Balvir Singh Sekhon, Ludhiana V. Addl. CIT, R-VII, Ludhiana

ITA 1229/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7560 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-07-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 11-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH B, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.1229/CHD/2017 (ASSESSMENT YEAR : 2011-12) BALVIR SINGH SEKHON, VS. THE ADDL. CIT, B-XX-1881, ST.NO.5, RANGE VII, MAHARAJ NAGAR, LUDHIANA. LUDHIANA. PAN: ADVPS6951J (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SARABJIT GARG, CA RESPONDENT BY : SMT.MEENAKSHI VOHRA, SR.DR DATE OF HEARING :13.04.2018 DATE OF PRONOUNCEMENT :10.07.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER : THIS APPEAL HAS BEEN PREFERRED BY THE ASSESSEE AGAI NST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEAL S)-3, LUDHIANA (HEREINAFTER REFERRED TO AS LD.CIT (APPEA LS)] DATED 22.5.2017, PASSED U/S 250(6 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IN APPEAL NO.762/ROT/IT/C IT(A)- 3/LDH/2014-15 RELATING TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACT S OF THE CASE, IN CONFIRMING THE ADDITION OF RS.35,16,000/- T O THE INCOME OF THE ASSESSEE, ON ACCOUNT OF AMOUNTS DEPOSITED IN BANKS, TERMING THEM AS UNEXPLAINED, DESPITE THE FACT THAT OUT OF THESE A SUM OF RS.3.00 LACS WAS DEPOSITED OUT OF LOAN AGAINST KVPS AGAINST WHICH BANK CERTIFICATE WAS DULY PRODUCED, RS.10.00 LACS WAS DEPOSITED OUT OF BIANA RECEIVED AGAINST AGREEMENT , TO SELL RESIDENTIAL HOUSE AGAINST WHICH NOT ONLY ITA NO.1229/CHD/2017 AY: 2011-12 2 PERSON WHO GAVE BIANA WAS PRODUCED BUT COPIES OF SALE DEED EXECUTED IN HER FAVOUR WERE ALSO PRODUCED, REST OF THE AMOUNTS WERE DEPOSITED OUT OF LOANS RECEIVED FROM BANKS IN EARLIER YEARS IN THE NAMES OF DOCTORS ASSOCIATED WITH THE ASSESSEE ON HIS PERSONAL GUARANTEE AND AGAINST WHICH POST DATED CHEQUES WERE ALSO ISSUED BY HIM, ENTRIES FOR WHICH WERE NEITHER RECORDED IN ASSESSEE'S BOOKS AT THE TI ME OF RECEIPT OF LOAN NOR AT THE TIME OF REPAYMENT THEREOF. 2. THAT ON THE FACTS AND THE CIRCUMSTANCES OF THE C ASE AND IN LAW, LEARNED CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS.3,09,861/- U/S 14A DESPITE THE FACT THAT THERE WAS NEITHER DIVIDEND INCOME AGAINST SHARES NOR ANY EXPENDITURE WAS INCURRED TO EARN EXEMPT INCOME. 3. IN GROUND NO.1, THE ASSESSEE HAS AGITATED THE AD DITION OF RS.35,16,000/- TO THE INCOME OF THE ASSESSEE ON ACCOUNT OF UNEXPLAINED DEPOSITS IN THE BANK ACCOUNT OF THE ASSESSEE. 4. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD TOTAL DEPOSITS OF RS.44,01,000/- IN THE CORPORATION BANK, LUDHIANA AN D RS.12,30,000/- IN PUNJAB NATIONAL BANK, LUDHIANA. ON BEING ASKED TO EXPLAIN, THE ASSESSEE EXPLAINED THAT THERE WAS EXCESSIVE WITHDRAWAL OF RS.11,85,000/- FROM PUN JAB NATIONAL BANK AND FURTHER THE ASSESSEE HAD GOT SANC TIONED LOANS IN THE NAME OF VARIOUS DOCTORS AGAINST HIS PE RSONAL GUARANTEE. THAT THESE DOCTORS HAD FURTHER GIVEN THE SE LOANS TO THE ASSESSEE TO CLEAR HIS DEBTS AND THAT THE SAI D LOANS FROM THE DOCTORS WERE DEPOSITED IN THE CORPORATION BANK. THE ASSESSEE HAD ISSUED POST-DATED CHEQUES TO CLEAR THE LOAN AMOUNT TO THE BANK OUT OF HIS OWN ACCOUNT. FUR THER, RS.10 LACS WERE DEPOSITED OUT OF ADVANCE MONEY (BIA NA) RECEIVED FROM ONE SMT.AVTAR KAUR IN RESPECT OF SALE OF ITA NO.1229/CHD/2017 AY: 2011-12 3 RESIDENTIAL HOUSE AT JANTA NAGAR, LUDHIANA. AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE ASSESSIN G OFFICER NOTICED THAT THE ASSESSEE COULD NOT PRODUCE RELIABL E EVIDENCE REGARDING RECEIPT OF BIANA OF RS.10 LACS. FURTHER, THE ASSESSEE COULD NOT PRODUCE RELIABLE EVIDENCE TO SUBSTANTIATE THE CLAIM THAT THE AMOUNTS OF RS.18,43 ,754/- WERE RECEIVED FROM DOCTORS. THE ASSESSING OFFICER F URTHER OBSERVED THAT THOUGH AN AMOUNT OF RS.8,90,000/- COU LD BE TREATED AS DEPOSITED OUT OF THE EXCESS WITHDRAWAL F ROM THE BANK, HOWEVER, THE ASSESSEE COULD NOT EXPLAIN THE S OURCE OF DEPOSIT REGARDING TWO ENTRIES OF RS.2,25,000/- ON 3 .7.2010 AND RS.75,000/- ON 7.7.2010 BY WAY OF PC/TRANSFER. HE, THEREFORE, HELD THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCE OF AMOUNT OF RS.35,16,000/- AND ADDED THE SA ME INTO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CRED ITS. 5. BEFORE THE LD.CIT(APPEALS), THE ASSESSEE MOVED A N APPLICATION UNDER RULE 46A OF THE INCOME TAX RULES AND FURNISHED THE RELEVANT EVIDENCES, ON WHICH THE LD.CIT(APPEALS) CALLED REMAND REPORT OF THE ASSESSI NG OFFICER. THE ASSESSING OFFICER EXAMINED THE PARTIES . THEREAFTER, HE REPORTED THAT THOUGH MRS. AVTAR KAUR IN HIS STATEMENT HAD ADMITTED THAT SHE HAD PAID RS.10 LACS TO THE ASSESSEE FOR PURCHASE OF HOUSE AT LUDHIANA AND SHE HAD ALSO EXPLAINED THAT THE AMOUNT WAS PAID IN THE THE YEAR 2010, EVEN THOUGH THE SALE DEED OF THE HOUSE HAD AL SO BEEN EXECUTED BY THE ASSESSEE IN HER FAVOUR IN 2016. HOW EVER, SHE COULD NOT EXPLAIN THE SOURCE OF THE PAYMENT O F RS.10 ITA NO.1229/CHD/2017 AY: 2011-12 4 LACS TO THE ASSESSEE. IN RESPECT OF LOAN RECEIVED F ROM DOCTORS, THE ASSESSING OFFICER REPORTED THAT THE ST ATEMENT OF THE DOCTORS WERE RECORDED, WHO STATED THAT NEITH ER THEY HAD RECEIVED ANY LOAN FROM THE BANK, NOR THEY HAD F URTHER PAID THE SAME TO THE ASSESSEE. EVEN THEY HAD NOT MA DE ANY REPAYMENT OF ANY LOAN TO THE BANK. THE ASSESSING OF FICER, THEREFORE, REPORTED THAT THE ASSESSEE HAD FAILED TO PROVE THE SOURCE OF ABOVE DEPOSITS. RELYING ON THE REPORT OF THE ASSESSING OFFICER, THE CIT(APPEALS) CONFIRMED THE I MPUGNED ADDITIONS SO MADE BY THE ASSESSING OFFICER. 6. THE ASSESSEE, THUS, HAS COME UP IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE REPORT. THE ADDITIONS MADE BY THE ASSESSING OFFICER CONSTITUTE THREE SEGMENTS, FIRST IS RS.3 LACS (RS.2,25,000/- + RS.75,000/-) FOUND DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE VIDE ENTRIES DATED 3.7 .2010 AND 7.7.2010 RESPECTIVELY. THE LD. COUNSEL FOR ASSE SSEE, IN THIS RESPECT, HAS DRAWN OUR ATTENTION TO THE PAPER BOOK PAGE NO.85, WHICH IS A COPY OF THE CERTIFICATE ISSU ED BY PUNJAB NATIONAL BANK, FEROZEPUR ROAD, LUDHIANA, WHE REIN IT HAS BEEN CERTIFIED THAT THE ASSESSEE HAD RAISED TWO DEMAND LOANS OF RS.2,25,000/- AND RS.75,000/- ON 3.7.2010 AND 7.7.2010 RESPECTIVELY AND FURTHER THAT THESE LOANS ARE ADVANCED AGAINST KVP IN THE NAME OF ASSES SEE. FURTHER THAT THESE LOANS WERE CREDITED INTO THE ACC OUNT OF THE ASSESSEE. A PERUSAL OF THE ABOVE CERTIFIC ATE CO- RELATES THE AMOUNT RECEIVED AS LOAN AGAINST KVP BY THE ITA NO.1229/CHD/2017 AY: 2011-12 5 ASSESSEE FROM THE BANK WITH THE DEPOSITS FOUND IN T HE BANK. IN VIEW OF THIS, THE AMOUNT OF RS.3 LACS STOOD EXPL AINED BY THE ASSESSEE. HOWEVER, THE LOWER AUTHORITIES IGNORE D THE ABOVE EVIDENCE ON THE FILE. 8. THE NEXT SEGMENT IS RELATING TO THE AMOUNT OF LO AN RECEIVED BY THE ASSESSEE THROUGH DOCTORS WHO WERE EMPLOYED IN HIS HOSPITAL. THERE IS NO DENIAL TO THE FACT THAT THE AMOUNTS IN QUESTION WERE SANCTINED BY THE BANK IN THE NAME OF RESPECTIVE DOCTORS. FURTHER THAT THE ASSESS EE HAS ALSO ISSUED POSTDATED CHEQUES FOR REPAYMENT OF THOS E LOANS. THE LOWER AUTHORITIES HAS MADE ADDITIONS ON THIS IS SUE ON THE BASIS OF STATEMENT OF DOCTORS THAT THEY HAD NEI THER RECEIVED ANY LOAN FROM BANK, NOR HAD REPAID THE SAM E TO THE BANK. EVEN THEY HAD NOT ADVANCED ANY LOAN TO T HE ASSESSEE. THE PLEA OF THE ASSESSEE HAS BEEN THAT THE BANK DO NOT ISSUE LOAN WITHOUT VERIFYING THE ANTECEDENTS OF THE LOANEE AND FURTHER WITHOUT TAKING ANY GUARANTEE OR SURETY OF THE LOAN AMOUNT. IT HAS, THEREFORE, BEEN PLEADED THAT THE FACT OF GRANT OF LOAN HAS BEEN PROVED IN THE NAMES OF DOCTORS AND FURTHER THE SAID LOAN AMOUNT WAS DEPOSI TED IN THE BANK ACCOUNT OF THE ASSESSEE. THE ASSESSEE HAD ALSO ISSUED CHEQUES FOR RE-PAYMENT OF THE SAME. 9. IN OUR VIEW, THOUGH THE CONCERNED DOCTORS HAD DE NIED THE RECEIPT OF ANY LOAN FROM THE BANK AS WAS ALLEGE D BY THE ASSESSEE, HOWEVER, THE FACT THAT HAD NOT BEEN D ISPUTED BY THE LOWER AUTHORITIES THAT THE LOANS IN QUESTIO N WERE DISBURSED BY THE BANK IN THE NAMES OF THE DOCTORS A ND ITA NO.1229/CHD/2017 AY: 2011-12 6 FURTHER THAT THE ASSESSEE HAD ALSO ISSUED POSTDATED CHEQUES FOR REPAYMENT. WE HEREBY ARE NOT CONCERNED AS TO W HETHER THE SAID LOANS WERE GOT ISSUED BY THE ASSESSEE IN T HE NAMES OF DOCTORS BY WAY OF KEEPING THEM IN DARK OR BY WAY OF ANY CONNIVANCE WITH THE BANK AUTHORITIES, WE ARE CONCER NED WHETHER THE DEPOSITS FOUND IN THE ACCOUNT OF THE AS SESSEE WERE OUT OF UNEXPLAINED INCOME OF THE ASSESSEE OR N OT. THE FACT ON THE FILE IS THAT THE LOANS WERE ISSUED IN T HE NAMES OF DOCTORS, MAY BE WITH OR WITHOUT THEIR CONSENT OR TH EIR KNOWLEDGE, AND THE SAID AMOUNT MOVED INTO THE ACCOU NT OF THE ASSESSEE AND FURTHER THAT THE ASSESSEE HAS OWNE D LOAN LIABILITY AND HAS ISSUED CHEQUES FOR REPAYMENT OF T HE SAME. UNDER THESE CIRCUMSTANCES, THE SOURCE OF DEPOSITS S TOOD EXPLAINED AND IT CANNOT BE SAID TO BE THE INCOME OF THE ASSESSEE AS THE SAME IS THE LIABILITY OF THE ASSES SEE AND THE ASSESSEE IS LIABLE TO REFUND THE SAME. HENCE, T HE SAID DEPOSITS OUT OF THE LOANS ISSUED IN THE NAMES OF TH E DOCTORS CANNOT BE ADDED AS INCOME OF THE ASSESSEE. SO FAR AS THE RECEIPT OF RS.10 LACS AS ADVANCE MONE Y (BIANA) RECEIVED AS PER THE AGREEMENT TO SELL OF HO USE WITH MRS.AVTAR KAUR, IS CONCERNED, MRS.AVTAR KAUR HAS CONFIRMED THAT THE SHE HAS EXECUTED AN AGREEMENT WI TH THE ASSESSEE AND THAT SHE HAD PAID RS.10 LACS TO THE AS SESSEE. THE ASSESSEE HAS ALSO EXECUTED THE REGISTERED SALE DEED IN FAVOUR OF MRS.AVTAR KAUR. THE ASSESSING OFFICER HAS DISBELIEVED THE AFORESAID TRANSACTION ONLY ON T HE GROUND THAT MRS.AVTAR KAUR COULD NOT EXPLAIN THE SO URCE OF ITA NO.1229/CHD/2017 AY: 2011-12 7 MONEY. ON THE OTHER HAND, THE PLEA OF THE ASSESSEE HAS BEEN THAT THE ASSESSEE WAS NOT SUPPOSED TO ENQUIRE THE PURCHASER OF HER SOURCE OF MONEY. AS PER THE AGREEM ENT, THE ASSESSEE HAS RECEIVED THE AMOUNT IN QUESTION AN D FURTHER HAS EXECUTED THE SALE DEED IN FAVOUR OF THE PURCHASER MRS.AVTAR KAUR. MRS.AVTAR KAUR HAS ALSO EXPLAINED THAT THERE WAS A DELAY IN EXECUTION OF SA LE DEED BECAUSE OF THE REASON THAT THE HOUSE WAS LYING MORTGAGED/ATTACHED WITH THE BANK. WE FIND FORCE IN THE SUBMISSIONS OF THE ASSESSEE IN THIS RESPECT. IT IS NOT A CASE OF LOAN TRANSACTION, RATHER, IT IS A CASE OF SALE OF HOUSE. THE HOUSE IN QUESTION H AS BEEN TRANSFERRED THROUGH REGISTERED SALE DEED. THE ASSES SEE HAS PARTED WITH HIS PROPERTY FOR WHICH HE GOT AN AMOUNT OF RS.10 LACS AS ADVANCE. UNDER THESE CIRCUMSTANCES, I T CANNOT BE SAID TO BE A CASE WHERE OWN MONEY OF THE ASSESSEE WOULD HAVE ROUTED THROUGH MRS. AVTAR KAUR. HAD IT BEEN SO, THERE WAS NO QUESTION OF TRANSFERRING T HE PROPERTY BY WAY OF REGISTERED SALE DEED BY THE ASSE SSEE TO MRS.AVTAR KAUR AND WHY THE PURCHASER WOULD SUFFER T HE EXPENDITURE OF STAMP DUTY ON THE REGISTRATION OF SA LE DEED. IN VIEW OF THIS, WE DO NOT FIND JUSTIFICATION ON TH E PART OF LOWER AUTHORITIES IN MAKING THE IMPUGNED ADDITIONS. IN VIEW OF OUR FINDINGS GIVEN ABOVE, NO ADDITIONS ARE WARRA NTED ON THIS ISSUE AND THE SAME ARE ACCORDINGLY, ORDERED TO BE DELETED. ITA NO.1229/CHD/2017 AY: 2011-12 8 10. VIDE GROUND NO.2 THE ASSESSEE HAS AGITATED THE DISALLOWANCE OF RS.3,09,861 U/S 14A OF THE ACT. 11. AT THE OUTSET, THE LD. COUNSEL FOR ASSESSEE HAS SUBMITTED THAT THE ASSESSEE DURING THE YEAR HAD NOT EARNED ANY TAX EXEMPT INCOME. THE LD. COUNSEL HAS FURTHER SUBMITTED THAT THE ISSUE IS NOW SQUARELY COVERED BY THE NUMEROUS DECISIONS OF THE VARIOUS HIGH COURTS INCLU DING THAT OF THE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARYANA IN THE CASES OF CIT FARIDABAD VS. LAKHANI MARKETI NG INC. 226 TAXMAN 45 (P&H) AND CIT VS. WINSOME TEXTILES (2009) 319 ITR 204 (P&H), OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD VS. ITO (2015) 378 ITR 33 (DELHI) AND OF THE HON'BLE GUJARAT HIGH COURT IN THE CAS E OF CORRTECH ENERGY P. LTD. (2014) 45 TAXMAN.COM 116 AND FURTHER OF THE HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. M/S SHIVAM MOTORS (P) LTD (2014) 272 CTR (ALL) 277 AND VARIOUS OTHER CASE LAWS. IN ALL THE ABOVE REFERRED TO CASE LAWS, THE HON'BLE HIGH COURTS HAVE BEEN UNA NIMOUS TO HOLD THAT NO DISALLOWANCE IS ATTRACTED U/S 14A O F THE ACT IN CASE THE ASSESSEE HAS NOT EARNED ANY INCOME NOT FORMING PART OF THE TOTAL INCOME. 12. THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE REFERRED TO DECISIONS AND THE SAME IS ACCORDINGLY, DECIDED IN FAVOUR OF THE ASSESSEE. ITA NO.1229/CHD/2017 AY: 2011-12 9 13. GROUND NOS.3 & 4 RAISED BY THE ASSESSEE ARE GEN ERAL IN NATURE AND, HENCE REQUIRE NO ADJUDICATION. 14. IN THE RESULT THE APPEAL OF THE ASSESSEE IS TRE ATED AS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 10.07.2018. SD/- SD/- (B.R.R.KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 TH JULY, 2018 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH