ACIT, New Delhi V. Sh. Suresh Maheshwari, Delhi

ITA 3915/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0174 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: G
• Next Hearing Date: 15-03-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 20-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUJANI MOHANTY
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `G: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI K.G. BANSAL, ACCOUNTANT MEMBER I.T. A. NO.3915/DEL/2010 ASSESSMENT YEAR : 2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, SH. SURESH MAHE SHWARI, CIRCLE 39(1), NEW DELHI. VS. 5859/2, BASTI HAR PHOOL SINGH, SADAR BAZAR, DELHI. PAN: AAJPM2386E (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. SUJANI MOHANTY, DR. RESPONDENT BY: SHRI RAJIV JAIN , CA. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL AGAINST THE ORDER OF THE C OMMISSIONER OF INCOME-TAX (APPEALS) DATED 31.03.2010 IN DELETING T HE ADDITION OF RS.7,59,712/- MADE BY THE ASSESSING OFFICER UNDER S EC. 68 OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR THE ASSESSMENT YEAR 2006-07 . 2. IN THE ASSESSMENT THE ASSESSING OFFICER MADE AN ADDITION OF RS.7,67,712/-BEING CREDIT IN THE ASSESSEES CAPITAL ACCOUNT IN THE ABSENCE OF EVIDENCE AS TO THE SOURCE THEREOF. THE ASSESSING O FFICERS OBSERVATIONS IN THIS REGARD ARE AS UNDER:- 2 8. ASSESSEE HAD MADE AN ADDITION OF RS.7,67,712/- IN ITS CAPITAL ACCOUNT BUT HAS ADDUCED NO EVIDENCE AS TO T HE SOURCE OF ADDITION MADE. AS SUCH THIS WILL BE TREATED AS THE INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AS PER THE PROVIS IONS OF SECTION 68 OF THE I.T. ACT, 1961 AND INTRODUCED IN ITS CAPITAL ACCOUNT. THIS WILL BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME AND FURNISHED INACCURATE PARTICULARS THEREOF TO THI S EXTENT, PENALTY PROCEEDINGS U/S 271(1)(C) SHALL ALSO BE INI TIATED. 3. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 4. THE DETAILS OF THE CREDITS IN THE CAPITAL ACCOUN T WERE EXPLAINED AS UNDER:- I) RS.1,00,000/- : INCOME-TAX PROVISION MADE IN FIRM T RANSFERRED TO CAPITAL ACCOUNT OF PROPRIETOR. II) RS.6,59,612/- : AMOUNT PAID DIRECTLY BY PROPRIETOR TO M/S. PANKAJ SHIPPING AND TRANSPORT CO. CR. CAPITAL A/C. III) RS. 5,000/- : CHEQUE RECEIVED FROM DELHI PUBLIC SCH OOL TOWARDS REFUND OF DEPOSIT OF DAUGHTER OF PROPRIETOR. IV) RS. 3,000/- : CHEQUE TOWARDS DONATION IN LAST YEAR CANCELLED. 5. BEFORE THE LEARNED CIT(A), THE ASSESSEE SUBMITTE D THAT THE AO MADE ADDITION OF RS.7,67,712/- WITHOUT REQUIRING THE ASS ESSEE TO GIVE ANY EXPLANATION IN THAT REGARD. IT WAS THUS, CONTENDED THAT ADDITIONS WERE MADE BY THE AO WITHOUT PROVIDING ANY OPPORTUNITY TO THE ASSESSEE. BEFORE THE LEARNED CIT(A) THE ASSESSEE FILED DETAILED COPY OF CAPITAL ACCOUNT. THE ASSESSEE THEN SUBMITTED BEFORE THE CIT(A) THAT THE AO WITHOUT GOING INTO THE DETAIL OF CAPITAL ACCOUNT MADE THE ADDITION MER ELY BY PICKING UP THE 3 FIGURE FROM THE BALANCE-SHEET. THE ASSESSEE FURNIS HED SUMMARY OF THE TOTAL CREDIT IN THE CAPITAL ACCOUNT BEFORE THE LEARNED CI T(A) AND REQUESTED HIM TO ADMIT ADDITIONAL DOCUMENTS UNDER RULE 46A OF THE IN COME-TAX RULES, 1962. 6. IN THE COURSE OF APPELLATE PROCEEDINGS, THE LEAR NED CIT(A) CALLED A REMAND REPORT FROM THE AO. HOWEVER, THE AO HAS NOT COMMENTED UPON THE SUBMISSIONS OF THE ASSESSEE IN THIS REGARD. THE AS SESSEE THEN SUBMITTED A REJOINDER TO THE REMAND REPORT AS UNDER:- 5.3 IN HIS REJOINDER TO THE REMAND REPORT, THE APP ELLANT HAS STATED AS FOLLOWS: THAT AS REGARD THE ADDITION OF RS.767712/- U/S 68 , ON ACCOUNT OF ALLEGED UNEXPLAINED SOURCE OF ADDITION T O CAPITAL ACCOUNT DURING THE YEAR THE LD. ASSESSING OFFICER H AS NOT MADE ANY COMMENT IN HIS REPORT. SINCE AS PER THE COPY O F CAPITAL ACCOUNT FILED BEFORE THE LD. ASSESSING OFFICER DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS (COPY ENCLOSED) AND THE S UMMARY OF THE TOTAL CREDITS TO CAPITAL ACCOUNT IT IS EVIDENT THAT THE CREDITS ARE ONLY JOURNAL ENTRIES AND NO FRESH CAPITAL AHS B EEN INTRODUCED DURING THE YEAR, THE ADDITION MADE ON TH IS ACCOUNT SHOULD BE DELETED. 7. AFTER CONSIDERING THE ASSESSEES EXPLANATION AND AOS REMAND REPORT, THE LEARNED CIT(A) DELETED THE ADDITION TO THE EXTE NT OF RS.7,59,712/- OUT OF TOTAL ADDITION OF RS.7,67,712/- BY OBSERVING AND HO LDING AS UNDER:- 5.4 THE SUBMISSIONS OF THE APPELLANT AND THE FACTS HAVE BEEN CAREFULLY CONSIDERED. REGARDING RS.1,00,000/- THE APPELLANT HAS STATED THAT THIS IS ONLY A JOURNAL ENTRY BEING REVERSAL OF PROVISION MADE. REGARDING CREDIT OF RS.6,59,612/-, THE APPELLANT HAS FILED A COPY OF ACCOUNT OF M/S. PANKA J SHIPPING & TRANSPORT CO. SHOWING PAYMENT BY THE PROPRIETOR. IT WAS 4 STATED THAT THIS PAYMENT HAS BEEN MADE BY THE APPEL LANT AS PROPRIETOR, OUT OF HIS OWN FUNDS AND THIS AMOUNT HA S BEEN TRANSFERRED TO CAPITAL ACCOUNT BY JOURNAL ENTRY AND AS SUCH, THERE IS NO RECEIPT FROM ANY OUTSIDE PARTY. THE AP PELLANT HAS ARGUED THAT THESE CREDITS TO CAPITAL A/C ARE ONLY J OURNAL ENTRIES AND DO NOT REPRESENT ANY FLOW OF FUNDS AND THEREFOR E, THE ADDITION U/S 68 IS UNJUSTIFIED. CONSIDERING THEE F ACTS, THE ADDITION U/S 68 IN RESPECT OF THESE CREDITS IS NOT LEGALLY TENABLE AND IS THEREFORE, DELETED. REGARDING CREDITS OF RS .5,000/- AND RS.3,000/- MENTIONED ABOVE, THE APPELLANT HAS NOT F ILED ANY EVIDENCE TO SUBSTANTIATE HIS CLAIM. IN VIEW OF THES E FACTS, THE ADDITION IN RESPECT OF THESE CREDITS IS JUSTIFIED. CONSEQUENTLY, THE APPELLANT GET RELIEF OF RS.7,59,712/- (7,67,712 8,000). THE GROUND IS PARTLY ALLOWED. 8. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 9. THE DEPARTMENT HAS TAKEN A GROUND THAT THE LEARN ED CIT(A) HAS DELETED THE ADDITION ON THE BASIS OF EXPLANATION AN D DOCUMENTS SUBMITTED BY THE ASSESSEE TO HIM, WITHOUT AFFORDING ANY OPPORTUN ITY TO THE ASSESSING OFFICER TO EXAMINE THE DOCUMENTS AS PER PROVISION O F RULE 46A OF THE INCOME-TAX RULES. 10. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO T HIS ASPECT OF THE MATTER. FROM THE ORDER OF THE CIT(A), IT IS CLEAR THAT THE ASSESSEES SUBMISSIONS WERE SENT TO THE AO FOR HIS COMMENT. T HE AO ALSO SUBMITTED HIS REMAND REPORT. THEREAFTER, THE ASSESSEE ALSO S UBMITTED HIS REJOINDER TO THE REMAND REPORT. IN THE LIGHT OF THESE FACTS, IT THEREFORE, CANNOT BE SAID THAT THE LEARNED CIT(A) HAS TAKEN INTO ACCOUNT THE EXPLA NATION AND DOCUMENT 5 SUBMITTED BY THE ASSESSEE WITHOUT GIVING ANY OPPORT UNITY TO THE AO. HENCE, THIS TECHNICAL OBJECTION RAISED BY THE REVENUE IS R EJECTED. 11. COMING TO THE MERIT OF THE ISSUE, WE FIND THAT THE AMOUNT OF RS.7,59,712/- WHICH HAS BEEN DELETED BY THE CIT(A), IS MERE A JOURNAL ENTRY TRANSFERRED TO THE ASSESSEES CAPITAL ACCOUNT AND T HERE WAS NO ACTUAL AMOUNT RECEIVED BY THE ASSESSEE WHICH HAS BEEN ADDED TO TH E ASSESSEES CAPITAL ACCOUNT. THIS FACTUAL POSITION HAS BEEN FULLY CONS IDERED BY THE LEARNED CIT(A) IN HIS ORDER. IN THE LIGHT OF THE FACTUAL F INDING RECORDED BY THE CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE WITH HIS ORDER IN DELETING THE ADDITION OF RS.7,59,712/-. HENCE, GROUND RAISED BY THE REVENUE IS REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 13. THIS DECISION WAS PRONOUNCED IN THE OPEN COURT ON 15.03.2011 AFTER CONCLUSION OF THE HEARING. SD/- SD/- (K.G. BANSAL) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 15 MARCH, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT BY ORDER 4. CIT(A) 5. DR *MG DEPUTY REGISTRAR, ITAT.