INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G": NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER
ITA No. 497 & 498/Del/2015
(Assessment Year: 2010-11 &2011-12)
Sandeep Wadhwa, Vs. DCIT,
C/o. M/s. RRA Tax India, Central Circle-8,
D-28, South Extension, Part-I, New Delhi
New Delhi
PAN: AAHPW8925D
(Appellant) (Respondent)
Assessee by : Shri Ashwani Taneja, Adv
Shri Somil Agarwal, Adv
Revenue by: Shri S. S. Rana, CIT DR
Date of Hearing 24/10/2018
Date of pronouncement 09/01/2019
ORDER
PER PRASHANT MAHARISHI, A. M.
1. These are the two appeals filed by the assessee for the 2 different
assessment years. They are heard together and disposed of by this common
order.
2. For assessment year 2010 11, the assessee has filed appeal against the
order of the learned Commissioner Of Income Tax (Appeals) XXVII, New
Delhi dated 11/12/2014 wherein in the appeal filed by the assessee against
the assessment order passed under section 153A read with section 143 (3)
of the income tax act dated 11/3/13 passed by the learned Deputy
Commissioner Of Income Tax, central circle 8, New Delhi the addition to
the extent of INR 225,000 on account of foreign travel under section 69C of
the income tax act has been confirmed. The assessee has preferred
following grounds of appeal in ITA No. 497/Del/2015 for the AY 2010-11:-
"1. That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in confirming the action of Ld. AO
in framing the impugned assessment order u/s 153A/143(3) without
assuming jurisdiction as per law and without serving the valid notices
as per law and without recording requisite satisfaction as per law and
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without obtaining requisite approval as per law and without complying
with other mandatory conditions under the Act and without serving the
mandatory notices u/s 143(2) and 142(1) of Income Tax Act, 1961.
2. That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in confirming the action of Ld. AO
in making addition of Rs.2,25,000/- on account of foreign travel u/s
69C of Income Tax Act, 1961.
3. That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making addition of Rs.2,25,000/- on
account of foreign travel is bad in law and against the facts and
circumstances of the case and in any case impugned addition is
beyond the scope and jurisdiction of the impugned assessment order.
4. Without prejudice to the above grounds, additions/disallowances could
not have been made in the present appeal because no incriminating
material has been found as a result of search."
3. The brief facts of the case shows that the assessee filed his return of income
under section 153A of the income tax act declaring total income of INR
1028411/ on 18/10/2011 pursuance to search under section 132 of the
income tax act at the business and residential premises on 19/10/2010.
The assessment under section 153A read with section 143 (3) of the income
tax act was passed on 11/3/2013 where the addition on account of
unexplained expenditure on foreign tour of INR 225,000 was made by the
assessing officer. The brief facts of the disallowance is that it was found by
the AO that assessee along with his wife visited Turkey and the expenses
incurred on the trip were claimed to have been born by Godrej & Boyce
Limited. The learned assessing officer rejected the contention of the
assessee as assessee is not director of that company. The assessee was also
asked to provide the certificate from that company which assessee failed.
Therefore the learned assessing officer held that onus was on the assessee
to prove the genuineness of the expenses on his foreign trip along with his
spouse and where the expenditure incurred have been accounted for the
same. According to the learned assessing officer, market enquiry were
conducted to ascertain the estimated cost of the tour undertaken by the
assessee and accordingly a sum of INR 225,000 was added under section
69C of the income tax act. The assessee aggrieved with the order has
preferred an appeal before the learned CIT A, who also confirmed the
addition vide para number 14 of the order. Therefore the assessee
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aggrieved with the order of the learned Commissioner of income tax appeals
has preferred an appeal before us.
4. The learned authorised representative submitted that the addition has been
made by the learned assessing officer on the basis of the estimate and no
actual expenditure has been found to have been incurred by the assessee.
He further relied upon the para number 13 of the order of the learned CIT
A where his submissions have been recorded.
5. The learned departmental representative vehemently supported the orders
of the lower authorities and stated that assessee has failed to show the
source of the expenditure incurred by him on his Turkey visit along with his
wife. He further stated that he failed to submit any certificate from the
company which he claimed to have born by the company . In view of this he
stated that the addition deserves to be confirmed.
6. We have carefully considered the rival submission and perused the orders of
the lower authorities. The fact is that assessee visited Turkey along with his
spouse and the issue is about the source of expenditure incurred on such
visit. The claim of the assessee is that such tour was organized by a
company as per the scheme of the said company, assessee and his wife
were invited for a tour, where all the expenditure are incurred by that
particular company. The assessee was given such an offer only for the
reason that assessee is a director in one of the company which was doing
the business with that company as a dealer. The assessee also submitted
the dealership certificate of that company which organized the tour,
Unfortunately assessee could not get the certificate from that company but
assessee submitted that such tour was organized by that company and
assessee was part of that particular tour. The assessee also submitted
some of the copies of the email and itinerary of the program where the name
of that particular company was mentioned. Even otherwise the assessee
stated that it has not incurred any expenditure on such tour. Despite
search on the assessee no evidences of incurring of any expenditure on that
tour was found. The learned assessing officer has also merely estimated the
amount of expenditure which would have been incurred by the assessee
based on the market survey. Therefore the whole addition made by the
learned AO was on the estimate basis discarding the fact that assessee was
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part of an entourage of a company. The learned AO also did not controvert
the fact that assessee is a director of the company which was a dealer of the
company who defray the expenditure for the foreign tour. Merely because
assessee could not obtain a certificate from a company that such
expenditure has been incurred by that particular company for the foreign
tour of the assessee and his wife who were part of the dealership
entourage of that company , addition cannot be made. Further the
assessee was on a tour as a director of the company was a dealer of the
organizing company. Therefore even if the addition is required to be made
on account of the value of benefit of such tour it is required to be made in
the hands of that particular company and not in the hands of the assessee.
In view of this, we reverse the finding of the lower authorities and direct the
learned assessing officer to delete the addition of INR 225,000 made under
section 69C of the income tax act on account of unexplained expenditure
incurred by the assessee on foreign tour of assessee along with his spouse.
Accordingly ground number 2 and 3 of the appeal of the assessee are
allowed.
7. Accordingly ITA number 497/del/2015 filed by the assessee for assessment
year 2010 11 is allowed.
8. For assessment year 2011 12 assessee filed the appeal against the order of
The Commissioner Of Income Tax (Appeals) XX Vii, New Delhi dated
11/12/2014 for assessment year 2011 12 passed in appeal filed by the
assessee against the order of The Deputy Commissioner Of Income Tax,
central circle 8, New Delhi (the learned AO) dated 11/3/2013 before him
wherein certain additions made by the learned assessing officer are
sustained. Assessee raised following grounds of appeal:-
"1. That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in not deleting the addition of
Rs.37,95,000/- fully as made by Ld. AO on account of unexplained
cash found u/s 69A and has further erred in sustaining the addition to
the extent of Rs.3,32,103/- and that too without appreciating the facts
and circumstances of the case.
2. That in any case and in any view of the matter, action of Ld. CIT(A) in
confirming the action of Ld. AO in making addition of Rs.3,32,103/- on
account of unexplained cash found u/s 69A is bad in law and against
the facts and circumstances of the case.
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3 That having regard to the facts and circumstances of the case, Ld.
CIT(A) has erred in law and on facts in confirming the action of Ld. AO
in making disallowance of Rs.3,92,855/- on the ground that no services
have been rendered by the assessee and without bringing any contrary
material on record and impugned disallowance is beyond the scope and
jurisdiction of the impugned assessment order.
4. That the appellant craves the leave to add, modify, amend or delete
any of the grounds of appeal at the time of hearing and all the above
grounds are without prejudice to each other."
9. The brief facts of the case shows that assessee is an individual and search
and seizure operation u/s 132 of the income tax act 1961 were conducted at
the business and residential premises of the assessee on 19/10/2010. The
assessee has filed its return of income on 30/9/2011 declaring total income
of INR 12524977/- The assessee is deriving income under the head income
from salary and business income over and above income from other
sources.
10. During the course of search cash of INR 4005000/- was found at the
residence of the assessee. Out of the above cash found an addition of INR
3795000 was made to the total income of the assessee as unexplained cash.
Certain other additions and disallowances were also made and consequently
the total income of the assessee was assessed at INR 17282832/ vide order
dated 11/3/2013 passed u/s 143 (3) of the income tax act 1961. The
assessee preferred an appeal before the learned CIT A. The learned CIT
A upheld the addition of Rs. 332103/- on account of cash found during
the course of search and deleted the balance addition. Therefore assessee is
in appeal before us.
11. The brief facts of the case shows that a sum of Rs 332103 it was explained
that a sum of INR 290000 belongs to the assessee's parents, INR 140,000
father of the assessee and INR 150,000 to the mother of the assessee
which was lying in the premises and was kept by these persons as they are
of old age to meet unforeseen exigencies. The balance amount of Rs.
42103/- belong to the wife of the assessee. The assessee further explained
that this amount has been generated out of the past saving of the mother of
the assessee who is a 74 years old person. The father of the assessee is also
80 years old person. Therefore the cash found with respect to these 2
persons are out of their past savings. It was further stated that during the
course of search in the statement also in answer to question number 5 and
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question number 9 the assessee stated that these cash belonged to the
parents of the assessee. The assessee also submitted that they are assessed
to the income tax with the same assessing officer and their case was also
reopened by the learned assessing officer under section 153A of the income
tax act. However the learned CIT A rejected the explanation of the assessee
and stated that as a legal hair of the father of the assessee the liability to
discharge is also based with the appellant and therefore he confirmed the
addition of INR 140,000 on account of cash belonging to the father of the
assessee. With respect to the cash belonging to the mother of the assessee
of INR 150,000 it was held by him that no return of income was filed for the
year consideration and therefore the cash found in the course of search was
rightly is of the appellant. Accordingly the sum of INR 150,000 with respect
to the mother of the assessee was also added in the hands of the assessee.
With respect to the addition of Rs 42103/- amount was stated to be
belonging to the wife of the assessee but the assessee did not furnish any
substantiated evidence and therefore the addition was confirmed in the
hands of the assessee. The assessee aggrieved with the order of the learned
Commissioner of income tax appeals has preferred an appeal before us.
12. The learned authorised representative submitted that during the course of
search the above cash was found to be belonging to the parents of the
assessee and wife of the assessee. He stated that same is the statement
made by the assessee during the course of search and also during the
course of assessment proceedings. He read his explanation made before the
learned CIT A with respect to the all the 3 above items relating to the cash
found during the course of search. He further referred to his explanation
submitted before the assessing officer Vide letter dated 20/2/2013 by the
mother of assessee in her own assessment and the letter dated 25/2/2013
submitted by the late father of the assessee in his assessment proceedings
explaining the source of the cash found. Both the parties stated that the
above cash belong to them and is not an unexplained income of the parties.
Therefore he submitted that looking to the status of the family and the age
of the parents the above amount should not be added to the income of the
assessee as the source of the above sum is explained. He further submitted
that when in their own assessment proceedings the explanation was given
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by the parents of the assessee, it was accepted and addition has not been
made. Therefore there is no reason that such addition is made in the hands
of the assessee.
13. The ld DR relied up on the orders of the lower authorities.
14. We have carefully considered the rival contention and perused the orders of
the lower authorities. Apparently the cash found during the course of
search was explained by the assessee belonging to his parents. Both the
parents of the assessee during the course of their assessment proceedings
have explained before their assessing officer that these cash belong to them.
In the assessment order it is stated by the learned authorised representative
that no addition was made by the assessing officer in their hands when they
have owned it. It was further stated by the learned authorised
representative that the assessing officer of the parent of the assessee and
the assessee are the same. In view of the age of the parents of the assessee,
looking at the family status of the assessee, income disclosed by the
assessee, fact that father of the assessee is assessed to income tax , the
queries raised by the assessing officer of the parents of the assessee in their
assessment proceedings and accepted by the assessing officer without
making any addition in the hands, we do not find any merit in confirming
the addition in the hands of the assessee with respect to the cash belonging
to the parents of the assessee. Therefore we reverse the finding of the lower
authorities and direct the learned assessing officer to delete the addition of
INR 150,000 INR 140,000 respectively belonging to the parents of the
assessee on account of cash found during the course of search.
15. With respect to the addition of INR 42103/- said to be belonging to the wife
of the assessee the assessee did not furnish any evidence before the learned
Commissioner of income tax appeals and therefore the addition was
confirmed. Before us also no substantiated evidence is with respect to the
balance available with the wife of the assessee of Rs. 42103/- was
submitted, therefore we do not find any infirmity in the order of the learned
CIT A confirming the above addition. Accordingly out of the total addition
of rupees 332103/ the assessee is granted further relief of INR 290,000/
and the balance addition assistant. Accordingly ground number 1 and 2 of
the appeal of the assessee are partly allowed.
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16. Next ground number 3 of the appeal of the assessee is related to
disallowance of INR 3 92855 out of the consultancy expenses. This was the
ground number 5 before the learned Commissioner of income tax appeals
who allowed the appeal of the assessee and had deleted the above addition.
Therefore the grievance of the assessee does not.
17. Accordingly appeal filed by the assessee is partly allowed.
Order pronounced in the open court on 09/01/2019.
-Sd/- -Sd/-
(BHAVNESH SAINI) (PRASHANT MAHARISHI)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated: 09/01/2019
A K Keot
Copy forwarded to
1. Applicant
2. Respondent
3. CIT
4. CIT (A)
5. DR:ITAT
ASSISTANT REGISTRAR
ITAT, New Delhi
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