RAJESH KUMAR GUPTA,LUDHIANA vs. ACIT, C-7, LUDHIANA

Per Sanjay Garg, Judicial Member: The present appeal has been preferred by the assessee against the

order dated 16.07.2019 of the Commissioner of Income Tax (Appeals)-3,

Ludhiana [hereinafter referred to as ‘CIT(A)’] passed u/s 250 of the

Income Tax Act, 1961 (hereinafter referred to as the ‘Act’).

appeal:-

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

assessee in its profit and loss account claimed business loss of Rs.

10,34,164/-. However, the Assessing officer disallowed the said business loss

on the ground of non-production of relevant supporting documents.

During the appellate proceedings before the Ld. CIT(A), the assessee

furnished certain additional evidences in support of its claim. The Ld. CIT(A)

sent those evidences to the Assessing officer for verification and remand report

thereof. In response, the Assessing officer submitted his remand report dated

18.1.2019, wherein, he recommended to the CIT(A) not to admit the additional

evidences as the same were not furnished by the assessee during the

assessment proceedings. The Ld. CIT(A) accordingly refused to consider the

evidences submitted by the assessee in support of the above claim. The Ld.

CIT(A) uphold the disallowance so made by the Assessing officer.

the various documents placed on file, wherein, the details of various expenses

have been mentioned along with copy of the ledger account etc. The Ld.

Counsel has further submitted that the assessee’s concern, had been declared

as non-performing assets (NPA) and bank had taken control over its properties.

He has further submitted that due to the aforesaid reasons, the assessee could

not furnish the relevant evidences before the Assessing officer. He has further

submitted that the relevant evidences were furnished before the Ld. CIT(A)

whereupon, the remand report was also called upon but, the Ld. CIT(A) failed

to take note of the aforesaid evidences. The Ld. Counsel has further submitted

that since the business of the assessee has been closed down and the expenses

claimed by the assessee are petty expenses in the shape of salary and day to

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

day expenses, therefore, the issue may be decided after considering the

evidences placed on file.

authorities.

out of which, the major expenses are in respect of salary to staff of Rs.

1,65,500/-. Once the assessee has furnished the relevant documents before

the Ld. CIT(A) and after admitting the same, the Ld. CIT(A) has called for

remand report from the Assessing officer, therefore, the Ld. CIT(A), in our view,

ought to have looked into these documents.

After considering the facts and circumstances of the case and going

through the evidences furnished, we do not find any justification on the part of

the lower authorities for disallowing the business loss to the tune of Rs.

10,34,134/- to the assessee. The disallowance made by the Assessing officer in

this respect is, therefore, ordered to be deleted.

action of the CIT(A) in confirming the addition of Rs. 64,47,530/- u/s 68 of

the Income Tax Act on account of amount credited in the capital account of the

assessee.

time of assessment proceedings, noticed that the assessee has made addition

of Rs. 64,47,530/- to its capital account. The assessee in this respect has

explained that the aforesaid addition in its capital was from two sources; the

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

first amount of Rs. 47,50,000/- was received from sale of land and that the

rest of the amount was from the withdrawal from capital of the assessee in

Akshit Enterprises and some of the amount was withdrwan from his bank

account maintained with the Yes Bank. The assessee furnished the relevant

evidences in this respect also, whereupon, the Ld. CIT(A) called for remand

report from the Assessing officer. The Ld. CIT(A) noted that the assessee had

not furnished the aforesaid evidence at the time of assessment proceedings.

Further, the assessee had not furnished the bank account statement in which

the sale proceeds from the sale of land were credited. He, however, has noted

that the assessee has submitted copy of the account of assessee in the books

of account of the Akshit Enterprises, copy of the bank accounts of Yes Bank

Ltd and Kotak Mahindra Bank. The assessee has also furnished the copy of

the sale deed with the regard to the property. The Ld. CIT(A) further noted that

the assessee had not produced any books of account from various persons /

parties from whom the said amount of Rs. 16,97,530/- was stated to have

been received. He, therefore, confirmed the additions so made by the AO.

assessee had filed copy of the registered sale deed vide which property was sold

for Rs. 95 lacs out of which the assessee received Rs. 47,50,000/- in capital

account. The assessee had filed the copy of the bank statement of the buyer of

the land, narration of which showed that the payment was directly made in the

loan account of the assessee which was actually became a NPA loan. The copy

of the PAN and the ITR of the buyer was also filed. The payment was made

directly to the loan account of the assessee by way of Demand Draft.

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

Regarding the addition of Rs. 16,97,530/-, the Ld. counsel has submitted that

no information was sought by the Assessing officer from the assessee regarding

source of Rs. 16,97,530/-. It has been submitted that all the deposits had

been made from the bank account of the assessee. However, the Ld. CIT(A)

has not considered the relevant transactions that every credit entry have been

backed by the saving bank account of the assessee.

assessee has successfully proved the sale transaction of the land for Rs. 95

lacs out of which, the assessee received Rs. 47,50,000/-which were directly

deposited interest eh firm’s loan account. .Therefore, the addition made into

the capital account of the said amount cannot be doubted. Relating to the rest

of the amount, the Ld. Counsel for the assessee has submitted that some of

the amount was withdrawn from its firm M/s Akshit Enterprises and some of

the amount was received from withdrawals of its Yes bank account. The copy

of the bank account statement were furnished before the Ld. CIT(A), however,

the Ld. CIT(A) failed to look into the aforesaid bank statement etc.

In view of this, we do not find justification on the part of the CIT(A) in

sustaining the aforesaid additions, the same is accordingly ordered to be

deleted.

of the Ld. CIT(A) in confirming the addition of Rs. 59,89,500/- on account of

unsecured loans received from Shri Harish Gupta and Dyal Sarup (HUF) u/s

68 of the Income Tax Act. So far as the loan of Rs. 47,50,000/- received by

the assessee from brother Shri Harish Gupta is concentred, the assessee has 6

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

duly proved the sale of the property of Rs. 90 lacs out of which 50% share of

Rs. 47,50,000/- has been claimed to have been taken by the assessee from his

brother namely Shri Harish Gupta, which has been directly deposited by the

buyer into the NPA Loan account of the firm M/s Ronald Exports and the said

amount was credited as unsecured loan. The bank statement and copy of the

demand draft was also filed before the Ld. CIT(A) as evidence to the payment

made to the bank account of the Roland Exports. Regarding the amount of

Rs. 12,39,500/-, which the assessee has added as loan taken form Dyal Sarup

(HUF), the Ld. counsel for the assessee has submitted that the assessee had

duly furnished the copy of the account of Shri Dyal Sarup (HUF) in his books

of account. That from the perusal of the confirmed copy of the accounts, it

was clear that one cheque amounting to Rs. 12,39,500 taken from Dyal

Sarup (HUF) was wrongly issued / repaid to Dyal Sarup Instead of Dyal Sarup

(HUF) and thus, it was paid back to the assessee subsequently. Thus, the

same needs to be accepted. Regarding the balance amount of Rs. 6,19,750/-

it is submitted that the said amount was not actually received from Dyal Sarup

(HUF) but was merely a book entry made from M/s Dhruv Impex and the same

has been submitted before the Ld. AO during the remand proceedings and

reproduced in the order in Para 7.3 at Page-12. The assessee has also filed the

copy of account of Dyal Sarup in the books of Dhruv Impex (Enclosed in the

paper book at page-79). The Worthy CIT(A) have not even cared to look into the

said facts and in a presumptive manner rejected the submissions of the

assessee and upheld the additions. Thus, the assessee has filed confirmed

copy of accounts to show that it was merely a book entry. The assessee has

also filed his bank statement, wherein, no such amount has been received and 7

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

no adverse inference with regard to the same has been drawn by the

Department. Thus, the addition made with regard to the same also deserves to

be deleted.

In view of this, the addition made by the Assessing officer relating to the

unsecured loans is ordered to the deleted.

the Assessing officer in making the addition of Rs. 38,00,196/- on account of

Long Term Capital Gains and thereby reducing the Long Term Capital Loss

claimed by the assessee. During the assessment proceedings, the Assessing

officer observed that the assessee and his brother had purchased a commercial

property at the cost of Rs. 90 lacs on 31.7.2006 whose circle rate was Rs.

11,000/- per square yard. However, the assessee and his brother sold the

aforesaid property showing the same as ‘residential property’ on 18.2.2014 for

a consideration of Rs. 95 lacs. The Assessing officer observed that the

assessee could not explain as to how the status of the property as

‘commercial property’ changed to that of ‘residential property’. He, accordingly,

applied circle rate of commercial property and recomputed the capital gain at

Rs. 73,17,450/- and allowed the Long Term Capital Loss of Rs. 38,00,196/-.

The Ld. CIT(A) confirmed the addition so made by the Assessing officer.

available on record. In this case, the assessee initially had purchased the

property as commercial property for Rs. 90 lacs. However, while selling the

property the assessee sold the property as residential property. The Stamp

Duty Authority has accepted the said property as residential property. Apart 8

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

from this, the assessee produced on file the Certificate issued by the Assistant

Town Planner supporting that the property sold by the assessee falls within the

Ludhiana Residential Town Planning Scheme and hence residential property.

value of the property transferred is shown less than the value assessed by the

Stamp Duty Authority / State Govt. Authority, the Assessing officer can apply

the value of assessed / assessable by the Stamp Duty Authority / State Govt.

Authority. As per the provisions of section 55A of the Act, the Assessing officer,

to ascertain the true value and the Stamp Duty Authority, can refer the matter

to the Stamp Valuation Officer. In this case, the assessee has claimed to have

sold the property as per the Value assessed by the Stamp Valuation Authority.

Apart from that, the assessee has also furnished a Certificate from the

concerned authority i.e. Assistant Town Planner that the property in question

falls in the residential area. However, it has not been explained as to why the

assessee had purchased the said property as commercial property. May it be

so, the Assessing officer at most, can have referred the matter to the District

Valuation Officer but the Assessing officer himself did not have any authority

to apply the value of the Circle rate of commercial property, especially when

the Stamp Duty Authority / Registering Authority had accepted this sale deed

as per the Circle rate meant for residential property. Since the value shown by

the assessee has been accepted by the Stamp Duty Authority and further the

Assessing officer has not referred the matter to the DVO to get the market

value of the property, therefore, we do not find any justification on the part of

the Assessing officer to himself made the additions by applying circle rate

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

meant for commercial property. In view of this, the addition made by the

Assessing officer relating to this amount is ordered to be deleted.

hence, does not require any specific adjudication.

action of the CIT(A) in not allowing the assessee the brought forward loss of AY

2012-13 and AY 2013-14 to the tune of Rs. 78,354/- and Rs. 45,66,708/-

respectively. The Ld. Counsel for the assessee has submitted that the aforesaid

brought forward losses of AY 2012-13 and AY 2013-14 inadvertently could not

be claimed in the relevant column of the return. However, during the course of

assessment proceedings, the same were very much claimed. Further, that the

claim was also made before the Ld. CIT(A) but the lower authority failed to look

into the aforesaid claim of the assessee.

held that the Income Tax Authorities should charge legitimate taxes from the

assessee. An assessee should not be punished for his/ her bonafide mistake.

The Instructions in this respect have also been issued by the CBDT from time

to time that the Income Tax Authorities should assist the assessee in correctly

making their claim in the return.

assessee regarding the brought forward losses of the previous years i.e. AYs

2012-13 and 2013-14 and if the claim of the assessee is found correct, then to

give set off adjustments of the same in the current year under considerations

I.T.A. No.1358/CHANDI/2019 Assessment Year: 2014-15 Mr. Rajesh Kumar Gupta

Chandigarh, the 30th December,, 2022.

Sd/- Sd/- [Sanjay Garg] [Shri Vikram Singh Yadav] Accountant Member Judicial Member

Dated: 30.12.2022. Rs. / rkk Copy of the order forwarded to: 1. Mr. Rajesh Kumar Gupta 2. ACIT, Circle-7, Ludhiana 3. CIT(A)- 4. CIT , 5. CIT(DR), ITAT, Chandigarh

//True copy// By order Assistant Registrar