ACIT, New Delhi V. Sh. Satvinder Singh Wadhawan, New Delhi

ITA 1486/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6945 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 03-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 13-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIJAY VERMA
• Section: 133(6); 131; 68; 56

Judgement Text

ACIT V SATVINDERSINGH WADHAWAN A Y 2008 - 09 ITA NO 1486/DEL/2013 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH C: NEW DELHI BEFORE I.C.SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER ITA NO.1486/DEL/2013 (ASSESSMENT YEAR: 2008 - 09) ACIT, CIRCLE - 33(1), ROOM NO.1505, 15 TH FLOOR, DR. SHYAMA PRASAD MUKHERJEE CIVIL CENTRE, NEW DELHI VS. SATVINDER SINGH WADHAWAN, E1/7, 2 ND FLOOR, EAST PATEL NAGAR, NEW DELHI PAN:AAAPW4845M (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. AJAY WADHWA, ADV REVENUE BY: SH. VIJAY VERMA, CIT DR DATE OF HEARING 11/05/2016 DATE OF PRONOUNCEMENT 08 /07/2016 O R D E R PER PRASHANT MAHARISHI , A. M. 1. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE LD CIT(A) - 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF THE APPEAL IN ITA NO. 1486/DEL/2013 AS UNDER: 1. THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,08,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED UNSECURED LOANS. 2. THE CIT(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.92,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNSUBSTANTIATED CONSTRUCTION EXPENSE. 3. THE C1T(A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS. 2,28,827/ - OUT OF TOTAL DISALLOWANCE OF RS.2,42,274/ - MADE BY THE ASSESSING OFFICER DESPITE THE FACT THAT BUSINESS EXPEDIENCY OF THESE EXPENSES COULD NOT BE ESTABLISHED IN THE ABSENCE OF BILLS AND VOUCHERS OR ANY SPECIFIC DETAILS. ACIT V SATVINDERSINGH WADHAWAN A Y 2008 - 09 ITA NO 1486/DEL/2013 3. THE ASSESSEE IS AN INDIVIDUAL FILED CARRYING ON THE BUSINESS OF REAL ESTATE. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.09.2008 SHOWING INCOME OF RS. 1689960/ - AND SUBSEQUENTLY, SPECIAL AUDIT WAS CARRIED OUT U/S 142(2A) OF THE INCOME TAX ACT WHICH WAS SUBMITTED BEFORE THE ASSESSING OFFICER. ULTIMATELY, THE ASSESSMENT WAS MADE AT RS. 32824240/ - . EACH OF THE ADDITION MADE TO THE TOTAL INCOME OF THE A SSESSEE WAS CONTESTED BEFORE THE LD CIT(A) WHO IN TURN DELETED THE SAME AND AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 4. THE FIRST GROUND OF APPEAL IS THAT THE ADDITION OF RS. 30800000/ - ON ACCOUNT OF UNEXPLAINED UNSECURED LOAN DELETED BY THE LD CIT ( A). DURING THE YEAR ASSESSEE HAS RECEIVED INTEREST FREE LOANS AND DEPOSITED SOME BY UNRELATED PERSONS AND THEREFORE THE ASSESSING OFFICER WAS OF THE VIEW THAT THESE LOANS ARE INCOME OF THE ASSESSEE U/S 56 OF THE ACT AS THEY ARE INTEREST FREE AND FROM UNRE LATED PERSONS. ALTERNATIVELY THE ADDITION WAS ALSO MADE U/S 68 OF THE INCOME TAX ACT AS SUMMONS U/S 131 AND NOTICES U/S 133(6) OF THE ACT WERE ISSUE AND RECEIVED BACK AS UNDELIVERED. SOME OF THE CASES REPLIES WERE RECEIVED BUT THE REQUISITE DETAILS ACCORDI NG TO THE ASSESSING OFFICER WERE NOT AVAILABLE. THEREFORE ADDITION OF RS. 30800000/ - . THE ASSESSEE PREFERRED THE LD CIT(A) WHO IN TURN DELETED THE ADDITION. THEREFORE THE REVENUE HAS RAISED THIS GROUND OF APPEAL. 5. LD DR RELIED ON THE ORDER OF THE LD ASSESS ING OFFICER AND LD AR RELIED ON HIS SUBMISSION MADE BEFORE THE LD CIT(A) WHICH WAS SUBMITTED BEFORE US IN THE FORM OF WRITTEN SYNOPSIS AND SUPPORTED THE ORDER OF THE LD CIT(A). 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS. FIRSTLY, WE DEAL WITH THE ADDITION WITH RESPECT TO APPLICABILITY OF SECTION 68 OF THE ACT. DURING THE YEAR THE ASSESSEE HAS RECEIVED LOAN OF RS. 1 , 38 , 00 , 000/ - FROM DEWANA DELHI AND SUBMITTED THE COPY OF THE ELECTION CARD OF THE PROPRIETOR, COPY OF THE PAN CARD, COPY OF THE BANK AC COUNT OF THE CREDITOR, COPY OF THE BANK ACCOUNT OF THE ASSESSEE SHOWING THE AMOUNT TRANSFERRED. THE ABOVE AMOUNT HAS BEEN REPAID IN THE NEXT YEAR. THE ACIT V SATVINDERSINGH WADHAWAN A Y 2008 - 09 ITA NO 1486/DEL/2013 AMOUNT OF LOAN IS ACCEPTED THROUGH BANKING CHANNELS AND THE SOURCE OF THE FUNDS IN THE BANK STATEMENT OF THE VENDOR IS ALSO SHOWN. IN VIEW OF THIS WE CONFIRM THE FINDING OF THE LD CIT(A) IN DELETING THE ADDITION. WITH RESPECT TO OTHER PARTIES THE ASSESSEE HAS SUBMITTED SIMILAR DETAILS BEFORE THE LD CIT(A). IN VIEW OF THIS HE WAS OF THE VIEW THAT ASSESSEE HAS ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. REGARDING THE ISSUE OF SUMMONS IT WAS RECORDED BY THE LD CIT(A) BY VERIFICATION OF THE NOTINGS ON THE ORDER SHEET THAT THE NOTICES U/S 133(6) AND SUMMONS U/S 131 WERE ISSUED TO SWAY EXPORT AND M/S. BNK ENTERPRISE OF WHOSE THE ASSESSEE IS A PARTNER. BEFORE THE LD CIT(A) THE ASSESSEE SUBMITTED THAT NO NOTICES OR SUMMONS WERE ISSUED TO THE PARTIES WITH RESPECT TO THE ADDITION OF RS. 3,08,00,000/ - . THE LD CIT(A) HAS FURTHER NOTED THA T AO HAS NOT POINTED OUT THAT WHETHER ANY SUMMONS AND NOTICES ISSUED TO THE PARTIES IN QUESTION HAVE RETURNED BACK OR NOT. HE ALSO PERUSED THE LETTER DATED 14.06.2011 WHEREIN THE ASSESSEE FILED COMPLETE DETAILS OF THESE LOANS ALONG WITH COPIES OF CONFIRMAT ION, COPIES OF PAN CARD, COPIES OF THE BANK STATEMENT OF THE CREDITORS AND THE COPIES OF THE INCOME TAX RETURNS OF THE CREDITORS AND THEREFORE HE HELD THAT WITH RESPECT TO M/S. DEWANA DAIRY, MR. GS BATRA, NAVIN KR. MALHOTRA AND MR. VIKASH CHOUDHURY THE ASS ESSEE HAS ESTABLISHED THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION. REGARDING THE LOAN OF RS. 30 LAKHS FROM SH. AVTAAR SINGH IT WAS MENTIONED THAT THIS AMOUNT WAS NOT RECEIVED DURING THE YEAR AND THEREFORE SAME CANNOT BE ADDED U/S 68 O F THE ACT. 7. NOW COMING TO THE ISSUE OF APPLICABILITY U/S 56(2)(VII) OF THE INCOME TAX ACT IT WAS HELD BY HIM THAT INTEREST FREE LOANS ARE NOT COVERED AS INCOME UNDER THAT SECTION. HE HAS HELD THAT AMOUNT OF LOAN CANNOT BE SAID TO BE A SUM OF MONEY RECEIVED WITHOUT CONSIDERATION BECAUSE THERE IS A STIPULATION OF REPAYMENT OF SUCH SUM AND THESE SUM HAVE BEEN REPAID IN THE SUBSEQUENT YEAR. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) IN HOLDING THAT PROVISION OF SECTION 56(2)(VII) OF THE ACT DOES NOT ACIT V SATVINDERSINGH WADHAWAN A Y 2008 - 09 ITA NO 1486/DEL/2013 APPLY IN CASE OF UNSECURED LOANS RECEIVED FROM NON RELATIVES WITHOUT ANY STIPULATION OF INTEREST. IN THE RESULT WE CONFIRM THE FINDING OF THE LD CIT(A) IN DELETING THE ADDITION OF RS. 30800000/ - ON ACCOUNT OF UNSECURED LOANS. IN THE RESULT GROUND NO. 1 OF THE APPEAL IS DISMISSED. 8. GROUND NO. 2 OF THE APPEAL IS AGAINST DELETING THE DISALLOWANCE OF RS. 92000/ - ON ACCOUNT OF CONSTRUCTION EXPENSES. 9. THE ASSESSING OFFICER HAS DISALLOWED RS. 92000/ - DEBITED IN THE TRADING ACCOUNT AS NO DETAILS WERE PROVIDED. HOWEVER, THE LD CIT(A) HAS HELD THAT VIDE LETTER DATED 16.06.2011 ASSESSEE SUBMITTED THE COPY OF THE ACCOUNT OF CONSTRUCTION EXPENSES FOR WHICH THE PAYMENT HAVE BEEN MADE BY CHEQUES AND NO INFIRMITY IN THE EXPENSES BOOKED WAS POINTED OUT BY THE LD AR AND THEREFORE, HE DELETED THE DISALLOWANCE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD CIT(A) AND LD DR ALSO COULD NOT SAY HOW THE ORDER OF THE LD CIT(A) IS ERRONEOUS. IN VIEW OF THIS GROUND NO. 2 OF THE APPEAL IS DISMISSED. 10. GROUND NO. 3 OF THE APPEA L IS AGAINST THE DISALLOWANCE OF RS. 228827/ - DELETED BY THE LD CIT(A). THE ASSESSEE HAS DEBITED THE TOTAL EXPENDITURE OF RS. 242274/ - ON ACCOUNT OF BANK CHARGES, REPAIRS AND MAINTENANCE EXPENDITURE, PETROL EXPENSES, BUSINESS PROMOTION EXPENSES AND MISCELL ANEOUS EXPENSES. THE LD ASSESSING OFFICER DISALLOWED THE TOTAL EXPENDIRTURE STATING THAT IT IS NOT ALLOWABLE BECAUSE EITHER THEY ARE NOT SUPPORTED OR THE BUSINESS EXPEDIENCY COULD NOT BE ESTABLISHED. THE LD CIT(A) DELETED THE DISALLOWANCE TO THE EXTENT OF RS. 228827/ - . 11. WE HAVE HEARD THE PARTIES. THE LD AO WHILE DISALLOWING HAS NOT GIVEN ANY SPECIFIC INSTANCES ABOUT THE EXPENDITURE WHICH ARE NOT SUPPORTED OR THE EXPENDITURE WHICH FAILS THE BUSINESS EXPEDIENCY TEST. IN VIEW OF THIS WE DO NOT FIND ANY INFIRM ITY IN THE ORDER OF THE LD CIT(A) IN DELETING THE DISALLOWANCE OF RS. 228827/ - . IN THE RESULT GROUND NO. 3 OF THE APPEAL IS DISMISSED. ACIT V SATVINDERSINGH WADHAWAN A Y 2008 - 09 ITA NO 1486/DEL/2013 12. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSED. ORDER PRO NOUNCED IN THE OPEN COURT ON 08 /07/2016. - SD/ - - SD/ - (I.C.SUHI R) (PRASHANT MAHARISHI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 08 /07/2016 A K KEOT COPY FORWARDED TO 1. APPLICANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI