Income Tax Appellate Tribunal - Delhi
Usha Kapoor, New Delhi vs Department Of Income Tax on 15 February, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H', NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
AND
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA No. 1949/Del/2012
Assessment Year: 2008-09
Assistant Commissioner of Income Tax vs. Smt. Usha Kapoor,
Circle 36(1), New Delhi G-87, Preet Vihar, Delhi-92
(PAN:AHEPK8691A)
(APPELLANT) (RESPONDENT)
AND
CROSS OBJECTION NO. 224/Del/2012
(IN ITA NO. 1949/DEL/2012)
Assessment Year: 2008-09
Smt. Usha Kapoor, vs. ACIT, CIRCLE 36(1)
G-87, Preet Vihar, Delhi-92 New Delhi
(PAN:AHEPK8691A)
(APPELLANT) (RESPONDENT)
Department by : Sh. V.R. Sonbhadra, Sr. DR
Assessee by : Sh. R.K. Tandon, CA
Date of Hearing : 02-02-2016
Date of Order : 15-02-2016
ORDER
PER H.S. SIDHU, J.M.
The Department has filed this Appeal and Assessee has filed the Cross Objection which is emanate from the Order dated 18.01.2012 of Ld. CIT(A)-XXVII, New Delhi pertaining to assessment year 2008-09.
2. The Revenue has originally raised the following grounds in its appeal which reads as under:-
"1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in deleting addition of Rs. 2.21 Crores under section 68 of the I.T. Act, 1961.ITA NO.1949/Del/2012 & CO No. 224/Del/2012 2
2. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal."
3. The Revenue further raised the following additional grounds on 10.7.2013:
"1. On the facts and in the circumstances of the case, the ld.
CIT(A) has erred in deleting addition of interest of Rs. 9,99,175/- debited to P&L account on the unsecured loan of Rs. 2.21 Crores.
2. The Appellant craves leave to add, allow or amend any or all the ground of appeal before or during the course of hearing of the appeal."
4. The brief facts of the case are that the Assessee filed return declaring income of Rs. 74,30,567/- on 30.9.2008. The case was processed u/s. 143(1) of the I.T. Act and subsequently the case was selected for scrutiny and accordingly, Notice u/s. 143(2) dated 25.9.2009 was issued and duly served upon the assessee. Later on notice u/s. 142(1) alongwith questionnaire was issued. In response to the notice, Ld. AR of the Assessee attended the assessment proceedings and filed necessary details. After consdiering the documents, the AO determined the income of the assessee at Rs. 3,25,77,242/- by making various additions vide order dated 31.12.2010 passed u/s. 143(3) of the I.T. Act, 1961.
5. Aggrieved by the aforesaid order of the Assessing Officer dated 31.12.2010 passed u/s. 143(3), assessee filed an appeal before the Ld. First Appellate Authority, who vide impugned Order dated 18.01.2012 had decided the issues in dispute in favour of the assessee by partly allowing the appeal of the Assessee.
6. Aggrieved with the aforesaid finding of the Ld. CIT(A), Revenue is in appeal before the Tribunal.
ITA NO.1949/Del/2012 & CO No. 224/Del/2012 37. Apropos deletion of addition of Rs. 2.21 Crores made u/s. 68 of the I.T. Act.
7.1 On this issue, Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal filed by the Revenue. In connection with addition of Rs. 2,21,50,000/- is concerned, it was the main contention of the Ld. DR that assessee failed to prove the creditworthiness and genuineness of the transactions by way of adducing any corroborative evidence and therefore, the AO has rightly held that initial onus cast upon the assessee has not been satisfactorily discharged, hence, the addition was rightly made by the AO and may be upheld accordingly.
7.2 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference and the same may be upheld. He stated that relevant details of the address or PAN identity of the creditor/ subscriber were furnished to the Department alongwith copies of the shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. He further stated that AO is duty bound to investigate the creditworthiness of the creditor/ subscriber, the genuineness of the transactions and the veracity. In order to support his contention, Ld. Counsel of the Assessee has filed a Paper Book having pages 1 to 30 containing the copies of the following decisions:
i) CIT vs. Shiv Dhooti Pearls & Investment Ltd. [2015] 64 Taxmann.com 329 (Delhi) High Court of Delhi
ii) CIT-IV vs. Dwarkadhish Investment (P) Ltd. (2010) 194 Taxman 43 (Delhi) High Court of Delhi.
iii) CIT-1 vs. Apex Therm Packaging (P) Ltd. (2014) 42 Taxmann.com 473 (Gujarat) High Court of Gujarat.
iv) CIT vs. Shyam Sunder & Co. (1989) 45 Taxman 248 (Cal.) High Court of Calcutta. v) CIT vs. Metachem Industries (2001) 116 Taxman 572 (MP) High Court of Madhya Pradesh, Indore Bench. ITA NO.1949/Del/2012 & CO No. 224/Del/2012 4 vi) Veer Metals vs. ACIT (1995) 51 TTJ 132 (Delhi) - ITAT, Delhi 'D' Bench.
8. We have heard both the parties and perused the records, especially the Orders of the revenue authorities and precedents relied upon by the Ld. CIT(A) in his impugned Order and the case laws cited by the Ld. Counsel of the assessee, as aforesaid. With regard to issue relating to deletion of addition of Rs. 2,21,50,000/- made under section 68 of the I.T. Act, 1961 is concerned, we find that the reason under which the A.O. has added back the amount of unsecured loans from the three creditors to the income of the assessee is that there were cash deposits in their bank accounts, out of which various payments were made by the creditors to the assessee through cheque. The A.O., therefore, held that the assessee had failed to prove the genuineness of the transaction and the creditworthiness of creditors.
8.1 We note that the assessee had filed during the course of the assessment proceedings confirmations from all the three creditors giving their, PAN and complete address along with a copy of their bank accounts. During the course of the appellate proceedings, copies of the audited accounts (audited balance sheet and P&L account and also Form 3CD in case of Avinash Lal Sachdeva and Soma Rani) of all the three creditors were also filed to prove their creditworthiness. Further, in the case of Mrs. Soma Rani a copy of her ITR for A.Y. 2007-08 along with a copy of the assessment order u/s 143(3) for the same year was also filed. Similarly, in the case of Mrs. Preeti Sachdeva a copy of her ITR for the Assessment Year 2006-07 was also filed. In his remand report the AO has stated that this documentary evidence filed by the assessee was fresh evidence and may not be considered as the same was not filed during the course of the assessment proceedings and the assessee did not fulfill the conditions of Rule 46A of the IT Rules. The assessee on the other hand, has submitted that this evidence was produced before the AO during the course of the assessment proceedings but was not accepted by the AO as the same was not accompanied by relevant ITRs. We have observed that a sworn affidavit has also been filed by the AR of the assessee to this effect. Keeping in view this situation, it was held by the Ld. CIT(A) that the assessee was prevented by sufficient cause from ITA NO.1949/Del/2012 & CO No. 224/Del/2012 5 filing this evidence before the AO and the documentary evidence filed by the assessee being relevant to the grounds of appeal, which was rightly admitted by the Ld. CIT(A).
8.2 We observe that from the audited accounts of all the three creditors, duly signed by the relevant creditor and his CAs, it was seen that they have shown substantial sales / receipts in the Profit & Loss account alongwith interest income earned on the amount of unsecured loan advanced to the appellant. Substantial amount of net profit has also been reflected in the Profit & Loss account of all the creditors, the details of which have already been reproduced above. In the balance sheets of the creditors, amounts receivable from various persons have been duly reflected under the head sundry debtors. No enquiries have been made by the A.O. even after the copies of audited accounts were forwarded to him. So nothing has been brought on record by the A.O. to show that these audited accounts are false or fabricated. Further, no enquiries have been made from the creditors, in spite of the information about them being available on record. Therefore, without conducting any inquiry and without bringing any material on record, the documentary evidence filed by the assessee cannot be rejected. In view of the above, we note that the assessee had discharged his initial onus in respect of establishing the identity and creditworthiness of the creditors and genuineness of the transactions in respect of unsecured loans raised during the year from the following three creditors:
(a) Avinash Lal Sachdeva Rs. 83,50,000/-
(b) Soma Rani Rs. 1,01,50,000/-
(c) Preeti Sachdeva Rs. 36,50,000/-
Total Rs. 2,21,50,000/-
8.2.1 We also note that AO without making any enquiry and without bringing any material on record to the contrary, was not justified in rejecting the evidence filed by the assessee and adding back the amount of the unsecured loans to the income of the assessee. Therefore, the addition of Rs.2,21,50,000/- on this account was rightly deleted by the Ld. CIT(A) while passing a well reasoned order, which in our opinion, does not need any interference on our ITA NO.1949/Del/2012 & CO No. 224/Del/2012 6 part, hence, we uphold the order of the Ld. CIT(A) on this issue and dismiss the ground raised by the Revenue.
9. Apropos additional ground relating to deletion of addition of interest of Rs.9,99,175/- debited to P&L account on the unsecured loan of Rs. 2,21,50,000/-.
9.1 On the issue of interest of Rs. 9,99175/- raised vide additional ground, Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal filed by the Revenue. Ld. DR stated that assessee had claimed an amount of Rs. 29,68,675/- as interest expenditure in the Profit and Loss account.. Out of this an amount of Rs. 9,99,175/- was disallowed on the unsecured loan raised during the year on the ground that same were disallowed u/s. 68 of the Act. The balance amount of Rs. 19,97,500/- was disallowed by observing that the assessee has debited its income and expenditure account by interest component towards liabilities, whereas no income has been shown from investment and loan and advances given. Therefore, he stated that the balance interest amount was rightly disallowed by the AO on the ground that interest paid was on the funds which were diverted towards interest free advances and deposits and investments which did not result in any income. 9.2 On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and stated that Ld. CIT(A) has passed a well reasoned order which does not need any interference on the issue in dispute and the same may be upheld.
10. We have heard both the parties and perused the relevant records, we find that the interest amount claimed in the Profit and Loss account has been disallowed by the AO on two grounds. The amount of Rs. 9,99,175/- has been disallowed on the ground that corresponding unsecured loans on which this interest has been credited, had been held as not explained satisfactorily and were added to the income of the assessee. Since we have upheld the decision of the Ld. CIT(A) of deletion of addition, relating to unsecured loans raised during the year which have been held as explained and the addition of unsecured loans was deleted. Therefore, interest amounting to Rs.9,99,175/- was allowable to the assessee. Hence, the addition on this ITA NO.1949/Del/2012 & CO No. 224/Del/2012 7 account was rightly deleted by the Ld. CIT(A). In our considered opinion, this decision of Ld. CIT(A) does not need any interference on our part, hence, we uphold the order of the Ld. CIT(A) on this issue in dispute and dismiss the additional ground raised by the Revenue.
ASSESSEE'S CROSS OBJECTION
11. As far as Assessee's Cross Objection is concerned, the same is only supportive to the Ld. CIT(A)'s order. Since we have dismissed the Appeal of the Revenue on both the issues, as aforesaid, hence, the Cross Objection filed by the Assessee has become infructuous and dismissed as such.
12. In the result, the Revenue's Appeal as well as Assessee's Cross Objection stand dismissed.
Order pronounced in the Open Court on 15/02/2016.
Sd/- Sd/-
(L.P. SAHU) (H.S. SIDHU)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 15/2/2016
*SR BHATNAGAR*
Copy forwarded to: -
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
TRUE COPY By Order,
ASSITANT REGISTRAR