Smt. Harneet Kaur, New Delhi V. ACIT, New Delhi

ITA 6626/DEL/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 3462 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-02-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 27-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PARMITA BISHWAS
• Assessee Lawyers: RAGNI HANDA SHRI AAKASH MEENA
• Keywords: Gift; Business expenditure; Search and seizure; Salary income; Corroborative evidences; Validity of assessment; Documents seized
• Section: 143(3); 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C : NEW DELHI) BEFORE HONBLE VICE PRESIDENT, SHRI G.D. AGRAWAL AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.6626/DEL./2016 (ASSESSMENT YEAR : 2009-10) SMT. HARNEET KAUR, VS. ACIT, CENTRAL CIRCLE 3, D 97, DEFENCE COLONY, NEW DELHI. NEW DELHI 110 024. (PAN : AEHPK0052M) (APPELLANT) (RESPONDENT) ASSESSEE BY : MS. RAGNI HANDA, ADVOCATE SHRI AAKASH MEENA, ADVOCATE REVENUE BY : SMT. PARMITA BISHWAS, CIT DR DATE OF HEARING : 31.01.2019 DATE OF ORDER : 25.02.2019 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SMT. HARNEET KAUR (HEREINAFTER REFE RRED TO AS THE ASSESSEE) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 12.06.2015 PASSED BY THE COMMI SSIONER OF INCOME-TAX (APPEALS)-23, NEW DELHI QUA THE ASSESSME NT YEAR 2009-10 ON THE GROUNDS INTER ALIA THAT :- 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS), NEW DELHI, DATED 12.06.2015 IS BAD IN LA W AND IN FACTS. ITA NO.6626/DEL./2016 2 2. THAT ON FACTS AND IN LAW, THE LD. CIT(A) HAS ERR ED IN NOT HOLDING THE ASSESSMENT MADE UNDER SECTION 153A READ WITH SECTION 143(3) OF THE ACT IS BAD IN LAW AND VOID AB INITIO. 2.1 THAT ON FACTS AND IN LAW, AND ON A TRUE AND COR RECT INTERPRETATION OF SECTION 153A OF THE ACT, WHERE AD MITTEDLY THERE WAS NO INCRIMINATING MATERIAL FOUND DURING THE COUR SE OF SEARCH U/S 132(1) OF THE ACT, CONDUCTED ON 14.03.2012, ASS ESSMENT ORDER PASSED UNDER SECTION 153A/143(3) OF THE ACT IS BAD IN LAW AND VOID AB INITIO. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. C!T(A) HAS ERRED IN DIRECTING THE LD. AO TO EXA MINE THE TAXABILITY OF THE EXPENSES INCURRED ON CREDIT CARDS FOR RS.10,27,552/- AS PERQUISITE IN THE HANDS OF THE AP PELLANT, AS PER THE PROVISIONS CONTAINED IN RULE 3 OF THE INCOME-TA X RULES, 1962, AND TAX THE SAME AT THE TIME OF GIVING EFFECT TO THE ORDER OF THE CIT(A). 3.1 THAT ON FACTS AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE APPELLANT HAD DERIVED PERSONAL BENEFIT FRO M THESE EXPENSES AND THAT SAME CONSTITUTED PERQUISITE IN TH E HANDS OF THE APPELLANT. 3.2 THAT ON FACTS AND IN LAW THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE ENTIRE CREDIT CARD EXPENSES H AD BEEN INCURRED WHOLLY AND EXCLUSIVELY FOR THE BUSINESS OF THE COMPANY I.E. JAY POLYCHEM INDIA LIMITED, IN WHICH THE APPEL LANT IS A DIRECTOR. 2. BRIEFLY STATED THE FACTS NECESSARY FOR ADJUDICAT ION OF THE CONTROVERSY AT HAND ARE : DURING THE SEARCH AND SEI ZURE OPERATION CONDUCTED AT THE PREMISES OF M/S. JAY POLYCHEM INDI A LIMITED AND ITS ASSOCIATES ON 14.03.2012, A NUMBER OF CREDIT CA RDS STATEMENTS OF FAMILY MEMBERS OF MADHOK FAMILY WERE FOUND AND SEIZ ED. ASSESSING OFFICER NOTICED FROM THE SEIZED DOCUMENT THAT HUGE AMOUNT HAS BEEN INCURRED ON LEATHER GOODS/LUGGAGE, WATCHES, HOTEL SERVICES, JEWELLERY, BOUTIQUE, WOMEN CLOTHING, MEN CLOTHING, COSMETICS, YARN & FABRIC, GIFTS, HOSPITAL, SHOES, B EAUTY PARLOUR, ITA NO.6626/DEL./2016 3 FASHION HOUSE, CHAMPION LEAGUE TICKET AND OTHER SER VICES ETC.. IT HAS ALSO COME ON RECORD THAT ASSESSEE OWNED HDFC AN D AMERICAN EXPRESS GOLD CARDS AND HAS INCURRED HUGE AMOUNT DUR ING FINANCIAL YEARS 2005-06 TO 2011-12 IN THE NAME OF BUSINESS OF M/S. JAY POLYCHEM INDIA LIMITED. THE PAYMENTS FOR CREDIT CA RD BILLS WERE MADE BY M/S. JAY POLYCHEM INDIA LIMITED. DECLINING THE CONTENTIONS RAISED BY THE ASSESSEE, AO PROCEEDED TO CONCLUDE THAT CREDIT CARD EXPENSES INCURRED BY THE ASSESSEE ARE M AINTAINING FOR PERSONAL LIFESTYLES AND WERE NOT INCURRED WHOLLY AN D EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND NO EVIDENCE HAS BEE N PRODUCED BY M/S. JAY POLYCHEM INDIA LIMITED TO PROVE AS TO HOW THESE EXPENSES WERE INCURRED FOR THE PURPOSE OF BUSINESS OF THE COMPANY AND THEREBY MADE ADDITION OF RS.10,27,552/- BEING T HE TOTAL CREDIT CARDS EXPENSES ON ACCOUNT OF DISALLOWANCE OF BUSINE SS EXPENSES. 3. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) W HO HAS PARTLY ALLOWED THE APPEAL. FEELING AGGRIEVED , THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 4. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES 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. ITA NO.6626/DEL./2016 4 5. UNDISPUTEDLY, ASSESSEE IS AN INDIVIDUAL TAX PAYE E HAVING DECLARED HER INCOME FROM SALARY, BUSINESS, RENTAL I NCOME AND INCOME FROM OTHER SOURCES AT RS.29,97,752/-. IT IS ALSO NOT IN DISPUTE THAT AY 2009-10 WAS COMPLETED ASSESSMENT ON THE DATE OF SEARCH. IT IS ALSO NOT IN DISPUTE THAT THE ASSESSE ES CASE IS COVERED IN THE SEARCH CONDUCTED AT THE PREMISES OF M/S. JAY POLYCHEM INDIA LIMITED ON 14.032012. 6. LD. AR FOR THE ASSESSEE CHALLENGING THE IMPUGNED ORDER QUESTIONED THE VALIDITY OF ASSESSMENT UNDER SECTION 153A OF THE INCOME-TAX ACT, 1961 (FOR SHORT THE ACT) IN THE A BSENCE OF INCRIMINATING MATERIAL FOUND DURING THE COURSE OF S EARCH AND IN THE ABSENCE OF ABATEMENT OF ASSESSMENT ON THE DATE OF S EARCH AND RELIED UPON CIT VS. KABUL CHAWLA - 380 ITR 173 (DEL.) . 7. LD. AR FOR THE ASSESSEE ALSO CONTENDED THAT IDEN TICAL ISSUE HAS ALREADY BEEN DECIDED IN ASSESSEE'S HUSBANDS CASE IN ITA NOS.690, 691, 692, 693, 694 & 977/DEL/2015 FOR AYS 2007-08 TO 2012-13 & ORS. ORDER DATED 21.02.2017 WHICH WAS COVERED ON THE BASIS OF SEARCH CONDUCTED ON 14.03.2012 AT THE PREM ISES OF M/S. JAY POLYCHEM INDIA LIMITED, ASSESSMENT WAS PASSED U NDER SECTION 153A IN AYS 2007-08 TO 2010-11. ITA NO.6626/DEL./2016 5 8. HOWEVER, LD. DR FOR THE REVENUE, ON THE OTHER HA ND, TO REPEL THE ARGUMENTS ADDRESSED BY THE LD. AR FOR THE ASSESSEE, RELIED ON THE ORDERS OF THE AO/CIT (A). 9. DURING THE RECORDING OF STATEMENT OF SHRI SANDEE P SINGH MADHOK RECORDED UNDER SECTION 131 OF THE ACT ON 27. 06.2012, HE WAS CONFRONTED WITH SEIZED MATERIAL/DOCUMENTS, ANNE XURES A-5, A-6, A-7, A-8 AND AA-1 AND WAS ASKED TO EXPLAIN AS TO HOW THE EXPENSES WERE INCURRED AND RECORDED IN THESE ANNEXU RES ARE BUSINESS EXPENSES OF THE ASSESSEE COMPANY I.E. M/S. JAY POLYCHEM INDIA LIMITED. AO EXTRACTED THE PORTION OF HIS STA TEMENT ON THIS ISSUE WHICH IS AS UNDER :- Q.21 I AM SHOWING YOU ANNEXURE A-5, A-6, A-7 AND A- 8 [PARTY JO-1] FOUND AND SEIZED FROM THE OFFICE OF M/S JAY POLYCHEM INDIA LIMITED D-143 DEFENCE COLONY, NEW DELHI IN THE COURSE OF SEARCH & SEIZURE OPERATION CONDUCTED UNDER SECTION 132 OF THE INCOME TAX ACT 1961 ON 14.03.2012 AND PAGE NO.4 TO 61 ANNEXURE AA-1 FOUND AND SEIZED ON 07.05.2012 FROM THE OFFICE PREMISES OF THE COMPANY D-143, DEFENCE COLONY, NEW DELHI. PLEASE EXPLAIN THE ENTRIES RECORDED IN THESE ANNEXURE ALONG WITH SUPPORTING EVIDENCES? ANS. THESE ARE CREDIT CARD STATEMENTS OF MYSELF AND MY BROTHER SATINDER SINGH MADHOK. EXPENSES INCURRED THROUGH THESE CREDIT CARDS ARE RELATING TO THE BUSINESS OF THE COMPANY THEREFORE COMPANY HAS PAID ALL THESE EXPENSES INCURRED THROUGH EITHER BY ME OR MY BROTHER THROUGH CREDIT CARDS Q.22 IN REPLY TO Q.NO. 23 ABOVE YOU HAVE STATED THA T ALL THE EXPENSES INCURRED THROUGH CREDIT CARDS OF ITA NO.6626/DEL./2016 6 MADHOK FAMILY HAVE BEEN CLAIMED AS BUSINESS EXPENDITURE AND THE PAYMENT TO CREDIT CARD ISSUING BANK HAD BEEN MADE BY JAY POLYCHEM INDIA LTD. PLEASE STATE UNDER WHICH HEAD OF EXPENDITURE/ EXPENSES INCURRED THROUGH CREDIT CARDS HAVE BEEN DEBITED IN THE P&L A/C OF JPIL. ALSO PRODUCE THE RELEVANT BILLS FOR THE EXPENSES INCURRED THROUGH CREDIT CARDS ANS. THE EXPENSES INCURRED BY ME AND MY FAMILY MEMBERS ARE MAINLY DEBITED UNDER THE HEAD OF TOUR & TRAVELLING AND BUSINESS PROMOTION. THE NATURE OF THESE EXPENSES IS FULLY CLEAR FROM THE NARRATION OF THE CREDIT CARD STATEMENTS ITSELF. Q.23 FROM THE NARRATION OF THE CREDIT CARD STATEMEN T IT APPEARS THAT MOST OF THE EXPENSES ARE OF PERSONAL NATURE AND THEY ARE NOT RELATED WITH BUSINESS OF THE COMPANY. ANS. NO SIR THESE ARE INCURRED FOR THE BUSINESS EXPEDIENCY. Q.24 PLEASE JUSTIFY THE PAYMENTS INCURRED THROUGH CREDIT CARD HOLD BY YOU AND SATINDER SINGH MADHOK AS THE NARRATION OF EXPENSES IN THE CREDIT CARD STATEMENT INDICATES THAT MOST OF THE EXPENSES ARE OF PERSONAL IN NATURE AND NOT RELATED TO BUSINESS PURPOSE OF THE COMPANY. ANS. THE EXPENSES ARE INCURRED FOR BUSINESS EXPEDIENCY AND FULLY ACCOUNTED FOR. 10. NOW, THE QUESTION ARISES FOR DETERMINATION IN T HIS CASE IS :- AS TO WHETHER ADDITION HAS BEEN MADE BY THE AO IN THIS CASE UNDER SECTION 153A ON THE BASIS OF ANY INCRIMINATING MATERIAL FOUND DURING THE SEARCH. 11. IDENTICAL ISSUE AS TO THE SIMILAR CREDIT CARDS PAYMENT HAS ALREADY BEEN DECIDED IN FAVOUR OF SATINDER SINGH MA DHOK, HUSBAND ITA NO.6626/DEL./2016 7 OF THE ASSESSEE, WHEREIN IT IS CATEGORICALLY HELD T HAT THE DOCUMENTS SEIZED CANNOT BE CONSIDERED AS INCREMENTING DOCUME NTS/MATERIAL. COORDINATE BENCH OF THE TRIBUNAL IN CASE OF SATINDER SINGH MADHOK DECIDED BY ORDER DATED 21.02.2017 IN WHICH ASSESSMENT WAS FRAMED UNDER SECTION 153A OF THE ACT ON THE BAS IS OF SEARCH CONDUCTED ON 14.03.2012 AT THE PREMISES OF M/S. JAY POLYCHEM INDIA LIMITED AS UNDER :- 5.3 WE HAVE DEALT WITH THIS LEGAL PROPOSITION REL ATING TO THE ADDITION U/S 153A IN RESPECT OF NOT ABATED ASSESSMENT BASED ON THE JUDGEMENT OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA ) WHILE ADJUDICATING THE ISSUE OF ADDITION MADE ON ACCOUNT OF DISCLOSURE U/S 132(4) OF THE ACT. IT IS A FACT THAT NO INCRIMINATING MATERIAL RELATING TO CREDIT C ARD EXPENSES WAS FOUND DURING THE COURSE OF SEARCH. THE LD. CIT(DR) HAS ALSO NO DISPUTE ON THIS ISSUE. UNDER TH ESE CIRCUMSTANCES, THE ADDITION ON ACCOUNT OF CREDIT CA RD EXPENSES IN RESPECT OF THE CAPTIONED ASSESSMENT YEA RS DESERVES TO BE DELETED. IT IS ORDERED ACCORDINGLY. IN RESULT, GROUND NOS. 4, 4.1 TO 4.2 IN ASSESSMENT YEA R 2007-08 AND GROUND NOS. 5, 5.1 TO 5.2 OF THE ASSESS MENT YEARS 2008-09 TO 2010-11 ARE ALLOWED. 12. WHEN WE EXAMINE THE UNDISPUTED FACTS OF THIS CA SE THAT THE CASE OF THE ASSESSEE WAS COVERED UNDER SECTION 132 OF THE ACT ON THE BASIS OF SEARCH AND SEIZURE OPERATION CONDUCTED ON 14.03.2012 AND IN VIEW OF THE FACT THAT ASSESSMENT OF THE ASSE SSEE FOR AY 2009-10 WAS COMPLETED ASSESSMENT AS ON 14.032012 AN D NO INCRIMINATING MATERIAL TO UNEARTH ANY UNDISCLOSED I NCOME WAS ITA NO.6626/DEL./2016 8 SEIZED DURING THE SEARCH AND SEIZURE OPERATION, THE PRESENT ADDITION MADE ON ACCOUNT OF CREDIT CARDS EXPENSES QUA AY 200 9-10 IS NOT SUSTAINABLE IN THE EYES OF LAW IN VIEW OF THE LAW L AID DOWN BY HONBLE JURISDICTIONAL HIGH COURT IN CASE OF KABUL CHAWLA (SUPRA). THE CASE OF THE ASSESSEE IS ALSO COVERED BY THE ORDER PASSED BY THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF SATINDER SINGH MADHOK, HUSBAND OF THE ASSESSEE . 13. SO, WE ARE OF THE CONSIDERED VIEW THAT ADDITION MADE BY AO AND CONFIRMED BY LD. CIT (A) IS LIABLE TO BE DELETE D, HENCE ORDERED TO BE DELETED. CONSEQUENTLY APPEAL FILED BY THE AS SESSEE IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 25 TH DAY OF FEBRUARY, 2019. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH ) VICE PRESIDENT JUDICIAL MEMBER DATED THE 25 TH DAY OF FEBRUARY, 2019 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-23, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.