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Income Tax Appellate Tribunal, DELHI BENCH “C”: NEW DELHI
Before: SHRI H. S. SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M.
This is appeal filed by the revenue against the order of the ld CIT (A)-XXVI, New Delhi dated 30.03.2013 for the Assessment Year 2009-10.
The revenue has raised the following grounds of appeal:- A. The CIT (A) has erred in allowing expenditure of Rs. 6,10,230/- for expenses incurred against the insurance commission even in the absence of any details, justification and nature and mode of payment. B. The CIT(A) has erred in deleting addition made on account of purchase of property by assessee in the absence of complete sale deed along with necessary source of funds to purchase the said property. C. The CIT (A) has erred in deleting addition made on account of unexplained credit of Rs.1,77,000/- in the absence of any clarification and justification by the assessee. D. The CIT(A) has erred in deletion addition made on account of undisclosed bank interest, household withdrawals and unverified deduction u/s 80C, E. The CIT(A) has erred in law by accepting additional evidences during the course of appellate proceedings in a situation when the assessee did not even turn up before the AO to verify the additional evidences filed during the appellate proceedings as per Rule 46A of the Income Tax Rule, 1962.”
Page 2 of 7 3. The assessee is an individual filed her return of income for Rs.423336/- and income was assessed at Rs.5772190/-. Assessee preferred an appeal before the ld CIT (A) wherein the appeal of the assessee was partly allowed. Against the order of the ld CIT (A) revenue has preferred this appeal before us.
It is also important to put on record the events of the appeal before the ld CIT(A). On 19.12.2010 in response to the hearing appellant filed an application under Rule 46A of the Income Tax Rules, 1962 for admission of additional evidence stating inter alia that Mr. Dhirendra Kumar who was earlier handling the issue before the Assessing Officer did not attend before the Assessing Officer therefore, certain additional evidences were filed. Additional evidences were cashbook ledger, bank statement of Axis Bank, ICICI Bank, copy of electricity bill, marriage certificate of assessee, income tax return of the husband of the assessee, copies of property documents and rent agreement. These documents were sent by the ld CIT (A) for submitting the remand report, which in turn was submitted by the ld Assessing Officer on 23.11.2012. The copy of the remand report was sent to the appellant for rejoinder, which was submitted on 29.01.2013. On this basis the ld CIT(A) recorded his finding admitting the additional evidence and decided the issue in the appeal.
The first ground of appeal
is against deletion of disallowance of Rs. 610230/- of expenses against the insurance commission income.
6. The brief facts of the case is that the assessee has received Rs. 1024354/- as insurance commission from M/s. Bajaj Alliance Life Insurance Co. and assessee has incurred an expenditure of Rs. 610230/- for earning this income. The ld Assessing Officer disallowed these expenditure as according to him the details of these expenditure and the mode of payment was not furnished. On appeal before the ld CIT (A) after obtaining the remand report and admission of additional evidences the addition was deleted.
7. Ld DR before us submitted that before ld Assessing Officer no detail was furnished therefore the matter should be set aside back to the file of Assessing Officer.
8. We have carefully considered the rival contentions. The ld CIT(A) based on the remand report perused the details of expenses incurred by the appellant for earning the commission income. Ld Assessing Officer in the remand report has reiterated the same arguments, which were raised in the assessment order. In the remand proceedings the assessee submitted the details of salary, conveyance, business promotion, staff welfare, printing and stationary, telephone and electricity expenses. It was also explained the source of the such expenditure is the amount received by the assessee at the time of her marriage and cash withdrawal of Rs. 840000/-, which is withdrawn from the ICICI Bank Account. Regarding the expenditure she has submitted the complete details along with books of accounts such as cash book and bank statement. She has also produced marriage certificate to show that the customary money is Page 3 of 7 available on her marriage. Based on this the ld CIT(A) has held that AO could not bring any adverse material and therefore the disallowance was deleted. We do not find any infirmity in the order of the ld CIT (A) in deletion of the disallowance of Rs. 610230/-. None was pointed out by ld DR except stating that the matter should be set aside. We do not accede to such a request as the ld CIT (A) has granted opportunity to verify the details submitted to the Ld. AO. The ld AO in his remand report has submitted that the assessee did not come to verify the additional evidences. We failed to understand when the assessee has submitted these details what was the further need to call assessee unless there is a specific requirement on examination of such records/ evidences. The complete details of the bank accounts were submitted along with the details of vouchers etc that could have been independently verified. The AO could have verified the details of such information by obtaining details by exercising wide powers bestowed up on him such as third party evidence and could have investigating the factum of such expenditure. The ld CIT (A) has recorded the response of the ld AO at page No. 6 in the last two paragraphs. The sole reason given by the ld Assessing Officer was that the assessee did not come before AO to verify the additional evidences filed by the assessee and therefore the ld AO did not comment anything on the additional evidence submitted. Such approach cannot be approved. The right course could have been that the ld Assessing Officer should have made independent enquiries and then confronted assessee with findings of such enquiry and then submitted his categorical remand report supporting his stand taken in the assessment proceedings. None of this exercise has been carried out by the ld Assessing Officer. Against this ld CIT(A) has perused the details of expenses incurred by the appellant and then deleted the disallowance. Therefore, we confirm the finding of ld CIT (A) and ground No. 1 of the appeal is dismissed.
9. Ground No. 2 of the appeal is against the deleting the addition made because of purchase of property of Rs. 4293000/-. The facts relating to those grounds are narrated by the ld CIT (A) in para 11.1 of the assessment order and further, has deleted the addition in view of the evidence filed by the assessee wherein the property is funded by a sum of Rs. 39.90 lacs by Cheque No.012074 dated 25.07.2008 from ICICI Bank Ltd. from ICICI Home Finance Ltd. on account of loan sanctioned of Rs 55.50 lakhs in the name of her husband Mr. Bikash Bhagat and assessee was co-applicant. Ld AR submitted the same facts as were stated before the ld CIT(A).
10. Ld DR reiterated the same submission that was raised in ground No. 1 with a prayer for setting aside.
11. We have carefully considered the rival contention and perused the order of the ld CIT (A) who deleted the addition in view of the statement of ICICI Home Finance Ltd. wherein loan Page 4 of 7 of Rs.55.50 lacs is sanctioned for purchase of the property in the name of the husband of the assessee and assessee is a co-applicant. Ld CIT(A) has decided this issue as under:- “13. I have considered the facts of the case, written submissions of the appellant, Assessing Officer's remand report and rejoinder of the appellant. The Assessing Officer in his remand report has again repeated what had been observed in the assessment order passed by his predecessor. The Assessing Officer did not offer any comments on the evidence filed before him in respect of the loan taken by the appellant's husband. I find that in the details of sale consideration paid as per sale deed, it had been clearly mentioned that a sum of Rs.39,90,000/- was paid vide cheque no.012074 dated 25.7.2008 drawn on ICICI Bank Ltd. who have sanctioned the loan to the appellant's husband. I have also perused the copy of ICICI loan account wherein an amount of Rs.55,50,000/- was sanctioned in the name of not only the appellant's husband Sh. Vikas Bhagat but the name of the appellant had also been mentioned as co-applicant. Therefore, in view of this evidence filed by the appellant, the source of investment in the property stands explained. Accordingly, the addition of Rs.42,93,0007- made by the Assessing Officer is deleted.”
12. We do not find any infirmity in the order of the ld CIT(A) and none has been pointed out by ld DR. in view of this we confirm the order of the ld CIT(A) in deleting addition of Rs. 4293000/- made by the Assessing Officer as source of such investment was not explained before ld AO however, ld CIT(A) deleted the same as the source of investment is explained by the loan from ICICI Home Finance of Rs. 55.50 lacs in the name of the husband of the assessee and assessee being co-applicant. Therefore ground No. 2 of the appeal is dismissed.
13. Ground No. 3 is regarding unexplained credit of Rs. 177000/- on account of unexplained deposited in the bank account. This issue has been considered by the CIT (A) as under : “15. In the course of appeal proceedings, the AR of the appellant filed the following written submissions: "The ld AO made an addition of RS. 1,77,000.00 deposited during the year in bank account, the detail of which is as follows:- 28.08.2008 Cash 49000.00 08.09.2008 Cash 11000.00 10.11.2008 VikasBhagat 30000.00 10.12.2008 VikasBhagat 30000.00 17.12.2008 VikasBhagat 2000.00 09.01.2009 Cash 35,000.00 10.02.2009 Vikas Bhagat 20,000.00 Total 1,77,000.00 In regard to the receipt of amount of Rs. 82,000.00, this is submitted that it was received by her from her husband, Vikas Bhagat. As far as cash is concerned, it is submitted that it is out of cash withdrawal from bank and other receipt, the cash book is being enclosed."
16. I have considered the facts of the case, written submissions of the appellant, Assessing Officer's remand report and rejoinder of the appellant. The Assessing Officer here also repeated what was mentioned in the assessment order. I have perused the copy of cash book, I find that there was sufficient cash available with the appellant prior to the cash deposited in her bank account. As for the receipt from Sh. Vikas Bhagat these amounts have been deposited in the bank account of the appellant Page 5 of 7 for payment of ICICI home loan otherwise also the husband of the appellant is separately assessed to tax. Therefore, considering these facts of the case, I see no justification for the addition of Rs. 1,77,0007- made by the Assessing Officer. Accordingly, the addition of Rs.1,77,000/-made by the Assessing Officer is deleted.”
14. We do not find any infirmity in the order of CIT (A) and none has been pointed out by the ld. DR. In the result Ground No 3 of the appeal is dismissed. Ld CIT(A) has categorically stated on verification of cash book there was sufficient cash in hand was available prior to the depositing the cash in the bank. Further the source of money is from source of husband with respect to Rs. 82000/- deposited on various days. The husband of the assessee is also assessed to income tax. In view of this we confirm the finding of the ld CIT(A) in deleting the addition made on account of unexplained credit of Rs. 177000/-. In the result ground No.3 of the appeal is dismissed.
15. Ground No. 4 of the appeal is against deletion of addition made on account of undisclosed bank interest, household withdrawals and unverified deduction u/s 80C. These addition are of very small nature and ld CIT(A) has dealt with this issue in Ground No.5,6 and 7 of the appeal before him as under:- “17. In ground no.5, the appellant has objected to the addition of Rs.627/- made by the Assessing Officer on account of interest income. 17.1 In the course of assessment proceedings, on perusal of the bank statement of the appellant, the Assessing Officer noticed that the appellant had earned an interest of Rs.627/- which was not declared by her in her return of income for assessment year under consideration. Therefore, the Assessing Officer added the same to the income of the appellant. 18. I find that the Assessing Officer had wrongly made the impugned addition. The appellant had already declared interest income in the return of income filed by her. Therefore, this addition of Rs.627/- made by the Assessing Officer is deleted. 19. In ground no.6, the appellant's objection is with regard to the restriction of deduction claimed u/s 80C at Rs.12,000/- only as against Rs.1,00,000/- claimed. 19.1 In the course of assessment proceedings, the Assessing Officer noticed that the appellant had claimed deduction u/s 80C amounting to Rs.1,00,000/-. According to the Assessing Officer, the appellant had filed receipts of insurance premium in respect of Rs.63,066/- but on perusal of the bank account it was seen that only a monthly payment of Rs. 1,000/- was made. Therefore, the Assessing Officer considered only Rs. 12,000/- for deduction u/s 80C and disallowed the balance amount of Rs.88,000/- and added to the income of the appellant. 20. In the course of appeal proceedings, the AR of the appellant filed the following written submissions: "The assessee invested Rs. 1,00,000.00 to claim the deduction under section 80C of the act. The detail of investment is as follows:-Life Insurance 83066.00 Repayment of housing loan 77,623.00 PB-The receipt is being enclosed. The schedule of loan account is being enclosed. However, due to certain communication gap, the LD AO made an amount of Rs. 88,000.00. As this all occur due to lack of knowledge by the counselor, hence, your honor is requested to delete the addition and oblige us.
Page 6 of 7 As far as source of funding the LIC is concerned, it is submitted that it is out of cash lying with the assessee and for that cash book is already enclosed."
I have considered the facts of the case, written submissions of the appellant, Assessing Officer's remand report and rejoinder of the appellant. The deduction u/s 80C had been claimed by the appellant in respect of life insurance premium amounting to Rs.63,0667/ and repayment of the housing loan amounting to Rs.77,623/-. After having verifying the evidences placed on record, I see no justification for the addition made by the Assessing Officer. Accordingly, the addition of Rs.88,000/- made by the Assessing Officer is deleted.
In ground no.7, the appellant has objected to the addition of Rs.1,80,000/- made by the Assessing Officer on account of household withdrawals. This addition had been made by the Assessing Officer in the absence of details and explanation filed by the appellant with regard to the household withdrawals.
In the course of appeal proceedings, the AR of the appellant filed the following written submissions: "The ID AO made an addition of Rs.1,80,000.00 on account of non submission of detail of household expenses. In this regard, this is submitted that there are only two member in the family i.e. the assessee and her husband and the husband is generally being the expenses of the house however, the assessee has also incurred the amount of Rs.1,00,000.00 for household expenses and to explain the cash; the cash book is being enclosed."
I have considered the facts of the case, written submissions of the appellant, Assessing Officer's remand report and rejoinder of the appellant. I find that the total withdrawals shown by the appellant for household expenses were Rs.1,00,000/-. These withdrawals which works out to Rs.8,330/- per month in no way appears to be reasonable considering the status of the appellant. The Assessing Officer has made a very moderate estimate in respect of the household expenses. Therefore, I see no justification to interfere with the estimate of the Assessing Officer. Accordingly, since the appellant had herself shown withdrawals of Rs.1,00,000/-, the difference of Rs.80,000/- (1,80,000- 1,00,000) between her withdrawals and estimated withdrawals made by the Assessing Officer, is confirmed.”
We do not find any infirmity in the order of the ld CIT(A) in deleting the addition of Rs.627/- on account of bank interest which has been already been disclosed in the return of income and addition of Rs.88000/- for which life insurance receipts and repayment proof of housing loan are submitted. Regarding the household withdrawal, ld Assessing Officer has made an addition of Rs.180000/- which has been restricted to Rs.80000/- as assessee herself has shown the withdrawal of Rs.1 lac. In the result ground No.4 of the appeal is dismissed.