Income Tax Appellate Tribunal - Delhi
Vivek Prakash, vs Assessee on 12 January, 2012
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'H' NEW DELHI.
BEFORE SHRI A.D. JAIN AND SHRI K.G. BANSAL
I.T.A. No.821(Del)/2009
Assessment year: 2003-04
Shri Vivek Prakash, Income-tax Officer,
6314, F-6, Alok Vihar-2, Vs. Ward 48(4), New Delhi.
Sector-50, Noida.
PAN: ACYPP2870K
(Applicant) (Respondent)
Appellant by : Shri Bharat Beriwal, Advocate
Respondent by: Shri A.K. Monga, Sr. D.R.
Date of Hearing: 12.01.2012
Date of Pronouncement: 20.01.2012.
ORDER
PER K.G. BANSAL : A.M In this case, the appeal of the assessee was dismissed in limine on 16.02.2010 for non-prosecution. This order was recalled on 21.10.2011 with a view to decide the appeal on merits.
1.1 The facts of the case are that the assessee had filed his return on 03.10.2003 declaring total income of Rs. 33,75,384/-. The return was processed u/s 143(1). Thereafter, the case was taken up for assessment by issuing notice u/s 143(2) on 28.10.2004. It was found that the 2 ITA No. 821(Del)/2009 assessee is an employee of M/s Samsung Electronics India Information & Telecommunication Ltd. In this year, he purchased a plot of land admeasuring 450 sq. mts. for consideration of Rs. 60,50,750/-. The consideration included stamp duty of Rs. 4,48,250/-. He was required to state the nature and source of investment. It was submitted that a sum of Rs. 34,91,250/- was taken as loan from ICICI Bank. Further, an amount of Rs. 25,59,500/- was paid out of personal loan, gift and savings. However, no evidence was filed regarding personal loan, gift and savings. Therefore, it was held that the amount of Rs. 25,59,500/- represents investment from undisclosed sources. Accordingly, this amount was included in the total income, which was computed at Rs. 64,25,830/-. 1.2 Aggrieved by this order, appeal was filed before the CIT(Appeals)- XXX, New Delhi. Additional evidence was also filed before him, which consists of copies of agreement of sale, documents from Standard Chartered bank, income-tax return of Shri R. Srinivasan, demand draft issued by ICICI bank to Shri R. Srinivasan, statement of income of Shri R. Srinivasan, contract of Shri Prabodh Gupta with Samsung India Electronics Ltd., and gift certificate. The ld. CIT(A) admitted these 3 ITA No. 821(Del)/2009 evidences and considered the same for the purpose of the disposal of the appeal.
1.3 It has been submitted before him that when the deal was being clinched, the assessee approached Shri Prabodh Gupta to give him a personal loan. Shri Gupta agreed to the request and gave him a demand draft of the amount of Rs. 23.80 lakh. Shri Gupta gave the demand draft to him and, in turn, he handed over the same to Shri R. Srinivasan as initial consideration for sale. The ledger account in the books of Shri Gupta's company shows the amount of Rs. 23.80 lakh as business expenditure incurred by him on behalf of his client, Samsung India Electronics Ltd. (SIEL). The assessee was also earlier employed in the same organization. It was argued that the contention of Shri Prabodh Gupta regarding business expenditure does not stand scrutiny and it has been disputed by him in an on going criminal proceedings in a court of law. A certificate of gift of Rs. 2.12 lakh was also filed.
1.4 The ld. CIT(A) considered the facts of the case and submissions made before him. It is mentioned that the sources of investment were stated to be the loan of Rs. 34,91,250/- from ICICI bank Ltd., loan of Rs. 4 ITA No. 821(Del)/2009 23.80 lakh from Shri Prabodh Gupta and gift of Rs. 2.12 lakh from the brother. The assessee has not been able to file confirmation of loan from Shri Prabodh Gupta. As a matter of fact, Shri Gupta has denied to have given any loan to the assessee. In respect of the gift, the assessee has produced a gift certificate. However, this certificate does not explain the genuineness of the gift. Coming to various evidences filed in respect of Prabodh Gupta and his company, his finding is that there was some kind of dispute between the assessee and Shri Prabodh Gupta on one hand and Shri R. Srinivasan on the other. In the face of claims and counter-claims, the exact nature of the transaction is not ascertainable. It appears that the money belonging to the company has changed hands for the personal benefit of the assessee. However, as mentioned earlier, he decided the appeal on the basis of evidences on record in respect of the loan and the gift. It has been concluded that the assessee failed to furnish satisfactory evidence regarding nature and source of the loan and the gift. Therefore, the addition made by the AO in respect of these two items has been upheld.
1.5 The assessee had also claimed deduction of Rs. 4,90,950/- u/s 10. The assessee was required to file various details about the allowance 5 ITA No. 821(Del)/2009 granted by the employer and the admissibility of the deduction. The assessee did not file any evidence in regard thereto. Therefore, this claim was denied. The assessee furnished form no. 16 before the ld. CIT(A), in which the aforesaid sum of Rs. 4,90,950/- has been deducted. This form, however, does not mention the nature of allowance or the provision under which it has been deducted. Therefore, it has been held that the AO rightly disallowed the claim in absence of any evidence in support thereof.
2. Aggrieved by this order, the assessee is in appeal before us. He has taken up two grounds. Ground no. 1 is to the effect that the ld. CIT(Appeals) erred in confirming the addition of Rs. 25,59,500/- as unexplained investment in property; and ground no. 2 is to the effect that he erred in confirming the disallowance of Rs. 4,90,950/- being House Rent Allowance (HRA), which was to be excluded as per the provisions of the Act and the Rules.
3. Ground no. 1 deals with two additions sustained by the ld. CIT(A). The first one is regarding the claim that the assessee had taken loan of Rs. 23.80 lakh from Shri Prabodh Gupta. In this connection, our attention has been drawn by the ld. counsel of the assessee towards written 6 ITA No. 821(Del)/2009 submissions filed before the ld. CIT(A). The assessee had purchased a plot of land from Smt. Usha Srinivasan, wife of Shri R. Srinivasan. The aforesaid amount was paid to Shri R. Srinivasan through a bank draft no. 656998 dated 27.06.2002 drawn in his favour and taken by Shri Gupta, a family friend, by debit to his bank account. A copy of the bank account of Syastem Research Pvt. Ltd., the company of Shri Gupta, has been placed in the paper book, which shows that a sum of Rs. 23.80 lakh was withdrawn from this account on 27.06.2002. Further, a copy of the letter dated 27.06.2002 addressed by the Systems Research Pvt. Ltd. addressed to the Manager, Standard Chartered Bank, has also been filed in the paper book, in which the bank has been requested to issue pay order/ demand draft of Rs. 23.80 lakh and deliver it to Shri Rakesh Suri. It will be seen from the above facts that while the letter is addressed by authorized signatory of Systems Research Pvt. Ltd., the bank account shows the name as Syastem Research Pvt. Ltd. This seems to be a typographical error. The aforesaid company has shown this amount as expenditure incurred on behalf of the client, SIEL. Shri Gupta has submitted his record to the police and stated that the amount has been paid to Shri R. Srinivasan on account of consultancy services provided by him to his client, SIEL. Tax has also been deducted from the payment as required under the Act. This 7 ITA No. 821(Del)/2009 claim has been refuted by Shri R. Srinivasan. There are also other evidences to corroborate the recitation made by Shri R. Srinivasan. In this connection, a copy of return of Smt. Usha Srinivasan for assessment year 2003-04 has been placed on record. This return shows the sale consideration of the property at Rs. 58,02,500/-. After reducing the cost etc., income under the head "capital gains" has been worked out at Rs. 47,16,625/-. Copies of return of Shri R. Srinivasan for assessment years 2001-02, 2002-03 and 2003-04 have been placed on record. All these returns show nominal incomes. However, income by way of consultancy charges from Systems Research Pvt. Ltd. has not been shown in any of these returns. The accounts of the aforesaid company had shown that tax had been deducted from professional charges paid to Shri R. Srinivasan. However, no credit has been claimed by him in these returns. Statement of Shri Srinivasan had been recorded by Inspector, F&C, EOW, Crime Branch, New Delhi on 01.07.2005. A copy of the statement so recorded in FIR No. 253/05 has also been placed on record. The relevant portion of the statement is reproduced below:-
"Today you showed me a debit entry of Rs. 25,11,873/- in Samsung account maintained in the books of SRPL, from which a draft of Rs. 23.80 lacs has been issued to Mr. Ramanathn Srinivasan towards rendering professional 8 ITA No. 821(Del)/2009 charges and a sum of Rs. 1,31,873/- shown as payment of TDS. This is totally false and incorrect as I had no business relationship whatsoever with SRPL. I did not provide any professional service to SRPL or to Samsung to an extent of Rs. 23,80,000/-. The said draft was given by Mr. Vivek Parkash as only evidence towards purchase of my Noida residential property. You also showed a form 16A dated 30.04.2003 filed by SRPL indicating a sum of Rs. 1,31,873/- having been deducted as TDS in the name of Ramanathan Srinivasan SPL-35, Ayyapan Koli Street, Madipakkam, Channai-91. The above certificate was not received by me and the address mentioned on the same does not belong to me. It is a false declaration given by SRPL. I was showed a TDS certificate issues by SRPL on 05/07/02 for Rs. 1,31,873/- and filed with the ITO, Ward II(IV), Jaipur. This certificate does not belong to me and was not received by me. Further, the certificates does not carry any name or PAN as mandatory on it. I have shown you copy of my IT return for the assessment year 2002-03 in which I have claimed TDS which does not include the above mentioned TDS certificate issued by so-called M/s SRPL. In the assessment year 2002- 03, I have claimed a TDS deduction of only Rs. 36,267/-. This deduction was done by Nabard. No TDS deduction has been claimed in the assessment years 2001-02 and 2003-04. My wife has shown the sale of above mentioned plot in her return filed with the income-tax department for the year 2002-
03."
3.1 It is further submitted that the investigation made by Delhi Police have concluded that the letter seized from the records of Mr. Prabodh Gupta is a forged document. This further belies his contention that the payment was in respect of professional services rendered by Shri R. Srinivasan. However, it may be mentioned by us here that there is no evidence on record to prove this part of the submission. 9 ITA No. 821(Del)/2009 3.2 It is also submitted that the activities of Shri Gupta, as marketing agent of SIEL, are governed by a contract, which provides for monthly retainership fee and reimbursement of any other expenditure incurred by him for SIEL. In respect of such reimbursement, written previous approval has to be sought, a debit note has to be raised and thereafter the payment is made to him. Shri Gupta has neither taken the approval nor raised the debit note nor any such payment has been made to him by SIEL. Again, there is no evidence in respect of any of the aforesaid averments except that annual contract 2002 dated 31.01.2002 has been placed on record.
3.3 In view of the aforesaid facts, it is argued that the amount received by Shri R. Srinivasan from Systems Research Pvt. Ltd. was not in connection with any professional services rendered by him but it was a loan advanced by Shri Gupta to the assessee.
4. In reply, the ld. senior DR placed strong reliance on the findings recorded by the ld. CIT(Appeals) in paragraph no. 6. Although these findings have been recorded earlier, it would be appropriate to record the 10 ITA No. 821(Del)/2009 same even at the cost of repetition. It has been held that the loan remains unexplained in view of the fact that there is no confirmation from Shri Prabodh Gupta. In fact, he has denied having given any loan to the assessee. Gupta's bank account proves his creditworthiness but such proof is of no consequence as he has denied giving any loan to the assessee.
5. We have considered the facts of the case and submissions made before us. The facts are that in the course of appellate proceedings before the ld. CIT(Appeals), the assessee claimed that he has taken a loan of Rs. 23.80 lakh from Shri Prabodh Gupta. It is the case of the assessee that a bank draft of equivalent amount was obtained by Shri Gupta from his bankers, Standard Chartered Bank. This bank draft was handed over to the assessee. However, there is no proof of handing over the bank account by Shri Gupta to the assessee. The assessee thereafter handed over this bank draft to Shri R. Srinivasan as a part of purchase consideration of a plot of land. The assessee has not obtained or filed any confirmation of loan from Shri Gupta. It appears that enquiry was carried out by the police in some criminal case, the details of which are not on record. In this enquiry, Shri Gupta submitted that he had paid the 11 ITA No. 821(Del)/2009 amount to Shri R. Srinivasan in connection with the professional services. Tax was deducted at source from such payment as required under the law. The amounts have been entered in the books as professional charges and the tax deducted at source. Police also made enquiries with Shri R. Srinivasan. He denied that the draft was issued to him for rendering professional services and stated that he did not have any business relationship with SRPL. Rendering of services to SIEL was also denied. The draft was stated to have been given to him by the assessee as advance towards purchase of Noida property. The receipt of TDS certificate was denied and the address mentioned in the certificate was also denied. It was stated that the certificate of Rs. 1,31,873/- dated 05.07.2002 filed with Income-tax Officer, Ward 2, Jaipur did not belong to him and was not received by him. This certificate did not carry any name or PAN. He has not claimed credit for this certificate as the credit claimed in assessment year 2002-03 amounts to Rs. 36,267/- only in respect of tax deducted by NABARD. He has not claimed any credit for TDS in assessment years 2001-02 and 2002-03. His wife has shown the sale of the property in the return for assessment year 2002-03. It may be mentioned here that a copy of the aforesaid TDS certificate has not been filed by the assessee. The copy of the demand draft is also not on record. 12 ITA No. 821(Del)/2009 The question is-whether, the assessee has discharged his onus regarding nature and source of the aforesaid amount of Rs. 23.80 lakh paid to Shri R. Srinivasan as part-investment in the plot of land?.
5.1 Before proceeding with the determination of the issue, we may examine the cases relied upon by the ld. counsel for the assessee. In the case of CIT Vs. Divine Leasing & Finance Ltd., (2008) 29 ITR 268 (Del), regarding the burden of a company regarding receipt of capital contribution, it is mentioned that-"In this analysis, a distillation of the precedents yields the following propositions of law in the context of Section 68 of the IT Act. The assessee has to prima facie prove (1) the identity of the creditor/subscriber; (2) the genuineness of the transaction, namely, whether it has been transmitted through banking or other indisputable channels; (3) the creditworthiness or financial strength of the creditor/subscriber. (4) If relevant details of the address or PAN identity of the creditor/subscriber are furnished to the Department along with copies of the Shareholders Register, Share Application Forms, Share Transfer Register etc. it would constitute acceptable proof or acceptable explanation by the assessee. (5) The Department would not be justified in drawing an adverse inference only because the creditor/subscriber fails or neglects to respond to its notices; (6) 13 ITA No. 821(Del)/2009 the onus would not stand discharged if the creditor/subscriber denies or repudiates the transaction set up by the assessee nor should the AO take such repudiation at face value and construe it, without more, against the assessee. (7) The Assessing Officer is duty-bound to investigate the creditworthiness of the creditor/subscriber the genuineness of the transaction and the veracity of the repudiation." The ld. counsel has placed reliance on observations numbered as 5, 6 and 7 to the effect that the department would not be justified in drawing an adverse inference only because the subscriber fails or neglect to respond to its notices. The onus would not stand discharged if the subscriber denies or repudiates the transaction set up by the assessee nor the AO take such repudiation at the face value and construe it, without more, against the assessee. A great emphasis has been laid that the repudiation should not be taken on face value and without some thing more it should not be taken against the assessee. The AO is duty bound to investigate the creditworthiness of the subscriber, genuineness of the transaction and veracity of the repudiation.
5.2 Further, reliance has been placed on the decision in the case of CIT Vs. Winstral Petrochemicals P. Ltd. , (2011) 330 ITR 603 (Del), in 14 ITA No. 821(Del)/2009 which the ratio in the case of Divine Leasing & Finance Ltd. (supra) in respect of seven points mentioned above has been repeated. 5.3 Reliance has also been placed on the decision in the case of Kapurchand Shrimal Vs. CIT, 131 ITR 451 (A.P), in which it is mentioned that it is well known that an appellate authority has the jurisdiction as well as the duty to correct all errors in the proceedings under appeal and to issue, if necessary, appropriate directions to the authority against whose decision the appeal is preferred to dispose off the whole or any part of the matter afresh unless forbidden from doing so under the statute. It is agitated that the Tribunal has jurisdiction as well as the duty to correct all errors in the proceedings before the first appellate authority.
5.4 Reliance has also been placed on the decision in the case of CIT Vs. Value Capital Services (P) Ltd., 307 ITR 334 (Del) regarding share application money, in which it has been mentioned that various decisions rendered by this court from time to time are to the effect that if the existence of the applicant is proved, normally no further enquiry is necessary. It is further mentioned that what is clinching is the additional 15 ITA No. 821(Del)/2009 burden on the revenue. It must show that even if the applicant does not have the means to make the investment, the investment made by the applicant actually emanated from the coffers of the assessee-company so as to enable it to be treated as its undisclosed income. On the basis of this decision, it is argued that the revenue must show that the investment made by the assessee has come out of the coffers of the assessee. Reliance has also been placed on the decision of 'F' bench of the Delhi Tribunal in the case of Shri Pawan Kumar Gupta in ITA No. 4690(Del)/2009 for assessment year 2001-02 dated 14.06.2010, a copy of which has been placed before us, in which it has been held that where the assessee was not afforded any opportunity of rebuttal or cross-examination, the addition was not valid. In this case, the addition was made on the basis of statement of a third party, which was not confronted to the assessee for rebuttal and no opportunity was granted to him to cross-examine the deponent in spite of repeated requests by the assessee to the AO in this behalf.
6. Reverting to the facts of this case, the claim of the assessee is that he received a loan of Rs. 23.80 lakh from Shri Prabodh Gupta by way of a bank draft. This bank draft was handed over to Shri R. Srinivasan in 16 ITA No. 821(Del)/2009 connection with purchase of a plot of land situated at Noida. One thing is undisputed that the whole of the consideration for purchase of the plot of land has been paid to Smt. Usha Srinivasan, a part of which is stated to have been paid through Shri R.Srinivasan, the husband, by raising a loan from Shri Prabodh Gupta. This means that the amount of Rs. 23.80 lakh has also been paid to Smt. Usha Srinivasan. Section 69A provides that where in any financial year, the assessee makes investments which are not recorded in the books of account, if any, maintained by him for any source of income, and the assessee offers no explanation about the nature and source of the investments or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the value of the investments may be deemed to be the income of the assessee of such financial year. This is a case where the revenue has proved that investment of Rs. 23.80 lakh has also been made in purchase of the plot of land. The assessee has also furnished an explanation that this money has been received as loan by way of bank draft from Shri Prabodh Gupta. The only evidence to bring Shri Prabodh Gupta into picture is that the amount has been debited in the bank account of his company. This evidence, according to us, does not prima facie lead to a conclusion that Shri Prabodh Gupta had lent Rs. 23.80 lakh to the assessee. His books show that this amount was paid to 17 ITA No. 821(Del)/2009 Shri R. Srinivasan in lieu of professional services and tax was deducted at source. The bank draft was drawn in the name of Shri R. Srinivasan and not in the name of Smt. Usha Srinivasan. It is explained that Shri R.Srinivasan was holding power of attorney and payment to him amounted to the payment to the seller. This may be true. But there is no prima facie evidence that the bank draft was initially handed over to the assessee, who in turn, handed over the same to Shri R. Srinivasan. On the contrary, the books of Shri Gupta's company, maintained in the regular course of business, show that the amount was paid as professional charges to Shri R. Srinivasan. The amount has been collected by Shri R. Srinivasan. He has also submitted before the police that he has not rendered any service to Systems Research Pvt. Ltd. or SIEL There is no independent evidence in this regard from SIEL. In absence of this evidence, the books of Systems Research Pvt. Ltd., maintained in the regular course of business, will have to be taken as prima facie correct. This means that the amount was paid to Shri R. Srinivasan in lieu of services rendered by him to Systems Research Pvt. Ltd. or SIEL. It is also a matter of fact that Shri R. Srinivasan has not claimed credit for the tax deducted at source. There could be many reasons for that, the main being that offering the income for taxation would have led to additional tax 18 ITA No. 821(Del)/2009 burden on him even after getting the credit of the TDS amount. Therefore, it is held that the explanation tendered by the assessee and evidence enclosed in respect thereof do not prove on a prima facie basis that the money was received by the assessee from Shri Gupta as a loan. Accordingly, the burden, which is initially cast on the assessee, does not stand shifted to the revenue in the light of facts on record. The assessee has relied on the decision in the case of Divine Leasing & Finance Ltd. and Winsteral Petrochemicals (P) Ltd. These decisions are in respect of monies received for allotment of shares. When shares are allotted in lieu of the money subscribed by a person, he becomes entitled to become the member of the company, which thereby grant him the right to vote in the general body meeting and to receive dividend. Thus, there is a quid-pro- quo. Such transaction is qualitatively different from the transaction of loan and in particular the alleged transaction of a loan in this case. There is no stipulation to pay any interest. There is no stipulation of time for return of loan. Further, what is even more curious is that the loan has not been returned to Shri Gupta till now, nor he has demanded the return of loan. The loan has become barred by limitation. It is inconceivable that any prudent person would advance loan and thereafter forget about it. These circumstances lend credence to the view that the money was paid 19 ITA No. 821(Del)/2009 by him to Shri Srinivasan for rendering services and, therefore, the bank draft was made in that name. If it had been loan, he would have at least made some attempt to recover the money with or without interest by pursuation or through due process of law. None of these things has happened. Further, the books of account of Shri Gupta constitute a more credible evidence compared to the statement of Shri R. Srinivasan furnished to the police. The statement is self-serving as it helps him to avoid payment of tax on professional charges received by him. Therefore, we are of the view that his statement cannot be relied upon. There is one more aspect of the question. At no point of time the assessee has offered or demanded examination of Shri Gupta or Shri Srinivasan. The latter has not been produced before the AO for verification of his statement before the police. We are of the view that these circumstances show that the assessee has something to hide. Therefore, it is held that the assessee has not furnished satisfactory explanation about the aforesaid investment. Accordingly, we do not find any error in the order of the ld. CIT(Appeals) which requires correction from us. Although the question is really one of fact, yet we may add that the decision in the case of Value Capital Services (P) Ltd. (supra) was rendered in connection with capital contribution, a transaction which is qualitatively different from the transaction of loan. 20 ITA No. 821(Del)/2009 The assessee earned substantial income of Rs. 33,75,384/-as admitted in the return. He could have income from undisclosed sources which could have been used for investment. However, on the facts of this case since the primary burden u/s 69 has not been discharged, it was not necessary for the revenue to show by way of a positive evidence that the money flowed from the coffers of the assessee.
7. The second part of ground no. 1 is in relation to the gift of Rs. 2,12,000/- from the brother. The only evidence filed in this regard is a copy of certificate from Shri Mayank Prakash. The certificate states that this is to confirm that he gifted Rs. 2.5 lakh in January, 2002 to his brother Shri Vivek Prakash. He is a permanent resident in the U.K. The finding of the ld. CIT(Appeals) is that this certificate does not lead to even a prima facie conclusion that the gift is genuine. In this connection, the assessee has relied on various submissions made in respect of loan from Shri Prabodh Gupta. The ld. senior DR has relied on the finding of the ld. CIT(Appeals). Having considered the rival submissions, we are of the view that this certificate does not prima facie prove the capacity of the donor to gift the amount and genuineness of the transaction. The extent of the income and wealth of the donor are not mentioned. There is also no 21 ITA No. 821(Del)/2009 evidence in this behalf. The account from which the gift is stated to have been made is not mentioned. Therefore, while the identity may be taken as proved, nothing else has been proved even on a prima facie basis. Therefore, the discussion made in respect of loan and the conclusion arrived in respect thereof apply with equal force in respect of the gift also. Accordingly, it is held that the assessee has failed to discharge the initial burden cast on him about the genuineness of the loan.
8. The result of aforesaid discussion is that ground no. 1 is dismissed.
9. Ground no. 2 is in relation to the claim of the assessee that HRA of Rs. 4,90,950/- is exempt from tax.
9.1 In this connection, it is mentioned in the assessment order that the assessee received an allowance of Rs. 4,90,950/- from the employer, which is claimed to be exempt from tax. In the course of assessment proceedings, the assessee was required to file the details of allowance received by him and state how the allowance is tax-exempt. Although sufficient time was allowed to the assessee, the details were not filed to substantiate the claim. In view of these facts, the claim has been denied. 22 ITA No. 821(Del)/2009 9.2 Before the ld. CIT(Appeals), the assessee filed form no. 16. This form shows deduction of a sum of Rs. 4,90,950/- from the salary income for the purposes of computation of income and deduction of tax at source from time to time. However, the nature of the allowance and evidence that it has to be deducted from the salary income have not been produced. Therefore, the disallowance made by the AO has been upheld.
10. Before us, the ld. counsel referred to page nos. 51 and 52 of the paper book. These pages contain a letter dated 31.12.2002 from Samsung Electronics India Information and Telecommunication Ltd. informing the assessee that he has been promoted to the post of Vice President, Sales and Marketing. The total salary has been fixed at Rs. 3,00,324/- with effect from 01.01.2003 against the existing salary of Rs. 2,46,211/-. It appears that the assessee is also entitled to incentive depending upon the targets achieved. The salary earlier consisted of conveyance allowance and HRA @ Rs. 50,000/- p.m. and Rs. 42,250/- p.m. While conveyance allowance has been dispensed with from 01.01.2003, the house rent allowance has been increased to Rs. 55,000/- p.m. from this date. Before the ld. CIT(Appeals), it was submitted that the return was filed on the basis of 23 ITA No. 821(Del)/2009 form no. 16 issued by the erstwhile employer. The assessee filed the computation of the deduction admissible in respect of HRA, according to which the amount of Rs. 4,90,950/- was not to be included in the total income. In view of these evidences, it is claimed that the assessee has rightly claimed the deduction.
10.1 In reply, the ld. senior DR submitted that the exemption is based upon three sums, the details of which are given on page no. 53 of the paper book. The first sum is the house rent allowance received in this year, which amounts to Rs. 5,45,200/-. The second sum is the house rent actually paid, which is stated to be Rs. 6.00 lakh p.a. The third sum is the excess of rent paid over 10% of the salary, which is Rs. 4,90,950/-. The least of these sums is tax-exempt. In this case, no evidence has been filed by the assessee to show that any rent was paid by him. In absence of actual payment of rent, no deduction is admissible to the assessee. The assessee has neither filed such evidence before lower authorities nor before the Tribunal. Therefore, it is urged that no exemption is available to the assessee u/s 10(13A).
24 ITA No. 821(Del)/2009
12. We have considered the facts of the case and submissions made before us. The facts are that the assessee claimed exemption of Rs. 4,90,950/- u/s 10(13A) of the Act. We have already discussed the method of computation of the exemption. Although this exemption was allowed by the employer, the same is subject to scrutiny by the AO and the ld. CIT(Appeals). The assessee has not produced any evidence till the date of hearing of this appeal to show that he actually paid rent of Rs. 6.00 lakh or any other amount in this year. What is surprising is that even a copy of the bank account has not been filed to show the payment(s). The certificate issued by the employer does not show the nature of allowance or the method on the basis of which exemption has been computed at Rs. 4,90,950/-. Therefore, it is clear that the assessee has not been able to substantiate his claim regarding the exemption of the aforesaid amount in any manner whatsoever. Accordingly, it is held that the lower authorities were right in denying the claim.
13. In the result, the appeal is dismissed.
(A.D. Jain) (K.G. Bansal)
Judicial Member Accountant Member
SP Satia
25 ITA No. 821(Del)/2009
Copy of the order forwarded to:-
Shri Vivek Prakash, Noida.
ITO, Ward 48(2), New Delhi.
CIT(A)
CIT,
The D.R., ITAT, New Delhi. Assistant Registrar.