MS. RENU AGARWAL , JAIPUR V. INCOME TAX OFFICER, JAIPUR

ITA 965/JPR/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 3633 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 29-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 08-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SHIVANGI SANDHANI
• Keywords: Unexplained expenditure; Gift; Set aside
• Section: 131

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE-B JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 965/JP/2017 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2012-13 MS. RENU AGARWAL C-46, GEETA APARTMENT, VIDHANSABHA COLONY, MURLIPURA, JAIPUR CUKE VS. INCOME TAX OFFICER WARD 4(3) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AHXPA9435B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : MS. SHIVANGI SANDHANI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI ANOOP SINGH (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 13/02/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 28/02/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-2, JAIPUR DATED 18.09.2017 FOR AY 2012-13 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AS WELL AS ON FACTS WHILE CONFIRMING THE ADDITIONS OF RS. 13,50,000/- OUT OF TOTAL ADDITIONS OF RS. 14,00,000/- BY AO. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AS WELL AS ON FACTS WHILE CONFIRMING ADDITIONS OF RS. 1,81,550/- BY AO UNDER THE HEAD FREIGHT AND LOADING AND UNLOADING EXPENSES . 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AS WELL AS ON FACTS WHILE CONFIRMING ADDITION OF RS. 3 4,005/- BY AO 10% OF THE EXPENSES UNDER THE HEAD OFFICE EXPENSES, PETROL EXPENSES, ITA NO. 965/JP/2017 MS. RENU AGARWAL, JAIPUR VS. ITO, JAIPUR 2 REFRESHMENT EXPENSES, REPAIR AND MAINTENANCE EXPENS ES, TRAVELLING EXPENSES AND MOBILE EXPENSES. 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL) ERRED IN LAW AS WELL AS ON FACTS WHILE CONFIRMING ADDITION OF RS. 4 0,000/- BY AO ON ACCOUNT OF HOUSE HOLD EXPENSES. 2. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 13,50,000/- OUT OF TOTAL ADDITION OF RS. 14,00, 000/- BY THE AO. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURING THE Y EAR UNDER CONSIDERATION, AN AMOUNT OF RS. 14,00,000/- WAS INTRODUCED AS FRESH C APITAL BY THE ASSESSEE. THE SOURCE OF THE FRESH CAPITAL HAS BEEN EXPLAINED BY T HE ASSESSEE AS GIFT OF RS. 11 LACS FROM HER TWO BROTHERS, SH. SANJAY KUMAR GUPTA AND SHRI MUKESH KUMAR AGARWAL AND THE REMAINING AMOUNT OF RS. 3 LAC S WAS CLAIMED TO BE OUT OF ASSESSEES OWN PAST SAVINGS. THE ASSESSING OFFIC ER HOWEVER, ADDED THE ENTIRE AMOUNT OF RS. 14,00,000/- AS UNEXPLAINED CAS H CREDIT IN THE HANDS OF THE ASSESSEE STATING THAT THE DONERS WERE NOT PRODUCED AND EVEN THE SUMMONS ISSUED U/S 131 REMAINED UNCOMPLIED WITH AND THEREFO RE, THE GENUINENESS AND CREDITWORTHINESS OF THE DONORS WERE PROVED, AND FUR THER, NO CORROBORATIVE EVIDENCE WAS FILED IN SUPPORT OF PAST SAVINGS BY TH E ASSESSEE. 3. ON APPEAL, THE LD. CIT(A) ON PERUSAL OF THE NOTA RIZED GIFT DEED HELD THAT THESE GIFT DEEDS THOUGH PROVE THE IDENTITY OF THE D ONORS BUT NOT THE CREDITWORTHINESS OF THE DONORS. FURTHER, NO CONVINC ING REASONS FOR THEIR NON- ATTENDANCE WERE SUBMITTED BY THE ASSESSEE. IN VIEW OF THE SAME, THE GIFTS REMAINED UNCORROBORATED, GENUINENESS AND CREDITWORT HINESS OF THE DONORS COULD NOT BE PROVED EITHER BEFORE THE AO OR IN THE PRESENT PROCEEDINGS. REGARDING SOURCE OF THE PAST SAVING OF RS. 3 LAKHS, THE LD. CIT(A) HELD THAT NO CORROBORATIVE EVIDENCE IN THE FORM OF BANK ACCOUNT, IT RETURNS HAVE BEEN SUBMITTED BY THE ASSESSEE. HOWEVER, CONSIDERING THA T THE ASSESSEE HAS BEEN ITA NO. 965/JP/2017 MS. RENU AGARWAL, JAIPUR VS. ITO, JAIPUR 3 DOING SMALL BUSINESS AND WORKING SINCE LONG AS CLAI MED, AN AMOUNT OF RS. 50,000/- WAS FOUND ACCEPTABLE AND THE BALANCE ADDIT IONS OF RS. 2.5 LAKHS WAS CONFIRMED. AGAINST THE SAID FINDINGS OF THE LD CIT( A), THE ASSESSEE IS NOW IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD. AR REITERA TED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES. IT WAS SUBMITTED BY THE LD. AR THAT THE SOURCE OF RS. 11 LAKH HAS BEEN EXPLAINED BY THE ASSESSEE AS G IFTS RECEIVED FROM HER TWO BROTHERS AND IN SUPPORT, COPY OF THE NOTARIZED GIFT DEEDS HAVE BEEN FILED BEFORE THE LOWER AUTHORITIES WHICH HAVE NOT BEEN DISPUTED. IT WAS FURTHER SUBMITTED THAT THE SUMMONS ISSUED U/S 131 WERE DULY SERVED ON THE ASSESSEES BROTHERS, HOWEVER, DUE TO FEAR OF THE INCOME TAX DEPARTMENT, THEY COULD NOT APPEAR BEFORE THE LOWER AUTHORITIES. AT THE SAME TIME, THE Y HAVE SUBMITTED THAT WHERE SO REQUIRED, THEY CAN APPEAR BEFORE THE ASSESSING O FFICER AND CONFIRM THE FACT OF THE GIFT SO GIVEN BY THEM TO THE ASSESSEE AND IN SUPPORT, COPY OF THE AFFIDAVIT OF SH. SANJAY KUMAR GUPTA AND SHRI MUKESH KUMAR AGARWAL WERE SUBMITTED. REGARDING SOURCE OF THE PAST SAVINGS OF RS. 3 LAKHS, THE LD. AR SUBMITTED THAT THE ASSESSEE IS RUNNING HER BUSINESS SINCE 2009 IN THE NAME OF M/S PRABHA ENTERPRISES AND HAS FILED HER TAX RETURN S AND GIVEN HER PAST EARNINGS, THE SOURCE OF RS. 3 LAKHS IS REASONABLY E XPLAINED. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PURSUED THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE ASSESSEE H AS RECEIVED CASH GIFT OF RS. 6,00,000/- FROM SHRI SANJAY KUMAR GUPTA AND RS. 5,00,000/- FROM SHRI MUKESH KUMAR AGARWAL. BOTH ARE BROTHERS OF THE ASSESSEE AND IN SUPPORT, COPY OF THE GIFT DEEDS HAVE BEEN SUBMITTED BEFORE T HE LOWER AUTHORITIES. ON PERUSAL OF THE GIFT DEEDS, IT IS NOTED THAT THEY HA VE STATED THAT THE GIFT HAS BEEN MADE OUT OF THEIR NATURAL LOVE AND AFFECTION F OR THEIR SISTER AND OUT OF THEIR OWN FUNDS AND THEY HAVE ALSO DISCLOSED THEIR PERMANENT ACCOUNT NUMBER. ITA NO. 965/JP/2017 MS. RENU AGARWAL, JAIPUR VS. ITO, JAIPUR 4 THE IDENTITY OF THE DONORS IS THUS CLEAR AND THE TR ANSACTION BY WAY OF GIFT TO THE ASSESSEE IS ALSO CORROBORATED BY WAY OF THE TWO GIF T DEEDS, THE CONTENTS THEREOF NOT BEEN DISPUTED BY THE REVENUE. THE ONLY DISPUTE RELATES TO CREDITWORTHINESS OF THESE TWO DONORS AND IN SUPPORT , THEY HAVE SUBMITTED THAT GIFT HAVE BEEN MADE OUT OF THEIR PAST SAVINGS AND W HERE SO REQUIRED, THEY CAN APPEAR BEFORE THE ASSESSING OFFICER AND PROVIDE THE NECESSARY EXPLANATION. THE LD. DR HAS NOT RAISED ANY SPECIFIC OBJECTIONS W HERE THE MATTER IS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER. IN VIEW OF TH E SAME, WE SET ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE AND SEEK TH E EXPLANATION OF THESE TWO DONORS IN SUPPORT OF GIFT SO MADE TO THE ASSESSEE. FURTHER, THE ASSESSEE IS ALSO DIRECTED TO FILE COPY OF HER PAST TAX RETURNS AND F UND FLOW STATEMENT IN SUPPORT OF HER CLAIM OF THE PAST SAVINGS WHICH HAVE BEEN IN TRODUCED AS CAPITAL DURING THE YEAR. IN THE RESULT, THE GROUND OF APPEAL IS AL LOWED FOR STATISTICAL PURPOSES. 6. IN GROUND NO. 2, THE ASSESSEE HAS CHALLENGED THE SUSTENANCE OF ADHOC DISALLOWANCE OF RS. 10% OF THE FREIGHT AND LOADING AND UNLOADING EXPENSES. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT TH E ASSESSEE DID NOT MAINTAINED PROPER VOUCHERS OF THESE EXPENSES AND PA YMENTS WERE MADE IN CASH AND THEREFORE AN AMOUNT OF RS. 1,81,550/- BEIN G 10% OF THEIR EXPENSES WERE DISALLOWED. ON APPEAL, THE SAME HAS BEEN CONFI RMED BY THE LD. CIT(A). 7. DURING THE COURSE OF HEARING, THE LD. AR SUBMIT TED THAT THE FREIGHT AND LOADING AND UNLOADING EXPENSES ARE PART OF THE DIRE CT EXPENSES AS SO REFLECTED IN THE ASSESSEES TRADING AND PROFIT & LOSS ACCOUNT . IT WAS FURTHER SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, T HE LD. AO HAS EXAMINED THE VARIATION IN THE GROSS PROFIT RATE SO DECLARED BY T HE ASSESSEE AND AFTER EXAMINATION OF THE BOOKS OF ACCOUNTS, TRADING RESUL TS SO DECLARED BY THE ASSESSEE WAS ACCEPTED. IT WAS ACCORDINGLY SUBMITTE D THAT WHEN THE GROSS ITA NO. 965/JP/2017 MS. RENU AGARWAL, JAIPUR VS. ITO, JAIPUR 5 PROFIT RATE SO DECLARED BY THE ASSESSEE WAS ACCEPTE D, THERE WAS NO BASIS WITH THE ASSESSING OFFICER TO SEPARATELY DISALLOW FREIGH T EXPENSES AND LOADING AND UNLOADING EXPENSES. WE AGREE WITH CONTENTIONS SO A DVANCED BY THE LD. AR AND THE ADHOC ADDITIONS SO MADE BY THE ASSESSING OFFICE R IS HEREBY DELETED AND THE GROUND OF APPEAL IS ALLOWED. 8. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED TH E ADHOC DISALLOWANCE OF 10% OF OFFICE EXPENSES, PETROL EXPENSES, REFRESHMEN T EXPENSES, REPAIRS AND MAINTENANCE EXPENSES, TRAVELING EXPENSES AND MOBILE EXPENSES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED T HAT THE ASSESSEE DID NOT MAINTAIN PROPER AND COMPLETE VOUCHERS OF THESE EXPE NSES AND THE PAYMENTS WERE MADE IN CASH. FURTHER, IN ABSENCE OF ANY RECOR D OF MOBILE CALLS PERSONAL USE OF MOBILES BY THE ASSESSEE CANNOT BE RULED OUT AND HE DISALLOWED 10% OF THESE EXPENSES. DURING THE COURSE OF HEARING, THE L D. AR SUBMITTED THAT THE NO SPECIFIC EXPENDITURE HAS BEEN HIGHLIGHTED BY THE AS SESSING OFFICER WHICH HAS NOT BEEN INCURRED FOR THE PURPOSES OF THE BUSINESS. THEREFORE, THE DISALLOWANCE OF 10% OF THE OFFICE AND OTHER EXPENSES IS PURELY O N ADHOC BASIS. IN OUR VIEW, THERE IS NO BASIS FOR ADHOC DISALLOWANCE OF EXPENSE S AND THE DISALLOWANCE SO MADE IS HEREBY DIRECTED TO BE DELETED AND THE GROUN D OF APPEAL IS ALLOWED. 9. IN GROUND NO. 4, THE ASSESSEE HAS CHALLENGED THE ADDITION OF RS. 40,000/- BY THE AO ON ACCOUNT OF HOUSE HOLD EXP ENSES. IN THIS REGARD, THE LD. AO OBSERVED THAT THE ASSESSEE HAS NOT WITHDRAWN ANY AMOUNT FOR HOUSE HOLD EXPENSES AND LOOKING TO THE BASIC NEED FOR LIV ING AND OTHER HOUSE HOLD EXPENSES, AN AMOUNT OF RS. 40,000/- WAS ESTIMATED A ND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ON APPEAL, THE SE ADDITIONS WERE CONFIRMED BY THE LD. CIT(A) HOLDING THE SAME TO BE REASONABLE . ITA NO. 965/JP/2017 MS. RENU AGARWAL, JAIPUR VS. ITO, JAIPUR 6 10. DURING THE COURSE OF HEARING, THE LD AR SUBMIT TED THAT THE ASSESSEE IS UNMARRIED AND IS STAYING WITH HER PARENTS AND SIBLI NGS AT VILLAGE KISHORE PURA. IT WAS SUBMITTED THAT HER HOUSEHOLD NEED AND OTHER EXPENSES WERE MADE BY HER BROTHERS AND THERE WAS NO NECESSITY FOR HER TO WITHDRAW ANY AMOUNT FOR THE INCURRING HOUSE HOLD EXPENSES AND ALL HER EARNI NGS HAVE BEEN RETAINED IN THE BUSINESS. IT WAS FURTHER SUBMITTED THAT THE AS SESSING OFFICER HAS DISALLOWED 10% OF THE OFFICE AND OTHER EXPENSES HOL DING THE SAME TO BE INCURRED FOR PERSONAL USE AND HAS FURTHER MADE ADHO C ADDITION TOWARDS HOUSEHOLD DRAWINGS WHICH HAS RESULTED IN DOUBLE TAX ATION IN THE HANDS OF THE ASSESSEE. WE FIND THAT THE REVENUE HAS NOT HIGHLIGH TED THE BASIS FOR ARRIVING AT THE FIGURE OF RS 40,000. WHERE ANY IDENTIFIABLE PE RSONAL EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE AND THE ASSESSEE FAILS TO EXPLAIN THE SOURCE OF THE SAME, THE SAME CAN BE BROUGHT TO TAX AS UNEXPLAINED EXPENDITURE. BUT, MERELY BECAUSE THERE ARE NO WITHDRAWALS, THE INCURRENCE OF HOUSEHOLD EXPENSES CANNOT BE ASSUMED AND DETERMINED ON ESTIMATED BASIS . THE ASSESSEE HAS GIVEN A REASONABLE EXPLANATION FOR NOT WITHDRAWING THE AMOUNT AS SHE IS STAYING WITH HER PARENTS AND BROTHERS WHO ARE ALSO TAKING CARE OF HER EXPENDITURE. THE SAID EXPLANATION IS NOT DISPUTED BY THE REVENUE. IN VIEW OF THE SAME, THE ADDITION SO MADE TOWARDS HOUSEHOLD EX PENSES IS HEREBY DIRECTED TO BE DELETED AND THE GROUND OF APPEAL IS ALLOWED. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 28/02/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR ITA NO. 965/JP/2017 MS. RENU AGARWAL, JAIPUR VS. ITO, JAIPUR 7 FNUKAD@ DATED:- 28/02/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- MS. RENU AGARWAL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- INCOME TAX OFFICER, WARD 4(3), JAIP UR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 965/JP/2017} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR