TaxTMI 
TaxTMI 
2018 (11) TMI 1841
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....tatement of Tejas V. Shah on the basis of which additions has been made by Id. A.O. and confirmed by Commissioner of Income-tax(A) even though letter dated 1/9/2016 addressed to the learned Commissioner of Incometax( A) and copy endorsed to learned Range Commissioner of Income-tax, however there was no reply of the said application till the date of hearing of appeal and no copy was supplied to the appellant and on unwanted premises this ground of the appellant was dismissed which is against the principle of natural justice and considering the same this ground of the appellant be decided on merits. 3. On peculiar facts and circumstances of the case of the appellant the additions confirmed by Commissioner of Income-tax (Appeal- 5) requires to be deleted. 4. Your appellant craves leave to add, alter or amend any of the grounds till the appeal is finally heard and decided." 3. The solitary issue raised by the assessee in this appeal is that ld CIT(A) erred in confirming the order of AO by sustaining the disallowance of Rs. 7,69,243/- u/s 69C of the Act. 4. Briefly stated facts are that the assessee is a partnership firm and engaged in the business of construction. There was a sea....
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.... the statement was recorded of Shri Tejas V. Shah u/s 132(4) of the Act or 131 of the Act or 133(A) of the Act. Therefore no addition can be made by the AO merely based on the statement furnished by Shri Tejas V. Shah which is not supported on the basis of any tangible material. The copy of the statement was not furnished to the assessee despite the fact the assessee made a request for furnishing the statement as discussed above. However, the ld CIT(A) disregarded the submission of the assessee and confirmed the order of the AO by observing as under: "3.5. Facts of the case and the submissions are considered. The addition made by the AO is based on the statement of Shri Tejas V. Shah recorded under oath and has its own evidentiary value. During the assessment proceedings in response to show cause issued by the AO the appellant has simply stated that it has no transactions with the firm or its partner Tejas V. Shah. During the assessment proceedings the appellant has not asked for copy of the statement of Tejas V. Shah. A proper opportunity was provided to the appellant. The appellant has also admitted that it has received advances against these plots which shows that the assesse....
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....s a purchaser to the seller" and in the very next line Ld. A.O. has said that "When such interested party approaches the seller / builder for booking a flat/shop and pays advance for the same, the introducer become eligible for the commission." Therefore the A.O. himself has given contradictor) finding because to eligible for commission and payment for commission are different. Eligible means right was created but transaction has not been took place, and paid means already paid. Therefore the addition made on assumption and presumption on the basis of third party is not tenable in km and requires to be deleted. Further the A.O. has made assumption and given finding that generally the commission is paid when a person introduces a purchase to the seller is very vague finding. In general principal commission is payable when all the transactions are completed and all the conditions are fulfilled between buyer and seller even in general trade practice commission on sale is paid after the payment has been received by the seller after the credit period is over. Therefore the A.O. has made addition on wrong presumptive finding is against the principal of natural justice and therefore the....
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....ther hand, ld DR submitted that Shri Tejas V. Shah has duly admitted in the statement for the sale of plots. In the statement, the details of the number of the plots along with address were duly furnished. 7.1 It is undisputed fact that the assessee has received advances against the sale of such plots which fortifies the order of the AO. The ld. DR vehemently supported the order of Authorities Below. 8. We have heard the rival contentions and perused the materials available on record. It is a fact on record that the addition was made on the basis of the statement furnished by Shri Tejas V. Shah during the course of search and survey proceedings. 8.1 From the finding of the AO we note that there is no clear finding given by him with regard to the statement whether it was obtained during the survey proceedings or search proceedings. In our considered view, the AO should have recorded the relevant details of the section under which the statement was recorded. 8.2 We also note that the addition was made by the AO under Section 69C of the Act merely on the basis of the statement obtained from Shri Tejas V. Shah. There was no other iota of evidence suggesting that the assessee ....
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....corded expenditure represented personal expenditure or pertained to business." 8.3 The provision of Section 69C requires to make the disallowance of the expenses which has been incurred by the assessee and the assessee fails to explain the nature/ source of such expenditure. Thus, it is implied that first of all the AO has to prove whether the assessee has incurred expenditure and then the question comes for the explanation. In the instant case, the AO has not proved with the documentary evidences that the assessee has incurred expenditure on account of commission expenses. Thus, in such case the question of explanation does not arise. In this regard, we find support and guidance from the judgment of Delhi High Court in the case of CIT vs. Lubtec India Ltd. reported in 311 ITR P. 175, wherein it was held as under: "5. The addition is sought to be made in view of the provisions of section 69C of the Income-tax Act, 1961, which reads as follows : "69C. Where in any financial year an assessee has incurred any expenditure and he offers no explanation about the source of such expenditure or part thereof, or the explanation, if any, offered by him is not, in the opinion of the Asses....
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.... flaw which makes the order nullity inasmuch as it amounted to violation of principles of natural justice because of which the assessee was adversely affected. It is to be borne in mind that the order of the Commissioner was based upon the statements given by the aforesaid two witnesses. Even when the assessee disputed the correctness of the statements and wanted to cross-examine, the Adjudicating Authority did not grant this opportunity to the assessee. It would be pertinent to note that in the impugned order passed by the Adjudicating Authority he has specifically mentioned that such an opportunity was sought by the assessee. However, no such opportunity was granted and the aforesaid plea is not even dealt with by the Adjudicating Authority. As far as the Tribunal is concerned, we find that rejection of this plea is totally untenable. The Tribunal has simply stated that cross-examination of the said dealers could not have brought out any material which would not be in possession of the appellant themselves to explain as to why their ex-factory prices remain static. It was not for the Tribunal to have guess work as to for what purposes the appellant wanted to cross-examine those d....