Sandeep Shamra, Amritsar. V. Income-tax Officer, Amritsar.

ITA 565/ASR/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 95087 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 09-12-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 16-09-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR KANCHAN GARG
• Assessee Lawyers: SUBASH MAHAJAN
• Keywords: Unexplained investment; Depreciation; Business expenditure
• Section: 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.565(ASR)/2014 ASSESSMENT YEAR:2006-07 PAN: AYMPS5869B SH. SANDEEP SHARMA, VS. INCOME TAX OFFICER, VILL. GANDA SINGH WALA, WARD 5(4), AMRITSAR. MAJITHA ROAD, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. SUBASH MAHAJAN, ADVOCATE RESPONDENT BY:DR. KANCHAN GARG, DR DATE OF HEARING: 09/12/2015 DATE OF PRONOUNCEMENT: 14/12/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2006-07, AGAINST THE ORDER DATED 02.04.2014 PASSED BY THE LD . CIT(A), AMRITSAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF AP PEAL: 1. LD. CIT(A) HAS ERRED IN SUSTAINING ADDITION OF RS.40,000/- MADE ON ACCOUNT OF PURCHASE OF MOTOR CYCLE AND RS.60,000/- MADE ON ACCOUNT OF PURCHASE OF CAR BY T HE ITO U/S 69 OF THE ACT. THIS ACTION OF THE LD. CIT(A) IS AGAINST THE FACTS OF THE CASE AND BASED ON MERE SURMISES AND CONJECTURES. 2. THAT THE CASH FLOW, THE BILLS AND RECEIPTS SUBMI TTED BY THE APPELLANT IN RESPECT OF PURCHASE OF MOTOR CYCLE AND CAR HAVE BEEN IGNORED AND HAVE NOT BEEN GIVEN ANY IMPORTANC E. THE ORDER APPEARS TO HAS BEEN PASSED WITHOUT REFERRING THEM. HIS THIS ACTION IS AGAINST THE LAW OF NATURAL JUST ICE AND IS UNLAWFUL. 3. THAT THE APPELLANT WRITTEN SUBMISSIONS THOUGH RE FERRED IN THE ORDER HAVE NOT BEEN THOROUGHLY GONE INTO WHILE PASSING ITA NO.565(ASR)/2014 2 THE ORDER. THE ADDITION SUSTAINED IS UNJUSTIFIED BE ING AGAINST THE FACTS OF THE CASE AND BASED ON SURMISES AND CON JECTURES. 4. IT IS PRAYED THAT THE ADDITION OF RS.40,000/- ON ACCOUNT OF PURCHASE OF MOTOR CYCLE AND RS.40,000/- ON ACCOUNT OF PURCHASE OF CAR U/S 69 MAY BE DELETED IN THE INTERE ST OF JUSTICE. 2. THE REGISTRY REPORTS THAT THE APPEAL IS BELATED BY 42 DAYS OF LIMITATION. AS PER THE APPLICATION FOR CONDONATION OF DELAY, THE ORDER DATED 02.04.2014 PASSED BY THE LD. CIT(A) WAS SERVE D ON THE ASSESSEE ON 06.06.2014; THAT THE DUE DATE FOR FILING THE APPEAL WAS 05.08.2014, BUT IT WAS FILED ON 16.09.2014 INCURRING A DELAY OF 42 DAYS. THE ASSESSEE HAS CONTENDED THAT HE WAS SUFFERING FROM LOW BACK-ACHE PROBLEM PIVD.P. LUMBAGO AND WAS ADVISED COMPLETE BEST REST BY THE D OCTOR FOR THE PERIOD FROM 2.8.2014 TO 15.9.2014. AN AFFIDAVIT AND DOCTOR CERTIFICATE ACCOMPANY THE APPLICATION WERE FILED. 3. IN VIEW OF THE FACTS MENTIONED IN THE APPLICATIO N FOR CONDONATION OF DELAY, WHICH IS DULY SUPPORTED BY THE ASSESSEES AF FIDAVIT AND CERTIFICATE FROM THE DOCTOR, THE DELAY OCCURRING IN FILING THE APPEAL IS CONDONED. 4. AS PER THE RECORD, THE ASSESSEE IS AN LIC COMMIS SION AGENT. THE AO MADE AN ADDITION OF RS.40,000/- ON ACCOUNT OF PU RCHASE OF MOTOR CYCLE AND RS.60,000/- ON ACCOUNT OF PURCHASE OF CAR UNDER SECTION 69 OF THE ACT, SINCE THE ASSESSEE HAD NOT PRODUCED BOOKS OF ACCOUNT DURING THE ASSESSMENT PROCEEDINGS NOR HAD SUBMITTED VARIOU S BILLS AND VOUCHERS IN RESPECT OF HIS CLAIM AND HAD NOT BEEN A BLE TO EXPLAIN THE SOURCE OF THE ABOVE CASH PAYMENT FOR THE PURCHASE O F THE VEHICLES. THE LD. CIT(A) DELETED THE ADDITION. 5. IT WAS OBSERVED THAT THOUGH DURING THE APPELLATE PROCEEDINGS, THE ASSESSEE HAD PRODUCED A CASH FLOW STATEMENT AND HA D TRIED TO EXPLAIN THE AVAILABILITY OF CASH FOR THE ABOVE PAYMENTS, TH E SAID CASH FLOW ITA NO.565(ASR)/2014 3 STATEMENT DID NOT INCORPORATE THE EXPENDITURE INCUR RED BY THE ASSESSEE, CLAIMED AS BUSINESS EXPENDITURE IN CASH AMOUNTING T O RS.1,69,050/- DURING THE YEAR AND RS.34,915/- IN THE EARLIER YEAR . IT WAS ALSO OBSERVED THAT THE ASSESSEE HAD CONSIDERED THE HOUSEHOLD EXPE NSES FOR FURTHER YEAR OF RS.68,000/- ONLY, WHICH CLEARLY SHOWED THAT THE ASSESSEE HAD NOT PROPERLY PREPARED THE CASH FLOW STATEMENT AND THE S AME WAS NOT RELIABLE. 5. BEFORE ME, THE LD. COUNSEL FOR THE ASSESSEE HAS PLACED ON RECORD, AT APB 10 TO 12, A CASH FLOW CHART FOR THE PERIOD FROM FEB., 2005 TO 31.03.2006. APROPOS PURCHASE OF MOTOR CYCLE, THE AS SESSEE MAINTAINED THAT HE HAD SPENT AN AMOUNT OF RS.40,000/- OUT OF W ITHDRAWAL FROM THE BANK ACCOUNT AND CASH IN HAND. FROM THE CASH FLOW S TATEMENT, IT HAS BEEN SHOWN THAT THE ASSESSEE HAD PAID FOUR INSTALME NTS FOR THE PURCHASE OF MOTOR CYCLE, AS FOLLOWS: I) RS.13,100/- ON 4.7.2005 II) RS.9,000/- ON 5.7.2005 III) RS.7,500/- ON 4.8.2005 IV) RS.5,900/- ON 16.8.2005 COPIES OF RECEIPTS CONCERNING THE PAYMENT OF THESE AMOUNTS ARE CONTAINED AT APB 25 TO 28. COPY OF MOTOR CYCLE INSU RANCE RECEIPT IS AT APB 29 AND COPY OF MOTOR CYCLE RC IS AT APB 30 TO 3 2. COPY OF BILL DATED 4.7.2005 (APB 24), SHOWS COST OF MOTOR CYCLE TO BE RS.35,500/-. R.C. CHARGES OF RS.1060/- ARE SHOWN AS PAID ON 15.7.2005 , AS PER APB-31. INSURANCE CHARGES OF RS.854/- SPENT PAID ON 4.7.200 5 AS PER THE APB - 29. THE TOTAL COMES TO RS.37,414/-. CASH STANDS SHO WN WITHDRAWN BY THE ASSESSEE ON DIFFERENT DATES FROM HIS SAVING BAN K A/C WITH CENTURIAN BANK OF PUNJAB AND FROM HIS SAVING BANK A/C WITH C ANARA BANK. THIS WITHDRAWAL IS BEFORE PURCHASE OF THE MOTOR CYCLE. T HE AVAILABILITY OF CASH FOR THE PURCHASE OF MOTOR CYCLE, PAYMENT OF RC CHAR GES AND PAYMENT OF INSURANCE CHARGES WITH REGARD TO THE MOTOR CYCLE STANDS EXPLAINED IN THE CASH FLOW CHART. ITA NO.565(ASR)/2014 4 6. APROPOS PURCHASE OF CAR, FOR WHICH THE ADDITION OF RS.60,000/- WAS MADE, THE ASSESSEE MAINTAINED THAT HE HAD PURCH ASED A TATA INDICA CAR FOR RS.3,43,116/- PLUS REGISTRATION AND MISCEL LANEOUS CHARGES, TOTAL AMOUNTING TO RS.3,60,000/-. THE ASSESSEE STATED TO HAVE RAISED LOAN OF RS.3,00,000/- FROM THE GE AND THE BALANCE OF RS.60, 000/- WHICH IS THE AMOUNT IN QUESTION IS STATED TO HAVE BEEN SPENT OUT OF THE WITHDRAWAL FROM THE BANK ACCOUNT AND CASH IN HAND. THE AO OBSE RVED THAT NEITHER OF THE ACCOUNTS OF THE ASSESSEE SHOWED ANY WITHDRAW AL OF RS.60,000/- ON 16.01.2006 AND THAT THEREFORE, THE INVESTMENT OF R S.60,000/- REMAINED UNEXPLAINED. AS PER THE ASSESSEE, THE FOLLOWING IS THE DETAILS OF PURCHASE OF CAR: 3,43,116/- PURCHASE VALUE OF CAR (BILL DT.16.01.20 06) 4,300/- RC CHARGES PAID ON 15.02.2006 12,863/- INSURANCE CHARGES PAID ON 29.12.2005 3,60,279/- 3,00,000/- LESS: LOAN FROM GE MONEY 60,279/- PAID CASH. 7. THE CASH FLOW STATEMENT EXPLAINS THE AVAILABILIT Y OF CASH WITH THE ASSESSEE FOR THE PURCHASE OF THE CAR AND PAYMENT OF RC CHARGES AND INSURANCE CHARGES, AS ABOVE. 8. THE DEPARTMENT HAS NOT BEEN ABLE TO DENY THE ABO VE CASH FLOW STATEMENT. THE LD. DR, THOUGH, HAS PLACED STRONG R ELIANCE ON THE IMPUGNED ORDER. 9. THE CASH FLOW STATEMENT PRODUCED BY THE ASSESSEE BEFORE ME REMAINS UNCHALLENGED. AS PER THIS CASH FLOW STATEME NT, THE ASSESSEE DEDUCTED EXPENSES FOR EARNING COMMISSION AND HIS H OUSE-HOLD EXPENSES. THEREAFTER, HE WAS STILL LEFT WITH RS.22, 896/- AT THE END OF THE YEAR. THE HOUSEHOLD EXPENSES OF RS.68,000/- WERE F OR THE YEAR UNDER CONSIDERATION AND NOT FOR THE SUCCEEDING YEAR, AS O BSERVED BY THE LD. ITA NO.565(ASR)/2014 5 CIT(A). THE EXPENSES FOR EARNING THE INCOME HAVE BE EN TAKEN BY THE ASSESSEE AT PER MENSEM BASIS. IT IS ON THE BASIS O F THIS THAT THE AMENDED CASH FLOW STATEMENT HAS BEEN FILED IN THE P RESENT APPEAL. 10. THUS, BOTH THE AMOUNTS OF RS.40,000/- AND RS.60 ,000/- STAND DULY EXPLAINED IN THE CASH FLOW STATEMENT APPENDED WITH THE WRITTEN SUBMISSIONS FILED BY THE ASSESSEE. THIS STATEMENT I S MERELY AN ELABORATION AND EXPLANATION OF THE ONE FILED BEFORE THE LD. CIT(A). THE EXPENSES OF RS.1,18,686/- INCLUDES DEPR ECIATION EXPENDITURE OF RS.32,568/-. THE EXPENDITURE DEBITED IN ADDITION TO THE DEPRECIATION, IS OF RS.85,518/-. THE HOUSE-HOLD WITHDRAWALS BEIN G AT RS.68,000/-, THE TOTAL EXPENDITURE FOR EARNING INCOME PLUS THE HOUS EHOLD EXPENDITURE DURING THE YEAR AMOUNTS TO RS.1,53,518/-. THE AVERA GE EXPENDITURE PER MONTH COMES TO RS.12,793/- AND THE POSITION AS PER THE CASH FLOW CHART FILED BEFORE ME IS AS FOLLOWS: CASH FLOW CHART PAYMENTS FOR THE PURCHASE OF MOTORCYCLE CASH FLOW & SOURCE OF INVESTMENT AND WERE MADE ON THE FOLLOWING DATES. EXPENDITURE. 13100 CASH ON 04/07/05 CASH WITHDRAWN F ROM CENTURIAN BANK 9000 CASH ON 05/07/05 OF PUNJAB IN FEB 2005 & MAR 2005 7500 CASH ON 04/08/05 (10000+300 0+1100+1700+9800+ 5900 CASH ON 16/08/05 700+6400+8400) 41000 -------- 35500 CASH WITHDRAWN FROM CANARA BANK (25/2/05 TO 31/03/05) RC CHARGES (2700+10000+1000+1000 PAID ON 300+21200+9000+1000) 46200 15/07/05 1060 APRIL 05 : CASH WITHDRAWN FROM INSURANCE CANARA BANK (1000+1400+2000 CHARGES 6600+300+300+2000+100+2200) 15900 PAID ON --------- 04/07/05 854 CASH DEPOSIT I N MARCH 05 103200 103200 ---------- WITH CANAR A BANK 1695 37414 CASH DEPOSITED IN APRIL, 05 (5500+3500+600+2460) 12060 --------- 13755 -------- 89445 BASIS OF DEBIT OF 12793 PER MONTH AVERAGE: HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING ITA NO.565(ASR)/2014 6 THE ASSESSEE CLAIMED EXP 1,68,08 6 COMMISSION INCOME ----- -- 76652 LEARNED I.T.OALLOWED EXP.71,211 MAY 05: CASH WITHDRAWN FROM CIT (A) ALLOWED EXP. 46,875 CAN ARA BANK(4000+1200+900+5000) 1 1100 -------- -------- 118086 118086 87752 -------- -------- C ASH DEPOSITED IN CANARA BANK DISALLOWANCE OF EXP BY CIT (A) 50000 IN MAY 05: (3500+18000) (-) 21500 ------- 66252 EXPENSES OF 118086 HOUSE HOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING INCLUDES DEPRECIATION EXP. 32568 COMMISSION INCOME ------ - -------- 53459 EXP. DEBITED IN ADDITION TO DEP. 85518 JUN E 05: CASH WITHDRAWN FROM CANARA BANK (10000+100+800+7000) 17900 HOUSEHOLD WITHDRAWALS 68000 71359 TOTAL EXP FOR EARNING INCOME -------- JUNE 05 CASH DEPOSITED IN CANARA +HOUSEHOLD EXP DURING THE YEAR 1,53,518 BANK (7840 +2000+800) (-) 10640 UNDER APPEAL -------- - ------ 60719 AVERAGE EXP. PER MONTH HOUSEHOLD EXPENSES & (-) 12793 COME OUT TO BE 153518 EXPEN SES ALLOWED FOR EARNING ------- - = 12793 RS COMMISSION INCOME ------- 12 47926 JULY 05 CASH WITHDRAWN FROM CANARA BANK ON 04/07/05 6000 ON 19/07/05 900 69 00 ------- 54826 CASH WITHDRAWN FRON CENTURIAN BANK OF PB. IN APRIL, MAY, JUNE 05 (2500+16900+11700) 31100 CASH WITHDRAWN FROM CBOP ON 05/07/2005 9300 40400 40400 95226 CASH PAID FOR SCOOTER ( SEE PAGE-I) ON 04/07/05 13100 ITA NO.565(ASR)/2014 7 ON 05/07/05 9000 22100 22100 73126 SCOOTER INSURANCE ON 04/07/05 ( SEE PAGE-I) 854 SCOOTER RC CHARGES ON 15/07/05 1060 ------- 1914 (-) 1914 -------- 71212 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME ------- 58419 CASH WITHDRAWN FROM CBOP ON 04/08/05 7900 -------- 66319 CASH WITHDRAWN FROM CANARA BANK IN AUG 2005 (200+200+100) 500 -------- 66819 CASH PAID FOR SCOOTER ( SEE PAGE-I) ON 04/08/05 7500 ON 16/08/05 5900 -------- 13400 13400 -------- --------- 53419 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME ------- 40626 CASH WITHDRAWN F ROM CENTURIAN BANK OF PB. IN SEP,05 13900 -------- 54526 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME ------ - 41733 CASH WITHDRAWN FROM CENTURIAN BANK OF PB. IN OCT,05 ITA NO.565(ASR)/2014 8 ON 01/10/05 10000 ON 01/10 /05 3300 CAR PURCHASE ON 04/10/05 8700 ON 16/01/06 FOR 343116 ON 21/10/05 6800 RC CHARGED PAID -------- ON 15/02/06 4300 28800 28800 INS. CHARGED PAID -------- -------- ON 29/12/05 12863 70533 -------- LESS : MOBILE PURCHASED 360279 ON 03/10/05 13700 - -------- LESS: LOAN FROM 56833 GE MONEY 300000 H OUSEHOLD EXPENSES & (-) 12793 -------- EXPENSES ALLOWED FOR EARNING CASH EXP 60279 COMMISSION INC OME ------- -------- 44040 C ASH WITHDRAWN FROM CANARA BANK IN NOV, 05 (6000+500+500) 7000 CASH WITHDRAWN FROM CENTURI AN BANK OF PB. IN NOV, 2005 20300 ------- 71340 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME ------- 58547 MOBILE PHONE PURCHASED CASH CASH WITHDRAWN FROM CENT URIAN ON 03/10/05 FOR 13700 BANK OF PB. IN DEC, 2005 30400 ------- 88947 HOUSEHOLD EX PENSES & (-) 12793 EXPENSES ALLOWED FOR EA RNING COMMISSION INCOME ------- 76154 CASH WITHDRAWN FROM CENTURIAN BANK OF PB. IN JAN, 2006 ON 09/01/06 2200 --------- - 78354 CASH AMT UTELISED FOR PURCHASE OF CAR COST ON 16/01/06 343116 RC CHARGE ON 15/02/06 4300 INS. ON 29/12/05 12 863 -------- ITA NO.565(ASR)/2014 9 360279 LOAN FROM GE MONEY 300000 --------- CASH 60279 60 279 --------- ------ 18075 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME 5282 CASH WITHDRA WN FRO, CBOPB. IN FEB, 2005 397 00 ------- 44982 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME ------- 32189 IN MARCH, 2005 53500 --------- 85689 HOUSEHOLD EXPENSES & (-) 12793 EXPENSES ALLOWED FOR EARNING COMMISSION INCOME ------- 72896 LESS: CIT (A) DISALLOWED EXP. 50000 ------- CASH IN HAND ON 31/03/2006 22896 11. FROM THE ABOVE, IT IS EVIDENT THAT THE PAYMENTS MADE BY THE ASSESSEE FOR THE PURCHASE OF THE MOTOR-CYCLE AND T HE CAR, AMOUNTING TO RS.40,000/- AND RS.60,000/-, RESPECTIVELY, STAND DU LY EXPLAINED, SINCE THE CASH FUNDS WERE EVIDENTLY AVAILABLE WITH THE AS SESSEE FOR SUCH PURCHASE. THEREFORE, FINDING THE GRIEVANCE OF THE A SSESSEE TO BE JUSTIFIED, THE SAME IS ACCEPTED AND BOTH THE ADDITIONS MADE AR E DELETED, AS THE INVESTMENT MADE IS NOT AN UNEXPLAINED INVESTMENT. A CCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO.565(ASR)/2014 10 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH D ECEMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 14/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE ITO 3. THE CIT(A), 4. THE CIT, 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.