Hira Lal and Sons, Meerut V. ACIT, Meerut

ITA 4895/DEL/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 7301 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 10-12-2015
• Assessment Year: 1991-1992
• Appeal Filed On: 29-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: AMRIT LAL
• Assessee Lawyers: RAJEEV SINGHAL
• Keywords: Gift; Additional evidence
• Section: 143(3); 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE : JUDICIAL MEMBER ITA NO. 4895/DEL/2015 ASSTT. YR: 1991-92 HIRA LAL & SONS, VS. ACIT, CIRCLE-1, A-80, DEFENCE COLONY, MEERUT. MEERUT. PAN: AAAFH 4650 B ( APPELLANT ) (RESPONDENT) APPELLANT BY : SHRI RAJEEV SINGHAL & SHRI RAMIT KAKKAR ADV. RESPONDENT BY : SHRI AMRIT LAL SR. DR . DATE OF HEARING : 10/12/2015. DATE OF ORDER : 02/02/2016. O R D E R PER S.V. MEHROTRA, A.M: THIS IS ASSESSEES APPEAL AGAINST THE ORDER DATED 2 .6.2015 PASSED BY THE LD. CIT(A), MEERUT IN APPEAL NO. 365/09-10, R ELATING TO A.Y. 1991-92. 2. BRIEF FACTS OF THE CASE ARE THAT THE ORIGINAL AS SESSMENT WAS COMPLETED U/S 143(3) AT AN INCOME OF RS. 7,66,330/- VIDE ASSE SSMENT ORDER DATED 25.3.1994. ASSESSMENT ORDER WAS SET ASIDE BY LD. CI T(A) ON CERTAIN ISSUES. THE INCOME WAS REASSESSED U/S 143(3)/250 AT AN INC OME OF RS. 6,57,463/-, WHICH INCLUDED ADDITIONS MADE U/S 68 OF RS. 1,62,97 5/- AND RS. 1,97,476/- ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE NAMES OF SMT. RACHNA MITTAL AND 2 M/S VARIETY (GV) PVT. LTD. EXPENSES CLAIMED ON ACCO UNT OF CAR KHARCHA FOR COLLECTION OF RENT RS. 22,852/- WAS ALSO DISALLOWED AND ADDED BACK TO THE INCOME OF THE ASSESSEE. THE ASSESSMENT WAS RECTIFIE D U/S 154 AND THE TAXABLE INCOME OF THE ASSESSEE REDUCED TO RS. 5,59,461/-. A GGRIEVED WITH THE ORDER OF LD. CIT(A) THE ASSESSEE PREFERRED APPEAL BEFORE ITAT AND PRODUCED ADDITIONAL EVIDENCE IN SUPPORT OF ITS CLAIM. THE IT AT REMITTED THESE ISSUES TO THE FILE OF AO AND CONSEQUENTLY THE ASSESSMENT O RDER HAS BEEN PASSED U/S 254/143(3). THE ASSESSMENT WAS COMPLETED AFTER DELE TING FOLLOWING THREE ADDITIONS: 1. ADDITION MADE EARLIER IN RESPECT OF RS. 1,00,000/ - SMT. RACHNA MITTAL 2. ADDITION MADE EARLIER IN RESPECT OF RS. 1,97,476/ - M/S VARIETY (GV)(P) LTD. 3. EXPENSES ON CAR KHARCH LIMITED TO RS. 17,139/- TO 3/4 TH (3/4X22,852) 3. LD. CIT(A) DISMISSED THE ASSESSEES APPEAL. BEIN G AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US AND HAS TAKEN FOLLO WING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT (A) HAS ERRED IN SUSTAINING ADDITION OF RS 62,9 75/- U/S 68 . 2. THAT THE LD COMMISSIONER OF INCOME TAX ( APPEALS ) , HAS ERRED IN SUSTAINING ADDITION OF RS 3,040/- ON A CCOUNT OF INTEREST CREDITED TO SMT RACHANA MITTAL 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD CIT(A) HAS ERRED IN ENHANCING ADDITION U/S 68 BY RS 57,025/- WHICH IS WITHOUT APPRECIATING THE CORRECT FACTS. 4. THAT THE L'D CIT(A} HAS ERRED IN SUSTAINING AN A DDITION OF RS 22,852/- HOLDING THAT THE AO HAS DECIDED THE ISSUE ON 3 MERITS, WHEREAS, IN THE IMPUGNED ORDER (PAGE 2), TH IS ADDITION HAS BEEN PREFERRED ON ACCOUNT OF 'EARLIER ASSESSMEN T YEARS '. 4. GROUND NO. 4 WAS NOT PRESSED AT THE TIME OF HEAR ING. ACCORDINGLY, GROUND NO. 4 STANDS DISMISSED BEING NOT PRESSED. 5. BRIEF FACTS APROPOS GROUND NOS. 1 & 3 ARE THAT ASSESSEE HAD CLAIMED GIFT RECEIVED AT THE TIME OF HER MARRIAGE AGGREGATI NG TO RS. 1,62,975/-. THE SUM OF RS. 1,00,000/- WAS ACCEPTED BY AO BUT FOR TH E BALANCE AMOUNT OF RS. 62,975/- HE POINTED OUT THAT NO CONFIRMATIONS HAD B EEN FILED BY THE ASSESSEE AND, THEREFORE, HE MADE THE ADDITION OF THIS AMOUNT U/S 68. 6. LD. CIT(A) CONFIRMED THE ADDITION AND FURTHER EN HANCED THE ADDITION BY RS. 57,025/- OBSERVING AS UNDER: THE ASSESSEE WAS REQUIRED TO ESTABLISH THE CREDITW ORTHINESS OF SMT. RACHNA MITTAL FROM WHOM THE ASSESSEE HAS SHOW N CREDIT ENTRY. FOR THIS PURPOSE, THE ASSESSEE HAD SUBMITTED COPY OF ACCOUNT OF SMT. RACHANA MITTAL. FROM THE COPY OF AC COUNT, IT CAN BE SEEN THAT THE CREDIT 'BALANCE ' STANDING IN THE ACCOUNT OF SMT. RACHANA MITTAL WAS RS. 1,62,975/- ONLY IF THE DEBIT ENTRY OF JEWELRY AMOUNTING TO RS. 57,025/- IS CONSIDERED. THE TOTAL OF CREDIT ENTRIES BEING REPRESENTED BY CASH GIFT WAS R S. 2,20,000/- OUT OF WHICH, THE AO HAS ACCEPTED RS. 1. LAC ONLY. THUS, ADDITION OF RS. 1,20,000/- WAS REQUIRED TO BE MADE. THE AO HOWEVER, ADDED ONLY RS. 62,975/- . IN RESPONSE TO T HE SHOW CAUSE NOTICE OF MY PREDECESSOR, THE AR HAS TRIED TO EXPLAIN THAT THE DEBIT ENTRY OF RS. 51,025/- HAS TO BE CONSIDERE D. HOWEVER, AS MENTIONED ABOVE, THE AO WAS NOT MAKING ASSESSMEN T' OF M/S RACHANA MITTAL. THE APPELLANT WAS REQUIRED TO ESTAB LISH THAT MIS RACHANA MITTAL HAS CREDITWORTHINESS OF RS. 2,20 ,000/-. DURING THE COURSE OF ASSESSMENT, THE AO ACCEPTED CREDITWORTHINESS OF RS. 1 LAC ONLY. IN THIS SITUATI ON, THE AO SHOULD HAVE MADE AN ADDITION OF RS. 1,20,000/-. THE DEBIT ENTRY OF RS. 57,025/~ MAY BE RELEVANT FOR THE ASSESSMENT OF MRS. 4 RACHANA MITTAL BUT NOT FOR APPELLANT BECAUSE IN APP ELLANT'S CASE CREDITWORTHINESS FOR THE ENTIRE AMOUNT OF RS. 2,20,000/- WAS REQUIRED TO BE ESTABLISHED. CONSIDERING THE TOT ALITY OF FACTS; TOTAL INCOME OF THE APPELLANT IS ENHANCED BY RS. 57,025/- AND ADDITION OF RS, 62,975/- IS FURTHER CONFIRMED. 7. LD. COUNSEL FOR THE ASSESSEE REFERRED TO PAGE 1 OF PB WHEREIN THE ACCOUNT OF RACHNA MITTAL IS CONTAINED AND POINTED O UT THAT THE SUM OF RS. 1,20,000/- WAS RECEIVED ON 17.2.1991 FROM FOLLOWING PERSONS AT THE TIME OF HER MARRIAGE: CASH GIFT FROM S.P. MITTAL 20,000.00 CURRENT P&L A/C CASH GIFT FROM TRILOK RAJ 20,000.00 CASH GIFT FROM SANJIV MITHAL 20,000.00 CASH GIFT FROM AMIT MITHAL 20,000.00 CASH GIFT FROM SAROJ MITHAL 20,000.00 CASH GIFT FROM ALKA MITHAL 20,000.00 8. LD. COUNSEL FURTHER REFERRED TO PAGES 2 TO 7 WHE REIN THE LEDGER ACCOUNTS OF DONORS TO RACHNA MITTAL ARE CONTAINED, SHOWING THEREIN THE CASH GIFTS GIVEN TO RACHNA MITTAL. AT THE TIME OF FIRST ROUND OF PROCEEDINGS, TRIBUNAL HAD ADMITTED THE ADDITIONAL EVIDENCE IN TH E SHAPE OF COPIES OF ACCOUNTS ETC. OF DONORS TO RACHNA MITTAL IN THE ASS ESSMENT YEAR 1990-01 OBSERVING AS UNDER: 14. COMING TO GROUND NOS. 3 TO 6, THE ASSESSEE HAS FILED AN APPLICATION, SEEKING TO PRODUCE ADDITIONAL EVIDENCE UNDER RULE 29 OF THE INCOME TAX (APPELLATE TRIBUNAL) RULES, 19 63. THIS ADDITIONAL EVIDENCE IS IN THE SHAPE OF COPIES OF AC COUNTS, ETC., OF DONORS TO MRS. RACHNA MITTAL IN THE A.Y. 1990- 9 1, TO SHOW THEIR POSITION OF OPENING BALANCES IN THE BOOKS OF ACCOUNT. IN THE AFFIDAVIT ACCOMPANYING THE APPLICATION FOR ADMI SSION OF ADDITIONAL EVIDENCE ( AFFIDAVIT OF SH. ALKESH MITTA L, S/O LATE DR. V.P. MITTAL), IT HAS BEEN AFFIRMED ON SOLEMN OATH THAT THE 5 FATHER OF THE DEPONENT WAS ALSO A PARTNER IN THE AS SESSEE FIRM AND USED TO ATTEND TO THE DAILY ACCOUNTING ETC. AN D OTHER CONNECTED INCOME-TAX MATTERS OF THE ASSESSEE FIR M ON HIS OWN, WITHOUT HIRING ANY TECHNICAL PERSON OR LAWYER, THAT HE WAS A DOCTOR BY PROFESSION, EARLIER EMPLOYED WITH THE ST ATE MEDICAL SERVICES; THAT HE WAS NOT IN GOOD HEALTH SINCE 2003 ; THAT HE UNDERWENT BYPASS HEART SURGERY ON 1.5.2005; THAT HE EXPIRED ON 6.11.2005; THAT BEING THE ELDEST SON, THE DEPONENT' WAS TAKING CARE OF HIS FATHER AND WAS ALSO CARRYING OUT HIS IN STRUCTIONS REGARDING THE APPEAL AT HAND AND OTHER CONNECTED BU SINESS AFFAIRS; THAT BEING AN ENGINEER BY PROFESSION, THE DEPONENT DID NOT HAVE ANY KNOWLEDGE OF INCOME-TAX PRIOR TO TAKIN G OVER THE AFFAIRS OF THE FIRM ON HIS FATHER'S DEMISE; THAT TH E DEPONENT AND HIS FATHER, BOTH BEING NON-TECHNICAL PERSONS COULD NOT APPRECIATE THE NECESSITY OF SUPPORTING THEIR CONTEN TIONS WITH COGENT EVIDENCE AND IT WAS NOT SO DONE; AND THAT IT WAS SO, THAT THE NEED AROSE TO FILE THE ADDITIONAL EVIDENCE AT T HIS STAGE. 9. WE FIND THAT REVENUE AUTHORITIES HAVE NOT EXAMIN ED THESE EVIDENCE AND MERELY CONFIRMED THE ADDITION OBSERVING THAT NO CONFIRMATION HAD BEEN FILED BY THE ASSESSEE. THESE BEING THE PROCEEDINGS RELATING TO AY 1991092 WE ARE NOT INCLINED TO AGAIN RESTORE THE MATTER TO THE FILE OF AO AND SINCE HE DID NOT AVAIL THE OPPORTUNITY TO EXAMINE THE ADDITI ONAL EVIDENCE ADMITTED BY TRIBUNAL, WE DRAW AN INFERENCE THAT THE CASH GIFTS TO RACHNA MITTAL ON OCCASION OF HER MARRIAGE WERE PROPER AND, THEREFORE , NO ADDITION IS CALLED FOR ON THIS COUNT. GROUND NOS. 1 & 3 ARE ALLOWED. 10. APROPOS GROUND NO. 2, LD. COUNSEL POINTED OUT T HAT THIS ADDITION WAS CONSIDERED IN THE ORIGINAL ASSESSMENT FROM WHICH TH E FIGURE OF RS. 5,59,461/- IS ADOPTED. THE AO IS DIRECTED TO VERIFY THE ASSESSEES CONTENTION WHILE GIVING EFFECT TO THE TRIBUNALS ORDER. 6 11. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCEMENT IN OPEN COURT ON 02/02/2016. SD/- SD/- (SUCHITRA KAMBLE ) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 02/02/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.