Sh. Harish Kumar through L/H Sh. Yatin Kumar, New Delhi V. ITO, New Delhi

ITA 1102/DEL/2014

• Counselvise Citation: 110220114 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 02-07-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GAGAN SOOD
• Assessee Lawyers: R S SINGHVI
• Keywords: Gift; Depreciation
• Section: 80C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: SMC NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER I.T.A .NO. - 1102 /DEL/201 4 (ASSESSMENT YEAR - 200 9 - 10 ) HARISH KUMAR THROUGH L/H SH.YATIN KUMAR, BL - 53, SHALIMAR BAGH, NEW DELHI - 110088. PAN - AASPK2290C ( APPELLANT) VS ITO, WARD - 19(1), NEW DELHI (RESPONDENT ) APPELLANT BY SH.R.S.SINGHVI, CA RESPONDENT BY SH.GAGAN SOOD, SR.DR ORDER BY THE PRESENT APPEAL, THE ASSESSEE ASSAILS THE CORRECTNESS OF THE ORDER DATED 30.12.2013 OF CIT(A) - XXII, NEW DELHI PERTAINING TO 2009 - 10 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS: - 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE O RDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS BAD IN LAW AND ON THE FACTS OF THE CASE. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF R.6,89,000/ - U/S 68 OF THE INCOME TAX ACT. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX (APPEAL) IS NOT JUSTIFIED IN SUSTAINING THE DISALLOWANCE OF RS.1,72,825/ - OUT OF VARIOUS EXPENSES DEBITED TO THE PROFIT AND LOSS ACCOUNT. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX(APPEAL) IS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE IS NOT ENTITLED TO HIGHER DEPRECIATION @ 40% ON TRUCK BEING USED IN THE TRANSPORTATION BUSINESS. 5. THAT THE APPELLANT CRAVE LEAVE T O TAKE ADDITIONAL GROUND OR GROUNDS OF APPEAL OR TO ALTER OR VARY ANY OR ALL THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL. 2. THE RELEVANT FACTS OF THE CASE ARE THAT THE ASSESSEE DECLARED AN INCOME OF RS.3,02,880/ - BY WAY OF E - FIL ING ITS RETURN WHICH WAS SELECTED FOR SCRUTINY UNDER CASS AS A RESULT THEREOF THE ASSESSEE WAS REQUIRED TO EXPLAIN ITS DEPOSITS IN THE ICICI BANK LIMITED, NEW DELHI. DATE OF HEARING 02 .0 7 .2015 DATE OF PRONOUNCEMENT 28 .08 .2015 I.T.A .NO. - 1102/ DEL/2014 PAGE 2 OF 5 2.1. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION DERIVED ITS INCOME FROM BUSINESS UNDER THE HEAD M/S INDORE GOODS CARRIED AT M - 183, GALI NO. - 12, SHASTRI NAGAR, NEW DELHI - 110052 AND INCOME FROM OTHER SOURCES. 2.2. THE ASSESSEE WAS REQUIRED TO EXPLAIN THE DEPOSITS IN HIS BANK ACCOUNT. THE AO OBSERVED THAT THE ASSESSEE HAD SHOWN A SUM OF RS.14,78,200/ - AS INCOME FROM COMMISSION AND RS. 7,80,073/ - AS TRUCK RECEIPTS FOR THE YEAR UNDER CONSIDERATION. 2. 3 . ON A PERUSIN G OF THE DETAILS , IT WAS OBSERVED THAT THE ASSESSEE HAD INTRODUCED AN AMOUNT OF RS. 6,89,000/ - IN THE CAPITAL ACCOUNT. SINCE BY THE SAID TIME, THE ASSESSEE HAD EXPIRED I N A ROAD ACCIDENT THE LEGAL HEIR SH. YATIN KUMAR SUBMITTED THAT THE ADDITION IN THE CA PITAL ACCOUNT WAS OUT OF CASH BALANCE AVAILABLE WITH THE ASSESSEE IN HIS PERSONAL CAPACITY ; A ND FROM THE SAVINGS AVAILABLE F R OM THE WITHDRAWALS MADE FOR HOUSEHOLD EXPENSES ; FROM GIFTS ETC. RECEIVED BY THE ASSESSEE AND HIS FAMILY MEMBERS ON VARIOUS OCCASIO NS. THE EXPLANATION OFFERED WAS CONSIDERED TO BE NOT TENABLE AS IT WAS CONCLUDED THAT THE SAME WAS NOT SUPPORTED BY WAY OF ANY EVIDENCE. 2.4. THE AO ALSO REQUIRED THE ASSESSEE TO EXPLAIN E XPENSES OF RS.17,28,247/ - CLAIMED UNDER VARIOUS HEADS BESIDES BANK CHARGES, INTEREST IN BANK DEPRECIATION ETC. CONSIDERING THE REPLY THAT ON ACCOUNT OF THE DEATH OF THE ASSESSEE IN A ROAD ACCIDENT WHERE HIS SON AND LEGAL HEIR STATED THAT HE D ID NOT KNOW ANYTHING ABOUT THE BUSINESS OR ITS RECORDS ETC. ADDITION BY WAY OF A DISALLOWANCE OF 10% OF THE EXPENSES CLAIMED WAS MADE AMOUNTING TO RS.1,72,325/ - . 2.5. APART FROM THAT CONSIDERING THE CLAIM OF DEDUCTION U/S 80C ADDITION BY WAY OF A DISALLOWANCE OF RS.1,574/ - WAS MADE FOR WANT OF EVIDENCE. 3 . AGGRIEVED BY THIS THE AS SESSEE CAME IN APPEAL BEFORE THE CIT(A). THE ADDITIONS MADE WERE CONFIRMED BY T HE CIT(A) . HOWEVER, HE PERMITTED THE ASSESSEE TO RAISE AN ADDITIONAL GROUND CLAIMING HIGHER DEPRECIATION AT 40% INSTEAD OF 15% BUT EVEN THIS GROUND ON MERITS WAS REJECTED BY H IM . 4 . AGGRIEVED BY THIS, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5 . LD.AR APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT WHERE EVIDENTLY ON FACTS THE ASSESSEE DIE D IN A ROAD ACCIDENT AND THE ASSESSEE S SON HAS ALL ALONG CLAIMED THAT HE IS NOT IN A POSITION TO EXPLAIN THE EXPENSES AND THE ADDITIONS IN THE CAP ITAL ACCOUNT WHICH WAS IN THE PERSONAL KNOWLEDGE OF HIS LATE FATHER, IT WAS SUBMITTED THAT IN TH E S E PECULIAR FACTS WHEN COMPARISON WITH EXPENSES OF LAST I.T.A .NO. - 1102/ DEL/2014 PAGE 3 OF 5 YEAR VIS - - VIS THIS YEAR IS MADE , IT WOULD SHOW THAT THE NET PROFIT RATE DISCLOSED WAS VERY REASONABLE. ADDRESSING THE INTRODUCTION IN THE CAPITAL ACCOUNT QUESTIONED BY THE AO IT WAS EXPLAINED THAT CONSISTENTLY THE ASSESSEE IS EXPLAINING THE SAME AS PARTLY FROM SAVINGS GENERATED FROM WITHDR AWALS MADE FOR HOUSEHOLD EXPENSES AND CASH BALANCE AVAILABLE TO HIS LATE FATHER IN HIS PERSONAL CAPACITY ALONGWITH GIFTS ETC. RECEIVED BY THE FAMILY MEMBERS OVER THE YEARS BY THE FATHER AS HEAD OF THE FAMILY . IN THE FACE OF THIS EXPLANATION IT WAS SUBMI TTED THAT ATLEAST PART RELIEF CAN BE GRANTED. 5.1. ADDRESSING THE NEXT ISSUE I T W AS SUBMITTED THAT NO DOUBT THE LATE ASSESSEE S SON AND LEGAL HEIR HAS STATED THAT HE DOES NOT KNOW ANYTHING ABOUT THE BUSINESS RECORD S BUT THE FACT REMAINS THAT EVEN THE AO HAS NOT POINTED OUT ANY SPECIFIC EXPENSES WHICH THE ASSESSEE FAILED TO EXPLAIN. A GENERAL QUESTION IS ANSWERED BY A GENERAL ANSWER DOES NOT ABSOLVE THE AO IT WAS SUBMITTED FROM POINTING OUT SPECIFIC DEFECTS. IN THESE FACTS, IT WAS SUBMITTED THE ADDITION ALTEA ST ON THIS COUNT SHOULD NOT HAVE BEEN SUSTAINED. A PARTIAL RELIEF FOR THE ADDITION SUSTAINED ON ACCOUNT OF DEDUCTION I N THE CAPITAL ACCOUNT IT WAS SUBMITTED ALSO ON HUMANITARIAN CONSIDERATION IN THESE PECULIAR CIRCUMSTANCES, IT WAS SUBMITTED WOULD BE FAI R BOTH TO THE TAX PAYER AND THE REVENUE. FOR READY - REFERENCE, ATTENTION WAS INVITED TO THE COMPARATIVE CHART OF EXPENSES & NET PROFIT RAT E FILED AT PAPER BOOK - 1 WHICH IT WAS SUBMITTED WOULD SHOW THAT INFACT THE EXPENSES HAVE SUBSTANTIALLY DECREASED AND T HE NET PROFIT RATIO IS MUCH HIGHER THAN THE EARLIER YEAR . 5.2 . ADDRESSING THE CLAIM OF HIGHER DEPRECIATION, ATTENTION WAS INVITED TO THE COPY OF THE BOARD S CIRCULAR NO. - 609 DATED 29.07.1991 AND ORDER OF THE ITAT (2006) 6 SOT 646 FILED AT PAGES 2 TO 11 OF THE PAPER BOOK IN C.SELVAKUMAR VS ITO AND JUDGEMENT OF THE HON BLE HIGH COURT OF B OMBAY IN THE CASE OF CIT VS S.C.THAKUR AND BRO THERS (2010) 322 ITR 463 (BOM.). ON THE BASIS OF THESE DECISIONS IT WAS SUBMITTED THAT THE ISSUE IS FULLY COVERED IN ASSESSEE S FAVOUR. IN THESE CIRCUMSTANCES IT WAS HIS PRAYER THAT A DIRECTION MAY BE GIVEN THAT RELIEF TO THIS EXTENT MAY BE DIRECTED T O THE AO. 6 . LD. SR. DR RELYING UPON THE IMPUGNED ORDER QUA THE CLAIM OF PART RELIEF REQUESTED IN REGARD TO INTRODUCTI ON I N THE CAPITAL ACCOUNT IN THE FACE OF THE PLEA OF THE LD.AR THAT SOME RELIEF ON FACTS WAS WARRANTED STATED THAT HE WOULD HAVE NO OBJECTION IF IT IS GRANTED AND THE ISSUE IS LEFT TO THE COURT. I.T.A .NO. - 1102/ DEL/2014 PAGE 4 OF 5 6.1 . ACCORDINGLY THE PART IES W ERE DIRECTED TO ADDRESS THE Q UANTUM OF PART RELIEF TO BE GRANTED, IF ANY ON THE ADDITION MADE FOR INCREASE IN CAPITAL ACCOUNT . AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES, BOTH THE PARTIES AGREED TO SUSTAINING THE ADDITION TO THE EXTENT OF RS.1,75,000/ - . A CCORDINGLY FOR THE REMAI NING AMOUNT THE EXPLANATION OF THE ASSESSEE THAT INTRODUCTION IN THE CAPITAL ACCOUNT WAS FROM THE PAST SAVINGS OF THE LATE SH.HARISH KUMAR IS ACCEPTED. IN THE RESULT, GROUND NO. - 2 OF THE ASSESSEE IS PARTLY ALLOWED. 7 . ADDRESSING GROUND NO.3, CONSIDERING T HE SUBMISSION OF THE PART IES BEFORE THE BENCH AND PERUSING THE MA TERIAL ON RECORD WHEREIN THE ADDITION HAS BEEN PROPOSED AND SUSTAINED IN AN ADHOC MANNER . I AM OF THE VIEW THAT ON FACTS ADDITION I N AN ADHOC MANNER WAS NOT WARRANTED. IN SUPPORT OF THE SAI D CONCLUSION REFERENCE IS MADE TO THE FOLLOWING FINDING OF THE AO IN THE ASSESSMENT ORDER UN - NUMBERED PARA 3 ITSELF WHERE THE AO OBSERVES THAT COPIES OF THE BALANCE SHEET, PROFIT AND LOSS ACCOUNT AND ANNEXURES HAVE BEEN FILED AND EXAMINED. IN THE SAI D FACTUAL POSITION, THE ADDITION CANNOT BE MADE WITHOUT ADDRESSING WHAT WAS THE DEFECT IN THE CLAIM WHICH THE LEGAL HEIR COULD NOT ADDRESS. THE ARGUMENTS BEFORE THE CIT(A) THAT IN FACT THE EXPENSES OVER THE YEARS HAVE DECREASED IS FOUND NOT ADDRESSED BY THE CIT(A) THOUGH IT IS REPRODUCED IN THE ORDER. IN THE LIGHT OF THE ABOVE FACTUAL POSITION, I FIND THAT THE ADDITION MADE IN AN ADHOC MANNER CANNOT BE SUSTAINED AND THE SAME IS ORDERED TO BE DELETED. 8. ADDRESSING THE LAST ISSUE AGITATED BY THE ASSESSEE IN GROUND NO. - 4, IT IS SEEN ON CONSIDERING THE PRECEDENT RELIED UPON THAT IT IS APPROPRIATE IN THE FACE OF THE LEGAL AND FACTUAL POSITION ON THE ISSUE TO DIRECT THE AO TO GRANT NECESSARY RELIEF TO THE ASSESSEE . W HILE SO HOLDING IT IS SEEN THAT THE ADDITIONAL GROUND HAS BEEN ADMITTED BY THE CIT(A) AND AGAINST ITS ADMISSION NO C R O S S OBJECTION HAS BEEN FILED BY THE REVENUE. MOREOVER NO ARGUMENTS WERE ADVANCED BY THE REVENUE AGAINST THE SAID CLAIM. THE LEGAL POSITION WARRANTING THE DIRECTION IS SUPPORTED BY THE FOLLOWING EXTRACT FROM THE JUDGEMENT OF THE HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. S. C. THAKUR (CITED SUPRA): - 2. IN BOARD S CIRCULAR NO. - 609, DT. 29 TH JULY 1991 [(1992) 96 CTR (ST) 233], IT WAS CLARIFIED THAT WHERE A TOUR OPERATOR OR TRAVEL AGENT USES MOTOR BUSINESS OR MOTOR TAXIS OWNED BY HIM IN PROVIDING TRANSPORTATION SERVICES TO TOURISTS, HIGHER RATE OF DEPRECIATION WOULD BE ALLOWED ON SUCH VEHICLES . IT IS FURTHER CLARIFIED THAT HIGHER DEPRECIATION WILL ALSO BE ADMISSIBLE ON MOTOR LORRIES USED FOR THE ASSESSEE S BUSINESS OF TRANSPORTATION OF GOODS ON HIRE. THE HIGHER RATE OF DEPRECIATION HOWEVER I.T.A .NO. - 1102/ DEL/2014 PAGE 5 OF 5 WILL NOT APPLY IF THE MOTOR BUSINESS, MOTOR LORRIES E TC. ARE USED IN SOME OTHER NON - HIRING BUSINESS OF THE ASSESSEE. 9. ACCORDINGLY THE AO IS DIRECTED TO GRANT NECESSARY RELIEF. 1 0 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COUR T ON 2 8 T H OF AUGUST, 2015. S D / - (DIVA SINGH) JUDICIAL MEMBER DATED: 2 8 / 08 /2015 * AMIT KUMAR * C OPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI