ITO, NEW DELHI vs. SHRI DHARMENDER KUMAR, NEW DELHI

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ITA 776/DEL/2016Status: DisposedITAT Delhi21 August 2019AY 2010-113 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that since the assessment was made on a protective basis and the commission income was already taxed in the hands of the employer, the assessee should not be taxed on the commission.

What were the facts?

The Revenue made a protective assessment of substantial cash and cheque deposits in the assessee's bank accounts, which were later transferred to his employer. The employer admitted these amounts belonged to him and the assessee was a name lender.

What were the issues?

Whether a protective assessment of commission income is sustainable when the substantive assessment of the same income has already been made in the hands of another assessee.

Which sections of the Income-tax Act were involved?

Not explicitly mentioned

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES ‘G’, NEW DELHI

Before: Sh. Amit ShuklaDr. B. R. R. Kumar

Hearing: 20.08.2019Pronounced: 21.08.2019

ORDER

Per Dr. B. R. R. Kumar, Accountant Member:

1.

Following grounds have been raised by the assessee: “(i) Deleting the addition of Rs.5,86,04,027/- on account of undisclosed cash deposited in the bank account of the concerns owned by the assessee. (ii) Computingg the income being 0.37% on Rs.5,86,04,027/- has commission income. It is not established that the assessee is carrying genuine business on which such commission is earned.”

2. The core pertains to assessing the commission on protective basis as confirmed by the Ld.CIT(A).The assessee is an employee of Sh. R.N. Aggarwal prop. R.N. Aggarwal & Company, D-16/381, Sector-7, Rohini, New Delhi. The only source of income of the assessee is the salary received from his employer. In the bank account No. 91311010000851 of the assessee the revenue has found cash deposits of Rs.58,57,000/- which have been subsequently transferred to Sh. R.N. Aggarwal, the employer’s bank account No. 91311010000398 by way of cheque transfers.

2 Dharmender Kumar Similarly, in the account No. 91311010000866 of the assessee the revenue has found cash deposits of Rs.237,98,310/- which have been transferred to Sh. R.N. Aggarwal, the employer’s bank account No. 91311010000398 by way of cheque transfers. In addition to the transfers out of the cash deposits, the assessee had deposits by way of cheques of Rs.289,48,717/- in both the accounts maintained by him. These deposits by way of cheques were also found to have been transferred to the account No. 91311010000398 belonging to Sh. R.N. Aggarwal. Owing to the statement of Sh. R.N. Aggarwal that these amounts belong to him and the assessee Dharmender Kumar is only a name lender who has opened the account at his behest to facilitate the transfer of funds, the revenue made protective assessment of these amounts of Rs.587,82,037/- (cash deposits of Rs.296,55,310/- + cheque deposit of Rs.289,48,717/-) in the hands of the assessee. The substantive assessment has been made in the hands of Sh. R.N. Aggarwal by ITO, Ward-38(2), New Delhi and assessed that the rate of 0.25% to 0.37% on the total deposits.

3.

The ld. CIT (A) has computed commission @ 0.37% on the total deposits (cash and cheque) found in the bank accounts of the assessee at Rs.214,434/- and held this as “income to be added on protective basis”.

4.

Aggrieved with the order of the ld. CIT (A), the revenue filed appeal before us. During the arguments before us, the ld. DR filed the assessment order in the case of Sh. R.N. Aggarwal wherein the deposits in the case of the assessee have been treated on substantive basis and charged to tax on the commission earned. The ld. DR fairly conceded the fact that the 3 Dharmender Kumar assessment in the case of the assessee has been made on protective basis.

5.

Since, the assessment has been made on protective basis, the assessee is not liable to be taxed even on account of commission which has already been taxed in the hands of Sh. R.N. Aggarwal. Hence, the appeal of the revenue stands dismissed.

6.

Before parting, we would like to keep it on record that, the Court has posed a pertinent question to the representatives as to whether the entire cash deposits or the cheque deposits have been substantively assessed in absolute amount in the case of any other assessee or not for which the revenue could not answer. If so, it would be loss to the exchequer as only the commission has been taxed and the remaining amount has escaped assessment altogether.

7.

In the result, the appeal of the Revenue is dismissed. (Order Pronounced in the Open Court on 21/08/2019).

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