Vijay Kumar Gupta, New Delhi V. ITO, New Delhi

ITA 117/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6938 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-06-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 07-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ANISH GUPTA
• Keywords: Gift; Business expenditure; Opportunity of being heard
• Section: 37(1); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: D: NEW DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER, AN D SHRI L.P. SAHU, ACCOUNTANT MEMBER , ITA NOS. 117 TO 119/DEL/2013 [A.YS : 2007-08 TO 2009-10] SHRI VIJAY KUMAR GUPTA VS. THE I.T.O K 28, SARITA VIHAR WARD 37(1) NEW DELHI NEW DELHI PAN : AAHPG 8703 D [APPELLANT] [RESPON DENT] DATE OF HEARING : 14.06.2016 DATE OF PRONOUNCEMENT : 22.07.2016 APPELLANT BY : SHRI ANISH GUPTA, CA RESPONDENT BY : SHRI YOGESH KUMAR SHARMA , SR. DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THESE THREE APPEALS HAVE BEEN FILED BY THE ASSESSEE AND DIRECTED AGAINST THE ORDER OF THE CIT(A)-XXVIII, NE W DELHI, DATED 30/11/2012 FOR AYS 2007-08 TO 2009-10. SINC E THE APPEALS PERTAIN TO SAME ASSESSEE AND WERE HEARD TOGETHER, W E ARE DISPOSING THEM OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVE NIENCE AND BREVITY. 2 ITA NOS. 117 TO 119/DEL/2 013 2 2. THE ASSESSEE HAS RAISED SIMILAR GROUNDS OF APPEA L IN ALL THE THREE APPEALS. HOWEVER, AT THE VERY OUTSET OF THE H EARING OF THE ARGUMENTS, THE LD. AR SUBMITTED THAT THE ISSUES INV OLVED IN ALL THESE THREE APPEALS STAND COVERED VIDE ORDER OF THI S TRIBUNAL IN THE CASE OF ASSESSEES SONS SHRI ANISH KUMAR GUPTA AND SHRI ASHISH KUMAR GUPTA IN ITA NOS. 120 & 121/DEL/2013 F OR A.YS 2007-08 AND 2008-09, A COPY OF WHICH HAS BEEN FURNI SHED ON RECORD. THE LD. AR FURTHER SUBMITTED THAT NEITHER THE LD. CIT(A) NOR THE AO WAS JUSTIFIED IN COMING TO A HASTE AND A RBITRARY CONCLUSION WITHOUT APPRECIATING THE FACTS AND CIRCU MSTANCES OF THE CASE AND WITHOUT VERIFYING THE CONFIRMATIONS OF THE ASSESSEE OF THE ASSESSEE PLACED ON RECORD. THE LD. AR CONT ENDED THAT HE HAS NO OBJECTION IF THE MATTER IS RESTORED TO THE F ILE OF THE AO FOR FRESH ADJUDICATION AND PRAYED THAT THE AO MAY BE DI RECTED TO VERIFY THE CONFIRMATIONS BEFORE PASSING ORDER. 3. ON CAREFUL CONSIDERATION OF ABOVE SUBMISSIONS, A T THE OUTSET, FROM THE COPY OF THE ORDER OF THE TRIBUNAL DATED 9.1.2014, PASSED IN THE CASES OF SHRI ANISH KUMAR G UPTA AND SHRI ASHISH KUMAR GUPTA IN ITA NOS. 120 TO 121/DEL/2013 AND 112 TO 114/DEL/2013 FOR AY 2007-08 TO 2009-10 [SUPRA] AS R ELIED UPON BY THE LD. AR OF THE PRESENT ASSESSEE, WE OBSERVE THAT IN THE APPEAL 3 ITA NOS. 117 TO 119/DEL/2 013 3 OF SHRI ANISH KUMAR GUPTA, THE ISSUE IS RESTORED TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATIONS: 13 . WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AND GONE THROUGH THE RECORD CAREFULLY. THE STAND OF THE ASSE SSEE IS THAT HE HAS ENTERED INTO AN AGREEMENT WITH M/S. RELIANCE IN DUSTRIES FOR PROVIDING CERTAIN SERVICES ON A MONTHLY PAYMENT OF RS.10,000 PLUS REIMBURSEMENT OF THE ACTUAL EXPENDITURE. NOW, THE ASSESSEE HAS POINTED OUT THAT HE HAS RECEIVED A SUM OF RS.37 8,93,279 IN ASSESSMENT YEAR 2007-08 AND SUM OF RS.340,66,623 IN ASSESSMENT YEAR 2008-09. THESE ARE THE GROSS RECEIPTS. THE PAY ER HAS GIVEN A CONFIRMATION DISCLOSING THE FACT THAT ASSESSEE HAS INCURRED A SUM OF RS.371,52,574 UNDER VARIOUS HEADS IN ASSESSMENT YEAR 2007-08 AND RS.333,41,778 IN ASSESSMENT YEAR 2008-09. THE P AYER HAS OBSERVED THAT IT IS REIMBURSING THE EXPENSES INCURR ED BY THE ASSESSEE ON ITS BEHALF. IN THIS SITUATION, THE AMOU NT TO THIS EXTENT IS NEITHER A LOAN TO THE ASSESSEE NOR A GIFT. HE HA S NOT KEPT THIS AMOUNT IN HIS POCKET. IF THE ASSESSING OFFICER HAS ANY DOUBT THAT THESE EXPENSES ARE NOT GENUINE EXPENDITURE THEN THE Y ARE TO BE EXAMINED IN THE HANDS OF THE PAYER. IT IS TO BE SEE N IN THE CASE OF RELIANCE INDUSTRIES AS TO FOR WHAT PURPOSE THESE EX PENSES HAVE BEEN INCURRED AND IF THEY ARE NOT FOR BUSINESS PURP OSES THEN THEY CAN BE DISALLOWED IN THE HANDS OF RELIANCE INDUSTRI ES. THE OTHER ANGLE COULD BE THAT IF RELIANCE INDUSTRIES DENIES T HAT THESE EXPENDITURES DO NOT PERTAIN TO IT THEN ITS GENUINEN ESS COULD BE EXAMINED IN THE HANDS OF THE ASSESSEE. IN THAT CASE , IF IT IS PROVED THAT THESE ARE NOT BUSINESS EXPENDITURE, ASS ESSEE HAS RECEIVED THIS MONEY AND KEPT IN HIS POCKET, ONLY TH EN, IT CAN BE 4 ITA NOS. 117 TO 119/DEL/2 013 4 ASSESSED IN THE HANDS OF THE ASSESSEE. WE ALSO FIND THAT IN ASSESSMENT YEAR 2008-09, LEARNED ASSESSING OFFICER HAS OBSERVED THAT THESE AMOUNTS ARE TO BE ADDED IN THE INCOME OF THE ASSESSEE ON PROTECTIVE BASIS. THEREFORE, LEARNED ASSESSING O FFICER HAS MISGUIDED HIMSELF IN EXAMINING THIS ISSUE IN THE HA NDS OF THE ASSESSEE. LEARNED ASSESSING OFFICER CAN EXAMINE VER ACITY OF ASSESSEES CLAIMS WITH REGARD TO THE BALANCE AMOUNT I.E. THE DIFFERENCE BETWEEN RS.378,93,277 MINUS RS.3,71,525 AND RS.340,66,623 MINUS RS.333,41,778. HOW THE TOTAL AM OUNT CAN BE ADDED IN THE HANDS OF THE ASSESSEE IS NOT ASCERTAIN ABLE IN THE ASSESSMENT ORDER. THE CONFIRMATION OF RELIANCE INDU STRIES IS AVAILABLE ON PAGES 53 AND 63 OF THE PAPER BOOK. WE HAVE GONE THROUGH THESE DOCUMENTS. THIS ISSUE IS ALSO SET ASI DE TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. LEARNE D ASSESSING OFFICER SHALL KEEP IN MIND THAT SIMILAR ADDITIONS A RE DELETED BY LEARNED CIT(APPEALS) IN ASSESSMENT YEAR 2006-07 AND ITAT HAS AFFIRMED THE ORDER OF LEARNED CIT(APPEALS). HE SHAL L ALSO KEEP IN MIND THAT IN THE CASE OF ANISH GUPTA, HE HIMSELF MA DE ADDITION ON PROTECTIVE BASIS. 14. NOW, WE TAKE THE REMAINING GROUNDS OF APPEAL IN THE CASE OF ASHISH KUMAR GUPTA. THE GROUND NO.5 IN ASSE SSMENT YEAR 2007-08 IS CONNECTED WITH GROUND NO.2. IN THIS GROUND, ASSESSEE HAS PLEADED THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.1,53488. THE BRIEF FA CTS OF THE CASE ARE THAT ACCORDING TO THE ASSESSING OFFICER, A SSESSEE HAD SHOWN ADVANCE OF RS.114,76,588 WHILE HE HAS FUR NISHED THE DETAILS BY WAY OF CASH RECEIVED FROM THE AGRICU LTURALIST AT RS.113,23,100. THE ASSESSING OFFICER HAS MADE TH E 5 ITA NOS. 117 TO 119/DEL/2 013 5 ADDITION OF THIS AMOUNT UNDER SEC. 68 OF THE ACT. H E TREATED THE BALANCE AMOUNT I.E. DIFFERENCE BETWEEN THESE TW O AT RS.1,53,488 AS UNEXPLAINED ON THE GROUND THAT ASSES SEE HAS NEITHER GIVEN THE DETAILS NOR CONFIRMATION. SINCE, WE HAVE ALREADY SET ASIDE THE MAIN ISSUE WHEREBY UNEXPLAINE D CASH CREDITS HAVE BEEN ADDED, WE DEEM IT APPROPRIATE TO SET ASIDE THIS ISSUE ALSO TO THE FILE OF THE ASSESSING OFFICER. LEARNED ASSESSING OFFICER SHALL READJUDICATE THIS I SSUE ALSO. 4. FROM THE ORDER OF THE TRIBUNAL DATED 09.1.2014 [ SUPRA, WE ALSO OBSERVE THAT THE SIMILAR ISSUE HAS BEEN RESTOR ED TO THE FILE OF THE AO IN THE APPEALS OF SHRI ANISH KUMAR GUPTA WIT H THE FOLLOWING OBSERVATIONS: 16. THE BRIEF FACTS WITH REGARD TO THESE GROUNDS A RE THAT SHRI ASHISH GUPTA WAS RUNNING A PROPRIETORSHIP CONCERN, NAMELY, ARNAV LISIONING SERVICES. HE ENTERED INTO AN AGR EEMENT WITH RELIANCE INDUSTRIES LTD. ON 5 TH DAY OF APRIL 2006 FOR PROVIDING CONSULTANCY SERVICES. THE RELIANCE INDUSTRIES SUPPO SED TO PAY CONSULTANCY FEE OF RS.15,000 PER MONTH. ACCORDING T O THE ASSESSEE, HE HAS RECEIVED A SUM OF RS.283,83,450 FR OM RELIANCE INDUSTRIES LTD. TOWARDS EXPENDITURE IN ASSESSMENT Y EAR 2007-08. THE ASSESSEE HAD INCURRED A SUM OF RS.276,98,340. I N ITS CONFIRMATION, RELIANCE INDUSTRIES HAS CONFIRMED THA T THIS MUCH AMOUNT WAS TOWARDS REIMBURSEMENT OF EXPENDITURE. LE ARNED ASSESSING OFFICER HAS MADE ANALYSIS OF THESE EXPENS ES UNDER VARIOUS HEADS AND THEREAFTER HE MADE AN ADDITION OF 6 ITA NOS. 117 TO 119/DEL/2 013 6 RS.274,76,043 WHICH REPRESENTS REIMBURSEMENT OF EXP ENDITURE. LEARNED ASSESSING OFFICER IS OF THE OPINION THAT TH ESE EXPENSES ARE FOR NON-BUSINESS PURPOSES. APART FROM THIS AMOU NT, LEARNED ASSESSING OFFICER HAS MADE ADDITION OF RS.2,02,476. THIS IS AN EXPENSE WHICH WAS PAYABLE BY THE ASSESSEE. SIMILARL Y, IN ASSESSMENT YEAR 2008-09, RELIANCE INDUSTRIES HAS PA ID RS.255,77,109 AND THE REIMBURSEMENT OF EXPENSES OUT OF THIS AMOUNT IS OF RS.249,03,984. LEARNED ASSESSING OFFIC ER HAS OBSERVED THAT THE EXPENDITURE WERE FOR NON-BUSINESS PURPOSES. HE ALSO ASSESSED THE INCOME ON PROTECTIVE BASIS WIT H REGARD TO THE RECEIPTS FROM M/S. RELIANCE INDUSTRIES. LEARNED ASSESSING OFFICER FURTHER MADE AN ADDITION OF RS.7,99,012 WHI CH IS CHALLENGED BY THE ASSESSEE IN GROUND NO.3. THIS AMO UNT REPRESENTS TDS CREDIT CLAIMED BY THE ASSESSEE AT RS .6,19,012 PLUS RS.1,80,000 I.E. CONSULTANCY FEE OF 12 MONTHS. LEARNED ASSESSING OFFICER HAS MADE AN ADDITION OF RS.247,78 ,097 ON PROTECTIVE BASIS WHICH IS AN AMOUNT WORKED OUT BY D EBITING THE TOTAL RECEIPTS PAID BY THE RELIANCE INDUSTRIES AT R S.255,77,109 MINUS RS.7,99,012. 17. IN ASSESSMENT YEAR 2009-10, ASSESSING OFFICER H AS AGAIN MADE AN ADDITION OF RS.46,08,774. THE ASSESSEE HAD RECEIVED A SUM OF RS.49,00,004 FROM RELIANCE INDUSTRIES AND OU T OF THIS AMOUNT, A SUM OF RS.45,03,104 WAS TOWARDS THE REIMB URSEMENT OF EXPENDITURE. THE ASSESSING OFFICER HAS MADE AN A SSESSMENT OF RS.46,08,774 ON PROTECTIVE BASIS. HE WORKED OUT THI S AMOUNT BY DEBITING A SUM OF RS.1,80,000 CLAIMED BY THE ASSESS EE AS CONSULTANCY CHARGES FROM THE TOTAL AMOUNT PAID BY T HE RELIANCE INDUSTRIES LTD. IN THIS YEAR. 7 ITA NOS. 117 TO 119/DEL/2 013 7 18. THE FACTS ARE SIMILAR TO THAT OF SHRI ANISH KUM AR GUPTA AS DISCUSSED IN THE FOREGOING PARAGRAPHS OF T HIS ORDER. LEARNED ASSESSING OFFICER IN TWO ASSESSMENT YEARS I.E. 2008-09 AND 2009-10 HIMSELF HAS OBSERVED THAT THE ALLEGED RECEIPTS FROM THE RELIANCE INDUSTRIES IS TO BE ASSESSED ON PROTECTIVE BASIS IN THE HANDS OF THE AS SESSEE, THEN HOW HE CAN MADE ADDITION ON SUBSTANTIVE BASIS IN ASSESSMENT YEAR 2007-08. WE HAVE SET ASIDE THIS ALS O TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION IN THE CASE OF HIS BROTHER. FOLLOWING OUR OBSERVATIONS IN PARA 13, WE ALLOW THESE GROUNDS ALSO AND SET ASIDE ALL THESE IS SUES TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATIO N 5. THE LD DR HAS FAIRLY ACCEPTED THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE PERTAINING TO FAT HER OF SHRI ANISH KUMAR GUPTA AND SHRI ASHISH KUMAR GUPTA ARE Q UITE SIMILAR AND ISSUE INVOLVED IN THESE THREE APPEALS IS ALSO S AME TO THE EARLIER APPEALS DECIDED BY THE TRIBUNAL ORDER DATED 9.1.2014 [SUPRA]. THE LD. DR SUPPORTED THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT THE LD. CIT(A) WAS QUITE JUSTIFIED I N UPHOLDING THE ORDER OF THE AO. HOWEVER, HE RAISED NO SERIOUS OBJ ECTION TO THE ASSESSEES SUBMISSION THAT HE HAS NO OBJECTION IF T HE APPEAL IS RESTORED TO THE FILE OF THE AO FOR AND VERIFICATION OF THE CONFIRMATIONS FILED BY THE ASSESSEE. 8 ITA NOS. 117 TO 119/DEL/2 013 8 6. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFO RE US. WE FIND FROM THE ORDER OF THE LD. CIT(A) THAT THE ISSU ES UNDER CONSIDERATION HAVE NOT BEEN DECIDED BY THE AO IN A PROPER MANNER AND FACTS HAVE NOT BEEN APPRECIATED IN A JUD ICIOUS MANNER. WE FIND THAT THE CONFIRMATIONS HAVE NOT BE EN VERIFIED BY THE LOWER AUTHORITIES. WE FURTHER FIND THAT THE LD. CIT(A) HAS PASSED THE ORDER WITHOUT PROVIDING THE ASSESSEE DUE OPPORTUNITY OF BEING HEARD. ON THE BASIS OF FOREGOING DISCUSSIO N AND CAREFUL PERUSAL OF THE OPERATIVE PART OF THE LD. CIT(A)S C ONCLUSION, IT IS AMPLY CLEAR THAT THE LD. CIT(A) HAS DECIDED THE ISS UE IN HASTE BY PASSING A CRYPTIC ORDER WHICH IS NOT SUSTAINABLE. WE FURTHER NOTE THAT THE LD. CIT(A) HAS ALSO NOT PROPERLY CONSIDERE D THE SUBMISSIONS AND FACTS OF THE CASE AND SIMPLY FOLLOW ED THE AOS CONCLUSION AND DISMISSED THE APPEALS OF THE ASSESSE E. WE FURTHER NOTE THAT THE LD. CIT(A) TOO HAS NOT GIVEN DUE OPPO RTUNITY OF BEING HEARD TO THE ASSESSEE. THE LD. DR HAS SUPPOR TED THE ORDER OF THE LD. CIT(A). HOWEVER, HE RAISED NO SERIOUS O BJECTION IF THE APPEAL IS RESTORED TO THE FILE OF AO FOR FRESH ADJU DICATION OF FIRST APPEAL. THEREFORE, IN THE INTEREST OF JUSTICE, WE D EEM IT FIT TO RESTORE THE GROUNDS OF APPEAL RAISED BY THE ASSESSE E IN ALL THE 9 ITA NOS. 117 TO 119/DEL/2 013 9 THREE APPEALS TO THE FILE OF THE AO FOR FRESH ADJUD ICATION. NEEDLESS TO MENTION THAT THE AO SHALL PROVIDE DUE A ND PROPER OPPORTUNITY OF BEING HEARD TO THE ASSESSEE, WITHOUT BEING PREJUDICED WITH THE EARLIER IMPUGNED ORDER. GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, ALL THE THREE APPEALS OF THE ASSE SSEE STAND ALLOWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON .07 .2016. SD/- SD/- (L.P. SAHU) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 22 ND JULY, 2016 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI