ITO, NEW DELHI vs. SH. MANMOHAN SINGH SEHGAL, NEW DELHI

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ITA 3956/DEL/2015Status: DisposedITAT Delhi28 November 2019AY 2011-1231 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the order of the Ld. CIT(A) was in accordance with law and the facts and circumstances of the case. The Tribunal found no infirmity in the detailed and speaking order passed by the Ld. CIT(A). The Tribunal noted that no materials were brought before it by either side to warrant a view different from that taken by the Ld. CIT(A) on the merits of the additions. Therefore, the Tribunal found no reason to interfere with the order of the Ld. CIT(A). The appeal filed by the Revenue was dismissed. The Tribunal did not expressly leave any issue undecided.

What were the facts?

The Revenue has appealed against an order dated 31.03.2015 passed by the CIT(A) for Assessment Year 2011-12. The appeal challenges the deletion of several additions made by the Assessing Officer (AO). These include an addition of Rs. 79,10,385/- by disallowing a claim under Section 54F, an addition of Rs. 5,90,376/- by applying a net profit rate of 2% on total sales, an addition of Rs. 10,95,230/- treating miscellaneous income as income from other sources, additions of Rs. 42,40,155/- and Rs. 1,15,43,077/- under Section 68, and an addition of Rs. 10,00,000/- under Section 2(22)(e). The assessee, an individual, derived income from salary, wholesale trading of mobile accessories, capital gains on sale of immovable properties, and sale of other capital assets. The AO made these additions in his assessment order dated 28.03.2014 under Section 143(3). The CIT(A) deleted these additions, leading to the present appeal by the Revenue.

What were the issues?

The Income Tax Appellate Tribunal (ITAT) had to decide the following issues: 1. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 79,10,385/- made by the AO by disallowing the claim of exemption under Section 54F of the Income Tax Act, 1961. 2. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 5,90,376/- made by the AO by applying a net profit rate of 2% on total sales of Rs. 2,30,49,244/- 3. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 10,95,230/- made by the AO treating miscellaneous income credited to the P&L account of M/s. Gagandeep Impex Pvt. Ltd. as Income from Other Sources. 4. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 42,40,155/- made by the AO under Section 68 of the Act, despite the assessee not producing books of accounts and failing to establish the identity, creditworthiness, genuineness, and capacity of the creditors. 5. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 1,15,43,077/- made by the AO as unexplained cash credits in the hands of the assessee under Section 68 of the Act. 6. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition of Rs. 10,00,000/- made by the AO under Section 2(22)(e) of the Act, treating a payment to a director as deemed income. 7. Whether the Ld. CIT(A) erred in law and on facts in deleting the addition under Section 2(22)(e) by observing that the payment was reflected in the books of accounts of the company, ignoring that the AO did not state the payment was made outside the books. Assessee's Contentions: The assessee relied on the impugned appellate order of the Ld. CIT(A) and the Paper Book filed to support it. The assessee argued that the difference in capital was due to the sale proceeds of old gold jewellery, which the AO had separately disallowed. The assessee also contended that confirmations from M/s Gagandeep Impex Pvt. Ltd. and M/s Universe Holding Company were furnished. Revenue's Contentions: The Revenue relied on the order of the AO. The Ld. DR argued that the assessee had not produced books of accounts and failed to establish the identity, creditworthiness, genuineness, and capacity of creditors for the additions under Section 68. The Revenue also argued that a payment to a director should be treated as deemed income under Section 2(22)(e).

Which sections of the Income-tax Act were involved?

Section 54F,Section 68,Section 2(22)(e),Section 143(3),Section 143(1),Section 142(1),Section 131

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH: ‘G’: NEW DELHI

Before: SHRI AMIT SHUKLA

(A) This appeal has been filed by Revenue against the impugned appellate order dated 31.03.2015 passed by Learned Commissioner of Income Tax (Appeals)-16, New Delhi, [“Ld. CIT(A)”,for short] pertaining to Assessment Year 2011-12, on the following grounds:

1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 79,10,385/- made by the AO by disallowing claim of exemption u/s 54F of the Act.

2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.5,90,376/- made by AO by applying a net profit rate of 2 % on total sales of Rs.2,30,49,244/-. Page 1 of 31 ITA No.- 3956/Del/2015 Shri Manmohan Singh 3. "The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.10.95.230/- made by the AO treating miscellaneous income credited to P&l account of M/s. Gagandeep Impex Pvt. Ltd. as Income from Other Sources.

4. "The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.42,40,155/- made by the AO u/s 68 of the Act. The Ld. CIT(A) without appreciating the fact that inspite of repeated request to the assessee, he has not produced books of accounts and also not established the identity, creditworthiness, genuineness and capacity of the creditors."

5. "The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.1,15,43,077/- made by the AO as unexplained cash credits in the hands of the assessee u/s 68 of the Act."

6. "The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.10,00,000/- made by the AO u/s 2(22)(e) of the Act. The Ld. CIT(A) without appreciating the fact that the assessee is a Director of the company and If Pvt. Ltd. company has made any payment .directly or indirectly to its director then such payment shall be treated as deemed income u/s 2 (22) (e) of the Act."

7.

"The Ld. CIT(A) has erred in law and on facts in deleting the addition u/s 2(22)(e) by observing that the said payment is reflected in the books of accounts of the company i.e. M/s. Gagandeep Impex Pvt. Ltd., ignoring the fact that the AO has nowhere stated that the said payment made on behalf of the assessee was made outside the books of account of the company.

8.

"The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal”

(B) In this appeal, filed by Revenue the disputes pertained to the following additions made by the Assessing Officer (“AO”, for short) (vide Assessment Order dated 28.03.2014 U/s 143(3) of the Income Tax Act, 1961), which were deleted by Ld. CIT(A) vide impugned appellate order dated 31.03.2015.

(a) Addition of Rs. 5,90,376/- made by the AO by applying net profit rate of 2% on total sales.

(b) Addition of Rs. 10,95,230/- made by the AO treating miscellaneous Page 2 of 31 ITA No.- 3956/Del/2015 Shri Manmohan Singh income as income from other sources.

(c) Additions of Rs. 42,40,155/- and Rs. 1,15,43,077/- made by the AO under Section 68 of I.T. Act.

(d) Addition of Rs. 10,00,000/- made by the AO under Section 2(22)(e) of I.T.

Act.

(B.1) For the ease of reference, portion of aforesaid Assessment Order dated 28.03.2014 is reproduced as under:

ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh (B.2) Also, the relevant portion of the aforesaid impugned appellate order dated 31.03.2015 of the Ld. CIT(A) is reproduced as under:

”

ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh ITA No.- 3956/Del/2015 Shri Manmohan Singh (B.3) In the course of appellate proceedings in Income Tax Appellate Tribunal (“ITAT”, for short), a Paper Book was filed from assessee’s side containing the following particulars:

“1. Photocopy of Application dt. 23.01.2015 moved by the assessee U/r 46A before the ld. CIT(A).

2.

Photocopy of Paper Book Index with It’s enclosures containing 123 pages, which were filed by the assessee alongwith application dt. 23.01.2015 ITA No.- 3956/Del/2015 Shri Manmohan Singh moved u/r 46A before the ld. CIT(A).

3.

Photocopy of written submissions dt. 23.01.2015 filed by the assessee with the ld. CIT(A).

4.

Photocopy of Paper Book Index with it’s enclosures containing 9 pages, which were filed alongwith application dt. 23.01.2015 with the ld. CIT(A).

5.

Photocopy of assessee’s letter dt. 25.02.2015 with it’s enclosures filed by the assessee with the ld. A.O. during remand proceedings.

6.

Photocopy of Ld. A.O.’s Remand Report dt. 09.03.2015 7. Photocopy of the assessee’s Rejoinder vide letter dt. 23.03.2015.

(C) At the time of hearing before us, the learned Departmental Representative (“Ld.

DR”, for short) relied on the order of the AO. The Ld. Counsel for the assessee, on the other side, relied on the aforesaid impugned appellate order dated 31.03.2015 of the Ld. CIT(A). He also relied on the aforesaid Paper Book to support the order of the Ld. CIT(A).

(C.1) We have heard both sides carefully. We have also perused the materials available on records. We are of the view that the order of the Ld. CIT(A) is in accordance with law in facts and circumstances of the case. Relevant portion of the order of the Ld. CIT(A) has already been reproduced in foregoing paragraph (B.2) of this order. He has passed a speaking order in detail and we find no infirmity in the order of the Ld. CIT(A). We find no reason to interfere with the order of the Ld. CIT(A). No materials were brought for our consideration by either side to warrant a view different from the view already taken by Ld. CIT(A) on the merits of the addition. Page 29 of 31 ITA No.- 3956/Del/2015 Shri Manmohan Singh Therefore, the appeal of the Revenue is dismissed.

Order is pronounced in the Open Court on 28/11/2019.

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