Anand Mishra, New Delhi V. ACIT, New Delhi

ITA 3621/DEL/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5185 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 05-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R C D AN DE
• Keywords: Unexplained expenditure; Principle of natural justice
• Section: 69C; 69; 144

Judgement Text

1 ITA NO. 3621/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: A NEW DELHI BEFORE SHRI R. K. PANDA, ACCOUNTANT MEM BER AND MS SUCHITRA KAMBLE, JUDI CIAL MEMBER ITA NO. 3621/DEL/201 7 ( A.Y 2012-13) ANAND MISHRA KASHYAP CHAMBERS, D 298, SARVODAYA ENCLAVE NEW DELHI ALYPM5923H (APPELLANT) VS ACIT CIRCLE-30(1) NEW DELHI (RESPONDENT) APPELLANT BY SHRI PRITESH KAPUR, SH. SHAUNAK KASHYAP, ADVS. RESPONDENT BY SH. R. C. DANDE, SR. DR ORDER PER SUCHITRA KAMBLE, JM THE APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORD ER DATED 31/01/2017 PASSED BY CIT(A)-10, NEW DELHI. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE BEST JUDGMENT ASSESSMENT APPLIED BY THE ASSESSMENT OFFIC ER, UNDER SECTION 144 OF THE INCOME TAX ACT, 1961, IS ERRONEOUS AS THE BE ST JUDGMENT ASSESSMENT MUST BE APPLIED ONLY IN CASES OF NON-CO- OPERATION ON THE PART OF THE ASSESSEE OR WHEN THE ASSESSEE IS IN DEFAULT AS REGARDS SUPPL YING INFORMATION. DATE OF HEARING 03.08.2017 DATE OF PRONOUNCEMENT 18.08.2017 2 ITA NO. 3621/DEL/2017 2. THAT IN FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE BEST JUDGMENT ASSESSMENT APPLIED BY THE ASSESSMENT OFFIC ER IS ERRONEOUS AND AS SUCH THE ORDER PASSED BY THE LEARNED COMMISSIONER O F INCOME TAX - APPEALS (HEREI NAFTER REFERRED TO AS THE ' ) IS NOT APPLICABLE TO THE CASE OF THE APPELLANT HEREIN AND AS SUCH THE IMPUGNED ORDER DATED 31.01.2 017 DESERVES TO BE SET ASIDE ON THIS GROUND ALONE. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LD. ASSESSING OFFICER ACIT (A) CIRCLE-30(1)/ NEW DELHI, ERRED BY WAY OF APPLYING SECTION 69 C TO THE CASE OF THE APPELLANT HEREIN. I T IS SUBMITTED THAT THE SECTION 69 C IS NOT APPLICABLE TO THE CASE OF THE A PPELLANT HEREIN AND CONSEQUENTLY EX FACIE THE IMPUGNED ORDER DATED 31/1 /2017 DESERVES TO BE SET ASIDE. 4. THAT SECTION 69 C OF THE INCOME TAX ACT, 1961 IS APPLICABLE TO A CASE WHERE EXPENDITURE INCURRED BY AN ASSESSEE EXCEEDS T HE INCOME DECLARED BY THE SAID ASSESSEE; THUS, IT IS APPLICABLE TO A CASE WHERE AN ASSESSEE IS INCURRING EXPENDITURE WITHOUT AN EXPLAINED SOURCE A ND NOT IN CASES WHEREBY THE SAID ASSESSEE HAD FUNDS TO INCUR THE SAID EXPEN DITURE. 5. IN THE PRESENT CASE, THE RETURN FILED BY THE APPEL LANT FOR THE RELEVANT ASSESSMENT YEAR CLEARLY REFLECTS THAT HE HAD NET IN COME OF RS. 1,95,97,980/- (RUPEES ONE CRORE NINETY FIVE LACS NINETY THOUSAND NINE HUNDRED EIGHTY ONLY) WHEREAS THE EXPENDITURE INCURRED BY HIM FOR T HE SAID ASSESSMENT YEAR IS RS. 1,65,49,775/- (RUPEES ONE CRORE SIXTY FIVE L ACS FORTY NINE THOUSAND SEVEN HUNDRED SEVENTY FIVE ONLY) WHICH IS WELL WITH IN THE NET INCOME AS DECLARED BY THE APPELLANT HEREIN IN THE RETURN OF I NCOME FILED BY HIM FOR THE RELEVANT ASSESSMENT YEAR 2012-2013. AS SUCH, THE PR OVISION OF SECTION 69 C OF THE INCOME TAX ACT, 1961 IS NOT APPLICABLE TO TH E CASE OF THE APPELLANT HEREIN AND AS SUCH THE IMPUGNED ORDER DATED 31/1/20 17 DESERVES TO BE SET ASIDE ON THIS GROUND ALONE. 3 ITA NO. 3621/DEL/2017 6. THEREFORE, IN FACTS AND CIRCUMSTANCES OF THE CASE A ND FOR THE REASONS THE STATED ABOVE, THE ORDER PASSED BY THE LEARNED CIT (A) IS ERRONEOUS AND IS LIABLE TO SET ASIDE. 4. THE ASSESSEE IS AN INDIVIDUAL WHO WAS A PRACTICING ADVOCATE AT THE SUPREME COURT OF INDIA. AS PER AIR INFORMATION AVAI LABLE WITH THE AO, ASSESSEE HAD INCURRED EXPENSES TO THE TUNE OF RS. 8,37,416/- BY WAY OF USING CREDIT CARDS OF AMERICAN EXPRESS BANK, SAKET, NEW DELHI AN D ICICI BANK OF RS. 4,84,895/- AND RS. 3,52,521/- RESPECTIVELY. CONSIDE RING THE NON-COMPLIANCE OF THE ASSESSEE, THE AO HELD THAT THE SOURCE OF PAYMEN TS MADE BY USE OF ABOVE CREDIT CARDS REMAINED UNEXPLAINED. THEREFORE, BY AP PLYING THE PROVISIONS OF SECTION 69C OF THE ACT, AO TREATED THE AMOUNT OF RS .8,37,416/- UNEXPLAINED EXPENDITURE OF THE ASSESSEE, WHICH WAS ADDED BACK T O THE INCOME DECLARED BY THE ASSESSEE. THE AO ALSO REJECTED THE CLAIM OF THE DEDUCTION UNDER CHAPTER VIA. SIMILARLY, CLAIM OF RS. 38,118/- WAS MADE IN R ESPECT OF SUNDRY CREDITOR WAS ALSO REJECTED. THE AO HAD MADE A TOTAL ADDITION OF RS. 1,65,49,775/- (RUPEES ONE CRORE SIXTY FIVE LAC FORTY NINE THOUSAN D SEVEN HUNDRED SEVENTY FIVE ONLY) TO THE INCOME FILED BY THE ASSESSEE, AND ASSESSED THE INCOME OF THE ASSESSEE AT RS. 1,95,97,890/- (RUPEES ONE CRORE NIN ETY FIVE LAC NINETY SEVEN THOUSAND EIGHT HUNDRED NINETY ONLY). AN ASSESSMENT ORDER DATED 20.03.2015 UNDER SECTION 144 OF THE INCOME TAX ACT, 1961 (HERE INAFTER REFERRED TO AS THE ACT') WAS PASSED BY THE ASSESSMENT OFFICER. DURING THE ENTIRE ASSESSMENT PROCEEDINGS, THE ASSESSEE COULD NOT ATTEND THE PROC EEDINGS DUE TO FAMILY CIRCUMSTANCES. 5. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESS EE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) UPHOLD THE ORDER OF T HE ASSESSING OFFICER. 6. THE LD. AR SUBMITTED THAT THE CIT(A) WAS CHALLENGED AS BEING TOTALLY ILLEGAL AND WRONG APPLICATION OF BOTH BEST JUDGMENT ASSESSMENT AND SECTION 69 C OF THE INCOME TAX ACT, 1961. THE ASSESSEE, AT PRESENT IS RESIDING IN ORISSA AS THE FATHER OF THE ASSESSEE PASSED AWAY IN THE MONTH OF OCTOBER 4 ITA NO. 3621/DEL/2017 2009, A YEAR AFTER THE DEATH OF THE UNCLE OF ASSESS EE. THE GRANDFATHER OF ASSESSEE PASSED AWAY IN SEPTEMBER 2012 AND IN THE M ONTH OF NOVEMBER, 2015, THE ASSESSEE ALSO LOST HIS GRANDMOTHER. BEING THE LAST SURVIVING MALE MEMBER OF THE FAMILY, THE ASSESSEE HAD NO OPTION BU T TO RELOCATE TO ORISSA. IT IS ALSO PERTINENT TO MENTION, THAT OWING TO THE TRAGIC TIMES AND DEMISE OF THE FAMILY MEMBERS IN WITHIN SUCH A SHORT SPAN OF TIME, THE ASSESSEE IS SUFFERING FROM SEVERE DEPRESSION SINCE RECENT PAST. THE ASSESSEE HAS ALSO FILED A DIVORCE PETITION SEEKING DIVORCE FROM HIS WIFE, AS THE WIFE OF THE ASSESSEE HAS FILED A NUMBER OF FRIVOLOUS CASES AGAINST THE ASSESSEE, UND ER DOMESTIC VIOLENCE ACT AND THE PROCEEDINGS OF THESE CASES ARE GOING ON IN ORISSA AND AS SUCH THE ASSESSEE IS UNDER TREMENDOUS DEPRESSION AND IS CONS TRAINED TO STAY BACK IN ORISSA. OWING TO THE FREEZING OF BANK ACCOUNTS OF T HE ASSESSEE, THE ASSESSEE IS NOT IN A POSITION TO MAKE PAYMENTS TOWARDS HIS RETU RN OF INCOME FOR THE FINANCIAL YEAR 2011-2012, WHICH HAVE ALSO BEEN ERRO NEOUSLY ASSESSED BY THE AO AND UPHELD BY THE CIT (A). PURSUANT TO THE ORDER DATED 31.01.2017 PASSED BY THE CIT (A), THE ASSESSEE HAS PREFERRED AN APPEA L TO THE INCOME TAX APPELLATE TRIBUNAL. THE LD. AR SUBMITS THAT DUE TO THE FAMILY CIRCUMSTANCES THE ASSESSEE COULD NOT CONTEST HIS MATTER PROPERLY BEFORE THE AUTHORITIES. THEREFORE, THE MATTER MAY BE ONCE AGAIN HEARD BY TH E ASSESSING OFFICER ON ITS MERIT. 7. THE LD. DR RELIED UPON THE ORDER OF THE ASSESSING O FFICER AND THE CIT(A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL AVAILABLE ON RECORD. THE ASSESSEE COULD NOT REPRESENT HIS CASE PROPERLY DUE TO THE FAMILY CIRCUMSTANCES BEFORE THE ASSESSING OFFICER AS HE WA S SHIFTED TO ORISSA FROM DELHI. IN THE INTEREST OF JUSTICE HE HAS TO BE GIVE N ONE MORE OPPORTUNITY FOR PRESENTING HIS CASE BEFORE THE ASSESSING OFFICER. T HE ASSESSEE COULD NOT PRESENT THE EVIDENCE BEFORE THE CIT(A) AS WELL DUE TO UNAVOIDABLE CIRCUMSTANCES IN THE FAMILY. NOW, THE ASSESSEE IS I N A POSITION TO FILE THE RELEVANT EVIDENCE SUCH AS LEDGER REFLECTING CASH SU MMARY, INVOICE REFLECTING 5 ITA NO. 3621/DEL/2017 AUDIT FEE PAID TO HEETENDRA JAIN & CO., INVOICE REF LECTING CONSULTANCY FEE PAID TO POOJA & CO. AND LEDGER REFLECTING EXPENSES TOWAR DS CONVEYANCE FEE REGARDING THE ADDITIONS MADE BY THE ASSESSING OFFIC ER WHICH HAS TO BE CONSIDERED BY THE ASSESSING OFFICER. THUS, THE ASSE SSING OFFICER AS WELL AS CIT(A) HAS NOT VERIFIED THE DOCUMENTS. IT IS JUST A ND PROPER TO SET ASIDE THE ASSESSMENT ORDER AND ALL THE ISSUES BE HEARD BY THE ASSESSING OFFICER ON MERITS AND ACCORDING TO THE DUE PROCESS OF LAW. NE EDLESS TO SAY, THE PRINCIPLE OF NATURAL JUSTICE BE FOLLOWED AND PROPER HEARING B E GIVEN TO THE ASSESSEE. 9. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH AUGUST, 2017 . SD/- SD/- (R. K. PANDA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 18/08/2017 R. NAHEED * COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 6 ITA NO. 3621/DEL/2017 1. DRAFT DICTATED ON 7/08/2017 PS 2. DRAFT PLACED BEFORE AUTHOR 7/08/2017 PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .2017 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 18.08.2017 PS/PS 6. KEPT FOR PRONOUNCEMENT ON PS 7. FILE SENT TO THE BENCH CLERK 1 8 .08.2017 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 7 ITA NO. 3621/DEL/2017