTRACTORS BV AND OTHER VS. DDIT 105 ITD 97 AND SPECIAL BENCH IN THE CASE OF E KTA PROMOTERS PVT. LTD. 113 ITD 719 HAS HELD THAT THE PROVISIONS OF SECTION 234D HAS COME I NTO EFFECT FROM JUNE 2003 AND THEREFORE WOULD NOT APPLICABLE PRIOR TO A.Y.2004-2005. SINCE SPECIAL BENCH HAS TAKEN VIEW THAT 6 ITA NO. 2732/AHD/2005 APPLICATION OF SECTION 234D IS PROSPECTIVE AND APPL ICABLE .W.E.F A.Y.2004-2005 NO INTEREST WOULD BE CHARGEABLE FOR A.Y.2002-2003. ACCORDINGLY THIS GROUND OF APPEAL IS PARTLY ALLOWED. 10. IN THE RESULT FOR STATISTICAL PURPOSES THE AP PEAL OF THE ASSESSEE IS PARTLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.02.201 0 SD/- SD/- (D.C. AGRAWAL) (T.K. SHARMA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18/ 02 / 2010 COPY OF THE ORDER IS FORWARDED TO : 1) THE ASSESSEE (2) THE DEPARTMENT. 3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R. ITAT AHMEDABAD. TRUE COPY BY ORDER DEPUTY REGISTRAR ITAT AHMEDABAD LAHA/SR.P.S.