Krishan Kumar Gupta vs Assistant Commissioner Of Income Tax

“6 Ground No. 2: BECAUSE on the facts and circumstances of the case & in law, the Ld. AO grossly erred in re-opening the case initially under the old provisions of section 148 merely based on suspicion assuming the total taxable income of the assessee Rs. 1890920/- as his total income and finding the purchase consideration of property Rs. 11200000/- much beyond his financial capacity While assuming so he had not carefully examined the ITR filed by the Assessee in which tax paid income (Exempt in the hands of the Assessee Rs. 21292065/- U/s 10(34), U/s 10(2A) etc. was also declared in addition to taxable income of Rs. 1890920/-, There was no valid reason to believe to issue such notice under the old provisions of the Act.

6.1

Information in the case of the assessee was received form the investigation wing that the assessee has made payment of Rs.1,12,00,000/- (Including stamp duty of Rs. 6,72,000/-) for purchase of property during the F.Y. 2013-14. Perusal of ITR filed by the assessee, it is noticed that the assessee has filed its ITR declaring total income of Rs. 18,90,930/- Thus, on perusal of the details available on record, it is noticed that during the previous year relevant to the assesses year under consideration, the assessee has undertaken financial transactions much beyond the financial capacity as per details available in its ITR.

6.2

In this regard the appellant has submitted that Ld AO completely erred while reopening the case and same was reopened without application of mind. The appellant has further stated that if it took into consideration the income which was exempt in his hands, his total Income during the year works out to be Rs.2,30,31,860/- Including exempted income. In view these facts appellant has stated that it had more than double income compared to the amount of property purchased during the year.

6.3

I have perused the submission filed by the appellant however the above mentioned contention of the appellant not found tenable or acceptable. Because, on perusal of the records it is noted that appellant has received dividend amount on 13.02.2014, whereas the payment for property was made between June 2013 and September 2013. At the time of purchase of property appellant did not have enough income to purchase the property. Further the fact, property being purchased by the appellant out of loan taken from various entities, also strengthen this contention. In view of these facts I am of the considered opinion that Ld. AO had concrete reason to believe that taxable income had escaped the assessment. Accordingly, this ground of appeal is hereby dismissed.

Ground No. 3: "The appellant has stated that the learned assessing officer has erred in law and on facts in making addition of INR 2400000/- treating the Loan taken from a NARC BRL Finlease Ltd without assigning any such query of the Learned AO which the Assessee could not reply to his satisfaction.

7.1

On perusal of the material available on record it is observed that Purchase of immovable property has been made utilizing amount received from M/s Shivalik Packaging, Pulkit Gupta, Karuna Gupta and BRL finlease limited and other cheque deposits. Perusal of bank detail shows that Dividend received by the assessee has not been utilized for purchasing of property as dividend was received in February 2014. Assessee has made all the payments related to purchase of property before receiving dividend.

7.2

Furthermore as per assessment records it is noted that assessee did not submit any detail from which claim of the assessee that "amount received from M/s Shivalik packaging Industries is partner's share of the assessee in the firm" can be verified. Assessee did not submit any detail of Shivalik Packaging Industries and profit earned by the firm during the year. Keeping, In view of facts discussed above, source of fund from which immovable property has been purchased could not be explained by the assessee with relevant supporting documents.

7.3

In response to the show cause notice issued the appellant submitted that he had taken a loan of Rs.24 Lacs from BRL Fin Lease Ltd. Ld AO after perusal of documents observed that the assessee did not submit sanction letter of loan, details of repayment, purpose of the loan. Accordingly, Ld AO rejected the claim of the appellant and added the Rs.24,00,000/- to the income of the appellant.

7.4

The appellant has stated that it submitted the following details before the Ld AO yet Ld AO without considering the same made instant addition to the income of the assessee:

a)

Confirmation of Accounts duly stamped and signed.

b)

Copy of Acknowledgement of ITR of both of the Financers for AY 2014-15(FY 2013-14)

c)

Complete Bank Statements of both the Financers highlighting the relevant entries of payments made to the Assessee.

d)

Complete Bank Statement of the Assessee highlighting the transactions received from these Financers which are cross tallied with the Bank Statements of the financers and confirmation of Accounts

e)

Interest has been paid to both the Financers Opening and closing Statement of Affairs of the Assesse as at 31 03.13 and 31.03.14

7.5

On perusal of the records it is noted that these submissions have been considered by Ld. AO, it is evident that appellant has failed to submit sanction letter of loan, details of repayment, purpose of the loan etc. Now even during the appellate proceedings as well despite given various opportunities the appellant has failed to furnish these details. Hence, the genuineness of the transaction could not be established. The appellant has failed to discharge initial onus lied upon him by the virtue of section 69 of the Act. Accordingly, the addition made by Ld. AO amounting to Rs.24,00,000/- is hereby confirmed and this ground of appeal is hereby dismissed.

8.

Ground No. 4: The appellant has stated that the learned assessing officer has erred in law and on facts in making the addition of INR 3500000/- treating the loan taken by the Assessee from Sh. Pulkit Gupta without considering the complete chain of the amount which was originated from the assessee and also terminated at him. The Assessee (from admitted source) repaid its loan to Karuna Gupta who had gifted the said amount to her son Pulkit Gupta and Pulkit Gupta given it as loan to the Assessee. All the three transactions were executed through bank Account Payee entries on the same date.

8.1

In response to show cause notice the appellant had submitted before Ld. AO that he had taken loan of Rs. 35 lac on 22.07.2014 from sh. Pulkit Gupta. Ld AO perused the ITR of the Pulkit Gupta and found that he has filed ITR for A.Y. 2014-15 at total income of Rs. 5,10,870/-. Thus, the creditworthiness of Sh. Pulkit Gupta was not proved hence rejected. 8.2 With regard to loan of Rs.35 lac taken from Pulkit Gupta, on careful perusal of the assessment record and facts submitted by the appellant during the course of appellate proceeding, it is found that the appellant has failed to establish the genuineness and creditworthiness of transaction. Therefore, contention of the appellant is not found tenable. In view of these facts addition made by Ld. AO amounting to Rs.35,00,000/- is hereby confirmed and this ground of appeal is hereby "dismissed."

9.

Ground No. 5: The appellant has stated that the learned assessing officer has erred in law and on facts in making addition of INR 300000/- treating the loan repayment received by the Assessee from Mr. Vikas Singla in a court case in part settlement of old outstanding Copy of court order is enclosed. The balance receivable as on 31.03.13 as per statement of Affairs filed was Rs 498592/-which reduced to Rs. 198592/-in statement of Affairs as at 31.03.14.

9.1

The appellant has taken loan of Rs. 3,00,000/- from Vikas Singla on 21.05.2013. But no documentary evidences were furnished before Ld. AO by the assessee hence it was added to the income of the appellant.

9.2

The appellant during the appellate proceedings has submitted that it has received Rs.3,00,000/- from Vikas Singla consequent to a court order yet, the appellant has not furnished the copy of Court Order, name of Court, date of order etc. In view of these facts the instant contention of the appellant could not be verified. Accordingly, the addition of Rs.3,00,000/-is hereby confirmed and this ground of appeal is hereby dismissed.

10.

Ground No.6: The appellant has stated that the learned assessing officer has erred in law and on facts in making an ad-hoc addition of balance INR 300000/-without assigning any reason/defect/ unexplained entry in the Bank Statement of the Assessee. The Learned AO has reversed the route to make additions. Out of the total Investment in property, he has recognized/admitted only credit entries totaling 4700000/-and de-recognized 3 entries narrated in ground No 3,4 and 5 totaling 6200000/- The Balance 300000/- added to the income of the Assessee without speaking about a single word defect/deficiency.

10.1

The abovementioned contention of the appellant has been considered and placed on record. I am of the considered opinion that Ld. AO has erred while adding Rs.3,00,000/- to the Income of the assessee by taking reverse route. Ld. AO has failed to specify any defect or reason for doing so. Ld. AO except for the abovementioned addition, failed to identify an unexplained entry in the books of the assessee. Hence, the addition of Rs.3,00,000/- made by taking reverse route is not justified. The appellant has declared taxable income of Rs.18,90,920/- for the year under consideration which proves the creditworthiness of the assessee. In light of the above the addition made by Ld. AO amounting to Rs.3,00,000/- is hereby deleted and this ground of appeal is hereby allowed.

Therefore, on the basis of discussion in ground no.3, 4, 5 and 6, out of the addition of Rs.65,00,000/-, addition of Rs.3,00,000./- is deleted and addition of Rs. 62,00,000/- is confirmed.”