Sh. Manjit Singh Kalra, New Delhi V. ITO, New Delhi

CO 316/DEL/2011

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7980 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 26-10-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 29-08-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 06-09-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ANOOP KUMAR SINGH SENIOR
• Keywords: Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E : NEW DELHI) BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMEBR AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.3553/DEL./2011 (ASSESSMENT YEAR : 2007-08) ITO, WARD 20 (2), VS. SHRI MANJIT SINGH KALRA, NEW DELHI. C 24, TRANSPORT CENTRE, TIMAR PUR, DELHI 110 054. (PAN : AFMPK8600H) CO NO.316/DEL/2011 (IN ITA NO.3553/DEL./2011) (ASSESSMENT YEAR : 2007-08) SHRI MANJIT SINGH KALRA, VS. ITO, WARD 20 (2), C 24, TRANSPORT CENTRE, NEW DELHI. TIMAR PUR, DELHI 110 054. (PAN : AFMPK8600H) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI KAPIL GOEL, ADVOCATE REVENUE BY : SHRI ANOOP KUMAR SINGH, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER THE APPEAL FILED BY THE REVENUE AND CROSS OBJECTIO N FILED BY ASSESSEE EMANATE FROM THE ORDER OF THE CIT (APPEALS )-XXII, NEW DELHI DATED 06.05.2011 FOR THE ASSESSMENT YEAR 2007-08. ITA NO.3553/DEL/2011 CO NO.316/DEL/2011 2 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANS PORT UNDER THE NAME OF M/S. M.K. & CO. RETURN OF INCOME WAS FILED ON 3 1.10.2007 DISCLOSING INCOME AT RS.4,48,921/-. THE ASSESSEE WAS HAVING A LOAN ACCOUNT NO.011500NC00000476 AT PNB, CIVIL LINES, DELHI. TH E OUTSTANDING BALANCE AS ON 01.04.2006, I.E. A FIRST DAY OF THE F INANCIAL YEAR WAS OF RS.27,95,067/-. THE PART OF THE LOAN WAS REPAID DU RING THE RELEVANT FINANCIAL YEAR BY MAKING CASH PAYMENTS, DETAILS OF SUCH CASH REPAYMENT ARE AS UNDER :- DATE AMOUNT 04.04.2006 RS. 60,000/- 30.06.2006 RS. 1,11,000/- 04.11.2006 RS. 37,000/- 10.11.2006 RS. 37,000/- 29.11.2006 RS. 37,000/- 16.12.2006 RS. 7,00,000/- 08.01.2007 RS.14,20,029/- TOTAL : RS.24,02,029/- THE ASSESSEE DID NOT FILE ANY REPLY OR EXPLANATION CASH REPAYMENT BEFORE THE ASSESSING OFFICER. ASSESSING OFFICER MADE THE ADDITION OF CASH REPAYMENT TO THE INCOME OF ASSESSEE AS UNDISCLOSED INCOME. CIT (A) HAS GRANTED THE PART RELIEF BY HOLDING AS UNDER :- 10. I HAVE CAREFULLY CONSIDERED THE VARIOUS SUBMIS SIONS MADE BY THE APPELLANT AND THE OBSERVATIONS OF THE ASSESSING OFFICER AS PER THE REMAND REPORT. THERE I S NO DENYING THAT THE APPELLANT HAS ATTEMPTED TO RECONCI LE THE AVAILABILITY OF CASH BY RELYING ON A 'CURRENT ACCOU NT' WHICH DOES NOT APPEAR IN THE BALANCE SHEET AS ON 31 .3.2007 OF M/S M.K. & CO. EVEN THE PERSONAL BALANCE SHEET O F THE APPELLANT HAS BEEN FILED FOR THE FIRST TIME DURING THE ITA NO.3553/DEL/2011 CO NO.316/DEL/2011 3 APPELLATE PROCEEDINGS. THE SAID CURRENT ACCOUNT IN THE BOOKS OF M/S M.K. & CO., AS PRODUCED DURING THE APPELLATE PROCEEDINGS SHOWS INTRODUCTION OF CASH OF RS.8,55,000/- AND WITHDRAWAL OF CASH OF RS.16,30,35 2/- THROUGH THE SAID CURRENT ACCOUNT. THE CAPITAL ACCOU NT OF THE PROPRIETOR SHOWS INTRODUCTION OF CASH OF RS.17,00,0 00/- AND WITHDRAWAL OF CASH OF RS.7,80,000/-. THE CASH WITHDRAWALS SHOWN FROM THESE 2 ACCOUNTS ARE TALLIED WITH THE DEPOSITS IN CASH IN THE PNB HOME LOAN ACCOUNT. TO GIVE AN EXAMPLE, REPAYMENT OF HOME LOAN IN CASH OF RS.7,00,000/- ON 16-12-2006 HAS BEEN EXPLAINED AS WITHDRAWAL FROM THE BUSINESS THROUGH HIS CURRENT AC COUNT OF RS.5,05,352/-AND WITHDRAWAL THROUGH HIS CAPITAL ACCOUNT OF RS.1,93,648/-, BOTH ON 14-12-2006. ON 08-01-2007 A DEPOSIT OF RS.14,20,029/- IN THE PNB HOME LOAN ACCO UNT, HAS BEEN EXPLAINED TO BE OUT OF WITHDRAWALS THROUGH HIS CURRENT ACCOUNT OF RS.5,00,000/- ON 4-1-2007, AND O F RS.6,25,000/- ON 6-1-2007, AND WITHDRAWAL FROM HIS CAPITAL ACCOUNT OF RS.2,66,352/- ON 8-1-2007. IT SHOULD BE NOTED THAT THERE IS NO PLAUSIBLE REASO N FOR THE PROPRIETOR TO WITHDRAW MONEY PARTLY THROUGH HIS CURRENT ACCOUNT AND PARTLY THROUGH HIS CAPITAL ACCO UNT ON THE SAME DAY. BEING A PROPRIETARY BUSINESS, THERE W AS NO QUESTION OF LIMITS TO HIS DRAWINGS. THE WITHDRAWAL OF RS.5,05,352/- THROUGH CURRENT ACCOUNT AND OF RS.1,9 3,648/- THROUGH HIS CAPITAL ACCOUNT ON 14-12-2006 TO MAKE A DEPOSIT OF RS.7,00,000/- ON 16-12-2006 IN THE LOAN ACCOUNT, DEFIES LOGIC AND RATIONALE. THE DEPOSIT OF RS.14,20,029/- ON 8-1-2007 IN THE PNB HOME LOAN ACC OUNT IS ALSO EXPLAINED TO BE OUT OF THREE WITHDRAWALS, T WO FROM THE CURRENT ACCOUNT AND ONE FROM THE CAPITAL ACCOUN T BETWEEN 4-1-2007 AND 8-1-2007. IT IS ALSO SEEN THAT AS PER THE CONSOLIDATED CASH F LOW STATEMENT OF CASH IN HAND OF THE APPELLANT, NOT INC LUDING CASH IN HAND OF THE BUSINESS, THE CASH IN HAND VARI ED BETWEEN RS.16,40,302/- ON 1-4-2006 TO RS.87,500/- O N 31.3.2007. FROM 1-4-2006 TILL 29-3-2007 THE CASH IN HAND REMAINED BETWEEN RS.6,00,000/- TO RS.11,00,000/-. T HE SAID CASH IN HAND WAS INTRODUCED IN THE BOOKS SOMET IMES THOUGH CURRENT ACCOUNT AND SOMETIMES THROUGH CAPITA L ACCOUNT AND ALSO DEPOSITED IN THE PNB HOME LOAN ACC OUNT ITA NO.3553/DEL/2011 CO NO.316/DEL/2011 4 AND THE ORIENTAL BANK OF COMMERCE SAVINGS ACCOUNT. IT CANNOT BE LOST SIGHT OF THAT THE APPELLANT SOLD A V ALUABLE PROPERTY IN G.K.-II, NEW DELHI ON 10-1-2007 FOR A DISCLOSED CONSIDERATION OF RS.54,50,000/-. THE APPE LLANT FAILED TO DISCLOSE THE SHORT TERM CAPITAL GAIN IN T HE RETURN OF INCOME FILED. THE DEPOSITS IN CASH IN THE PNB HOME LOAN ACCOUNT ARE IN DECEMBER 2006 AND JANUARY 2007. AS CORRECTLY ARGUED BY THE ASSESSING OFFICER IN HIS RE MAND REPORT, THE CLAIM OF THE CURRENT ACCOUNT AND OF THE CASH IN HAND ON 1-4-2006 OF RS.16,40,302/- HAS NO BASIS. TH OUGH SPECIFICALLY ASKED, THE APPELLANT HAS NOT SHOWN THE SOURCE OF CASH IN HAND OF RS.16,40,302/- AS ON 1-4-2006. I AM CONSTRAINED TO AGREE WITH THE ASSESSING OFFICER THA T THE EXPLANATION OFFERED DURING APPELLATE PROCEEDINGS AR E AN AFTERTHOUGHT AND DO NOT TALLY WITH THE COPIES OF AC COUNTS FILED WITH THE RETURN OF INCOME. AS DISCUSSED EARLIER, THE CASH BOOK WAS FOUND TO HAVE A NEGATIVE CASH BALANCE ON 4 DATES, WHICH CAST S DOUBT UPON THE VERACITY OF THE AUDIT CARRIED OUT BY M/S S INGH & JAIWAL, CHARTERED ACCOUNTANTS. THE WITHDRAWALS CLAI MED TO BE MADE IN ODD AMOUNTS THROUGH CURRENT ACCOUNT AND CAPITAL ACCOUNT ON THE SAME DATE, DO NOT INSPIRE CONFIDENCE. AFTER CONSIDERING THE VARIOUS FACTS AND CIRCUMSTANCES, IT IS HELD THAT THE CLAIM OF OPENING CASH BALANCE OF RS.16,40,302/- IS NOT SATISFACTORILY PRO VEN. THE CLAIM OF A CURRENT ACCOUNT USED FOR WITHDRAWALS AND DEPOSITS IN CASH IS ALSO NOT ACCEPTED AS THIS EXPLA NATION HAS BEEN FURNISHED FOR THE FIRST TIME DURING THE APPELL ATE PROCEEDINGS AND IS NOT REFLECTED IN THE AUDITED BAL ANCE SHEET. EVEN THE CAPITAL ACCOUNT FILED DURING THE AP PELLATE PROCEEDINGS DOES NOT TALLY WITH THE CAPITAL ACCOUNT FURNISHED DURING ASSESSMENT PROCEEDINGS. THE APPELL ANT HAS FAILED TO PROVE THE SOURCES OF CASH DEPOSITED O F RS.16,40,352/- IN THE CURRENT ACCOUNT OF HIS BUSINE SS CONCERN. AFTER CONSIDERING THE CASH WITHDRAWALS FRO M THE ORIENTAL BANK OF COMMERCE SAVINGS ACCOUNT NO. 3423 OUT OF SALE PROCEEDS OF THE HOUSE AND AFTER CONSIDERING ' THE WITHDRAWALS IN CASH THROUGH THE CAPITAL ACCOUNT, TH E ADDITION OF RS.24,02,029/- IS CONFIRMED TO THE EXTE NT OF RS.16,40,302/- BEING THE UNPROVEN OPENING CASH IN H AND. ITA NO.3553/DEL/2011 CO NO.316/DEL/2011 5 3. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. IN T HE REVENUES APPEAL, THE ISSUE INVOLVED IS OF THE TOTAL RELIEF GRANTED B Y THIS ORDER WAS OF RS.7,61,727/-. WE FIND THAT THE TAX EFFECT IN TH IS APPEAL IS LESS THAN RS.3 LACS. THE APPEAL IS FILED ON 14.07.2011 AND AS PER THE INSTRUCTION NO. 3/2011 DATED 09.02.2011, THE REVENUE IS NOT PERM ITTED TO FILE APPEAL BEFORE THE TRIBUNAL IF THE TAX EFFECT IS LESS THA N RS.3.00 LAKH. THIS APPEAL DOES NOT FALL IN ANY OF THE EXCEPTIONS PROVI DED IN THE INSTRUCTION NO. 3/2011. THE APPEAL OF REVENUE IS NOT MAINTAINAB LE IN THE INSTANT CASE AS THE TAX EFFECT IS LESS THAN RS.3 LACS. ACCORD INGLY, IT IS HELD THAT APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND DISMIS SED IN LIMINE. 4. THERE IS A DELAY IN FILING THE CROSS OBJECTION B Y THE ASSESSEE. WE HAVE HEARD BOTH THE SIDES ON THE CONTENTION OF THE DELAY. AFTER HEARING BOTH THE SIDES, WE CONDONE THE DELAY AND DECIDE THE CROSS OBJECTION ON MERITS. IN THE CROSS OBJECTION, THE ASSESSEE HAS C HALLENGED THE SUSTENANCE OF ADDITION OF RS.16,40,302/- BY CLAIMING THAT THE ADDITION HAS BEEN SUSTAINED BY IGNORING THE BALANCE SHEET AS ON 31.03 .2006 AND IGNORING THE PAST TAX RECORD OF THE ASSESSEE. WE HAVE CONSIDERE D THE SUBMISSIONS OF BOTH THE SIDES. THE ASSESSEE CLAIMED THAT IN THE C ONSOLIDATED CASH FLOW STATEMENT FOR ASSESSMENT YEAR 2006-07, THERE IS AN OPENING CASH BALANCE OF RS.16,40,302/- AND CASH WITHDRAWALS FROM THE CAP ITAL ACCOUNT, CURRENT ACCOUNT AND BANK ACCOUNTS. THIS BALANCE SHEET AS ON 31.03.2006 SHOWING THE CASH BALANCE OF RS.16,40,302/- WAS NOT FILED ALONG WITH THE ITA NO.3553/DEL/2011 CO NO.316/DEL/2011 6 RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07. THE CASH BOOK PRODUCED TO EXPLAIN CASH BALANCE ALSO SHOWS NEGATIVE BALANCE ON CERTAIN DATES WHICH ITSELF MAKE IT UNRELIABLE. ASSESSEE HAD TRI ED TO RECONCILE THE AVAILABILITY OF CASH BY RELYING ON CURRENT ACCOUNT BUT SUCH ACCOUNT DOES NOT APPEAR IN THE BALANCE SHEET AS ON 31.03.2007 OF M/S. M.K. & CO. IN OUR CONSIDERED VIEW, THE ASSESSEE HAS FAILED TO EXP LAIN THE SOURCE OF CASH IN HAND OF RS.16,40,302/- AS ON 01.04.2006. IN VIE W OF THESE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS FAILED TO OFF ER AN EXPLANATION BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE CIT (A) IN THE APPELLATE PROCEEDINGS. WHATEVER EXPLANATION OFFERED DURING T HE APPELLATE PROCEEDINGS ARE JUST AN AFTER-THOUGHT AND THE FACTS DO NOT TALLY WITH THE COPY OF ACCOUNTS FILED ALONG WITH THE RETURN OF INC OME. THE CASH BOOK OF THE ASSESSEE WAS FOUND TO HAVE NEGATIVE CASH BALANC E ON MANY DATES WHICH ALSO CASTS DOUBT ABOUT THE VERACITY OF THE AU DIT CARRIED OUT OF THE ASSESSEES ACCOUNTS. THE SO-CALLED WITHDRAWALS MAD E IN ODD AMOUNTS THROUGH THE CURRENT ACCOUNT AND CAPITAL ACCOUNT ON THE SAME DATE ALSO DO NOT INSPIRE CONFIDENCE IN THE SUBMISSIONS OF THE AS SESSEE. IN THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT CIT (A) HAS RIGHTLY SUSTAINED THE ADDITION OF RS.16,40,302/- WHICH THE ASSESSEE HAS M ISERABLY FAILED TO PROVE. THE ASSESSEES CLAIM THAT CURRENT ACCOUNT U SED FOR WITHDRAWAL AND DEPOSITS IN CASH SUBMITTED BEFORE THE CIT (A). IT DID NOT REFLECT IN THE AUDITED BALANCE SHEET FILED ALONG WITH THE RETURN O F INCOME. EVEN THE ITA NO.3553/DEL/2011 CO NO.316/DEL/2011 7 CAPITAL ACCOUNT FILED BEFORE THE CIT (A) WAS NOT IN CONFORMITY WITH THE CAPITAL ACCOUNT FURNISHED DURING THE ASSESSMENT PRO CEEDINGS. ALL THESE FACTS SUGGEST THAT ASSESSEE HAS FAILED TO PROVE THE SOURCE OF CASH DEPOSIT OF RS.16,40,302/- IN THE CURRENT ACCOUNT OF HIS BUS INESS CONCERN. THEREFORE, WE FIND NO MERIT IN THE CROSS OBJECTION FILED BY THE ASSESSEE. THE SAME IS DISMISSED. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE AND C ROSS OBJECTION FILED BY THE ASSESSEE STAND DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON THIS 26 TH DAY OF OCTOBER, 2012. SD/- SD/- (U.B.S. BEDI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED THE 26 TH DAY OF OCTOBER, 2012 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A)-XXII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR/ITAT NEW DELHI