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Facts
The assessee, an individual engaged in real estate business, failed to file an income tax return for the assessment year 2016-17. Based on information regarding a Rs. 30 lakh real estate deal, the Assessing Officer (AO) issued a notice. Despite reassessment proceedings, the assessee did not provide details, leading the AO to bring the Rs. 30 lakhs to tax under section 69A of the Act.
Held
The Tribunal held that it was not discernible whether the assessee followed a cash or mercantile system of accounting. The substantial sum was received on 06.04.2016 for services rendered in the financial year 2015-16. Since the assessee did not file a return for the subsequent year disclosing this receipt, the AO was correct in bringing it to tax in the relevant assessment year 2016-17.
Key Issues
Whether the addition of Rs. 30 lakhs under section 69A was justified for AY 2016-17, given the date of receipt and accounting method?
Sections Cited
250, 69A, 148, 147, 143(3), 145
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Income Tax Appellate Tribunal, ‘A’ (SMC
Before: SHRI GEORGE GEORGE K
आदेश/ O R D E R This appeal filed at the instance of the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 30.12.2024, passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2016-17.
The solitary issue that is raised is whether the First Appellate Authority (FAA) is justified in confirming the addition made by the AO amounting to Rs.30,00,000/- u/s.69A of the Act.
Brief facts of the case are as follows: The assessee is an individual doing real estate business. For the assessment year 2016-17, the assessee did not file any return of income. Based on the information that assessee had received Rs.30 lakhs from one Smt. Rashmi Rajan Kapoor on account of real estate deal, notice u/s.148 of the Act was issued. During the course of reassessment proceedings, assessee did not furnish requisite details such as brokerage fees received / receivable during the year, business activities of the assessee, etc. Therefore, an amount of Rs.30 lakhs was brought to tax by the AO u/s.69A of the Act.
Aggrieved by the assessment completed u/s.147 r.w.s. 143(3) of the Act on 24.09.2021, the assessee preferred appeal before the First Appellate Authority. Before the First Appellate Authority, the assessee took legal contentions as well as grounds on merits. Both legal contentions and the issues on merits were
Aggrieved by the order of the FAA, the assessee has filed the present appeal before the Tribunal. The limited submission of the Ld.AR before the Tribunal was that the assessee had received an amount of Rs.30 lakhs only on 06.04.2016 and same can be brought to tax in the subsequent assessment year namely AY 2017-18, since the assessee was following cash system of accounting. The Ld.AR filed a brief written submission, which is reproduced below:- The respectful submissions of the appellant is that the impugned addition of Rs.30,00,000/-represents commission RECEIVED by the appellant from Rashmi Rajan Kapoor on 06/04/2016, which sum is credited in the bank account in Account No.820310310000074 in Bank of India, Saibaba Colony, Coimbatore on 06/04/2016. As the appellant has been, whenever his income has exceeded the taxable limit, in filing income tax returns by mentioning in the column - METHOD OF ACCOUNTING- CASH and the details of returns of income filed with acknowledgement number in the form of a chart. Asst. Year Date of Filing Acknowledgment Number 2010-11 22/07/2011 241129230220711 2011-12 22/07/2011 241144560220711 2012-13 22/03/2014 130910760220314 2013-14 05/07/2013 644590520050713 2016-17 16/09/2021 518426850160921 2021-22 29/03/2022 461752970290322 2023-24 31/07/2023 121686601310723 4 -: Turning to sec.145 for a moment, sub sec.1 of sec.145 mandates that income chargeable under Business or Profession or Other sources shall, subject to sub. Sec.2, be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. When it is open to the appellant to adopt either the cash basis or mercantile basis, the choice is that of the appellant. In view of the above, the addition made, though NOT RECEIVED IN THIS YEAR, requires to be deleted, keeping in mind the income consistently and regularly offered on CASH BASIS.
The Ld.DR strongly supported the orders of the AO and the FAA.
I have heard rival submissions and perused the material on record. The assessee is a real estate consultant and had received Rs.30 lakhs as brokerage fee from sale proceeds. It is also an admitted fact that for the relevant assessment year assessee had not filed the return of income. The only contention before the Tribunal is that assessee had received Rs.30 lakhs in the subsequent year namely 2017-18 and same may be brought to tax in that year. It is also an admitted fact that for the subsequent year the assessee had not filed the return of income disclosing the receipt of Rs.30 lakhs as brokerage / commission from sale of a property. The assessee before the AO nor before the FAA had produced the details as regards to the activities undertaken by the assessee, details of commission received, etc.
5 -: It is not discernable from facts on record whether assessee is following cash system of accounting or mercantile system of accounting. Moreover, a substantial sum of Rs.30 lakhs has been received on 06.04.2016 admittedly for the services rendered during the financial year namely 2015-16. As mentioned earlier, assessee had not filed the return of income even for the subsequent assessment year disclosing the receipt of this amount of Rs.30 lakhs. Therefore, the AO is correct in bringing to tax the sum of Rs.30 lakhs during the relevant assessment year namely 2016-17. It is ordered accordingly.
In the result, the appeal filed by the assessee is dismissed.
Order pronounced in the open court on 1st July, 2025 at Chennai.