Loading judgment…
Facts
During a survey under section 133A, incriminating material was found indicating the assessee, a real estate agent, received undisclosed brokerage income in cash from the 'Bhoomi and Ekata' group. The assessee admitted this receipt in a statement recorded during the survey. The Assessing Officer added Rs. 11,90,200/- as income.
Held
The Tribunal held that the addition was based on incriminating material seized and the assessee's own admission during the survey. The assessee's contention that no such brokerage was received was rejected due to the admission and lack of justification. The claim for ad hoc expenses was also denied as no evidence was produced, and regular expenses were already accounted for.
Key Issues
Whether the addition of Rs. 11,90,200/- on account of alleged undisclosed brokerage income received in cash is justified. Whether the assessee is entitled to ad hoc expenses against the said income.
Sections Cited
132, 133A, 131
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “D” MUMBAI
Before: SHRI OM PRAKASH KANT & MS. KAVITHA RAJAGOPAL
This appeal by the assessee is directed against order dated 21.05.2024 passed by the Ld. Commissioner of Income-tax (Appeals) – 54, Mumbai [in short ‘the Ld. CIT(A)’] for assessment year 2016-17, raising following grounds:
“Ground No. 1 "On the facts and circumstances of the case, the learned Commissioner of "On the facts and circumstances of the case, the learned Commissioner of "On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) tax (Appeals) -54, Mumbai erred in law and in facts by confirming 54, Mumbai erred in law and in facts by confirming the addition of Rs.11,90,200 the addition of Rs.11,90,200 made on account of alleged brokerage made on account of alleged brokerage received in cash solely on the basis of estimating brokerage amount (by received in cash solely on the basis of estimating brokerage amount (by received in cash solely on the basis of estimating brokerage amount (by multiplying figures with 100) from material seized at third party premises multiplying figures with 100) from material seized at third party premises multiplying figures with 100) from material seized at third party premises under search and wrongly interpreting the statement of your appellant under search and wrongly interpreting the statement of your appellant under search and wrongly interpreting the statement of your appellant recorded under section 131 of the Income corded under section 131 of the Income-tax Act that your appellant has tax Act that your appellant has accepted brokerage in cash." accepted brokerage in cash." GROUND NO 2 (Without Prejudice to Ground No 1 above) GROUND NO 2 (Without Prejudice to Ground No 1 above) "On the facts and circumstances of the case, the learned Commissioner of "On the facts and circumstances of the case, the learned Commissioner of "On the facts and circumstances of the case, the learned Commissioner of Income-tax (Appeals) tax (Appeals) -54, Mumbai, erred in law and in facts in not ai, erred in law and in facts in not allowing ad hoc expenses as deduction from brokerage income alleged as allowing ad hoc expenses as deduction from brokerage income alleged as allowing ad hoc expenses as deduction from brokerage income alleged as unaccounted brokerage received in cash of Rs.11,90,200 (refer ground no unaccounted brokerage received in cash of Rs.11,90,200 (refer ground no unaccounted brokerage received in cash of Rs.11,90,200 (refer ground no 1 above)."
Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed Briefly stated, facts of the case are that the assessee filed his return of income on 29.10.2016 declaring total income at return of income on 29.10.2016 declaring total income at return of income on 29.10.2016 declaring total income at Rs.7,45,080/-. The assessee was engaged in the real estate agent . The assessee was engaged in the real estate agent . The assessee was engaged in the real estate agent activity having brokerage income. The return of income filed by the activity having brokerage income. The return of income filed by the activity having brokerage income. The return of income filed by the assessee was selected for scrutiny and statutory notices under the assessee was selected for scrutiny and statutory notices under assessee was selected for scrutiny and statutory notices under Income-tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied tax Act, 1961 (in short ‘the Act’) were issued and complied with. The Assessing Officer noted that during the course of search with. The Assessing Officer noted that during the course of search with. The Assessing Officer noted that during the course of search action u/s 132 of the Act in the case of ‘Bhoomi and Ekata’ group, action u/s 132 of the Act in the case of ‘Bhoomi and Ekata’ group action u/s 132 of the Act in the case of ‘Bhoomi and Ekata’ group certain incriminating material was found indicating receipt of certain incriminating material was found indicatin certain incriminating material was found indicatin brokerage in cash by the assessee. brokerage in cash by the assessee. The premises of the assessee The premises of the assessee were accordingly covered under survey u/s 133 of the Act and the accordingly covered under survey u/s 133 of the Act and the accordingly covered under survey u/s 133 of the Act and the statement of the assessee was recorded statement of the assessee was recorded, wherein he admitted wherein he admitted receipt of brokerage from ‘Bhoomi and Ekata’ group in cash and receipt of brokerage from ‘Bhoomi and Ekata’ group receipt of brokerage from ‘Bhoomi and Ekata’ group admitted that same was not disclosed in the return of income filed admitted that same was not disclosed in the return of income filed admitted that same was not disclosed in the return of income filed by him. Accordingly, the Assessing Officer issued show cause notice by him. Accordingly, the Assessing Officer issued show cause notice by him. Accordingly, the Assessing Officer issued show cause notice to the assessee. But no reply was submitted by the assessee and to the assessee. But no reply was submitted by the assessee and to the assessee. But no reply was submitted by the assessee and therefore, therefore, therefore, the the the Assessing Assessing Assessing Officer Officer Officer made made made the the the addition additi additi of Rs.11,90,200/- as brokerage earned by the assessee under the as brokerage earned by the assessee under the as brokerage earned by the assessee under the head ‘profit and gains from business or profession’. head ‘profit and gains from business or profession’.
On further appeal, the assessee claimed before the Ld. CIT(A) On further appeal, the assessee claimed before the Ld. CIT(A) On further appeal, the assessee claimed before the Ld. CIT(A) that no such brokerage income that no such brokerage income was received by the assessee and by the assessee and was made without any show cause notice issued. But the addition was made without any show cause notice issued. But the was made without any show cause notice issued. But the Ld. CIT(A) upheld the addition observing as under: Ld. CIT(A) upheld the addition observing as under:
“8.2 In this regard it is seen that the AO has mentioned in the assessment 8.2 In this regard it is seen that the AO has mentioned in the assessment 8.2 In this regard it is seen that the AO has mentioned in the assessment order that during the course of search action u/s 132 in the case of order that during the course of search action u/s 132 in the case of order that during the course of search action u/s 132 in the case of Bhoomi and Ekta Groups the premises of the assessee was also covered under and Ekta Groups the premises of the assessee was also covered under and Ekta Groups the premises of the assessee was also covered under Survey u/s 133A of the Act, where the statement of the assessee was Survey u/s 133A of the Act, where the statement of the assessee was Survey u/s 133A of the Act, where the statement of the assessee was recorded. In his statement the assessee admitted that he had received recorded. In his statement the assessee admitted that he had received recorded. In his statement the assessee admitted that he had received brokerage which had not been disclosed in t brokerage which had not been disclosed in the return of income filed by he return of income filed by him. Material was seized in the case of Bhoomi and Ekta Groups where it him. Material was seized in the case of Bhoomi and Ekta Groups where it him. Material was seized in the case of Bhoomi and Ekta Groups where it was found that assessee had received brokerage in cash which was not was found that assessee had received brokerage in cash which was not was found that assessee had received brokerage in cash which was not accounted in his books and was not offered for tax computation. The same accounted in his books and was not offered for tax computation. The same accounted in his books and was not offered for tax computation. The same was admitted was admitted by the assessee in his statement. On the basis of material by the assessee in his statement. On the basis of material found during the search action, the AO added Rs. 11,90,200/ found during the search action, the AO added Rs. 11,90,200/ found during the search action, the AO added Rs. 11,90,200/- as brokerage earned under the head of "Profit & Gains of business or brokerage earned under the head of "Profit & Gains of business or brokerage earned under the head of "Profit & Gains of business or profession" 8.3 In view of the above, it is seen that the addition 8.3 In view of the above, it is seen that the addition has been made by the has been made by the AO on the basis of the incriminating material found and also the statement AO on the basis of the incriminating material found and also the statement AO on the basis of the incriminating material found and also the statement of the assessee himself admitting the receipt of brokerage in cash. Thus, I of the assessee himself admitting the receipt of brokerage in cash. Thus, I of the assessee himself admitting the receipt of brokerage in cash. Thus, I do not see merits in the contentions of the appellant. The addition made is do not see merits in the contentions of the appellant. The addition made is do not see merits in the contentions of the appellant. The addition made is upheld and the ground of appeal is dismissed. nd the ground of appeal is dismissed.”
4. Aggrieved, the assessee is in appeal before the Tribunal by way Aggrieved, the assessee is in appeal before the Tribunal by way Aggrieved, the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above. of raising grounds as reproduced above.
We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. We find that th relevant material on record. We find that the Assessing Officer has e Assessing Officer has made addition of Rs.11,90,200/ made addition of Rs.11,90,200/- on the basis of the documents on the basis of the documents found during the course of search action at the premises of Shri found during the course of search action at the premises of Shri found during the course of search action at the premises of Shri ‘Bhoomi’ and ‘Ekata’ group coupled with the statement the statement of assessee, wherein he accepted this fact of the r cepted this fact of the receipt of the brokerage income of the brokerage income in cash. The Assessing Officer in the assessment order has . The Assessing Officer in the assessment order has . The Assessing Officer in the assessment order has reproduced the relevant extract of the seized material. For ready reproduced the relevant extract of the seized material. For ready reproduced the relevant extract of the seized material. For ready reference same is reproduced as under: reference same is reproduced as under:
“4. Material was seized in the case of Bhoomi Group of cases Material was seized in the case of Bhoomi Group of cases which Material was seized in the case of Bhoomi Group of cases shows that the assessee has received brokerage in cash which has shows that the assessee has received brokerage in cash which has shows that the assessee has received brokerage in cash which has not been accounted for in his books and has not been offered for not been accounted for in his books and has not been offered for not been accounted for in his books and has not been offered for tax. Details of square meters and rate per square meter with dates tax. Details of square meters and rate per square meter with dates tax. Details of square meters and rate per square meter with dates are mentioned in the seized material. It also contain are mentioned in the seized material. It also contains details of s details of cheque cheque cheque payments payments payments made made made to to to the the the assessee. assessee. assessee. Therefore, Therefore, Therefore, the the the preponderance of probability is that the brokerage in cash as preponderance of probability is that the brokerage in cash as preponderance of probability is that the brokerage in cash as appearing in the seized material has also been received by the appearing in the seized material has also been received by the appearing in the seized material has also been received by the lessee. Relevant extract of the seized material is reproduced lessee. Relevant extract of the seized material is reproduced lessee. Relevant extract of the seized material is reproduced Brok (rajesh panj) m-770 @ 5500 770 @ 5500 - 4000 (1 %) ac nil 25-04-2015 2015 1244
Brokerage (Rajesh panjuani) as pr below (ac nil) Brokerage (Rajesh panjuani) as pr below (ac nil) 06-05-2015 2015 80 M-60 @ 5500/- - 35521/- M-30 @ 5400/- = 17400A M-320 @ 4500/- = 155000/- M-210@4700/- = 106240/- total = 31 3961 /- total = 31 3961 / less cq : - 306000/- less cq : balance = 7961 /- balance = 7961 /
Brok. (rajesh panjuani) as below Brok. (rajesh panjuani) as below 20-06-2015 2015 2810 M-1 420 @ 4700 - 3500 = 1 834/ 3500 = 1 834/- M-340 @ 5075 - 3500 = 576/50 3500 = 576/50 M-270 @ 4750 - 3375 = 4007 3375 = 4007-
M-270 (runwal tdr excess refund 270 (runwal tdr excess refund - rajesh panjuani) 08-07-2015 2015 40 Brok. M-260 @ 5800 - - 3200 (1%) Rajesh pan] 11-08-2015 2015 728
Brok (Rajesh panjuani) as below 17-08-2015 Brok (Rajesh panjuani) as below 2015 7000 M-1 0000 (shivalik purchase) @ 3400 purchase) @ 3400-2982(1%) = 4500/- M-710 @ 5775 - 3200 (kabra)(1%) = 3200 (kabra)(1%) = 1968/- M-1 90 @ 5900 - 3300 (Dhoot dev)1 % = 3300 (Dhoot dev)1 % = 532/- 1. it can be seen that the above data contains detailed information it can be seen that the above data contains detailed information it can be seen that the above data contains detailed information of computation of brokerage paid to the assessee. The figures of computation of brokerage paid to the assessee. The figures of computation of brokerage paid to the assessee. The figures appearing above are coded. To get the correct figures, the appearing above are coded. To get the correct figures, the appearing above are coded. To get the correct figures, the amounts have to be multiplied by 100. On decoding, the amounts have to be multiplied by 100. On decoding, the amounts have to be multiplied by 100. On decoding, the brokerage earne brokerage earned by the assessee during the year comes to the year comes to Rs.l l,90,200 Rs.l l,90,200/-. The same is added to income under the head . The same is added to income under the head 'Profits and gains of business or profession 'Profits and gains of business or profession”. 5.1 On perusal of the above material On perusal of the above material, it is evident that commission it is evident that commission has been computed on separate real est has been computed on separate real estate transactions ate transactions and the brokerage also includes brokerage also includes payment through cheque which has not payment through cheque which has not been declined/disputed /disputed by the assessee. Therefore, once, the by the assessee. Therefore, once, the brokerage recorded in same seized paper as received in same seized paper as received in cheque has in same seized paper as received been accepted by the assessee, w been accepted by the assessee, we do not find any reason for not nd any reason for not accepting the brokerage recorded in cash in the same seized paper. accepting the brokerage recorded in cash in the same seized paper. accepting the brokerage recorded in cash in the same seized paper. No justified explanation has been provided by the assessee in this No justified explanation has been provided by the assessee in this No justified explanation has been provided by the assessee in this respect. Accordingly, we reject the contention of the assessee that Accordingly, we reject the contention of the assessee that Accordingly, we reject the contention of the assessee that no such brokerage was received p no such brokerage was received particularly when the assessee was articularly when the assessee was confronted during survey proceedings confronted during survey proceedings and he accepted the fact of he accepted the fact of receipt of brokerage in cash, which prevented the tax authorities or receipt of brokerage in cash, which prevented the tax authorities or receipt of brokerage in cash, which prevented the tax authorities or the revenue from making further inquiry making further inquiry during the course of during the course of survey. Thus, the contention the contentions of the assessee are rejected. However, of the assessee are rejected. However, the Ld. counsel for the assessee the Ld. counsel for the assessee alternatively alternatively submitted that addition has been made for the gross brokerage and no benefit for addition has been made for the gross brokerage and no benefit for addition has been made for the gross brokerage and no benefit for the expenses incurred the expenses incurred against said brokerage income against said brokerage income was allowed to the assessee. But the Ld. counsel did not bring on record any ut the Ld. counsel did not bring on record any ut the Ld. counsel did not bring on record any evidence of incurring any such expenses against said brokerage evidence of incurring any such expenses against said brokerage evidence of incurring any such expenses against said brokerage income received in cash received in cash. The regular expenses against brokerage . The regular expenses against brokerage income reported as received by way of cheque reported as received by way of cheque has already been has already been claimed by the assessee in the profit and loss account for the the assessee in the profit and loss account for the the assessee in the profit and loss account for the brokerage income shown in the regular return of income and brokerage income shown in the regular return of income and brokerage income shown in the regular return of income and allowed to the assessee, allowed to the assessee, therefore, no further deduction could be therefore, no further deduction could be allowed against the brokerage income recorded in the seized allowed against the brokerage income recorded in the seized allowed against the brokerage income recorded in the seized material. The ground No. 1 and 2 of the appeal of the assessee are nd No. 1 and 2 of the appeal of the assessee are nd No. 1 and 2 of the appeal of the assessee are accordingly dismissed. accordingly dismissed.
In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed. In the result, the appeal of the assessee is dismissed.