UDAY JAWAHAR KOTNIS,PUNE vs. INCOME TAX OFFICER, PUNE

ITA 1/PUN/2024Status: DisposedITAT Pune10 July 2024Bench: SHRI R. K. PANDA (Vice President), SHRI VINAY BHAMORE (Judicial Member)21 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer (AO) did not commit any error in accepting the income of Rs. 1,75,00,000/- disclosed by the assessee himself under the head 'income from other sources'. The Tribunal found that the assessee had claimed the entire amount as expenses without any supporting evidence, which was rightly disallowed by the AO. Regarding the 'real income' argument, the Tribunal referred to the Supreme Court's decision in Commissioner of Income Tax vs. Shiv Prakash Janak Raj And Co. Pvt. Ltd., stating that the concept of real income cannot be used to defeat the provisions of the Act. The assessee himself decided what to show, how much to show, and when to show it. The Tribunal noted that the income appeared on the portal in Form 26AS, and the assessee chose to declare only Rs. 1,75,00,000/- in the current year, carrying forward the balance. The Tribunal also observed that the civil suit by purchasers was filed after three years, and the assessee had not refunded the amount even after the suit, while also filing a complaint for recovery. The Tribunal found no infirmity in the order of the CIT(A)/NFAC and dismissed the grounds of appeal.

What were the facts?

The assessee, Uday Jawahar Kotnis, filed an appeal against the order of the CIT(A)/NFAC for Assessment Year 2017-18. The assessee had declared a taxable income of Rs. 14,05,860/-. The case was selected for limited scrutiny concerning deductions/exemptions from capital gains, investment in immovable property, and income from other sources. The Assessing Officer (AO) noted that the assessee received Rs. 1,75,00,000/- as a consenting party for land sale, purportedly for removing EWS reservation. The assessee claimed this amount as commission under 'income from other sources' but also claimed the entire Rs. 1,75,00,000/- as expenses without providing supporting evidence. Consequently, the AO added Rs. 1,75,00,000/- to the assessee's income, resulting in a total assessed income of Rs. 1,89,05,860/-. The CIT(A)/NFAC upheld the AO's addition, finding that the assessee had not refunded the amount despite the transaction not materializing and having no intention to do so.

What were the issues?

1. Whether the addition of Rs. 1,75,00,000/- as commission under the head 'income from other sources' by the Assessing Officer is justified, considering the assessee's claim of expenses and the nature of the receipt. Assessee's Contention: The assessee argued that he entered into an agreement to purchase property, which was later cancelled, and the advance was refunded. Subsequently, he was made a party as a consentor to lift EWS reservation for a consideration of Rs. 4,75,00,000/-, out of which only Rs. 1,75,00,000/- was paid, with the balance kept in joint FD. The EWS reservation lifting work was not fully completed. The assessee also contended that due to pending litigation, the income had not accrued and was not 'real income', and its declaration was for disclosure purposes. Reliance was placed on Rohan Projects vs. DCIT and Balbir Singh Maini. Revenue's Contention: The revenue, through the AO and CIT(A), argued that the amount received was income from other sources, as the assessee had not refunded it despite the passage of time and pending litigation, indicating no intention to refund. The claim of expenses was unsubstantiated. The CIT(A) noted that the amount would go untaxed if relief was granted at that stage. The AO initiated penalty proceedings for misreporting of income.

Which sections of the Income-tax Act were involved?

Section 56,Section 270A,Section 143(3),Section 5(1)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE

Before: SHRI R. K. PANDA

PER VINAY BHAMORE, JM:

This appeal filed by the assessee is directed against the order

dated 22.11.2023 passed by LD CIT(A)/NFAC, Delhi for the assessment year 2017-18. 2. The appellant has raised the following grounds of appeal :-

“1. The learned AO has erred on facts and in law in making an addition of Rs.1,75,00,000/- as commission under the head income

from other sources.

2.

The appellant craves leave to amend or alter any of the grounds

of appeal or add to the same, if deemed necessary.

3.

The facts, in brief, are that the assessee is an individual and filed his return of income for the assessment year 2017-18 on 04.08.2017 declaring taxable income of Rs.14,

The order continues below.

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