M/s. God Gift Properties Pvt. Ltd., New Delhi V. DCIT, New Delhi

ITA 6374/DEL/2016

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 7120 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 1 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 14-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S N MEENA
• Keywords: Gift; Set aside
• Section: 143(3); 22; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER AND BEFORE SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO. 6374/DEL/2016 (ASSESSMENT YEAR : 2011-12) M/S. GOD GIFT PROPERTIES PVT. LTD. V S DCIT C/O. R. N. MARWAH & CO., LLP, CAS, CIRCLE 10(1), 4/80, JANPATH NEW DELHI NEW DELHI PAN : AAACG9053G ( APPELLANT ) (RESPO NDENT) ASSESSEE BY : SH. U.N. MARWAH, CA REVENUE BY : SH. S.N.MEENA, SR. DR DATE OF HEARING : 27 .01.2020 DATE OF ORDER : 31.01.2020 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, M/S. GOD GIFT PROPERTIES PVT. L TD., NEW DELHI (HEREINAFTER REFERRED TO AS 'THE ASSESSEE) BY FILI NG THE AFORESAID APPEAL, SOUGHT TO SET ASIDE THE IMPUGNED ORDER DAT ED 02/09/2016 PASSED BY LD. COMMISSIONER OF INCOME TAX(APPEALS)-1 6, NEW DELHI QUA THE ASSESSMENT YEAR 2011-12 ON THE GROU NDS INTER ALIA THAT: ITA NO. 6374/DEL/ 2016) 2 1.1 THAT ON FACTS AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING PROPORTIONATE DISALLOWANCE OF INTEREST O F RS. 8,98,325/- ON ACCOUNT OF UTILIZATION OF LOAN FUNDS FOR PURPOSES OTHER THAN FOR PURCHASE OF HOUSE PROPERTY. 1.2 THAT THE LD. CIT(A) WHILE CONFIRMING THE IMPUGNED DISALLOWANCE FAILED TO APPRECIATE THAT DEDUCTION FO R INTEREST IS ALLOWABLE U/S 36(1 )(III) AS THE APPELLANT HAS CARR IED BUSINESS ACTIVITY DURING THE YEAR. 2.1 THAT ON FACTS, THE LD. CIT(A) ERRED IN CONFIRMING ADDITION OF RS. 88,00,000/- U/S 68 OF THE ACT, BY H OLDING THAT THE APPELLANT COMPANY HAS FAILED TO EXPLAIN THE SOU RCE OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE APPELLANT. 2.2 THAT THE LD. CIT(A) WHILE CONFIRMING THE IMPUGNED ADDITION FAILED TO CONSIDER AND APPRECIATE THAT THE SAID CASH WAS DEPOSITED OUT OF RS. 90,00,000/- WITHDRAWN EARL IER IN APRIL 2010 FOR PURCHASE OF STAMP DUTY WHICH HAS BEEN DEPO SITED BACK IN THE BANK ACCOUNT SUBSEQUENTLY. 3. THAT THE APPELLANT CRAVES LEAVE, TO ADD, ALTER, AMEND, FORGO, AND SUBSTITUTE ANY OR ALL THE GROUNDS OF APP EAL BEFORE OR AT THE TIME OF HEARING. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE: DURING THE YEAR UNDER ASSESSMENT THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS PU RCHASED A PROPERTY NO. B.P-4A, JANGPURA B, NEW DELHI FOR PURPOSES OF RE-DEVELOPMENT AS STOCK IN TRADE FOR RS. 17.50 CRORES, FOR WHICH IT HAS TAKEN LOAN FROM THE BANK TO THE TUNE O F RS. 15 CRORES. AO NOTICED THAT THE ASSESSEE COMPANY HAS UTILIZED O NLY AN AMOUNT OF RS. 13,97,38,686/- FOR PURCHASE OF HOUSE PROPER TY AND CLAIMED INTEREST ON 15 CRORES, WHICH THE AO HAS PROPORTIONA TELY DISALLOWED U/S 24(B) OF THE ACT TO THE TUNE OF RS. 898.325/-. 3. ASSESSING OFFICER ALSO DISALLOWED AN AMOU NT OF RS. ITA NO. 6374/DEL/ 2016) 3 88,00,000/- AND MADE ADDITION THEREOF U/S 68 OF THE ACT ON THE GROUND THAT THE ASSESSEE COMPANY HAS FAILED TO EXPL AIN IMMEDIATE SOURCE OF CASH DEPOSIT AND THEREBY FRAMED THE ASSES SMENT U/S 143(3) AT TOTAL INCOME OF RS. 7,52,56,940/-. 4. ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A ) BY WAY OF FILING THE APPEAL WHO HAS PARTLY ALLOWED THE SAME. FEELING AGGRIEVED THE ASSESSEE HAS COME UP BEFORE THE TRIBU NAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVE OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. GROUND NO. 1.1 & 1.2 6. UNDISPUTEDLY, ASSESSEE HAS PURCHASED PROPERTY NO. B.P-4A, JANGPURA B, NEW DELHI FOR THE PURPOSE OF RE-DEVE LOPMENT AS STOCK IN TRADE FOR RS. 17.50 CRORE AFTER AVAILING O F LOAN OF RS. 15 CRORE FROM THE BANK DURING THE YEAR UNDER ASSESSMEN T. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSEE UTILIZED THE AMOUNT OF RS. 13,97,38,686/- OUT OF THE LOAN OF RS. 15 CRORE BEI NG THE SALE CONSIDERATION, PROCESSING FEES , LEGAL AND PROFESSI ONAL CHARGES, BROKERAGE / COMMISSION ETC. 6.1 IN THE BACKDROP OF THE AFORESAID UNDISPUTED FAC TS THE ITA NO. 6374/DEL/ 2016) 4 QUESTION ARISES FOR DETERMINATION IN THIS CASES AS TO, WHETHER ASSESSEE IS ENTITILED TO CLAIM INTEREST EXPENSES OF RS. 8,98,325/- QUA THE AMOUNT STATED TO BE NOT UTILIZED DURING THE YEA R UNDER ASSESSMENT. 6.2 THE LD. AR FOR THE ASSESSEE CHALLENGING THE IM PUGNED ORDER PASSED BY AO AS WELL AS LD. CIT(A) CONTENDED THAT R EMAINING AMOUNT OF RS. 1.2 CRORE OUT OF THE TOTAL LOAN AMOUN T OF RS. 15 CRORE WAS SPENT ON PAYING THE STAMP DUTY FOR EXECUTING / REGISTERING THE SALE DEED OF THE PROPERTY IN QUESTION IN ITS FAVOUR AND THIS FACT HAS BEEN BROUGHT TO THE NOTICE OF AO AS WELL AS LD. CIT (A) DURING THE ASSESSMENT AS WELL AS APPELLATE PROCEEDINGS AND DRE W OUR ATTENTION TOWARDS LETTER DATED 25.10.2013 SUBMITTED TO AO DUR ING ASSESSMENT PROCEEDINGS AVAILABLE AT PAGE 22 TO 33 A OF THE PAPER BOOK. 6.3 PERUSAL OF PARA 2 AT PAGE 30 AND DETAIL OF UTILIZATION OF LOAN TAKEN FROM THE BANK AT PAGE 33A OF THE PAPER BOOK C ATEGORICALLY GOES TO PROVE THAT THE ASSESSEE HAS SPECIFICALLY CL AIMED THE STAMP DUTY CHARGES AT RS. 1,05,00,000/-. HOWEVER BOTH AO AS WELL AS LD. CIT(A) HAS LOST SIGHT OF THIS FACT. WE HAVE PERUSED THE COPY OF SALE DEED SHOWING PAYMENT OF STAMP DUTY CHARGES OF RS. 1 ,05,00,000/- PAID BY THE ASSESSEE FOR GETTING THE SALE DEED EXEC UTED QUA THE PROPERTY IN QUESTION. WHEN IT IS NOT IN DISPUTE THA T THE ASSESSEE HAS ITA NO. 6374/DEL/ 2016) 5 PURCHASED THE PROPERTY DURING THE YEAR UNDER ASSESS MENT STAMP DUTY CHARGES PAID BY THE ASSESSEE ARE PART AND PARC EL OF SALE CONSIDERATION PAID BY THE ASSESSEE ON WHICH INTERES T CANNOT BE DISALLOWED. 6.4 SO THE ADDITION OF RS. 8,98,325/- MADE BY THE AO AND CONFIRMED BY LD. CIT(A) IS ORDERED TO BE DELETED. CONSEQUENTLY GROUND NO. 1.1 AND 1.2 IS DETERMINED IN FAVOUR OF T HE ASSESSEE. GROUND NO. 2.1 & 2.2 7. AO AFTER NOTICING THAT THE ASSESSEE COMPANY HAS INTRODUCED CASH IN BANK ACCOUNT DURING THE PERIOD 25.05.2010 T O 17.03.2011 BY WAY OF DIFFERENT AMOUNTS TO THE TUNE OF RS. 88,0 0,000/- AND MADE ADDITION THEREOF U/S 68 ON THE GROUND THAT THE ASSESSEE COMPANY HAS FAILED TO EXPLAIN IMMEDIATE SOURCE OF CASH DEPOSIT. LD. CIT(A) CONFIRMED THE ADDITION MADE BY AO. 7.1 BEFORE AO AS WELL AS LD. CIT(A) ASSESSEE COMPAN Y HAS COME UP WITH SPECIFIC PLEA THAT IN ORDER TO CARRY OUT THE PROPERTY TRANSACTION SITUATED AT JANGPURA IN MAY, 2010 ASSES SEE COMPANY HAS ISSUED A CHEQUE NO. 275368 DATED 30.03.2010 FOR RS. 90 LAKHS FAVOURING ITS EMPLOYEE NAMELY SANDEEP JAIN FOR EFFE CTING CASH WITHDRAWAL TO BE UTILIZED FOR PAYMENT OF STAMP DUTY . THE SAID CHAQUE WAS REFLECTED IN THE BALANCE SHEET AS 31.03. 2010 AS CHEQUE IN HAND. THEREAFTER ASSESSEE CAME TO KNOW THAT STA MP PAPERS NO ITA NO. 6374/DEL/ 2016) 6 LONGER REQUIRED TO BE PURCHASED AGAINST CASH AND CO NSEQUENTLY THE SAID CASH WAS RE-DEPOSITED IN THE BANK IN F.Y. 2010 -11 FROM TIME TO TIME IN VIEW OF BUSINESS EXIGENCY. 7.2 AFORESAID FACTUAL PLEA HAS BEEN DEALT WITH BY T HE AO AS WELL AS LD. CIT(A) ON THE BASIS OF PREPONDERANCE OF PRO BABILITY BY OBSERVING THAT THE ASSESSEES ASSERTION IS HIGHL Y IMPROBABLE IF NOT UNBELIEVABLE. THE PERSON GOING TO ACQUIRE A PRO PERTY FOR SUCH A HUGE SUM IS AWARE OR MADE AWARE BY THE BROKER REG ARDING RULES AND REGULATION FOR REQUISITION OF PROPERTY AND ASSE SSEE IS NOT NOVICE OR ILLITERATE. WITHDRAWAL OF HUGE CASH AND KEEPING THE SAME WITH HIMSELF FOR NO APPARENT REASON AND THE DEPOSITING T HE SAME CASH IN THE BANK ACCOUNT, IN INSTALLMENT IS AGAINST NORMAL , PRUDENT BEHAVIOR. 7.3 WE ARE OF THE CONSIDERED VIEW THAT AFORESAID FI NDINGS RETURNED BY AO AS WELL AS LD. CIT(A) ON THE BASIS O F PREPONDERANCE OF PROBABILITY IN THE FACE OF FACT S ON RECORD ARE NOT SUSTAINABLE IN THE EYES OF LAW FOR THE REASONS INTER ALIA THAT AO HAS ACCEPTED THAT ASSESSEE HAS CARRIED OUT ITS BUSI NESS ACTIVITIES BY PURCHASING PROPERTY AT JANGPURA AFTER AVAILING LOAN OF RS. 15 CRORE FOR WHICH SALE DEED HAS BEEN EXECUTED; THAT AMOU NT OF RS. 90 LAKHS WITHDRAWN BY WAY OF CHEQUE BY THE EMPLOYEE OF ASSESSEE COMPANY ON 30.03.2010, HAS BEEN DULY REFLECTED IN T HE BALANCE ITA NO. 6374/DEL/ 2016) 7 SHEET AS ON 31.03.2010 WHICH HAS NEVER BEEN DISPUTE D; THAT FROM THE BANK STATEMENT IT IS PROVED ON RECORD THAT CASH WAS WITHDRAWN ON 03.04.2010 AND WHEN THE SOURCE OF HAVING AMOUNT OF RS. 90 LAKHS WITH ASSESSEE COMPANY IS PROVED, THE SAID SOU RCE CANNOT BE DISPUTED MERELY BECAUSE OF THE FACT THAT THE AMOUNT REMAINED UNUTILIZED WITH THE ASSESSEE COMPANY FOR ABOUT ONE MONTH. 7.4 IT IS HIGHLY PROBABLE THAT IN CASE OF PURC HASING PROPERTY ONE HAS TO BE EXTRA CAUTIOUS TO KEEP THE CASH READY TO PURCHASE THE STAMP PAPER ETC. MOREOVER, WHEN ASSESSEE COMPANY PR OVED TO HAVE PURCHASED THE STAMP PAPER ON 20.05.2010 FOR WHICH A SSESSEE COMPANY MADE THE PAYMENT THROUGH BANKING CHANNEL AN D ONLY THEREAFTER IT HAS DEPOSITED THE AMOUNT OF RS. 88 LA KHS IN THE BANKS ON NUMEROUS DATE AS PER ITS CONVENIENCE, THERE IS N O QUESTION OF UNEXPLAINED CASH DEPOSIT. 7.5 SO WHEN AVAILABILITY OF RS. 90 LAKHS AND ITS WITHDRAWAL IN CASH BY THE ASSESSEE COMPANY IS NOT DISPUTED, SUBSE QUENTLY DEPOSITING THE SAID AMOUNT BY WAY OF CASH IN THE SA ME BANK ACCOUNT CANNOT MAKE THE SOURCE OF DEPOSIT DOUBTFUL. A BUSINESSMAN IS OTHERWISE ENTITLED TO EXERCISE ITS BEST DISCRETION TO WITHDRAW THE CASH FROM ITS ACCOUNT AND THEN R E-DEPOSIT THE SAME AS PER ITS BUSINESS EXIGENCY. 7.6 MOREOVER, ASSESSEE COMPANYS BOOKS OF ACCO UNT ARE AUDITED ITA NO. 6374/DEL/ 2016) 8 ONE AND HAS NOT BEEN DISPUTED BY THE REVENUE. EVEN NO EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE AO THAT THE CASH WAS NOT EXISTED BEFORE RE-DEPOSITING IN THE BANK. 7.7 IT IS NOT CASE OF THE REVENUE THAT AMOUNT OF RS. 90 LAKHS WITHDRAWN BY WAY OF CASH BY THE ASSESSEE COMPANY HA VE ALREADY BEEN SPENT. SO MERELY ON THE BASIS OF THE FACT THAT THERE IS A TIME GAP IN WITHDRAWING THE CASH OF RS. 90 LAKHS AND RE- DEPOSITING THE SAME IN THE BANK ITS SOURCE CANNOT BECOME DOUBTFUL . SO, WE ARE OF THE CONSIDERED VIEW THAT EXPLANATION FURNISHED BY T HE ASSESEE FOR KEEPING THE CASH DEPOSIT WITH IT TILL THE EXECUTION OF THE SALE DEED IN ITS FAVOUR IS CORRECT AND BEYOND ANY COMPREHENSI ON. SO THE ADDITION MADE BY AO AND CONFIRMED BY LD. CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE, ORDERED TO B E DELETED. CONSEQUENTLY, GROUNDS NO. 2.1 & 2.2 ARE DETERMINED IN FAVOUR OF ASSESSEE. 8. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, PRES ENT APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 31 ST JANUARY SD/- SD/- (N.K.BILLAIYA) (KUL DIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31/01/ 2020 BR ITA NO. 6374/DEL/ 2016) 9 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT(A), NEW DELHI. AR, ITAT NEW DELHI. DATE OF DICTATION 30/01/2019 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 31/01/2019 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