TEAM INDIA ADVISORY LTD.,NEW DELHI V. DCIT, CIRCLE- 25(1), NEW DELHI

ITA 5066/DEL/2019

AI Insights

The case involves Team India Advisory Ltd., which appealed against the order of the Commissioner of Income Tax (Appeals) - 9, New Delhi, concerning the Assessment Year 2012-13. The appeal contested disallowances and additions made by the Assessing Officer, which included a disallowance under section 14A for expenses related to earning exempt income, a disallowance under section 40(a)(ia) for non-deposit of TDS, and an addition under section 68 for unexplained bank entries. The Tribunal noted the absence of the appellant or any representative throughout the proceedings and decided the case based on the material available on record and the arguments presented by the Departmental Representative.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474868 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-01-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Other Referred Cases: Godrej & Boyce Mfg. Co. Ltd. v. DCIT, B.N Bhattacharjee and another (118 ITR 461), M/s Chemipol vs. Union of India in Excise Appeal No. 62 of 2009
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Keywords: TDS; Earning of tax free income; Rule 8D
• Section: 144; 68; 14A; 40(a)(ia); 40a(ia)

Judgement Text

" 1 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT IN THE INCOME TAX APPELLATE TRIBUNAL DELHI (DELHI BENCH ‘B’ NEW DELHI) BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SH. YOGESH KUMAR U.S., JUDICIAL MEMBER ITA No. 5066/Del/2019 (A.Y. 2012-13) Team India Advisory Ltd. 18/13, 2nd floor, West Patel Nagar, New Delhi PAN: AACCT1658G Vs. DCIT Circle-25 (1) New Delhi Appellant Respondent Assessee by None Revenue by Sh. Rajesh Kumar Dhanesta, SR (DR) Date of Hearing 13/01/2025 Date of Pronouncement 22/01/2025 ORDER PER YOGESH KUMAR, U.S. JM: This appeal is filed by the Assessee against the order of Commissioner of Income Tax (Appeals) (‘Ld. CIT(A)’ for short)- 9, New Delhi, dated 10/09/2018 for the Assessment Year 2012-13. 2. The Grounds of Appeal are as under:- “1. The order of CIT (A) is bad in law and on facts. 2. The Ld. CIT (A) has erred in confirming disallowance the Rs. of 3,85,974/- made by the Ld. Assessing Officer u/s 14A of the Income Tax Act, 1961. 2 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT 3. The Ld. CIT (A) has erred in confirming disallowance the Rs. of 45,85,700/- made by the Ld. Assessing Officer on account of non-deposit of TDS u/s 40a(ia) of the Income Tax Act, 1961. 4. The Ld. CIT (A) has erred in confirming the addition of Rs. 1,99,51,364/- made by the Ld. Assessing Officer on account of unexplained bank entries u/s 68 of the Income Tax Act, 1961. 5. The assessee craves leave to add alter modify any grounds of appeal at the time of hearing.” 3. Brief facts of the case are that, the Assessee filed its return for Assessment Year 2012-13 declaring NIL income. An assessment order came to be passed on 20/03/2019 u/s 144 of the Act by making disallowance u/s 14A Income Tax Act, 1961 (‘Act’ for short) of Rs. 3,85,700/-, disallowed u/s 40(a)(ia) of the Act to the tune of Rs. 45,85,700/- and also made addition of Rs. 1,99,51,364/- u/s 68 of the Act. Aggrieved by the assessment order dated 20/03/2015, the Assessee preferred the present Appeal on the grounds mentioned above. 4. None appeared for the Assessee, it is found from the order sheet, right from filing of the Appeal in the year 2019 till this date neither the Assessee nor its representative of the Assessee appeared before the Tribunal. The registry sent as many as thirteen notices by registered post to the address of the Assessee. Further, the Assessee has also filed an application for adjournment dated 28/08/2023, however, failed to 3 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT appear or address the argument till this date. Considering the above facts, we deem it fit to decide the Appeal on hearing the Ld. Departmental Representative and on verifying the material available on record. The Ld. Departmental Representative vehemently submitted that, the addition made by the A.O. have been rightly sustained by the CIT(A) which requires no interference at the hands of the Tribunal and by relying on the orders of the Lower Authorities, sought for dismissal of the Appeal filed by the Assessee. 5. We have heard the Ld. Departmental Representative and perused the material available on record. The Ld. CIT(A) while dismissing the Appeal held as under:- “I have considered the impugned order. So far attendance to the appellate proceedings is concerned, it is noted from the appeal record that the appellant was provided following opportunities to present its appeal by way of submission of details, document evidences and argument, as the case may be. Sr. No Notice Date of issue of notice/date of speed post Date of hearing Speed post no. Remark s 1 ITBA/APL/S/ APL-1/2017- 18/1007815 992(1) 28/11/20 17 13.12.2017 On 19.12.2 017 sought adjourn ment. Case Adj to 15.01.2 018 2 15.01.2018 Sought adjournm ent case adj. To 15.02.20 4 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT 18 3 15.02.2018 None attended 4 1496 13.03.2018 20.0 3.20 18 27.03.2018 ED6873 04295IN Notice returned 5 ITBA/APL/S/ APL-1/2018- 19/10117280 4(1) 23.08.2018 24.08.201 8 30.08.2018 ED7599 938105I N None attende d 6. Further, serial no. 1 and 5 notices were sent through e- mail at the mail id. [e-mail], this mail ID is one through which appeal has been filed and the same is available as primary e-mail ID in the ITBA system. Notices generated and sent by email at the ID are found to have been delivered as no adverse delivery report like \"bounce back\" was reported in the system. 7. The notices mentioned in the table above Serial no. 1 and 5 were generated through ITBA system of the Income Tax Department and address mentioned therein as \"18/13, 2nd Floor, West Patel Nagar, New Delhi-110008\" is same as mentioned in the PAN database, communication address mentioned in the Appeal Memo. Importantly, in response to notice at serial no. 1 dated 13.12.2017 Authorized Representative filed a letter dated 19.12.2017 requested to adjourn the case. Considering this application, the case was adjourned for hearing on 15.01.2018, the Authorized Representative filed a letter on 15.01.2018 requested to adjourn the case in the second week of Feb, 2018 for the reason that he is a law student and today is his examination and enclosed copy of his admit card and datasheet. Considering this application the case was adjourned for hearing 15.02.2018. However, none attended. 8. On 27.03.2013 another notice at serial no. 4 was issued at the address \"122/123, Mangla Puri, Mandi Road, New Delhi-110070\" which is the address mentioned in appeal memo and Assessment order, treated as final opportunity. However, none attendant. 9. Chronology of event as noted above indicate that the appellant was aware of the ongoing appellate proceedings, 5 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT as the AR of the appellant has filed adjournment petition in response to notices issued. However, it is a matter of record that the Authorized Representative neither produced any kind of documents/details nor power of attorney during the appellate proceedings. 10. It has been held by the Hon'ble Supreme Court in the case of B.N Bhattacharjee and another (118 ITR 461) (at pages 477 & 478) that appeal does not mean merely filing of memo of appeal but also pursuing it effectively. In cases where the appellant does not want to pursue the appeal, appellate authorities have inherent power to dismiss the appeal for non-prosecution as held by the Hon'ble Bombay High Court in the case of M/s Chemipol vs. Union of India in Excise Appeal No. 62 of 2009. 11. This appeal has been filed by the appellant claiming that the action of the Assessing Officer is not supported by facts and laws and that it is unjust. In such a situation, it is for the appellant to furnish submissions with relevant evidence(s), case laws, if any, to support the claim. The burden of proof is always on the person who makes the claim. In this case, it is the appellant who has made the claim by filing the appeal. Thus, in cases where a particular receipt is sought to be taxed as income, the initial onus is on the Assessing Officer to prove that it is taxable. Where, however, the assessee claims exemption, the burden is on the assessee to prove it to be exempt. Same is the position in case of all allowance, deductions, claims or loss, etc. since an appeal is nothing but the claim of the appellant that he has been unduly unjustifiable taxed, it is for the appellant to prove its case. The appellant has not availed any opportunity to do so. 11. Since, the Appellant has not presented any argument and submission or any paper filed in support of its claim, the appeal is being decided judiciously based on materials available on record. 12 Ground no. 1,2 and 6 are general in nature and need not be adjudicated separately. Ground no. 2 is directed against 6 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT addition of Rs.4585700/-. Briefly stated facts of the ground are as under:- 3. During the course of assessment proceedings it was noticed that the assessee company has made investment in shares to the extent of Rs. 7,71,94,707/-. As the dividend income in relation to this investment would be exempt and no disallowance in respect of expenses incurred in making and maintaining this investment has been made, the disallowance u/s 14A is called for. 3.1. The income from shares/mutual funds invested in a company would be in the form of dividend which is exempt u/s 10(34) of the IT Act. Though the assessee has not shown any dividend income, yet it is also not necessary that the assessee should actually receive dividend for suffering the disallowance u/s 14A read with rule 8D. This is very much clear from boards circular no-5/2014 dated 11.02.2014 which after referring to the purpose of introduction of section 14A as stated in circular no-14 of 2001 held as under: \"Thus legislative intent is to allow only that expenditure which is relatable to earning of income and it therefore follows that the expenses which are relatable to earning of exempt income have to be considered for disallowance, irrespective of the fact whether any such income has been earned during the financial year or not The above position is further clarified by the usage of term 'includible' in the Heading to section 14A of the Act and also the Heading to Rule 8Ad of It Rules,. 1962 which indicates that it is not necessary that exempt income should necessarily be included in a particular year's income, for disallowance to be triggered. Also, section 14A of the Act does not use the word \"income of the year\" but \"income under the Act\". This also indicates that for invoking disallowance under section 14A, it is not material that assessee should have earned such exempt income during the financial year under consideration. 3.2 Thus it is clear that non receipt of dividend income is not a relevant consideration for invoking the provisions of 7 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT section 14A read with rule 8D. The only way by which the assessee can escape the operation of section 14A is by establishing that no expenditure, direct or indirect, has been incurred in making the investments and holding them. The assessee has also not established that the income from all the investments as dividends would be includible in its total income and taxable. The assessee has not furnished details of any expenditure incurred which is attributable to such exempt income. However, it cannot be ruled out that some expenditure would definitely be incurred towards such investments. By looking at the volume of investment made and their value at Rs. 7,71,94,707/-, it can be safely concluded that buying or selling of securities as well as maintaining a portfolio of large number of scrips leading to or capable of generating the dividend income is one of the many activities of the assessee. In these circumstances it would be naive to contend that trading in securities and earning of dividend thereon has not led to incurring of any expenditure in relation there to. It is not the case of the assessee that separate bank accounts, separate books of accounts and separate office is maintained in relation to maintaining the portfolio and making sale and purchase of securities out of it. The legislature contemplated this assimilation of the resources for earning taxable and tax- free income and difficulty of gauging the expenses in relation to the two types of income and brought on statue book the methodology of finding out the expenses in relation to exempt income in the form of Rule 8D. While deliberating on the validity of provisions of rule 8D r.w. section 14A, the Hon Isle High Court of Bombay in the case of Godrej & Boyce Mfg. Co. Ltd. v. DCIT in ITA No.626 85 WP 2010, held as under:- i) The provisions of section 14A and Rule 8D are constitutionally valid. ii) The basic object of Section 14A is to disallow the direct and indirect expenditure incurred in relation to income which does not form part of the total income. 8 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT iii) The insertion of Section 14A was curative and declaratory of the intent of the Parliament. The basic principle of taxation is that only net income, namely, gross income minus expenditure is taxable. Once the test of proximate cause, based on the relationship of the expenditure with tax exempt income is established, a disallowance would have to be effected under Section 14A. iv) what merit emphasis is that the jurisdiction of the Assessing Officer to Determine the expenditure incurred in relation to such income which does not form part of the total income, in accordance with the prescribed method, arises if the Assessing Officer is not satisfied with the correctness of the claim of the the assessee in respect of the expenditure which the assessee claims to have incurred in relation to income which does not form part of the total income. The satisfaction of the Assessing officer must be arrived on an objective basis. It is only when the Assessing Officer is not satisfied with the claim of the assessee, that the legislature directs him to follow the method that may be prescribed. v) In the event the Assessing Officer is not satisfied with the correction of the claim made by the assessee, he must record reasons for his conclusion. vi) The effect of Section 14A is to widen the theory of the appointment of expenditure. vii) Sub section (2) and (3) of Section 14A are intended to enforce and implement the provisions of Sub section (1). viii) Even in the absence of sub-section (2) of Section 14A, the Assessing Officer would have to apportion the expenditure after following a reasonable method consistent with what the circumstances of the case would warrant and having regard to all relevant facts and circumstances to disallow the expenditure incurred by the assessee in relation to income which does not form part of the total income under the Act. 9 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT ix) The expenditure incurred u/s 14A would include direct and indirect but. relationship with exempted income must be proximate. x) Where the expenditure incurred cannot be related to either taxable income or exempted income, the provisions of section 14A would be attracted and therefore, AO would be justified in making disallowance in accordance with provisions of sub section (2) 8s (3) r/w Rule 8D. 3.3. Following the ratio of Hon Tale High Court the provisions of rule 8D are invoked in the present case as I am satisfied that the assessee has incurred expenses in earning the dividend income. Therefore disallowance u/s 14A is computed here below on the value of investment of Rs. 7,71,94,707/-in accordance with rule 8D 12.1 I have considered the facts of the ground, it is noticed that the Appellant in this ground of appeal has claimed the issue that the assessee company has made investment in shares to the extent of Rs. 77194707/-, as the dividend income in relation to this investment would be exempt and no disallowance in respect of expenses incurred but it has not adduced any document to demonstrate in this regard. In absence of the same, there is no besle to interfere with the finding of the AO in this regard. This ground is dismissed. 13 Ground no. 4 is directed against addition of Rs.4585700/- u/s 40(a)(ia) of the IT Act. Briefly stated facts of the ground are as under: \"On going through auditor's report it is found that by a note number (ix) it is commented that the assessee has not deposited TDS of Rs.4,58,570/- till the balance sheet date. As per profit and loss account, the assessee is claiming expenses on account of rent, events, salary etc. Accordingly by taking 10% rate of tax deduction applicable in the case of rent, salary etc. a sum of Rs.45,85,700/- disallowed u/s 40(a)(ia).\" 10 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT 13.1 considered the facts of this ground. The AO has made addition of Rs. 4585700/- u/s 40(a)(ia) based on qualification calculated by the Tax Auditor and no reply/clarification being filed by the assessee to the AO. Even at appellate stage, there is no submission of the Appellant in support of its claim and controverting the finding of the AO. Under the circumstances, I have no basis to interfere with the finding of the AO. Impugned addition is confirmed. This ground is dismissed. 14 Ground no. 5 is directed against addition of Rs.19951364/- u/s 68 of the IT Act. Briefly stated facts of the ground are as under: 5. On going through the copy of bank account number 023981 maintained with Bank of Tokyo, Delhi it is seen that the following amounts have been credited to the bank account:- “ 19 17.10.20 11 120000 20 - 14.11.20 11 2250000 21 22.11.20 11 573912 22 24.11 2 01 1 164219 23 29.11. 20.000.0 S.No. Date of Deposit Amount (Rs.) 1 21.04.2011 532574 2 28.04.2011 1613670 3 06.05.2011 1120222 4 18.05.2011 1099430 5 20.05.2011 450000 6 25.05.2011 219076 7 04.06.2011 25000 8 09.06.2011 1658965 9 15.06.2011 551264 10 29.06.2011 1103422 11 19.07.2011 500000 12 21.07.2011 400000 13 01.08.2011 563258 10708.2011 1166616 15 10.08.2011 300000 16 16.08.2011 1914736 17 01,09.2011 25000 18 16.09.2011 500000 19 04.10.2011 15000 17 07.10.2011 250000 18 11.10.2011 400000 11 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT 24 29.11.20 11 1460000 25 09.12.20 11 50000 26 13.12.20 11 35000 27 17.12.20 11 200000 28 15.01.20 12 350000 29 16.01.20 12 50000 30 28.01.20 12 120000 Total 19951364 5.1. The assessee has failed to offer any explanation for the resources of these credit entries in the bank accounts. In this year the assessee has raised fresh share capital of Rs. 23.30 lacs and in its schedule for current liabilities it is showing addition to the extent of Rs.1.03 crore on account of advance revenue. The assessee has submitted the copy of bank account, ITR etc in respect of fresh share capital raised during the year from Mr. Vibhav Kant Upadhyay. On examining his bank account it was found the immediately before the issue of cheque tor share application money to the assessee, there was corresponding deposit of equal or more amount. By query sheet dated 17.02.2015 the assessee was to explain the source of deposits in the bank account of the share applicant. However, till date no explanation has been furnished. Similarly the assessee has not offered any explanation as to why the advance revenue has not been recognized as income. Keeping in view the history of the cases of the assessee wherein in the proceeding assessment years additions on account t of unexplained share capital have been made as well as the present position, the amount of Rs. 1,99,51,364/- deposited in the bank is treated as assessee's income from undisclosed sources u/s 68 of the Act. This would take care of unexplained share application money of Rs.23.30 lacs as well as addition in advance revenue of Rs.1.03 crore for which no separate additions are made. 14.1 I have perused the impugned order, considered the contention of the AO and also submission of the assessee made before the AO as incorporated in the impugned assessment order. This is noticed that the AO has provided opportunity to the appellant company to furnish requisite 12 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT details, documents and clarification on the issues mentioned in the respective grounds as discussed in the assessment orders. However, no details or documents or clarification whatsoever was submitted to the AO. At appellate proceedings also, the appellant has not made any submission much less controverting the finding of the fact by the AO. It is trite law that onus is on the party/assessee to buttress its claim by adducing necessary evidence and filing clarification/ explanation. On the matter of issue being u/s 68 of the Act, onus is much more heavier on the appellant to satisfy the rigors of this provision in terms of identity, creditworthiness and genuineness of transaction. In this case the AO has examined the facts of issue and on the basis of same called for details of the parties, computation, Balance Sheet, rate of interest and creditworthiness of the parties. However, the Appellant failed to submit the details. In view of above, addition of Rs. 19951364/- u/s 68 of the Act is confirmed. Appellant fails in this ground. 15. In the result,, the Appeal is DISMISSED.” 6. Neither the Assessee nor the representative of the Assessee have appeared or made any submission to controvert the above findings and conclusion of the Ld. CIT(A) on verifying the orders of the Ld. CIT(A), it is found that the Ld. CIT(A) committed no error in dismissing the Appeal filed by the Assessee and upholding the addition or the disallowances made by the A.O. Finding no merits in the Grounds of appeal of the Assessee, we dismiss the Grounds of Appeal of the Assessee. 13 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT 7. In the result, the Appeal of the Assessee is dismissed. Order pronounced in the open court on 22nd January, 2025 Sd/- Sd/- (M. BALAGANESH) (YOGESH KUMAR U.S.) ACCOUNTANT MEMBER JUDICIAL MEMBER Date:- 22.01.2025 R.N, Sr.P.S* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI 14 ITA No. 5066/Del/2019 Team India Advisory Ltd. Vs. DCIT "