Sh. Daljit Kaur, Amritsar. V. The Income Tax Officer, Amritsar.

ITA 381/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0807 (ITAT-AMRITSAR)
• Duration Of Justice: 9 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 12-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 13-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S S KANWAL
• Keywords: Revenue expenditure; Capital expenditure

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR (SMC). BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.381(ASR)/2015 ASSESSMENT YEAR:2006-07 PAN: ARDPK 7062P SMT. DALJIT KAUR, VS. INCOME TAX OFFICER, VIA MAJITHA, WARD 4(1), AMRITSAR. AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. IQBAL SINGH, CA RESPONDENT BY: SH. S.S. KANWAL, CA DATE OF HEARING: 12/04/2016 DATE OF PRONOUNCEMENT: 19/04/2016 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07 AGAINST THE ORDER DATED 28.04.2015, PASSED BY THE L D. CIT(A)-1, AMRITSAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. THAT THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE LAW AND OPPOSED TO THE FACTS AND AGAINST THE PRINCIPAL OF N ATURAL JUSTICE. 2. THE LD. CIT(A) DID NOT APPRECIATE THE FACTS THAT THE ASSESSEE HAS BEEN IN THIS BUSINESS FOR THE LAST EIGHT YEARS AND CAN EASILY HAVE SUFFICIENT SAVINGS FOR A FIXED DEPOSIT OF RS.1,05,000/-. 3. THE LD. CIT(A) DID NOT APPRECIATE THE FACTS THAT THE SPOUSE OF THE ASSESSEE IS ALSO AN ASSESSEE AND IS HOLDING SHA RE IN AGRICULTURE LAND TO THE TUNE OF 7 ACRES WHICH IS S UFFICIENT ENOUGH TO SHARE HOUSEHOLD EXPENSES, BESIDES SAVINGS . ITA NO.381(ASR)/2015 ASSESSMENT YEAR: 2006-07 2 4. THE ADDITION BY THE AO HAS BEEN UPHELD ON THE BA SIS OF THE ASSUMPTIONS. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONS IDERATION AT RS.1,08,499/- THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS AND NOTICE U/S 143(2) WAS ISSUED TO THE ASSESS EE BY THE AO. THE SOURCE OF INCOME THE ASSESSEE WAS FROM CABLE TV OPE RATING BUSINESS. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF PURCHASE OF TWO FDRS AMOUNTING TO RS.1,05,000/-. IN HER REPLY, THE ASSESSEE STATED THAT THE SOURCE OF PURCHASE OF FDRS WERE OUT OF SAVINGS OF PRECEDING YEARS BUT NO DOCUMENTARY EVIDENCE OR CASH FLOW CHART WAS FURNISHED. THEREFORE, THE AO WHILE FRAMING THE ASSESSMENT TREA TED THE AMOUNT OF RS.1,05,000/- INVESTED IN FDRS AS AN INCOME FROM TH E UNEXPLAINED SOURCE AND MADE AN ADDITION OF RS.1,05,000/- TO THE RETURNED INCOME. 3. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE LD. CIT(A). 4. THE LD. CIT(A) CONFIRMED THE ADDITION SO MADE BY THE ASSESSING OFFICER, ON THE BASIS OF FRESH ASSUMPTIONS THAT THE ASSESSEE WOULD HAVE INCURRED CONSIDERABLE CAPITAL EXPENDITURE DURING TH E RELEVANT PERIOD. 5. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ADDITION OF RS.1,05,000/- HAS BEEN MADE BY THE AO AND SUBSEQUEN TLY CONFIRMED BY THE LD. CIT(A), WHICH IS PURELY ON THE BASIS OF GUE SS WORK AND PRESUMPTIONS (THAT HUGE CAPITAL EXPENDITURE HAS BEE N INCURRED DURING ITA NO.381(ASR)/2015 ASSESSMENT YEAR: 2006-07 3 THE RELEVANT PERIOD) WITHOUT CONSIDERING THE FACTS AND MATERIAL PLACED ON THE RECORD. THE LD. COUNSEL, THEREFORE, PRAYED THAT THE ADDITION OF RS.1,05,000/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT MAY BE ANNULLED. 6. THE LD. DR, ON THE OTHER HAND, PLACED RELIANCE O N THE ORDERS OF THE AUTHORITIES BELOW. 7. HAVING HEARD BOTH THE PARTIES, IT IS SEEN THAT T HE ASSESSEE HAD ESTABLISHED HER CABLE NET WORK IN LATE NINETIES AND THE ENTIRE CAPITAL EXPENDITURE HAD BEEN INCURRED IN THE YEAR OF ESTABL ISHMENT, AS SUCH THERE WAS NO QUESTION OF INCURRING CAPITAL EXPENDIT URE ON THE SET UP EVERY YEAR. THE EXPENDITURE ON THE SET UP IS ONE T IME EXPENDITURE AND NOT OF THE TYPE OF A RECURRING NATURE. THE INCOME O F THE LAST THREE YEARS PRECEDING THE ASSESSMENT YEAR UNDER CONSIDERATION I S NET OF ALL REVENUE EXPENDITURES, WHICH IS SUFFICIENT AND ENOUGH FOR TH E SAVINGS OF RS.1,05,000/-. THIS FACT HAS COMPLETELY BEEN IGNORE D DURING ORIGINAL ASSESSMENT AS WELL AS AT THE APPELLATE STAGE. HOWEV ER, THE NET INCOME OF BOTH THE ASSESSEE AND HER SPOUSE FOR THE LAST THREE YEARS, PRECEDING THE RELEVANT ASSESSMENT YEAR IS AS FOLLOWS: ASSESSMENT YEAR INCOME OF DALJIT KAUR (ASSESSEE) INCOME OF MANJIT SINGH (SPOUSE OF THE ASSESSEE) 2004-05 48,000 52500+75000 AGRL. INCOME 2005-06 53,500 52500 + 90000 AGRL. INCOME ITA NO.381(ASR)/2015 ASSESSMENT YEAR: 2006-07 4 2006-07 1,08,000 96000 + 110000 AGRL. INCOME IT WAS STATED THAT THE ABOVE FIGURES ARE PART OF T HE PREVIOUS PROCEEDINGS AS NOTED DOWN BY THE LD. CIT(A) IN THE APPELLATE OR DER. MOREOVER, A GIST OF CASH FLOW IS ALSO REPRODUCED BELOW FOR READY REFERE NCE: DALJIT KAUR ASSESSMENT YEAR INCOME (RS.) 2003-04 47,500 2004-05 48,000 2005-06 53,500 2006-07 1,08,500 CASH FLOW STATEMENT OF SH. MANJIT SINGH ASSTT. YEAR INCOME FROM TOTAL INCOME BUSINESS AGRICULTURE 2004-05 52500 75000 127500 2005-06 52500 90000 142500 2006-07 96000 110000 206000 THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SH. MANJIT SINGH (SPOUSE OF THE ASSESSEE) IS HOLDER OF SEVEN ACRES OF AGRL. LAND AND THIS FACT IS ACCEPTED BOTH BY THE AO AS WELL AS BY THE LD. CIT(A ). THE AVERAGE EARNING PER ACRE DURING THE ASSESSMENT YEARS 2004-05, 2005- 06, 2006-07 WAS TAKEN AS RS.11,540/-, RS.13,850/- AND RS.16,925/- R ESPECTIVELY, WHICH WAS REASONABLY ACCEPTABLE. 8. IN VIEW OF THE ABOVE DISCUSSION, IT IS EVIDENT T HAT THE ADDITION HAS BEEN MADE PURELY ON THE BASIS OF GUESS WORK, ASSUMP TIONS AND PRESUMPTIONS AND SUCH ADDITION DOES NOT SURVIVE. HE NCE, THE ADDITION OF ITA NO.381(ASR)/2015 ASSESSMENT YEAR: 2006-07 5 RS.1,05,000/- MADE ON ACCOUNT OF UNEXPLAINED INVEST MENT ON THE BASIS OF SURMISES AND CONJECTURES IS DELETED AND AS SUCH THE APPEAL OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/04/ 2016 . SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 19/04/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SMT. DALJIT KAUR, AMRITSAR. 2. THE ITO WARD 4(1), AMRITSAR. 3. THE CIT(A), AMRITSAR. 4. THE CIT, AMRITSAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR. ITA NO.381(ASR)/2015 ASSESSMENT YEAR: 2006-07 6