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Income Tax Appellate Tribunal, DELHI BENCH ‘G’ NEW DELHI
Before: SHRI N.K. SAINI & SHRI SUDHANSHU SRIVASTAVA
order passed by the Ld. CIT(A)-23, New Delhi dated 19.1.2015 for assessment year 2006-07 and the sole issue being disputed by the assessee is the action of the ld. Commissioner of Income Tax(A) in directing the Assessing Officer to examine the taxability of expenditure incurred on credit cards amounting to Rs. 1,25,99,657/- as perquisite in the hands of the assessee.
Brief facts of the case are that a search and seizure operation was carried out u/s 132 of the Income Tax Act, 1961 (hereinafter called 'the Act') in M/s Jay Polychem India group of cases on 14.3.2012. The case of the assessee was also covered in the search. Notice u/s 153A was issued and in response, the assessee filed a return declaring income of Rs. 29,00,000/-. The case was assessed on an income of Rs. 1,54,99,657/- which included the sole addition of credit card expenses amounting to Rs.1,25,99,657/- which were considered as perquisite by the Assessing Officer.
2.1 Aggrieved, the assessee preferred an appeal before the ld. First Appellate Authority who restored the issue of examining the taxability of expenses incurred on credit cards as perquisite to the file of the Assessing Officer. The assessee is in appeal against this direction.
2.2 At the outset, ld. AR appearing on behalf of the assessee submitted that a similar addition of credit card expenses was also made in the hands of the assessee in assessment years 2007-08 to 2012-13 and the same was deleted by the ITAT vide consolidated order dated 21.02.2017 in 691, 692, 693, 694 and 977/Del/2015. She drew our attention to page 40 of the said order of the ITAT and submitted that the issue was dealt on this page in para 5.3 of the said order.
In response, the ld. C.I.T. DR submitted that the order of the Assessing Officer as well as the ld. Commissioner of Income Tax(A) ought to be upheld as it could not be demonstrated that the impugned expenditure was for business purposes and not personal expenditure and, therefore, it was perquisite in the hands of the assessee. It was also submitted that incriminating documents had been seized from the office of M/s Jay Polychem India Ltd. which were respectively Annexures A-5, A-7, AA-1 wherein the credit card expenses were mentioned. Reliance was placed on the judgment of the Hon’ble Apex Court in the case of CIT vs Mukundray K. Shah reported in 429 ITR 233(SC) and another judgment of the Hon’ble Apex Court in the case of CIT vs Ajit Kumar reported in 93 rtaxmann.com 294(SC). Ld. C.I.T. DR submitted that any material or evidence found and collected during the course of search can be used in the case of a connected person.
We have heard the rival submissions and perused the material available on record. It is seen that an identical issue was decided by the ITAT in assessee’s own case for assessment years 2007-08 to 2012-13 and similar addition on account of credit card expenses was deleted by the ITAT vide para 5.3 of the said order. The relevant portion of the order at page no. 40 reads as under:-
“5.3. We have dealt with this legal proposition relating to the addition u/s 153A in respect of not abated assessment based on the judgment of the Hon’ble Delhi High Court in the case of Kabul Chawla (supra) while adjudicating the issue of addition made on addition of disclosure u/s 132(4) of the Act. It is a fact that no incriminating material relating to credit card expenses was found during the course of search. The Ld. CIT (DR) has also no dispute on this issue. Under these circumstances, the addition on account of credit card expense in respect of the captioned assessment years deserves to be deleted. It is ordered accordingly. In result, ground nos. 4, 4.1 to 4.2 in assessment year 2007-08 and ground nos. 5, 5.1 to 5.2 of the assessment years 2008-09 to 2010-11 are allowed.”
4.1 Ld. CIT DR has vehemently argued against this order in the assessee’s own case being followed and has also cited certain judicial precedents as laid down by the Hon’ble Apex Court. We are afraid that the case laws cited by the ld. CIT DR are distinguishable on facts and also considering the fact that similar addition had been deleted by the Coordinate Bench of the ITAT in assessee’s own case for assessment years 2007-08 to 2012-13 in following the same, we allow the grounds raised by the assessee and direct the Assessing Officer to delete the impugned addition.
In the result, the appeal of the assessee stands allowed.
Order pronounced in the Open Court on 31st July, 2018.