Sh. Sandeep Kataria, New Delhi V. ITO, Gurgaon

ITA 3069/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1988 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2009-2010
• Appeal Filed On: 30-05-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR ANJULA JAIN
• Keywords: Principle of natural justice
• Section: 143(3); 201; 48; 145(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES G, NEW DELHI BEFORE MS. SUSHMA CHOWLA, VICE PRESIDENT DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 3069/DEL/2016 : ASSTT. YEAR : 200 9-10 SANDEEP KATARIA, C/O M/S RRA TAXINDIA, D-28, SOUTH EXTENSION, PART-I, NEW DELHI-110049 VS INCOME TAX OFFICER, WARD-1(3), GURGAON (APPELLANT) (RESPONDENT) PAN NO. A NXPK6568M ASSESSEE BY : SH. SOMIL AGARWAL, ADV. REVENUE BY : DR. ANJULA JAIN, SR. DR DATE OF HEARING: 30 . 0 1 .2020 DATE OF PRONOUNCEMENT: 27 .0 4 .2020 ORDER PER DR. B.R.R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT(A)-2, GURGAON DATED 31.03.2016 . 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANC ES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN CONFIRMING THE ADDITION TO THE EXTENT OF RS. 10,00, 000/- OUT OF TOTAL UNSECURED LOAN OF RS.37,00,000/- AND T HAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND W ITHOUT OBSERVING THE PRINCIPLES OF NATURAL JUSTICE. 2. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ADDITION TO THE EXT ENT OF RS. 10,00,000/- ON ACCOUNT UNSECURED LOAN IS BAD IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE . 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN REJECTING THE BO OKS OF ACCOUNTS OF ASSESSEE U/S 145(3) OF INCOME TAX ACT, 1961. ITA NO. 3069/DEL/2016 SANDEEP KATARIA 2 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN ESTIMATING THE N ET PROFIT AT RS.27,81,150/- AND THAT TOO @50% OF TOTAL RECEIPTS AFTER REJECTING THE BOOKS OF ACCOUNTS OF A SSESSEE WITHOUT ANY BASIS, MATERIAL AND EVIDENCES ON RECORD . 5. THAT IN ANY CASE AND IN ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION OF LD. AO IN ESTIMATING THE NET PROFIT AT RS.27,81,150/- AND THA T TOO @50% OF TOTAL RECEIPTS IS BAD IN LAW AND AGAINST TH E FACTS AND CIRCUMSTANCES OF THE CASE. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCE S OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT GRANTING THE BENEFIT OF TELESCOPING. ADDITION OF UNSECURED LOANS RS.10,00,000/-: 3. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE BALANCE SHEET OF THE ASSESSEE HAS SHOWN AN AMOUNT OF RS.37,00,000/- UNDER THE HEAD UNSECURED LOAN. THE AO CALLED FOR THE DETAILS ON VARIOUS DATES, HOW EVER NO COMPLIANCE WAS MADE BEFORE THE AO EXCEPT THE AFFIDA VIT OF SH. LAKHPAT SINGH KATARIA, THE FATHER OF THE ASSESSEE A ND COPY OF THE PAN CARD. SINCE, NO DETAILS HAVE BEEN FURNISHED BEFORE THE AO, AN ADDITION OF RS.37,00,000/- HAS BEEN MADE TO THE TOTAL INCOME OF THE ASSESSEE ON ACCOUNT OF UNSECURED LOAN S RECEIVED. DURING THE PROCEEDINGS BEFORE THE LD. CIT (A), IT WAS CLARIFIED THAT AN AMOUNT OF RS.27,00,000/- OUT OF RS.37,00,000/- PERTAIN TO EARLIER ASSESSMENT YEARS AND HENCE THE SAME WAS DELETED. THE LD. CIT (A) CONFIRMED THE AMOUNT OF RS.10,00,000/- HOLDING THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE TRANSACTION ON THE GROUNDS THAT THE FATHER OF THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE YEAR, WAS NOT ASSESSED TO TAX AND THE AMOUNT HAS BEEN REC EIVED BY THE APPELLANT WAS IN FACT A JOINT ACCOUNT OPERATED IN THE NAME ITA NO. 3069/DEL/2016 SANDEEP KATARIA 3 OF THE ASSESSEE AND HIS FATHER. AGGRIEVED THE ASSES SEE FILED APPEAL BEFORE US AGAINST THE CONFIRMATION OF RS.10, 00,000/- BY THE LD. CIT (A). 4. DURING THE ARGUMENT, THE LD. AR FILED THE COPY O F THE AFFIDAVIT PURPORTEDLY SIGNED BY THE SH. LAKHPAT SIN GH KATARIA WHICH WAS UNDATED BY THE DEPONENT AND A COPY OF THE PAN CARD. THE LD. AR HAS ALSO PRODUCED THE COPY OF A/C NO. 20241779285 OF THE ASSESSEE IN ALLAHABAD BANK FOR T HE PERIOD 22.06.2008 TO 31.12.2008. IT WAS ARGUED THAT THE FA THER OF THE ASSESSEE SH. LAKHPAT SINGH KATARIA HAS EXPIRED ON 1 5.04.2013 AND IN VIEW OF THE AFFIDAVIT GIVEN BY SH. LAKHPAT S INGH KATARIA CONFIRMING THE ISSUE OF LOAN, THE ADDITION NEEDS TO BE DELETED. 5. REBUTTING THE ARGUMENTS, THE LD. DR SUBMITTED TH AT THE AFFIDAVIT IS A SELF-SERVING DOCUMENT AND THE COPY F ILED IN THE PAPER BOOK IS NOT EVEN NOTARIZED, HENCE ITS VALIDIT Y IS HIGHLY QUESTIONABLE. IT WAS ARGUED THAT MERE SUBMISSION OF PAN NUMBER DOESNT PROVE THE GENUINENESS AND CREDITWORT HINESS OF THE LOAN PARTY. THE FACT THAT THE CERTIFICATE DATED 25.06.2016 ISSUED BY THE BANK MANAGER CONFIRMS THAT THE ACCOUN T IS MAINTAINED BY THE ASSESSEE WHICH IN TURN GOES TO PR OVE THAT THE AMOUNTS HAVE INDEED BEEN UNACCOUNTED. 6. HEARD THE ARGUMENTS OF BOTH THE PARTIES. WE HAVE GONE THROUGH THE DOCUMENTS FILED BEFORE US FROM THE PAGE NOS. 1 TO 48 OF THE PAPER BOOK. THE BANK STATEMENT HAS ALSO B EEN PERUSED. THERE HAS BEEN ONE CREDIT OF RS.23,72,500/ - ON 13.08.2008 AND THE AMOUNTS HAVE BEEN TRANSFERRED AN D WITHDRAWN TO SELF ON 14.08.2008 AND 18.08.2008. THE CLOSING BALANCE AS ON 31.12.2008 WAS RS.27,820/-. THERE WER E NO ITA NO. 3069/DEL/2016 SANDEEP KATARIA 4 MAJOR TRANSACTIONS EXCEPT ONE ON 15.11.2008 WHICH I S A CORRESPONDING ENTRY TO TRANSFER OF MONEY ON THE SAM E DATE. HENCE KEEPING IN VIEW, THE ENTIRE FACTS AND CIRCUMS TANCES OF THE CASE IT CAN BE SAID THAT THE ASSESSEE COULD NOT PROVE THE GENUINENESS OF THE AMOUNT OF RS.10,00,000/- RECEIVE D AS UNSECURED LOAN. HENCE, WE DECLINE TO INTERFERE WITH THE ORDER OF THE LD. CIT (A) ON THIS GROUND. THE APPEAL OF TH E ASSESSEE ON THIS GROUND IS DISMISSED. ESTIMATION OF BUSINESS PROFITS OF THE CURRENT YEAR: 7. OWING TO NON SUBMISSION OF EVIDENCES, THE ASSESS ING OFFICER HAS DISALLOWED 50% EXPENSES OUT OF THE TOT AL GROSS RECEIPTS OF THE ASSESSEE OF RS.55,62,300/-. THE LD. CIT (A) CONFIRMED THE DISALLOWANCE OF RS.27,81,150/-. DURIN G THE ARGUMENTS BEFORE US, THE LD. AR ARGUED THAT THERE W AS NO RATIONALE TO DISALLOW 50% OF THE GROSS RECEIPTS BY THE REVENUE AUTHORITIES AND ARGUED THAT THE PRE-REQUISITE FOR R EJECTION OF THE BOOKS OF ACCOUNTS U/S 145(3) AND ESTIMATION OF THE INCOME IS TOTALLY AGAINST THE PROVISIONS OF THE ACT. THE L D. AR SUBMITTED THAT THE PROFIT @12% HAS BEEN DETERMINED BY THE ORDER PASSED U/S 143(3) FOR THE ASSESSMENT YEAR 201 6-17. THE INCOMES FOR THE ASSESSMENT YEARS 2009-10 AND 2010-1 1 DECLARED BY THE ASSESSEE SHOWN A NET PROFIT OF 5% O N THE TURNOVER. 8. THE LD. DR ARGUED THAT IN THE ABSENCE OF ANY DET AILS FORTHCOMING FROM THE ASSESSEE THE ESTIMATION IS THE ONLY WAY TO DETERMINE THE PROFITS OF THE BUSINESS. 9. HEARD THE ARGUMENTS OF BOTH THE PARTIES AND PERU SED THE MATERIAL AVAILABLE ON RECORD. ITA NO. 3069/DEL/2016 SANDEEP KATARIA 5 10. WE FIND THAT THE ASSESSEE COULD NOT SUBMIT THE DETAILS OF EXPENSES OWING TO MISPLACEMENT OF THE DATA BY THE P REVIOUS CONSULTANT. THAT WAS THE REASON AS TO WHY THEY COUL D NOT PRODUCE THE SAME EVEN DURING THE REMAND PROCEEDINGS BEFORE THE AO. WE HAVE GONE THROUGH THE RECORD AND FIND TH AT THE ASSESSEE HAS SHOWN MAJOR EXPENSES UNDER TWO HEADS N AMELY COMMISSION & SALARY EXPENSES, THE OTHER EXPENSES BE ING ADVERTISING, REPAIR & MAINTENANCE, SALES PROMOTION ETC. AND THESE EXPENSES HAVE ALSO BEEN SHOWN TO HAVE INCURRE D IN CASH. EVEN THE NAMES OF THE PERSON TO WHOM THE COMMISSION /SALARY HAS BEEN PAID AND THE PURPOSE HAS NOT BEEN EXPOUNDE D BY THE ASSESSEE. THE PROFIT RATE OF THE ASSESSEE FOR THE SUBSEQUENT YEARS DETERMINED BY THE REVENUE IS ALSO CONSIDERED. AFTER CONSIDERING THE FACTS, WE FEEL THAT THE INTEREST OF JUSTICE WOULD BE WELL SERVED BY ESTIMATING THE PROFITS OF THE ASS ESSEE @20% AS AGAINST 50% DETERMINED BY THE LD. CIT (A). THIS GROUND OF APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED . 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/04/2020. SD/- SD/- (SUSHMA CHOWLA) (DR. B.R.R. KUMAR) VICE PRESIDENT ACCOUNTANT MEMB ER DATED: 27/04/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR