SHRI HARPAL YADAV, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-3, JAIPUR

ITA 1071/JPR/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1389 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 10 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 30-08-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B K GUPTA CIT A
• Assessee Lawyers: NIKHILESH KATARIA
• Keywords: Unexplained investment; Depreciation; Source of fund
• Section: 143(3); 153A

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S,B JAIPUR JH LAANHI XKSLKBZ] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI VIKRAM SING H YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 1071/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2013-14 SHRI HARPAL YADAV 17, JAYAPURIYO KA BADH, SIRSI, JAIPUR. CUKE VS. THE ACIT, CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACOPH 3647 N VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI NIKHILESH KATARIA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI B.K. GUPTA (CIT) A LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 28/06/2021 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 02/07/2021 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST THE ORDER OF LD. CIT(A)-IV, JAIPUR DATED 08.07.2019 PERTAINING TO AS SESSMENT YEAR 2013-14 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWIN G GROUNDS OF APPEAL:- 1. THE ASSESSMENT ORDER PASSED U/S 143(3) R.W.S. 1 53A IS BAD IN LAW AS WELL AS ON FACTS OF THE PRESENT CASE AND HEN CE, THE SAME MAY PLEASE BE QUASHED. 2. RS. 369850/- THE LD. ASSESSING OFFICER ERRED IN LAW AS WELL AS ON THE FACTS OF THE PRESENT CASE IN MAKING ADDITION AS ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 2 UNEXPLAINED INVESTMENT AND LD. CIT(A) ERRED IN SUST AINING THE SAME. 2. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED THAT THE ASSESSEE IS A FARMER EARNING INCOME FROM AGRICULTUR E AS WELL AS DAIRY BUSINESS FOR LAST SEVERAL YEARS AND THERE IS NO CHA NGE IN THE SOURCE OF INCOME DURING THE YEAR UNDER CONSIDERATION. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS FILED RETURN OF INC OME DECLARING INCOME OF RS.193,850/- ON 30.08.2013. A SEARCH WAS CONDUCT ED IN THE CASE OF KEDIA AND YADAV GROUP AND IN CONSEQUENT TO THE SAME , ASSESSEE'S PREMISES WAS ALSO SEARCHED ON 19.11.2016. ACCORDING LY, NOTICE U/S 153A WAS ISSUED ON 17.02.2017 AND IN COMPLIANCE OF THE SAME, RETURN WAS E-FILED ON 14.08.2017 AT THE SAME TOTAL INCOME OF RS.193,850/-. IN THE COURSE OF ASSESSMENT PROCEEDINGS, THE LD. AO HA S NOTICED THAT AS PER PAGE 10 OF EXHIBIT NO. 2, THE ASSESSEE HAD MADE PAYMENT OF RS.369,850/- IN CASH FOR PURCHASE OF A CAR ON 13.02 .2013. THOUGH REGULAR BOOKS OF ACCOUNTS HAVE NOT BEEN KEPT BY THE ASSESSEE BUT THE ASSESSEE HAS EXPLAINED THE SAME WITH HIS CASH FLOW STATEMENT AS WELL AS CAPITAL ACCOUNT AND BALANCE SHEET WHICH WERE MAD E ON ESTIMATED BASIS. HOWEVER, THE LD. AO REJECTED THE SAME AS THE RE WERE NO CASH WITHDRAWALS IN THE BANK STATEMENT OF THE ASSESSEE A ND ACCORDINGLY, THE AMOUNT WAS ADDED AS UNEXPLAINED INVESTMENT. ON APPE AL THE LD. CIT(A) SUMMARILY REJECTED THE APPEAL OF THE ASSESSEE AND A GAINST THE SAME, THE ASSESSEE HAS FILED THE PRESENT APPEAL. 3. IN THE ABOVE BACKGROUND, THE LD AR HAS RAISED VA RIOUS CONTENTIONS DURING THE COURSE OF HEARING, AS ARE CO NTAINED IN THE WRITTEN SUBMISSIONS FILED BY HIM AND CONTENTS THERE OF READ AS UNDER:- ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 3 1.1.1 THE CAR PURCHASED WITH DISCLOSED SOURCES OF INCOME: AT THE OUTSET, WE MAY SUBMIT THAT THE CASH PAYMENT FOR PUR CHASE OF CAR HAS BEEN MADE OUT OF DISCLOSED SOURCES OF INCOME. I T MAY BE NOTED THAT THE ASSESSEE IS EARNING FOR MORE THAN 20 YEARS AND ALSO FILING RETURN OF INCOME SINCE AY 2010-11. THEREFORE , PAYMENT MADE FOR PURCHASE OF CAR IS VERY WELL JUSTIFIED, ESPECIA LLY WHEN THE ASSESSEE LIVES IN A VILLAGE AND LIVING EXPENSES IS QUITE LOW WITH ITS OWN ANCESTRAL HOUSE. THUS APPARENTLY SUCH PAYMENT C AN BE TREATED AS JUSTIFIED. THE PURCHASE OF CAR IS DULY S UPPORTED WITH THE CASH FLOW STATEMENT WHICH IS ENCLOSED IN PAPER BOOK AT PB 16. 1.1.2 ASSESSEE REGULARLY FILING ITS RETURN OF INCO ME SINCE AY 2010- 11: WE MAY SUBMIT THAT AS SUBMITTED ABOVE THE ASSES SEE IS REGULARLY FILING ITS RETURN SINCE AY 2010-11 AGRICU LTURAL AND DAIRY INCOME AS SOURCE OF INCOME. COPIES OF RETURN OF INC OME ARE DULY PLACED IN THE PAPER BOOK FROM PB 13-25 ALONGWITH TH E FINANCIAL STATEMENTS PREPARED ON THE BASIS OF AVAILABLE INFOR MATION. THEREFORE, THERE IS CLEAR SOURCE OF INCOME AVAILABL E WITH THE ASSESSEE AND IS DULY DISCLOSED TO DEPARTMENT ALSO. 1.1.3 FINANCIAL STATEMENT ON ESTIMATED BASIS AND CA SH FLOW STATEMENT SUBMITTED: WE MAY SUBMIT THAT THOUGH THE ASSESSEE HAS NOT MAINTAINED ANY BOOKS OF ACCOUNTS, HOWEVER T HE ASSESSEE HAS DULY SUBMITTED THE PROFIT AND LOSS ACCOUNT, CAP ITAL ACCOUNT AND BALANCE SHEET ON ESTIMATED BASIS TO SUPPORT THE PAYMENT TOWARDS PURCHASE OF CAR AND THE SAME IS APPEARING A T PB 15. ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 4 EVEN THE ASSESSEE HAS DULY SUBMITTED THE CASH FLOW STATEMENT EXPLAINING THE SOURCE OF INVESTMENT IN PURCHASE OF CAR AT PB 16. 1.1.4 COPIES OF ITR, COMPUTATION OF TOTAL INCOME, C ASH FLOW STATEMENT AND FINANCIAL STATEMENTS SUBMITTED FROM A Y 2010-11 TO AY 2013-14: WE ARE SUBMITTING HEREWITH THE FINANCIA L STATEMENTS AND CASH FLOW STATEMENTS FROM AY 2010-11 TO AY 2013 -14 FOR YOUR KIND PERUSAL FROM PB 13-25. THESE STATEMENTS S HOW THE YEAR TO YEAR AVAILABILITY OF CASH WITH THE ASSESSEE . THE OPENING CASH BALANCE AS CARRIED FORWARD FROM PRECEDING YEAR HAS DULY BEEN SHOWN IN THE STATEMENT FOR THE YEAR UNDER CONS IDERATION. THE CASH FLOW STATEMENT FOR THE YEAR UNDER CONSIDER ATION IS PLACED AT PB16. 1.1.5 NO DEFECT OR ERROR FOUND BY THE AO OR CIT(A) IN THE INFORMATION SUBMITTED BY THE ASSESSEE: IT IS IMPORT ANT TO NOTE THAT ALL THE ABOVE INFORMATION INCLUDING FINANCIAL STATE MENTS AND CASH FLOW STATEMENTS WERE DULY SUBMITTED BEFORE BOTH THE LOWER AUTHORITIES I.E. AO AND CIT(A). HOWEVER, NONE OF TH E AUTHORITIES HAVE FOUND ANY ERROR OR DEFECT IN THE INFORMATION S O SUBMITTED. THEREFORE, SUCH INFORMATION HAS TO BE ACCEPTED AS C ORRECT AND ON THAT BASIS THE SUBMISSIONS OF THE ASSESSEE COULD NO T BE REJECTED. THE SILENCE OF THE DEPARTMENT IS ONLY TO DENY THE L EGITIMATE RELIEF TO THE ASSESSEE WITHOUT ANY SUBSTANTIVE BASIS. ACCO RDINGLY, THE ADDITION MADE BY THE LD. AO WAS BAD IN LAW. ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 5 1.1.6 REASON FOR NON-WITHDRAWAL FROM BANK ACCOUNT: THE LD. AO STATED THAT THERE IS NO CASH WITHDRAWAL EXCEPT AY 2 012-13 AND THEREFORE, CASH PAYMENT OF RS.369850/- IS NOT JUSTI FIED. IN THIS REGARD, WE MAY SUBMIT THAT THE ASSESSEE LIVES IN A VILLAGE AND THE SOURCE OF INCOME OF THE ASSESSEE I.E. AGRICULTURAL INCOME AND DAIRY INCOME ARE SUCH THAT ONLY CASH IS RECEIVED BY THE A SSESSEE AND EVEN THERE ARE NO CASH OR CHEQUE DEPOSIT. MOST OF T HE TIME THE ASSESSEE RECEIVES CASH ON ACCOUNT OF ITS INCOME AND THE SAME IS KEPT WITH HIM TO MEET DRAWINGS AND THE BALANCE IS K EPT AS SAVINGS IN CASH ONLY. THIS CONTENTION OF THE ASSESSEE IS PR OVED BY ABSENCE OF DEPOSIT IN THE BANK ACCOUNT IN ANY CASE, THE COMPLETE RECEIPT SHOWN BY THE ASSE SSEE AS APPEARING IN THE CASH FLOW STATEMENT HAS DULY BEEN ASSESSED BY THE LD. AO TO TAX AND THEREFORE, THERE IS NO JUSTIFICAT ION IN STATING THAT THERE WAS NO CASH WITHDRAWAL BY THE ASSESSEE AS THE CASH WAS DULY AVAILABLE OUT OF THE RECEIPTS SHOWN BY THE ASSESSEE 1.1.7 DRAWINGS OF ASSESSEE OR INCOME OF ASSESSEE N OT DOUBTED BY THE LD. AO: IT IS IMPORTANT TO NOTE THAT THE ASS ESSEE HAS DULY SUBMITTED THE COMPLETE FIGURES OF INCOME AS WELL AS DRAWINGS WITH THE FINANCIAL STATEMENT SUBMITTED. NO QUESTION WAS RAISED BY THE LD. AO ON THE DRAWINGS DECLARED BY THE ASSESSEE . INCOME OF THE ASSESSEE IS ALSO DULY SUPPORTED BY THE RETURN O F INCOME. IN THESE CIRCUMSTANCES THERE WAS NO REASON FOR NON-ACC EPTANCE OF CASH SHOWN BY THE ASSESSEE AS THE ENTIRE RECEIPTS H AVE BEEN BROUGHT TO TAX. ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 6 1.1.8 REASONABLENESS OF CASH IN HAND NOT IN QUESTIO N: IT IS ALSO RELEVANT TO MENTION HERE THAT NO QUESTION IS RAISED BY THE LD. AO REGARDING REASONABLENESS OF THE CASH BALANCE IN QUE STION AND THE ONLY ISSUE RAISED IS OF CASH WITHDRAWAL. IN THESE C IRCUMSTANCES WHEN THE CASH WAS AVAILABLE OUT OF INCOME OF THE AS SESSEE WHICH IS DULY BROUGHT TO TAX, THERE REMAINS NO OTHER GROUND TO REJECT SUBMISSIONS OF THE ASSESSEE. 1.1.9 NO REASON ADVANCED BY THE LD. CIT(A) IN REJEC TING THE SUBMISSIONS OF THE ASSESSEE: IT IS SUBMITTED THAT T HE LD. CIT(A) HAS REJECTED THE APPEAL OF THE ASSESSEE SUMMARILY W ITHOUT CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND EVE N WITHOUT POINTING OUT THAT HOW THE ASSESSEE COULD NOT PROVE THE SOURCE OF CASH PAYMENT. THEREFORE, IT IS CLEAR THAT EVEN THE ID. CIT(A) HAS NO VALID REASONS TO REJECT APPEAL OF THE ASSESSEE A ND HENCE, CHOSEN TO REJECT THE APPEAL SUMMARILY WITHOUT ANY D ISCUSSION. AS SUCH THE ORDER OF LD. CIT(A) CANNOT SUSTAIN ON THIS ISSUE AND GROUND OF THE ASSESSEE HAS TO BE ALLOWED. IN THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE, T HE ID. AO WAS NOT JUSTIFIED IN REJECTING THE SUBMISSION OF THE AS SESSEE MERELY FOR THE REASON OF NON-WITHDRAWAL OF CASH WHEREAS TH E ENTIRE RECEIPTS SHOWN BY THE ASSESSEE HAS DULY BEEN TAXED BY THE LD. AO. THE ID. CIT(A) HAS ALSO ERRED IN SUSTAINING THE SAME WITHOUT ANY JUSTIFICATION. HENCE, THE APPEAL OF THE ASSESSE E IS PRAYED TO BE ALLOWED. THEREFORE, WE PRAY YOUR GOODSELF TO DE LETE THE COMPLETE ADDITION OF RS. 369,850/-. ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 7 4. PER CONTRA, THE LD. CIT/DR HAS RELIED ON THE FINDIN GS OF THE AO WHICH ARE CONTAINED AT PARA 7.1 TO 7.4 OF THE ASSES SMENT ORDER WHICH READ AS UNDER:- 7.1 THE REPLY FILED BY THE AR OF ASSESSEE HAS BEEN DULY CONSIDERED AND NOT FOUND ACCEPTABLE FOR THE REASONS THAT THE ASSESSEE HAS HIMSELF ADMITTED THAT NO BOOKS OF ACCO UNTS ARE MAINTAINED BY HIM. THE INCOME DECLARED BY ASSESSEE IN HIS RETURN OF INCOME IS NOT SUPPORTED WITH HIS CONTENTION AS N O CASH WAS AVAILABLE WITH HIM. 7.2 FURTHER, THE CONTENTION OF ASSESSEE REGARDING D AIRY BUSINESS IS BEING RUNNING FOR MORE THAN 20 YEARS IS NOT FOUN D ACCEPTABLE FOR THE REASONS THAT NO RETURN OF INCOME WAS FILED TILL A.Y. 2009- 10 AND INCOME DECLARED IN RETURN FILED FROM A.Y. 20 10-11, 2011- 12 & 2012-13 AT RS. 85,740/-, 148,050/- & RS. 1,94, 480/- RESPECTIVELY WITH IS NOT COMMENSURATE WITH OPENING CAPITAL OF RS. 3,69,850/- IN A.Y. 2013-14. 7.3 THE FOLLOWING CASH BALANCE SHOWN BY ASSESSEE IN CAPITAL ACCOUNT SUBMITTED WHICH IS PREPARED ON ESTIMATED BA SIS AS UNDER:- S. NO. A.Y. CASH BALANCE AS PER CAPITAL (RS. CASH WITHDRAWALS EVERY YEARS AS PER BANK STATEMENT (RS. DRAWING (RS.) 1. 2010-11 1,57,110 - 1,40,000 2. 2011-12 2,05,045 0 1,45,000 3. 2012-13 1,92,391 1,40,500 1,46,795 4. 2013-14 3,500 0 2,02,744 7.4 FROM THE ABOVE WORKING, IT IS CLEAR THAT THE AS SESSEE HAS CASH IN HAND AT RS. 1,92,391/- AT THE BEGINNING OF YEAR I.E. A.Y. 2013- 14 AND HE MADE PAYMENT OF RS. 3,96,850/- IN CASH. N O CASH WITHDRAWALS FROM BANK EXCEPT FOR F.Y. 2011-12 RELEV ANT TO A.Y. 2012-13 ARE SEEN. THE WITHDRAWALS FROM CAPITAL ACC OUNT WERE FOR THE PURPOSE FOR DAILY OR HIS PERSONAL EXPENSES. SIN CE, CASH BALANCE FOR PAYMENT OF RS. 3,69,850/- IS NO WHERE J USTIFIED. ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 8 THEREFORE, THE INVESTMENT IN PURCHASING OF CAR IS T REATED AS OUT OF HIS UNDISCLOSED INCOME AND THE SAME IS HEREBY ADDED IN HIS TOTAL INCOME FOR THIS YEAR. 5. IT WAS FURTHER SUBMITTED THAT LD CIT(A) HAS DULY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND THE FINDINGS OF THE AO HAVE BEEN CONFIRMED. IT WAS ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE FINDINGS OF THE LD CIT(A) AND THE SAME MAY BE CONFI RMED AND APPEAL OF THE ASSESSEE BE DISMISSED. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT TH E ASSESSEE IS ENGAGED IN AGRICULTURAL AND DIARY ACTIVITIES AND HAS BEEN R EGULARLY FILING HIS RETURN OF INCOME SINCE A.Y 2010-11. FOR THE IMPUGNED ASSE SSMENT YEAR 2013- 14, THE ASSESSEE HAS REPORTED AGRICULTURAL INCOME O F RS 191,240/- AND DAIRY INCOME OF RS 257,850/- WHICH HAS BEEN ACCEPTE D BY THE AO WHILE PASSING THE IMPUGNED ASSESSMENT ORDER. CONSIDERING THE FACT THAT THE AGRICULTURAL AND DIARY ACTIVITIES ARE PREDOMINANTLY RURAL ACTIVITIES WHERE THE TRANSACTIONS CONTINUES TO BE UNDERTAKEN PREDOMI NANTLY IN CASH RATHER THAN THROUGH FORMAL BANKING CHANNELS, WHAT I S RELEVANT IS AVAILABILITY OF OVERALL CASH IN HANDS OF THE ASSESS EE AT THE TIME OF PURCHASE OF THE CAR TOWARDS THE END OF THE FINANCIA L YEAR I.E, ON 13.02.2013. ON PERUSAL OF THE RETURN OF INCOME ALO NGWITH ACCOMPANYING CASH FLOW STATEMENT, WE FIND THAT THE ASSESSEE HAS GENERATED NET CASH RECEIPTS OF RS 191,240/- FROM AG RICULTURAL OPERATIONS, NET CASH RECEIPTS (BEFORE DEPRECIATION) OF RS 315,589/- FROM DIARY BUSINESS DURING THE YEAR UNDER CONSIDERATION WHICH REASONABLY EXPLAINS THE SOURCE OF PURCHASE OF CAR FOR WHICH PA RT PAYMENT WAS ITA NO. 1071/JP/2019 SHRI HARPAL YADAV VS. ACIT 9 MADE IN CASH OF RS 369,850/-. AS FAR AS WITHDRAWALS FOR HOUSEHOLD EXPENSES ARE CONCERNED, WE FIND THAT THE SAME IS AG AIN DEMONSTRATED PARTLY FROM AGRICULTURAL AND DIARY ACTIVITIES DURIN G THE YEAR AS WELL AS AVAILABILITY OF CASH AT THE BEGINNING OF THE FINANC IAL YEAR. WE THEREFORE FIND THAT THE ASSESSEE HAS DULY EXPLAINED THE SOURC E OF PAYMENT FOR PURCHASE OF CAR AND THE INVESTMENT SO MADE IN PURCH ASE OF CAR CANNOT BE TREATED AS MADE OUT OF UNDISCLOSED SOURCES AND T HE ADDITION OF RS 369,850 IS HEREBY DIRECTED TO BE DELETED. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02/07/2021. SD/- SD/- LANHI XKSLKBZ FOE FLAG ;KNO ( SANDEEP GOSAIN ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/07/2021. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HARPAL YADAV, JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ACIT, CENTRAL CIRCLE-3, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 1071/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR