ITO, Patiala V. Sh. Gurjeet Singh, Patiala

ITA 1335/CHANDI/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7407 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-01-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 24-11-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K MUKHI
• Assessee Lawyers: JAI SHREE SHARMA
• Keywords: Gift
• Section: 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B CHANDIGARH BEFORE MS.SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 1335/CHD/2010 ASSESSMENT YEAR: 2007-08 ITO, WARD-1, V SHRI GURJEET SINGH, PATIALA. C/O M/S TARA SINGH & SONS, SHER-E-PUNJAB MARKET, PATIALA. PAN: ANOPS-8437J (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAISHREE SHARMA RESPONDENT BY : SHRI S.K.MUKHI DATE OF HEARING : 16.01.2012 DATE OF PRONOUNCEMENT : 25.01.2012 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER DATED 29.09.2010 PASSED BY THE LD. CIT(A) U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE ACT'). 2. IN THIS APPEAL, THE REVENUE HAS RAISED THE FOLLO WING GROUNDS OF APPEAL: 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN DELETING THE TRADING ADDITION OF RS.4,99,000/- MADE BY THE AO AFTER REJECTING THE BOOKS OF ACCOUNT BY INVOKING THE PROVISIONS OF SECT ION 145(2), WITHOUT APPRECIATING THE FACT THAT THE SALE S, AS DECLARED BY THE ASSESSEE, HAD REMAINED UNSUBSTANTIATED IN THE ABSENCE OF BOOKS OF ACCOUNT/BILLS/VOUCHERS AND HENCE THE AO WAS 2 JUSTIFIED IN TAKING AN ADVERSE VIEW AS PER SECTION 114 OF THE INDIAN EVIDENCE ACT. THUS, THE CIT(A) HAS ER RED IN NOT FOLLOWING THE DECISION OF THE HON'BLE SUPREM E COURT IN THE CASE OF S.N.NAMASIVAYAM CHETTIAR V CIT (1960) 38 ITR 579 (S.C) AND THE DECISION OF THE HON 'BLE BOMBAY HIGH COURT IN THE CASE OF KISHANCHAND CHELLARAM V CIT (1974) 114 ITR 671 (BOMBAY) RELIED UPON BY THE AO, WHEN THE FACTS OF THE CASE ARE FAIR LY COVERED WITHIN THE AMBIT OF THE JUDGEMENTS. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, LD.C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.3,75,000/- ON ACCOUNT OF SHORT TERM CAPITAL GAINS, WITHOUT APPRECIATING THE FACT THAT THE ASSESSEE HAD PRODUCE D NEITHER ANY SUPPORTIVE DOCUMENTARY EVIDENCE NOR SHR I PREET MOHINDER SINGH, UNCLE AND ALLEGED SOURCE OF RS.3,50,000/- FOR VERIFICATION AND HENCE THE AO WAS JUSTIFIED IN TAKING AN ADVERSE VIEW AS PER SECTION 114 OF THE INDIAN EVIDENCE ACT. 3. IT IS PRAYED THAT THE ORDER OF LD. CIT(A) BE SET ASIDE AND THAT OF THE AO RESTORED.. 4. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND FINALLY DISPOSED OF. 3. THE ASSESSEE IS AN INDIVIDUAL WHO FILED ITS RETU RN OF INCOME AT RS.1,62,650/- ON 29.10.2007. THE CASE WA S PICKED UP FOR SCRUTINY ASSESSMENT AND THE AO PASSED ASSESS MENT ORDER U/S 144 OF THE ACT AFTER REJECTION OF THE BOOKS OF ACCOUNT. 4. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'DR' CONTENDED THAT THE ORDER PASSED BY THE CIT(A) IS AG AINST THE FACTS AND CONTRARY TO THE STATUTORY PROVISIONS. TH E ASSESSEE HAD FAILED TO PRODUCE THE BOOKS OF ACCOUNT AND HENC E, THE REJECTION OF BOOKS OF ACCOUNT ON THE BASIS OF NON-M AINTENANCE OF STOCK REGISTER AND STOCK TALLY IS PERFECTLY JUST IFIED. LD. 'DR' 3 REFERRED TO PARA 5.2 OF THE ORDER OF THE CIT(A). H E PLACED RELIANCE ON THE ORDER OF THE AO. 5. THE LD. 'AR' ON THE OTHER HAND, PLACED RELIANCE ON THE ORDER PASSED BY THE CIT(A). 6. LD. 'DR' REFERRED TO PAGE 4 OF THE PAPER BOOK WH EREIN DETAILS OF GP, RANGING FROM 10.21% TO 10.53% FROM T HE ASSESSMENT YEAR 2005-06 TO 2007-08 HAVE BEEN GIVEN. 7. THE REVENUE, IN RESPECT OF GROUND NO.1 CONTENDED THAT THE CIT(A) ERRED IN DELETING TRADING ADDITION OF RS.4,99,000/- VALIDLY MADE BY THE AO, AFTER REJECTI ON OF THE BOOKS OF ACCOUNT. THE AO INVOKED THE PROVISIONS OF SECTION 145(3) OF THE ACT ON THE GROUND OF NON-PRODUCTION O F BOOKS OF ACCOUNT, NON-MAINTENANCE OF STOCK REGISTER AND S TOCK TALLY AND APPLIED 12% GP IN COMPUTING THE TRADING A DDITION OF RS.4,99,000/-. THE LD. CIT(A) OBSERVED THAT THE AO, IN THE REMAND REPORT STATED THAT THE BOOKS OF ACCOUNT AND BILLS ETC. WERE PRODUCED. HOWEVER, NO STOCK REGIST ER WAS PRODUCED. IT WAS FURTHER MENTIONED THAT A FRESH INV ENTORY OF STOCK WAS PREPARED AND SUBMITTED BY THE ASSESSEE . THE CIT(A) HELD THAT THE PROVISIONS OF SECTION 145(3) C ANNOT BE APPLIED ON THE BASIS OF NON-MAINTENANCE OF STOCK RE GISTER. THE FINDINGS OF THE LD. CIT(A), AS RECORDED IN PARA 5.2 OF HIS ORDER DATED 29.09.2010, ARE REPRODUCED HEREUNDE R : I HAVE CONSIDERED THE FACTS AND RIVAL SUBMISSIONS. THERE IS NO JUSTIFICATION IN THE AOS CONTENTION TH AT ADDITION OF RS.4,99,000/- IS REQUIRED TO BE MADE IN THE TRADING ACCOUNT DUE TO NON-PRODUCTION OF STOCK 4 REGISTER. THE APPELLANT HAS SUBMITTED ALL THE BOOKS OF ACCOUNT AND VOUCHERS. NO DISCREPANCY OF ANY NATURE HAS BEEN POINTED OUT THEREFORE, THERE IS NO REASON FOR AO TO INVOKE THE PROVISIONS OF SECTION 145(2) OF THE ACT TO MAKE SUCH AN ADDITION THE SAME IS THEREFORE, DELETED. 8. LD. 'AR' REFERRED TO THE RE-CAST TRADING ACCOUNT AND CONSEQUENTIAL GP PREPARED BY THE ASSESSEE, BUT FAIL ED TO ADDUCE THE SAME BEFORE THE BENCH, IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS. THE ORDER PASSED BY THE LD. CIT(A) IS PATENTLY CRYPTIC IN NATURE AND NOT FOUNDED ON RE LEVANT MATERIAL BROUGHT ON RECORD. THEREFORE, IT IS IMPER ATIVE TO MARSHAL OUT THE FACT SITUATION OF THE PRESENT CASE ON THE ISSUE IN QUESTION, IN ITS ENTIRETY AND THE REFERENC E OF THE LD. 'AR' FOR THE SAID TRADING ACCOUNT INCLUDING THE FRESH INVENTORY OF STOCK, NEEDS DETAILED EXAMINATION FOR THE PURPOSE OF DRAWING PROPER INFERENCE. ACCORDINGLY, W E DEEM IT FIT TO REFER THE ISSUE TO THE FILE OF THE CIT(A) , FOR FRESH ADJUDICATION, AFTER BRINGING ON RECORD THE RELEVANT MATERIAL AND TO ADJUDICATE THE ISSUE AS PER LAW, AFTER AFFOR DING PROPER AND REASONABLE OPPORTUNITY. 9. THE NEXT GROUND OF APPEAL RAISED BY THE REVENUE IS AGAINST THE DELETION OF ADDITION OF RS.3,75,000/- O N ACCOUNT OF SHORT TERM CAPITAL GAIN MADE BY THE CIT( A), WITHOUT APPRECIATING THE FACTS OF THE CASE AND IN T HE ABSENCE OF ANY SUPPORTING DOCUMENTARY EVIDENCE. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, LD. 'DR' C ONTENDED THAT THE ASSESSEE HAD MISERABLY FAILED TO ADDUCE EV IDENCE, JUSTIFYING THE CLAIM OF THE SAID EXPENSES, AS ALSO THE 5 NATURE AND SOURCE OF SUCH EXPENSES. LD. 'DR' VEHEM ENTLY CONTENDED THAT ASSESSEE HAD FAILED TO ADDUCE EVEN T HE PRIMA-FACIE EVIDENCE, ESTABLISHING THE NATURE AND S OURCE OF RS.3,50,000/-. MERE ASSERTION THAT THE SOURCE OF T HE SAID AMOUNT AS GIFT/LOAN, IS NOT ENOUGH TO ESTABLISH THE GENUINENESS OF THE TRANSACTION AND CREDIT WORTHINES S OF THE PARTY. 10. LD. 'AR' ON THE OTHER HAND, REFERRED TO PAGE 29 OF THE PAPER BOOK INDICATING THE SETTLEMENT ENTERED INTO B Y THE PARTIES. LD. 'AR' FAILED TO SATISFY THE SPECIFIC Q UERY RAISED BY THE BENCH AS TO THE PRODUCTION OF EVIDENCE INDIC ATING INCURRING OF SUCH EXPENDITURE AND CLAIM MADE THERET O, BY THE ASSESSEE. THE LD. 'AR' ALSO FAILED TO GIVE COM PLETE PARTICULARS SUCH AS DATE ETC. OF THE AMOUNT RECEIVE D BY HIM, WHICH WAS UTILIZED FOR THE PURPOSE OF INCURRIN G THE SAID EXPENSES. THE BRIEF FACTS OF THE ISSUE ARE, T HAT THE ASSESSEE PURCHASED SHOP NO.90 ON 27.09.2005 IN SHER -E- PUNJAB MARKET, PATIALA FOR AN AMOUNT OF RS.5.50 LAC S, WHICH WAS SOLD FOR AN AMOUNT OF RS.9.25 LACS TO SHR I PANNA LAL S/O SHRI HARNAM DASS, RESIDENT OF PATIALA. THE AO OBSERVED THAT SHORT TERM CAPITAL GAIN OF RS.3.75 LA CS (9.25 5.50) WAS NOT DISCLOSED BY THE ASSESSEE. CONSEQUENT LY, THE AO ASKED THE REASON FOR THE SAID NON-DISCLOSURE OF THE SAID SHORT TERM CAPITAL GAIN. IN RESPONSE TO SAID QUERY , THE ASSESSEE SUBMITTED THAT A SUM OF RS.3.50 LACS WAS S PENT ON THE SETTLEMENT AND THE SAME WAS ARRANGED FROM SH RI HARPREET SINGH S/O LATE SHRI BHAGAT SINGH, A FAMILY FRIEND OF THE ASSESSEE WITHOUT ANY INTEREST. THE AO, ON T HE BASIS 6 OF NON PRODUCTION OF ANY DOCUMENTARY EVIDENCE, MADE THE ADDITION OF RS.3.75 LACS, ON ACCOUNT OF SHORT TERM CAPITAL GAINS, ON THE SALE OF THE SAID SHOP. LD. CIT(A) DE LETED THE ENTIRE ADDITION OF RS.3.75 LACS, ON THE GROUND THA T THE AO HAS NOT DISPUTED THAT THE APPELLANT DID NOT INCUR A NY EXPENDITURE PRIOR TO THE PASSING OF THE TITLE. THE RE HAS BEEN A DISPUTE REGARDING THE SAID PROPERTY AS ALSO THERE WAS SETTLEMENT. LD. CIT(A), HELD THAT THE AO HAS NOT TREATED THE EXPLANATION FILED BY THE ASSESSEE AS UNSATISFACTORY AS TO THE NATURE AND SOURCE OF THE S AID SUM. THE RELEVANT OBSERVATION OF THE CIT(A) NO DOUBT, MERE FILING OF AN AFFIDAVIT IN SUPPORT CANNOT BE A CONCL USION, BUT AO IS REQUIRED TO CONFRONT THE SAME AND REJECT THE CONTENTION IN THE AFFIDAVIT. IN HIS ORDER, HE HAS GIVEN NO FINDING TO THIS EFFECT AND HAS NOT TREATED THE EXPL ANATION OF THE APPELLANT AS UNSATISFACTORY AND UNREASONABLE. LD. CIT(A) ALSO REFERRED TO THE RATIO IN THE CASE OF ME HTA PARIKH & CO. V CIT (1956) 30 ITR 181. 11. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE , RIVAL SUBMISSIONS AND THE RELEVANT RECORD MADE AVAILABLE. THE AO MADE THE IMPUGNED ADDITION ON THE GROUND THAT TH E ASSESSEE HAS FAILED TO PROVE THE NATURE AND SOURCE OF RS.3.50 LACS, ALLEGEDLY INCURRED ON THE SETTLEMENT OF DISPUTE. THE LD. CIT(A) ALSO CONCENTRATED ON THE I SSUE OF NATURE AND SOURCE OF SAID AMOUNT. HOWEVER, THE ASS ESSEE HAS FAILED TO ADDUCE ANY EVIDENCE IN THE FORM OF RE CEIPT OR ANY OTHER CREDIBLE EVIDENCE TO THE EFFECT OF ESTABL ISHING THAT THE AMOUNT OF RS.3.50 LACS HAS BEEN INCURRED F OR THE 7 PURPOSE OF ARRIVING AT THE SETTLEMENT IN RESPECT OF THE SAID PROPERTY. THE ONUS SQUARELY LIES ON THE ASSESSEE F OR THE CLAIM OF EXPENDITURE MADE BY THE ASSESSEE. IT IS INTERESTING TO NOTE THAT LD. 'AR' ADMITTED THAT THE IMPUGNED EXPENDITURE HAS NOT BEEN DISCLOSED IN THE BOOKS OF ACCOUNT, WHICH WERE PRODUCED AT THE APPELLATE STAGE BY THE ASSESSEE. A REFERENCE HAS BEEN MADE BY THE CIT(A) T O THE RATIO OF MEHTA PARIKH & CO. (SUPRA). IN THIS CONTE XT, IT IS MENTIONED THAT THE HON'BLE MADHYA PRADESH HIGH COUR T IN THE CASE OF SMT.GUNWANTI BAI V CIT (1983) 12 TAXMAN 86 (MP) AND THE HON'BLE ALLAHABAD HIGH COURT IN THE CA SE OF RAM RATTAN V CIT (1983) 13 TAXMAN 309 (ALL) HAD THE OCCASION TO APPRECIATE THE RATIO LAID DOWN BY THE H ON'BLE SUPREME COURT IN THE CASE OF MEHTA PARIKH CO. (SUP RA). THE OBSERVATIONS OF THE HON'BLE HIGH COURTS ARE APP LICABLE TO THE FACTS OF THE PRESENT CASE. THE HON'BLE MADHY A PRADESH HIGH COURT HELD THAT AN AFFIDAVIT IS A PIECE OF EVIDENCE, WHICH ALONGWITH OTHER MATERIAL ON RECORD, HAS TO BE TAKEN INTO CONSIDERATION BY THE TRIBUNAL, BEFORE ARRIVING AT A FINDING. HOWEVER, A STATEMENT BY A DEPONENT CAN BE HELD TO BE UN-RELIABLE BY THE TRIBU NAL EITHER ON THE BASIS OF CROSS EXAMINATION OF THE DEPONENT OR BY REFERENCE TO OTHER MATERIAL ON RECOR D, LEADING TO THE INFERENCE THAT THE STATEMENT MADE IN THE AFFIDAVIT CANNOT BE HELD TO BE TRUE. 12. UNDOUBTEDLY, IN THE ABOVE CASE, THE TRIBUNAL HA D ARRIVED AT THE FINDING THAT INTEREST INCOME HAD ACC RUED TO THE ASSESSEE ON A CONSIDERATION OF THE ENTIRE MATER IAL ON 8 RECORD INCLUDING THE AFFIDAVIT. THE FACT THAT APAR T FROM THE AFFIDAVIT FILED BY THE ASSESSEE, THERE WAS OTHER RE LEVANT MATERIAL ON RECORD, WAS NOT DISPUTED BY THE ASSESSE E. THE VERACITY OF THE STATEMENTS IN THE AFFIDAVIT WAS, AC CORDING TO THE TRIBUNAL, DISPROVED BY THE MATERIAL ON RECORD, THE FINDING OF THE TRIBUNAL COULD NOT BE HELD TO BE VIT IATED FOR THE REASON THAT THE TRIBUNAL ARRIVED AT THE FINDING BY NOT PLACING RELIANCE ON THE AFFIDAVITS. ACCORDINGLY, T HE TRIBUNAL WAS CORRECT IN UPHOLDING THE ORDERS OF THE LOWER AUTHORITIES. 13. IN VIEW OF THIS, IT IS EVIDENT THAT THE STATEME NTS MADE BY ANY PARTY, IN THE AFFIDAVIT MUST, INVARIABLY BE NOT CONSTRUED AS SACROSANCT AND RELIABLE, UNLESS CORROB ORATED BY COGENT AND CREDIBLE EVIDENCE. IN THE CASE OF ME HTA PARIKH & CO. (SUPRA), THE HON'BLE APEX COURT HELD T HAT, AS THE CASH BOOK OF THE APPELLANT WAS ACCEPTED, AND EN TRIES THEREIN WERE NOT CHALLENGED, AND NEITHER FURTHER AC COUNTS NOR VOUCHERS WERE CALLED FOR, AND THE PERSONS WHO G AVE THE AFFIDAVITS WERE NOT CROSS-EXAMINED, IT WAS NOT OPEN TO THE REVENUE TO CHALLENGE THE CORRECTNESS OF THE CASH BO OK OR THE STATEMENTS MADE IN THE AFFIDAVITS. CONSEQUENTLY, THE HON'BLE APEX COURT HELD THAT THERE WAS NO JUSTIFICA TION FOR HAVING ACCEPTED EXPLANATION IN PART. THE VIEW OF T HE TRIBUNAL THAT IT WAS IMPOSSIBLE FOR THE APPELLANT T O HAVE 61 NOTES ON 18 TH JAN.,1946 AND REJECTION OF 30 SUCH NOTES, WAS BASED ON PURE SURMISES AND SUCH APPELLANT HAD FURNISHED A REASONABLE EXPLANATION FOR POSSESSION O F 61 NOTES, THERE WAS NO JUSTIFICATION FOR HAVING ACCEPT ED THEIR 9 EXPLANATION IN PART AND DISCARDED IN RELATION TO TH E SUM OF RS.30,000/- AND NO PART OF THE SUM OF RS.61,000/- C OULD, IN THE CIRCUMSTANCES OF THE CASE, HAVE BEEN ASSESSE D AS UNDISCLOSED PROFITS. THE RATIO LAID DOWN BY THE HO N'BLE APEX COURT HAS BEEN MISCONSTRUED IN ISOLATION AND W ITHOUT REFERENCE TO THE CONTEXT AND ENTIRETY OF THE FACTS OF THAT CASE. THE CROSS-EXAMINATION OF THE PERSON WHO FILE D AFFIDAVITS IS ONE OF THE REASONS FOR THE FINDING A RRIVED AT BY THE HON'BLE APEX COURT, ALONGWITH OTHER REASONS. CONSEQUENTLY, THE RATIO OF THE DECISION CONCLUDED A ND RELIED UPON BY THE ASSESSEE IS NOT APPLICABLE TO TH E FACTS OF THE CASE. 14. HAVING REGARD TO THE LEGAL AND FACTUAL DISCUSSI ON, WE ARE OF THE OPINION THAT THE ASSESSEE HAS FAILED TO ADDUCE CORROBORATIVE DOCUMENTARY EVIDENCE TO THE FACTUM OF INCURRING THE SAID EXPENDITURE AND HENCE, THE CLAIM OF THE ASSESSEE CANNOT BE ACCEPTED. THIS GROUND OF APPEAL OF THE REVENUE IS ALLOWED. 15. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25 TH JAN.,2012. SD/- SD/- (SUSHMA CHOWLA) (MEHAR SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 25 TH JAN.,2012. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT CHANDIGARH