BHA Associates Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 24/DEL/2013

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 3285 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-05-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 04-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 02-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN
• Assessee Lawyers: V K AGARWAL
• Keywords: Unexplained investment; Business expenditure; Source of fund
• Section: 69

Judgement Text

ITA NO. 24/DEL/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI G.D. AGRAWAL, HONBLE PRESIDEN T & SHRI K.N. CHARY, JUDICIAL MEMBER ITA NO.-24/DEL/2013 ( ASSESSMENT YEAR: 2009-10) BHA ASSOCIATES PVT. LTD. E-47, GREATER KAILASH PART-II, NEW DELHI. AABCB4540L VS ACIT CIRCLE IV NEW DELHI. ASSESSEE BY SH. V.K. AGARWAL, AR REVENUE BY SH. S.K. JAIN, SR. DR ORDER PER K. NARSIMHA CHARY, J.M. THIS APPEAL IS FILED BY THE ASSESSEE CHALLENGING T HE ORDER DATED 16.11.2012 IN APPEAL NO. 300/2011-12/985. 2. BRIEF FACTS OF THE CASE ARE THAT FOR THE AY 2009 -10 ASSESSEE FILED THEIR RETURN OF INCOME ON 19.02.2010 DECLARIN G A TOTAL INCOME OF RS. 23,85,132/- AND ON A PERUSAL OF THE A IR INFORMATION THE AO FOUND THAT THE ASSESSEE HAD TRAN SACTED RS. 77,27,025/- ON 03.06.2008 ON ACCOUNT OF PURCHASE OF IMMOVABLE PROPERTY AT JAIPUR BUT IT WAS NOT REFLECTED IN THE BALANCE SHEET OF THE ASSESSEE FOR THE PERIOD ENDED BY 31.03.2009 AS SUCH AO SOUGHT THE EXPLANATION OF THE ASSESSEE. ASSESSEE S UBMITTED THAT DATE OF HEARING 04.05.2017 DATE OF PRONOUNCEMENT 05.05.2017 ITA NO. 24/DEL/2013 2 THE PROPERTY WAS PURCHASED BY ONE SH. PRAVIN JUNEJA WHO IS THE PROMOTER DIRECTOR OF THE ASSESSEE COMPANY BUT AT TH E TIME OF FINALIZATION OF BALANCE SHEET, THE SAID JAIPUR PROP ERTY ACCOUNT AND PRAVIN JUNEJA SHARE CAPITAL ACCOUNT WERE SET OF F INADVERTENTLY BUT THE SAME WAS ACCOUNTED FOR IN THE BOOKS OF ACCO UNT OF THE ASSESSEE. AO DID NOT ACCEPT THE SAID EXPLANATION O F THE ASSESSEE AND PROCEEDED TO ADD THE SAME TO THE INCOME OF THE ASSESSEE UNDER SECTION 69 OF THE ACT. BESIDES THIS, AO ADDE D A SUM OF RS. 1,67,759/- ALLEGED EXPENSE OF BUSINESS AND A SUM OF RS. 38,535/- UNDER THE ADVERTISEMENT EXPENSES. 3. APPEAL PREFERRED BY THE ASSESSEE WAS DISMISSED B Y THE LD. CIT (A) CONFIRMING THE ASSESSMENT ORDER AND THE ADD ITION MADE TO THE INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE IMPUGNED ORDER, ASSESSEE IS BEF ORE US IN THIS APPEAL, STATING THAT AN AMOUNT OF RS. 50 LAKHS OUT OF RS. 84,20,000/- RELATES TO THE EARLIER YEARS AND THE EX PENDITURE OF SALARY AND ADVERTISEMENT WERE ACTUALLY INCURRED BY THE ASSESSEE. 5. IT IS THE ARGUMENT OF THE LD. AR THAT PROPERTY W AS PURCHASED BY ONE PRAVIN JUNEJA WHO IS THE PROMOTER DIRECTOR O F THE ASSESSEE COMPANY AND PAGE NO. 53 OF THE PB CLEARLY ESTABLISH THAT A SUM OF RS. 50 LAKHS WAS PAID BETWEEN 22.11.2005 AND 19. 10.2007 ITA NO. 24/DEL/2013 3 AND ONLY A SUM OF RS. 28,000/- WAS PAID ON 31.12.20 07, AS SUCH THE AUTHORITIES BELOW ARE NOT SATISFIED IN SUSTAINI NG THE DISALLOWANCE AND THE COST OF THE PROPERTY HOLDING I T TO BE AN UNEXPLAINED INVESTMENT, INASMUCH AS ALL THE AMOUNTS WERE PAID BY PRAVIN JUNEJA BY WAY OF CHEQUE. IT IS FURTHER A RGUED BY HIM THAT THOUGH THE INCOME FOR THE RELEVANT YEAR IS ONL Y RS. 20,000/- FROM PROFESSION AND HOUSE PROPERTY, AN EXPENDITURE OF RS. 1,67,259/- WAS INCURRED FOR THE CARRYING ON BUSINES S BECAUSE THESE ARE THE INITIAL OR FORMATIVE YEARS. SO ALSO HE JUSTIFIES THE EXPENDITURE OF RS. 38,535/- ON SUCH SCORE. PER CON TRA, LD. DR VEHEMENTLY RELIES ON THE ORDERS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY GONE THROUGH THE RECORD INCLUD ING THE PAPER BOOK SUBMITTED BY THE ASSESSEE. PAGE NO. 57 THEREOF IS THE ALLOTMENT LETTER DATED 05.01.2008 ISSUED BY JAIPUR NEED NIRMAN PVT. LTD. SHOWING THE ASSESSEE AS THE ALLOTTEE OF T HE PROPERTY. IT IS CLEARLY STATED IN THIS LETTER THAT A SUM OF RS. 50 LAKHS WAS PAID BY WAY OF CHEQUES BETWEEN 22.11.2005 AND 19.10.2007 CL EARLY IN THE EARLIER YEARS AS SUCH AN AMOUNT DOES NOT APPEAR TO BE VALIDLY ADDED IN THE CURRENT ASSESSMENT YEAR. FURTHER ACCO RDING TO THE ASSESSEE ALL THE PAYMENTS WERE MADE TO THE JAIPUR N EED NIRMAN PVT. LTD. BY WAY OF CHEQUES ISSUED BY SH. PRAVIN JU NEJA THE ITA NO. 24/DEL/2013 4 DIRECTOR OF THE ASSESSEE. IF THE SOURCE OF THE PAY MENTS, CAPACITY OF THE PARTY, GENUINENESS OF THE TRANSACTION ARE VE RIFIABLE ONES THAT TOO WHEN THE MAJOR PORTION OF THE AMOUNTS APPE ARS TO HAVE BEEN PAID IN THE EARLIER PREVIOUS YEARS BUT IS NOT RELEVANT TO THE CURRENT ASSESSMENT YEAR, WE FIND IT DIFFICULT TO SU STAIN THE ADDITION OF RS. 84,20,000/- IN THE CURRENT YEAR AND WE ARE OF THE CONSIDERED OPINION THAT THIS MATTER REQUIRES FACTUA L VERIFICATION AT THE END OF THE AO, AFTER GIVING THE ASSESSEE A FAI R DEAL OF OPPORTUNITY FOR PRODUCING THE EVIDENCE AS TO THE SO URCES OF FUNDS FOR MAKING SUCH PAYMENTS, CAPACITY OF THE PARTY AND GENUINENESS OF THE TRANSACTION. WITH THIS VIEW OF THE MATTER W E SET ASIDE THE ISSUE TO THE FILE OF THE AO FOR VERIFICATION. 7. NOW COMING TO THE EXPENSES OF RS. 1,67,759/- REL ATING TO THE BUSINESS EXPENSES OF PROFESSION AND HOUSE PROPERTY AND A SUM OF RS. 38,535/- THE ADVERTISEMENTS EXPENSES, THE ASSES SEE ADMITS THAT THE INCOME FROM PROFESSION AND HOUSE PROPERTY IS ONLY RS. 20,000/-. THERE IS NO EVIDENCE BEFORE US TO DISBEL IEVE THE FINDINGS OF THE AO THAT THESE EXPENSES DO NOT RELAT E TO THE BUSINESS OF THE ASSESSEE AND THE NEXUS BETWEEN THE EXPENSE AND THE BUSINESS IS NOT CLINCHINGLY ESTABLISHED. WE, T HEREFORE, DO NOT FIND ANY ILLEGALITY OR IRREGULARITY IN THE FINDINGS OF THE AUTHORITIES ITA NO. 24/DEL/2013 5 BELOW IN RESPECT OF THESE TWO EXPENSES AS SUCH WHIL E DISMISSING THE GROUNDS IN RESPECT OF THESE TWO EXPENSES, WE UP HOLD THE FINDINGS OF THE AUTHORITIES BELOW. 8. FOR THE REASON SET FORTH IN THE PRECEDING PARAGR APHS, WE SET ASIDE THE ISSUE RELATING TO THE ADDITION OF RS. 84, 20,000/- U/S 69 OF THE ACT TO THE FILE OF AO FOR VERIFICATION AS TO THE EXACT YEAR IN WHICH SUCH PAYMENTS WERE MADE, SOURCE OF FUNDS FOR PAYMENT, CAPACITY OF THE PARTY TO MAKE SUCH PAYMENTS AND THE GENUINENESS OF THE TRANSACTION AFTER GIVING AN OPPO RTUNITY TO THE ASSESSEE FOR PRODUCING NECESSARY MATERIAL. IN RESP ECT OF THE EXPENSES RELATING TO RS. 1,67,259/- AND RS. 38,535/ - THE APPEAL STANDS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED IN PART FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 05 TH MAY, 2017 SD/- SD/- (G.D. AGRAWAL) (K. NARSIMHA CHAR Y) PRESIDENT JUDICIAL MEMBER DATED: 05.05.2017 *KAVITA ARORA ITA NO. 24/DEL/2013 6 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI DRAFT DICTATED ON 04.05.2017 DRAFT PLACED BEFORE AUTHOR 05.05.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. APPROVED DRAFT COMES TO THE SR.PS/PS 05.05.17 KEPT FOR PRONOUNCEMENT ON 05.05.17 FILE SENT TO THE BENCH CLERK 08.05.17 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.