ITO, NEW DELHI vs. SH. SAURAV CHATTERJEE, NEW DELHI

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ITA 1723/DEL/2013Status: DisposedITAT Delhi19 April 2017AY 2008-095 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The CIT(A) was justified in considering the additional evidence provided by the assessee, which proved the expenses were incurred on behalf of the employer. Since the quantum addition was deleted, the penalty levied on it was also cancelled.

What were the facts?

The Assessing Officer (AO) made an ex-parte addition of Rs. 67,90,244/- as undisclosed income for credit card payments, as the assessee failed to explain the source. The assessee later provided evidence to the CIT(A) showing the amounts were spent on behalf of his employer for official work.

What were the issues?

Whether the CIT(A) was justified in admitting additional evidence not filed before the AO and deleting the addition based on it. Whether the penalty was sustainable when the primary addition was deleted.

Which sections of the Income-tax Act were involved?

Section 144

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, DELHI BENCH: ‘G’ NEW DELHI

Before: SH. BHAVNESH SAINI & SH.L.P.SAHU

Hearing: 05.04.2017Pronounced: 19.04.2017

PER BHAVNESH SAINI, JUDICIAL MEMBER Both the appeals by the Revenue are directed against the common order of CIT(A)-XXX, New Delhi dated 23.01.2013 for A.Y. 2008-09.

2.

Briefly the facts of the case are that the AO passed the ex-parte assessment order u/s 144 of the I.T.Act, 1961 (in short “Act”). The AO noted that as per AIR information received the assessee has made payments through various banks credit cards amounting to Rs.67,90,2444/-. The assessee could not explain the source of these amounts and also failed to furnish supporting evidences. Therefore, the same amount remained unexplained and treated as undisclosed

1.

Page 2 of 5 income of the assessee. The AO made addition of Rs.67,90,244/- as well as levied the penalty on this addition vide separate order.

3.

The assessee challenged the above addition as well as penalty order before the Ld. CIT(A). The assessee produced necessary evidences during the course of hearing. It was explained that during the assessment year under appeal, the assessee was working as a Marketing Manager in the company SSIPL Retail Pvt.Ltd. He had been given credit cards by the employer company with six banks and he had used the money by drawing from credit cards in his official works. The details were submitted of all these banks and as per letter of the employer No.553 dated 14.10.2009 which is reproduced in the impugned order, the employer has certified with the assessee was working with their organization upto 31.03.2008. He was paid salary from 01.08.2007, 31.03.2008 at Rs.2,15,570/-. The company has provided ATM cards of ICICI Bank, CITI Bank, HDFC Bank, American Express Bank, HSBC Bank and ABN Amro Bank. It was also certified that in the above said banks, all money i.e. Rs.67,90,244/- have been deposited by the company. The assessee also filed his affidavit affirming therein that certificate issued by the company was filed during the assessment proceedings. The Ld.CIT(A), therefore, noted that the assessee’s employer had claimed the above expenses in its company assessment with DCIT, Circle-4(1), Delhi and that Page 3 of 5 expenditure had been reimbursed by the company in the credit cards and ATM cards of the banks. The employer had claimed this expenditure in the P&L A/c and allowed by the AO of the employer company. The Ld.CIT(A) noted that the AO did not file the Remand Report nor did make any inquiry and accordingly addition was deleted. The Ld.CIT(A) in view of the deletion of addition on quantum also cancel the penalty. Both appeals of the assessee were accordingly allowed.

4.

Ld.DR contended that whatever documents were filed before the Ld.CIT(A) were not filed before the AO and thus Rule 46A of I.T.Rules have been violated. The Ld.CIT(A) did not consider the Remand Report.

5.

On the other hand, the counsel for the assessee reiterated the submissions made before the Ld.CIT(A) and submitted that the assessee filed written submissions supported by all the above evidences i.e. certificate of the employer and affidavits which were forwarded to the AO for filing the Remand Report. The Remand Report of the AO dated 08.08.2012 is placed on record in which the AO reiterated the same fact stated in the assessment order, therefore, no Rule 46A have been violated.

6.

After considering the rival submissions, we do not find any merit in both the appeals of the Revenue. The assessee filed copies of his

Page 4 of 5 affidavit which were not filed before the Ld.CIT(A) in which he has affirmed that no notice has been served at his residence. The assessee also placed on record of the CIT(A), certificate of the employer confirming that the amount of Rs.67,90,244/- was spent by the assessee on behalf of the company. The Ld.CIT(A) also noted that these expenses have been claimed as expenses by the company of the assessee and the AO has allowed deduction of the same. It is, therefore, clear that all the credit cards and ATM have been used on behalf of the employer company and nothing have been spent by the assessee personally. All the submissions and evidences filed before the Ld.CIT(A), were sent to the AO for filing Remand Report, the AO did not rebut the contention of the assessee in any manner. Copy of the Remand Report dated 08.08.2012 is filed on record. Hon’ble P&H High Court in the case of Kuldeep Industrial Corporation 209 CTR 400 held that when the AO was present before the Ld.CIT(A), did not raise any objection, Rule 46A not violated. In this case, the assessee claimed that no notice has been served upon him at the assessment stage and when details were submitted before the Ld.CIT(A), the same have not been rebutted by the AO. Since the additional evidences filed before the Ld.CIT(A) were relevant and goes to the route of the matter and no sufficient opportunity was given to the assessee at assessment stage to produce this additional evidence, the Ld.CIT(A) was justified in Page 5 of 5 considering the same in accordance with law. Thus, we do not find any infirmity in the order of the Ld.CIT(A) in considering the additional evidences for the purposes of deleting the addition. Since the additions on quantum have been deleted, therefore, there is no basis to levy the penalty on the same addition. The Ld.CIT(A) rightly allowed both the appeals of the Revenue.

7.

In the result, there is no merit in both appeals and both appeals are dismissed.

The order is pronounced in the open court.

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