Mr. Praveen Kumar Gupta, New Delhi V. ITO, New Delhi

ITA 721/DEL/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7706 (ITAT-DELHI)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 12-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K K JAISWAL
• Assessee Lawyers: R K SINGHAL
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SH. N. K. SAINI, AM AND SH. KULDIP SINGH, JM ITA NO. 721/DEL./2016 : A SSTT. YEAR : 2008-09 PRAVEEN KUMAR GUPTA C/O R. KUMAR SINGAL & CO. 602, NILGIRI APARTMENTS, 9, BARAKHAMBA ROAD, NEW DELHI VS ITO WARD 36(2), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AGMPG9842L APPELLANT BY : SH. R. K.SINGHAL, CA RESPONDENT BY : SH. K.K.JAI SWAL, DR DATE OF HEARING : 13.04.2016 DATE OF PRONOUNCEMENT : 24.05.2016 ORDER PER N.K. SAINI, A.M. THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER DATED 17/12/2015 OF CIT(A)-19, NEW DELHI. FOLLOWING GROUNDS HAS BEEN RAISED IN THIS APPEAL : 1. THAT VIDE ORDER DATED 17.12.2015 THE LD. COMMISSI ONER OF INCOME TAX (APPEALS)-19 HAS ERRED IN FACT AND LAW B Y PARTLY DISMISSING THE APPEAL FILED BY THE APPELLANT AND TH EREBY ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 2 UPHOLDING THE ASSESSMENT ORDER 21.12.2010 PASSED BY THE LD. ASSESSING OFFICER. 2. THAT VIDE ORDER DATED 17.12.2015 THE LD. COMMISSION ER OF INCOME TAX (APPEALS)-19 HAS ERRED IN FACT AND LAW B Y HOLDING THAT THE ASSESSING OFFICER HAS CORRECTLY MADE THE A DDITION OF AN AMOUNT OF RS. 93,206/- TO THE INCOME OF THE ASSESSE E ON ACCOUNT OF UNDERVALUATION OF CLOSING STOCK. THAT IN FACT AN D CIRCUMSTANCES OF THE CASE THE ASSESSEE HAS DULY EXP LAINED THE VALUATION OF CLOSING STOCK. 3. THAT VIDE ORDER DATED 17.12.2015 THE LD. COMMISSIO NER OF INCOME TAX (APPEALS)-19 HAS ERRED IN FACT AND LAW B Y HOLDING THAT LD. ASSESSING OFFICER HAS CORRECTLY MADE THE A DDITION OF AN AMOUNT OF RS. 125000/- RECEIVED FROM REKHA GUPTA. T HAT IN FACT AND CIRCUMSTANCES OF THE CASE THE ASSESSEE HAS DULY DISCHARGED THE ONUS CASTED UPON HIM TO PROVE THE IDENTITY, GEN UINENESS AND CREDITWORTHINESS OF REKHA GUPTA AS PROVIDED UNDER S ECTION 68 OF THE INCOME TAX ACT, 1961 AND FURTHER THE ASSESSEE H AS ALSO EXPLAINED THE SOURCE OF AMOUNT DEPOSITED IN BANK AC COUNT OF REKHA GUPTA BY PROVIDING HER CASH BOOK. 4. THAT VIDE ORDER DATED 17.12.2015, THE LD. COMMISSIO NER OF INCOME TAX (APPEALS)-19 HAS ERRED IN FACT AND LAW B Y HOLDING THAT THE ADDITION OF RS. 1,50,000/- MADE BY THE LD. ASSESSING OFFICER ON ACCOUNT OF LOW HOUSEHOLD DRAWINGS IS LOG ICAL AND CORRECT. 5. THAT WHILE PASSING THE ORDER DATED 17.12.2015 THE L D. COMMISSIONER OF INCOME TAX (APPEALS)-19 HAS NOT TAK EN INTO CONSIDERATION THE FACTS AND THE DOCUMENTS SUBMITTED BY THE ASSESSEE DURING THE COURSE OF THE ASSESSMENT AND TH E APPEAL PROCEEDINGS. 6. THE ASSESSEE CRAVES LEAVE OF THIS HONBLE TRIBUNAL TO ADD TO OR AMEND THE AFORESAID GROUNDS BEFORE DISPOSAL OF THE APPEAL. 2. GROUND NO. 1, 5 AND 6 ARE GENERAL IN NATURE SO DO NOT REQUIRE ANY COMMENTS ON OUR PART. 3. VIDE GROUND NO. 2 GRIEVANCE OF THE ASSESSEE REL ATES TO THE CONFIRMATION OF ADDITION OF RS. 93,206/- MADE BY TH E AO ON ACCOUNT OF UNDER VALUATION OF CLOSING STOCK. ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 3 4. THE FACTS RELATED TO THIS ISSUES IN BRIEF ARE T HAT THE ASSESSEE FILED THE RETURN OF INCOME DECLARING AN INCOME OF R S. 1,67,820/- LATER ON THE CASE WAS SELECTED FOR SCRUTINY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O. NOTICED THAT THE A SSESSEE HAD INCLUDED CERTAIN SHARES IN CLOSING STOCK BUT THE VA LUE OF THE SAME WAS TAKEN AT RS. NIL. ACCORDING TO HIM, THE AS SESSEE DID NOT FURNISH ANY EXPLANATION AS TO WHY THE VALUE OF SUCH SHARES WAS SHOWN AT RS. NIL AND THAT THE SHARES WERE APPEA RING IN THE DEMAT STATEMENT AS ON 31/3/2008 THEREFORE IT WAS CO NCLUSIVELY PROVED THAT THE ASSESSEE WAS THE OWNER OF SUCH SHAR ES BUT HE HAD NOT SHOWN ANY VALUE THEREOF. THE VALUE OF THOSE SHARES WAS SHOWN IN THE OPENING STOCK BY THE ASSESSEE AS UNDER : NAME OF SCRIP QTY(NOS.) VALUE(RS.) FOURTH GEN INFO 2000 1,780/- GOYAL ASSOCIATES 5000 3,200/- NUMERO UNO 950 4,541/- S M DYCHEM 500 5,435/- SOMANI CEMENT 2000 11,260/- WESTERN INDUSTRIES 14,500 66,990/- TOTAL 93,206/- THE AO WAS OF THE VIEW THAT THE ASSESSEE HAD UND ER-VALUED THE CLOSING STOCK BY THE AFORESAID SUM AND ACCORDIN GLY ADDITION OF RS. 93,206/- WAS MADE. 5. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE SCRIPTS UNDER CONSIDE RATION WERE ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 4 NOT TRADED ON THE STOCK EXCHANGE AS ON 31.3.2009 AN D THEREFORE VALUATION WAS TAKEN AS NIL AND SINCE STOCK WAS BEIN G VALUED BY THE ASSESSEE AT COST OR MARKET PRICE, AS THE MARKET PRICE WAS NIL, NO VALUE WAS TAKEN IN RESPECT THEREOF. 6. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT IT WAS NOT NECESSARY THAT EA CH AND EVERY SCRIPT SHOULD HAVE BEEN TRADED ON THE LAST DAY OF T HE FINANCIAL YEAR AND IF THE SCRIP HAD NOT BEEN TRADED FOR FEW D AYS OR MAY BE MONTHS THEN SAME IS REQUIRED TO BE VALUED AT THE LA ST TRADED PRICE AND NOT AT NIL. HE THEREFORE CONFIRMED THE AD DITION MADE BY THE AO. 7. NOW THE ASSESSEE IS IN APPEAL. THE LD COUNSEL F OR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW. IT WAS FURTHER SUBMITTED THAT THE DETAILS OF PURCHASE AND SALE OF SHARES WITH DEMAT ACCOUNT TO SHOW THAT THE ENTIRE TRANSACTIONS WERE DELIVERY BASED, WERE FURNISHED BE FORE THE LD. C.I.T. (A) WHICH REVEALED THAT THE TRANSACTIONS WER E DELIVERY BASED AND DID NOT REFLECT ANY JOBBING. IT WAS FURTH ER SUBMITTED THAT SCRIPTS WERE NOT TRADED ON THE STOCK EXCHANGE AS ON 31 ST MARCH, 2009 AND THEREFORE, VALUATION WAS TAKEN AS N IL AND SINCE THE CLOSING STOCK WAS BEING VALUED AT COST OR MARKE T PRICE AND AS THE MARKET PRICE WAS NIL, NO VALUE WAS TAKEN IN RESPECT OF THE ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 5 SAID CLOSING STOCK. IN HIS RIVAL SUBMISSIONS, THE L D. DR SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT( A). 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE PRESENT CASE IT IS AN ADMITTED FACT THAT THE ASSESSEE WAS VALUING THE CLOSING STOCK AT COST OR MARKET PRICE W HICHEVER WAS LOWER AND THIS PRACTICE WAS FOLLOWED CONSISTENTLY. IN THE INSTANT CASE, IT WAS CLAIMED THAT IN THE PRECEDING YEAR AND SUCCEEDING YEAR, SIMILAR VALUATION HAS BEEN ACCEPTED BY THE DE PTT. AND WHENEVER THE SHARES WERE SOLD, THE PROFIT EARNED IN THE TRADING WAS OFFERED FOR TAXATION, THE CONTENTION OF THE ASS ESSEE WAS THAT NO TRADING TOOK PLACE AS ON 31 ST MARCH, 2009 IN RESPECT OF THE SHARES IN QUESTION, AS SUCH THE VALUATION ON THAT D ATE WAS NOT QUOTED AND CONSIDERED AS NIL. THE ABOVE SAID CONTEN TION WAS NOT REBUTTED BY BRINGING ANY COGENT MATERIAL ON RECORD. IT WAS ALSO NOT REBUTTED BY THE DEPARTMENT THAT WHENEVER THE SH ARES WERE SOLD THE PROFIT EARNED ON THE SAID TRANSACTION WAS OFFERED FOR TAXATION AND ACCEPTED BY THE DEPTT. WE, THEREFORE, BY CONSIDERING THE TOTALITY OF THE FACTS, ARE OF THE V IEW THAT THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CI T(A) WAS NOT JUSTIFIED, ACCORDINGLY THE SAME IS DELETED. 8. THE NEXT ISSUE VIDE GROUND NO. 3 RELATES TO THE SUS TENANCE OF ADDITION OF RS. 1,25,000/- RECEIVED FROM SMT. RE KHA GUPTA. ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 6 THE FACTS OF THE CASE IN BRIEF ARE THAT THE AO DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS SHOWN VARIOUS CREDIT BALANCES IN THE NAME OF P.K.GUPTA AN D COMPANY OWNED BY HIS WIFE. HE ALSO FOUND THAT THE ASSESSEE HAS TAKEN A LOAN OF RS. 1,25,000/- FROM SHRI P.K.GUPTA WHOSE BA NK STATEMENT REVEALED THAT BEFORE THE ISSUE OF THE CHE QUE A CASH OF RS. 1,25,000/- HAD BEEN DEPOSITED IN THE BANK. HE, THEREFORE, CONSIDERED IT AN ACCOMMODATION ENTRY AND ADDED THE SAME IN THE INCOME OF THE ASSESSEE. 9. BEING AGGRIEVED ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED THAT THE CONFIRMATION AND COPY OF THE INCOME-TAX RETURN WAS FURNISHED IN SUPPORT OF THE C LAIM, HOWEVER, THE AO TREATED THE SAME AS UNEXPLAINED BEC AUSE THE LENDER WAS THE WIFE OF THE ASSESSEE. 10. THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF THE ASSESSEE OBSERVED THAT THE ASSESSEE COULD NOT EXPLA IN THE SOURCE OF CASH DEPOSIT IN THE BANK NEITHER IN THE ASSESSME NT PROCEEDING NOR DURING THE COURSE OF APPELLATE PROCEEDING, THER EFORE, THE AO RIGHTLY MADE THE ADDITION. THE RELIANCE WAS PLAC ED ON THE FOLLOWING CASE LAWS : I) VAJUBHAI KANANI VS. ITO 221 TAXMAN 140 (GUJARAT H.C ) II) BLESSING CONSTRUCTION CO. VS. ITO 214 TAXMAN 645 III) UMESH KUMAR VS. ITO 217 TAXMAN 13. ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 7 11. BEING AGGRIEVED THE ASSESSEE IS IN APPEAL, THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE AS SESSEE FILED A COPY OF BANK LEDGER AND BANK STATEMENT WHEREIN THE CHEQUE OF RS. 1,25,000/- RECEIVED BY THE ASSESSEE WAS DULY CR EDITED A REFERENCE WAS MADE TO PAGE NO. 40 TO 44 AND 54-55 O F THE ASSESSEES PAPER BOOK WHICH ARE THE COPIES OF BANK STATEMENT OF ASSESSEE AND OF M/S. P.K. GUPTA & CO. (PROPRIETOR S MT. REKHA GUPTA) RESPECTIVELY. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE PROVED THE IDENTITY OF THE LENDER, HER CREDITWORTHI NESS AND GENUINENESS OF TRANSACTION, THEREFORE, THE ADDITION SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED. THE REFERENCE WAS MADE TO PAGE NO. 47 AND 66 OF THE ASSESSEES PAPER BOOK WHI CH ARE THE COPIES OF CONFIRMATION FROM SMT. REKHA GUPTA AND CO PY OF HER INCOME-TAX RETURN RESPECTIVELY. IT WAS ALSO SUBMITT ED THAT THE ASSESSEE FILED LETTER DATED 26.12.2013 AND EXTRACT OF CASH BOOK FOR M/S. P.K. GUPTA & CO. (PROPRIETOR CONCERN OF RE KHA GUPTA) BEFORE THE LD. C.I.T.(A), EXPLAINING THE SOURCE OF CASH DEPOSIT IN THE BOOKS OF M/S. P.K.GUPTA & CO. REFERENCE WAS MADE TO PAGE NO. 127 TO 130 OF THE ASSESSEES PAPER BOOK. I N HIS RIVAL SUBMISSIONS, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 8 12. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N THE RECORD. IN THE INSTANT CASE, IT IS AN ADMITTED FACT THAT TH E ASSESSEES RECEIVED A CHEQUE OF RS. 1,25,000/- FROM SMT. REKHA GUPTA AND DEPOSITED THE SAME IN HIS BANK ACCOUNT SMT. REKHA G UPTA IS PROPRIETOR OF M/S. P.K.GUPTA & CO. AND MAINTAINED THE CASH BOOK IN HER REGULAR COURSE OF BUSINESS. SHE DEPOSIT ED A SUM OF RS. 1,25,000/- ON 14.3.2008 WHICH IS EVIDENT FROM P AGE NO. 130 OF THE ASSESSEES PAPER BOOK. SHE ALSO FURNISHED HE R CONFIRMATION WHICH HAS NOT BEEN DOUBTED, COPY OF TH E SAME IS PLACED AT PAGE NO. 46 OF THE ASSESSEES PAPER BOOK. SHE ALSO DISCLOSED HER ADDRESS AS WELL AS BANK AND INCOME-TA X WARD WERE SHE WAS ASSESSED. SMT. REKHA GUPTA ALSO FURNISHED C OPY OF HER INCOME-TAX RETURN WHICH IS PLACED AT PAGE NO. 66 OF THE ASSESSEES PAPER BOOK. FROM THE ABOVE NARRATED FACT S, IT IS CLEAR THAT THE ASSESSEE DISCHARGED THE ONUS CAST UPON HIM TO PROVE THE IDENTITY OF THE DEPOSITOR, HER CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTIONS. THEREFORE, THE ADDITION MADE B Y THE AO AND SUSTAINED BY THE LD. CIT(A) WAS NOT JUSTIFIED, ACCO RDINGLY THE SAME IS DELETED. 13. THE LAST ISSUE VIDE GROUND NO. 4 RELATES TO THE SUS TENANCE OF ADDITION OF RS. 1,50,000/- ON ACCOUNT OF LOW HOU SEHOLD ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 9 WITHDRAWALS. THE FACTS RELATED TO THIS ISSUE IN BRI EF ARE THAT THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTI CED FROM THE COPY OF THE ASSESSEES CAPITAL ACCOUNT THAT A S UM OF RS. 55,000/- WAS WITHDRAWN FOR HOUSEHOLD EXPENSES WHICH HE CONSIDERED ON LOWER SIDE AND MADE THE ADDITION RS. 1,50,000/-. 14. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER T O THE LD. CIT(A) WHO OBSERVED THAT THE FAMILY OF THE ASSESSEE INCLUDED TWO SCHOOL GOING CHILDREN AND THAT EVEN WHEN THE FE ES HAD BEEN PAID SEPARATELY, THE WITHDRAWALS OF RS. 1,00,000/- BY THE ASSESSEE AND HIS WIFE WERE NOT SUFFICIENT, THEREFOR E, THE ADDITION OF RS. 1,50,000/- MADE BY THE AO WAS LOGIC AL CORRECT. 15. NOW THE ASSESSEE IS IN APPEAL. THE LD. COUNSEL F OR THE ASSESSEE SUBMITTED THAT THE WITHDRAWALS MADE BY THE ASSESSEE AND HER WIFE WERE AS UNDER : PARTICULARS DRAWINGSOFPRAVEENKR. GUPTA DRAWINGSOFREKHA GUPTA TOTAL DRAWINGS CASH DRAWINGS 60,000.00 40,000.00 100,000.00 SCHOOL FEES ----- 23,730.00 23,730.00 TDS 11,895.00 18,562.00 30,457.00 STT 58,422.09 58,422.09 TOTAL 130,317.09 82,292.00 212,609.09 ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 10 16. IT WAS FURTHER SUBMITTED THAT THE FAMILY OF THE ASSESSEE COMPRISES OF ONLY FOUR MEMBERS I.E. SELF, HIS WIFE AND TWO CHILDRENS. THEY ARE RESIDING IN THEIR OWN HOUSE AND THE SCHOOL FEES OF BOTH THE CHILDREN WERE MADE OUT BY DRAWINGS MADE THROUGH M/S. P.K.GUPTA & CO., A PROPRIETARY CONCERN OF MRS REKHA GUPTA. THEREFORE, THE WITHDRAWALS OF RS. 1,00 ,000/- BY ASSESSEE AND HIS WIFE WERE SUFFICIENT TO FULFIL THE DAY TO DAY NEEDS AND NO ADDITION WAS CALLED FOR. IN HIS RIVAL SUBMISSIONS, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 17. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PART IES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE O N RECORD. IN THE PRESENT CASE, IT IS NOTICED THAT THE ASSESSEE A ND HIS WIFE HAD WITHDRAWN A SUM OF RS. 1,23,730/- OUT OF WHICH RS. 23730/- WERE ON ACCOUNT OF SCHOOL FEES OF THE CHILD REN. THE ASSESSEE IS RESIDING WITH HIS FAMILY IN HIS OWN HOU SE, AND NO RENT WAS PAID. IN THE PRESENT CASE, IT IS NOT BROUG HT ON RECORD THAT HOW AND IN WHAT MANNER THE WITHDRAWALS BY THE ASSESSEE AND HIS WIFE WERE NOT SUFFICIENT TO MEET OUT THE NE EDS OF THE DAY TO DAY LIFE. IT, THEREFORE, APPEARS THAT THE AD DITION HAS BEEN MADE BY THE AO ONLY ON THE BASIS OF PRESUMPTION WHI CH IS NOT TENABLE IN THE EYES OF LAW. WE, THEREFORE, DELETE T HE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT(A). ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 11 15. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. (ORDER PRONOUNCED IN THE COURT ON 24/05/2016). SD/- SD/- (KULDIP SINGH) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 24 / 05/2016 *B.RUKHAIYAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITA NO.721/DEL/2016 PRAVEEN KUMAR GUPTA 12 DATE INITIAL 1. DRAFT DICTATED ON 27.04.2016 2. DRAFT PLACE D BEFORE AUTHOR 27.04.2016 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 24.05.2016 7. FILE SENT TO THE BENCH CLERK 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.