The ITO, Rajkot Ward-5(3), Morbi V. Shri Mukesh Chhaganlal Sommanek, Morbi

ITA 103/RJT/2011

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0212 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 5 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 01-04-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: J C RANPURA
• Keywords: Unexplained cash credit; Unexplained investment; Corroborative evidences; Retraction
• Section: 133A; 131

Judgement Text

: : IN THE INCOME TAX APPELLATE TRIBULAL: RAJKOT BENCH: RAJKOT . .. . . . . . , , , , . .. . . . . . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K . SRIVASTAVA, AM ITA NO. 103/RJT/2011 / ASSESSMENT YEAR 2004-05 INCOME TAX OFFICER V. MUKESH CHHAGANLAL SOMMANEK WARD 5(3), SONI BAZAR PRTOP. DILKHUSH BHEL HOUSE MORBI NASTA GALI-PARA BAZAR, MORBI PAN:AFNPS7235M DATE OF HEARING : 17.7.2012 DATE OF PRONOUNCEMENT : 14.9.2012 REVENUE BY : SHR I AVINASH KUMAR ASSESSEE BY : SHRI J C RANPURA. / // / ORDER . .. . . . . . /D. K. SRIVASTAVA: THE APPEAL FILED BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER PASSED BY THE CIT(A) ON 27.1.2011 DELETING THE ADDITION OF RS.9,25,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED INVESTMENT AND ALSO ADDITION OF RS.1,23,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT. 2. THE ASSESSEE IS AN INDIVIDUAL. HE IS ENGAGED IN THE BUSINESS OF SALE AND SERVICE OF FOOD PRODUCTS LIKE BHELPURI. HE PURCHA SED A SHOP AT MORBI ON 30.7.2003 FOR WHICH CONSIDERATION WAS SHOWN IN THE INSTRUMENT OF PURCHASE AT RS.3,00,000/-. THE SAID INVESTMENT OF RS.3,00,000 /- WAS MADE BY THE ASSESSEE OUT OF LOAN AMOUNTING TO RS.2,20,000/- TAKEN BY TH E ASSESSEE FROM RAJKOT NAGRI SAHAKARI BANK LTD. AND REMAINING SUM OUT OF PERSONA L SAVINGS. SURVEY U/S 133A OF THE INCOME-TAX ACT 1961 WAS CARRIED OUT ON 19.9. 2003 FOLLOWED BY HIS STATEMENT RECORDED U/S 131 OF THE SAID ACT. IT IS S TATED IN THE ASSESSMENT ORDER THAT THE ASSESSEE, IN HIS STATEMENT RECORDED AT THE TIME OF SURVEY, HAS ADMITTED TO HAVE PURCHASED A SHOP FOR A SUM OF RS.12,25,000/ -. IT IS THE CASE OF THE ASSESSEE THAT HE HAS RETRACTED FROM THE SAID STATEM ENT SOON THEREAFTER. 3. IT IS IN THE AFORESAID BACKGROUND THAT THE ASSES SEE FILED HIS RETURN OF INCOME ON 31.10.2004 DECLARING TOTAL INCOME AT RS. 64,910/-. AFTER PROCESSING, 2 ITA NO. 103/RJT/2011 THE RETURN WAS SELECTED FOR SCRUTINY AS A RESULT OF WHICH A SUM OF RS.9,25,000/- WAS TREATED AS PAYMENT MADE IN CASH (I.E. ON MONEY) FOR PURCHASING THE SAID PROPERTY OVER AND ABOVE THE ONE RECORDED IN THE INS TRUMENT OF PURCHASE. IN THE ABSENCE OF SATISFACTORY EXPLANATION REGARDING THE N ATURE AND SOURCE OF THE SAID SUM PAID AS ON-MONEY, THE AO TREATED THE SAID SUM O F RS.9,25,000/- AS UNEXPLAINED INVESTMENT AND CONSEQUENTLY TAXED THE S AME. THE AO FURTHER TAXED A SUM OF RS.40,000/- BEING DEPOSITS MADE IN SB A/C WITH INDIAN BANK AS ALSO OPENING BALANCE OF RS.83,000/- WITH SYNDICATE BANK AS UNEXPLAINED WITH REFERENCE TO THE BOOKS OF ACCOUNT. ON APPEAL, THE L D. CIT(A) DELETED BOTH THE ADDITIONS MADE BY THE AO. 4. AGGRIEVED BY THE ORDER PASSED BY THE CIT(A) THE DEPARTMENT IS IN APPEAL BEFORE THIS TRIBUNAL. IN SUPPORT OF GROUND NO.1, TH E LD. DR SUBMITTED THAT THE ASSESSEE HIMSELF HAS ADMITTED IN HIS STATEMENT RECO RDED ON 19.9.2003 THAT THE ASSESSEE HAD PURCHASED A SHOP FOR A SUM OF RS.12,25 ,000/- OUT OF WHICH A SUM OF RS.3,00,000/- ALONE WAS RECORDED IN THE INSTRUME NT OF PURCHASE AND THE REMAINING SUM WAS PAID IN CASH. IT WAS FURTHER STAT ED THAT THE ASSESSEE HAD SOUGHT TO EXPLAIN THE NATURE AND SOURCE OF THE SAID SUM OF RS.9,00,000/- THROUGH LOANS ALLEGEDLY TAKEN FROM 7 PARTIES MENTIONED AT P AGE 2 OF THE ASSESSMENT ORDER. ACCORDING TO HIM, THE ASSESSEE HAS FAILED TO EXPLAIN THE GENUINENESS OF THOSE LOANS AND THEREFORE THE AO WAS JUSTIFIED IN T REATING THE IMPUGNED SUM AS UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN PURC HASE OF SHOP. HIS SECOND SUBMISSION WAS THAT EVEN THE SELLERS HAD ADMITTED I N THEIR STATEMENT THAT A SUM OF RS.9,00,000/- WAS RECEIVED BY THEM IN CASH FROM THE ASSESSEE AS ON MONEY. 6. IN REPLY, THE LD.AR FOR THE ASSESSEE SUPPORTED T HE ORDER OF THE CITA) DELETING THE IMPUGNED ADDITION. HIS SUBMISSIONS, IN BRIEF, ARE FIVE-FOLD: (I) STATEMENT OF THE ASSESSEE WAS RECORDED UNDER DURESS IMMEDIATELY AFTER THE SURVEY WAS CARRIED OUT AND THEREFORE THE SAID STATE MENT COULD NOT FORM THE BASIS FOR MAKING THE IMPUGNED ADDITION; (II) STATEMENT OF THE ASSESSEE RECORDED BY THE DEPARTMENTAL AUTHORITIES WAS RETRACTED ALMOST IMMED IATELY AFTER IT WAS RECORDED AND THEREFORE STATEMENT WHICH STOOD RETRACTED WAS N OT CAPABLE OF BEING USED BY 3 ITA NO. 103/RJT/2011 THE DEPARTMENT; (III) STATEMENTS OF THE SELLERS REC ORDED BY THE DEPARTMENTAL AUTHORITIES OR INFORMATION GATHERED FROM THEM WAS N EVER CONFRONTED TO THE ASSESSEE AND THEREFORE COULD NOT HAVE BEEN FORM THE BASIS FOR MAKING THE IMPUGNED ADDITION; (IV) THERE WAS NO MATERIAL AVAI LABLE ON RECORD TO INDICATE THAT THE VALUATION OF THE PROPERTY WAS RS.13,25,000/- AS AGAINST RS.3,00,000/- SHOWN IN THE INSTRUMENT OF PURCHASE; AND (V) THE DE PARTMENT HAD ITSELF CARRIED OUT SURVEY U/S 133A BUT DID NOT FIND ANY IRREGULAR ITY IN THE BOOKS OF ACCOUNT MAINTAINED BY THE ASSESSEE OR IN HIS BUSINESS OPERA TIONS. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY CON SIDERED THEIR SUBMISSIONS. THERE IS NO DISPUTE THAT THE AMOUNT O F CONSIDERATION HAS BEEN SHOWN IN THE INSTRUMENT OF PURCHASE AT RS.3,00,000/ -. THERE IS NO MATERIAL AVAILABLE ON RECORD TO ESTABLISH THAT THE VALUE OF THE PROPERTY WAS AT RS.12,25,000/- AS TAKEN BY THE AO. THE AO HAS NO T BROUGHT OUT ON RECORD EVEN THE CIRCLE RATE TO SHOW THAT THE VALUE OF THE PROPE RTY WAS RS.12,25,000/- FOR THE PURPOSE OF PAYMENT OF STAMP DUTY. THERE IS NO EVIDE NCE ON RECORD TO ESTABLISH THAT THE VALUE OF THE PROPERTY WAS RS.12,25,000/- A S TAKEN BY THE AO AS AGAINST RS.3,00,000/- SHOWN IN THE INSTRUMENT OF PURCHASE. IN THE ABSENCE OF ANY EVIDENCE ON RECORD TO SUSTAIN THE MARKET VALUE OF T HE PROPERTY AT RS.12,25,000/-, WE ARE UNABLE TO HOLD THAT THE VALUE OF THE PROPER TY WAS RS.12,25,000/- AS TAKEN BY THE AO AND NOT RS.3,00,000/- AS SHOWN BY THE PAR TIES TO THE TRANSACTION IN THE INSTRUMENT OF PURCHASE. 8. CONSIDERATION APPARENTLY SHOWN IN THE INSTRUMENT OF PURCHASE WILL BE TAKEN AS REAL UNLESS EVIDENCE IS BROUGHT ON RECORD TO ESTABLISH THAT APPARENT CONSIDERATION SHOWN IN THE INSTRUMENT OF PURCHASE W AS NOT REAL. THIS IS MORE PARTICULARLY SO AS THE AS THE AO HAS NOT PLACED ANY MATERIAL ON RECORD TO ESTABLISH THAT THE MARKET VALUE OF THE PROPERTY WAS MORE THAN RS.3 LAKHS AS SHOWN IN THE INSTRUMENT OF PURCHASE. THE IMPUGNED ADDITION HAS BEEN MADE ON THE BASIS OF THE STATEMENT OF THE ASSESSEE AS RECOR DED BY THE DEPARTMENTAL AUTHORITIES AND ALSO ON THE BASIS OF THE STATEMENTS OF THE SELLERS. THE CASE OF THE ASSESSEE IS THAT HE HAD RETRACTED FROM THE STATEMEN T RECORDED BY THE DEPARTMENT 4 ITA NO. 103/RJT/2011 IMMEDIATELY AFTER SURVEY. IT IS ALSO THE CASE OF T HE ASSESSEE THAT THE STATEMENT OF THE SELLERS RECORDED BY THE DEPARTMENT WAS NOT CONF RONTED TO HIM. THE AFORESAID SUBMISSIONS MADE BY THE ASSESSEE AT THE TIME OF HEA RING WERE NOT REBUTTED BY THE DEPARTMENT. ONCE THE STATEMENT IS RETRACTED, IT IS FOR THE DEPARTMENT TO ESTABLISH THAT THE RETRACTION WAS NOT IN ORDER. THE DEPARTMENT HAS FAILED TO DO SO AT THE TIME OF HEARING. SECONDLY, THERE IS NO MATER IAL ON RECORD THAT THE STATEMENTS OF THE SELLERS AS RECORDED BY THE DEPART MENT WERE CONFRONTED TO THE ASSESSEE. THIRDLY, THE STATEMENTS RELIED UPON BY TH E AO ARE NOT CORROBORATED BY ANY INDEPENDENT EVIDENCE, E.G., THE VALUATION OF TH E PROPERTY. IN THIS VIEW OF THE MATTER, THE STATEMENTS OF THE SELLERS WERE NOT CAPA BLE OF BEING USED AGAINST THE ASSESSEE. 8. IN VIEW OF THE FOREGOING, THE ORDER PASSED BY TH E CIT(A) IN THIS BEHALF IS CONFIRMED. GROUND NO.1 TAKEN BY THE DEPARTMENT IS D ISMISSED. 9. APROPOS THE ORDER OF THE CIT(A) DELETING THE ADD ITION OF RS.1,23,000/- MADE BY THE AO AS UNEXPLAINED CASH CREDIT, THE LD. CIT(A) DELETED THE SAID ADDITION WITH THE FOLLOWING OBSERVATIONS : 6.2 I HAVE PERUSED THE ASSESSMENT ORDER AND THE SU BMISSION ALONG WITH SUPPORTING EVIDENCES IN THE MATTER. SO FAR AS ADDITION OF RS.40,000/- IS CONCERNED, I FIND FROM THE COPY OF BANK PASSBOOK OF INDIAN BANK FURNISHED DURING THE COURSE OF HEARING THAT, THE BA LANCE AS ON 31.3.2003 OF S.41,987/- TALLIED WITH THE BOOKS OF ACCOUNTS. HENC E THERE IS NO DIFFERENCE AS ALLEGED AND THEREFORE THIS ADDITION IS DIRECTED TO BE DELETED. 6.3 SO FAR AS THE ADDITION OF RS.83,000/- IS CONCER NED, I FIND THAT HE SAME DOES NOT PERTAIN TO THE YEAR UNDER CONSIDERATI ON AND HENCE, THE SAME IS DIRECTED TO BE DELETED. 10. AT THE TIME OF HEARING BEFORE US, THE LD. DR CO ULD NOT REBUT THE AFORESAID FINDING RECORDED BY THE CIT(A). IN THIS VIEW OF THE MATTER, THE ORDER OF THE CIT(A) DELETING THE ADDITION OF RS.1,23,000/- IS CONFIRME D. GROUND NO.2 IS DISMISSED. 5 ITA NO. 103/RJT/2011 11. GROUND NOS. 3 - 5 TAKEN BY THE DEPARTMENT ARE G ENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION. 12. IN VIEW OF THE FOREGOING, APPEAL FILED BY THE D EPARTMENT IS DISMISSED. ) + 14-09-2012 ) ORDER PRONOUNCED ON 14-09-2012 SD SD ( .. / T. K. SHARMA) ( .. / D. K. SRIVASTAVA) /JUDICIAL MEMBER / ACCOUNTANT MEMBER +/ DATE 14-09-2012. /RAJKOT SRL/- ) )) ) ./ ./ ./ ./ 0/ 0/ 0/ 0/ / COPY OF ORDER FORWARDED TO:- 1. 3 / APPELLANT-. 2. .53 / RESPONDENT-. 3. 9 / CONCERNED CIT 4. 9- / CIT (A). 5. / ., , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER TRUE COPY SENIOR PRIVATE SECRETARY, ITAT, RA JKOT :