Mamraj Chuni Lal, Delhi V. ITO, Ward-46(1), New Delhi

ITA 444/DEL/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6562 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 22-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Principle of natural justice; Agreed addition
• Section: 143(3)

Judgement Text

PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE MRS. DIVA SINGH, JUDICIAL MEMBER ITA NO.444/DEL/2019 ASSESSMENT YEAR: 2011 -12 M/S MAM RAJ CHUNNI LAL 5183 LOHRI GATE DELHI-110006 VS. INCOME TAX OFFICER, 46(1), NEW DELHI. PAN : AAAFM 9668A (APPELLANT) (RESPONDENT) O R D E R THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE W HEREIN THE CORRECTNESS OF THE ORDER DATED 14.09.2018 OF CIT(A)-16, NEW DELHI PERTAINING TO 2011-12 ASSESSMENT YEAR IS ASSAILED ON THE FOLLOWING GROUND S. 1. THAT THE LD. CIT(APPEALS) ERRED IN LAW AND ON F ACTS IN CONFIRMING ADDITION OF RS.39,42,270/- AS MADE BY THE AO WITHOUT PROPERLY C ONSIDERING DOCUMENTS ON RECORD, JUSTIFYING NO ADDITION ON FACTS AND IN LAW, WHATSOE VER. 1.1 THAT THE LD. CIT(APPEALS) WAS WRONGLY INFLUENCED BY THE SURRENDER OBTAINED FROM THE APPELLANT AND CIT(A) OUGHT TO HAVE EXERCISED HI S POWERS/AUTHORITY VESTED IN LAW AS TO WHETHER THE ADDITION OF RS.394270/- REPRE SENTING EXPENSES INCURRED IN THE PRECEDING YEARS BUT NOW HAVING BEEN ACCEPTED IN YEAR UNDER APPEAL, WAS TAXABLE. 2. THAT THE LD. CIT(APPEALS) HAS BEEN UNJUST IN CON FIRMING DISALLOWANCE OF RS.101198/- OUT OF EXPENSES ON TELEPHONE, CAR EXPEN SES, INTEREST ON CAR LOAN, CAR DEPRECIATION @ 15% OF THE TOTAL EXPENSES AMOUNTING TO RS.674256/- IGNORING THE MAGNITUDE OF BUSINESS ACTIVITIES OF THE APPELLANT. 3. THAT THE LD. CIT(APPEALS) RESERVES ITS RIGHT TO ADD, AMEND AND MODIFY AND GROUNDS OF APPEAL BEFORE FINAL ADJUDICATION. APPELLANT BY SH. K.L. ANEJA, ADV. RESPONDENT BY SH. PRADEEP SINGH GAUTAM, SR. D.R. DATE OF HEARING 03.02.2020 DATE OF PRONOUNCEMENT 07.02.2020 02.L05005 20 ITA NO.444/DEL/2019 MAMRAJ CHUNNI LAL VS. ITO PAGE 2 OF 5 2. THE LD. AR INVITING ATTENTION TO THE GROUND NOS. 1 AND 1.1. SUBMITTED THAT THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINE D BY THE CIT(A) IN APPEAL IS BAD IN LAW. IT WAS SUBMITTED THAT THE ASSESSEE WAS HAVING A DISPUTE WITH M/S FENA PVT. LTD. IT WAS ULTIMATELY SETTLED IN A SUBSEQUENT ASSESSMENT YEAR. REFERRING TO THE REPLY AT PAPER BOOK PAGE 35, IT WAS SUBMITTED THAT THIS ARGUMENT HAD BEEN MADE BEFORE THE ASSESSING OFFICER AND THE ASSESSEE PLACE D FULL FACTS AND EVIDENCES TO SHOW THAT THERE IS A DISPUTE WITH M/S FENA PVT. LTD . AND ONLY ON ACCOUNT OF THE MENTAL STRESS AND INSISTENCE OF THE AO HE AGREED TO THE ADDITION ON THE CONDITION NO PENALTY WOULD BE LEVIED. THE EVIDENCES AND FACTS WE RE AVAILABLE WITH THE ASSESSING OFFICER FOR WHICH PURPOSE PB RUNNING 15 PAGES WAS F ILED AND RELIED UPON ON READING THE SUBMISSIONS MADE QUA GROUND NO.2 BEFORE THE LD. CIT(A). THE LD. SR. DR SUBMITTED THAT IT WAS AN AGREED ADDITION AS SUCH COULD NOT BE CHALLENGED. FINDING OF THE CIT(A) WAS RELIED UPON. 3. ON A READING OF THE IMPUGNED ORDER, IT APPEARS T HAT SOME FACTS HAD SPECIFICALLY BEEN BROUGHT TO THE NOTICE OF THE LD. CIT(A). IN VIEW THEREOF, IT APPEARS THAT THE GRIEVANCE POSED IN GROUND NO.1 IN THE PRES ENT PROCEEDINGS IS MADE OUT. ACCORDINGLY, AFTER HEARING THE LD. SR. DR IT WAS DE EMED APPROPRIATE TO RESTORE THE ISSUE BACK TO THE FILE OF THE CIT(A) DIRECTING HIM TO PASS A SPEAKING ORDER AFTER ADDRESSING THE GRIEVANCE OF THE ASSESSEE WHERE IT I S MAINTAINED THAT IT WAS NOT AN AGREED ADDITION. THE RELEVANT EXTRACT OF THE SUBMIS SIONS RELIED UPON WHICH ARE REPRODUCED HEREUNDER FOR READY REFERENCE PAGE 35, 3 6 OF PB: GROUND NO.2 THE ADDITION OF RS.3,94,270/- ON ACCOUNT OF RECEIPT OF OUTSTANDING SUMS FROM PRECEDING YEAR FROM M/S FENA (P) LTD. THE APPELLANT IS INDGLDGED IN ARAB APART FROM SELL ING VERY GOOD AND SUPERIOR QUALITY OF RICE AND DEALT WITH M/S FENA (P ) LTD. IN THE PREVIOUS YEAR RELEVANT TO AY:2010-11 AND SUPPLIED RICE AND INCURR ED OTHER EXPENSES AGGREGATING TO RS 11,61,996/- WHICH WAS DECLINED BY THE SAID PARTY TO PAY AND FOR RECOVERY OF THE SAME A LEGAL NOTICE DATED 23.6. 2010 WAS SENT THROUGH SOLICITORS WHICH WAS CONTESTED BY SAID M/S FENA VIDE LETTER DA TED 6.7.2010. AFTER DISCUSSION THE SAID PARTY M/S FENA AGREED TO PAY A SUM OF RS 3,94,270/- VIDE LETTER DATED 15.7.2010 AND ASKED FOR ISSUE OF PROPE R BILL AS HAD DONE BEFORE. THE SAID PARTY HAS POSTED THE ENTRIES IN THIS RESPECT I N HIS BOOKS. ITA NO.444/DEL/2019 MAMRAJ CHUNNI LAL VS. ITO PAGE 3 OF 5 THE APPELLANT FORWARDED THE BILL VIDE LETTER DATED 15.07.2010 FOR RECOVERY AT OUT- STANDING SUM OF RS.394270/- WHICH WAS OF CERTAIN L IABILITIES AS ON 31.3.2010 AND FORMING PART OF BOOKS OF ACCOUNT IN AY:2010-11. A COPY ENC LOSED (PAGES). THE AUDITED ACCOUNTS FOR AY: 2010-11, THE EVIDENCE OUT-STANDING ARE PROD UCED FOR VERIFICATION. COPIES OF NOTICE REPLIED AND FINAL COMPRISES OF DOCUMENTS ARE PLACED IN THE PAPER BOOK AT PAGE THE PERUSAL OF THE ABOVE, WILL REVEAL THAT THE OUT- STANDING SUM PERTAINED TO AY:2010-11 WHICH WAS TOWARDS BUSINESS DEALINGS AND HAD NO CO-RELATION TO THE INCOME OF AY: 2011-12 (YEAR UNDER APPEAL) BUT THE APPELLATE UNDER STRESS OF CIRCUMSTANCES OF MENTAL TEMPERAMENT AND DUE TO AO,S PRESSURE, WAS FO RCED TO AGREE TO PAY TAX THEREON SUBJECT TO NO PENAL ACTION. BUT THE AO STILL CONSID ERED THE ADD BACK FOR CONCEALMENT OF INCOME AND ULTIMATELY LEVIED PENALTY VIDE ORDER DAT ED 26.08.2014 AND SUBJECT MATTER OF SEPARATE APPEAL BEARING APPEAL NO.178/2014-15. THERE IS NO DISPUTE FOR THE ADDITIONS MADE IN THE Y EAR, HAD NO CO- RELATION WITH ANY PART OF THE INCOME AND RECOVERY OF THE OUT-STANDING BUSINESS DEBITED BALANCE IN THE PREVIOUS YEAR AND BY NO STRETCH OF IMAGINATION TO BE TREATED AS INCOME FOR AY: 2012-13. NO INCOME CAN BE ADDED BY THE AO SIMPLE CONDITIONS OF THE APPELLANT THAT TOO UNDER MENTAL TEMPERAMENT AND SORROW CONDITION IN THE FAMILY BECAUSE OF DEATH OF SENIOR PARTNER SH. PRADEEP KUMAR BEFORE PASSING ASSESSMENT ORDER UNDER APPEAL. THE PRINCIPAL OF NATURAL JUSTICE AND FAIR PLAY DO REQUIRE THAT LIST OF ADDITIONS COULD NOT BE MADE ON THE MERE REASONS THAT RECOVERY OF OUT-STANDING SUM WAS MADE IN THE YEAR UNDER CONSIDERATION. THE AO HAS NOT BROUGHT: ANY MATERIAL ON RECORD THAT THE IMPUGNED SUM HAS NO CO-RELATION WITH THE CURREN T YEAR'S INCOME AND AS SUCH THE ADD BACK DESERVES TO BE DELETED. 3.1 IT IS SEEN THAT THE LD. CIT(A) HELD AS UNDER: 7. GROUND NO. 2: PERTAINS TO ADDITION OF RS. 3 , 94 , 270 /- ON ACCOUNT OF RECEIPT OF THE AMOUNT FROM M/S FENA P. LTD. IN APPEAL NO SUBMISSION IS MA DE BY THE LD. AR OF THE APPELLANT. IN FACT ON PERUSAL OF ASSESSMENT ORDER IT IS NOTED THAT THE AP PELLANT VIDE ITS LETTER DATED 17 . 01.2014 HAS ADMITTED THE FACT THAT THE PAYMENT FROM M/S FENA P. LTD. HAS NOT BEEN DISCLOSED IN THE BOOKS OF ACCOUNT. THE APPELLANT HAS ALREADY OFFERED THE SAME FOR TAXATION BEFORE AO. THEREFORE TO MY MIND ONCE AN AMOUNT HAS BEEN SURRENDERED BEFORE AO IT CL OSES THE CHAPTER ON THAT ISSUE. THE AO THEN SHIFTS HIS FOCUS FROM THE ISSUE AND CONCENTRATE ON OTHER ISSUES. AFTER AGREEING FOR DISALLOWANCE BEFORE AO AND THEN RAISING THE SAME GROUND IN APPEA L IS TO MY MIND IS VERY UNFAIR. THE APPELLANT IN A WAY HAS BYPASSED THE SCRUTINY OF THE AO BY UNF AIR MEANS. THEREFORE, IN THE LIGHT OF UNAMBIGUOUS OFFER BEFORE AO, TO MY MIND THE APPELLA NT HAS PRECLUDED ANY SCOPE FOR RELIEF BEFORE APPELLATE AUTHORITY. THEREFORE THE ADDITION OF RS. 3 , 94 , 270 /- MADE BY THE AO IS CONFIRMED. HENCE THIS GROUND OF APPEAL IS DISMISSED. (EMPHASIS SUPPLIED ) 3.2 ACCORDINGLY ON A READING OF THE ABOVE GROUND NO .1 AND 1.1 ARE RESTORED BACK WITH THE DIRECTION TO PASS A SPEAKING ORDER IN ACCO RDANCE WITH LAW AND AFTER GIVING THE ASSESSEE A REASONABLE OPPORTUNITY OF BEING HEAR D AS ADMITTEDLY THE ASSESSEE HAS CONTESTED THAT IT WAS NOT AN AGREED ADDITION. 4. ADDRESSING THE ISSUES RAISED IN GROUND NO.2, TH E LD. AR SUBMITTED THAT THIS WAS THE FIRST TIME THE ORDER WAS PASSED IN SCRUTINY PROCEEDINGS U/S 143(3) AS EARLIER ITA NO.444/DEL/2019 MAMRAJ CHUNNI LAL VS. ITO PAGE 4 OF 5 RETURN WAS PROCESSED U/S 143(1). THUS, NO DISALLOWA NCE WAS MADE IN THE PAST. THE LD. SR. DR RELIED UPON THE IMPUGNED ORDER. 5. I HAVE HEARD THE SUBMISSIONS AND PERUSED THE MA TERIAL AVAILABLE ON RECORD. IT IS SEEN THAT THE LD. CIT(A) HAS ADDRESSED THE ISSUE IN THE FOLLOWING MANNER: 7. GROUND NO.3: PERTAINS TO DISALLOWING OF RS.1,01 ,138/- OUT OF THE EXPENSES ON TELEPHONE, CAR EXPENSES, INTEREST ON CAR LOAN, CAR INSURANCE AND CAR DEPRECIATION FOR PERSONAL USE OF THE PARTNER. THE AO NOTED THAT THE ASSESSEE HAS SNOT MAINTAINED THE LOG BOOK IN R/O OF CAR. THE AO FURTHER NOTED THAT THE E LEMENT OF PERSONAL USE CAN NOT BE DENIED. THEREFORE, THE AO DISALLOWED OF 15% OF THES E EXPENDITURE BEING PERSONAL IN NATURE. IN APPEAL NO MATERIAL FACTS HAS BEEN BROUGH T ON RECORD BY THE LD. AR TO CONTROVERT THE FINDING OF THE AO. POSSIBILITY OF PE RSONAL ELEMENT IN THESE EXPENSES CANNOT BE RULED OUT. THEREFORE, THE DISALLOWANCE MADE BY T HE AO IS CONFIRMED. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 6. THE LD. AR PRAYS FOR RELIEF. THE LD. SR. DR STAT ES THAT IN THE FACTS, NO RELIEF IS MAINTAINABLE SINCE THERE IS NO REFERENCE TO ANY FAC T FOR COMPARISON . THE PARTIES WERE HEARD ON A FAIR ESTIMATE. ULTIMATELY IT WAS AG REED THAT ESTIMATE OF 7.5 % WOULD SATISFY THE PARTIES. ADDITION TO THE SAID EFFECT BY WAY OF ESTIMATE IS SUSTAINED. SAID ORDER WAS PRONOUNCED IN THE OPEN COURT AT THE TIME OF HEARING ITSELF. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. THE ORDER IS PRONOUNCED IN THE OPEN COURT AT THE TI ME OF HEARING ITSELF ON 07 TH FEBRUARY, 2020. SD/- (DIVA SINGH) JUDICIAL MEMBER PK/PS COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTR AR, ITAT NEW DELHI