Shri Sajid Mian Nasir, Muzaffarnagar V. ACIT, Muzaffarnagar

ITA 1413/DEL/2011

• Counselvise Citation: 141320114 RSA 2011
• Duration Of Justice: 3 year(s) 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 15-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 21-03-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G , NEW DELHI) BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1413 /DEL/2011 ASSESSMENT YEAR : 2006-07 SHRI SAJID MIAN NASIR, VS. ACIT, CIRCLE 2, S/O RASHEED AHMAD MUZAFFARNAGAR 786/1-C, YOGENDERPURI, MUZAFFARNAGAR GIR / PAN:AAYPN0030H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI ANKIT GUPTA, ADV. RESPONDENT BY : SHRI BRR KUMAR, SR. DR ORDER PER T.S. KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) DATED 16.12.2010. THE ASSESSEE HAS TAKEN 8 GROUNDS OF APPEAL. HOWEVER, THE CRUX OF GRIEVANCE OF THE ASSESSEE IS THE ACTION OF LD. CIT(A) BY WHICH HE HAD PARTIALLY UPHELD THE AGRICULTURAL INCOME AS INC OME FROM OTHER SOURCES. THE SECOND GRIEVANCE IS THE ACTION OF LD. CIT(A) BY WHICH HE HAS UPHELD THE ADDITION OF RS.80,000/- ON ACCOUNT OF HOUSE HOL D EXPENSES. THE ASSESSEE IS FURTHER AGGRIEVED WITH THE CONFIRMATION OF ADDIT ION OF RS.3.73 LACS ON ACCOUNT OF IMPREST AMOUNT RECEIVED FROM M/S. HANS I SPAT LTD. WHEREIN THE ASSESSEE WAS A DIRECTOR. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL DERIVING INCOME FORM SHARES, SALARY, TRADING, INTER EST AND AGRICULTURE. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DU RING ASSESSMENT PROCEEDINGS, THE A.O. OBSERVED THAT THE ASSESSEE HA D DECLARED AGRICULTURAL INCOME AMOUNTING TO RS.55,000/- AS AGAINST RS.20,00 0/- DECLARED IN THE ITA NO.1413/DEL/2011 2 IMMEDIATELY PRECEDING YEAR. THEREFORE, ASSESSEE WA S REQUIRED TO SUBMIT THE COPIES OF KHASRA AND KHATAUNI. THE ASSESSEE DID NO T SUBMIT ANY EVIDENCE. THEREFORE, THE A.O. REJECTED THE CLAIM OF THE ASSES SEE FOR AGRICULTURAL INCOME AND TREATED THE AMOUNT AS INCOME FROM OTHER SOURCES . 2.1 THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HAD DECLARED HOUSE HOLD WITHDRAWALS OF ONLY RS. ONE LAC FIFTY THOUSAND WHER EAS THE ASSESSEE HAD 6 CHILDREN AND WIFE OUT OF WHICH 2 CHILDREN WERE SCHO OL GOING AND THE ASSESSEE HAD SUBMITTED THAT HE HAD SPENT AN AMOUNT OF RS.1 LAC ON THE FEE OF CHILDREN. THE ASSESSEE FURTHER EXPLAINED THAT HIS WIFE HAD ALSO CONTRIBUTED RS.50,000/- TOWARDS HOUSEHOLD EXPENSES. HOWEVER, T HE A.O. ESTIMATED THE MONTHLY EXPENSES @ RS.15,000/- BEING RS.1.80 LACS A NNUALLY AND AFTER GIVING CREDIT FOR RS.1,00,000/- CONTRIBUTED BY ASSE SSEE AND HIS WIFE, MADE AN ADDITION OF RS.80,000/- BEING THE DIFFERENCE BET WEEN ESTIMATED HOUSE HOLD EXPENSES AND ACTUAL WITHDRAWAL MADE BY THE ASS ESSEE AND HIS WIFE. 2.2 THE A.O. FURTHER OBSERVED THAT THE ASSESSEE HA D DEPOSITED RS.3.73 LACS IN HIS BANK ACCOUNT THEREFORE, THE ASSESSEE WA S SHOW CAUSED TO EXPLAIN THE SAME. THE ASSESSEE SUBMITTED THAT THE AMOUNT W AS RECEIVED FROM M/S. HANS ISPAT LTD. AS IMPREST AMOUNT. THE A.O. OBSERV ED THAT THE ASSESSEE HAD NOT FILED COPY OF BALANCE SHEET AND THEREFORE, THE FACTS WERE NOT VERIFIABLE. IN VIEW OF THE ABOVE, THE A.O. MADE ADDITION OF RS. 3.73 LACS AS INCOME FROM UNEXPLAINED SOURCES. AGGRIEVED, THE ASSESSEE FILED APPEAL BEFORE LD. CIT(A) . HOWEVER, LD. CIT(A) DID NOT AGREE WITH TH E CONTENTION OF THE ASSESSEE AND UPHELD THE ADDITIONS MADE BY THE A.O. BY HOLDING AS UNDER: (I) REGARDING AGRICULTURAL INCOME: THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT, REMAND REPORT OF THE A.O. AND APPELLANT'S REJOINDER HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE APPE LLANT HAS FURNISHED ITA NO.1413/DEL/2011 3 COPY OF KHASRA AND KHATAUNI AND TOTAL AGRICULTURAL HOLDINGS ARE 8.70 BIGHA IN FASLI YEAR 1414 WHICH WAS PURCHASED BY THE APPELLANT. IT IS OBSERVED THAT DURING THE YEAR, THE APPELLANT WAS HA VING ONLY 3.65 BIGHA OF LAND AND LARGER CHUNK OF LAND WAS PURCHASE D IN THE YEAR 2007. THE APPELLANT'S ARGUMENT THAT DUE TO GENERAL PRACTICE OF TEHSIL DEPARTMENT, THE NAME OF THE APPELLANT WAS NOT ENTER ED IN ITS RECORD BUT WAS SUBSEQUENTLY ENTERED IN THE NEXT YEAR DOES NOT HELP AS 5.05 BIGHA LAND WAS PURCHASED AT A LATER DATE. THE APPEL LANT HAS DECLARED AGRICULTURAL INCOME RS.20,000/- IN A.Y. 2005-06 WHI CH WAS CONSIDERED REASONABLE CONSIDERING THE THEN PREVAIL ING AGRICULTURAL RATES OF THE REGION. IN SUCH CIRCUMSTANCES, IT WOUL D BE REASONABLE AND JUST TO ESTIMATE THE AGRICULTURAL INCOME AT RS.20,0 00/-. THE DISALLOWANCE OF RS.35,000/- (RS.55,000 - RS.20,000) OUT OF AGRICULTURAL INCOME AND TREATING IT AS INCOME FROM UNDISCLOSED SOURCES IS HEREBY UPHELD. GROUND NO.2 IS PARTLY ALL OWED. (II) REGARDING HOUSE HOLD WITHDRAWAL: THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT HAS BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THE APPELLANT IS CHANGING HIS STAND FROM TIME TO TIME. INITIALLY, T HE PLEA TAKEN THAT ONLY HUSBAND AND WIFE CONTRIBUTE TOWARDS HOUSEHOLD EXPENSES HAS BEEN MODIFIED WITH MOTHER'S WITHDRAWALS. FURTHER, T HE FACT THAT SCHOOL FEES IS ALSO CONTRIB THE APPELLANT'S WIFE AND MOTHE R HAS NEITHER BEEN CONSIDERED BY THE A.O. NOR THE SAME WAS DISCLOSED B Y THE APPELLANT IN THE INITIAL STAGE. TAKING THE OVERALL POSITION OF T OTAL WITHDRAWAL OF RS.2,45,000/- OUT OF WHICH - RS.1,49,000/- SPENT ON ACCOUNT OF SCHOOL FEE ONLY; IT IS OBSERVED THAT THE AVAILABLE SUM WIT H THE APPELLANT REMAINED LESS THAN RS.1 LAC WHICH SEEMS TO BE INSUF FICIENT LOOKING TO STANDARD OF LIVING AS REFLECTED IN THE KIND OF EDUC ATION BEING IMPARTED TO THE CHILDREN. THEREFORE, THE A.O.'S ESTIMATION I S FULLY JUSTIFIED AND. ADDITION OF RS.80,000/- IS HEREBY SUSTAINED. GROUND NO.3 IS DISMISSED. (III) REGARDING DEPOSIT IN BANK ACCOUNT: THE FACTS OF THE CASE AS WELL AS SUBMISSIONS MADE BY THE APPELLANT HAVE BEEN CAREFULLY CONSIDERED. IT IS OBSERVED THAT THERE IS CONTRADICTION IN APPELLANTS SUBMISSIONS. FROM THE ALLEGED COY OF ACCOUNT OF M/S. HANS ISPAT LTD. BHUJ, THE BALANCE A S ON 31-03-2006 ITA NO.1413/DEL/2011 4 REMAINED RS.3,73,0001- BUT IN HIS REJOINDER THE BAL ANCE IS STATED TO BE NIL FOR A.YS. 2006-07, 2007-08, 2008-09, 2009-10. I MPREST ACCOUNT HAS TO BE SETTLED BEFORE THE CLOSURE OF ACCOUNTING YEAR OR ELSE THE SAME SHOULD HAVE BEEN REFLECTED IN THE BALANCE SHEE T OF THE COMPANY. THE APPELLANT HAS NOT PRODUCED THE BALANCE SHEET OF THE COMPANY FOR SHOWING THE BALANCES AGAINST THE APPELLANT IN COMPA NY'S BOOKS OF ACCOUNT AT THE END OF THE ACCOUNTING YEAR. MOREOVER , MONEY SO RECEIVED BY THE APPELLANT IS STATED TO HAVE BEEN SP ENT ON HIS OWN MEDICAL TREATMENT WHICH IS PERSONAL LIABILITY OF TH E DIRECTOR APPELLANT AN IMPREST ACCOUNT IS NOT MEAN FOR MEETING OUT PERS ONAL EXPENSES. FURTHER, FROM WHERE THE APPELLANT MADE THE PAYMENT TO HIS COMPANY HAS NOT BEEN MADE CLEAR EITHER BEFORE THE A.O. OR I N THE APPELLATE PROCEEDINGS. MOREOVER, MONEY IS STATED TO HAVE BEEN RECEIVED IN CASH WHICH IS NOT OPEN FOR CROSS-VERIFICATION. IN SUCH C IRCUMSTANCES, THE CASH CREDIT REMAINS UNEXPLAINED AND A.O. WAS JUSTIF IED IN MAKING ADDITION OF RS.3,73,000/- IN APPELLANT'S HAND WHICH IS HEREBY SUSTAINED. GROUND NO.4 IS DISMISSED.' 2.3 AGGRIEVED, HT ASSESSEE IS IN APPEAL BEFORE US. 3. AT THE OUTSET, LD. A.R. SUBMITTED THAT EARLIER, THE ASSESSEE WAS HAVING 5.6 BIGHAS OF LAND WHICH HAD BEEN INCREASED TO 8.07 BIGHAS THE ASSESSEE HAD PURCHASED FRESH AGRICULTURAL LAND AND IN THIS RESPE CT, OUR ATTENTION WAS INVITED TO PAPER BOOK PAGE 27-50 WHERE A COPY OF SA LE DEED ALONG WITH KHASRA AND KHATAUNI WAS PLACED. IT WAS SUBMITTED T HAT THE A.O. AND CIT(A) HAD REJECTED THE CLAIM OF THE AGRICULTURAL INCOME H OLDING THAT THE NAME OF THE ASSESSEE WAS NOT ENTERED IN KHASRA AND KHATAUNI . IT WAS SUBMITTED THAT DUE TO COMMON PRACTICE PREVAILING, THE NAME OF THE PURCHASER IN KHASRA RECORD IS ENTERED IN THE NEXT YEAR FROM THE DATE OF PURCHASE. HOWEVER, THE FACT REMAIN THAT ASSESSEE HAD EARNED EXTRA AGRICULT URAL INCOME FROM THIS LAND. 3.1 REGARDING THE ADDITION ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWAL, LD. A.R. SUBMITTED THAT MOTHER OF THE ASSESSEE ALSO CON TRIBUTED TOWARDS HOUSE ITA NO.1413/DEL/2011 5 HOLD EXPENSE AND KEEPING IN VIEW THE SIMPLE LIFESTY LE, THE ASSESSEES TOTAL WITHDRAWAL OF RS.2.45 LACS WERE SUFFICIENT TO MEET THE FAMILY REQUIREMENT INCLUDING SCHOOL FEES OF CHILDREN AMOUNTING TO RS. ONE LAC. 3.2 AS REGARDS THE 3 RD ADDITION OF RS.3.73 LACS, LD. A.R. INVITED OUR ATTENTION TO PAPER BOOK PAGES 51-54 WHERE A COPY OF ACCOUNT OF ASSESSEE IN THE BOOKS OF ACCOUNT OF M/S. HANS ISPAT LTD. FOR TH E YEARS STARTING FORM 01.04.2005 TO 31.03.2009 WAS PLACED. IT WAS SUBMIT TED THAT BY 31.03.2009 THE WHOLE OF THE IMPREST WAS REPAID AND THEREFORE, ADDITION ON THIS ACCOUNT WAS NOT WARRANTED. IT WAS SUBMITTED THAT LD. CIT(A ) HAS MADE A WRONG FINDING OF FACT THAT BALANCE IN 31.03.2006, 30.03.2 007 WAS NIL. 4. LD. D.R. ON THE OTHER HAND HEAVILY RELIED UPON T HE ORDERS OF AUTHORITIES BELOW. IN RESPECT OF ADDITION ON ACCOU NT OF HOUSE HOLD EXPENSES, LD. D.R. SUBMITTED THAT IN FACT FAMILY CONSISTED OF 9 MEMBERS AND MAJOR WITHDRAWALS WERE FOR SCHOOL FEES AND THE ASSESSEE H AS BEEN CONTINUOUSLY CHANGING HIS STAND REGARDING EXPENSES AND, THEREFOR E, LD. CIT(A) HAS RIGHTLY CONFIRMED THE ADDITION. AS REGARDS AGRICULTURAL IN COME, LD. D.R. SUBMITTED THAT INCOME WAS JUST ESTIMATION AND NO PROOF WAS SU BMITTED WITH RESPECT TO SOWING OF CROPS AND SALE OF CROP. AS REGARDS THE 3 RD ADDITION OF RS.3.73 LACS, LD. D.R. SUBMITTED THAT ASSESSEE HAS STATED THAT HE HAD RECEIVED THE AMOUNT FROM COMPANY AS IMPREST WHEREAS NO EVIDENCE WAS FIL ED WITH RESPECT TO CASH IN HAND OF THE COMPANY. THEREFORE, LD. CIT(A) HAS RIGHTLY UPHELD THE ADDITION. 5. WE HAVE HEARD RIVAL PARTIES AND HAVE GONE THROUG H THE MATERIAL PLACED ON RECORD. AS REGARDS THE AGRICULTURAL INCOME, WE FIND THAT THE ASSESSEE HAD PURCHASED A NEW PIECE OF LAND ON 08.07.2005 AND COP Y OF SALE DEED IS PLACED AT PAPER BOOK PAGES 27-50. THE NEW AGRICULTURAL LA ND IS MEASURING 5.05 ITA NO.1413/DEL/2011 6 BIGHAS WHEREAS ORIGINALLY ASSESSEE WAS HOLDING ONLY 3.65 BIGHAS OF AGRICULTURAL LAND. ON THE OLD LAND HOLDING THE ASS ESSEE HAD DECLARED AGRICULTURAL INCOME OF RS.20,000/- WHICH WAS BEING ACCEPTED BY THE DEPARTMENT. THE AUTHORITIES BELOW DID NOT ACCEPT T HE AGRICULTURAL INCOME FROM NEW LAND WHICH HE HAD PURCHASED ON 08.07.2005 DUE TO THE FACT THAT THE NAME OF THE ASSESSEE WAS NOT ENTERED IN KHASRA/ KHATAUNI FOR FASLI YEAR 1412 AND 1413. HOWEVER, THE FACT REMAINS THAT THE ASSESSEE HAD PURCHASED NEW AGRICULTURAL LAND WHICH IS MEASURING 5.05 BIGHA S AND WHICH WAS MORE THAN 3.65 BIGHAS ORIGINALLY HELD BY ASSESSEE. BY P URCHASING THIS NEW AGRICULTURAL LAND, ADDITIONAL INCOME OF RS.35,000/- COULD HAVE BEEN EARNED FROM THIS LAND KEEPING IN VIEW OF THE FACT THAT FRO M A LAND MEASURING 3.65 BIGHAS AGRICULTURAL INCOME OF RS.20,000/- WAS BEING ACCEPTED. IN VIEW THE ABOVE GROUND NO.1 OF THE APPEAL IS ALLOWED. 5.1 AS REGARDS ADDITION ON ACCOUNT OF HOUSE HOLD E XPENSES, WE FIND THAT LD. CIT(A) HAS PASSED A VERY REASONED ORDER AND WE DO NOT FIND ANY REASON TO INTERFERE IN THE SAME. IN VIEW OF THIS, GROUND NO.2 OF THE APPEAL IS DISMISSED. 5.2 AS REGARDS GROUND NO.3 REGARDING RECEIPT OF RS .3.73 LACS FROM M/S. HANS ISPAT LTD. WE FIND THAT ASSESSEE HAS FILED COP Y OF ACCOUNT WITH THE COMPANY FOR THE AY 2005-06, TO 2008-09 WHICH IS PLA CED AT PAPER BOOK PAGES 51-54. THESE STATEMENTS WERE FILED BEFORE T HE A.O. IN REMAND PROCEEDINGS BUT THE A.O. DID NOT ACCEPT THE SAME ON THE BASIS THATS THE ASSESSEE HAD FAILED TO CORRELATE THE EXPENDITURE AN D CREATION OF IMPREST ACCOUNT AND HAD ALSO FAILED TO JUSTIFY AS TO WHAT W AS THE URGENCY / REQUIREMENT TO CREATE SUCH IMPREST. HE DID NOT COM MENT ON THE SUBMISSIONS OF THE ASSESSEE THAT THE AMOUNT WAS RECEIVED FROM S UCH COMPANY. LD. ITA NO.1413/DEL/2011 7 CIT(A) HAS OBSERVED THAT THE ASSESSEE HAD SHOWN NI L BALANCE FOR AY 2006- 07 TO 2009-10 WHICH IS NOT A CORRECT FINDING AS, AS ON 31.03.2006, THE BALANCE OUTSTANDING REMAINED 3.73 LACS, WHICH IS AP PARENT FROM PAPER BOOK PAGE 51. SUCH LOAN WAS CARRIED FORWARD TO NEXT YE AR ALSO AND AFTER FRESH TRANSACTIONS IN SUCCEEDING YEARS, THE ACCOUNT WAS S ETTLED IN AY 2008-09. THE STATEMENTS ARE PLACED AT PAPER BOOK PAGES 52 TO 54. THE ASSESSEE HAD ALSO SUBMITTED PAN OF M/S. HANS ISPAT LTD. IN THE STATEM ENT OF ACCOUNT BUT THE A.O. FAILED TO VERIFY THE SAME EVEN DURING REMAND P ROCEEDINGS AND HAS NOT COMMENTED ADVERSELY ON THESE STATEMENTS. IN VIEW O F THE ABOVE, WE FIND THAT ASSESSEE HAD BEEN ABLE TO EXPLAIN THE SOURCE O F IMPREST ACCOUNT AND NO ADDITION WAS WARRANTED. 6. IN VIEW OF THE ABOVE, GROUND NO.3 IS ALLOWED. 7. IN VIEW OF THE ABOVE, APPEAL FILED BY THE ASSESS EE IS PARTLY ALLOWED. 8. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST OCT., 2014. SD./- SD./- ( I. C. SUDHIR) (T.S. KAPOO R) JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 31SST OCT., 2014 SP COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. BY ORDER (ITAT, NEW DELHI). ITA NO.1413/DEL/2011 8 S.NO. DETAILS DATE INITIALS DESIGNATION 1 DRAFT DICTATED ON SR. PS/PS 2 DRAFT PLACED BEFORE AUTHOR SR. PS/PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/AM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR. PS/PS 6 KEPT FOR PRONOUNCEMENT SR. PS/PS 7 FILE SENT TO BENCH CLERK 31/10/2014 SR. PS/PS 8 DATE ON WHICH THE FILE GOES TO HEAD CLERK 9 DATE ON WHICH FILE GOES TO A.R. 10 DATE OF DISPATCH OF ORDER