Shri Damjibhai Jivabhai Hadial, Ahmedabad V. The Income tax Officer,Ward-14(2), Ahmedabad

ITA 136/AHD/2013

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 8024 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 10 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 19-07-2017
• Assessment Year: 1997-1998
• Appeal Filed On: 15-01-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K DEV
• Assessee Lawyers: PF JAIN
• Keywords: Salary income; Deemed to accrue or arise in india
• Section: 147; 68; 69; 148; 6

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA.NO.136/AHD/2013 / ASSTT. YEAR: 1997-98 DAMJIBHAI JIVABHAI HADIAL A/32, SHUBHLAXMI FLATS VASTRAPUR AHMEDABAD 380 015. PAN : AAEPH 7551 H VS ITO, WARD - 14(2) AHMEDABAD. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI P.F. JAIN, AR REVENUE BY : SHRI S.K. DEV, SR.DR / DATE OF HEARING : 09/10/2017 / DATE OF PRONOUNCEMENT: 04 /12/2017 $%/ O R D E R ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF LD.CIT(A)-XXI, AHMEDABAD DATED 5.11.2012 PASSED FOR ASSTT.YEAR 199 7-98. 2. THE ASSESSEE HAS TAKEN 12 GROUNDS OF APPEAL, BUT HIS GRIEVANCE REVOLVES AROUND TWO ISSUES VIZ. THE LD.CIT(A) HAS ERRED IN U PHOLDING RE-OPENING OF ASSESSMENT UNDER SECTION 147 OF THE INCOME TAX ACT, 1961, AND (B) THE LD.CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS.7,21,000/- W HICH WAS ADDED BY THE AO WITH THE AID OF SECTION 68 OF THE ACT. 3. WITH THE ASSISTANCE OF THE LD.REPRESENTATIVES, I HAVE GONE THROUGH RECORD CAREFULLY. IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEE IS A BLIND MAN SERVING AT BLIND MENS ASSOCIATION AS A CANE INSTRUCTOR. HE W AS GETTING SALARY INCOME. ACCORDING TO THE AO, ONE SHRI SHAILESH K. THAKER HA S FILED COMPLAINT AGAINST ITA NO.136/AHD/2013 2 ASSESSEE POINTING OUT THAT HE HAS TAXABLE INCOME WH ICH HAS ESCAPED ASSESSMENT. THE BACKGROUND IS THAT THE ASSESSEE HAS GIVEN A LOA N OF RS.5,61,000/- TO SHRI SHALESH THAKER DURING THE MONTH OF AUGUST AND SEPTE MBER, 1996. SHRI SHAILESH THAKER HAS ISSUED A CHEQUE BEARING NO. 105871 DRAWN ON CENTRAL BANK OF INDIA, VASNA BRANCH. THIS CHEQUE WAS DISHNOURED AND THE A SSESSEE HAS FILED A CRIMINAL COMPLAINT UNDER SECTION 138 OF NEGOTIABLE INSTRUMEN T ACT. IN THE PROCEEDINGS BEFORE JUDICIAL MAGISTRATE, THE ASSESSEE HAS DEPOSE D THAT LOAN OF RS.5.00 LAKH WAS GIVEN TO SHRI SHAILESH THAKER. SHRI SHAILESH THAKE R HAS ATTACHED COPY OF CROSS- EXAMINATION OF THE ASSESSEE DONE BY HIS COUNSEL DUR ING THAT PROCEEDINGS AND COPY OF PLAINT TO THE AO ALONG WITH HIS TAX EVASION PETI TION. ON THE BASIS OF THAT COMPLAINT, THE AO HAS RECORDED REASON THAT THE ASSE SSEE HAS FILED RETURN OF INCOME ONLY FOR ASSTT.YEAR 2003-04. HE HAS NOT FILED ANY RETURN FOR THE ASSTT.YEAR 1997- 98, THEREFORE, ALLEGED ADVANCEMENT OF LOAN IS ESCAP EMENT OF INCOME, AND HE ISSUED A NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT. CO PY OF THE REASONS IS AVAILABLE AT PAGE NO.51 AND 52 OF THE PAPER BOOK. 4. I HAVE GONE THROUGH THE REASONS AS WELL AS FINDI NG RECORDED BY THE LD.CIT(A). ON DUE CONSIDERATION OF THE MATERIAL ON RECORD, I A M SATISFIED THAT THE AO WAS POSSESSING SUFFICIENT INFORMATION FOR HARPING A BEL IEF THAT TAXABLE INCOME HAS ESCAPED ASSESSMENT, AND THEREFORE, HE HAS RIGHTLY R EOPENED THE ASSESSMENT. I DO NOT FIND ANY MERIT IN THE FIRST FOLD OF GRIEVANCE RAISE D BY THE ASSESSEE. 5. IN THE NEXT FOLD OF GRIEVANCE, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMATION OF RS.7,21,000/-. 6. THE STAND OF THE ASSESSEE IS THAT OUT OF THIS TO TAL AMOUNT, RS.4,55,000/- WAS OBTAINED AS LOAN FROM SIX PERSONS IN THE PAST. DET AILS OF SIX PERSONS HAVE GIVEN AS UNDER: NAME AMOUNT 1. RAHIMKHAN F. PATHAN 75,000 2. SATYANARAYAN TIWARI 75,000 ITA NO.136/AHD/2013 3 3. PANKAJ K. DAGLI 75,000 4. NANJI D. KHOKHARIYA 75,000 5. RAVJI N. GOPANI 80,000 6. TARKESHWAR L. LUHAR 75,000 7. HE FURTHER CONTENDED THAT RS.2.16 LAKHS IS HIS P AST SAVINGS. RS.50,000/- WAS AN ADVANCE GIVEN EARLIER, WHICH HAS BEEN RECEIVED B ACK BY THE ASSESSEE IN THIS YEAR. THIS AMOUNT HAS BEEN ADDED BY THE AO UNDER SECTION 69 OF THE INCOME TAX ACT. THE LD.CIT(A) WHILE EVALUATING EVIDENCES, HAS MADE DISCUSSION WITH REGARD TO NATURE OF EVIDENCE PRODUCED BY THE ASSESSEE AND HOW IT DESERVES TO BE REJECTED. THE DISCUSSION MADE BY THE LD.CIT(A) READS AS UNDER : 3.8 IN THE COURSE OF APPEAL PROCEEDINGS, THE APPEL LANT HAS FURNISHED THE FOLLOWING IN RESPECT OF THE AMOUNTS CLAIMED TO HAVE BEEN RECEIVED AS LOANS FROM THE FORESAID SIX PERSONS - I) TARKESHWAR K. NABAR :- [A) AN UNDATED CONFIRM ATION LETTER (B) A CERTIFICATE DTD. 29.07.2005 OF ANDHAJAN MANDAL STAFF CREDIT CO-OP. SOCIETY GIVING DETAI LS OF LOANS TAKEN BY THE SAID PERSON ON VARIOUS DA TES IN 1991, 1992 & 1993, AGGREGATING TO RS. 1,05,000/- (C) AN UNDATED CONFIRMATION OF ACCOUNT, II) PANKAJKUMAR DAGLI :- (A) AN UNDATED CONFIR MATION LETTER (B) DETAILS OF SALARY DRAWN FROM 1984-85 TO 200 4- 05 (C) AN UNDATED CONFIRMATION OF ACCOUNT, III) SATYANARYAN TIWARI :- (A) AN UNDATED CONFIR MATION LETTER B) A CERTIFICATE DTD. 26.07.2005 OF ANDHAJAN MANDAL STAFF CREDIT CO-OP. SOCIETY GIVING DETAILS O F LOANS TAKEN BY THE SAID PERSON ON VARIOUS DATES IN 1991, 1992 & 1994, AGGREGATING TO RS. 94,5OO/- (C) AN UNDATED CONFIRMATION OF ACCOUNT. IV) RAVJIBHAI N. GOPANI (A) AN UNDATED CONFIRMATI ON LETTER (B) 7/12 EXTRACT (C) AN UNDATED CONFIRMATION OF ACCOUNT. V) NANJIBHAI KHOKHAVIA (A) AN UNDATED CONFIRMATIO N OF LETTER (B) A CERTIFICATE RS. 26.05.2005 OF ANDHAJAN MANDAL STAFF CREDIT CO-OP. SOCIETY GIVING DETA ILS ITA NO.136/AHD/2013 4 OF LOANS TAKEN BY THE SAID PERSON ON VARIOUS D ATES IN 1991, 1992 & 1995, AGGREGATING TO RS. 94.00 0/-. (C) AN UNDATED CONFIRMATION OF ACCOUNT. VI) RAHIMKHAN PATHAN A) A CONFIRMATION LETTER. (B) A CERTIFICATE DTD. 26,07,2005 OF ANDHAJAN MANDAL STAFF CREDIT CO-OP. SOCIETY GIVING DETA ILS OF LOANS TAKEN IN THE SAID PERSON ON VARIOUS D ATES IN 1991,1992 & 1995, AGGREGATING TO RS.1,05,00 0/- (C) AN UNDATED CONFIRMATION OF ACCOUNT. 3.9 AFTER CAREFUL CONSIDERATION OF THE CONTENTIONS OF THE A.O., THE SUBMISSIONS OF THE APPELLANT AND THE VARIOUS DOCUMENTS FURNISHED B Y HIM, I FIND AS UNDER: (A) AS OBSERVED BY THE A.O. THE AGREEMENTS FOR LOAN ARE UNDATED AND EXECUTED ON PLAIN PAPER. (B) BOTH THE APPELLANT AS WELL AS THE WITNESSES, I. E., THE LENDERS ARE SILENT AS TO THE STATUS OF THE LOANS AT THE TIME OF ASSESSMENT P ROCEEDINGS. AS OBSERVED BY THE A.O., THE RECOVERY OF LOANS HAS BECOME BARRED BY LI MITATION. (C) THERE IS NO STIPULATION AS TO THE AMOUNT OF INT EREST THAT THE APPELLANT IS LIABLE TO PAY TO THE LENDERS. (D) THE LENDERS HAVE CLAIMED TO HAVE LENT MONEY IN CASH TO THE APPELLANT EVEN THOUGH THEY HAD BANK ACCOUNTS. ALSO, AS EVIDENT FRO M THE CERTIFICATES ISSUED BY ANDHAJAN MANDAL STAFF CREDIT CO-OP. SOCIETY, THE LO ANS HAD BEEN TAKEN BY THE LENDERS FROM THE SOCIETY BY CHEQUE, WHICH FURTHER S UBSTANTIATES THE OPERATION OF BANK ACCOUNTS BY THEM. HENCE, THE NECESSITY OF GIVI NG LOANS BY CASH IS NOT CLEAR. (E) AS EVIDENT FROM THE CERTIFICATED ISSUED BY ANDH AJAN MANDAL STAFF CREDIT CO- O. SOCIETY, THE LENDERS HAVE THEMSELVES BORROWED SU BSTANTIAL AMOUNT FROM THE SOCIETY, WHICH ARE LIKELY TO CARRY THE BURDEN OF IN TEREST. HOWEVER, NONE OF THE LENDERS HAS STATED THAT THEY HAVE RECEIVED INTEREST FROM THE APPELLANT AGAINST THE ALLEGED LOAN. THE CONFIRMATION OF ACCOUNT SUBMITTED BY EACH OF THESE LENDERS DOES NOT REFLECT ANY INTEREST RECEIVED OR RECEIVABL E FROM THE APPELLANT. (F) AS EVIDENT FROM THE CERTIFICATES ISSUED BY ANDH JAN MANDAL STAFF CREDIT CO- OP. SOCIETY, THE LOANS TAKEN BY THE LENDERS WHICH I S CLAIMED TO BE ONE OF THE MAJOR SOURCES OF THE IMPUGNED LOANS TO THE APPELLAN T, PERTAINED TO SEVERAL YEARS EARLIER, I.E., 1991, 1992, 1993, 1994 & 1995 THOUGH THE IMPUGNED LOANS HAVE BEEN SHOWN AS ADVANCED DURING THE YEAR 1996. THUS, THERE IS NO NEXUS BETWEEN THE LOANS TAKEN FROM THE SOCIETY AND THE ALLEGED LO ANS TO THE APPELLANT. (G) FROM THE AFFIDAVIT FILED BY THE APPELLANT BEFOR E THE CITY CIVIL COURT, IT IS EVIDENT THAT THE ENTIRE MONEY BELONGS TO HIM, AS IT IS NOWHERE MENTIONED IN THE ITA NO.136/AHD/2013 5 AFFIDAVIT THAT THE MONEYS ADVANCED TO SHRI SHAILESH THAKKER BELONGED TO SUCH OTHER PERSONS AND THAT THESE AMOUNTS WERE LIABLE TO BE RETURNED TO THE SAID ALLEGED LENDERS. 3.10 IN VIEW OF THE ABOVE, I HOLD THAT THE ASSESSIN G OFFICER WAS JUSTIFIED IN TREATING THE AMOUNT OF RS.4,55,000/- AS THE UNEXPLA INED INVESTMENT OF THE APPELLANT AND HENCE HIS DEEMED INCOME U/S. 69 OF TH E ACT. 8. SECTION 68 OF THE INCOME TAX ACT CONTEMPLATES THAT WHERE ANY S UM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR ANY PREVIOUS YEAR, AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE T HEREOF, OR THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT, IN THE OPINION OF THE AO SATISFACT ORY, THEN THE SUM SO CREDITED IN THE ACCOUNTS MAY BE TREATED AS INCOME OF THE ASSESSEE O F THAT PREVIOUS YEAR. HOWEVER, IN THE PRESENT CASE, W HILE REJECTING EXPLANATION OF THE ASSESSEE, THE LD. CIT(A) HAS APPROACHED FACTS AND CIRCUMSTANCES WITH LITTLE TECH NICAL AND MECHANICAL WAY. IT HAS BEEN OBSERVED THAT THE LENDERS ARE SILENT TO STATUS OF LOAN AS WELL AS RATE OF INTEREST. LENDERS HAVE BANK ACCOUNT AND THEY HAVE GIVEN LOAN IN CASH. IT IS PERTINENT TO OBSERVE THAT THESE ARE NOT TRANSACTIONS IN DAY-TO-D AY BUSINESS OF ASSESSEE. THIS IS TO BE APPRECIATED WITH BACK GROUND OF THE ASSESSEE, WH O IS A BLIND PERSON; WHO HAS SOME RELATIONSHIP WITH LENDERS. THIS WAY LOANS WER E TAKEN BY HIM IN PERSONAL RELATION CAPACITY. WHENEVER ANY SMALL AMOUNTS ARE BEING TAKEN FROM NEAR-AND-DEAR ONE, THEN INTEREST AND OTHER TERMS AND CONDITIONS A RE NOT NEGOTIATED. IT IS ONLY ON THE BASIS OF MUTUAL FAITH AND REQUIREMENT OF PARTIC ULAR PERSON. THEY HAVE CONFIRMED ADVANCEMENT OF LOANS. THEY APPEARED BEFORE THE AO IN SUPPORT OF SUCH ADVANCEMENT; THEY HAVE SUBMITTED DETAILS OF LAND HO LDING AND OTHERS SOURCE OF EARNINGS. TO MY MIND, THE LD.CIT(A) HAS ERRED IN R EJECTING THE EXPLANATION OF THE ASSESSEE. I AM SATISFIED WITH THE KIND OF EVIDENCE PRODUCED BY THE ASSESSEE THAT HAS DISCHARGED HIS ONUS AS CONTEMPLATED UNDER SECTION 6 8 OF THE ACT. SIMILARLY, THE ASSESSEE IS IN SERVICE GETTING SALARY INCOME. HE U SED TO MANUFACTURE CANE FURNITURE I.E. WEAVING/INTERLACING OF CANE IN CHAIRS ETC. SA VINGS AT HIS END TO THE EXTENT OF RS.2.60,000/- CANNOT BE DOUBTED. THEREFORE, TAKING INTO CONSIDERATION THE EVIDENCES PRODUCED BY THE ASSESSEE, I ALLOW THIS FOLD GRIEVAN CE AND DELETE ADDITION OF ITA NO.136/AHD/2013 6 RS.7,21,000/- MADE BY THE AO AND CONFIRMED BY THE L D.CIT(A). ACCORDINGLY, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON 4 TH DECEMBER, AT AHMEDABAD. SD/- (RAJPAL YADAV) JUDICIAL MEMBER