Sh. Sanjay Bansal, Chandigarh V. ITO, Chandigarh

ITA 147/CHANDI/2012

• Counselvise Citation: 14721514 RSA 2012
• Duration Of Justice: 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 06-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: PRIKSHIT AGGARWAL
• Keywords: Business income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A, CHANDIGARH BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO.147/CHD/2012 (ASSESSMENT YEAR : 2007-08) SH. SANJAY BANSAL, VS. THE INCOME TAX OFFICER, H.NO.577, SECTOR 8-B, WARD 1 (3), CHANDIGARH. CHANDIGARH. PAN: AAPPB5623B (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI PRIKSHIT AGGARWAL RESPONDENT BY : SHRI N.K.SAINI, DR DATE OF HEARING : 20.03.2012 DATE OF PRONOUNCEMENT : 26.03.2012 O R D E R PER SUSHMA CHOWLA, J.M, : THE APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), CHANDIGARH DA TED 19.12.2011 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORD ER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT). 2. THE ASSESSEE HAS RAISED VARIOUS GROUNDS OF APPEA L RELATING TO THE ADDITION OF RS.19,99,500/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD DEPOSITED SUM OF RS. 19,99,500/- ON VARIOUS DATES IN ITS SAVING BANK ACCOUNT WITH STATE BANK OF PATIALA, CHANDIGARH. THE DATE-WISE DETAILS OF THE BANK DE POSITS ARE TABULATED UNDER PARA 2 AT PAGE 2 OF THE ASSESSMENT ORDER. TH E PLEA OF THE ASSESSEE BEFORE THE ASSESSING OFFICER WAS THAT IT HAD WITHDR AWN A SUM OF RS.20 LACS ON 25.1.2006 FROM HIS SAVING BANK ACCOUNT WITH HDFC BANK, CHANDIGARH FOR THE PURPOSE OF PURCHASE OF PROPERTY AND STAMP PAPERS AND 2 OTHER INCIDENTAL EXPENSES. THE ASSESSEE PAID EARNE ST MONEY OF RS.10 LACS AT THE TIME OF EXECUTION OF AGREEMENT TO SELL. HOWEVER THE SELLER WAS UNABLE TO GET THE REGISTRATION OF THE SALE DEED IN TIME AS THE PROPERTY UNDER CONSIDERATION WAS OCCUPIED AND IT WAS AGREED BETWEEN THE PARTIES THAT THE VACANT POSSESSION OF THE PROPERTY WOULD BE HANDED OVER. THE SELLER REFUNDED THE EARNEST MONEY TO THE BUYER AND THE SAME WAS DEPOSITED IN THE BANK ACCOUNT ON VARIOUS DATES. TH E ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AS THE AGRE EMENT IN QUESTION WAS NOT REGISTERED WITH ANY AUTHORITY OR COURT AND FURT HER THE ASSESSEE WAS UNABLE TO PRODUCE THE PERSON I.E. THE SELLER FOR VE RIFICATION. IN VIEW THEREOF, THE ASSESSING OFFICER MADE THE ADDITION OF RS.19,99,500/-. 4. THE CIT (APPEALS) UPHELD THE ADDITION MADE BY TH E ASSESSING OFFICER HOLDING THAT THE GENUINENESS OF THE TRANSAC TION WAS IN DOUBT. 5. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF T HE CIT (APPEALS). THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT THAT FROM THE PERUSAL OF THE BANK STATEMENT PLACED AT PAGE 8 OF THE PAPER BO OK IT IS APPARENT THAT THE ASSESSEE HAD WITHDRAWN A SUM OF RS.20 LACS IN C ASH ON 25.1.2006. FURTHER REFERENCE WAS MADE TO THE CERTIFICATE OF TH E HDFC BANK PLACED AT PAGE 13 OF THE PAPER BOOK, UNDER WHICH IT IS CERTIF IED THAT SUM OF RS.20 LACS IN CASH WAS DEBITED TO THE SAVING ACCOUNT OF T HE ASSESSEE. THE LEARNED A.R. FOR THE ASSESSEE THEREAFTER REFERRED T O THE AGREEMENT TO SELL PLACED AT PAGES 5 AND 6 OF THE PAPER BOOK, UNDER WH ICH THE ASSESSEE HAD AGREED TO PURCHASE PROPERTY FOR CONSIDERATION OF RS .18 LACS, OUT OF WHICH RS.10 LACS WAS PAID AS EARNEST MONEY ON 27.1.2006. FURTHER THE BALANCE PAYMENT WAS TO BE MADE ON OR BEFORE 15.2.2006. HOW EVER, THE AGREEMENT BETWEEN THE PARTIES COULD NOT BE COMPLETE D AND THE SAME WAS CANCELLED. THE COPY OF CANCELLATION OF AGREEMENT I S PLACED AT PAGE 7 OF THE PAPER BOOK AND THE SAID SUM OF RS.10 LACS WAS R ETURNED TO THE 3 ASSESSEE. THE ASSESSEE HAS DEPOSITED THE SAID AMOU NT IN THE BANK AND AS THE SOURCE OF THE SAID DEPOSIT IS EXPLAINED, THERE IS NO MERITS IN ANY ADDITION. IT WAS FURTHER POINTED OUT BY THE LEARNE D A.R. FOR THE ASSESSEE THAT THE ONLY SOURCE OF THE ASSESSEE IS RENTAL INCO ME AND NO BUSINESS INCOME IS BEING EARNED BY THE ASSESSEE. FURTHER RE LIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE CHANDIGARH BENCH OF THE TRIBUNAL IN PANKAJ BANSAL VS. ITO IN ITA NO.781/CHD/2011 RELATING TO A SSESSMENT YEAR 2007-08 (DATE OF ORDER 21.9.2011). 6. THE LEARNED D.R. FOR THE REVENUE POINTED OUT THA T THE AGREEMENT TO SELL BETWEEN THE PARTIES WAS EXECUTED AND HAD TO BE COMPLETED WITHIN SHORT SPAN OF TIME, WHEREAS CANCELLATION OF AGREEME NT IS AFTER LONG GAP OF TIME. THE CONTENTION OF THE LEARNED D.R. FOR TH E REVENUE IN THIS REGARD WAS THAT IN THE ABSENCE OF ANY EXTENSION OF TIME FOR EXECUTION OF AGREEMENT TO SELL, THERE IS NO MERITS IN THE PLEA O F THE ASSESSEE. THE LEARNED D.R. FOR THE REVENUE FURTHER STATED THAT TH E ASSESSEE WAS ASKED TO PRODUCE THE PERSON BUT HE FAILED TO PRODUCE HIM BEFORE THE ASSESSING OFFICER. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE ON 25.1.2006 HAD WITHDRAWN A SUM OF RS.20 LACS FROM HIS SAVING BANK ACCOUNT WITH HDFC BANK, CHANDIGARH. TH E COPY OF THE BANK STATEMENT IS PLACED AT PAGE 8 OF THE PAPER BOOK. F URTHER THE BANK HAS CERTIFIED THAT THE SAID SUM OF RS.20 LACS IN CASH W AS PAID ON 25.1.2006 AGAINST TWO CHEQUES OF RS.10 LACS EACH TO THE ASSES SEE. THE CLAIM OF THE ASSESSEE IS THAT ON 27.1.2006 IT HAD ENTERED INTO A N AGREEMENT TO SELL FOR PURCHASE OF PROPERTY AT VILLAGE KARORAN, NAYAGAON. IN THE SAID AGREEMENT TO SELL IT IS NOTED THAT BOTH THE ROOMS A ND SHOPS BUILT ON THE PLOT OF LAND WERE OCCUPIED BY THE TENANTS. IT WAS AGREED BY THE PARTIES THAT THE SELLER WOULD GET THE SAID TENANTS VACATED AND HAND OVER THE 4 VACANT POSSESSION OF THE PROPERTY TO THE PURCHASER ON OR BEFORE THE REGISTRATION OF THE SALE DEED. THE TOTAL SALE CONS IDERATION AS PER THE AGREEMENT TO SELL WAS FIXED AT RS.18 LACS, OUT OF W HICH THE ASSESSEE (PURCHASER) PAID THE EARNEST MONEY OF RS.10 LACS IN CASH TO THE SELLER. THE BALANCE PAYMENT WAS TO BE MADE AT THE TIME OF E XECUTION OF SALE DEED AND THE LAST DATE FOR THE SAME WAS FIXED ON OR BEFORE 15.2.2006, ON WHICH DATE PHYSICAL VACANT POSSESSION OF THE PROPER TY HAD TO BE HANDED OVER. THE COPY OF THE AGREEMENT TO SELL IS PLACED AT PAGES 5 AND 6 OF THE PAPER BOOK. FURTHER CLAIM OF THE ASSESSEE IS THAT THE TENANTS OF THE SAID PROPERTY COULD NOT BE VACATED. THE AGREEMENT BETWE EN THE PARTIES WAS CANCELLED AND EARNEST MONEY OF RS.10 LACS WAS REFUN DED BY THE SELLER TO THE ASSESSEE. THE COPY OF CANCELLATION OF AGREEMEN T TO SELL IS PLACED AT PAGE 7 OF THE PAPER BOOK, UNDER WHICH SUM OF RS.5 L ACS WAS PAID ON 28.10.2006, RS.2.50 LACS ON 1.12.2006 AND THE BALAN CE RS.2.50 LACS ON 29.12.2006. 8. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD DEPOSITED CASH IN ITS BANK ACCOUNT WITH STATE BANK OF PATIALA , CHANDIGARH. THE AMOUNTS WERE DEPOSITED ON VARIOUS DATES TOTALING RS .19,99,500/-. THE COPY OF THE BANK STATEMENT PLACED AT PAGES 9 TO 12 OF THE PAPER BOOK. THE ASSESSEE HAS FURNISHED ON RECORD THE TABULATED DETAILS OF SOURCE OF DEPOSITS IN THE BANK ACCOUNT, WHICH ARE AS UNDER: DETAILS OF RECEIPT OF RS. 10.00 LACS FROM CANCEL LATION OF AGREEMENT TO SELL AND DEPOSIT INTO THE BANK DATE OF AMOUNT DATE OF AMOUNT RECEIPT FROM DEPOSIT INTO CANCELLATION BANK OF AGREEMENT TO SELL \ 28.10.2006 500000 01.11.2006 100000 02.11.2006 200000 5 03.11.2006 172500 25.11.2006 27500 01.12.2006 250000 01.12.2006 90000 02.12.2006 100000 05.12.2006 60000 29.12.2006 250000 01.01.2007 150000 02.01.2007 90000 06.01.2007 10000 DETAILS OF DEPOSIT OF BALANCE OF RS. 10.00 LACS INT O THE BANK AFTER CANCELLATION OF AGREEMENT TO SELL ON 28.10.2006 DATE OF AMOUNT DATE OF AMOUNT WITHDRAWLS DEPOSIT INTO FROM BANK BANK 25.01.2006 1000000 25.11.2006 372500 29.11.2006 100000 12.12.2006 100000 12.12.2006 250000 06.01.2007 59000 19.01.2007 42000 30.01.2007 38000 06.02.2007 38000 TOT//L 1000000 999500 9. THE FACTUM OF AVAILABILITY OF CASH OF RS.20 LACS IN HAND BY WAY OF WITHDRAWAL FROM THE SAVING BANK ACCOUNT OF THE ASSE SSEE STANDS ESTABLISHED BOTH FROM THE ENTRIES REFLECTED IN THE BANK STATEMENT AND THE CERTIFICATE OF HDFC BANK. THE ASSESSEE UNDOUBTEDLY WAS IN RECEIPT OF CASH OF RS.20 LACS WHICH WAS WITHDRAWN ON 25.1.2006 . THEREAFTER THE ASSESSEE CLAIMS TO HAVE ENTERED INTO AN AGREEMENT T O SELL UNDER WHICH IT HAD PURCHASED A PROPERTY FOR A TOTAL CONSIDERATION OF RS.18 LACS IN ADDITION THE COST OF STAMP DUTY AND OTHER CHARGES T OTALING RS.2 LACS. THE 6 ASSESSEE THUS HAD WITHDRAWN THE SAID CASH OF RS.20 LACS FROM HIS BANK ACCOUNT FOR THE PURPOSE OF INVESTMENT IN THE PROPER TY. HOWEVER, BECAUSE OF CERTAIN CIRCUMSTANCES THE DEAL COULD NOT BE FINA LIZED AND THE SAID CASH WAS AVAILABLE WITH THE ASSESSEE THOUGH ON A LATER D ATE I.E. IN THE MONTHS OF OCTOBER/NOVEMBER, 2006. THE ASSESSEE HAD ONLY P AID SUM OF RS.10 LACS AS EARNEST MONEY AND THE BALANCE SUM OF RS.10 LACS WAS ALWAYS AVAILABLE WITH THE ASSESSEE AS CASH IN HAND. NO EV IDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSING OFFICER TO SHOW THAT THE BALANCE SUM OF RS.10 LACS WHICH WAS USED BY THE ASSESSEE IN ANY OTHER INVESTMENT/EXPENDITURE. THE ASSESSEE BEFORE US IS EARNING INCOME ONLY FROM HOUSE PROPERTY AND WE FIND MERITS IN THE STAND OF THE ASSESSEE THAT THE CASH IN HAND DEPOSITED IN THE BANK ACCOUNT WAS OUT OF THE CASH AVAILABLE WITH THE ASSESSEE, WHICH IN TURN WAS WITH DRAWN FROM HIS BANK ACCOUNT ON 25.1.2006. MERELY BECAUSE THERE WAS CER TAIN DELAY IN DEPOSIT OF THE CASH IN HAND AS THE DISPUTE BETWEEN THE PART IES WAS NOT SETTLED, DOES NOT WARRANT THE REJECTION OF THE EXPLANATION O F THE ASSESSEE IN THIS REGARD. IN THE TOTALITY OF FACTS AND CIRCUMSTANCE S OF THE CASE WHERE THE SOURCE OF THE CASH DEPOSIT HAS BEEN EXPLAINED BY TH E ASSESSEE, ITS REDEPOSIT IN THE BANK ACCOUNT STANDS EXPLAINED AND THERE IS NO MERITS IN TREATING THE SAME AS INCOME OF THE ASSESSEE FROM UN DISCLOSED SOURCES. IN THIS REGARD WE FIND SUPPORT FORM THE ORDER OF THE T RIBUNAL IN THE CASE OF SH.PANKAJ BANSAL VS. ITO (SUPRA), IN THE FACTS OF W HICH A SUM OF RS.7.50 LACS WAS WITHDRAWN IN CASH ON 27.1.2006 FRO M THE SAVING BANK ACCOUNT AND WAS RE-DEPOSITED IN THE BANK ACCOUNT AF TER A DELAY OF THREE MONTHS. IN VIEW THEREOF, WE FIND NO JUSTIFICA TION IN THE IMPUGNED 7 ADDITION MADE IN THE HANDS OF THE ASSESSEE, HENCE, THE SAME IS DELETED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE TH US ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 26 TH DAY OF MARCH, 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 26 TH MARCH, 2012 *RATI* COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT(A)/TH E CIT/THE DR. TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH