ACIT, New Delhi V. Sh. Vinay Kumar Kurele, Kanpur

ITA 4131/DEL/2014

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6847 (ITAT-DELHI)
• Duration Of Justice: 4 year(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2009-2010
• Appeal Filed On: 24-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Search and seizure; Salary income; Loose papers; Document seized; Documents seized
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH D NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER I.T.A. NO.4131/DEL/2014 ASSESSMENT YEAR: 2009-10 ACIT, CENTRAL CIRCLE-23, NEW DELHI. V. SHRI VINAY KUMAR KURELE, 15M/20, DABAULI, KANPUR. TAN/PAN: ADKPK9621Q (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI AMIT JAIN, SR.D.R. RESPONDENT BY: SHRI SANJAY KUMAR, CA. DATE OF HEARING: 23 07 2018 DATE OF PRONOUNCEMENT: 25 07 2018 O R D E R PER AMIT SHUKLA, J.M.: THE AFORESAID APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE IMPUGNED ORDER DATED 26.02.2014, PASSED BY LD. CIT (APPEALS)-XXXIII, NEW DELHI FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEA R 2009- 10. IN THE GROUNDS OF APPEAL, THE REVENUE HAS RAISE D THE FOLLOWING GROUNDS:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD . CIT(A) HAS ERRED IN LAW AND ON FACTS IN DIRECTING THE ASSESSIN G OFFICER TO VERIFY AND ALLOW THOSE EXPENSES WHICH HAVE BEEN INC URRED IN CASH AND ARE RECORDED IN THE BOOKS OF ACCOUNT WITHO UT TAKING INTO ACCOUNT THE PROVISIONS OF SECTION 40A(3) OF TH E INCOME TAX ACT, 1961. I.T.A. NO.4131/DEL/2014 2 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN I NDIVIDUAL DERIVING INCOME FROM SALARY AS DIRECTOR OF M/S. GAH OI BUILWELL LTD. (NOW V3S INFRASTRUCTURE LTD.); SHARE FROM A PARTNERSHIP FIRM, M/S. K4U SERVICES, RENTAL INCOME, ETC. A SEARCH AND SEIZURE ACTION U/S.132 WAS CARRIED OUT O N 19.01.2009 IN KURELE GROUP AND ALSO AT THE RESIDENT IAL PREMISES OF THE ASSESSEE. THE MAIN DISPUTE IN THE R EVENUES APPEAL IS WITH REGARD TO THE ADDITION OF RS.88,98,7 12/- ON ACCOUNT OF TWO LOOSE PAPERS FOUND DURING THE COURSE OF SEARCH AT THE RESIDENTIAL PREMISES OF THE ASSESSEE. THE SA ID LOOSE PAPERS NUMBERED AS PAGES 144 AND 145 OF ANNEXURE A- 3, GIVES THE DESCRIPTION OF RECEIPTS AND UTILIZATION O F FUND DURING THE YEAR WHICH HAS BEEN TABULATED BY THE ASSESSING OFFICER IN THE IMPUGNED ASSESSMENT ORDER WHICH CAN BE SUMMARIZ ED HEREUNDER:- (I) 51,16,912 FOR LOOSE PAPER NO. 145/ANN. A-3 SOLELY FOR THE REASON THAT THERE IS EXCESS PAYMENT OF FUNDS [90,86,912 39,70,000] WHEN THE AVAILABILITY OF FUNDS AS REFLECTED IN BOOKS OF ACCOUNT WITH THE ASSESSEE IS COMPUTED; AND (II) 37,81,800 FOR LOOSE PAPER NO. 144/ANN. A-3 BY ADDING UP ALL THE FIGURES MENTIONED THEREIN [21,58,600 + 14,53,600 + 1,69,600] AS UNEXPLAINED MISC. EXPENSES. 88,98,712 TOTAL 3. THE ASSESSEES CONTENTION BEFORE THE ASSESSING O FFICER WITH REGARD TO THE AFORESAID LOOSE PAPERS WAS AS UN DER: PAGE 145 ARE THE NOTING OF VARIOUS TRANSACTIONS OF ASSESSEE, AS APPEARING IN VARIOUS ACCOUNTS OF M/S K4U SERVICES, WHEREIN I.T.A. NO.4131/DEL/2014 3 ASSESSEE IS PARTNER AND THE RELATED LEDGER ACCOUNTS IN THE BOOKS OF SAID FIRM WERE ENCLOSED; AND PAGE 144 ARE THE NOTING/SUMMERY OF VARIOUS TRANSACT IONS RELATING TO INDRAPURAM PROJECT OF GBL WHEREIN ASSESSEE IS ON E OF THE DIRECTOR AND DOES NOT RELATES TO THE ASSESSEE. 4. LEARNED ASSESSING OFFICER HELD THAT THERE IS AN EXCESS PAYMENT OF FUNDS OF RS.51,16,912/- AND RS.37,81,800 /- AS UNEXPLAINED MISC. EXPENSES WHICH HAS BEEN TREATED B Y HIM AS UNEXPLAINED EXPENDITURE OUT OF UNDISCLOSED SOURC ES. 5. BEFORE THE LD. CIT (A), IT WAS SUBMITTED THAT AL L THE TRANSACTIONS RECORDED IN THE SEIZED LOOSE PAPER STO OD REFLECTED IN THE BOOKS OF M/S. K4U SERVICES, WHEREIN THE ASSE SSEE WAS ONE OF THE PARTNER WHICH IS ALSO EVIDENT FROM THE L EDGER ACCOUNT OF THE SAID FIRM DESPITE THAT ADDITION HAS BEEN MADE IN THE INDIVIDUAL HANDS OF THE ASSESSEE BY THE ASSE SSING OFFICER IN THE FOLLOWING MANNER:- RECEIPTS OF FUNDS DURING THE YEAR (AS PER PAGE 2 OF ASSESSEE ORDER) RS.39,70,000 DEDUCT: UTILIZATION OF FUNDS DURING THE YEAR (AS PER PAGE 2-3 OF ASSESSMENT ORDER) RS.90,86,91 2 EXCESS PAYMENT OF FUNDS RS.51,16,912 IT WAS SUBMITTED THAT ALL THE TRANSACTIONS MENTIONE D IN THE SEIZED DOCUMENT WERE FOUND TO BE RECORDED IN THE BO OKS OF ACCOUNT IN THE NORMAL COURSE OF BUSINESS AND THEREF ORE, NO SUCH ADDITION OF EXCESS FUNDS COULD HAVE BEEN MADE IN THE INDIVIDUAL HANDS OF THE ASSESSEE. APART FROM THAT, CERTAIN I.T.A. NO.4131/DEL/2014 4 CLARIFICATION WITH REGARD TO THE MISCELLANEOUS EXPE NDITURE WAS GIVEN WHICH WERE AS UNDER:- (I) INCLUSION OF FIGURE OF RS.1,69,600 IN THE IMPUG NED ADDITION IS WHOLLY ERRONEOUS AS THE SAME REPRESENTS THE SUM OF VARIOUS EXPENSES 63,000+26,000+1,600+3,000+11,000+20,000+1,000+4,000 +25,00 0+15,000) MARKED. (II) ON A READING OF SAID LOOSE PAPER, IT IS EVIDEN T THAT THERE AS RECEIPTS OF RS.21,58,600 AND EXPENDITURE OF RS.14,5 3,600 AND BALANCE SHOWN IS RS.7,05,000 WHEREAS THE ADDITION H AS BEEN MADE BY ADDING UP THE RECEIPTS OF RS.21,58,600 AS W ELL AS EXPENDITURE OF RS.14,53,600 AND FURTHER ADDING ONE STRAY FIGURE OF RS.1,69,600 IN AN UTMOST ARBITRARY MANNER WITHOUT H AVING DUE REGARD TO THE NOTING/WORKING MADE ON THE SAID LOOSE PAPER. FURTHER, IT WAS BROUGHT ON RECORD BEFORE THE ASSESS ING OFFICER THAT THE SEIZED LOOSE PAPER RELATES TO SUMMARY OF T RANSACTION RELATING TO INDRAPURAM PROJECT OF GAHOI BUILDWELL LTD., WHEREIN THE ASSESSEE WAS ONE OF THE DIRECTORS WHICH FACT HAS NOT BEEN DISPUTED OR REBUTTED BY THE ASSESSING OFFI CER. IT WAS ALSO BROUGHT ON RECORD THAT IN THE CASE OF M/S. GAH OI BUILDWELL LTD., THE SAME DOCUMENT HAS BEEN INVENTOR ISED AND SPECIFIC QUERY WAS RAISED BY THE ASSESSING OFFICER IN THE CASE OF THE SAID COMPANY AND ASSESSING OFFICER AFTER DET AILED SCRUTINY AND EXAMINATION FOUND THAT ENTRIES APPEARI NG IN THE LOOSE PAPER WERE TALLYING WITH RECORDS MAINTAINED B Y THE SAID COMPANY. BASED ON THESE FINDINGS, ASSESSING OFFICER FIRST OF ALL NOTED THE ASSESSEES REPLY WITH REGARD TO BOTH SEIZED DOCUMENTS AS UNDER:- I.T.A. NO.4131/DEL/2014 5 6. PX- 2/ANNEXURE A-3 PAGE 144 NOTING/SUMMARY OF TRANSACTIONS RELATING TO INDRAPURAM PROJECT OF GBL GAHOI BUILDWELL LTD. THIS DOES NOT RELATES TO ME 7. PX-2/ ANNEXURE-3 PAGE 145 NOTING OF VARIOUS TRANSACTION OF VINAY KUMAR KURELE VINAY KURELE THESE TRANSACTIONS ARE APPEARING IN THE VARIOUS ACCOUNTS OF K4U SERVICES WHEREIN VINAY KURELE IS PARTNER, COPY OF A/C ENCLOSED. 6. LD. CIT (A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND ON PERUSAL OF THE ENTIRE MATERIAL PLAC ED ON RECORD DELETED THE ADDITION AFTER OBSERVING AND HOL DING AS UNDER:- I HAVE CONSIDERED ENTIRE ARGUMENTS OF LD. AR. APPA RENTLY LD. ASSESSING OFFICER HAS NOT CONSIDERED THE SUBMIS SION OF THE APPELLANT THAT THESE PAPERS ARE RELATED TO THE CONC ERNS WHERE HE IS A DIRECTOR OR A PARTNER, I DIRECT THE ASSESSING OFF ICER TO VERIFY WHETHER ENTRIES CLAIMED TO BELONG TO M/S GAHOI BUIL DWELL LTD. WAS EXPLAINED IN THAT CASE & NO ADDITION WAS MADE AS CO PY OF SEIZED THE PAGE NO. 144 WAS FOUND FROM THE PREMISE OF M/S GAHOI BUILDWELL LTD. ON PAGE 114/A-10. IN THAT CASE, ADDI TION MADE IN APPELLANTS CASE MAY BE DELETED. THE APPELLANT HAS EXPLAINED DURING THE ASSESSMENT PROCEEDINGS THE ENTRIES ON PA GE 145 BELONGING TO M/S K4U SERVICES WHERE HE IS A PARTNER , THEREFORE, THE ASSESSING OFFICER SHOULD EXAMINE WHETHER THE CONTEN TS OF THIS PAGE IS REFLECTED IN THE BOOKS OF K4U ON THE BASIS OF AC COUNTS OF K4U FILED DURING THE ASSESSMENT PROCEEDINGS. IN CASE, T HE CONTENT OF PAGE 145 IS REFLECTED IN THE BOOKS OF K4U, THE ASSE SSING OFFICER IS I.T.A. NO.4131/DEL/2014 6 DIRECTED TO DELETE THE ADDITION. THESE GROUNDS OF A PPEAL PARTLY ALLOWED. 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND ON PERUSAL OF THE IMPUGNED ORDER AND MATERIAL REFERRED TO BEFORE US AT THE TIME OF HEARING, WE FIND THAT IN THE GROU NDS OF APPEAL, THE REVENUE HAS RAISED THAT THE LD. CIT (A) HAS ERRED IN DIRECTING THE ASSESSING OFFICER TO ALLOW THE EXP ENSES WHICH HAS BEEN INCURRED IN CASH AND ARE RECORDED IN THE B OOKS OF ACCOUNT WITHOUT TAKING INTO ACCOUNT THE PROVISION O F SECTION 40A (3). THE SAID GROUND RAISED FIRST OF ALL IS COM PLETELY DIVORCED FROM THE FINDING GIVEN IN THE IMPUGNED ORD ERS, BECAUSE THE ADDITION HAS BEEN MADE AS UNEXPLAINED EXPENDITURE/PAYMENT OUTSIDE BOOKS OF ACCOUNT FOR WH ICH ADDITION HAS BEEN MADE BY THE ASSESSING OFFICER. TH ERE IS NO SUCH DISALLOWANCE MADE U/S 40A (3) MADE BY THE ASSE SSING OFFICER WHICH HAS BEEN CLAIMED BY THE ASSESSEE AS A N EXPENDITURE OUT OF THE INCOME DISCLOSED BY HIM. THU S, THE VERY BASIS ON WHICH THE GROUND HAS BEEN RAISED IS E RRONEOUS AS APPLICATION OF SECTION 40A (3) WAS NEVER A DISPU TE. BE THAT AS IT MAY BE, IT HAS BEEN CLEARLY BROUGHT ON RECORD BY THE ASSESSEE THAT NOT ONLY DURING THE COURSE OF ASSESSM ENT PROCEEDINGS BUT ALSO DURING THE COURSE OF APPELLATE PROCEEDINGS, THE ENTRIES IN THE SAID LOOSE PAPERS W ERE, FIRST OF ALL SHOWN TO BE BELONGING TO M/S. GAHOI BUILWELL LT D., IN WHOSE CASE DURING SCRUTINY PROCEEDINGS, EXACTLY THE SAME DOCUMENTS HAVE BEEN EXAMINED AND VERIFIED AND NO AD DITION HAS BEEN MADE IN THE CASE OF THE SAID COMPANY; AND I.T.A. NO.4131/DEL/2014 7 SECONDLY, THE CONTENTS NOTED IN THE LOOSE PAPER, PA GE NO.145 WERE REFLECTED IN THE BOOKS OF K4U. ONCE THESE FACT S ARE UNDISPUTED, OSTENSIBLY THESE ADDITIONS COULD NOT HA VE BEEN MADE IN THE HANDS OF THE ASSESSEE AT ALL. THE LD. C IT (A) WAS THUS CORRECT ON FACTS IN DIRECTING THE ASSESSING OF FICER TO VERIFY THESE FACTS AND DELETE THE ADDITIONS. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) AND ACCORDINGLY, THE GROUNDS RAISED BY THE REVENUE IS D ISMISSED. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JULY, 2018. SD/- SD/- [PRASHANT MAHARISHI] [AMIT SHUKLA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH JULY, 2018 PKK: