M/s Turner Builders & Promoters (P) Ltd., New Delhi V. ITO, New Delhi

CO 312/DEL/2009

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3223 (ITAT-DELHI)
• Duration Of Justice: 6 year(s) 7 month(s) 15 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-04-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: H
• Next Hearing Date: 21-04-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 10-09-2009
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: M K JAIN
• Assessee Lawyers: R K GUPTA CA SHRI SUMIT GOEL
• Keywords: Unexplained cash credit; Tax effect
• Section: 133(6); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH H NEW DELHI BEFORE SHRI S.V. MEHROTRA : ACCOUNTANT MEMBER AND SMT. BEENA A. PILLAI : JUDICIAL MEMBER ITA NO. 3579/DEL/2009 ASSTT. YR: 2005-06 INCOME TAX OFFICER, VS. TURNER BUILDERS & PROMOTE RS (P) LTD., WARD 16(4), NEW DELHI. WZ-146, 2 ND FLOOR, GALI NO. 2, SRI NAGAR, SHAKUR BASTI, NEW DELHI. PAN: AAACT 2121 N AND C.O. 312/DEL/2009 ( ITA NO. 3579/DEL/2009) ASSTT. YR: 2005-06 TURNER BUILDERS & PROMOTERS (P) LTD., VS. INCOME T AX OFFICER, WZ-146, 2 ND FLOOR, GALI NO. 2, WARD 16(4), NEW DELHI. SRI NAGAR, SHAKUR BASTI, NEW DELHI. ( APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI M.K. JAIN SR. DR ASSESSEE BY : SH.R.K. GUPTA CA . SHRI SUMIT GOEL CA DATE OF HEARING : 21/04/2016. DATE OF ORDER : 26/04/2016. O R D E R PER S.V. MEHROTRA, A.M: THE REVENUE HAS PREFERRED APPEAL AND THE ASSESSEE HAS FILED CROSS OBJECTIONS AGAINST THE ORDER DATED 8.6.2009 PASSED BY THE LD. CIT(A)-XIX, NEW DELHI IN APPEAL NO. 214/208-09 RELATING TO AY 2 006-07. 2 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE CO MPANY, IN THE RELEVANT ASSESSMENT YEAR WAS ENGAGED IN THE BUSINESS OF REAL ESTATE. IT HAD FILED ITS RETURN OF INCOME DECLARING INCOME AT RS. 50,797/-. THE ASSESSMENT WAS MADE AT A TOTAL INCOME OF RS. 56,21,040/- AFTER MAK ING FOLLOWING ADDITIONS: (A) ON ACCOUNT OF UNEXPLAINED U. LOANS U/S 68 RS. 37,9 0,000/- (B) VALUE OF PLOT NOT FULLY DISCLOSED RS. 17,50,000/- (C) SOURCE OF STAMP DUTY BEING UNEXPLAINED RS. 30,240/ - RS. 56,21,037/- ROUNDED OFF: RS. 56,21,040/- 3. LD. CIT(A) WHILE PARTLY ALLOWING THE ASSESSEES APPEAL DELETED THE ADDITIONS MADE U/S 68 AGGREGATING TO RS. 28,70,000/ - AND CONFIRMED THE ADDITION TO THE TUNE OF RS. 3,95,000/- AND FURTHER ADDITION OF RS. 50,000/- IN RESPECT OF CASH DEPOSIT IN BANK. 4. BEING AGGRIEVED WITH THE ORDER OF LD. CIT(A), TH E DEPARTMENT PREFERRED APPEAL BEFORE US AND THE ASSESSEE FILED C ROSS OBJECTIONS. 5. GROUND TAKEN BY THE REVENUE IN ITS APPEAL ARE AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO U/S 68 OF IT ACT 1961, IN RESPECT OF CREDITORS NAMELY M S RANJANA CHAWLA (RS. 1,00,000)/ MR. MANGAT RAM (RS. 3,00,000 ), MR. SATISH KUMAR (RS. 2,00,000), MR. SARDARI LAL MAGGO (RS. 4,00,000), MR. BIHARI LAL (RS. 5,00,000), & SH. ASH OSK KUMAR (RS. 1,15,000) AGGREGATING TO RS. 16,15,000/-. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E LD. CIT(A) HAS ERRED IN DELETING THE ADDITIONS MADE BY THE AO U/S 68 OF IT ACT 1961, IN RESPECT OF CREDITORS NAMELY M /S SHANTI DEVI, M/S AAKASH APPARELS AND MR. KAMAL MAGGO AGGRE GATING TO RS. 12,55,000/-. 3 6. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE POINTED OUT THAT THE DEPARTMENTS APPEAL IS TO BE DISMISSED AS THE TAX E FFECT INVOLVED IS LESS THAN RS. 10,00,000/-. 7. LD. DR DID NOT DISPUTE THIS FACTUAL ASPECT BUT S UBMITTED THAT SINCE THE DEPARTMENTS APPEAL IS TO BE DISMISSED, THEREFORE, THE ASSESSEES CROSS- OBJECTION ALSO BECOMES INFRUCTUOUS. 8. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES. THERE IS NO DISPUTE THAT AS FAR AS THE DEPARTMENTS APPEAL IS C ONCERNED, THE SAME IS TO BE DISMISSED IN VIEW OF CBDT CIRCULAR NO. 21/2015 DATE D 10.12.2015 STIPULATING THAT NO DEPARTMENTAL APPEAL, INVOLVING TAX EFFECT BELOW RS.10 LAKHS, SHALL BE FILED BEFORE THE ITAT. PARA 10 OF THE CIRCULAR SPECIFIES THAT SUCH INSTRUCTION WOULD APPLY RETROSPECTIVELY AND TH E PENDING APPEALS BELOW THE SPECIFIED TAX LIMIT OF RS.10 LAKH MAY BE WITHDR AWN/NOT PRESSED. HOWEVER, WE ARE NOT IN AGREEMENT WITH THE SUBMISS ION OF LD. DR THAT THE ASSESSEES CO BECOMES INFRUCTUOUS. 9. LD. COUNSEL HAS RIGHTLY POINTED OUT THAT IN VIEW OF SECTION 253(4), THE CROSS OBJECTION IS TO BE DISPOSED OF BY THE APPELLA TE TRIBUNAL AS IF IT WERE AN APPEAL PRESENTED WITHIN THE TIME SPECIFIED IN SUB-S ECTION (3) OR SUB-SECTION (3A). THE RIGHT TO FILE CROSS OBJECTION CRYSTALLIZE S THE MOMENT APPEAL IS FILED BY EITHER PARTY. AS PER MANDATE OF SECTION 253(4), IT IS AN IRRELEVANT CONSIDERATION THAT CROSS OBJECTOR HAD ORIGINALLY NO T FILED ANY APPEAL. THEREFORE, MERE DISMISSAL OF DEPARTMENTS APPEAL DO ES NOT RESULT INTO 4 MAKING THE CROSS OBJECTION INFRUCTUOUS AND THE SAME HAS TO BE DISPOSED OF AS AN APPEAL. WE, ACCORDINGLY, PROCEED TO DECIDE THE A PPEAL ON MERITS. 10. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF CRO SS OBJECTION: 1. THAT BOTH THE LOWER AUTHORITIES GROSSLY ERRED IN LAW AS WELL AS ON MERIT IN MAKING AND CONFIRMING ADDITIONS U/S 68 OF THE I.T. ACT AS UNEXPLAINED CREDITS FOR THE FOLLOWI NG AMOUNTS: NAME AMOUNT (IN RS.) ATUL KATYAL 150000.00 ASHOK KUMAR 150000.00 MANJU KHATTRI 95000.00 2. THAT UNDER THE FACTS AND CIRCUMSTANCES, THERE IS NO JUSTIFICATION FOR THE ADDITION OF RS. 50,000/- BEIN G CASH DEPOSIT IN BANK ON 16.06.2005 AS THE SOURCE THEREOF SHOULD BE HELD AS EXPLAINED BEING OUT OF CASH RECEIPTS FROM SH. MANO J KUMAR, MOHD. SAFFIQUE AND MOHD. ASLAM. 11. BRIEF FACTS APROPOS GROUND NO. 1 ARE THAT ASSE SSEE, INTER ALIA, HAD TAKEN A LOAN OF RS. 1,50,000/- FROM ATUL KATYAL. TH E AO HAS OBSERVED THAT FROM THE REPLIES RECEIVED TO NOTICE U/S 133(6) IT T RANSPIRED THAT CASH OF RS. 1 LAKH WAS DEPOSITED IN THE BANK A/C OF THIS VENDOR B EFORE ISSUING CHEQUE TO ASSESSEE COMPANY. HE OBSERVED THAT SHRI ATUL KATYAL IS A PETTY CLOTH SELLER (PHERIWALA), SELLING CLOTHES IN VILLAGES. HE WAS AL SO STATED TO HAVE BEEN EARNING BETWEEN RS. 5000/- TO RS. 6000/- PER MONTH. 12. BEFORE LD. CIT(A) THE ASSESSEE EXPLAINED AS UND ER: FIRSTLY, FACTUAL ERROR BY THE AO IS THAT THE CORRE CT CASH DEPOSIT RS. 10,0001- AND NOT RS. 1,00,0001-. THE TOTAL CASH DEPOSIT BEFORE ISSUE OF CHEQUE. IS ONLY RS. 12,0001-. THUS, THE BASIS OF THE AO IS ITSELF INCORRECT. SECONDLY, IN THE BANK A CCOUNT RS. 44,0901- ARE APPEARING AS OPENING BALANCE AS ON 01. 04.2005 5 WHICH HAS ALSO BEEN USED FOR LOAN. THUS, TO THIS EX TENT, THE LOAN AMOUNT, IN ANY CASE, CANNOT BE ADDED. THIRDLY, THE CREDITOR IN HIS STATEMENT DULY ADMITTED THE LOAN AND ALSO EXPLA INED THE SOURCE WHICH REMAINS UNREBUTTED. FOURTHLY, ON THE BASIS OF FOLLOWING DOCUMENTS FURNI SHED TO THE AO, THE GENUINENESS, CREDITWORTHINESS, AND IDENTITY STANDS PROVED. FIFTHLY, THE AO HAS NOT PROVED THAT THE CAS H DEPOSITED IN THE BANK IS THE MONEY PROVIDED BY THE-ASSESSEE. COPY OF STATEMENT. CONFIRMED LEDGER ACCOUNT. CONFIRMATION. RELEVANT BANK STATEMENT. VOTER ID CARD. WITHOUT PREJUDICE, STATEMENT WAS RECORDED ON 18.12. 2008 AND THE ASSTT. ORDER IS ALSO DTD. 18.12.08 AND IT WAS N EVER CONFRONTED, THEREFORE, IT CANNOT BE USED IN ASSTT. ADVERSELY.' 13. LD. CIT(A), HOWEVER, CONFIRMED THE AOS ACTION OBSERVING AS UNDER: 8.3.2 SHRI ATUL KATYAL IS A PETTY CLOTH SELLER WIT H LITTLE INCOME. THOUGH HE HAS ~ CONFIRMED THE ADVANCE OF LOAN, THE SOURCES ARE NOT PROPERLY EXPLAINED. HENCE, THE ADDITION IS CONFIRMED. 14. LD. COUNSEL REFERRED TO PAGES 102 TO 104 OF THE PB, WHEREIN THE STATEMENT OF ATUL KATYAL IS CONTAINED AND FURTHER T HE CONFIRMATION FILED BY ATUL KATYAL, GIVING ENTIRE DETAILS CONTAINED AT PAG E 106 OF PB, BANK A/C IS ALSO CONTAINED AT PAGES 108-109 OF THE PB. 15. A BARE PERUSAL OF THE FINDINGS RECORDED BY BOTH THE LOWER REVENUE AUTHORITIES CLEARLY SHOWS THAT THE SUBMISSIONS MADE BY ASSESSEE HAVE NOT AT 6 ALL BEEN CONSIDERED INCLUDING THE AVAILABILITY OF O PENING BALANCE OF RS. 44,090/- AS ON 1.4.2005. THE LENDER SUBMITTED ALL T HE EVIDENCES AND CONFIRMED THE GIVING OF LOAN. THE ASSESSEE HAD ALSO POINTED OUT THAT THE CASH DEPOSIT WAS ONLY RS. 10,000/- AND NOT RS. 1 LAKH WH ICH ASPECT HAS NOT AT ALL BEEN CONSIDERED BY LOWER REVENUE AUTHORITIES WHILE DECIDING THE CREDITWORTHINESS AND GENUINENESS OF THE TRANSACTION . UNDER SUCH CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO CONFIRM THE FINDINGS OF LOWER REVENUE AUTHORITIES IN REGARD TO THIS AMOUNT. ACCOR DINGLY, GROUND IS ALLOWED. 16. APROPOS LOAN FROM ASHOK KUMAR, BRIEF FACTS ARE THAN LOAN OF RS. 2,65,000/- WAS TAKEN FROM HIM. THE AO HAS OBSERVED THAT THERE WAS CASH DEPOSIT OF RS. 2,66,000/-, BEFORE ISSUING CHEQUES O F LOAN TO THE ASSESSEE COMPANY. THE ASSESSEES SUBMISSION WAS THAT ASHOK K UMAR WAS OWNING 6 ACRES OF AGRICULTURE LAND AND A SMALL KIRYANA STORE . THE AO OBSERVED THAT IT IS HARD TO COMPREHEND THAT SUCH SMALL FARMERS, RESI DING IN A A FAR OFF VILLAGE OR DOING PETTY BUSINESSES WERE ADVANCING MONEY INTE REST FREE AND WITHOUT ANY OTHER BENEFIT TO A COMPANY ENGAGED IN REAL ESTA TE BUSINESS WITH SOLE MOTTO OF EARNING PROFITS. HE POINTED OUT THAT THE C REDITWORTHINESS WAS NOT ESTABLISHED. 17. LD. CIT(A) DELETED THE ADDITION TO THE EXTENT O F RS. 1,50,000/- AFTER CONSIDERING THE FOLLOWING SUBMISSIONS MADE BY ASSES SEE: 'NO REASON HAS BEEN GIVEN BY THE AO FOR ADDITION EX CEPT THAT IN THE TABLE HE HAS STATED CASH DEPOSIT OF RS. 2.,66,0 001- IN THE BANK. THIS ADDITION IS WRONG. FIRSTLY, DURING THE YEAR LOAN ONLY OF RS. 1,50,000/ - HAS BEEN TAKEN AND RS. 1,15,000/- IS THE OPENING BALANCE. TH US, NO 7 ADDITION CAN BE MADE FOR THE OPENING BALANCE. SECON DLY, THE IMMEDIATE PRECEDING CASH DEPOSIT IN THE BANK IS ONL Y RS. 1,49,000/- (RS. 54,0001- + RS. 46,0001- + RS. 49,00 01-). THE SOURCE OF THIS CASH STANDS EXPLAINED IN THE STATEME NT. SOURCE IS INCOME FROM GENERAL MERCHANT SHOP AND 6 ACRE AGRICU LTURAL LAND. HE ALSO ADMITTED FOR NOT OPENING ANY BANK ACC OUNT EARLIER (IT WAS OPENED ONLY ON 16.03.2005 FOR THE FIRST TIM E). THUS, THE OLD SAVINGS OUT OF INCOME WERE BEING KEPT ONLY WITH HIM. THIRDLY, THE AO HAS NOT PROVED THAT THE SOURCE OF C ASH DEPOSIT IS ASSESSEE. FOURTHLY, THE FOLLOWING DOCUMENTS WHIC H REMAINED UNREBUTTED PROVE THE GENUINITY OF THE LOAN. COPY OF STATEMENT RECORDED. CONFIRMED LEDGER ACCOUNT. CONFIRMATION. RATION CARD. DRIVING LICENSE. RELEVANT BANK STATEMENT. DOCUMENTS SHOWING AGRICULTURAL LAND AND PRODUCED THEREON. WITHOUT PREJUDICE, STATEMENT WAS RECORDED ON 18.12. 2008 AND THE' ASSTT. ORDER IS ALSO DTD. 18.12.08 AND IT WAS NEVER CONFRONTED, THEREFORE, IT CANNOT BE USED IN ASSTT. ADVERSELY.' 18. LD. CIT(A) OBSERVED AS UNDER: 8.5.2 IT IS SEEN FROM THE ACCOUNT COPY, THE AMOUNT RECEIVED DURING THE FINANCIAL YEAR RELEVANT FOR A. Y. WAS ON LY RS. 1,50,000/-. HENCE THE ADDITION, IF AT ALL TO BE MAD E, IS ONLY RS. 1,50,000/--. I AM IN AGREEMENT WITH THE CONTENTION OF THE AR IN THIS REGARD. AS SEEN FROM THE DETAILS FURNISHED, T HERE IS NO PROPER SOURCES FOR LENDING MONEY, THOUGH HE HAD CON FIRMED THE ADVANCE IN THE STATEMENT RECORDED. ON CAREFUL CONSI DERATION OF THE MATERIAL AVAILABLE ON RECORD, THE AMOUNT OF RS. 1,50,000/-, 8 WHICH WAS RECEIVED DURING THE YEAR IS TREATED AS U NEXPLAINED. RELIEF: RS. 1,50,000/-. 19. FROM BARE PERUSAL OF THE OBSERVATIONS MADE BY C IT(A) IT IS EVIDENT THAT HE HAS NOT AT ALL EXAMINED THE CREDITWORTHINES S OF THE LENDER PARTICULARLY WITH REFERENCE TO THE DOCUMENTS SHOWING AGRICULTURA L HOLDING AND PRODUCE THEREON. LD. CIT(A) HAS NOT GIVEN ANY COGENT REASON S FOR CONFIRMING THE ADDITION TO THE EXTENT OF RS. 1,15,000/-. 20. CONSIDERING THE ENTIRETY OF FACTS AND CIRCUMSTA NCES AND THE DETAILED DOCUMENTS SUBMITTED BY LENDER, WE ARE OF THE OPINIO N THAT THE ADDITION DESERVES TO BE DELETED AS LENDER HAS BEEN ABLE TO E STABLISH ITS IDENTITY, GENUINENESS OF THE TRANSACTION AND THE CAPACITY TO ADVANCE THE LOAN. ACCORDINGLY, THIS GROUND IS ALLOWED. 21. APROPOS THIRD ADDITION OF RS. 95,000/- IN RESPE CT OF MANJU KHATRI LD. COUNSEL DID NOT PRESS THE SAME. ACCORDINGLY THIS GR OUND IS DISMISSED AS NOT PRESSED. 22. BRIEF FACTS APROPOS GROUND NO. 2, AO NOTICED TH AT THERE WAS CASH DEPOSIT AMOUNTING TO RS. 50,000/- IN THE BANK ACCOU NT OF THE ASSESSEE ON 16.6.2005. THE SOURCE OF THE SAID CASH WAS EXPLAINE D AS RS. 17,000/-N EACH RECEIVED FROM MANOJ KUMAR, MOHD. SAFFIQUE AND MOHD. ASLAM. HE OBSERVED THAT IN RESPONSE TO NOTICE U/S 133(6), WHI CH WERE RECEIVED BACK IT TRANSPIRED THAT THERE WAS NO SUCH PERSON. ASSESSEE ALSO COULD NOT PRODUCE THEM BEFORE THE AO. ACCORDINGLY, ADDITION OF RS. 50 ,000/- WAS MADE, WHICH WAS CONFIRMED BY CIT(A). 9 23. AFTER HEARING BOTH THE PARTIES WE DO NOT FIND A NY REASON TO INTERFERE ON THIS COUNT AS THE ASSESSEE MISERABLY FAILED TO E XPLAIN THE BASIC THREE INGREDIENTS IN RESPECT OF THESE THREE LOANS. IN THE RESULT, THIS GROUND IS DISMISSED. 24. IN THE RESULT, REVENUES APPEAL IS DISMISSED AN D THE ASSESSEES CROSS OBJECTION IS PARTLY ALLOWED. ORDER PRONOUNCEMENT IN OPEN COURT ON 26/04/2016. SD/- SD/- (BEENA A. PILLAI) (S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 26/04/2016. *MP* COPY OF ORDER TO: 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI.