Assistant Commissioner of Income-Tax, Central Circle-1,(1), BILASPUR(CG) V. M/s. HARJITLAL SALUJA, BILASPUR(CG)

ITA 155/BIL/2011

• Counselvise Citation: 15524714 RSA 2011
• Duration Of Justice: 3 year(s) 5 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 01-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WRITTEN SUBMISSIONS
• Assessee Lawyers: D LAHRI
• Keywords: Gross profit estimation; Unexplained investment; Income from undisclosed sources; Reasonable cause; Retraction
• Section: 68; 69; 133A

Judgement Text

INCOME TAX APPELLATE TRIBUNAL,BENCH -RAIPUR . .. . . .. . , ,, , ! ! ! !, ,, , . .. . . .. . BEFORE S/SH.H.L.KARWA,PRESIDENT AN D RAJENDRA,ACCOUNTANT MEMBER ./ ITA NO.155/BLPR/2011- # # # # / // / ASSESSMENT YEAR -2006-07 ASSTT. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), BILASPUR. V/S. SHRI HARJEET LAL SALUJA, PROP. SALUJA TEXTILE, SHRIRAM MARKET, BILASPUR. PAN: AQGPS 3510 G ( ) / // / APPELLANT ) ( *+) / RESPONDENT ) ASSESSEE BY : SH. D. LAHRI, SR. DR REVENUE BY : WRITTEN SUBMISSIONS - /DATE OF HEARING : 18-12-2014 - /DATE OF PRONOUNCEMENT : 22 -12-2014 # # # # , 1961 1961 1961 1961- - - - 254 254254 254( (( (1 11 1) )) ) ORDER U/S.254(1)OF THE INCOME-TAX ACT,1961(ACT) PER RAJENDRA,AM < << < = = = =, ,, , ! ! ! ! : CHALLENGING THE ORDER DT.19.12.2008 OF THE CIT(A),B ILASPUR, THE ASSESSING OFFICER (AO)HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1.(A)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING THE RELIEF OF RS. 11,11, 713/- WITHOUT CONSIDERING THE REMAND REPORT SUBMITTED BY THE A.O.AS ON 22.02.2011 IN COMPLIANCE TO THE REQUISITION BY THE C.1.T.(A) VIDE HIS OFFICE LETTER F. NO. CIT(A)/BSP/REMAND REPORT/1 0-11/124 DATED 29.12.2010 RECEIVED BY THE A.O.31.12.2010. (B) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING THE RELIEF OF RS.7,00,000/- IN SPITE OF THE FACTS ON RECORD THAT DURING THE COURSE OF SURVEY THE ASSESSEE HAS ADMITTED THAT THO UGH HE DID NOT OWNS THE SAID BUILDING,BUT HE INVESTED AN AMOUNT OF RS. 7,00,000/- IN THE SAID BUILDING. FURTHER, THE EVIDENCES PRODUCED BEFORE THE CIT(A), WERE NOT CONFRONTED TO THE A.O. AND THE SAME HAS BEEN ENTERTAINED BY THE CIT(A) IN VIOLATION OF RULE 46-A OF THE I.T. RULES. (C)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING THE RELIEF OF RS.48,000/- IN RESPECT OF RENT, IN SPITE OF THE FACTS ON RECORD THAT DURING THE ASSESSMENT PROCEEDINGS NO EV IDENCE OF PAYMENT OF RENT HAS BEEN FURNISHED BY THE ASSESSEE AND THE EVIDENCES PRODUCE D BEFORE THE CIT(A), WERE NOT CONFRONTED TO A.O. AND THE SAME HAS BEEN ENTERTAINED BY THE CI T(A) IN VIOLATION OF RULE 46-A OF THE I.T. RULES. (D) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING RELIEF OF RS. 44,096/- ON ACCOUNT OF LOW G.P. IN SPITE OF THE FACTS ON RECORD THAT DURING THE ASSESSMENT PROCEEDINGS THE A SSESSEE HAD NOT PRODUCED COMPLETE SET OF BOOKS OF ACCOUNTS,BILLS AND VOUCHERS ETC FOR NECESS ARY VERIFICATION AND THE EVIDENCES PRODUCED BEFORE THE CIT(A),WERE NOT CONFRONTED TO A .O. AND THE SAME HAS BEEN ENTERTAINED BY THE CIT(A) IN VIOLATION OF RULE46-A OF I. T. RUL ES. (E) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING THE RELIEF OF RS.1,76,500/- ON ACCOUNT OF CASH CREDITS IN SPITE OF THE FACTS ON RECORD THAT DURING THE ASSESSMENT PROCEEDI NGS THE ASSESSEE HAD FAILED TO PRODUCE THE LENDERS FOR NECESSARY VERIFICATION AND THE EVIDENCE S PRODUCED BEFORE THE C!T(A), WERE NOT PUT ITA/155/BLPR/2011,AY.06-07-H SALOOJA 2 FORTH BEFORE THE A.O (F)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING THE RELIEF OF RS.78,117/- ADDED ON ACCOUNT OF LOW HOUSE HOLD WITHDRAWALS, IN SPITE OF THE FACTS ON RECORD THAT THE ASSESSEE H AS SHOWN WITHDRAWALS FOR HOUSE HOLD FOR WHOLE THE YEAR AT RS. 41,883/- ONLY AND THE A.O. HA S ELABORATELY DISCUSSED THE REASON IN DETAILS. (G) THAT ON THE FACTS AND IN THE 'CIRCUMSTANCES OF THE CASE, THE LEARNED CIT (A) ERRED IN LAW AND IN FACT IN ALLOWING THE RELIEF OF RS.65,000/- ADDED U/S 69B, IN SPITE OF THE FACTS ON RECORD THAT THIS AMOUNT WAS DEPOSITED IN CASH ON 29.03.200 6 IN S.B.I. KORBA AND THE ASSESSEE FAILED TO EXPLAIN THE SOURCE OF THE SAID INVESTMENT. 2.THAT THE LD. CIT CA)'S ORDER BEING ERRONEOUS, PER VERSE AND CONTRARY TO THE FACTS ON RECORD, THE SAME MAY BE REVERSED WHILE THAT OF THE A.O. BE RESTORED. 2. ASSESSEE,AN INDIVIDUAL,ENGAGED IN THE BUSINESS OF C LOTHS,FILED HIS RETURN OF INCOME ON 31. 03.2007DECLARING TOTAL INCOME OF RS.9,04,654/-.THE AO FINALISED THE ASSESSMENT ON 21. 11. 2008 DETERMINING THE INCOME OF ASSESSEE AT RS.20,86 ,370/-.AN ACTION UNDER SECTION 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE ASSESSEE ON 06.03.2006 AND THE ASSESSEE SURRENDERED UNDISCLOSED INCOME INVESTED IN HOUSE PROPERTY.LATER ON,WHILE FILING THE RETURN OF INCOME THE ASSESSEE DID NOT INCLUDE THE I NCOME OFFERED DURING THE SURVEY PROCEEDINGS. 3. FIRST EFFECTIVE GROUND IS DIRECTED AGAINST AN ADDIT ION OF RS.7 LAKHS MADE BY THE AO BY INVOKING THE DEEMING PROVISIONS OF SECTION 69 OF TH E ACT.ACCORDING TO THE AO, DURING THE SURVEY CONDUCTED AT THE BUSINESS PREMISES OF THE AS SESSEE UNDISCLOSED INVESTMENT IN BUILDING WORTH RS.5 LAKHS WAS DETECTED.IN THIS REGARD HE HEL D THE ASSESSEE HAD SURRENDERED THE UNDISCLOSED INCOME,THAT IN THE RETURN FILED THE ASS ESSEE DID NOT INCLUDE THE DISPUTED DEMAND.HE DIRECTED THE ASSESSEE TO JUSTIFY THE RETR ACTION FROM THE VOLUNTARY DISCLOSURE OF THIS SUM MADE BEFORE THE SURVEY TEAM.IN RESPONSE, IT WAS SUBMITTED THAT THE APPELLANT WAS NOT THE OWNER OF THE HOUSE AND THAT THE HOUSE AND SHOP WERE TAKEN ON RENT FROM THE APPELLANT'S RELATIVES.IN SUPPORT THEREOF, A COPY OF RECEIPT TOW ARDS PAYMENT OF PROPERTY TAX ISSUED BY THE MUNICIPAL CORPORATION WAS ALSO FILED.IT WAS ALSO EX PLAINED THAT, THE RECEIPT OF THE RENT FROM THE ASSESSEE WAS SHOWN BY THE RECIPIENTS IN THEIR R ESPECTIVE RETURNS,THAT THE ASSESSEE WAS NOT THE OWNER OF THE PROPERTY IN QUESTION, THAT ERRONEO US SURRENDER MADE DURING SURVEY WAS RIGHTLY RETRACTED,THAT THE FACTS DISCLOSED IN THE R ETURN WERE SUBSTANTIATED BY THE EVIDENCES MENTIONED ABOVE SHOULD BE ACCEPTED,THAT IN THE ABSE NCE OF EVIDENCE HAVING BEEN BROUGHT ON RECORD TO PROVE THE CONTRARY NO ADVERSITY SHOULD BE HELD AGAINST THE ASSESSEE ON PRESUMPTIONS AND BY INVOKING THE DEEMING PROVISIONS OF THE ACT,T HAT WITHOUT BRINGING ANY EVIDENCE TO PROVE THE CONTRARY AND SIMPLY PLACING RELIANCE ON T HE SURRENDER MADE DURING SURVEY,THE AO HAD MADE THE IMPUGNED ADDITION. 3.1. AGGRIEVED BY THE ORDER OF THE AO THE ASSESSEE FILED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA).DURING THE COURSE OF APPELLATE PROC EEDINGS ALL THE FACTS STATED BEFORE THE AO TOGETHER WITH EVIDENCES SUPPORTING THE SAME WERE REITERATED AND IT WAS VEHEMENTLY URGED THAT THE IMPUGNED ADDITION-UNSUBSTANTIATED ON THE S TRENGTH OF EVIDENCE IN THE MANNER IN WHICH IT WAS DONE-WAS UNSTAINABLE.AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND THE ASSESSMENT ORDER THE FAA HELD THAT THERE WAS NO DIS PUTE WITH REGARD TO THE FACT THAT THE ASSESSEE WAS NOT THE OWNER OF THE HOUSE,THAT THE HO USE AND SHOP WERE TAKEN ON RENT FROM THE ASSESSEES RELATIVES,THAT IN SUPPORT OF THE CLAIM M ADE BY THE HIM A COPY OF RECEIPT TOWARDS PAYMENT OF PROPERTY TAX ISSUED BY THE MUNICIPAL COR PORATION WAS FILED,THAT THE RENT RECEIVED FROM THE APPELLANT WAS SHOWN BY THE RECIPIENTS IN T HEIR RESPECTIVE RETURNS OF INCOME,THAT ALL THOSE FACTS WERE VERIFIABLE FROM THE CONCERNED RECO RDS, THAT SAME WERE NOT VERIFIED AND WERE NOR PROVED AS FALSE,THAT THE ERRONEOUS SURRENDER MA DE DURING SURVEY WAS RIGHTLY RETRACTED,THAT ITA/155/BLPR/2011,AY.06-07-H SALOOJA 3 THE FACTS DISCLOSED IN THE RETURN SUBSTANTIATED BY THE EVIDENCE MENTIONED ABOVE SHOULD HAVE BEEN ACCEPTED,THAT IN THE ABSENCE OF EVIDENCE HAVIN G BEEN BROUGHT ON RECORD TO PROVE THE CONTRARY NO ADVERSE VIEW SHOULD HAVE BEEN TAKEN AGA INST THE ASSESSEE ON PRESUMPTIONS AND BY INVOKING THE DEEMING PROVISIONS OF THE ACT,THAT FOR INVOKING THE DEEMING PROVISIONS OF SECTION 69 THERE MUST BE SOME EVIDENCE TO POSITIVEL Y JUSTIFY SUCH ACTION,THAT IN THE CASE UNDER CONSIDERATION NO EVIDENCE WHATSOEVER WAS BROUGHT ON RECORD TO PROVE THAT HE WAS THE REAL OWNER OF THE QUESTIONED PROPERTY,THAT IT WAS AN ERR ONEOUS SURRENDER,THAT IT DID NOT PROHIBIT THE ASSESSEE FROM RECTIFYING THE MISTAKE WHILE FILI NG THE RETURN.FINALLY,HE DELETED THE ADDITION MADE BY THE AO. 3.2. BEFORE US,THE DEPARTMENTAL REPRESENTATIVE(DR)STATED THAT THE ASSESSEE HAD ADMITTED UNEXPLAINED INVESTMENT IN THE STATEMENT RECORDED ON OATH,THAT THE RETRACTION WAS MADE VERY LATE,THAT THE ASSESSEE WAS OWNER OF THE SHOP.IN THE WRITTEN SUBMISSION THE ASSESSEE HAS MENTIONED THAT THE FAA HAD NOT ADMITTED ANY ADDITI ONAL EVIDENCES,THE HE HAD FILED ONLY DOCUMENTS BEFORE THE FAA THAT WERE MADE AVAILABLE T O THE AO,THAT THE SOCIETY HAD ALLOTTED THE PROPERTY TO SOMEONE ELSE AND NOT TO THE ASSESSE E. 3.3. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD.WE FIND THAT THE SHOP AND THE HOUSE WERE NOT OWNED BY THE ASSESSEE,THAT HE WAS PAYING R ENT TO THE OWNERS OF THE HOUSE AND SHOP,THAT THE OWNERS WERE SHOWING THE RENTAL INCOME IN THEIR RETURNS OF INCOME,THE OWNERS WERE PAYING MUNICIPAL TAXES.AGAINST ALL THESE DOCUM ENTED EVIDENCES IS THE RETRACTED STATEMENT OF THE ASSESSEE AND THAT ALSO WAS RECORDE D DURING SURVEY PROCEEDINGS.IN OUR OPINION,WITHOUR BRINING SOMETHING ON RECORD NO ADDI TION CAN BE MADE UNDER SECTION 69 OF THE ACT.WE ARE NOT AWARE AS TO WHICH PAPERS WERE AD MITTED BY THE ASSESSEE IN VIOLATION OF RULE 46A OF THE RULES.IN THE STATEMENTS RECORDED ON OATH DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE HAS SPECIFICALLY MENTIONED THAT THE SU RVEY TEAM WAS WITH HIM FROM 11AM.TO 4A.M.NEXT DAY AND HIS STATEMENT WAS RECORDED AT THE NIGHT WHEN HE WAS EXHAUSTED.IN OUR OPINION,SUCH A STATEMENT DOES NOT HAVE ANY EVIDENTI ARY VALUE ESPECIALLY WHEN DOCUMENTARY EVIDENCES CLEARLY PROVE OTHERWISE.SO,IN OUR OPINION THE ORDER OF THE FAA DOES NOT SUFFER FROM ANY LEGAL OR FACTUAL INFIRMITY.CONFIRMING HIS ORDER,WE DISMISS GROUND NO.1 FILED BY THE AO. 4. NEXT GROUND IS ABOUT DISALLOWANCE OF RS.48000/- MAD E BY THE AO.ACCORDING TO THE AO THE SHOP WAS CONSTRUCTED AND FURNISHED BY THE ASSES SEE HIMSELF AND NO EVIDENCE OF PAYMENT OF RENT WAS ADDUCED,THAT THE CLAIM MADE BY HIM TOWA RDS PAYMENT OF RENT,AMOUNTING TO RS.48000/- WAS NOT ALLOWABLE.HE DISALLOWED IT AND ADDED BACK TO THE INCOME SHOWN BY THE ASSESSEE. 4.1. IN THE APPELLATE PROCEEDINGS,THE FAA HELD THAT THE PAYMENT OF RENT TO THE OWNERS, FLOWED FROM THE BOOKS OF ACCOUNT, WAS PROVED NOT ONLY FROM THE BOOKS OF THE ASSESSEE BUT ALSO FROM THE BOOKS AND RETURNS OF THE OWNERS/RECIPIENTS OF T HE RENT,THAT EVIDENCE PLACED ON RECORD-IN THE FORM OF COPY OF ALLOTMENT LETTER FROM THE SOCIE TY IN FAVOUR OF THE ALLOTTEES-EVIDENCED THE FACTS THAT THE BUILDING BELONGED TO THE SOCIETY NAM ELY NEW SHRIRAM CLOTH MARKET SOCIETY, BILASPUR AND THE OWNERS WERE THE PERSONS TO WHOM TH E ASSESSEE HAD PAID RENT,THAT THEY WERE MEMBERS OF THE SAID SOCIETY AND THEY WERE ALLOTTED THE SAID PREMISES BY THE SOCIETY,THAT PREMISES ALLOTTED TO THE OWNERS WAS LET OUT TO HIM, THAT THE RENT REALISED FROM THE ASSESSEE SUFFERED TAX IN THE HANDS OF THE RECIPIENTS,THAT IN THE ABSENCE OF EVIDENCE TO PROVE THE CONTRARY THE DISALLOWANCE OF PAYMENT OF RENT IN TH E HANDS OF THE ASSESSEE WAS UNJUSTIFIED,THAT THE SAID PAYMENT MADE WAS WHOLLY AND EXCLUSIVELY FO R BUSINESS PURPOSES.HE DELETED THE DISALLOWANCE MADE BY THE AO. 4.2. BEFORE US,DR SUPPORTED THE ORDER OF THE FAA.IN THE SUBMISSIONS IT HAS MENTIONED THAT THE ASSESSEE WAS PAYING RENT TO THE PEOPLE TO WHOM THE SOCIETY HAD ALLOTTED THE SHOP. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD AN D FOUND THAT THE SHOP WAS ALLOTTED BY THE ITA/155/BLPR/2011,AY.06-07-H SALOOJA 4 CO-OPERATIVE HOUSING SOCIETY TO THE PERSONS OTHER T HAN THE ASSESSEE AND HE WAS PAYING RENT TO THEM,THAT THEY OFFERED THE RENTAL INCOME FOR TAXATI ON,THAT THE EXPENDITURE INCURRED WAS WHOLLY AND EXCLUSIVELY FOR HIS BUSINESS.THE FAA HA D RIGHTLY DELETED THE ADDITION.WE DISMISS GROUND NO.2 RAISED BY THE AO. 5. NEXT GROUND PERTAINS TO ESTIMATED ADDITION OF RS.44 096/- MADE BY THE AO ON ACCOUNT OF LOW GP. ACCORDING TO THE AO, TO SUBSTANTIATE THE GP SHOWN AT 8.86%, THE APPELLANT HAD NOT PRODUCED COMPLETE SET OF THE BOOKS OF ACCOUNT, BILL S AND VOUCHERS ETC. FOR VERIFICATION,THAT DURING SURVEY MANY OF THE TRANSACTIONS WERE FOUND UNRECORDED IN THE BOOKS OF ACCOUNT.IN ORDER TO COVER THE SUPPRESSED SALES/PROFIT,THE GP S HOWN BY THE ASSESSEE WAS HELD UNACCEPTABLE BY THE AO.SO,TO COVET THE POSSIBLE LEA KAGES ON ACCOUNT OF THE DEFICIENCY FOUND DURING SURVEY,HE ENHANCED THE GP TO 10% WHICH RESUL TED IN THE IMPUGNED ADDITION. 5.1. AGAINST THE ABOVE,IN APPELLATE PROCEEDINGS BEFORE T HE FAA,IT WAS SUBMITTED ON BEHALF OF THE ASSESSEE THAT THE ACTION OF THE AO WAS UNJUSTIF IED BECAUSE THE ASSESSEE HAD PRODUCED BOOKS OF ACCOUNT SUCH AS CASH BOOK, BANK BOOK, JOUR NAL, LEDGER, PURCHASE/SALE BILL FILES AND FILE CONTAINING VOUCHERS TO SUBSTANTIATE THE EXPENS ES INCURRED THROUGH BOOKS FOR BUSINESS PURPOSES,THAT THE AO HAD EXAMINED THEM BUT HAD NOT POINTED OUT ANY SPECIFIC DISCREPANCY NOR HAD HE DETECTED ANY SUPPRESSION IN SALES OR INF LATION IN PURCHASES/EXPENSES,THAT THE ESTIMATED ADDITION, BEING WITHOUT ANY EVIDENCE WAS UNSUSTAINABLE.AFTER CONSIDERING THE CONTROVERSY THE FAA HELD THAT THE AO DID NOT BRING ANY EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE EARNED MORE THAN THAT RETURNED AS PER THE BOOKS OF ACCOUNT KEPT IN THE REGULAR COURSE OF BUSINESS,THAT THERE WAS NO SPECIFIC FINDING GIVE N BY THE AO TO THE EFFECT THAT THE METHOD EMPLOYED BY THE ASSESSEE WAS SUCH THAT CORRECT PROF ITS COULD NOT BE DEDUCED THERE FROM,THAT UNLESS SUCH FINDING WAS GIVEN AND UNLESS THE BOOKS WERE REJECTED THE AO WAS NOT ENTITLED TO MAKE ADDITION ON WILD GUESS WORK. 5.2. BEFORE US,DR SUPPORTED THE ORDER OF THE AO.WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD.WE DO NOT FIND ANY REASONABLE CAUSE FOR ENHA NCING THE RATE OF GROSS PROFIT BY THE AO. THE AO HAD NOT INDICATED THE REASONS THAT PROMPTED HIM TO REJECT THE GP SHOWN BY THE ASSESSEE.HE MADE THE ADDITION FOR THE SAKE OF MAKIN G AND ADDITION.THE FAA HAS GIVEN A CATEGORICAL FINDING THAT THE AO WAS NOT ENTITLED TO MAKE ADDITION ON WILD GUESS WORK.ENDORSING HIS VIEWS,WE DECIDE GROUND NO.3 AGAI NST THE AO. 6. NEXT GROUND DEALS WITH THE ADDITION OF RS.1,76,500/ -TREATING AND DEEMING THE CASH CREDITS OBTAINED FROM TEN PERSONS AS ASSESSEES INCOME FROM UNDISCLOSED SOURCES U/S.68 OF THE ACT.WHEN CONFRONTED,THE ASSESSEE SUBMITTED BEFORE T HE AO THAT ALL THE CREDITORS WERE INCOME TAX ASSESSEES AND IN EVIDENCE, COPIES OF ACKNOWLEDG EMENT OF THE RETURNS FILED BY THEM WERE FURNISHED TO PROVE THEIR SOURCE OF INCOME.COPIES O F CAPITAL ACCOUNT AND BALANCE SHEET FILED BY THEM TOGETHER WITH THE EVIDENCE REGARDING THEIR AGRICULTURAL HOLDINGS (WHEREVER ENJOYED BY THEM)WERE ALSO FILED. THE CREDITORS,IN THEIR SWO RN AFFIDAVITS,CONFIRMED THE IMPUGNED TRANSACTIONS THEY HAD WITH THE ASSESSEE.THE AO DID NOT ACCEPT THE ABOVE EXPLANATION AND EVIDENCE TENDERED BY THE ASSESSEE,HE HELD THAT DESP ITE AMPLE OPPORTUNITIES GIVEN THE ALLEGED CREDITORS WERE NOT PRODUCED BEFORE HIM FOR EXAMINAT ION FOR VERIFYING THE GENUINENESS, THAT ALMOST ALL THE ALLEGED LOANS WERE FROM CLOSE RELATI VES OF THE ASSESSEE,THAT THEY RESIDED IN AND AROUND BILASPUR,THAT THEY WERE NOT PRODUCED HENCE T HE ESSENTIAL INGREDIENTS OF SECTION 68 REMAINED UNPROVED,THAT ALL THESE SUMS WERE ALLEGED TO HAVE BEEN RECEIVED IN CASH,THAT THE GENUINENESS OF THE IMPUGNED CLAIM WAS NOT FREE FROM DOUBT,THAT MERE POSSESSION OF PAN AND FILING OF IT RETURN DID NOT PROVE THE ESSENTIAL ING REDIENTS OF SECTION 68.FINALLY,THE AO MADE AN ADDITION OF RS.1.76 LAKHS. 6.1. IN THE APPELLATE PROCEEDINGS,THE FAA HELD THAT THE RECORD FILED BY THE ASSESSEE EVIDENCED THE FACT THAT ALMOST ALL THE CREDITORS WERE ASSESSE D TO TAX AND THEIR PAN PARTICULARS WERE ITA/155/BLPR/2011,AY.06-07-H SALOOJA 5 FILED,THAT THEIR IDENTITY WAS UNQUESTIONABLE,THAT N O OBLIGATION CAST UPON THE APPELLANT TO PROVE THE SOURCE OF THE SOURCE AND ORIGIN OF THE ORIGIN O F THE CREDITORS.FAA RELIED UPON THE ORDERS OF S. HASTIMAL (49 ITR 273), NEMI CHAND KOTHARI (26 4ITR254) AND BEDI & CO.(P)LTD.(230 ITR 580).HE FURTHER HELD THAT COMPLETE ADDRESSES OF THE CREDITORS WERE DISCLOSED TO THE AO, THAT BEFORE INVOKING THE DEEMING PROVISIONS OF SECT ION 68 OF THE ACT IT WAS INCUMBENT UPON THE AO TO VERIFY THE FACTS BY ISSUING SUMMONS AND E XAMINING THE CREDITORS,THAT THE AO DID NOT ISSUE SUMMONS TO THE CREDITORES,THAT THE ASSESS EE HAD DISCHARGED THE INITIAL BURDEN OF PROVING THE ESSENTIAL INGREDIENTS OF SECTION 68 WIT H COGENT EVIDENCE,THAT THE IMPUGNED ADDITION WAS UNJUSTIFIED.HE DELETED THE ADDITION MA DE BY THE AO. 6.2. BEFORE US,THE DR STATED THAT THE CREDITORS WERE NOT PRODUCED BEFORE THE AO.IN THE SUBMISSIONS FILED THE ASSESSEE HAS MENTIONED THAT A LL THE NECESSARY EVIDENCES,INCLUDING BALANCE SHEET,CAPITAL ACCOUNT AND AGRICULTURAL INCO ME OF THE CREDITORS WERE FILED BEFORE THE AO,THAT THE CREDITORS HAD IN THEIR SWORN AFFIDAVITS HAD ADMITTED THE TRANSACTION. WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD.WE FIND THAT THE ASSESSEE HAD DISCHARGED HIS PRIMARY ONUS BY PRODUCING DOCUMENTARY EVIDENCE OF IDENTITY OF THE CREDITORS AS WELL AS GENUINENESS OF THE TRANSACTION AND THEIR CREDITWORT HINESS.IN OUR OPINION,IF THE AO HAD ANY DOUBT ABOUT THE ESSENTIAL INGREDIENT OF ANY OF THE ABOVE THREE ELEMENTS,HE SHOULD HAVE ISSUED SUMMONS TO THEM AND EXAMINED THEM.THE ASSESSEE HAD ALSO FILED CONFIRMATION LETTERS OF THE CREDITORS.THEREFORE,WE AGREE WITH THE DECISION OF T HE FAA THAT THE ADDITION MADE BY THE AO U/S.68 OF THE ACT WAS NOT JUSTIFIABLE.GROUND NO.4 I S DECIDED AGAINST THE AO. 7. LOWER HOUSE HOLD EXPENSES IS THE SUBJECT MATTER OF NEXT GROUND OF APPEAL.DURING THE ASSESSMENT PROCEEDINGS,THE AO HELD THAT THE ASSESSE E HAD SHOWN HOUSE HOLD EXPENSES AT RS.41,883/-,THAT IT WAS INADEQUATE.IT WAS SUBMITTED BEFORE HIM THAT FAMILY OF THE ASSESSEE CONSISTED OF FOUR MEMBERS ONLY,THAT THEY WERE LEADI NG A VERY SIMPLE AND ORDINARY LIFE.BUT THE AO DID NOT ACCEPT THE SUBMISSION MADE AND MADE AN A DDITION OF RS.78,117/-TO THE INCOME OF THE ASSESSEE. 7.1. IN THE APPELLATE PROCEEDINGS THE FAA HELD THAT THE AO HAD NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT THE ASSESSEE WITHDRAWAL SHOWN BY THE ASSESSEE WAS INSUFFICIENT,THAT THE ADDITION WAS MADE ON ESTIMATION ONLY.AS A RESULT,HE DELETED THE ESTIMATED ADDITION MADE BY THE AO. 7.2. BEFORE US,THE DR SUPPORTED THE ORDER OF THE AO.WE H AVE PERUSED THE MATTER BEFORE US. WE FIND THAT THE AO HAD MADE ADDITION ONLY ON ESTIM ATE.HE HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO JUSTIFY THE ADDITION MADE.HE HAS RECORDED THE STATEMENT OF THE ASSESSEE U/S.131.WE DO NOT FIND ANYTHING IN THE STATEMENT ALSO THAT COU LD PROVE THAT THE ADDITION MADE BY THE AO WERE BASED ON SOME EVIDENCES.IN THESE CIRCUMSTANCES ,WE ARE OF THE OPINION THAT THE FAA HAD RIGHTLY GRANTED RELIEF TO THE ASSESSEE.GROUND NO.5 IS DECIDED AGAINST THE AO. 8. LAST GROUND IS DIRECTED AGAINST ADDITION OF RS.65,0 00/- MADE BY THE AO U/S.69B OF THE ACT. ACCORDING TO THE AO, THE ASSESSEE HAD MADE CASH INV ESTMENT OF RS.65,000/- IN SBI TOWARDS PPF AND CLAIMED DEDUCTION U/S. 80C,THAT SOURCE FOR SUCH INVESTMENT WERE NOT PROVED,THAT SAME WAS TO BE ADDED U/S. 69B OF THE ACT. 8.1.CONSIDERING THE FACT THAT THE IMPUGNED INVESTME NT HAD FLOWED FROM THE BOOKS OF ACCOUNT OF THE ASSESSEE,THE FAA HELD THAT THE ADDITION WAS VIRTUALLY INCORRECT,THAT IT WAS EVIDENCE FROM THE COPY OF CAPITAL ACCOUNT FILED ALONGWITH TH E RETURN,THAT IN THE BOOKS OF A/CS. PRODUCED BEFORE THE AO THE FACT WAS PROVED BY THE A SSESSEE,THAT IT WAS NOT UNDERSTOOD NOR WAS IT SPECIFICALLY SPELT AS TO WHAT MORE EVIDENCE WAS NEEDED BY THE AO,THAT THE FACT WAS FURTHER FORTIFIED BY THE STATEMENT OF THE ASSESSEE RECORDED ON OATH.FIANALLY,THE FAA DELETED THE ADDITION OF THE IMPUGNED SUM MADE U/S. 69B OF T HE ACT. 8.2. BEFORE US,DR REFERRED TO THE ORDER OF THE AO.IN THE WRITTEN SUBMISSION THE ASSESSEE HAS ITA/155/BLPR/2011,AY.06-07-H SALOOJA 6 STATED THAT ALL THE DOCUMENTARY EVIDENCES WERE PROD UCED BY HIM ABOUT THE INVESTMENT DURING ASSESSMENT PROCEEDINGS.WE HAVE PERUSED THE MATERIAL AVAILABLE ON RECORD.IT IS A FACT THAT INVESTMENT MADE BY THE ASSESSEE IS APPEARING THE BO OKS OF ACCOUNTS OF THE ASSESSEE.IF IT IS SO THEN WHERE IS THE JUSTIFICATION FOR MAKING ANY ADDI TION.THE FAA HAS GIVEN A FINDING OF FACT ABOUT THE INVESTMENT AND HAS DELETED IT.WE ARE OF T HE OPINION THAT THERE IS NO NEED TO INTERFERE WITH THE ORDER OF THE FAA.LAST GROUND OF APPEAL IS DECIDED AGAISNT THE AO. AS A RESULT, APPEAL FILED BY THE AO STANDS DISMISSED. > > > > #> #> #> #> @ @@ @ A A A A - -- - . ORDER PRONOUNCED IN THE OPEN COURT ON 22 ND ,DECEMBER,2014. - E 22 F ,2014 - . SD/- SD/- (H.L.KARWA/ . .. . . .. . ) ( ! ! ! ! / RAJENDRA) PRESIDENT/ = = = = /ACCOUNTANT MEMBER /RAIPUR. F DATE: 22.12.2014 - -- - *#GH *#GH *#GH *#GH IH IH IH IH / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / ) 2. RESPONDENT / *+) 3. THE CONCERNED CIT(A)/ J K , 4. THE CONCERNED CIT / J K 5. DR ITAT,RAIPUR BENCH/ H *## , . . . , 6. GUARD FILE/ . +H *# //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, RAIPUR