M/S. Chamber Properties Pvt. ... vs Department Of Income Tax

Dy. Commissioner of Income Tax, M/s. Chamber Properties Central Circle 2(1), Pune Pvt. Ltd., Vs. Esplanaded School Bldg., 1st Flr. Fort, Mumbai-01 (Appellant) (Respondent) PAN No. AAACC5318E

Revenue By: Shri Rajiv Harit Assessee By: Shri Dharmesh Shah

Date of hearing : 07-05-2015 Date of pronouncement : 13-05-2015

ORDER

PER VIKAS AWASTHY, JM:-

The appeal has been filed by the Revenue against the order of

Commissioner of Income Tax (Appeals)-Central, Pune dated 06-09-2013

for the assessment year 2005-06. The Revenue has assailed the findings

of Commissioner of Income Tax (Appeals) in deleting the addition of

Rs.15,33,644/- on account of disallowance of commission and

brokerage.

2. The brief facts of the case are: The assessee is a Builder and

Developer. The assessee filed its return of income for the assessment

year 2005-06 on 07-10-2005 declaring income of Rs.2,39,990/-. The

case of the assessee was selected for scrutiny and notice u/s. 143(2) was 2 ITA No. 2201/PN/2013, A.Y. 2005-06

issued to the assessee. During the course of scrutiny assessment, the

Assessing Officer observed that the assessee has claimed payment of

brokerage and commission Rs.15,33,644/- under the head

Administrative Expenses. The details of the payment of brokerage and

commission were called for. On the basis of information furnished by

the assessee, the Assessing Officer made preliminary enquiries from the

persons who had purchased flats. According to the assessee the

brokerage was paid to M/s. Mehta's Real Estate Consultant and M/s.

Panchsheel Realty (unit of Premsagar Hotels Pvt. Ltd.), a sister concern

of assessee company. On enquiry the Assessing Officer found that the

persons to whom flats were allegedly sold through broker denied the

payment of any brokerage/commission. They categorically stated that

they had purchased flats directly from builder and there was no

involvement of any broker. The Assessing Officer accordingly, disallowed

the expenditure towards payment of brokerage and commission.

Aggrieved by the assessment order dated 31-12-2007, the assessee

preferred an appeal before the Commissioner of Income Tax (Appeals).

The Commissioner of Income Tax (Appeals) reversed the findings of the

Assessing Officer and allowed the entire claim of assessee with respect to

payment of brokerage and commission.

Now, the Revenue has come in appeal before the Tribunal assailing

the findings of the First Appellate Authority.

3. Shri Rajiv Harit representing the Department submitted that the

Assessing Officer summoned the persons who had purchased flats from

the assessee company. The purchasers of the flats denied the payment

of any brokerage commission or the involvement of any broker in the

purchase of property. The Ld. DR referred to page 14 of the Paper Book 3 ITA No. 2201/PN/2013, A.Y. 2005-06

filed by the assessee. On page 14 the assessee has placed on record the

invoice raised by M/s. Mehta's Real Estate Consultants who was

purportedly instrumental in selling Flat No. D-202 and was paid

brokerage of Rs.92,360/-. The Ld. DR pointed out that except for the

name, the invoice does not bear Sl. No., Address/Details of the broker.

He further contended that the assessee has not placed on record any

agreement for engaging the services of the brokers/commission agents.

No details of services provided by the brokers are given. A bill raised by

M/s. Panchshil Realty that is at page 13 of the Paper Book has

discrepancies. The bill amount and the payments made to the broker

are at variance. The Ld. DR vehemently defended the assessment order

and prayed for set aside the findings of the Commissioner of Income Tax

(Appeals) on this issue.

4. Au contraire Shri Dharmesh Shah appearing on behalf of the

assessee strongly supported the findings of Commissioner of Income Tax

(Appeals). The Ld. AR submitted that the assessment order was passed

hurriedly at the fag end of time barring assessment. Sufficient

opportunity was not afforded to the assessee to properly present its case.

In short period, the assessee produced the evidence whatever available

on 26-12-2007. The assessment order was passed on 31-12-2007. The

assessee had discharged its onus by giving the details of the persons to

whom brokerage/commission was paid. The Assessing Officer did not

verify from the brokers who had received the commission. One of the

brokers M/s. Panchshil Realty confirmed the receipt of brokerage

commission. The confirmation given by M/s. Panchshil Realty is placed

at page 18 of the Paper Book. The Ld. AR vehemently supported the

impugned order and prayed for dismissing the appeal of the Revenue. 4 ITA No. 2201/PN/2013, A.Y. 2005-06

5. We have heard the submissions made by the representatives of

rival sides and have perused the orders of the authorities below. A

perusal of the assessment order shows that the assessment proceedings

were taken up in the third week of December, 2007. The assessee

submitted details of the brokerage/commission paid on 26-12-2007.

Thereafter, show cause notice was served on the assessee on 28-12-

2007. On 31-12-2007 the assessment order was passed. The Assessing

Officer gave effective opportunity of hearing to the assessee on three days

only i.e. 19-12-2007, 21-12-2007 and 24-12-2007. The assessee

furnished certain documents before the Commissioner of Income Tax

(Appeals) during first appeal. Remand report was sought from the

Assessing Officer. The Assessing Officer in remand report has stated

that two flat owners out of six who have purchased the flat from assessee

have denied payment of brokerage or involvement of any

broker/commission agent. However, the Assessing Officer is silent about

other four purchasers. The Commissioner of Income Tax (Appeals) while

granting relief to the assessee has not ascertained the veracity of the

invoice produced by the assessee and has failed to consider the fact that

some of the purchasers of flats have denied the involvement of brokers.

6. It is a well settled principle of natural justice that no one should be

condemned unheard. Adequate opportunity of hearing should be

granted to the parties to the lis. In the present case, it is evident that

assessment was made in a rush. The principles of natural justice were

breached. We, accordingly, remit the file back to the Assessing Officer

for deciding of this issue afresh. The Assessing Officer shall consider the

documents furnished by the assessee before the Appellate Authorities.

The Assessing Officer shall grant sufficient opportunity to the assessee to

present its case. After verifying the genuineness of the documents filed 5 ITA No. 2201/PN/2013, A.Y. 2005-06

by the assessee and the veracity of payment of commission/brokerage,

the Assessing Officer shall decide the issue de novo.

7. The findings of the Commissioner of Income Tax (Appeals) on this

issue are set aside and the appeal of the Revenue is allowed for

statistical purpose.

Order pronounced on Wednesday, the 13th day of May, 2015

at Pune

Sd/- Sd/-

(R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER

Pune, Dated: 13th May, 2015 RK/PS

Copy to

1 Assessee 2 Department 3 The CIT(A)-Central, Pune 4 The CIT-Central, Pune 5 The DR, ITAT, "B" Bench, Pune. 6 Guard file.

//True Copy// By Order

Assistant Registrar, Income Tax Appellate Tribunal, Pune