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Income Tax Appellate Tribunal, DELHI BENCHES “SMC” : DELHI
Before: SHRI BHAVNESH SAINI
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “SMC” : DELHI BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA.No.2090/Del./2018 Assessment Year 2013-2014 Shri Sharad Kumar Vashistha, Ghaziabad. The Income Tax Officer, PAN AABPV3411B Ward -2(3), vs. C/o. Sanjeev Anand & Ghaziabad. Associates, 77, Navyug Market, Ghaziabad-201001 (Appellant) (Respondent)
Shri Somil Aggarwal, And For Assessee : Shri Deepesh Garg, Advocates For Revenue : Shri S.L. Anuragi, Sr. D.R. Date of Hearing : 27.02.2019 Date of Pronouncement : 15.03.2019
ORDER This appeal by assessee has been directed against the Order of the Ld. CIT(A), Ghaziabad, Dated 19th January, 2018, for the assessment year 2013-2014.
I have heard the Learned Representatives of both the parties and perused the material available on record.
2 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. 3. Ground Nos.1 and 7 are general in nature and need no adjudication.
On Ground No.2, assessee challenged the addition of Rs.8,66,560/- under section 69 of the Income Tax Act. During the year under consideration, assessee has received property through gift from his father. It was noticed by the assessing officer that expenditure of Rs.8,66,560/- [Rs.8,43,500/- for stamp and Rs.23,060/- for registration] has been incurred on Transfer of Property. The assessee was required to explain the source of such investment. It was claimed by assessee that expenditure for transfer has been incurred by his father. Copy of the gift deed was filed. The assessee was required to furnish ITR details and creditworthiness of the father. The assessing officer noted that merely because in the gift deed it is mentioned that the expenses have been paid by his father is not enough. The assessee submitted that his father Shri O.P. Vasishta is not an income tax payee and is a ‘Katha Wachak’. Assessing officer, therefore, made addition of the aforesaid amount under section 69 of the Income Tax Act, 1961.
3 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. 5. After considering the rival submissions, I am of the view that addition is not sustainable. Learned Counsel for the Assessee referred to PB 35 which is the gift deed in question, in which, at page-68, it is mentioned that Donor has paid all the expenses while executing the gift deed. Therefore onus upon assessee have been discharged.
On the other hand, Ld. D.R. submitted that assessee failed to prove the creditworthiness of his father. Therefore, addition was rightly made. It is a fact that father of the assessee was owner of the property in question and that vide gift deed dated 26th July 2012, the property in question have been transferred to assessee through gift deed. The assessing officer has wrongly mentioned it to be a sale deed in the assessment order. In the gift deed it is specifically mentioned that Donor that is father of the assessee has incurred all the expenses for transferring of the property. It is a registered document which itself is sufficient to hold that assessee has not incurred any expenses for execution of the gift deed. Assessing Officer without any basis, asked the assessee to prove that
4 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. assessee has incurred expenses on the execution of the gift deed. Thus, the order of the authorities below, cannot be sustained in Law. I, accordingly, set aside the orders of the authorities below and delete the addition of Rs.8,66,560/-. Ground No.2 of appeal of assessee is allowed. However, I clarify that the Department is at liberty to proceed against the father of the assessee, seeking explanation of incurring of the aforesaid expenditure, if so advised, in accordance with Law.
On Ground No.3, assessee challenged the addition of Rs.3 lacs out of household expenses. Assessing Officer asked the assessee to justify household expenses. Assessee explained that he made withdrawal of Rs.2,20,000/- which is mentioned in the balance sheet and Rs.1,80,000/- is remuneration from Mamatha Vashista, which is sufficient to meet out household expenditure. The assessing officer, however, noted that bank account of the assessee and his wife shows that no cash withdrawal have been made from the bank account of the assessee and his wife, specially in the circumstances when all the income of
5 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. the assessee has been credited in his account. The assessee was, therefore, directed to justify the household expenditure. The assessee claimed that his father is ‘Katha Wachak’ and household expenses have been incurred by him. The assessing officer did not accept the explanation of assessee because his father is not an income tax assessee and his creditworthiness has not been proved. It is also noted that assessee and his wife are shareholders of the company M/s. Vashishtha Chemtech (India) Pvt. Ltd., and having the status of Director and assessee is having capital in crores, therefore, he may not be depending upon his father for household expenses. The assessing officer also noted that out of the bank account assessee has paid fees to Gurukul School for his children’s education totalling to Rs.1,43,006/-. LIC payment was also made of Rs.98,559/- and assessee maintained Luxury Tata Safari Car. The assessee is also having gun and pistal in his balance sheet. The assessing officer, therefore, considering the luxurious life of the assessee, estimated the household expenditure of assessee at Rs.40,000/- per month and computed addition
6 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. to Rs.4,80,000/-. However, the Addl. CIT has directed under section 144A of the Income Tax Act to make the addition of Rs.3 lacs. Therefore, assessing officer, made addition of Rs.3 lacs under this head.
Learned Counsel for the Assessee reiterated the submissions made before the authorities below.
On the other hand, Ld. D.R. relied upon orders of the authorities below.
After considering the rival submissions, I am not inclined to interfere with the orders of the authorities below. The assessing officer has specifically noted that assessee is a Director in a company having capital in crores and is maintaining car and gun and pistol. The assessee also paid for LIC Premium and paid school fees of the children through cheque. These facts would show that assessee is living a luxurious life. The assessing officer also gave a specific finding that assessee has not shown any cash withdrawal from the bank account. Therefore, merely showing withdrawal in the balance sheet is not enough to
7 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. prove its case. The Assessing Officer was very generous in estimating the household expenditure to Rs.3 lacs. The addition is just and proper. No interference is required in the matter. Ground No.3 of appeal of assessee is dismissed.
On Ground No.4, assessee challenged addition of Rs.4,45,780/- as unexplained investment. The assessing officer asked the assessee to furnish details of loan taken or given. The assessee submitted that he has given loan of Rs.6,37,000/- to M/s. Vashishtha Chemtech (India) Pvt. Ltd. Details of the same is noted at page-6 of the assessment order. Further, it was perused from the balance sheet of the Company that this Company has shown credit balance of Rs.10,82,780/-. The amount of Rs. 10,82,780/- is shown in the Schedule as unsecured loan, but, in the Schedule-1 of the Audit Report also, scanned copy of the same is reproduced at page-7 of the assessment order. The assessee was, therefore, directed to explain as to why the differential amount should not be added. The assessee submitted that as per books of Shri Sharad Vashishtha, loan given to the Company is Rs 6,33,000/- and difference
8 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. in the ledger is due to opening balance, which was not considered by the Company. Confirmation from the company was filed, which is signed by the assessee as a Director. Assessee was, therefore, directed to produce books of account of the Company. The assessee, however, failed to produce the same. The Assessing Officer, therefore, noted that assessee has either having another bank account which have been used for providing cheques to the company or loan has been given out of the undisclosed sources. The assessing officer treated the excess amount of Rs.4,75,780/- [Rs.10,82,780/- (-) Rs.6,37,000/-] as unexplained investment under section 69 of the Income Tax Act, 1961.
Learned Counsel for the Assessee referred PB 78 which is the ledger account of the assessee in the books of the company showing opening balance of Rs.4,45,780/-. PB 92 is balance sheet of the company ending 31st March 2012 showing the same amount. Learned Counsel for the Assessee, therefore, submitted that opening balance has not been considered by the authorities below.
9 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. 13. On the other hand, Ld. D.R. relied upon orders of the authorities below.
After considering the rival submissions, I am of the view that this issue needs re-investigation at the level of the assessing officer. Though the assessee has now filed copy of the ledger account in the paper book, but, when opening balance has not been considered by the assessing officer as assessee failed to produce books of account of the company before assessing officer for his examination in which the assessee is Director of the company, therefore, assessee should have to produce books of the company for verification of the opening balance before assessing officer. However, the assessee did not do so. Therefore, considering the ledger account filed in the paper book, it would be appropriate to restore this issue to the file of assessing officer for re-examination. I, accordingly, set aside the orders of the authorities below and restore this issue to the file of assessing officer with a direction to re- examine this issue on production of the books of account by the assessee. The assessee is directed to produce the books of account of
10 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. Company before assessing officer for his examination along with relevant balance sheet and documents in respect of the same. The assessing officer shall give reasonable, sufficient opportunity of being heard to the assessee. Ground No.4 of appeal of assessee is allowed for statistical purposes.
On Ground No.5, assessee challenged the addition of Rs.85,000/- under section 2(22)(e) of the Income Tax Act, 1961.
The assessing officer noted from the ledger account that the company M/s. Vashistha Chemtech (India) Pvt. Ltd., has given loan to the assessee of Rs.55,000/- on 3rd April 2012 and Rs.30,000/- on 4th May 2012, since, assessee is a share holder of 50% equity shares and as per the balance sheet of the company there are accumulated profits of Rs.1,10,455/- in the form of reserve and surplus in the balance sheet of the company. Therefore, conditions of Section 2(22)(e) were found satisfied. It was treated as deemed dividend, addition of Rs.85,000/- was made in the hands of the assessee. Learned Counsel for the Assessee referred to page-78 of the PB, which is ledger account of the
11 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. assessee, in the books of the company. He has submitted that since opening balance was of Rs.4,45,780/-, therefore, loan out of opening balance was received back. Therefore, no addition could be made on this ground.
On the other hand, Ld. D.R. relied upon orders of the authorities below.
After considering the rival submissions, I am of the view that this issue also needs re-investigation at the level of assessing officer. Since on Ground No.4, the similar ledger account is considered and assessee is directed to produce books of account before the assessing officer for examination, therefore, this issue being related to the same ledger account and production of the books of account, therefore, I set aside the orders of the authorities below and restore this issue also to the file of assessing officer with a direction to re-decide this issue, after verifying the facts from the books of account and the balance sheet to be produced by the assessee. The assessing officer shall give reasonable, sufficient opportunity of being heard to the
12 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. assessee. Ground No.5 of the appeal of assessee is allowed for statistical purposes.
On Ground No.6, assessee challenged the addition of Rs.8,08,491/- as undisclosed rent.
The assessing officer noted that assessee in his personal balance sheet has shown the following properties.
Sl.No. Details Value 1. Factory building 3,94,963/- 2. Property at Meerut road 32,20,402/- 3. Property Delhi 45,000/- 4. Property at M.G. Road 20,67,900/- industrial area 5. Residential house 28,00,000/-
20.1. It is also noted that assessee through gift deed has also received property i.e., residential plot in Raj Nagar, Ghaziabad whose value is Rs.1.30 crores approximately, has not been shown in the statement of affairs/balance sheet. The assessee has shown rental income from the property situated at Meerut road @ Rs.1,23,596/- per month. The assessee has not shown any rental income from other properties. Therefore, assessee was asked to furnish annual rental value of these properties for the purpose of
13 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. computation under Section 23(1)(a)/23(4)(b) of the Income Tax Act, 1961. The assessee did not file any statement on this issue and application for transfer of case was filed from this Ward to any other Ward. The assessing officer on perusal of the bank account of the assessee, found that assessee is earning rent from Idea Cellular Tower. The details of NEFT Idea Cellular Tower are noted in the assessment order. In the absence of any reply of the assessee and clarification on this issue, the assessing officer computed the rental income of Rs.8,08,491/-.
Learned Counsel for the Assessee referred to page 4 of the paper book to show that assessee has shown rental income. He has submitted that one of the property is damaged which is clear from the letter of the Slum and JJ Department. PB-102, property at MG Road, is an Industrial plot and is not a house property, within the meaning of section 22 of the Income Tax Act. He has, therefore, submitted that the matter requires reconsideration at the level of the assessing officer.
14 ITA.No.2090/Del./2018 Shri Sharad Kumar Vashishta, Ghaziabad. 22. Ld. D.R. also suggested that the matter may be reminded to the assessing officer for fresh adjudication.
In view of the above, I set aside the orders of the authorities below and restore this issue to the file of Assessing Officer with a direction to re-decide this issue in the light of explanation of assessee to be furnished afresh before him in the remand proceedings. The assessing officer shall give reasonable, sufficient opportunity of being heard to the assessee. Ground No.6 of the appeal of assessee is allowed for statistical purposes. 24. In the result, appeal of assessee partly allowed. Order pronounced in the open Court. Sd/- (BHAVNESH SAINI) Delhi, Dated 15th March, 2019 JUDICIAL MEMBER VBP/- Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘SMC’ Bench, Delhi 6. Guard File. // BY Order //
Assistant Registrar : ITAT Delhi Benches : Delhi.