ACIT, New Delhi V. Sh. Ajai Shukla, New Delhi

ITA 2896/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53390 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 17-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 02-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALIL MISRA
• Assessee Lawyers: VIKRAM GERA
• Keywords: Unexplained investment; Gift
• Section: 14A; 37(1); 69

Judgement Text

ITA NO. 2896/DEL/2011 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A, NEW DELHI BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T.A. NO. 2896/DEL/2011 A.Y. : 2008-09 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE -23(1), NEW DELHI ROOM NO. 190, CR BUILDING, IP ESTATE, NEW DELHI VS. SH. AJAI SHUKLA, C-171, 2 ND FLOOR, GR. KAILASH-I, NEW DELHI (PAN: ATBPS1319J) (APPELLANT ) (APPELLANT ) (APPELLANT ) (APPELLANT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) (RESPONDENT ) ASSEESSEE BY : SH. VIKRAM GERA, CA DEPARTMENT BY : SH. SALIL MISRA, SR. D.R. ORDER ORDER ORDER ORDER PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM PER SHAMIM YAHYA: AM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DATED 31.3.2 011 PERTAINING TO ASSESSMENT YEAR 2008-09. 2. THE GROUNDS RAISED READ AS UNDER:- 1. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE C ASE THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 70,18,518/- MADE BY T HE ASSESSING OFFICER ON ACCOUNT OF UNEXPLAINED INVESTMENT. 2. ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CAS E THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 4,00,000/- MADE BY ITA NO. 2896/DEL/2011 2 ASSESSING OFFICER ON ACCOUNT OF BUSINESS PROMOTION EXPENSES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF ` 1,46,334/- MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE U/S. 14A OF THE IT ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEN D ANY OF THE GROUNDS OF APPEAL BEFORE OR DURING THE COUR SE OF HEARING OF THE APPEAL. 3. IN THIS CASE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE CLAIMED TO HAVE RECEIVED PROFESSIONAL RECEIPTS FROM VARIOUS ELECTRONICS AS WELL AS PRINT MEDIA AMOUNTING TO ` 32 ,51,671/- AGAINST WHICH IT HAS CLAIMED VARIOUS EXPENSE INCLUDING BUSIN ESS PROMOTION EXPENSES OF ` 4,44,464/-. EXAMINATION OF THESE EX PENSES REVEALED THAT MOST OF THESE EXPENSES RELATE TO EXPENSE FOR FO OD AND GIFT ITEMS. ASSESSEE EXPLAINED THAT THE ABOVE EXPENSES WERE INC URRED FOR FUNCTIONS AND DISTRIBUTION OF TROPHIES TO THE TANK TROOP UNIT OF THE ARMED FORCES FOR THEIR EXCELLENCE IN THE KARGIL WAR. ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD FAILED TO ESTABLISH THE FACT THAT THESE EXPENSES INCURRED WERE WHOLLY AND EXCLUSIVELY FO R THE PURPOSE OF BUSINESS. ACCORDINGLY, ASSESSING OFFICER PROCEEDE D TO DISALLOW ` 4,00,000/- OUT OF THE BUSINESS PROMOTION EXPENSES. 3.1 ASSESSING OFFICER FURTHER OBSERVED THAT DURIN G THE YEAR UNDER CONSIDERATION AIS INFORMATION WAS RECEIVED RELATING TO INVESTMENT MADE BY THE ASSESSEE IN VARIOUS MUTUAL FUNDS. THE AS SESSEE WAS ASKED TO EXPLAIN THE SOURCES OF INVESTMENTS IT HAS MADE IN THE MUTUAL ITA NO. 2896/DEL/2011 3 FUNDS. ASSESSING OFFICER OBSERVED THAT THE ASSES SEE FAILED TO EXPLAIN TO SOURCES FOR THE FOLLOWING INVESTMENTS MADE BY IT I N THE YEAR:- DATE NAME OF MUTUAL FUND AMOUNT 14.6.2007 DSP MERRIL LYNCH 5,17,864/- 26.12.2007 JP MORGAN 15,00,000/- 14.6.2007 DSP MERRIL LYNCH 5,00,000/- 1.8.2007 SUNDARAM BNP PARIWAS 15,00,000/- 23.1.2008 HDFC 15,00,654/- 23.1.2008 UTI 15,00,000/- TOTAL TOTAL TOTAL TOTAL 70,18,518/ 70,18,518/ 70,18,518/ 70,18,518/- -- - 3.2 ACCORDINGLY, ASSESSING OFFICER TREATED ` 70,18 ,518/- AS UNDISCLOSED INVESTMENT OF THE ASSESSEE U/S 69 OF THE IT ACT. 3.3 ASSESSING OFFICER FURTHER OBSERVED THAT ON EX AMINATION OF THE PROFIT AND LOSS ACCOUNT OF THE ASSESSEE IT WAS REVE ALED THAT IT HAS RECEIVED DIVIDEND INCOME OF ` 10,13,388/-. SINCE THIS INCOME DOES NOT FORM A PART OF THE TOTAL INCOME OF THE ASSESSEE, IT WAS ASKED TO EXPLAIN WHY PART OF THE EXPENSES RELATABLE TO THE EARNING OF THIS INCOME SHOULD NOT BE DISALLOWED U/S 14A OF THE ACT. ASSESSEE SHOWED THE COMPUTATION OF DISALLOWANCE AT ` 1,46,334/-. AS SESSING OFFICER ADDED BACK THIS AMOUNT TO THE INCOME OF THE ASSESSEE. ITA NO. 2896/DEL/2011 4 4. UPON ASSESSEES APPEAL LD. COMMISSIONER OF INCOME TAX (APPEALS) ELABORATELY CONSIDERED THE ISSUES AND HE LD AS UNDER:- (I) AS REGARDS THE ADDITION ON ACCOUNT OF UNDISCLOS ED INVESTMENT, LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT A SSESSING OFFICER HAS MADE THE ADDITION WITHOUT EXAMINING THE SUBMISSION S DETAILING THE SOURCES OF INVESTMENT OF ` 70,15,800/-. LD. COMMISSI ONER OF INCOME TAX (APPEALS) OBSERVED THAT EVIDENCE FILED BY THE A SSESSEE DURING THE ASSESSMENT PROCEEDINGS HAS BEEN COMPLETELY IGNORED, WHEREAS THE SAME CLEARLY SHOWS THAT THE INVESTMENT MADE BY THE ASSESSEE ARE DULY UNACCOUNTED FOR. IN VIEW OF THE ADDITION, LD . COMMISSIONER OF INCOME TAX (APPEALS) DELETED THE ADDITION MADE BY T HE ASSESSING OFFICER IN THIS REGARD. (II) AS REGARDS THE ADDITION OF ` 4,00,000/- ON ACC OUNT OF BUSINESS PROMOTION. LD. COMMISSIONER OF INCOME TAX (APPEALS) O BSERVED THAT THE ASSESSEE HAD ORGANIZED FUNCTIONS AND DISTRIBUTI ON OF TROPHIES TO TANK TROOP FOR THEIR EXCELLENCE IN KARGIL WARD IN H IS PURSUIT TO MAINTAIN WORKING RELATIONSHIP WITH THE DEFENCE FORCES FOR THE PURPOSES OF GETTING INFORMATION PERTAINING TO WAR FOR JOURNALIS M PURPOSES. LD. COMMISSIONER OF INCOME TAX (APPEALS) FURTHER OBSERVE D THAT THE CLAIM THAT THE AMOUNT HAD BEEN SPENT ON THE SAID PURPOSE HAS NOT BEEN FACTUALLY DENIED BY THE ASSESSING OFFICER. FURTHER , LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED THAT ASSESSING OFFIC ER HAS NOT BROUGHT ON RECORD ANY BASIS TO POINT OUT THAT THE S AID EXPENDITURE WAS NOT FOR THE PURPOSE OF BUSINESS. LD. COMMISSIONER OF INCOME TAX (APPEALS) OBSERVED T HAT THERE IS APPARENTLY A DIRECT CONNECTION BETWEEN THE ASSESSE ES SPHERE OF ITA NO. 2896/DEL/2011 5 ACTIVITY AND THE ITEM OF EXPENDITURE AND THE EXPEN DITURE SO MADE IS NOT FOR HIS PERSONAL PURPOSES. UNDER THESE CIRCUMS TANCES, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT ALLOW ABILITY OF THE CLAIM UNDER SECTION 37(1) CANNOT BE CHALLENGED. ACC ORDINGLY, HE DIRECTED THAT THE ADDITION BE DELETED IN THIS REGA RD. (III) AS REGARDS THE ADDITION OF ` 1,46,334/- U/S. 14A. IT WAS EXPLAINED TO THE LD. COMMISSIONER OF INCOME TAX (APPE ALS) THAT THE AUDITORS OF THE ASSESSEE WHILE COMPUTING THE TOTAL TAXABLE INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION HAVE ALREADY DISALLOWED SUCH EXPENSES. HOWEVER, THE ASSESSING OFFICER WH ILE PASSING THE ASSESSMENT ORDER OF THE ASSESSEE HAS MADE THE ADDIT ION OF ` 1,46,334/- U/S 14A OF THE ACT WITHOUT VERIFYING TH AT THE SAME HAS ALREADY BEEN DISALLOWED BY THE AUDITORS WHILE CALCU LATING THE TOTAL TAXABLE INCOME OF THE ASSESSEE. CONSIDERING THE AB OVE, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE A SSESSING OFFICER HAS MADE THE ADDITION U/S 14A WITHOUT VERIFYING THA T THE SAME HAS ALREADY BEEN DISALLOWED BY THE ASSESSEE. ACCORDINGL Y, HE DELETED THE ADDITION. 5. AGAINST THE ABOVE ORDER THE REVENUE IS IN APPEAL BEFORE US. ITA NO. 2896/DEL/2011 6 6. WE HAVE HEARD THE RIVAL CONTENTIONS IN LIGHT OF THE MATERIAL PRODUCED AND PRECEDENT RELIED UPON. (I) APROPOS INVESTMENT OF ` 70,18,518/-. WE FIND THAT THE ASSESSEE HAS SUBMITTED THE NECESSA RY INFORMATION BEFORE THE ASSESSING OFFICER VIDE SUBMI SSION DATED 3.12.2010. THE COPY OF THE SAME HAS BEEN PROVIDED BE FORE US VIDE PAPER BOOK PAGE NO. 101 & 102. FROM THE ABOVE, IT IS EVIDENT THAT THE ASSESSEE HAS DULY SUBMITTED BEFORE THE ASSESSING OFFICER THE DETAIL OF SOURCE OF INVESTMENT. CONSIDERING THESE SUBMISSIONS OF THE A SSESSEE, LD. COMMISSIONER OF INCOME TAX (APPEALS) HELD THAT THE A SSESSING OFFICER HAS MADE THE ADDITION BY COMPLETELY IGNORING THE EV IDENCES FILED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IN VIE W OF THE AFORESAID DETAIL FILED BY THE ASSESSEE BEFORE THE ASSESSING O FFICER, IN OUR CONSIDERED OPINION, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) DOES NOT NEED ANY INTERFERENCE ON OUR PAR T. ACCORDINGLY, WE UPHOLD THE SAME. (II) APROPOS ADDITION OF ` 4,00,000/- IN THIS REGARD, WE FIND THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS GIVEN A FINDING THAT THERE IS A DIRE CT CONNECTION BETWEEN THE ASSESSEES SPHERE OF ACTIVITY AND THE ITEM OF EX PENDITURE AND THE EXPENDITURE SO MADE IS NOT FOR HIS PERSONAL PURPOSE S. ASSESSEE HAS EXPLAINED THAT THE ASSESSEE HAS ORGANIZED A FUNCTIO N OF DISTRIBUTION OF TROPHIES TO TANK TROOP FOR THEIR EXCELLENCE IN KARG IL WARD IN HIS PURSUIT ITA NO. 2896/DEL/2011 7 TO MAINTAIN WORKING RELATIONSHIP WITH THE DEFENCE FOR CES FOR THE PURPOSES OF GETTING INFORMATION PERTAINING TO WAR FO R JOURNALISM PURPOSES. THE ASSESSING OFFICER HAS NOT BROUGHT ON RECORD ANY BASIS THAT THE EXPENSES ARE NOT MADE FOR THE BUSINESS PUR POSES. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD , DOES NOT NEED ANY INTERFERENCE ON OUR PART. ACCORDINGLY, WE UP HOLD THE SAME. (III) APROPOS ADDITION OF ` 1,46,334/-. IN THIS REGARD, LD. COMMISSIONER OF INCOME TAX (APPE ALS) HAS GIVEN A FINDING THAT THIS AMOUNT WAS ALREADY DISA LLOWED BY THE ASSESSEE IN THE COMPUTATION OF INCOME. HENCE,, AS SESSING OFFICERS ACTION OF MAKING FURTHER DISALLOWANCE HAS RESULTED IN DOUBLE DISALLOWANCE OF THE SAME AMOUNT. IN THESE CIRCUMSTA NCES, WE FIND THAT THERE IS NO INFIRMITY IN THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IN THIS REGARD. HENCE, WE UP HOLD THE SAME. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/12/2011. SD/ SD/ SD/ SD/- -- - SD/ SD/ SD/ SD/- -- - [ [[ [R.P. TOLANI R.P. TOLANI R.P. TOLANI R.P. TOLANI] ]] ] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] [SHAMIM YAHYA] JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER ACCOUNTANT MEMBER DATE 23/12/2011 SRB COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES