Mr. Rajan Bhatia, Delhi V. DCIT, New Delhi

ITA 2204/DEL/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0172 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 02-07-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 15-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIKRAM SAHAY
• Assessee Lawyers: GURDEEP SINGH
• Section: 143(3); 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F, NEW DELHI) BEFORE SHRI J. S. REDDY, ACCOUNTANT MEMBER AND SHRI C. M. GARG, JUDICIAL MEMBER I.T.A. NO.2204 /DEL/2013 ASSESSMENT YEAR : 2007-08 RAJAN BHATIA, VS. DCIT, CIRCLE 35(1), PROP. M/S. DIYA ENTERPRISES, NEW DELHI 138. RAM NAGAR, DELHI-110 051 GIR / PAN:AHRPB3558N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GURDEEP SINGH, ADV. RESPONDENT BY : SHRI VIKRAM SAHAY, SR. DR DATE OF HEARING : 02.07.2015 DATE OF PRONOUNCEMENT : 29.10.2015 ORDER PER J. S. REDDY, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A) XXVII, NEW DELHI DATED 24.12.2012 FOR THE ASSESSME NT YEAR 2007-08. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF SHEET METAL PARTS. HE DERIVES INCOME UNDER THE HEAD BUSINESS & PROFESSION AND INCOME FROM O THER SOURCES. HE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-0 8 ON 31.10.2007 DECLARING TOTAL INCOME OF RS.5,98,870/-. THE A. O. FRAMED ASSESSMENT U/S 143(3) ON 29.12.2009 DETERMINING THE TOTAL INCOME A T RS.11,53,490/-. ITA NO.2204/DEL/2013 2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEA L. THE FIRST APPELLATE AUTHORITY GRANTED PART RELIEF. FURTHER AGGRIEVED, THE ASSESSEE IS BEFORE US ON THE FOLLOWING GROUNDS: 1. BECAUSE THE LD. ASSESSING OFFICER HAS ERRED IN P ASSING THE ASSESSMENT ORDER CREATING HEAVY DEMAND OF TAX AND I NTEREST TREATING LOANS TAKEN BY THE APPELLANT AS HIS INCOME WITHOUT GIVING DUE WEIGHT AND CONSIDERATION TO THE LAW AND THE FACTS OF THE C ASE. 2. BECAUSE THE LD. CIT(A) FAILED TO APPRECIATE THE CERTIFICATE ISSUED BY THE BANK AND BANK STATEMENT OF THE APPELL ANT TO SHOW THE LOAN RETURNED / REPAID BACK BY THE APPELLANT. 3. BECAUSE THE LD. CI(A) ERRED IN HOLDING THAT THE APPELLANT HAS NOT BEEN ABLE TO ESTABLISH THE CREDITWORTHINESS OF SH. YOGENDCER AGGARWOAL AND HIS CAPACITY TO ADVANCE AN AMOUNT OF RS. 250000/- TO THE APPELLANT DOES NOT STAND PROVED. 4. BECAUSE THE CIT(A) ERRED INSOFAR AS HE FAILED TO APPRECIATE THE STATEMENT OF SH. YOGENDER AGGARWAL RECORDED BY THE AO AND NOT AFFORDING ANY CHANCE TO SUBMIT HIS CONTENTIONS. 5. BECAUSE THE CIT(A) IN VIEW OF HIS DECISION ERRED IN HOLDING THAT THE APPELLANT NEITHER FILED AY CONFIRMATION FROM TH E OTHER TWO CREDITORS I.E. M/S SEEMA AND MS REKHA BHATIA NOR TH EIR ADDRESS WAS BROUGHT ON RECORD NOR A COPY OF THEIR BANK ACCOUNT AND IR WAS FILED. 6. BECAUSE THE CIT(A) ERRED IN HOLDING THAT THE ELE MENT OF PERSONAL USE FOR THE TELEPHONE AND CONVEYANCE CANNO T BE RULED OUT ON THE GROUND OF NON MAINTENANCE OF LOG GO OK AND CALL REGISTER. 7. BECAUSE THE LD. ASSESSING OFFICER HAS FAILED TO APPRECIATE THE DOCUMENTARY EVIDENCE SUBMITTED BY THE APPELLANT IN SUPPORT OF UNSECURED LOANS TAKEN BY THE APPELLANT DURING THE Y EAR UNDER APPEAL. 8. BECAUSE THE LD. ASSESSING OFFICER FAILED TO APPL Y LEGAL MIND AS THERE IS NO NEXUS OF SUCH AN ADDITION WITH THE INCO ME OF THE ASSESSEE. 9. BECAUSE THE LD. ASSESSING OFFICER EXAGGERATED HE R POWERS IN MAKING ADDITION OF RS. 18000/- & RS. 13000/- ON ACC OUNT OF CASH LOANS FROM SMT. REKHA BHATIA, (MOTHER OF THE ASSESS EE) AND SMT. SEEMA RELATIVE OF THE ASSESSEE RESPECTIVELY WITHOUT CONFRONTING THE ASSESSEE. 10. BECAUSE THE ADDITION OF RS. 2913/- DISALLOWING THE CONVEYANCE EXPENSES IS BASELESS AND ON FLIMSY GROUNDS. KEEPING IN VIEW THE ITA NO.2204/DEL/2013 3 NATURE OF THE BUSINESS OF THE ASSESSEE AND THE FACT THAT THE ASSESSEE HAS NOT HAVE ANY VEHICLE THE DISALLOWANCE TO THE TU NE OF 20% OF TOTAL IS UNJUSTIFIED AND UNREASONABLE. 11. BECAUSE THE ADDITION OF RS. 878/- ON ACCOUNT O F DISALLOWANCE OF TELEPHONE BY 20% OF THESE EXPENSES IS ALSO UNJUSTIF IED AND UNREASONABLE. 3. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE DETAILS OF RS. 250000/- TAKEN FROM SH. YOGENDER AGGARWAL IS AS UND ER: DATED CHEQUE NO. AMOUNT 21.2.07 273110 75000/- 21.2.07 273109 65000/- 23.2.07 273111 55000/- 2.3.07 273114 55000/- 250000/- 3.1 THESE CHEQUES WERE ISSUED BY SH. YOGENDER AGGAR WAL FROM HIS CURRENT ACCOUNT IN THE NAME OF M/S KSHITIZ INTERNAT IONAL WITH STATE BANK OF INDIA, KRISHNA NAGAR, DELHI. SH. YOGENDER AGGARWAL ALSO CONFIRMED HAVING GIVEN THE SAID LOAN TO THE APPELLANT. A CONFIRMATIO N LETTER, COPY OF BANK STATEMENT AND COPY OF INCOME TAX RETURN WAS ALSO SU BMITTED DURING THE ASSESSMENT PROCEEDINGS. SH. YOGENDER AGGARWAL ALSO DEPOSED IN HIS STATEMENT BEFORE THE LD. AO UPON SUMMONS U/S 131 OF THE INCOME TAX ACT. THE QUESTION ASKED WAS:- Q. 'HAVE YOU GIVEN ANY AMOUNT TO SH. RAJAN BHATIA O R TAKEN ANY AMOUNT FROM HIM OR ANY SALE OR PURCHASE IN BUSINESS?' A. I HAVE GIVEN ONLY LOAN OF RS. 250000/- TO SH. RA JAN BHATIA. I HAVE NEITHER INVOLVED IN ANY BUSINESS TRANSACTIONS WITH RAJAN BH ATIA SUCH AS SALE OR PURCHASE. 3.2 THE APPELLANT HAS RETURNED / REPAID LOAN TAKEN FROM SH. YOGENDER ITA NO.2204/DEL/2013 4 AGGARWAL AS PER FOLLOWING DETAILS: DATED CHQ NO. AMOUNT BANK 29.1.10 990059 50000/- PUNJAB NATIONAL BANK, RAD HEY PURI 1.2.10 990064 50000/- -DO- 5.2.10 990068 75000/- -DO- 10.2.10 990075 75000/- -DO- COPY OF BANK CERTIFICATE AND BANK STATEMENT WAS SUB MITTED BEFORE THE LD. CIT (A) DURING THE APPEAL PROCEEDINGS. 3.3 THAT CASH LOANS OF SMALL AMOUNTS OF RS. 18000/ - & 13000/- TAKEN FROM REKHA BHATIA, MOTHER OF APPELLANT AND SEEMA (R ELATIVE) WERE DISALLOWED ON THE GROUND THAT THE APPELLANT DID NOT FILE COPY OF RETURN AND COPY OF BANK STATEMENT FROM WHICH THE AMOUNT WAS AD VANCED TO THE ASSESSEE. 4. THE ASSESSEE REITERATED THE CONTENTION BEFORE TH E FIRST APPELLATE AUTHORITY. 5. LD. D.R. RELIED ON THE ORDER OF A.O. 6. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. ON CAREFUL CONSIDERATION OF ABOVE ISSUE THAT WAS AGITATED BEFORE US, WE HOLD AS FOLLOWS: 6.1 WE FIRST CONSIDER THE ADDITION OF RS.2.50 LACS , BEING AN AMOUNT RECEIVED FROM ONE SHRI YOGENDER AGARWAL U/S 68 OF T HE ACT. THE DETAILS OF AMOUNT TAKEN FROM MR. YOGENDER AGARWAL IS AS UNDER: DATED CHEQUE NO. AMOUNT 21.2.07 273110 75000/- 21.2.07 273109 65000/- 23.2.07 273111 55000/- 2.3.07 273114 55000/- 250000/- ITA NO.2204/DEL/2013 5 6.1 THE ASSESSEE CLAIMED THAT THE CHEQUES WERE ISSU ED BY SHRI YOGENDER AGARWAL FROM HIS CURRENT ACCOUNT IN THE NAME OF M/S . KSHITIZ INTERNATIONAL, HAVING ACCOUNT WITH STATE BANK OF INDIA, KRISHNA NA GAR, DELHI. SHRI YOGENDER AGARWAL CONFIRMED THAT HE HAS GIVEN LOAN T O THE ASSESSEE. THE ASSESSEE ALSO FILED CONFIRMATION LETTER, COPIES OF BANK ACCOUNTS AS WELL AS COPY OF INCOME TAX RETURN BEFORE THE DEPARTMENTAL A UTHORITIES. STATEMENT U/S 131 WAS RECORDED FROM SHRI YOGENDER AGARWAL BY THE A.O. AND MR. YOGENDER AGARWAL CONFIRMED THAT HE HAS GIVEN LOAN O F RS.2.50 LACS TO RAJAN BHATIA. COPIES OF THESE DOCUMENTS ARE PLACED BEFOR E US BY WAY OF PAPER BOOK. 6.2 MOREOVER, EVIDENCE HAS BEEN PRODUCED THAT THE L OAN TAKEN FROM MR. YOGENDER AGARWAL WAS REPAID IN THE YEAR 2010 THROUG H CHEQUES AS DETAILED BELOW: DATED CHQ NO. AMOUNT BANK 29.1.10 990059 50000/- PUNJAB NATIONAL BANK, RAD HEY PURI 1.2.10 990064 50000/- -DO- 5.2.10 990068 75000/- -DO- 10.2.10 990075 75000/- -DO- 6.3 UNDER THESE FACTS AND CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADD ITION U/S 68 OF THE ACT, IN THE HANDS OF ASSESSEE. THE ASSESSEE HAS PRODUCED A LL EVIDENCES THAT WERE WITHIN HIS CONTROL TO PROVE THE GENUINENESS, IDENTI TY AND CAPACITY OF THE CREDITOR. THE A.O. WAS NOT SATISFIED WITH THE SOU RCES OF FUNDS WITH MR. YOGENDER AGARWAL. IN SUCH A CASE AN ADDITION CAN B E MADE IN THE HANDS OF YOGENDER AGARWAL AS ADMITTEDLY HE IS INCOME TAX ASS ESSEE AND HE HAS ITA NO.2204/DEL/2013 6 ADMITTED ON OATH BEFORE THE A.O. THAT HE HAD GIVEN THIS LOAN. HENCE, THE ADDITION IS DELETED. THIS GROUND OF THE ASSESSEE I S ALLOWED. 6.4 NO OTHER ISSUE HAS BEEN ARGUED BEFORE US. HENC E, ALL OTHER GROUNDS ARE DISMISSED. 7. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED IN PART. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JULY 2015. SD./- SD./- ( C. M. GARG) (J. S. REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 29 TH JULY, 2015 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON 27/7 SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR 27,28 SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS 29/7/15 SR. PS/PS 6 KEPT FOR PRONOUNCEMENT 29/7 SR. PS/PS 7 FILE SENT TO BENCH CLERK 29/7 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER