ITO, New Delhi V. Sh. Sanjeev Rohilla, New Delhi

ITA 2678/DEL/2010

• Counselvise Citation: 267820114 RSA 2010
• Duration Of Justice: 3 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 17-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIRAJ JAIN; RENUKA JAIN GUPTA
• Assessee Lawyers: P K MISHRA
• Keywords: Gift

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI R. S. SYAL, ACCOUNTANT ME MBER AND SHRI A. D. JAIN, JUDICIAL MEMBER I.T.A NO. 2678 /DEL/2010 (ASSESSMENT YEAR:- 2007-08) ITO ROOM NO. 304, D BLOCK, VIKAS BHAWAN, NEW DELHI (APPELLANT) VS SANJEEV ROHILLA RZ-199, DHARAMPURA, KAKROLA ROAD, NAJAFGARH NEW DELHI AGFPR1954H (RESPONDENT) APPELLANT BY SMT. RENUKA. JAIN GUPTA, SR. DR & SH. NIRAJ JAIN, CA RESPONDENT BY SH. P. K. MISHRA, CA ORDER PER R. S. SYAL, AM THIS APPEAL BY THE REVENUE ARISES OUT OF THE ORDE R PASSED BY THE CIT(A) ON 17/3/2010 IN RELATION TO THE ASSESSMENT YEAR 2007-0 8. 2. FIRST GROUND OF THE APPEAL IS AGAINST THE DELETI ON OF ADDITION OF RS.70,000/- ON ACCOUNT OF DISALLOWANCE OUT OF SALARY. BRIEFLY STA TED THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS PROPRIETOR OF M/S UDIT IMPEX & M/S S. R . MERCHANDISING CORPORATION. HE FILED HIS RETURN DECLARING TOTAL INCOME OF RS.2, 51,047/- IN RESPECT OF BOTH THE PROPRIETORSHIP CONCERNS. THE ASSESSING OFFICER OBSE RVED THAT THE TAX AUDITOR HAS REPORTED THAT SALARY OF RS.40,000/- WAS PAID TO R. P. ROHILLA AND RS.30,000/- TO SUNITA ROHILLA AS PER SECTION 40A(2)(B) OF THE ACT. HE MADE THE DISALLOWANCE OF RS.70,000/- BY RECORDING THAT : SINCE THESE TWO A LLEGED EMPLOYEES WERE NOT IN SERVICE, THE CLAIM OF RS.70,000 IS REJECTED. THE LD. CIT(A) DELETED THE ADDITION BY OBSERVING THAT THESE PERSONS WERE IN EMPLOYMENT SIN CE A. Y 2006-07 AND THERE WAS NO EXCESS PAYMENT. 3. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE RELEVANT MATERIAL ON RECORD IT IS ABUNDANTLY CLEAR THAT THE ASSESSING OF FICER HAS GIVEN ABSOLUTELY NO REASON FOR DRAWING THE INFERENCE THAT THESE TWO PER SONS WERE NOT IN SERVICE. THERE IS NO MATERIAL WORTH THE NAME TO SUGGEST SEVEN REMOTEL Y THAT THESE PERSONS WERE NOT IN THE EMPLOYMENT OF THE ASSESSEE. THE FINDING RECORD ED BY THE LD. CIT(A) THAT THESE TWO PERSONS WERE IN ASSESSEES SERVICES FOR A. Y 2 006-07 ONWARDS AND THERE WAS NO EXCESSIVE PAYMENT, HAS NOT BEEN CONTROVERTED BY THE LD. DR. WHEN WE CONSIDER THE TOTAL QUANTUM OF SALARY AT RS. 1,28,000/- OUT OF WHICH 70,000/- HAS BEEN PAID TO THESE PERSONS, WE FIND NO REASON T O INTERFERE WITH THE IMPUGNED ORDER . THIS GROUND IS NOT ALLOWED. 4. SECOND GROUND OF THE APPEAL IS AGAINST THE DELET ION OF ADDITION OF RS.8,945/- ON ACCOUNT OF DISALLOWANCE OUT OF STAFF WELFARE EXP ENSES. AGAIN THE ASSESSING OFFICER, FROM THE ACCOUNTS OF /S S. R. MERCHANDISIN G CORPORATION, MADE THIS ADDITION BY DISALLOWING A SUM OF RS.8,945/- OUT OF TOTAL ST AFF WELFARE EXPENSES OF RS. 10,945/- WITHOUT ANY REASONS. THE LD. CIT(A) DELET ED THE SAID ADDITION. 5. HAVING HEARD BOTH THE SIDES ON THIS ISSUE, WE FI ND THAT THERE CAN BE NO GROUND FOR DISALLOWANCE OF RS.8,945/- OUT OF TOTAL STAFF W ELFARE EXPENSES OF RS. 10,945/- WITHOUT PINPOINTING ANY REASON. THE IMPUGNED ORDER IS UPHELD ON THIS SCORE. THIS GROUND IS FAILS. 6. NEXT GROUND OF THE APPEAL IS AGAINST THE DELETIO N OF ADDITION OF RS.10,260/- OUT OF DIWALI EXPENSES. THE ASSESSEE CLAIMED DEDUC TION FOR DIWALI EXPENSES AT RS.21,175/-. THE AO ALLOWED DEDUCTION FOR RS.5,000 /- AND MADE DISALLOWANCE OF RS.16175/-. ON THE PERUSAL OF DETAILS, THE LD. CI T(A) OBSERVED THAT THERE WAS NO GENUINENESS OF GIFTS WORTH RS.5915/-. HE THEREFORE , REDUCED AT DISALLOWANCE TO THIS LEVEL. THE REVENUE IS AGGRIEVED AGAINST THE DELETI ON OF ADDITION OF RS.10,260/-. 7. HAVING HEARD BOTH THE SIDES ON THIS ISSUE AND PE RUSED THE RIVAL MATERIAL ON RECORD, WE AGAIN FIND NO REASON TO INTERFERE WITH THE IMPUGNED ORDER BECAUSE THE LD. CIT(A) HAS JUSTIFIABLY SUSTAINED THE DISALLO WANCE OF RS.5915/- FOR WHICH THERE WAS NO RELEVANT EVIDENCE. THIS GROUND IS NOT ALLOWE D. 8. GROUND NO. 4 IS AGAINST THE DELETION OF ADDITION OF RS.1,00,000/- ON ACCOUNT OF UNSECURED LOAN FROM SURESH KUMAR ROHILLA. THE A SSESSING OFFICER MADE DISALLOWANCE OF THE SAID LOAN ON THE GROUND THAT THE ASSESSEE FAILED TO FURNISH THE CONFIRMATION AND COMPLETE ADDRESS IN RESPECT OF THI S CREDITOR. THE LD. CIT(A) HAS DISCUSSED THIS ASPECT VIDE PARA 4.3 OF THE OF THE I MPUGNED ORDER. ON THE PERUSAL OF THE CASE RECORD IT WAS OBSERVED BY THE LD. CIT(A) THAT THE AO HAD NEVER QUESTIONED THE GENUINENESS OF THIS CASH CREDIT DURI NG THE ENTIRE ASSESSMENT PROCEEDINGS. HOWEVER, THE ASSESSEE VOLUNTARILY FIL ED ALL THE NECESSARY DETAILS TO SUBSTANTIATE THE GENUINENESS OF THIS CREDIT BEFORE THE LD. FIRST APPELLATE AUTHORITY. HE THUS ORDERED FOR THE DELETION OF ADDITION. 9. HAVING HEARD BOTH THE SIDES ON THIS ISSUE AND PE RUSED THE RIVAL MATERIAL ON RECORD, IT IS SEEN THAT THE ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER WITHOUT MAKING ANY QUERY DURING THE ASSESSMENT PROCEEDINGS . TTHIS FINDING RECORDED BY THE LD. CIT(A) HAS NOT BEEN CONTROVERTED BY THE LD. DR. ONCE THERE IS NO QUERY BY THE ASSESSING OFFICER, IT IMPLIES THAT THE GENUINENESS IS ACCEPTED. WE, THEREFORE, HOLD THAT THE LD. CIT(A) WAS JUSTIFIED IN DELETING THIS ADDITION. 10. GROUND NO. 5 OF THE APPEAL IS AGAINST THE DELET ION OF ADDITION OF RS.35,749/- OUT OF CONVEYANCE AND PETROL EXPENSES. GROUND NO. 6 IS AGAINST THE DELETION OF ADDITION OF RS.13,560/- OUT OF INSURANCE EXPENSES A ND GROUND NO. 7 IS AGAINST THE DELETION OF ADDITION OF RS. 91,976/- OUT OF TOUR & TRAVELS EXPENSES. THE ASSESSEE INCURRED CONVEYANCE AND PETROL EXPENSES AT RS.44,68 6/-, TOURS AND TRAVELS AT RS.91,976/- AND CAR INSURANCE AT RS.13,560/-. CONS IDERING THAT THE TURNOVER WAS MERE RS.16.48 LACS, THE ASSESSING OFFICER MADE THE ABOVE DISALLOWANCES TOTALING RS.150222/-. THE LD. CIT(A) SUSTAINED THE DISALLOW ANCE OUT OF CONVEYANCE AND PETROL AND ALSO INSURANCE EXPENSES AT 1/5 TH TOWARDS PERSONAL USE. THE ADDITION ON ACCOUNT OF TOUR AND TRAVEL WAS DELETED BECAUSE OF N O REASONS WERE GIVEN BY THE ASSESSING OFFICER. 11. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE LD. CIT(A) WAS JUSTIFIED I N RESTRICTING THE DISALLOWANCE OUT OF CONVEYANCE AND PETROL AND ALSO INSURANCE EXPENSE S AT 1/5 TH ON ACCOUNT OF PERSONAL USE. THE AO GAVE ABSOLUTELY NO REASON FO R MAKING DISALLOWANCE OF THE ENTIRE EXPENDITURE IN SO FAR AS THE TOUR EXPENSES A RE CONCERNED. WE ARE NOT PERSUADED WITH THE ARGUMENT OF THE LD. DR FOR SUS TAINING THIS ADDITION WITHOUT ANY REASON. THESE THREE GROUNDS, THEREFORE, FAIL. 12. GROUND NO. 8 IS AGAINST THE DELETION OF ADDITIO N OF RS.11,10,719/- OUT OF SUNDRY CREDITORS. THE ASSESSEE HAD SHOWN SUNDRY CR EDITORS AT RS.11.10 LAKH. THE ASSESSING OFFICER NOTICED THAT PURCHASES WERE ONLY TO THE TUNE OF RS.3.49 LAKH. HE THEREFORE, INFERRED THAT THE CREDITS WERE NOT GENUI NE. THE LD. CIT(A) DELETED THE DISALLOWANCE. 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USING THE RELEVANT MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE ASSESSING OFF ICER MADE THE ADDITION WITHOUT MAKING ANY ENQUIRY AS REGARD THE GENUINENESS OF SUN DRY CREDITORS. HE WAS SWAYED BY SMALL AMOUNT OF PURCHASE TO HOLD THAT THE CREDIT S WAS NOT GENUINE. IN ORDER TO BRING THE CASE WITHIN THE MISCHIEF OF SECTION 68, THE ONUS WAS UPON HIM TO SHOW THAT THE CREDITORS WERE NOT GENUINE. THE ASSESSING OFFICER OUGHT TO HAVE EXAMINED THE CREDITORS AS PER PROCEDURE PRESCRIBED UNDER THE LAW. HAVING NOT DONE SO, WE FIND NO DIFFICULTY IN UPHOLDING THE DELETION OF DISALLOW ANCE MADE BY THE LD. CIT (A). THIS GROUND IS ALSO NOT ALLOWED. 14. LAST GROUND IS AGAINST THE DELETION OF ADDITION OF RS.9,03,255/- ON ACCOUNT OF `DISALLOWANCE OF AGENCY COMMISSION, DESIGNING & SA MPLING CHARGES. WHEREAS ALL THE ABOVE REFERRED DISALLOWANCES WERE MADE IN RESP ECT OF THE PROPRIETORSHIP CONCERN UNDER THE NAME OF AND STYLE OF S. R. MERCHANDISE CORPORATION, THE PRESENT ADDITION WAS MADE FROM M/S UDIT IMPEX, THE OTHER PROPRIETORS HIP CONCERN. THE RELEVANT DISCUSSION IS CONTAINED ON PAGE NO. 3 OF THE ASSESS MENT ORDER. THE AO RECORDED THAT THE ASSESSEE DID NOT PRODUCE BOOKS OF ACCOUNTS AND THAT THE BOOKS OF ACCOUNTS WERE REJECTED. THEREAFTER, HE ADOPTED THE FIGURE O F NOT PROFIT SHOWN AS RS.2,72,300 AND ADDED THE FOLLOWING RECEIPTS TO THE ASSESSEE S TOTAL INCOME :- AGENCY COMMISSION RS.4,87,115/- DESIGNING & SAMPLING CHARGES RS.2,90,111/- SERVICE CHARGES RS.1,26,029/- RS.9,03,255/- THAT IS HOW THE ASSESSING OFFICER ADDED RECEIPTS OF RS.9,03,255/- TO THE ASSESSEES TOTAL INCOME. THE LD. CIT (A) DELETED THE SAID ADD ITION. 15. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PER USES THE RELEVANT MATERIAL ON RECORD, WE FIND THAT THE GROUND OF APPEAL HAS BEEN WRONGLY WORDED BY THE AO IN AS MUCH AS IT IS NOT A CASE OF DELETION OF `DISALLOWAN CE OUT OF AGENCY COMMISSION, DESIGNING AND SAMPLING CHARGES. RATHER, IT IS A CAS E WHERE THE ASSESSING OFFICER ADDED THE RECEIPTS IN THE TOTAL INCOME WHICH AMOU NTS WERE ALREADY CREDITED TO THE PROFIT AND LOSS ACCOUNT AND THE NET PROFIT OF RS. 2 ,72,300/- WAS DETERMINED BY CONSIDERING THE ABOVE REFERRED THREE ITEMS OF THE R ECEIPTS. WE ARE UNABLE TO APPRECIATE AS TO HOW ANY ITEM OF RECEIPT CREDITED T O THE PROFIT AND LOSS ACCOUNT CAN BE ADDED TO THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT. IN OUR CONSIDERED OPINION, THE LD. CIT(A) WAS JUSTIFIED IN DELETING T HIS ADDITION. 16. IN THE RESULT, APPEAL IS DISMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 18 TH FEBRUARY 2014. SD/- SD /- (A. D. JAIN) (R. S. SYAL) JUDICIAL MEMBER ACCO UNTANT MEMBER DATED: 18/02/2014 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTAN T REGISTRAR ITAT NEW DELHI