Sh. Bhupesh Kumar Dhingra, New Delhi V. ACIT, New Delhi

ITA 6557/DEL/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98135 (ITAT-DELHI)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-10-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 09-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI JAIN
• Assessee Lawyers: BHUPESH KUMAR DHINGRA
• Keywords: Unexplained cash credit; Depreciation; Search and seizure
• Section: 153A; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : A : NEW DELHI BEFORE SHRI S.V. MEHROTRA , ACCOUNTANT MEMBER SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER ITA NO. 6557 /DEL /201 3 ASSESSMENT YEAR : 20 0 3 - 0 4 BHUPESH KUMAR DHINGRA VS. THE A.C.I.T F - 6/5, VASANT VIHAR CENTRAL CIRCLE 17 NEW DELHI - 57 NEW DELHI PAN : AAFPD 2778 P [APPELLANT] [RESPONDENT] DATE OF HEARING : 1 5 . 1 0 . 2015 DATE OF PRONOUNCEMENT : 09 . 12 .2015 APPELLANT BY : SH RI BHUPESH KUMAR DHINGRA , CA RESPONDENT BY : SHRI RAVI JAIN , CIT, DR ORDER PER CHANDRA MOHAN GARG, JUDICIAL MEMBER THIS APPEAL BY THE ASSESSEE HAS BEEN FILED AGAINST THE ORDER OF THE CIT(A) - I I , NEW DELHI DATED 06 . 1 1 .201 3 PASSED IN FIRST APPEAL NO. 175 / 2010 - 11 FOR AY 200 3 - 0 4 . 2. AT THE VERY OUTSET OF THE BEGINNING OF THE ARGUMENTS, THE LD. A.R SUBMITTED HIS ARGUMENTS ON ABRIDGED GROUND NO. 4 AND T H E DEPARTMENTAL REPRESENTATIVE [DR] ALSO PLACED HIS SUBMISSIONS REPLYING THE SAME WHICH READS AS UNDER: 2 ITA NO. 6557/DEL/2013 3. ABRIDGED GROUND NO. 4 OF THE ASSESSEE THAT ON THE FACTS AND ON THE CIRCUMSTANCES OF THE CASE, AND THE PROVISIONS OF LAW, THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN SUSTAINING ADDITION OF RS. 75,000/ - 4 . WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AND CAREFULLY PERUSED THE RELEVANT MATERIAL PLACED ON RECORD BEFORE US. THE ASSESSEE SUBMITTED THAT SEARCH AND SEIZURE OPERATION WAS CONDUCT ED ON SHRI BHUPESH DHINGRA AND GROUP ENTITIES ON 20.10.2008. NO INCRIMINATING MATERIAL WAS FOUND DURING THE COURSE OF SAID OPERATION. THE LD. COUNSEL POINTED OUT THAT THE AO MADE ADDITION U/S 68 OF THE INCOME - TAX ACT 1961 [FOR SHORT, THE ACT ] BY OBSERVING THAT THE AMOUNT OF RS. 75,000/ - IN QUESTION IS NOT REFLECTED IN THE CONFIRMATION OF ACCOUNT OF M/S B.K. DHINGRA [HUF] AND THUS THE SAME WAS ADDED TO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH CREDIT. ON APPEAL, THE LD. CIT(A) CONFIRMED T HE ADDITIONS BY OBSERVING THAT WHEN THE APPELLANT IS SHOWING ADDITION OF RS. 1 LAKH TO H IS CAPITAL ACCOUNT IN THE BALANCE SHEET OF B.K. DHINGRA & CO., THEREFORE, ASSERTION OF THE ASSESSEE THAT NO ADDITION WAS MADE IN THE CAPITAL ACCOUNT OF SHRI B.K. DHINGR A IN THE BOOKS OF B.K. DHINGRA & CO. IS NOT TENABLE. 3 ITA NO. 6557/DEL/2013 5 . ON CAREFUL PERUSAL OF THE IMPUGNED ORDER, WE NOTE THAT THE ISSUE HAS BEEN DECIDED AGAINST THE ASSESSEE WITH THE FO LLOWING FINDINGS AND CONCLUSION BY THE LD. CIT(A) AT PARAS 7 TO 7.3 AT PAGES 7 AND 8 OF HIS ORDER AS UNDER: 7. GROUND 8 OF THE APPEAL THAT RELATES TO THE ADDITION OF RS 75,000 U/S 68 IS CONSIDERED NEXT . 7.1 WHILE PASSING THE IMPUGNED ORDER, THE AO NOTED THAT WHILE AN ADDITION OF RS 75,000 HAD BEEN MADE TO THE CAPITAL ACCOUNT OF B K DHINGRA BY TRANSFER OF THE SUM FROM B K DHINGRA HUF, THE SAME WAS NOT REFLECTED IN THE CONFIRMATION OF ACCOUNT OF B K DHINGRA HUF. ACCORDINGLY, THE SUM OF RS 75,000 WAS TREATED AS UNEXPLAINED CASH CREDIT U/S 68. THE BASIS OF THE ADDITION MADE BY THE AO WAS THE SPECIFIC REPLY OF THE APPELLANT TO QUERY 37 OF THE QUESTIONNAIRE, WHEREIN REPLY HAD BEEN SOUGHT ON THE ADDITION OF CAPITAL OF RS 75,000 IN THE PROPRIETARY CONCERN B K DHINGRA & CO, AS REFLECTED IN THE DETAILS OF DRAWINGS FOR THE YEAR ENDED 31/3/2003, APPENDED TO THE RETURN OF INCOME. 7.2 DURING THE APPELLATE PROCEEDINGS, THE APPELLANT CONTENDED THAT NO ADDITION HAD BEEN MADE IN THE CAPITAL ACCOUNT OF B K DHINGRA IN THE BOOKS OF B K DHINGRA & CO, THOUGH AN AMOUNT OF RS 75,000 WAS DEBITED IN THE DRAWING S ACCOUNT OF B K DHINGRA IN THE BOOKS OF B K DHINGRA & CO, ON ACCOUNT OF TRANSFER ENTRY . IT WAS STATED THAT NO ADDITION COULD BE MADE U/S 68 IN RESPECT OF THE DEBIT ENTRY OF RS 75,000. 7.3 THE SUBMISSIONS OF THE APPELLANT ARE CONSIDERED. IT IS NOTED FROM THE DOCUMENTS SUBMITTED WITH THE RETURN OF INCOME THAT THE 4 ITA NO. 6557/DEL/2013 AFFAIRS OF THE APPELLANT ARE REFLECTED IN NOT ONLY HIS INDIVIDUAL ACCOUNT BUT ALSO IN THE ENTITY B K DHINGRA & CO, THE PROPRIETARY CONCERN THROUGH WHICH HE RENDERS PROFESSIONAL SERVICES OF A CHARTERED ACCOUNTANT. A PERUSAL OF THE BALANCE SHEET OF B K DHINGRA (INDIVIDUAL) REVEALS AN ADDITION OF RS 1 LAKH TO HIS CAPITAL ACCOUNT AND ALSO DRAWINGS OF MORE THAN RS 3,26,807 / - . THE BALANCE S HEET OF B K DHINGRA & CO SHOWS THE CAPITAL ACCOUNT OF B K DHINGRA WITH DRAWINGS OF RS 2,51,807 / - , THE DETAILS OF WHICH APPEAR IN ANNEXURE - I FILED ALONG WITH THE RETURN OF INCOME. THE ANNEXURE - I LISTS DETAILS OF DRAWING EXPENSES BEING ON HOUSEHOLD, LIC, SCH OOL FEES, ELECTRICITY AND WATER EXPENSES, ADVANCE TAX, CAR EXPENSES, CAR DEPRECIATION AND TELEPHONE, AMOUNTING TO RS 3,26,807 / - . A SUM OF RS 75,000 / - , NARRATED AS ADDITION INTO CAPITAL IS DEDUCTED FROM RS 3,26,807 / - AND THE BALANCE OF RS 2,51,807 / - ONLY IS REFLECTED IN THE BALANCE SHEET OF B K DHINGRA & CO AS DRAWINGS . THUS IT IS EVIDENT FROM THESE DOCUMENTS THAT, CONTRARY TO THE ASSERTION OF THE APPELLANT, RS 75,000 DID COMPRISE ADDITION INTO CAPITAL IN THE BOOKS OF B K DHINGRA & CO. IN THESE CIRCUMSTA NCES, WHEN THE APPELLANT IS SHOWING ADDITION OF RS 1 LAKH TO HIS CAPITAL ACCOUNT IN THE BALANCE SHEET OF B K DHINGRA (INDIVIDUAL) AND ADDITION OF RS 75,000 TO HIS CAPITAL ACCOUNT IN THE BALANCE SHEET OF B K DHINGRA & CO, HIS ASSERTION THAT NO ADDITION WAS MADE IN THE CAPITAL ACCOUNT OF B K DHINGRA IN THE BOOKS OF B K DHINGRA & CO IS CLEARLY ERRONEOUS AND UNTENABLE. THE ACCOUNTING JUGGLERY AND THE EXPLANATIONS OFFERED BY HIM IN THE APPELLATE PROCEEDINGS DO NOT EXPLAIN AWAY THE WRITTEN SUBMISSION MADE BY HI M DURING THE ASSESSMENT PROCEEDINGS IN RESPONSE TO THE QUESTIONNAIRE, WHERE HE STATED IN PARA 37: DURING THE FY 2002 - 2003, THE ASSESSEE HAS MADE ADDITION INTO CAPITAL OF M/S BHUPESH K DHINGRA AND CO, AMOUNTING RS 75000.00, BEING THE TRANSFER OF OUTSTANDIN G AMOUNT OF BHUPESH KUMAR (HUF) . 5 ITA NO. 6557/DEL/2013 MOREOVER, SINCE THE CONFIRMATION OF B K DHINGRA (HUF), FILED ALONG WITH THE WRITTEN SUBMISSION, DOES NOT SUPPORT THE SOURCE OF RS 75,000, THE AO WAS JUSTIFIED IN TREATING THE SAME AS UNEXPLAINED CASH CREDIT U/S 68. THEREF ORE, GROUND 8 OF THE APPEAL IS DISMISSED. 6 . FROM THE CONTENTIONS OF THE ASSESSEE IT IS NOTED THAT REPLYING TO QUESTION NO. 37 , THE ASSESSEE VIDE LETTER DATED 24.12.2010 [ASSESSEE S PAPER BOOK PAGE 41] , REPLIED AS UNDER: DURING THE A.Y 2003 - 04, I HAD NOT RECEIVED AMOUNT OF RS. 75,000/ - FROM BHUPESH KUMAR [HUF]. ADDITION INTO CAPITAL OF RS. 75,000/ - AS PER THE AUDITED BALANCE SHEET OF BHUPESH K. DHINGRA & CO. AS ON 31.03.2003 IS THE TRANSFER ENTRY OF BALANCE AS STANDING IN THE ACCOUNT OF B.K. DHINGRA BEING DIFFERENTIAL AMOUNT OF RECEIPTS/PAYMENTS DURING THE A.Y 2003 - 04 IN THIS ACCOUNT . 7 . IN VIEW OF THE ABOVE REPLY, THE STAND AND EXPLAN ATION OF THE ASSESSEE IS OF TWO - FOLD VIZ, FIRSTLY THE ASSESSEE HAD NOT RECEIVED RS . 75,000/ - OR ANY OTHER AMOUNT IN CASH AND SECONDLY, THE ADDITION INTO CAPITAL ACCOUNT OF THE ASSESSEE IS BASED ON THE TRANSFER ENTRY OF BALANCE AS STANDING IN THE ACCOUNT OF B.K. DHINGRA BEING DIFFERENCE AMOUNT OF RECEIPTS/PAYMENTS DURING A.Y 2003 - 04 IN THIS ACCOUNT, AS PER AUDITED BALANCE SHEET OF : K. DHINGRA & CO. [ASSESSEE S PAPER BOOK PAGE 33 & 37]. IT IS AMPLY CLEAR THAT ON 31.3.2003 SHRI B.K. DHINGRA S CURRENT ACCOUNT WAS CREDITED BY RS. 75,000/ - AND ON THE SAME DATE DRAWING ACCOUNT THE ASSESSE E WAS DEBITED BY THE SAME AMOUNT. 6 ITA NO. 6557/DEL/2013 FROM ASSESSEE S CAPITAL ACCOUNT IN THE BALANCE SHEET OF M/S BHUPESH KUMAR DHINGRA & CO. AS ON 31.3.2003 DRAWINGS HAS BEEN DEDUCTED FROM CAPITAL ACCOUNT OF RS. 2,51,807/ - WHEREAS AS PER THE DETAILS APPEARING AT PAGE 17 OF THE PAPER BOOK DETAILS OF DRAWINGS FOR THE YEAR ENDED HAS BEEN SHOWN AS 3,26,807/ - AND AFTER ADJUSTMENT OF ADDITION TO CAPITAL ACCOUNT OF RS. 75,000/ - THE ACTUAL DRAWINGS HAS BEEN CALCULATED AT RS. 2,51,807/ - WHICH HAS BEEN DEDUCTED FROM CAPITAL ACCOUNT [S UPRA]. THESE DETAILS EMERGING FROM AUDITED ACCOUNTS AND BALANCE SHEET OF M/S B.K. DHINGRA & CO. HAS NOT BEEN DISPUTED BY THE AUTHORITIES BELOW AND THE AO IN SECOND PAR A HAS RECORDED INCORRECT AND IRRELEVANT FACTS WHICH ARE CONTRARY TO THE REPLY VIDE DATED 24.12.2010, AS REPRODUCED ABOVE, OF THE ASSESSEE. THE LD. CIT(A) WAS ALSO NOT CORRECT IN UPHOLDING TH E S AME BY OBSERVING THAT NO ADDITION WAS MADE IN THE CAPITAL ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S B.K. DHINGRA & CO. BECAUSE WHEN OUT OF TOTAL DRAWINGS OF RS. 3,26,807/ - AFTER ADJUSTING TH E AMOUNT OF CAPITAL ADDITION OF RS. 75,000/ - THE AMOUNT OF RS. 2,51,807/ - AS DRAWINGS HAS BEEN DEBITED TO THE CAPITAL ACCOUNT OF THE ASSESSEE. IF THE CAPITAL ADDITION OF RS. 75,00 0/ - WAS ADDED TO THE OPENING CAPITAL BALANCE AND THEREAFTER TOTAL DRAWINGS OF RS. 3,26,807/ - WAS DEDUCTED THEREFROM THE EFFECT WOULD BE THE SAME AS GIVEN IN THE AUDITED BOOKS AND BALANCE SHEET OF THE ASSESSEE. 7 ITA NO. 6557/DEL/2013 8 . IN VIEW OF THE FOREGOING DISCUSSION, WE D ECLINE TO ACCEPT THE CONC LU SION OF THE FIRST APPELLATE AUTHORITY. WE FURTHER OBSERVE THAT THE ADDITION U/S 68 OF THE ACT CAN BE MADE IN RESPECT OF CASH CREDITS SUM FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR THE PREVIOUS YEAR BUT IN THE PRES ENT CASE THE AO COULD NOT ESTABLISH ANY SUM OF CASH CREDITED IN THE BOOKS OF THE ASSESSEE. 9 . PER CONTRA, FROM THE FACTS EMERGED FROM THE AFORESAID DISCUSSION, WE NOTE THAT THE AMOUNT OF RS. 75,000/ - FOUND CREDITED IN T HE ASSESSEE S CAPITAL ACCOUNT IN THE BOOKS OF M/S BHUPESH K. DHINGRA & CO. WAS MERELY TRANSFER ENTRY AS STANDING ON 31.3.2003 STA ND ING IN T HE CURRENT ACCOUNT OF THE ASSESSEE WHICH RESULTED INTO LESS DEDUCTION OF DRAWINGS AFTER ADJUSTMENT OF CREDITED CAPITAL AMOUNT OF RS. 75,000/ - . THUS, WE ARE INCLINED TO HOLD THAT THE EXPLANATION OF THE ASSESSEE REPLYING TO QUESTION NO. 37 AVAILABLE AT PAGE 41 OF THE ASSESSEE S PAPER BOOK WAS QUITE JUSTIFIED, REASONABLE AND SUSTAINABLE AND THE AUTHORITIES BELOW WERE NOT JU STIFIED AND CORRECT IN REJECTING THE SAME ON IRRELEVANT FACTS AND WRONG APPRECIATION OF DOCUMENTARY EVIDENCE AND EXPLANATION OF THE ASSESSEE AND WE SET ASIDE THE SAME. ACCORDINGLY, ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A) IS NOT SUSTAINABLE AND THUS WE DEMOLISH THE SAME. CONSEQUENTLY, GROUND NO. 4 OF THE ASSESSEE IS ALLOWED. 8 ITA NO. 6557/DEL/2013 10 . BEFORE WE PART WITH THE ORDER, IT IS NECESSARY AND RELEVANT TO DEAL WITH THE CONTENTIONS OF THE ASSESSEE THAT ADDITION U/S 68 OF THE ACT WAS MADE IN REASSESSMENT O RDER U/S 148(3) R.W.S 153A OF THE ACT WITHOUT ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH AND SEIZURE OPERATIONS AND, THEREFORE, IN VIEW OF THE JUDGMENT OF THE HON BLE JURISDICTION HIGH COURT OF DELHI IN THE CASE OF CIT VS. KABUL CHAWLA VS. CIT REP ORTED AS ITA 707 & 709 /2014 ORDER DATED 28.8.2015, NO ADDITION CAN BE MADE. THE LD. DR CONTENDED THAT THE SAID JUDGMENT IS NOT A FINAL VERDICT ON THE ISSUE AS THE SAME HAS BEEN CHALLENGED BEFORE THE HON BLE SUPREME COURT. ON CAREFUL CONSIDERATION OF THE ABOVE LEGAL CONTENTIONS, WE ARE OF THE VIEW THAT SINCE BY THE EARLIER PART OF THIS ORDE R AFTER DEALING WITH THE MERITS OF THE ADDITION IN THE LIGHT OF THE DOCUMENTAR Y EVIDENCE AND EXPLANATION OF THE ASSESSEE , WE HAVE HELD THAT ADDITION U/S 68 OF THE ACT WAS NOT WARRANTED AND SUSTAINABLE AND EXPLANATION OF THE ASSESSEE IS TENABLE AND ACCEPTAB LE AND THUS THE SAME HAS BEEN DELETED THEN ISSUE OF APPLICATION OF DICTA IN THE C A SE OF KABUL CHAWLA [SUPRA] BECOMES ACADEMIC , HOWEVER OUR CONCLUSION ALSO GETS SUPPORT FROM THIS ORDER OF THE HON BLE JURISDICTIONAL HIGH COURT OF DELHI. IT IS ALSO PERTINENT TO NOTE THAT ON SPECIFIC QUERY FROM THE BENCH, THE ASSESSEE HAS NOT PLACED ANY ARGUMENT ON HIS GROUND NOS. 1, 2 AND 3. THUS WE DEEM THESE GROUNDS AS IMPLIEDLY NOT PRESSED AND WE DISMISS THE SAME AS NOT PRESSED. 9 ITA NO. 6557/DEL/2013 1 1 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED ONLY ON GROUND NO. 4 . THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 0 9 .12 .2015 . SD/ - SD/ - ( S.V. MEHROTRA ) (C.M. GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 0 9 T H DECEMBER, 2015 VL/ COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI SI. NO. DESCRIPTION DATE 1 . DATE OF DICTATION BY THE AUTHOR 07 .12.2015 2. DRAFT PLACED BEFORE THE DICTATING MEMBER 08 - 12 - 2015 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY THE SECOND MEMBER 5. DATE OF APPROVED ORDER COMES TO THE SR. PS 6. DATE OF PRONOUNCEMENT OF ORDER 7. DATE OF FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER 10 ITA NO. 6557/DEL/2013