Mohan Metal Industries, Chennai vs Department Of Income Tax

ी चं पज ू ार , लेखा सद य एवं ी वी. दग ु ा! राव, या"यक सद य के सम$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER & SHRI V. DURGA RAO, JUDICIAL MEMBER

आयकर अपील सं./ I.T.A. No.2924/Mds/2014 ( नधा रण वष / Assessment Year : 2011-2012)

The Assistant Commissioner of Income M/s. Mohan Metal Industries, Tax, Vs K-20, Vyasarpadi, Non-Corporate Circle -5, Chennai 600 039. Chennai [PAN:ABCPS 0892H] (अपीलाथ&/Appellant) ('(यथ&/Respondent)

अपीलाथ क ओर से / Appellant by : Shri. A.V. Sreekanth, IRS, JCIT. यथ क ओर से / Respondent by : None

सन ु वाई क तार ख/Date of hearing : 21.5.2015 घोषणा क तार ख /Date of Pronouncement : 29.05.2015

आदे श / O R D E R

PER CHANDRA POOJARI, ACCOUNTANT MEMBER

This appeal by Revenue is directed against the order of the

Commissioner of Income Tax (Appeals)-IV, Chennai, dated 08.09.2014

for the assessment year 2011-12.

:- 2 -: I.T.A.No.2924/Mds/2014.

2. The Revenue has raised the following grounds:-

"2.1.The learned CIT(A) erred in deleting the addition of ₹22,50,000/- made towards disallowance of commission expenditure.

2.2 The learned CIT(A) held that assessee has produced proof that the property was under litigation. This fact and evidence was argued and produced before the ld.CIT(A) for the first time. The ld. Commissioner of Income Tax (Appeals) has neither called for a remand report nor given the Assessing Officer a reasonable opportunity to verify the fresh evidence.

2.3 The details regarding litigation was new evidence produced before the ld.CIT(A). If the Assessing Officer was aware of this litigation he would have accordingly made enquires regarding market rate for litigated properties and fixed the allowable commission which exercise the ld. Commissioner of Income Tax (Appeals) has held that the Assessing Officer has not done.

2.4 Having regard to the provisions of Rule 46A of the Income Tax Rules, the ld. Commissioner of Income Tax (Appeals) ought to have given the Assessing Officer a reasonable opportunity to examine/verify the fresh evidence produced before the ld. Commissioner of Income Tax (Appeals).

2.5 The ld. Commissioner of Income Tax (Appeals) ought to have appreciated that the assessee has not produced before the Assessing Officer the four persons to whom commission was paid but merely filed a Memorandum of Understanding listing the services to be rendered by the related parties.

2.6 The learned CIT(A) has not appreciated the fact that the persons stated to have received the payment have admitted the same as ''share of profit on land'' and not as commission. This could not be verified by Assessing Officer as the persons were not produced before him.

2.7 The ld. Commissioner of Income Tax (Appeals) ought to have appreciated that the assessee has not produced any evidence towards the various activities as mentioned in the Memorandum of Understanding''.

:- 3 -: I.T.A.No.2924/Mds/2014.

3. None appeared for assessee. We proceed to dispose of this

appeal after hearing the ld. Departmental Representative.

4. At the time of hearing, the ld. Departmental Representative

drew our attention to para 7 of the order of Commissioner of Income

Tax (Appeals)'s stating that at the time of first appellate proceedings,

the assessee had produced copies of police compliant, criminal petition

filed by the assessee and High Court order dated 07.02.2014, relating

to the criminal petition, to show that joint development of the land was

not feasible. The Commissioner of Income Tax (Appeals) relied on this

decision to delete the addition of G22,50,000/- towards commission

expenditure. Accordingly, the ld. Departmental Representative

submitted that there was violation of Rule 46A of the Income Tax

Rules and requested that opportunity of hearing to the given to the

Assessing Officer.

5. We accede to the request of the ld. Departmental

Representative. Accordingly in the interest of justice, we remit the

entire issue back to the file of the Assessing Officer for fresh

consideration. The Assessing Officer shall consider all the documents

whatever the assessee has filed before the Commissioner of Income :- 4 -: I.T.A.No.2924/Mds/2014.

Tax (Appeals) and decide the issue of disallowance of commission

expenditure of G22,50,000/- afresh.

6. In the result, appeal of the Revenue in ITA No.2924/Mds/2014

is partly allowed for statistical purpose.

Order pronounced on Friday, the 29th day of May, 2015, at Chennai.

Sd/- Sd/- (वी. दग ु ा! राव) (चं पज ू ार ) V. DURGA RAO (CHANDRA POOJARI) या"यक सद य / JUDICIAL MEMBER लेखा सद य/ ACCOUNTANT MEMBER

चे"नई/Chennai. #दनांक/Dated:29.05.2015. KV

आदे श क त&ल'प अ(े'षत/Copy to: 1. अपीलाथ /Appellant 2. यथ / Respondent 3. आयकर आयु*त (अपील)/CIT(A) 4. आयकर आयु*त/CIT 5. 'वभागीय त न-ध/DR

6. गाड फाईल/GF.