Late Pannalal Mannalal Agarwal, Jalna V. ACIT, Cir.1, Aurangabad, Aurangabad

ITA 1302/PUN/2008

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 7646 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-01-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 18-01-2011
• Assessment Year: 1997-1998
• Appeal Filed On: 13-10-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HEMANTKUMAR C LEUVA
• Keywords: Depreciation
• Section: 69C; 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI I C SUDHIR, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER ITA NO. 1302 & 1303/PN/08 (ASSTT YEAR: 1997-98 & 1998-99) LATE PANNALAL M AGARWAL C/O M/S HIRALAL MANNALAL SARAF, MONDHA ROAD, JALNA .. APPELLANT VS. ASSTT. COMMSSIONER OF INCOME-TAX, .. RESPONDENT CIR. 1, AURANGABAD APPELLANT BY : SMT DEEPA KHARE RESPONDENT BY : SHRI HEMANTKUMAR C LEUVA ORDER PER G.S. PANNU, A.M: THESE TWO APPEALS BY ASSESSEE ARE DIRECTED AGAIN ST SEPARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX ( APPEALS), AURANGABAD, BOTH DATED 1.7.2008 WHICH, IN TURN, HA VE ARISEN FROM THE ORDERS DATED 1.3.2000 AND 27.12.2000 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 ( IN SHORT THE ACT) PERTAINING TO THE ASSESSMENT YEARS 1997-98 AND 1998 -99 RESPECTIVELY. 2. IN THE APPEAL PERTAINING TO THE ASSESSMENT YEAR 199 7-98, THE FIRST ISSUE RELATES TO THE DISALLOWANCE OF RS 7 7,000/- ON ACCOUNT OF LOSS IN THE ACTIVITY OF TANKER HIRING. T HE ASSESSING OFFICER NOTED THAT ASSESSEE HAD DECLARED A LOSS OF RS 77,000/ UNDER THE HEAD TANKER HIRING BUSINESS, WHICH WAS DISALLOWED ON THE GROUND THAT NO EVIDENCE WAS PRODUCED BY THE ASSESSEE ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 2 FOR RECEIPT OF TANKER HIRE CHARGES, WHICH WAS CLAIM ED AT RS 3,000/-. THE ASSESSING OFFICER HELD THAT THE TANKER WAS NOT USED FOR ANY BUSINESS ACTIVITY. THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ALSO SUSTAINED THE ACTION ON THE PLEA THAT THERE IS NOTHING ON RECORD TO SHOW THAT THE ASSESSEE BECAME THE OWNE R OF THE TANKER AND HE ALSO UPHELD THE STAND OF THE ASSESSING OFFIC ER TO THE EFFECT THAT THERE IS NO EVIDENCE TO PROVE EARNING OF TANKER HIR ING CHARGES OF RS 3,000/-.. 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT THE AUTHORITIES BELOW HAV E UNJUSTIFIABLY DENIED THE CLAIM, WHICH WAS WELL SUPP ORTED BY MATERIAL ON RECORD. IN THE COURSE OF THE HEARING, T HE LEARNED COUNSEL REFERRED TO THE PAPER BOOK FILED IN SUPPORT OF HER SUBMISSIONS. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPRESENTATIVE, APPEARING FOR THE REVENUE, HAS RELI ED UPON THE ORDERS OF THE LOWER AUTHORITIES IN SUPPORT OF THE C ASE OF THE REVENUE. 5. ON THIS ASPECT, THE FACTS ARE THAT A TANKER BEAR ING REGISTRATION NO. MH-21-5598 WAS REGISTERED WITH THE TRANSPORT AUTHORITY ON 1.8.1995 IN THE NAME OF THE ASSESSEE A ND THE COST OF THE SAME WAS DEBITED IN THE ACCOUNT BOOKS O F A PARTNERSHIP FIRM M/S HIRALAL MANNALAL SARAF IN WHIC H SHRI PANNALAL M AGARWAL, THE ASSESSEE WAS A PARTNER. THE SAID TANKER WAS PUT TO USE BY THIS FIRM FOR ITS BUSINESS . ON 25.3.1997, IT IS CLAIMED BY THE ASSESSEE THAT THE S AID TANKER WAS SOLD BY THE FIRM TO HIM FOR A TOTAL COST OF RS 4 LAKHS FOR ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 3 WHICH ENTRY WAS MADE IN THE ACCOUNT BOOKS OF THE FI RM M/S HIRALAL MANNALAL SARAF BY DEBITING CAPITAL ACCOUNT OF THE ASSESSEE AND CREDITING THE TANKER ACCOUNT. THE ASSE SSEE FURTHER CLAIMED THAT AFTER THE PURCHASE, FURNACE OI L WAS TRANSPORTED IN THE SAID TANKER FOR M/S SUNIL AUTO S ERVICE. IT WAS CLAIMED THAT FURNACE OIL WAS LOADED AT THE SEWR I DEPOT OF THE IBP CO., LTD. ON 28.3.2007 AND THE SAME WAS DEL IVERED AT THE INSTRUCTION OF M/S SUNIL AUTO SERVICES TO RADHA GOVIND FERTILIZERS, JALNA, WHO WERE THE PURCHASERS OF THE SAID FURNACE OIL. THE ASSESSEE CREDITED THE SUM OF RS 3,000/- IN THE ACCOUNT BOOKS TOWARDS FREIGHT RECEIPTS FROM RADHAGO VIND FERTILIZERS FOR THE TRANSPORTATION OF THE SAID FURN ACE OIL. A XEROX COPY OF THE BILL OF IBP LTD., IN THE NAME OF M/S SUNIL AUTO SERVICE AND THE BILL OF M/S SUNIL AUTO SERVICE TO RADHAGOVIND FERTILIZERS WAS SOUGHT TO BE RELIED UPO N TO SUPPORT THE USE BY THE ASSESSEE OF THE STATED TANKE R FOR THE PURPOSES OF HIS BUSINESS OF TANKER HIRING. THE ASSE SSEE CLAIMED DEPRECIATION OF RS 80,000/- AND, AFTER REDU CING THE HIRE RECEIPTS OF RS 3,000/-, NET LOSS OF RS 77,000/ - WAS CLAIMED IN THE HIRING BUSINESS. THE ASSESSING OFFICER AND T HEREAFTER THE COMMISSIONER OF INCOME-TAX (APPEALS) HAVE DISAL LOWED THE LOSS ON THE GROUND THAT THERE WAS NO EVIDENCE OF EARNING OF HIRE CHARGES OF RS 3,000/- BY THE ASSESSEE, SINCE THE SAME IS NOT REFL ECTED EITHER IN THE DELIVERY CHALLAN OF IBP LTD. OR IN THE BILL RAISED BY M/S SUNIL AUTO SERVICE. IT IS ALSO RECORDED Y THE COMMISSIONER OF INCOME-TAX (APPEALS) THAT THERE IS NO MATERIAL TO SHOW THAT ASSESSEE HAD BECOME OWNER OF THE TANKER ON 25.3.1997 AND THAT HE HAD EARNED TANK ER HIRING CHARGES ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 4 OF RS 3,000/-. BEFORE US, APART FROM REFERRING TO T HE MATERIAL WHICH HAVE BEEN NOTED HEREINABOVE, THE LEARNED COUNSEL HAS NOT REFERRED TO ANY FURTHER MATERIAL OR ARGUMENTS TO NEGATE THE FINDING S OF THE LOWER AUTHORITIES. AS PER THE APPELLANT, THE FIRM M/S HIR ALAL MANNALAL SARAF HAD NOT CLAIMED DEPRECIATION ON THE TANKER AND, THE REFORE, IT EVIDENCES THAT THE SAME WAS SOLD TO THE ASSESSEE ON 25.3.1997 . IN OUR CONSIDERED OPINION, THE ISSUE TO DETERMINE IS WHETH ER THE ASSESSEE BECAME THE OWNER OF THE TANKER AND IT WAS PUT TO US E FOR BUSINESS. ON BOTH THESE ASPECTS, THE FINDINGS OF THE LOWER AUTHO RITIES ARE QUITE CLEAR AND THERE IS NO MATERIAL BEFORE US TO NEGATE THE SA ME. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDERS OF THE LOWER AUTHORITIES AND ACCORDINGLY, THE DENIAL OF LOSS OF RS 77,000/- IS H EREBY AFFIRMED. 6. THE NEXT ISSUE RELATES TO THE ACTION OF THE LOWE R AUTHORITIES IN NOT ACCEPTING THE PLEA OF THE ASSESS EE OF HAVING EARNED AGRICULTURAL INCOME OF RS 20,000/-. IT WAS C LAIMED BY THE ASSESSEE THAT AGRICULTURAL INCOME WAS EARNED BY THE ASSESSEE FROM CULTIVATION OF BANANA, ONION SEED AND SWEET- LIME. THE ASSESSING OFFICER AND THEREAFTER THE COMM ISSIONER OF INCOME-TAX (APPEALS) HAVE DISALLOWED THE CLAIM ON T HE GROUND THAT THERE WAS NO EVIDENCE TO SHOW SALE OF AGRICULTURAL PRODUCE OR INCURRING OF EXPENSES FOR AGRICULTURAL ACTIVITY. 7. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE ASSESSEE HAS APPROXIMATELY 16 ACRES OF IRRIGATED AGRICULTURAL LAND, WHICH ARE CO-OWNED BY THE ASSESS EE ALONGWITH HIS THREE BROTHERS, AND THAT THE OTHER CO -OWNERS HAD ALSO DECLARED AGRICULTURAL INCOME ON THE SAME LINES , AS SHOWN BY THE ASSESSEE AND SUCH PLEA HAS BEEN ACCEPTED BY THE ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 5 TRIBUNAL IN THE CASE OF DATTULAL PANNALAL AGRAWAL, JALNA, VIDE ITA NO 551/PN/06 DATED 23.2.2007 FOR ASSESSMENT YEA R 1997- 98, A COPY OF THE SAID ORDER HAS BEEN PLACED ON REC ORD. IN THE ABSENCE OF ANY CONTRADICTION TO THE AFORESAID FACTU AL MATRIX, FOLLOWING THE PRECEDENT IN THE CASE OF A CO-OWNER O F AGRICULTURAL LAND, WE HEREBY DIRECT THE ASSESSING O FFICER TO ACCEPT THE EXPLANATION RENDERED BY THE ASSESSEE AND TREAT THE INCOME OF RS 20,000/- DECLARED BY THE ASSESSEE AS A GRICULTURAL INCOME. THUS, ON THIS GROUND, ASSESSEE SUCCEEDS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. 9. IN THE APPEAL FOR THE ASSESSMENT YEAR 1998-99, T HE SOLITARY GRIEVANCE RELATES TO AN ADDITION OF RS 1,2 0,000/- UPHELD BY THE COMMISSIONER OF INCOME-TAX (APPEALS). IT WAS POINTED OUT THAT THE ADDITION OF RS 1,20,000/- COMPRISES O F TWO ADDITIONS OF RS 22,000/- UNDER SECTION 69C OF THE ACT AND RS 98,000 /-, WHICH RELATED TO THE CASH AVAILABLE IN THE HANDS OF THE ASSESSEE. DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, CASH BALANCE AS REFLECTED I N THE CASH BOOK WAS EXAMINED BY THE ASSESSING OFFICER. THE CASH POS ITION AS CLAIMED BY THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE ASS ESSING OFFICER, AS HE WAS OF THE VIEW THAT THE ASSESSEE HAS TRIED TO B UILD UP CASH POSITION BY TAKING ADVANTAGE OF CERTAIN TRANSACTIONS TO HIS CONVENIENCE, WHEREAS AT THE TIME OF SEARCH IT WAS FOUND THAT THE CASH BOOK WAS INCOMPLETE. THE ASSESSING OFFICER ALSO NOTED THAT S IMILAR MATRIX WAS ALSO FOUND IN THE CASE OF OTHER MEMBERS OF THE FAMI LY. THEREFORE, AN AMOUNT OF RS 1,20,000/- OUT OF THE CASH BALANCE SHO WN IN THE CASH BOOK WAS CONSIDERED AS UNEXPLAINED. OUT OF THIS, RS 98,000/- REFLECTED ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 6 CASH LOAN GIVEN BY THE ASSESSEE TO A FAMILY CONCERN M/S HIRALAL MANNALAL SARAF, IN WHICH HE WAS A PARTNER. SINCE TH E SAID ADDITION WAS MADE ON SUBSTANTIVE BASIS IN THE HANDS OF THE FIRM, IN THE HANDS OF THE ASSESSEE THE ADDITION WAS MADE ON PROTECTIVE BASIS AND, BALANCE OF RS 22,000/- WAS TAXED ON SUBSTANTIVE BASIS UNDER SECTI ON 69C OF THE ACT. THE COMMISSIONER OF INCOME-TAX (APPEALS) NOTED THAT IN THE CASE OF THE FIRM M/S HIRALAL MANNALAL SARAF ADDITION OF RS 98,000/- CLAIMED AS CAPITAL BY THE ASSESSEE IN THE SAID FIRM, WAS DELET ED AND, THEREFORE, THE SAME WAS RETAINED IN THE HANDS OF THE ASSESSEE ON S UBSTANTIVE BASIS. THE COMMISSIONER OF INCOME-TAX (APPEALS) ALSO RETAI NED THE ADDITION OF RS 22,000/- AND, ACCORDINGLY THE ENTIRE ADDITION OF RS 1,20,000/- WAS UPHELD BY THE COMMISSIONER OF INCOME-TAX (APPEALS) ON SUBSTANTIVE BASIS. 10. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT THE LOWER AUTHORITIES HAVE FAILED TO APPRE CIATE THAT THE TRIBUNAL IN THE CASE OF FIRM M/S HIRALAL MANNALAL S ARAF VIDE ITA NO 548/PN/06 DATED 30.5.2007 FOR ASSESSMENT YEAR 19 98-99 HAS DELETED THE ADDITION BY REFERRING TO THE CASH B OOK MAINTAINED BY THE ASSESSEE, WHICH SHOWED THE FLOW O F MONEY INTO THE SAID FIRM AS CAPITAL INTRODUCTION BY THE A SSESSEE. THEREFORE, ACCORDING TO HER, THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN REJECTING THE CREDIBILITY OF SUCH CASH BOOK IN ORDER TO NEGATE THE AVAILABILITY OF RS 98,000/- WITH THE ASSESSEE FOR INTRODUCTION INTO THE SAID FIRM. IT IS FURTHER POIN TED OUT THAT THE CASH BALANCE SHOWN AS PER THE BOOKS OF ACCOUNT MAIN TAINED BY THE ASSESSEE HAVE BEEN UNJUSTIFIABLY REJECTED AN D, THEREFORE, THE ENTIRE ADDITION DESERVES TO BE DELET ED. ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 7 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. IN THIS CASE, SUM AND SUBSTANCE OF THE DISPUTE ARISES FROM THE FINDINGS OF THE LOWER AUTHORITIES THAT CASH BALANCE S AS REFLECTED IN THE ACCOUNT BOOK PRODUCED BY THE ASSES SEE FOR THE PERIOD 1.4.1997 TO 30.6.1997 ARE UNSUBSTANTIATED. A T PAGE 7 OF HIS ORDER, THE COMMISSIONER OF INCOME-TAX (APPEALS) HAS ANALYSED THE ENTRIES SHOWING RECEIPT OF CASH LOANS OF VARYIN G AMOUNTS FROM VARIOUS PERSONS AND ALSO OTHER ENTRIES WHICH, ACCOR DING TO HIM ARE NOT SUPPORTED BY ANY EVIDENCE. EVEN BEFORE US, THERE IS NO MATERIAL TO SUPPORT SUCH ENTRIES IN THE CASH BOOK AND, THEREFOR E, WE FIND NO REASON TO INTERFERE WITH THE SAID FINDING OF THE COMMISSIO NER OF INCOME-TAX (APPEALS). IN THIS MANNER, WE FIND NO JUSTIFICATION TO INTERFERE WITH THE INFERENCES DRAWN BY THE LOWER AUTHORITIES. IN SO FA R AS THE RELIANCE PLACED BY THE ASSESSEE ON THE JUDGMENT OF THE TRIBU NAL DATED 30.5.2007 (SUPRA) IN THE CASE OF THE FIRM M/S HIRAL AL MANNALAL SARAF, WHEREIN ASSESSEE IS A PARTNER, IS CONCERNED, THE SA ME, IN OUR VIEW, HAS BEEN RENDERED IN AN ENTIRELY DIFFERENT CONTEXT. IN THE CASE OF THE FIRM, THE TRIBUNAL WAS DEALING WITH THE DISPUTE WITH REGA RD TO INVOKING OF SECTION 68 IN RELATION TO CREDIT OF RS 98,000/- APP EARING IN THE ACCOUNT BOOKS OF THE FIRM. THE REQUIREMENTS OF SECTION 68 W ERE EXAMINED QUA THE FIRM WHEREIN THE CLAIM WAS THAT THE SAID AMOUNT REFLECTED CAPITAL CONTRIBUTION BY THE ASSESSEE INDIVIDUAL. IN SO FAR AS THE PRESENT DISPUTE IS CONCERNED, THE ONUS IS ON THE ASSESSEE TO EXPLAI N THE AVAILABILITY OF SUCH AMOUNT OF RS 98,000/- DEPOSITED IN THE FIRM. T HE SOURCE OF THE IMPUGNED AMOUNT CAN CERTAINLY BE ENQUIRED INTO BY T HE ASSESSING OFFICER IN THE CASE OF THE ASSESSEE INDIVIDUALLY AN D THE SAME HAS TO BE EVALUATED IN THE LIGHT OF THE EXPLANATION BY THE AS SESSEE REGARDING SUCH ITA NO 1302 & 1303/PN/08 LATE PANNALAL M AGARWAL, JALNA 8 CREDITS. THE CREDITS HAVE BEEN FOUND TO BE UNRELIAB LE AND, THEREFORE, THE EXPLANATION HAS BEEN REJECTED. WE FIND THAT THE COM MISSIONER OF INCOME-TAX (APPEALS) MADE NO MISTAKE IN HOLDING THA T THE OBSERVATIONS OF THE TRIBUNAL IN THE CASE OF M/S HIRALAL MANNALAL SARAF (SUPRA) DOES NOT DISCHARGE THE ONUS CAST ON THE ASSESSEE TO EXPL AIN THE IMPUGNED CREDITS IN TERMS OF SECTION 68 OF THE ACT. THEREFOR E, THE ADDITION SUSTAINED BY THE COMMISSIONER OF INCOME-TAX (APPEAL S) IS HEREBY UPHELD. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. PRONOUNCED IN THE OPEN COURT ON THIS 21ST DAY OF JANUARY, 2011. SD/- SD/- (I C SUDHIR) (G .S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMB ER PUNE, DATED: 21 ST JANUARY, 2011 COPY TO:- 1) LATE PANNALAL M AGARWAL, JALNA 2) THE ACIT CIR. 1 AURANGABAD 3) THE CIT (A) AURANGABAD 4) THE CIT AURANGABAD 5) THE DEPARTMENTAL REPRESENTATIVE, B BENCH, I.T.A.T., PUNE. BY ORDER TRUE COPY ASST. REGISTRAR, I.T.A.T., PUNE B