Satinder Singh Madhok, New Delhi V. ACIT, New Delhi

ITA 976/DEL/2015

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6964 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2006-2007
• Appeal Filed On: 17-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S S RANA
• Keywords: Search and seizure
• Section: 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI N.K. SAINI, ACCOUNTANT MEMBER AND SHRI SUDHANSHU SRIVASTAVA, JUDICIAL MEMBER ITA NO. 976/DEL/2015 AY: 20 06-07 SATINDER SINGH MADHOK, VS ACIT, D-97, DEFENCE COLONY, CENTRAL CIRCLE-3, NEW DELHI-110024 NEW DELHI. (PAN: AAAPS4461K) (APPELLANT) (RESPONDENT) DEPARTMENT BY : MS HARSIMRAN GREWAL, ADV. ASSESSEE BY : SHRI S.S. RANA, CIT DR DATE OF HEARING: 30.07.2018 DATE OF PRONOUNCEMENT: 31.07.2018 ORDER PER SUDHANSHU SRIVASTAVA, J.M. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE LD. CIT(A)-23, NEW DELHI DATED 19.1.2015 FOR ASSESSMENT YEAR 2006-07 AND THE SOLE ISSUE BEING DI SPUTED BY THE ASSESSEE IS THE ACTION OF THE LD. COMMISSIONER OF INCOME TAX(A) IN DIRECTING THE ASSESSING OFFICER TO EXAMIN E THE TAXABILITY OF EXPENDITURE INCURRED ON CREDIT CARDS AMOUNTING T O RS. 1,25,99,657/- AS PERQUISITE IN THE HANDS OF THE ASS ESSEE. 2. BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SE IZURE OPERATION WAS CARRIED OUT U/S 132 OF THE INCOME TAX ACT, 1961 ITA NO. 976/DEL/2015 ASSESSMENT YEAR 2006-07 2 (HEREINAFTER CALLED 'THE ACT') IN M/S JAY POLYCHEM INDIA GROUP OF CASES ON 14.3.2012. THE CASE OF THE ASSESSEE WAS A LSO COVERED IN THE SEARCH. NOTICE U/S 153A WAS ISSUED AND IN RESP ONSE, THE ASSESSEE FILED A RETURN DECLARING INCOME OF RS. 29, 00,000/-. THE CASE WAS ASSESSED ON AN INCOME OF RS. 1,54,99,657/- WHICH INCLUDED THE SOLE ADDITION OF CREDIT CARD EXPENSES AMOUNTING TO RS.1,25,99,657/- WHICH WERE CONSIDERED AS PERQUISIT E BY THE ASSESSING OFFICER. 2.1 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE THE LD. FIRST APPELLATE AUTHORITY WHO RESTORED THE ISSUE OF EXAMINING THE TAXABILITY OF EXPENSES INCURRED ON CREDIT CARDS AS PERQUISITE TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSEE IS IN APPEAL AGAINST THIS DIRECTION. 2.2 AT THE OUTSET, LD. AR APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED THAT A SIMILAR ADDITION OF CREDIT CARD EX PENSES WAS ALSO MADE IN THE HANDS OF THE ASSESSEE IN ASSESSMEN T YEARS 2007-08 TO 2012-13 AND THE SAME WAS DELETED BY THE ITAT VIDE CONSOLIDATED ORDER DATED 21.02.2017 IN ITA NOS. 690 , 691, 692, 693, 694 AND 977/DEL/2015. SHE DREW OUR ATTENTION TO PAGE 40 OF THE SAID ORDER OF THE ITAT AND SUBMITTED THAT TH E ISSUE WAS DEALT ON THIS PAGE IN PARA 5.3 OF THE SAID ORDER. ITA NO. 976/DEL/2015 ASSESSMENT YEAR 2006-07 3 3. IN RESPONSE, THE LD. C.I.T. DR SUBMITTED THAT TH E ORDER OF THE ASSESSING OFFICER AS WELL AS THE LD. COMMISSION ER OF INCOME TAX(A) OUGHT TO BE UPHELD AS IT COULD NOT BE DEMONS TRATED THAT THE IMPUGNED EXPENDITURE WAS FOR BUSINESS PURPOSES AND NOT PERSONAL EXPENDITURE AND, THEREFORE, IT WAS PERQUIS ITE IN THE HANDS OF THE ASSESSEE. IT WAS ALSO SUBMITTED THAT INCRIMINATING DOCUMENTS HAD BEEN SEIZED FROM THE OFFICE OF M/S JA Y POLYCHEM INDIA LTD. WHICH WERE RESPECTIVELY ANNEXURES A-5, A -7, AA-1 WHEREIN THE CREDIT CARD EXPENSES WERE MENTIONED. R ELIANCE WAS PLACED ON THE JUDGMENT OF THE HONBLE APEX COURT IN THE CASE OF CIT VS MUKUNDRAY K. SHAH REPORTED IN 429 ITR 233(SC ) AND ANOTHER JUDGMENT OF THE HONBLE APEX COURT IN THE C ASE OF CIT VS AJIT KUMAR REPORTED IN 93 RTAXMANN.COM 294(SC). LD . C.I.T. DR SUBMITTED THAT ANY MATERIAL OR EVIDENCE FOUND AND C OLLECTED DURING THE COURSE OF SEARCH CAN BE USED IN THE CASE OF A CONNECTED PERSON. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS SEEN THAT AN ID ENTICAL ISSUE WAS DECIDED BY THE ITAT IN ASSESSEES OWN CASE FOR ASSE SSMENT YEARS 2007-08 TO 2012-13 AND SIMILAR ADDITION ON ACCOUNT OF CREDIT CARD EXPENSES WAS DELETED BY THE ITAT VIDE PARA 5.3 OF THE SAID ITA NO. 976/DEL/2015 ASSESSMENT YEAR 2006-07 4 ORDER. THE RELEVANT PORTION OF THE ORDER AT PAGE N O. 40 READS 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 JUDGMENT OF THE HONBLE DEL HI HIGH COURT IN THE CASE OF KABUL CHAWLA (SUPRA) WHIL E ADJUDICATING THE ISSUE OF ADDITION MADE ON ADDITION OF DISCLOSURE U/S 132(4) OF THE ACT. IT IS A FACT THAT NO INCRIMINATING MATERIAL RELATING TO CREDIT CARD EXPE NSES WAS FOUND DURING THE COURSE OF SEARCH. THE LD. CIT (DR) HAS ALSO NO DISPUTE ON THIS ISSUE. UNDER THESE CIRCUMSTANCES, THE ADDITION ON ACCOUNT OF CREDIT CA RD EXPENSE IN RESPECT OF THE CAPTIONED ASSESSMENT YEAR S 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. 4.1 LD. CIT DR HAS VEHEMENTLY ARGUED AGAINST THIS O RDER IN THE ASSESSEES OWN CASE BEING FOLLOWED AND HAS ALSO CIT ED CERTAIN JUDICIAL PRECEDENTS AS LAID DOWN BY THE HONBLE APE X COURT. WE ARE AFRAID THAT THE CASE LAWS CITED BY THE LD. CIT DR ARE DISTINGUISHABLE ON FACTS AND ALSO CONSIDERING THE F ACT THAT SIMILAR ADDITION HAD BEEN DELETED BY THE COORDINATE BENCH O F THE ITAT IN ASSESSEES OWN CASE FOR ASSESSMENT YEARS 2007-08 TO 2012-13 IN ITA NO. 690, 691, 692, 693, 694 AND 977/DEL/2015, R ESPECTFULLY FOLLOWING THE SAME, WE ALLOW THE GROUNDS RAISED BY THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO DELETE THE IMPU GNED ADDITION. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAN DS ALLOWED. ITA NO. 976/DEL/2015 ASSESSMENT YEAR 2006-07 5 ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2018. SD/- SD/- (N.K. SAINI) (S UDHANSHU SRIVASTAVA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 31ST JULY, 2018 GS COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4.CIT(A) 4. DR, ITAT BY ORDER ASSTT. REGISTRAR DATE OF DICTATION DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.PS /PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P S/PS DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WE BSITE OF ITAT DATE ON WHICH THE FILE GOES TO THE BENCH CLERK DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER 1