Case Law Details
Gaurav Kumar Goenka Vs DCIT (ITAT Chennai)
It is an admitted fact by the Assessee’s alleged credit card transaction had happened due to an inadvertent allotment of the PAN Number which he never used for filing the return of income but the same was reflected in his credit card expenses and the alleged transaction of Rs.30,75,430/- was treated by the Assessing Officer as unexplained expenses u/s.69C of the Income Tax Act, 1961. However, while deciding the appeal of the Assessee, the learned Commissioner of Income Tax (Appeals) allowed relief to the extent of Rs. Rs.26,66,240/- and the remaining amount of Rs.4,09,190/- was directed to be added as unexplained income of the Assessee. While passing the impugned order, the learned Commissioner of Income Tax (Appeals) did not allow the expenses of Rs.4,09,190/- as the Assessee was not able to prove that the amount was incurred for the business purposes and that the view of the learned Commissioner of Income Tax (Appeals) was that it was used for the personal benefits of the shareholders and directed that it is liable to be taxed u/s.2(22)(e) of the Income Tax Act, 1961.
While we look into the matter, it is an admitted fact that the assessment of the company, i.e. M/s. KGI Clothing Private Limited for the Assessment Year 2010 – 2011 was already done and that it was completed way back on 25.02.2011. Since the completion of the assessment was in the hands of the company, it is an admitted position that the alleged expenses incurred by the Assessee were business expenses of the company and therefore no personal benefit accrues to the Assessee as alleged by the authorities below. Hence, this Section 2(22)(e) of the Income Tax Act, 1961 cannot be invoked by alleging that the Assessee had benefitted.
As such, we allow the appeal of the Assessee and direct that the addition made by the learned Commissioner of Income Tax (Appeals) amounting to Rs.4,09,190/- be deleted.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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