ITO, New Delhi V. M/s Ritu Dalmia, New Delhi

ITA 5487/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53128 (ITAT-DELHI)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 28-11-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 06-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIBHA KAUSHIK
• Assessee Lawyers: SURESH K GUPTA
• Keywords: Unexplained investment; Salary income
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL [ DELHI BENCH F DELHI ] BEFORE SHRI U. B. S. BEDI, JM AND SHRI K. D. RANJAN, AM I. T. APPEAL NO. 5487 (DEL) OF 2010 ASSESSMENT YEAR : 2006-07. THE INCOME-TAX OFFICER, MS. RITU DALM IA, W A R D : 7 (2), VS. S15, PANC HSHEEL PARK, N E W D E L H I. N E W D E L H I 110 017 PAN / GIR NO. AGI PD 3031A. ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI SURESH K. GUPTA, C. A.; DEPARTMENT BY : MS. PRATIBHA KAUSHIK, SR. D. R.; O R D E R. PER K. D. RANJAN, AM : THIS APPEAL BY THE REVENUE FOR ASSESSMENT YEAR 200 6-07 ARISES OUT OF ORDER OF THE LD. CIT (APPEALS)-X, NEW DELHI. 2. THE GROUND OF APPEAL RAISED BY THE REVENUE READS AS FOLLOWS :- ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT (APPEALS) ERRED IN LAW AS WELL AS ON MERITS IN DELETING THE ADDITION O F RS.10,20,816/- MADE BY ASSESSING OFFICER AS UNEXPLAINED INVESTMENT UNDER S ECTION 69 OF THE INCOME TAX ACT, 1961. 3. THE ONLY ISSUE FOR CONSIDERATION RELATES TO DELE TING THE ADDITION OF RS.10,20,816/- MADE BY THE ASSESSING OFFICER AS UNEXPLAINED INVESTMENT UNDER SECTION 69 OF THE INCOME TAX ACT, 1961. THE FACTS OF THE CASE STATED IN BRIEF ARE TH AT THE ASSESSEE DERIVED SALARY INCOME FROM M/S. SALOME EXPORTS P. LTD. AS DIRECTOR. THE ASSESSEE W AS ALSO PARTNER IN M/S. STEEL FEB OFFSHORE HAVING 1 PER CENT SHARE IN THE PROFIT / LOSS OF THE FIRM. MS. RITU DALMIA AND HER MINOR DAUGHTER MISS DEVINA DALMIA WERE INDUCTED AS PARTNERS OF M/S . STEEL FAB OFFSHORE HAVING 1 PER CENT 2 I. T. APPEAL NO. 5487 (DEL) OF 2010 SHARE ON 6 TH MARCH, 2006. THE TOTAL VALUE OF PARTNERS CAPITAL ACCOUNT WAS RS.10,20,81,562/- AND, THEREFORE, THE ASSESSING OFFICER CONCLUDED THA T THE ASSESSEE AND HER MINOR DAUGHTER SUPPOSEDLY MUST HAVE CONTRIBUTED RS.10,20,816/- EAC H. SINCE THE ASSESSEE COULD NOT FURNISH ANY PROOF OF PAYMENT OF THE ABOVE SUMS, HE TREATED RS.2 0,41,632/- [RS.10,20,816/- EACH IN RESPECT OF ASSESSEE AND HER MINOR DAUGHTER] AS UNEXPLAINED INV ESTMENT UNDER SECTION 69 OF THE ACT. 4. ON APPEAL IT WAS SUBMITTED THAT THE ASSESSING OF FICER TREATED SUM OF RS.10,20,816/- BEING 1 PER CENT OF THE TOTAL PARTNERS CAPITAL ACCOUNT O F RS.10,20,81,561/- AS UNEXPLAINED INVESTMENT. IT WAS SUBMITTED THAT OUT OF RS.10,19,855/- REPRESE NTING THE CAPITAL OF THE ASSESSEE, RS.34,316/- WAS INVESTED OUT OF HER BANK ACCOUNT AND THE BALANC E AMOUNT OF RS.9,84,939/- WAS CREDITED BY THE FIRM IN THE CAPITAL ACCOUNT BY REVALUATION OF T HE ASSETS. IT WAS ALSO POINTED OUT THAT THE FIGURE OF RS.10,20,816/- TAKEN BY THE AO WAS NOT CORRECT A ND CORRECT AMOUNT SHOULD HAVE BEEN RS.10,19,255/-. SINCE THERE WAS A SOURCE FOR INVES TMENT OF RS.34,316/-, TO THAT EXTENT, THE ADDITION IN THE CAPITAL ACCOUNT OF THE ASSESSEE STO OD EXPLAINED. THE BALANCE AMOUNT OF RS.9,84,939/- WAS PARTNERS SHARE IN THE FIXED ASSE TS REVALUED DURING THE PREVIOUS YEAR. THEREFORE, IT WAS NOT CORRECT ON THE PART OF THE AO TO MAKE ADDITION OF RS.10,20,816/-. THE LD. CIT (A) ON CONSIDERATION OF ABOVE FACTS OBSERVED TH AT THE AO WAS AWARE OF THE FACT AS SEEN FROM ASSESSMENT ORDER THAT A SUM OF RS.9,84,939/- HAD BE EN CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE FIRM ON ACCOUNT OF HER 1 PER CENT S HARE IN THE APPRECIATION IN THE CAPITAL ON ACCOUNT OF REVALUATION OF THE ASSETS OF THE FIRM. THE LD. CIT (A), THEREFORE, HELD THAT THE AO WAS NOT CORRECT IN OBSERVING WHILE MAKING THE ADDITION OF RS.10,20,816/- THAT NO PROOF OF THE ABOVE SUM HAD BEEN PROVIDED TO HIM BY THE ASSESSEE. HE A CCORDINGLY HELD THAT THERE WAS NO BASIS FOR THE AO TO MAKE ADDITION OF RS.10,20,816/-. THE LD. CIT (A) ACCORDINGLY DELETED THE ADDITION. 5. BEFORE US THE LD. SR. DR SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE OTHER HAND, THE LD. AR OF THE ASSESSEE SUBMITTED THAT THE ASSES SEE HAD NOT INTRODUCED ANY AMOUNT IN THE CAPITAL ACCOUNT. THE CAPITAL ACCOUNT WAS CREDITED ON ACCOUNT OF REVALUATION OF THE ASSETS OF THE FIRM AND, THEREFORE, NO ADDITION CAN BE MADE. 3 I. T. APPEAL NO. 5487 (DEL) OF 2010 6. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. FROM THE FACTS STATED ABOVE, IT IS CLEAR THAT THE ASSESS EE BECAME PARTNER AND CONTRIBUTED RS.34,316/- THROUGH BANKING CHANNEL. THE AO IN PARA 5 OF HIS O RDER HAS STATED THAT THE ASSESSEES CAPITAL ACCOUNT WAS CREDITED BY A SUM OF RS.9,84,940/- ON A CCOUNT OF REVALUATION OF THE ASSETS OF THE FIRM. SINCE THE AMOUNT WAS CREDITED IN THE CAPITAL ACCOUNT OF THE ASSESSEE BY WAY OF REVALUATION, NO ADDITION CAN BE MADE UNDER SECTION 69 OF THE ACT . THEREFORE, IN OUR CONSIDERED OPINION, THE LD. CIT (A) WAS JUSTIFIED IN DELETING THE ADDITION. ACCORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT (A) DELETING THE AD DITION. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON: 28 TH NOVEMBER, 2011 . SD/- SD/- [ U. B. S. BEDI ] [ K. D. RANJAN ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 28 TH NOVEMBER, 2011 . *MEHTA * COPY OF THE ORDER FORWARDED TO : - 1. APPELLANT. 2. RESPONDENT. 3. CIT, 4. CIT (APPEALS), 5. DR, ITAT, NEW DELHI. TRUE COPY. BY ORDER. ASSISTANT REGISTRAR, ITAT.