Sunil Eknath Loharkar, Nashik V. Assistant Commissioner of Income-tax,

ITA 170/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1596 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HITENDRA NINAWE
• Section: 143(3)

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 170 /PN/201 5 / ASSESSME NT YEAR : 20 1 0 - 1 1 SUNIL EKNATH LOHARKAR 04, PANZARA SOCIETY, BEHIND RTO, PETH ROAD, NASHIK . / APPELLANT PAN: A B MPL0633R VS. THE ASST. COMMISSIONER INCOME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : SHRI PRAMOD SHINGTE / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 2 8 . 0 6 .201 6 / DATE OF PRONOUNCEMENT: 08 . 0 7 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL F ILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 2 1 . 0 1 .20 1 5 RELATING TO ASSESSMENT YEAR 20 1 0 - 1 1 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUND S OF APPEAL: - 1 . ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED CIT(A) - 1, NASHIK ERRED IN ENHANCING THE APPELLANTS INCOME WITHOUT GIVING THE NOTICE AND OPPORTUNITY OF HEARING, THIS BEING A PATENT IRREGULARITY THE ORDER PASSED BY CIT(A) - 1, NEEDS TO BE QUASHED TO THE EXTENT OF SUCH ENHANCEMENT. ITA NO. 170 /PN/20 1 5 SUNIL EKNATH LOHARKAR 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LOWER AUTHORITIES HAVE ERRED IN MARKING AN ADDITION OF RS.22,34,975/ - ON ACCOUNT OF CASH DEPOSIT IN BANK ON ADHOC BASI S AND FURTHER CIT(APPEALS) 1, NASHIK HAS ERRED IN ENHANCING THE SAME ADDITION BY ANOTHER RS.22,35,000/ - TO THE INCOME OF THE ASSESSEE BY DISREGARDING APPELLANT CONTENTION IN THIS REGARD. 3. THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS NOT PRESSED AND HENCE, THE SAME IS DISMISSED AS NOT PRESSED. 4. THE ISSUE IN GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS AGAINST ADDITION MADE ON ACCOUNT OF CASH DEPOSITS IN BANK BY THE ASSESSING OFFICER AT RS. 22,34,975/ - AND ENHANCED BY THE CIT(A) BY ANOTHER RS . 22,35,000/ - . 5. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS.22,76,600/ - INCLUDING AGRICULTURAL INCOME OF RS.3,40,600/ - . THE ASSESSEE WAS WORKING AS CIVIL CONTRACTOR AND WAS ALSO PARTNER IN THE FIRM AND WAS HAVING AGRICULTURAL INCOME. THE ASSESSEE WAS ASKED TO PRODUCE THE BILLS OF CASH DEPOSITS IN ALL THE BANK ACCOUNTS WITH ASKED TO PRODUCE THE BILLS OF CASH DEPOSITS IN ALL THE BANK ACCOUNTS WITH SOURCES THEREOF. THE SUMMARY OF CASH DEPOSITS IN BANK ACCOUNTS IS TABULATED UNDER PARA 3 AT PAGE 2 OF THE ASSESSMENT O RDER , WHICH TOTALS TO RS.44,69,950/ - . THE ASSESSING OFFICER NOTED THAT THE CASH DEPOSIT OF RS.44,69,950/ - WAS CLAIMED TO BE CASH RECEIVED FROM TWO FARMERS MR. VINOD JOSHI AND MR. SANJAY LOHARKAR. THE ASSESSEE CLAIMED THAT THE SAID FARMERS HAD ENTERED INTO AN AGREEMENT WITH THE ASSESSEE FOR PURCHASE OF LAND AT SURVEY NO.278/1A, MEASURING 4400 SQ.MTRS. FOR TOTAL SALE CONSIDERATION OF RS.88 LAKHS, OUT OF WHICH THE ASSESSEE HAD RECEIVED RS.21,94,950/ - FROM MR. VINOD JOSHI AND RS.22,75,000/ - FROM MR. SANJAY LOH ARKAR. THE ASSESSEE WAS ASKED TO PRODUCE THE CONFIRMATION, ADDRESS, PAN NUMBER, RETURN OF INCOME AND COMPUTATION OF BOTH THE SAID PERSONS AND WAS ALSO ASKED TO PROVE THE SOURCES OF CASH PAID AND GENUINENESS OF THE TRANSACTION AND ALSO THE CREDITWORTHINESS OF TWO PERSONS. THE ASSESSEE COULD NOT PRODUCE THE RETURN OF INCOME, PAN NUMBER ITA NO. 170 /PN/20 1 5 SUNIL EKNATH LOHARKAR 3 AND COMPUTATION OF INCOME OF THE SAID PERSONS AS THEY WERE CLAIMED TO BE THE FARMERS AND THE CASH PAID BY THEM WAS FROM AGRICULTURAL PRODUCE ONLY. THE LEARNED AUTHORIZED REP RESENTATIVE FOR THE ASSESSEE WAS THUS, ASKED TO PRO DUCE 7/12 EXTRACT, BILLS/VOUCHERS OF AGRICULTURAL P RODUCE, ETC. BOTH THE PERSONS ATTENDED THE OFFICE OF ASSESSING OFFICER AND CONFIRMED THE CASH GIVEN. AN AFFIDAVIT WAS FILED, BUT NO BILLS / VOUCHERS WER E PRODUCED IN RESPECT OF AGRICULTURAL INCOME. THE ASSESSING OFFICER OBSERVED THAT CASH HAD BEEN PAID BY THE SAID PERSONS, BUT THE SOURCE OF CASH PAID, GENUINENESS OF TRANSACTIONS AND CREDITWORTHINESS OF PERSONS COULD NOT BE ESTABLISHED AND THEREFORE, HE D ISALLOWED SUM OF RS. 22,34,975/ - BEING 50% OF CASH RECEIVED OF RS.44,69,950/ - AND ADDED BACK THE SAME TO THE INCOME OF ASSESSEE. 6. THE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE HAD CONCOCTED THE STORY OF RECEIVING CASH ADVANCE AGAINST SALE OF LAND TO SHRI VINOD JOSHI AND SHRI SANJAY LOHARKAR, IN ORDER TO EXPLAIN CASH DEPOSITS MADE BY HIM IN HIS BANK SANJAY LOHARKAR, IN ORDER TO EXPLAIN CASH DEPOSITS MADE BY HIM IN HIS BANK ACCOUNT WITH PUNJAB NATIONAL BANK AND NDCC BANK. THE CIT(A) FURTHER OBSERVED THE ASSESSEE TO HAVE CONCOCTED SATHEKHAT AGREEMENT, AFFIDAVITS AND THE CONFIRMATIO NS OF THE ABOVE REFERRED TWO PERSONS AND THE TRANSACTION WAS HELD TO BE FABRICATED. THE CIT(A) FURTHER HELD THAT WHERE THE ASSESSEE HAS FAILED TO PROVE THE CREDITWORTHINESS OF TWO PERSONS AND THE GENUINENESS OF TRANSACTION, THE CASH DEPOSITS IN THE BANK A CCOUNT REMAINED UNEXPLAINED. HE FURTHER OBSERVED THAT THE LAND WAS IN THE NAME OF MORE THAN 5 - 6 PERSONS AND IN THE ABSENCE OF OTHER PERSONS HAV ING EXECUTED THE SATHEKHAT AGREEMENT, THE ASSESSEE COULD NOT TAKE ADVANCE FROM THE TWO PARTIES. THE CIT(A) IN T HIS REGARD CONFIRMED THE ADDITION OF RS.44,69,950/ - AS UNEXPLAINED CASH DEPOSITS, AGAINST WHICH THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. ITA NO. 170 /PN/20 1 5 SUNIL EKNATH LOHARKAR 4 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE SOURCE OF CASH DEPOSITS IN THE BA NK ACCOUNT WAS AGAINST TWO DIFFERENT AGREEMENTS TO SELL EXECUTED WITH DIFFERENT PARTIES. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE ASSESSING OFFICER HAD ACCEPTED 50% OF CASH RECEIPTS AGAINST THE AGREEMENTS TO SELL. IN OT HER WORDS, HE ACCEPTS THE TRANSACTION, BUT DISPUTES THE AMOUNT WHICH HAD NO BASIS. ATTENTION WAS DRAWN TO THE AGREEMENT DATED 14.01.2010 PLACED AT PAGES 21 AND 22 OF THE PAPER BOOK AND IT WAS POINTED OUT THAT THE SAID AGREEMENT WAS EXECUTED BY TWO PERSONS WHO WERE THE CO - OWNERS. FURTHER, TOTAL PRICE WAS RS. 9 0 LAKHS, AGAINST WHICH THE AMOUNT WAS RS.45 LAKHS. HE FURTHER POINTED OUT THAT THE AMOUNT WAS ALSO RECEIVED BY CO - OWNERS AND THE SAME WAS DEPOSITED IN BOTH THE ACCOUNTS. IN THE CASE OF CO - OWNERS, THE ASSESSMENT HAS BEEN COMPLETED BY PASSING AN ASSESSMENT ORDER, WHEREIN NO ADDITIONS WERE MADE. HOWEVER, IN THE CASE OF ASSESSEE, THE PLEA HAS NOT BEEN ACCEPTED. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE FURTHER POINTED OUT THAT THE LANDHOLDI NG WAS ABOUT 22.50 ACRES AND 27 ACRES OF THE TWO PERSONS AND EVEN IF LANDHOLDING WAS NOT ENOUGH , FAMILY HA D SUFFICIENT LANDHOLDING, WHICH IS NOT DISPUTED. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDERS OF AUTHORIT IES BELOW. 9. ON PERUSAL OF RECORD AND PAPER BOOK FILED BY THE ASSESSEE, THE ISSUE ARISING IN THE PRESENT APPEAL IS IN RELATION TO THE ADDITION MADE ON ACCOUNT OF CASH DEPOSITS IN THE BANK ACCOUNTS OF ASSESSEE. THE CLAIM OF ASSESSEE I S THAT THE SAID AMOU NT WAS RECEIVED FROM TWO PERSONS MR. VINOD JOSHI AND MR. SANJAY LOHARKAR, WHO IN TURN, HAD CONFIRMED THE ADVANCEMENT OF THE SAID AMOUNT TO THE ASSESSEE AND HAD ALSO APPEARED BEFORE THE ASSESSING OFFICER IN ITA NO. 170 /PN/20 1 5 SUNIL EKNATH LOHARKAR 5 THIS REGARD AND CONFIRMED THE SAME. WITH REGARD T O SOURCE OF CASH AVAILABLE IN THE HANDS OF TWO PERSONS, THE ASSESSEE HAD PLACED RELIANCE ON THE SATHEKHAT AGREEMENT EXECUTED BY THE TWO PERSONS FOR THE SALE OF PROPERTY. IT WAS THE CASE OF ASSESSEE BEFORE THE AUTHORITIES BELOW THAT BOTH THE LENDERS WERE A GRICULTURISTS AND HAD RECEIVED THE MONEY ON AGREEMENTS TO SELL OF ITS PROPERTY AND ADVANCED THE SAID AMOUNT TO THE ASSESSEE AND THERE WAS NO MERIT IN ANY ADDITION IN THE HANDS OF ASSESSEE. THE TOTAL LANDHOLDING OF MR. SANJAY LOHARKAR AND HIS FAMILY WAS 9. 48R I.E. 22.50 ACRES AND THE TOTAL LANDHOLDING OF MR. VINOD JOSHI AND HIS FAMILY WAS 10.81R I.E. 27 ACRES. THE DETAILS OF AGRICULTURAL LANDHOLDING OF THE TWO PERSONS WAS FILED BEFORE THE CIT(A) AND IS AVAILABLE AT PAGES 4 AND 5 OF THE PAPER BOOK. THE ASS ESSING OFFICER IN THIS CASE, AFTER GOING THROUGH THE EVIDENCE FILED BY THE ASSESSEE HAD ACCEPTED THE TRANSACTION PARTIALLY I.E. 50% OF THE AMOUNT RECEIVED IN C ASH BY THE ASSESSEE WAS ACCEPTED TO BE AS PER THE EXPLANATION OF ASSESSEE TO HAVE BEEN RECEIVED F ROM THE SAID TWO PERSONS. WHEN THE ASSESSEE FILED AN APPEAL BEFORE THE F ROM THE SAID TWO PERSONS. WHEN THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A), HE ISSUED ENHANCEMENT NOTICE TO THE ASSESSEE AND THE COMPLETE AMOUNT DEPOSITED IN CASH IN THE BANK ACCOUNT WAS ADDED AS INCOME OF THE ASSESSEE. THE SUMMARY OF CASH DEPOSITS IN THE BANK ACCOUNT IS AVAILABLE AT PAGE 15 OF THE PAPER BOOK, UNDER WHICH SUM OF RS.42,69,950/ - HAS BEEN DEPOSITED ON VARIOUS DATES RANGING FROM 25.04.2009 TO 27.03.2010 IN CASH IN PUNJAB NATIONAL BANK . FURTHER, SUM OF RS.2 LAKHS HAS BEEN DEPOSITED ON 30.0 3.2010 IN NDCC BANK, THUS TOTALING RS. 44,69,950/ - . THE SOURCE OF SAID CASH DEPOSITS IS AN ADVANCE RECEIVED AGAINST LAND FROM MR. VINOD JOSHI AND MR.SANJAY LOHARKAR. THE SUMMARY OF CASH DEPOSITS IN BANK ACCOUNTS ARE PLACED AT PAGE 15 OF THE PAPER BOOK. T HE ASSESSEE HAD FURNISHED COPIES OF AFFIDAVIT AND SATHEKHAT AGREEMENT S FURNISHED BY THE TWO PERSONS, AS PER WHICH, SUM OF RS.22 LAKHS WAS GIVEN IN CASH AGAINST PROPERTY AT GAT NO.278/1A AND MR. SANJAY LOHARKAR HAD GIVEN CASH OF RS.22,50,000/ - AS AN ADVANCE FOR THE ITA NO. 170 /PN/20 1 5 SUNIL EKNATH LOHARKAR 6 PROPERTY AT GAT NO.191, 200/3, 194/2. THE SAID TRANSACTIONS WERE REQUIRED TO BE COMPLETED BY 31.03.2004. THE EXPLANATIONS FILED BY THE TWO PERSONS WERE REJECTED ON THE GROUND THAT THE LANDHOLDING OF TWO PERSONS WAS NOT SUFFICIENT TO BACK THE ADV ANCES MADE BY THEM INDIVIDUALLY TO THE ASSESSEE. AS POINTED OUT IN THE PARAS HEREINABOVE, THE TOTAL LANDHOLDING OF THE ASSESSEE OF MR. VINOD JOSHI WAS 27 ACRES AND OF MR. SANJAY LOHARKAR WAS 22.50 ACRES, IN ADDITION THE FAMILIES OF TWO PERSONS OWNED FURTH ER PROPERTY. WHERE THE ASSESSEE HAS FURNISHED EVIDENCE AVAILABLE WITH IT TO ESTABLISH ITS CASE AND FURTHER FILED SOURCE OF CASH IN HAND IN THE HANDS OF TWO PERSONS, WHO IN TURN, HAVE ADVANCED THE AMOUNT TO THE ASSESSEE IN ORDER TO PURCHASE A PIECE OF LAND FROM THE ASSESSEE, THEN A PRAGMATIC VIEW SHOULD BE TAKEN ON THE ISSUE. AN AGREEMENT HAS BEEN EXECUTED BETWEEN THE ASSESSEE AND THE TWO PERSONS FROM WHOM HE HAD RECEIVED CASH AMOUNT WHICH WAS AGAINST THE SALE OF PROPERTY BY THE ASSESSEE. THE ASSESSING OF FICER HAD ACCEPTED THE CASH GIVEN BY THE TWO PERSONS TO THE EXTENT OF 50%. THE CIT(A) ON THE OTHER HAND, REVERSED THE SAID PERSONS TO THE EXTENT OF 50%. THE CIT(A) ON THE OTHER HAND, REVERSED THE SAID ORDER OF ASSESSING OFFICER. NOW, THE QUESTION TO BE SEEN IS WHETHER THE ASSESSEE WHO HAD ENTERED INTO AN AGREEMENT TO SELL THE PROP ERTY HAS RECEIVED THE AMOUNT IN CASH FROM KNOWN SOURCES. THE ASSESSEE HAS FURNISHED ON RECORD THE COMPLETE INFORMATION IN RESPECT OF SOURCE OF AVAILABILITY OF CASH IN THE HANDS OF LENDERS I.E. MR. VINOD JOSHI AND MR. SANJAY LOHARKAR. ONCE THE SOURCES ARE KNOWN TO THE ASSESSEE AND THE SAME HAVE BEEN EXPLAINED BY WAY OF FILING CONFIRMATIONS AND THE RELEVANT DOCUMENTS AND ALSO THE PERSONS WHO HAVE GIVEN THE AMOUNT HAVE ACCEPTED TO HAVE GIVEN, THERE IS NO MERIT IN MAKING ANY ADDITION IN THE HANDS OF ASSESSEE. 10. ANOTHER POINT TO BE NOTED IN THE CASE IS THAT THE SAID ADVANCES HAVE BEEN MADE TO TWO CO - OWNERS OF THE PROPERTY I.E. THE ASSESSEE IN THE PRESENT CASE AND SHRI SANJEEV GAJANAN RASANE. THE ASSESSEE POINTS OUT THAT THE TOTAL ITA NO. 170 /PN/20 1 5 SUNIL EKNATH LOHARKAR 7 CONSIDERATION FIXED WAS R S. 90 LAKHS AND RS.45 LAKHS WAS RECEIVED BY BOTH THE CO - OWNERS I.E. INCLUDING THE ASSESSEE. THE ASSESSMENT IN THE CASE OF SHRI SANJEEV GAJANAN RASANE HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT VIDE ORDER DATED 07.03.2013 AND NO ADDITION IN THIS REG ARD HAS BEEN MADE IN THE HANDS OF CO - OWNER. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, THERE IS NO MERIT IN ANY ADDITION IN THE HANDS OF ASSESSEE AND THE SAME IS DELETED. ACCORDINGLY, AN ADDITION OF RS.44,69,950/ - MADE IN THE HANDS OF ASSESSEE IS DELETED. THE GROUND OF APPEAL NO.2 RAISED BY THE ASSESSEE IS THUS, ALLOWED. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 11 . IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRON OUNCED ON THIS 8 TH DAY OF JU LY , 201 6 . SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 8 TH JU LY , 201 6 . GCVSR / COPY OF T HE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , I TAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE