MRS. RATNA CHADHA,NEW DELHI vs. DCIT, NEW DELHI
Income Tax Appellate Tribunal, DELHI BENCH: ‘C’: NEW DELHI
Before: SHRI ANUBHAV SHARMA & SHRI AMITABH SHUKLA
PER AMITABH SHUKLA, AM:
In this case, the order vide ITA No. 3406/Del/2013 dated
11.07.2016, was passed dismissing assessee’s appeal on account of non-appearance.
Subsequently, vide order in M.A.
375/Del/2016, dated 15.01.2018, the appeal was restored for adjudication.
ITA No.- 3406/Del/2013
Mrs. Ratna Chadha
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The first issue is regarding an addition of Rs. 7,14,361/- made by the Ld. AO under Section 14A of the Act. The Ld. Counsel for the assesse argued that the impugned addition made invoking provisions of Rule 8D (2)(iii) is against the tenets of establish law as no satisfaction has been drawn before making the impugned addition. The Ld. Counsel argued that the confirmation of the impugned addition by the Ld. CIT(A) is also based upon a presumption. Request was accordingly made to delete this addition. The Ld. DR would like to rely upon the order of the lower authorities. 3. We have heard rival submissions, in the light of material available on record. Section 14A r.w. Rule 8D(2)(iii) casts a responsibility upon the AO to draw his satisfaction which has provoked him to invoke impugned provisions. We have noted from para 4.5 of the AO’s order that, even though, recording that assesse had shown expenses direct attributable to exempt income as Nil and also that interest expenses in the P & L Account have been shown as Nil, he concluded that “ …however, there can be no denying of the fact that assesse has used the available infrastructure of his firm to earn this huge exempted income. …”
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Mrs. Ratna Chadha
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The comments of the Ld. AO clearly allude that the Ld. AO is making a conjecture and / or guess and that his conclusions are not based upon any bonafide satisfaction. The contemporaneous law provides for satisfaction and not any presumption. There is a huge difference between satisfaction of the officer and presumptions. Whereas, latter can be a case of the guess work, the former can only be arrived at based upon demonstrative and cogent evidences. Accordingly, we are of the view that the order of lower authority is not based upon correct understanding and appreciation of contemporary statute. The order of lower authority is therefore set aside, and we direct the Ld. AO to delete the impugned addition of Rs. 7,14,361/-. All the grounds of appeal raised by the assessee on this issue, are thereby allowed. 5. The next issue, raised by the assesse is regarding an addition of Rs. 69,53,155/- on account of commission income. The Ld. Counsel for the assesse submitted that the AO held that the assessee was entitled for receipt of its commission income on accrual basis and hence he made the impugned addition. The Ld. CIT(A) confirmed the addition, in view of decision of Hon’ble juri ictional High Court dated 27.07.2011, in assessee’s own case. The Ld. Counsel for the assesse urged that it is in appeal
ITA No.- 3406/Del/2013
Mrs. Ratna Chadha
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before Hon’ble Apex Court against the said decision. Nothing has been brought on record to indicate the order of Hon’ble Delhi High
Court has been stayed. The Ld. DR placed total reliance upon the decision of Hon’ble juri ictional High Court dated 27.07.2011. 6. We have heard rival submission in the light of material available on record. In respectful compliance to the decision of Hon’ble juri ictional High Court dated 27.07.2011(supra), we are of the view that there is no case for any intervention in the decision of Ld. CIT(A). Accordingly, the decision of Ld. CIT(A) is confirmed and all the grounds of appeal raised by the assesse are dismissed.
7. The next issue raised by the assessee is regarding an addition of Rs. 75,39,437/- on account of commission income having relation with port charges and other charges. The Ld. Counsel submitted that the lower authorities have not considered its evidences properly. During the course of present hearing, the Ld.
Counsel also filed additional evidences for consideration of the matter. The Ld. DR argued that the details now provided were not before the lower authorities for their consideration.
8. We have heard rival submission in the light of material available on record. We have noted that the Ld. CIT(A) in para 22
to 24 of his order indicated towards non-supply adequate details
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Mrs. Ratna Chadha
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in support of his claims. The assesse on his part has made a petition for submission of additional evidences under Rule 24 of ITAT Rules. The said additional evidences are admitted. The Ld.
AR argued that the impugned evidences allude that no case of any addition would be made out. We are of the considered view that the Ld.AO has the first authority to examine any claim of the assesse qua determination of its correct taxable income. In this view of the matter, we draw strength from decision of Hon’ble Apex
Court in the case of Tin Box Company. Accordingly, we set aside the order of lower authority and direct the Ld. AO to examine the details filed by the assesse for the purposes of limited verification and decide the issue in accordance with law. It shall be bounden upon the Ld. AO to provide due opportunity of being heard to the assesse and the assesse shall comply with all the statutory notices.
The grounds of appeal raised by the assesse on this issue, is allowed for statistical purposes.
9. The next issue raised by the assesse is regarding an addition of Rs. 22,60,059/- on account of treatment of alleged dividend income as interest income. The Ld. Counsel submitted that the Ld. AO had mi irected himself by treating the impugned exempt dividend income as interest income. The Ld. AO has observed in ITA No.- 3406/Del/2013
Mrs. Ratna Chadha
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the order that the action of the assesse is erroneous as no case of any exempt dividend income is made out. The Ld. CIT(A) confirmed the findings of the Ld. AO.
10. We have heard rival submission in the light of the material available on record. Both the parties have principally agreed that adequate evidences were not provided / available with the lower authorities for arriving at their conclusions. We are of the considered view that the Ld. AO has the first authority to examine any claim of the assesse qua determination of its correct taxable income. In this view of the matter, we draw strength from decision of Hon’ble Apex Court in the case of Tin Box Company.
Accordingly, we set aside the order of lower authority and direct the Ld. AO to examine the details filed by the assesse for the purposes of limited verification and decide the issue in accordance with law. It shall be bounden upon the Ld. AO to provide due opportunity of being heard to the assesse and the assesse shall comply with all the statutory notices. The grounds of appeal raised by the assesse on this issue, is allowed for statistical purposes.
11. The last issue raised by the assesse through its grounds of appeal is regarding an addition of Rs. 4,10,895/- invoking provision of Section 40A(2)(b) of the Act by the Ld. AO and its ITA No.- 3406/Del/2013
Mrs. Ratna Chadha
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confirmation by the Ld. First Appellate Authority. The Ld. AO noted that the impugned amount was incurred for the promotion of another company in which appellant subsequently became a Director. Holding that there was no business expediency under Section 37(1), declared expenditure was disallowed by the Ld. AO.
The Ld. Counsel for the assessee reiterated his arguments about the genuineness and business expediency of the impugned expenses.
12. The Ld. DR submitted that there is no case for justification of claims. Nobody can claim expenses for services rendered to himself. It was argued that the assessee became the Director of the impugned company subsequently. We have noted that the case of the assesse rest upon very weak arguments. The conclusion drawn by lower authorities on the basis of material available on record, cannot be faulted. Accordingly, we are of the view that there is no case for any intervention to the order of Ld.
CIT(A). The grounds of appeal raised by the assesse, is therefore dismissed.
13. In the result, appeal of the assesse is partly allowed.
ITA No.- 3406/Del/2013
Mrs. Ratna Chadha
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Order pronounced in the Open Court on 05.03.2025 (ANUBHAV SHARMA)
ACCOUNTANT MEMBER
Dated: 05/03/2025. Pooja/-