ITO, RAJSAMAND V. Late Shri Ram lal Choudhary, RAJSAMAND

ITA 130/JODH/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4886 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 18-07-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Assessee Lawyers: U C JAIN SHRI RAJENDRA JAIN
• Keywords: Income from undisclosed sources
• Section: 131

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 130/JODH/2012 (A.Y. 2008-09) THE ITO VS LATE SHRI RAM LAL CHOUDHARY WARD 2 L/H SHRI SURESH CHOUDHARY RAJSAMAND PROP M/S RAIPUR GOLDEN TRANSPORT PAN NO. ACUPC 2504 R [APPELLANT] [RESPONDENT] ASSESSEE BY : SHRI U.C. JAIN SHRI RAJENDRA JAIN DEPARTMENT BY : SHRI G.R. KOKANI DATE OF HEARING : 18/07/2013. DATE OF PRONOUNCEMENT : 16/08/2013. O R D E R PER HARI OM MARATHA, J.M. : THIS APPEAL BY THE REVENUE FOR A.Y. 2008-09 IS DIR ECTED AGAINST THE ORDER OF LD. CIT(A), UDAIPUR DATED 15/12/2011. 2 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, AS AN INDIVIDUAL, FILED HIS RETURN OF INCOME [ROI] FOR A. Y. 2008-09 DATED 31.03.2009 DECLARING TOTAL INCOME OF RS. 1,53,730/- . THE ASSESSEE IS ENGAGED IN THE BUSINESS OF TRANSPORTATION OF GOODS IN THE NAME OF M/S RAIPUR GOLDEN TRANSPORT COMPANY, RAJSAMAND. DURING THE YEAR, THE ASSESSEE HAS SHOWN A NET PROFIT OF RS. 1,53,855/- O N TOTAL COMMISSION RECEIPTS OF RS. 2,97,450/- GIVING NET PROFIT RATE O F 51.72% AS AGAINST NET PROFIT RATE OF 49.85% SHOWN ON TOTAL COMMISSION RECEIPTS OF RS. 3,65,900/- IN THE IMMEDIATELY PRECEDING A.Y. THE N ET PROFIT RATE SHOWN IN THIS YEAR IS BETTER THAN THE PRECEDING A.Y . ASSESSMENT HAS BEEN COMPLETED ON 23.12.2010 AT TOTAL INCOME OF RS. 26,27,941/- [ RS. 26,27,940/-] AS ROUNDED OFF. IN ARRIVING AT THE AB OVE INCOME, THE A.O. HAS MADE ADDITION OF RS. 14,627/- ON ACCOUNT OF DIS ALLOWANCE OF EXPENSES OF RS. 3,30,984/- ON ACCOUNT OF INCOME FRO M UNDISCLOSED SOURCES AND OF RS. 21,28,600/- ON ACCOUNT OF UNDISC LOSED CASH DEPOSIT IN THE INDUS INDUSIND BANK. BEING AGGRIEVED, THE A SSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A), WHO HAS DELETED THE A DDITIONS OF RS. 21,28,600/- AND RS. 3,16,089/-. AGAINST THESE DELE TIONS, THE REVENUE IS AGGRIEVE AND HAS COME IN APPEAL BEFORE THE TRIBU NAL. 3 3. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. FACTS OF GROUND NO. 1 PERTAINING TO DELETION OF ADDITION OF RS. 21,28,600/- ARE THAT IT WAS NOTICED THAT THE ASSESSEE HAD BANK ACCOUNT WITH INDUSIND BANK, BHILW ARA. THE ASSESSEE HAS NOT MAINTAINED REGULAR BOOKS OF ACCOUNT. WHEN ASKED TO EXPLAIN, THE ASSESSEE STATED THAT THIS BANK ACCOUNT WAS OPEN ED IN ASSESSEES NAME FOR PAYMENT OF EMIS FOR LOANS TAKEN BY SHRI HI RA LAL GADRI, RAGHUVEER SINGH KANAWAT, BAERA, BHILWARA AND SHRI N ARAYAN LAL JAT WHO ARE RELATIVES / CLOSE FRIENDS OF THE ASSESSEE. AS PER THE ASSESSEE, THIS BANK ACCOUNT IS NOT AT ALL RELATED TO THE BUSI NESS OF THE ASSESSEE. THE ABOVE-NAMED PERSONS WERE GETTING LOAN FACILITY FROM FINANCIAL INSTITUTIONS IN THE NAME OF THE ASSESSEE FOR THE RE ASON THAT THEY WERE NOT GETTING FINANCE FROM ANY OF THE FINANCIAL INSTI TUTIONS AND THEY ARE ALSO NOT INCOME-TAX PAYERS AND NOT FILING THEIR RET URN OF INCOME [ROI]. THEY WERE NOT FAMILIAR WITH THE BANKERS AND REQUEST ED THE ASSESSEE TO OPEN AN ACCOUNT IN HIS NAME FOR PAYMENT OF EMIS FOR LOANS TAKEN BY THEM TOWARDS TRUCKS PURCHASED BY THEM FOR THEIR OWN BUSINESS PURPOSES BY TAKING LOANS FROM FINANCIAL INSTITUTION S. THE ASSESSEE FILED DULY SWORN-IN AFFIDAVITS OF ALL THE ABOVE FIVE PERS ONS WHO HAD INDIVIDUALLY PURCHASED TRUCKS AND OPERATE THEM. THE A.O. EVEN RECORDED THE STATEMENTS OF THESE PERSONS U/S 131 OF THE ACT. THESE 4 PERSONS EXPLAINED THE MODUS OPERANDI ADOPTED BY THE M FOR USING THIS BANK ACCOUNT IN CONFORMITY WITH THE CLAIM OF THE AS SESSEE. THEY ALSO EXPLAINED THAT THE DEPOSITS MADE IN THIS BANK ACCOU NT WERE FOR PAYMENT OF EMIS AND TRANSFER OF TRUCKS IN THE NAME OF SOME OTHER PERSONS AFTER THE ENTIRE LOAN AMOUNTS WERE PAID. I T WAS NOTICED THAT THE ISSUED CHEQUES FOR PAYMENTS OF THESE INSTALLMEN TS. THEREFORE, THE CUMULATIVE EFFECT OF THESE CIRCUMSTANCES WEIGHED TH E MIND OF THE A.O. TO CONCLUDE THAT THIS ACCOUNT WAS NOT OPENED BY THE ASSESSEE TO ACCOMMODATE HIS RELATIVES/CLOSE FRIENDS AND MADE TH E IMPUGNED ADDITION IN THE HANDS OF THE ASSESSEE. THE ASSESSE E TOOK THIS ISSUE BEFORE THE LD. CIT(A) WHO HAS DELETED THIS ADDITION MAINLY ON THE PREMISE THAT THE AVERMENTS MADE IN THE AFFIDAVITS A S WELL AS STATEMENTS RECORDED U/S 131 OF THESE PERSONS ARE NO T FOUND TO BE CONTROVERTED BY THE A.O. AND THAT THERE IS NO EVIDE NCE ON RECORD TO PROVE THEIR STATEMENTS FALSE. NOW THE REVENUE IS A GGRIEVED AND HAS TAKEN GROUND NO. 1 IN THIS REGARD. 4. IT WAS ARGUED BY THE LD. D.R. BEFORE US THAT THE A.O. HAS CORRECTLY MADE THIS ADDITION BECAUSE THE ASSESSEE D ID NOT MAINTAIN BOOKS OF ACCOUNT AND THIS ACCOUNT WAS OPEN IN HIS N AME SO THERE IS PRESUMPTION THAT THIS ACCOUNT BELONGS TO THE ASSESS EE AND THE CASH 5 DEPOSITS MADE IN THIS ACCOUNT PERTAIN TO THE ASSESS EE. SINCE THESE DEPOSITS STAND UNEXPLAINED, THE A.O. HAS CORRECTLY MADE THE ADDITION. ACCORDING TO HIM, THE LD. CIT(A) HAS WRONGLY DELETE D THIS AMOUNT FROM THE HANDS OF THE ASSESSEE. 5. ON THE OTHER HAND, THE LD. A.R. SHRI U.C. JAIN H AS HEAVILY RELIED ON THE ORDER OF THE LD. CIT(A) AND HAS FURTHER SUBM ITTED THAT THE A.O. HAS NOT FOUND THAT THE ASSESSEE IS THE OWNER OF THE SE TRUCKS. HE HAS FURTHER SUBMITTED THAT THE OWNERS OF THE TRUCKS HAV E MADE IT VERY CLEAR THROUGH AFFIDAVITS AS WELL AS THEIR SWORN STA TEMENTS RECORDED BY THE A.O. THAT THEY ARE OWNERS OF THOSE TRUCKS IN TH EIR INDIVIDUAL CAPACITY AND THE DEPOSITS WERE MADE IN THIS BANK AC COUNT BY THEM FROM THEIR INCOME ARRIVED FROM PLYING OF THESE TRUC KS THEY HAVE CLEARLY STATED THAT THIS BANK ACCOUNT HAS BEEN SIMPLY USED AND THE ASSESSEE IS BEING BENEVOLENT ENOUGH TO ACCOMMODATE HIM TO RAISE LOAN TO PURCHASE TRUCKS FOR THEIR OWN BUSINESS. IN THIS RE GARD, THE LD. A.R. HAS RELIED ON VARIOUS DECISIONS IN SUPPORT OF HIS CONTE NTION THAT WHEN THE ASSESSEE EXPLAINED THE SOURCE OF DEPOSIT BY WAY OF AFFIDAVIT AND STATEMENTS RECORDED U/S 131 OF THE ACT NO PRESUMPTI ON CAN ARISE AGAINST THE INTEREST OF THE ASSESSEE. 6 6. AFTER HEARING BOTH THE SIDES, WE HAVE FOUND THAT THE TRUCKS WHICH WERE TAKEN ON LOAN BY FIVE DIFFERENT PERSONS HAVE NOT BEEN TREATED BY THE A.O. HIMSELF AS OWNED BY THIS ASSESS EE. WE HAVE ALSO FOUND THAT ALL THOSE FIVE PERSONS HAVE DECLARED THE IR INDIVIDUAL INCOMES FROM THE PLYING OF THESE TRUCKS WHICH HAVE BEEN ACCEPTED AS THEIR INCOME FROM PLYING OF TRUCKS BY THE A.O. WE HAVE ALSO FOUND THAT THE AVERMENTS OF THESE FIVE PERSONS THAT THEY HAVE USED THE BANK ACCOUNT OF THE ASSESSEE FOR THEIR COLLATERAL END FO R PERSONAL BENEFITS AND ALL DEPOSITS ARE MADE BY THEM INDIVIDUALLY. IT IS TRUE THAT THE CHEQUES HAVE BEEN ISSUED BY THIS ASSESSEE TO PAY TH E EMIS OF THESE TRUCKS TO THE FINANCIAL INSTITUTION. WHEN THE ASSE SSEE HAS OPENED THE BANK ACCOUNT TO ACCOMMODATE FRIENDS /CLOSE RELATIVE S, HE IS NATURALLY DUTY BOUND TO ISSUE CHEQUES TO THE CONCERNED PARTIE S. OTHERWISE, THERE WOULD BE NO USE AND THE UTILITY OF THIS BANK ACCOUNT OPENED IN HIS NAME. THE OVERWHELMING EVIDENCE WHICH IS AVAIL ABLE IN FAVOUR OF THE ASSESSEE INCLUDES AS UNDER: I. THE BANK ACCOUNT WAS OPENED FOR CONVENIENCE OF T HE FIVE PERSONS, NAMELY SHRI HEERA LAL, SHRI RAGHUVEER SINGH, SHRI ISHWAR LAL, SHRI BHANWAR LAL AND SHRI NARAYAN LAL WHO WERE RELATIVES AND FRIENDS OF THE ASSESSEE AS PER T HE AFFIDAVITS FILED BY THESE PERSONS AND STATEMENT REC ORDED BY THE A.O. U/S 131 OF THESE PERSONS. 7 II. THE CASH WAS DEPOSITED IN THIS BANK ACCOUNT BY THESE TRUCK OPERATORS FROM THEIR TRANSPORT INCOME. III. SOME OF THE TRUCKS HAVE ALREADY BEEN TRANSFERR ED IN THESE NAMES AFTER EMIS WERE OVER AS PER THE STATEME NTS RECORDED. IV. THERE IS NOTHING ON RECORD TO SHOW THAT THE AVERMENTS IN THE AFFIDAVIT AS WELL AS STATEMENTS RE CORDED U/S 131 OF THESE FIVE PERSONS WERE NOT CORRECT. THE ABOVE OVERWHELMING EVIDENCE WHEN PITTED AGAINST THE ONLY FACT THAT THE ACCOUNT HAS BEEN OPENED AND CHEQUES HAVE B EEN ISSUED BY THE ASSESSEE FOR PAYMENT OF EMIS TO VARIOUS FINANCI AL INSTITUTIONS, THE SCALE TILTS IN FAVOUR OF THE ASSESSEES CONTENTION. MOREOVER, ALL THE FIVE PERSONS HAVE FILED THEIR AFFIDAVITS AND HAVE A LSO BEEN EXAMINED ON OATH BY THE A.O AND NO CONTRADICTION HAS BEEN FOUND IN THEIR STATEMENTS. IN THIS REGARD, THE DECISIONS ON WHICH THE LD. A.R. HAS RELIED AND THEIR COMMON RATIO DECIDENDI BEING THAT WHEN THE ASSESSEE EXPLAINS THE SOURCE BY FILING AFFIDAVITS AND BY PRO DUCING THE WITNESSES FOR EXAMINATION U/S 131, THE ONUS CAST UPON THE ASS ESSEE TO EXPLAIN THE SOURCE OF DEPOSIT HAS BEEN DISCHARGED. THESE D ECISIONS ARE SHEO NARAIN DULI CHAND VS CIT [1969] 72 ITR 766 [ALL], L ABH CHAND BOHRA VS. 8 ITO 219 CTR 571 [RAJ], ARAVALI TRADING COMPANY [220 CTR 622 (RAJ)] AND CIT VS. BHAWANI OIL MILLS PVT. LTD [49 DTR 212 (RAJ)]. ACCORDINGLY, BY RESPECTFULLY FOLLOWING THE ABOVE DECISIONS, WE C ONFIRM THE IMPUGNED DELETION AND DO NOT FIND ANY MERIT IN THIS GROUND OF REVENUES APPEAL. ACCORDINGLY, WE DISMISS GROUND N O. 1 OF REVENUES APPEAL. 7. GROUND NO 2 RELATES TO THE DELETION OF ADDITION OF RS. 3,16,089/- MADE ON ACCOUNT OF UNDISCLOSED INCOME. 8. BRIEFLY STATED, THE FACTS OF THIS GROUND ARE THA T THE ASSESSEE HAS NOT DECLARED RECEIPTS OF RS. 3,30,984/- RECEIVED FR OM M/S VIP MARBLE CENTRE, VASUDEV MARBLE AND GRANITES AND HM SHAH & CO. AND HAS ALSO NOT DECLARED NET PROFIT ON THE ABOVE RECEIPTS. THE ASSESSEE HAS ALSO NOT CLAIMED TDS AMOUNT OF RS. 7006 THEREON. THEREF ORE, THE A.O. HAS MADE ADDITION OF RS. 3,30,984/- TO THE TOTAL INCOME OF THE ASSESSEE AS HIS INCOME FROM UNDISCLOSED SOURCES. HOWEVER, THIS ADDITION HAS BEEN DELETED EXCEPT FOR AN AMOUNT OF RS. 14,895/- WHICH IS COMMISSION RECEIPT BEING FOR 5% OF GROSS FREIGHT. THEREFORE, THE REVENUE IS AGGRIEVED FOR THE DELETED AMOUNT OF RS. 3,16,089/-. 9 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. WE HAVE FOUND THAT THE TOTAL AMOUNT OF RS. 3,30,984/- WAS RECEIVED BY THE ASSESSEE FROM TH REE PARTIES. THE ASSESSEE HAS NOT DECLARED NET PROFIT ON THE ABOVE R ECEIPTS. THE ASSESSEE HAS ALSO NOT CLAIMED THE BENEFIT OF TDS OF RS. 7,006/- WHICH WAS DEDUCTED ON THIS RECEIPT. THE ASSESSEE IS A CO MMISSION AGENT DERIVING INCOME FROM SUPPLY OF VEHICLES AND CHARGES COMMISSION AMOUNT FROM VEHICLE OWNERS IN THE NAME OF HIS AGENC Y. THE ASSESSEE DOES NOT OWN ANY VEHICLE OR TRUCK AND HAS BEEN FILI NG RETURN OF INCOME SHOWING COMMISSION INCOME FROM BUSINESS OF TRANSPOR T AGENCY FOR LAST SEVERAL YEARS. THE ABOVE FACTS HAVE NOT BEEN CONTR OVERTED BY THE LD. D.R. WE HAVE ALSO FOUND THAT THE TRUCK/FLEET OWNER S HAVE ALSO SHOWN FROM SAME GROSS RECEIPTS INCOME FROM THEIR BOOKS OF ACCOUNT FROM PLYING OF TRUCKS AND HAVE SUFFERED TAX IN THEIR IND IVIDUAL HANDS. THE ASSESSEE HAS NOT TAKEN BENEFIT OF TDS AMOUNT OF RS. 7,006/-. SO, IT BECOMES CLEAR THAT THE ASSESSEE HAS DISCLOSED ONLY COMMISSION INCOME AND HAS OFFERED FOR TAXATION. THE ASSESSEE HAS BEE N CHARGING COMMISSION FROM TRUCK OWNERS FOR ARRANGING LOAN FRO M VEHICLE FLEET OWNERS. THE ASSESSEE DOES NOT OWN ANY VEHICLE TO O PERATE. THEREFORE, THE ENTIRE RECEIPT CANNOT BE TREATED AS HIS INCOME. ONLY 10 THE USUALLY PAID COMMISSION ON THE GROSS FREIGHT HA S TO BE TAXED IN ASSESSEES HANDS AT THE MOST. THE LD. CIT(A) HAS D ONE THE SAME THING. THEREFORE, WE DO NOT FIND ANY REASONS TO INTERFERE WITH THE IMPUGNED FINDING AND THUS CANNOT ALLOW GROUND NO. 2 OF THIS APPEAL. 10. IN THE RESULT, THE APPEAL OF THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 16 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR