Nirbhay Chhabra, New Delhi vs Assessee

ITA NO. 3215/Del/2011

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH "E", NEW DELHI BEFORE SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER AND SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. No. 3215/DEL/2011 A.Y. : 2006-07 Nirbhay Chhabra Income Tax Officer-21(1), C/o P.K. Arya & Co., VS. New Delhi Chartered Accountants, A-87, FFC Jhandewalan, New Delhi - 110 055 (PAN: AFKPC4965R) (APPELLANT) (RESPONDENT)

Assessee by : Sh. P.K. Arya, CA Department by : Sh. K.K. Jaiswal, Sr. DR

Date of Hearing : 20-4-2015 Date of Order : 22-4-2015

ORDER

PER H.S. SIDHU : JM This appeal by the Assessee is directed against the Order of

the Ld. Commissioner of Income Tax (Appeals)-XXII, New Delhi

dated 10.3.2011 pertaining to assessment year 2006-07 on the

following grounds:-

"1.That the impugned order of Ld CIT-Appeals-XII New Delhi

dated 10/03/2011 is Bad in law and wrong, incorrect and

illegal on the facts and in circumstances of the case and

legal position.

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ITA NO. 3215/Del/2011

2. That on the facts and in circumstances of case and legal

position the Learned CIT-Appeals in confirming addition of

credit payments of Rs.841000/- as unexplained expenditure

u/s 69C of I.Tax Act, particularly, when

i. the Ld AO had erred in invoking Sec 69C of the I.

Tax Act; and

ii. the appellant had satisfactorily explained the source

of payments made towards credit card ;

and, said addition made was on no material/evidence and/or

on irrelevant material/evidence and/ or by ignoring relevant

material/evidences and / was based on surmises and was

perverse.

3. i. That the observations made by authorities below are

denied;

ii. That appellant had discharged the burden/onus that

rest on him and the authorities below failed to discharge the

burden/onus that rest on them;

iii. That Ld CIT (Appeals) has erred in ignoring/or rejecting

submissions and contentions made by the appellant and

erred in not putting cogent material on record before

disapproving the same.

iv. That the addition made and/or confirmed were made at

the back of the appellant and without confronting adverse

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inference drawn by authorities below and by not giving

reasonable opportunity to rebut the same.

4. That on facts and in circumstances of the case and legal

position that A.O erred in levying interest u/s 234 A and,

234B, particularly, the said interest were not leviable at all

in view of arbitrary addition of Rs. 841000/-.

5. That appellant craves leave to add, alter, delete, amend,

modify or vary any Ground(s) of appeal before or at the time

of hearing of appeal."

2. The brief facts in the case are that the assessee filed return of

income of Rs. 1,01,000/- on 31.3.2007. The case was selected for

scrutiny on the basis of AIR information that the assessee had

incurred expenditure through credit card of Rs. 8,41,000/-. The

Assessing Officer issued notice u/s. 143(2) on 6.11.2007, in response

to which the assessee filed his bank statement. No books of account

were maintained. Inspite of specific query, the assessed offered no

explanation regarding source of payment of credit card bill of Rs.

8,41,000/-. The AO treated the said sum of unexplained expenditure

u/s. 69C of the I.T. Act and completed the assessment vide order

dated 26.1.2008 passed u/s. 143(3) of the I.T. Act, 1961.

3. Against the aforesaid assessment, assessee appealed before

the Ld. CIT(A), who vide impugned order dated 10.3.2011 has

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upheld the action of the AO and dismissed the Appeal of the

Assessee.

4. Aggrieved with the Ld. CIT(A)'s order, Assessee is in appeal

before the Tribunal.

5. Ld. Counsel of the assessee reiterated the contention raised in

the grounds of appeal and requested that the addition of

Rs. 8,41,000/- u/s. 69 of the I.T. Act made by the AO and upheld by

the CIT(A) may be deleted. He has also filed a Paper Book

containing pages 1 to 102 in which he has attached the particulars

of HDFC credit card statement; sale and purchase of trucks; freight

received voucher; diesel expense voucher and ITR of Family.

6. On the contrary, Ld. DR has opposed the request of the

assessee's counsel and relied upon the order of the revenue

authorities.

7. We have heard both the parties and perused the relevant

records available with us, especially the orders passed by the

Revenue authorities, we find that the Ld. CIT(A) has perused the

evidences and documents filed, namely the returns of income of all

the three family members, the copy of credit card statement, 5

copoies of freight bills of Sh. Harish Chhabra and Smt. Shail

Chhabra, and 3 copies of diesel bills. Ld. CIT(A) also called for the

proof of ownership of the vehicles concerned of which the assessee

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has filed only 3. We note that as per the Assessing Officer, the

assessee filed his return disclosing "estimated income from trading

of general goods". In no way can this be considered to be a return of

income u/s. 44AE, disclosing income on presumptive basis from

plying of trucks. Even during the assessment proceedings, the AO

was never informed that the source of income was from plying of

trucks. Moreover, the details filed during the appellate proceedings

have been inconsistent, which casts doubt on their veracity.

7.1 We find that Ld. CIT(A) noted that in the submission of

10.06.2010, it was stated that the assessee filed a return under

section 44AE, which is not correct. It is stated that he owned only

one truck - HR 38G 8082, which was sold in June' 2005.There is no

proof of either purchase or sale of the truck concerned, though

specifically asked for. In the submission dated 23.12.2010, it is

stated that the appellant owned only one truck - HR 38J 8442 - which

was sold on 17.12.2008. Though the submission says that 'delivery

documents are enclosed'., however no such details are attached. It

has to be presumed that the appellant was the owner of two trucks,

for part or whole of the year, but never disclosed the income from

their plying. The income of Rs.1,O1,OOO/- is disclosed from 'trading',

as already discussed.

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ITA NO. 3215/Del/2011

7.2 We also note that Ld. CIT(A) has observed that in the case of

Sh. Harish Chhabra, as per submission dated 10.06.2010, he was the

owner of two trucks in that year. However, the return of income filed

by Sh. Harish Chhabra for the A.Y. 2006-07 on 31.03.2007, shows

computation u/s 44AE for only one truck for 12 months, which works

out to Rs.42,0001-, but offered at Rs.1,O1,OOO/-. HR38H 8412 was

purchased in F.Y. 2003-04, as per registration certificate filed which

is dated 13.05.2003. As per submission of23.12.2010, it was sold in

F.Y. 2007-08, but there is no proof of the sale. For truck no.

HR38G6042, a copy of bill of purchase is filed, but the date is not

legible. According to submission of 10.06.2010, this truck was sold

on 15.09.2005 (no proof) but according to the submission of

23.12.2010, it was sold in 2007-08 (no proof). Hence, it is presumed

that for the A.Y. 2006-07, Sh. Harish Chhabra owned and plied two

trucks.

7.3 Ld. CIT(A) further observed that Smt. Shail Chhabra has filed return for A.Y. 2006-07 on 31.03.2007, disclosing income u/s 44AE for two trucks for 12 months, which works out to Rs.84,0001-, but offered at Rs.1,40,4501-. However, as per submission of 10.06.2010, she owned three trucks- (1) HR38K0032 (2) HR38J1632 & (3) HR38G 6622. As per submission of 23.12.2010, she owned only two trucks - at (1) and (2) above. Copy of purchase bill of 11.08.2003 and registration certificate of 22.08.2003 are available only for HR 38J 1632. As per submission of 23.12.2010, the trucks at (1) and (2) have been sold in 2007-08, but there is no proof

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provided. There is no evidence of date of purchase of HR 38K 003 R 38G 6622. It may be presumed that Smt. Chhabra was owning and operating 3 trucks in the concerned year. We find that Ld. CIT(A) further observed that as against 3 trucks disclosed between the returns of the 3 family members, there appear to have actually been 7 trucks. The presumptive provisions of the Income Tax Act were introduced with a view to enable small tax payers to file returns without the requirement of maintenance of books of account. The purpose of including such provision was to mitigate the hardship that certain businesses may face in computing taxable income accurately. But such provisions are not meant to be misused by disclosing income from trading, when the income was actually derived from the ownership of trucks. There is no evidence that the purchase of diesel by the assessee's credit card was met out of cash received from his parents. It is equally possible that they have incurred diesel expenses which are not reflected in the credit card bill of the appellant. It can be seen that there is very incomplete and inconsistent evidence of the number of trucks owned and operated, and no evidence whatsoever of the source of purchase of the trucks

- whether 3 or 7 in number. We find considerable force in the finding of the Ld. CIT(A) that even when books of account are not maintained, any assessee would maintain records of purchase and sale of trucks, and of receipts and expenditure. Hence, in the absence of credible details of quantum of freight receipts and quantum of expenditure, the source of payment of the credit card bills cannot be satisfactorily explained. Accordingly, cash payment of credit card bills amounting to Rs.8,41,000/- as unexplained expenditure u/s 69C was rightly confirmed by the Ld. CIT(A). Keeping in view of the facts and circumstances of the present case and the documentary evidence filed by the Assessee before us as well as the order of the Revenue Authorities, we are of the 7 ITA NO. 3215/Del/2011

considered view that the Ld. CIT(A) has passed a well reasoned order which does not require any interference on our part, hence, we uphold the same on the issue in dispute and dismiss the appeal filed by the Assessee.

8. In the result, the Appeal filed by the Assessee stands dismissed.

Order pronounced in the Open Court on 22/4/2015.

Sd/- Sd/-

[S.V. MEHROTRA] [H.S. SIDHU] ACCOUNTANT MEMBER JUDICIAL MEMBER

Date 22/4/2015 "SRBHATNAGAR" Copy forwarded to: - 1. Appellant

2. Respondent 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY By Order,

Assistant Registrar, ITAT, Delhi Benches

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