ACIT, Ludhiana V. Sh.Jaspal Singh, Malerkotla

ITA 1128/CHANDI/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73521 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 03-09-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI T.R. SOOD, ACCOUNTANT MEMBER AND MS. SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 1128/CHD/2010 ASSESSMENT YEAR: 2007-08 THE ACIT, VS SHRI JASPAL SINGH, CIRCLE IV, MALERKOTLA LUDHIANA PAN NO. AEHPS 1060H (APPELLANT) (RESPONDENT) DATE OF HEARING : 24.02.2014 DATE OF PRONOUNCEMENT : 06.03.2014 APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY : SHRI AKHILESH GUPTA ORDER PER T.R.SOOD, A.M. THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER DATED 29.6.2010 OF LD. CIT(A)-II, LUDHIANA . 2. IN THIS APPEAL THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THAT THE LD. CIT(A)-II HAS ERRED IN LAW AND ON FACT S IN DELETING THE ADDITION OF RS. 37,00,000/- BEING THE BALANCE BROUGHT FORWARD FROM FINANCIAL YEAR 2005-06 IN RES PECT OF ADVANCE FOR LAND PURCHASED AS THE ASSESSEE COULD NO T FILED ANY EVIDENCE IN RESPECT OF THE SAME DURING THE COUR SE OF ASSESSMENT PROCEEDINGS. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT AS PER THE STATE MENT OF ASSETS AND LIABILITIES FOR FINANCIAL YEAR 2005-06, THE ASSESSEE HAD SHOWN LAND FOR RESIDENTIAL HOUSE, 2 SHARE FOR KISSAN COLONIZERS(P) LTD., KISSAN ENCLAVE (REGD), KISSAN FINANCE (REGD) AND ADVANCE FOR LAND PURCHASED AS ON ASSET. THE ASSESSEE WAS ASKED TO FURNISH DOCUMENTARY EVIDENCE IN RESPECT OF THESE IN VESTMENTS AS WELL AS SOURCES. THE ASSESSEE ACCEPTED THAT BOOKS OF ACCOUNT WERE BE ING MAINTAINED. THE ASSESSING OFFICER OBSERVED THAT IN VIEW OF THE FACT THAT GENUINENESS OF BALANCE BROUGHT FORWARD BY THE ASSESSEE IN RESPECT OF ADVA NCE FOR LAND PURCHASED AT RS. 37 LAKHS CANNOT BE ACCEPTED AND, THEREFORE, HE MADE A ADDITION OF RS. 37 LAKHS. 4. ON APPEAL, IT WAS MAINLY STATED THAT STATEMENT O F AFFAIRS FILED BEFORE THE ASSESSING OFFICER WAS FOR FINANCIAL YEARS 2001-02 T O 2005-06. THE CAPITAL HAS ACCRUED TO THE ASSESSEE FROM VARIOUS FIRMS WHERE H E WAS PARTNER. COPY OF THE INCOME TAX RETURN WAS ALSO FURNISHED AND, THEREFORE , THIS ADDITION WAS NOT JUSTIFIED. THE LD. CIT(A) FOUND FORCE IN THESE SUBM ISSIONS AND DELETED THE SAME. 5. BEFORE US, THE LD. DR STRONGLY SUPPORTED THE OR DER OF ASSESSING OFFICER. 6. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSE SSEE SUBMITTED THAT THIS AMOUNT REPRESENTS THE BALANCE BROUGHT FORWARD FROM EARLIER YEARS AND IN THIS REGARD HE REFERRED TO COPIES OF THE STATEMENTS OF A FFAIRS FILED BEFORE THE ASSESSING OFFICER AND CIT(A) WHICH CLEARLY SHOWS TH AT ADVANCE FOR PURCHASE OF LAND WAS BEING SHOWN IN THE EARLIER YEARS, THEREFOR E, NO ADDITION WAS POSSIBLE IN THIS YEAR FOR THE ADVANCES WHICH HAD BEEN GIVEN IN THE EARLIER YEARS. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. THE ADDITION HAS BEEN DELETED BY THE LD. CIT(A) VIDE PARA 6 TO 6.3 WHICH ARE AS UNDER:- 6. I HAVE CAREFULLY CONSIDERED THE CONTENTION OF T HE LD. COUNSEL FOR THE APPELLANT AND PERUSED THE RELEVANT RECORD. THOUGH THE A.O. HAS MADE THIS ADDITION ON THE GROUND THAT THE GENUINENESS 3 OF THE BALANCE BROUGHT FORWARD IN RESPECT OF ADVANC E FOR LAND PURCHASED AT RS. 37,00,000/- COULD NOT BE ACCEPTED, IT IS EXPLAINED IN DETAIL IN THE WRITTEN SUBMISSIONS OF THE LD. COU NSEL REPRODUCED ABOVE THAT INVESTMENTS MADE UPTO 01.04.2002 IN VARI OUS CONCERNS IN WHICH THE APPELLANT IS PARTNER/DIRECTOR WAS MADE FROM EXPLAINED SOURCES OF INCOME IN THE RESPECTIVE YEARS . THIS IS STATED TO BE DECLARED IN THE INCOME TAX RETURN FILED WITH THE DEPARTMENT FOR THE A.Y. 2002-03 AND WHICH IS FURTHER STATED TO HAVE BEEN DULY ASSESSED. AFTER 31.03.2002, NO CAPITAL ACCRETION IS SHOWN TO HAVE TAKEN PLACE AND ONLY THE AMOUNTS OF PROFIT/INCOME F OR THE RESPECTIVE ASSESSMENT YEARS WERE ACCOUNTED FOR IN T HE RESPECTIVE RETURNS OF INCOME FILED WITH THE DEPARTMENT. IN VIE W OF THE ABOVE, I AGREE WITH THE LD. COUNSEL THAT THE POSITION IS DUL Y VERIFIABLE FROM THE INCOME TAX RETURN FILED FOR 2002-03 AND THE INC OME DECLARED IN THE RETURN FILED FOR A.Y. 2003-04 TO A.Y. 2006-07. FROM THIS EVIDENCE IT IS QUITE CLEAR THAT THE ASSET IN QUESTI ON BEING ADVANCE OF RS. 37,00,000/- CLAIMED TO BE MADE FOR PURCHASE OF LAND IN A.Y. 2006-07 WAS OUT OF DECLARED SOURCES OF INCOME OF TH E APPELLANT. I AGREE WITH THE LD. COUNSEL THAT IN VIEW OF THE ABOV E DISCUSSED POSITION ITSELF THE ADDL. CIT CANNOT BE SAID TO BE JUSTIFIED IN MAKING THE ADDITION OF RS. 37,00,000/- 6.1 ANOTHER IMPORTANT ASPECT HIGHLIGHTED BY THE LD. COUNSEL IS THAT THE ADVANCE IN QUESTION PERTAINED TO THE EARLI ER YEARS AND IT WAS BROUGHT FORWARD IN THE ASSESSMENT YEAR UNDER CO NSIDERATION. IF, SOURCES OF THIS ADVANCE ARE TAKEN TO BE NOT EXP LAINED, ADDITION IF ANY COULD ONLY BE MADE IN THE RELEVANT PRECEDING YEAR DURING WHICH THE SAID INVESTMENT WAS ACTUAL MADE. THE FACT WITH REGARD TO THIS INVESTMENT HAVING BEEN MADE IN THE PRECEDING Y EAR BEING QUITE OBVIOUS AND CLEAR AS PER THE ASSESSMENT ORDER ALSO, AGAIN ADDITION OF RS. 37,00,000/- COULD NOT BE MADE IN THE ASSESSM ENT YEAR UNDER CONSIDERATION. 6.2 IN ADDITION TO THE ABOVE THERE IS FURTHER CONSIDERA BLE FORCE IN THE CONTENTION OF THE LD. COUNSEL THAT AN ADVANC E MADE CANNOT PER-SE BE THE SUBJECT MATTER OF AN ADDITION. THIS I S BEING AN ASSET CANNOT BE DISALLOWED/ADDED IN THE ASSESSMENT PROCEE DINGS SO LONG THE CORRESPONDING SOURCES OF INCOME/ACCRETIONS ON T HE LIABILITY 4 SIDE OF THE BALANCE SHEET ARE NOT DISTURBED. FROM T HIS ANGLE ALSO ADDITION OF RS. 37,00,000/- MADE BY THE A.O. IS NOT SUSTAINABLE. 6.3 KEEPING IN VIEW THE ABOVE DISCUSSED POSITION AD DITION OF RS. 37,00,000/- MADE BY THE A.O. CANNOT BE HELD TO BE J USTIFIED AT ALL AND THE SAME IS ACCORDINGLY DELETED. THIS GROUND OF APPEAL IS THEREFORE ALLOWED. 8. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY ADJ UDICATED THE ISSUE. WHEN THE STATEMENT OF AFFAIRS OF EARLIER YEARS CLEARLY S HOWS THAT ADVANCE FOR LAND WAS GIVEN IN EARLIER YEARS THEN ADDITION CANNOT BE MADE IN THE PRESENT YEAR, THEREFORE, WE FIND NOTHING WRONG WITH THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME. 9. IN THE RESULT, REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 06.03.2014 SD/- SD/- (SUSHMA CHOWLA) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMER DATED : 6 TH MARCH, 2014 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH