Sh. Ashok Kumar Chauhan, New Delhi V. ITO, New Delhi

ITA 2176/DEL/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 8180 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 11 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 13-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI O.P. KANT, ACCOUNTANT MEMBER I.T.A. NO. 2176/DEL/2015 ASSESSMENT YEAR: 2002-03 SHRI ASHOK KUMAR CHAUHAN, PROP. M/S. GURUCHARAN JEWELLERS, 17/2, TILAK NAGAR, NEW DELHI. V. ITO, WARD-26(2), NEW DELHI. TAN/PAN: AAAPC 1005F (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI R.S. SINGHVI & SHRI SATYAJEET GOEL, CA RESPONDENT BY: SHRI PRAVEEN KUMAR, SR.D.R. DATE OF HEARING: 16 01 2019 DATE OF PRONOUNCEMENT: 12 04 2019 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 09.01.2015, PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS)-XV, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2002-03. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS.20 LACS IN RESPECT OF ALLEGED UNDISCLOSED INVESTMENT IN FURNITURE AND FIXTURE. 2. THE BRIEF FACTS AND BACKGROUND QUA THE ADDITION OF RS.20 LACS ARE THAT, A SURVEY U/S.133A WAS CONDUCTE D ON 31.01.2002 AT THE BUSINESS PREMISES OF THE ASSESSEE , DURING I.T.A. NO.2176/DEL/2015 2 THE COURSE OF WHICH THE ASSESSEE HAS SURRENDERED AN AMOUNT OF RS.1 CRORE IN HIS STATEMENT WHICH ALSO INCLUDED SUM OF RS.20 LACS ON ACCOUNT OF INVESTMENT IN FURNITURE AN D EQUIPMENTS IN SHOWROOM. LATER ON, THE ASSESSEE RETR ACTED FROM THE SAID SURRENDER THAT NO SUCH INVESTMENT WAS MADE AND NO MATERIAL AS SUCH FOUND. HOWEVER, THE LD. ASS ESSING OFFICER VIDE HIS ORDER DATED 27.01.2004 HAS MADE TH E ADDITION OF RS.20 LACS ON THE GROUND THAT THIS AMOUNT HAS NO T BEEN DECLARED IN THE RETURN OF INCOME WHICH WAS SURRENDE RED AT THE TIME OF SURVEY AND ASSESSEE HAS NOT FURNISHED A NY EXPLANATION ABOUT THE SAID INVESTMENT,. ACCORDINGLY , THE SAME WAS ADDED U/S.68. SUCH AN ADDITION WAS CONFIRM ED BY THE LD. CIT (A) VIDE HIS ORDER DATED 30.09.2004. IN THE SECOND APPEAL, THE TRIBUNAL VIDE ORDER DATED 08.04.2008 HA D DELETED THE ADDITION OF RS.20 LACS, HOLDING THAT NO MATERIA L WAS FOUND DURING THE COURSE OF SURVEY THAT THE ASSESSEE HAS M ADE ANY INVESTMENT OUTSIDE THE BOOKS FOR FINISHING OF THE S HOWROOM. FURTHER, THERE WAS NO INQUIRY DONE BY THE ASSESSING OFFICER IN THIS REGARD. ACCORDINGLY, AFTER DETAILED DISCUSSION , THE SAID ADDITION WAS DELETED. THEREAFTER, THE MATTER HAD TR AVELLED UP TO THE STAGE OF THE HON'BLE HIGH COURT WHEREIN THE HON'BLE HIGH COURT HAD REMITTED THIS ISSUE TO THE FILE OF T HE ASSESSING OFFICER AFTER OBSERVING AND HOLDING AS UNDER:- THE INCOME TAX APPELLATE TRIBUNAL HAS, AFTER SETTI NG ASIDE CERTAIN ADDITIONS MADE BY THE ASSESSING OFFICER, REMITTED T HE CASE HACK TO THE AO FOR AFRESH ADJUDICATION. THE GRIEVANCE RAISE D BY THE LEARNED COUNSEL FOR THE DEPARTMENT IS THAT THE AO HAD ALSO MADE ADDITION IN THE SUM OF 20 LACS UNDER SECTION 68 OF THE INCOM E TAX ACT ON THE GROUND THAT THE ASSESSEE HAD MADE INVESTMENTS ON SH OWROOM I.T.A. NO.2176/DEL/2015 3 FURNISHING AND EQUIPMENT, ETC, BY SPENDING THAT AMO UNT. SUBMISSION IS THAT WHILE REFERRING OTHER ADDITIONS BACK TO THE AO, THIS ITEM OF ADDITION SHOULD ALSO HAVE BEEN REFERRE D, WHICH IS WRONGLY DELETED BY THE ITAT. MR. SETHI HAS NO OBJEC TION IF THIS ASPECT IS ALSO REFERRED TO THE AO. BASED ON THE AFO RESAID STATEMENT OF MR. SETHI, WE MODIFY THE ORDER OF THE TRIBUNAL TO THE AFORESAID EXTENT AND DIRECT THAT THE A0 SHALL CONSI DER AFRESH ASPECT OF THE PURPORTED INVESTMENT MADE ON SHOWROOM FURNISHING AND EQUIPMENT WITH ALLEGED EXPENDITURE O F RS.20 LACS INCURRED THEREUPON . NEEDLESS TO MENTION, IT WOULD BE OPEN TO THE ASSESSEE TO QUESTION THE PROPOSED ADDITION AND ARGUE THAT THERE IS NO BASIS FOR MAKING SUCH AN ADDITION. [EMPHASIS IN BOLD IS OURS] 3. IN THE SET-ASIDE PROCEEDINGS, THE LD. ASSESSING OFFICER HAS AGAIN REFERRED TO THE SURRENDER OFFERED BY THE ASSESSEE DURING THE COURSE OF SURVEY. THE RELEVANT QUESTION IN THIS REGARD READS AS UNDER: Q. NO.8. THE SHOWROOM AT 1/5, TILAK NAGAR HAS BEEN FURNISHED AND EQUIPPED DURING THE F.Y.2001-02 AND HAS BEEN PU T TO USE FROM 19-10-01 ONWARDS. WHAT IS TOTAL INVESTMENT FOR THIS PURPOSE? A. THE INVESTMENTS IN FURNISHING AND EQUIPPING THE SHOWROOM IS PARTLY RECORDED IN THE BOOKS OF ACCOUNTS. HOWEVER, THE ACTUAL INVESTMENT IS MORE AND IS OUT OF MY INCOME SO FAR N OT RECORDED IN THE BOOKS OF ACCOUNTS REQUIRED TO BE MAINTAINED BY ME FAR NOT RECORDED IN THE BOOKS OF ACCOUNTS REQUIRED TO BE MA INTAINED BY ME UNDER THE PROVISIONS OF LAW. THE INCOME IS MY INCOM E FOR ONGOING F.Y. I.E 2001-02 AND I AM GOING TO RECORD THE SAME IN MY BOOKS OF I.T.A. NO.2176/DEL/2015 4 ACCOUNTS AND INCLUDE THIS AMOUNT IN MY INCOME OVER AND ABOVE AND IN ADDITION TO THE INCOME HAVING ARISEN/ACCRUED TO ME TILL DATE I.E. 31.01.2002 AND OFFER THE SAME FOR TAXATION AS PER PROVISIONS OF LAW. I OFFER UNCONDITIONALLY AND IRREVOCABLY AN AMO UNT OF RS. 20 LACS AS MY INCOME INVESTED IN FURNISHING AND EQUIPP ING THE SHOWROOM OVER AND ABOVE IN ADDITION TO THE INVESTME NT ALREADY RECORDED BY ME IN THE BOOKS OF ACCOUNTS. I SHALL PA Y TAX ON THIS AMOUNT OF MY INCOME AS PER PROVISIONS OF LAW IN ADD ITION TO TAX PAYABLE BY ME UNDER THE PROVISIONS OF LAW. BASED ON SUCH STATEMENT, THE ASSESSING OFFICER HAS AGAIN MADE THE SAME ADDITION OF RS.20 LAC. 4. BEFORE THE LD. CIT (A), THE ASSESSEE SUBMITTED T HAT NO MATERIAL EVIDENCE ON RECORD HAS BEEN FOUND REGARDIN G INVESTMENT IN SHOWROOM WITH REGARD TO THE FURNITURE AND EQUIPMENT, ETC. HOWEVER, THE LD. CIT (A) REJECTED T HE ASSESSEES CONTENTION. FIRST OF ALL, HE AGREED WITH THE CONTENTION OF THE ASSESSEE THAT ADDITION CANNOT BE SUSTAINED SOLELY ON THE BASIS OF STATEMENT MADE BY THE ASSESS EE AT THE TIME OF SURVEY OPERATION. HE HAS ALSO OBSERVED THAT ASSESSING OFFICER HAS NOT BROUGHT ANY MATERIAL FACTS IN THE A SSESSMENT ORDER, WHICH WERE COLLECTED DURING THE COURSE OF OR IGINAL ASSESSMENT PROCEEDINGS. HERE IN THIS CASE, ASSESSEE HAD PURCHASED PROPERTY AT 1/5, TILAK NAGAR, NEW DELHI W HICH WERE DEMOLISHED AND THEREAFTER CONSTRUCTION FROM BA SEMENT TO 2 ND FLOOR WAS MADE IN THE FINANCIAL YEARS 1998-99 TO 2 001- 02. THE VALUATION OFFICER OF THE DEPARTMENT IN HIS REPORT DATED 13.08.2003 HAD ESTIMATED THE VALUATION OF PRO PERTY AT RS.37,39,275/- AS AGAINST THE INVESTMENT OF RS.24,0 5,000/- I.T.A. NO.2176/DEL/2015 5 SHOWN BY THE ASSESSEE. THUS, THERE WAS A CLEAR DIFF ERENCE OF RS.13,34,275/-. HE ALSO REFERRED THE LETTER DATED 3 0.12.2003 WRITTEN BY THE ASSESSEE TO THE ASSESSING OFFICER WH EREIN ASSESSEE HAD STATED WHATEVER ADDITION WOULD BE MADE , SAME CAN BE ASSESSED IN 2002-03 AND HE HAS NO OBJECTION IF ASSESSING OFFICER HAS MADE ADDITION FOR THE ASSESSM ENT YEAR 1999-00 AND 2002-03. FURTHER, ON THE PERUSAL OF THE BALANCE- SHEET AS ON 31.03.2002, LD. CIT (A) NOTED THAT ASSE SSEE IN THE SCHEDULE OF ASSETS HAD SHOWN FOLLOWING ITEMS:- COLOUR TV & REFRIGERATOR - RS.15,000/- CAMERA - RS. 4,540/- WATER FILTER - RS. 7,590/- SECURITY SYSTEM - RS.12,420/- WEIGHING MACHINE - RS.51,315/- GENERATOR - RS.16,500/- HOWEVER, ASSESSEE HAS NOT SHOWN ANY ADDITION IN RES PECT OF FURNITURE AND FIXTURE, AIR CONDITIONERS AND OTHER S HOWCASES WHICH ARE ESSENTIALLY REQUIRED IN JEWELERS SHOP. T HUS, BASED ON THIS REASONING, HE HELD THAT AMOUNT OF RS.20 LAC TOWARDS INVESTMENT IN SHOWROOM FURNISHING/BUILDING IS JUSTIF IED. 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT IN SO FAR AS THE DIFFERENCE IN THE V ALUATION OF THE PROPERTY IS CONCERNED, THERE IS NO DISPUTE. IN THE PRESENT APPEAL, THE ISSUE IS WITH REGARD TO CERTAIN UNEXPLA INED INVESTMENT MADE IN THE FURNITURE AND FIXTURE, ETC I N THE SHOWROOM MADE BY THE ASSESSING OFFICER SIMPLY ON TH E BASIS OF STATEMENT GIVEN BY THE ASSESSEE DURING THE COURS E OF SURVEY. SUCH A SURRENDER MADE BY THE ASSESSEE DURIN G THE COURSE OF SURVEY HAS BEEN NEGATED BY THE TRIBUNAL I N THE FIRST I.T.A. NO.2176/DEL/2015 6 ROUND OF PROCEEDINGS AFTER DETAIL DISCUSSION. IN TH E APPEAL FILED BY THE DEPARTMENT BEFORE HONBLE HIGH COURT, THE MATTER HAS BEEN RESTORED BACK SOLELY TO EXAMINE THE ISSUE ON MERITS. HE FURTHER POINTED OUT THAT THE ASSESSEE IN ITS BAL ANCE SHEET AS ON 31.03.2002 HAS ALREADY REFLECTED ADDITION OF ASSETS OF RS.2,73,445/- WHICH INCLUDES FURNITURE AND FIXTURES , CAMERA, COLOUR TV AND REFRIGERATOR, WATER FILTER, SECURITY SYSTEM, ETC. LD. CIT (A) SOLELY BASED ON PRESUMPTION THAT THERE IS NO ADDITION IN RESPECT OF FURNITURE AND FIXTURE, AIR C ONDITIONER ETC., WHICH IS AN ESSENTIAL REQUIREMENT IN JEWELER S SHOP HAS CONFIRMED THE ADDITION, WITHOUT LOOKING TO THE FACT THAT NEITHER ANY MATERIAL WAS FOUND NOR THERE WAS ANY IN QUIRY THAT ASSESSEE HAS INSTALLED ANY FURNITURE AND FIXTU RE IN THE SHOP WHICH HAS NOT BEEN DISCLOSED IN THE BOOKS OF A CCOUNT. THUS, THE ADDITION MADE BY THE ASSESSING OFFICER SH OULD BE DELETED. 6. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT, FIRSTLY, ASSE SSEE HIMSELF HAS MADE THE SURRENDER DURING THE COURSE OF SURVEY AND ALSO BEFORE THE ASSESSING OFFICER THAT ANY ADDITION MADE IN THE ASSESSMENT ORDER SHALL BE ACCEPTED. IN THIS BACKGRO UND ALONGWITH THE FINDING OF LD. CIT (A) IS TAKEN INTO CONSIDERATION, THEN IT IS QUITE CLEAR THAT ASSESSEE DID MAKE CERTA IN INVESTMENTS IN THE SHOP OUTSIDE THE BOOKS OF ACCOUN T, AND THEREFORE, ADDITION MADE SHOULD BE SUSTAINED. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT FIRST OF ALL, T HE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER HAS SIMPLY MADE I.T.A. NO.2176/DEL/2015 7 THE ADDITION ON THE GROUND THAT ASSESSEE DURING THE COURSE OF SURVEY HAS OFFERED SUM OF RS.20 LACS TOWARDS INVEST MENT IN FURNISHING AND IN EQUIPMENTS IN SHOWROOM OVER AND A BOVE THE INVESTMENT ALREADY RECORDED IN THE BOOKS OF ACC OUNT. HOWEVER SUCH A BASIS FOR MAKING THE ADDITION AT THE OUTSET WAS REJECTED BY THE TRIBUNAL AFTER DETAILED REASONI NG AND IT WAS HELD THAT NO SUCH ADDITION CAN BE MADE SIMPLY O N THE BASIS OF STATEMENT WITHOUT ANY MATERIAL ON RECORD A ND ALSO NO INQUIRY WAS MADE BY THE ASSESSING OFFICER TO JUSTIF Y SUCH AN ADDITION. THE HON'BLE HIGH COURT WHILE REMANDING TH E ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER HAS CATEG ORICALLY OBSERVED THAT COUNSEL FOR THE RESPONDENT-ASSESSEE H AS NO OBJECTION IF THIS ISSUE IS ALSO REFERRED TO THE ASS ESSING OFFICER TO BE DECIDED AFRESH AND IT WOULD BE OPEN FOR THE A SSESSEE TO QUESTION THE PROPOSED ADDITION AND ARGUE THAT THERE IS NO BASIS FOR MAKING SUCH AN ADDITION. THUS, WHEN THE A SSESSEE BEFORE THE AUTHORITIES BELOW HAVE STATED THAT THERE IS NO BASIS FOR MAKING SUCH AN ADDITION, THEN AGAIN RELYING UPO N THE SAME STATEMENT MADE DURING THE COURSE OF SURVEY CAN NOT JUSTIFY THE ADDITION. THE LD. CIT (A) HOWEVER HAS TR IED TO MODIFY THE ORDER OF THE ASSESSING OFFICER, FIRSTLY, BY OBSERVING THAT THERE WERE CERTAIN DIFFERENCES IN THE VALUATIO N OF THE PROPERTY CONSTRUCTED BY THE ASSESSEE AND SUCH A DIF FERENCE OF RS.13.34 LAC GOES TO SHOW THAT ASSESSEE HAS MADE CE RTAIN INVESTMENT OUTSIDE THE BOOKS. APART FROM THAT, HE H AS ALSO REFERRED TO THE LETTER WRITTEN BY THE ASSESSEE TO T HE ASSESSING OFFICER WHEREIN ASSESSEE HAS STATED THAT HE HAS NO OBJECTION IF ANY ADDITION IS MADE IN THE ASSESSMENT ORDER. SUCH A LETTER OF THE ASSESSEE, FIRST OF ALL DOES HAS LOST ITS RELEVA NCE, BECAUSE I.T.A. NO.2176/DEL/2015 8 THE ADDITION IN THE FIRST ROUND WAS DELETED BY THE TRIBUNAL AND AGAIN MATTER HAS BEEN RESTORED BACK BY THE HON' BLE HIGH COURT TO BE DECIDED AFRESH. SECONDLY, THE DIFFERENC E IN THE VALUATION WAS ON COST OF CONSTRUCTION WHICH WAS NOT IN DISPUTE. LD. CIT(A) HAS NOTED THAT ASSESSEE HAD SHO WN CERTAIN ASSETS IN HIS BALANCE SHEET IN THE FORM OF CERTAIN EQUIPMENTS, BUT THERE IS NO ADDITION IN RESPECT OF FURNITURE AND FIXTURE, AIR CONDITIONER, ETC., WHICH IS REQUIR ED IN THE JEWELERS SHOP. HOWEVER, SUCH AN OBSERVATION IS AGAI N BASED ON CERTAIN SURMISES, BECAUSE DE HORS ANY MATERIAL COMING ON RECORD THAT THERE WAS ANY INVESTMENT OUTSIDE THE BO OKS OF ACCOUNT OR ANY SPOT ENQUIRY NO INFERENCE CAN BE MAD E ON HYPOTHETICAL MANNER, ESPECIALLY UNDER THE DEEMING P ROVISION OF SECTION 68 OR 69. FROM THE PERUSAL OF THE AUDITE D BALANCE- SHEET, IT IS SEEN THAT ASSESSEE AS ON 01.04.2001 HA D SHOWN FURNITURE AND FIXTURE AT RS.24,848/- AND OTHER ASSE TS IN THE FORM OF EQUIPMENTS. IF ASSESSEE HAS NOT MADE ANY AD DITION IN THIS YEAR IN FIXTURE AND FURNITURE, THAT DOES NOT M EAN THAT ASSESSEE MUST HAVE MADE ANY INVESTMENT OUTSIDE THE BOOKS, ESPECIALLY, WHEN THERE IS NO MATERIAL TO SUPPORT TH E SAME. THERE IS NO ACTUAL VERIFICATION THAT ASSESSEE HAS I NSTALLED ANY AIR CONDITIONER DURING THAT PERIOD, AND THEREFORE, TO PRESUME THAT THE ASSESSEE MUST HAVE MADE CERTAIN INVESTMENT IN SUCH EQUIPMENTS WHICH IS REQUIRED IN JEWELERS SHOP CANN OT BE THE BASIS FOR ADDITION. ONCE, THE BASIS OF SURRENDER AN D LETTER WRITTEN BY THE ASSESSING OFFICER STANDS NEGATED BY THE TRIBUNAL LATER ON BY THE HIGH COURT IN THE SENSE TH AT THE HON'BLE HIGH COURT HAS DIRECTED THE ASSESSING OFFIC ER TO CONSIDER THE ISSUE OF PURPORTED INVESTMENT AFRESH A ND I.T.A. NO.2176/DEL/2015 9 ASSESSEE IS OPEN TO CHALLENGE THE SAID PROPOSED ADD ITION ON THE GROUND THAT THERE IS NO BASIS FOR MAKING SUCH A DDITION, THEN IT WAS NOT OPEN FOR THE ASSESSING OFFICER TO A GAIN MAKE THE ADDITION ON SAME REASONING. IF THE ASSESSEE HAS DENIED MAKING ANY SUCH INVESTMENT AND HAD SHOWN CERTAIN INVESTMENT IN THE BOOKS, THEN ONUS SHIFTS UPON THE ASSESSING OFFICER TO BRING ON RECORD EITHER BY WAY OF INQUIRY OR ANY MATERIAL WHICH HAS BEEN FOUND DURING THE COURSE OF SURVEY THAT THERE WAS CERTAIN INVESTMENT IN FIXTURE AND FU RNITURE DURING THE RELEVANT ASSESSMENT YEARS. EVEN IN THE D VOS REPORT THE SUBJECT MATTER OF VALUATION WAS NOT THE INVESTMENT IN FIXTURE AND FURNITURE BUT WAS ONLY RESTRICTED TO THE INVESTMENT MADE IN THE CONSTRUCTION OF BUILDING. TH US, EVEN THE DVOS REPORT DOES NOT SUPPORT THE CASE OF THE A SSESSING OFFICER. 8. UNDER THESE FACTS AND CIRCUMSTANCES OF THE CASE, ONCE THERE IS NO MATERIAL TO SUPPORT SUCH ADDITION THEN ADDITION CANNOT BE MADE ON CERTAIN ESTIMATE OR PRESUMPTION A ND ACCORDINGLY SAME IS DIRECTED TO BE DELETED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH APRIL, 2019. SD/- SD/- [O.P. KANT] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 12 TH APRIL, 2019 PKK: