ITO, New Delhi V. Sh Krishan Kumar Sethi, Delhi

ITA 3866/DEL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58567 (ITAT-DELHI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 01-02-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAMITA
• Keywords: Unexplained investment; Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3866/DEL./2011 (ASSESSMENT YEAR : 2007-08) ITO, WARD 36 (1), VS. SHRI KRISHAN KUMAR SETHI, NEW DELHI. PROP. M/S. SETHI AUTO CENTRE, 431 / A, JHEEL KHURENJA, DELHI 110 031. (PAN : AARPS6482R) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI C.S. ANAND, CA REVENUE BY : MS. NAMITA PANDEY, DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : THIS APPEAL FILED BY THE REVENUE EMANATES FROM THE ORDER OF CIT (APPEALS)-XXVII, NEW DELHI DATED 27.05.2011 FOR THE ASSESSMENT YEAR 2007- 08. 2. THE ASSESSEE IS DOING THE BUSINESS OF SALE/PURCH ASE OF THREE WHEELER SCOOTERS ON COMMISSION BASIS. ASSESSEE ALSO FINANC ES THE SCOOTERS AND CHARGES INTEREST. THE RETURN OF INCOME FOR THE AS SESSMENT YEAR 2007-08 FILED ON 31.03.2007 DECLARING INCOME AT RS.4,46,680/-. T HE ASSESSMENT WAS FRAMED UNDER SECTION 143(3) AT AN INCOME OF RS.18,0 7,496/- WHICH WAS ITA NO.3866/DEL./2011 2 CHALLENGED BEFORE THE CIT (A). IN THE ASSESSMENT M ADE UNDER SECTION 143(34), THE FOLLOWING ADDITIONS WERE MADE : A. ADDITION ON ACCOUNT OF ADDITION IN CAPITAL ACCOUNT AS DISCUSSED IN FINAL SHOW CAUSE NOTICE RS .95,000/- B. ADDITION ON ACCOUNT OF INVESTMENT MADE FOR PURCHASE OF NEW CAR AS MENTIONED IN THE FINAL SHOW CAUSE NOTICE RS.9,06,000/- C. ADDITION OF 1/4 TH OF THE EXPENSE OUT OF RS.2,96,267/- CLAIMED IN THE I&E ACCOUNT AS MENTIONED IN THE FINAL SHOW CAUSE NOTICE RS.74,06 6/- D. DISALLOWED INTEREST RECEIVABLE AS MENTIONED IN THE FINAL SHOW CAUSE NOTICE RS.2,85,750/- ASSESSEE PREFERRED APPEAL AND CIT (A) DELETED ALL T HE AFORESAID FOUR ADDITIONS. NOW, THE REVENUE IS IN APPEAL ON THREE ISSUES. THE GROUNDS OF APPEAL READ AS UNDER :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT (A) HAS ERRED IN RESTRICTING THE DISALLOWANCE OF RS.74, 066/- (BEING 1/4TH OF EXPENSES CLAIMED) TO RS.15,000/- DESPITE T HE FACT THAT THE ASSESSEE DID NOT PRODUCE BILLS/VOUCHERS OF THE EXPENSES CLAIMED. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.9,06,000/- IN PURCHASING NEW CAR. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D CIT (A) HAS ERRED IN DELETING THE DISALLOWANCE OF RS.2,85,7 50/- MADE BY THE AO ON ACCOUNT OF INTEREST RECEIVABLE. ITA NO.3866/DEL./2011 3 4. THE APPELLANT CRAVES LEAVE FOR RESERVING THE RIG HT TO AMEND, MODIFY, ALTER, ADD OR FOREGO ANY GROUND(S) O F APPEAL AT ANY TIME BEFORE OR DURING THE HEARING OF THIS APPEA L. 3. IN THE GROUND NO.1, THE REVENUE HAS RAISED THE I SSUE REGARDING RESTRICTING THE DISALLOWANCE TO RS.15,000/- OUT OF TOTAL DISALLOWANCE OF RS.74,066/- WHICH WAS 1/4 TH OF THE EXPENSES DEBITED IN INCOME & EXPENDITURE ACCOUNT. 4. THE CIT (A) GRANTED THE RELIEF BY HOLDING AS UND ER :- 10. WITH REGARD TO DISALLOWANCE OF EXPENSES, THE A O IN THE REPORT HAS STATED THAT THE APPELLANT DID NOT PRODUC E ANY VOUCHERS IN SUPPORT OF THE EXPENSES CLAIMED. FROM THE DETAIL S OF THE EXPENSES, IT IS SEEN THAT THE APPELLANT HAS CLAIMED A TOTAL OF RS.2,96,266/- IN THE I & E ACCOUNT. THE APPELLANT I N HIS REJOINDER TO THE REMAND REPORT SUBMITTED THAT THE A O NEVER ASKED HIM TO PRODUCE BILLS/VOUCHERS IN SUPPORT OF T HE EXPENSES INCURRED/CLAIMED. MOREOVER, 75% OF THE TOTAL EXPENS ES CLAIMED ARE ON ACCOUNT OF SALARY TO STAFF (RS.96,000/), INT EREST ON LOANS (RS.86,457/-), INTEREST PAID TO ICICI BANK RS.45,39 7/-). THESE EXPENSES ARE COMPARABLE TO EXPENSES OF THE PRECEDIN G YEAR, WHICH HAVE BEEN ALLOWED TO THE APPELLANT. THE BALA NCE EXPENSES ARE MINOR EXPENSES, ON FOLLOWING ACCOUNT : A) ACCOUNTING CHARGES RS.7,200/- B) STATIONERY RS.2,250/- C) GENERAL EXPENSES RS.12,450/- D) TELEPHONE EXPENSES RS.7,334/- E) ELECTRICITY EXPENSE RS.19,170/- F) CAR RUNNING & MAINTENANCE RS.13,400/- G) DEPRECIATION RS.4,170/- 11. KEEPING IN VIEW THE NATURE OF THESE EXPENSES A ND THE FACT THAT THE APPELLANT DID NOT PRODUCE BILLS/VOUCHERS O F THESE EXPENSES BEFORE THE AO AND THE FACT THAT PERSONAL N ATURE OF SOME OF THE EXPENSES CANNOT BE RULED OUT, DISALLOWA NCE OF EXPENSES IS RESTRICTED TO RS.15,000/-. ITA NO.3866/DEL./2011 4 5. WE HAVE HEARD BOTH THE SIDES AND AFTER HEARING, WE FIND THAT THE CIT (A) HAS CONFIRMED THE ADDITION OF RS.15,000/- BEING EXPENSES OF PERSONAL NATURE. THE DETAILS OF EXPENDITURE SHOWS THAT RS.9 6,000/- WAS SALARY TO STAFF, RS.86,457/- WAS INTEREST ON LOAN AND RS.45,397/- WA S THE INTEREST PAID TO ICICI BANK. UNDER THESE HEADS, THERE IS NO SCOPE F OR ANY PERSONAL EXPENDITURE TO BE DEBITED. WE ALSO FIND THAT THE C IT (A) HAS ALSO CALLED THE REMAND REPORT FROM THE ASSESSING OFFICER IN THIS RE GARD. THEREFORE, IN OUR CONSIDERED VIEW, THE SUSTAINING OF ADDITION OF RS.1 5,000/- OUT OF THE REMAINING REVENUE EXPENSE IS SUFFICIENT TO COVER UP THE REVENUE LEAKAGE ON ACCOUNT OF PERSONAL EXPENDITURE. HENCE, WE SUSTAIN THE ORDER OF THE CIT (A) IN THIS REGARD. 6. IN THE GROUND NO.2, THE ISSUE RAISED REGARDING D ELETION OF ADDITION MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT OF RS.9,06,000 /- IN THE PURCHASE OF NEW CAR. 7. THE CIT (A) HAS DEALT THE ISSUE IN PARA 8 WHICH READ AS UNDER :- 8. WITH REGARD TO THE ADDITION ON ACCOUNT OF-INVE STMENT IN CAR, IT IS SEEN THAT THE CAR HAS BEEN DULY REFLECTED BY THE APPELLANT IN THE BALANCE SHEET OF HIS PROPRIETARY CONCERN. THE SOURC E OF INVESTMENT IN THIS CAR IS OUT OF LOAN OF RS.7.5 LACS FROM ICICI B ANK AND THE BALANCE AMOUNT OF RS.1,56,000/- FROM THE FUNDS AVAI LABLE WITH THE PROPRIETARY CONCERN. THE OUTSTANDING LOAN AMOUNT OF RS. 6,44,173/- WAS STILL OUTSTANDING AS REFLECTED UNDER THE HEAD L IABILITIES IN THE BALANCE SHEET. THE APPELLANT HAS ALSO PAID INTEREST AMOUNTING TO RS.45,357/- ON LOAN WHICH HAD BEEN DEBITED IN THE I NCOME & EXPENDITURE STATEMENT. THESE FACTS HAVE BEEN VERIFI ED BY THE AO AS STATED BY HIM IN HIS REMAND REPORT. THIS ADDITION I S, THEREFORE, DIRECTED TO BE DELETED. ITA NO.3866/DEL./2011 5 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUES AND A FTER HEARING, WE HOLD THAT THERE IS NO FAULT IN THE ORDER OF THE CIT (A) AS MAJORITY OF THE INVESTMENT IN THE CAR IS COMING OUT OF THE LOAN TAKEN FROM THE ICICI BANK. THEREFORE, WE SUSTAIN THE ORDER OF CIT(A) AND DISMISS THIS GROUND OF REVENUES APPEAL ALSO. 9. IN GROUND NO.3, THE ISSUE RAISED IS AGAINST THE DELETION OF ADDITION OF RS.2,85,750/- ON ACCOUNT OF INTEREST RECEIVED. 10. THE CIT (A) HAS DELETED THE ADDITION BY HOLDING AS UNDER ;- 9. WITH REGARD TO INTEREST RECEIVABLE, IT HAS BEE N STATED BY THE APPELLANT THAT THE SAME IS ON ACCOUNT OF INTEREST R ECEIVABLE FOR THE FUTURE TENURE OF THE LOANS AND INTEREST ACCRUED /RECEIVED DURING THE YEAR HAS BEEN DULY REFLECTED IN THE INCO ME & EXPENDITURE ACCOUNT AS INCOME OF THE APPELLANT, WHI CH HAS BEEN FOUND REFLECTED IN THE PROFIT & LOSS ACCOUNT OF THE APPELLANT BY THE AO AS STATED BY HIM IN HIS REMAND REPORT. THIS ADDITION IS, THEREFORE, DIRECTED TO BE DELETED. 11. WE ALSO FIND THAT THE CIT (A) HAS CALLED THE RE MAND REPORT WHERE THE FACTUAL POSITION HAS BEEN REPORTED BY THE ASSESSING OFFICER. CONSIDERING THESE FACTS, WE FIND NO FAULT IN THE ORDER OF THE C IT (A) AND DISMISS THIS GROUND OF REVENUES APPEAL. 12. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 3 RD DAY OF FEBRUARY, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 3 RD DAY OF FEBRUARY, 2012 TS ITA NO.3866/DEL./2011 6 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.