Ranchhodbhai Nathubhai Dholariya, RAJKOT-GUJARAT V. The Income Tax Officer, Ward-2 (3), RAJKOT-GUJARAT

ITA 122/RJT/2016

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 8899 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-02-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 18-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K L SOLANKI
• Assessee Lawyers: CHETAN L AGARWAL
• Keywords: Salary income
• Section: 68; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AHMEDABAD] IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER I.T.A. NO.122/RJT/2016 ( / ASSESSMENT YEAR : 2012-13) RANCHHODBHAI NATHUBHAI DHOLARIAY, PATEL PARK, PEDAK ROAD, OPP. ASTHA HOSPITAL, RAJKOT 360 003 VS. INCOME TAX OFFICER, WARD 2(3), RAJKOT 360 001 ! PAN/GIR NO. : ADMPD 6989 L ( ' / APPELLANT ) .. ( #' RESPONDENT ) '$ APPELLANT BY : SHRI CHETAN L. AGARWAL, A.R. #'%$ / RESPONDENT BY : SHRI K. L. SOLANKI, SR. D.R. & ' (%) * / DATE OF HEARING 29/01/2018 +,-. %) * / DATE OF PRONOUNCEMENT 02/02/2018 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER: THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-2, RAJKOT, VIDE APPEAL NO.CIT(A)-2/160/14-15 DATED 12/02/2016 FOR THE ASSE SSMENT YEAR (AY) 2012-13, ON THE FOLLOWING GROUNDS: [A] REGARDING ADDITION OF RS.1,40,213/- OF INTERES T ON AGRICULTURAL OVERDRAFT ACCOUNT. 1. THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT AM OUNT GENERATED FROM AGRICULTURAL OVERDRAFT ACCOUNT WAS APPLIED FOR BUSINESS PURPOSES. YOUR APPELLANT HAD ALREADY STATED IN THE STATEMENT OF FACTS FILED BEFORE CIT (A) THAT MAIN SOURCE OF INCOME OF YOUR APPELLANT ITA NO.122/RJT/ 2016 RANCHHODBHAI NATHUBHAI DHOLARIYA VS. ITO ASST.YEAR 2012-13 - 2 - INCLUDES (I) INCOME FROM BROKERAGE (II) INCOME FROM PARTNERSHIP FIRM (III) INCOME FROM SALARY & (IV) INTEREST FROM SAVINGS ACCOUNT AND THAT AMOUNT OBTAINED FROM LOAN WAS INTRODUCED A S CAPITAL CONTRIBUTION TO YOUR APPELLANT'S PARTNERSHIP FIRM. IN SPITE OF BEING INFORMED, THE LEARNED CIT(A) HAS ERRED IN BOTH FACT S AND LAW BY ADDING THE INTEREST OF RS.1,40,213/- TO YOUR APPELL ANT'S TOTAL INCOME WHICH IS UNCALLED FOR. IN DOING SO, THE LEARNED CIT (A) HAS OVERLOOKED THE JUDGMENT OF HON'BLE GUJARAT HIGH COU RT IN CIT VS. NANALAL MANSUKHRAM [2002]253 ITR 50 (GUJ) 2. THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THE FA CT YOUR APPELLANT HAS ALREADY PROVED NEXUS BETWEEN THE APPLICATION OF FUNDS GENERATED FROM AGRICULTURAL LOAN TO BUSINESS PURPOS ES AS CAPITAL CONTRIBUTION TO HIS PARTNERSHIP FIRM M/S ZION CONST RUCTION BY WAY OF PRODUCING SUPPORTING DOCUMENTARY EVIDENCE IN THE FORM OF (I) AGRICULTURAL LOAN ACCOUNT STATEMENT (II) SAVINGS BA NK ACCOUNT STATEMENT AND (III) YOUR APPELLANT'S CAPITAL ACCOUN T LEDGER IN THE BOOKS OF M/S ZION CONSTRUCTION. . IN DOING SO, THE LEARNED CIT(A) HAS OVERLOOKED JUDGMENT OF APEX COURT IN SA BUILDER S LTD 206 CTR 631 (SC) . [B] REGARDING ADDITION OF RS.1,00,000/- UNEXPLAINE D CASH CREDIT OF RS.1,00,000/- U/S 68. 1. THE LEARNED CIT (A) HAS FAILED TO APPRECIATE THA T RS.1,00,000/- WAS WRONGLY ADDED BY ITO U/S 68 WITHOUT MAKING PROP ER ENQUIRY. YOUR APPELLANT HAS ESTABLISHED THE IDENTIT Y, GENUINENESS AND CREDITWORTHINESS OF HIS WIFE BY SUB MITTING CONFIRMATION LETTER. COPY BANK PASSBOOK & IDENTITY PROOF TO THE ITO & LEARNED CIT(A). YOUR APPELLANT HAD OBTAIN ED SUCH LOAN BY WAY OF ACCOUNT PAYEE CHEQUE & NOT CASH THER EFORE NO ADDITION CAN BE MADE AS UNEXPLAINED CASH. MOREOVER, YOUR APPELLANT HAS ALSO PROVED SOURCE OF DEPOSITS IN HIS WIFE'S ACCOUNT IN THE FORM OF FIXED DEPOSITS WHICH WERE RENEWED FR OM TIME TO TIME FROM THE YEAR 2003. IT IS RE- DEPOSIT OF EXCESS WITHDRAWALS MADE OUT OF EXPLAINED BANK DEPOSITS. THUS, BY ADDIN G RS.1,00,000/-, LEARNED CIT(A) HAS OVERLOOKED THE DE CISION AS GIVEN IN GURPREET SINGH VS. INCOME-TAX OFFICER [201 5]61 TAXMANN.COM (CHANDIGARD- TRIB) ITA NO.122/RJT/ 2016 RANCHHODBHAI NATHUBHAI DHOLARIYA VS. ITO ASST.YEAR 2012-13 - 3 - 2. SOURCES OF SOURCE NEED NOT BE EXPLAINED: ALTHOU GH YOUR APPELLANT HAD EXPLAINED THE SOURCES OF SOURCE (SOUR CES OF HIS WIFE), BY MAKING ADDITION OF RS.1,00,000/- OF CASH DEPOSIT IN THE ACCOUNT OF YOUR APPELLANT'S WIFE. LEARNED CIT(A) HA S OVERLOOKED THE DECISION OF HON'BLE GUJARAT HIGH COURT IN CIT V S. ROHINI BUILDERS [2003] 127 TAXMANN 523 (GUJARAT) WHEREIN I T WAS HELD THAT THAT ASSESSEE WAS NOT EXPECTED TO PROVE GENUIN ENESS OF CASH DEPOSITED IN BANK ACCOUNTS OF CREDITORS, BECAUSE UN DER LAW, ASSESSEE CAN BE ASKED TO PROVE SOURCE OF CREDITS IN ITS BOOKS OF ACCOUNT BUT NOT SOURCE OF SOURCE. 3. IN, SMT. SHANTA DEVI V. CIT [1988] 37 TAXMAN 104 (PUNJ. & HAR.), IT WAS HELD THAT A PERUSAL OF SECTION 68 WOU LD SHOW THAT THE EXPRESSION 'BOOKS' HAS BEEN USED WITH REFERENCE TO THE WORD 'ASSESSEE'. IN OTHER WORDS, SUCH BOOKS HAVE TO BE B OOKS OF THE ASSESSEE HIMSELF, AND NOT OF ANY OTHER ASSESSEE. TH US, THE BOOKS OF ACCOUNT SPOUSE OF YOUR APPELLANT CANNOT BE CONSI DERED TO BE THE BOOKS OF ACCOUNT OF YOUR APPELLANT. ANY CASH CR EDIT SHOWN THEREIN CANNOT BE BROUGHT TO TAX AS INCOME UNDER SE CTION 68 IN THE HANDS OF YOUR APPELLANT. IN THIS CASE, YOUR APP ELLANT HAS RECEIVED THE AMOUNT BY ACCOUNT PAYEE CHEQUE AND NOT BY CASH. THE ENTRY OF IMPUGNED AMOUNT IS CASH ENTRY IN PASS BOOK OF YOUR APPELLANT'S WIFE AND NOT YOUR APPELLANT'S OWN BOOKS. [C] REGARDING ADDITION OF RS.40,000/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES: 1. LEARNED CIT (A) HAS UPHELD THE ADDITION OF RS.40,00 0/- MADE ON ACCOUNT OF LOWER WITHDRAWALS. HE HAS REBUTTED YOUR APPELLANT'S ARGUMENT THAT SOME OF APPELLANT'S NEEDS WERE MET OU T OF MY OWN AGRICULTURAL FARM PRODUCE BY STATING THAT YOUR APPE LLANT HAS NOT SHOWN ANY AGRICULTURAL INCOME. HOWEVER. LEARNED CIT (A) HAS GROSSLY MADE NEGLIGENCE CONSIDERING THE FACT THAT Y OUR APPELLANT HAS SHOWN AGRICULTURAL INCOME OF RS.5,74,000/- IN F.Y.2 011-12(A.Y. 2012-13) WHICH WAS VERIFIABLE FROM THE STATEMENT OF INCOME FILED BEFORE CIT(A) AS WELL AS ITO. MOREOVER, LEARNED CIT (A) HAS NOT STATED AGAINST YOUR APPELLANT'S ARGUMENT OF LOW COS T OF LIVING IN THE YEAR 2012-13 AS YOUR APPELLANT BEING PERSONS HAILIN G FROM RURAL AREA AND ALSO ARGUMENT OF MEETING PERSONAL EXPENDIT URE FROM YOUR APPELLANT'S WIFE'S SOURCE & ONLY TWO PERSONS IN THE FAMILY. THUS, THE ADDITION OF RS.40,000/-IS UNCALLED FOR. ITA NO.122/RJT/ 2016 RANCHHODBHAI NATHUBHAI DHOLARIYA VS. ITO ASST.YEAR 2012-13 - 4 - THEREFORE, YOUR APPELLANT PRAYS THAT ALL THE THREE ADDITIONS MAY PLEASE BE DELETED. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERI ALS ON RECORD ARE AS UNDER:- THE APPELLANT IS AN INDIVIDUAL AND IS A GENERAL CO MMISSION AGENT. THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESS EE HAS DISCLOSED AN O.D. WITH BANK OF INDIA AGAINST THE CROP LOAN OF RS .1,64,000/- AND RS.10,00,000/- FOR DEVELOPMENT OF AGRICULTURAL LAND . THE AO DISALLOWED THE INTEREST EXPENDITURE OF RS.1,40,213/- CLAIMED T O BE INCURRED BY THE APPELLANT IN RELATION TO THE O.D. WITH BANK OF INDI A AGAINST THE CROP LOAN, IN RELATION TO THE INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME OF THE APPELLANT. THE AO HAS FURTHER NOTICED THAT THE APPELLANT HAS TAKEN A UNSECURED LOAN OF RS.1,00,000/- FROM MRS. S. R. PAT EL WHO IS WIFE OF THE APPELLANT. THE AO HELD THAT ASSESSEE FAILED TO PROD UCE DOCUMENTARY EVIDENCES TO SUBSTANTIATE THE SOURCE OF CASH DEPOSI T OF RS.1,00,000/- IN THE ACCOUNT OF HIS WIFE AS DISCUSSED IN PARA-4 OF T HE ASSESSMENT ORDER. ACCORDINGLY, AO MADE AN ADDITION OF RS.1,00,000/-, PURPORTED TO BE TAKEN FROM HIS WIFE BEING CONSIDERED AS AN UNEXPLAI NED CASH CREDIT. THE AO HAS FURTHER OBSERVED THAT THE LOAN HOUSEHOLD OF RS.60,000/- ONLY DURING THE YEAR RELEVANT AS AGAINST THE WITHDRAWALS OF RS.2,90,000/- WAS BEING MADE DURING THE IMMEDIATELY PRECEDING YEAR BY THE APPELLANT. CONSIDERING THE COST OF INFLATION AND THE STANDARD OF LIVING OF THE APPELLANT, AO HAS ESTIMATED THE HOUSEHOLD EXPENSES AT RS.1,00,000/- F OR THE YEAR AND THUS, MADE AN ADDITION OF RS.40,000/- OVER AND ABOVE TO RS.60,000/- SHOWN BY THE APPELLANT AS HOUSEHOLD WIT HDRAWALS. ITA NO.122/RJT/ 2016 RANCHHODBHAI NATHUBHAI DHOLARIYA VS. ITO ASST.YEAR 2012-13 - 5 - 3. AGAINST THE SAID ORDER ASSESSEE PREFERRED FIRST STATUTORY APPEAL BEFORE THE LD. CIT(A) WHO DISMISSED THE APPEAL OF T HE ASSESSEE. 4. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR AS GROUND NO.1 IS CONCERNED REGARDING DISALLOWA NCE OF INTEREST OF RS.1,40,213/- CLAIMED AGAINST INTEREST AND REMUNERA TION FROM PARTNERSHIP FIRM. MAIN SOURCE OF INCOME OF APPELLANT ARE (I) IN COME FROM BROKERAGE (II) INCOME FROM PARTNERSHIP FIRM (III) INCOME FROM SALARY AND (IV) INTEREST FROM SAVINGS ACCOUNT AND THAT AMOUNT OBTAI NED FROM LOAN IS INTRODUCED AS CAPITAL CONTRIBUTION TO THE APPELLANT S PARTNERSHIP FIRM. APPELLANT HAD OBTAINED TWO LOANS OF RS.1,64,000/- W HICH WAS CROP LOAN AND RS.1,00,000/- MORTGAGE LOAN, THE SAID MORTGAGE LOAN WAS INVESTED IN PARTNERSHIP FIRM M/S. ZION CONSTRUCTION. SAME IS RE FLECTING IN PAPER BOOK AND CAPITAL ACCOUNT OF THE APPELLANT. IN OUR C ONSIDERED OPINION, SINCE ALL THE TRANSACTIONS ARE MADE THROUGH BANKING CHANNEL AND SAME IS VERIFIABLE. THEREFORE, WE ALLOW THIS GROUND OF APPE AL. 5. SO FAR GROUND NO.2 IS CONCERNED WITH REGARD TO U NSECURED LOAN FROM WIFE OF APPELLANT U/S.68. IN THIS CASE, ASSESS EE HAS FURNISHED NAME, ADDRESS, PAN, CONFIRMATION AND BANK STATEMENT BEFOR E THE AUTHORITIES BELOW AND SAME ARE PART OF THE PAPER BOOK AT PAGE N O.10 TO 13. AN AMOUNT WAS GIVEN BY DEPOSITING CASH WHICH WAS WITHD RAWAL EARLIER FROM SAME BANK. WE ARE CONVINCED WITH THE PLEA OF LD. AR . THEREFORE, WE ALLOW THIS GROUND OF APPEAL. ITA NO.122/RJT/ 2016 RANCHHODBHAI NATHUBHAI DHOLARIYA VS. ITO ASST.YEAR 2012-13 - 6 - 6. SO FAR GROUND NO.3 IS CONCERNED REGARDING LOW HO USEHOLD WITHDRAWAL. THIS GROUND IS NOT PRESSED AND SAME IS DISMISSED AS NOT PRESSED. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 02/02/2018 SD/- SD/- IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ IZEKSN DQEKJ EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN EGKOHJ IZLKN YKS[KK LN YKS[KK LN YKS[KK LN YKS[KK LNL; L; L; L; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; U;KF;D LNL; (PRAMOD KUMAR) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 02/02/2018 PRITI YADAV, SR. PS COPY OF THE ORDER FORWARDED TO : 1. ' / THE APPELLANT 2. #' / THE RESPONDENT. 3. 012) & 3) / CONCERNED CIT 4. & 3) 45 / THE CIT(A)-2, RAJKOT. 5. 67 8)'12 *12. 0 / DR, ITAT, AHMEDABAD 6. 8 9: ( GUARD FILE. / BY ORDER, # 6)) //TRUE COPY// / !'# ( DY./ASSTT.REGISTRAR) #$ %, / ITAT, AHMEDABAD 1. DATE OF DICTATION 29/01/2018 (DICTATION-PAD 2 P AGES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 30/01/2018 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER