M/s. Merit Marketing Pvt. Ltd., New Delhi V. ACIT, New Delhi

ITA 5400/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4764 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 11-08-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHAFALI SWAROOP
• Assessee Lawyers: V S RASTOGI
• Keywords: Search and seizure
• Section: 40A(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: E NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER & SHRI K.N. CHARRY, JUDICIAL MEMBER ITA NO.-5400/DEL/2014 ( ASSESSMENT YEAR: 2010-11) MERIT MARKETING PVT. LTD. M-11, MIDDLE CIRCLE, CONNAUGHT CIRCUS, NEW DELHI. AAECM7934Q VS ACIT CIRCLE 23 NEW DELHI. ASSESSEE BY SH. V.S. RASTOGI, ADV. REVENUE BY MS. SHAFALI SWAROOP, CIT DR ORDER PER SHRI K.N. CHARY, JUDICIAL MEMBER THIS IS AN APPEAL CHALLENGING THE ORDER DATED 27.06 .2014 IN APPEAL NO. 255/2013-14/1406 PASSED BY THE LD. COMMI SSIONER OF INCOME TAX (APPEALS)-XXXIII, NEW DELHI (HEREINAFTER FOR SHORT CALLED AS LD. CIT (A)). 2. BRIEFLY STATED RELEVANT FACTS ARE THAT PURSUANT TO THE SEARCH AND SEIZURE OPERATIONS THAT WERE CARRIED OUT AT VAR IOUS PREMISES OF DATE OF HEARING 04.09.2017 DATE OF PRONOUNCEMENT 13.09.2017 2 ITA NO.5400/DEL/2014 M/S BPTP LTD. AND ITS GROUP CONCERNS AND ASSOCIATED PERSONS ON 7.12.2010 AND CONCLUDED ON 05.02.2011, NOTICE U/S 1 53A OF THE INCOME TAX ACT, 1961 (HEREINAFTER FOR SHORT CALLED AS THE ACT) WAS ISSUED TO THE ASSESSEE, AND THE ASSESSEE FILED THE RETURN OF INCOME ON 23.01.2012 DECLARING A TOTAL LOSS OF RS. 5,779/- . ASSESSING OFFICER CONCLUDED THE ASSESSMENT BY REACHING THE TO TAL INCOME OF THE ASSESSEE AT RS. 5,78,900/- BY MAKING TWO ADDITI ONS, NAMELY, RS. 4,34,687/- ON ACCOUNT OF PDCS AND A SUM OF RS. 1,50,000/- U/S 40A(3) OF THE ACT. APPEAL TO THE LD. CIT (A) W AS DISMISSED CONFIRMING THE ADDITIONS. HENCE THIS APPEAL IS PRE FERRED BY THE ASSESSEE ON SEVERAL GROUNDS. HOWEVER, AT THE TIME OF ARGUMENTS LD. AR NOT PRESSED THE GROUND NOS. 1, 2, 2.1, 2.2, 2.3, 2.4 AND 4, AND THEREBY LIMITING HIS ARGUMENT ONLY TO THE FOLLO WING GROUND: 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CA SE AND IN LAW THE CIT (A) ERRED IN SUSTAINING THE DISALLOWANCE OF RS. 1,50,000/- U/S 40A(3) OF THE IT ACT DESPITE THE FACT THAT NO DEDUC TION IN RESPECT OF SAID SUM WAS CLAIMED IN THE COMPUTATION OF INCOME F ROM BUSINESS. 3. ON THIS ASPECT, AS COULD BE SEEN FROM THE ASSESS MENT ORDER, DURING THE SCRUTINY THE ASSESSING OFFICER NOTICED T HAT THE ASSESSEE COMPANY ACQUIRED VARIOUS EXTENTS OF LAND FROM FARME RS AND MADE PART PAYMENT OF RS. 1,50,000/- IN CASH IN CONTRAVEN TION OF SECTION 3 ITA NO.5400/DEL/2014 40A(3) OF THE ACT AND THE CASE OF THE ASSESSEE IS N OT COVERED BY THE EXCEPTIONS ENUMERATED IN RULE 6DD OF THE INCOME TAX RULES, 1962 (HEREINAFTER FOR SHORT CALLED AS I.T. RULES). AS SESSEE EXPLAINED TO THE AO THAT IN THE PRESENT CASE THE SUM PAID TOWARD S PURCHASE OF THE LAND WAS NOT THE EXPENDITURE IN THE HANDS OF TH E ASSESSEE AND IT WAS NOT CLAIMED AS DEDUCTION. ASSESSEE CLAIMS T HAT THE LAND PURCHASED WAS NOT STOCK-IN-TRADE IN THEIR HANDS, AN D ENTIRE EXPENDITURE INCURRED ON THIS ACCOUNT WAS REIMBURSED TO THE ASSESSEE BY M/S COUNTRY WIDE PROMOTERS (P) LTD. (CW PPL), AND IT IS THE SETTLED PREPOSITION THAT REIMBURSEMENT, UNDE R NO CIRCUMSTANCES, CAN BE REGARDED AS REVENUE RECEIPT. ASSESSEE CONTENDED THAT THE AMOUNT PAID IN CASH WAS NOT DEBI TED TO THE PROFIT AND LOSS ACCOUNT AND CONSEQUENTLY IT WAS NOT CLAIMED AS EXPENDITURE. HOWEVER, AO RECORDED THAT THE CONTENT ION OF THE ASSESSEE WAS NOT TENABLE AND PROCEEDED TO ADD THE E NTIRE 1,50,000/-. 4. ON THIS ASPECT CONTENTION OF THE ASSESSEE IS THA T FACTS INVOLVED IN THIS MATER ARE SUBSTANTIALLY THE SAME A S ARE INVOLVED IN THE CASE OF M/S WESTLAND DEVELOPERS PVT. LTD. A GR OUP COMPANY. 4 ITA NO.5400/DEL/2014 IT IS SUBMITTED THAT FOR THE AY 2006-07 A SIMILAR D ISALLOWANCE WAS MADE BY THE AO IN THE CASE OF M/S WESTLAND DEVELOPE RS PVT. LTD. AND SUCH AN ADDITION WAS CONFIRMED BY THE LD. CIT ( A), BUT A COORDINATE BENCH OF THIS TRIBUNAL DEALT WITH THAT A SPECT AT LENGTH AND VIDE PARAGRAPH NO.10.10 CONCLUDED AS FOLLOWS: ACCORDINGLY ON A CONSIDERATION OF THE PECULIAR FA CTS AND CIRCUMSTANCES OF THE CASE AND THE JUDGMENTS RELIED UPON CONSIDERING THE RELEVANT PROVISION OF THE ACT NAMEL Y SECTION 40A(3), WE HOLD FOR THE DETAILED REASONS GIVEN HERE INABOVE THAT SECTION 40A(3) OF THE ACT HAS BEEN WRONGLY INVOKED AS ADMITTEDLY NO EXPENSES RELATABLE TO THE ADDITION HAS BEEN CLAI MED AND THE ASSESSEE HAS SUCCESSFULLY DEMONSTRATED THAT THE PAY MENT WERE REIMBURSEMENT MADE BY CWPPL. ACCORDINGLY, GROUND N O. 4 IS ALLOWED. 5. FURTHER THE ASSESSEE PRODUCED A LETTER DATED 15. 03.2016 ADDRESSED BY THE AO TO THE DR TO THE EFFECT THAT NO APPEAL WAS RECOMMENDED AGAINST THIS ORDER OF THE TRIBUNAL IN I TA 1752/DEL/2013. LD. DR SUBMITS THAT THIS ORDER OF T HE COORDINATE BENCH OF THE TRIBUNAL IN ITA 1752/DEL/2013 WAS ACCE PTED BY THE DEPARTMENT. LD. DR VEHEMENTLY RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 6. WE HAVE CAREFULLY GONE THROUGH THE RECORD. THER E IS NO DISPUTE THAT M/S WESTLAND DEVELOPERS PVT. LTD. IS A LSO A GROUP COMPANY AND FOR THE AY 2006-07 A SIMILAR DISALLOWAN CE U/S 5 ITA NO.5400/DEL/2014 40A(3) WAS MADE BY THE AO CONFIRMED BY THE LD. CIT (A) BUT DELETED BY A COORDINATE BENCH OF THIS TRIBUNAL IN I TA 1752/DEL/2013 BY OBSERVING THAT WHEN NO EXPENSES RE LATABLE TO THE ADDITION HAVE BEEN CLAIMED BY THE ASSESSEE, NO DISALLOWANCE ARISES. NO CHANGE IN FACTS IS BROUGHT TO OUR NOTIC E. WE, THEREFORE, WHILE RESPECTFULLY FOLLOWING THE DECISION OF A COOR DINATE BENCH OF THIS TRIBUNAL IN ITA 1752/DEL/2013, HOLD THAT THE A DDITION BY DISALLOWANCE U/S 40A(3) OF THE ACT CANNOT BE SUSTAI NED AND ACCORDINGLY, HAS TO BE DELETED. WE, ORDER SO. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 13.09.2017 SD/- SD/- (N.K. SAINI) (K.N. CHA RY) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 13.09.2017 *KAVITA ARORA COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT TRUE COPY ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO.5400/DEL/2014 DRAFT DICTATED ON 05.09.2017 DRAFT PLACED BEFORE AUTHOR 07.09.2017 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 13.9.2017 APPROVED DRAFT COMES TO THE SR.PS/PS 13.09.2017 KEPT FOR PRONOUNCEMENT ON 13.09.2017 FILE SENT TO THE BENCH CLERK 13.09.2017 DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.