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Facts
A search action was carried out under section 132, and information transferred to the AO led to a notice under section 148 for AY 2010-11 for Smt. Madhu Goel. The AO made additions for unexplained investment (Rs. 1,62,27,000), estimated interest (Rs. 8,36,666), mediclaim disallowance (Rs. 25,000), and credit card expenditure (Rs. 2,85,000). The CIT(A) partly allowed the appeal, deleting additions related to unexplained investment, estimated interest, and a portion of credit card expenditure, prompting the Revenue to appeal to the Tribunal.
Held
The Tribunal upheld the CIT(A)'s decision to delete the addition for unexplained investment, noting that the assessee had sufficiently proven the identity, genuineness, and creditworthiness of lenders, and the loan was repaid via banking channels. It also affirmed the deletion of estimated interest as the assessee had declared accrual interest and the AO failed to provide contrary evidence. The deletion of Rs. 2,05,727/- for credit card expenditure was upheld as explained, and the Tribunal found no reason to interfere with the CIT(A)'s admission of additional evidence. Ground 5 was deemed general and not requiring adjudication.
Key Issues
1. Deletion of addition for unexplained investment. 2. Deletion of addition for estimated interest income. 3. Deletion of addition for unexplained credit card expenditure. 4. Validity of admitting additional evidence by CIT(A).
Sections Cited
Income Tax Act, 1961, Section 132, Section 148, Rule 46A of Income Tax Rules, 1962
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Income Tax Appellate Tribunal, DELHI BENCH “E”: NEW DELHI
Before: SHRI KUL BHARAT & SHRI M. BALAGANESH
O R D E R PER KUL BHARAT, JM:
This appeal, by the Revenue, is directed against the order of the learned Commissioner of Income-tax (Appeals)-16, New Delhi, dated 11.04.2016, pertaining to the assessment year 2010-11. The Revenue has raised following grounds of appeal:
1. "On the facts and the circumstances of the case the Ld CIT(A) has erred in deleting the addition of Rs. 1,62,27,000/- as unexplained investment by ignoring the fact that the addition was made as the source of the investment could not be established/proved by the assessee."
2. "On the facts and circumstances of the case in law the Ld. CIT (A) has erred in deleting the addition of Rs. 8,36,666/- on account of interest earned by the assessee by ignoring the fact that the addition was made because of lack of evidence and proof by the assessee." 3. "On the facts and circumstances of the case and in law the CIT(A) erred in giving relief at Rs. 2,05,727/- on account of credit card payment to Citi Bank by ignoring the fact that the assessee could not furnish the source of payments towards credit cards." 4. "On the fact and circumstances of the case and in law the CIT(A) erred the admission of additional evidence submitted by the assessee under Rule 46A of Income Tax Rules, 1962 in view of the fact of that the assessee had made deliberate attempt to avoid assessment proceeding."
Whether the CIT(A) is correct in facts and circumstances of the case and in law in deleting the additions on above accounts.?
At the hearing no one attended the proceedings on behalf of the assessee. No one has been attending the proceedings since 27.02.2019. Notices of hearing sent to the assessee at the address furnished in Form no. 36 have been returned unserved. Under these circumstances we proceed to dispose of the Revenue’s appeal ex parte to the assessee. We have heard learned DR and perused the material available on record.
Facts giving rise to the present appeal are that in this case a search action was carried out u/s 132 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) on M/s Salcon Group of cases by DDIT (Inv. II), Faridabad on 21.01.2012. Certain information was transferred to the jurisdictional Assessing Officer (in short “AO”). On the basis of such information a notice u/s 148 of the Act was issued and served upon the assessee. In response thereto the assessee filed return of income declaring an income of Rs. 49,35,369/-. The AR of the assessee attended the proceedings and furnished information as called for. The AO thereafter framed
assessment. Thereby he made addition of Rs. 8,36,666/- on account of estimated interest @ 8% in respect of sale consideration received by the assessee. The AO also made addition of Rs. 1,62,27000/- treating it as unexplained investment in the property purchased by him. Apart from the aforesaid the AO also made addition of Rs. 25,000/- on account of disallowance of mediclaim and Rs. 2,85,000/- in respect of expenditure made through credit card bills. Aggrieved against this the assessee preferred appeal before learned CIT(A), who partly allowed the appeal. Thereby he deleted the addition in respect of unexplained investment and estimated interest. However, in respect of addition on account of credit card expenditure the learned CIT(A) deleted addition of Rs. 2,05,727/- and rest of the addition was sustained. Aggrieved against this, Revenue is in appeal before this Tribunal.
Apropos to ground no. 1 it was the contention of the assessee that she had taken loan from certain persons and the learned CIT(A) verified the claim of the assessee and deleted the addition, inter alia, by observing as under:
“I have considered the detailed submission and evidence produced before me by the appellant. To my mind successfully discharged her onus of establishing the identity, genuineness of the transaction and the creditworthiness of the lender. All of them are income tax assessee, the transaction has taken place to banking channels having enough funds and moreover the loan has been repaid by the appellant. The appellant has also submitted the confirmation from all the lenders. The Assessing Officer in his remand report dated 12 / (0 1/20) 16 has mentioned that M/s Ganesh Info Services Pvt Ltd had returned a meagre income of Rs.3,290/- for AY 2010- 11. However, perusal of bank statement shows that enough funds were available in the bank account of the company. Therefore the creditworthiness is also established. Similarly in the case of Smt Aruna Goel also, there are enough funds available in her bank account with HSBC to lend a loan of Rs.15 lacs to the appellant. However, the Assessing Officer is free to pass on the this information to the Assessing Officers of lenders, for appropriate action, if any. Considering all these facts and evidence, I delete the addition of Rs. 1,62,27,000/-”
4.1 Learned DR relied upon the assessment order. However, he could not controvert the above finding of fact arrived at by learned CIT(A). Accordingly, we are constrained to affirm the finding of learned CIT(A) on this issue. Ground no. 1 stands rejected accordingly.
5. Apropos to ground no. 2, relating to deletion of addition made on account of interest earned, we find that the learned CIT(A) deleted the addition, inter alia, by observing that the assessee had declared accrual interest earned by her and paid tax on that and that the AO could not bring on record any evidence to establish that the assessee had actually earned income of Rs. 8,36,666/-.
5.1. Learned DR relied on the assessment order, however, he could not controvert the finding of fact arrived at by learned CIT(A) on the issue in question. Accordingly, we see no reason to deviate from the finding of learned CIT(A) and the same is affirmed. Ground no. 2 stands rejected accordingly.
Apropos to ground no. 3, relating to deletion of addition of Rs. 2,05,727/- out of total addition of Rs. 2,85,000/- made by the AO on account of unexplained expenditure, we find that the learned CIT(A) deleted the addition by observing that the same had been explained satisfactorily by the assessee. No contrary material has been placed by the Revenue so as to take a different view on the issue in question. Accordingly, order of learned CIT(A) on the issue in question is affirmed. Ground no. 3 stands rejected accordingly.
Apropos to ground no. 4, relating to admission of additional evidence, no submission has been made by the Revenue. Accordingly, we see no reason to interfere in the finding of learned CIT(A) on this ground. Ground no. 4 stands rejected.
Ground no. 5 is general and needs no adjudication.
Consequently, appeal preferred by the Revenue stands dismissed.
Order pronounced in open court on 03.01.2024.