TaxTMI 
TaxTMI 
1998 (5) TMI 34
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....ted on 23-3-1987. The legal plea of the assessee was that it is barred by time and assessment should be annulled. He has also placed reliance on the decision of Rajasthan High Court in the case of CIT v. Shah Bros. [1988] 171 ITR 19/36 Taxman 194, decision in the case of Eapen Joseph v. CIT [1987] 168 ITR 26/35 Taxman 213 (Ker.) and the decision of Delhi High Court in the case of O.P. Malhotra v. CIT [1981] 129 ITR 379/7 Taxman 98 and that of the Allahabad High Court decision in the case of Dr. S.B. Bhargava v. CIT [1982] 136 ITR 559/11 Taxman 28. This plea of the learned counsel of the assessee was not accepted by the learned CIT(A) on the ground that the Hon'ble High Court of Calcutta in the case of Kumar Jagadish Chandra Sinha v. CIT [1982] 137 ITR 722 has held otherwise after interpretation of section 153(1)(c) of the Act in which return under section 139(4) of the Act was also treated as revised return and assessment could be completed up to 31-3-1987 and thus held that assessment order was not barred by limitation. It is now contended by the learned counsel for the assessee that the Hon'ble Supreme Court in the case of Kumar Jagdish Chandra Sinha v. CIT [1996] 220 ITR 67/86 T....
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....ler. He gave out the instances as in the case of sale of one property sold for Rs. 4 lacs, the assessee has shown Rs. 4,000 as commission while it should have been Rs. 8,000. In the same way, in some cases, no commission was charged as particularly in cases of Sr. No. 13. He specifically asked the assessee to explain the reasons as to why commission has not been charged or under-charged from various parties. The assessee gave explanation vide reply dated 12-6-1987 to the effect that charging of low rate of commission was very much inherent in their trade and they had been following this practice in the past too and the Department never objected. Sometimes the rate of commission if charged @ 2% becomes too much and parties are not coming forward to part with that amount, that is why in such cases lower rate of commission is charged. Sometimes to promote the business, no commission is charged from any party but it is not the practice that commission is charged and not accounted for in the books. The assessee's explanation was considered and following the order of the assessment year 1983-84, the Assessing Officer found himself not satisfied with the same as well as about the correctn....
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.... he failed to examine any of them. Apart from it, the assessee submitted a comparative chart showing the commission income and additions made by the Assessing Officer. A perusal of the chart will reveal that from the assessment years 1983-84 to 1989-90, the additions have been made by the Assessing Officer to the commission income declared by the assessee and in all the cases the CIT(A) deleted the additions and the Department did not come in appeal before the Tribunal. The learned counsel further pointed out that from the assessment years 1991-92 to 1996-97, no addition has been made by the Assessing Officer to the commission income shown by the assessee even though assessments have been completed under section 143(3) of the Act. Relying upon this, the contention is that the Department itself accepted the contention of the assessee after assessment year 1991-92 and no addition was made. On the basis of the above, he contended that the additions were rightly deleted and the grounds be rejected. 8. We have considered that rival submissions and perused the records. It is undisputed fact that the assessee was showing commission income and details giving out the names of the propert....
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....ns thereof. Nothing has been done by the assessee. Mere giving out the names of the parties, who were involved in the sale and purchase of properties and asking the Assessing Officer to summon any of them and to find out whether the amount as shown by the assessee in that transaction alone passed the hands or some more amount was transferred to assessee will not be taken as sufficient. It is a matter of general knowledge that in every transaction of sale and purchase of immovable properties between individuals, the exact amount which passes the hands is invariably much more than to the amount shown by those parties in sale deed, etc. After transfer is over, each of the parties will always remain stick to the amount shown in the registered sale deed as in case they come with other figures, naturally they will face consequences for violation of different laws. The same thing will apply in the cases of commission to be charged by property dealers as in case the Assessing Officer is examining any of the parties or the transaction undisputedly first they will support property dealer, otherwise he will reveal the actual truth of that transaction, which is always known to him and will bri....
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.... allowed as we restore the orders of the Assessing Officer and reverse that of the CIT(A). 12. One additional ground is involved in the assessment year 1984-85, which relates to the addition of Rs. 11,400. 13. The Assessing Officer noted that in assessment year 1984-85, Smt. Raj Kumari wife of one of the partners of the assessee-company had declared a short term capital gain of Rs. 11,400. The Assessing Officer looked into the assessment records of Smt. Raj Kumari for the assessment year 1973-74 onwards and found that assessee was regularly engaged in the business of purchase and sale of land and the profit arising out of such transactions were to be taxed as business profits and not capital gains. He treated the business of Smt. Raj Kumari as benami of the assessee-company on the ground that the entire investment was made by the assessee-company from its accounts and thus he treated the amount of Rs. 11,400 as income of the assessee. The learned CIT(A) deleted this addition on the ground that this lady is being separately assessed to tax and already the amount of Rs. 11,400 has been subjected to tax as capital gain in the hands of Smt. Raj Kumari by the same Assessing Office....
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....ands of the appellate authorities which I will like to reproduce hereunder: Asst. Year Commission Addition Relief by CIT(A) Remarks 1983-84 2.07,237 50,000 50,000 Under Appeal for I.T.A.T. 1984-85 1,19,963 70,000 70,000 -do- 1985-86 33,209 25,000 25,000 -do- 1986-87 1,59,375 60,000 60,000&n....
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.... 143(3) dated 26-3-1993 1993-94 3,47,710 NIL N.A. Asst. completed under section 143(3) dated 17-2-1994 1994-95 3,73,440 NIL N.A.  ....
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....-83 wherein it was held that it is for the assessee to decide as to whether the commission should be charged from the seller or from the purchaser or from both or from none at all. It is again between the assessee and the payer of commission to decide as to the rate on which the commission should be paid. The question of making addition would arise in a case where it is found that the assessee has received commission but has not accounted for the same in the books. The CIT(A) for the assessment year 1982-83 deleted the addition of Rs. 15,548 and that decision was accepted by the Revenue. The CIT(A) deleted the addition of Rs. 50,000 for assessment year 1983-84 but although the Revenue is in appeal against the order of the CIT(A) yet that appeal has become only of a academic nature since the assessment for assessment year 1983-84 has been annulled by us on the basis of the decision of the Supreme Court in the case of Kumar Jagdish Chandra Sinha. 5. For the assessment year 1984-85 the addition of Rs. 70,000 made by the Assessing Officer was deleted by the CIT(A) relying on his order for the assessment year 1983-84 and the observations of the CIT(A) for assessment year 1982-83 whic....
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....y Rs. 1,087 has been charged. Here also the appellant has charged commission of Rs. 1,087 + Rs. 2,174, i.e., Rs. 3,261. 8. Thus, I find that the Assessing Officer's observations are not based on record. There is no instance at all, where commission was actually charged but not recorded in the books. There are some instances where commission has been charged from only one party but this is part of the nature of business as has been held by the CIT(A)-II, Jalandhar, and in my appellate order for the asst. year 1983-84. I, therefore, hold that the addition of Rs. 60,000 is not, at all, sustainable and the same is ordered to be deleted." 8. The Assessing Officer has made the additions only on the ground that complete details with regard to the transactions of immovable properties in respect of which the commission was earned by the assessee were not furnished, although the Assessing Officer himself admits that the assessee did furnish the details in respect of a large number of properties in relation to which the commission was earned and disclosed in the books of account. The details of total commission income declared have been given in the chart reproduced by me in para 3 abov....
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....t actually paid by the purchaser/seller but instead made ad hoc addition of Rs. 70,000 for assessment year 1984-85, Rs. 25,000 for assessment year 1985-86 and Rs. 60,000 for assessment year 1986-87. 9. On appeal, the CIT(A) deleted the additions for the reasons given in the order reference to which has been made in the earlier paras. On further appeal by the Revenue my learned brother has reversed the order of the CIT(A) and restored that of the Assessing Officer for the reasons given in paras 8 to 11 of his proposed order. 10. The main justification for reversing the order of the CIT(A) given by my learned brother is that it is a matter of general knowledge that in every transaction of sale and purchase of immovable properties between individuals, the exact amount which passes the hands is invariably much more than to the amount shown by those parties in sale deeds, etc. After transfer is over, each of the parties will always stick to the amount shown in the registered sale deed as in case they come with other figures, naturally they will face consequences for violation of different laws. The same thing will apply in the case of commission to be charged by property dealers a....
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....her he has correctly accounted for the commission received in the books of account. It is an admitted position that the Assessing Officer has not summoned any of the purchasers or sellers despite the fact that a specific request was made by the assessee to the Assessing Officer in this regard. In this view of the matter I am of the opinion that the additions were made by the Assessing Officer only on the basis of surmises and conjectures and were rightly deleted by the CIT(A) as there was no material on record to support the additions. Thus keeping in view the totality of the facts and circumstances of the case I am of the opinion that the order of the CIT(A) requires no interference and has to be upheld. Therefore I will adjudicate the grounds of the Revenue relating to the above additions against the Revenue and in favour of assessee. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 The Members who heard these appeals having difference of opinion on the following points, the case is referred to the Hon'ble President, Income-tax Appellate Tribunal under section 255(4) of the Income-tax Act, 1961 for the opinion of the Third Member: "Whether, in the facts and circums....
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....hasers and sellers. Details in respect of the amount of Rs. 1,05,439 were furnished by the assessee. On the basis of these details, the Assessing Officer drew certain presumptions. Taking into consideration the background for the assessment year 1983-84, Assessing Officer opined that from these details, sale and purchase transactions cannot be verified. It was also noticed from these details that assessee did not charge commission @ 2% from the purchasers and sellers. Some illustrations were given to show that the rate of commission was not 2% in all the cases. Assessing Officer asked for the explanation of the assessee. In the opinion of Assessing Officer, commission was undercharged. Assessee explained vide its letter dated 12-3-1987 that charging of low rate of commission was very much inherent in their trade and they had been following this practice since last many years and it was accepted by the Department in the past. There was nothing sacrosanct about the rate of commission. It was charged as per the business exigencies. No uniform rate of commission can be charged in this trade. It is dependent on the nature of the transaction. At times to promote the cause of business low....
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....ng her winnings from races was not genuine. 7. The learned Departmental Representative further relied on the order of the Assessing Officer and argued that there was nothing wrong in deriving inference from human probabilities, as the assessee could not give any justification for charging the lower rate of commission. It is a matter of general knowledge that in every transaction of sale and purchase of immovable properties between individuals, the exact amount which passes hands is invariably much more than to the amount shown by these parties in sale deeds, etc. After transfer is over, each of the parties will always stick to the amount shown in the registered sale deed as in case they come with other figures, they will face consequences for violation of different laws. Correct facts cannot be gathered from the parties. Therefore, recourse to be made to the circumstantial evidence. The Assessing Officer rightly decided the issue by taking into consideration the circumstantial evidence. It was submitted that under hand payments are prevalent in the real estate transactions. 8. I have heard the rival submissions in the light of material placed before me and precedents relied u....
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....her side or where it is equally worthless or equally balanced. Where such is not the case and all available evidence is considered without reference to the onus and, without relying on the circumstances that the onus lies on a particular party, the issue is determined on facts, the onus cannot be said to have influenced the decision. 10. I now revert to the facts of the present case. It is clear from records that assessee has given details of the amount of "commission received" to the Assessing Officer. Assessing Officer harboured certain doubts as to the amount of commission received. Assessing Officer wanted the assessee to produce the agreements and the documents pertaining to the purchase and sale of properties. It was pointed out to him that the agreement remains with the parties. The assessee worked only as a middleman and he earned his commission. He did not keep the papers connected with the parties. Next the Assessing Officer objected that in large number of cases the assessee did not charge commission either from the purchasers or from the sellers and the amount of commission charged was less than 2% which is the normal rate of commission. It is nowhere laid down that ....
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....nst any buyer for inclusion of the so-called 'on-money' paid by them for acquisition of premises and wherever such action had been taken, additions made have been deleted by the appellate authorities. When such is the position, we are of the view that the addition made by the Assessing Officer cannot be sustained even if we take into consideration the prevailing practice of payment of 'on-money' in real estate transactions." 14. The maxim of English Law, as propounded by Holroyd, J. prescribes: "It is better than ten guilty men should escape rather than one innocent should suffer." The principle of justice requires than no one should be punished on the basis of presumption. Addition should not be made merely on surmises. It should be supported by cogent material and evidence. The ratio of the Apex Court rendered in the case of Sumati Dayal cannot be stretched to the facts of the present case as because the bona fide of the transaction was not in doubt. The Department did not detect any concealment. 15. Initially the burden is on the Revenue to prove each item which is liable to be taxed as revenue receipt. This burden depends upon the nature of income and the circumstances....