Anant Enterprises, Faizabad V. Income Tax Officer-I, Faizabad

ITA 11/LKW/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 78530 (ITAT-LUCKNOW)
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 07-05-2014
• Assessment Year: 2004-2005
• Appeal Filed On: 07-01-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Keywords: Unexplained cash credit; Business income; Income from undisclosed sources
• Section: 68; 69

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.11/LKW/2014 ASSESSMENT YEAR:2004 - 05 M/S ANANT ENTERPRISES, 493, NEAR BUS STATION, GOSHINGANJ, FAIZABAD. PAN:AALFA0798A VS. INCOME TAX OFFICER - I, FAIZABAD. (APPELLANT) (RESPONDENT) APPELLANT BY NONE RESPONDENT BY SHRI ALOK MITRA, D. R. DATE OF HEARING 07/05/2014 DATE OF PRONOUNCEMENT 2 7 /05/2014 O R D E R PER A. K. GARODIA, A.M. THIS IS AN ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT (A) - I, LUCKNOW DATED 22/07/2013 FOR ASSESSMENT YEAR 2004 - 2005. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE LEARNED CIT(APPEALS) HAS ERRED IN NOT CONSIDERING THE FACT THAT ADDITION BOTH IN THE HANDS OF THE FIRM AND PARTNER FOR THE SAME AMOUNT RESULTS IN DOUBLE ADDITION. 2. THAT THE LEARNED CIT(A) HAS ERRED IN CITING A RULING IN HIS APPELLATE ORDER WITHOUT CONSIDERING THE FACT THAT THE SAME IS NOT A PPLICABLE IN THIS CASE. 3. THAT THE LEARNED CIT(A) HAS ERRED THAT THE ASSESSING AUTHORITY HAS NOT HIMSELF MADE DOUBLE ADDITION. HE HAS DONE MAIN ADDITION IN THE CASE OF THE FIRM AND PROTECTIVE ADDITION IN THE CASE OF THE PARTNER. 2 4. THAT THE REASONS GIVE N BY THE LEARNED CIT(A) FOR DISMISSING THE APPEAL ARE FLIMSY, UNJUST AND UNWARRANTED AND NOT APPLICABLE IN THIS CASE. 3. NONE APPEARED ON BEHALF OF THE ASSESSEE INSPITE OF NOTICE AND HENCE, WE PROCEED TO DECIDE THIS APPEAL OF THE ASSESSEE EX - PARTE QUA T HE ASSESSEE. 4. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE SUBMISSIONS OF LEARNED D.R. OF THE REVENUE AND HAVE GONE THROUGH THE MATERIALS AVAILABLE ON RECORD AND WE FIND THAT THIS ISSUE HAS BEEN DECIDED BY LEARNED CIT(A) AS PER PARA 5, 5 .1 AND 5.2 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR THE SAKE OF READY REFERENCE: 5. I HAVE CONSIDERED THE MATTER. I FIND THAT DURING THE YEAR SH. SONI HAS DISCLOSED BUSINESS INCOME OF RS.27,595/ - WHICH IS BARELY SUFFICIENT TO MEET HIS HOUSEHOLD EXPENSES. HE HAS ALSO NOT BEEN ABLE TO EXPLAIN THE SOURCE OF SAVINGS OR BUSINESS ASSETS WHICH WAS ALLEGEDLY UTILIZED BY HIM TO MAKE THE INVESTMENT OF RS.90,000/ - IN CASH AS CAPITAL IN THE APPELLANT FIRM. THE SOURCE O F LOANS OF RS.30,000/ - WAS ALSO NOT EXPLAINED BY HIM PROPERLY. SH. SONI DID NOT HAVE CAPACITY TO INVEST RS.90,000/ - AS CAPITAL IN THE FIRM AND HE HAS NOT BEEN ABLE TO EXPLAIN THE SOURCE OF RS.90,000/ - PROPERLY. SINCE THE SOURCE OF INVESTMENT IN CAPITAL OF THE APPELLANT FIRM MADE BY SH. SONI HAS REMAINED UNEXPLAINED, I CONFIRM THE ADDITION OF RS.90,000/ - MADE BY THE AO. 5.1 REGARDING THE CAPITAL OF RS.95,000/ - INTRODUCED BY SH. HARISH KR. SINGH, I FIND THAT DURING THE APPELLATE PROCEEDINGS IN HIS CASE IN AP PEAL NO. CIT(A) - I/LKO/08 - 09/442 (THE ORDER WAS PASSED BY ME ON 22.07.2013) SH. HARISH KR. SINGH HAS STATED THAT HE WAS NOT A PARTNER OF THE APPELLANT FIRM. HE HAS NEITHER INVESTED ANY CAPITAL IN THE SAID FIRM NOR RECEIVED ANY INTEREST OR REMUNERATION FROM THE FIRM. HE HAS ALSO NOT SIGNED THE PARTNERSHIP DEED. SH. SINGH SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS IN HIS CASE ALSO, HE DENIED IN HIS STATEMENT THAT HE WAS A PARTNER IN THE FIRM AND THE SAME WAS SUBMITTED BY HIM IN WRITING. SH. HARISH KR. SI NGH HAS ALSO FILED AN AFFIDAVIT BEFORE ME STATING THESE FACTS. INCIDENTALLY DURING THE APPELLATE PROCEEDINGS THE APPELLANT FIRM AS WELL AS SH. HARISH KR. 3 SINGH WAS REPRESENTED BY THE SAME AUTHORIZED REPRESENTATIVE, SH. A.P. SINGH, ADVOCATE. IN THE PARTNERS HIP DEED THE NAME OF FATHER OF HARISH KR. SINGH IS SHOWN AS SAMAR BAHADUR SINGH RESIDENT OF VILL - ADHIARI, DISTT. FAIZABAD WHICH IS SAME AS THAT OF ANOTHER HARISH KR. SINGH WHOSE APPEAL WAS DECIDED BY ME. SINCE, SH. HARISH KR. SINGH HAS CATEGORICALLY DENIE D THE INVESTMENT OF CAPITAL OF RS.95,000/ - INTRODUCED IN HIS NAME, SOURCE OF RS. 95,000/ - HAS REMAINED UNEXPLAINED AND HENCE, ADDITION OF RS. 95,000/ - MADE BY THE AO AS DISCUSSED ABOVE IS CONFIRMED. 5.2 REGARDING INVESTMENT OF RS. 90,000/ - MADE BY SH. DHARMENDRA KR. SINGH IT IS SEEN THAT HE IS MAN OF NO MEANS. HE COULD NOT EXPLAIN THE SOURCE OF INVESTMENT OF RS. 90,000/ - PROPERLY. REGARDING THE LOANS OF RS. 70,000/ - TAKEN FROM MOTHER AND ELDER BROTHERS AL SO NO PROPER EXPLANATION, CONFIRMATION OR EVIDENCE WAS FILED. SH. SINGH DID NOT FURNISH ANY EVIDENCE TO SUBSTANTIATE AGRICULTURAL HOLDINGS AND INCOME. IN VIEW OF THE ABOVE, I HOLD THAT THE AO IS JUSTIFIED IN MAKING THE ADDITION OF RS. 90,0007 - IN THE HANDS OF THE APPELLANT AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT. ADDITION OF RS.90,000/ - IS UPHELD. 5.3 REGARDING THE SUBMISSION OF THE APPELLANT THAT THE SAME ADDITION COULD NOT BE MADE IN THE HANDS OF THE APPELLANT FIRM AS WELL AS ITS PARTNERS AS THE SAME WOULD AMOUNT TO DOUBLE ADDITION, I FIND THAT THIS ISSUE HAS BEEN DECIDED AGAINST THE APPELLANT BY THE JUDGMENT OF THE HON'BLE JURISDICTIONAL ALLAHABAD HIGH COURT IN THE CASE OF JAGMOHAN RAM RAM CHANDRA V. CIT, [2004] 141 TAXMAN 574 (ALL.) IN WHICH IT HAS BEEN HELD AS UNDER: 'WHERE A SUM IS FOUND IN THE BOOKS OF AN ASSESSEE AND THE EXPLANATION OFFERED BY IT ABOUT THE NATURE AND SOURCE THEREOF IS NOT FOUND TO BE SATISFACTORY OR NO EXPLANATION IS OFFERED, THE SUM SO CREDITED IS CHARGED TO THE INCOME - TAX AS T HE INCOME OF THAT ASSESSEE FOR THE RELEVANT PREVIOUS YEAR. SINCE, IN THE INSTANT CASE, THE EXPLANATION OFFERED BY THE FIRM HAD BEEN DISBELIEVED, SECTION 68 WAS FULLY ATTRACTED AND, THEREFORE, RS.17,500 HAD RIGHTLY BEEN ADDED. THERE WAS NO OCCASION TO CONCL UDE THAT THE PARTNERS WERE RELYING ON THE COMMON MONEY AND THERE WAS HENCE NO OCCASION TO HOLD THAT THE DEPOSITS SHOULD BE ASSESSED IN THE INDIVIDUAL ASSESSMENT OF THE PARTNERS. 4 IT IS SETTLED THAT IF AN ENTRY OF CASH CREDITS IS FOUND IN THE BOOKS OF ACCOUNT OF A FIRM, IT IS FOR THE FIRM TO GIVE EXPLANATION REGARDING IDENTITY AND SOURCE OF SUCH DEPOSITS AND IF THE EXPLANATION IS DISBELIEVED, THEN IT IS TO BE ADDED AS AN INCOME UNDER SECTION 68 IN THE HANDS OF THE FIRM . SIMILARLY , IF AN ASSESSEE, WHO I S A PARTNER IN THE PARTNERSHIP FIRM HAS MADE INVESTMENTS, WHICH ARE NOT RECORDED IN THE BOOKS OF ACCOUNT MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE EXPLANATION GIVEN BY THE PARTNER OR INDIVIDUAL REGARDING SOURCE OF DEPOSITS IS DISBELIEVED, THEN SUC H DEPOSIT WHICH IS INVESTMENT CAN BE BROUGHT TO TAX AS INCOME FROM UNDISCLOSED SOURCES UNDER SECTION 69 IN THE HANDS OF PARTNER. THERE IS NO QUESTION OF ANY DOUBLE TAXATION. FULL EFFECT OF THE DEEMING PROVISIONS AND THE PRESUMPTIONS PROVIDED UNDER SECTIONS 68 AND 69 HAS TO BE GIVEN. THE PARTNERSHIP FIRM AND THE PARTNERS BEING TREATED AS SEPARATE ASSESSEES UNDER THE ACT, THE ASSESSMENT OF THE INCOME IN THE HANDS OF DIFFERENT ASSESSEES UNDER DIFFERENT PROVISIONS OF THE ACT IS PERMISSIBLE. IN VIEW OF THE ABOV E, THE TRIBUNAL WAS JUSTIFIED IN UPHOLDING THE ADDITION OF RS . 17,500 IN THE TOTAL INCOME OF THE ASSESSEE - FIRM EVEN THOUGH THE SAID AMOUNT WAS ALSO ASSESSED IN THE HANDS OF THE TWO PARTNERS AND WAS ALSO JUSTIFIED IN UPHOLDING THE ADDITION OF RS.7,500/ - MADE BY THE ITO IN THE HANDS OF THE PARTNER.' TO CONCLUDE ADDITION OF RS.2,75,000/ - MADE BY THE AO AS UNEXPLAINED CASH CREDIT U/S 68 OF THE ACT ON ACCOUNT OF CAPITAL INTRODUCED BY THESE OF THE PARTNERS IS CONFIRMED. GROUND NOS. (V) AND (VI) ARE DECIDED AGAINS T THE APPELLANT. GROUND NO, (IX) IS OF GENERAL NATURE. 5.1 FROM THE ABOVE PARA S OF LEARNED CIT(A), WE FIND THAT THE CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING THE JUDGMENT OF HON'BLE ALLAHABAD HIGH COURT RENDERED IN THE CASE OF JAGMOHAN RAM RAM CHANDRA V. CIT, [2004] 141 TAXMAN 574 (ALL) . REGARDING THE INVESTMENT OF RS.90,000/ - IN CASH BY SHRI SONI AS CAPITAL, A CLEAR FINDING IS GIVEN BY CIT(A) THAT SHRI SONI HAS DISCLOSED BUSINESS INCOME OF RS.27,595/ - WHICH IS BARELY SUFFICIENT TO MEET HIS HOUSEHOLD E XPENSES AND H E HAS ALSO NOT BEEN ABLE TO EXPLAIN THE SOURCE OF 5 SAVINGS OR BUSINESS ASSETS WHICH WAS ALLEGEDLY UTILIZED BY HIM TO MAKE THE INVESTMENT OF RS.90,000/ - IN CASH . REGARDING THE INVESTMENT OF RS.95,000/ - BY SHRI HARISH KUMAR SINGH, THIS FINDING I S GIVEN BY LEARNED CIT(A) THAT IN THE CASE OF SHRI HARISH KUMAR SINGH, IT WAS STATED BY HIM THAT HE WAS NOT THE PARTNER OF THE ASSESSEE FIRM AND H E HAS NEITHER INVESTED ANY CAPITAL IN THE SAID FIRM NOR RECEIVED ANY INTEREST OR REMUNERATION FROM THE FIRM. HE HAS ALSO NOTED THAT IT WAS STATED BY SHRI HARISH KUMAR SINGH THAT H E HAS ALSO NOT SIGNED THE PARTNERSHIP DEED. REGARDING THE INVESTMENT OF RS.90,000/ - BY SHRI DHARMENDRA KUMAR SINGH, A CLEAR FINDING IS GIVEN BY CIT(A) THAT HE IS MAN OF NO MEANS. HE COULD NOT EXPLAIN THE SOURCE OF INVESTMENT OF RS. 90,000/ - . CONSIDERING ALL THESE FACTS, AS DISCUSSED ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). UNDER THESE FACTS AND IN VIEW OF THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT FOLLOWED BY LE ARNED CIT (A) , WE DECLINE TO INTERFERE IN THE ORDER OF CIT(A). 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DISMISSED. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 2 7 /05/2014. *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. CONCERNED CIT 4. THE CIT(A) 5. D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR