Sh. Sushil Bindal, Panchkula V. ITO, Panchkula

ITA 443/CHANDI/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1178 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 10 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 07-01-2020
• Assessment Year: 2011-2012
• Appeal Filed On: 27-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SHRIKULTEJ SINGH BAINS
• Assessee Lawyers: SHRIAJAY JAIN
• Keywords: Unexplained cash credit; Deemed owner of house property; Business income; Depreciation
• Section: 69C; 32; 10

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRISANJAY GARG, JUDICIAL MEMBER ./ ITA NO.443/CHD/2016 ! / ASSESSMENT YEAR : 2011-12 SHRISUSHILBINDAL, H. NO.SECTOR 9 PANCHKULA VS. '# THE ITO, WARD-1, PANCHKULA $% ./ PAN NO:AEEPS7885K $&/ APPELLANT ()$& / RESPONDENT *+,- /ASSESSEE BY : SHRIAJAY JAIN , CA ,- / REVENUE BY : SHRIKULTEJ SINGH BAINS, ADDL. CI T . /,+0% /DATE OF HEARING : 07.01.2020 12! ,+0% / DATE OF PRONOUNCEMENT : 20.02. 2020 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 29.02.2016 OF THE OF THE COMMISSIONER O F INCOME TAX (APPEALS), PANCHKULA [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE LEARNED C.I.T. (A) PANCHKULA HAS WRONGL Y SUSTAINED THE ADDITION OF RS 313500/- ON ACCOUNT OF NEGATIVE BALANCE ON ACCOUNT OF CASH DEPOSIT & CASH WITHDRAWAL FROM BANKS WITHOUT APPRECIATING THE FACT THAT ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 2 THE APPELLANT HAD MADE CASH WITHDRAWAL FROM PARTNER SHIP FIRMS & ALSO EARNED CASH RENTAL INCOME DULY DISCLOS ED IN RETURN OF INCOME FILED . 2. THAT THE LEARNED C.I.T. (A) PANCHKULA HAS WRONGL Y UPHELD THE ADDITION OF RS 54600/- ON ACCOUNT OF DEE MED LET OUT UNDER HEAD HOUSE PROPERTY WITHOUT APPRECIAT ING THE FACT THAT THE APPELLANT HAD BEEN USING H.NO. 81 5 SECTOR 10 PANCHKULA FOR BUSINESS PURPOSE . 3. THAT THE LD CIT (A) HAS WRONGLY UPHELD ADDITION OF RS 3,00,000/- U/S 69C OF INCOME TAX ON ACCOUNT OF UNEXPLAINED EXPENSES INCURRED ON FOREIGN TRIP. 4. THAT THE LD CIT (A) HAS WRONGLY UPHELD ADDITION OF RS 211500/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION CLAIMED U/S 32 READ WITH SECTION 29 OF I.T. ACT FROM INCOME FROM PARTNERSHIP FIRM U/S 28(V) OF I .T. ACT IN SHAPE OF SALARY & INTEREST WITHOUT APPRECIAT ING THE FACT THAT THE APPELLANT HAS BEEN USING VEHICLE FOR BUSINESS OF PARTNERSHIP FIRM & ELIGIBLE FOR DEDUCTION. 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND THE GROUNDS OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D AND DISPOSED OFF. 3. GROUND NO.1 : VIDE GROUND NO.1, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN SUSTAINING THE ADDITION OF RS. 3,13,500/- ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BANK ACCOUNT. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSING OFFICE R NOTED THAT THE ASSESSEE HAD DEPOSITED A CASH OF RS. 42,14,286/- AN D RS. 17,80,000/- WITH INDIAN OVERSEAS BANK, PANCHKULA AND IDBI BANK, ZIRAKPUR RESPECTIVELY. THE CASH WAS DEPOSITED ON DIFFERENT D ATES AS DETAILED IN THE ASSESSMENT ORDER.ON BEING ASKED TO EXPLAIN THE SOUR CE OF CASH DEPOSIT, THE ASSESSEE FURNISHED THE CASH FLOW STATEMENT TO E XPLAIN THE SOURCE OF ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 3 THE CASH DEPOSITS. THE MAIN CONTENTION OF THE ASSES SEE WAS THAT THE SAID DEPOSITS WERE OUT OF THE WITHDRAWALS MADE BY THE AS SESSEE FROM HIS BANK ACCOUNT ON OTHER DATES. HOWEVER, THE ASSESSING OFFI CER DID NOT GET SATISFY WITH THE ABOVE EXPLANATION OF THE ASSESSEE AND MADE THE ADDITIONS OF RS. 33,14,286/- AND RS. 17,80,000/- AS INCOME FR OM UNDISCLOSED SOURCES. 4. IN APPEAL, THE ASSESSEE FURNISHED THE CASH FLOW STATEMENT BEFORE THE CIT(A) UPON WHICH REMAND REPORT WAS CALLED FOR BY THE LD. CIT(A) FROM THE ASSESSING OFFICER. AFTER GOING THROUGH THE REMAND REPORT AND CO-RELATING ENTRIES OF THE DEPOSITS WITH THE CASH F LOW STATEMENT, THE LD. CIT(A) RESTRICTED THE ADDITIONS OF RS. 3,13,500/- O BSERVING THAT EVEN AFTER CONSIDERING THE DEPOSITS OUT OF WITHDRAWALS M ADE FROM BANK THERE WAS STILL A PEAK NEGATIVE BALANCE OF CASH OF RS. 3, 13,500/-. HE REJECTED THE EXPLANATION OF THE ASSESSEE THAT SOME OF THE DE POSITS WERE OUT OF WITHDRAWALS FROM PARTNERSHIPFIRM & RENTAL INCOME OB SERVING THAT NO EVIDENCE WAS SUBMITTED IN RESPECT OF DATE WISE WITH DRAWALS SHOWN FROM PARTNERSHIP FIRM AND RENTAL INCOME. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) , THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD. THE LD. COUNSEL FOR THE ASSESSEE HAS IN VITED OUR ATTENTION TO THE REMAND REPORT OF THE ASSESSING OFFICER PLACED A T PAGE 4 OF THE PAPER ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 4 BOOK,WHEREIN, THE ASSESSING OFFICER MADE AN OBSERVA TION THAT THEAR OF THE ASSESSEE HAS SUBMITTED NARRATION OF EACH DEBIT AND CREDIT ENTRY. HOWEVER, IT WAS OBSERVED THAT THE PURPOSE OF EACH W ITHDRAWAL MADE AND SUBSEQUENT DEPOSITS MADE HAD NOT BEEN EXPLAINED. TH E ASSESSING OFFICER, HOWEVER, HAD NOT DISPUTED THE INFLOW OF T HE CASH WITHDRAWALS FROM PARTNERSHIP FIRMS AND RENTAL INCOME. IT IS NOT THE CASE OF THE ASSESSING OFFICER THAT WITHDRAWALSFROM PARTNERSHIP FIRM AND RENTAL INCOME WAS ALREADY DEPOSITED IN THE BANK ACCOUNT FR OM WHICH WITHDRAWALS WERE MADE. UNDER THE CIRCUMSTANCES, THE ACTION OF THE LD. CIT( A) IN NOT CONSIDERING THE WITHDRAWALS FROM PARTNERSHIP FIRM A ND RENTAL INCOME, IN OUR VIEW, IS NOT JUSTIFIED. IN VIEW OF THIS, THE ADDITIONS SUSTAINED BY THE CIT (A) OF RS. 3,13500/- IS ACCORDINGLY ORDERED TO BE DELETED. THIS GROUND IS ACCORDINGLY ALLOWED IN FAVOUR OF THE ASSESSEE. 7. GROUND NO.2: VIDE GROUND NO.2, THE ASSESSEE HAS CONTESTED THE ACTION OF THE CIT(A) IN UPHOLDING THE ADDITION OF R S. 54,600/- ON ACCOUNT OF DEEMED LET OUT OF THE HOUSE PROPERTY. 8. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE WAS 1/4 TH OWNER OF H.NO. 815, SECTOR 10, PANCHKULA. HE, ACCORDINGLY ASSESSED THE DEEMED ANNUAL RENTAL VALUE AND MADE THE ADDITION OF RS. 54,600/- TO THE INCOME OF THE ASSESSEE AS PER THE ASSESSEES SHARE AFTER PROVIDING ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 5 DEDUCTION OF RS. 23,400/- U/S 24(A) OF THE INCOME T AX ACT, 1961 (IN SHORT 'THE ACT'). 9. BEING AGGRIEVED BY THE ABOVE ORDER OF THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) AND EXP LAINED THAT, IN FACT, THE ASSESSEE IS OWNER OF 1/3 RD SHARE OF H.NO. 815, SECTOR 10, PANCHKULA. HOWEVER, IT WAS SUBMITTED THAT THE SAID HOUSE WAS B EING USED FOR BUSINESS PURPOSES BY THE BROTHER OF THE ASSESSEE. T HE LD. CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE OBSERVING T HAT ASSESSEE HAS FAILED TO FURNISH ANY EVIDENCE THAT THE SAID HOUSE WAS BEI NG USED FOR BUSINESS PURPOSES OF THE ASSESSEE. 10. BEFORE US, THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT HIS BROTHER MR. YASHPAL BINDAL WAS RESIDING IN THE SAID HOUSE AND HIS BROTHER HAS BEEN USING THE SAID HOUSE FOR BUSINESS PURPOSES AS OFFICE OF HIS FIRM WAS AT THE SAME PLACE. 11. WE HAVE CONSIDERED THEIR ABOVE SUBMISSIONS AND HAVE ALSO GONE THROUGH RECORD. WE FIND THAT NO EVIDENCE HAVE BEEN FURNISHED THAT THE HOUSE WASBEING USED BY THE ASSESSEE FOR HIS OWN BUS INESS PURPOSES. A COPY OF THE INCOME TAX RETURN OF ONE SHRI YASH PAL BINDAL FOR ASSESSMENT YEAR 2012-13 HAS BEEN FILED,WHEREIN, HIS ADDRESS HA S BEEN MENTIONED AS H.NO. 815, SECTOR 10 PANCHKULA, HOWEVER, THE SAID R ETURN PERTAINED TO THE SUBSEQUENT YEAR, WHICH SEEMS TO BE AN AFTERTHOU GHT. THERE IS NO ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 6 EVIDENCE THAT THE SAID HOUSE HAS EVER BEEN USED FOR BUSINESS PURPOSES. UNDER THE CIRCUMSTANCES, WE DO NOT FIND ANY INFIRMI TY IN THE ORDER OF THE CIT(A) IN CONFIRMING THE ADDITION MADE BY THE ASSES SING OFFICER. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREFORE, DISMISSED. 12. GROUND NO.3 : VIDE GROUND NO.3, THE ASSESSEE HAS AGITATED THE ACTION OF THE CIT(A) IN UPHOLDING THE ADDITION OF R S. 3 LACS U/S 69C OF THE ACT ONACCOUNT OF UNEXPLAINED EXPENSES INCURRED ON FOREIGN TRIP. 13. FROM THE PERUSAL OF THE PASSPORT OF THE ASSESSE E, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE ALONG WITH FAMILY HAS GONE ONA FOREIGN TRIP. THE ASSESSEE CLAIMED THAT THE TOTAL EXPENDITU RE ON THE FOREIGN TRIP WAS RS. 1 LAC. HOWEVER, THE ASSESSING OFFICER ESTIM ATED THE EXPENDITURE ON FOREIGN TRIP AT RS. 4 LACS. ON BEING ASKED TO EX PLAIN THE SOURCE OF THE AFORESAID EXPENDITURE, THE ASSESSEE EXPLAINED THE E XPENDITURE OF RS. 1 LAC ONLY.THE PLEA OF THE ASSESSEE ABOUT THE REMAINI NG AMOUNT WAS THAT THE SAID AMOUNTWAS CONTRIBUTED BY HIS WIFE. THE AS SESSING OFFICER REJECTED THE ABOVE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION OF RS. 3 LACS INTO THE INCOME OF THE ASSESSEE. THE LD. CIT(A) CONFIRMED THE ADDITION SO MADEBY THE ASSESSING OFFICER. 14. BEFORE US,LD. COUNSEL FOR THE ASSESSEE HAS SUBM ITTED THAT HIS WIFE HAS BEEN AN INCOME TAX ASSESSEE AND THAT THE AFORES AID EXPENDITURE ON FOREIGN TRIP WAS CONTRIBUTED BY HER FROM HER OWN IN COME. THE LD. ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 7 COUNSEL IN THIS RESPECT HAS RELIEDUPON THE INCOME T AX RETURNS OF WIFE OF THE ASSESSEE E NAMELY SMT. PALLAVI BINDAL. A PERUS AL OF THE SAID INCOME TAX RETURN REVEALS THAT SHE HAS RETURNED THE TOTAL INCOME FOR TAXATION AT RS 9,11,690/- FOR THE ASSESSMENT YEAR UNDER CONSIDE RATION 2011-12, WHICH SHOWS THAT SHE HAS BEEN ASSESSED TO INCOME T AX AND HAD SUFFICIENT INCOME DURING THE YEAR. THE LOWER AUTHORITIES HAVE FAILED TO LOOK INTO THIS ASPECT. IT IS NOTTHE CASE OF THE LOWER AUTHORI TIES THAT SMT. PALLVI BINDAL WAS NOT POSSESSED OF SUFFICIENT FUNDS TO MAK E CONTRIBUTION IN EXPENDITURE ON FOREIGN TRIP OF HER FAMILY. INVIEW OF THIS, THE ADDITION CONFIRMED BY THE CIT(A ) ON THIS ISSUE ISNOT SUSTAINABLE AND THE SAME IS ACCORDINGLYORDERE D TO BE DELETED. 15. GROUND NO.4 : VIDE GROUND NO.4, THE ASSESSEE HAS AGITATED THE ADDITION OF RS. 2,11,150/- MADE BY THE ASSESSING OF FICER ON ACCOUNT OF DISALLOWANCE OF DEPRECIATION ON CAR. THE PLEA OF TH E ASSESSEE HAS BEEN THAT SINCE THE ASSESSEE HAD EARNED REMUNERATION FRO M PARTNERSHIP FIRM WHICH WAS TO BE TREATED AS BUSINESS INCOME AS PER P ROVISIONS OF SECTION 28(V) OF THE ACT, THEREFORE, THE ASSESSEE WAS ENTIT LED TO DEDUCTION OF DEPRECIATION ON CAR. 16. WE FIND THAT THE LD. CIT(A) HAS GIVEN A CATEGOR ICAL FINDINGS THAT BUSINESS OF THEFIRM WAS CLOSED FOR THE YEAR UNDER CONSIDERATION AND THAT THEREWAS NO EVIDENCE THAT THE SAID CAR WAS USED F OR BUSINESS OF THE FIRM. MERELY BECAUSE OF THE PROVISIONS OF SECTION 2 8(V) OF THE ACT THE ITA NO. 443-CHD.-2016 SHRI HAKAM SINGH, BARNALA 8 REMUNERATION FROM PARTNERSHIP FIRM IS TO BE TREATED AS BUSINESS INCOME, THAT ITSELF DOES NOT ENTITLE THE ASSESSEE TO CLAIM DEPRECIATION ON CAR IN THE ABSENCE OF ANY EVIDENCE THAT THE SAID CAR WAS U SED OF BUSINESS PURPOSES. IN VIEW OF THIS, WE DO NOT FIND ANY INFIRMITY IN TH E ORDER OF THECIT(A) ON THIS ISSUE AND THE SAME IS ACCORDINGL Y UPHELD. 17. GROUND NO.5 : THIS GROUND IS GENERAL IN NATURE AND DOES NOT REQUIRE ANY SPECIFIC ADJUDICATION. IN VIEW OF OUR FINDINGS GIVEN ABOVE, THE APPEAL OF THE ASSESSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20.02.2020. SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT &' / JUDICIAL MEMBER DATED : 20.02.2020 .. 3,(+45 65!+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. ()$& / THE RESPONDENT 3. . 7+ / CIT 4. . 7+ ( )/ THE CIT(A) 5. 58(+9 , 09 , :;<= / DR, ITAT, CHANDIGARH 6. <>/ / GUARD FILE 3 . / BY ORDER, ? / ASSISTANT REGISTRAR