ITO, New Delhi V. M/s Asian International, New Delhi

ITA 1711/DEL/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8198 (ITAT-DELHI)
• Duration Of Justice: 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-02-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 01-02-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 27-04-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAMBIT TRIPATNY
• Assessee Lawyers: RAKESH K KHIW ANIC A
• Keywords: Income from undisclosed sources; Additional evidence; Corroborative evidences
• Section: 133(6); 131; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A DELHI BEFORE SHRI K.G. BANSAL AND SHRI GEORGE MATHAN ITA NO. 1711(DEL)/2009 ASSESSMENT YEAR: 2005-06 INCOME-TAX OFFICER, M/S ASIAN INTERNATIONAL, WARD 26(1), NEW DELHI. VS. GB-2 7, SHIVAJI ENCLAVE, RAJA GARDEN, NEW DELHI. PAN-AABFA 3834F C.O. NO. 20 (DEL)/2010 (ARISING OUT OF ITA NO. 1711(DEL)/2009) ASSESSMENT YEAR :2005-06 M/S ASIAN INTERNATIONAL, INCOME-TAX OFFICER, GB-27, SHIVAJI ENCLAVE, VS. W ARD 26(1), NEW DELHI. RAJA GARDEN, NEW DELHI. (APPELLANT) (RESPONDENT) DEPARTMENT BY : SHRI SAMBIT TRIPATNY, SR. DR ASSESSEE BY : SHRI RAKESH K. KHIW ANI,C.A. ORDER PER K.G. BANSAL : AM THIS APPEAL OF THE REVENUE AND CROSS OBJECTION OF THE ASSESSEE ARISE OUT OF THE ORDER OF THE CIT(APPEALS)-XXIV, NEW DELHI, PASSED ON 19.12.2008 IN APPEAL NO. 194/07-08 AND THEY PERT AIN TO ASSESSMENT YEAR 2005-06. THE CORRESPONDING ORDER OF ASSESSMENT W AS FRAMED BY THE INCOME-TAX OFFICER, WARD 26(1), NEW DELHI, ON 04.12.2007 UNDER THE PROVISIONS OF SECTION 144 OF THE INCOME-TAX ACT, 1961. ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 2 ITA NO. 1711(DEL)/2009- APPEAL OF THE REVENUE 2. GROUND NO. 1 IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN DELETING T HE ADDITION OF RS. 6.50 LAKH MADE BY THE AO ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES BY ADMITTING THE ADDITIONAL EVIDENCE ADDUCED IN T HE COURSE OF APPELLATE PROCEEDINGS. 2.1 IN THIS CONNECTION, IT IS MENTIONED IN THE ASSESSMENT ORDER THAT THE BALANCE-SHEET OF THE ASSESSEE SHOWED UNSECURED LOAN OF RS. 6.50 LAKH IN THE NAME OF SHRI RAJESH CHAWLA. IN ABSENCE OF ANY DOCUMENTARY EVIDENCE AND BOOKS OF ACCOUNT, THE SAME IS TRE ATED AS INCOME FROM UNDISCLOSED SOURCES. 2.2 AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED APPEAL BEFORE THE CIT(APPEALS)-XXIV, NEW DELHI. IT WAS INTER-ALI A SUBMITTED THAT THE ASSESSEE HAD FILED CONFIRMATION FROM THE DEPOSITOR AND, THEREFORE, IT WAS NOT RIGHT ON HIS PART TO STATE THAT THE AD DITION WAS BEING MADE IN ABSENCE OF ANY DOCUMENTARY EVIDENCE AND THE B OOKS OF ACCOUNT. IT WAS FURTHER SUBMITTED THAT NO FURTHER EVIDENCE OR DOCUMENT WAS REQUIRED BY THE AO. THE AO ALSO DID NOT MAKE ANY ENQUIRY U/S 131 OR ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 3 133(6) TO VERIFY THE CORRECTNESS OF THE CONFIRMA TION FURNISHED BY THE CREDITOR. THE LD. CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE AND MENTIONED THAT THE ASSESSEE HAD FURNISHED CONFIR MATION OF LOAN FROM THE CREDITOR. HE HAD ALSO FURNISHED HIS ADDRESS, PERMANENT ACCOUNT NUMBER AND PERSONAL STATEMENT OF AFFAIRS. THESE VERY DOCUMENTS WERE FILED IN THE COURSE OF APPELLATE PROCEEDINGS. THE AO WA S DIRECTED TO FURNISH REMAND REPORT IN RESPECT OF THESE DOCUMENTS. THE SAME WAS FURNISHED VIDE LETTER DATED 17.12.2008, WHICH READS AS UNDER:- THE ASSESSMENT IN THIS CASE WAS FRAMED U/S 14 4 ON 4.12.2007 BY MY PREDECESSOR WHO RETIRED ON 30 .4.2008. THE ASSESSEE SUBMITTED THE DETAILS VIDE ITS LETTER DATED 07.08.2007 WHEREAS THE ASSESSMENT WAS FRAMED O N 04.12.2007. IT IS NOT POSSIBLE FOR ME TO EXPL AIN WHY HE HAS NOT CONSIDERED THE DETAILS WHICH WERE ALREAD Y BEFORE HIM. FURTHER, ON THE ISSUE OF LOAN FROM SHRI RAJESH C HAWLA, THE ASSESSING OFFICER HAS SUBMITTED THE FOLLOWING CO MMENTS:- THE ASSESSEE HAD TAKEN UNSECURED LOAN OF RS. 6, 50,000/- FROM SHRI RAJESH CHAWLA WHOSE CONFIRMATION IS ON RECORD. THE ASSESSEE IN ITS SUBMISSIONS IN PARA 3 OF HIS LETTER DATED 07.08.2007 STATED THAT THE ASSESSEE HAS ONE UNSECURED LOAN I.E., M/S ASIAN PENCILS PVT. LTD. WHEREAS IN THE ANNEX ATTACHED WITH THE RETURN OF UNSECUR ED LOAN ONLY ONE NAME THAT IS OF RAJESH CHAWLA HAS BEEN MEN TIONED AND HIS CONFIRMATION HAS BEEN FILED. MR. RAJESH CHAWL A IS AN EMPLOYEE IN M/S ASIAN PENCIL PVT. LTD. ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 4 2.3 ON THE BASIS OF THE AFORESAID FACTS, IT W AS HELD THAT THE ADDITION WAS MADE WITHOUT CONSIDERING THE DETAILS AND, TH EREFORE, IT COULD BE SAID TO BE ARBITRARY IN NATURE. ACCORDINGLY, THE AMOUNT WAS DELETED FROM THE TOTAL INCOME OF THE ASSESSEE. 2.4 BEFORE US, THE LD. DR RELIED ON THE ORDER OF THE AO WHILE THE LD. COUNSEL FOR THE ASSESSEE RELIED ON THE ORDER OF THE LD. CIT(APPEALS). 2.5 WE HAVE CONSIDERED THE FACTS OF THE CASE A ND SUBMISSIONS MADE BEFORE US. THE FACTS ARE THAT THE BOOKS OF THE ASSESSEE SHOWED A CREDIT OF RS. 6.50 LAKH IN THE NAME OF SHRI RAJES H CHAWLA. IN THE COURSE OF ASSESSMENT, THE ADDRESS, PAN, STATEMENT OF A FFAIRS AND CONFIRMATION FROM THE CREDITOR WERE FILED. HOWEVER, THE AO MADE THE ADDITION BY STATING THAT THERE WAS NO DOCUMENTARY EVIDENC E AND THE BOOKS WERE NOT PRODUCED. IN THE APPELLATE PROCEEDINGS, THESE VE RY DOCUMENTS WERE RELIED UPON BY THE ASSESSEE. IN THE REMAND REP ORT, THE AO COULD NOT SUBMIT THE REASONS FOR NON-CONSIDERATION OF TH E DOCUMENTS FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS. THESE DOCUMENT S WERE NOT REBUTTED BY THE AO EVEN IN REMAND PROCEEDINGS. THEREFORE , WE ARE OF THE VIEW THAT THERE IS NO REASON FOR US TO MAKE ANY INTERFERENCE WITH THE ORDER OF ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 5 THE LD. CIT(APPEALS) AS THE SAME IS BASED UPON EVIDENCE ON RECORD. THUS, THIS GROUND IS DISMISSED. 3. GROUND NO. 2 IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN DELETING THE ADDITION OF RS. 43.35 LAKH MADE BY THE AO AS INCOME FROM UNDISCLOSE D SOURCES BY ADMITTING ADDITIONAL EVIDENCE IN THE APPELLATE PROCEEDINGS . 3.1 IN THIS CONNECTION, IT IS MENTIONED IN THE A SSESSMENT ORDER THAT CAPITAL ACCOUNTS OF FOUR PARTNERS WERE CREDITED BY THE TOTAL AMOUNT OF RS. 43.35 LAKH IN THIS YEAR. THE ASSESSEE DID NO T FURNISH ANY EVIDENCE IN REGARD TO THE NATURE AND SOURCE OF THESE ADD ITIONS. THEREFORE, THE AMOUNT WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3.2 AGGRIEVED BY THIS ORDER, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(APPEALS). THE DETAILS OF ADDITIONS MADE B Y THE AO WERE STATED TO BE AS UNDER:- SL. NO. NAME AMOUNT (RS.) (I) R.D. CHAWLA 18,00,000/- (II) SAVITA CHAWLA 12,85,00 0/- (III) AMIT CHAWLA 7,50,000/- (IV) SEEMA CHAWLA 5 ,00,000/- ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 6 3.3 IT WAS SUBMITTED THAT EVIDENCE IN REGARD T O THE AFORESAID CREDITS WAS FURNISHED VIDE LETTER DATED 7.8.2007 IN TH E COURSE OF ASSESSMENT PROCEEDINGS. THE PARTNERS HAD WITHDRAWN THE MON EY FROM ASIAN PENCILS PVT. LTD. AND DEPOSITED THE SAME IN THE SAVI NGS ACCOUNTS. ADDITIONAL CAPITAL IN THE FIRM WAS INTRODUCED FROM THE SA VINGS ACCOUNTS. THE ASSESSEE ALSO FURNISHED CONFIRMED COPIES OF CAPI TAL ACCOUNT IN THE BOOKS OF THE FIRM, STATEMENT OF AFFAIRS OF THE PAR TNERS, PROOF OF FILING INCOME- TAX RETURNS BY THEM, AND PASS-BOOKS OF THE SA VINGS ACCOUNTS OF THE PARTNERS. THE LD. CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM. HE WAS OF THE VIEW THAT THE EVIDENCES PRODUCED NOW AND AS MENTIONED ABOVE WERE NO T FURNISHED BEFORE THE AO. THEREFORE, HE OBTAINED THE REMAND REPORT OF THE AO, WHICH READS AS UNDER:- AS REGARDS THE ADDITION IN THE CAPITAL ACCO UNT OF THE PARTNERS, NAMELY, MR.R.D. CHAWLA (AMOUNTING TO RS. 18,00,000/- IN WHICH RS. 10 LAKHS HAVE BEEN TAKEN FROM M/S ASIAN PENCIL PVT. LTD. AND RS. 8 LAKH FROM SMT. DHARSHAN KAUR), MRS. SUNITA CHAWLA (AMOUNTING TO RS. 12,85, 000/-), SHRI AMIT CHAWLA (AMOUNTING TO RS. 7,50,000/-) AN D MS. SEEMA CHAWLA. THE SOURCES OF THESE ADDITIONS ARE FROM M/S ASIAN PENCILS PVT. LTD. I HAVE CALLED THE COUNSEL OF THE ASSESSEE; WHEN ENQUIRED ABOUT M/S ASIAN PENCILS PVT. LTD. AND ITS STAT EMENT OF AFFAIRS BECAUSE THE SOURCES OF INTRODUCTION IN THE CAPITAL ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 7 ACCOUNTS OF THE PARTNERS ARE FROM M/S ASIAN PEN CIL PVT. LTD.. HE REPLIED THAT THESE CANNOT BE CALLED BY YOU NOW. THOUGH HIS PLEA IS ACADEMICALLY CORRECT AND THE MATTER HAS NOT BEEN PROPERLY INVESTIGATED DURING ASSESSME NT STAGE, IT IS NOT POSSIBLE FOR ME TO SUBMIT ANY COMMENTS ON THE BASIS OF FACTS ON RECORD. 3.4 THE LD. CIT(APPEALS) CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE HIM BY THE RIVAL PARTIES. IT WAS MENTIONED THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE HAD FILED EVIDENCE AS DESIRED BY THE AO FOR PROVING THE SOURCE OF THE SOURCE, BEING ASIAN PENCILS (P) LTD., FROM WHERE THE MONEY WAS WITHDRAWN AND DEPOSITED IN THE SAVINGS ACCOUNTS OF THE PAR TNERS. THE MONEY WAS INTRODUCED IN THE FIRM AS ADDITIONAL CAPITAL FROM THE AFORESAID SAVINGS ACCOUNTS. IT WAS HELD THAT THE PARTNERS ARE S EPARATELY ASSESSED TO TAX AND THE EVIDENCE PRODUCED CLEARLY SHOWED TH AT ADDITIONAL CAPITAL HAD FLOWED FROM THE BANK ACCOUNT OF THE PARTNERS. SI NCE THE NATURE AND SOURCE OF THE ADDITION TO THE CAPITAL WERE PROVED, TH ERE WAS NO FURTHER NECESSITY TO EXAMINE THE SOURCE OF THE SOURCE BY LOOKING AT THE ACCOUNTS WITH ASIAN PENCILS PVT. LTD., AS LAID DOWN BY TH E HONBLE SUPREME COURT IN THE CASE OF DAULAT RAM RAWAT MULL VS. CIT , (1973) 87 ITR 349. ACCORDINGLY, HE DELETED THE ADDITION. ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 8 3.5 BEFORE US, THE LD. DR RELIED ON THE O RDER OF THE AO AND HIS REMAND REPORT WHILE THE LD. COUNSEL RELIED ON THE ORDER OF THE LD. CIT(APPEALS). 3.6 WE HAVE CONSIDERED THE FACTS OF THE CASE AND SUBMISSIONS MADE BEFORE US. IT IS A MATTER OF RECORD THAT COPIES OF CONFIRMATION OF CAPITAL ACCOUNTS, STATEMENT OF AFFAIRS OF THE PARTNERS, PROOF OF FILING INCOME-TAX RETURNS AND PASS-BOOKS WERE PRODUCED FOR THE FIRST TIME BEFORE THE LD. CIT(APPEALS) BY WAY OF ADDITIO NAL EVIDENCE, WHICH WAS ADMITTED BY HIM. HOWEVER, THIS WAS DONE IN THE CONTEXT OF THE FACT THAT THE AO STRAIGHTWAY PROCEEDED TO EXAMINE THE SOU RCE OF THE SOURCE FOR WHICH THE ASSESSEE WAS REQUIRED TO FILE ACCOUN TS OF THE PARTNERS WITH ASIAN PENCIL (P) LTD. THIS EVIDENCE SHOWED T HAT THEY HAD WITHDRAWN THE MONEY FROM THE COMPANY. THE LD. CIT(APPEALS) WAS OF THE VIEW THAT DIRECT EVIDENCE WAS REQUIRED TO BE FILED ABOUT ADDITION TO CAPITAL BY THE PARTNER. IN VIEW THEREOF, ADDITIONAL EVIDENC E WAS FILED BEFORE HIM. THIS EVIDENCE WAS IN THE NATURE OF PRIMARY E VIDENCE FROM WHICH ONE COULD GO FURTHER TO ENQUIRE THE ADDITION IN THE BANK ACCOUNTS. HOWEVER, SINCE THE PARTNERS WERE SEPARATELY ASS ESSED TO TAX AND REQUISITE EVIDENCE TO SHOW THE ADDITION TO CA PITAL WAS FILED, HE DELETED ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 9 THE ADDITION MADE BY THE AO. WE ARE OF THE VIEW THAT ADDITIONAL EVIDENCE FILED IN THE COURSE OF APPELLATE PROCE EDINGS WAS IN THE NATURE OF SUPPORTING EVIDENCE SHOWING THAT THE MONIES WIT HDRAWN FROM ASIAN PENCILS (P) LTD. WAS DEPOSITED WITH THE FIRM AS ADDITIONAL CAPITAL ALTHOUGH IT WAS ROUTED THROUGH THE BANK ACCOUN T. THUS, IT WAS CLARIFICATORY IN NATURE AND THE LD. CIT(APPEALS ) WAS JUSTIFIED IN ADMITTING THIS EVIDENCE. THE REVENUE HAS NOT OBJECTED SPECIFICALLY TO THE ADMISSION OF ADDITIONAL EVIDENCE BY TAKING ANY SPECIFIC GROUND IN THE MATTER. NOTWITHSTANDING THE LACK OF SUCH OB JECTION, WE ARE ALSO OF THE VIEW THAT SUCH EVIDENCE WAS NECESSARY TO COME TO A PROPER CONCLUSION IN THE MATTER. THUS, IT IS HELD THAT THE LD. CIT(APPEALS) WAS JUSTIFIED IN TAKING THE EVIDENCE ON RECORD. O NCE THIS EVIDENCE IS TAKEN ON RECORD, IT BECOMES CLEAR THAT THE AMOUNT WA S RECEIVED FROM KNOWN PERSONS, WHO WERE NONE BUT THE PARTNERS OF TH E FIRM AND WHO WERE REGULARLY ASSESSED TO TAX. NOT ONLY THE SOURCE AND NATURE STAND PROVED BUT EVEN SOURCE OF THE SOURCE STANDS PROVED A LTHOUGH THE ASSESSEE WAS NOT REQUIRED TO PROVE SOURCE OF THE SOURCE OF THE CREDIT. IN THIS VIEW OF THE MATTER, WE DO NOT FIND ANY ERROR IN THE ORDER O F THE LD. CIT(APPEALS), WHICH REQUIRES CORRECTION FROM US. THUS, THIS GR OUND IS ALSO DISMISSED. ITA NO. 1711(DEL)/2009 & C.O. NO. 20(DEL)/2010 10 C.O. NO. 20(DEL)/2010 4. THE ONLY GROUND TAKEN BY THE ASSESSEE IS TH AT THE LD. CIT(APPEALS) ERRED IN REJECTING THE CONTENTION OF THE ASSESS EE IN RESPECT OF QUASHING THE ORDER U/S 144 PASSED BY THE AO WITHOUT OBSER VING THE MANDATORY REQUIREMENT OF SECTION 144. THIS GROUND WAS NOT PRESSED BY THE LD. COUNSEL IN THE COURSE OF HEARING BEFORE US. WE FIN D THAT THIS GROUND ALSO BECOMES INFRUCTUOUS IN VIEW OF OUR ORDER ON THE APPEAL OF THE REVENUE (SUPRA). 5. IN THE RESULT, THE APPEAL OF THE REVENUE AND O BJECTION OF THE ASSESSEE ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 5T H FEBRUARY, 2010. SD/- SD/- (GEORGE MATHAN) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE OF ORDER: 5TH FEBRUARY, 2010. SP SATIA COPY OF THE ORDER FORWARDED TO:- 1. M/S ASIAN INTERNATIONAL, NEW DELHI. 2. ITO, WARD 26(1), NEW DELHI. 3. CIT(A) 4. CIT 5. DR, ITAT, NEW DELHI. ASSISTANT REGISTRA R.