Suraj Negi, Delhi V. ITO, Ward-71(3), Delhi

ITA 1025/DEL/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1084 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 13-07-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 26-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH GUPTA
• Keywords: Unexplained expenditure
• Section: 69C; 69A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH: ‘SMC’ NEW DELHI SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA No.1025/Del/2021 Assessment Year: 2017-18 Shri Suraj Negi, G-147, Block-G, Chitra Lekha Gali, Jagat Puri, Krishna Nagar, Delhi-110051 Vs. ITO, Ward-71(3), Delhi PAN :AIBPN1187E (Appellant) (Respondent) ORDER This is an appeal by the assessee against order dated 27.07.2021 passed by the National Faceless Appeals Centre (NFAC), Delhi for the assessment year 2017-18. 2. The dispute in the present appeal is confined to addition of Rs.8,00,000 under Section 69A of the Income-Tax Act, 1961. 3. Briefly, the facts are, assessee is a resident individual. For the assessment year dispute, assessee filed its return of income on Appellant by Dr. Rakesh Gupta, Adv. & Shri Somil Agarwal, CA Respondent by Shri Om Parkash, Sr. DR Date of hearing 13.07.2022 Date of pronouncement 12.10.2022 2 ITA No.1025/Del./2021 04.08.2017 declaring income of Rs.4,17,170. Assessee’s case was selected for limited scrutiny to examine large cash payment made for credit card purchases. 4. In course of assessment proceeding, the Assessing Officer noticing that in the year under consideration assessee has made payment of Rs.11,18,380 towards credit card purchases, called upon the assessee to explain the source of such expenditure. In response, assessee submitted that he was employed as Manager (Operation) with a company and drawing salary. While explaining the source of credit card purchases, the assessee submitted that he had opening cash balance of Rs.5,00,000 as on 01.04.2016, cash withdrawals from bank of Rs.1,83,300 and cash reimbursement from friends for use of credit card amounting to Rs.8,00,000. Though, the Assessing Officer accepted the opening cash balance of Rs.5,00,000 and cash withdrawals from bank amounting to Rs.1,83,300, however, he did not accept the cash reimbursement from friends by use of credit card amounting to Rs.8,00,000. Accordingly, he made the addition of Rs.8,00,000 to the income of the assessee by invoking the provision of section 69A of the Act. Though, the assessee contested the aforesaid 3 ITA No.1025/Del./2021 addition before the first appellate authority, however, the addition was sustained. 5. Before me, learned counsel appearing for the assessee, submitted that the addition made under Section 69A of the Act is unsustainable as section 69A can be invoked only when the assessee is found to be the owner of money, bullion, jewellery or other valuable articles which are not recorded in the books of accounts and the assessee offers no explanation about the nature and source of the acquisition of the money, bullion, jewellery etc. He submitted, in the facts of the present case, no money, bullion and jewellery were found from the possession of the assessee. Therefore, the addition could not have been made under Section 69A of the Act. 6. Without prejudice, he submitted, learned Commissioner (Appeals) has factually found assessee’s explanation that the credit card of the assessee was used by friends for purchase of petrol is believable. Thus, he should have deleted the addition. 7. The learned Departmental Representative, submitted, if the Assessing Officer has wrongly invoked the provisions of section 69A, 4 ITA No.1025/Del./2021 the addition can be made under Section 69C of the Act by treating it as unexplained expenditure. 8. In rejoinder, learned counsel for the assessee submitted, since, the addition has been made under Section 69A of the Act both by the Assessing Officer and learned Commissioner (Appeals), the Tribunal cannot travel beyond the subject matter of appeal or enlarge the scope of appeal by sustaining the addition under a different provision. For such proposition, he relied upon the decision of Hon'ble Allahabad High Court in case of Smt. Sarika Jain vs. CIT (2018) 407 ITR 264. 9. I have considered rival submissions and perused the material available on record. 10. Undisputedly, out of the total amount representing the credit card purchases, the Assessing Officer has accepted an amount of Rs.6,83,300 as explained. As regards, the balance amount of Rs.8,00,000, assessee has explained that the credit card was used by some of his friends for purchase of fuel from petrol pump. Though, the Assessing Officer has refused to accept such explanation of the assessee, however, learned Commissioner (Appeals) on perusal of the credit card statement and other materials available before him has 5 ITA No.1025/Del./2021 recorded a finding of fact that multiple entries of same amount of fuel purchased at a particular petrol pump on a particular date was recorded. Though, learned Commissioner (Appeals), ultimately, has not accepted assessee’s claim, however, he has not entirely disbelieved assessee’s claim that credit card was used by assessee’s friends for buying fuel. Therefore, in my view, benefit of doubt can be given to the assessee. However, I must hasten to add that this kind of activity cannot be encouraged as the credit card is for the personal use of the assessee. The assessee should be careful in using the credit card. 11. Another aspect of the issue is, whether the addition could have been made under Section 69A of the Act. Admittedly, the addition of Rs.8,00,000 is not based on any cash found from the possession of the assessee. It is a fact on record that on verifying the credit card statement, certain purchases were found to have been made by the assessee for using the credit card. That being the factual position emerging on record, the conditions of section 69A of the Act are not satisfied, as, section 69A speaks of the following: i) The assessee must be the owner of the money, bullion, jewellery; 6 ITA No.1025/Del./2021 ii) It has not been recorded in the books of accounts, if any, maintained by him for any source of income; & iii) The assessee offers no explanation about the nature and source of money, bullion and jewellery etc. or explanation offered by him is not satisfactory. 12. Apparently, in the facts of the present appeal, the aforesaid conditions are not satisfied. Therefore, the addition could not have been made under Section 69A of the Act. In this regard, I rely upon the decision of Hon'ble Punjab and Haryana High Court in the case of CIT vs. Ravi Kumar (2007) – 294 ITR 78. 13. In view of the aforesaid, I delete the addition of Rs.8,00,000. 14. In the result, the appeal is allowed, as indicated above. Order pronounced in the open court on 12 th October, 2022. Sd/- (SAKTIJIT DEY) JUDICIAL MEMBER Dated: 12 th October, 2022. Mohan Lal Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi