ITA NO.510/Del/2013
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "G", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI J.S. REDDY, ACCOUNTANT MEMBER
I.T.A. No.510/Del/2013
A.Y. : 2009-10
SMT. SUSHMA GUPTA, INCOME TAX OFFICER,
PROP. M/S SUSHMA DIARY, VS. WARD-2,
VILL. BASDUDA DISTT. REWARI REWARI
HARYANA
(PAN: ALBPG3576D)
(APPELLANT) (RESPONDENT)
Assessee by : Sh. P.C. YADAV, ADV.
Department by : Sh. B.R.R. KUMAR, Sr. DR
Date of Hearing : 02-02-2015
Date of Order : 03-02-2015
ORDER
PER H.S. SIDHU : JM
The Assessee has filed the present appeal against the impugned order
dated 20/11/2012 passed by the Commissioner of Income Tax (Appeals)-
Rohtak on the following grounds:-
"I. That the learned Commissioner of Income Tax (Appeals)
Rohtak has erred both in law and on facts in denying the
claim of deduction of Rs. 1,88,100/- representing the
expenditure incurred for leveling the land and construction
of boundary walls.
1.1 That the learned Commissioner of lncome Tax (Appeals) has
failed to appreciate that expenditure incurred was duly
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recorded in the books of accounts in the preceding
assessment years and books of account for the instant
assessment year had duly been examined and accepted and
as such there is no justification to deny the claim of
deduction by holding that no evidence was furnished in
support of claim of expenditure.
2. That the learned Commissioner of Income Tax (Appeals) has
also erred both in law and on facts in upholding the addition
of Rs. 4,00,000/- representing unsecured loan received by
the appellant from husband of the appellant Shri Manoj
Kumar who is an independent assessee.
2.1 That mere fact there were cash deposits in the bank
account of Sh. Manoj Kumar could not be a ground to
conclude that creditworthiness of the creditor was not
proved and hence the addition made is sustained is not
tenable.
3 That the learned Commissioner of Income Tax (Appeals) has
erred both in law and on facts in upholding the addition of
Rs. 5,50,000/- representing advances made in earlier years
and received in the instant year and as such addition made
in disregard of the facts and evidence on record is wholly
untenable and unsustainable.
It is therefore, prayed that the disallowance / additions so
made by the Income Tax Officer and, sustained by the
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learned Commissioner of Income Tax (Appeals) may kindly
be deleted and appeal of the appellant be allowed."
2. Brief facts of the case are that the Return declaring an income of Rs.
1,79,470/- was filed on 30.10.2010 and the same was processed u/s. 143(1) as
such. Later on, the case was selected for scrutiny through CASS. Notice u/s.
143(2) was issued on 24.8.2001 which was served upon the assessee by speed
post on 29.8.2011 fixing the case for 5.9.2011. Again notice u/s. 143(2) and
142(1) alongwith questionnaire dated 13.9.2011 were issued to the assessee.
Information and details as called for have been furnished and placed on
record. Books of accounts produced and examined by test check. Thereafter,
completed the assessment vide his assessment order dated 24.10.2011 passed
u/s. 143(3) of the I.T. Act, 1961 and made various additions.
3. Against the order of the AO dated 24/10/2011 assessee filed an appeal
before the Id. First Appellate Authority, who vide impugned order dated
20/11/2012 dismissed the appeal of the assessee. Now the Assessee is
aggrieved against the impugned order and filed the present appeal before the
Tribunal.
4. Ld. Counsel of the assessee has filed the synopsis in order to support his
contentions. For the sake convenience, we reproduce the same as under:-
1. The present appeal is arising from the order of CIT(A) dated
20.11.2012. And pertains to AY 2009-10. The assessee in
order to assist this Hon'ble Bench has prepared this
synopsis.
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2. It is submitted that assessee is an individual and filed her
return of Income declaring an income of Rs 1,79,7401- for
the impugned year.
3. It is submitted that assessee has taken three grounds of
appeal ground number one and two have two parts and
ground number three is singularly raised.
4. The first issue embodied in ground number 1 and 1.1 is the
addition of Rs. 1,88,100/-. The facts which are relevant in
respect of this ground are as under:-
5. It is submitted that in AY 2007 -08 assessee had purchased
one plot for an amount of Rs 5,66,000/-. In AY 2008-09 the
assessee incurred cost towards the improvement of this
plot, assessee has incurred expenses of Rs 1,88,000/- on
leveling and erecting of boundary wall-of this plot. Which
means assessee had made investment of Rs 7,54,100/- in
this plot. It is pertinent to note that assessment for AY
2008-09 has attained finality and the expenses claimed vis-
a-vis improvement of land has been accepted.
6. It is submitted that in the impugned year when the assessee
has sold out this plot she had claimed the deduction of Rs
7,54,100/-( Cost of Improvement). However, during the
course of assessment proceedings the AO, without referring
to any material, disallowed the amount of expenses
incurred by assessee on leveling and erection of boundary
wall.
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7. Finding of AO in this regard are at Page No-1- Para-2
8. CIT(A) affirmed the order of the AO without appreciating
the fact that cost of improvement was incurred and allowed
in immediately previous assessment year and the AO was
not justified in questioning the genuineness of these
expenses in the impugned year particularly when there is no
material on record to prove otherwise.
9. Finding of CIT(A) are at Page No-2 Para 4 Submissions of the
assessee are as under:-
10. The expenses were incurred and allowed in AY 2008-09,
this explanation was given to the AO by the assessee See
Page No 3 of file PS. And relevant Page No 21-22 of PS.
11. It is submitted that once it is accepted position of fact that
the expenses were incurred and allowed in previous
assessment year then the AO and CIT(A) cannot disallow
these expenses in the impugned year, in other words the
AO ought to have reopened the previous assessment year
for examining the genuineness of these expenses.
12. It is settled position of law that there has to be some
consistency in the approach of the revenue and it cannot do
those things which it can not do directly. It is submitted that
till today no action either under section 263 or 147 has
been taken for that year.
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13. Recently Hon'ble Apex Court in the case of Excel Industries
reported in 358 ITR 295 and Hon'ble Delhi High Court in the
case of Crain U.K 359 ITR 268 have held that there has to be
consistency in the approach of the revenue. And if there is
no change in facts and circumstance revenue cannot plead
that principle of res-judicata are not applicable in tax
proceedings. Therefore, having regard to the fact that the
financial result after allowing these expenses have been
accepted in AY 2008-09 the revenue cannot disallowed any
thing in the impugned assessment year
14. It is submitted that the AO and CIT(A) have accepted the
fact of incurring of expenses as is evident from the fact that
quantum of expenses has been accepted in toto, neither
there is any addition nor any subtraction in this figure as
claimed by assessee. Therefore without touching the
assessment of previous year the AO and CIT(A) were not
justified in disallowing the amount of Rs 1,88,100/-
15. The issue raised in ground number 2 and 2.1 pertained to
the addition of Rs 4.00 Lakhs received by the assessee from
her husband on account of unsecured loan. The fact in this
regard is that assessee has received an amount of Rs 4
Lakhs from her husband and the AO added this amount
under section 68 on the ground that husband of the
assessee failed to prove the source of these funds. The
CIT(A) also affirmed the finding of the AO
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16. The Finding of AO in this regard are at page No 2 Para 2 of
the order and CIT(A) are at Page No 5 Para 7 of the order.
Submissions of the assessee before this Hon'ble Bench are as
under:-
17. It is submitted that it is not a case where some amount has
been received from any entry operator in as much as the
sum was received from the husband therefore there is no
question of any dubious methods involved
18. The husband of the assessee was regularly assessed to tax
and all the documents such as Income Tax details and other
were duly filed with AO-See Submission of the assessee
before AO at PG No 6 of PS regarding loan confirmation- Pg
No 10 the confirmation of the husband
19. The financial results and ROI of husband are at Page 23-25,
a perusal of these documents would prove beyond doubt
that the capital of the husband was enough to meet out the
advance portion given to wife as unsecured loan.
20. It is submitted that CIT(A) has grossly erred in overlooking
the presence of adequate capital and alleging that husband
of the assessee failed to prove the source of funds, it is
settled position of law that revenue cannot question the
source of source. A reference in this regard can be made to
the judgment of Delhi High Court in the CIT Vs Diamond
products reported in 177 Taxman 331 (Del) copy of the
judgment is annexed in decision paper book
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21. It is further pertinent to mention here that husband has
appeared before the AO and has confirmed the
advancement of loan. However, his statement is also
discarded with out taking any action in the case of husband.
22. It is next submitted that in ground no 3 the assessee has
disputed the addition of Rs 5,50,000/-. In respect of this
ground the facts are that the assessee has deposited an
amount of Rs 17 Lakhs in cash in her bank account. The AO
while examining the source of this cash has doubted the
quantum of Rs 5,50,000/-.
23. The assessee vide his reply dated 19-10-2011 filed before
the AO explained that out of this amount. an amount of Rs
2 Lakh was received from Mahender Singh Yadav and Rs 3
Lakhs were received from Rajpal Yadav and amount of Rs
30440/- was recovered from debtors.
24. The assessee explained that amounts given to Sh Mahender
and Rajpal were given as advance towards purchase of land
in previous assessment year and because the deal was not
materialized the funds were received back. Assessee has
also filed the confirmation of these parties wherein they
have duly confirmed the transaction- See Page NO 8-9 of PB
25. The AO overlooking the confirmation of third parties and
overlooking the return of income of assessee for AY 2008-
09, wherein these funds were duly reflected added the
amount under section 68 of the Act.
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26. The finding of the AO are at Pg No 3 Para 4 and CIT(A) are at
7 Para 10 of the order.
Submissions of the assessee before this Hon'ble Bench are as
under:-
27. Advances were given in previous year and the copy of the
return of income and Balance sheet were filed before the
AO.
28. It is settled position of law that no third party would come
forward with false evidence to oblige an assessee
29. It is submitted that AO disallowed the amounts on the
ground that assessee failed to produce the witness before
him. In this regard it is submitted that it is settled position
of law that opening balances cannot be added under
section 68 See Delhi High Court Usha Studs case reported in
301 ITR 384(Del)-Copy of the decision is attached in PB
30. Without prejudice to the above It is submitted that by
providing the confirmation of the third parties and hence
discharged her burden. However the AO without issuing any
summon under section 131 to the concerned persons has
added the amount arbitrary. It IS settled position of law that
no adverse inference can be drawn against assessee
without issuing summons under section 131 of the Act-
Orrisa Cement 159 ITR 78(SC). And 297 ITR 441 (SC)
31. Once again the assessee placed reliance on the principle of
consistency and submits that having accepted the
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advancement of money in previous years the AO cannot
make any addition of such money when the same is
returned to assessee.
32. As far as the amount of Rs 30440/- is concerned it is
submitted that this amount represent the income of the
assessee already offered for taxation in earlier year. And
hence the addition of the same would amount to double
taxation.
33. As per the observation of the CIT(A) that only 3% cases are
selected for scrutiny the assessee seeks to rely on the
judgment of Hon'ble Delhi High court in the case of Orient
Craft reported in 354 ITR 536(Del) AR of the assessee
5. Ld. DR on the other hand relied upon the orders of the revenue
authorities and stated that the assessee has not filed any documentary
evidence supporting her claim before the AO as well as Ld. CIT(A), in spite of
the various opportunities given to the assessee, therefore, he stated that the
revenue authorities have rightly passed the orders. As regards the addition of
Rs. 4 lacs towards unsecured loan received by the assessee from her husband
Sh. Manoj Kumar, Ld. DR has submitted that assessee has not established the
creditworthiness of her husband and genuineness of the transactions,
therefore, he stated that the impugned order passed by the Ld. CIT(A) may be
upheld.
6. We have heard both the parties and perused the records, especially the
orders of the revenue authorities; Synopsis filed by the assessee and Paper
Book.
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6.1 As regards the issue involved in Ground No. 1 regarding the denial of
claim of deduction of Rs. 1,88,100/- and expenditure incurring for leveling the
land and construction of boundary wall. We have perused the relevant
documentary evidence filed by the assessee in the Paper Book containing
pages 1 to 37 as well as the order passed by the Revenue Authorities, we are of
the view that in the interest of justice, the issue requires re-examination at the
level of the AO, because some relevant evidence assessee has produced before
the Revenue Authority, has not been appreciated by them. In the interest of
justice, we set aside the issue to the file of the AO, with the direction to decide
the same afresh under the law, after adequate opportunity of being heard to
the assessee.
6.2 As regards the issue of addition of Rs. 4 lacs representing unsecured loan
received by the assessee from her husband Sh. Manoj Kumar, we are of the
view that assessee has produced necessary evidence before the AO to prove
the genuineness and creditworthiness of Sh. Manoj Kumar who had advanced
the loan of Rs. 4 lacs to her wife i.e. assessee. Assessee has filed the return of
income of her husband Sh. Manoj Kumar and copy of the bank account in
which her husband has deposited money on 5.12.2008, 10.12.2008 and
16.12.2008 and advanced the same to the assessee on 16.12.2008 through
cheque. The important basis of evidence is the statement of Sh. Manoj Kumar,
husband of the assessee has also been recorded by the AO on 19.10.2011 and
he stated that he is doing Kiryana business and he has deposited the amount
in the Bank and advanced the amount in dispute to her wife from her Kiryana
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business. The assessee has discharged her onus to prove the genuineness and
creditworthiness of her husband who has given the loan to the unsecured loan
to her wife i.e. assessee. In our considered opinion, the AO has wrongly made
the addition of Rs. 4 lacs to the income of the assessee representing as
unsecured loan received by the assessee from her husband and the Ld. CIT(A)
has also wrongly upheld the same without appreciating the evidence filed
before him. Keeping in view of the above facts and circumstances as
explained above, we are of the view that the amount of Rs. 4 lacs has been
fully explained by the assessee, therefore, the addition in dispute is hereby
cancelled.
6.3 As regards the issue involved in Ground No. 3 regarding the upholding
the addition of Rs. 5,50,000/- representing advances made in earlier years and
received in the instant year and as such addition made. At the time of hearing,
Ld. Counsel of the assessee filed the documentary evidence and draw our
attention towards the relevant evidence which support the claim of the
assessee qua the addition of Rs. 5,50,000/-. We are of the view that relevant
evidence produced by the assessee, has not been appreciated by the revenue
authorities which requires examination at the level of AO. In the interest of
justice , we set aside the issue to the file of the AO, with the direction to decide
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the same afresh under the law, after adequate opportunity of being heard to
the assessee.
7. In the result, the appeal of the Assessee is partly allowed for statistical
purpose.
Order pronounced in the Open Court on 03.2.2015.
Sd/- Sd/-
[J.S. REDDY] [H.S. SIDHU]
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date 03/2/2015
"SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT
TRUE COPY
By Order,
Assistant Registrar,
ITAT, Delhi Benches
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