Shri Shailendra Sharma, Bhopal V. DCIT Central -Gwalior, Bhopal

ITSSA 140/Ind/2021

AI Insights

The case revolves around an appeal by Shri Shailendra Sharma against the order of the Commissioner of Income-Tax (Appeals) which partially sustained an addition made by the Assessing Officer regarding unexplained expenditure on foreign travels amounting to Rs. 6,50,000 for the Assessment Year 2012-13. The Assessing Officer had disallowed the entire amount initially, questioning the source of funds for the foreign travel expenses. The Commissioner of Income-Tax (Appeals) later allowed Rs. 3,25,000, considering the expenses were on the higher side but did not fully accept the assessee's explanation. The Tribunal, after reviewing the 'Receipt & Payment A/c' submitted by the assessee, which detailed the financial transactions including the travel expenses, found that the assessee had sufficiently explained the source of the funds and thus allowed the appeal in full.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 130873 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 5 month(s) 6 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 27-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 21-10-2021
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained expenditure; Source of fund
• Section: 143(3); 153A

Judgement Text

Page 1 of 6 आयकर अपीलीय अिधकरण, इंदौर ायपीठ, इंदौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI B.M. BIYANI, ACCOUNTANT MEMBER IT(SS)A No.140/Ind/2021 Assessment Year: 2012-13 Shri Shailendra Sharma, H-3B, Nishat Colony, 74, Bun Galows, TT Nagar, Bhopal बनाम/ Vs. DCIT, Central-Gwalior Bhopal (Appellant / Assessee) (Respondent / Revenue) PAN: AMZPS 9792 A Assessee by Shri Deepak Sharma, AR Revenue by Shri P.K. Mishra, CIT-DR Date of Hearing 02.03.2023 Date of Pronouncement 28.03.2023 आदेश / O R D E R Per B.M. Biyani, A.M.: Feeling aggrieved by appeal-order dated 11.06.2021 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“Ld. CIT(A)”], which in turn arises out of assessment-order dated 27.12.2017 passed by learned ACIT (Central), Gwalior [“Ld. AO”] u/s 153A read with 143(3) of Income-tax Act, 1961 [“the Act”] for Assessment-Year [“AY”] 2012-13, the assessee has filed this appeal on following grounds: “1. The Assessing Officer disallowed the foreign travel expenses of Rs.6,50,000/-on the grounds that the Appellant Assessee did not have the requisite source of funds; however, while adjudicating, the Learned Commissioner of Income Tax (Appeal-3) allowed only Rs.3,25,000/- out Shailendra Sharma IT(SS)A No140/Ind/2021 Assessment year 2012-13 Page 2 of 6 of the total expense on the mistaken belief that the expenses were on a higher side, without considering the fact that these expenses were only personal expenses and had not been claimed as deduction from income by the Assessee; hence, the Commissioner of Income Tax (Appeal) was not justified in disallowing 50% of the foreign tour expenses Rs. 3,25,000/-. 2. That the Appellant Assessee craves leaves to add or modify any ground(s) of appeal as may have been inadvertently left out from being raised here.” 2. Heard the learned Representatives of both sides and case-records perused. 3. The sole grievance of assessee in present-appeal is the addition of Rs. 3,25,000/- confirmed by Ld. CIT(A) out of the total addition of Rs. 6,50,000/- made by Ld. AO on account of unexplained expenditure incurred by assessee on foreign travels. 4. During assessment-proceeding, Ld. AO asked the assessee to file details of his foreign travels alongwith sources of expenses incurred thereon. In response, the assessee submitted to have incurred a total of Rs. 16,00,000/- on foreign travels in different years, including expenditure of Rs. 6,50,000/- during AY 2012-13 under consideration. The assessee also filed a statement in the form of “Receipt & Payment A/c” as also the Returns of Income and claimed that the said “Receipt & Payment A/c” explains the sources of expenses incurred on foreign travels. However, the Ld. AO was not satisfied with the submission made by assessee and made addition. Being aggrieved, the assessee filed appeal to Ld. CIT(A). 5. During first-appeal, Ld. CIT(A) granted partial relief and upheld addition to the extent of 50% of original addition i.e. Rs. 3,25,000/-. 6. Shri Deepak Sharma, brother of assessee, authorized by assessee to represent his case, appeared before us and made submission. He submitted that it is a fact on record that during the course of assessment-proceeding, the assessee has submitted “Receipt & Payment A/c” which establishes the Shailendra Sharma IT(SS)A No140/Ind/2021 Assessment year 2012-13 Page 3 of 6 inflows as well outflows including the expenses incurred by assessee on foreign travels. He further carried us to Para No. 4.2 of the order of first- appeal wherein the Ld. CIT(A), while adjudicating other ground of assessee qua the source of cash-deposits in bank account, has himself accepted, very categorically, that the “Receipt & Payment A/c” filed by assessee ought to have been accepted by Ld. AO. The relevant portion of the order of Ld. CIT(A) is extracted below: “Common Ground No 2- Through this ground of appeal, the appellant has challenged addition of Rs. 1,75,000/- in AY 2010-11, Rs. 2,00,000/- in AY 2014-15 and Rs. 4,35,000/-in AY 2016-17 on account of unexplained cash deposit. The AO during the course of assessment proceedings found that assessee has deposited cash in his bank account for which no source of each cash deposit has been furnished before the AO. I have considered facts of the case, plea raised by the appellant and finding of the AO. The appellant before the AO as well as before me has taken a plea that he has prepared Receipts and Payments Account showing each receipt of income and each payment made. Further, the Receipts and Payments account started with the opening Cash and Bank Balance to which receipts were added and payments were deducted to arrive at the closing cash and bank balances. In support of the opening balance of cash, Receipt and Payment Account of the one year prior to the first (oldest) Assessment Year i.e. AY 2010- 11 was also furnished before the AO i.e. AY 2009-10 which clearly shows income received in cash was at Rs. 4,48,850/- and was also shown in return of income. The said cash book containing receipts and expenditure details was furnished before AO and no fault was observed by the AO. I find a strong force in contentions of the appellant that when all the receipts and payments made by appellant were furnished by the appellant before the AO and the closing cash and bank balance was shown while filing return of income, the AO was not justified in making addition towards cash deposit being already shown in return of income. therefore, addition made by the AO amounting to Rs. 1,75,000/- in AY 2010-11, Rs. 2,00,000/- in AY 2014- 15 and Rs. 4,35,000/- in AX 2016-17 are Deleted. Therefore, appeal on this ground is Allowed.” [Emphasis supplied] Shailendra Sharma IT(SS)A No140/Ind/2021 Assessment year 2012-13 Page 4 of 6 7. Ld. AR submitted that despite such clear finding, when it came to the source of expenditure incurred on foreign-visits, Ld. CIT(A) has upheld addition partially to the extent of 50%. Ld. AR submitted that initially at assessment-stage, the AO has erred in making addition of Rs. 6,50,000/- ignoring the “Receipt & Payment A/c” filed by assessee and later during first-appellate stage, the Ld. CIT(A) has also erred in sustaining 50% out of that addition. Ld. AR prayed that no addition ought to have been made/sustained in the case of assessee once the “Receipt & Payment A/c” stands duly filed by assessee and accepted by Ld. CIT(A). 8. Ld. DR representing the revenue strongly defended the addition made/confirmed by authorities. 9. We have considered rival submissions of both sides and also perused the orders of lower authorities. After a careful consideration, we find strong merit in the submission of Ld. AR of assessee. We observe that the Ld. CIT(A) has given a clear acceptance to the “Receipt & Payment A/c” filed by assessee to Ld. AO which also reveals the sources of expenses on foreign- travels. Faced with such a situation, there is no reason to reject the outflow on foreign-travels appearing in the “Receipt & Payment A/c” and thereby conclude that the sources of foreign-travels remain unexplained. In fact, the Ld. CIT(A) has also accepted the “Receipt & Payment A/c”, but still sustained addition of 50%, which in our view is not a correct approach. Therefore, we are inclined to delete the addition sustained by Ld. CIT(A). The assessee gets full relief and succeeds in his grounds. 10. Before parting, we would like to make a mention that although there is some drafting error in the order of Ld. CIT(A) but with the assistance of learned Representatives of both sides, we have understood the issue involved and adjudicated accordingly in the foregoing paragraph and conveyed the same to Ld. DR representing the revenue during hearing. Shailendra Sharma IT(SS)A No140/Ind/2021 Assessment year 2012-13 Page 5 of 6 11. Resultantly, this appeal of assessee is allowed. Order pronounced as per Rule 34 of I.T.A.T. Rules, 1963 on 28/03/2023. Order pronounced in the open court on ....../....../2023. Sd/- Sd/- (VIJAY PAL RAO) (B.M. BIYANI) JUDICIAL MEMBER ACCOUNTANT MEMBER Indore िदनांक /Dated : 28.03.2023 Patel/Sr. PS Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY Sr. Private Secretary Income Tax Appellate Tribunal Indore Bench, Indore Shailendra Sharma IT(SS)A No140/Ind/2021 Assessment year 2012-13 Page 6 of 6 1. Date of taking dictation 20.3.23 2. Date of typing & draft order placed before the Dictating Member 20.3.23 3. Date on which the approved draft comes to the Sr. P.S./P.S. 20.3.23 4. Date on which the approved draft is placed before other Member 5. Date on which the fair order is placed before the Dictating Member for pronouncement 6. Date on which the file goes to the Bench Clerk 7. Date on which the file goes to the Head Clerk 8. Date on which the file goes to the Assistant Registrar for signature on the order 9. Date of dispatch of the Order