JASPAL SINGH SEHGAL, MUMBAI V. ITO WD 21(2)(1), MUMBAI

ITA 5590/MUM/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3313 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 6 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Bench Allotted: J
• Next Hearing Date: 03-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 04-09-2012
• Court: TRIBUNAL
• Department Lawyers: K MOHANDA S
• Assessee Lawyers: R S BINDRA
• Keywords: Unexplained expenditure; Gift; Business expenditure
• Section: 143(3)

Judgement Text

, , J, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI , , , BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER, AND SHRI ASHWANI TANEJA, ACCOUNTANT MEMBER ITA NO.5590/MUM/2012 ASSESSMENT YEAR: 2009-10 JASPAL SINGH SEHGAL, FLAT NO.501, ASHAR VILLA, PLOT NO.242, NEAR TAMIL SANGHAM HALL SION (E) MUMBAI-400022 / VS. ITO WD (21(2)(1), PRATYAKSHKAR BHAVAN, 505/C-10 ANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400051 (ASSESSEE ) (REVENUE) P.A. NO. ARXPS3569C / ASSESSEE BY SHRI R.S. BINDRA (AR) / REVENUE BY SHRI K.MOHANDAS, (DR) ! ' / DATE OF HEARING : 17/02/2016 ! ' / DATE OF ORDER: 16/03/2016 / O R D E R PER ASHWANI TANEJA (ACCOUNTANT MEMBER): THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS), MUMBAI- 32 {(IN SHORT CIT(A)}, ORDER DATED 27.06.2012 PAS SED AGAINST ASSESSMENT ORDER U/S. 143(3) OF INCOME TAX ACT 1961 , DATED JASPAL SINGH SEHGAL 2 30.12.2011 FOR THE ASSESSMENT YEAR 2009-10 ON THE F OLLOWING GROUNDS: 1.THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 20,65,00 0/- MADE BY ASSESSING OFFICER AS UNEXPLAINED CASH CREDI TS FOR THE REASONS STATED IN THE ASSESSMENT ORDER. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 4,19,120 /- MADE BY ASSESSING OFFICER AS UNEXPLAINED EXPENDITUR E TOWARDS FOREIGN TRAVELING. HOWEVER THE APPELLANT HA S INCURRED THE TRAVELING EXPENDITURE FOR HIS PERSONAL PURPOSE AND THE SAID AMOUNT HAS BEEN DEBITED TO THE CAPITAL ACCOUNT OF THE APPELLANT AND THE SAME HAS N OT BEEN CLAIMED AS THE BUSINESS EXPENDITURE. FURTHER A LL THE PAYMENTS TOWARDS THE EXPENDITURE ON' FOREIGN TRAVELING HAVE BEEN MADE OUT OF THE NORMAL BANKING ACCOUNTS OF THE APPELLANT SO THERE IS NO QUESTION O F ANY UNEXPLAINED EXPENDITURE AND THE APPELLANT HAS ON HI S OWN DECLARED THE SAID EXPENDITURE AS DEBIT TO HIS C APITAL ACCOUNT.' 2. DURING THE COURSE OF HEARING, ARGUMENTS WERE MADE B Y SHRI R.S. BINDRA, AUTHORISED REPRESENTATIVE (AR) ON BEHALF OF THE ASSESSEE AND BY SHRI K. MOHANDAS, DEPARTMENTAL REPRESENTATIVE (DR) ON BEHALF OF THE REVENUE. 3. GROUND NO.1: IN THIS GROUND THE ASSESSEE HAS CHALLENGED THE ACTION OF LOWER AUTHORITIES IN MAKING AN AGGREG ATE ADDITION OF RS.20.65 LAKHS ON ACCOUNT OF CASH DEPOSITED IN T HE BANK ACCOUNT. WE HAVE HEARD BOTH THE PARTIES ON THESE IS SUES. IT IS NOTED THAT THE AO MADE ADDITION ON ACCOUNT OF CASH DEPOSITED IN ITS THREE BANK ACCOUNTS NAMELY: (I) AXIS BANK JASPAL SINGH SEHGAL 3 (II) PMC BANK (III) P & S BANK 3.1. DURING THE COURSE OF HEARING BEFORE LOWER AUTHORIT IES THE ASSESSEE TRIED TO EXPLAIN WITH THE HELP OF CASH SUM MARY THE SOURCES OF DEPOSIT OF CASH IN THE BANK ACCOUNT. THE LOWER AUTHORITIES WERE NOT SATISFIED FULLY WITH THE EXPLA NATION OF THE ASSESSEE AND THEREFORE, AMOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT WAS ADDED. 3.2. DURING THE COURSE OF HEARING BEFORE US, LD. COUNSE L OF THE ASSESSEE HAS TAKEN US THROUGH VARIOUS PAGES OF THE PAPER BOOK EXPLAINING ITEM WISE SOURCES OF CASH UNDER VAR IOUS HEADS AND ALSO SUBMITTED SUMMARISED AND DETAILED CA SH BOOK SHOWING INFLOW AND OUTFLOW THE CASH. AFTER HEARING BOTH THE PARTY, WE HAVE OUR DECISION WITH RESPECT TO EACH OF THE ITEMS OF SOURCES OF CASH IN FOLLOWING PARAMETERS: (I) OPENING CASH BALANCE OF RS.3,86,222/-: WITH THE ASSISTANCE OF BOTH THE PARTIES, IT IS NOTED BY US T HAT THE ASSESSEE HAS SHOWN CLOSING CASH BALANCE IN THE BALA NCE SHEET OF LAST YEAR. THESE DOCUMENTS COULD NOT BE CONTROVE RTED BY THE LOWER AUTHORITIES AS WELL AS BY THE LD. DR BEFORE U S. THEREFORE, WE DIRECT THE AO TO ACCEPT THE OPENING BALANCE OF RS.3,86,222/-. (II) CASH WITHDRAWN FROM AXIS BANK OF RS.9,73,000/- AND FROM PMC BANK OF RS.2,33,100/- : THE LOWER AUTHORITIES REFUSED TO GIVE BENEFIT OF CASH WITHDRAWN FROM THE BANK ON THE JASPAL SINGH SEHGAL 4 GROUND THAT THE ASSESSEE COULD NOT ESTABLISH THAT T HE CASH WITHDRAWN HAS NOT BEEN USED ANYWHERE ELSE. IN OUR O PINION APPROACH OF THE LOWER AUTHORITIES IS NOT FAIR AND J USTIFIED. THE ASSESSEE HAS SUBMITTED DETAILED CASH SUMMARY SHOWIN G INFLOW AND OUTFLOW OF THE CASH FOR THE ENTIRE YEAR. IN OUR OPINION THE ASSESSEE CANNOT BE DIRECTED TO PROVE TH E NEGATIVE. IT IS A BURDEN UPON THE AO TO PROVE THAT CASH HAS B EEN UTILIZED ELSEWHERE BY THE ASSESSEE BEFORE HE REJECT S THE CLAIM OF THE ASSESSEE. UNLESS ANY SUCH CONTRARY MATERIAL IS BROUGHT ON RECORD BY HIM TO PROVE THAT CASH HAS BEEN UTILIZ ED ELSEWHERE BY THE ASSESSEE, HE SHOULD GIVE BENEFIT O F CASH WITHDRAWN BY THE ASSESSEE FROM THE BANK ACCOUNT AGA INST THE AMOUNT OF CASH DEPOSIT INTO THE BANK ACCOUNT OF THE ASSESSEE, ESPECIALLY WHEN THE CASH HAS BEEN WITHDRAWN AND DEP OSITED IN THE SAME FINANCIAL YEAR, EVEN IF THE BANK FROM WHER E CASH WAS WITHDRAWN AND BANK WHERE THE CASH WAS DEPOSITED ARE DIFFERENT. THUS, AFTER CONSIDERING ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE, WE DIRECT THE AO TO GIVE SET OFF OF ENTIRE AMOUNT OF CASH WITHDRAWN FROM THE AXIS BANK AND PMC BANK. III) FRIENDLY LOANS OF RS.3,55,000/- : NO SERIOUS ARGUMENTS HAVE BEEN MADE BY THE ASSESSEE FOR EXPLAINING FRIEN DLY LOANS. RATHER AT THE CONCLUSION OF THE HEARING LD. COUNSEL STATED THAT HE DID NOT WANT TO PRESS THIS AMOUNT. THEREFOR E, IN ABSENCE OF PROPER DETAILS AND EXPRESSION WE REJECT THIS CLAIM OF FRIENDLY LOANS OF RS.3,55,000/-. JASPAL SINGH SEHGAL 5 IV) GIFT FROM MOTHER OF RS.1,50,000/- AND GIFT FROM FA THER OF RS. 3,50,000/-: THE SITUATION WITH RESPECT TO GIFTS IS SAME AS WITH REGARD TO FRIENDLY LOANS. SINCE LD. COUNSEL HA S NOT PRESSED THESE TWO ITEMS ALSO, THEREFORE THIS CLAIM IS ALSO REJECTED. V) THE INCOME FROM FREE LANCING OF RS.3,18,789/ -: WITH THE ASSISTANCE OF BOTH THE PARTIES, IT IS NOTED THAT TH IS AMOUNT HAS BEEN SHOWN BY THE ASSESSEE AS ITS INCOME IN THE RET URN FILED WHICH HAS BEEN ACCEPTED AND TAXED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER. THEREFORE, WE DIRECT THE AO T O GIVE CREDIT OF THIS AMOUNT ALSO. THUS, THIS CLAIM IS ACC EPTED. AS A RESULT GROUND NO.1 IS PARTLY ALLOWED IN TERMS OF OUR DIRECTIONS AS GIVEN ABOVE. 4. GROUND NO.2:- IN THIS GROUND, THE ASSESSEE HAS CHALLENGED THE ACTION OF LOWER AUTHORITIES IN MAKING ADDITION OF RS.4,19,120/- AS UNEXPLAINED EXPENDITURE ON ACCOUNT OF FOREIGN TRAVELING. 4.1. WE HAVE CAREFULLY GONE THROUGH FACTS OF THE CASE A ND ORDERS OF LOWER AUTHORITIES. ON THE BASIS OF SUBMIS SIONS MADE DURING THE COURSE OF HEARING THAT ENTIRE AMOUNT WAS SPENT BY THE ASSESSEE BY CHEQUE AND FOR THIS PURPOSE OUR ATT ENTION WAS DRAWN ON PAGE NO. 16 OF THE PAPER BOOK WHEREIN IT W AS SHOWN THAT ENTIRE AMOUNT HAS BEEN SPENT BY DIFFERENT CHEQ UES ISSUED FROM THE BANK ACCOUNTS OF THE ASSESSEE. THE ASSESSE E HAS JASPAL SINGH SEHGAL 6 GIVEN ITEM WISE DETAILS AND PARTICULARS OF CHEQUE N O. OF VARIOUS AMOUNTS PAID BY THE ASSESSEE FOR MEETING THE EXPEND ITURE INCURRED ON FOREIGN TRAVEL. THESE DETAILS CLEARLY R EFLECT THAT THE ASSESSEE HAD MADE PAYMENT BY CHEQUE TO SUPER TRAVEL S PVT. LTD. AND TO M/S. PAUL MERCHANT FOR FOREIGN CURRENCY . IT APPEARS THAT LD. CIT(A), MISUNDERSTOOD THE FACTS AN D PRESUMED THAT ENTIRE EXPENSES WERE INCURRED BY THE ASSESSEE IN CASH. LD. DR DID NOT MAKE ANY SERIOUS ARGUMENTS TO REBUT THE SUBMISSIONS OF THE LD. COUNSEL. WE FIND THE DIS ALLOWANCE HAS BEEN MADE BY THE LOWER AUTHORITIES UNDER WRONG ASSUMPTION OF FACTS. IN OUR VIEW THE ENTIRE PAYMENT HAS BEEN MADE FROM BANK ACCOUNTS OF THE ASSESSEE. THUS, NO DISALLOWANCE OR ADDITION IS CALLED FOR. THEREFORE, WE DELETE THE ADDITION MADE BY THE ASSESSEE AND ALLOW GROUND NO.2 . 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH, 2016. SD/- (SANJAY GARG ) SD/- (ASHWANI TANEJA) '# / JUDICIAL MEMBER $# / ACCOUNTANT MEMBER MUMBAI; $ DATED :16/ 03 /2016 CTX? P.S/. .. %'&'()(*& / COPY OF THE ORDER FORWARDED TO : 1. & '( / THE APPELLANT 2. )*'( / THE RESPONDENT. 3. + + , ( & ) / THE CIT, MUMBAI. 4. + + , / CIT(A)- , MUMBAI 5. /0 ) 1 , + &' 12 , / DR, ITAT, MUMBAI JASPAL SINGH SEHGAL 7 6. 3 4 / GUARD FILE. / BY ORDER, * /& ) //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI