ACIT, New Delhi V. Ms Madhu Arora, New Delhi

ITA 4857/DEL/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87186 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 31-03-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 03-11-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DAM KANUNJNA
• Keywords: Unexplained investment; Income from undisclosed sources; Earning of tax free income; Additional evidence
• Section: 153A

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E , NEW DELHI BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI C.M. GARG, JUDICIAL MEMBER ITA NO. 4857 /DEL/2011 AY: 2002 - 03 ACIT, C.C. 22 VS. MADHU ARORA NEW DELHI 201, VIPPS CENTRE 2 COMMUNITY COMPLEX MASJID MOTH, GK II NEW DELHI (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.DAMKANUNJNA, SR.D.R. RESPONDENT BY : NONE ORDER PER J. SUDHAKAR REDDY, ACCOUNTANT MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AND IS DIRECTED AGAINST THE ORDER OF THE LD.CIT(A) - III, NEW DELHI DT. 19.8.2011 PERTAINING TO THE A.Y. 2002 - 03 ON THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.15,92,510/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INVESTMENT MADE IN ACQUIRING EQUITY SHARES OF M/S NESTLE INDIA LTD . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.2,40,000/ - MADE BY THE AO ON ACCOUNT OF UNDISCLOSED INCOME BEING CASH DEPOSITED IN THE BANK. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.61M260/ - MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DIVIDEND INCOME. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN ADMITTING ADDITIONAL EVIDENCE UNDER RULE 46A WHICH WAS NOT SUBMITTED BEFORE THE AO INSPITE OF SEVERAL OPPORTUNITIES GIVEN TO THE ASSESSEE. 5. THE ORDER OF THE CIT(A) IS ERRONEOUS AND IS NOT TENABLE ON FACTS AND IN LAW. 6. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND ANY/ALL OF GROUNDS OF APPEAL BEFORE OR DURING THE COURSE OF THE HEARING OF THE APPELLANT. 2 2. NONE APPEARED ON BEHALF OF THE ASSESSEE DESPITE ISSUAL OF NOTICE. UNDER THE CIRCUMSTANCES WE DISPOSE OF THIS CASE EX PARTE ON MER ITS QUA THE ASSESSEE AFTER HEARING THE LD.SR.D.R. 3. HEARD SHRI P.DAMKANUNJNA, T HE LD. SR. D.R. THE FIRST APPELLATE AUTHORITY AT PAGES 11 AND 12 PARA 5 HELD AS FOLLOWS. IN THE LIGHT OF ABOVE FACTS AND UNDER THE CIRCUMSTANCES, THE OBSERVATION OF THE ASSESSING OFFICER IS NOT ACCEPTABLE AND THE ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 15,92,510/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN 3063 SHARES O F M/S NESTLE INDIA LTD. DURING THE ASSESSMENT YEAR 2002 - 03. THEREFORE, IT IS PRAYED THAT THE ENTIRE ADDITION MADE BY THE ASSESSING OFFICER MAY BE DELETED AND FULL RELIEF BE ALLOWED TO THE APPELLANT.' FINDING: - IN GROUND OF APPEAL NO. 1 THE APPELLANT HAD CONTESTED THE ADDITION MADE FOR RS.15,92,510/ - AS INCOME FROM UNDISCLOSED SOURCES BEING IN THE NATURE OF UNDISCLOSED INVESTMENT MADE IN 3063 EQUITY SHARES OF NESTLE INDIA. IN THIS REGARD THE APPELLANT'S CONTENTION IS THAT THE APPELLANT HAD WITH HER 3063/ - DEMATERIALIZED SHARES OF NESTLE INDIA LTD AS ON 18.12.02, AS EVIDENCED FROM THE COPY OF DEMAT ACCOUNT WITH MLS ALANKIT ASSIGNMENT LTD, WHICH BECAME NIL AS CLOSING BALANCE ON THIS VERY DATE. HOWEVER THE CONTENTION OF THE APPELLANT IS THAT THE INVESTMENT IN THESE 3063 SHARES OF NESTLE INDIA LTD WAS OWNED BY THE APPELLANT FROM EARLIER YEARS IS SUBSTANTIATED BY THE FACT THAT IT HAD RECEIVED DIVIDEND AMOUNT OF RS. 16,847/ - ON 20.05.1999 ON 3063 NUMBER OF EQUITY SHARES OF NESTLE ITSELF. SUBSEQUENTLY TOO, DIVIDEND HAS BEEN RECEIVED ON THESE VERY NUMBER OF SHARES ON 02.07.2001 FOR RS.30,630/ - AND ANOTHER AMOUNT OF RS. 30,630/ - ON 20.12.01. THUS THE APPELLANT'S ARGUMENT IS THAT THE TOTAL NUMBER OF THESE 3063 NESTLE SHARES ARE CONTINUING SINCE A PERIOD MORE THAN 6 YEA RS, WHICH IN ANY CASE COULD NOT HAVE BEEN REOPENED UNDER THE PROVISIONS OF SECTION 153A AND ACCORDINGLY THERE IS NO CASE FOR HOLDING THAT THE AVERAGE INVESTMENT VALUE OF THESE NUMBER OF SHARES DURING A.Y. 2002 - 03 WORKED OUT FOR AN AMOUNT OF RS. 15,92,5101 - WHICH CAN THEREFORE BE ADDED TO THE INCOME OF THE APPELLANT AS UNACCOUNTED INVESTMENT. IT IS ALSO SEEN THAT THE 3 TOTAL DIVIDEND RECEIVED DURING THE YEAR ON ACCOUNT OF NESTLE INDIA SHARES WORKS OUT TO RS. 61,260/ - , WHICH IS AN EXEMPT INCOME AND FORMS PART O F THE TOTAL DIVIDEND OF RS.7,40,625/ - RECEIVED DURING THE YEAR IN APPELLANT'S CASE. IN SUPPORT THEREOF, THE APPELLANT HAS ALSO RELIED ON THE FACT THAT SUCH EXEMPT DIVIDEND INCOME HAS BEEN SHOWN IN THE INCOME STATEMENT AND COPY OF ACCOUNT FOR THE YEAR ENDIN G 31.03.02, THE RETURN FOR WHICH WAS FILED ON 28.10.02. IN VIEW OF SUCH FACTS ON RECORD, WHICH HAVE BEEN VERIFIED BY ME AND KEEPING IN VIEW THE ADDITIONAL FACT THAT NOTHING INCRIMINATING RELATING TO THE INVESTMENT IN SHARES OF NESTLE INDIA LTD. NUMBERING 3063 WERE FOUND DURING THE COURSE OF SEARCH THE ADDITION MADE FOR RS. 15,92,510/ - IS DIRECTED TO BE DELETED. FURTHER, THE ADDITION MADE FOR RS. 61,260/ - AS DIVIDEND INCOME IS ALSO DELETED FOR THE REASONS AS DISCUSSED ABOVE. THIS ADDITION HAS BEEN CONTESTE D BY THE APPELLANT IN GROUND NO.3 OF THE APPEAL , WHICH IS DECIDED IN FAVOUR OF THE APPELLANT. IN GROUND NO. 2 THE APPELLANT HAS CONTESTED ADDITION OF RS. 2,40,000/ - MADE BY THE AO AS INCOME FROM UNDISCLOSED SOURCE BEING CASH DEPOSITED IN THE SAVING BANK ACCOUNT WITH PNB MADE ON 01.03.02. WITH REGARD TO THIS ADDITION THE APPELLANT VIDE REPLY FILED ON 19.04.2011 HAS INTER - ALIA SUBMITTED THAT THE APPELLANT HAD OPENING CASH BALANCE OF RS. 2,43,786/ - AS PER COPY OF LEDGER ACCOUNT OF CASH IN HAND IN THE BOOKS OF THE APPELLANT. THE COPY OF THIS LEDGER ACCOUNT HAS BEEN FILED AS SUBSTANTIATION OF THE ABOVE FACT. IT HAS BEEN ARGUED THAT THERE IS NO REASON AND EVIDENCE BEFORE THE AO IN DISBELIEVING BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT REGARDING OF AVAILABIL ITY OF CASH IN HAND OF THE APPELLANT DURING THE YEAR UNDER CONSIDERATION. FURTHER THE CASH IN HAND DULY TALLIES WITH THE BALANCE SHEET AS ON 31.03.02 WHICH IS FOR RS. 3,786/ - AS WELL AS THE OPENING BALANCE ON 01.04.2001 WHICH IS FOR RS. 33,786/ - ( CLOSING B ALANCE AS ON 31.03.2001). IN VIEW OF THESE FACTS THE SOURCE OF DEPOSIT IN THE BANK ACCOUNT BEING SUBSTANTIATED FROM THE COPY OF BOOKS OF ACCOUNTS MAINTAINED BY THE APPELLANT, THE ADDITION FOR RS. 2,40,000/ - IS DIRECTED TO BE DELETED. IN A RESULT THE APPEA L IS ALLOWED. 4 4. THE LD.D.R. COULD NOT CONTROVERT THESE FACTUAL FINDINGS OF THE FIRST APPELLATE AUTHORITY AS FAR AS THE ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 46 A WAS CONCERNED, WE FIND THAT THE FIRST APPELLATE AUTHORITY AT PAGE 10 HAS RECORDED T HAT THE A.O. SERVED NOTICE U/S 153A ON 12.12.2008 AND THE ASSESSEE HAD FILED A RETURN OF INCOME IN COMPLIANCE THEREOF ON 31.12.2008. AFTER A GAP OF 9 MONTHS, THE AO GAVE ONLY ONE OPPORTUNITY VIDE QUESTIONNAIRE DT. 14.10.2008 AND COMPLETED THE ASSESSMENT ON 29.12.2009. THE ASSESSEE HAD COMPLIED TO THE QUESTIONNAIRE VIDE ITS REPLY DT. 27.11.2009. UNDER THE CIRCUMSTANCES WE FIND NO INFIRMITY IN THE ORDER OF THE LD.CIT(A) IN ADMITTING ADDITIONAL EVIDENCES. 5. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2015. SD/ - SD/ - (C.M. GARG) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 31 ST MARCH, 2015 MANGA COPY FORWARDED TO: - 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR, ITAT TRUE COPY BY ORDER ASSISTANT REGISTRAR