Sh. Amarjeet singh, Bathinda V. The Income-tax Officer 2(1), Bathinda

ITA 114/ASR/2015

• Counselvise Citation: 11420914 RSA 2015
• Duration Of Justice: 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 24-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR KANCHAN GARG
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH; AMRITSAR (SMC) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER ITA NO.114(ASR)/2015 ASSESSMENT YEAR:2011-12 PAN: AWFPS8228N SH.AMARJEET SINGH VS. INCOME TAX OFFICER, C/O M/S A.G. FINANCE GROUP, WARD 2(1), BATHINDA. GRAIN MARKET, BUCHO MANDI, DISTT. BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH. P.N.ARORA, ADVOCATE RESPONDENT BY:DR. KANCHAN GARG, DR DATE OF HEARING: 09/12/2015 DATE OF PRONOUNCEMENT: 14/12/2015 ORDER THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT YE AR 2001-12, AGAINST THE ORDER DATED 13.01.2015, PASSED BY THE LD. CIT( A), BATHINDA. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(A) HAS ERRED IN REJECTING THE APPEAL OF THE APPELLANT WHEN THE APPELLANT HAS FULLY EXPLAINED TH E AMOUNT OF RS.12,00,000/-. 2. THAT THE LD. CIT(A) HAS ERRED IN REJECTING THE G ROUND OF THE APPELLANT WHERE THE ITO HAS APPLIED SECTION 68 WHIL E MAKING THE ADDITION. 3. THAT THE LD. CIT(A) HAS ERRED IN APPLYING THE PR OVISION OF SECTION 69 INSTEAD OF SECTION 68 BY GETTING PROTECT ION OF SECTION 292B. 4. THAT THE LD. CIT(A) HAS ERRED IN REJECTING THE P LEA OF THE APPELLANT THAT THE ADDITION MADE MAY BE CONSIDERED AS AGRICULTURE INCOME AND INCOME FROM OTHER SOURCES ON PROPORTION BASIS AND DECLARED BY THE APPELLANT. ITA NO. 114(ASR)/2015 ASSTT. YEAR 2011-12 2 2. THE BRIEF FACTS OF THE CASE ARE THAT: THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY UNDE R CASS FOR THE REASONS THAT THERE WERE CASH DEPOSITS EXCEEDING TH E THRESHOLD LIMIT INTO HIS SAVINGS BANK ACCOUNTS WITH OBC, BUCH O, CENTRAL BANK OF INDIA, AND STATE BANK OF PATIALA. THE AO C ALLED FOR THE DETAILS OF SOURCE OF CASH DEPOSITS IN THE AFORESAID ACCOUNTS PURSUANT TO WHICH A CASH FLOW STATEMENT WAS FURNISH ED. FROM THE SAID CASH FLOW, THE AO FOUND THAT THERE WAS A CRED IT BALANCE OF ONLY RS.6,63,082/- AS ON 11.08.2010 AND THAT THE SO URCE OF SUBSEQUENT CASH DEPOSIT OF RS.12,00,000/- ON 20.08. 2010 WAS SOUGHT TO BE EXPLAINED AS RECEIPT OF BIANA FOR SA LE OF LAND FROM ONE SH. GOBINDER SINGH. THE AO DOUBTED THIS ENTRY AND CALLED FOR FURTHER DETAILS. THE ASSESSEE REITERATED THE SAME E XPLANATION NAMELY ADVANCE AGAINST AGREEMENT FOR SALE OF LAND T O SH. GURBINDER SINGH. HOWEVER, IT WAS STATED THAT NO AGR EEMENT TO INTENT WAS EXECUTED AND THAT THE ADVANCE OF SAID AM OUNT WAS GIVEN VIDE A PRONOTE DATED 20.08.2010. IT WAS FURTH ER AVERRED THAT THE SAID ADVANCE OF RS.12,00,000/- WAS RETURNED IN THE SUBSEQUENT FINANCIAL YEAR AS PER ORAL PANCHAYATI RA JINAMA SINCE REGISTRATION DEED COULD NOT BE EXECUTED. THE AO FURTHER FOUND THAT THE PRONOTE REFERRED TO E ARLIER WAS NOT FOR PURCHASE OR SALE OF LAND BUT WAS FOR DEPOSITING ADMISSION FEE OF THE DAUGHTER OF THE ASSESSEE. THE SUBMISSIONS OF TH E ASSESSEE BEFORE THE AO WAS THUS FOUND TO BE COMPLETELY CONTR ADICTORY. HOWEVER, THE ASSESSEE WAS AGAIN ASKED TO EXPLAIN TH E CREDIT WORTHINESS OF SH.GURBINDER SINGH WHO WAS PURPORTED TO HAVE GIVEN THE APPELLANT AN ADVANCE OF RS.12,00,000/-. FOR ESTABLISHING THE CREDIT-WORTHINESS OF SH. GURBI NDER SINGH, THE ASSESSEE FILED A COPY OF BANK ACCOUNT WITH DENA BAN K AT BATHIDNA, WHICH WAS JOINTLY HELD BY SH. GURBINDER SINGH ALONG WITH THE ASSESSEE. ALONGWITH THIS, A DULY NOTARIZED AFFIDAVI T OF SH.GURBINDER SINGH WAS ALSO FILED DEPOSING THEREIN THAT THE AFOR ESAID BANK ACCOUNT, THOUGH HELD JOINTLY BY SH.GURBINDER SINGH AND THE ASSESSEE, ACTUALLY BELONGED TO SH. GURBINDER SINGH AND HE OWNED ALL THE TRANSACTIONS CONTAINED IN THIS ACCOUNT. THE AO TESTED THIS EXPLANATION ALSO AND FOUND THAT PRIOR TO THE PURPOR TED ADVANCE BY SH. GURBINDER SINGH TO THE ASSESSEE, THE ACCOUNT HA D ONLY A PETTY BALANCE OF RS.2916/- ONLY. WITH THESE FACTS IN THE POSSESSION OF THE AO, IT WAS HELD BY HIM THAT THE ASSESSEE HAD NO SATISFACTORY EXPLANATION FOR THE IMPUGNED CASH DEPOSIT OF RS.12, 00,000/- AND THE SAID AMOUNT WAS ADDED TO THE INCOME OF THE ASSE SSEE U/S 68 OF THE ACT. ITA NO. 114(ASR)/2015 ASSTT. YEAR 2011-12 3 3. THE LD. CIT(A) CONFIRMED THE ADDITION OF RS.12,0 0,000/-. THE LD. CIT(A) HAS OBSERVED THAT THE AO HAD COMMITTED A MIS TAKE BY INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT, IN MAKING THE ADDITION OF RS.12,00,000/-; AND THAT IN THE GIVEN SET OF FACTS, THE APPROPRIATE SECTION WAS SECTION 69 OF THE ACT. THE LD. CIT(A), THUS, CO NFIRMED THE ADDITION, BUT BY APPLYING THE PROVISIONS OF SECTION 69 OF THE ACT, RATHER THAN THOSE OF SECTION 68, AS APPLIED BY THE AO, INVOKING THE P ROVISIONS OF SECTION 69B OF THE ACT. 4. THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED T HAT THE LD. CIT(A) HAS ERRED IN APPLYING THE PROVISIONS OF SECTION 69 OF THE ACT WHILE HOLDING THAT THE PROVISIONS OF SECTION 68 OF THE ACT HAD BE EN WRONGLY APPLIED BY THE AO AND THAT THE MISTAKE WAS CURABLE UNDER SECTI ON 69B OF THE ACT. HE HAS SOUGHT TO PLACE RELIANCE ON THE FOLLOWS CASE LAWS: I) SHANTA DEVI VS. CIT, 171 ITR 532 (P&H) II) CIT VS. BHAICHAND H. GANDHI, 141 ITR 67 (BOM.) 5. ON THE OTHER HAND, THE LD. DR HAS PLACED STRONG RELIANCE ON THE IMPUGNED ORDER. IT HAS BEEN CONTENDED THAT THE LD. CIT(A) HAS CORRECTLY OBSERVED THAT THE PROVISIONS OF SECTION 68 & 69B OF THE ACT ARE MEANT TO CURB THE PERVADING EVIL OF GENERATION AND PROLIFERA TION OF BLACK MONEY; THAT THESE SECTIONS ARE ONLY CLARIFICATORY; AND THA T THE ADDITION CAN BE MADE EVEN OTHERWISE IN RESPECT OF INCOME FROM UNDI SCLOSED SOURCE, FROM WHICH SUCH INCOME SHOULD NOT BE TREATED DIFFERENTL Y FOR THE PURPOSES OF APPLYING OTHER PROVISIONS OF THE ACT. IT HAS BEEN C ONTENDED THAT THERE IS NO DENYING THAT THE AO HAD COMMITTED A MISTAKE BY I NVOKING THE PROVISIONS OF SECTION 68 BUT HAS CORRECTLY TAKEN NO TE OF BY THE LD. CIT(A). THIS IS AN IRREGULARITY WHICH GETS IMMUNITY BY THE PROVISIONS OF SECTION 292B OF THE ACT. ITA NO. 114(ASR)/2015 ASSTT. YEAR 2011-12 4 6. IN THIS REGARD, THE FACTS ARE NOT DISPUTED. THE QUESTION IS THAT WHEN, AO HAS BEEN HELD TO BE WRONGLY APPLIED THE PR OVISIONS OF SECTION 69, WHETHER THE ADDITION CAN BE SUSTAINED BY INVOKI NG, INSTEAD, THE PROVISIONS OF SECTION 69 OF THE ACT. IT CANNOT BE G AINSAID THAT SECTION 68 OF THE ACT DEALS WITH THE CASH CREDITS, WHEREAS SEC TION 69 CONCERNS THE UNEXPLAINED INVESTMENTS. AT THE OUTSET, THE AREA OF BOTH THESE SECTIONS ARE CLEAR AND DISTINCT. SECTION 68 ATTRACTS WHERE T HERE ARE UNEXPLAINED CASH CREDITS AND SECTION 69 APPLIES IN THE CASE OF UNEXPLAINED INVESTMENTS. IN THE PRESENT CASE, THE AO INVOKED THE SECTION 68, MADE AN ADDITION QUA UNEXPLAINED CASH CREDIT. NOW WHETHE R THE LD. CIT(A) HAS BEEN CORRECT IN CONVERTING THIS CHARGE OF UNEXPL AINED CASH CREDIT U/S 68 OF THE ACT TO THAT OF UNEXPLAINED INVESTMENT U /S 69 OF THE ACT. THE LD. CIT(A). THE LD. CIT(A) TERMED IT AS A MERE IRRE GULARITY CURABLE UNDER THE PROVISIONS OF SECTION 292B OF THE ACT. IT IS NO T A CASE OF TYPOGRAPHICAL OR A MERE WRONG MENTION OF THE SECTION. HOWEVER, I AM NOT ABLE TO AGREE WITH THIS OBSERVATION OF THE LD. CIT(A). SECTION 29 2B OF THE ACT AND NOTIFICATION OF THE PARTICULAR PROVISIONS OF THE AC T TO MAKE CERTAIN ADDITION IS NONE THAN THE JURISDICTIONAL MATTER GOI NG TO THE VERY ROOT OF THE MATTER. IF THE PROVISIONS INVOKED ARE HELD TO BE NON APPLICABLE, THE VERY CHARGE FOR MAKING THE ADDITION DOES NOT SURVI VE AND IT CANNOT BE CONVERTED TO THAT OF ANOTHER ENTIRELY DIFFERENT PR OVISION. THEREFORE, THE LD. CIT(A) HAS EVIDENTLY ERRED IN APPLYING THE PR OVISIONS OF SECTION 69 OF THE ACT, OBSERVING THAT THE NATURE AND SOURCE OF CA SH DEPOSIT OF RS.12,00,000/- COULD NOT BE SATISFACTORILY EXPLAINE D WITH CREDIBLE OR COGENT EVIDENCE AND HENCE THE SECTION OF DEEMED INC OME CREATED BY SECTION 69 COMES INTO OPERATION. SECTION 69 OF THE ACT TALKS OF CLAUSES WHERE THE ASSESSEE HAD MADE INVESTMENTS WHICH ARE N OT RECORDED IN THE BOOKS OF ACCOUNT, IF ANY, MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE OF INVESTMENTS OR THE EXPLANATION OFFERED BY HIM IS N OT, IN THE OPINION OF THE AO, SATISFACTORY. SECTION 68 OF THE ACT, ON THE OTHER HAND, CONCERNS ITA NO. 114(ASR)/2015 ASSTT. YEAR 2011-12 5 THE INSTANCES WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF THE ASSESSEE AND THE SOURCE THEREOF REMAINED UNEXPLAINE D. IN THE PRESENT CASE, THE ASSESSEE IS NOT SHOWN TO HAVE MADE ANY I NVESTMENT AND, THEREFORE, THE PROVISIONS OF SECTION 69 OF THE ACT ARE ENTIRELY INAPPLICABLE. 7. FOR THE ABOVE DISCUSSION, THE GRIEVANCE OF THE A SSESSEE IS FOUND TO BE JUSTIFIED AND ACCEPTED AS SUCH AND THE ADDITION MADE BY THE LD. CIT(A) IS DELETED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14TH DE CEMBER, 2015. SD/- (A.D. JAIN) JUDICIAL MEMBER DATED: 14/12/2015 /SKR/ COPY OF ORDER FORWARDED TO: 1. THE ASSESSEE:SH. AMARJEET SINGH, BUCHO MANDI, DI STT. BATHINDA. 2. THE ITO, WARD 2(1), BATHINDA. 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA. 5. THE SR. DR, ITAT, ASR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR.