ITO, New Delhi V. Ramesh Gautam, New Delhi

ITA 3541/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 5594 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2009
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 25-01-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 12-08-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P C
• Assessee Lawyers: NARESH SODHANI
• Keywords: Unexplained investment; Income from undisclosed sources; Opportunity of being heard; Notional interest
• Section: 271(1)(c); 69B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI B.P. JAIN, ACCOUNTANT MEMBER ITA NO. 3541/DEL/2009 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD 34(2), NEW DELHI. VS. SHRI RAMESH GAUTAM, C/O SHRI S.C. SINGH, 1/3289, RAM NAGAR EXTN., SHAHDARA, DELHI. PAN : AFVPG 3577 Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI NARESH SODHANI, CA REVENUE BY : SHRI P.C. PANCHOLI, SR. DR. ORDER THIS IS AN APPEAL FILED BY THE REVENUE. IT IS DIR ECTED AGAINST THE ORDER OF THE CIT (A) DATED 29 TH MAY, 2009 FOR ASSESSMENT YEAR 2006-07. GROUNDS OF APPEAL READ AS UNDER:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.6,000/ - & RS.7,488/- MADE BY THE AO ON ACCOUNT OF PERSONAL US E OF TELEPHONE & VEHICLES RESPECTIVELY. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.6,000/ - & RS.5,000/- & RS.6,000/- MADE BY THE AO ON ACCOUNT O F STAFF WELFARE EXPENSES, OFFICE MAINTENANCE EXPENSES AND ELECTRICITY EXPENSES RESPECTIVELY BEING NOT SUPPORT ED BY THE VOUCHERS. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.1,00,0 00/- MADE ITA NO.3541/DEL/2009 2 BY AO ON ACCOUNT OF SHORT TERM CAPITAL GAIN EARNED ON THE SALE OF INDUSTRIAL PLOT NOT DECLARED IN THE RETURN. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.60,000 /- MADE BY THE AO ON ACCOUNT OF INTEREST INCOME EARNED ON THE ADVANCES/LOAN.. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.1,00,0 00/- MADE BY THE AO ON ACCOUNT OF UNSECURED LOAN U/S 68 OF TH E IT ACT, 1961 AS THE ASSESSEE FAILED TO FURNISH RELEVANT EVI DENCES. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LEA RNED CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.6,94,3 22/- MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME U/S 69B OF THE IT ACT, 1961. LEARNED CIT (A) ERRED IN LAW IN ACCEPTING THE ADDIT IONAL EVIDENCES DURING THE COURSE OF APPELLATE PROCEEDING S WITHOUT PROVIDING AN OPPORTUNITY TO THE AO WHICH IS A VIOLE NCE OF RULE 46A(3) OF THE INCOME TAX RULES, 1962. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIGHT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) OF APPEA L AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEAL. 2. APROPOS GROUND NO.1, WHICH IS WITH REGARD TO DIS ALLOWANCE MADE ON ACCOUNT OF PERSONAL USE OF TELEPHONE AND VEHICLES, THE AO HAS MADE DISALLOWANCE ON ACCOUNT OF PERSONAL USER OF TELEPHO NE AND VEHICLES @ 25% WHICH HAS BEEN REDUCED TO 10% BY CIT (A). THE DEPA RTMENT IS AGGRIEVED, HENCE, IN APPEAL. 3. LD. DR RELIED UPON THE ORDER OF AO WHEREAS THE L D. AR OF THE ASSESSEE HAS RELIED UPON THE ORDER OF THE CIT (A). 4. IN THIS VIEW OF THE SITUATION, AFTER HEARING BOT H THE PARTIES, WE DECLINE TO INTERFERE AS IT IS A CASE OF MERE ESTIMATION. THIS GROUND OF THE REVENUE IS DISMISSED. ITA NO.3541/DEL/2009 3 5. APROPOS GROUND NO.2 WHICH IS WITH REGARD TO DISA LLOWANCE MADE ON AD- HOC BASIS ON ACCOUNT OF STAFF WELFARE EXPENSES AND OFFICE MAINTENANCE AND ELECTRICITY EXPENSES, ETC., THE DISALLOWANCE HAS BE EN DELETED BY CIT (A) IN TOTALITY ON THE GROUND THAT THIS DISALLOWANCE HAS BEEN MADE ON AD HOC BASIS ONLY. WE DECLINE TO INTERFERE IN SUCH FINDINGS OF CIT (A) T HEREFORE, THIS GROUND OF THE REVENUE IS ALSO DISMISSED. 6. APROPOS GROUND NO.3, THE AO NOTICED THAT THE ASS ESSEE DID NOT DISCLOSE SHORT-TERM CAPITAL GAIN ACCRUED TO HIM IN RESPECT O F SALE OF PLOT AT UPSIDC. THE SAID PLOT WAS PURCHASED BY THE ASSESSEE FOR RS.11, 50,000/- AND IT WAS SOLD FOR RS.12,50,000/-, THEREFORE, SHORT-TERM CAPITAL GAIN ACCRUED TO ASSESSEE OF A SUM OF RS.1 LAC. ACCORDING TO THE AO, THE SAME WAS NOT DECLARED BY THE ASSESSEE, THEREFORE, HE ADDED THE SUM OF RS.1 LAC TO THE INCO ME OF THE ASSESSEE. 7. BEFORE CIT (A) IT WAS POINTED OUT THAT IT WAS ON LY DUE TO A MISTAKE THE SAID SURPLUS AMOUNT WAS CREDITED TO COMMISSION ACCOUNT A ND, THEREFORE, SEPARATE ADDITION OF RS.1 LAC WAS UNCALLED FOR AS THE REQUIS ITE INCOME WAS DECLARED IN COMMISSION ACCOUNT. THE RELEVANT DOCUMENTS WERE PR ODUCED BEFORE THE CIT (A) AND UPON BEING SATISFIED THAT THE SAID AMOUNT WAS C REDITED IN THE COMMISSION ACCOUNT, THE CIT (A) HAS DELETED THE ADDITION. 8. LD. DR HAS RELIED UPON THE ORDER OF AO AND SUBMI TTED THAT THE ASSESSEE DID NOT SHOW THE SAID SURPLUS WHICH WAS ASSESSABLE AS SHORT-TERM CAPITAL GAIN AND, THEREFORE, THE AO WAS RIGHT IN MAKING THE ADDI TION. HE SUBMITTED THAT THE ASSESSEE DID NOT SUBMIT ANY DETAIL BEFORE THE AO AN D, THEREFORE, THE ISSUE THAT WHETHER SUCH AMOUNT WAS CREDITED TO COMMISSION ACCO UNT HAS NOT BEEN EXAMINED BY THE AO. HE SUBMITTED THAT AT LEAST ASS ESSMENT ORDER IS SILENT ABOUT THAT. THUS, IT WAS SUBMITTED THAT ADDITION HAS INC ORRECTLY BEEN DELETED BY THE CIT (A) AND THE SAME SHOULD BE RESTORED. IN THE ALTERN ATIVE, IT WAS SUBMITTED THAT THIS ASPECT MAY BE SENT BACK TO THE FILE OF AO FOR VERIF ICATION THAT WHETHER OR NOT THE ITA NO.3541/DEL/2009 4 SAID AMOUNT WAS CREDITED IN THE COMMISSION ACCOUNT MAINTAINED BY THE ASSESSEE AND FORMING PART OF THE PROFIT AND LOSS A CCOUNT. 9. ON THE OTHER HAND, RELYING UPON THE FINDINGS GIV EN BY CIT (A), IT WAS SUBMITTED THAT THE AMOUNT OF RS.1 LAC WAS ALSO INCL UDED IN THE INCOME IN COMMISSION ACCOUNT, THEREFORE, SEPARATE ADDITION WA S NOT CALLED FOR AND THE CIT (A) HAS RIGHTLY DELETED THE ADDITION. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS IN THE LIGHT OF THE MATERIAL PLACED BEFORE US. IT IS CLEAR THAT THE ASS ESSEE DID NOT SHOW THE SAID AMOUNT OF RS.1 LAC AS INCOME ARISING OUT OF CAPITAL GAIN. ACCORDING TO THE FINDINGS OF AO A SUM OF RS.1 LAC HAS NOT BEEN DECLA RED BY THE ASSESSEE AS HIS INCOME. HOWEVER, KEEPING IN VIEW THE FINDINGS OF C IT (A) AND THE SUBMISSION OF THE ASSESSEE THAT THE SAID SURPLUS AMOUNT FORMS PAR T OF COMMISSION INCOME, WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE T O THE FILE OF AO WITH A DIRECTION THAT IF THE SAID AMOUNT OF RS.1 LAC IS CREDITED TO THE COMMISSION ACCOUNT, THEN NO SEPARATE ADDITION SHOULD BE MADE IN RESPECT OF SHOR T-TERM CAPITAL GAIN ARISING OUT OF SALE OF THE SAID PLOT. WITH THESE DIRECTIONS, W E RESTORE THIS ADDITION TO THE FILE OF AO. 11. APROPOS GROUND NO.4, THE AO HAS MADE THIS ADDIT ION BY MAKING THE FOLLOWING OBSERVATIONS:- FURTHER, AS MENTIONED ABOVE, THE ASSESSEE HAS ADVA NCED A SUM OF RS.8,00,520/- (250520 + 250000 +300000) TO SEEM AND NARESH ETC. NO INCOME FROM THIS ADVANCES/LOANS HAS BEEN S HOWN BY THE ASSESSEE EITHER ALONG WITH THE RETURN OF INCOME OR DURING THE COURSE OF ASSESSMENT PROCEEDINGS. NO SATISFACTORY EXPLANATION HAS BEEN OFFERED BY THE ASSESSEE IN THIS CONNECTION . EVEN THE NATURE OF ADVANCEMENT OF THESE AMOUNTS HAS NOT BEEN FURNISHED. KEEPING IN VIEW THE FACTS OF THE CASE, AN AMOUNT OF RS.60,000/-IS ADDED TO THE INCOME OF THE ASSESSEE AS INTEREST FRO M THESE LOANS/ADVANCES. I AM, THEREFORE, SATISFIED THAT IT IS A FIT CASE FOR INITIATING PROCEEDINGS U/S 271(1)(C) FOR CONCEALMEN T OF INCOME. ITA NO.3541/DEL/2009 5 12. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. IT IS NOT A CASE OF DISALLOWANCE OF INTEREST CLAIMED BY THE ASSESSEE ON THE GROUND THAT INTEREST BEARING FUNDS WERE UTILIZED BY THE ASSESSEE FOR THE NON-BUSINESS PURPOSES. IT APPEARS TO BE A CASE WHERE NOTIONAL INTEREST INCOME IS BEING ADDED BY THE AO WHICH IS NOT IN ACCORDANCE WITH THE LAW, THEREFORE, WE SEE NO JUSTIFICATION IN INTERFERING IN DELETION OF THIS ADDITION. THIS GRO UND OF THE REVENUE IS DISMISSED. 13. APROPOS GROUND NO.5, THIS ISSUE IS DISCUSSED BY THE AO AT PAGE 4 OF THE PAPER BOOK. THE OBSERVATIONS OF AO ARE AS UNDER:- THE ASSESSEE HAD NOT FILED HIS BALANCE SHEET ALON G WITH THE RETURN OF INCOME. HOWEVER, DURING THE COURSE OF AS SESSMENT PROCEEDINGS, THE ASSESSEE, VIDE HIS REPLY DATED 25. 11.2008, HAS FURNISHED A BALANCE SHEET. AS PER THIS BALANCE SHE ET, THE ASSESEE HAS MENTIONED UNSECURED LOANS AT RS.20,75,000/- COMPRISING OF RS.10,75,000/- AND FURTHER RS.10,00,0 00/- AS LOAN FROM SECURACROP SECURITIES INDIA PVT. LTD. THE ASS ESSEE WAS ASKED, VIDE NOTE SHEET ENTRY DATED 25.11.2008, TO F URNISH EVIDENCE/CONFIRMATION IN THIS CONNECTION PARTICULAR LY COMPLETE DETAILS/EVIDENCE OF RS.10,00,000/- RECEIVED FROM SE CURACROP SECURITIES INDIA PVT. LTD. THE AR OF THE ASSESSEE FINALLY APPEARED ON 8.12.2008 AND FILED DETAILS AND DOCUMENTS WHICH ALSO INCLUDED ANOTHER BALANCE SHEET. AS PER THIS BALANCE SHEET, ALTHOUGH THE TOTAL UNSECURED LOANS HAVE BEEN SHOWN AT RS.20,75,0 00/-, BUT THE NAME OF SECURACROP SECURITIES INDIA PVT. LTD. HAS BEEN DELETED (COPY OF THE BALANCE SHEET FILED VIDE LETTER DATED 25.11.2008 AND SUBSEQUENTLY VIDE LETTER DATED 8.12.2008 ARE ENCLOS ED AS ANNEXURE A & B). THE ASSESSEE HAS FURNISHED ONLY PHOTOCOPIE S OF THE CONFIRMATIONS FROM VARIOUS PERSONS. THE DETAILS/EVIDENCE/CONFIRMATIONS FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS HAVE BEEN GONE THROUGH. NO CONFIRMATION HAS BEEN FILED BY THE ASSESSEE ROM SEC URACROP SECURITIES INDIA PVT. LTD., IT WAS ON THE PART OF THE ASSESSEE TO FURNISH EVIDENCE IN SUPPORT OF HIS SUBMISSIONS, WHI CH HE HAS FAILED TO FURNISH. IT IS ALSO NOTICED THAT THE ASSESSEE H AS SHOWN HUGE INVESTMENT IN THE SHAPE OF IMMOVABLE PROPERTIES/INV ESTMENTS /ADVANCE/MUTUAL FUNDS. UNDER THESE CIRCUMSTANCES, I AM LEFT WITH NO OTHER ALTERNATIVE BUT TO HOLD THAT THE AMOUNT O F RS.10,00,000/- IS NOTHING BUT THE ASSESSEES INCOME FROM UNDISCLOSED SOURCES AND IS TAXED IN THE HANDS OF THE ASSESSEE U/S 68 OF THE AC T. I AM, THEREFORE, SATISFIED THAT IT IS A FIT CASE FOR INIT IATING PROCEEDINGS U/S 271(1)(C) FOR CONCEALMENT OF INCOME. ITA NO.3541/DEL/2009 6 14. THE CIT (A) HAS DELETED THIS ADDITION ON THE GR OUND THAT THE SAID CREDIT OF RS.10 LAC BELONG TO ONE SHRI ALOK SINGH, B-58, SECT OR GAMA I, GREATER NOIDA, UP. IT IS FOUND FROM THE ASSESSMENT ORDER THAT IT HAS NEVER BEEN THE CASE OF ASSESSEE BEFORE THE AO THAT THE SAID CREDIT WAS BEL ONGING TO THE SAID SHRI ALOK SINGH. FRESH EVIDENCES WERE TAKEN INTO CONSIDERATI ON BY THE CIT (A) TO CONSIDER THIS ISSUE AND AFTER CONSIDERING THOSE EVIDENCES, T HE CIT (A) HAS COME TO THE CONCLUSION THAT THE ASSESSEE HAS BEEN ABLE TO ESTAB LISH THAT THE SAID CREDIT WAS GENUINE. IN THE ORDER OF CIT (A), THERE IS NO DISC USSION ABOUT SENDING THIS MATTER BACK TO THE AO SEEKING HIS COMMENTS. LD. AR OF THE ASSESSEE ALSO STATED THAT LD. CIT (A) HAS NOT CALLED FOR REMAND REPORT FROM T HE AO. ACCORDING TO THE PROVISIONS OF RULE 46A IF ANY EVIDENCE IS FILED BY THE ASSESSEE FOR THE FIRST TIME BEFORE THE CIT (A) WHICH WAS NOT FURNISHED TO THE A O HAS TO BE FILED WITH AN APPLICATION AND LD. CIT (A) IS REQUIRED TO PASS A S PEAKING ORDER UPON THAT TO STATE THAT IN WHAT CIRCUMSTANCES SUCH EVIDENCE WAS ADMISSIBLE. CONSIDERING THE ENTIRETY OF THE FACTS AND TAKING INTO CONSIDERATION THE FACT THAT BEFORE AO IT WAS THE CLAIM OF THE ASSESSEE THAT SAID CREDIT BELONG T O SECURACROP SECURITIES INDIA PVT. LTD. AND LATER ON THAT STAND WAS CHANGED TO ST ATE THAT THE SAID DEPOSIT BELONG TO SHRI ALOK SINGH, WE CONSIDER IT JUST AND PROPER TO RESTORE THIS ISSUE TO THE FILE OF AO FOR DECIDING AFRESH AS PER PROVISION S OF LAW AFTER PROVIDING THE ASSESSEE A REASONABLE OPPORTUNITY OF HEARING. WE D IRECT ACCORDINGLY. THIS GROUND OF THE REVENUE IS ALLOWED FOR STATISTICAL PU RPOSES. 14. APROPOS GROUND NO.6, ADDITION OF RS.6,94,322/- WAS MADE BY THE AO ON THE GROUND THAT A VEHICLE KNOWN AS CHEVROLET TAVERA B-3 WAS PURCHASED IN THE NAME OF WIFE OF THE ASSESSEE NAMELY SMT. SMITA BHAR TI AND THE SAID AMOUNT WAS NOT FOUND TO BE DEBITED IN THE BOOKS OF THE ASSESSE E. IT HAS BEEN THE CONTENTION OF THE ASSESSEE THAT THE SAID VEHICLE DID NOT BELON G TO THE ASSESSEE AND IT WAS IN THE NAME OF HIS WIFE WHO IS SEPARATELY BEING ASSESS ED TO INCOME TAX AND, IN THESE CIRCUMSTANCES, THE CIT (A) HAS DELETED THE AD DITION. ITA NO.3541/DEL/2009 7 15. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. THE ADDITION HAS BEEN DELETED BY THE CIT (A) ONLY ON THE GROUND THAT THE SAID VEHICLE WAS IN THE NAME OF WIFE OF THE ASSESSEE WHO WAS SEPARATELY BEING AS SESSED AND HER CONFIRMATION WAS ALSO FURNISHED, BUT ALL THESE EVIDENCES WERE FU RNISHED BY THE ASSESSEE BEFORE THE CIT (A) ONLY AND NONE OF THESE EVIDENCES WAS SUBMITTED BEFORE THE AO. FOR THE SAKE OF CLARITY, THE FINDINGS OF CIT ( A) ON THIS ISSUE ARE BEING REPRODUCED BELOW:- 15.1 THE APPELLANT ON THE OTHER HAND HAS FURNISHED THE RELEVANT DETAILS IN THIS REGARD, WHICH HAVE BEEN PLACED ON R ECORD. IT HAS BEEN SUBMITTED THAT THE ASSESSEE NEVER OWNED AND PU RCHASED THE CHEVROLET TAVERA CAR FOR WHICH THE LD. ASSESSING O FFICER HAS MADE ADDITION OF RS.6,94,232/- ON THE ASSUMPTION TH AT THIS CAR WAS PURCHASED BY THE ASSESSEE IN THE NAME OF HIS WIFE S MITA BHARTI ON 27.04.2005 FROM UNEXPLAINED INVESTMENT. IT IS STAT ED THAT ASSESSEE NEVER PURCHASED THE ABOVE MENTIONED VEHICLE AND DID NOT OWN THE SAME AT ANY POINT OF TIME. NOWHERE EVEN A SINGLE P ENNY WAS INVESTED BY THE ASSESSEE IN PURCHASING OF THE CAR. SMITA BHARTI, WIFE OF THE ASSESSEE, IS SEPARATELY ASSESSED TO INC OME-TAX AT PAN AWRPG3819C. HER CONFIRMATION HAS BEEN FURNISHED IN SUPPORT WHICH HAS BEEN PLACED ON RECORD. 15.2. IN VIEW OF THE ABOVE DISCUSSION, IT IS HEREBY HELD THAT THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING ADDIT ION U/S 69B AS ABOVE. THE ADDITION OF RS.6,94,232/- MADE ON THIS COUNT IS, ACCORDINGLY, HEREBY DELETED. 16. IT HAS ALSO BEEN THE GROUND OF REVENUE THAT ALL THE ADDITIONS HAVE BEEN DELETED BY THE CIT (A) BY CONSIDERING THE ADDITIONA L EVIDENCES FOR WHICH NO OPPORTUNITY HAS BEEN PROVIDED TO THE AO WHICH IS IN VIOLATION OF RULE 46A (3) OF THE IT RULES, 1962. THEREFORE, KEEPING IN VIEW SUC H SUBMISSION OF THE REVENUE, WE ARE OF THE OPINION THAT THIS MATTER IS ALSO REQU IRED TO BE RESTORED BACK TO THE FILE OF AO FOR DECISION AFRESH AS PER LAW AFTER PRO VIDING THE ASSESSEE PROPER OPPORTUNITY OF BEING HEARD. WE DIRECT ACCORDINGLY. THIS GROUND IS ALSO ALLOWED FOR STATISTICAL PURPOSES ONLY. ITA NO.3541/DEL/2009 8 17. IN THE RESULT, THE APPEAL FILED BY THE DEPARTME NT IS PARTLY ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. . 18. THE ORDER PRONOUNCED IN THE OPEN COURT ON 29.01 .2010. [B.P. JAIN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 29.01.2010. DK COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES