M/s BNK Investments, Chandigarh V. DCIT, Chandigarh

ITA 160/CHANDI/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9175 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 12-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Retraction
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH,CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SH.MAHARSHI PRASHANT KUMAR, ACCOUNTANT MEMBER ITA NO. 160/CHD/2015 ASSESSMENT YEAR: 2010-11 M/S BNK INVESTMENTS, VS THE DCIT, # 89, SECTOR 8-A, CIRCLE 1(1), CHANDIGARH. CHANDIGARH. PAN: AABF18621G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI TEJ MOHAN SING H RESPONDENT BY : SHRI MANJIT SINGH, DR DATE OF HEARING : 05.08.2016 DATE OF PRONOUNCEMENT : 11.08.2016 O R D E R PER BHAVNESH SAINI, JM THIS APPEAL BY ASSESSEE HAS BEEN DIRECTED AGAINST THE ORDER OF LD. CIT(APPEALS)-I, CHANDIGARH DATED 31.12.2014 FOR ASSESSMENT YEAR 2010-11 CHALLENGING THE ADDITION OF RS. 91,09,000/- ON ACCOUNT OF DISALLOWA NCE OF EXPENDITURE. 2. BRIEF FACTS ARE THAT A SURVEY OPERATION U/S 133A OF THE ACT WAS CARRIED OUT AT THE BUSINESS PREMISES OF THE APPELLANT ON 10.03.2010 AND DURING THE COURSE OF SURVEY, THE APPELLANT HAD SURRENDERED AN AMOUNT OF RS. 2 3.60 CRORES, BUT IN THE RETURN OF INCOME FILED, IT HAD NOT DECLARED THE ENTIRE AMOUNT OF RS. 3.60 CRORES A ND SO THE ASSESSING OFFICER QUESTIONED THE APPELLANT ABOU T NOT DECLARING THE AMOUNT OF RS. 91,09,000/- AND THE APPELLANT HAD REPLIED AS UNDER: 'THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH ON E MR. GURUMUKH SINGH SON OF SH. RANJIT SINGH RESIDENT OF VILLAGE MULLAPUR, GARIBDAS, DISTRICT-MOHALI (PUNJAB) FOR TRADING IN L AND IN AN AROUND VILLAGE MULLAPUR, GARIBDAS. ALL THE TRANSACTION FOR THE PURCHASE AND SALE WERE IN CASH. ONLY IN THE CASE OF BNK INVESTMENTS THERE WAS A TRA NSACTION WHERE THE ASSESSEE HAD SUFFERED A LOSS AMOUNTING TO RS. 9 1.09 LACS. A TOKEN FOR A SAUDA (LAND TRANSACTION) WAS BOOKED AT RS. 5.45 CRORES ON 5 TH MARCH, 2010 WHEREIN AN ADVANCE OF RS. 91.09 LACS W AS WITH MR. GURUMUKH SINGH AND THIS MONEY WAS NOT RETURNED BACK AND THE ASSESSEE INCURRED A LOSS ON THE SAME. A DETAILED TR ANSACTION CHART GIVING THE DETAILS OF THE DEALS AND THE PROFIT THER EON IS ENCLOSED VIDE ANNEXURE IV(A) AND A COPY OF THE TRANSACTIONS , IS ENCLOSED VIDE ANNEXURE IV(B). THE COPY OF THE AGREEMENT IS ENCLOS ED VIDE ANNEXURE IV(C).' ) 3. THE ASSESSING OFFICER ASKED THE APPELLANT TO PRODUCE SH. GURMUKH SINGH, BUT THE APPELLANT DID NO T PRODUCE HIM. THE ASSESSING OFFICER ADDED BACK THIS AMOUNT OF RS. 91,09,000/-. 4. DURING THE COURSE OF APPELLATE PROCEEDINGS, THE LD. COUNSEL FOR THE APPELLANT HAS FILED THE DETAILS OF TRANSACTIONS DONE THROUGH SH. GURMUKH SINGH. THE SUBMISSION FILED BY THE LD. COUNSEL IS SUMMARIZED BELOW: (I) ALL THE TRANSACTIONS WITH SH. GURMUKH SINGH WERE RECORDED IN THE CASH BOOK. THE LAST AMOUNT ADVANCED WAS NOT 3 RETURNED BACK AND SO WAS CLAIMED AS EXPENDITURE, (II) THE AMOUNT OF RS. 91,09,000/- WAS UNREALIZED PROFIT, WHICH WAS SURRENDERED ON 10.03.2010, BUT WAS NEVER REALIZED. (III) THE APPELLANT DID NOT WANT TO CONTINUE WITH THIS BUSINESS AFTER THE SURVEY AND SUBSEQUENTLY SH. GURMUKH SINGH ALSO CAME TO KNOW ABOUT THE SURVEY AND HE STARTED AVOIDING THE APPELLANT. (IV) LATER ON, SH. GURMUKH SINGH DIED ON 13.12.2010 AND THE AMOUNT COULD NOT BE REALIZED, (V) THE DEPARTMENT IS ACKNOWLEDGING THAT LAND TRADING WAS BEING DONE BY THE APPELLANT, WHEREIN AN AMOUNT OF RS. 3,25,00,000/- HAD BEEN EARNED TILL 10.03.2010 AND WAS OFFERED FOR 'TAXATION, BUT DEPARTMENT REFUSES TO ACCEPT THE FACT THAT OUT OF THE SAME AMOUNT, AN AMOUNT OF RS. 91,09,000/- WAS NOT RECEIVED BACK, WHICH WAS CLAIMED AS EXPENDITURE. 5. THE LD. CIT(APPEALS), HOWEVER, DID NOT ACCEPT CONTENTION OF THE ASSESSEE AND DISMISSED THE APPEAL OF ASSESSEE. SAME IS REPRODUCED AS UNDER : 3.3 I HAVE CONSIDERED THE SUBMISSION OF THE LD. COUNSEL. THE APPELLANT WAS CARRYING ON T HE BUSINESS OF THE LAND TRANSACTIONS THROUGH SHRI GURMUKH SINGH. AS PER THE DETAILS FILED, SH. GURMUKH SINGH USED TO ENTER INTO THE LAND DEALS BY PAYING TOKEN AMOUNT AND WAS SELLING THE LAND SUBSEQUENTLY. AT THE TIME OF SURVEY ON 10.03.2010, THE APPELLANT HAD OFFERED AN AMOUNT OF RS. 3.25 CROES F OR TAXATION ON ACCOUNT OF LAND DEALS DONE BY SH. GURMU KH SINGH ON BEHALF OF THE APPELLANT. OUT OF THIS DISCL OSURE, 4 THE APPELLANT HAD NOT DECLARED RS. 91,09,000/- IN I TS RETURN OF INCOME, WHICH HAS BEEN ADDED BY THE ASSESSING OFFICER. AS PER THE DOCUMENTS FILED BY TH E APPELLANT, THIS AMOUNT OF RS. 91,09,000/- IS THE TO KEN AMOUNT GIVEN BY SH. GURMUKH SINGH TOWARDS LAND DEAL (SAUDA) ON 05.03.2010 FOR RS. 5,45,00,000/-. THIS WAS THE LAST DEAL AS PER THE DETAILS FILED, WHICH WA S FIVE DAYS BEFORE THE DATE OF SURVEY. IT IS CLAIMED T HAT THE APPELLANT COULD NOT FINALISE THIS LAND DEAL AND SH. GURMUKH SINGH COULD NOT GET BACK THE TOKEN AMOUNT GIVEN OF RS. 91,09,000/-, BUT NO EVIDENCE HAS BEEN FILED BY THE APPELLANT IN SUPPORT OF THIS CONTENTION. IT IS A CONCOCTED STORY TO REDUCE THE AMOUNT OF DISCLOSURE, SINCE IF A 'SAUDA' WAS ENTERED FOR RS. 5.45 CRORES, THE LAND WOULD HAVE BEEN SOLD OR THE AMOUNT WOULD HAVE BEEN RECEIVED BACK. FURTHER, THE VOLUNTARY DISCLOSU RE WAS MADE AFTER TAKING INTO ACCOUNT ALL THE FACTORS AND THERE WAS NO REASON NOT TO DECLARE THE ENTIRE SURRENDERED AMOUNT IN THE RETURN OF INCOME. AT THE TIME OF SURVEY, THE APPELLANT HAD NEVER INDICATED THAT T HE LAND FOR WHICH RS. 91,09,000/- WAS GIVEN AS TOKEN AMOUNT HAD NOT BEEN SOLD. 3.3.1 THE RATIO OF JUDGEMENT OF HON'BLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF BACHITTAR SINGH (328 ITR 400) IS SQUARELY APPLICABLE TO THE CASE OF THE APPELLANT. I N THAT CASE, THE ASSESSEE HAD SURRENDERED AN AMOUNT OF RS. 19,00,000/- ON ACCOUNT OF INVESTMENT IN A SHOP, BUT SUBSEQUENTLY HE RESILED FROM HIS STATEMENT ON THE GROUND THAT HE HAD AGRICULTURAL INCOME AND INVESTME NT WAS FROM THAT SOURCE, EVIDENCE OF WHICH WAS FOUND DURING THE COURSE OF SURVEY IN THE FORM OF A DIARY. T HE ASSESSING OFFICER REJECTED THE CONTENTION OF THE APPE LLANT BY HOLDING THAT THERE WAS A LONG GAP BETWEEN THE STATEMENT MADE ORIGINALLY ON 21.03.2003 AND RETRACTION ON 28.05.2003 OF THE SAID STATEMENT AND THE STAND TAKEN WAS AN AFTERTHOUGHT. THE COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE PLEA OF THE ASSESSEE, BUT HON'BLE TRIBUNAL REVERSED THE VIEW TAK EN BY CIT(A) BY HOLDING THAT BURDEN WAS ON THE ASSESSE E TO ESTABLISH THAT THE ADMISSION MADE BY HIM DURING THE COURSE OF SURVEY WAS WRONG. IT WAS ALSO HELD BY THE HON'BLE TRIBUNAL, THAT THE STATEMENT HAVING NOT BEEN RETRACTED AT THE EARLIEST OPPORTUNITY WAS AN IMPORT ANT PIECE OF EVIDENCE, WHICH COULD NOT BE BRUSHED ASIDE AND STATEMENT OF ASSESSEE RECORDED DURING SURVEY WAS MATERIAL AND COULD FORM THE BASIS OF ASSESSMENT. THUS, IN THAT CASE, EVEN GAP OF ABOUT TWO MONTHS FR OM MARCH 21 TO MAY 28, 2003 WAS CONSIDERED A LONG GAP, WHEREAS IN THE CASE OF THE APPELLANT THERE WAS NO RETRACTION, BUT THE ADDITIONAL INCOME SURRENDERED W AS SIMPLY NOT DISCLOSED IN THE RETURN OF INCOME, FILED ALM OST ONE YEAR AFTER THE DATE OF SURVEY. 5 3.3.2 THE STATEMENT GIVEN BY THE ASSESSEE WAS VOLU NTARY AND WITHOUT ANY COERCION OR UNDUE INFLUENCE. ONE CANNOT BE ALLOWED TO STATE ONE THING TODAY AND TO WITHDRAW THE SAME TOMORROW. IT IS ALSO PERTINENT TO NOTE THAT IF SUCH A STATEMENT IS ALLOWED TO BE RETRACTED, THEN IT WOULD BE A MOCKERY OF LAW. IT WOULD BE TOO MUCH OF A TRAVESTY AND ABUSE OF THE JUDICIAL PROCESS-UNLESS THERE IS SOME MATERIAL ON RECORD THAT CLEARLY ESTABLISHES THAT THE STATEMENT WAS GIVEN UNDER DURESS OR INDUCEMENT. 3.3.3 THE CRUCIAL QUESTION IS WHETHER ANY ADDITIO N CAN BE MADE ON THE BASIS OF SELF STATEMENT GIVEN VOLUNTARILY BY THE ASSESSEE, WHICH IS LATER RETRACT ED. IT IS SETTLED LAW THAT ADMISSION BY A PERSON IS GOO D PIECE OF EVIDENCE 'THOUGHT NOT CONCLUSIVE AND THE SAME CAN BE USED AGAINST A PERSON WHO MAKES IT. THE REASON BEHIND THIS IS THAT A PERSON MAKING A STATEM ENT STOPS THE OPPOSITE PARTY FROM MAKING FURTHER INVESTIGATION. IT IS TRUE THAT THERE ARE EXCEPTIO NS TO SUCH ADMISSION WHERE THE ASSESSEE CAN RETRACT FRO M SUCH ADMISSION. THE FIRST EXCEPTION IS WHERE SUCH STATEMENT IS MADE INVOLUNTARILY I.E. OBTAINED UNDER COERCION, THREAT, DURESS, UNDUE INFLUENCE ETC, BU T IN THIS SITUATION, THE BURDEN LIES ON THE PERSON MAKIN G SUCH ALLEGATIONS TO PROVE THAT STATEMENT WAS OBTAIN ED BY THE AFORESAID MEANS. THE SECOND EXCEPTION IS WHERE THE STATEMENT HAS BEEN GIVEN UNDER SOME MISTAKEN BELIEF EITHER OF FACT OR LAW AND IN THAT SITUATION, THE ASSESSEE HAS TO SHOW THAT THE STATEM ENT WAS MADE ON MISTAKEN BELIEF OF FACTS AND HE CAN RET RACT FROM THE STATEMENT IF HE CAN SHOW THAT FACTS ON THE BASIS OF ADMISSION SO MADE WERE INCORRECT. IF ANY UNDUE INFLUENCE, DURESS, COERCION, THREAT HAD BEEN BROUGH T UPON THE APPELLANT AT THE TIME OF DEPOSING THE STATEMENT OR IF HE WAS UNDER SOME MISTAKEN BELIEF OF FACT OR LAW, IT W AS INCUMBENT UPON HIM TO HAVE INFORMED THIS FACT TO THE HIGHER AUTHORITIES AND INFORM THEM ABOUT THE FACT TH AT WHAT WAS STATED IN THE STATEMENT WAS WRONG. 3.3.4 IN VIEW OF THE ABOVE, IT IS HELD THAT THE APPE LLANT HAD NO REASON NOT TO DECLARE THIS AMOUNT OF RS. 91,09,000/- IN ITS RETURN OF INCOME. THE ASSESSING O FFICER HAS RIGHTLY ADDED BACK THIS AMOUNT AND HIS ACTION I N THIS REGARD IS UPHELD. 6. WE HAVE HEARD LD. REPRESENTATIVES OF BOTH THE PARTIES, PERUSED THE FINDINGS OF AUTHORITIES BELOW AND CONSIDERED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE DURING THE COURSE OF SURVEY, SURRENDERED A N 6 AMOUNT OF RS. 3.60 CRORES BUT WHEN RETURN WAS FILED , THE ASSESSEE DID NOT DECLARE THE AMOUNT OF RS. 91,09,000/-. THE ASSESSEE EXPLAINED THAT HE H AD ENTERED INTO AN AGREEMENT WITH SHRI GURMUKH SINGH F OR TRADING IN LAND AND ALL THE TRANSACTIONS FOR PURCHA SE AND SALE WERE IN CASH. THE ASSESSEE EXPLAINED THAT IN ONE OF THE TRANSACTION, ASSESSEE HAD SUFFERED A LOS S AMOUNTING TO RS. 91,09,000/-. A TOKEN FOR LAND TRANSACTION WAS BOOKED AT RS. 5.45 CR ON 05.03.2010 WHEREIN ADVANCE OF RS. 91.09 LACS WAS WITH SHRI GURMUKH SINGH AND THIS MONEY WAS NOT RETURNED BACK, THEREFORE, ASSESSEE SUFFERED A LOSS. THE ASSESSEE FILED DETAILED TRANSACTION CHART GIVING THE DETAILS OF SA LES AND PROFIT/LOSS EARNED THEREON BEFORE THE AUTHORITIES B ELOW, COPY OF WHICH IS REPRODUCED AT PAGE 3 OF THE ASSESS MENT ORDER AND COPY OF THE SAME IS ALSO FILED AT PAGE 9 OF THE PAPER BOOK. IT DISCLOSED THAT ASSESSEE HAD ENTERED INTO VARIOUS TRANSACTIONS WITH SHRI GURMUKH SINGH. THE REVENUE DEPARTMENT ACCEPTED ALL THE TRANSACTIONS MENTIONED IN THIS CHART. HOWEVER, THE LAST DEAL OF 05.03.2010 WAS PARTLY ACCEPTED WITH REGARD TO LAND PURCHASE FOR PRICE AND ADVANCE GIVEN BUT LOSS SUFFE RED ON ACCOUNT OF DEAL DID NOT MATERIALIZED AND ASSESSE E SUFFERED LOSS, WAS NOT ACCEPTED. THIS CHART IS SUP PORTED BY PB-10 TO 14 WHICH IS THE DETAILS OF TRANSACTIONS MENTIONED IN THIS CHART AND HAVE BEEN SIGNED ON BEH ALF OF THE ASSESSEE AND SHRI GURMUKH SINGH. PRIOR TO T HE PASSING OF THE ASSESSMENT ORDER IN QUESTION, SHRI 7 GURMUKH SINGH DIED ON 13.12.2010 THEREFORE, ACCORDI NG TO THE ASSESSEE, THE DEAD PERSON COULD NOT BE PRODU CED BEFORE ASSESSING OFFICER FOR EXAMINATION. THESE FA CTS WOULD CLEARLY PROVE THAT ASSESSEE MAINTAINED COMPLE TE DETAILS OF TRANSACTIONS WITH SHRI GURMUKH SINGH WHI CH IS SUPPORTED BY THE DETAILS NOTED AND SIGNED BY BOT H THE PARTIES, COPIES OF WHICH ARE FILED AT PAGE 10-14 OF THE PAPER BOOK AS WELL AS TAKEN INTO CONSIDERATION BY T HE REVENUE DEPARTMENT ACCEPTING THE SURRENDER AMOUNT FROM THE ASSESSEE. IF THE ASSESSING OFFICER WANTED TO SAY THAT THIS DEAL IS MATERIALIZED IGNORING THE LOS S IN THE TRANSACTION, ASSESSING OFFICER SHOULD HAVE BROU GHT ON RECORD ANY AGREEMENT OR SALE TRANSACTION EXECUTE D BETWEEN ASSESSEE AND SHRI GURMUKH SINGH. FURTHER ASSESSING OFFICER SHOULD HAVE ALSO INVESTIGATED THE MATTER FROM HIS OWN SOURCES WHETHER ASSESSEE HAS EARNED ANY PROFIT OUT OF THE LAST TRANSACTION. THE AUTHORITIES BELOW MERELY GOING THROUGH THE TOTAL SURRENDER MADE BY ASSESSEE HAS DISALLOWED THE CLAIM OF THE ASSESSEE OF THE LOSS SUFFERED IN THE LAST TRANS ACTION BECAUSE THE AMOUNT DID NOT RECEIVE BACK FROM SHRI GURMUKH SINGH. 6(I) THE ASSESSEE FROM THE EVIDENCES AND MATERIAL ON RECORD HAS BEEN ABLE TO SATISFY THAT THERE WAS REAS ON FOR ASSESSEE NOT TO DECLARE AN AMOUNT OF RS. 91,09,000/ - IN THE RETURN OF INCOME. THE EXPLANATION OF THE ASSES SEE IS SUPPORTED BY THE MATERIAL FACT WHICH SHOULD NOT HAV E 8 BEEN IGNORED BY THE AUTHORITIES BELOW. THE ASSESSE E DESPITE MAKING SURRENDER AT THE TIME OF SURVEY COUL D EXPLAIN THAT ADMISSION WAS INCORRECT OR DO NOT SHOW CORRECT STATE OF FACT. THE ASSESSEE COULD PROVE TH AT THE ADMISSION MADE BY HIM WAS IN FACT NOT CORRECT AND T RUE. WE RELY UPON DECISION OF HON'BLE SUPREME COURT IN T HE CASE OF PULLANGODE RUBBER PRODUCE CO. LTD. 91 ITR 18 AND DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF KISHAN LAL SHIV CHAND 88 ITR 293. 6(II) CONSIDERING MATERIAL ON RECORD AND THE FACT THAT THE AUTHORITIES BELOW BELIEVED THE CHART PRODUCED B Y ASSESSEE FOR TRANSACTION WITH SHRI GURMUKH SINGH AS REPRODUCED IN THE ASSESSMENT ORDER, THERE WAS NO REASON FOR THE ASSESSING OFFICER TO DISBELIEVE THE LAST TRANSACTION IN THE SAME CHART WHICH IS SUPPORTED BY THE ENTRIES CONTAINED IN THE LIST FILED AT PAGE 10 TO 1 4 OF THE PAPER BOOK. THE LD. CIT(APPEALS) MERELY PRESUMED THAT SINCE SAUDA WAS ENTERED INTO FOR RS. 5.45 CRORES THEREFORE, LAND WOULD HAVE BEEN SOLD OR THE AMOUNT WOULD HAVE BEEN RECEIVED BACK. IT IS MERELY A PRESUMPTION OF THE LD. CIT(APPEALS) AND CAN NOT TAK E PLACE OF LEGAL PLACE. 7. FROM THE FACTS AND CIRCUMSTANCES AND MATERIAL ON RECORD, WE ARE OF THE VIEW THAT EXPLANATION OF THE ASSESSEE IS SUPPORTED BY THE CHART PRODUCED BEFORE THE AUTHORITIES BELOW AND SUPPORTED BY THE DETAILS SIGN ED BY THE ASSESSEE AND SHRI GURMUKH SINGH. THERE WAS THU S, 9 NO REASON TO DISBELIEVE THE LOSS SUFFERED BY THE AS SESSEE ON THE LAST TRANSACTION ON ACCOUNT OF THE AMOUNT IN QUESTION NOT RETURNED BY SHRI GURMUKH SINGH TO THE ASSESSEE, WHO HAS, LATER ON, EXPIRED BEFORE PASSING OF THE ASSESSMENT ORDER. WE, THEREFORE, DO NOT FIND A NY JUSTIFICATION TO SUSTAIN THE ASSESSEE. WE SET ASID E THE ORDERS OF AUTHORITIES BELOW AND DELETE THE ADDITION OF RS. 91,09,000/-. 8. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- ( PRASHANT MAHARSHI) ( BHA VNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 11 TH AUGUST,2016. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT, DR ASSISTANT REGISTRAR, ITAT/CHD