ITO Co. Ward-9 (1), V. Sound of Music (India) Pvt. Ltd,

MA 233/DEL/2010

• Counselvise Citation: [2011] 123 COUNSELVISE.COM (IT) 6645 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 2 month(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: G
• Assessment Year: 2004-2005
• Appeal Filed On: 30-04-2010
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: SRUJANI MOHANTY
• Keywords: Unexplained investment; Depreciation
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : FRIDAY : NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI K.D. RANJAN, ACCOUNTANT MEMBER M.A NO. 233/DEL/2010 (ITA NO.986/DEL/08) ASSESSMENT YEAR : 2004-05 ITO, COY. WARD 9(1), NEW DELHI. VS. M/S SOUND OF MUSIC (INDIA) PVT. LTD., 106, 2 ND FLOOR, NEW MANGLAPURI, MEHRAULI GURGAON ROAD, NEW DELHI 110 030. PAN : AAFCS 5065 B (APPLICANT) (RESPONDENT) APPLICANT BY : SMT. SRUJANI MOHANTY, DR RESPONDENT BY : MS LALITA KRISHNAMURTHY, CA O R D E R PER I.P. BANSAL, JUDICIAL MEMBER: THE AFOREMENTIONED MISCELLANEOUS APPLICATION HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF THE TRIBUNAL DATED 21 ST AUGUST, 2009 IN ITA NO.986/DEL/2008. 2. THOUGH THE MISC. APPLICATION IS LENGTHY, BUT THE SO LE GRIEVANCE OF THE REVENUE IS REGARDING GIVING TELESCOPING BENEFIT I N RESPECT OF ADDITION OF ` 5,41,000/- SPENT BY THE ASSESSEE ON RENOVA TION. THE RELEVANT DISCUSSION REGARDING THIS GROUND AS FOUND IN TH E AFOREMENTIONED ORDER IS REPRODUCED BELOW:- MA NO.233/DEL/2010 2 13. IN REGARD TO GROUND NO.7 AND 8 IT WAS SUBMITTED THA T DEPRECIATION HAS BEEN GRANTED TO THE ASSESSEE. HOWEVER , THE ISSUE OF TELESCOPING REMAINED. THE LD. AR REITERATED HER SUBMISSIONS BEFORE THE LD. CIT (A). 14. IT IS NOTICED THAT THE ASSESSING OFFICER HAS CO ME TO THE CONCLUSION THAT THE ASSESSEE HAS MADE A PAYMENT OF RS.5,41,000/- TOWARDS THE RENOVATION OF THE OFFICE BUIL DING AS THE UNEXPLAINED INVESTMENT OF THE ASSESSEE. IT IS FURTHER N OTICED THAT THE EVIDENCE ON ACCOUNT OF THIS PAYMENT IN CASH HAS BEEN FOUND IN THE COURSE OF SURVEY. UNDISPUTEDLY, THE EVID ENCES FOUND IN THE COURSE OF SURVEY ALSO SHOW THAT THE ASSESS EE HAS BEEN IN THE HABIT OF TAKING CASH PAYMENTS TOWARDS THE SER VICE CHARGES. WE HAVE ALSO HELD THAT THE 54% OF THE ADDITION S ON SUCH ACCOUNT IS TO BE TREATED AS GP AND TO BE BROUGHT TO TA X AND NOT THE TOTAL RECEIPTS. AS IT IS FOUND THAT THE ASSESSEE IS IN THE HABIT OF DEALING IN CASH THE EXPENDITURE IN REGARD TO RS.5,41,000/- SHOULD BE DEEMED TO HAVE BEEN INCURRED OUT OF THE SAID CASH TRANSACTIONS, THE GP OF WHICH HAS BEEN DI RECTED TO BE ADDED. 15. IN THE CIRCUMSTANCES THE ASSESSING OFFICER IS DIRECTED TO TELESCOPE THIS ADDITION OF RS.5,41,000/- INTO THE GP ADD ITION ON ACCOUNT OF CASH TRANSACTION IN THE EVENT MANAGEMENT TO THE EXTENT OF THE GP ADDITION AS AVAILABLE. 3. IN THE APPLICATION, THE DETAILS REGARDING CASH REC EIPTS OF THE ASSESSEE IS ALSO MENTIONED WHICH IS AN AGGREGATE SUM OF ` 1 4,53,723/- IN RESPECT OF SIX PARTIES WHICH SUM WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE BY THE ASSESSING OFFICER AND IT WAS CONFIRMED BY TH E CIT (A). THE DETAILS OF THESE CASH RECEIPTS ARE AS UNDER:- CASH RECEIPTS OF THE ASSESSEE AS PER THE ORDER OF THE A.O. U/S 143(3) DT. 22.12.2006 AND AS MENTIONED BY THE ASSESSEE IN THE GROUNDS OF APPEAL. SL. NO. GROUND NO. DT. NAME OF THE PARTY AMOUNT RECEIVED (RS.) REMARKS 1 4 19.4.03 KAMAL PASSI 100000 2 1 21.11.03 ANKUSH SALUJA 196000 3 3 08.01.04 JAGOTA 180000 4 5 05.03.04 UDAY PARK 363123 5 2 07.03.04 UDAY SINGH 384600 6 6 14.02.04 RAGHAV 230000 HONBLE ITAT HAS DIRECTED THAT 545 OF THESE RECEIPTS IS TO BE TREATED AS GP AND TO BE BROUGHT TO TAX AND NOT THE TOTAL RECEIPTS. 1453723 @54% 785010 MA NO.233/DEL/2010 3 4. IT MAY BE MENTIONED HERE THAT THE TRIBUNAL VIDE PARA 11 HAD UPHELD THE ADDITION ON ACCOUNT OF CASH RECEIPTS TO TH E EXTENT OF 54% THEREOF BEING NET INCOME OF THE ASSESSEE FROM SUCH CASH R ECEIPTS AS, ACCORDING TO THE TRIBUNAL, THE EXPENDITURE WOULD HA VE BEEN INCURRED BY THE ASSESSEE ON THOSE CASH RECEIPTS WHICH MAY BE TO THE TUNE OF 46%. IN VIEW OF THE ASSESSMENT OF THAT 54% OF THE CASH RECEIPTS, THE AFOREMENTIONED RELIEF WAS GIVEN TO THE ASSESSEE VIDE PAR A 15 WHICH HAS BEEN REPRODUCED ABOVE. 5. IN THE MISC. APPLICATION IT IS THE CASE OF THE REVE NUE THAT IF THE DATE-WISE COMPARISON IS MADE, THEN, THE CASH AVAILABLE WITH THE ASSESSEE TO MAKE THE CASH PAYMENTS FOR RENOVATION IS ONLY A SUM OF ` 2,50,000/- AND THE BALANCE PAYMENTS COULD NOT BE SAID TO BE OUT OF THE INCOME ASSESSED IN RESPECT OF CASH RECEIPTS. 6. LD. DR, RELYING UPON THE CONTENTS OF THE MA, PLEA DED THAT TELESCOPING BENEFIT COULD ONLY BE GIVEN TO THE ASSESSEE IN THE CASE OF ` 2,50,000/-, HENCE, THE TRIBUNAL HAS COMMITTED A MISTA KE WHEN THE ENTIRE ADDITION OF ` 5,41,000/- HAS BEEN ORDERED TO BE DELETED BY GIVING TELESCOPING BENEFIT AGAINST THE ASSESSABLE INCOME WITH RE GARD TO CASH RECEIPTS. 7. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. AR THAT THE ORDER OF THE TRIBUNAL IS FOR GIVING TELESCOPING BENEFIT TO THE ASSESSEE TO THE EXTENT OF INCOME ASSESSABLE WITH REGARD TO CASH RECEIPTS AND THE SAID INCOME CERTAINLY EXCEEDED THE AMOUNT OF ` 5,41,000/ -. THUS, THERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL AND THE MISC. APPLICATION FILED BY THE REVENUE SHOULD BE DISMISSED. 8. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENTI ONS HAVE CAREFULLY BEEN CONSIDERED. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL MA NO.233/DEL/2010 4 HAS ALREADY BEEN REPRODUCED IN THE ABOVE PART OF THI S ORDER. THE MISC. APPLICATION FILED BY THE REVENUE REST UPON THE CONTE NTION THAT IF THE ACTUAL DATES ARE TAKEN INTO CONSIDERATION, THEN, NO C ASH CAN BE POSSESSED BY THE ASSESSEE IN EXCESS OF ` 2,50,000/- AS THE DAT ES ON WHICH THE SAID AMOUNT OF ` 5,41,000/- HAS BEEN INCURR ED ON RENOVATION ARE PRIOR TO THE CASH RECEIPTS. WE FIND NO FORCE IN SUCH CONTENTION OF THE REVENUE. THE AVAILABILITY OF AMOUNT TO MAKE TH E EXPENDITURE WILL NOT SOLELY DEPEND UPON THE CASH RECEIPTS MADE BY THE A SSESSEE WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT. WHAT HAS B EEN ORDERED BY THE TRIBUNAL IS THAT GP OF 54% ON THE CASH RECEIPTS AN D THE RENOVATION EXPENSES INCURRED BY THE ASSESSEE CANNOT BE SIMULTANEOUSLY ADDED TO THE INCOME OF THE ASSESSEE AND IF ONE EXCEEDS, THEN, TEL ESCOPING BENEFIT HAS TO BE GIVEN. IN THE PRESENT CASE, IF 54% OF CASH RECEIPTS OF ` 14,53,723/- IS CALCULATED, THEN, IT WILL BE AN AMO UNT OF ` 7,85,010/- WHICH IS CERTAINLY IN EXCESS OF ` 5,41,000/-. THEREFO RE, THERE IS NO FORCE IN THE MISC. APPLICATION FILED BY THE REVENUE AND TH ERE IS NO MISTAKE IN THE ORDER OF THE TRIBUNAL WHEN SUCH RELIEF WAS GIVEN TO THE ASSESSEE. 9. IN THE RESULT, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS DISMISSED. THE ORDER PRONOUNCED IN THE OPEN COURT ON 30.06.20 11. SD/- SD/- [K.D. RANJAN] [I.P. BANSAL] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED, 30.06.2011. DK MA NO.233/DEL/2010 5 COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES MA NO.233/DEL/2010 6 DATE OF DICTATION 17.6.11 DATE OF PRESENTATION OF THE DRAFT ORDER TO THE MEMBER 20.6.11 DATE OF RETURN FROM THE BENCH AFTER PRONOUNCEMENT &SIGNING DATE OF DISPATCH OF THE ORDER TO THE BENCH