TaxTMI 
TaxTMI 
TaxTMI 
2019 (3) TMI 72
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....come. The assessee was a director in a company named Ganesh Housing corporation Ltd.("GHCL" for short). Records of GHCL were subject to audit survey and examined by the Revenue department. The Revenue authorities found that GHCL has disallowed a sum of Rs. 80,38,101/-. In the computation of total income, it made reference to the audit report and observed this amount relates to personal expenditure, hence, it was construed that expenditure incurred on personal needs of the Director ought to have been shown by the Director as perquisite in the return. According to the AO, the assessee failed to recognize that expenditure as his income which has escaped assessment. Therefore, he recorded reasons and reopened the assessment. The reasons recorded by the AO has been reproduced by the ld.CIT(A), which reads as under: "Reasons for invoking provisions of section 147 of the I. T. Act 1. The assessee is one of the directors in Ganesh Housing Corporation Limited. The return of income was filed on 27/03/2010 declaring total income of Rs. 49,53,850/-. The assessment of the assessee was completed u/s. 143(23) on 23/12/201GBPdetermining total income at Rs. 49,53,850/-. During the course of....
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....ekhar G. Patel has sold non - agriculture land (50% share) situated at Shilaj Village for Rs. 15,00,000/-. The stamp duty paid thereon is Rs. 89,500/-. By applying jantry rate @ 4.9% on stamp duty paid, the cost of the property works out to be Rs. 18,26,530/-. Therefore, there is under valuation of property to the extent of Rs. 3,26,530/-. Since, Shri Shekhar G. Patel had ½ share in the property, under assessment comes to Rs. 1,63,265/- in the hands of Shri Shekhar G. Patel. 4. Similarly a property situated at Shilaj Village, BlockNo. 737 was sold at Rs. 15,00,0007-. Shri Shekhar G. Patel had 173rd share in the said property. The stmp duty paid thereon is Rs. 87,200/-. By applying jantri rate @ 4.9% on stamp duty, the cost of property should have been Rs. 17,79,590/-, so there is undervaluation of property of Rs. 2,79,590/- u7s. 50C of the Act, Since Shri Shekhar G. Patel has 173rd share in the property under assessment comes toRs.93,195/-. In view of above, I have reason to believe that income of Rs. 77,13,281 /-(Rs.26,79,366/- + Rs. 47,77,455/- + Rs. 1,63,265/- + Rs. 93,195/-) has escaped assessment for A. Y. 2008-09 and therefore, I am of the opinion that this a fit....
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....e record carefully. There is no dispute that original assessment was made under section 143(3) of the Act. There is also no dispute that four years has lapsed from the end of the assessment year. The question is, whether proviso appended to section147 puts an embargo in the power of the AO for reopening of an assessment order, where a scrutiny assessment has been made, and four years has expired, which would come to the rescue of the assessee or not ? On the other hand, view of the Revenue is that there was no disclosure of material facts fully and truly, therefore, proviso will not come in way of the AO. On the other hand, the stand of the assessee is that AO failed to analysis the nature of expenditure, and therefore, there is no live-link between formation of opinion showing escapement of income vis-à-vis information available with the Ld.AO. Let us take into consideration bifurcation of those expenditure. These have been reproduced by the ld.CIT(A). They read as under: a) Advertisement expenses : Rs.46,29,768/- b) Printing & Stationary : Rs.18,00,000/- c) Books and Magazines : Rs. 2,50,000/- d) Being 1/5th of Rs. 67,91,665/- : Rs.13,58,333/- 8. A perusal of ....
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.... of the assessee, which ought to have been shown by him as income. The ld.CIT(A) has considered this aspect and noticed the break-up of this expenditure. Thereafter observed that, this is not an expenditure which can be termed as personal in nature. The finding recorded by the ld.CIT(A) reads as under: "I have carefully considered the facts of the case, the reassessment order and the written submission of the appellant. The AO has made the addition of Rs. 26,79,366/- being l/3rd of the amount of Rs. 80,38,101/- in respect of the total expenditures disallowed in the case of M/s.Ganesh Housing Corporation Ltd. in which the appellant was one of the directors. This addition has been made by the A.O. as a perquisite as per section 2(24) (iv) being the value of benefit or perquisite obtained by the appellant from the aforesaid company as income. The AO observed that in the case of M/s. Ganesh Housing Corporation in which the assessee was a director, has disallowed certain sums which were observed to be of personal in nature by the Tax Auditors and as a consequence the said amounts were to be assessed in the hands of the directors. 4.4. On the other side, the appellant has submitted ....
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....red for printing and publishing of the book "Gujarat Goories- Power People 50" which contained a write up of the director of the company i.e. appellant which is again no way related to the personal benefits of the appellant. 4.8. The company namely M/s. Ganesh Housing Corporation Ltd. being a public limited company it has got credit recognition, increase in good will, good faith and trust of the general public at large due to publishing of the book. Further in respect of addition made on account of various expenditures from motor car, mobile phone, electricity expenses, security service charge and directors foreign travel that it was not possible to determine the expenses used for personal purposes therefore in annexure-6 to tax audit report of Ganesh Housing Corporation the auditors have made the observations in this regard. So it was a view of the tax auditor that some portion of the expenditure was for personal purpose of the directors but there was no evidence to justify the auditors view to be true. It was submitted that all these expenses were incurred for the purpose of business of the company in which the appellant was a director. Also submitted that these expenses were ....
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..... and not the appellant since no personal benefit has been obtained nor it was the obligation of the appellant to make the payment thereof which was paid by Ganesh Housing Corporation. 4.13. In view of the aforesaid discussion, the expenditures made in respect of above heads are in no way personally benefited to the appellant and therefore the same cannot be treated as perquisites as income and hence the addition made by the AO is liable for deletion." 11. With the assistance of the ld.representatives, we have gone through the record carefully. The ld.CIT(A)has made a detailed analysis of all the expenditure, and thereafter recorded a finding that there is no personal element involved in all these expenditure. They cannot be considered as perquisite in the hands of the director. After going through well reasoned order of the ld.CIT(A), we do not find any error on this issue. It is upheld. 12. In the next ground of appeal, the grievance of the Revenue is that the ld.CIT(A) has erred in deleting the addition of Rs. 47,77,455/-. 13. Brief facts of the case are that the assessee has alleged to have taken loan of Rs. 3,18,49,700/- from Umnesh Complex PLtd., and Mihika Buildcon P.....
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....s therefore no income can be taxed in the hands of the appellant more so when a company has not paid any sum of money which is by way obligation payable by the appellant. It has also been submitted that no loan has been taken in the year under consideration from Mihika Buildcon Pvt. Ltd. but the same was the opening balance which remained as closing balance at the end of the year. In support of this, it has relied upon catena of judgements which have been reproduced in the preceding paras of this order. 5.6. Having considered the facts and the submissions, it is noticed that the AO has not brought on record that the appellant was an employee in the aforesaid companies from whom the loans have been taken. Even no remuneration or salary in the capacity of the director has been drawn by the appellant from the aforesaid two companies. Being the director he cannot be held to be an employee of the companies from whom he has availed the loans. Moreover he was not having substantial interest in the aforesaid companies. The AO has also not brought anything on record to say that the aforesaid companies have paid any sum of money which is by way of obligation payable by the appellant. In t....