Shri Subhash Chandra Narang, New Delhi V. ITO, New Delhi

ITA 5995/DEL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4349 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 04-11-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI C BEN CH, NEW DELHI BEFORE SHRI B.P. JAIN, ACCOUNTANT MEMBER AND SHRI KULDIP SINGH, JUDICIAL MEMBER. ITA NO. 5995/DEL/2015 [A.Y. 2012-13] SHRI SUBHASH CHANDRA NARANG VS. THE I.T.O D 103, ANAND NIKETAN WARD 3 (4) NEW DELHI NEW DELHI PAN : AAAPN 0971 B [APPELLANT] [RESPONDENT] DATE OF HEARING : 31.08.2017 DATE OF PRONOUNCEMENT : .09.2017 ASSESSEE BY : SHRI ATUL PURI, CA REVENUE BY : SHRI ARUN KUMAR YADAV , SR. DR ORDER PER B.P. JAIN, ACCOUNTANT MEMBER: THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE LD. CIT(A)- CENTRAL, GURGAON VIDE ORDER DATED 07.03.201 3 FOR ASSESSMENT YEAR 2012-13 . 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD.CIT(A) HAS ERRED IN MISUNDERSTA NDING THE FACTS OF THE CASE. 2 2. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.8,60,533.00 MADE BY AO, WITHOUT ANY BASIS, PURELY ON ASSUMPTIONS AND ESTIMATION, OUT OF CREDIT CARD EXPENSES IN COMPLETE DISREGARD OF THE CONFIRMATIONS HAVING BEEN FILED FROM THE CONCERNS ON WHOSE BEHALF THE EXPENDI TURE HAD BEEN MADE THROUGH THE CREDIT CARD IN THE NAME OF TH E ASSESSEE SINCE THESE EXPENSES WERE RELATED TO THEIR BUSINESS AND THEY HAD BORNE IT AND PAID FOR IT. 3. THAT THE LD. CIT(A) HAS FURTHER ERRED IN MISU NDERSTANDING THE FACTS AND FAILED TO APPRECIATE THAT NO AMOUNT O UT OF CREDIT CARD PAYMENTS HAD BEEN CLAIMED BY THE ASSESSEE AS E XPENSE, IN HIS RETURN THEREFORE THE ADDITION COULD NOT HAVE BE EN MADE ESPECIALLY WHEN PERSONAL EXPENSES SPENT THROUGH THE CREDIT CARD, HAD BEEN MET OUT OF THE ASSESSEE'S PERSONAL A CCOUNT AND ALL THE DOCUMENTS WERE FURNISHED AND PROPERLY DISCU SSED DURING THE ASSESSMENT AS WELL AS THE APPELLATE PROCEEDINGS . 4. THAT THE LD CIT(A) HAS FURTHER ERRED IN CONF IRMING THE DISALLOWANCE ON ACCOUNT OF THE PAYMENT OF CREDIT CA RD FOR WANT OF PURPOSE WHICH COULD HAVE BEEN ASKED FOR BY THE A .O. OF THE CONCERN WHERE THE EXPENDITURE HAD BEEN DEBITED DESP ITE BEING INFORMED THAT THE CASE OF THE CONCERN HAD BEEN COMP LETED U/S 143(3) OF THE INCOME TAX ACT,1961 FOR THE SAME ASSE SSMENT YEAR. 5. ANY OTHER GROUND AT THE TIME OF HEARING. 3 3. BRIEFLY STATED, THE FACTS OF THE CASE AS EMANAT ING FROM ORDER OF THE ASSESSING OFFICER ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTED THAT THE ASSESSEE HAS CREDIT CARD EXPENSES. AS PER AIR INFORMATION, A SUM OF RS.13,88,005/- WAS INCURRED BY THE ASSESSEE BY CREDIT CARD CITI BANK N A. VIDE ORDER SHEET ENTRY DATED 05.02.2015, THE ASSESSEE WAS ASKED TO PROVIDE SOURCE OF CREDIT CARD EXPENSES INCURRED BY ASSESSEE . VIDE ITS REPLY, THE ASSESSEE HAS SUBMITTED THAT CREDIT CARD HAS BEE N USED FOR THE REQUIREMENT OF SISTER CONCERN IN WHICH THE ASSESSEE HAS DIRECTOR AND PARTNER. ON PERUSAL OF RECORD SUBMITTED BY ASSESSEE , IT WAS NOTED THAT THESE EXPENSES INCURRED BY ASSESSEE WERE PUREL Y PERSONAL IN NATURE. THE ASSESSEE HAS ALSO SUBMITTED THE CERTIFI CATES FROM (I) M/S PARADISE INDUSTRIES AND M/S AUTOMATIC INSTRUMENTS ( P) LTD. WHEREIN THEY HAVE CERTIFIED THAT RS.9,48,037/- AND RS.1,06, 305/- RESPECTIVELY WERE PAI D BY THEM AND FURTHER CERTIFIED THAT 'THE CARD IS USE D PARTLY FOR THE PURPOSE FOR OUR BUSINESS AND PARTLY FOR HIS PERSONAL USE .' ON PERUSAL OF THE RESPECTIVE CREDIT CARD BILLS, IT WAS ALSO NOTED THAT THE EXPENSES WERE INCURRED FOR HOTEL EXPENSES, TRAVELLI NG EXPENSES, BUSINESS PROMOTION EXPENSES ETC. NO, SPECIFIC DOCUM ENTS/REPLY FURNISHED BY THE AR OF THE ASSESSEE WHICH PROVES TH AT THESE EXPENSES WERE INCURRED TOWARDS BUSINESS ACTIVITY. THEREFORE, TO 4 PROTECT ANY LEAKAGE OF REVENUE, A LUMP SUM ADDITION OF RS.5,27,113/- (BEING RS,10,54,643/- *50%) WAS TREAT ED AS INCOME OF THE ASSESSEE AND LIABLE TO BE DISALLOWED. THE ASSE SSEE HAS SUBMITTED THAT RS.10,54,342/- WAS PAID BY HIS SISTE R CONCERNS AND NO EXPLANATION WAS PROVIDED FOR THE BALANCE OF RS. 3,3 3,362/- [RS. 138005 1054643] WHICH REMAINED UNEXPLAINED, HENCE , WAS ADDED BACK TO THE TOTAL INCOME OF ASSESSEE. 4. AGGRIEVED, THE ASSESSEE WENT IN APPEAL BEFORE TH E LD. CIT(A) WHO CONFIRMED THE ACTION OF THE ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY B OTH THE SIDES, PERUSED THE ORDERS OF THE A.O AND THE LD. CIT(A) AN D THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. IT IS AN UNDISPU TED FACT THAT M/S PARADISE INDUSTRIES AND AUTOMATIC INSTRUMENTS PVT. LTD HAVE CERTIFIED THAT THE CARD IS USED PARTLY FOR THE PURPOSE OF BUS INESS AND PARTLY FOR PERSONAL USE. ACCORDINGLY, THE ASSESSING OFFICER H AS RIGHTLY ESTIMATED THE ADDITION AT RS. 5,27,171/- AND ALSO TO THE SAME THE ASSESSEE HAS NOT BEEN ABLE TO PROVIDE THE DETAILS OF RS. 3,33,36 2/- AND ACCORDINGLY, THE ASSESSING OFFICER HAS MADE THE ADDITIONS IN THE ABSENCE OF DETAILS AND WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CI T(A). THE PLEADING BY 5 THE ASSESSEE BEFORE THE LD. CIT(A) AS WELL AS BEFOR E US WAS THAT THE ASSESSEE HAS NOT CLAIMED THESE EXPENSES BEING PERSO NAL IN NATURE AND THE ASSESSEE DOES NOT HAVE ANY BUSINESS INCOME AND THE WHOLE PAYMENTS HAS BEEN GIVEN BY M/S PARADISE INDUSTRIES AND M/S AUTOMATIC PVT. LTD. WITH REGARD TO THE CREDIT CARD. IN SUCH CIRCUMSTANCES, IT IS NOT CORRECT TO SAY THAT THE ASSESSEE DOES NOT HAVE ANY INCOME. THE ASSESSEE IS HAVING INCOME IN THE FORM OF REMUNERATI ON, SALARY AND INTEREST FROM PARTNERSHIP FIRM AND THE SHARE OF PRO FIT IS MATTER OF RECORD. THEREFORE, SUCH EXPENSES ARE DISALLOWABLE IN THE HANDS OF THE ASSESSEE AGAINST SUCH INCOMES AND HE CANNOT AVOID TAX LIABILITY BY GETTING PAYMENTS DONE FROM THE SAID FIRMS. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DO NOT FIND ANY INFIR MITY IN THE ORDER OF THE LD. CIT(A). ACCORDINGLY, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE DISMISSED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DI SMISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON .09 .2017. [KULDIP SINGH] [B.P. JAIN] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: SEPTEMBER, 2017 6 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI