ITO, New Delhi V. Sh. Vijay Kumar Jain, New Delhi

ITA 337/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3462 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 21-07-2010
• Assessment Year: misc
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K CHAND
• Keywords: Unexplained investment; Unexplained expenditure; Gift; Valuation report; Assessment record
• Section: 133(6); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `H : NEW DELHI BEFORE SHRI C.L. SETHI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T.A.NOS.337/DEL/2010 ASSESSMENT YEAR : 2004-05 INCOME-TAX OFFICER, SHRI VIJAY KUMAR JAIN, WARD-29(2), NEW DELHI. VS. 1280, VAKILPURA, NEAR J AMA MASJID, DELHI. PAN: AAAPJ1842H. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI N.K. CHAND, SR. DR. RESPONDENT BY : SHRI G.S . GREWAL, CA. O R D E R PER C.L. SETHI, JUDICIAL MEMBER. THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 30 TH NOVEMBER, 2009 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) IN THE MATTER OF AN ASSESSMENT MADE UNDER SECTION 147/143(3) OF T HE INCOME-TAX ACT, 1961 (THE ACT), FOR THE ASSESSMENT YEAR 2004-05. 2. THE FIRST GROUND IS AGAINST THE DELETION OF ADDI TION OF RS.8 LAKH MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOANS TAKEN BY THE ASSESSEE. IN THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD TAKEN LOAN OF RS.5,00,000/- A ND RS.3,00,000/- FROM TWO PERSONS NAMELY, FROM SHRI RAJESH KUMAR, PROPRIETOR A.K. INVESTMENT; AND 2 SHRI RAVI CHAUDHARY, PROPRIETOR M/S. CAP SECURITIES , RESPECTIVELY DURING THE YEAR UNDER CONSIDERATION. THE ASSESSING OFFICE R MADE THE ADDITION OF THE AFORESAID LOAN AMOUNT TREATING THE SAME TO BE U NEXPLAINED ON THE GROUND THAT THOUGH THE ASSESSEE HAD SUBMITTED CONFIRMATION LETTERS FROM THE CREDITORS BUT THE SAME HAVE NOT BEEN AUTHENTICATED BY THE CREDITORS IN REPLY TO THE LETTERS ISSUED BY THE ASSESSING OFFICER U/S 133(6) OF THE ACT. 3. ON APPEAL, THE LEARNED CIT(A) DELETED THE ADDITI ON BY OBSERVING THAT THE ASSESSEE HAS DISCHARGED ITS BURDEN BY ADDUCING EVIDENCES SUCH AS CONFIRMATIONS FROM THE LENDERS, THEIR INCOME-TAX AS SESSMENT DETAILS, COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME BY THE CREDITOR S, COPY OF PAN CARD AND ALSO LAND DOCUMENT WHERE THE AMOUNT TAKEN FROM THE CREDITORS THROUGH PAY ORDER IS MENTIONED. HENCE, THE DEPARTMENT IS I N APPEAL. 4. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY GON E THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO GONE THROUG H THE VARIOUS DOCUMENTS PLACED IN THE PAPER BOOK FILED BY THE ASSESSEE. IN THIS CASE, THE ASSESSING OFFICER HAS TREATED THE TRANSACTION OF ACCEPTING LO AN OF RS.5,00,000/- AND RS.3,00,000/- AGGREGATING TO RS.8,00,000/- TAKEN BY THE ASSESSEE FROM SHRI RAJESH KUMAR AND SHRI RAVI CHAUDHARY RESPECTIVELY F OR THE REASONS THAT BOTH THE CREDITORS DID NOT GIVEN ANY REPLY TO THE L ETTERS ISSUED UNDER SEC. 133(6) BY THE ASSESSING OFFICER. HOWEVER, THE AO H AS NOT BROUGHT ANY 3 MATERIAL ON RECORD TO DISBELIEVE THE VARIOUS DOCUME NTS AND EVIDENCES FILED BY THE ASSESSEE IN SUPPORT OF THE LOAN TAKEN. IT I S NOT IN DISPUTE THAT IN THE COURSE OF THE ASSESSMENT PROCEEDINGS THE ASSESSEE F URNISHED CONFIRMATION LETTERS FROM THE CREDITORS AND THEIR INCOME-TAX ASS ESSMENT DETAILS SUCH AS COPY OF ACKNOWLEDGEMENT OF RETURNS FILED IN THE ASS ESSMENT YEAR 2003-04 AND COPY OF PAN CARD ISSUED TO THEM BY THE DEPARTME NT. IT IS ALSO NOT IN DISPUTE THAT THE PAYMENT HAS BEEN RECEIVED THROUGH BANKING CHANNEL. THE ASSESSEE HAS PURCHASED A PROPERTY FOR CONSIDERATION OF RS.8,00,000/- IN RESPECT OF WHICH THE PAYMENTS WERE MADE BY THE ASSE SSEE VIDE SAME CHEQUES OR PAY ORDERS ISSUED BY THE CREDITORS IN THE NAME O F THE SELLER OF THE PROPERTY AS PER ASSESSEES REQUEST. THE COPY OF AGREEMENT T O PURCHASE THE PROPERTY WAS ALSO FILED BEFORE THE AO WHERE THE PAYMENT FOR CONSIDERATION OF RS.8,00,000/- HAS BEEN SHOWN TO HAVE BEEN PAID BY P AY ORDERS, WHICH HAVE BEEN ISSUED BY THE PERSONS WHO HAD ADVANCED THE LOA NS TO THE ASSESSEE FOR THE PURPOSE OF PURCHASING THE PROPERTY. IN THE CON FIRMATION LETTERS GIVEN BY THE CREDITORS, THE CREDITORS HAVE CLEARLY MENTIONED THAT THE PAY ORDERS HAVE BEEN ISSUED OR GIVEN IN FAVOUR OF ONE MR. PRAMOD GU PTA AS PER REQUEST FROM THE ASSESSEE. IT IS NOT IN DISPUTE THAT THE PROPER TY WAS PURCHASED BY THE ASSESSEE FROM MR. PRAMOD GUPTA. ALL THESE DETAILS WERE AVAILABLE BEFORE THE ASSESSING OFFICER BUT THE AO HAS NOT MADE ANY ENQUI RY TO DISPROVE THE SAME 4 EXCEPT BY ISSUING LETTERS UNDER SECTION 133(6) TO T HE LENDERS. IN CASE THE AO HAD ANY DOUBT ABOUT THE GENUINENESS OF THE CONFIRMA TION LETTERS ISSUED BY THE CREDITORS AND THEIR INCOME-TAX DETAILS, THE AO SHOULD HAVE MADE ENQUIRY FROM THEIR ASSESSMENT RECORDS OR SHOULD HAVE ISSUED SUMMONS TO THE CREDITORS UNDER SEC. 131 FOR THEIR STATEMENTS BUT T HE SAME HAS NOT BEEN DONE BY THE AO EXCEPT SIMPLY REJECTING THE ASSESSEES EX PLANATION WITHOUT THERE BEING ANY MATERIAL BROUGHT ON RECORD TO THE CONTRAR Y. WE, THEREFORE, UPHOLD THE ORDER OF THE CIT(A) IN DELETING THE ADDITION AN D THUS, THIS GROUND RAISED BY THE REVENUE IS REJECTED. 5. GROUND NO.2 IS DIRECTED AGAINST THE CIT(A)S ORD ER IN DELETING THE ADDITION OF RS.5,00,000/- MADE BY THE ASSESSING OFF ICER ON ACCOUNT OF UNEXPLAINED EXPENDITURE ON THE MARRIAGE OF ASSESSEE S DAUGHTER. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF EXPENSES INCURRED ON THE OCCASION OF MARR IAGE OF HIS DAUGHTER TAKEN PLACE ON 04.05.2003. IN REPLY THERETO, THE A SSESSEE SUBMITTED A WRITTEN REPLY THAT THE ASSESSEE SPENT NOMINAL AMOUNT OF RS. 2,00,000/- TOWARDS MARRIAGE EXPENSES OF HIS DAUGHTER AND ALL THESE EXP ENSES WERE MET BY THE ASSESSEE AND HIS WIFE AND OTHER FAMILY MEMBERS OUT OF THEIR DRAWINGS FROM THEIR REGULAR INCOME AS WELL AS FROM THE VARIOUS SM ALL GIFTS RECEIVED FROM VARIOUS RELATIVES. THE ASSESSEE HAD ALSO GIVEN DET AILS OF THE TOTAL INCOME OF 5 FAMILY MEMBERS EARNED DURING THE ASSESSMENT YEARS 2 004-05 TO 2006-07. HOWEVER, THE ASSESSEES EXPLANATION WAS REJECTED BY THE AO MERELY BY OBSERVING AS UNDER:- SINCE THE ASSESSEE DID NOT EXPLAIN THE AMOUNT AND SOURCE OF MARRIAGE EXPENSES, ON THE OCCASION OF THE MARRIAGE, I HAVE NO OTHER ALTERNATIVE BUT TO ESTIMATE THE UNEXP LAINED EXPENDITURE AT RS.5 LAKHS. THIS IS ADDED AS INCOME FRO THE ASSESSMENT YEAR 2004-05. 6. ON AN APPEAL, THE LEARNED CIT(A) DELETED THE ADD ITION BY OBSERVING THAT THE AO DID NOT HAVE ANY MATERIAL OR CASE FOR M AKING THE ESTIMATED ADDITION OF RS.5,00,000/- ON ACCOUNT OF MARRIAGE E XPENSES. THE CIT(A) FURTHER OBSERVED THAT THE AO MADE THE ADDITION ARBI TRARILY ON AD HOC BASIS BASED ON CONJECTURES AND SURMISES WITHOUT BRINGING ANY MATERIAL ON RECORD TO ESTABLISH THAT THE ASSESSEE HAS INCURRED EXPENDI TURE OF RS.5,00,000/- TOWARDS MARRIAGE OF HIS DAUGHTER. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. IN THE COURSE OF HEARING OF THIS APPEAL, T HE LEARNED DR MERELY RELIED UPON THE ASSESSING OFFICERS ORDER. THE LEARNED CO UNSEL FOR THE ASSESSEE ON THE OTHER HAND, INVITED OUR ATTENTION TO THE DETAIL ED SUBMISSIONS MADE BEFORE THE AO AS WELL AS BEFORE THE CIT(A) IN RESPECT OF E XPENSES INCURRED TOWARDS MARRIAGE OF ASSESSEES DAUGHTER. 6 7. AFTER CONSIDERING THE TOTALITY OF FACTS AND CIRC UMSTANCES OF THE CASE, WE FIND THAT THE AO HAS NOT BEEN ABLE TO MAKE OUT A CASE TO PROVE AND ESTABLISH THAT THE ASSESSEE HAD ACTUALLY INCURRED A N EXPENDITURE OF RS.5,00,000/- TOWARDS MARRIAGE EXPENSES OF HIS DAUG HTER. THE AO HAS NOT GIVEN ANY BASIS TO ESTIMATE THE MARRIAGE EXPENSES A T RS.5,00,000/- AS AGAINST RS.2,00,000/- CLAIMED BY THE ASSESSEE. THE SOURCE OF RS.2,00,000/- SPENT TOWARDS VARIOUS ITEMS OF MARRIAGE CEREMONY, HAS BEE N PROPERLY EXPLAINED BY THE ASSESSEE IN HIS DETAILED REPLY FILED BEFORE THE AO, WHICH HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN HIS ORDER. IN THIS VIEW OF THE MATTER, WE, THEREFORE, DO NOT FIND ANY BASIS TO SUSTAIN ADD ITION MADE BY THE AO. THE ORDER OF THE LEARNED CIT(A) ON THIS ISSUE IS THUS U PHELD. 8. THE NEXT GROUND IS AGAINST THE CIT(A)S ORDER IN DELETING THE ADDITION OF RS.12,00,000/- MADE BY THE AO ON ACCOUNT OF UNEX PLAINED INVESTMENT IN PURCHASE OF PROPERTY BEING FLAT NO.303, MAYURDHAWAJ APARTMENTS, PATPAR GANJ, DELHI. AS AGAINST RS.8,00,000/- SHOWN AS CON SIDERATION IN THE PURCHASE DEED ON ACCOUNT OF PURCHASE OF FLAT NO.S-3 03, MAYURDHAWAJ APARTMENTS, PATPAR GANJ, DELHI FROM ONE MR. PRAMOD GUPTA, THE AO HAD TAKEN THE CONSIDERATION AMOUNT AT RS.20,00,000/- ON THE BASIS OF VALUATION REPORT OF THE VALUATION OFFICER OBTAINED UNDER SECT ION 142A OF THE ACT. THE AO, THEREFORE, MADE THE ADDITION OF DIFFERENCE OF R S.12,00,000/- AS 7 UNEXPLAINED INVESTMENT IN THE PROPERTY. THE AO FUR THER STATED THAT THE ASSESSEE DID NOT COOPERATE WITH THE VALUATION OFFIC ER IN SPITE OF 3 OPPORTUNITIES GIVEN BY HIM. HOWEVER, ON APPEAL, TH E LEARNED CIT(A) DELETED THE ADDITION BY OBSERVING THAT THE AO HAS F AILED TO BRING ANY COGENT MATERIAL OF UNDER VALUATION OF THE PROPERTY SO AS T O CALL FOR ANY ADDITION ON THAT ACCOUNT. 9. THE LEARNED DR MERELY RELIED UPON THE AOS ORDER . THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON HIS SUBMISSION S MADE BEFORE THE AO AS WELL AS BEFORE THE CIT(A). 10. BOTH THE PARTIES WERE HEARD AND MATERIAL ON REC ORD WAS PERUSED. IT IS A CASE OF PURCHASE OF PROPERTY BY REGISTERED SALE D EED. A COPY OF SALE DEED OF PROPERTY PURCHASED BY THE ASSESSEE IS PLACED BEF ORE US. IN THE PURCHASE DEED, IT HAS BEEN CLEARLY MENTIONED THAT THE SELLER HAS SOLD THE PROPERTY TO THE ASSESSEE FOR A CONSIDERATION OF RS.8,00,000/-. IT IS NOT THE CASE OF THE AO THAT THE ASSESSEE HAS MADE FURTHER INVESTMENT IN TH E PROPERTY BY WAY OF ANY ADDITIONAL CONSTRUCTION OR IMPROVEMENT TO THE HOUSE PURCHASED. IT IS ALSO NOT THE CASE WHERE THE CONSIDERATION SHOWN IN THE P URCHASE DEED IS BELOW THE PRICE FIXED BY THE GOVERNMENT FOR THE STAMP DUT Y PURPOSES. THE AO HAS MERELY MADE THE ADDITION ON THE BASIS OF VALUAT ION REPORT SUBMITTED BY THE VALUATION OFFICER BUT NO MATERIAL HAS BEEN BROU GHT ON RECORD TO ESTABLISH 8 THAT THE ASSESSEE HAS PAID ANY AMOUNT OVER AND ABOV E THE AMOUNT MENTIONED IN THE SALE AGREEMENT. THE AO HAS NOT EXAMINED THE SELLER BEFORE MAKING ANY ADDITION ON ACCOUNT OF ADDITIONAL CONSIDERATION PAID BY THE ASSESSEE OVER AND ABOVE THE AMOUNT MENTIONED IN THE SALE AGREEMEN T. IN THIS VIEW OF THE MATTER, WE THEREFORE, FIND THAT THE CIT(A) HAS RIGH TLY DELETED THE ADDITION ON THIS COUNT. THE ORDER OF THE CIT(A) IS THUS UPHELD . 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. THIS DECISION IS PRONOUNCED IN THE OPEN COURT ON 30 TH JULY, 2010. SD/- SD/- (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30 TH JULY, 2010. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.