Lalit Aggarwal, New Delhi V. ACIT, New Delhi

ITA 1302/DEL/2011

• Counselvise Citation: 130220114 RSA 2011
• Duration Of Justice: 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 14-09-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 14-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Section: 10

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE G.E. VEERABHADRAPPA, HON'BLE VICE-PRESIDENT AND SHRI RAJPAL YADAV: HONBLE JUDICIAL MEMBER ITA NO.1302/DEL/2011 ASSESSMENT YEAR: 2006-07 SHRI LALIT AGGARWAL, VS. ASSISTANT CIT, C-10, IST FLOOR, NDSE PART-II, CIRCLE 42(1), NEW DELHI-1100 49 NEW DELHI. (PAN: AACPA6804E ) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SALIL KAPOOR, RESPONDENT BY: MS. Y. KAKKAR, DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(APPEALS) DATED 25.11.2010 PASSED FOR ASSESSMENT YEAR 2006-07. THE ASSESSEE HAS RAISED TWO GROUNDS OF APPEAL WHEREBY H E IMPUGNED THE CONFIRMATION OF ADDITIONS AMOUNTING TO RS.7,75,000 AND RS.3,50,830. THESE ADDITIONS HAVE BEEN MADE BY THE ASSESSING OFFICER O N ACCOUNT OF HOUSEHOLD EXPENSES AND DISALLOWANCE OF EXEMPTION UNDER SEC. 1 0 OF THE INCOME-TAX ACT, 1961 RESPECTIVELY. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE HAS FILED HIS RETURN OF INCOME ON 31 ST JULY 2006 DECLARING TAXABLE INCOME OF RS.20,17,020 . HE WAS WORKING AS A SALARIED EMPLOYEE WITH M/S. GE CAPITAL INTERNATIONAL SERVICES 2 LTD. HIS CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE UNDER SEC. 143(2) WAS SERVED UPON THE ASSESSEE. SHRI ROHIT DHA R, CA APPEARED ON BEHALF OF THE ASSESSEE FROM TIME TO TIME AND FILED THE DETAILS. ACCORDING TO THE ASSESSING OFFICER, ASSESSEE HAS CLAIMED DEDUCTI ON UNDER SEC. 10 ON ACCOUNT OF HOUSE RENT PAID BY HIM TO HIS WIFE. SUCH DEDUCTION HAS BEEN COMPUTED BY THE ASSESSEE AT RS.3,50,830. ASSESSING OFFICER RECORDED A FINDING THAT ASSESSEE FAILED TO BRING EVIDENCE DEMO NSTRATING THE PAYMENT OF HOUSE RENT @ RS.40,000 PER MONTH. SIMILARLY, HE FOU ND THAT ASSESSEE HAS MADE PAYMENT OF RS.7,75,000 TO HIS WIFE SMT. SEEMA AGGARWAL ON DIFFERENT DATES THROUGH CHEQUES. ACCORDING TO THE ASSESSEE, T HIS AMOUNT WAS PAID FOR HOUSEHOLD EXPENSES BUT ACCORDING TO THE ASSESSING O FFICER, THE MONEY GIVEN TO THE WIFE FROM TIME TO TIME AS STATED BY THE ASSE SSEE FOR HOUSEHOLD EXPENSES, THROUGH ACCOUNT PAYEE CHEQUES WAS STRAIGH TWAY DEPOSITED IN HER BANK ACCOUNT AND IT WAS NOT USED FOR HOUSEHOLD PURP OSES. THEREFORE, ASSESSING OFFICER WAS OF THE OPINION THAT ASSESSEE FAILED TO BRING ANY EVIDENCE EXHIBITING THE SOURCE OF HOUSEHOLD EXPENSE S. HE ESTIMATED THE HOUSEHOLD EXPENSES AT RS.7,75,000 DISCLOSED BY THE ASSESSEE IN HIS LETTER DATED 3.11.2008 AND IN THIS WAY TWO ADDITIONS HAVE BEEN MADE IN THE TOTAL INCOME OF THE ASSESSEE. 3 3. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. WE FIND THAT LEARNED FIRST APPELLATE AUTH ORITY HAS NOT MADE ANY DISCUSSION AT HIS OWN IN THE APPELLATE ORDER THOUGH THE ORDER IS RUNNING INTO 13 PAGES. LEARNED FIRST APPELLATE AUTHORITY EITHER REPRODUCED THE ASSESSMENT ORDER, WRITTEN SUBMISSIONS OF THE ASSESS EE OR THE REMAND REPORT GIVEN BY THE ASSESSING OFFICER. HIS OBSERVATIONS AR E CONTAINED IN PARAGRAPH NOS. 8.3 AND 8.4, THEY READ AS UNDER: 8.3 I FIND FROM THE FACTS OF THE CASE AS WELL AS T HE REMAND REPORT OF THE ASSESSING OFFICER NARRATED ABOVE THAT THE EVIDE NCE LET IN BY THE APPELLANT FAILS TO CARRY ANY EVIDENTIARY VALUE. THE APPELLANT HAS FAILED TO PRODUCE ANY CREDIBLE SOURCE FOR THE PAYMENT MADE TO HIS WIFE OF RS.7.75 LAKHS DURING THE YEAR. THEREFORE, THE ADDIT ION MADE BY THE ASSESSING OFFICER IS SUSTAINED. 8.4 I ALSO HOLD THAT THE ASSESSEE HAS NOT PAID ANY ACTUAL RENT & THE RENT RECEIPT IN THE ABSENCE OF ACTUAL PAYMENT ON A NOTIONAL BASIS IS IRRELEVANT. THE APPELLANT HAS NOT MADE ANY ACTUAL P AYMENT & THEREFORE, THE SUM OF RS.3,50,000 CLAIMED U/S. 10 O F THE ACT, WHICH IS DISALLOWED BY THE ASSESSING OFFICER IS HEREBY UPHEL D. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDERS OF THE REVENUE AUTHORITIES BELOW SUBMITTED THAT BOTH T HE AUTHORITIES HAVE 4 LOOKED THE FACTS AND CIRCUMSTANCES WITH A VERY CONS ERVATIVE APPROACH. THE CASE OF THE ASSESSEE WAS THAT HE HAS PAID RS.7,75,0 00 TO HIS WIFE THROUGH ACCOUNT PAYEE CHEQUES WHICH INCLUDES HOUSE RENT @ R S.40,000 PER MONTH MEANING THEREBY OUT OF THE TOTAL AMOUNT RS.4,80,000 MEANT FOR HOUSE RENT. IT HAS BEEN CREDITED IN THE ACCOUNT OF THE WIFE WHO HA PPENS TO BE THE LANDLORD AND A SEPARATE ASSESSEE. IN SUCH SITUATION, THE DED UCTION UNDER SEC. 10 OF RS.3,50,830 COULD NOT BE DENIED TO THE ASSESSEE. WI TH REGARD TO THE ESTIMATION OF HOUSEHOLD EXPENSES, HE DREW OUR ATTEN TION TOWARDS THE SUBMISSIONS OF THE ASSESSEE REPRODUCED BY LEARNED C IT(APPEALS) ON PAGES 7 TO 10 OF THE IMPUGNED ORDER. ON THE STRENGTH OF T HESE SUBMISSIONS, HE POINTED OUT THAT MOST OF THE EXPENSES WERE THROUGH DEBIT CARD AND DETAILS ARE DISCERNIBLE FROM THE BANK ACCOUNT. IN ADDITION TO T HE EXPENSES INCURRED FROM THE DEBIT CARD, ASSESSEE HAS USED CASH OF RS.95,000 . HIS WIFE HAS ALSO MADE CASH WITHDRAWAL OF RS.78,670. THUS, THERE WAS SUFFI CIENT WITHDRAWALS BY BOTH THE HUSBAND AND WIFE AND, THEREFORE, THERE CAN NOT BE ANY ADDITION ON THIS ACCOUNT. 5. LEARNED DR ON THE OTHER HAND SUBMITTED THAT PAYM ENT TO THE WIFE AS HOUSE RENT WAS NOT MADE MONTHLY RATHER IT WAS MADE AT THE SWEET WILL OF THE ASSESSEE. THUS, THE TOTAL PAYMENT ALLEGED TO HAVE B EEN MADE BY THE ASSESSEE 5 TO THE WIFE CANNOT BE TERMED AS PAID TOWARDS HOUSE RENT. SHE FURTHER SUBMITTED THAT ASSESSEE FAILED TO GIVE THE EVIDENCE DEMONSTRATING THE HOUSEHOLD EXPENSES, THEREFORE, ASSESSING OFFICER WA S JUSTIFIED IN ESTIMATING THE HOUSEHOLD EXPENSES AS DISCLOSED BY THE ASSESSEE AT RS.7.75 LACS. SHE PRAYED THAT THE APPEAL OF THE ASSESSEE BE DISMISSED . 6. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. IN ORDER TO APPRECIATE THE CONTEN TIONS OF THE ASSESSEE IN A MORE SCIENTIFIC WAY, WE DEEM IT APPROPRIATE TO TAKE NOTE OF THE DETAILS SUBMITTED BY THE ASSESSEE IN A TABULAR FORM EXHIBIT ING THE HOUSEHOLD EXPENSES AND SOURCE ETC. THEY READ AS UNDER: PARTICULARS AMOUNT TOTAL HOUSE HOLD INCL. INSURANCE AS PER SUMMARY OF BANK ACCOUNT-EXCEL SHEET. LESS: INSURANCE PREMIUM PAID ADD: CASH WITHDRAWALS (NET) 4,46,432 1,55,689 95,000 ADD: HOUSEHOLD EXPENSES THROUGH BANK ACCOUNT OF WIFE MRS. SEEMA AGGARWAL (AS PER BANK STATEMENT SUBMITTED BEFORE A.O) 67,670 ADD: FURNITURE REN AS PER FORM 16 9,894 ADD: HOUSE RENT PAID 4,80,000 TOTAL HOUSEHOLD EXPENSES 9,54,397 6 PARTICULARS BANK/DEBIT CARD CASH CITI BANK CREDIT CARD SCB CREDIT CARD SALARY THROUGH BANK ACCOUNT OF WIFE TOTAL BANK CHARGES 6,745 6,745 ELECTRICITY EXPENSES 11,380 11,380 HOUSE RENT PAID 4,80,000 4,80,000 SCHOOL FEE 28,200 28,200 HOUSEHOLD EXPENSES 1,89,508 95,000 43,000 12,000 78,670 4,18,178 FURNITURE RENTAL 9,894 9,984 TOTAL 7,15,833 95,000 43,000 12,000 9,894 78,670 9,54,397 7. IT HAS BEEN BROUGHT TO OUR NOTICE THAT FAMILY OF THE ASSESSEE CONSIST SELF, WIFE SEEMA AGGARWAL, A MINOR DAUGHTER STUDYIN G IN KG AND SON WHO HAD NOT JOINED SCHOOL. THUS, HE HAS NOT A VERY LARG E FAMILY TO SUPPORT. THE CASE OF THE ASSESSING OFFICER IS THAT THERE IS NO D IRECT EVIDENCE EXHIBITING THE PAYMENT OF HOUSE RENT. SIMILARLY, ACCORDING TO HIM, ASSESSEE FAILED TO BRING ANY DIRECT EVIDENCE AVAILABLE IN THE BANK STATEMENT THAT THIS MUCH PARTICULAR AMOUNT WAS INCURRED TOWARDS HOUSEHOLD EXPENSES. FRO M THE TABLE EXTRACTED 7 SUPRA, IT IS DISCERNIBLE THAT OUT OF THE TOTAL PAYM ENT MADE TO THE WIFE, AN AMOUNT OF RS.4,80,000 WAS ATTRIBUTED TOWARDS HOUSE RENT. NOW, IT IS THE CONVENIENCE OF THE TENANT AND THE LANDLORD AS ON WH AT INTERVAL HOUSE RENT OUGHT TO BE PAID BY THE TENANT. THERE IS NO STATUTO RY REQUIREMENT THAT IT SHOULD BE PAID MONTHLY. THEY MAY SETTLE THEIR ACCOU NT AT THE END OF THE YEAR AND WHATEVER MAY BE RECEIVABLE THAT WOULD BE PAID T O THE LANDLORD. THIS IS NOT SUCH A STRONG FACTOR TO DISBELIEVE THE PAYMENT OF HOUSE RENT. AFTER EXCLUSION OF HOUSE RENT, THERE IS A SUFFICIENT AMOU NT SHOWN BY THE ASSESSEE TOWARDS VARIOUS OTHER EXPENSES, SCHOOL FEES HAS BEE N PAID THROUGH ACCOUNT PAYEE CHEQUES, HOUSEHOLD EXPENSES TO THE EXTENT OF RS.1,90,000 WERE MET EITHER THROUGH DEBIT CARD OR BANKING CHANNEL. THE H USBAND AND WIFE HAVE USED ALMOST RS.1,75,000 IN CASH. APART FROM THIS, T HEY HAVE MADE PAYMENT THROUGH CREDIT CARD AND DEBIT CARD. THEREFORE, IN O UR OPINION, LEARNED REVENUE AUTHORITIES HAVE FAILED TO APPRECIATE THE F ACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE. WE ALLOW THE APPEAL OF THE ASSES SEE AND DELETE BOTH THE ADDITIONS. DECISION PRONOUNCED IN THE OPEN COURT ON 14.10.201 1 SD/- SD/- ( G.E. VEERABHADRAPPA) ( RAJPAL YAD AV ) VICE-PRESIDENT JUDICIAL MEMBER DATED: 14 /10/2011 MOHAN LAL 8 COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR