DCIT, New Delhi V. M/s. Ajay Enterprises Pvt. Ltd., New Delhi

ITA 4832/DEL/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 3644 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 04-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI KANT GUPTA SENIOR
• Assessee Lawyers: R K KAPOOR
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.4832/DEL./2014 (ASSESSMENT YEAR : 2010-11) DCIT, CENTRAL CIRCLE 6, VS. M/S. AJAY ENTERPRISES P VT. LTD., NEW DELHI. 8 TH FLOOR, EROS CORPORATE TOWER, NEHRU PLACE, NEW DELHI 110 019. (PAN : AAACA1967D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI PRADEEP DINODIA, CA & SHRI R.K. KAPOOR, CA REVENUE BY : SHRI RAVI KANT GUPTA, SENIOR DR DATE OF HEARING : 03.01.2018 DATE OF ORDER : 31.01.2018 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, DCIT, CENTRAL CIRCLE 6, NEW DELHI (HEREINAFTER REFERRED TO AS THE REVENUE) BY FILIN G THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 05.06.2014 PASSED BY THE COMMISSIONER OF INCOME-TAX (APPEALS)- 1, NEW DELHI QUA THE ASSESSMENT YEAR 2010-11 ON THE GROUND S INTER ALIA THAT :- ITA NO.4832/DEL/2014 2 ON THE FACT AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT (A) HAS ERRED IN:- 1. THE ORDER OF LD. CIT (A) IS NOT CORRECT IN LAW A ND FACTS. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,62, 629/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF BUSINESS PROMO TION EXPENSES. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW IN RESTRICTING THE ADDITION TO RS. 5,57,712/- OUT OF TOTAL ADDITION OF RS.11,51,424/- MADE BY AO ON ACCOUNT OF DISALLOWANCE OF FOREIGN TRAVELLING EXPENSES. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 61,00,000 /- MADE BY AO ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES ON SA LE OF FLAT AT CHARMWOOD VILLAGE, FARIDABAD. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE : DURING THE SCRUTINY PROCE EDINGS, ASSESSING OFFICER NOTICED FROM THE PROFIT & LOSS AC COUNT THAT THE ASSESSEE COMPANY HAS CLAIMED EXPENSES OF RS.44,53,4 19/- ON ACCOUNT OF BUSINESS PROMOTION EXPENSES. BUT, ON FA ILURE OF THE ASSESSEE COMPANY TO FURNISH THE NAME OF THE PERSONS WHO HAVE ENTERTAINED FOR BUSINESS PURPOSE, AO DISALLOWED 20% OF THE EXPENSES OF RS.8,38,146/- AND MADE ADDITION OF RS.1 ,67,629/-. AO ALSO MADE ADDITION OF RS.11,15,424/- BEING DISAL LOWANCE @ 20% OF THE EXPENSES OF RS.44,61,695/- CLAIMED BY TH E ASSESSEE COMPANY IN PROFIT & LOSS ACCOUNT ON ACCOUNT OF FORE IGN TRAVELLING EXPENSES ON THE GROUND THAT POSSIBILITY OF THE EXPE NSES OF PERSONAL NATURE INCURRED BY THE DIRECTOR OF THE COMPANY AND STAFF MEMBERS ITA NO.4832/DEL/2014 3 WHO ARE RELATIVE TO THE DIRECTORS OF THE ASSESSEE C OMPANY CANNOT BE RULED OUT. AO HAS ALSO MADE ADDITION OF RS.61,0 0,000/- BEING THE AMOUNT RECEIVED IN CASH FROM M/S. QUANTUM VINIM AY PRIVATE LIMITED THROUGH AUTHORIZED SIGNATORY, SHRI DWARKA D ASS DAGA IN RESPECT OF PROPERTY AT CHARMSWOOD VILLAGE, FARIDABA D FOR LACK OF CORROBORATIVE EVIDENCE. 3. ASSESSEE CARRIED THE MATTER BY WAY OF FILING APP EAL BEFORE THE LD. CIT (A) WHO HAS DELETED THE ADDITION OF RS. 1,67,629, RESTRICTED THE ADDITION TO RS.5,57,712/- OUT OF THE TOTAL ADDITION OF RS.11,15,424/- AND AGAIN DELETED THE ADDITION OF RS .61,00,000/- BY PARTLY ACCEPTING THE APPEAL OF THE ASSESSEE. FEELIN G AGGRIEVED, THE REVENUE HAS COME UP BEFORE THE TRIBUNAL BY CHALLENG ING THE IMPUGNED ORDER PASSED BY LD. CIT (A) . 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO.1 5. GROUND NO.1 IS GENERAL IN NATURE, HENCE DOES NOT REQUIRE ANY ADJUDICATION. ITA NO.4832/DEL/2014 4 GROUND NO.2 6. BARE PERUSAL OF PAGE 2 PARA 2 OF THE ASSESSMENT ORDER GOES TO SHOW THAT THE AO HAS MADE DISALLOWANCE WITHOUT DISP UTING THE BUSINESS PROMOTION EXPENSES, CLAIMED BY THE ASSESSE E COMPANY, ON ESTIMATION BASIS WHICH IS OTHERWISE NOT PERMISSIBLE UNDER LAW, PARTICULARLY WHEN EXPENDITURE WHICH HAVE ADMITTEDLY BEEN INCURRED THROUGH CREDIT CARD. MOREOVER, LD. CIT (A) HAS RIG HTLY RECORDED THE FINDING THAT THE EXPENDITURE IS LESS THAN 0.5% OF T HE PROFIT OF THE COMPANY AND NEGLIGIBLE AS COMPARED TO THE TURNOVER OF THE BUSINESS. SO, WE FIND NO ILLEGALITY OR PERVERSITY IN DELETION OF THE BUSINESS PROMOTION EXPENSES OF RS.1,67,629/- BY THE LD. CIT (A). SO, GROUND NO.2 IS DETERMINED AGAINST THE REVENUE. GROUND NO.3 7. SO FAR AS QUESTION OF RESTRICTING THE ADDITION T O RS.5,57,712/- OUT OF THE TOTAL ADDITION OF RS.11,15,424/- MADE BY THE AO ON ACCOUNT OF FOREIGN TRAVEL EXPENSES ON THE GROUND TH AT TWO STAFF MEMBERS WHO HAVE TRAVELLED WERE RELATED TO THE DIRE CTORS OF THE ASSESSEE COMPANY IS CONCERNED, HOWEVER, KEEPING IN VIEW THE FACT RECORDED BY THE LD. CIT (A) IN THE IMPUGNED ORDER T HAT AS COMPARED TO THE ASSESSMENT YEAR 2008-09, THE DISALL OWANCE WAS MADE TO ONE-HALF AND FOLLOWING THE SAID ORDER, THE DISALLOWANCE ITA NO.4832/DEL/2014 5 MADE BY THE AO TO THE TUNE OF RS.11,15,424/- HAS AL SO BEEN RESTRICTED TO 50% I.E. RS.5,57,712/-. MOREOVER, ME RELY BECAUSE OF THE FACT THAT SUCH DISALLOWANCE CANNOT BE MADE MERE LY ON THE GROUND THAT TWO OF THE STAFF MEMBERS, WHO HAVE TRAV ELLED FOR BUSINESS PURPOSE, WERE RELATED TO DIRECTOR OF THE A SSESSEE COMPANY, THE SAME CANNOT BE DISALLOWED MERELY ON TH E BASIS OF ESTIMATION WITHOUT GOING INTO THE DETAIL AND PURPOS E OF EXPENSES BY THE AO. SO, WE ARE OF THE CONSIDERED VIEW THAT LD. CIT (A) HAS MERELY RESTRICTED THE ADDITION TO 50% INSTEAD OF 2 5% MADE BY THE AO FOLLOWING HIS OWN ORDER PASSED IN AY 2008-09 IN ASSESSEES OWN CASE WHICH IS STATED TO HAVE NOT BEEN CHALLENGE D FURTHER. SO, AGAIN, WE FIND NO ILLEGALITY OR PERVERSITY IN THE F INDINGS RETURNED BY THE LD. CIT (A). GROUND NO.3 IS DETERMINED AGAINST THE REVENUE. GROUND NO.4 8. UNDISPUTEDLY, DURING THE SEARCH AND SEIZURE OPER ATION CONDUCTED U/S 132 OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) AT THE PREMISES OF M/S. SHIV-VANI GROUP AND ITS ASS OCIATES AND ITS DIRECTORS, CERTAIN DOCUMENTS WERE SEIZED AND ONE SU CH DOCUMENT WAS QUA PROPERTY BEARING SPACE NO.4 MEASURING 4,395 SQ.FT. ON THE 7 TH FLOOR OF THE BUILDING ROYAL RETREAT-II, CHARMWOOD VILLAGE, SOHNA ROAD, FARIDABAD HAVING BEEN PURCHASED BY ONE M/S. ITA NO.4832/DEL/2014 6 QUANTUM VINIMAY PVT. LTD. FOR CONSIDERATION OF RS.2 ,56,00,000/- AND PROPERTY REGISTERED FOR RS.1,94,16,145/-. IT I S ALSO NOT IN DISPUTE THAT M/S. QUANTUM VINIMAY PVT. LTD. IS PROM OTED AND MANAGED BY DAGAS, IN-LAWS OF SHRI PADAM SINGHEE. I T IS ALSO NOT IN DISPUTE THAT PADAM SINGHEE STATED THAT DIFFERENC E OF RS.61,00,000/- WAS PAID IN CASH. 9. ASSESSEE COMPANY CHALLENGED THE ADDITION ON TWO GROUNDS : ONE THAT ADDITION HAS BEEN MADE WITHOUT GIVING OPPO RTUNITY TO CROSS-EXAMINE THE PADAM SINGHEE; AND SECOND THAT TH E ADDITION HAS BEEN MADE ON THE BASIS OF STATEMENT WITHOUT ANY COR ROBORATION AND IN ANY CASE, THE ADDITION IS TO BE MADE, IT IS TO B E MADE IN THE HAND OF M/S. QUANTUM VINIMAY PVT. LTD. 10. WHEN UNDISPUTEDLY THE SALE DEED OF THE PROPERTY IN QUESTION HAS BEEN REGISTERED FOR A CONSIDERATION OF RS.1,94, 16,145/- IN THE NAME OF M/S. QUANTUM VINIMAY PVT. LTD.; A JURISTIC PERSON, AND IN CASE, ANY PAYMENT OF RS.61,00,000/- IN CASH HAS BEE N PAID THEN ADDITION SHOULD BE MADE IN THE HANDS OF M/S. QUANTU M VINIMAY PVT. LTD.. MOREOVER, WHEN ASSESSEE COMPANY HAS NOT BEEN CONFRONTED WITH THE STATEMENT OF PADAM SINGHEE RELI ED UPON BY THE AO FOR FRAMING THE ASSESSMENT, THE SAME CANNOT BE U TILIZED AGAINST THE ASSESSEE COMPANY. ITA NO.4832/DEL/2014 7 11. THE CONTENTION OF THE LD. DR THAT SHRI PADAM SI NGHEE AND DAGAS ARE NOT THE THIRD PARTIES RATHER THEY ARE DIR ECTORS OF THE ASSESSEE COMPANY BUT IN THE FACE OF A SPECIFIC DOCU MENT THAT WHEN SALE DEED OF THE PROPERTY IN QUESTION HAS BEEN REGI STERED IN THE NAME OF A DIFFERENT COMPANY, NAMELY, M/S. QUANTUM V INIMAY PVT. LTD., THE ADDITION, IF ANY, THAT CAN BE MADE IN THE HANDS OF M/S. QUANTUM VINIMAY PVT. LTD.. SO, LD. CIT (A) AFTER E XAMINING ALL THESE FACTS HAS DELETED THE ADDITION AND FINDING NO ILLEGALITY OR PERVERSITY IN THE IMPUGNED ORDER, GROUND NO.4 IS AL SO DECIDED AGAINST THE REVENUE. 12. RESULTANTLY, THE APPEAL FILED BY THE REVENUE ST ANDS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST DAY OF JANUARY, 2018. SD/- SD/- (B.P. JAIN) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED THE 31 ST DAY OF JANUARY, 2018 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-1, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.