SHYAM SUNDER JINDAL, NEW DELHI V. ACIT, CENTRAL CIRCLE- 30, NEW DELHI

ITA 6297/DEL/2017

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2596 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 8 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 10-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAKASH DUBEY
• Keywords: Notional interest
• Section: 271(1)(c); 153A; 207; 22; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI G BEN CH, NEW DELHI [THROUGH VIDEO CONFERENCE] BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER, AND SHRI KULDIP SINGH, JUDICIAL MEM BER ITA NOS. 6295 TO 6298/DEL/2017 [ASSESSMENT YEARS: 2008-09 TO 2011-12] SHYAM SUNDER JINDAL VS. THE A.C.I.T 12-A, GREEN AVENUE, SECTOR D CIRCLE - 30 POCKET 3, VASANT KUNJ NEW DELHI NEW DELHI PAN : AAGPJ 0184 N [APPELLANT] [RESPONDENT] DATE OF HEARING : 24.06.2021 DATE OF PRONOUNCEMENT : 24.06.2021 ASSESSEE BY : SHRI ROHIT JAIN, ADV MS. DEEPASHREE RAO, ADV MS. MADHVI SHARMA, CA REVENUE BY : SHRI PRAKASH DUBEY, SR. DR ORDER PER N.K. BILLAIYA, ACCOUNTANT MEMBER:- THE ABOVE CAPTIONED FOUR SEPARATE APPEALS BY THE AS SESSEE ARE PREFERRED AGAINST THE ORDER OF THE LD. CIT(A)- 30, NEW DELHI DATED 22.08.2017 PERTAINING TO A.YS 2008-09 TO 2011-12. 2 2. SINCE COMMON ISSUES ARE INVOLVED IN ALL THE CAPT IONED APPEALS, THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THI S COMMON ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. THE COMMON GRIEVANCE IN ALL THESE APPEALS RELATE S TO THE LEVY OF PENALTY U/S 271(1)(C) OF THE INCOME-TAX ACT, 1961 [ HEREINAFTER REFERRED TO AS 'THE ACT']. THE COMMON GROUND ON WHICH PENAL TY HAS BEEN LEVIED IS THE ADDITION OF NOTIONAL INTEREST IN HDFC BANK A CCOUNT. 4. THE DISPUTE RELATING TO THE QUANTUM ADDITION TRA VELLED UPTO THE TRIBUNAL AND THE TRIBUNAL IN MA NOS. 780 TO 783/DEL /2019 ARISING OUT OF ITA NOS. 4125 TO 4128/DEL/2016 BY ORDER DATED 20 .12.2019 HAS DELETED THE QUANTUM ADDITION. THE RELEVANT FINDING S OF THE CO- ORDINATE BENCH READ AS UNDER: 8. WITH REGARD TO THE TAXATION OF NOTIONAL INTERES T @4% ADDED BY THE ASSESSING OFFICER, WE FIND THAT THE SIMILAR MATTER STANDS ADJUDICATED BY THE CO-ORDINATE BENCH OF THE TRIBUNA L IN THE CASE OF SH. KRISHNA KUMAR MODI IN ITA NO. 2892/DEL/2017, WHEREIN THE ADDITION MADE ON ACCOUNT OF NOTIONAL INTEREST IN RE SPECT OF ALLEGED FOREIGN BANK ACCOUNT WITH HSBC, GENEVA WAS DELETED BY HOLDING THE SAME TO BE NOTIONAL AND WITHOUT ANY BASIS. FOR THE SAKE OF 3 READY REFERENCE, THE RELEVANT PART OF THE ORDER IS REPRODUCED AS UNDER: COMING TO REVENUES APPEAL IN ITA NO. 3951/ DEL /2 017, THE DEPARTMENT HAS CHALLENGED THAT THE ACTION OF THE CI T(A) IN DELETING THE ADDITION OF RS.1,64,962/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF UNDISCLOSED INTEREST INCOME I N HSBC GENEVA. THE FACTS IN RESPECT OF THE SAID ISSUE ARE THAT IN THE ASSESSMENT ORDER PASSED UNDER SECTION 153A R.W.S. 1 43(3) OF THE IT ACT, THE ASSESSING OFFICER, APART FROM THE A DDITION ON ACCOUNT OF THE DEPOSITS/ BALANCES APPEARING IN THE ALLEGED FOREIGN BANK ACCOUNT, MADE FURTHER ADDITION OF RS.1,64,962/- (US$ 3,821.22 @ RS.43.17) UNDER SECTI ON 69 OF THE IT ACT ON ACCOUNT OF INTEREST CALCULATED @ 4% P.A. ON THE ALLEGED BALANCE APPEARING IN THE UNDISCLOSED FOREIGN BANK ACCOUNT. 6.2 ON APPEAL, THE LD. CIT (A) DELETED THE ADDITION MADE BY THE ASSESSING OFFICER HOLDING THAT SINCE NO CORROBORATI VE EVIDENCE HAS BEEN BROUGHT OUT BY THE ASSESSING OFFICER TO SUBSTA NTIATE THAT THE ASSESSEE HAS ACTUALLY EARNED ANY INTEREST ITA 2892 TO 2894/D/2017 ITA 3952 TO 3956/D/2017 INCOME, THEREF ORE, THE ADDITION MADE ONLY ON THE BASIS OF ESTIMATE AND PRE SUMPTION IS NOT SUSTAINABLE. 6.3 IN SUPPORT OF THE AFORESAID GROUND, THE LD. CIT -DR/ DEPARTMENTAL REPRESENTATIVE HEAVILY RELIED ON THE O RDER OF THE ASSESSING OFFICER AND CONTENDED THAT THE ADDITION O F RS. 1,64,962/- MADE ON ACCOUNT OF INTEREST SHOULD BE CO NFIRMED AND THE FINDING OF THE CIT(A) TO THIS EXTENT SHOULD BE REVERSED. IN REBUTTAL, THE LD. SENIOR COUNSEL VEHEMENTLY ARGUED THAT THE ADDITION ON ACCOUNT OF NOTIONAL INTEREST HAS BEEN R IGHTLY DELETED BY LD. CIT (A) SINCE THE SAID ADDITION WAS MADE BY THE ASSESSING OFFICER IN THE ABSENCE OF ANY BANK STATEMENT OR ANY OTHER 4 DOCUMENTS, MERELY ON THE BASIS OF PRESUMPTION THAT INTEREST @4% P.A. WOULD HAVE BEEN CREDITED ON THE BALANCE IN THE ACCOUNT, WITHOUT EVEN FIRST ESTABLISHING THE EXISTENCE OF TH E ALLEGED FOREIGN BANK ACCOUNT IN THE PERIOD UNDER CONSIDERATION. THE LD. COUNSEL CONTENDED THAT UNDER THE SCHEME OF THE ACT, LIABILI TY TO PAY TAX IS ATTRACTED AT TWO POINTS OF TIME, VIZ., THE ACCRUAL OF THE INCOME OR ITS RECEIPT, BUT THE SUBSTANCE OF THE MATTER IS INC OME. THUS, IN THE ABSENCE OF ANY INFORMATION, EVIDENCE OR RECORD, NOT IONAL INTEREST INCOME CANNOT BE ADDED IN THE ASSESSEES HANDS, MER ELY ON HYPOTHESIS, ASSUMPTION, ITA 2892 TO 2894/D/2017 ITA 3952 TO 3956/D/2017 CONJECTURES & SURMISES. FOR THE SAID PR OPOSITION RELIANCE WAS PLACED ON THE FOLLOWING DECISIONS, WHE REIN IT HAS BEEN HELD THAT NO ADDITION ON ACCOUNT OF INTEREST CAN BE MADE WHERE NO INTEREST HAS IN FACT BEEN CHARGED BY THE PARTIES WI THIN THE TERMS OF FUNDS/LOAN ADVANCED. CIT VS. GOYAL M.G. GASES (P) LTD.: 303 ITR 159 (D EL.) B & A PLANTATIONS AND INDUSTRIES VS. CIT: 242 ITR 22 (GAU.) KESHRICHANDJAISUKHLAL VS. CIT: 248 ITR 47 (GAU.) HIGHWAYS CONSTRUCTION CO. PVT. LTD VS. CIT: 199 I TR 702 (GAU.) JWALA PRASAD RADHA KRISHNA VS. CIT [1992]: 198 IT R 415 (ALL) CIT VS. PUNJAB FINANCIAL CORPN. LTD.: 295 ITR 510 (P&H HC) CIT VS. SOUTH INDIA CORPN. (AGENCIES) LTD.: 293 I TR 237 (CHENNAI HC) CIT VS. SANGHI FINANCE AND INVESTMENT LTD.: 190 C TR 207 (MP) ITA 2892 TO 2894/D/2017 ITA 3952 TO 3956/D/2017 6.4 WE HAVE CONSIDERED RIVAL SUBMISSIONS AND THE DE CISIONS RELIED UPON BY BOTH THE PARTIES. WE HAVE ALREADY DELETED T HE ADDITION MADE IN ASSESSMENT YEAR 2006-07 AND ALSO IN ASSESSM ENT YEAR 5 2007-08, THEREFORE, ON THIS GROUND ITSELF THE ADDIT ION MADE BY THE ASSESSING OFFICER IS LIABLE TO BE DELETED. INDEPEND ENT THEREOF, WE NOTE THAT IN THE INSTANT CASE, THE ADDITION OF RS.1 ,64,962 HAS BEEN MADE PURELY ON NOTIONAL BASIS ON THE PREMISE THAT T HE ASSESSEE: (A) HAD ALLEGED FOREIGN BANK ACCOUNT, WHICH ITSELF IS U NDER SERIOUS CHALLENGE; AND (B) ON SUCH BANK ACCOUNT, ASSESSEE E ARNED INTEREST @ 4%. WE ARE OF THE VIEW THAT THE CASE OF THE ASSES SEE IS ON A MUCH BETTER FOOTING VIS--VIS THE FACTS IN JUDICIAL PRECEDENTS RELIED UPON BY THE LD.COUNSEL INASMUCH AS IN THE AF ORESAID CASES THERE WAS AT LEAST SOME BASIS OF TAXATION OF NOTION AL AMOUNT/ INTEREST, WHICH WAS NEVER REALIZED/ RECEIVED BY THE ASSESSEE, BUT IN THE CASE OF THE ASSESSEE, THE SO-CALLED AMOUNT O F INTEREST BROUGHT TO TAX IS TOTALLY WITHOUT ANY BASIS AND IS CLEARLY HYPOTHETICAL/ IMAGINARY.SINCE THERE IS NO EVIDENCE THAT THE ASSESSEE ACTUALLY RECEIVED INTEREST ON THE DISPUTED DEPOSIT AND JUST BY FIGMENT OF IMAGINATION IT HAS BEEN CONCLUDE D THAT THE ASSESSEE EARNED INTEREST ON SUCH DEPOSITS @ 4% P.A. , THE IMPUGNED ADDITION ON ACCOUNT OF NOTIONAL ITA 2892 TO 2894/D/ 2017 ITA 3952 TO 3956/D/2017 INTEREST, HAS, EVEN ON MERITS, BEEN RIGHTLY DELETED BY THE CIT(A). FOR THE SAID CUMULATIVE REAS ONS, THE REVENUES APPEAL ON THIS GROUND STANDS DISMISSED. 9. SINCE, THE MATTER HAS BEEN ADJUDICATED ON MERITS , ANY ADJUDICATION OF THE TECHNICAL GROUNDS TAKEN UP BY T HE ASSESSEE WOULD ACADEMIC IN NATURE, HENCE NOT RESORTED TO. 5. SINCE THE ADDITION HAS BEEN DELETED, THE PENALTY SO LEVIED MUST ALSO BE DELETED. SUBLATO FUNDAMENTO CADIT OPUS, MEANING THEREBY, THAT IN CASE THE FOUNDATION IS REMOVED, THE SUPER S TRUCTURE FALLS. SINCE THE FOUNDATION [ADDITION] HAS BEEN REMOVED, THE SUP ER STRUCTURE I.E. 6 PENALTY MUST FALL. WE, ACCORDINGLY, DIRECT THE LD. CIT(A) TO DELETE THE PENALTY SO LEVIED. 6. IN THE RESULT THE APPEALS OF THE ASSESSEE IN ITA NOS. 6295 TO 6298/DEL/2017 ARE ALLOWED. THE ORDER IS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE REPRESENTATIVES ON 24.06.2021. SD/- SD/- [KULDIP SINGH] [N.K. BILLAIYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 24 TH JUNE, 2021 VL/ COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI 7 DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.PS/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER