SHRI BHAIRU LAL YADAV, Jaipur V. ITO 1, BEHROR

ITA 143/JPR/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7793 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 29-11-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 13-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Unexplained investment
• Section: 131; 68; 69; 145

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH : JAIPUR BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NO.143/JP/2012 (ASSESSMENT YEAR :2006-07) SHRI BHAIRU LAL YADAV, VS. ITO, WARD BEHROR, PROP. M/S. JYOTI STONE CRUSHER, ALWAR. C/O CA ANIL GOYAL, 1 ST FLOOR, SHRI GOVERDHAN PLAZA, KOTPULI, JAIPUR 303 108. (PAN : AAPPY2735D) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI MAHENDRA GARGIEYA, ADVOCATE REVENUE BY : SHRI RAJESH OJHA, ADDL.CIT DATE OF HEARING : 26.11.2014 DATE OF PRONOUNACEMENT : 02.12.2014 O R D E R PER B.C. MEENA, ACCOUNTANT MEMBER : T HIS APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE CIT (APPEALS), ALWAR DATED 05.10.2011 FOR THE ASSESSMEN T YEAR 2006-07. 2. THE ASSESSEE IS AN INDIVIDUAL DERIVING INCOME FR OM STONE CRUSHERS, JCB MACHINE AND AGRICULTURE. THE RETURN OF INCOME WAS FILED DECLARING A LOSS OF 2 ITA NO.143/JP/2012 RS.4,88,517/- AND AGRICULTURAL INCOME AT RS.61,500/ - ON 31.07.2006. FOR THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS SHOWN TO TAL SALES OF RS.8,89,500/- IN STONE CRUSHER AND DECLARED GROSS PROFIT AT RS.4,17, 849/-. THE INCOME FROM JCB MACHINE WAS DECLARED AT RS.1,45,000/-. THE AO MADE VARIOUS ADDITIONS WHICH HAS BEEN CONFIRMED BY THE CIT (A) AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE US IN THE FOLLOWING GROUNDS :- 1. THE LEARNED AO HAS ERRED IN MAKING ADDITION OF RS.1,53,977/- ON ACCOUNT OF TRADING ADDITION AND CI T (APPEAL) HAS ERRED IN CONFIRMING THE SAME. 2. THE LEARNED AO HAS ERRED IN MAKING ADDITION U/S 68 OF RS.13,00,000/- AND CIT (APPEAL) HAS ERRED IN CONFIR MING THE SAME. 3. THE LEARNED AO HAS ERRED IN MAKING ADDITION OF RS.1,23,700/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN PURCHASE OF FIXED ASSETS AND CIT (APPEAL) HAS ERRED IN CONFIRMING THE SAME. 4. THE LEARNED AO HAS ERRED IN TREATING AGRICULTURA L INCOME OF RS.31,200/- AS NON-AGRICULTURAL INCOME OUT OF TO TAL DECLARED AGRICULTURAL INCOME OF RS.61,200/- AND CIT (APPEAL) HAS ERRED IN CONFIRMING THE ACTION OF AO. 3 ITA NO.143/JP/2012 5. THE LEARNED AO HAS ERRED IN MAKING ADDITION OF RS.24,000 /- ON ACCOUNT OF LOW WITHDRAWS FOR HOUSE HOLD EXPENSE AND CIT (APPEAL) HAS ERRED IN CONFIRMING TH E SAME. 6. ANY OTHER GROUND OF APPEAL AT THE TIME OF HEARIN G. 3. IN THE GROUND NO.1, THE ISSUE INVOLVED IS SUSTAI NING THE ADDITION OF RS.1,53,977/- MADE ON ACCOUNT OF THE PROVISIONS OF SECTION 145(3) OF THE INCOME-TAX ACT, 1961. 4. AS PER AO, THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCOUNTS MAINTAINED FOR STONE CRUSHER AND JCB MACHINE. THE ASSESSEE WAS ALSO ASKED TO PRODUCE BILLS AND VOUCHERS OF THE EXPENSES. THE AS SESSEE HAS NOT PRODUCED BOOKS OF ACCOUNTS, BILLS AND VOUCHERS. IN THE ABSE NCE OF THE SAME, THE TRADING RESULT WAS REJECTED AND NET INCOME WAS ESTIMATED AT RS.2 LACS ON BOTH THE COUNTS (STONE CRUSHER AND JCB MACHINE) AND THE DIFFERENCE OF RS.1,53,977/- (RS.2,00,000/- MINUS RS.46,003/-) WAS ADDED IN THE INCOME OF THE ASSESSEE. THE CIT (A) CONFIRMED THE ADDITION. 5. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ASSESSEE HAS DECLARED GROSS PROFIT OF RS.4,17,839/- ON SALE OF RS.8,89,50 0/- OF STONE CRUSHER WHICH GIVES GROSS PROFIT @ 46.97%. IN THE IMMEDIATE PREC EDING YEAR, THE GROSS PROFIT RATE WAS 10.61% ONLY ON THE TURNOVER OF RS.3,73,796 /-. THIS FACT ITSELF SHOWS THAT THERE WAS A HUGE INCREASE IN THE GROSS PROFIT IN THE YEAR UNDER CONSIDERATION. THEREFORE, IN OUR CONSIDERED VIEW, THERE WAS NO JUS TIFICATION IN INVOKING THE 4 ITA NO.143/JP/2012 PROVISIONS OF SECTION 145 (3) OF THE ACT. FURTHER, THE ASSESSEE HAS DECLARED NET INCOME OF RS.1,45,000/- FROM JCB MACHINE WORK AND T HE JCB MACHINE WAS PURCHASED IN THE MONTH OF JANUARY, 2006. THUS, THE MACHINE WORKS ONLY FOR THREE MONTHS. THIS INCOME WAS DECLARED AFTER CLAIM ING REPAIR EXPENSES OF RS.88,694/- AND INTEREST ON LOAN OF RS.4,18,459/-. THEREFORE, IN OUR CONSIDERED VIEW, WE FIND NO JUSTIFICATION IN REJECTING THE INC OME DECLARED BY THE ASSESSEE. WE ALLOW GROUND NO.1 OF THE ASSESSEES APPEAL. 6. THE SECOND GROUND IN THE APPEAL IS SUSTAINING TH E ADDITION OF RS.13 LACS MADE U/S 69 OF THE ACT. 7. THE ASSESSEE HAS SHOWN LOAN OF RS.12 LACS FROM S HRI SATYA PAL AND RS.1 LAC FROM SMT. BADAMI DEVI. THE AO MADE AN ADDITION ON THE BASIS THAT ASSESSEE HAS NOT PROVED THE GENUINENESS OF TRANSACT ION, CREDITWORTHINESS OF CREDITORS AND IDENTITY OF THE CREDITORS IN BOTH THE CASES. THE CIT (A) HAS CONFIRMED THE ADDITION. 8. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. LD. AR SUBMITTED THAT ASSESSEE HAS SUBMITTED ADDRESS OF SHRI SATYA PAL AN D ALSO COPY OF BANK ACCOUNT BEFORE THE AO AND ASSESSEE HAS ALSO REQUESTED THE A O TO CALL SHRI SATYA PAL AS HE WAS NOT COOPERATING WITH THE ASSESSEE. LD. AR S UBMITTED THAT AO HAS FAILED TO EXERCISE THE POWERS AVAILABLE IN LAW FOR MAKING THE ATTENDANCE OF SHRI SATYA PAL. THE ASSESSEE SUBMITTED THE BANK STATEMENT OF SHRI SATYA PAL WHEREIN RS.12 LACS HAVE BEEN DEBITED. IT IS ALSO OBSERVED THAT T HERE WERE VERY FEW AMOUNT OF 5 ITA NO.143/JP/2012 CASH DEBITED, THEREFORE, IT CANNOT BE SAID THAT THE CREDIT HAS COME OUT OF THE CASH DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR. IN OUR CONSIDERED VIEW THE ASSESSEE HAS DISCHARGED TO EXPLAIN THE IDENTITY AND CREDITWORTHINESS OF THE PERSON AND SINCE THE AMOUNT HAS BEEN RECEIVED THROU GH THE BANKING CHANNELS AND NOT COOPERATING BY THE CREDITOR, SHALL NOT PUT ASSESSEE IN A DIFFICULT SITUATION. SHRI SATYA PAL HAS ACCEPTED THE LOAN GIVEN TO ASSES SEE IN HIS STATEMENT RECORDED DURING THE REMAND PROCEEDINGS, COPY OF REMAND REPORT IS PLACED AT PAGES 24-25 OF THE PAPER BOOK. AS PER AO, SHRI SATYA PAL HAS ACCE PTED THAT HE HAS GIVEN THE ADVANCE TO THE ASSESSEE IN HIS STATEMENT RECORDED U/S 131 O N 01.11.2010. SHRI SATYA PAL IS A REGULAR INCOME-TAX ASSESSEE IN RANGE 3, JAIPUR AND HIS PERMANENT ACCOUNT NUMBER WAS GIVEN AS AOTPS4498K. HE HAS ALSO SUBMIT TED THE COPY OF HIS INCOME TAX RETURNS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08. IN VIEW OF THESE FACTS, WE FIND THAT THE CIT (A) WAS NOT JUSTI FIED IN SUSTAINING THE ADDITION IN RESPECT OF CREDITOR, SHRI SATYA PAL WHEN HIS IDE NTITY IS PROVED AND CREDITWORTHINESS AND GENUINENESS OF TRANSACTION IS ESTABLISHED. 8.1 THE ASSESSEE HAS ALSO RECEIVED RS.1 LAC FROM SM T. BADAMI DEVI. SMT. BADAMI DEVI IS THE MOTHER OF THE ASSESSEE. SHE HAS EXPIRED. THE FATHER OF THE ASSESSEE, WHO IS THE HUSBAND OF SMT. BADAMI DEVI, H AS FILED AN AFFIDAVIT STATING THAT A CHEQUE WAS ISSUED BY HIS WIFE FROM HER SAVIN G BANK ACCOUNT TO THE ASSESSEE. THE REVENUE AUTHORITIES HAVE FAILED TO C ONTROVERT THE FACTS RECORDED IN THE AFFIDAVIT. IN VIEW OF THESE FACTS, WE FIND THA T THE ASSESSEE WAS ABLE TO ESTABLISH THE GENUINENESS OF TRANSACTION WITH SMT. BADAMI DEVI. THE IDENTITY 6 ITA NO.143/JP/2012 WAS ALSO ESTABLISHED. SHE HAS GIVEN THE AMOUNT FRO M HER BANK ACCOUNT AND THE SOURCE WAS ALSO ESTABLISHED. IN VIEW OF THESE FACT S, THIS ADDITION DOES NOT ALSO DESERVE TO BE SUSTAINED. WE ORDER ACCORDINGLY. 8.2 IN VIEW OF THE ABOVE, GROUND NO.2 OF THE ASSESS EES APPEAL IS ALLOWED. 9. IN THE GROUND NO.3, THE ISSUE IS REGARDING SUSTA INING THE ADDITION OF RS.1,23,700/- MADE U/S 69 OF THE ACT IN RESPECT OF PURCHASE OF CERTAIN MACHINERY. 10. THE ASSESSEE HAS MADE TOTAL INVESTMENT OF RS.26 ,57,500/- AND OUT OF WHICH, RS.14 LACS WERE FINANCED BY ICICI BANK LTD.. FURTHER, RS.7,33,800/- WERE PAID BY CHEQUES ON VARIOUS DATES WHICH WERE RE FLECTED IN THE BANK STATEMENT OF THE ASSESSEE AND THESE SOURCE OF INVES TMENTS WERE ACCEPTED BY THE AO. RS.5,23,700/- WERE PAID OUT OF CASH WITHDRAWAL S BY THE ASSESSEE. THE AO ACCEPTED THE CASH WITHDRAWALS OF RS.3,50,000/- AND RS.50,000/- MADE ON 01.10.2005 AND 06.10.2005 RESPECTIVELY. HOWEVER, THE AO DID NOT CONSIDER WITHDRAWAL OF RS.1 LAC WHICH WAS ALSO USED FOR ADVA NCING THE BOOKING OF TRANSFORMERS. REMAINING INVESTMENT OF RS.23,700/- WAS EXPLAINED OUT OF THE CASH ACCRUALS FROM THE REGULAR BUSINESS OF THE ASSE SSEE. 11. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE REVENUE HAS ACCEPTED THE CASH WITHDRAWALS OF RS.4 LACS TO EXPLAIN THE INVEST MENT OF RS.5,23,700/- IN CASH OUT OF THE TOTAL INVESTMENT OF RS.27,57,500/-. THE RE WAS ALSO OTHER CASH WITHDRAWAL OF RS.1 LAC. THIS AMOUNT WAS USED TO EX PLAIN THE ADVANCE BOOKING 7 ITA NO.143/JP/2012 OF TRANSFORMERS AND REMAINING AMOUNT OF RS.23,700/- WAS EXPLAINED BY CASH ACCRUALS FROM REGULAR BUSINESS OF THE ASSESSEE. SI NCE THERE WAS CASH WITHDRAWAL FROM ASSESSEES BANK ACCOUNT TO EXPLAIN THE SOURCE OF INVESTMENT OF RS.1 LAC, THEREFORE, WE FIND FORCE IN THE CONTENTION OF THE A SSESSEE. ASSESSEE WAS ALSO HAVING SUFFICIENT AMOUNT TO EXPLAIN INVESTMENT OF R S.23,700/-, THEREFORE, WE HOLD THAT THE ASSESSEE WAS HAVING SUFFICIENT FUND T O EXPLAIN THE INVESTMENT OF RS.1,23,700/- FOR THE PURCHASE OF THE MACHINERY. I N VIEW OF THESE FACTS, WE ALLOW THIS GROUND OF ASSESSEES APPEAL ALSO. 12. GROUND NO.4 IS REGARDING THE ADDITION OF RS.31, 200/- MADE OUT OF THE AGRICULTURAL INCOME. 13. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE AO MADE THIS ADDITION WITHOUT ANY JUSTIFICATION. THIS ADDITION WAS MADE ONLY ON THE ESTIMATE BASIS. THE ASSESSEE HAS SUBMITTED PROOF OF OWNERSHIP OF LA ND AND PROOF OF GROWING THE CROP ON THIS LAND. THE ASSESSEE BELONGS TO FARMER COMMUNITY AND FAMILY MEMBERS ARE ACTIVELY ENGAGED IN THE AGRICULTURAL AC TIVITY. NORMALLY REGULAR BOOKS OF ACCOUNTS ARE NOT MAINTAINED FOR THE SALE O F AGRICULTURAL CROP. CONSIDERING ALL THESE FACTS, WE HOLD THAT THIS ADDI TION OF RS.31,200/- WAS UNCALLED FOR. THEREFORE, WE DELETE THIS ADDITION. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 8 ITA NO.143/JP/2012 14. THE FIFTH GROUND OF ASSESSEES APPEAL IS ABOUT MAKING THE ADDITION OF RS.24,000/- ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS WHICH HAS BEEN SUSTAINED BY THE CIT (A). 15. WE HAVE HEARD BOTH THE SIDES ON THE ISSUE. THE ASSESSEE LIVES IN A SMALL TOWN. ASSESSEE HAS NOT PAID ANY RENT FOR HOUSING D URING THE RELEVANT PERIOD. IT IS ALSO STATED THAT ASSESSEE HAD NO SOCIAL FUNCTION DURING THE RELEVANT FINANCIAL YEAR. IN VIEW OF THESE FACTS, THE WITHDRAWAL OF RS .48,000/- FOR HOUSEHOLD EXPENSES APPEARS TO BE QUITE REASONABLE FOR THE YEA R UNDER CONSIDERATION. MOREOVER, THIS ADDITION WAS MADE BY THE AO PURELY O N THE ESTIMATE BASIS WITHOUT ANY EVIDENCE. IN VIEW OF THESE FACTS AND A LSO CONSIDERING THE DECISION OF ITAT, JODHPUR BENCH IN THE CASE OF BABULAL CHACH AN VS. ITO REPORTED IN 34 TAX WORLD 141, WE FIND NO MERITS IN THIS ADDITION A ND WE DIRECT TO DELETE THE SAME. THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 16. GROUND NO.6 IS GENERAL IN NATURE AND DOES NOT R EQUIRE ANY ADJUDICATION. 17. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 2 ND DAY OF DECEMBER, 2014. SD/- SD/- (SHAILENDRA KUMAR YADAV) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED : THE 2 ND DAY OF DECEMBER, 2014/TS. 9 ITA NO.143/JP/2012 COPY FORWARDED TO: 1. SHRI BHAIRU LAL YADAV 2. ITO, WARD BEHROR, ALWAR. 3.CIT 4.CIT(A) 5.DR, ITAT GUARD FILE (ITA NO.143/JP/2012) AR, ITAT NEW DELHI.