Balwant Kumar, Haryana V. ITO, Haryana

ITA 3183/DEL/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 7095 (ITAT-DELHI)
• Duration Of Justice: 7 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 19-12-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 01-06-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: NAVEEN GUPTA
• Keywords: Reasonable cause
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC-I, NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.3183/DEL/2016 ASSESSMENT YEAR : 2011-12 BALWANT KUMAR, PROP. M/S MANOJ KUMAR RAJESH KUMAR, KANINA MANDI, DISTT. MAHENDERGARH, HARYANA. VS. ITO, WARD- 2, HARYANA. PAN : ACFPK 0213 J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI NAVEEN GUPTA, ADV. RESPONDENT BY : SHRI RAJESH KUMAR, SR.DR DATE OF HEARING : 19-12-2016 DATE OF PRONOUNCEMENT : 10-01-2017 O R D E R PER S.V. MEHROTRA, A.M : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 22.02.2016 PASSED BY THE COMMISSIONER OF INCOME TAX (APPEALS), FARIDABAD, U/S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) RELATING TO ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL :- 1. THAT THE ORDER OF LD. CIT(A) IS AGAINST LAW AND FACTS. 2. THAT THE LD. CIT(A) ERRED IN NOT CONDONING THE D ELAY IN FILING OF APPEAL, ALTHOUGH THE APPELLANT HAS THE REASONABLE CAUSE FOR THE DELAY IN FILING OF APPEAL. 3. THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 230000/- MADE BY THE LD. AO U/S 68 OF THE ACT BY TREATING TH E FRESH CASH CREDITS AS UNEXPLAINED. 4. THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 25300/- MADE BY THE LD. AO BY DISALLOWING THE INTEREST PAID OF R S. 25300/- TO THE UNSECURED 2 ITA NO.3183/DEL/2016 LOANS NOT CONSIDERED AS GENUINE. 5. THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 7070/- MADE BY THE LD. AO BY DISALLOWING 1/6 TH OF EXPENSES OUT OF SHOP EXPENSES ON AD-HOC BASIS. 6. THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 5800/- MADE BY THE LD. AO BY DISALLOWING 1/6 TH OF EXPENSES OUT OF CAR AND TELEPHONE EXPENSES ON ACCOUNT OF PERSONAL USER. 7. THAT THE LD. CIT (A) ERRED IN CONFIRMING THE ADD ITION OF RS. 36000/- MADE BY THE LD. AO ON ACCOUNT OF LOW HOUSE HOLD EXPENSES . 2. APROPOS GROUND NO.2, LD. COUNSEL FOR THE ASSESSE E POINTED OUT THAT THERE WAS DELAY IN FILING THE APPEAL BEFORE LD. CIT (A), WHICH WAS MERELY ATTRIBUTABLE TO THE COUNSEL, WHO FORGOTTEN TO FILE THE APPEAL. HE SUBMITTED THAT LD. CIT(A) HAS DECIDED THE APPEAL ON MERITS AN D, THEREFORE, IMPLIEDLY HE HAS CONDONED THE DELAY THOUGH AFTER HEARING BOTH TH E PARTIES, HE HELD THAT ASSESSEE HAD NOT BEEN ABLE TO PROVIDE ANY SUFFICIEN T REASON FOR THE DELAY IN FILING THE APPEAL. I FIND THAT LD. CIT(A) THOUGH H ELD THAT THERE WAS NO SUFFICIENT CAUSE FOR CONDONING THE DELAY BUT DECIDE D THE APPEAL ON MERITS. THEREFORE, AS RIGHTLY SUBMITTED BY LD. COUNSEL FOR THE ASSESSEE, THE DELAY IN FILING THE APPEAL STANDS CONDONED. HOWEVER, I FURT HER FIND THAT THE DELAY WAS ATTRIBUTABLE TO THE ASSESSEES COUNSEL AND, THE REFORE, THE ASSESSEE COULD NOT BE MADE TO SUFFER. IN THE RESULT, THE DELAY IN FILING THE APPEAL BEFORE THE LD. CIT(A) IS CONDONED AND THE GROUND NO.2 IS ALLOW ED. 3. BRIEF FACTS APROPOS GROUND NO.3 ARE THAT ASSESSE E IS A PROPRIETOR OF M/S MANOJ KUMAR RAJESH KUMAR. IN THE RELEVANT YEAR UNDER CONSIDERATION, 3 ITA NO.3183/DEL/2016 THE ASSESSEE DERIVED INCOME FROM TRADING OF FOOD GR AINS. HE HAD FILED RETURN OF INCOME DECLARING NET INCOME OF RS.4,26,50 0/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER REQUI RED THE ASSESSEE TO PROVIDE INFORMATION IN RESPECT OF UNSECURED LOANS I NCLUDING SQUARED UP ACCOUNTS AND ALSO TO EXPLAIN THE SOURCE OF DEPOSITS IN THE ACCOUNTS OF CREDITORS. FROM THE DETAILS OF COPY OF ACCOUNT FUR NISHED BY THE ASSESSEE IN RESPECT OF UNSECURED LOAN RAISED DURING THE YEAR, H E NOTICED THAT THE ASSESSEE HAD RAISED LOANS WORTH RS.1,20,000/- FROM SMT. SANT OSH DEVI, W/O BINOD KUMAR AND RS.1,10,000/- FROM SMT. SANTOSH DEVI, W/O MUNSHI RAM, VILLAGE KANINA. HE REQUIRED THE ASSESSEE TO ESTABL ISH THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION S IN RESPECT OF THESE TWO UNSECURED LOANS. THE ASSESSEE FURNISHED COPY OF BA NK ACCOUNT ALONG WITH PROOF OF INCOME-TAX RETURNS FILED IN RESPECT OF BOT H THE LADIES. FROM THE BANK ACCOUNT OF SMT. SANTOSH DEVI, W/O BINOD KUMAR, HE NOTICED THAT SHE DEPOSITED RS.1,20,000/- CASH IN HER ACCOUNT ON 14.0 5.2010 AND ADVANCED LOAN OF RS.1,20,000/- ON THE SAME DATE TO ASSESSEE. SIMILARLY, SMT. SANTOSH DEVI, W/O MUNSHI RAM DEPOSITED CASH AMOUNTING TO RS .1,10,000/- ON 14.05.2010 IN HER BANK ACCOUNT AND ON THE SAME DATE SHE ADVANCED RS.1,10,000/- TO ASSESSEE. HE, THEREFORE, REQUIRED THE ASSESSEE TO FURNISH THE SOURCE OF DEPOSIT OF RS.1,20,000/- BY SMT. SANTOSH DEVI, W/O BINOD KUMAR 4 ITA NO.3183/DEL/2016 AND RS.1,10,000/- BY SMT. SANTOSH DEVI, W/O MUNSHI RAM AND ALSO REQUIRED THEM TO PRODUCE THE SAID LADIES FOR EXAMIN ATION ON 13.11.2013. HE HAS POINTED OUT THAT ON THE DATE OF HEARING, ASSES SEE ATTENDED THE ASSESSMENT PROCEEDINGS BUT NEITHER ANY EXPLANATION REGARDING HIS QUERIES WAS FURNISHED BY THE ASSESSEE NOR LADIES WERE PRODU CED FOR EXAMINATION. HE, THEREFORE, CONCLUDED THAT THE ASSESSEE FAILED T O DISCHARGE HIS ONUS OF BURDEN IN RESPECT OF THESE TWO CREDITORS. HE, ACCO RDINGLY, MADE ADDITION U/S 68 OF RS.2,30,000/-. THE ASSESSING OFFICER, FURTHE R, MADE DISALLOWANCE OF RS.25,300/- ALLEGEDLY ON ACCOUNT OF INTEREST PAID T O ABOVEMENTIONED CREDITORS. HE, FURTHER, MADE DISALLOWANCES OF RS.7 070/- OUT OF SHOP EXPENSES AMOUNTING TO RS.42,397/-, INTER-ALIA, OBSERVING THAT COMPLETE VOUCHERS WERE NOT PRODUCED. SIMILARLY, HE ALSO MAD E ANOTHER DISALLOWANCE OUT OF TELEPHONE AND VEHICLE EXPENSES AMOUNTING TO RS.5800/-. HE ALSO MADE ADDITION OF RS.36,000/- ON ACCOUNT OF LOW HOUS E HOLD WITHDRAWALS. LD. CIT(A) DISMISSED THE ASSESSEES APPEAL. BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. LD. COUNSEL REFERRED TO PAGE 8 WHEREIN THE RETUR N OF INCOME OF SMT. SANTOSH DEVI, W/O BINOD KUMAR FOR ASSESSMENT YEAR 2 011-12 IS CONTAINED WHEREIN THE RETURNED INCOME HAS BEEN DISCLOSED AT R S.1,87,730/-. HE REFERRED TO PAGE 9 OF THE PAPER BOOK WHEREIN THE ST ATEMENT OF TOTAL INCOME, 5 ITA NO.3183/DEL/2016 CAPITAL ACCOUNT FOR THE YEAR ENDING 31 ST MARCH, 2011 AND BALANCE SHEET AS ON 31 ST MARCH, 2011 IS CONTAINED. AS PER THE STATEMENT OF TOTAL INCOME, THE RENTAL INCOME HAS BEEN RECEIVED FROM M/S MANOJ KUMA R RAJESH KUMAR AMOUNTING TO RS.30,000/-. FURTHER, INCOME UNDER TH E HEAD BUSINESS AND PROFESSION HAS ALSO BEEN SHOWN AT RS.1,14,000/- AN D INCOME FROM OTHER SOURCES AT RS.52,734/- IN THE CAPITAL ACCOUNT. TH E INTEREST PAID TO M/S MANOJ KUMAR RAJESH KUMAR HAS BEEN SHOWN AT RS.17,60 0/-. FURTHER, ON THE LIABILITY SIDE, THE BALANCE OUTSTANDING TO M/S MANOJ KUMAR RAJESH KUMAR HAS BEEN SHOWN AT RS.4,00,709/-. LD. COUNSEL , FURTHER, REFERRED TO PAGE 10 OF THE PAPER BOOK WHEREIN THE COPY OF LEDGE R ACCOUNT OF SMT. SANTOSH DEVI, IN THE BOOKS OF ASSESSEE, IS CONTAINE D WHICH HAS DULY BEEN CONFIRMED BY SMT. SANTOSH DEVI. LD. COUNSEL POINTE D OUT THAT A SUM OF RS.1,20,000/- WAS TAKEN ON 14.05.2010 AND A SUM OF RS.10,50,000/- WAS GIVEN TO SMT. SANTOSH DEVI ON 24.05.2010. LD. COUN SEL, FURTHER, REFERRED TO PAGE 11 12 OF THE PAPER BOOK WHEREIN THE BANK ACC OUNT OF SMT. SANTOSH DEVI IS CONTAINED IN WHICH ALL TRANSACTIONS ARE DUL Y REFLECTED. 4.1 AS REGARDS SMT. SANTOSH DEVI, W/O MUNSHI RAM, L D. COUNSEL REFERRED TO PAGE 13 WHEREIN THE COPY OF RETURN OF INCOME OF SMT. SANTOSH DEVI IS CONTAINED WHEREIN THE RETURNED INCOME HAS BEEN SHOW N AT RS.1,75,270/- WHICH COMPRISED OF INCOME UNDER THE HEAD HOUSE PRO PERTY OF RS.21,000/- 6 ITA NO.3183/DEL/2016 FROM M/S MANOJ KUMAR RAJESH KUMAR, INCOME FROM BUSI NESS OF RS.1,08,000/- AND INCOME UNDER THE HEAD OTHER SOUR CES OF RS.46,267/- IN THE CAPITAL ACCOUNT. THE INTEREST PAID TO M/S MANO J KUMAR RAJESH KUMAR HAS BEEN SHOWN AT RS.15,200/- IN THE BALANCE SHEET. THE LIABILITY TOWARDS M/S MANOJ KUMAR RAJESH KUMAR HAS BEEN SHOWN AT RS.3 ,58,480/-. THE COPY OF LEDGER ACCOUNT OF THE CREDITOR IN THE ASSES SEES BOOKS OF ACCOUNT IS CONTAINED AT PAGE 15 OF THE PAPER BOOK WHICH IS DUL Y CONFIRMED BY SMT. SANTOSH DEVI. LD. COUNSEL POINTED OUT THAT THE LOA N OF RS.1,10,000/- WAS TAKEN ON 14.05.2010 AND A CHEQUE OF RS.10,50,000/- WAS ISSUED TO SMT. SANTOSH DEVI ON 24.05.2010. FURTHER, HE REFERRED T O THE BANK ACCOUNT OF SMT. SANTOSH DEVI CONTAINED AT PAGE 16 17 OF THE PAPER BOOK EVIDENCING THESE TRANSACTIONS. 4.2 WITH REFERENCE TO AFOREMENTIONED DOCUMENTS, LD. COUNSEL POINTED OUT THAT THE ASSESSEE HAD DULY DISCHARGED HIS PRIMARY O NUS OF ESTABLISHING THE IDENTITY, CREDITWORTHINESS AND GENUINENESS OF THE T RANSACTIONS. HE SUBMITTED THAT THERE IS NO LAW WHICH PROHIBITS ANY PERSON FRO M DEPOSITING CASH IN HIS ACCOUNT AND ISSUING CHEQUE ON THE SAME DATE. HE SU BMITTED THAT ONCE THE ASSESSEE HAD DISCHARGED HIS PRIMARY ONUS THE ACTION COULD BE TAKEN AGAINST THE CREDITOR AND NOT THE ASSESSEE. HE, FURTHER, PO INTED OUT THAT THE SMALL 7 ITA NO.3183/DEL/2016 AMOUNTS WERE DEPOSITED IN BANK AND, THEREFORE, NO A DVERSE INFERENCE COULD BE DRAWN. LD. DR RELIED ON THE ORDER OF LD. CIT(A) . 5. I HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PA RTIES AND HAVE PERUSED THE RECORD OF THE CASE. THE ASSESSING OFFIC ER HAD MADE THE ADDITION U/S 68 PRIMARILY FOR TWO REASONS. FIRSTLY , THE AMOUNT WAS DEPOSITED BY CREDITORS IN THEIR ACCOUNTS ON THE SAME DATE VIZ . 14.05.2010 ON WHICH DATE THEY ISSUED THE CHEQUE IN FAVOUR OF THE ASSESS EE AND, SECONDLY, ON THE GROUND THAT ASSESSEE FAILED TO PRODUCE THE CREDITOR S BEFORE ASSESSING OFFICER. AS FAR AS THE FIRST REASONING IS CONCERNE D, NO DOUBT WHENEVER THERE IS PROXIMITY OF DEPOSIT OF CASH AND ISSUANCE OF CHE QUE THEN THE ASSESSING OFFICER RIGHTLY GETS PROMPTED TO EXAMINE THE GENUIN ENESS OF TRANSACTIONS. HOWEVER, THIS FACT PER SE DOES NOT LEAD TO ANY ADVERSE INFERENCE AND ASSESSING OFFICER IS REQUIRED TO EXAMINE ALL THE AT TENDANT CIRCUMSTANCES AND TAKE A HOLISTIC VIEW OF THE ENTIRE TRANSACTION WITH REFERENCE TO THE EVIDENCES FURNISHED BY ASSESSEE BEFORE COMING TO ANY CONCLUSI ON. IF THE ASSESSEE FURNISHES SUFFICIENT EVIDENCES WHICH PRIMA-FACIE ES TABLISH THE CREDITWORTHINESS OF THE CREDITOR VIS--VIS THE AMOU NT ADVANCED BY CREDITORS, THEN, MERELY ON ACCOUNT OF DEPOSIT OF CASH IN THE B ANK ON THE SAME DATE ON WHICH THE CHEQUE WAS ISSUED, NO ADVERSE INFERENCE C AN BE DRAWN BECAUSE THE PRIMARY ONUS OF THE ASSESSEE STANDS DULY DISCHA RGED. IN THE PRESENT CASE 8 ITA NO.3183/DEL/2016 FROM DETAILED SUBMISSIONS OF LD. COUNSEL, IT IS EVI DENT THAT RETURNED INCOME OF BOTH THE CREDITORS FULLY JUSTIFIED THE SMALL SUM S ADVANCED BY THEM. BOTH THE CREDITORS HAD CURRENT ACCOUNT WITH THE ASSESSEE INASMUCH AS THEY HAD RECEIVED RENT FROM ASSESSEE. UNDER SUCH CIRCUMSTAN CES, ALL THE THREE INGREDIENTS FOR ESTABLISHING THE GENUINENESS OF TRA NSACTIONS U/S 68 WERE FULLY MET. 6. THE SECOND REASON ASSIGNED BY ASSESSING OFFICER WAS THAT THE CREDITORS WERE NOT PRODUCED. IN THIS REGARD, I MAY OBSERVE THAT MERELY ON THIS COUNT, THE ADDITION CANNOT BE MADE U/S 68. IN VIEW OF ABOVE DISCUSSIONS, I DIRECT FOR DELETING THE ADDITION MAD E BY ASSESSING OFFICER U/S 68 OF THE ACT. IN THE RESULT, GROUND NO.3 IS ALLOW ED. 7. AS FAR AS GROUND NO.4 IS CONCERNED, AS NOTED EAR LIER, BOTH THE CREDITORS HAD PAID INTEREST TO ASSESSEE WHICH HAS DULY BEEN C REDITED IN THE ACCOUNT STATEMENT FILED BY THE ASSESSEE AND, THEREFORE, I F AIL TO UNDERSTAND AS TO HOW THE DISALLOWANCE COULD BE MADE ON ACCOUNT OF INTERE ST PAYMENT OF RS.25,300/-. THE ENTIRE BASIS ON WHICH THE FINDING S OF ASSESSING OFFICER ARE BASED MISCONCEIVED. THUS, THIS ADDITION IS ALSO DI RECTED TO BE DELETED. IN THE RESULT, GROUND AND 4 IS ALLOWED. 8. AS FAR AS GROUND NO. 5 AND 6 ARE CONCERNED, THE MAIN GRIEVANCE OF ASSESSEE IS THAT DISALLOWANCE OF 1/6 TH OF EXPENSES OUT OF SHOP EXPENSES ON 9 ITA NO.3183/DEL/2016 AD-HOC BASIS AND DISALLOWANCE OF EXPENSES OUT OF CA R AND TELEPHONE EXPENSES ON ACCOUNT OF PERSONAL USER WAS NOT JUSTIF IED. AS FAR AS DISALLOWANCE OUT OF SHOP EXPENSES ARE CONCERNED THE SAME HAS BEEN MADE BECAUSE COMPLETE VOUCHERS COULD NOT BE PRODUCED. I , THEREFORE, DO NOT FIND ANY BASIS FOR INTERFERING WITH THE ORDER OF THE LOW ER AUTHORITIES ON THIS COUNT. SIMILARLY, AS REGARDS DISALLOWANCES OUT OF CAR AND TELEPHONE EXPENSES ARE CONCERNED, IT CANNOT BE DENIED THAT THERE WAS PERSO NAL USER OF BOTH THESE FACILITIES AND, THEREFORE, DISALLOWANCE ON ACCOUNT OF PERSONAL USER WAS CALLED FOR. THE DISALLOWANCE WAS QUITE REASONABLE AND NO INTERFERENCE IS CALLED FOR ON THIS COUNT. IN THE RESULT, GROUND NOS.5 AND 6 A RE DISMISSED. 9. APROPOS GROUND NO.7, THE ASSESSING OFFICER HAS O BSERVED THAT ASSESSEE IS HAVING FAMILY OF TWO MEMBERS. HE ESTIM ATED THE OVERALL EXPENDITURE ON VARIOUS HOUSE HOLD ITEMS AT RS.8,000 /- PER MONTH AND, SINCE, THE ASSESSEE HAD SHOWN RS.60,000/- TOWARDS HOUSE HO LD EXPENSES, THEREFORE, ADDITION OF RS.36,000/- WAS MADE WHICH WAS CONFIRME D BY LD. CIT(A). LD. COUNSEL POINTED OUT THAT ASSESSING OFFICER DID NOT CONSIDER THE WITHDRAWALS MADE BY ASSESSEES WIFE OF RS.30,000/-. IN THIS RE GARD, HE REFERRED TO PAGE 18 WHEREIN THE COPY OF RETURN OF INCOME OF SMT. SAN TOSH DEVI WIFE OF ASSESSEE IS CONTAINED ALONG WITH STATEMENT OF TOTAL INCOME, CAPITAL ACCOUNT AND BALANCE SHEET. THESE PAPERS WERE ALSO FILED BE FORE LD. CIT(A) BUT HE 10 ITA NO.3183/DEL/2016 HAS ALSO NOT CONSIDERED ON THIS COUNT. THUS, THERE WAS TOTAL WITHDRAWAL OF RS.90,000/- AND NOT RS.60,000/- OF HUSBAND AND WIFE TOGETHER. HAVING HEARD BOTH THE PARTIES, I FIND CONSIDERABLE FORCE I N THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE BECAUSE THE TOTAL WITHDRAW ALS TOWARDS HOUSE HOLD EXPENSES WERE RS.90,000/- AND, THEREFORE, NO ADDITI ON WAS CALLED FOR. THUS, THIS GROUND IS ALLOWED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10 TH DAY OF JANUARY, 2017. SD/- (S.V. MEHROTRA) ACCOUNTANT MEMBER DATED : 10-01-2017. SUJEET COPY OF ORDER TO: - 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT 4) THE CIT(A) 5) THE DR, I.T.A.T., NEW DELHI. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, NEW DELHI