Aashish Arora, Ludhiana V. ITO, W-3(2), Ludhiana

ITA 1219/CHANDI/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5476 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 09-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARVIND SUDARSHAN JCIT DR
• Keywords: Unexplained cash credit; Additional evidence; Set aside
• Section: 143(3); 201; 143(2); 145(3); 144

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH .., !' . . , # $ % BEFORE: SHRI. N.K.SAINI, VP & SHRI. R.L. NEGI, JM ITA NO.1219/CHD/2019 ASSESSMENT YEAR : 2013-14 SH. AASHISH ARORA PROP. M/S SHANTI KNIT FAB, 413, 4 TH FLOOR, K-10 TOWER, FEROZE GANDHI MARKET, LUDHIANA THE ITO WARD-3(2) LUDHIANA PAN NO: ADKPA1111B APPELLANT RESPONDENT !' ASSESSEE BY : SHRI YOGESH KUMAR SAXENA, ADVOCATE SHRI AMANDEEP SAXENA, C.A #!' REVENUE BY : SHRI ARVIND SUDARSHAN, JCIT, DR $ %! & DATE OF HEARING : 29/09/2020 '()*! & DATE OF PRONOUNCEMENT : 29/09/2020 $&/ ORDER PER RAM LAL NEGI; JM THE ASSESSEE HAS FILED THE PRESENT APPEAL AGAINST T HE ORDER DT. 09/07/2019 PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEAL S)-1(FOR SHORT THE CIT(A)), LUDHIANA PERTAINING TO THE A.Y. 2013-14, WHEREBY THE LD. CIT(A) HAS PARTLY ALLOWED THE APPEAL FILED BY THE ASSESSEE AGA INST THE ASSESSMENT ORDER PASSED UNDER SECTION 144 OF THE INCOME TAX ACT, 196 1 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE EN GAGED IN THE BUSINESS OF TRADING IN HOSIERY GOODS, CLOTH, DUPLEX BOARD ETC., FILED ITS RETURN OF INCOME FOR THE A.Y. UNDER CONSIDERATION DECLARINJG TOTAL INCOM E OF RS. 34,05,640/-. SINCE THE CASE WAS SELECTED FOR SCRUTINY, A.O. ISSUED NOTICED UNDER SECTION 143(2) OF THE ACT. THE ASSESSEE DID NOT APPEAR IN RESPONSE TO THE SAID NOTICE AND REQUESTED FOR ADJOURNMENT. FURTHER, THE ASSESSEE DID NOT COMP LY WITH THE NOTICE ISSUED UNDER SECTION 142 (1) OF THE ACT. ACCORDINGLY, A.O. ISSUED SHOW CAUSE NOTICE AS TO WHY THE DEDUCTIONS AND OTHER CLAIMS SHOULD NOT B E DISALLOWED. THE ASSESSEE AGAIN FAILED TO APPEAR BEFORE THE A.O. ON THE DATE FIXED FOR HEARING. THEREAFTER 2 THE A.O. ISSUED NOTICE TO THE ASSESSEE DIRECTING TO EXPLAIN AS TO WHY THE BOOK VERSION SHOULD NOT BE REJECTED UNDER THE PROVISIONS OF SECTION 145(3) AND ASSESSMENT ORDER SHOULD NOT BE PASSED UNDER SECTION 144 OF THE ACT. SINCE THERE WAS NO RESPONSE ON THE PART OF THE ASSESSEE, A.O. RELYING ON THE VARIOUS JUDGMENTS OF THE HON'BLE SUPREME COURT AND THE HIG H COURTS COMPLETED THE ASSESSMENT UNDER SECTION 144 OF THE ACT DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS. 2,63,32,380/- (ROUNDED OFF) AFTER M AKING ADDITION OF RS. 56.68,679/- ON ACCOUNT OF ADDITIONAL PROFIT, ADDITI ON OF RS. 1,36,00,030/- ON ACCOUNT OF DISALLOWANCE OF INCREASE IN CAPITAL ACCO UNT SHOWN BY THE ASSESSEE IN HIS PROPRIETORSHIP FIRM, ADDITION OF RS. 46,499/ - ON ACCOUNT OF REJECTION OF CLAIM MADE UNDER CHAPTER VI A OF THE ACT, ADDITION OF RS. 1,86,389/- ON ACCOUNT OF DISALLOWANCE OF CLAIM OF ASSESSEE UNDER THE HEAD IN COME FROM OTHER SOURCES, ADDITION RS. 6,00,000/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES AND ADDITION OF RS. 1,03,000/- ON ACCOUNT OF CASH DEPOSIT IN THE BA NK. 3. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEF ORE THE LD. CIT(A). DURING APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTE D AN APPLICATION FOR ADMITTING ADDITIONAL EVIDENCE. THE LD. CIT(A) FORWA RDED THE SAME TO THE A.O. FOR HIS COMMENTS ON ADMISSIBILITY AS WELL AS ON MER IT QUA THE IMPUGNED ADDITION MADE TO THE INCOME OF THE ASSESSEE. AFTER RECEIVING THE REPORT FROM THE A.O. THE LD. CIT(A) PARTLY ALLOWED THE APPEAL. ACCORDING LY, THE LD. CIT(A) CONFIRMED THE ADDITION OF RS. 6,00,000/- MADE ON ACCOUNT OF LOW HOUSEHOLD EXPENSES AND ADDITION RS. 1,03,000/- ON ACCOUNT OF CASH DEPOSIT IN THE BANK. STILL AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 4. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER B Y RAISING THE FOLLOWING EFFECTIVE GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN UPHOLDING ADDITION OF RS. 6 LAKHS MADE BY THE A.O. ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. 3 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE TH E LD. CIT(A) HAS ERRED IN UPHOLDING ADDITION OF RS. 1,03,000/- MADE BY THE A.O. ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT. 5. VIDE GROUND NO 1 THE ASSESSEE HAS CHALLENGED THE ACTION OF THE LD. CIT(A) IN CONFIRMING THE ADDITION OF RS. 6,00,000/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. BEFORE US, THE LD. COUNSEL FOR THE ASSESS EE SUBMITTED THAT THE LD. CIT(A) HAS WRONGLY SUSTAINED THE ADDITION MADE BY T HE A.O. PURELY ON ESTIMATION BASIS. THE LD. COUNSEL SUBMITTED THAT DU RING THE YEAR RELEVANT TO THE A.Y. UNDER CONSIDERATION, THE ASSESSEE HAD MADE WIT HDRAWAL OF RS. 12,000/- PER MONTH FROM THE ACCOUNT OF M/S S.D. MARKETING IN WHI CH THE ASSESSEE WAS A PARTNER, FOR HOUSEHOLD EXPENSES OF HIS FAMILY CONSI STING OF HIS WIFE AND PARENTS. THE LD. CIT(A) CONFIRMED THE ADDITION ON THE BASIS OF OBSERVATIONS OF THE AO THAT THE CLAIM OF THE APPELLANT THAT IT COULD MANAG E WITH THE EXPENSES OF RS. 12,000/- PER MONTH IS NOT PLAUSIBLE, THEREFORE NOT ACCEPTABLE, WITHOUT ASSIGNING ANY REASON TO JUSTIFY THE ADDITION. 6. THE LD. COUNSEL FURTHER POINTED OUT THAT IN THE A.Y. 2012-13 WITHDRAWAL OF RS. 12,000/- PER MONTH WAS CONSIDERED SUFFICIENT FO R FAMILY OF THE ASSESSEE CONSISTING OF THE SAME NUMBERS, HOWEVER, IN THE A.Y . UNDER CONSIDERATION THE A.O HAS ESTIMATED THE HOUSEHOLD EXPENSES AT RS. 6,0 0,000/- PER ANNUM WITHOUT BRINGING ON RECORD ANY FRESH MATERIAL TO JUSTIFY IT S ACTION. THE LD. COUNSEL INVITED OUR ATTENTION TO THE COPY OF ASSESSMENT ORDER PASSE D U/S 143(3) OF THE ACT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2012-13 AND POINTED OUT THAT DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 201 2-13, THE ASSESSEE HAD WITHDRAWN THE SAME AMOUNT AND THE AO HAD NOT MADE A NY ADDITION ON ACCOUNT OF LOW HOUSEHOLD EXPENSES. 7. THE LD. COUNSEL RELIED ON THE DECISION OF THE B BENCH OF THE ITAT DELHI, RENDERED IN THE CASE OF SHRI DINESH KUMAR KAUSHAL VS. ACIT IN ITA NO. 6053/DEL/2013 FOR THE A.Y. 2010-11 IN WHICH THE TRIBUNAL HAS DELETED THE AD HOC ADDITION MADE BY THE A.O. ON ACCOUNT OF LOW HOUSEHO LD EXPENSES. THE LD. 4 COUNSEL FURTHER SUBMITTED THAT THE FINDINGS OF THE ITAT DELHI BENCH IS BASED ON THE RATIO LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF C. VELUKUTY REPORTED IN 17 STC, P-465. 8. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE AO HAD MADE THE ADDITION IN QUESTION WITHOUT GIVING ANY REASON OR P OINTING OUT ANY EVIDENCE ON RECORD, THE LD. CIT(A) OUGHT TO HAVE DELETED THE SA ME. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE ACTION OF THE LD. CIT(A) B AD IN LAW, THE IMPUGNED ORDER IS LIABLE TO BE SET ASIDE. 9. ON THE OTHER HAND THE LD. DEPARTMENTAL REPRESENT ATIVE (DR) VEHEMENTLY SUPPORTING THE ORDER PASSED BY THE LD. CIT(A) SUBMI TTED THAT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN TO THE SATISFACTION OF THE AU THORITIES BELOW, AS TO HOW HE COULD MANAGE WITH THE EXPENSES OF RS. 12,000/- PER MONTH, THE LD. CIT(A) HAS RIGHTLY SUSTAINED THE ADDITION MADE BY THE AO. THE LD. DR FURTHER SUBMITTED THAT THERE IS NO INFIRMITY IN THE ORDER PASSED BY THE LD . CIT(A) TO INTERFERE WITH. 10. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON THE RECORD INCLUDING THE CASES RELIED U PON BY THE LD. COUNSEL FOR THE ASSESSEE AND THE AUTHORITIES BELOW. AS POINTED OUT BY THE LD. COUNSEL, THE AO HAS MADE THE ADDITION IN QUESTION WITHOUT CONSI DERING THE FACT THAT IN THE ASSESSMENT YEAR 2012-013, THE ASSESSEE HAD MADE WIT HDRAWALS OF THE SAME AMOUNT AND NO ADDITION WAS MADE ON ACCOUNT OF LOW H OUSEHOLD EXPENSES. WE FURTHER NOTICE THAT THE AO HAS NOT GIVEN ANY REASON FOR ESTIMATING THE HOUSEHOLD EXPENSES MORE THAN FOUR TIMES IN THE ASSE SSMENT YEAR UNDER CONSIDERATION AS COMPARED TO THE EXPENSES SHOWN BY THE ASSESSEE IN THE IMMEDIATE PRECEDING ASSESSING YEAR. THE HON'BLE SUP REME COURT IN THE CASE OF C. VELUKUTY (SUPRA) HAS HELD THAT THOUGH THERE IS AN ELEMENT OF A GUESS - WORK IN A BEST JUDGMENT ASSESSMENT YET IT SHALL NOT BE A WILD ONE BUT SHALL HAVE A REASONABLE NEXUS TO THE AVAILABLE MATERIAL AND CIRC UMSTANCES OF THE CASE. THE ASSESSING AUTHORITY SHOULD NOT BE VINDICTIVE WHILE MAKING BEST JUDGMENT 5 ASSESSMENT. WE NOTICE THAT IN THE PRESENT CASE TH E AO HAS NEITHER POINTED OUT ANY AND COGENT AND CONVINCING REASON NOR POINTED OU T ANY EVIDENCE ON RECORD TO JUSTIFY HIS ACTION. IN THE REMAND REPORT AO HAS JUSTIFIED THE ADDITION IN QUESTION ONLY ON THE GROUND THAT HIS PREDECESSOR HA S MADE THE SAID ADDITION. AS POINTED OUT BY THE LD. COUNSEL IN THE CASE OF SH. DINESH KUMAR KAUSHAL VS. ACIT (SUPRA), THE ITAT DELHI HAS DELETED THE ADDITION M ADE ON ACCOUNT OF LOW HOUSEHOLD EXPENSES IN THE SIMILAR SET OF FACTS BY F OLLOWING THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT IN THE CASE OF C. VELUKUTY (SUPRA), 11. IN VIEW OF THE DISCUSSIONS IN THE AFORESAID PAR AS AND IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT DISCUSSED AB OVE, WE ARE OF THE CONSIDERED VIEW THAT THE LD. CIT(A) HAS WRONGLY AFF IRMED THE ACTION OF AO IN MAKING ADDITION OF RS. 6,00,000/- PURELY ON AD HOC BASIS WITHOUT ASSIGNING ANY COGENT REASON AND REFERRING ANY EVIDENCE. HENCE, RE SPECTFULLY FOLLOWING THE DECISION OF THE DELHI BENCH OF THE TRIBUNAL DISCUSS ED ABOVE, WE SET ASIDE THE FINDINGS OF THE LD. CIT(A) AND ALLOW THIS GROUND OF APPEAL OF THE ASSESSEE AND DIRECT THE AO TO DELETE THE ADDITION. 12. VIDE GROUND NO 2 THE ASSESSEE HAS CHALLENGED TH E ACTION OF LD. CIT(A) IN SUSTAINING THE ADDITION OF RS. 1,03,000/- OUT OF TH E TOTAL ADDITION OF RS. 28,25,138/- MADE BY THE A.O. ON ACCOUNT OF UNEXPLAINED CREDITS IN THE BANK ACCOUNT OF THE ASSESSEE MAINTAINED WITH BANK OF INDIA. LD. COU NSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE ASSESSEE HAS DEPOSITED RS. 1,03,000/- IN ITS BANK ACCOUNT OUT OF CASH IN HAND AVAILABLE AS ON 01/04/2 012. THE LD. COUNSEL INVITED OUR ATTENTION TO THE CASH FLOW STATEMENT FOR THE PR ECEDING ACCOUNTING PERIOD 2011-12 AS PER WHICH THERE WAS OPENING CASH BALANCE OF RS. 49,76,258/- AS ON 01/04/2011 AND CLOSING BALANCE OF RS. 1,06,758/- AS ON 31/03/2012. THE CASH FLOW STATEMENT OF THE ASSESSEE FOR THE ACCOUNTING P ERIOD 2011-12 WAS DULY CONSIDERED BY THE LD. CIT(A)-1, LUDHIANA WHILE DELE TING THE ADDITION OF RS. 41,00,000/- MADE BY THE A.O. IN ASSESSEES APPEAL F OR THE A.Y. 2012-13. THE OPENING CASH BALANCE OF R.S 1,06,758/- AS ON 01/04/ 2012 WHICH WAS DEPOSITED 6 ON DIFFERENT DATES. LD. COUNSEL FOR THE ASSESSEE PL ACING RELIANCE ON THE JUDGMENT OF THE HON'BLE DELHI HIGH COURT IN THE CAS E OF JAYA AGARWAL VS. ITO REPORTED IN 302 CTR 0241 (DEL) SUBMITTED THAT THE AUTHORITIES BELOW HAVE WRONGLY REJECTED THE EXPLANATION GIVEN BY THE ASSES SEE WITHOUT POINTING OUT ANY JUSTIFICATION AND GROUND TO HOLD TO THE CONTRAR Y. THE LD. COUNSEL FOR THE ASSESSEE FURTHER PLACING RELIANCE ON THE JUDGMENT O F THE HON'BLE JURISDICTIONAL HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CIT VS. PARNEETA GOYAL IN ITA NO. 278 OF 2010, SUBMITTED THAT AS PER THE RATIO LAID D OWN BY THE HONBLE COURT THERE IS NO BAR IN DEPOSITING OR WITHDRAWING ANY AM OUNT UNLESS AND UNTIL SOME FOUL PLAY IS BROUGHT ON RECORD. IN VIEW OF THE AFOR ESAID SUBMISSIONS, THE LD. COUNSEL CONTENDED THAT THE LD. CIT(A) HAS WRONGLY U PHELD THE ADDITION MADE BY THE AO. 13. ON THE OTHER HAND THE LD. DR SUPPORTING THE ORD ER PASSED BY THE LD. CIT(A) SUBMITTED THAT SINCE THE ASSESSEE HAS FAILED TO EXPLAIN THE IMPUGNED CREDITS DURING THE ASSESSMENT PROCEEDINGS DESPITE S EVERAL OPPORTUNITIES AFFORDED BY THE AO AND EVEN FAILED TO EXPLAIN DURIN G THE APPELLATE PROCEEDINGS, THE LD CIT(A) HAS RIGHTLY SUSTAINED TH E ADDITION MADE BY THE AO. 14. WE HAVE GONE THROUGH THE MATERIAL ON RECORD IN THE LIGHT OF THE RIVAL CONTENTIONS OF THE PARTIES. THE LD. CIT(A) HAS SUST AINED THE ADDITION OF RS.1,03,000/- ON THE BASIS OF REMAND REPORT RECEIVE D FROM AO WHEREIN THE AO HAD MENTIONED THAT ASSESSEE COULD EXPLAIN CREDIT E NTRIES OF RS. 27,22,138/- OUT OF THE TOTAL AMOUNT OF RS. 28,25,138/- AND FAILED T O EXPLAIN ABOUT THE REMAINING AMOUNT OF RS. 1,03,000/-. AS CONTENDED BY THE LD. C OUNSEL, THE ASSESSEE HAD CASH BALANCE OF RS. 1,06,758/- AS ON 01-04-2012/ AN D THE DEPOSITS IN QUESTION WERE MADE OUT OF THE SAID AMOUNT. THE ASSESSEE HAS FILED THE COPY OF PERSONAL CASH BALANCE FOR THE PERIOD FROM 01-04-2012 TO 31. 03.2013 BEFORE THE LD. CIT(A). HOWEVER, THE LD. CIT(A) HAS SUSTAINED THE ADDITION WITHOUT CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE. WE FURTHER NOTIC E THAT THE ASSESSEE HAS CONTENDED BEFORE THE LD. CIT(A) THAT DURING THE YEA R RELEVANT TO THE ASSESSMENT 7 YEAR UNDER CONSIDERATION, THE ASSESSEE WAS A PARTNE R IN M/S S.D. MARKETING CO. HAVING 60% SHARE, BESIDES PROPRIETOR OF TWO CONCERN S. THE ASSESSEE WITHDREW MONEY FROM THE ACCOUNTS OF THE SAID CONCERNS FROM T IME TO TIME IN CONNECTION WITH THE BUSINESS OF THE SAID CONCERNS. WE FURTHER NOTICE THAT THE AUTHORITIES BELOW HAVE NOT EXAMINED THIS ASPECT IN ORDER TO VER IFY THE CONTENTION OF THE ASSESSEE. FURTHER, THE AUTHORITIES BELOW HAVE NOT C ONTROVERTED THE PLEA OF THE ASSESSEE THAT THE ASSESSEE HAD PERSONAL CASH BALANC E OF RS.1,06,758/- AS ON 01- 04-2012. IN OUR CONSIDERED VIEW, THE ASSESSEE HAS DISCHARGED THE ONUS OF EXPLAINING THE CREDIT ENTRIES IN QUESTION, HOWEVER, THE AUTHORITIES BELOW HAVE REJECTED THE EXPLANATION WITHOUT ASSIGNING ANY COGE NT REASON OR REBUTTING THE CONTENTION OF THE ASSESSEE. THE FACTS OF THE CASE A ND THE EVIDENCE ON RECORD SUGGEST THAT THE LD. CIT(A) HAS SUSTAINED THE ADDIT ION WITHOUT CONSIDERING THE EXPLANATION GIVEN BY THE ASSESSEE. THEREFORE, WE AR E OF THE CONSIDERED VIEW THAT THE ACTION OF THE LD. CIT(A) IS NOT IN ACCORDA NCE WITH THE SETTLED PRINCIPLES OF LAW. HENCE, WE ALLOW THIS GROUND OF APPEAL OF TH E ASSESSEE AND SET ASIDE THE FINDINGS OF THE LD. CIT(A). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITION. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2013-14 IS ALLOWED. (ORDER PRONOUNCED ON 29/09/2020 UNDER RULE 34(4) OF THE INCOME TAX RULES) SD/- SD/- .. . . ( N.K. SAINI) (R.L. NEGI ) / VICE PRESIDENT # $%/ JUDICIAL MEMBER AG DATE: 29/09/2020 (+! ,-.- COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT 3. $ / CIT 8 4. $ / 01 THE CIT(A) 5. -2 45&456789 DR, ITAT, CHANDIGARH 6. 8:% GUARD FILE (+ $ BY ORDER, ; # ASSISTANT REGISTRAR