SHRI TEJENDER PAL SINGH SAHNI, KOTA V. DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL, KOTA

ITA 1105/JPR/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0388 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-12-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2016-2017
• Appeal Filed On: 09-09-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VARINDER MEHTA
• Keywords: Unexplained investment; Gift; Search and seizure; Source of fund; Set aside
• Section: 69; 139; 153A; 271D; 139(1); 153; 20

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A, JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NOS. 1104 & 1105/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2014-15 & 16-17. SHRI TEJENDER PAL SINGH SAHNI, C/O C.M. BIRLA & CO., CHARTERED ACCOUNTANTS, 1D, NEW COLONY, GUMANPURA, KOTA. CUKE VS. THE DCIT, CENTRAL, KOTA. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AFFPS 1351 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI C.M. BIRLA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI VARINDER MEHTA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 16.12.2019. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 23/12/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGA INST TWO SEPARATE ORDERS OF LD. CIT (A)-2, UDAIPUR BOTH DATED 28.06.2019 FOR THE ASSESSMENT YEARS 2014-15 AND 16-17 RESPECTIVELY. FOR THE ASSESSMENT YEAR 20 14-15, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN CONFIRMING ADDITION OF RS. 3,00,00 0/- U/S 69 IGNORING THE EVIDENCES FILED BEFORE THE LEARNED AO COPIES WHEREOF WERE FILED TO HONBLE CIT (A) ALSO. ADDITIO N OF RS. 3,00,000/- THEREFORE, NEEDS DELETION. 2 ITA NOS. 1104 & 1105/JP/2019 SHRI TEJENDER PAL SINGH SAHNI, KOTA. (2) THAT AS THE INVESTMENT IS APPEARING IN BALANCE SHEET OF THE APPELLANT AND THEREFORE IT BEING RECORDED IN BOOKS OF ACCOUNTS THEREFORE ITS SOURCE BEING FULLY EXPLAINED IT CAN N OT BE TAXED U/S 69. THE HONBLE CIT (A) THEREFORE ERRED IN SUSTAINI NG ADDITION OF RS. 3,00,000/- WHICH NEEDS DELETION. (3) THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE C ASE THE HONBLE CIT FURTHER ERRED IN NOT DIRECTING LEARNED AO TO DE LETE OBSERVATION FOR CONTRAVENTION OF PROVISIONS OF SECT ION 269SS BY THE LEARNED AO WHICH IS BASED ON AUDITORS REPORT OF THIRD PARTY IGNORING BOOKS OF ACCOUNTS AND BANK RECORDS OF THE APPELLANT. WE PRAY YOUR HONOUR TO DIRECT LEARNED AO TO DELETE THE OBSERVATION OF CONTRAVENTION OF PROVISIONS OF SECTI ON 269SS. (4) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY AND/OR OTHERWISE SUBSTITUTE ANY OF THE FOREGOING GR OUNDS AS AND WHEN REQUIRED. GROUND NOS. 1 & 2 ARE REGARDING THE ADDITION OF RS. 3,00,000/- MADE UNDER SECTION 69 OF THE IT ACT ON ACCOUNT OF UNEXPL AINED INVESTMENT. 2. THERE WAS A SEARCH AND SEIZURE ACTION UNDER SECT ION 132(1) OF THE IT ACT ON 30 TH JUNE, 2016 AT THE VARIOUS PREMISES OF BAJAJ GROUP KOTA TO WHICH THE ASSESSEE BELONGS. PURSUANT TO THE SEARCH, THE AO HAS ISSUED NOTICE UNDER SECTION 153A OF THE ACT ON 22.02.2017 IN RESPONSE TO WHICH THE ASSESSEE FURNISHED HIS RETURN OF INCOME ON 7 TH JUNE, 2017 DECLARING TOTAL INCOME OF RS. 2,08,110/ - WHICH IS SAME INCOME AS DECLARED IN THE RETURN OF INCOME FILED UNDER SECTIO N 139 OF THE IT ACT ON 29.08.2014. THE AO HAS REFERRED TO THE INCRIMINATING DOCUMENT F OUND AND SEIZURE DURING THE COURSE OF SEARCH RELATING TO THE INVESTMENT OF RS. 3,00,000/- MADE BY THE ASSESSEE AT KANHA KUNJ, KOTA. THE ASSESSEE EXPLAINED THAT T HESE TWO PLOTS WERE SHOWN BY HIM IN THE BALANCE SHEET WITH RETURN OF INCOME AS I NVESTMENT. THE AO HAS NOT ACCEPTED THIS EXPLANATION OF THE ASSESSEE ON THE GR OUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE INVESTMENT IN THE SEARCH PROCEEDINGS AND IN POST SEARCH INVESTIGATION. 3 ITA NOS. 1104 & 1105/JP/2019 SHRI TEJENDER PAL SINGH SAHNI, KOTA. ACCORDINGLY THE AO HAS MADE THE ADDITION OF RS. 3,0 0,000/- UNDER SECTION 69 ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE ASSESSEE HA S CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT (A) BUT COULD NOT SUCCEED. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT DURING THE POST SEARCH ENQUIRY CONDUCTED BY THE ADIT, THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS IN RELATION TO THE IMMOVABLE AND MOVABLE PROPERTIES PURCHASED DURING THE ASSESSMENT YEAR 2011 TILL THE DATE OF SEARCH. HE H AS SUBMITTED THAT THE ASSESSEE VIDE LETTER DATED 27.07.2016 FURNISHED THE DETAILS OF PURCHASE OF IMMOVABLE/MOVABLE PROPERTIES WHICH INCLUDE THE PROP ERTY IN QUESTION FOR A CONSIDERATION OF RS. 3,00,000/- PURCHASED DURING TH E YEAR UNDER CONSIDERATION. THUS THE LD. A/R HAS SUBMITTED THAT ONCE THIS INVES TMENT IS SHOWN IN THE BOOKS OF ACCOUNT AND WAS ALSO DECLARED IN THE RETURN OF INCO ME FILED UNDER SECTION 139(1) OF THE IT ACT, THEN NO ADDITION CAN BE MADE IN THE PRO CEEDINGS UNDER SECTION 153A IN THE ABSENCE OF ANY INCRIMINATING MATERIAL DISCLOSIN G UNDISCLOSED INCOME OF THE ASSESSEE. FURTHER, THE ASSESSEE HAS DULY EXPLAINED THE SOURCE OF INVESTMENT AS PER THE STATEMENT OF AFFAIRS FILED DURING THE ASSESSMEN T PROCEEDINGS. THUS THE LD. A/R HAS CONTENDED THAT ONCE THE INVESTMENT IS REFLECTED IN THE BALANCE SHEET APPENDED TO THE RETURN OF INCOME WHICH IS BASED ON THE BOOKS OF ACCOUNT, THEN THE ADDITION UNDER SECTION 69 IS UNCALLED FOR. IN SUPPORT OF HI S CONTENTION, HE HAS RELIED UPON THE JUDGMENT OF THE HONBLE MADHYA PRADESH HIGH COURT I N CASE OF DR. PRAKASH TIWARI VS. CIT, 148 ITR 474 (MP). THE ADDITION MADE BY TH E AO IGNORING THE FACT THAT INVESTMENT WAS DULY SHOWN IN THE BOOKS OF ACCOUNT A S WELL AS SOURCE OF INVESTMENT WAS EXPLAINED IN THE STATEMENT OF AFFAIRS, IS NOT J USTIFIED AND THE SAME BE DELETED. 4 ITA NOS. 1104 & 1105/JP/2019 SHRI TEJENDER PAL SINGH SAHNI, KOTA. 4. ON THE OTHER HAND, THE LD. CIT D/R HAS SUBMITTED THAT THE ASSESSMENT WAS PENDING AS ON THE DATE OF SEARCH, THEREFORE, THE AS SESSMENT GOT ABATED DUE TO THE SEARCH AND SEIZURE ACTION ON 30 TH JUNE, 2016. THE LD. CIT D/R HAS FURTHER CONTENDED THAT ONCE THE ASSESSMENT WAS ABATED, THEN THE PROCEEDINGS UNDER SECTION 153A OF THE ACT WERE IN THE NATURE OF ASSES SMENT AND NOT REASSESSMENT OF INCOME OF THE ASSESSEE. IT IS A REGULAR ASSESSMENT PROCEEDING AFTER SEARCH AND, THEREFORE, THERE IS NO BAR FOR TAKING UP THE ISSUE OF UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE IN SUCH ASSESSMENT PROCEEDINGS. THERE MAY BE AN ISSUE OF MAKING ADDITION IN THE PROCEEDINGS UNDER SECTION 153A IF T HE ORIGINAL ASSESSMENT PROCEEDINGS WERE NOT PENDING AS ON THE DATE OF SEAR CH AND CONSEQUENTLY THE PROCEEDINGS UNDER SECTION 153 WOULD BE IN THE NATUR E OF REASSESSMENT AND IN SUCH CASE WITHOUT INCRIMINATING MATERIAL ADDITION MAY NO T BE JUSTIFIED. THE LD. CIT D/R HAS THUS CONTENDED THAT THE ASSESSEE IS REQUIRED TO EXPLAIN THE SOURCE OF INVESTMENT DURING THE COURSE OF ASSESSMENT AND IN THE ABSENCE OF SOURCE OF INVESTMENT, THERE IS NO FETTER IN THE POWER OF THE AO TO MAKE SUCH AD DITION BEING UNEXPLAINED INVESTMENT. HE HAS RELIED UPON THE ORDERS OF THE A UTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THERE IS NO DISPUTE THAT THE ORIGINAL ASSES SMENT WAS PENDING ON THE DATE OF SEARCH I.E. 30.06.2016 AND CONSEQUENTLY THE ORIGINA L ASSESSMENT GOT ABATED. ONCE THE ASSESSMENT WAS PENDING AND GOT ABATED BY VIRTUE OF SEARCH AND SEIZURE ACTION UNDER SECTION 132, THEN THE AO HAS TO ASSESS THE IN COME OF THE ASSESSEE IN THE PROCEEDINGS UNDER SECTION 153A AS IN THE REGULAR AS SESSMENT PROCEEDINGS. THEREFORE, THE QUESTION OF EXISTENCE OF INCRIMINATI NG MATERIAL IN SUCH PROCEEDINGS IS NOT RELEVANT. RATHER THE AO HAS TO COMPLETE THE ASS ESSMENT AS A REGULAR 5 ITA NOS. 1104 & 1105/JP/2019 SHRI TEJENDER PAL SINGH SAHNI, KOTA. ASSESSMENT PROCEEDING AND EACH AND EVERY ISSUE ARIS ING FROM THE RETURN OF INCOME AS WELL AS ANY UNDISCLOSED INCOME DETECTED DURING T HE COURSE OF SEARCH WOULD BE SUBJECT MATTER OF ASSESSMENT. THERE IS NO DISPUTE THAT THE ASSESSEE HAS DISCLOSED THE INVESTMENT OF RS. 3,00,000/- IN THE BALANCE SHE ET AS ON 31 ST MARCH, 2014. HOWEVER, MERELY SHOWING THIS INVESTMENT IN THE BALA NCE SHEET WOULD NOT IPSO FACTO EXPLAIN THE SOURCE OF SUCH INVESTMENT. THE ONUS IS ON THE ASSESSEE TO EXPLAIN THE SOURCE OF INVESTMENT AND, THEREFORE, THE ISSUE CAN BE DECIDED ONLY ON THE MERITS OF THE SOURCE OF INVESTMENT WITHOUT ANY TECHNICAL HURD LE OF INCRIMINATING MATERIAL FOUND OR SEIZED DURING THE COURSE OF SEARCH. WE FI ND THAT THE ASSESSEE IN HIS STATEMENT OF AFFAIRS HAS SHOWN THE GIFT RECEIVED FR OM THE SISTER-IN-LAW (WIFE OF HIS BROTHER) OF RS. 3,00,000/-. THE ASSESSEE HAS FILED A DECLARATION OF GIFT IN SUPPORT OF SUCH CLAIM. THE SAID GIFT IS BETWEEN THE FAMILY MEM BERS AND CANNOT BE VERIFIED INDEPENDENTLY. THE EXISTENCE OR ACTUAL TRANSACTION OF GIFT CANNOT BE VERIFIED FROM ANY INDEPENDENT SOURCE AND, THEREFORE, THE CLAIM OF GIFT FROM THE FAMILY MEMBER OF AN EQUAL AMOUNT IS NOT FREE FROM THE POSSIBILITY OF PREPARING A SELF SERVING DOCUMENT. EVEN OTHERWISE, WE FIND THAT THE SOURCE OF FUND AS CLAIMED BY THE ASSESSEE IS GIFT FROM WIFE OF THE BROTHER HAS NOT B EEN VERIFIED BY THE AUTHORITIES BELOW AND ACCORDINGLY THE SAID CLAIM OF THE ASSESSE E IS REQUIRED TO BE VERIFIED AND EXAMINED BY THE AO. HENCE THE ISSUE IS SET ASIDE TO THE RECORD OF THE AO FOR PROPER VERIFICATION AND EXAMINATION OF CLAIM OF THE ASSESS EE BEING SOURCE OF INVESTMENT AND PARTICULARLY THE GIFT FROM THE FAMILY MEMBER. GROUND NO. 3 IS REGARDING THE OBSERVATION OF THE AO FOR CONTRAVENTION OF PROVISIONS OF SECTION 269SS REGARD ING THE LOAN TAKEN BY THE ASSESSEE FROM M/S. WHOLESALE CLOTH MERCHANT ASS OCIATION. 6 ITA NOS. 1104 & 1105/JP/2019 SHRI TEJENDER PAL SINGH SAHNI, KOTA. 6. SINCE THE AO HAS NOT MADE ANY ADDITION IN RESPEC T OF THE SAID LOAN AND ONLY OBSERVED THAT IT IS A CONTRAVENTION OF THE PROVISIO NS OF SECTION 269SS, THEREFORE, THE SAID ISSUE RAISED BY THE ASSESSEE IS A PRE-MATURE A S IT CAN BE CONSIDERED ONLY IN THE PROCEEDINGS OF LEVY OF PENALTY UNDER SECTION 271D O F THE ACT. HENCE THE GROUND NO. 3 OF THE ASSESSEES APPEAL IS DISMISSED BEING PRE-M ATURE. 7. FOR THE ASSESSMENT YEAR 2016-17, THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS :- 1. THAT UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE THE LEARNED CIT (A) ERRED IN CONFIRMING ADDITION OF RS. 10,00,000/- U/S 69 IGNORING THE EVIDENCES FILED BEFORE THE LEAR NED AO COPIES WHEREOF WERE FILED TO HONBLE CIT (A) ALSO. ADDITIO N OF RS. 10,00,000/- THEREFORE, NEEDS DELETION. (2) THAT AS THE INVESTMENT IS APPEARING IN BALANCE SHEET OF THE APPELLANT AND THEREFORE IT BEING RECORDED IN BOOKS OF ACCOUNTS THEREFORE ITS SOURCE BEING FULLY EXPLAINED IT CAN N OT BE TAXED U/S 69. THE HONBLE CIT (A) THEREFORE ERRED IN SUSTAINI NG ADDITION OF RS. 10,00,000/- WHICH NEEDS DELETION. (3) THAT THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND, MODIFY AND/OR OTHERWISE SUBSTITUTE ANY OF THE FOREGOING GR OUNDS AS AND WHEN REQUIRED. THE ONLY ISSUE RAISED BY THE ASSESSEE IN THIS APPEA L IS REGARDING THE ADDITION OF RS. 10,00,000/- MADE UNDER SECTION 69 O F THE ACT ON ACCOUNT OF UNEXPLAINED INVESTMENT. 8. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THIS IS ALSO A CASE OF ORIGINA L ABATED ASSESSMENT AND THE PROCEEDINGS UNDER SECTION 153A WERE INITIATED PURSU ANT TO SEARCH AND SEIZURE ACTION UNDER SECTION 132(1) ON 30 TH JUNE, 2016. THE AO HAS MADE AN ADDITION OF RS. 7 ITA NOS. 1104 & 1105/JP/2019 SHRI TEJENDER PAL SINGH SAHNI, KOTA. 10,00,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE FACTS AND CIRCUMSTANCES ARE IDENTICAL TO THE APPEAL FOR THE ASSESSMENT YEAR 2014-15 EXCEPT THE QUANTUM OF ADDITION ON ACCOUNT OF UNEXPLAINED INVESTMENT. THE ASSESSEE HAS EXPLAINED THE SOURCE OF INVESTMENT AS STATEMENT OF AFFAIRS AND GI FT OF RS. 9,50,000/- FROM HIS BROTHER. ACCORDINGLY, IN VIEW OF OUR FINDING FOR TH E ASSESSMENT YEAR 2014-15, THE ISSUE IS SET ASIDE TO THE RECORD OF THE AO FOR VERI FICATION AND EXAMINATION OF THE CLAIM OF THE ASSESSEE REGARDING GIFT OF RS. 9,50,00 0/- FROM THE BROTHER OF THE ASSESSEE. 9. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE SET ASIDE. ORDER PRONOUNCED IN THE OPEN COURT ON 23/12/20 19. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 23/12/2019. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-SHRI TEJENDER PAL SINGH SAHNI, KOTA. 2. IZR;FKHZ@ THE RESPONDENT-THE DCIT, CENTRAL, KOTA. 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. 1104 & 1105/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR