Jaiveer Singh Beniwal, Muzaffarnagar V. ITO, Muzaffarnagar

ITA 1411/DEL/2011

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 7330 (ITAT-DELHI)
• Duration Of Justice: 5 year(s) 2 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 25-04-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 18-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RICHA RASTOGI
• Keywords: Unexplained cash credit; Rejection of books of accounts; Corroborative evidences
• Section: 143(3); 68; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : D : NEW DELHI BEFORE SH. H.S. SIDHU , JUDICIAL M EMBER AND SH. O.P. KANT , ACCOUNTANT MEMBER ITA NO. 1411 /DEL/ 2011 & 6276/DEL/2012 ASSESSMENT YEAR: 2007 - 08 SH. JAIVEER SINGH BENIWAL, S/O - SH. MANSUKH RAM, 1284/85A, SANTOSH VIHAR, CIRCULAR ROAD, MUZAFFARNAGAR, (UP). VS. INCOME TAX OFFICER, WARD - 1(1), MUZAFFARNAGAR, UP GIR/PAN : ACDPB2201P (APPELLANT) (RESPONDENT) APPELLANT BY SH. PRATAP GUPTA, CHARTERED ACCOUNTANT RESPONDENT BY MS. RICHA RASTOGI, SR. DR DATE OF HEARING 27.04.2016 DATE OF PRONOUNCEMENT 14.06.2016 ORDER PER O.P. KANT , A. M. : THESE TWO APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPARATE ORDERS DATED 20/12/2010 AND 28/09/2012 OF THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) , MUZAFFARNAGAR FOR ASSESSMENT YEAR 2007 - 08. THE FIRST APPEAL IS IN RESPECT OF THE ADDITIONS MADE IN THE ASSESSMENT UNDER SECTION 143(3) OF THE INCOME - T AX ACT, 1961 (IN SHORT THE ACT ) AND THE SECOND APPEAL IS IN RESPECT OF PENA LTY LEVIED UNDER SECTION 271 (1)(C) OF THE ACT. AS BOTH THE APPEALS ARE INTERCONNECTED, SAME ARE HEARD TOGETHER AND DECIDED BY THIS CONSOLIDATED ORDER. ITA NO. 1411/DEL/2011 2. FIRST WE TAKE UP, THE APPEAL IN ITA NO. 1411/DEL/2011 WHEREIN FOLLOWING GROUNDS HAVE BEEN RAISED: 1. LD. CIT (APPEAL) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REJECTING THE AUDITED BOOKS OF ACCOUNT 2 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 OF APPELLANT AND ESTIMATING THE GROSS RECEIPT OF FREIGHT OF RS. 68,00,000/ - AGAINST THE REC EIPT OF RS. 65,78,869/ - DECLARED BY THE APPELLANT. 2. LD CIT(A) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ACTION OF ASSESSING OFFICER IN REJECTING THE AUDITED BOOKS OF ACCOUNT OF APPELLANT AND IN ESTIMATION OF INCOM E AT THE RATE OF 5 %. 3. LD. CIT (APPEAL) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE ADDITION OF RS.5,00,000/ - UNDER SECTION 68 OF THE I.T. ACT. 4. ASSESSEE HAS EVERY RIGHT TO MAKE, ADD, DELETE, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 3. T HE FACTS IN BRIEF ARE THAT THE ASSESSEE, AN INDIVIDUAL WAS DERIVING INCOME FROM TRANSPORT BUSINESS UNDER TH E NAME AND STYLE OF M/S MARUTI ROAD L INES. THE ASSESSEE FILED RETURN OF INCOME ON 31/10/ 2007 DECLARING INCOME OF RS. 1,54, 760/ - . DURING THE ASSESSMENT PROCEEDING, THE ASSESSING OFFICER OBSERVED INTRODUCTION OF CAPITAL OF RS. 70,000/ - . THE ASSESSEE WAS ASKED TO PRODUCE BOOKS OF ACCOUNTS, SOURCE OF CAPITAL CONTRIBUTION AND DETAIL S OF VARIOUS BANK AC COUNTS MAINTAINED BY THE ASSESSEE. THE ASSESSING OFFICER OBSERVED NON - COMPLIANCE BY THE ASSESSEE AS RECORDED IN PARA - 6 OF THE ASSESSMENT ORDER. IN VIEW OF NON - COMPLIANCE, THE ASSESSING OFFICER PROCEEDED TO MAKE THE ASSESSMENT ON THE BASIS OF THE MATERIAL A ND INFORMATION AVAILABLE BEFORE HIM, WHICH HAS BEEN SUMMARIZED BY THE ASSESSING OFFICER IN PARA - 9 OF THE ASSESSMENT ORDER AS UNDER: 9. THE SUM AND SUBSTANCE OF THE ABOVE FACTS IS: (A) THAT THERE IS NO PROPER EXPLANATION FOR THE ADDITION OF RS. 70000/ - . (B) THAT THE WITHDRAWAL IS FOR RS. 60000/ - FROM THE CAPITAL BUT THE LIP PAID IS FOR RS. 40451/ - . THUS THE HOUSE HOLD EXPENSES ARE NOT EXPLAINED. (C) THAT IN THE PERSONAL BANK ACCOUNT WITH PNB CASH DEPOSITS TOTAL TO RS 186000/ FOR WHICH THERE IS NO PLAUSIBLE EXPLA NATION (EXCLUDING RS 5,00,000/ - CONSIDERED SEPARATELY). (D) THAT NO DETAILS INDICATING THE NAME AND ADDRESSES OF THE TRUCK OWNERS, TRUCK NUMBER, DATE OF PAYMENT, MODE OF PAYMENT, AMOUNT PAID, RATE OF PAYMENT FOR FREIGHT PAID TO TRUCKS AT RS 64,31,813/ - HAVE BEEN FURNISHED FOR VERIFICATION. (E) THAT NO NAME AND ADDRESS O F THE EMPLOYEE TO WHOM SALARY PAID AT RS 40552/ - HAVE BEEN FURNISHED. (F) THAT THE COPY OF BANK ACCOUNT RELATING TO M/S MARUTI ROAD LINES HAS NOT BEEN FURNISHED. EVEN THE BANK ACCOUNT NO NAME OF BANK AND BRANCH CODE HAVE BEEN FURNISHED. IN VIEW OF THE ABOVE FACTS THE BOOKS OF ACCOUNT ARE NOT S UCH FROM WHICH TRUE AND CORRECT I N COME CAN BE DEDUCED. CONSEQUENTLY THE BOOKS OF ACCOUNT ARE REJECTED. 3 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 4. I N VIEW OF ABOVE OBSE RVATION S, THE ASSESSING OFFICER REJECTING THE BOOKS OF ACCOUNTS UNDER SECTION 145(3) OF THE ACT, ESTIMATED THE RECEIPT FROM FREIGHT AT RS. 68,00, 000/ - AS AGAINST REC EIPT OF RS. 65,78, 869/ - DECLARED BY THE ASSESSEE AND APPLIED THE NET PROFIT RATE OF 5% RESU LTING INTO NET PROFIT OF RS. 3,40, 000 / - AS AGAINST PROFIT OF RS. 1,87, 510/ - DECLARED BY THE ASSESSEE WHICH RESULTED IN ADDITION OF RS. 1,52, 490/ - . THE ASSESSING OFFICER NOTED THAT NO SEPARATE ADDITION ON ACCOUNT OF UNEXPLAINED DEP OSITS IN BANK ACCOUNT OF R S. 1,86, 000/ - AND FRESH CAPITAL CONTRIBUTION OF RS. 70,000 / - WAS MADE AS THE ABOVE ADDITION TO NET PROFIT WOULD TAKE CARE OF THE SE INVESTMENTS /EXPENDITURES . THE ASSESSING OFFICER ALSO O BSERVED CASH DEPOSITS OF RS. 6,88,464 / - IN BANK ACCOUNT NO. 3157 WITH P NB SADAR BAZAR, MUZAFFARNAGAR WHICH INCLUDED A DEPOSIT OF RS. 5,00,000/ - , THE SOURCE OF WHICH WAS NOT EXPLAINED BY THE ASSESSEE AND , THEREFORE , THE ASSESSING OFFICER ADDED THE SAME AS UNDISCLOSED INCOME OF THE ASSESSEE. 5. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE THE LEARNE D COMMISSIONER OF INCOME - TAX( APPEALS), WHO UPHELD THE REJECTION OF BOOKS OF ACCOUNTS BY THE ASSESSING OFFICER AS THE ASSESSEE DID NOT PRODUCE COPIES OF BANK ACCOUNTS OF M/S MARUTI ROAD L INES AND CONFIRMED THE ADDITION TO THE NET PR OFIT OF THE ASSESSEE . REGARDING THE UNEXPLAINED CASH CREDIT OF RS. 5 LAKH, THE ASSESSEE FILED CONFIRMATION FROM M/S DYNAMIC INFRA PROJECTS PRIVATE LIMITED, NEW DELHI CERTIFYING THAT IT HAD ADVANCED SAID SUM OF RUPEES , ALONG WITH COPY OF BANK ACCOUNT OF M/S DYNAMIC INTRA - DEVELOPERS PRIVATE LIMITED. THE AUTHORISED R EPRESENTATIVE OF M/S DYNAMIC INFRA PROJECTS PRIVATE LIMITED APPEARED BEFORE THE ASSESSING OFFICER IN REMAND PROCEEDINGS AND CONFIRMED THE ISSUE OF DRAFT OF RS. 5 LAKH DATED 27/09/2006 BY M/S DYNAMI C INFRA DEVELOPERS PRIVATE LIMITED I.E. A SISTER CONCERN ON BEHALF OF M/S DYNAMIC INFRA PROJECTS PRIVATE LIMITED. IN REMAND PROCEEDINGS THE ASSESSEE STATED THAT SAID SUM OF RS. 5 LAKH WAS WITHDRAWN ON 03/10/2006 FOR MAKING ADVANCE FOR PURCHASE OF LAND, HOW EVER , SAID LAND DEAL COULD NOT BE EXECUTED AND THE AMOUNT WAS ALSO NOT RECEIVED BACK EVEN AFTER A LAPSE OF FOUR YEARS. THE LEARNED COMMISSIONER OF INCOME 4 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 TAX(APPEALS) DID NOT ACCEPT THE SUBMISSION OF THE ASSESSEE AND HELD THAT SUM OF RS. 5 LAKH WAS NOT REFUNDABLE TO THE AFORESAID COMPANY AND WAS PAID TO THE ASSESSEE FOR SERVICES RENDERED AND THUS CONFIRMED THE ADDITION. AGGRIEVED , THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL RAISING THE GROUNDS REPRODUCED. 6. IN GROUNDS NO. 1 AND 2 , THE ASSESS EE HAS CHALLENGED REJECTION OF BOOKS OF ACCOUNTS AND ESTIMATING THE FREIGHT RECEIPTS AT RS. 68,00, 000/ - AND NET PROFIT RATE AT 5% OF THE RECEIPT. 6.1 BEFORE US , THE LEARNED A UTHORISED R EPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT ALL THE RELEVANT DOCUMENTS WERE PRODUCED BEFORE THE LEARNE D COMMISSIONER OF INCOME - TAX( APPEALS) AND , THEREFORE , THE REJECTION OF BOOKS OF ACCOUNTS WAS NOT JUSTIFIED. 6.2 ON THE OTHER HAND , LEARNED SR. DEPARTMENTAL R EPRESENTATIVE RELYING ON THE ORDERS OF AUTHORITIES BELOW SUBMITTE D THAT BEFORE THE ASSESSING OFFICER DESPITE PR OVIDING NUMBER OF OPPORTUNITIES , THE ASSESSEE FAILED TO P RODUCE BILLS/VOUCHERS, EXPLAIN THE SOURCE OF CAPITAL OF RS. 70,000 / - AND INSUFFICIENT WITHDRAWALS ETC. AND EVEN BEFORE THE LEARNE D COMMISSIONER OF INCOME - TAX(APPEALS) , THE ASSESSEE FAILED TO PRODUCE COPY OF BANK ACCOUNTS OF THE BUSINESS CONCERN , NAMELY , MRS MARUTI R OAD LINES AND DEP ENDANTS OF THE ASSESSE . ACCORDINGLY, S HE SUBMITTED TO UPHOLD THE FINDINGS OF THE LEARNER COMMISSIONER OF INCOME - TAX( APPEALS). 6.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND FROM THE ORDER OF THE ASSESSING OFFICER THAT NUMBER OF OPPORTUNITIES WERE PROVIDED TO THE ASSESSEE BY THE ASSESSING OFFICER TO JUSTIFY THE NET PROFIT DECLARED AND PRODUC E COPY OF BANK ACCOUNTS AND BILLS AND VOUCHERS OF THE BUSI NESS CONCERN NAMELY M/S MARUTI ROAD L INES , HOWEVER , DUE TO FAILURE ON THE PART OF THE ASSESSEE TO PRODUCE DETAILS, THE ASSESSING OFFICER REJECTED THE BOOKS OF ACCOUNTS AND ESTIMA TED FREIGHT RECEIPTS AT RS. 68 ,00, 000/ - AND NET PROFITS AT THE RATE OF 5% ON SUCH RECEIPTS. THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) UPHELD THE FINDINGS OF THE ASSESSING OFFICER WITH FOLLOWING OBSERVATIONS: 5 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 3.1 GROUND OF APPEAL NO.2 IS AGAINST ESTIMATION OF NET PROFIT AT RS.3,40,000/ - . AS PER THE APPELLANT THE BUSINESS IS THAT OF TRANSPORT AGENCY I.E. HE IS SUPPLYING TRUCKS TO THE FACTORIES FOR TRANSPORTATION OF THEIR PRODUCTS TO VARIOUS PARTS OF THE COUNTRY AND CHARGING HIS COMMISSION ON G.R. CHARGES. THE FREIGH T1 AS MENTIONED IN G.R. OF GOODS TRANSPORTED ARE PAID BY THE CONSIGNEE DIRECTLY TO THE TRUCK DRIVERS/OWNERS ON DELIVERY OF THE GOODS AFTER DEDUCTING THE AMOUNT OF T.D.S. WHERE APPLICABLE. CERTIFICATE OF THE AMOUNT OF T.D.S. WERE RECEIVED BY THE ASSESSEE AN D TAKEN INTO ACCOUNTS. IT HAS FURTHER BEEN CONTENDED THAT THE ASSESSEE WAS IN FACT TAKING INTO ACCOUNT THE FREIGHT CHARGES ACTUALLY PAID BY THE CONSIGNEE ON THE BASIS OF FORM NO. L6A RECEIVED FROM THE TRUCK DRIVERS/OWNERS. THE A.O. HAS TAKEN ESTIMATE OF FR EIGHT CHARGES OF RS.68,00,000/ - AS AGAINST RS.65,78,889/ - (BASED ON FORM N0.I6A TAKEN BY THE APPELLANT) THUS ADDITION MADE BY THE A.O. ON ESTIMATE BASIS IS NOT CORRECT AND THEREFORE BE DELETED. THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE A.O. REJECTED BOOK RESULTS AND ESTIMATED NET PROFIT ON THE BASIS OF FACT THAT CERTAIN QUERIES WERE NOT COMPLIED BY THE APPELLANT AND THE BOOKS OF ACCOUNT I.E. CASH BOOK AND LEDGER AS WELL AS COPY OF BANK ACCOUNT OF THE APPELLANT WERE PRODUCED VERY LATE WHEREAS, COPY OF BANK ACCOUNTS OF THE M/S MARUTI ROAD LINES, AND DEPENDENTS WERE NOT FURNISHED. FURTHER, NO BILLS AND VOUCHERS WERE PROD UCED FOR EXAMINATION. DURING APPELLATE PROCEEDINGS ALSO THE APPELLANT HAS NEITHER BEEN, ABLE TO PRODUCE COPIES OF BANK ACCOUNTS OF M/S MARUTI ROAD LINES AND DEPENDENTS NOR ANY EXPLANATION HAS BEEN PUT - FORTH BY THE APPELLANT FOR NON - PRODUCTION OF COPIES OF BANK ACCOUNTS. THUS, THE CONDUCT OF THE APPELLANT HAS REMAINED DOUBTFUL.. THE A.O. IN THE ASSESSMENT ORDER HAS DISCUSSED THE REASONS FOR REJECTION OF BOOK RESULTS WHICH NOT REPEATED HERE FOR THE SAKE OF BREVITY. THE REASONING ELUCIDATED FOR REJECTION OF BO OKS OF ACCOUNT ARE UPHELD. THUS IT IS HELD THAT THE A.O. WAS PERFECTLY JUSTIFIED IN ESTIMATING NET PROFIT AT RS. 3,40,000/ - . THE SAME IS HEREBY CONFIRMED. GROUND NO.2 IS DISMISSED. 6.3 W E FIND FROM THE OBSERVATION OF THE ASSESSING OFFICER AND LEARNED C OMMISSIONER OF INCOME - TAX ( APPEALS) THAT NO BILLS AND VOUCHERS WERE PRODUCED FOR EXAMINATION BY THE ASSESSING OFFICER AND BANK ACCOUNTS OF THE BUSINESS CONCERN WERE ALSO NOT PRODUCED EVEN BEFORE THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS). IN OUR OPIN ION, IN ABSENCE OF BILLS AND VOUCHERS AND BANK STATEMENTS AND OTHER DEFECTS MENTIONED BY THE ASSESSING OFFICER IN THE 6 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 ASSESSMENT ORDER, THE ASSESSING OFFICER WAS JUSTIFIED IN REJECTING BOOKS OF ACCOUNTS AND ESTIMATING THE REC EIPT OF THE ASSESSEE AT RS. 68, 00, 000/ - AS AGAINST RECEIPT OF RS. 65,78,869/ - DECLARED BY THE ASSESSEE. AS FAR AS APPLYING THE NET PROFIT RATE OF 5% ON THE ESTIMATED RECEIPT IS CONCERNED, WE FIND THAT NO COMPARABLE CASE HAS BEEN CITED BY THE ASSESSING OFFICER, HOWEVER, IN SECTION 44 AD O F THE ACT, THE LEGISLATURE HAS ITSELF PROVIDED NET PROFIT RATE OF 8% IN C ASE OF ELIGIBLE RETAIL BUSINESS, AND THEREFORE, IN OUR VIEW , THE NET PROFIT RATE OF 5% APPLIED BY THE ASSESSING OFFICER IS REASONABLE AND ACCORDINGLY THE FINDINGS OF THE LEARNE D COMMI SSIONER OF INCOME - TAX( APPEALS) ON THE ISSUE IN DISPUTE ARE UPHELD. THE GROUNDS NO. 1 AND 2OF THE APPEAL ARE DISMISSED. 7. IN GROUND NO. 3, THE ASSESSEE HAS CHALLENGED ADDITION OF RS. 5 LAKH S MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LEARNED COMM ISSIONER OF INCOME - TAX( APPEALS). 7.1 BEFORE US, THE LEARNE D AUTHORISED R EPRESENTATIVE OF THE ASSESSEE REFERRING TO THE PAGE S 5 AND 7 OF THE ASSESSEE S PAPER BOOK SUBMITTED THAT M/S . DYNAMIC INFRA PROJECTS PRIVATE LIMITED IN THEIR CONFIRMATIONS AND IN COP Y OF BOOKS OF ACCOUNTS HAS CLEARLY ACCEPTED THAT SAID AMOUNT OF RS. 5 LAKH WAS GIVEN AS ADVANCE TO THE ASSESSEE FOR PURCHASE OF LAND AND THE TRANSACTION WAS ALSO CONFIRMED FROM THE BANK STATEMENT OF THE AFORESAID COMPANY AND THE CERTIFICATE ISSUED BY THE BANKER ENCLOSED RESPECTIVELY ON PAGE 8 AND 6 OF THE ASSESSEE S PAPER BOOK. HE ALSO REFERRED TO THE COPY OF STATEMENT OF THE ASSESSEE RECORDED BY THE ASSESSING OFFICER IN REMAND PROCEEDINGS PLACED AT PAGES 10 TO 12 OF THE ASSESSEE S PAPER - BOOK AND SUBMITTED THAT ON BEHALF OF THE COMPANY HE MADE A DEAL FOR PURCHASE OF LAND AND PAID SAID SUM TO ONE BROKER. HE ALSO FURTHER REFERRED TO THE STATEMENT OF THE ASSESSEE THAT THIS WAS THE FIRST AND LAST DEAL IN THE LAND AND THE ASSESSEE DID NOT TURN ANY INCOME IN T HE DEAL. IN VIEW OF ABOVE, THE LD. AUTHORIZED R EPRESENTATIVE SUBMITTED THAT THE ASSESSEE HAS DISCHARGED THE ONUS AS REQUIRED UNDER SECTION 68 OF THE ACT AND , THEREFORE , NO ADDITION WAS JUSTIFIED IN THE CASE OF THE ASSESSEE. 7 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 7.2 ON THE OTHER HAND, L D. SR. DEPARTMENTAL R EPRESENTATIVE RELYING ON THE ORDERS OF THE LOWER AUTHORITIES SUBMITTED THAT THE SAID ADVANCE HAS NOT BEEN RETURNED BY THE ASSESSEE EVEN AFTER A LAPSE OF NUMBER OF YEARS, WHICH ESTABLISHED THAT IT WAS AN INCOME OF THE ASSESSEE WHICH WAS NOT DI SCLOSED IN THE RETURN OF INCOME. 7.3 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD INCLUDING THE PAPER BOOK OF THE ASSESSEE. THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) HAS MADE FOLLOWING OBSERVATION S IN RESPECT OF THE ADDIT ION: (I) THE APPELLANT HAS NOT BEEN ABLE TO PRODUCE COPIES OF BANK ACCOUNTS O F THE PROPRIETARY CONCERN NAMELY M/S MARUTI ROAD LINES FROM WHERE THE DEBIT/CREDIT ENTRIES COULD BE VERIFIED AND ALSO THE APPELLANT HAS NO EXPLANATION REGARDING THE SAME. (II) THE DIRECT OR OF THE COMPANY MAKING ADVANCE OF RS.5,00,000/ - HAS NOT BEEN PRODUCED BEFORE THE A.O. FOR EXAMINATION DESPITE THE PLEA TAKEN BY THE APPELLANT DURING THE APPELLATE PROCEEDINGS THAT HE WOULD BE PRODUCED BEFORE THE A.O. DURING REMAND PROCEEDINGS. (III) THE CONFIR MATION OF ADVANCE MADE AT RS.5,00,000/ - HAS BEEN FILED BY DYNAMICS INFRAPROJECTS PVT. LTD. WHILE THE D.D. HAS BEEN PREPARED BY DYNAMIC INFRADEVELOPERS PVT. LTD REGARDING WHICH THE APPELLANT HAS NO EXPLANATION. (IV) THE APPELLANT HAS DEPOSED THAT THE ADVANCE OF RS.5,00,000/ - WAS MADE TO ONE SH. TOHID AHMED. VILLAGE RAM NAGAR, ROORKEE FOR PURCHASE OF LAND BUT DESPITE OF THE FACT THAT THE DEALING COULD NOT BE EXECUTED, THE AMOUNT HAS NOT BEEN RETURNED BY THE AFORESAID PERSON EVEN AFTER THE LAPSE OF 4 YEARS AND NO E FFORTS HAVE BEEN MADE BY THE APPELLANT TO RECOVER THE SAID AMOUNT. IT REMAINS A CONCOCTED STORY AS NO EVIDENCES WITH REGARD TO FURTHER PASSING ON OF THE AMOUNT HAS BEEN FURNISHED. FURTHER NO DOCUMENTARY EVIDENCE HAS BEEN FURNISHED TO PROVE THAT THE APPELLA NT MADE ADVANCE TO SH. TOHID AHMED, VILLAGE RAM NAGAR, ROORKEE FOR PURCHASE OF LAND. THE COMPANY WHO ISSUED THE D.D. IN FAVOUR OF THE APPELLANT ALSO HAVE NOT STATED WHEN THEY RECEIVED BACK RS.5 LAC FROM THE APPELLANT. THE FACT OF RECEIPT OF RS.5 LAC FROM T HE AFORESAID COMPANY IS ADMITTED. HOWEVER, THE FACT OF ADVANCE TO SH. TOHID AHMED IS NOT PROVED BY ANY DOCUMENT. (V) NO CORRESPONDENCE FOR THE RECOVERY OF SUM OF RS.5 LAC BY THE APPELLANT FROM SH. TOHID AHMED AND VICE VERSA BY THE COMPANY ISSUING D.D. FOR RECO VERY OF IMPUGNED SUM FROM THE APPELLANT HAVE BEEN FURNISHED AT ALL. (VI) FROM THE STATEMENT ON OATH OF THE APPELLANT RECORDED BY THE A.O. DURING REMAND PROCEEDINGS IT IS OBSERVED THAT THE APPELLANT WAS ENGAGED IN THE BUSINESS OF REAL ESTATE BUT NEVER ADMITTED T HE SAID BUSINESS BEFORE THE A.O. AND AT THE TIME OF APPELLATE PROCEEDINGS, BUT ONLY AT THE TIME OF REMAND PROCEEDINGS. IT IS APPARENT THAT THE AMOUNT OF RS.5 LAC HAS BEEN RECEIVED BY THE APPELLANT FROM M/S DIDPL AS BROKERAGE/COMMISSION FOR ARRANGING LAND A T ROORKEE. (VII) WITHOUT PREJUDICE TO WHAT HAS BEEN HELD IN PARA (VI) ABOVE, IT IS IMPORTANT TO NOTE THAT M/S DIDPL HAS NOT ADMITTED THAT THE AMOUNT OF RS.5 LAC GIVEN BY IT TO THE APPELLANT WAS RETURNABLE/REFUNDABLE. EVEN , IF THE APPELLANT WAS SHOWING IT THE LI ABILITY, THE SAME STOOD CEASED DURING THE SAME YEAR. THUS NON - REFUNDABLE ADVANCE/DEPOSIT OR CEASED LIABILITY DEFINITELY CONSTITUTES THE INCOME OF THE 8 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 APPELLANT. 7.4 W E FIND THAT OBSERVATION I N POINT NO. (I) OF THE CIT( A ) WAS HAVING EFFECT ON THE PROFIT O F THE BUSINESS CONCERN , NAMELY , M/S MARUTI ROAD L INES, AND WHICH HE HAVE ALREADY CONSI DERED WHILE DECIDING THE GROUNDS NO. 1 AND 2 OF THE APPEAL. AS REGARD TO THE POINT NO. (II) IS CONCERNED, WE FIND THAT THE COMPANY M/S . DYNAMIC INFRA PROJECTS PRIVATE LIM ITED HAD DULY AUTHORIZED SH. AJAY K . SINGHAL TO APPEAR BEFORE THE ASSESSING OFFICER AND HE EXPLAINED THE SOURCE OF RS. 5 LAKH GIVEN AS ADVANCE TO THE ASSESSEE AND THEREFORE THE SUMMONS WERE DULY COMPLIED BY THE AFORESAID COMPANY. AS REGARD TO POINT NO. (II I), WE FIND THAT THE DEMAND DRAFT WAS PREPARED FROM THE BANK ACCOUNT OF M/S DYNAMIC INFRA DEVELOPERS PRIVATE LIMITED WHEREAS THE CONFIRMATION OF ADVANCE WAS GIVEN BY M/S DYNAMIC INFRA PROJECTS PRIVATE LIMITED. BUT WE DO NOT FIND ANYTHING WRONG AS IN THE BU SINESS, THE SISTER CONCERN MAY GIVE ADVANCE ON BEHALF OF THE ANOTHER CONCERN. IT IS A MATTER WHICH IS BETWEEN TWO SISTERS CONCERN, HOW DO THEY MANAGE THEIR CASH FLOW EFF ICIENTLY AND IT IS NOT FOR THE R EVENUE AUTHORITY TO DECIDE HOW TO CONDUCT THE BUSINESS ACTIVITY. AS REGARD TO POINT S NO. (IV) AND (V) OF ADVANCE TO TOHID AHMED IS CONCERNED, WE FIND THAT AS FAR AS DISCHARGING OF ONUS UNDER SECTION 68 OF THE ACT WAS CONCERNED, IT WAS NOT RELEVANT HOW THE MONEY WAS UTILIZED . THE ASSESSEE HAS EXPLAINED ALL THE THREE INGREDIENTS OF THE TRANSACTION , I.E. , IDENTITY AND CREDITWORTHINESS OF THE PERSON AND GENUINENESS OF THE TRANSACTION AND THEREFORE THE FA CT OF ADVANCE TO SH TOHID AHMED , WHETHER PROVED OR NOT , WAS NOT RELEVA NT. AS REGARD TO POINT NO. (VI) , THE CONCL USION OF THE LEARNE D COMMISSIONER OF INCOME - TAX ( APPEALS) THAT THE ASSESSEE WAS ENGAGED IN THE REAL ESTATE BUSINESS AND AMOUNT OF RS. 5 LAKH RECEIVED FROM M/S . DYNAMIC INFRA DEVELOPERS PRIVATE LIMITED WAS A BROKERAGE COMMISSION FOR ARRANGING LAND DEALS AT ROORKEE IS WITHOUT ANY BASIS OR ANY SUPPORTING EVIDENCE. THE ASSESSEE IN ITS STATEMENT RECORDED BY THE ASSESSI NG OFFICER IN REMAND PROCEEDING , HAS DULY STATED THAT IT WAS A FIRST DEAL OF PURCHASE OF LAND AND WHICH DID NOT RESULT ANY IN ANY INCOME AND THERE FORE ARRIVING AT CONCLUSIONS BY THE 9 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 LEARNED COMMISSIONER OF INCOME TAX(APPEALS) WITHOUT ANY EVIDENCE IS NOT JUSTIFIED. AS REGARD TO POINT (VII) IS CONCERNED THE FINDING OF THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) ARE WITHOUT PROPER APPRECIATION OF THE DOCUMENTS. IN THE CONFIRMATION SUBMITTED BY M/S . DYNAMIC INFRA PROJECTS PRIVATE LIMITED AND THE COPY OF THE ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S DYNAMIC INFRA PROJECTS PRIVATE LIMITED, WHICH ARE APPEARING AT PAGE 7 AND 5 OF THE ASSESSEE S PAPER BOOK, IT IS EVIDENT THAT SAID SUM WAS GIVEN BY THE AFORESAID COMPANY AS ADVANCE FOR PURCHASE OF LAND. FURTHER , THE OBSERVATION OF THE LEARNED COMMISSIONER OF INCOME - TAX ( APPEALS) THAT THE SAID ADVANCE WAS NON - REFUNDABLE, IS ALSO WITHOUT ANY SUPPORTING EVID ENCE. IN OUR OPINION, THE ASSESSEE HAS DISCHARGED ITS ONUS UNDER SECTION 68 OF THE ACT AS IT HAS ALREADY PROVIDED ALL DOCUMENTS IN RESPECT OF IDENTITY AND CREDITWORTHINESS OF THE PERSON WHO ADVANCED THE MONEY AND GENUINENESS OF THE TRANSACTION BY PROVIDING THE COPY OF THE BANK ACCOUNT AND A CERTIFICATE FROM THE BANK THAT SAID AMOUNT OF DEMAND DRAFT WAS ISSUED FROM THE BANK ACCOUNT OF THE COMPANY. IN VIEW OF THE ABOVE DISCUSSION, WE HOLD THAT SAID ADDITION OF RS. 5 LAKH IS NOT JUSTIFIED IN THE HANDS OF THE A SSESSEE AND ACCORDINGLY IT IS DELETED. THE GROUND OF THE APPEAL IS ALLOWED. 8. GROUND NO. 4 BEING GENERAL IN NATURE, IT IS NOT REQUIRED TO ADJUDICATE UPON AT OUR END. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ITA NO. 6 276/DEL/2012 10. T HE GROUNDS OF APPEAL RAISED THE ASSESSEE IN THE APPEAL ARE AS UNDER: 1. LEARNED COMMISSIONER OF INCOME TAX(APPEALS) IS NOT JUSTIFIED IN LAW AND FACTS AND CIRCUMSTANCES OF THE CASE IN CONFIRMING THE PENALTY UNDER SECTION 271(1)(C) ON THE AMOUNT OF ADDIT ION OF RS. 5,00,000/ - UNDER SECTION 68 OF THE I.T. ACT, 1961 MADE BY THE ASSESSING OFFICER. 2. ASSESSEE HAS EVERY RIGHT TO MAKE, ADD, DELETE, MODIFY OR ALTER ANY GROUNDS OF APPEAL AT THE TIME OF HEARING. 11. W E FIND THAT THE ADDITION IN RESPECT OF WHI CH PENALTY UNDER SECTION 271(1)(C) OF THE ACT WAS LEVIED, HAS ALREADY BEEN DELETED BY US IN GROUND NO. 3 10 ITA NO S . 1411/DEL/2011 & 6276/DEL/2012 AY: 2007 - 08 OF ITA NO. 1411/DEL/2011 IN PARAS NO. 7 TO 7.4 ABOVE. AS THE ADDITION ITSELF HAS BEEN DELETED, THE PENA LTY LEVIED UNDER SECTION 271(1)(C) OF THE ACT ALSO CANNOT SURVIVE AND , THEREFORE , THE SAME IS DELETED. ACCORDINGLY , THE GROUND NO. 1 OF THE APPEAL IS ALLOWED. 12. GROUND NO. 2 OF THE APPEAL BEING GENERAL IN NATURE NOT REQUIRED TO ADJUDICATE UPON BY US. 13. IN THE RESULT , THE APPEAL OF THE ASSESSEE IS ALLOWED. THE DECISION IS PRONOUNCED IN THE OPEN COURT ON 1 4 T H JUNE , 2016 . S D / - S D / - ( H.S. SIDHU ) ( O.P. KANT ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 1 4 T H JUNE , 2016 . LAPTOP / - COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ASST. REGISTRAR, ITAT, NEW DELHI