Shri Mahaveer Prasad, SRIGANGANAGAR V. ACIT, SRIGANGANAGAR

CO 49/JODH/2009

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8376 (ITAT-JODHPUR)
• Duration Of Justice: 3 year(s) 4 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 11-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 23-01-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 18-09-2009
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SURESH OHJA
• Assessee Lawyers: G R KONKANI
• Keywords: Unexplained cash credit; Notional interest
• Section: 143(3); 54F; 68; 69; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH, JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K.SAINI, ACCOUNTANT MEMBER ITA NO. 365/JU/2009 ASSESSMENT YEAR : 2006-07 THE ACIT, CIRCLE, VS. SHRI MAHABIR PRASAD, SRIGANGANAGAR C/O MS SUNTEX INDIA, SRIGANGANAGAR PAN NO. AAQPP7386L & C.O. NO. 49/JU/2009 (IN ITA NO. 365/JU/2009) ASSESSMENT YEAR : 2006-07 SHRI MAHABIR PRASAD, VS. THE ACIT, CIRCLE, C/O MS SUNTEX INDIA, SRIGANGANAGAR SRIGANGANAGAR (APPELLANT) (RESPONDENT) APPELLANT BY : G.R. KONKANI RESPONDENT BY : SHRI SURESH OHJA DATE OF HEARING : 23.01.2013 DATE OF PRONOUNCEMENT : 11.02.2013 ORDER PER HARI OM MARATHA, J.M. THE APPEAL BY THE REVENUE AND CROSS OBJECTION BY TH E ASSESSEE ARE DIRECTED AGAINST THE ORDER OF LEARNED CIT(A) DATED 24.3.2009 PERTAINING TO ASSESSMENT YEAR 2006-07. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE DERIVES INCOME FROM INTEREST, REMUNERATION AND CAPITAL GAIN S. FOR ASSESSMENT YEAR 2006-07, HE FILED HIS RETURN OF INCOME ON 30.10.200 6 DISCLOSING TOTAL INCOME OF RS. 14,14,400/-. THE ASSESSEE IS A PARTNE R IN THE FIRM M/S SUNTEX INDIA. IN THE INCOME DISCLOSED FOR THE YEAR, THE A SSESSEE HAS INCLUDED LONG TERM CAPITAL GAIN OF RS. 12,76,288/-. THE ASSESSME NT WAS COMPLETED U/S 143(3) OF THE ACT ON 29.12.2008. THE ASSESSING OFF ICER MADE VARIOUS ADDITIONS AGAINST WHICH ASSESSEE FILED FIRST APPEAL AND THE LEARNED CIT(A) HAS DELETED MANY ADDITIONS, THEREFORE, BOTH THE PA RTIES ARE NOW AGGRIEVED. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL. 'ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN:- I) DELETING THE ADDITION OF RS. 1,90,000/- MADE BY HOLDING THAT ACTUALLY THERE IS NO EXCESS OF CASH BUT ON THE OTHE R HAND AS PER CHART, THOUGH THE AO THERE IS SHORTAGE OF CASH AND SO NO ADDITION CAN BE MADE BY APPLYING THE PROVISION OF SECTION 69 A II) DELETING THE ADDITION OF RS. 1,87,000/- A S NOTIONAL INTEREST ON THE CASH IN HAND BY HAULING THAT THE THEORY OF INCOME- TAX IS THAT ONLY THE REAL INCOME SHOULD BE TAXED AND NO NOTIONAL I NCOME CAN BE TAXED. III) DELETING THE ADDITION OF RS. 11,00,000/- + RS . 2,00,000/- MADE ON ACCOUNT OF SECTION 68 OF THE IT ACT, 1961 BY HOLDIN G THAT ENTRIES FOUND RECORDED IN THE BANK ARE EVIDENCED BY THE CAS H IN HAND AVAILABLE, HENCE NO ADDITION U/S 68 CAN BE MADE. 3 IV) DELETING THE ADDITION OF RS. 51430 + 18807 MAD E ON ACCOUNT ON NON CHARGING OF INTEREST FROM M/S GANESHGARHIA ROLL ER FLOUR MILL AND M/S BAJAJ TEA HOUSE BY HOLDING THAT AO COU LD NOT BRING ON RECORD THAT ASSESSEE HAS RECEIVED SOME INCOME FR OM THESE PARTIES WHICH IS NOT DISCLOSED IN THE RETURN NOR ESTABLISH THE ASSESSEE HAS GAINED ANY RIGHT TO RECEIVE THE INTEREST INCOME. V) ALLOWING THE REBATE CLAIMED U/S 54F BY HOLDING THAT THE PROPERTY WAS RESIDENTIAL AT THE TIME OF PURCHASE HENCE THE A SSESSEE IS ELIGIBLE FOR THE EXEMPTION U/S 54F. 4. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS CROSS OBJECTION:- 1. THAT THE COMMISSIONER OF INCOME TAX RIGHTLY DELETED THE ADDI TION OF RS. 1,90,000/- MADE BY THE INCOME TAX OFFICER U/ S 69 A. 2. THAT THE COMMISSIONER OF INCOME TAX RIGHTLY DELETED THE ADDITION OF RS.L,87,000/- BECAUSE IN FACT THE ADDITION WERE MADE ON CONJUNCTURES AND SURMISES. 3. THAT THE COMMISSIONER OF INCOME TAX RIGHTLY DELETED THE ADDITION OF RS. 11,00,000/-AND RS.2,00,000/- MADE UNDER SECT IOND 68, BECAUSE THE ASSESSEE SUCCESSFULLY DISCHARGED THE BU RDEN. 4. THAT THE ADDITION OF RS. 51,430/- AND RS.18807 MADE ON ACCOUNT OF NON-CHARGING OF INTEREST FROM GANESH GARHIA ROLLAR FLOUR MILL AND BAJAJ TEA HOUSE BECAUSE THE ASSESSEE WAS HAVING SUFFICIENT MONEY AND THE INTEREST IS ALLOWABLE AS PER SECTION 36 OF THE INCOME TAX ACT. 5. THAT THE COMMISSIONER OF INCOME TAX RIGHTLY ALLOWED DEDUCTION U/S 54F OF THE INCOME TAX ACT SAYING THAT THE PROPERTY 4 WAS RESIDENTIAL WHICH IS WELL PROVED FROM THE RECOR D OF THE ASSESSEE. 6. THAT THE COMMISSIONER OF INCOME TAX SHOULD HAVE ALL OWED THE INDEXING OF THE PROPERTY WHICH WAS RECEIVED BY WAY OF WILL BECAUSE AS PROVIDED IN THE ACT. PURCHASE VALUE OF T HE PREVIOUS OWNER HAS TO BE CONSIDERING FOR THE PURPOSE OF CALC ULATION OF CAPITAL GAIN. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE RECORDS AVAILABLE BEFORE US. AT THE TIME OF HEARING, LEARNED LD. AR SHRI SURESH OJHA CHOOSE NOT TO PRESS THE GROUNDS R AISED IN THE CROSS OBJECTION. ACCORDINGLY, THE CROSS OBJECTION IS DIS MISSED AS NOT PRESSED. 6. IN THE REVENUES APPEAL, THERE ARE FIVE GROUNDS. REGARDING GROUND NO.(I) TO (IV), THE LEARNED LD. DR HAS MAINLY RELI ED ON THE REASONS GIVEN BY THE ASSESSING OFFICER FOR MAKING IMPUGNED ADDITIONS . ON THE CONTRARY, LD. AR HAS RELIED ON THE FINDINGS GIVEN FOR DELETING TH ESE ADDITIONS BY LEARNED CIT(A). IN RESPECT OF GROUND NO. (V) RELATING TO CLAIM U/S 54F, THE LEARNED LD. DR HAS MADE FURTHER SUBMISSIONS. 7. AFTER HEARING BOTH THE SIDES VIS--VIS THE SUBMI SSIONS OF THE PARTIES, WE HAVE FOUND THAT THERE IS NO ERROR IN THE FINDING S OF LEARNED CIT(A) IN RESPECT OF ALL THESE GROUNDS. 8. THE BRIEF FACTS LEADING TO THIS APPEAL ARE THAT IN THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD WITHDRAWN AND DEPOS ITED SEVERAL AMOUNTS 5 FROM AND IN THE SAME BANK ACCOUNT. THE ASSESSEE HAS SHOWN OPENING CASH IN HAND OF RS. 2 LAKHS AND THE CLOSING CASH IN HAND OF RS. 12 LAKHS. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE. BUT THE ASSE SSING OFFICER HAS PREPARED A CASH FLOW STATEMENT AND FROM THAT HE HA S OBSERVED THAT THERE IS AN EXCESS CASH OF RS. 1,90,000/- AND THEREFORE, HE HAS ADDED THE SAME BY TREATING IT AS ASSESSEES UNDISCLOSED INCOME U/S 69 A OF THE ACT. THE CASH FLOW STATEMENT PREPARED BY THE ASSESSING OFFICER WH ICH APPEARS AT PAGE NO.2 OF THE ASSESSING OFFICERS ORDER AND ALSO AT P AGE NO.2 HIS ORDER IS AS UNDER:- DATE CASH RECEIVED. AMOUNT (IN RS.) DATE CASH PAID AMOUNT (IN RS.) 1.4.2005 OP. BAL. 200000/- 5.11.2005 P.N.B. 10000/- 1.8.2005 B.O.R. 400000/ 28.12.2005 P.N.B. 300000/- 13.5.2005 P.N.B. 800000/ 31.12.2005 P.N.B. 100000/- 25.5.2005 P.N.B. 500000/ 9.1.2006 P.N.B. 300000/- 27.5.2005 P.N.B. 500000/ 28.3.2006 P.N.B. 400000/- 16.6.2005 P.N.B. 100000/ 31.3.2006 CL.BAL. 1200000/ - 9. THE ABOVE CASH-FLOW STATEMENT PREPARED BY THE AS SESSING OFFICER HAS BEEN ASSAILED BY THE ASSESSEE BY MAKING A SUBMISSIO N THAT IT IS NOT A CORRECT VERSION AS PER THE FACTUAL MATRIX. ACCORDING TO LD . AR, THE ASSESSING OFFICER HAS NOT CONSIDERED RS. 2 LAKHS DEPOSITED BY THE ASSESSEE WITH M/S SUNTEX INDIA IN WHICH HE IS A PARTNER ALTHOUGH HE O BSERVED THIS FACT IN THE ASSESSMENT ORDER IN PARA 3 AT PAGE 3. THAT AN AMOU NT OF RS. 10,000/- 6 DEPOSITED ON 5.11.2005 IS NOT OUT OF THE CASH IN HA ND BUT IS OUT OF THE FUNDS WITHDRAWN FROM M/S SUNTEX INDIA. ACCORDING TO HIM, AFTER CONSIDERING BOTH THE ABOVE AMOUNTS THERE WILL REMAIN NO DIFFERE NCE IN THE CASH IN HAND. HOWEVER, LD. DR HAS CONTRADICTED THE ABOVE SUBMISSI ON AND HAS RELIED ON THE CASH-FLOW STATEMENT PREPARED BY THE ASSESSING O FFICER. 10. WE HAVE CONSIDERED AND HAVE FOUND THIS SUBMISSI ON OF THE LD. AR AS CORRECT. OTHERWISE ALSO, FROM THIS VERY CHART, IT IS REVEALED THAT TOTAL CASH WITHDRAWN BY THE ASSESSEE COMES TO RS. 25 LAKHS AS AGAINST TOTAL DEPOSIT OF RS. 11,10,000/-. EVEN AFTER ADDING THE CLOSING CAS H IN HAND, THE TOTAL COMES TO RS. 23,10,000/-. THUS, THERE REMAINS NO SH ORTAGE OF CASH AS HAS BEEN FOUND BY THE ASSESSING OFFICER. THEREFORE, WE ARE ALSO OF THE CONSIDERED OPINION THAT THIS AMOUNT CANNOT BE ADDED U/S 69A OF THE ACT AND CONFIRM THE DELETION MADE BY LEARNED CIT(A) OF RS. 1,90,000/-. 11. AS AGAINST THE ADDITION OF RS. 1,87,500/- MADE ON ACCOUNT OF NOTIONAL INTEREST ON THE CASH IN HANDS, WHICH REMAINED WITH THE ASSESSEE DURING THE PERIOD FROM 16.6.2005 TO 15.12.2005, IT IS FOUND TH AT THE ASSESSEE WAS HAVING CASH IN HAND OF RS. 25 LAKHS BUT MADE A PAYM ENT OF ADVANCE FOR THE PURCHASE OF PROPERTY THROUGH CHEQUE AND HAS ALSO MA DE WITHDRAWALS OF PETTY AMOUNT FOR MEETING HOUSEHOLD EXPENSES. THE A SSESSING OFFICER HAS PRESUMED THAT THE INTEREST @ 15% ON THIS AMOUNT FOR THE PERIOD STATED ABOVE SHOULD BE ADDED ON NOTIONAL BASIS. THE CASE O F THE ASSESSEE IS THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE H AD PURCHASED THE HOUSE AND FOR THAT PURCHASE HE HAD WITHDRAWN FROM THE BAN K FOR MAKING THE 7 PAYMENTS. THE ADVANCE WAS GIVEN THROUGH CHEQUE FO R THE SAKE OF SAFETY AND NOT FOR THE FACT THAT CASH IN HAND WAS NOT AVAI LABLE. THE HOUSE IS STATED TO HAVE BEEN PURCHASED FOR A TOTAL CONSIDERATION OF RS. 42 LAKHS AND OUT OF THE SAME A SUM OF RS. 10,00,000/- WAS PAID AS ADVA NCE. IT WAS STATED THAT THE CASH IN HAND WAS KEPT BACK BECAUSE THE SELLER C OULD DEMAND THE BALANCE CONSIDERATION AT ANY TIME AND TO MEET THAT SITUATIO N CASH WAS DESIRABLE TO BE KEPT IN HAND. THUS, PART PAYMENT THROUGH CHEQUE CAN NOT LEAD A CONCLUSION THAT THE ASSESSEE DID NOT POSSESS CASH A T THAT POINT OF TIME. 12. WE HAVE FOUND THAT THE SUBMISSIONS OF THE ASSES SEE ARE CORRECT. THE ASSESSING OFFICER HAS NOT GIVEN LOGICAL REASONING O R EVIDENCE TO PROVE THAT THE ASSESSEE HAD EARNED SOME INCOME WHICH HE HAD NO T DISCLOSED. ACCORDINGLY, WE CONFIRM THE DELETION OF RS. 1,87,50 0/- MADE BY THE LEARNED CIT(A). 13. THE NEXT ISSUE IS REGARDING THE ADDITION OF RS. 11,00,000/- MADE ON ACCOUNT OF DEPOSITS IN THE BANK ACCOUNT ON DIFFERE NT DATES BY TREATING THEM AS UNEXPLAINED CREDITS U/S 68 OF THE ACT. THE ASSES SING OFFICER HAS ADDED FOLLOWING AMOUNTS IN ASSESSEES DECLARED INCOME. RS. 300000/- DESPOTISED IN S.B. A/C WITH PNB ON 28 .12.2005 RS. 100000/- -DO- ON 31.12.2005 RS. 300000/- -DO- ON 19.01.2006 RS. 400000/- -DO- ON 28.03.2006 8 THE LEARNED CIT(A) HAS FOUND THESE DEPOSITS OUT OF CASH AVAILABLE WITH HIM. 14. AFTER HEARING BOTH SIDE, WE HAVE ALSO FOUND THA T ENTRIES RECORDED IN THE BANK ARE EVIDENCED BY CASH IN HAND AVAILABLE WI TH THE ASSESSEE, THEREFORE, THIS AMOUNT CANNOT BE ADDED U/S 68 OF TH E ACT. ACCORDINGLY, DELETION OF RS. 11,00,000/- IS JUSTIFIED. 15. REGARDING ADDITION OF RS. 2 LAKHS DEPOSITS WITH M/S SUNTEX INDIA, SRIGANGANAGAR IN WHICH THE ASSESSEE IS A PARTNER, W E HAVE FOUND THAT THIS DEPOSIT CAN VERY WELL BE OUT OF OPENING CASH IN HAN D. ON 1.4.2005, THE ASSESSEE HAD OPENING CASH IN HAND OF RS. 2 LAKHS WH ICH WAS LATER ON 23.4.2005 MAY HAVE BEEN DEPOSITED IN THE ABOVE FIRM . THEREFORE, THIS ADDITION IS ALSO NOT JUSTIFIED. 16. LASTLY, THE ADDITIONS OF RS. 51,430/- AND RS. 1 8,807/- ON ACCOUNT OF NON CHARGING OF INTEREST FROM M/S GANESHGARIA ROLLE R FLOUR MILL AND M/S BAJAJ TEA HOUSE RESPECTIVELY, ARE FOUND TO BE BASED ON NO LOGIC AND WITH THE REASONING GIVEN THESE ADDITIONS CANNOT BE SUSTA INED. WE HAVE FOUND THAT THE ASSESSING OFFICER HAS NOT BROUGHT ON RECOR D ANY EVIDENCE TO PROVE THAT THE ASSESSEE HAS RECEIVED SOME MONIES FROM THE SE PARTIES AND THE SAME HAVE NOT BEEN DISCLOSED IN THE RETURN OF INCOME. AC CORDINGLY, THESE DELETIONS ARE ALSO IN ORDER. 9 17. REGARDING CLAIM OF REBATE U/S 54F OF THE ACT, T HE FACTS ARE THAT THE ASSESSEE HAD SOLD A PIECE OF LAND SITUATED IN PANWA TA AREA OF JODHPUR. THIS LAND WAS PURCHASED ON 3.3.1989. HALF OF THIS LAND BELONGS TO THE ASSESSEE AND HALF TO HIS FATHER. HIS FATHER EXPIRED ON 26.1 1.1990 AND THE ASSESSEE BECAME FULL OWNER OF THE ENTIRE LAND. SUBSEQUENTLY , THIS LAND WAS SOLD FOR A CONSIDERATION OF RS. 58,83,570/-. THE ASSESSEE H AD INVESTED RS. 45,48,600/- IN THE PURCHASE OF HOUSE NO. 20, PUBIC PARK, SRI SRIGANGANAGAR AND CLAIMED REBATE U/S 54F OF THE ACT . THE ASSESSEE ALSO CLAIMED INDEXATION FOR THE FINANCIAL YEAR 1988-89 I N WHICH THE LAND WAS PURCHASED BUT THE ASSESSING OFFICER HAS ALLOWED SU CH INDEXATION FROM THE YEAR 1991 FOR THE SHARE OF THE FATHER OF THE ASSE SSEE WHICH FELL TO HIS SHARE AT HIS DEATH. BUT THE ASSESSING OFFICER DENI ED THIS CLAIM BY OBSERVING THAT THIS BUILDING IS NOW USED FOR A COM MERCIAL PURPOSE AND ALSO THAT THIS PROPERTY IS SITUATED IN THE MARKET A REA. ACCORDINGLY, HE HAS FOUND THAT THE PURCHASED PROPERTY FALLS IN THE COM MERCIAL AREA AND SIT IT CANNOT BE TREATED AS A RESIDENTIAL HOUSE. CONTRARY TO THE ABOVE, THE LEARNED CIT(A) HAS FOUND THAT, AS PER THE REGISTERED DEED, THIS PROPERTY IS A RESIDENTIAL PROPERTY AND, THEREFORE, HE HAS REVERSE D ASSESSING OFFICERS FINDINGS TO ALLOWA EXEMPTION U/S 54F OF THE ACT. 18. BEFORE US, BOTH PARTIES HAVE MAINTAINED THEIR EARLIER STAND. WE HAVE FOUND THAT THE REASONS GIVEN BY THE ASSESSING OFFIC ER FOR DISALLOWING THE BENEFIT OF SECTION 54 ARE NOT CORRECT AS PER LAW. T HE ASSESSEE HAD PURCHASED A RESIDENTIAL PROPERTY. AS PER SETTLED LAW, THE NATURE OF THE PROPERTY AT THE POINT OF TIME OF ITS PURCHASE HAS TO BE CONSIDERED AND NOT ITS SUBSEQUENT 10 USER. ACCORDINGLY, WE CONFIRM THE ACTION OF THE L EARNED CIT(A) IN THIS REGARD ALSO. 19. AS A RESULT OF OUR ABOVE FINDINGS, THE APPEAL O F THE REVENUE STANDS DISMISSED. 20. IN THE RESULT, THE APPEAL OF THE REVENUE AND CR OSS OBJECTION OF THE ASSESSEE ARE DISMISSED. (ORDER PRONOUNCED IN THE OPEN COURT ON 11.02.2013 ) SD/- SD/- (N.K.SAINI) (HARI OM MARATHA) ACCOUNTANT MEMBER JUDICIAL MEMER DATED : FEBRUARY, 2013 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR