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Smt. Sushma Gupta, Prop. M/s Sushma Diary, Vill. Basduda Distt. Rewari Haryana Vs. Income Tax Officer, Ward-2, Rewari
February, 06th 2015
                                                              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

                                         1
                                                 ITA NO.510/Del/2013


      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




                          2
                                                                ITA NO.510/Del/2013


                   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.




                                       3
                                                 ITA NO.510/Del/2013


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.


                          4
                                                   ITA NO.510/Del/2013


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.







                           5
                                                   ITA NO.510/Del/2013


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



                          6
                                                 ITA NO.510/Del/2013


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

                          7
                                                 ITA NO.510/Del/2013


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.


                          8
                                                   ITA NO.510/Del/2013


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

                           9
                                                               ITA NO.510/Del/2013


                    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.


                                       10
                                                                 ITA NO.510/Del/2013


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

                                        11
                                                                  ITA NO.510/Del/2013





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




                                        12
                                                               ITA NO.510/Del/2013


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




                                       13

 
 
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