ACIT, Meerut V. Sh. Dharma Pal Khanna, Meerut

ITA 695/DEL/2012

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 2766 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 10 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 09-12-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained cash credit
• Section: 133(6); 68

Judgement Text

1 ITA NO. 695/DEL/ 2012 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: B NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND MS. SUCHITRA KAMBLE , JUDICIAL MEMBER I.T.A .NO.- 695/DEL/2012 (ASSESSMENT YEA R-2007-08) ACIT CIRCLE-1 AAYAKAR BHAWAN, BHANSALI GROUND, DELHI ROAD MEERUT (APPELLANT) VS DHARMA PAL KHANNA 171/3, THAPAR NAGAR MEERUT ABAPK0792N (RESPONDENT) ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORD ER OF LD. CIT (A), MEERUT PASSED ON 23/11/2011. 2. THE GROUNDS OF APPEAL IS AS FOLLOWS:- 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED I N DELETING THE ADDITION OF RS.2,45,280/- MADE BY THE A.O ON ACCOUNT OF HOUSE PROPERTY INCOME IGNORING THE FACT THAT ASSESSEE FAILED TO FURNISH ANY DOCUMENT FOR THE REL EVANT APPELLANT BY SH. AMRIT LAL, SR. DR RESPONDENT BY SH. SANDEEP SAPRA, ADV DATE OF HEARING 09.12.2015 DATE OF PRONOUNCEMENT 04.01.2016 2 ITA NO. 695/DEL/ 2012 PERIOD IN SUPPORT OF ITS CONTENTION THAT THE FLAT W AS BEING USED FOR THE PURPOSE OF ITS BUSINESS AND INCOME FRO M HOUSE PROPERTY IS BEING ASSESSED AS PER PROVISIONS OF SECTION 23(1) OF THE I.T. ACT, 1961. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS.3,87,449/- AND RS.2,37, 826/- MADE BY THE A.O ON ACCOUNT OF TANKER EXPENSES AND SALARY EXPENSES RESPECTIVELY ON MERE GROUND THAT BO OKS WERE AUDITED DESPITE THE FACT THAT ASSESSEE COULD N OT PRODUCE COMPLETE BOOKS OF ACCOUNT AND PROPER BILLS AND VOUCHERS ON THE PRETEXT THAT THEY WERE COMPLETELY DESTROYED. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CA SE, THE LD. COMMISSIONER OF INCOME TAX(APPEALS) HAS ERRED I N DELETING THE ADDITION OF RS.4,09,664/- MADE BY THE A.O ON ACCOUNT OF UNEXPLAINED CREDITORS IN SPITE OF THE FA CT THAT ASSESSEE FAILED TO FILE THE CONFIRMATION EVEN AFTER AVAILING SUFFICIENT OPPORTUNITIES. THE ONUS WAS CERTAINLY U PON THE ASSESSEE TO PROVE THE CREDIT APPEARING IN ITS BOOKS WHICH REMAINED TOTALLY UNDISCHARGED. RELIANCE IS PLACED ON THE FOLLOWING JUDGMENTS:- 3. THE ASSESSEE IS DOING THE BUSINESS OF TRANSPORTA TION THROUGH OWN AS WELL AS HIRED TANKERS. THE ASSESSEE IS THE O WNER OF TWO HOUSE PROPERTIES, ONE AT MEERUT AND ANOTHER AT NOID A. THE A.O ENQUIRED ABOUT THE FLAT AT NOIDA. THE ASSESSEE INF ORMED THAT IT WAS USED FOR THE BUSINESS PURPOSES AS OFFICE. THE ASSESSEE AND THE STAFF OF THE ASSESSEE HAVE TO VISIT DELHI OFFICE FR EQUENTLY FOR PROCURING THE ORDERS AND OTHER RELATED BUSINESS MAT TERS FOR WHICH THE ASSESSEE IS DOING THIS OPERATION FROM HIS NOIDA FLAT/OFFICE. THE ASSESSEE HAS EMPLOYED FULL TIME STAFF FOR THIS OFFI CE. THE A.O HELD 3 ITA NO. 695/DEL/ 2012 THAT ASSESSEE FAILED TO FURNISH ANY DOCUMENT FOR TH E RELEVANT PERIOD IN SUPPORT OF ITS CONTENTION THAT THE FLAT WAS BEIN G USED FOR THE PURPOSES OF ITS BUSINESS AND MADE ADDITION OF RS. 2 ,45,280/ AS THE INCOME FROM HOUSE PROPERTY. THE ASSESSING OFFICER F URTHER MADE DISALLOWANCE ON ACCOUNT OF TANKER EXPENSES FOR RS.3 ,87,748/- AND SALARY EXPENSES FOR RS. 2,37,826/-. THE ASSESSING O FFICER ALSO MADE ADDITION ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS FOR RS.5,58,883/-. 4. THE ASSESSEE FILED APPEAL BEFORE THE CIT (A). A S RELATES TO ADDITION OF RS. 2,45,280/- TOWARDS INCOME FROM HOUS E PROPERTY, THE CIT(A) HELD THAT DURING ASSESSMENT PROCEEDINGS FOR A.Y 2006-07, THE ASSESSEE VIDE LETTER DATED 10/12/2008 HAD DULY INFORMED THAT THE NOIDA FLAT WAS BEING USED FOR OFFICE PURPOSES W .E.F. MARCH 2006. THE CIT (A) FURTHER HELD THAT THE AR EXPLAINE D THE USE OF THE FLAT AS OFFICE IN THE CONTEXT OF THE NATURE OF ASSE SSEES BUSINESS BY SUBMITTING EVIDENCES OF CORRESPONDENCES RELATING TO BUSINESS FROM THIS ADDRESS. IN VIEW OF THIS, THE CIT (A) HOLD TH AT NOIDA FLAT WAS USED FOR BUSINESS PURPOSES AND ADDITION IS UNWARRAN TED AND ACCORDINGLY DELETED THE SAME. AS RELATES TO DISALL OWANCE OF TANKER EXPENSES, THE CIT(A) HELD THAT THE DISALLOWANCE COU LD NOT BE JUSTIFIED MERELY BECAUSE SOME VOUCHERS WERE NOT PRO DUCED WHEN THE BOOKS ARE AUDITED AND THE AUDITORS HAVE VOUCHED THE EXPENSES AND DELETED THE ADDITION. AS RELATES TO DISALLOWANC E OF SALARY EXPENSES, THE CIT (A) DID NOT FIND ANY JUSTIFICATIO N ON THE PART OF THE 4 ITA NO. 695/DEL/ 2012 ASSESSING OFFICER FOR RESTRICTING THE CLAIM OF THE SALARY IN PROPORTION OF TURNOVER WITH REFERENCE TO A PARTICULAR FINANCIA L YEAR AND DELETED THE SAME. AS RELATES TO DISALLOWANCE FOR NON-CONFIR MATION OF SUNDRY CREDITORS, THE CIT (A) HELD THAT THE ASSESSEE HAD I NFORMED THE NON CO-OPERATION OF THE CREDITOR WITH THE ASSESSEE BECA USE OF CERTAIN DISPUTES, BUT THE ASSESSEE GAVE THE DETAILS OF CRED ITS ON ACCOUNT OF FREIGHT PAID AS WELL AS PAN OF THE CREDITOR. THE CI T(A) FURTHER HELD THAT BESIDES ISSUING A LETTER U/S. 133(6) OF THE IN COME TAX ACT, 1961, THE A.O DID NOT TAKE ANY FURTHER STEPS TO ENQ UIRE INTO THE CREDITORS. THE CIT(A) FURTHER OBSERVED THAT THE AS SESSEE MADE TDS OUT OF PAYMENTS AND THE ASSESSEE SHOWED THE CREDIT PLANS WHICH WAS PAID IN THE NEXT FINANCIAL YEAR. THEREFORE, TH IS ADDITION U/S 68 WAS DELETED BY THE CIT(A). 5. THE LD. DR SUBMITTED THAT THE ASSESSING OFFICER RIGHTLY MADE ADDITION OF RS. 2,45,280/ AS THE INCOME FROM HOUSE PROPERTY AND CORRECTLY DISALLOWED TANKER EXPENSES AND SALARY EXP ENSES. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSING OFFICER RIG HTLY MADE ADDITION ON ACCOUNT OF UNEXPLAINED SUNDRY CREDITORS . THUS THE LD. DR SUBMITTED THAT THE ORDER OF CIT(A) BE SET ASIDE. 6. THE LD. AR SUBMITTED THAT THE EVIDENCE RELATED T O THE USE OF NOIDA PROPERTY WAS SUBMITTED BEFORE THE ASSESSING O FFICER AND THE SAME WAS PROPERLY DEALT BY THE CIT(A). THE EXPENSES ON ACCOUNT OF 5 ITA NO. 695/DEL/ 2012 TANKER AND SALARY WAS ESTABLISHED BEFORE THE ASSESS ING OFFICER THROUGH VARIOUS DOCUMENTS BUT THE SAME WAS IGNORED BY THE ASSESSING OFFICER. DISALLOWING ONLY ON THE GROUND O F NON-PRODUCTION OF VOUCHERS DUE TO UNAVOIDABLE REASONS CAN NOT BE T HE SOLE REASON AS THE BOOKS OF ACCOUNT OF THE ASSESSEE WERE AUDITE D AND AT THE TIME OF AUDIT, THE AUDITOR HAD VERIFIED THE VOUCHER S FOR THE SAID EXPENSES. THE LD. AR FURTHER SUBMITTED AS RELATES TO SUNDRY CREDITORS, THE ASSESSEE PROVIDED THE PAN OF THE CRE DITOR TO THE ASSESSING OFFICER AND ASSESSEE MADE TDS OUT OF THE SAID PAYMENTS. THEREFORE, THE LD. AR SUBMITTED THAT THE CIT(A) HAS RIGHTLY DISALLOWED THE ADDITION ON ACCOUNT OF UNEXPLAINED S UNDRY CREDITORS. 7. WE HAVE PERUSED ALL THE RELEVANT RECORDS AND HEA RD SUBMISSION OF BOTH THE PARTIES. AS RELATES TO GROU ND NO. 1, IT IS PERTINENT TO NOTE THAT THE ASSESSEE HAS PRODUCED AL L THE INFORMATION AND ALL THE RELEVANT DOCUMENTS BEFORE THE ASSESSING OFFICER RELATED TO THE PROPERTY AND ESTABLISHED THAT THE ASSESSEE W AS USING THE SAID PROPERTY AS ITS BUSINESS OFFICE. THEREFORE, T HE CIT (A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 8. AS RELATES TO GROUND NO. 2, THE ASSESSEE HAS PRO PERLY ESTABLISHED THAT TANKER EXPENDITURE, THE ASSESSEE H AS GIVEN THE RELEVANT DOCUMENTS AND ESTABLISHED THAT THE EXPENDI TURE WAS INCURRED DURING THE SAID ASSESSMENT YEAR. AS RELATE S TO SALARY 6 ITA NO. 695/DEL/ 2012 EXPENDITURE IT IS NOT A FIXED NATURE BECAUSE IN THE RELEVANT ASSESSMENT YEAR THE ASSESSEE OPENED ANOTHER OFFICE AND DEPUTED NEW STAFF AND FOR THIS REASON THERE WAS AN INCREASE IN SALARY AMOUNT FROM 10.13 LACS TO 10.68 LACS. THE RELEVANT RECORDS WERE BEFORE THE ASSESSING OFFICER. THEREFORE, THE ASSES SING OFFICER SHOULD HAVE TAKEN INTO CONSIDERATION THIS RELEVANT FACTORS. THE CIT (A) HAS RIGHTLY CONSIDERED THIS ASPECT AND DELETED THE SAID ADDITION. 9. AS RELATED TO CONFIRMATION OF SUNDRY CREDITORS I .E. GROUND NO. 3, WHEN THE ASSESSING OFFICER HAS ACCEPTED ONE OF T HE CREDITORS BECAUSE HIS CONFIRMATION HAS BEEN PRODUCED BEFORE T HE ASSESSING OFFICER AND REJECTING THE OTHER CREDITOR BECAUSE HI S CONFIRMATION WAS NOT THERE IS NOT PROPER AS THE ASSESSEE HAS GIV EN THE DETAILS ABOUT THE PAN OF THAT PARTICULAR CREDITOR AND ALSO MADE TDS PAYMENT. THE ASSESSING OFFICER HAS ALSO NOT TAKEN A NY STEPS TO ENQUIRE INTO THE CREDITOR. THEREFORE THAT CANNOT BE THE WHOLE AND SOLE CRITERIA FOR REJECTING THE ASSESSEES CONTENTI ON THAT HE IS SUNDRY CREDITOR. THE ASSESSEE WAS NOT IN A POSITION TO FI LE CONFIRMATION BUT HE HAS GIVEN ALL THE RELEVANT DETAILS AS RELATES TO THE ASSESSEES DETAILS OF THE CREDITOR IN RESPECT OF GIVING PAN NO TO THE ASSESSING OFFICER AS WELL AS GIVEN THE DETAILS AS TO HOW THE CREDITORS ARE ON ACCOUNT OF FREIGHT PAID THE SAME WAS EVEN FROM LEDG ER ACCOUNT OF R. K. JINDAL AND THUS NEARLY NOT FINDING CONFIRMATION WILL NOT AMOUNT TO BE ADDING THE SAME ADDITION BY THE ASSESSING OFF ICER. IN VIEW OF 7 ITA NO. 695/DEL/ 2012 THIS, THE ASSESSEE HAS ESTABLISHED ITS CASE PROPERL Y BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT (A). 10. IN RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 4TH OF JANUARY, 2016. SD/- SD/- ( S. V. MEHROTRA) (SUCH ITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 04/01/2016 *R. NAHEED* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI DATE 1. DRAFT DICTATED ON 09.12.2015 PS 2. DRAFT PLACED BEFORE AUTHOR 10.12.2015 PS 8 ITA NO. 695/DEL/ 2012 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER .12.2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. .12.2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 04.01.2016 PS/PS 6. KEPT FOR PRONOUNCEMENT ON .12.2015 PS 7. FILE SENT TO THE BENCH CLERK 05.01.2016 PS 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 9 ITA NO. 695/DEL/ 2012