I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 1 of 10 IN INCOME TAX APPELLATE TRIBUNAL, KOLKATA B(SMC) BENCH, KOLKATA Before Shri P.M. Jagtap, Accountant Member I.T .A. No. 1783/KOL/ 2014 Assessment Year: 2004-2005 & I.T .A. Nos. 1784 & 1785/KOL/ 2014 Assessment Year: 2005-2006 Ram Karan Tiwari,... ............................................................Appellant 11A, Palm Avenue, shok Towers, Ballygunge, Kolkata-700 019 [PAN: ABTPT 8315 M] -Vs.- Assistant Commissioner of Income Tax,.... ........................Respondent Circle-54, Ko lkata, 3, Government Place (West), Kolkata-700 001 Appearances by: Shri Manoj Kumar Tiwari, C.A., fo r assessee Shri A.K. Singh, JCIT, D.R., for Department Date of concluding th e hearing : Au gust 10, 2016 Date of pronouncing order : October 21, 2016 O R D E R These three appeals filed by assessee are directed against three separate orders, all dated 27.06.2014 passed by ld. Commissioner of Income Tax (Appeals)-XXXVI, Kolkata and since some of issues involved therein are common, same have been heard together and are being disposed of by this consolidated order for sake of convenience. I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 2 of 10 2. First we take up appeal of assessee for A.Y. 2004-05 being ITA No. 1783/KOL/2014. Ground No. 1 raised by assessee in this appeal is general, which does not require any specific adjudication. 3. issue involved in Ground No. 2 relates to claim of assessee for exemption on account of agricultural income of Rs.2,25,000/- which is disallowed by Assessing Officer and confirmed by ld. CIT(Appeals). 4. assessee in present case is individual, who is engaged in carrying on legal profession. return of income for year under consideration, i.e. A.Y. 2004-05 was filed by him on 29.10.2004 declaring total income of Rs.20,58,220/- and agricultural income of Rs.2,25,000/-. During course of assessment proceedings, claim of assessee of agricultural income was examined by Assessing Officer. In this regard, explanation of assessee of having received his share of agricultural income of Rs.2,25,000/- by cheque from ancestral agricultural land was not accepted by Assessing Officer on ground that same was not supported by relevant documentary evidence showing cultivation of crops, sale of crops, expenditure incurred, etc. He, therefore, treated agricultural income of Rs.2,25,000/- shown by assessee as income from other sources and brought same to tax in hands of assessee. On appeal, ld. CIT(Appeals) upheld action of Assessing Officer on this issue. 5. I have heard arguments of both sides on this issue and also perused relevant material available on record. As agreed by ld. representatives of both sides, this issue is squarely covered in favour of assessee by decision of this Tribunal rendered in assessee s I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 3 of 10 own case for A.Y. 2003-04 vide its order dated 23.11.2007 passed in ITA No. 343/KOL/2006, wherein claim of assessee of having earned agricultural income of Rs.2,10,000/- was accepted by Tribunal after taking note of fact that assessee had been continuously showing agricultural income in his return from A.Y. 1976-77 and same was accepted by Department in assessments completed either under section 143(1) or under section 143(3). Respectfully following said decision of Tribunal rendered in assessee s own case for A.Y. 2002-03, I direct Assessing Officer to accept claim of assessee for agricultural income of Rs.2,25,000/-. Ground No. 2 is accordingly allowed. 6. In Ground No. 3, assessee has challenged following disallowances made by Assessing Officer and confirmed by ld. CIT(Appeals):- (i) Rs.48,895/- out of car running and maintenance expenses; (ii) Rs.27,035/- out of telephone expenses; (iii) Rs.7,895/- out of chamber maintenance expenses; (iv) Rs.49,117/- out of travel and conveyance & (v) Rs.1,560/- out of provision for liability. 7. During course of assessment proceedings, it was noticed by Assessing Officer that relevant record in form of Log Book, etc. was not maintained by assessee in order to establish that motor car running and maintenance expenses of Rs.2,93,370/- and salary and bonus paid to driver of Rs.78,000/- was wholly and exclusively incurred for purpose of his profession. He also noted that no disallowance out of these expenses was offered by assessee in his return of income on account of personal use of vehicle. Since such personal use of vehicle could not be ruled out, Assessing Officer made disallowance of Rs.48,895/- being 1/6 t h of motor car running I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 4 of 10 and maintenance expenses and Rs.13,000/- being 1/7 t h of Driver s salary and bonus. Similarly disallowance of Rs.27,035/- being 1/5 t h of telephone and Trunk-call expenses of Rs.1,35,175/- claimed by assessee was made by him for involvement of personal element as no proper record was maintained by assessee to establish that expenses claimed by him on telephone and Trunk-call were wholly and exclusively incurred for purpose of his profession. Assessing Officer also noted that Chamber maintenance expenses of Rs.47,370/- claimed by assessee were inclusive of electricity expenses incurred for flats, which were being used by assessee for stay of his family. He, therefore, made disallowance of Rs.7,895/- being 1/6 t h of Chamber maintenance expenses of Rs.47,370/- claimed by assessee. further disallowance of Rs.49,117/- was also made by Assessing Officer being 1/6 t h of travelling and conveyance expenses of Rs.2,94,720/- claimed by assessee on ground that said claim was not duly supported by relevant documentary evidence to show that travelling and conveyance expenses claimed by assessee were wholly and exclusively incurred for purpose of his profession. provision for liability of Rs.1,560/- was also disallowed by Assessing Officer as same was not supported by any documentary evidence and assessee also failed to furnish relevant details in respect of such provision. On appeal, ld. CIT(Appeals) confirmed all these disallowances made by Assessing Officer mainly for same reasons as given by Assessing Officer, which assessee failed to rebut or controvert. 8. I have heard arguments of both sides on this issue and also perused relevant material available on record. At time of hearing, ld. counsel for assessee has not been able to rebut or controvert findings recorded by Assessing Officer that claim of assessee for relevant expenses is not supported by documentary evidence in form of Log Book, Call Register, bills/vouchers, etc. I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 5 of 10 limited relief sought by him is that disallowance made by Assessing Officer out of various expenses is excessive and unreasonable and same may be reduced. However, keeping in view all facts of case, nature of expenses claimed by assessee, nature of profession carried out by him and quantum of expenses claimed under respective heads, I find that disallowance made by Assessing Officer out of said expenses is quite fair and reasonable and there is no justifiable reason to interfere with same. I, therefore, uphold impugned order of ld. CIT(Appeals) confirming various disallowances made by Assessing Officer and dismiss Ground No. 3 of assessee s appeal. 9. Now I take up appeal of assessee for A.Y. 2005-06 being ITA No. 1784/KOL/2014. Ground No. 1 raised by assessee in this appeal is general, which does not require any specific adjudication. 10. issue raised in Ground No. 2 relates to disallowance of Rs.3,37,535/- made by Assessing Officer and confirmed by ld. CIT(Appeals) on account of legal charges paid by assessee. 11. In Profit & Loss Account filed along with his return of income declaring total income of Rs.22,94,210/-, sum of Rs.3,37,535/- was debited by assessee on account of professional fees paid to Shri Ranjan Mitra. As no tax had been deducted by assessee from payment made to Shri Ranjan Lal Mitra, Assessing Officer required him to explain as to why said amount should not be disallowed under section 40(a)(ia). In reply, it was explained by assessee that amount in question was paid by him to Shri Ranjan Lal Mitra for making payments to his Juniors, Clerks and other Counsels for services rendered in favour of assessee. It was contended by assessee that since proper break-up of amount so paid was not available, it was I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 6 of 10 not practically possible to deduct tax at source. This contention of assessee was not found acceptable by Assessing Officer. According to him, Shri Ranjan Lal Mitra having raised consolidated bill of Rs.3,37,535/-, assessee was required to deduct tax at source from said amount under section 194J of Act and since there was failure on part of assessee to do so, he disallowed amount of Rs.3,37,535/- under section 40(a)(ia). On appeal, ld. CIT(Appeals) confirmed said disallowance made by Assessing Officer. 12. I have heard arguments of both sides on this issue and also perused relevant material available on record. ld. counsel for assessee has submitted that amount in question was mainly paid by assessee to two Advocates, who have already included said amounts in their income and paid tax thereon. He has contended that no disallowance under section 40(a)(ia) in respect of amounts paid to these two Advocates can be made in view of 2 n d proviso to section 40(a)(ia), which is applicable with retrospective effect. As regards balance amount, he has submitted that same paid to other parties did not exceed Rs.20,000/- in any individual case and, therefore, provisions of section 194J are not applicable. Ld. D.R., on other hand, has contended that all these submissions now made by ld. counsel for assessee for first time before Tribunal require verification and matter may be sent back to Assessing Officer for this purpose. I find merit in this contention of ld. D.R. Accordingly, impugned order of ld. CIT(Appeals) on this issue is set aside and matter is restored to file of Assessing Officer for deciding same afresh after verifying submissions made by ld. counsel for assessee for first time before Tribunal from relevant record. Ground No. 2 is accordingly treated as allowed for statistical purposes. 13. issue raised in Ground No. 3 of assessee s appeal for A.Y. 2005-06 relates to disallowance of Rs.67,267/- made by Assessing I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 7 of 10 Officer and confirmed by ld. CIT(Appeals) out of travelling and conveyance expenses. 14. During course of assessment proceedings, expenses of Rs.4,41,325/- claimed by assessee on travelling and conveyance were examined by Assessing Officer. On such examination, he found that sum of Rs.67,267/- was paid by assessee for air-fare of his daughter Ms. Pragya Tiwari from Mumbai to London. In this regard, explanation offered by assessee that his daughter Ms. Pragya Tiwari was graduated in Law from very reputed U.K. University and had assisted him during visits to London by working for Goodricke Group of Companies was not found acceptable by Assessing Officer in absence of any supporting evidence. He also noted that Ms. Pragya Tiwari was neither employee or Associate of assessee and no amount of salary or professional fees was paid by him to her. He, therefore, held that visit of Ms. Pragya Tiwari to London is purely personal in nature having no nexus with profession of assessee and expenses claimed on said visit amounting to Rs.67,267/- was disallowed by him. On appeal, ld. CIT(Appeals) confirmed said disallowance. 15. I have heard arguments of both sides on this issue and also perused relevant material available on record. Although ld. counsel for assessee has contended that main client of assessee is having offices in London, he has not been able to rebut or controvert findings recorded by Assessing Officer that Ms. Pragya Tiwari was neither employee nor Associate of assessee during year under consideration. He has also not been able to bring any evidence on record to show that visit of Ms. Pragya Tiwari to London had any nexus with profession of assessee. I, therefore, find no justifiable reason to interfere with impugned order of ld. CIT(Appeals) confirming disallowance made by Assessing Officer I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 8 of 10 on this issue and upholding same, I dismiss Ground No. 3 of assessee s appeal for A.Y. 2005-06. 16. Now I take up appeal of assessee for A.Y. 2005-06 being ITA No. 1785/KOL/2014, which is arising from order passed by Assessing Officer under section 143(3) of Act read with section 263. 17. records of assessment made by Assessing Officer under section 143(3) was examined by ld. CIT and on such examination, he was of view that amount of Rs.6,55,000/- received by assessee as loan from M/s. Mahanagar Properties Pvt. Limited clearly fell within ambit of deemed dividend under section 2(22)(e). Since said amount was not added by Assessing Officer to total income of assessee as deemed dividend under section 2(22)(e), he set aside order passed by Assessing Officer under section 143(3) by treating same as erroneous as well as prejudicial to interest of Revenue with direction to Assessing Officer to complete assessment afresh after giving opportunity of being heard to assessee. Accordingly, fresh assessment proceedings were initiated by Assessing Officer and assessee was afforded opportunity by him to offer his explanation in matter. In reply, it was submitted by assessee that he had entered into agreement for transfer of property to M/s. Mahanagar Properties Pvt. Limited and amount in question was received by him against said transaction as advance. This explanation of assessee was not found acceptable by Assessing Officer. According to him, provisions of section 2(22)(e) were applicable to any payment and amount in question received by assessee as advance was covered by said provision. He accordingly invoked provision of section 2(22)(e) and treated amount of Rs.6,55,000/- received by assessee from M/s. Mahanagar Properties Pvt. Limited as deemed dividend under section 2(22)(e) in assessment completed under section 143(3) read with section 263 by I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 9 of 10 order dated 28.12.2010. On appeal, ld. CIT(Appeals) confirmed said addition made by Assessing Officer. 18. I have heard arguments of both sides on this issue and also perused relevant material available on record. ld. counsel for assessee has submitted that amount in question was received by assessee as advance from M/s. Mahanagar Properties Pvt. Limited under agreement by which property belonging to assessee was agreed to be sold to said Company. He has submitted that sale of sai d property, however, was not effected and property belonging to assessee was ultimately sold by assessee to some other party in year 2008. Relying on decision of Hon ble Calcutta High Court in case of Pradip Kumar Malhotra [338 ITR 538], he has contended that amount in question received by assessee as consequence of any other consideration, which is beneficial to Company, cannot be said to be deemed dividend within meaning of section 2(22)(e) of Act. When he was asked to file copy of Unregistered Agreement entered into between assessee and M/s. Mahanagar Properties Pvt. Limited in support of this contention, ld. counsel for assessee, however, has failed to file same. perusal of relevant Balance- sheet of M/s. Mahanagar Properties Pvt. Limited placed by him on record also shows that amount in question paid to assessee was shown by said Company as advance under head Loans and Advances and there is nothing to show that amount in question was paid by said Company to assessee as advance against property. There is also nothing brought on record on behalf of assessee to show that Unregistered Agreement stated to be entered into with M/s. Mahanaga r Properties Pvt. Limited was subsequently cancelled before property belonging to assessee was ultimately sold to some third party. I, therefore, find no merit in case of assessee on this issue and rejecting same, I uphold impugned order of ld. CIT(Appeals) I . T. . N o. 1 7 8 3 / KO L . / 2 0 1 4 Assessment year: 2004-2005 & I . T. . N o s . 1 7 8 4 & 1 7 8 5 / KO L . / 2 0 1 4 Assessment year: 2005-2006 Page 10 of 10 confirming addition made by Assessing Officer on account of deemed dividend under section 2(22)(e) of Act. 19. In result, appeal of assessee being ITA No. 1783/KOL/2014 is partly allowed, appeal of assessee being ITA No. 1784/KOL/2014 is treated as partly allowed and ITA No. 1785/KOL/2014 is dismissed. Order pronounced in open Court on October 21, 2016. Sd/- (P.M. Jagtap) Accountant Member Kolkata, 21 s t day of October, 2016 Copies to : (1) Shri Ram Karan Ti wari, 11A, Palm Avenue, shok Towers, Ballygunge, Kolkata-700 019 (2 ) Assistant Commissioner of Income Tax, Circle-54, Ko lkata, 3, Government Place (West), Kolkata-700 001 (3) Commissioner of Income Tax(Appeals)-XXXVI, Kolkata; (4) Commissio ner of Income Tax- , (5) Depart ment al Represent ative (6) Guard File By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S. Ram Karan Tiwari v. Assistant Commissioner of Income Tax, Circle-54, Kolkata