Ram Kishore sapra, New Delhi v. ITO, New Delhi

ITA 2115/DEL/2010 | 2006-2007
Pronouncement Date: 07-07-2010 | Result: Allowed

Appeal Details

RSA Number 211520114 RSA 2010
Bench Delhi
Appeal Number ITA 2115/DEL/2010
Duration Of Justice 2 month(s) 1 day(s)
Appellant Ram Kishore sapra, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 07-07-2010
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted F
Tribunal Order Date 07-07-2010
Date Of Final Hearing 07-07-2010
Next Hearing Date 07-07-2010
Assessment Year 2006-2007
Appeal Filed On 06-05-2010
Judgment Text
I.T.A. NO.2115 & 2116 /DEL/10 1/13 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F NEW DELHI) BEFORE SHRI C.L. SETHI JUDICIAL MEMBER AND SHRI A.K. GARODIA ACCOUNTANT MEMBER I.T.A. NO.2115 & 2116 /DEL/2010 ASSESSMENT YEAR : 2006-07 SHRI RAM KISHORE SAPRA ITO S-39 OKHLA INDL. AREA WARD-22 (4) PHASE-II NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO.ABIPS-9136-G APPELLANT BY : SHRI RAM KISHORE SAPRA. RESPONDENT BY : SHRI HK LAL SR. DR. ORDER PER A.K. GARODIA AM: BOTH THESE APPEALS ARE FILED BY THE ASSESSEE WHICH ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF LD CIT(A) XXVI NEW DELHI D ATED 10.6.2010 AND 11.6.2010 FOR THE SAME ASSESSMENT YEAR I.E. ASSESSM ENT YEAR 2006-07. IN ONE APPEAL I.E. IN I.T.A. NO.2115/DEL/2010 THE GRIEVAN CE OF THE ASSESSEE IS REGARDING SOME DISALLOWANCES/ADDITIONS MADE BY THE ASSESSING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143 (3) WHERE AS IN THE REMAINING APPEAL I.E. IN I.T.A. NO.2116/DEL/2010 THE GRIEVANCE OF T HE ASSESSEE IS REGARDING PENALTY OF RS.5.83 LAKHS IMPOSED BY THE ASSESSING O FFICER U/S 271D OF THE INCOME TAX ACT 1961. FOR THE SAKE OF CONVENIENCE BOTH THESE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER. 2. FIRST WE TAKE UP THE APPEAL NO.2115/DEL/2010. . I.T.A. NO.2115 & 2116/DEL/10 2/13 3. GROUND NO.1 OF THE APPEAL READS AS UNDER:- THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN CON FIRMING THE DISALLOWANCE OF BUSINESS LOSS OF RS.45 289/- CLAIME D BY THE ASSESSEE IN ITS RETURN ON ACCOUNT OF EXPENSES INCURRED BY IT C ONCLUDING IT TO BE UNEXPLAINED EXPENDITURE U/S 69C. IT IS PRAYED THAT THE DISALLOWANCE OF RS.45 289/- BE DELETED AS THIS LOSS IS ON ACCOUNT O F GENUINE BUSINESS EXPENSES INCURRED BY THE ASSESSEE TOWARDS BUSINESS BEING RUN BY HIM SINCE LAST MANY YEARS. 4. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS CLAIMED LOSS OF RS.45 289/- IN THE RET URN OF INCOME. THE ASSESSING OFFICER ASKED THE ASSESSEE TO PRODUCE P&L A/C AND B OOKS OF ACCOUNTS TO JUSTIFY THE CLAIM. IT IS OBSERVED BY THE ASSESSING OFFICER THAT IN REPLY THE ASSESSEE HAS FURNISHED A SELF GENERATED COPY OF P&L A/C OF M/S E LECTRONICS SYSTEM(SOFTWARE DEVELOPMENT DIVISION) WHEREIN THE ASSESSEE HAS CLA IMED TO HAVE PAID SALARIES TO DEVELOPMENT ENGINEER AND SALES ASSISTANT AMOUNTI NG TO RS.45 000/- AND A SUM OF RS.289/- AS MISC. EXPENSES. IT IS ALSO OBSE RVED BY THE ASSESSING OFFICER THAT THERE WAS NO SALE OR PURCHASE MADE DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE ASS ESSEE IS NOT HAVING ANY OPENING AND CLOSING STOCK. IT IS ALSO OBSERVED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS NOT PROVIDED ANY SERVICES TO ANY PARTY DURING THE YEAR. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE IS NOT MAINTAINING ANY OFFICE AND IS NEITHER REGISTERED UNDER SALES TAX NOR UNDER SERVICE TAX. THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT IN THE LIGH T OF THESE FACTS THERE IS NO JUSTIFICATION OF ANY BUSINESS EXPENSES INCLUDING SA LARY PAYMENT. THE ASSESSING OFFICER SAYS THAT THERE IS NO REASON TO HIRE SERVIC ES OF DEVELOPMENT ENGINEER AND SALES ASSISTANT FOR A CONTINUOUS PERIOD OF FOUR MONTHS WHEN THE ASSESSEE IS NEITHER MAINTAINING ANY OFFICE NOR IT IS HAVING ANY STAFF. THEREAFTER IT IS OBSERVED BY THE ASSESSING OFFICER THAT FROM THE BANK STATEME NT OF THE ASSESSEE NO SALARY . I.T.A. NO.2115 & 2116/DEL/10 3/13 PAYMENT OF ANY TIME TO ANY EMPLOYEE IS VISIBLE. TH E ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF VARIOUS EXPENDITU RE CLAIMED UNDER THE HEAD BUSINESS AND PROFESSION. THEREAFTER IT IS NOTED BY THE ASSESSING OFFICER THAT NO REPLY WAS SUBMITTED BY THE ASSESSEE AND THEREAFTER THE ASSESSING OFFICER HAS ASSESSED THE BUSINESS INCOME OF THE ASSESSEE AT RS. NIL AND DISALLOWED THE CLAIM OF THE ASSESSEE REGARDING BUSINESS LOSS OF RS .45 289/-. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A). IN PARA 5 OF HIS ORDER LD CIT(A) HAS OBSERVED THAT THE CLAIM OF THE ASSESSEE REGARDING BUSINESS LOSS CANNOT BE DISALLOWED ON THE BASIS THAT THERE W AS CLAIM FOR FOUR MONTHS ONLY. IT IS SPECIFICALLY OBSERVED BY THE LD CIT(A) IN THI S PARA OF HIS ORDER THAT THERE IS NO EVIDENCE ON RECORD THAT THE BUSINESS OF THE ASSE SSEE HAS INDEED CLOSED DOWN. IT IS ALSO OBSERVED BY HIM THAT NO ADVERSE I NFERENCE CAN BE DRAWN REGARDING PRODUCTION OF SELF GENERATED BOOKS OF ACC OUNTS OF M/S ELECTRONICS SYSTEMS AS LONG AS NO DEFECT IN THE ENTRIES ARE PO INTED OUT. IT IS ALSO OBSERVED BY HIM THAT THIS ASPECT THAT THE ASSESSEE DID NOT M AINTAIN ANY OFFICE ALSO CANNOT GO AGAINST THE ASSESSEE. AFTER MAKING THESE OBSERVA TIONS LD CIT(A) HAD REJECTED THE CLAIM OF THE ASSESSEE ON THIS BASIS AL ONE THAT AFTER GOING THROUGH THE BOOKS OF ACCOUNTS IT WAS REVEALED THAT THE BANK ST ATEMENT OF THE ASSESSEE DID NOT MANIFEST ANY SALARY PAYMENT. IT IS FURTHER OBSE RVED BY HIM THAT DURING APPELLATE PROCEEDINGS NO ARGUMENT HAS BEEN ADVANCE D WHICH COULD NEGATE THE STAND TAKEN BY THE ASSESSING OFFICER ON THIS ISSUE THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF THESE EXPENSES. HE CONFIRMED THE ASSESSMENT ORDER ON THIS ISSUE AND NOW THE ASSESSEE IS IN FURTHER APPEA L BEFORE US. 5. IT IS SUBMITTED BY THE ASSESSEE HIMSELF BEFORE U S THAT HE WAS NOT HAVING ANY ASSISTANCE FROM ANY ACCOUNTANT AND BECAUSE OF H IS IGNORANCE HE COULD NOT PRESENT HIS CASE PROPERLY BEFORE THE AUTHORITIES BE LOW AND HENCE THE MATTER MAY BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFIC ER FOR FRESH DECISION AND IF SO RESTORED THE ASSESSEE WILL MAKE SUFFICIENT EFFORTS TO PRESENT HIS CASE PROPERLY BEFORE THE ASSESSING OFFICER. . I.T.A. NO.2115 & 2116/DEL/10 4/13 6. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF AUT HORITIES BELOW. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GON E THROUGH THE MATERIAL AVAILABLE ON RECORD AND WE FIND THAT LD CIT(A) HAS FOUND THAT ALL OTHER ISSUES WAS IN FAVOUR OF THE ASSESSEE AND HE HAS CONFIRMED THE ASSESSMENT ORDER ON THIS BASIS ALONE THAT THE ASSESSEE COULD NOT EXPLAI N THE SOURCE OF EXPENSES STATED TO HAVE BEEN INCURRED BY HIM. THIS IS ADMIT TED POSITION THAT THE ASSESSEE IS A RETIRED MILITARY MAN AND HENCE IN THE INTEREST OF JUSTICE WE FEEL THAT THE ASSESSEE MAY BE ALLOWED ONE MORE OPPORTUNITY TO PRE SENT HIS CASE BEFORE THE ASSESSING OFFICER AND THEREFORE WE SET ASIDE THE O RDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF TH E ASSESSING OFFICER FOR A FRESH DECISION. THE ASSESSEE SHOULD PRESENT HIS CASE PROP ERLY BEFORE THE ASSESSING OFFICER AND AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE THE ASSESSING OFFICER SHOULD DECIDE THIS ISSUE AFRE SH. THIS GROUND OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 8. GROUND NO.2 OF THE APPEAL READS AS UNDER:- THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT GIVING CREDIT FOR RS.92 000/- BEING PURCHASE PRICE OF 7536.845 UNITS IN CALCULATING SHORT TERM PROFIT OF RS.1 55 262/- ON SALE PURCHASE OF UN ITS OF MUTUAL FUNDS WHEREAS THE SALE CONSIDERATION OF THESE UNITS HAS B EEN TAKEN INTO CONSIDERATION FOR REACHING AT PROFIT OF RS.1 55 262 /-. IT IS PRAYED THAT THE PURCHASE PRICE OF RS.92 000/- AS PER MUTUAL FUND ST ATEMENT BE DEDUCTED FROM SALE PRICE TO ARRIVE AT THE CORRECT FIGURE OF SHORT TERM CAPITAL AND SHORT TERM CAPITAL GAIN BE CALCULATED AT FIGURE OF RS.63 262/-. 2A. THAT THE LD CIT(A) HAS ERRED IN LAW AND ON FACT S IN TREATING THE MUTUAL FUND STATEMENT AND CORRECT COMPUTATION OF CAPITAL G AIN AS ADDITIONAL EVIDENCE AND IT AS THERE ARE DOCUMENTS TO ARRIVE AT THE CORRECT TAXABLE INCOME WHICH CIT(A) IS LEGALLY BOUND TO ARRIVE AT. IT IS PRAYED THAT THE . I.T.A. NO.2115 & 2116/DEL/10 5/13 SHORT TERM CAPITAL GAIN BE COMPUTED CORRECTLY AFTER DEDUCTING PURCHASES AGAINST THE SALES OF MUTUAL FUND UNIT. 9. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO.3 OF THE ASSESSMENT ORDER THAT FROM THE PER USAL OF BANK STATEMENT AND OTHER DETAILS FILED BY THE ASSESSEE IT WAS OBSERVE D THAT THE ASSESSEE WAS DEALING IN MUTUAL FUNDS ETC. THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS EARNED SHORT TERM CAPITAL GAIN AT RS.1 15 262/- ON PURCHASE AND SALE OF MUTUAL FUNDS UNITS AND THIS INCOME WAS NOT OFFERED FOR TAXATION BY THE ASSESSEE. THE ASSESSING OFFICER MADE ADDITION OF THIS AMOUNT IN TOTAL INCOME OF THE ASSESSEE UNDER THE HEAD INCOME FROM SHORT TERM CAPI TAL GAIN. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A). BEFO RE LD CIT(A) IT WAS THE SUBMISSION OF THE ASSESSEE THAT WHILE WORKING OUT T HIS AMOUNT OF SHORT TERM CAPITAL GAIN AT RS.1 15 262/- THE ASSESSEE HAD MIS SED OUT THE PURCHASE OF 7536.845 UNITS ON 1.8.2005 FOR RS.92 000/- WHEREAS AGGREGATE SALES OF UNITS INCLUDED THESE UNITS. THE ASSESSEE ALSO FURNISHED REVISED CHART BEFORE LD CIT(A) AND ALSO FURNISHED THE MUTUAL FUND STATEMENT . THESE TWO DOCUMENTS WERE NOT CONSIDERED BY THE LD CIT(A) ON THIS BASIS THAT THE ASSESSEE IS NOT COMPLYING WITH RULE 46A AND HENCE THESE DOCUMENTS C ANNOT BE CONSIDERED. HE CONFIRMED THE ASSESSMENT ORDER ON THIS ISSUE AND NO W THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 10. IT WAS SUBMITTED BY THE ASSESSEE BEFORE US THAT THE CAPITAL GAIN OF THE ASSESSEE HAS TO BE COMPUTED AFTER DEDUCTING THE COS T OF ACQUISITION OF THE UNITS SOLD AND HENCE THE ASSESSEE HAS TO BE ALLOWED DEDUC TION REGARDING COST OF ACQUISITION OF 7536.84 UNITS BEING RS.92 000/- SINC E THE SALE CONSIDERATION OF THESE UNITS IS ALREADY CONSIDERED. 11. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. . I.T.A. NO.2115 & 2116/DEL/10 6/13 12. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT SHORT TERM CAPITA L GAIN WAS NOT DISCLOSED BY THE ASSESSEE IN THE RETURN OF INCOME AND IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS SUBMITTED A WORKING REGARDING SHOR T TERM CAPITAL GAIN. BEFORE LD CIT(A) IT WAS THE CLAIM OF THE ASSESSEE THAT TH ERE IS SOME MISTAKE IN SUCH COMPUTATION OF SHORT TERM CAPITAL GAIN AND WHILE SA LE PROCEEDS OF 7536.845 UNITS WAS CONSIDERED ITS COST OF ACQUISITION WAS NOT CON SIDERED BY MISTAKE. IT WAS SUBMITTED THAT THESE UNITS WERE ACQUIRED ON 1.8.200 5 FOR RS.92 000/-. IF THIS IS A FACT THAT WHILE WORKING OUT THE SHORT TERM CAPITAL GAIN SALE PROCEEDS OF THESE UNITS WERE CONSIDERED AND ITS COST OF ACQUISITION W AS LEFT OUT THEN IT IS APPARENT MISTAKE WHICH COULD BE RECTIFIED EVEN U/S 154 OF TH E ACT. HENCE WE FEEL THAT IN THE INTEREST OF JUSTICE THIS MATTER SHOULD ALSO GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION AFTER EXAMINING THESE CONTENTIONS OF THE ASSESSEE. WE THEREFORE SET ASIDE THE ORDER OF THE LD CIT(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER FO R A FRESH DECISION AFTER EXAMINING THIS CONTENTION OF THE ASSESSEE. THE ASS ESSEE HAS TO FURNISH ALL NECESSARY FACTS AND EVIDENCES BEFORE THE ASSESSING OFFICER IN THIS REGARD AND THEREAFTER THE ASSESSING OFFICER SHOULD PASS NECESS ARY ORDER AS PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO TH E ASSESSEE. GROUND NO.2 OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 13. GROUND NO.3 OF THE APPEAL READS AS UNDER:- THAT THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING DISALLOWANCE OF RS.1M85M000/- AS COST OF IMPROVEMEN T ON PROPERTY 65-R NEW COLONY GURGAON BEFORE COMPUTING CAPITAL GAIN O N SALE OF THIS PROPERTY. 14. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED B Y THE ASSESSING OFFICER ON PAGE NO.4 OF THE ASSESSMENT ORDER THAT THE ASSESSEE HAS NOT DECLARED ANY CAPITAL GAIN IN THE RETURN OF INCOME. IT IS FURTHER NOTED BY THE ASSESSING OFFICER . I.T.A. NO.2115 & 2116/DEL/10 7/13 THAT FROM THE BANK ACCOUNTS OF THE ASSESSEE IT WAS NOTED THAT HUGE AMOUNT OF TRANSACTIONS ARE APPEARING WHICH ARE NOT COMMENSURA TE WITH THE INCOME SHOWN BY THE ASSESSEE. IT IS FURTHER NOTED BY THE ASSESSI NG OFFICER THAT IN THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE HAS STATED TH AT DURING THIS YEAR THE ASSESSEE HAS SOLD TWO PROPERTIES. THERE IS NO DISPU TE REGARDING SALE OF ONE PROPERTY FOR WHICH CAPITAL GAIN WAS ASSESSED BY THE ASSESSING OFFICER AT RS.2 24 499/- BECAUSE THIS WAS DELETED BY THE LD CI T(A) ON THIS BASIS THAT THE ASSESSEE WAS NOT THE OWNER OF THIS PROPERTY BECAUSE THIS PROPERTY BELONGS TO HIS WIFE. REGARDING SALE OF SECOND PROPERTY THE ASSESS ING OFFICER ASSESSED LONG TERM CAPITAL GAIN OF RS.4 45 780/-. IN CONNECTION W ITH LONG TERM CAPITAL GAINS ON SALE OF THIS PROPERTY IT WAS A CLAIM OF THE ASSESS EE THAT HE HAS INCURRED EXPENSES OF RS.1.85 LAKHS TOWARDS COST OF IMPROVEME NT. THE ASSESSEE HAS FURNISHED A BILL OF RS.1.85 LAKHS OF M/S VIJAY MALI K & CO. DATED 15.12.1994. DEDUCTION WAS NOT ALLOWED BY THE ASSESSING OFFICER REGARDING THIS COST OF IMPROVEMENT IN PROPERTY AND CAPITAL GAIN WAS COMPUT ED BY THE ASSESSING OFFICER AFTER DISREGARDING THIS COST OF IMPROVEMENT STATED TO HAVE BEEN INCURRED BY THE ASSESSEE TO THE EXTENT OF RS.1.85 LAKHS. THE ASSESS EE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 15. IT IS SUBMITTED BY THE ASSESSEE BEFORE US THAT THIS ISSUE HAS BEEN DECIDED BY LD CIT(A) AGAINST THE ASSESSEE ON THIS BASIS THA T THE ASSESSEE COULD NOT FURNISH ANY EVIDENCE OF PAYMENT MADE BY HIM TOWARDS COST OF IMPROVEMENT. IT IS SUBMITTED THAT EVEN IF THE PAYMENT WAS MADE BY THE ASSESSEE AFTERWARDS DEDUCTION HAS TO BE ALLOWED ON ACCOUNT OF COST OF I MPROVEMENT IF IT IS INCURRED BY THE ASSESSEE BEFORE THE SALE OF PROPERTY AND HENCE THIS MATTER MAY ALSO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. 16. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF TH E AUTHORITIES BELOW. 17. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT FIRST OBJECTION R AISED BY THE ASSESSING OFFICER IS . I.T.A. NO.2115 & 2116/DEL/10 8/13 THAT THE BILL IS NOT CONTAINING ANY SIGNATURE OF TH E PERSON ISSUING IT. THE SECOND OBJECTION OF THE ASSESSING OFFICER IS THAT THE ASSE SSEE WAS NOT ABLE TO FURNISH ANY DOCUMENTARY EVIDENCE TO SUBSTANTIATE THAT ANY P AYMENT WAS MADE BY HIM TOWARDS THIS COST OF IMPROVEMENT. ON THE BASIS OF T HESE OBJECTIONS THE ASSESSING OFFICER HAS DISALLOWED THE CLAIM OF THE A SSESSEE REGARDING THIS COST OF IMPROVEMENT. THERE WAS ONE MORE OBJECTION OF THE A SSESSING OFFICER THAT THE ASSESSEE IS ONLY 1/5 TH OWNER OF THE PROPERTY THEN WHY HE IS CLAIMING ENTI RE AMOUNT IN HIS HANDS. LD CIT(A) HAS CONFIRMED THIS D ISALLOWANCE ON THIS BASIS THAT IT CANNOT BE STATED WITH ANY DEGREE OF CERTAIN ITY THAT WHETHER THE MONEY WHICH IS CLAIMED AS COST OF IMPROVEMENT I.E. RS.1.8 5 LAKHS WAS ACTUALLY PAID BEFORE THE YEAR ENDING PERTAINING TO THE YEAR UNDER CONSIDERATION. WE FAIL TO UNDERSTAND THAT IF THE INCURRING OF THIS EXPENDITUR E IS ACCEPTED THEN WHETHER THE SAME WAS PAID OR NOT WITHIN THIS YEAR CAN BE A BASI S TO DISREGARD AND DISALLOW THE CLAIM OF THE ASSESSEE. WE ARE IN AGREEMENT THAT THE ASSESSEE THAT THIS ISSUE MAY ALSO BE RESTORED TO THE FILE OF THE ASSESSING O FFICER FOR A FRESH DECISION. WE THEREFORE SET ASIDE THE ORDER OF LD CIT(A) AND RES TORE THE MATTER BACK TO THE ASSESSING OFFICER FOR A FRESH DECISION. THE ASSESSI NG OFFICER SHOULD DECIDE THIS ASPECT AS TO WHETHER THESE EXPENSES ARE PERTAINING TO IMPROVEMENT OF THE PROPERTY IN QUESTION OR NOT AND WHETHER INCURRED OR NOT. THEN HE SHOULD DECIDE AS TO WHETHER THE DEDUCTION IS ALLOWABLE FOR FULL O R 1/5 TH THE AMOUNT IF FIRST ASPECTS ARE DECIDED IN FAVOUR OF THE ASSESSEE. THEREAFTER IT IS TO BE SEEN AS TO WHETHER PAYMENT IS MADE OR NOT IN THE SAME YEAR OR AFTERWAR DS. IF PAYMENT IS MADE DATE MAY BE AFTER END OF THIS YEAR ALSO. ALL THESE ASPEC TS SHOULD BE DECIDED BY WAY OF A SPEAKING ORDER AFTER PROVIDING ADEQUATE OPPORTUNI TY OF BEING HEARD TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALSO ALLO WED FOR STATISTICAL PURPOSES. 18. GROUND NO.4 OF THE APPEAL READS AS UNDER:- THAT LD CIT(A) HAS ERRED IN LAW AND ON FACTS IN CO NFIRMING THE DISALLOWANCE OF RS.61 006/- U/S 80C AND IT IS PRAYE D THAT THE SAME BE ALLOWED. . I.T.A. NO.2115 & 2116/DEL/10 9/13 19. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT THE ASSESSEE HAS CLAIMED DEDU CTION U/S 80C FOR REPAYMENT OF HOUSING LOAN PRINCIPLE. THE ASSESSING OFFICER ASKED THE ASSESSEE IN THE COURSE OF ASSESSMENT PROCEEDINGS TO FURNISH DOCUMENTARY EVIDENCE AND SOURCE REGARDING PAYMENT OF THE SAME. IT IS ALSO NO TED BY THE ASSESSING OFFICER THAT AS PER THE DETAILS FILED IT IS SEEN THAT THE HOUSING LOAN HAS BEEN TAKEN BY SHRI DEEPAK SAPRA SON OF THE ASSESSEE. ON THIS BASI S THE ASSESSING OFFICER REJECTED THE CLAIM OF THE ASSESSEE REGARDING DEDUCT ION U/S 80C OF THE ACT. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE LD CIT(A). BEFORE LD CIT(A) IT WAS SUBMITTED BY THE ASSESSEE THAT HOUSI NG LOAN WAS APPLIED BY THE ASSESSEE WHEREIN THE NAME OF THE SON WAS INCLUDED A S A CO-BORROWER AS A MATTER OF FACT OF PRECAUTION USUALLY DEPLOYED BY TH E FINANCING BANK. IT WAS ALSO SUBMITTED THAT ALTHOUGH THE REPAYMENT OF HOUSING LO AN WAS MADE FROM THE ACCOUNT OF THE SON OF THE ASSESSEE BUT THE SAME HAS BEEN REIMBURSED BY THE ASSESSEE AND THEREFORE THE ASSESSEE DESERVES THE CL AIM OF DEDUCTION U/S 80C OF THE ACT. A CERTIFICATE FROM THE SON WAS ALSO SUBMIT TED BEFORE LD CIT(A). LD CIT(A) HAS DECIDED THIS ISSUE ALSO AGAINST THE ASSE SSEE WITHOUT ACCEPTING THE CERTIFICATE FROM THE SON OF THE ASSESSEE SHRI DEEPA K SAPRA. NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 20. THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE MAY ALSO BE RESTORED BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECIS ION AFTER EXAMINING ALL ASPECTS OF THE MATTER. IT IS SUBMITTED BY HIM THAT INCLUSION O F NAME OF SON AS A CO-BORROWER DOES NOT DISENTITLE THE ASSESSEE FROM CLAIMING DEDU CTION U/S 80C OF THE ACT. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHO RITIES BELOW. 21. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ASSESSING OFF ICER SAYS IN THE ASSESSMENT ORDER THAT THE LOAN WAS TAKEN BY THE SON OF THE ASS ESSEE WHEREAS IT WAS A CATEGORICAL SUBMISSION OF THE ASSESSEE BEFORE LD CI T(A) THAT THE LOAN WAS TAKEN BY THE ASSESSEE AND THE NAME OF THE ASSESSEES SON WAS INCLUDED AS CO- . I.T.A. NO.2115 & 2116/DEL/10 10/13 BORROWER ONLY. NO FINDING IS GIVEN BY LD CIT(A) ON THIS ASPECT AS TO WHETHER THE LOAN IS TAKEN BY THE SON OF THE ASSESSEE OR HIS NAM E HAS BEEN INCLUDED AS A CO- BORROWER ONLY AND THE LOAN HAS BEEN TAKEN BY THE AS SESSEE. WE THEREFORE FEEL THAT THIS MATTER SHOULD ALSO GO BACK TO THE FILE OF THE ASSESSING OFFICER FOR A FRESH DECISION. AND HENCE WE SET ASIDE THE ORDER OF LD CI T(A) ON THIS ISSUE AND RESTORE THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICE R FOR A FRESH DECISION THE ASSESSING OFFICER SHOULD ASCERTAIN THE FACTUAL POSI TION AS TO WHETHER THE HOUSING LOAN WAS TAKEN BY THE SON OF THE ASSESSEE OR HIS NA ME WAS INCLUDED ONLY AS A CO-BORROWER AND THE LOAN WAS TAKEN ONLY BY THE ASSE SSEE. REGARDING REPAYMENT OF LOAN ALSO THE FACTS CAN BE EXAMINED BY THE ASSE SSING OFFICER AND THEREAFTER THE ASSESSING OFFICER SHOULD PASS NECESSARY ORDER A S PER LAW AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE . THIS GROUND OF THE ASSESSEE IS ALSO ALLOWED FOR STATISTICAL PURPOSES. 22. IN THE RESULT THIS APPEALS OF THE ASSESSEE STA NDS ALLOWED FOR STATISTICAL PURPOSES. 23. NOW WE TAKE UP I.T.A. NO.2116/DEL/2010. 24. THE ONLY GROUND RAISED BY THE ASSESSEE READS AS UNDER:- THAT THE LD CIT(A) HAS ERRED IN LAW AND ON FACTS I N CONFIRMING PENALTY OF RS.5M83 000/- LEVIED BY ADDL. CIT RANGE-22 NEW DE LHI U/S 271D AND IT IS PRAYED THAT THE PENALTY BE DELETED. 25. BRIEF FACTS OF THE CASE ARE THAT IT IS NOTED B Y THE ASSESSING OFFICER IN THE ASSESSMENT ORDER THAT AS PER INFORMATION RECEIVED F ROM AIR SYSTEM IT WAS INFORMED THAT THE ASSESSEE HAS MADE VARIOUS INVESTM ENT DURING THE FINANCIAL YEAR 2005-06 IN MUTUAL FUNDS AGGREGATING TO RS.71.2 0 LAKHS. IT IS ALSO NOTED BY THE ASSESSING OFFICER THAT IT WAS SUBMITTED BY THE ASSESSEE THAT THESE INVESTMENTS WERE MADE BY THE ASSESSEE FROM BANK A/C IN ABN AMRO BANK. IT IS . I.T.A. NO.2115 & 2116/DEL/10 11/13 ALSO NOTED BY THE ASSESSING OFFICER THAT IN THE SAI D BANK ACCOUNT THE ASSESSEE HAS MADE HUGE CASH DEPOSIT DURING THE YEAR UNDER RE FERENCE AND THE TOTAL AMOUNT OF CASH DEPOSIT NOTED BY THE ASSESSING OFFIC ER IS OF RS.6 65 600/- ON VARIOUS DATES. IT WAS SUBMITTED BY THE ASSESSEE BEF ORE THE ASSESSING OFFICER THAT CASH DEPOSITS WERE MADE OUT OF LOAN RECEIVED I N CASH FROM VARIOUS FRIENDS AND RELATIVES. THE ASSESSEE PROVIDED LIST OF 28 PA RTIES FROM WHOM RS.5 97 200/- WAS RECEIVED DURING THE YEAR. THE ASSESSING OFFICE R HAS NOTED THAT OUT OF THIS TWO LOANS OF RS.6100/- AND RS.8100/- WERE BELOW RS. 20 000/-. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S 271D. IN THE COURSE OF PENALTY PROCEEDINGS U/S 271D IT WAS SUBMITTED BY THE ASSES SEE THAT HE HAD NO IDEA THAT ACCEPTANCE OF LOAN AMOUNT OF RS.20 000/- OR MORE IN CASH WILL ATTRACT VIOLATION OF PROVISION OF SECTION 269SS OF THE INCOME TAX ACT 1 961. HE WAS CONTINUED TO BE UNDER BONA FIDE BELIEF THROUGH OUT THAT ACCEPTANCE OF SUCH LOANS DOES NOT INVOLVE ANY VIOLATION OF ANY LAW. SOME OTHER CONTENTIONS WE RE ALSO RAISED BY THE ASSESSEE IN THE COURSE OF PENALTY PROCEEDINGS INCLU DING THE APPLICABILITY OF SECTION 273B BUT THE ASSESSING OFFICER WAS NOT SATI SFIED AND HE HAS IMPOSED PENALTY OF RS.5.83 LAKHS U/S 271D OF THE INCOME TAX ACT 1961. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE LD CIT(A) BUT WITHOUT SUCCESS AND NOW THE ASSESSEE IS IN FURTHER APPEAL BEFORE US . 26. THE ASSESSEE HAS REITERATED THE SAME ARGUMENTS WHICH WERE ADVANCED BEFORE THE AUTHORITIES BELOW I.E. BONA FIDE BELIEF AND REASONABLE CAUSE AS REQUIRED U/S 273B. LD DR OF THE REVENUE SUPPORTED THE ORDERS OF AUTHORITIES BELOW. 27. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE GO NE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THIS A SUBMISSION OF THE ASSESSEE BEFORE THE ASSESSING OFFICER ALSO IN THE COURSE OF PENALTY PRO CEEDINGS THAT THE ASSESSEE HAD NO IDEA THAT ACCEPTANCE OF LOAN AMOUNT OF RS.20 000/- ARE MORE IN CASH WILL ATTRACT THE VIOLATION OF PROVISION OF SECTION 269SS OF THE ACT AND HE WAS UNDER BONA FIDE BELIEF THAT ACCEPTANCE OF SUCH LOAN DOES NOT INVOLVE ANY VIOLATION OF . I.T.A. NO.2115 & 2116/DEL/10 12/13 ANY LAW. THE ASSESSING OFFICER HAS COME TO THE CON CLUSION THAT THE ASSESSEE HAS NOT MADE OUT A CASE OF REASONABLE CAUSE FOR THE FAILURE AS REQUIRED U/S 273B OF THE ACT WITHOUT GIVING ANY FINDING AS TO WHETHER THE IGNORANCE OF THE ASSESSEE REGARDING PROVISION OF SECTION 269SS IS A REASONABL E CAUSE OR NOT. THE SAME ARGUMENT WAS TAKEN BY THE ASSESSEE BEFORE THE LD CI T(A) AND IT IS STATED BY THE LD CIT(A) IN PARA NO.15 OF HIS ORDER THAT THIS ARGU MENT HAS NOT BEEN TAKEN BEFORE HIM ALTHOUGH IN PARA NO.14 OF HIS ORDER HE IS SAYING THAT ANOTHER PLEA TAKEN BY THE ASSESSEE WAS THAT HE WAS EARLIER IN TH E ARMED FORCES AND HE WAS IGNORANT OF LAW. LD CIT(A) HAS STATED IN PARA NO.1 6 OF HIS ORDER THAT IT WOULD BE RELEVANT TO MENTION THAT THE ASSESSEE HAS BEEN IN B USINESS FOR ALMOST A DECADE AND HENCE TO ATTRIBUTE IGNORANCE OF LAW TO HIS BACK GROUND IN THE ARMED FORCES IS UNJUSTIFIED. WE ARE NOT IN AGREEMENT WITH LD CIT(A) ON THIS ASPECT BECAUSE WE HAVE ALREADY NOTICED WHILE DECIDING THE APPEAL OF T HE ASSESSEE REGARDING VARIOUS ADDITIONS AND DISALLOWANCES MADE BY THE ASS ESSING OFFICER IN THE ASSESSMENT PROCEEDINGS U/S 143(3) THAT THE ASSESSE E WAS NOT HAVING ANY OFFICE AND THERE WAS NO PURCHASE AND SALE OF STOCK AND THE ASSESSEE WAS DOING BUSINESS OF SOFTWARE DEVELOPMENT WHICH IS WORK OF A TECHNICAL NATURE AND HENCE IT IS SEEN THAT THE ASSESSEE WAS NOT INVOLVED IN AN Y REGULAR AND TRADITIONAL TYPE OF BUSINESS. THE ASSESSEE WAS ADMITTEDLY IN ARMED FORC ES AND IS EARNING PENSION INCOME AND AFTER TAKING RETIREMENT FROM THE OFFICE HE WAS ACTING AS SOFTWARE DEVELOPER WHICH IS ALSO A TECHNICAL TYPE OF WORK WI THOUT ANY ASSISTANCE OF ANY ACCOUNTANT C.A. OR LEGAL PERSON. ONE MORE FACT IS RELEVANT THAT THE LOAN AMOUNT IN QUESTION IS OF RS.20 000/- IN CASE OF 22 PARTIES AGGREGATING TO RS.4.40 LAKHS OUT OF TOTAL CASH LOAN OF RS.5.83 LAKHS FROM 26 PER SONS. HENCE THIS VERY CONDUCT OF THE ASSESSEE ALSO SHOWS THAT THE ASSESSEE WAS UN DER BONA FIDE BELIEF THAT THERE IS NO VIOLATION OF ANY LAW IN ACCEPTING CASH LOAN OF RS.20 000/- OR MORE BECAUSE HAD IT BEEN KNOWN TO THE ASSESSEE THE ASSE SSEE COULD HAVE TAKEN SUCH CASH LOAN BELOW RS.20 000/- FROM EACH PERSON I .E. OF RS.19 500/- FROM EACH PERSON AND COULD HAVE EASILY AVOIDED THE VIOLATION OF SECTION 269SS AND AT THE SAME TIME WOULD HAVE ACCEPTED THE LOAN OF ALMOST E QUAL AMOUNT IN CASH. CONSIDERING THIS POSITION WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE . I.T.A. NO.2115 & 2116/DEL/10 13/13 WAS UNDER BONA FIDE BELIEF THAT ACCEPTING OF SUCH C ASH LOAN DOES NOT VIOLATE ANY PROVISIONS OF INCOME TAX ACT RESULTING INTO SUCH HU GE PENALTY OF 100% OF SUCH LOAN AMOUNT AND HENCE AS PER THE PROVISIONS OF SECT ION 273B IT HAS TO BE ACCEPTED THAT THERE WAS REASONABLE CAUSE FOR THE FA ILURE OF THE ASSESSEE IN COMPLYING WITH THE PROVISIONS OF SECTION 269SS AND HENCE NO PENALTY SHOULD BE IMPOSED U/S 271D OF THE ACT. WE THEREFORE DELETE THE PENALTY. 28. IN THE RESULT THE APPEAL OF THE ASSESSEE STAND S ALLOWED. 29. IN THE COMBINED RESULT BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED IN THE TERMS AS INDICATED ABOVE. 30. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE OF HEARING I.E. 7 TH JULY 2010. SD/- SD/- (C.L. SETHI) (A.K. G ARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 07.7.2010. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)- NEW DELHI. 5. THE DR ITAT LOKNAYAK BHAWAN KHAN MARKET NEW DELHI. TRUE COPY. BY ORDER (ITAT NEW DELHI).