Smt. Parul Grover, Faridabad V. ITO, Faridabad

CO 323/DEL/2009

• Counselvise Citation: [2010] 122 COUNSELVISE.COM (IT) 4642 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 30-04-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 27-04-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 22-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: BANITA DEVI NAREON
• Keywords: Unexplained investment; Additional evidence
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.3458/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD-1(3), FARIDABAD. VS. SMT. PARUL GROVER, H.NO.1409, SECTOR-14, FARIDABAD. PAN : AEEPG0534R C.O. NO.323/DEL/2009 (ITA NO.3458/DEL/2009) ASSESSMENT YEAR : 2006-07 SMT. PARUL GROVER, H.NO.1409, SECTOR-14, FARIDABAD. PAN : AEEPG0534R VS. INCOME TAX OFFICER, WARD-1(3), FARIDABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GURJEET SINGH, CA REVENUE BY : SMT. BANITA DEVI NAREON, SR. DR ORDER PER I.P. BANSAL, JUDICIAL MEMBER THE APPEAL IS FILED BY THE REVENUE AND THE CROSS O BJECTIONS BY THE ASSESSEE. BOTH OF THEM ARE DIRECTED AGAINST THE OR DER OF THE CIT (A) DATED 24 TH JUNE, 2009 FOR ASSESSMENT YEAR 2006-07. THE GROUND S OF APPEAL AND THE GROUNDS OF CROSS OBJECTIONS READ AS UNDER:- GROUNDS OF APPEAL 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING T HE ADDITION ITA NO.3458/DEL/2009 C.O. NO.323/DEL/2009 2 OF RS.20,24,569/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 EVEN THOUGH THE AS SESSEE HAD FAILED TO EXPLAIN THE SOURCE OF DEPOSITS MADE W ITH M/S PROGRESSIVE MACHINES DESPITE AFFORDED FOUR OPPORTUN ITIES. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE, THE LD. CIT (A) HAS ERRED ON FACTS AND IN LAW IN DELETING T HE ADDITION OF RS.2,69,880/- MADE BY THE ASSESSING OFFICER ON A CCOUNT OF INTEREST PAID ON HOUSING LOAN ESPECIALLY WHEN THE A SSESSEE HAD FAILED TO PROVE THAT THE FUNDS FOR WHICH SHE HA S CLAIMED DEDUCTION OF INTEREST ON ACCOUNT OF HOUSING LOAN HA D ACTUALLY BEEN USED BY HER FOR THE PURPOSE OF HOUSE CONSTRUCT ION OR PURCHASE OF THE HOUSE OR REPAYMENT OF LOANS FOR CON STRUCTION DESPITE AFFORDED FOUR OPPORTUNITIES. 3. THAT THE APPELLANT CRAVES FOR THE PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIM E OF HEARING OF APPEAL. GROUNDS OF CROSS OBJECTIONS BECAUSE THE ACTION IS BEING CHALLENGED ON FACTS AND LAW FOR MAKING A DISALLOWANCE OF INTEREST AMOUNTING TO RS.1 ,83,969/- TREATING INTEREST NOT ELIGIBLE FOR CLAIM WHEREAS TH E EXPEDIENCY, UTILIZATION U/S 57 (III) REMAINED TO BE EXAMINED. 2. THE ASSESSEE IN THE PRESENT CASE HAD RAISED A LO AN OF RS.20 LAC FROM BANK OF INDIA, BALLABHGARH FOR THE PURPOSE OF CONST RUCTION OF HOUSE AT PLOT NO.1409, SECTOR 14, FARIDABAD. THE CONSTRUCTION WA S COMPLETED ON 27 TH SEPTEMBER, 2004 AS PER COMPLETION CERTIFICATE OF MU NICIPAL CORPORATION, FARIDABAD. AFTER THE COMPLETION OF THE HOUSE, THE ASSESSEE HAD APPLIED FOR HOUSE LOAN AMOUNTING TO RS.49,99,000/- FROM CITI BA NK ON 9 TH APRIL, 2005 AND THE CITI BANK DISBURSED RS.40,23,260/- VIDE ACCOUNT NO.116979 WHICH AMOUNT WAS UTILIZED BY THE ASSESSEE FOR REPAYMENT OF EARLI ER LOAN TAKEN FROM BANK OF INDIA WHICH WAS OUTSTANDING AT THAT RELEVANT TIME A T AN AMOUNT OF RS.19,98,691/-. ANOTHER LOAN OF RS.20,24,569/- WAS OUTSTANDING IN T HE NAME OF M/S PROGRESSIVE MACHINES (A PROPRIETARY CONCERN OF THE HUSBAND OF T HE ASSESSEE) WHICH WAS ALSO PAID OUT OF THE SAID AMOUNT OF RS.40,23,260/-. BEF ORE THE ASSESSING OFFICER THE ASSESSEE REMAINED UNABLE TO DESCRIBE THE SOURCE OF RS.20,24,569/- ON ACCOUNT OF REPAYMENT OF LOAN OUTSTANDING IN THE NAME OF M/S PROGRESSIVE MACHINES, ITA NO.3458/DEL/2009 C.O. NO.323/DEL/2009 3 THEREFORE, THE SAID AMOUNT OF RS.20,24,569/- WAS AD DED TO THE INCOME OF THE ASSESSEE BEING UNEXPLAINED AMOUNT DEPOSITED TO SETT LE THE LOAN OUTSTANDING IN THAT ACCOUNT. BEFORE THE CIT (A) CERTAIN ADDITIONA L EVIDENCES IN THE FORM OF CERTIFICATE FROM BANK, ETC. WERE FILED TO WHICH THE ASSESSING OFFICER OBJECTED FOR ADMISSION THEREOF. HOWEVER, BASED UPON THE SAID EV IDENCE, LD. CIT (A) HAS DELETED THE ADDITION OF RS.20,24,569/- AND, THUS, B Y WAY OF GROUND NO.1, IT IS THE GRIEVANCE OF THE REVENUE THAT THE SAID AMOUNT HAS B EEN WRONGLY DELETED BY THE CIT (A). 3. FURTHER, THE COMMON GRIEVANCE OF THE ASSESSEE AS WELL AS THE DEPARTMENT IS WITH REGARD TO ALLOWABILITY OR OTHERWISE OF INTE REST RELATING TO LOAN OBTAINED BY THE ASSESSEE ON ACCOUNT OF CONSTRUCTION OF THE ABOV E HOUSE PROPERTY. THE SUM PAID AS INTEREST IN ITS ENTIRETY WAS DISALLOWED BY THE ASSESSING OFFICER. THE LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE AS SESSEE HAS COME TO A CONCLUSION THAT THE FRESH LOAN OBTAINED BY THE ASSE SSEE FOR REPAYMENT OF THE EARLIER LOAN WAS ELIGIBLE FOR DEDUCTION U/S 24(1)(V I) AND, THUS, BY TAKING INTO ACCOUNT THE GROSS INTEREST WHICH IS A SUM OF RS.4,5 3,576/- AND THE AMOUNT UTILIZED BY THE ASSESSEE FOR REPAYMENT OF EARLIER L OAN OBTAINED FOR CONSTRUCTION OF THE HOUSE AND DIVIDED BY THE FRESH LOAN, LD. CIT (A ) HAS ARRIVED AT A CONCLUSION THAT THE AMOUNT WHICH COULD BE ALLOWED TO THE ASSES SEE WAS ONLY A SUM OF RS.2,69,880/- AND, THUS, HE RETAINED THE DISALLOWAN CE OF RS.1,83,696/-. THE DEPARTMENT IN ITS GROUND NO.2 AGITATING THE DELETIO N OF ADDITION OF RS.2,69,880/- AND THE ASSESSEE IN HER CROSS OBJECTION IS AGITATIN G THE RETAINED ADDITION OF RS.1,83,696/-. 4. AFTER NARRATING THE FACTS, LD. DR SUBMITTED THAT THE ASSESSING OFFICER HAD GRANTED MANY OPPORTUNITIES TO THE ASSESSEE TO EXPLA IN THE SOURCE OF REPAYMENT OF LOAN IN THE ACCOUNT OF M/S PROGRESSIVE MACHINES WHICH WAS A PROPRIETARY CONCERN OF THE ASSESSEES HUSBAND. THE ASSESSEE DI D NOT FURNISH ANY EVIDENCE, THUS, THERE WAS NO LACK OF OPPORTUNITY PROVIDED BY THE ASSESSING OFFICER AND THE CIT (A) WAS WRONG IN ADMISSION OF THE ADDITIONAL EV IDENCE AND THEREBY DELETING THE IMPUGNED ADDITION AND, THUS, SHE SUBMITTED THAT DELETION OF ADDITION IS NOT IN ITA NO.3458/DEL/2009 C.O. NO.323/DEL/2009 4 ACCORDANCE WITH THE LAW. SIMILARLY, FOR INTEREST C OMPONENT SHE SUBMITTED THAT THE ASSESSEE COULD NOT PRODUCE EVIDENCE BEFORE THE ASSE SSING OFFICER DESPITE VARIOUS OPPORTUNITIES AND, THUS, ALSO DELETION OF A DDITION ON THAT ACCOUNT WAS NOT IN ACCORDANCE WITH THE LAW. 5. ON THE OTHER HAND, LD. AR SUBMITTED THAT THE ASS ESSEE HAD FIRST RAISED LOAN FROM BANK OF INDIA WHICH WAS DISCHARGED BY ANO THER LOAN TAKEN FROM CITI BANK AND THE EVIDENCE IN THIS REGARD WAS FURNISHED FOR THE FIRST TIME BEFORE THE CIT(A) WITH AN APPLICATION TO ADMIT THE SAME UNDER THE PROVISIONS OF RULE 46A OF INCOME-TAX RULES, 1962. HE DREW OUR ATTENTION TO T HE WRITTEN SUBMISSIONS FILED BEFORE THE CIT (A), COPY OF WHICH IS FILED IN THE P APER BOOK WHEREIN IT IS CLEARLY STATED THAT THE EVIDENCE WAS ASKED BY THE ASSESSING OFFICER ONLY IN THE MONTH OF DECEMBER, 2008 I.E., AT THE FAG END OF THE CULMINAT ION OF ASSESSMENT PROCEEDINGS AS THE ASSESSMENT IS FINALIZED VIDE ORD ER DATED 24 TH DECEMBER, 2008. THUS, THE TIME AVAILABLE WITH THE ASSESSEE W AS VERY SHORT AND, THEREFORE, ADMISSION OF ADDITIONAL EVIDENCE WAS JUSTIFIED. HE FURTHER SUBMITTED THAT AS PER COPY OF BANK CERTIFICATE OBTAINED FROM BANK OF INDI A WHICH IS PLACED AT PAGE 2 OF THE PAPER BOOK THERE WERE TWO OUTSTANDING LOANS ONE AGAINST THE ASSESSEE WITH REGARD TO THE ABOVE MENTIONED CONSTRUCTED PROPERTY AND THE OTHER WITH REGARD TO THE CASH CREDIT FACILITY OBTAINED BY THE HUSBAND OF THE ASSESSEE FOR HIS PROPRIETARY CONCERN IN THE NAME OF M/S PROGRESSIVE MACHINES. HE SUBMITTED THAT THE OUTSTANDING LOANS AS PER THE CERTIFICATE DATED 08.04.2005 WAS AS FOLLOWS:- 1. HOUSE LOAN IN THE NAME OF THE ASSESSEE - RS.19, 98,691.00 2. CASH CREDIT LOAN IN THE NAME OF M/S PROGRESSIVE MACHINES - RS.20,24,568.75 6. HE SUBMITTED THAT AS PER COPY OF ACCOUNT ISSUED BY CITI BANK FURTHER LOAN SANCTIONED BY THE BANK ON THE SAID HOUSE, WHICH WAS CONSTRUCTED BY THE ASSESSEE, IS A SUM OF RS.49,99,000/- OUT OF WHICH A SUM OF RS.40,23,260/- WAS DISBURSED ON 9 TH APRIL, 2005 AND FROM THAT AMOUNT BOTH THE ABOVE AM OUNTS OF OUTSTANDING LOANS WERE DISCHARGED AND, THEREFORE, T HERE WAS NOTHING WHICH WAS ITA NO.3458/DEL/2009 C.O. NO.323/DEL/2009 5 NOT EXPLAINABLE. THUS, HE SUBMITTED THAT ACTING ON THIS EVIDENCE, LD. CIT (A) HAS DELETED THE ADDITION AND THE DELETION OF ADDITION I S IN ACCORDANCE WITH THE LAW. 7. WITH REGARD TO ALLOWABILITY OF INTEREST HE SUBMI TTED THAT AS PER CIRCULAR OF CBDT NO.28 DATED 20 TH AUGUST, 1969, IF THE FRESH LOAN IS TAKEN TO DISCHA RGE EARLIER LOAN IN RESPECT OF CONSTRUCTION OF A HOUSE, THEN, THE INTEREST PAYABLE ON SUBSEQUENT LOAN IS ELIGIBLE FOR DEDUCTION U/S 24(1) (VI) AND HE HAS PRODUCED BEFORE US COPY OF THAT CIRCULAR THE TEXT OF WHICH I S AS UNDER:- CIRCULAR NO.28 SEC.24(1) OF THE IT ACT, 1961 INSTRUCTIONS REGARD ING. 20/08/1969 INCOME FROM HOUSE PROPERTY SECTIONS 24, SEC. 24(1)(VI) OF THE IT ACT, 1961 PROVIDES THAT WH ERE THE PROPERTY HAS BEEN ACQUIRED, CONSTRUCTED, REPAIRED, RENEWED O R RE- CONSTRUCTED WITH BORROWED CAPITAL, THE AMOUNT OF AN Y INTEREST PAYABLE ON SUCH CAPITAL SHALL BE ALLOWED AS AN ADMI SSIBLE DEDUCTION IN THE COMPUTATION OF THE INCOME FROM THE SAID PROPERTY. 2. A QUESTION HAS BEEN RAISED WHETHER IN A CASE WHE RE A FRESH LOAN HAS BEEN RAISED TO REPAY THE ORIGINAL LOAN TAK EN FOR THE ABOVE PURPOSE, THE INTEREST PAYABLE IN RESPECT OF THE SEC OND LOAN WOULD ALSO BE ADMISSIBLE AS A DEDUCTION UNDER S.24(1)(VI) OF THE IT ACT. 3. THE MATTER HAS BEEN CONSIDERED BY THE BOARD AND IT HAS BEEN DECIDED THAT IF THE SECOND BORROWING HAS REALLY BEE N USED MERELY TO REPAY THE ORIGINAL LOAN AND THIS FACT IS PROVED TO THE SATISFACTION OF THE ITO, THE INTEREST PAID ON THE SECOND LOAN WOULD ALSO BE ALLOWED AS A DEDUCTION UNDER S.24(1)(VI). 8. HE SUBMITTED THAT A LOAN OF RS.19,98,691/- WAS U TILIZED BY THE ASSESSEE FOR THE PURPOSE OF REPAYMENT OF EARLIER LOAN AND TO THAT EXTENT INTEREST WAS ALLOWABLE U/S 24 (1)(VI). HE SUBMITTED THAT AS LD. CIT (A) HAS CONSIDERED THE ALLOWABILITY OF THE INTEREST ON LOAN UPTO RS.20,24, 569/- AND, THUS, THE ORDER OF THE CIT (A) IS IN ACCORDANCE WITH THE LAW. HE SUBMITTE D THAT INSTEAD OF RS.20,24,569/-, THE FIGURE WORKED OUT IN THE FORMUL A GIVEN IN THE ORDER OF THE CIT ITA NO.3458/DEL/2009 C.O. NO.323/DEL/2009 6 (A) CAN BE REPLACED TO RS.19,98,691/- AS THE SAID A MOUNT REPRESENTED THE REPAYMENT OF EARLIER LOAN. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. WE HAVE CAREFULLY GONE THROUGH THE CERTIFICATE ISSUED BY BANK OF INDIA, COPY OF WHICH IS PLACED AT PAGE 2 OF THE PAPER BOOK. WE HAVE ALSO CAREFULLY GONE THROUGH THE LOAN ACCOUNT STATEM ENT OF CITI BANK VIDE WHICH THE ASSESSEE RAISED SUBSEQUENT LOAN TO DISCHARGE EA RLIER LOAN. THE AMOUNT OF RS.40,23,263/- DISBURSED BY CITI BANK WHICH WAS UTI LIZED BY THE ASSESSEE TO DISCHARGE THE LOAN TAKEN FOR CONSTRUCTION OF ABOVE MENTIONED HOUSE AND ALSO TO SATISFY THE CASH CREDIT FACILITY AVAILED BY THE HUS BAND OF THE ASSESSEE FOR HIS PROPRIETARY CONCERN, NAMELY, M/S PROGRESSIVE MACHIN ES. THEREFORE, THE SOURCE OF PAYMENT MADE BY THE ASSESSEE FOR SATISFACTION OF LOAN RAISED IN THE PROPRIETARY CONCERN OWNED BY THE HUSBAND OF THE ASS ESSEE IS EXPLAINED. THE GRIEVANCE OF THE DEPARTMENT IS THAT ADDITIONAL EVID ENCE COULD NOT BE ADMITTED BY THE CIT (A), WHICH, IN OUR OPINION, IS NOT JUSTIFIE D AS THERE WAS LACK OF OPPORTUNITY TO THE ASSESSEE TO PRODUCE THE RELEVANT EVIDENCE. MOREOVER, THE CAUSE OF JUSTICE IS IMPORTANT. THE DOORS OF JUSTICE CANNOT BE SHUT DOWN IN GENUINE CASE WHERE THE AMOUNT IN ITSELF IS EXPLAINABLE AND WITH THE HE LP OF ABOVE EVIDENCE THE ASSESSEE IS CLEARLY ABLE TO SHOW THAT NO AMOUNT WAS UNEXPLAINABLE. THEREFORE, WE SEE NO JUSTIFICATION IN GROUND NO.1 RAISED BY TH E REVENUE AND THERE IS NO INFIRMITY IN THE ORDER OF THE CIT (A) WHEN HE DELET ED THE ABOVE MENTIONED ADDITION OF RS.20,24,569/- AS THE SOURCE THEREOF WA S EXPLAINED BY THE ASSESSEE. ACCORDINGLY, GROUND NO.1 IS DISMISSED. 10. SO AS IT RELATES TO GROUND NO.2 FILED BY THE RE VENUE, THE VERSION OF THE ASSESSEE IS SUPPORTED BY THE AFOREMENTIONED CIRCULA R WHICH HAS BEEN REPRODUCED IN THE EARLIER PART OF THIS ORDER. HOWE VER, THERE IS A MISTAKE IN THE ORDER OF THE LD. CIT (A). LD. CIT (A) HAS GIVEN TH E FOLLOWING FORMULA TO ARRIVE AT A FIGURE OF RS.2,69,880/-:- RS.4,53,576/- X RS.20,24,569/- RS.49,99,000/- ITA NO.3458/DEL/2009 C.O. NO.323/DEL/2009 7 11. THE ABOVE FORMULA IS REPLACED BY THE FOLLOWING FORMULA AS THE AMOUNT OF LOAN REPAYMENT, AS SUBMITTED BY LD. AR IS A SUM OF RS.19,98,691/-:- RS.4,53,576/- X RS.19,98,691/- = RS.1,81,348/- RS.49,99,000/- 12. ACCORDINGLY, THE DELETION WOULD BE AN AMOUNT OF RS.2,72,228/- IN PLACE OF RS.2,69,888/-. THUS, THE ADDITION IS CONFIRMED ONL Y TO THE TUNE OF RS.1,81,348/-. THE CALCULATION OF THE CIT (A) IS REVISED ACCORDING LY AND THE CROSS OBJECTION OF THE ASSESSEE IS PARTLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS DISMISSED AND THE CO FILED BY THE ASSESSEE IS PARTLY ALLOWED. . THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.04.20 10. [SHAMIM YAHYA] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.04.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES