Mohd. Asgar Imam, New Delhi v. ITO, New Delhi

ITA 4155/DEL/2010 | 2007-2008
Pronouncement Date: 11-03-2011 | Result: Partly Allowed

Appeal Details

RSA Number 415520114 RSA 2010
Bench Delhi
Appeal Number ITA 4155/DEL/2010
Duration Of Justice 6 month(s) 2 day(s)
Appellant Mohd. Asgar Imam, New Delhi
Respondent ITO, New Delhi
Appeal Type Income Tax Appeal
Pronouncement Date 11-03-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted E
Tribunal Order Date 11-03-2011
Date Of Final Hearing 11-03-2011
Next Hearing Date 11-03-2011
Assessment Year 2007-2008
Appeal Filed On 08-09-2010
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI B.C. MEENA I.T.A. NO.4155/DEL/2010 ASSESSMENT YEAR: 2007-08 MOHD. ASGAR IMAM VS. INCOME-TAX OFFICER C-183/10 CHINOT BASTI WARD 39(4) MULTANI DHANDA PAHARGANJ NEW DELHI. NEW DELHI. (PAN: AAPPMO0054M) (APPELLANT) (RESPONDENT) APPELLANT BY: MS. MONIKA CU PTA CA RESPONDENT BY: SHRI PEEYUSH SONKA R SR.DR ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 28.2.2010 PASSED IN ASSESSMENT YEAR 2007-08. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT'S RULES THEY ARE DESCRIPTIVE AND ARGUM ENTATIVE IN NATURE. THE ASSESSEE HAS TAKEN EIGHT GROUNDS OF APPEAL OUT OF THESE EIGHT GROUNDS ONLY FOUR ARE SUBSTANTIAL GROUNDS OF APPEAL. THE FIRST I SSUE IMPUGNED BY THE ASSESSEE IS IN RESPECT OF AN ADDITION OF ` 8 55 000. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED HIS RETURN OF INCOME ON 31.10.2007 DECLARING AN INCOME OF ` 1 52 500. THE CASE OF THE 2 ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE UNDER SECTION 143(2) OF THE ACT WAS ISSUED ON 19 TH SEPTEMBER 2008. ACCORDING TO THE ASSESSING OFFICER ASSESSEE HAS PRODUCED BOOKS OF A CCOUNT AND THEY ARE TEST- CHECKED. ASSESSING OFFICER HAS NOTICED A CREDIT ENT RY OF ` 8 55 550 AGAINST THE NAME OF M/S. PUNAM CIRCUIT. ASSESSING OFFICER H AS DIRECTED THE ASSESSEE TO FILE CONFIRMATION AND OTHER DETAILS IN RESPECT O F THIS ENTRY. ACCORDING TO THE ASSESSING OFFICER ASSESSEE HAS FILED CONFIRMAT ION BUT IT DOES NOT CONTAIN PAN OF THIS CONCERN. HE MADE AN ADDITION OF ` 8 55 550. 3. APPEAL TO THE LEARNED CIT(APPEALS) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPU GNING THE ADDITION SUBMITTED THAT THE ASSESSING OFFICER FAILED TO APPR ECIATE THE FACTS AND CIRCUMSTANCES IN RIGHT PERSPECTIVE. SHE POINTED OUT THAT ASSESSEE IS IN THE BUSINESS OF MANUFACTURING COVERS USED IN SUITS (COA TS). HE HAS SHOWN GROSS RECEIPTS OF ` 90 32 343 AND G.P. OF ` 44 53 859 WHICH IS 49.35%. SHE POINTED OUT THAT ASSESSEE HAD PURCHASED MATERIAL FROM M/S. PUNAM CIRCUIT IN ORDINARY COURSE OF BUSINESS AND SUCH PURCHASES WERE MADE IN EARLIER YEARS. THERE WAS A CLOSING BALANCE OF THE LIABILITY AMOUNT ING TO ` 8 55 550. THE ASSESSEE PRODUCED COPY OF THE BALANCE SHEET BEFORE THE ASSESSING OFFICER FOR 3 ASSESSMENT YEAR 2006-07. HE HAS FILED CONFIRMATION AND HE HAS FILED COPY OF THE LEDGER ACCOUNT. THE AMOUNT IN THE PRESENT YEAR IS THE OPENING BALANCE OF THE LAST YEARS CLOSING BALANCE. THUS NO ADDITION CAN BE MADE IN THE PRESENT ASSESSMENT YEAR. FOR BUTTRESSING HER CONTENTION SH E TOOK US THROUGH PAGE NO. 113 WHICH IS THE COPY OF BALANCE SHEET AS ON 31 .3.2006. THE SUNDRY CREDITORS HAVE BEEN SHOWN AT ` 23 59 851. SHE THEREAFTER REFERRED TO PAGE NO.117 WHEREIN SCHEDULE B REPRESENTING SUNDRY CREDI TORS IS AVAILABLE. THE LEARNED COUNSEL FOR THE ASSESSEE THEREAFTER REFERRE D TO AMOUNT SHOWN AS THE OPENING BALANCE IN THE PRESENT YEAR. LEARNED DR ON THE OTHER HAND SUBMITTED THAT ASSESSEE FAILED TO FILE CONFIRMATION FROM M/S. PUNAM CIRCUIT. IT MEANS THAT THE LIABILITY TO PAY HAS CEASED AND A N ADDITION UNDER SEC. 41(1) OF THE ACT CAN BE MADE. 5. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES WE DO NOT FIND ANY FORCE IN THE CONTENTIONS OF THE LEARNED DR. THE AMOUNT IS NOT TAXABLE AS A CASH CREDIT IN THE PRESENT ASSESSMENT YEAR BECAU SE IT RELATES TO THE PURCHASE MADE IN ASSESSMENT YEAR 2006-07. IT WAS S HOWN IN THE CLOSING BALANCE. AS FAR AS THE CESSATION OF LIABILITY IS C ONCERNED WE ARE OF THE VIEW THAT ASSESSEE HAS SPECIFICALLY OWING THE LIABILITY. THE CREDIT HAS NOT BEEN WRITTEN OFF IN THE BOOKS OF ACCOUNT. THUS THERE IS NO EVIDENCE ON THE RECORD 4 WHICH SUGGEST THAT LIABILITY HAS CEASED. IN VIEW O F THE ABOVE DISCUSSION WE ALLOW GROUND NO.3 OF THE ASSESSEES APPEAL AND DELE TE THE ADDITION OF ` 8 56 000. 6. THE NEXT GRIEVANCE OF THE ASSESSEE IS THAT LEARN ED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF ` 5 LACS. ASSESSING OFFICER HAS MADE THIS ADDITION BY MAKING THE FOLLOWING OBSERVATIONS: THE NET PROFIT RATE SHOWN BY THE ASSESSEE IS 3.02% AS COMPARED TO 4.61% DECLARED IN THE PRECEDING YEAR. THE DECLINE I N THE NET PROFIT RATE IS DUE TO CLAIM OF EXCESSIVE EXPENSES FOR WHICH VID E QUESTIONNAIRE ISSUED ON 11.12.2009 THE COMPARISON OF EXCESSIVE E XPENSES WERE POINTED OUT TO THE ASSESSEE AND THE ASSESSEE WAS SP ECIFICALLY ASKED TO PRODUCE BOOKS OF ACCOUNT AND VOUCHERS FOR VERIFICAT ION. BUT NEITHER THE BOOKS OF ACCOUNT NOR VOUCHERS WERE PRODUCED FOR VERIFICATION THEREFORE I HAVE NO OTHER OPTION EXCEPT TO ESTIMAT E AN ADDITION OF ` 5 LACS TO COVER UP POSSIBLE LEAKAGE ON ACCOUNT OF EXC ESSIVE EXPENSES DEBITED TO P & L A/C. I AM SATISFIED THAT THIS IS A FIT CASE TO INITIATE PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE INCOME-TA X ACT 1961. 7. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES WE HAVE GONE THROUGH THE RECORD CAREFULLY AND FIND THAT ASSESSING OFFICE R HAD RECORDED A CONTRADICTORY FINDING IN PARAGRAPH NO.1. HE HAS OBS ERVED THAT ASSESSEE HAS 5 SUBMITTED BOOKS OF ACCOUNT AND THOSE WERE CHECKED. IN THIS PARAGRAPH HE HAS OBSERVED THAT BOOKS OF ACCOUNT AND VOUCHERS HAV E NOT BEEN PRODUCED. THE GROSS PROFIT OF THE ASSESSEE IS BETTER FROM THE LAST ASSESSMENT YEAR. ASSESSING OFFICER HAS NOT POINTED OUT ANY SPECIFIC DEFECTS IN THE MAINTENANCE OF THE BOOKS OR IN THE DETAILS. HE SIMP LY ON AN AD HOC BASIS MADE AN ADDITION OF ` 5 LACS. IN OUR OPINIONS IT IS NOT SUSTAINABLE IN THE EYES OF LAW. THIS GROUND OF APPEAL IS ALLOWED AND ADDITI ON IS DELETED. 8. IN THE NEXT GROUND OF APPEAL GRIEVANCE OF THE A SSESSEE IS THAT LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION O F ` 2 24 790. 9. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES WE HAVE GONE THROUGH THE RECORD CAREFULLY. ASSESSING OFFICER HAS MADE TH IS ADDITION ON THE GROUND THAT ASSESSEE HAS SHOWN WITHDRAWALS OF ` 51 585 ONLY. HE HAS CLAIMED DEDUCTION UNDER SECTION 80-C OF THE ACT OF ` 96 375. HE HAS PAID A MONTHLY RENT OF ` 5 000. ACCORDING TO THE ASSESSING OFFICER THE TOTA L OF THESE TWO AMOUNTS IS OF ` 1 56 375 WHICH IS FAR MORE THAN THE TOTAL WITHDRAWA LS. THE ASSESSEE FAILED TO GIVE SOURCE OF RENT PAYMENT AS W ELL A SAVING FOR THE PURPOSE OF SEC. 80C OF THE ACT. HE ESTIMATED THE PE RSONAL EXPENSES OF THE 6 ASSESSEE AT ` 10 000 PER MONTH WHICH COMES OUT TO ` 1 20 000 AFTER GIVING THE CREDIT OF WITHDRAWALS SHOWN BY THE ASSESSEE. HE MAD E AN ADDITION OF ` 2 24 790. 10. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS UNMARRIED AND LIVING ALONE. HIS FATHER MADE CONTRIB UTION TOWARDS RENT PAYMENT. ALTERNATIVELY SHE ARGUED THAT ESTIMATION O F PERSONAL EXPENSES AT ` 10 000 PER MONTH IS ON THE HIGHER SIDE. ON THE OTHE R HAND LEARNED DR RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 11. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMST ANCES WE DO NOT SEE ANY MERIT IN THIS GROUND OF APPEAL. THERE IS NO EVIDENCE ON THE RECORD SUGGESTING THAT ASSESSEES FATHER HAD MADE ANY CONT RIBUTION FOR PAYMENTS TOWARDS RENT. IT IS JUST AN ARGUMENT RAISED BY THE LEARNED COUNSEL FOR THE ASSESSEE WITHOUT ANY SUPPORTING MATERIAL. AS FAR AS ESTIMATION OF EXPENSES AT ` 10 000 PER MONTH IS CONCERNED WE ARE OF THE VIEW T HAT ASSESSING OFFICER HAS EXERCISED HIS DISCRETION AFTER LOOKING INTO THE SURROUNDING CIRCUMSTANCES OF THE ASSESSEES BUSINESS SOCIAL STATUS ETC. THER E CANNOT BE ANY STRAIGHT JACKET FORMULA FOR WORKING OUT THE EXPENSES OF ANY INDIVIDUAL. IT IS ALWAYS DEPENDENT UPON THE SURROUNDING CIRCUMSTANCES AVAILA BLE I.E. WHERE ASSESSEE 7 RESIDES WHAT TYPE OF ELECTRONICS TRANSPORT FACILI TIES ETC. HE POSSESSED. THERE WILL ALWAYS BE AN ELEMENT OF GUESS WORK IN SU CH ESTIMATION. ONE AUTHORITY HAS EXERCISED HIS DISCRETION. LEARNED FI RST APPELLATE AUTHORITY HAS UPHELD THE EXERCISE OF SUCH DISCRETION. THE LEARNED COUNSEL FOR THE ASSESSEE FAILED TO POINT OUT ANY CIRCUMSTANCE WHICH CAN SUGG EST THAT DISCRETION WAS EXERCISED ON EXTRANEOUS REASONS. IN HER UNDERSTANDI NG IT IS ON HIGHER SIDE BUT IN OUR OPINION IT IS NOT ADVISEABLE FOR THE SE COND APPELLATE AUTHORITY TO REPLACE THE ESTIMATED OPINION OF THE ASSESSING OFFI CER BASED ON CERTAIN FACTUAL INFORMATION PERTAINING TO THE ASSESSEES LI FE BY OTHER ESTIMATION THEREFORE THIS GROUND OF APPEAL IS REJECTED. 12. THE NEXT GROUND RELATES TO CHARGING OF INTEREST UNDER SECTION 234B OF THE INCOME-TAX ACT 1961. IT IS CONSEQUENTIAL IN NA TURE HENCE REJECTED. 13. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTY ALLOWED. DECISION PRONOUNCED IN THE OPEN COURT ON 11.03.2011 ( B.C. MEENA ) ( RAJ PAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11/03/2011 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 8 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR