ITO, New Delhi V. Shri Rajesh Kalra, New Delhi

ITA 674/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6358 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 15-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: V B AGGARWAL
• Keywords: Income from undisclosed sources; Principle of natural justice; Additional evidence
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : F : NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO.674/DEL/2012 ASSESSMENT YEAR : 2008-09 ITO, WARD-19(4), ROOM NO.D-217, VIKAS BHAWAN, NEW DELHI. VS. RAJESH KALRA, B-16/1, KEWAL PARK EXTENSION, SHRI RAM MARG, ADARSH NAGAR, NEW DELHI. PAN : AIBPK2761P ( APPELLANT ) ( RESPONDENT ) ASSESSEE BY : SHRI V.B. AGGARWAL, CA DEPARTMENT BY : S MT. MEENAKSHI VOHRA, SR . DR ORDER PER A.D. JAIN, JUDICIAL MEMBER: THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2008-09 A GAINST THE ORDER DATED 13.12.2011, PASSED BY THE LD. CIT(A)-XXII , NEW DELHI, TAKING THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LD. CIT (A) HAS ERRED IN DELETING THE ADDITIO N OF RS.25,26,120/- MADE BY THE ASSESSING OFFICER UNDER TH E HEAD INCOME FROM UNDISCLOSED SOURCES ON ACCOUNT OF UNEXPLAINED D EPOSITS IN: THE BANK ACCOUNT, AND GIVING THE RELIEF OF RS.1,91,780/- OUT OF DISALLOWANCE OF COMMISSION EXPENSES, BY RELYING UPON THE ASSESSEE S DOCUMENTS AND IGNORING THE FACTS OF THE CASE. 2. THE LD. CIT (A) HAS ERRED IN ADMITTING THE FRESH E VIDENCES, WITHOUT CALLING FOR ANY REMAND REPORT FROM THE ASSESSIN G OFFICER AND WITHOUT GIVING AN OPPORTUNITY TO THE A.O. TO VERIFY THE CON TENTS OF THE ADDITIONAL EVIDENCE GIVEN BY THE ASSESSEE BEFORE THE L D. CIT (A). ITA NO.674/DEL/2012 2 3. THE LD. CIT (A) HAS ERRED IN ADMITTING THE FRESH E VIDENCES, IN CONTRAVENTION OF RULES 46A OF THE INCOME-TAX RULES. 2. THE FACTS AS PER THE RECORD ARE THAT THE ASSESSEE IS EN GAGED IN THE BUSINESS OF PLYING GOODS CARRIERS AND ALSO INSURANCE COMMI SSION AGENT BUSINESS. HE HAS GOT TWO TRUCKS FOR WHICH HE HAS NOT MAIN TAINED ANY BOOKS OF ACCOUNT AND INCOME FROM TRUCK BUSINESS HAS BEEN OFFE RED U/S 44AE OF THE IT ACT. FOR INSURANCE COMMISSION AGENT BUSINESS, THE ASSESSEE HAS MAINTAINED BOOKS OF ACCOUNT AND DURING THE YEAR HE H AS SHOWN COMMISSION RECEIPTS OF ` 6,07,611/-. IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER ADDED ` 25,26,120/- ON ACCOUNT OF THE CREDIT ENTRIES APPEAR ING IN THE BANK ACCOUNT. THE ASSESSING OFFICER HAS ALSO DISALLOWED 50% EXPENSES, I.E ., ` 2,39,724/- OUT OF THE EXPENSES CLAIMED. 3. WHILE MAKING THE ADDITION OF ` 25,26,120/-, THE AO OBSERVED AS FOLLOWS:- FROM THE BANK STATEMENT, IT IS SEEN THAT THERE ARE CREDIT ENTRIES TOTALING TO RS.31,33,731/- IN THE SAVINGS BANK ACCOUNT M AINTAINED BY THE ASSESSEE WITH AXIS BANK AND CANARA BANK. THE ASSE SSEE WAS ASKED TO FURNISH THE SOURCE OF DEPOSIT OF CASH & CHEQUES OF RS.25,26,120/- I.E., AFTER REDUCING THE COMMISSION RECEIPT OF RS.6,07 ,611/- SHOWN IN THE P&L ACCOUNT. HOWEVER, DESPITE REPEATED OPPORTUNITIES PROVIDED, THE ASSESSEE FAILED TO GIVE ANY SATISFACTORY REPLY SUPP ORTED BY DOCUMENTARY EVIDENCES LIKE G.R. OR ANY REGISTER SHOWI NG THE DETAILS OF PARTIES FROM WHOM AMOUNT RECEIVED AS FREIGHT WHICH WAS DEPOSITED IN SAVINGS BANK ACCOUNTS. IN THE ABSENCE OF ANY DETAILS AS CALLED FOR AND BILLS & VOUCHERS, THE AMOUNT OF RS.25,26,120/- IS ADD ED TO THE INCOME OF THE ASSESSEE U/S 68 OF THE IT ACT AS INCOME FROM UN DISCLOSED SOURCES. 4. THE LD. COMMISSIONER (APPEALS) DELETED THE ABOVE AD DITION MADE BY THE AO, HOLDING AS FOLLOWS:- I HAVE CONSIDERED THE SUBMISSION OF THE APPELLANT AND OBSERVATION OF THE ASSESSING OFFICER. IT IS SEEN THAT DURING THE YEAR I N THE BANK ACCOUNT OF THE APPELLANT MAINTAINED WITH AXIS BANK AND C ANARA BANK, THERE WERE TOTAL CREDIT ENTRIES OF RS.31,33,731/-. IN THE ASSESSMENT ORDER, ASSESSING OFFICER GAVE CREDIT OF RS.6,07,611 /- WHICH WAS SHOWN AS INSURANCE COMMISSION RECEIPTS AND REST OF THE AMOUN T CREDITED IN THE BANK ACCOUNT WAS TREATED AS UNEXPLAINED CASH CREDI T U/S 68 OF THE IT ACT. DURING THE COURSE OF APPELLATE PROCEEDING, THE APPELLANT HAD ITA NO.674/DEL/2012 3 SUBMITTED THAT HE HAS GOT TWO TRUCKS AND INCOME FROM THESE TRUCKS HAS BEEN OFFERED U/S 44AE OF THE IT ACT. IT IS CLAIMED BY THE APPELLANT THAT FREIGHT RECEIPTS RECEIVED FROM FOLLOWING PARTIES FO R EXECUTION OF TRANSPORTATION CONTRACTS OR TRANSPORTATION OF GOODS WERE D EPOSITED IN THE BANK ACCOUNT MAINTAINED WITH AXIS BANK AND CANARA B ANK:- M/S K.L. RATHI STEEL LTD. M/S RATHI INDUSTRIES LTD. M/S BANSAL CARGO MOVERS PVT. LTD. M/S M.K. JUNEJA IRON & STEEL PVT. LTD. M/S BHAGA LAXMI OIL MILLS M/S RATHI SUPER STEEL PVT. LTD. IT IS SUBMITTED BY THE APPELLANT THAT AMOUNT RECEIVED FRO M ABOVE PARTIES BY WAY OF CHEQUE AS WELL AS CASH WAS CREDITE D IN THE ABOVE MENTIONED BANK ACCOUNTS. IT IS ALSO SUBMITTED BY THE AP PELLANT THAT TDS HAS BEEN DEDUCTED BY THE ABOVE MENTIONED PARTIES O N THE PAYMENT OF FREIGHT AND SUCH TDS HAS BEEN CLAIMED IN TH E RETURN OF INCOME AND REFUND HAS BEEN ALLOWED BY THE ASSESSING OFFICER. IT IS SUBMITTED BY THE APPELLANT THAT DURING THE YEAR APPELLANT HAD RECEIVED TOTAL FREIGHT RECEIPT OF RS.30,50,697/- OUT OF WHICH, SO ME AMOUNT WAS RECEIVED IN CASH, WHICH WAS GIVEN TO THE DRIVER FOR I NCURRING EXPENDITURE AND MAJORITY AMOUNT WAS RECEIVED BY WAY OF CHEQUE WHICH WAS CREDITED IN THE ABOVE MENTIONED BANK ACCOUN T OF THE APPELLANT. IT IS CLAIMED BY THE APPELLANT THAT THE AMOUNT O F RS.25,26,120/- TREATED BY THE ASSESSING OFFICER AS U NEXPLAINED WAS PERTAINING TO THESE RECEIPTS ONLY. IN SUPPORT OF HIS CON TENTION, THE APPELLANT HAS FILED COPIES OF THE TDS CERTIFICATES AND DETAILS OF THE PAYMENTS RECEIVED FROM THE ABOVE PARTIES. THE APPELLAN T HAS ALSO LGIVEN DETAILS OF THE AMOUNTS RECEIVED FROM THE PARTIES AND CREDITED IN THE BANK ACCOUNT ON A PARTICULAR DATE WITH CHEQUE NO. AN D AMOUNT, WHICH TALLIES WITH THE CREDIT ENTRIES APPEARING IN THE BA NK ACCOUNT. THESE DETAILS ARE PLACED ON RECORD. SINCE THE AMOUNT O F RS.25,26,120/- ADDED BY THE ASSESSING OFFICER WAS PERTAINING TO FREIG HT RECEIPTS RECEIVED FROM VARIOUS PARTIES AND TDS ON THE SAME HAS BEEN DEDUCTED, THE SAME CANNOT BE TREATED AS UNEXPLAINED DEP OSIT IN THE HANDS OF THE APPELLANT. THE INCOME PERTAINING TO THESE F REIGHT RECEIPTS HAS BEEN OFFERED BY THE APPELLANT U/S 44AE OF THE IT ACT OF RS.84,000/-. THE APPELLANT HAS FILED THE COPY OF COMPUTATION OF INC OME IN SUPPORT OF HIS CONTENTION. THE APPELLANT HAS ALSO FILED COPIES O F THE REGISTRATION OF THE TRUCKS OWNED BY THE APPELLANT. IN VIEW OF THE ABOVE STATED FACTS, THE ADDITION MADE BY THE APPELLANT OF RS.25,26,120/- WA S NOT JUSTIFIED AND SAME IS DELETED. THE ASSESSING OFFICER HAS ALSO DISALLOWED RS.2,39,7 20/- OUT OF THE EXPENSES OF RS.4,79,447/- CLAIMED IN P&L ACCOUNT. IT IS MENTIONED BY THE ASSESSING OFFICER THAT APPELLANT HAS NOT GIVEN FULL DETAILS OF THE EXPENSES DURING THE COURSE OF HEARING. AT THE SAME TIM E, IT CANNOT BE DENIED THAT TO RUN BUSINESS OF COMMISSION AGENT APPELL ANT NEEDS TO PAY COMMISSION TO SUB-AGENTS AND VARIOUS PARTIES TO GET BUSINESS. THE APPELLANT HAS ALSO NEEDS TO INCUR EXPENSES ON MAINTE NANCE OF OFFICE ITA NO.674/DEL/2012 4 AND VEHICLES. THEREFORE, THE 50% DISALLOWANCE MADE B Y THE ASSESSING OFFICER WAS UNREASONABLE. CONSIDERING THE NATURE OF B USINESS OF THE APPELLANT, THE DISALLOWANCE IS RESTRICTED TO 10% OF THE TOTAL EXPENSES WHICH COMES TO RS.47,944/-. AS A RESULT, THE APPELLAN T GETS A RELIEF OF RS.1,91,780/-. 5. BEFORE US, THE DEPARTMENT, BY WAY OF GROUND NOS.2 AND 3, HAS CONTENDED THAT THE LD. CIT (A) HAS ERRED IN ADMITTIN G THE FRESH EVIDENCE FILED BY THE ASSESSEE, WITHOUT CALLING FOR ANY REMAND REPORT FROM THE AO AND WITHOUT GIVING ANY OPPORTUNITY TO THE AO TO VERIFY THE CONTENTS OF SUCH ADDITIONAL EVIDENCE, IN VIOLATION OF RULE 46A OF TH E IT RULES. 6. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, HAS PLACED STRONG RELIANCE ON THE ORDER UNDER APPEAL IN THIS REGARD. 7. WE FIND THAT APROPOS THE ISSUE OF ADDITIONAL EVIDE NCE, THE RELEVANT OBSERVATIONS OF THE LD. CIT (A) ARE AS FOLLOWS:- IT IS SUBMITTED BY THE APPELLANT THAT DURING THE YEAR APPELLANT HAD RECEIVED TOTAL FREIGHT RECEIPT OF RS.30,50,697/- OUT OF WHICH, SOME AMOUNT WAS RECEIVED IN CASH, WHICH WAS GIVEN TO THE DR IVER FOR INCURRING EXPENDITURE AND MAJORITY AMOUNT WAS RECEIVED BY WAY OF CHEQUE WHICH WAS CREDITED IN THE ABOVE MENTIONED BAN K ACCOUNT OF THE APPELLANT. IT IS CLAIMED BY THE APPELLANT THAT THE AMO UNT OF RS.25,26,120/- TREATED BY THE ASSESSING OFFICER AS U NEXPLAINED WAS PERTAINING TO THESE RECEIPTS ONLY. IN SUPPORT OF HIS CON TENTION, THE APPELLANT HAS FILED COPIES OF THE TDS CERTIFICATES AND DETAILS OF THE PAYMENTS RECEIVED FROM THE ABOVE PARTIES. THE APPELLAN T HAS ALSO GIVEN DETAILS OF THE AMOUNTS RECEIVED FROM THE PARTIES A ND CREDITED IN THE BANK ACCOUNT ON A PARTICULAR DATE WITH CHEQUE NO. AN D AMOUNT, WHICH TALLIES WITH THE CREDIT ENTRIES APPEARING IN THE B ANK ACCOUNT. 8. FROM THE ABOVE, IT IS QUITE EVIDENT THAT THE LD. CIT (A), WHILE ADMITTING AND USING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE, DID NOT GIVE ANY OPPORTUNITY OF HEARING TO THE AO. NO REMAND REPORT WAS CALLED FOR. NOR WAS THE AO ASKED TO VERIFY THE CONTENTS OF THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. THEREFORE, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT BY WAY OF GROUND NOS.2 AND 3 IS JUSTIFIED AND IS ACCEPTED. THE ACTION OF THE LD. CIT (A) IS IN VIOLATION OF THE SETTLED NATURAL JUSTICE PRINCIPLE OF AUDI ALTEREM PARTEM . ACCORDINGLY, THE MATTER IS REMITTED TO THE FILE OF THE AO FOR DECISION ITA NO.674/DEL/2012 5 AFRESH IN ACCORDANCE WITH THE LAW ON CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE BEFORE THE LD. CIT (A). THE ASSESSEE, NO DOUBT, SHALL BE AFFORDED ADEQUATE OPPORTUNITY OF HEARING BY THE AO. THE ASSESSEE SHALL COOPERATE WITH THE AO IN THE REMAND PROCEEDINGS. 9. IN THE RESULT, FOR STATISTICAL PURPOSES, THE APPEAL FILED BY THE DEPARTMENT IS TREATED AS ALLOWED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 23.05.201 4. SD/- SD/- [ SHAMIM YAHYA ] [A.D. JAIN] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 23 RD MAY, 2014. DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.