1 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH: `C' NEW DELHI
BEFORE SHRI R. S. SYAL, ACCOUNTANT MEMBER
AND
SMT SUCHITRA KAMBLE, JUDICIAL MEMBER
I.T.A .No.-1007/Del/2012
(ASSESSMENT YEAR-2008-09)
ACIT vs Habib Ahmed
Circle-32 (1), Room No. 376A, M-3, South Extension
C.R. Building, I.P. Estate Part-II
New Delhi New Delhi
ABAPA7773K
(APPELLANT) (Respondent)
I.T.A .No.-3748/Del/2013
(ASSESSMENT YEAR-2009-10)
DCIT vs Habib Ahmed
Circle 32(1), M-3, South Extension-II
New Delhi New Delhi
ABAPA7773K
(APPELLANT) (Respondent)
Appellant by Ms Anima Barnwal, Sr. DR.
Respondent by Sh. Rajeev Saxena, Adv.
Ms. Sumangla Saxena, Adv.
Date of Hearing 19.10.2015
Date of Pronouncement
23.10.2015
ORDER
PER SUCHITRA KAMBLE, JM
ITA NO. 1007/DEL/2012
This appeal is filed by the Revenue against order dated 15/12/2011
passed by Ld. CIT(A)'s XXVI for the A.Y 2008-09.
2 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
2. The grounds of appeal are as under:-
"1. Whether Ld. CIT(A) was justified in the deleting addition of
Rs.1,600,22/- on account of undisclosed profits received from
various outlets when agreement speaks of the sharing of the gross
receipts in the ratio of 65:35 and not that of the net profit from
various outlets."
2. Whether Ld. CIT(A) was justified in the deleting addition of Rs.
254369/- on a/c of excess claim of rent when details filed before the
Ld. CIT(A) were not available before the A.O for examination and the
Ld. CIT(A) deleted the addition after admitting additional evidences
in violation of Rule 46A.
3. Whether Ld. CIT(A) was justified in the deleting addition of
Rs.397930/-on a/c of business promotion expenses when no
bills/voucher were filed by the assessee before the Assessing
Officer and Ld. CIT(A) deleted the addition after admitting
additional evidences in violation of Rule 46A.
4. Whether Ld. CIT(A) was justified in deleting addition of Rs.235320/-
made by the Assessing Officer on account of repairs and
maintenance when no bills/voucher were filed by the assessee
before the Assessing Officer and Ld. CIT(A) deleted the addition
after admitting additional evidences in violation of Rule 46A."
3. The assessee is a proprietor of business concerns named as M/s Habibs
& M/s Habib & Sons. M/s Habibs is engaged in running saloons in various
parts of Delhi and M/s Habib & Sons is engaged in running the training
academy. The assessee filed his return of income for the A.Y 2008-09 on 30th
September 2008 disclosing a total income of Rs.5,80,250/-.
4. As relates to Ground No.1, the assessee has claimed commission
expenses of Rs.18,69,981/- in the profit and loss account. In response to the
notice, the assessee submitted that the commission was paid to various parties
with whom the assessee has opened different partnership entities in and out of
Delhi. As an evidence to the commission paid the assessee has submitted
3 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
management agreement/collaboration agreement with various parties to whom
the commission has been paid. The assessee had an arrangement of the net
profit sharing in the ratio of 65:35 on the amount after reducing, the operating
expenses from the gross receipts with various parties. The assessee claimed
35% of the net profit sharing paid to the various parties as commission
expenses. The Assessing Officer has added Rs.19,60,022/- as business income
on account of net profits received from outlets at Rohini (Delhi), Dehradun,
Noida and Faridabad. The Ld. CIT(A) deleted the said addition of Rs.
19,60,022/-.
5. The DR submitted that the agreements are neither of franchise in nature
or that of collaboration agreement. All the payments were made from the
assessee's account only. The DR further submitted that the respective parties
were only agents and there was different arrangement altogether diverting the
actual nature of the agreements. The DR relied upon Para 4.7 of the Assessing
Officer 's order. The DR submitted that the Assessing Officer and Ld. CIT(A)'s
order is non-speaking in this respect and is required to be restored back to the
Assessing Officer.
6. The AR submitted that the Ld. CIT(A) had passed the order after proper
perusal of all the agreements which were annexed to paper book & the same
were submitted before the Assessing Officer as well as Ld. CIT(A). Therefore,
Ld. CIT(A)'s order is just and proper.
7. We have perused all the records and heard both the parties. The
assessee has given all the details related to collaboration agreement as well as
audited accounts and tax audit. The same was annexed at Page 152, 188 to the
4 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
paper book of the assessee and submitted before the authorities by the
assessee. Thus, the relevant material as to how the profits are earned was
explained by the assessee with relevant documents before the Assessing Officer
as well as before the Ld. CIT(A). The CIT(A) has rightly held that as per the
terms of the agreements, the assessee was collecting the total revenue and
booking the same as its income out of the gross collections, reducing the
service tax. The agreed percentage of revenue share is being paid to the
partner franchisees and booked the same as commission in the books of
accounts. All the payments of commission were paid by cheques to the
franchise after deducting the tax at source at applicable rates. This finding of
the CIT(A) is right and is upheld.
8. In result, Ground No. 1 of Revenue is dismissed.
9. Ground No. 2 relates to addition of Rs. 2,54,369 on account of excess claim
of rent. The Assessing Officer stated that the assessee has submitted only the
copy of rental agreements up to Rs.90,000/- as per the rental agreement the
assessee was due to pay an amount of Rs.10,80,000/- on account of the rental
expenses. The Assessing Officer further held that in respect to the remaining
rental expenses the assessee had no justification in terms of any
documents/evidences to substantiate the claims. Further in case of the branch
out lets rental expenses or other premises related expenses are turn by other
parties and in case of employees' HRA was dealt in their salary component.
Hence no additional rental expenses were allowed and addition of
Rs.2,54,369/- was made by the Assessing Officer .
5 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
10. The Ld. CIT(A) held that the assessee has filed copies of TDS Certificates
which included service tax of Rs.1,00,116/- and arrear rent of Rs.91,253/-.
The addition was deleted on the account of production of TDS Certificate by the
CIT(A).
11. Ground No. 3 relates to addition of Rs. 3,97,930/- on account of
business promotion expenses. The Assessing Officer held that there was no
bills in respect of any of the ledger entry & the same were provided by the
assessee in respect of the business promotion expenses. The Ld. CIT(A) in its
order has given a finding that the assessee produced the copy of ledger account
along with complete bills/vouchers. The Ld. CIT(A) has perused major bills
which were filed by the assessee during the course of the Ld. CIT(A)'s
proceedings.
12. Ground No. 4 relates to repair and maintenance expenses. The
Assessing Officer found that as per the ledger account these expenses were
only amounting to Rs.3,91,394/-. The Assessing Officer added an amount of
Rs.39,623/- to the income of the assessee on account of being the bogus
claims. The Ld. CIT(A) deleted the addition of Rs.2,35,320/- made by the
Assessing Officer by holding that the same is on estimated basis.
13. The DR submitted that there was additional evidence produced by the
assessee before the CIT(A) which was not at all produced before the Assessing
Officer. The Assessing Officer requested for the relevant documents in respect
of additions made on account of excess claim of rent, business promotion
expenses and repairs and maintenance. But assessee failed to do so. Therefore,
the DR submitted that the Ld. CIT(A) should have given the opportunity to
6 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
Assessing Officer as per Rule 46A as relates to additional evidences, which the
Ld. CIT(A) failed to do so. The AR relied upon the Ld. CIT(A)'s order.
14. We have perused all the relevant documents and heard both the parties.
It is observed that in respect of the additions made on account of excess claim
of rent, business promotion expenses and repairs and maintenance, the AO
requested the assessee to furnish the necessary details for enabling him to
complete the assessment, but the assessee did not properly comply with.
However, the Ld. CIT(A) has deleted the addition by taking into consideration
several documents/evidence, which were not furnished before the AO, without
giving any opportunity to the AO in terms of Rule 46A. As such, his action
cannot be countenanced. Under the given circumstances, we are of the
considered opinion that the ends of justice would meet adequately, if the
impugned order is set aside and the matter is restored to the file of the AO for
deciding these issues afresh as per law. We order accordingly. Needless to say,
the assessee will be allowed a reasonable opportunity of hearing in such fresh
assessment proceedings. Ground Nos. 2, 3 and 4 of the Revenue are allowed
for statistical purposes
15. In result, the appeal is partly allowed for statistical purpose.
ITA NO. 3748/DEL/2013
This appeal is against order dated 08/03/2013 passed by Ld. CIT(A)'s
XXVI and filed by the Revenue for the A.Y 2009-10.
17. The grounds of appeals are as under:-
7 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
"1. Whether in facts and circumstances of the case Ld. CIT(A) is justified
in deleting the addition of Rs.25,51,872/- made on account of
undisclosed income from running of saloons at Dehradun,
Faridabad, Noida and Rohini as own share of revenue of the
assessee and overlooking sharing of revenue in 65:35 ratio."
18. Both the sides are in agreement that the facts and circumstances of this
ground are similar to Ground No. 1 for the Assessment Year 2008-09.
Following the view taken hereinabove, we decide this ground against the
Revenue.
19. In result, the appeal of the Revenue is dismissed.
The order is pronounced in the open court on 23rd of October, 2015.
Sd/- Sd/-
(R.S. SYAL) (SUCHITRA KAMBLE)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 23/10/2015
R. Naheed*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
8 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
Date
1. Draft dictated on 19.10.2015 PS
2. Draft placed before author 20.10.2015 PS
3. Draft proposed & placed before JM/AM
the second member 21.10.2015
4. Draft discussed/approved by JM/AM
Second Member.
5. Approved Draft comes to the 23.10.2015 PS/PS
Sr.PS/PS
6. Kept for pronouncement on PS
7. File sent to the Bench Clerk PS
23.10.2015
8. Date on which file goes to the AR
9. Date on which file goes to the
Head Clerk.
10. Date of dispatch of Order.
9 ITA NO.1007/DEL/12 &
ITA NO.3748/DEL/13
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