Sh. Jasbir Singh, Pehowa V. ITO, Kurukshetra

ITA 153/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5405 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 04-04-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 07-02-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: S K MUKHI
• Keywords: Income from undisclosed sources
• Section: 143(3); 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES SMC CHANDIGARH BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO.153/CHD/2011 ASSESSMENT YEAR: 2005-06 SHRI JASBIR SINGH, VS. THE ITO, S/O SHRI DHARAM PAL, WARD-1, PEHOWA KURUKSHETRA PAN NO. ARFPS2652C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K.MUKHI RESPONDENT BY: SMT. JAISHREE SHARMA ORDER THE APPEAL BY THE ASSESSEE IS AGAINST THE ORDER OF CIT(A), KARNAL DATED 24.12.2010 RELATING TO ASSESSMENT YEAR 2005-0 6 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- I) THAT THE LD. CIT(A) HAS ERRED IN UPHOLDING THE ADDITION OF RS. 3,39,000/- MADE BY ASSESSING OFFICER BY TREATING APPELLANTS PREVIOUS & PAST SAVINGS AS INCOME FROM UNDISCLOSED SOURCES. II) THAT THE LD. CIT(A) HAS ERRED IN DISAPPROVING THE CASH WITHDRAWALS FROM ONE BANK & DEPOSITING TO ANOTHER, FOR MAKING FRIENDLY ADVANCES THROUGH A/C PAYEE CHEQUE / DRAFTS. III) THAT THE LD. CIT(A) ERRED IN NOT DELETING THE ADDITION ON ACCOUNT OF BANK DEPOSITS ON WHICH THE APPELLANT HAS ALREADY PAID THE INCOME TAX IN RELEVANT YEARS. IV) THAT THE LD. CIT(A) ALSO ERRED IN NOT TREATING ASSESSING OFFICERS ACTION AS ILLEGAL & INVALID, FOR NOT ISSUING ANY SHOW-CAUSE NOTICE BEFORE MAKING THE ABOVE ADDITION. 2 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN CON NECTION WITH THE ADDITION OF RS. 3,39,000/-. 4. BRIEF FACTS OF THE CASE ARE THAT IN THE CASE OF THE ASSESSEE, INFORMATION WAS RECEIVED FROM ITO, WARD -3, YAMUNAN AGAR VIDE HIS OFFICE LETTER NO. 2761 DATED 7.12.2007 THAT THE ASSESSEE H AD GIVEN LOAN OF RS. 4.00 LAKHS TO BAJRANG BALI RICE MILLS, DHALARLA, RA DAUR IN THE FINANCIAL YEAR 2003-04 THROUGH DD OF RS. 1.25 LAKHS ON 3.6.20 04 AND RS. 2.70 LAKHS ON 14.6.2004. THE AO RECORDED THE REASONS FOR REOP ENING THE ASSESSMENT U/S 147 OF IT ACT THAT THE ABOVE SAID INFORMATION O F GIVING LOAN WAS NOT VERIFIABLE FROM THE INCOME. ACCORDINGLY THE AO WAS OF THE BELIEF THAT DUE TO OMISSION ON THE PART OF THE ASSESSEE, INCOME OF RS. 4.00 LAKHS CHARGED TO TAX HAD ESCAPED ASSESSMENT. THE AO ISSUED NOTIC E U/S 148 TO THE ASSESSEE AND ON THE REQUEST OF THE ASSESSEE THE REA SONS RECORDED FOR REOPENING THE ASSESSMENT U/S 147 OF IT ACT WERE ALS O FORWARDED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDI NGS THE PLEA OF THE ASSESSEE WAS THAT HE HAD GIVEN LOAN/DEPOSIT THROUGH DD TO BAJRANG BALI RICE MILLS OUT OF HIS CAPITAL OF RS. 4,52,894/- AS ON 31.3.2005. THE AO NOTED THAT THE ASSESSEE HAS MADE CASH DEPOSITS IN B ANK ACCOUNT NO. 183 WITH ORIENTAL BANK OF COMMERCE, PEHOWA BRANCH. THE ASSESSEE HAD DEPOSITED RS. 1,50,000/- IN CASH ON 31.5.2004 AND R S. 1,89,000/- ON 5.6.2004. THE STATEMENT OF THE ASSESSEE WAS RECORD ED ON 26.10.2009 BY THE AO, IN WHICH HE STATED THAT THE ABOVE SAID AMOU NTS WERE RECEIVED FROM HIS FATHER IN CASH. THE ASSESSEE FAILED TO FILE AN Y DOCUMENTARY EVIDENCE IN THIS REGARD. THE AO TREATED THE DEPOSITS OF RS. 1, 50,000/- + RS. 1,89,000/- = RS. 3,39,000/- AS UNEXPLAINED U/S 68/69 OF IT ACT AND INCLUDED THE SAME AS INCOME IN THE HANDS OF THE ASSESSEE. 3 5. BEFORE THE LD. CIT(A), THE CLAIM OF THE ASSESSEE WAS THAT HE WAS AN EMPLOYEE IN SAISON PAPER INDUSTRIES LTD. SINCE 1993 AND WAS DOING LIC BUSINESS AND HIS WIFE WAS ALSO CLAIMED TO BE DOING THE LIC BUSINESS. THE SAID ADVANCE OF RS. 4.00 LAKHS TO M/S BAJRANG BALI RICE MILLS WAS CLAIMED TO HAVE BEEN MADE FOR GETTING LIC BUSINESS. THE AS SESSEE EXPLAINED THAT THE CASH OF RS. 2,53,204/- WAS WITHDRAWN FROM HIS A CCOUNT MAINTAINED WITH CENTRAL BANK OF INDIA FROM 10.3.2004 TO 20.5.2 004 WHICH WAS GIVEN TO HIS FATHER AND WAS RETURNED BY HIM ON 31.5.2004. A SUM OF RS. 1.50 LAKHS WAS DEPOSITED IN ORIENTAL BANK OF COMMERCE AN D THEREAFTER DD OF RS. 1,25 LAKHS WAS ISSUED ON 1.6.2004 AND RS.2.75 L AKHS ON 11.6.2004. THE BALANCE WAS EXPLAINED TO BE OUT OF CASH AT HOME OUT OF HIS WITHDRAWAL AND SAVING FOR THE AYS 2001-02 TO 2005-06. IT WAS FURTHER EXPLAINED BY THE ASSESSEE BEFORE THE CIT(A) THAT HIS FAMILY OWNE D AND CULTIVATED 15 ACRES OF AGRICULTURAL LAND AT VILLAGE SAINSON AND T HEY WERE RESIDING IN ANCESTRAL HOUSE HAVING A COMMON KITCHEN AND HOUSEHO LD EXPENSES WERE MET OUT OF AGRICULTURAL INCOME. 6. THE CIT(A) NOTED THAT THE ASSESSEE HAD CHANGED I TS STATEMENT REGARDING SOURCE OF DEPOSIT OF CASH IN THE APPELLAT E PROCEEDINGS. THE CIT(A) ALSO FOUND IT DIFFICULT TO APPRECIATE THAT T HE ASSESSEE HAD GOT CASH AT HOME IN VIEW OF THE FACT THAT HE WAS MAINTAINING THREE BANK ACCOUNTS. FURTHER THE LD. CIT(A) DISBELIEVED THE CLAIM OF THE ASSESSEE OF HAVING MADE HOUSEHOLD EXPENSES OUT OF HIS AGRICULTURAL IN COME IN SUPPORT OF WHICH J FROM WAS FILED. THE CIT(A) NOTED ONE OF THE J FORM WAS OF THE LAST YEAR AND OTHER J FORM RELATING TO YEAR UNDER CONSIDERATION WAS OF THE VALUE OF RS. 17,757/- ONLY. THE CIT(A) NOTED THAT THE ASSESSEE HAD FURNISHED COPY OF ACCOUNT OF SHRI DHARMA PAL, FAT HER OF THE ASSESSEE, IN THE BOOKS OF RONKI RAM ROOP CHAND, PEHOWA, WHICH WA S FOUND TO BE OF THE LAST YEAR I.E. AY 2003-04. FURTHER THE CIT(A) N OTED THAT EVEN IN THE 4 REVENUE RECORD THE NAME OF SHRI DHARAM PAL WAS MADE BY OVERWRITING. THE CIT(A) THUS HELD THE ASSESSEE NOT TO HAVE EXPLA INED THE SOURCE OF CASH DEPOSIT IN THE BANK AND IN THE ABSENCE OF THE SAME ADDITION OF RS. 3,39,000/- WAS CONFIRMED. 7. THE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSE E POINTED OUT THAT THE SOURCE OF CASH DEPOSIT WERE DULY EXPLAINED BEFO RE THE AUTHORITIES BELOW WHICH HAVE BEEN DIS-BELIEVED. OUR ATTENTION WAS DRAWN TO THE COPY OF THE BANK ACCOUNT FILED IN WHICH THERE WAS CASH W ITHDRAWAL OF RS. 2.00 LAKH ON 30.4.2004 AND RS. 30,000/- ON 24.3.2004. T HE LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE FURTHER MADE A REFER ENCE OF COPY OF ACCOUNT OF THE FATHER OF THE ASSESSEE WITH RANKI RAM ROOP C HAND, PEHOWA PLACED AT PAGE 4 OF THE PAPER BOOK WHICH REVEALS THE INCOM E EARNED FROM AGRICULTURAL BY THE FATHER OF THE ASSESSEE. THE LD . AUTHORISED REPRESENTATIVE OF THE ASSESSEE ADMITTED THAT THE HO USEHOLD EXPENSES WERE BEING MET BY THE FATHER OF THE ASSESSEE AND HIS PER SONAL WITHDRAWAL WAS MEAGER. THE LD. DR FOR THE REVENUE PLACING RELIANCE ON THE ORDER OF THE LD. CIT(A) STRESSED THAT THE ASSESSEE HAD FAILED TO PRODUCE ANY EVIDENCE TO JUSTIFY THE AVAILABILITY OF CASH WHICH IN TURN WAS DEPOSITED IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE, FROM WHICH HE I SSUED DDS TO BAJRANG BALI RICE MILLS. 8. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE CORD. THE ISSUE RAISED IN THE PRESENT APPEAL IS IN CONNECTION WITH ADDITIONS MADE ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNT. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD ADVANCED RS. 1.25 LAKHS ON 1.6.2004 AND RS. 2.75 LAKHS ON 11.6.2004 TO M/S BAJRANG BALI RICE MILLS. THE SOURCE OF THE SAID DEPOSIT WAS FOUND TO BE CASH DEPOSITED IN THE BANK ACCOUNT BEFORE THE ISSUE OF RESPECTIVE DDS FROM BANK ACCOUNT MAINTAINE D WITH ORIENTAL BANK 5 OF COMMERCE, PEHOWA. ON PERUSAL OF THE BANK STATEM ENT, I FIND THAT STARING FROM OCTOBER, 2003 THERE WAS CASH WITHDRAWN OF RS. 12,000 ON 21.3.2003. THE NEXT WITHDRAWAL WAS RS. 2.00 LAKHS ON 10.3.2004. FURTHER THERE WAS CASH WITHDRAWAL OF RS. 30,000/- ON 24.3.2 004. THE ASSESSEE THEREAFTER FROM JANUARY 2001 TO 15.3.2004 HAD WITHD RAWN PALTRY SUMS IN CASH ON VARIOUS DATES BEING RS. 19,500/- ON 1.12.2 001 AND WITHDRAWAL OF RS. 12,000/- ON 22.4.2003. DURING THE YEAR UNDER C ONSIDERATION THE ASSESSEE HAD DEPOSITED A SUM OF RS. 1,50,000/- IN CASH ON 31.5.2004, SUM OF RS. 1,89,000/- IN CASH ON 5.6.2004 OUT OF WHICH THE AFORESAID LOAN/DEPOSIT OF RS. 4.00 LAKHS WAS MADE THROUGH DD TO BAJRANG BALI RICE MILLS. UNDER THE PROVISIONS OF IT ACT THE ONUS IS U PON THE ASSESSEE TO EXPLAIN THE NATURE OF THE ENTRIES IN HIS BOOKS OF A CCOUNT OR THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE. THE REQUIREMEN T OF LAW IS TO JUSTIFIABLY WITH EVIDENCE PROVE THE SOURCE OF DEPOS ITS IN THE BANK ACCOUNT OR THE ENTRIES IN THE BOOKS OF ACCOUNT AND ALSO TO EXPLAIN THE NATURE OF TAXABILITY OR OTHERWISE OF THE RECEIPT OF MONEY DEP OSITED IN THE BANK ACCOUNT OR ENTRIES IN THE BOOKS OF ACCOUNT. IN THE ABSENCE OF THE ASSESSEE DISCHARGING HIS ONUS, THE SAID RECEIPT/ENTRY IS INC LUDIBLE IN THE HANDS OF THE ASSESSEE AS INCOME OF THE ASSESSEE FOR THE YEAR UNDER CONSIDERATION. 9. NOW COMING TO THE FACTS OF THE PRESENT CASE, THE ONUS WAS UPON THE ASSESSEE TO EXPLAIN THE AVAILABILITY OF CASH IN HIS HANDS WHICH IN TURN WAS UTILISED FOR MAKING CASH DEPOSITS IN THE BANK ACCOU NT. THE ASSESSEE, ADMITTEDLY IS A SALARIED PERSON AND AS PER DETAILS TABULATED AT PAGE 4 OF THE APPELLATE ORDER, THE TOTAL INCOME OF THE ASSESSEE I N AY 2001-02 WAS RS. 44,800/-, AY 2002-03 WAS RS. 59,200/-, AY 2003-04 2 003-04 WAS RS. 68,250/-, AY 2004-05 WAS RS. 98,500/- AND IN AY 200 5-06 WAS RS. 1,05,342/-. OUT OF THE SAID INCOME THE ASSESSEE HA D WITHDRAWN IN AY 2001-02 RS. 22,500/-, IN AY 2002-03 RS. 25,000/-, IN AY RS. 43,500/-, IN 6 AY 2004-05 RS. 32,500/- AND IN AY 2005-06 RS. 36,40 0/-. THE ASSESSEE HAD CLAIMED CERTAIN BROUGHT FORWARD CASH IN HAND AN D HENCE THE ASSESSEE HAD TABULATED THAT IN AY 2005-06, THE BROUGHT FORWA RD FUNDS AVAILABLE WITH THE ASSESSEE WERE RS. 4,52,894/-. THE ASSESSE E HAD FAILED TO PRODUCE ANY RECORD TO SHOW THAT THE ASSESSEE HAD ACCUMULATE D THE AFORESAID FUNDS AND SOURCE OF THE SAID FUNDS. FROM THE PERUSAL OF THE DETAILS IT TRANSPIRES THAT IN AY 2001-02 OUT OF TOTAL INCOME OF RS. 44,80 0, THE ASSESSEE HAD WITHDRAWAL A SUM OF RS. 22,500 ONLY WHICH THE ASSES SEE CLAIMS WAS AVAILABLE WITH HIM AND HAS NOT BEEN UTILISED FOR AN Y PURPOSES. IN AY 2002-03 OUT OF TOTAL INCOME OF RS. 59,200/- WITHDRA WAL RS. 25,000/-, IN AY 2003-04 OUT OF RS. 68,250/- WITHDRAWAL OF RS. 43 ,500/-, IN AY 2004- 05 OUT OF RS. 98,500/- WITHDRAWAL OF RS. 32,500 AND IN AY 2005-06 OUT OF 1,05,342/- WITHDRAWAL OF RS. 36,400/- WERE CLAIMED TO HAVE MADE BY THE ASSESSEE. THE CLAIM OF THE ASSESSEE IS THAT ALL TH E WITHDRAWALS WERE MADE BY THE ASSESSEE IN CASH AND WERE NOT UTILISED AND W ERE AVAILABLE WITH HIM AS CASH IN HAND. LOOKING AT THE QUANTUM OF WITHDRAW AL MADE BY THE ASSESSEE FROM YEAR TO YEAR, I FIND NO SUBSTANCE IN THE EXPLANATION OF THE ASSESSEE THAT OUT OF SUCH WITHDRAWAL, THE ASSESSEE HAD FURTHER SAVING OF FUNDS, WHICH IN TURN WERE AVAILABLE WITH THE ASSESS EE FOR DEPOSITING THE SAME IN FINANCIAL YEAR 2004-05. THE HOUSEHOLD EXPE NSES MET BY THE FATHER OF THE ASSESSEE OUT OF HIS SOURCES HAS NO RE LEVANCE. 10. THE ASSESSEE HAD WITHDRAWN CASH OF RS. 2.00 LAC KS ON 10.3.2004 + RS. 30,000/- ON 24.3.2004, WHICH WAS AVAILABLE FOR MAKING CASH DEPOSITS IN THE BANK ACCOUNT. I FIND MERIT IN THE SAID CLAIM OF THE ASSESSEE. ACCORDINGLY I DIRECT THE AO TO ALLOW THE BENEFIT OF RS. 2,30,000/- AS CASH AVAILABLE WITH THE ASSESSEE. IN THE ABSENCE OF ANY EVIDENCE BROUGHT ON RECORD, I FIND NO MERIT IN THE CLAIM OF THE ASSESS EE THAT THE CASH WAS AVAILABLE WITH HIM OUT OF WITHDRAWAL MADE OVER THE YEARS. I DIRECT THE AO 7 TO ALLOW THE ADJUSTMENT OF CASH OF RS. 2.30 LAKHS A VAILABLE WITH THE ASSESSEE AND BALANCE ADDITION OF RS. 1,39,000/- IS HEREBY CONFIRMED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE PARTLY ALLOWED. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 31 ST DAY OF MAY, 2011. SD/- (SUSHMA CHOWLA) JUDICIAL MEMBER DATED : 31 ST MAY, 2011 RKK COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH