M/s U.K. Enterprises, Solan V. ITO, Parwanoo

ITA 1166/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8272 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-03-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Assessee Lawyers: AJAY KUMAR JAIN
• Keywords: Gift
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER ITA NO. 1166/CHD/2016 ASSESSMENT YEAR: 2007-08 M/S U.K. ENTERPRISES, VS THE ITO, PLOT NO. 12, SECTOR-5, PARWANOO, PARWANOO (HP). (HP). PAN: AACFU0147N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI AJAY KUMAR JAI N RESPONDENT BY : SHRI S.K.MITTAL, DR DATE OF HEARING : 28.02.2017 DATE OF PRONOUNCEMENT : 06.03.2017 O R D E R THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-18 NEW DELHI DATED 01.07.2016 FOR ASSESSMENT YEAR 2007-08. 2. I HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PAR TIES AND PERUSED THE MATERIAL ON RECORD. 3. GROUND NOS. 1 AND 5 ARE GENERAL AND NEED NO ADJUDICATION. 4. ON GROUND NOS. 2 AND 3, ASSESSEE CHALLENGED THE UPHOLDING OF ADDITIONS OF RS. 1,60,000/- BEING CAPI TAL CONTRIBUTION BY SHRI UMESH ANAND, PARTNER OF THE FI RM 2 AND ADDITION OF RS. 1 LAC BEING CAPITAL CONTRIBUTIO N BY SHRI SURINDER SAPRA, PARTNER OF THE FIRM. 4(I) BRIEFLY THE FACTS OF THE CASE ARE THAT ASSESSE E IS A FIRM, DERIVES INCOME FROM MANUFACTURING OF STEEL ME TAL COMPONENTS AND SUBMERSIBLE PUMPS. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE SOURCE OF INTRODUCTION OF CAPITAL BY PARTNERS. THE ASSESSING OFFICER NOTED THAT ONE OF THE PARTNER SHRI UMESH AN AND INTRODUCED CAPITAL OF RS. 1.60 LACS AND ANOTHER PAR TNER SHRI SURINDER SAPRA INTRODUCED RS. 1 LAC. THESE WE RE CASH INVESTMENTS. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE REGA RDING SOURCE OF CAPITAL INTRODUCED BY THE PARTNERS IN ASS ESSEE FIRM AND ACCORDINGLY, TREATED THE CAPITAL CONTRIBUT ION BY THE PARTNERS AS UNEXPLAINED AND MADE ADDITION OF RS . 2.60 LACS. THE LD. CIT(APPEALS) ALSO CONFIRMED THE ADDITION BECAUSE SOURCE OF THE SAME WAS NOT EXPLAIN ED. 5. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY ORDER OF ITAT CHANDIGARH BENCH IN THE CASE OF M/S MOHINDER P AL SHAM SUNDER VS ITO IN ITA 806/2016 FOR ASSESSMENT YEAR 2008-09 DATED 14.09.2016 IN WHICH FOLLOWING TH E DECISIONS OF THE JURISDICTIONAL HON'BLE PUNJAB & HA RYANA HIGH COURT, THE IDENTICAL ADDITION HAVE BEEN DELETE D. THE FINDINGS IN PARA 2 TO 8 OF THIS ORDER ARE REPRODUCE D AS UNDER : 3 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON EXAMINATION OF THE BANK STATEMENT, DIRECTED THE ASSESSEE TO EXPLAIN AN AMOUNT OF RS. 1,96,000/- DEPOSITED IN CASH BY SHRI SHYAM SUNDER, PARTNER AND FURTHER AN AMOUNT OF RS. 1,50,000/- WAS DEPOSITED BY SHRI MOHINDER PAL, PARTNER IN CASH ON 13.06.2007. THE ASSESSEE SUBMITTED THAT THESE PARTNERS DEPOSITED THEIR PERSONAL AMOUNT WHICH BELONGS TO THEIR FATHER AND MOTHER. THE ASSESSING OFFICER DID NOT ACCEPT CONTENTION OF THE ASSESSEE A ND MADE ADDITION OF RS. 3,46,000/-. THE ASSESSEE SUBMITTED BEFORE LD. CIT(APPEALS) THAT ASSESSEE IS A PARTNERSHIP FIRM OF TWO REAL BROTHERS WHO ARE ENGAG ED IN CONTRACTORSHIP BUSINESS FOR FABRICATION SINCE LO NG. BOTH THE ABOVE PARTNERS MADE DEPOSITS IN THEIR RESPECTIVE CAPITAL ACCOUNTS WHICH HAVE BEEN RECEIVE D BY THEM FROM THEIR FATHER AND MOTHER, THEREFORE, ADDITION IN THE HANDS OF THE ASSESSEE FIRM IS UNJUSTIFIED. 3. THE LD. CIT(APPEALS) NOTED THAT THERE IS NO DISPUTE REGARDING AMOUNT OF RS. 3,46,000/- DEPOSITE D IN THE BANK ACCOUNT OF THE ASSESSEE FIRM AND SAME HAD BEEN MADE BY SHRI SHYAM SUNDER AND SHRI MOHINDER PAL WHO WERE ALSO PARTNERS OF THE ASSESSEE FIRM. THE LD. CIT(APPEALS), HOWEVER, NOTED THAT TH E AFFIDAVITS OF THE PARENTS OF THE PARTNERS ARE ONLY SELF SERVING AND AMOUNT DEPOSITED HAVE NOT BEEN SUPPORTED BY ANY EVIDENCE THEREFORE, ADDITION WAS CONFIRMED AND APPEAL OF THE ASSESSEE HAS BEEN DISMISSED. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, I AM OF THE VIEW ADDITION IS WHOLLY UNJUSTIFIED. THE LD . COUNSEL FOR THE ASSESSEE RELIED UPON DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF 4 CIT V RAMESHWAR DASS SURESH PAL CHEEKA 208 CTR 459 IN WHICH IT WAS HELD AS UNDER : ONCE A PARTNER OF THE FIRM HAS ACCEPTED HAVING ADV ANCED AMOUNT TO THE FIRM, NO ADDITION COULD BE MADE IN THE HANDS OF FIRM UNDER S. 68. 5. HE HAS ALSO RELIED UPON DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V METAL & METALS OF INDIA 208 CTR 457 IN WHICH IT WAS HELD AS UNDER : PARTNER HAVING ADMITTED THAT HE HAS MADE THE IMPUG NED DEPOSIT WITH THE ASSESSEE FIRM OUT OF THE AMOUNT R ECEIVED AS GIFT, IT IS THE PARTNER AND NOT THE FIRM WHO IS LIABLE TO BE TAXED BY TREATING THE SAID AMOUNT AS UNDISCLOSED IN COME EVEN IF THE CLAIM OF GIFT SAID TO HAVE BEEN RECEIVE D BY HIM IS REJECTED. 6. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE LEDGER ACCOUNT OF THE PARTNERS SHRI SHYAM SUNDER AND SHRI MOHINDER PAL IN THE BOOKS OF ACCOUN T OF THE ASSESSEE FIRM WHICH SHOWS THAT THE AMOUNT IN QUESTION HAVE BEEN CONTRIBUTED BY BOTH THE PARTNERS IN ASSESSEE'S FIRM WHICH HAVE BEEN TAKEN IN THEIR RESPECTIVE CAPITAL ACCOUNTS. IN THE CASE OF SHRI MOHINDER PAL, RS. 1,50,000/- WAS EVEN DEPOSITED THROUGH BANKING CHANNEL. BOTH THE PARTNERS ARE ASSESSED TO TAX SEPARATELY. THE LD. CIT(APPEALS) SPECIFICALLY NOTED IN HIS FINDINGS THAT PARTNERS HA VE MADE DEPOSIT IN THE ACCOUNTS OF THE ASSESSEE FIRM THEREFORE, WHEN THE PARTNERS OF THE ASSESSEE FIRM HAVE ACCEPTED HAVING MADE DEPOSIT IN THE ASSESSEE'S FIRM IN THEIR CAPITAL ACCOUNT, NO ADDITION COULD BE MADE AGAINST THE ASSESSEE FIRM OF THE AFORESAID AMOUNT. SINCE BOTH THE PARTNERS ARE ASSESSED TO TA X SEPARATELY, THEREFORE, THESE AMOUNTS MAY BE CONSIDERED IN THEIR INDIVIDUAL CASES. THE IMPUGNED ADDITION IN THE HANDS OF THE ASSESSEE FIRM IS, 5 THEREFORE, WHOLLY UNJUSTIFIED. THE JUDGEMENTS RELI ED UPON BY LD. COUNSEL FOR THE ASSESSEE ABOVE SQUARELY SUPPORT THE CASE OF THE ASSESSEE THAT ADDITION IS WHOLLY UNJUSTIFIED IN THE HANDS OF THE ASSESSEE FIR M. 7. IN VIEW OF THE ABOVE DISCUSSION, I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 3,46,000/- IN THE HANDS OF THE ASSESSEE FIRM. THE REVENUE IS AT LIBERTY TO TAKE UP THIS ISSUE IN THE INDIVIDUAL CASES OF THE PARTNERS IN ACCORDANCE WITH LAW, IF SO ADVISED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . 6. FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF M/S MOHINDER PAL SHYAM SUNDER (SUPRA), I SET ASIDE THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 2,60,000/- IN THE HANDS OF THE ASSESSEE FIRM. HOWE VER, REVENUE IS AT LIBERTY TO TAKE UP THIS ISSUE IN THE INDIVIDUAL CASES OF THE PARTNERS IN ACCORDANCE WITH LAW, IF SO ADVISED. 7. IN THE RESULT, THESE GROUNDS OF APPEAL OF THE ASSESSEE ARE ALLOWED. 8. ON GROUND NO. 4, ASSESSEE CHALLENGED THE UPHOLDI NG OF ADDITION OF RS. 5 LACS BEING UNSECURED LOAN RAIS ED BY THE FIRM FROM SMT. ANU ANAND. THE ASSESSEE HAD CLA IMED TO HAVE OBTAINED UNSECURED LOAN OF RS. 15,03,500/- FROM SMT. ANU ANAND OUT OF WHICH A SUM OF RS. 5 LACS ( A CTUAL RS. 5,01,750/-) WAS PAID BY HER TO THE ASSESSEE FIR M ON 05.08.2006 THROUGH CHEQUE FROM HER SAVING BANK 6 ACCOUNT NO. 9 MAINTAINED WITH STATE BANK OF INDIA, NEW ROHTAK ROAD, DELHI. THE SOURCE OF THE SAID PAYMENT WAS OUT OF CASH DEPOSIT OF RS. 2 LACS ON 03.08.2006 AND RS. 3 LACS ON 04.08.2006 IN THE SAID BANK ACCOUNT. THE ASSESSEE WAS REQUESTED TO INFORM THE SOURCE OF THE DEPOSIT OF ABOVE CASH OF RS. 2 LACS AND RS. 3 LACS IN CASH IN BANK ON THE ABOVESAID DATES, IN RESPONSE TO WHIC H, IT WAS SUBMITTED THAT SAID DEPOSIT WAS MADE OUT OF WITHDRAWALS MADE BY HER FROM THE SAME BANK ACCOUNT OF RS. 3 LACS ON 03.02.2006 AND RS. 5 LACS ON 11.02.20 06. THE ASSESSING OFFICER, HOWEVER, DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE OF WITHDRAWING THE AMOUN T IN FEBRUARY,2006 BECAUSE PURPOSE OF WITHDRAWAL WAS NOT EXPLAINED AND IT COULD NOT BE SAID THAT THE AMOUNT REMAINED WITH HER FOR SIX MONTHS. THE ASSESSING OFF ICER, ACCORDINGLY, TREATED THE SOURCE OF LOAN OF RS. 5 LA CS AS UNEXPLAINED AND MADE ADDITION OF RS. 5 LACS. THE L D. CIT(APPEALS) ON THE SAME REASONING, CONFIRMED THE ADDITION BECAUSE CREDIT WORTHINESS OF THE CREDITOR WAS NOT ESTABLISHED. 9. AFTER CONSIDERING RIVAL SUBMISSIONS, I AM OF THE VIEW THAT ADDITION IS WHOLLY UNJUSTIFIED. THE ASSESSEE H AS FILED LEDGER ACCOUNT OF SMT. ANU ANAND AT PAGE 13 OF THE PAPER BOOK WHICH SHOWS THAT IN ASSESSMENT YEAR UNDE R APPEAL, ASSESSEE HAS ADVANCED A SUM OF RS. 15,03,50 0/- TO THE ASSESSEE IN THREE INSTALMENTS I.E. ON 01.04. 2006 RS. 5 LACS, ON 16.05.2006 RS. 5,01,750/- AND ON 7 05.08.2006 RS. 5,01,750/-. THE ASSESSING OFFICER DI D NOT MAKE ANY ADDITION OF THE FIRST TWO LOANS TAKEN FROM SMT. ANU ANAND IN THE ASSESSMENT ORDER. THEREFORE, CRED IT WORTHINESS OF THE CREDITOR WAS NOT DISPUTED BY THE ASSESSING OFFICER WITH REGARD TO SUBSTANTIAL AMOUNT ADVANCED BY HER IN ASSESSMENT YEAR UNDER APPEAL. PHH12 IS ACKNOWLEDGEMENT OF FILING OF HER INCOME TA X RETURN IN ASSESSMENT YEAR UNDER APPEAL IN WHICH SHE HAS SHOWN TOTAL INCOME OF RS. 1,83,447/-, COPY OF THE B ANK ACCOUNT IS FILED AT PAGE 14 OF THE PAPER BOOK TO SH OW THAT ON 05.08.2016, SHE HAS FURTHER ADVANCED A SUM OF RS. 5,01,750/- TO THE ASSESSEE. OUT OF THE SAME BA NK ACCOUNT, THE AUTHORITIES BELOW, HOWEVER, CONSIDERED THAT PRIOR TO GIVING OF THIS LOAN TO THE ASSESSEE, THERE ARE CASH DEPOSITS OF RS. 2 LACS AND RS. 3 LACS IN THE SAME B ANK ACCOUNT ON 03.08.2006 AND 04.08.2006. THE ASSESSEE , HOWEVER, EXPLAINED THAT PRIOR TO IT ON 03.02.2006 A ND 11.02.2006, THE CREDITOR SMT. ANU ANAND HAS WITHDRA WN RS. 3 LACS AND RS. 5 LACS RESPECTIVELY IN CASH WHIC H WERE AVAILABLE TO HER TO MAKE RE-DEPOSIT IN THE BANK ACC OUNT. THE LD. COUNSEL FOR THE ASSESSEE RELIED UPON ORDER OF THE DIVISION BENCH OF ITAT, CHANDIGARH BENCH IN THE CAS E OF SHRI VIVEK JOLLY VS DCIT IN ITA 672/2012 DATED 29.11.2012 IN WHICH ON IDENTICAL FACTS OF WITHDRAWA L AND RE-DEPOSIT IN THE SAME BANK ACCOUNT, EXPLANATION OF THE ASSESSEE WAS ACCEPTED. THE FINDINGS IN THIS ORDER IN PARAS 7 TO 10 ARE REPRODUCED AS UNDER : 8 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. IN THE FACTS OF THE PRESENT CASE THE ASSES SEE HAD MADE CASH WITHDRAWALS OF RS.23 LACS ON VARIOUS DATE S OUT OF ITS SAVING ACCOUNT WITH ABN AMRO BANK AS UNDER: 24.4.2007 RS.8 LACS 7.7.2007 RS.5 LACS 7.7.2007 RS.1 LAC ------------ TOTAL: RS.23 LACS. ------------- 8. THE ASSESSEE THEREAFTER DEPOSITED CASH IN ITS BA NK ACCOUNT AS UNDER: 13.9.2007 RS.5 LACS 14.9.2007 RS.5 LACS 18.9.2007 RS.5 LACS 9. THE ASSESSEE CLAIMED TO HAVE WITHDRAWN CASH FROM ITS BANK ACCOUNT FOR THE PURPOSE OF UTILIZING THE SAME IN THE INVESTMENT IN IMMOVABLE PROPERTY AND AS THE TRANSAC TION DID NOT GO THROUGH, PART OF THE CASH WITHDRAWN WAS REDE POSITED IN THE BANK ACCOUNT AND BALANCE WAS UTILIZED FOR HO USEHOLD PURPOSE. ADMITTEDLY, THE ASSESSEE HAD WITHDRAWN CA SH FROM ITS BANK ACCOUNT WHICH IN TURN WAS REDEPOSITED IN THE B ANK AFTER A GAP OF FEW MONTHS. WE DO NOT FIND ANY MERIT IN THE ORDER OF THE AUTHORITIES BELOW IN TREATING THE SAID REDEPOSIT OF CASH IN THE BANK ACCOUNT AS INCOME UNDER SECTION 68 OF THE ACT. 10. THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT- II VS. PARNEETA GOYAL (SUPRA) ON SIMILAR FACTS WHERE C ASH WAS WITHDRAWN ON EARLIER DATES AND WAS REDEPOSITED IN T HE BANK ACCOUNT OF THE ASSESSEE HELD THAT THERE WAS NO MERI T IN THE ADDITION IN VIEW OF THE EXPLANATION OF THE ASSESSEE IN RESPECT OF THE GAP OF ENTRIES BETWEEN CASH WITHDRAWALS AND DEPOSIT IN THE BANK ACCOUNT BEING OPERATED BY THE ASSESSEE. F OLLOWING THE ABOVE SAID AND IN VIEW OF THE FACTS OF THE PRE SENT CASE, WE FIND NO MERIT IN THE AFORESAID ADDITION MADE IN THE HANDS OF THE ASSESSEE. ACCORDINGLY, WE DELETE THE SAME A ND ALLOW THE GROUND OF APPEAL RAISED BY THE ASSESSE. 10. CONSIDERING EXPLANATION OF THE ASSESSEE IN THE LIGHT OF THE ORDER OF THE DIVISION BENCH OF THE TRIBUNAL IN THE CASE OF SHRI VIVEK JOLLY (SUPRA) EXPLANATION OF THE ASSESSEE IS ACCEPTED THAT CREDITOR HAS WITHDRAWN TH E AMOUNT OF RS. 2 LACS AND RS. 5 LACS IN FEBRUARY,200 6 WHICH WERE AVAILABLE TO HER FOR MAKING RE-DEPOSIT I N THE 9 SAME BANK ACCOUNT. THE ASSESSING OFFICER HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT THE AMOUNTS SO WITHDRAWN BY THE CREDITOR IN FEBRUARY,20 06 HAVE BEEN UTILIZED OR SPENT ANYWHERE ELSE. THEREFOR E, EXPLANATION OF THE ASSESSEE IS ACCEPTED THAT THE CR EDITOR HAS CREDIT WORTHINESS TO ADVANCE A SUM OF RS. 5,01, 750/- TO THE ASSESSEE. THEREFORE, NO ADDITION CAN BE MAD E OF THIS AMOUNT TREATING THE SAME TO BE UNEXPLAINED CRE DIT. ACCORDINGLY, ORDERS OF THE AUTHORITIES BELOW ARE SE T ASIDE AND ADDITION OF RS. 5 LACS IS DELETED. 11. IN THE RESULT, THIS GROUND OF APPEAL OF THE ASS ESSEE IS ALLOWED. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- (BHAVNESH SAINI) JUDICIAL MEMBER DATED : 6 TH MARCH, 2017. POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT,DR ASSISTANT REGISTRAR, ITAT CHANDIGARH