The Dycit Circle-9, Ahmedabad V. Shri Amratlal T Patel, Ahmedabad

ITA 298/AHD/2002

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8953 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 year(s) 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 15-09-2009
• Assessment Year: 1996-1997
• Appeal Filed On: 11-02-2002
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: GOVIND SINGHAL
• Assessee Lawyers: N O N E
• Keywords: Unexplained cash credit

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL : A BENCH : AHMEDABAD (BEFORE HONBLE SHRI T.K. SHARMA, J.M. & HONBLE SH RI D.C. AGRAWAL, A.M.) I.T.A. NO. 298/AHD./2002 ASSESSMENT YEAR : 1996-1997 DEPUTY COMMISSIONER OF INCOME TAX, -VS.- SHRI AMR ATLAL T. PATEL, AHMEDABAD CIRCLE-9, AHMEDABAD (APPELLANT) (R ESPONDENT) APPELLANT BY : SHRI GOVIND SINGHAL, D.R. RESPONDENT BY : N O N E O R D E R PER SHRI T.K. SHARMA, JUDICIAL MEMBER : THE REVENUE HAS FILED THIS APPEAL FOR THE ASSESSME NT YEAR 1996-97 AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-XV, AHMEDABAD D ATED 30.10.2001. 2. IN THIS CASE, THE NOTICE OF HEARING WAS SERVED O N THE ASSESSEE. HOWEVER, ON THE DATE OF HEARING, NEITHER ANYBODY APPEARED NOR ANY ADJOURNME NT APPLICATION RECEIVED FROM THE SIDE OF ASSESSEE. WE, THEREFORE, PROCEED TO DECIDE THIS APP EAL ON THE BASIS OF THE SUBMISSION MADE BY THE LD. DEPARTMENTAL REPRESENTATIVE AND THE MATERIAL AV AILABLE ON RECORD. 3. GROUND NO. 1 OF THE APPEAL IS AGAINST THE DELETI ON OF DISALLOWANCE OF RS.1,76,509/- BEING LEASE EXPENSES. 4. IN THE ASSESSMENT ORDER, THE A.O. DISALLOWED THE LEASE EXPENSES AMOUNTING TO RS.1,76,509/- HOLDING THAT PAYMENT WAS A MERE DOWN PAYMENT FOR ULTIMATE PURCHASE OF MARUTI ESTEEM CAR. THE A.O. FURTHER HELD THAT THERE IS NO BUSINESS ACTIVITY, THEREFORE, THE ASSESSEE IS NOT ENTITLED TO CLAIM OF LEASE CHARGES. ON APPEAL BEFOR E THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS), IT WAS CONTENDED THAT THE ASSESSEE IS A WORKING PARTNER IN TWO FIRMS NAMELY, M/S. 2 SUPER CONSTRUCTION AND M/S. SUPER CORPORATION. AS A PARTNER IN THESE FIRMS, ASSESSEE WAS REQUIRED TO USE THESE CARS FOR THE PURPOSE OF BUSIN ESS OF THE PARTNERSHIP FIRM. THE FACT THAT THE ASSESSEE HAD ANOTHER CAR WAS NOT RELEVANT TO THE DI SALLOWANCE OF LEASE CHARGES. THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) HELD THAT LEASE CHARGES FOR OBTAINING VEHICLE ON LEASE WHICH DID NOT AMOUNT TO DOWN PAYMENT FROM THE ACQUI SITION OF CAR IN QUESTION. ON PERUSAL OF LEASE AGREEMENT, THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) ALSO OBSERVED THAT IN THE SAID AGREEMENT, THERE IS NO MENTION THAT LEASE CHAR GES ARE IN THE NATURE OF DOWN PAYMENT. 5. AFTER CONSIDERING THE AFORESAID ARGUMENT ADVANCE D BY THE LD. D.R., IN THE IMPUGNED ORDER THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) DEL ETED THE DISALLOWANCE FOR THE REASONS GIVEN IN PARA 6 OF HIS ORDER, WHICH READS AS UNDER :- I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE COUNSEL OF THE APPELLANT. TERMS AND CONDITIONS OF LEASE AGREEMENT HAVE BEEN EXAMINED. THE APPELLANT IS DERIVING HIS SHARE INCOM E FROM TWO PARTNERSHIP FIRM AS A WORKING PARTNER AND THERE IS NO DENYING THE FACT THAT THE APPELLANT HAS TO MOVE FROM PLACE TO PLACE IN CONNECTION WITH THE BUSINESS ACTIVITY OF THE FIRM WHERE HE IS A WORKING PARTNER. THEREFORE, ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR EARNIN G THE INCOME FROM HIS BUSINESS IS LIABLE TO BE ALLOWED. THE LEASE CHA RGES PAID BY THE APPELLANT ARE NOT CAPITAL IN NATURE. IT BECOMES EVI DENT FROM THE PERUSAL OF THE LEASE AGREEMENT FILED BY THE APPELLANT. IN V IEW OF THE ABOVE, THE APPELLANT IS GRANTED A RELIEF OF RS.1,76,509/-. 6. AGGRIEVED BY THIS ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS), THE REVENUE IS IN APPEAL BEFORE US. 7. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT INCOME FROM THE PARTNERSHIP FIRM IS LIKELY TO BE EXEMPT, THEREF ORE, THE EXPENDITURE IN QUESTION ON ACCOUNT OF LEASE CHARGES IS NOT ALLOWABLE. THE LD. D.R. FURTHE R SUBMITTED THAT SINCE THE CAR WAS ULTIMATELY PURCHASED BY THE ASSESSEE, THEREFORE, IT CAN BE REA SONABLY PRESUMED THAT THESE CHARGES WERE IN THE NATURE OF DOWN PAYMENT. 8. WE HAVE HEARD THE LD. DEPARTMENTAL REPRESENTATIV E AND PERUSED THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO NOTE THAT APART FROM SHAR E OF PROFIT FROM THE TWO FIRMS, THE ASSESSEE IS ALSO GETTING INTEREST AND REMUNERATION, WHICH IS NO T EXEMPT. THE FACT THAT THE CARS WERE USED FOR 3 THE PURPOSE OF BUSINESS, I.E. BY THE FIRM OF WHICH THE ASSESSEE IS A PARTNER. IN VIEW OF THIS, IN OUR CONSIDERED OPINION, THE LEARNED COMMISSIONER OF INC OME TAX(APPEALS) HAS GIVEN COGENT REASON FOR DELETING THE DISALLOWANCE. WE, THEREFORE, DECLI NE TO INTERFERE WITH THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THIS GROUND OF APPEAL. 9. GROUND NO. 2 IS AGAINST THE DELETION OF ADDITION OF RS.55,000/- BEING UNEXPLAINED CASH CREDIT. 10. IN THE ASSESSMENT ORDER, THE A.O. MADE AN ADDIT ION OF RS.55,000/- ON ACCOUNT OF UNEXPLAINED CASH CREDIT. BEFORE THE LEARNED COMMISS IONER OF INCOME TAX(APPEALS), IT WAS SUBMITTED THAT THE ASSESSEE DERIVES INCOME FROM ANC ESTRAL AGRICULTURAL LANDS MEASURING APPROXIMATELY 6 BIGHAS AT VILLAGE UNZA AND THE INCO ME BELONGED TO HIS HUF. THEREFORE, THE SAME WAS NOT SUPPOSED TO BE DISCLOSED THROUGH THE R ETURN FILED IN HIS INDIVIDUAL CAPACITY. IT WAS FURTHER STATED THAT THE VILLAGE WHERE THE AGRICULTU RAL LAND OF HUF IS SITUATED IS FAMOUS FOR NON- PERISHABLE CROPS LIKE JEERA AND PULSE WHICH EASILY FETCH PRICE IN THE MARKET. AFTER CONSIDERING THIS ARGUMENT, THE LEARNED COMMISSIONER OF INCOME T AX(APPEALS) DELETED THE ADDITION FOR THE DETAILED REASONS GIVEN IN PARA 11, WHICH IS AS UNDE R :- I HAVE GONE THROUGH THE SUBMISSION MADE BY THE COU NSEL OF THE APPELLANT AND REASONS GIVEN BY THE A.O. IN HIS ASSESSMENT ORD ER. AFTER CAREFULLY CONSIDERING THE SAME, I FIND THAT APPELLANT HAS GIV EN A PIECE OF EVIDENCE IN THE HANDS OF THE A.O. WHEREFROM FURTHER ENQUIRIES S HOULD HAVE BEEN MADE TO REBUT THE CLAIM. CLAIM OF THE APPELLANT FOR SUCH INCOME FROM AGRICULTURAL OPERATIONS. THE A.O. HAS ADMITTED IN H I ORDER THAT HE WAS GIVEN 7/12 EXTRACT BY THE APPELLANT DURING THE ASSE SSMENT PROCEEDINGS. THE APPELLANT HAS FURNISHED A COPY OF THE RETURN FI LED BY HUF OF WHICH APPELLANT IS A KARTA. FROM THE PERUSAL OF THE STATE MENT OF INCOME GIVEN BY THE COUNSEL THERE IS A NOTE WHICH SAYS AGRICULTURAL INCOME IS NOT AGGREGATED AS TOTAL INCOME IS LESS THAN TAXABLE MIN IMUM. FROM THE EVIDENCE GIVEN BY THE APPELLANT, IT IS CLEAR THAT H UF HAS FILED ITS RETURN AND MENTION OF AGRICULTURAL INCOME IS GIVEN IN THE NOTE TO SAY THAT JUNE AND JULY ARE NOT THE MONTHS WHEN CROPS ARE HARVESTE D IS NOT SUFFICIENT TO 4 MAKE ADDITION IN THE HANDS OF THE APPELLANT. THE A. O. SHOULD HAVE FURTHER MADE INQUIRIES TO PROVE THIS POINT CONCLUSIVELY. HE HAS SIMPLY OBTAINED THE 7/12 EXTRACT AND DID NOT TO MAKE ANY ENQUIRIES WHETHER SOME AGRICULTURAL OPERATION ARE CARRIED OUT OR NOT FROM THE LANDS BELONGING TO THE HUF OF THE APPELLANT. IN THE ABSENCE OF ANY FIN DINGS BASED ON ANY EVIDENCE NO ADDITION COULD BE SUSTAINED. THEREFORE, AN ADDITION OF RS.55,000/- TREATED AS UNACCOUNTED CASH CREDIT IS H ELD TO BE UNCALLED FOR AND THE SAME IS ACCORDINGLY DELETED. 11. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE RELYING ON THE REASONING GIVEN BY THE A.O. CONTENDED THAT THE ADDITION WAS RIGHTLY MADE B Y A.O. AND THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN DELETING T HE SAME. 12. WE HAVE CAREFULLY CONSIDERED THE ORDERS OF THE AUTHORITIES BELOW. IN OUR OPINION LOOKING TO THE TOTALITY OF THE FACTS, THE LEARNED COMMISSIO NER OF INCOME TAX(APPEALS) HAS GIVEN COGENT REASONS FOR DELETING THE ADDITION. WE, THEREFORE, I NCLINED TO UPHOLD THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX(APPEALS) AND REJECT THIS GROUND OF APPEAL. 13. GROUND NO. 3 OF APPEAL TAKEN BY THE REVENUE REA DS AS UNDER :- THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS AL SO ERRED IN LAW AND ON FACTS IN DELETING PROTECTIVE ADDITION OF RS.6,25 ,000/-, WHERE SUBSTANTIVE ADDITION IS PENDING BEFORE THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS) 14. AT THE TIME OF HEARING, THE LD. DEPARTMENTAL RE PRESENTATIVE POINTED OUT THAT THE A.O. MADE THE ADDITION ON SUBSTANTIVE BASIS IN THE ASSES SMENT YEAR 1995-96. ON APPEAL, THE SAID ADDITION WAS DELETED BY THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS). ON FURTHER APPEAL, ITAT, D BENCH VIDE ORDER DATED 21.05.2007 IN I.T. A. NO. 930/AHD./2003 FOR THE ASSESSMENT YEAR 1995-96 VIDE PARA 5 ON PAGE 3 HELD THAT THIS I NCOME OF RS.6,25,000/- IS ASSESSABLE IN THE ASSESSMENT YEAR 1996-97 ON SUBSTANTIVE BASIS. THE L D. D.R. ACCORDINGLY SUBMITTED THAT IN VIEW OF ORDER BOTH THE APPELLATE AUTHORITY IN THE ASSESSMEN T YEAR 1995-96, THAT THE ADDITION OF 5 RS.6,25,000/- MADE BY THE A.O. IN THE ASSESSMENT YE AR UNDER APPEAL ON PROTECTIVE BASIS, HELD THAT IT IS TAXABLE ON SUBSTANTIVE BASIS. 15. AFTER GOING THROUGH THE ORDERS OF AUTHORITIES B ELOW AS WELL AS THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1995-96 IN I.T.A. NO. 930/AHD./2003 (SUPRA), WE ARE OF THE VIEW THAT THE ADDITION OF RS.6,25,000/- IS REQUIRED TO BE MADE IN THE ASSESSMENT YEAR UNDER APPEAL ON SUBSTANTIVE BASIS. THE A.O. IS DIRE CTED ACCORDINGLY TO TAKE THE SUM ON SUBSTANTIVE BASIS IN THE ASSESSMENT YEAR UNDER APPE AL.. THIS GROUND OF APPEAL IS ALLOWED. 16. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. THE ORDER WAS PRONOUNCED IN THE COURT ON 18.0 9.2009 SD/- SD/- (D.C. AGARWAL) (T.K. SHARMA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 18/ 09 / 2009 COPY OF THE ORDER IS FORWARDED TO : 1) SHRI AMRATLAL T. PATEL,19, TIRTHNAGAR, VIBHAG-2, ME MNGAR, AHMEDABAD, (2) DCIT, CIRCLE-9, VASUPUJYA CHAMBERS, ASHRAM ROAD , AHMEDABAD-380 014. 3) CIT(A)- ,AHMEDABAD, (4) CIT- ,AHMED ABAD.(5) D.R., ITAT, AHMEDABAD. TRUE COPY BY ORDER LAHA/SR.P.S. DEPUTY REGISTRAR, ITAT, AHMEDA BAD