Surinder Kumar, Chandigarh V. ITO, Chandigarh

ITA 173/CHANDI/2011

• Counselvise Citation: 17321514 RSA 2011
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-10-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 14-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: ANIL KUMAR BATRA
• Keywords: Income from undisclosed sources

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH BEFORE SHRI H.L.KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER ITA NO. 173/CHD/2011 ASSESSMENT YEAR: 2000-01 SHRI SURINDER KUMAR, V ITO, WARD 5(2), H.NO. 1545, CHANDIGARH. SECTOR 18D, CHANDIGARH. PAN: AOWPK-1310D (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI ANIL KUMAR BATRA DEPARTMENT BY SHRI N.K.SAINI DATE OF HEARING : 21.10.2011 DATE OF PRONOUNCEMENT : 24.10.2011 ORDER PER MEHAR SINGH, AM THE PRESENT APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER DATED 07.12.2010 PASSED BY THE LD. CIT(A) PAT IALA U/S 250(6) OF THE INCOME-TAX ACT,1961 (IN SHORT 'THE AC T'). 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: THAT THE LD. CIT(A) HAS WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES, WITHOUT VERIFYING THE TREATMENT GIVEN TO THE SUM OF RS.10,00,000/- IN THE HANDS OF M/S TRANJIT SINGH & CO. IN WHOSE BOOKS THE SAID AMOUNT APPEARED AS A CREDIT AND WITHOUT APPRECIATING THE AFFIDAVIT GIVEN BY THE APPELLANT I N EVIDENCE HAS ERRED IN DISMISSING OF THE CASE. THE ADDITION BE DELETED AND THE TAX LEVIED BE WITHDRAWN. 2 3. IN THE COURSE OF PRESENT APPELLATE PROCEEDINGS, THE LD. 'AR' SUBMITTED THAT THE ASSESSEE APPELLANT WAS AN E X- EMPLOYEE OF M/S TARANJIT SINGH & CO., LIQUOR CONTRA CTORS. IT WAS ARGUED THAT THE ASSESSEE APPELLANT WAS EMPLO YED AT A PETTY SALARY OF RS.2200/- PER MONTH AND CONSEQUENTL Y, HE IS A MAN OF NO MEANS. THE IMPUGNED AMOUNT OF RS.10,00,000/- FOUND DEPOSITED IN THE NAME OF THE A SSESSEE APPELLANT IN THE BANK ACCOUNT NO.1988 WITH PUNJAB N ATIONAL BANK, SECTOR 23 BRANCH, CHANDIGARH BELONGING TO M/S TARANJIT SINGH & CO., LIQUOR CONTRACTORS. HE REFER RED TO THE STATEMENT OF THE ASSESSEE RECORDED ON 26.11.201 0 WHERE IN RESPONSE TO QUESTION NO.4, THE ASSESSEE DEPOSED AS THIS WAS A NORMAL PRACTICE IN OUR CONCERN THAT A/CS OF T HE EMPLOYEES ARE GENERALLY OPENED IN THE NAMES OF EMPL OYEES AND OPERATED UPON BY THE FIRM OWNERS AFTER GETTING SIGNATURES ON BLANK CHEQUES. I BEING A VERY PETTY EMPLOYEE, COULD NOT QUESTION THE EMPLOYERS AUTHORITY AND AS I ALSO DONE THE SAME AS OTHER EMPLOYEES WERE DOING IN THE COMMAND OF OWNERS. IT WAS ALSO ARGUED THAT ASSESSEE IS NOT PARTNER IN THE IMPUGNED FIRM AND HE WAS RESIDIN G WITH OTHER CO-WORKERS AT THE VEND. FURTHER, IT WAS STAT ED THAT HIS FAMILY WAS RESIDING WITH HIS PARENTS IN VILLAGE . THE ASSESSEE ALSO FILED AN AFFIDAVIT DATED 15.01.2010 W HEREIN IT WAS DEPOSED THAT HE WAS EMPLOYED AT A PETTY SALARY WITH M/S TARANJIT SINGH & CO. WHO WAS LIQUOR CONTRACTOR FROM THE YEAR 1996 TO 2001. M/S TARANJIT SINGH & CO. WA S CONDUCTING HIS BUSINESS IN VARIOUS NAMES AND WAS POPULARLY KNOWN AS M/S LADA LIQUOR GROUP. M/S TARA NJIT 3 SINGH & CO. BEING AN INFLUENTIAL PERSON HAD OPENED VARIOUS ACCOUNTS IN THE NAME OF HIS WORKERS AND WAS OPERATI NG SUCH ACCOUNTS THROUGH BLANK SIGNED CHEQUES OF THE WORKER S. THOUGH THERE IS SUCH ENTRY IN HIS ACCOUNT OF WHICH HE WAS NOT AWARE AND DID NOT HAVE RESOURSES TO MAKE HUGE INVESTMENTS. THE AMOUNT OF RS.10 LACS DID NOT BELO NG TO HIM. PRESENTLY, HE WAS RUNNING HIS OWN TAXI AND EA RNING RS.5500/- PER MONTH. IT WAS FURTHER DEPOSED THAT FO R THE YEAR UNDER REFERENCE, HE WAS NOT AN INCOME TAX ASSE SSEE. 4. LD. 'DR' CONTENDED THAT THE ADDITION MADE IN THE HANDS OF M/S TARANJIT SINGH & CO. HAS SINCE BEEN DELETED ON ACCOUNT OF TECHNICAL GROUNDS. CONSEQUENTLY, ADDITI ON MADE IN THE HANDS OF THE PRESENT APPELLANT IS JUSTIFIED. THE LD. 'DR' PLACED RELIANCE ON THE ORDER OF THE LOWER AUTH ORITIES. 5. WE HAVE CAREFULLY PERUSED THE FACTS OF THE CASE, RIVAL SUBMISSIONS AND THE PAPER BOOK FILED BY THE ASSESSE E. A BARE PERUSAL OF ACCOUNT NO.1988 WITH PUNJAB NATIONA L BANK, SECTOR 23, CHANDIGARH IN THE NAME OF M/S TAR ANJIT SINGH & CO. REVEALS THAT DURING THE ASSESSMENT YEAR 1999- 2000 TO 2000-01, DEPOSITS APPEARING IN THE NAME OF CERTAIN PERSONS ARE APPEARING IN THIS ACCOUNT. ONE OF THE ALLEGED DEPOSITORS IS THE PRESENT ASSESSEE. THE AO MADE TH E ADDITION IN THE HANDS OF THE PRESENT ASSESSEE TREAT ING THE IMPUGNED DEPOSIT APPEARING IN THE BANK ACCOUNT OF M /S TARANJIT SINGH & CO. AS INCOME FROM OTHER SOURCES. THE LD. CIT(A) UPHELD THE FINDINGS VIDE PARA 3.5 OF HIS ORD ER. IT IS INTERESTING TO NOTE THAT THE IMPUGNED AMOUNT HAS BE EN 4 ADDED AND TAXED ON SUBSTANTIVE BASIS IN THE HANDS O F M/S TARANJIT SINGH & CO., LIQUOR CONTRACTORS AS WELL AS IN THE HANDS OF THE PRESENT ASSESSEE. IT IS A SETTLED PRO POSITION IN VIEW OF THE SCHEME OF INCOME-TAX ACT THAT THE SAME INCOME CANNOT BE TAXED TWICE. FURTHER, DELETION IN THE HA NDS OF M/S TARANJIT SINGH & CO. CANNOT BE MADE AS A FOUNDA TION FOR MAKING ADDITION IN THE HANDS OF THE PRESENT ASS ESSEE, AS CONTENDED BY THE LD. 'DR'. A BARE ANALYSIS OF THE FINDINGS OF THE LD. CIT(A), AS CONTAINED IN PARA 5.3 REVEALS TH AT IT HAS BEEN RECORDED BY THE FIRST APPELLATE AUTHORITY THAT ACIT, CC, CHANDIGARH HAS ALREADY GIVEN FINDING IN HIS ORD ER THAT SHRI SURNDER KUMAR IS BENAMI OF SHRI TARANJIT SINGH AND HIS FIRM. THE AO HAS STATED THAT IT IS A SELF-SUPP ORTING DOCUMENT (AFFIDAVIT FILED BY THE ASSESSEE) AND IS N OT CORROBORATED BY OTHER DOCUMENTARY EVIDENCE. IT WAS HELD BY THE CIT(A), THAT AO IS NOT JUSTIFIED IN DOUBTING TH E CORRECTNESS OF THE STATEMENT MADE BY THE DEPONENT I N THE AFFIDAVIT WITHOUT PLACING MATERIAL ON RECORD FOR DO UBTING THE VERACITY IN HIS STATEMENT. THE CIT(A), FURTHER, ST ATED THAT IN NUMEROUS CASE LAWS, IT HAS BEEN HELD THAT EVIDEN CE RENDERED BY AFFIDAVIT BEFORE AO IS LEGAL AND IS TO BE ACTED UPON BY THE AO. THE CIT(A), CONTINUING HIS ARGUMEN T FURTHER, OBSERVED THAT THE AO HAS DOUBTED THE CONTE NTS OF THE AFFIDAVIT STATING THAT IT IS NOT SUFFICIENT BUT HE DID NOT CALL UPON THE APPELLANT TO PRODUCE ANY OTHER DOCUME NTARY EVIDENCE. NOW, THE CIT(A), POSES THE QUESTION AS T O WHETHER THE RECITALS IN THE AFFIDAVIT BY ITSELF SHOULD BE S UFFICIENT PROOF FOR THE APPELLANTS CONTENTS. THE ANSWER IS THAT THE 5 APPELLANT HAD ALSO NOT BEEN ABLE TO BRING ANYTHING FURTHER ON RECORD TO SHOW THAT HE IS BENAMIDAR OF M/S TARAN JIT SINGH & CO. AND CONSEQUENTLY, THE CIT(A) UPHELD THE ADDITION MADE BY THE AO. IT IS EVIDENT THAT THE CI T(A) CORRECTLY HELD THAT CONTENTS OF THE AFFIDAVIT CANNO T BE BRUSHED ASIDE, WITHOUT BRINGING COGENT AND CREDIBLE EVIDENCE ON RECORD. HOWEVER, THE CIT(A) HIMSELF CHO SEN THE SAME PATH AS ADOPTED BY THE AO AND UPHELD THE ADDIT ION MADE BY HIM. IT IS EVIDENT THAT FINDINGS OF THE CI T(A), ARE CONTRADICTORY IN NATURE. HAVING REGARD TO THE STAT EMENT MADE BY THE APPELLANT, COUPLED WITH AFFIDAVIT FILED BY HIM IT IS EVIDENT THAT THE APPELLANT IS A MAN OF NO MEANS WHO WAS AN EMPLOYEE AT A MONTHLY SALARY OF RS.2200/- P.M., WITH M/S TARANJIT SINGH & CO. NEEDLESS TO SAY THAT THE IMPUGNED CREDIT IS FOUND IN THE BANK ACCOUNT BELONG ING TO M/S TARANJIT SINGH & CO. , THEREFORE, THE ONUS LIES UPON HIM TO EXPLAIN THE NATURE AND SOURCE OF SUCH DEPOSI TS. IN THE EVENT OF CATEGORICAL DENIAL BY THE PRESENT ASSE SSEE, AS BEING THE REAL OWNER OF THE AMOUNT DEPOSITED, IN TH E BANK ACCOUNT, THE ONUS BECOMES MORE HEAVY TO ESTABLISH T HE GENUINENESS OF SUCH ENTRY FOR M/S TARANJIT SINGH & CO. HAVING REGARD TO THE ENTIRETY OF THE FACTS AND CIRC UMSTANCES OF THE CASE, BOTH THE AO AND THE CIT(A), PROCEEDED ON INCORRECT ASSUMPTION OF FACTS AND INCORRECT APPLICA TION OF LAW. THE ASSESSEE BEING A MAN OF NO MEANS AND BEIN G EMPLOYEE AS DISCUSSED EARLIER, CANNOT BE SAID TO HA VE MADE SUCH DEPOSITS, IN THE ACCOUNT OF M/S TARANJIT SINGH & CO. THEREFORE, RELYING ON THE DECISION OF HON'BLE SUPRE ME COURT 6 IN THE CASE OF CIT V DURGA DASS MORE (1969) 72 ITR 807 AND SUMATI DAYAL V CIT (1995) 214 ITR 801 (S.C), THE FI NDINGS OF THE LD. CIT(A), CANNOT BE SUSTAINED. FURTHER, T HE LD. 'AR' PLACED RELIANCE ON THE DECISION IN THE CASE OF ACIT V PANCHURAM DESHMUKH AND OTHERS (2010) 133 TTJ 53 (BILASPUR) WHEREIN IT HAS BEEN HELD AS UNDER : INCOME FROM UNDISCLOSED SOURCES-ADDITION-BENAMI INCOME-ASSESSEE IS A PARTNER IN A FIRM FORMED BY T AND HIS FAMILY MEMBERS TO CARRY ON LIQUOR BUSINESS- HE IS AN EX-EMPLOYEE OF T AND IS A MAN OF NO MEANS- ASSESSEE WAS MADE PARTNER IN THE FIRM AFTER RECEIPT OF EXCISE CONTRACT-T, HIS FAMILY MEMBERS AND RELATIVES WERE MAJOR FINANCING PARTNERS OF THE FIRM WHILE OTHER PARTNERS MADE MEAGER CONTRIBUTIONS- EXCEPT T AND HIS FAMILY MEMBERS, OTHER PARTNERS WERE CHANGED FROM YEAR TO YEAR-ONLY THOSE PERSONS WERE MADE PARTNERS WHO HELD LICENCES FOR LIQUOR SHOPS/BARS IN THEIR NAMES-IN ORDER TO RETAIN CONTRO L OVER THE LIQUOR BUSINESS, A FRONT FIRM ST WAS CREAT ED IN THE GUISE OF FINANCING THE BUSINESS OF LIQUOR SHOPS/BAR-EXAMINATION OF BANK ACCOUNTS REVEALED THAT THOUGH HUGE CASH WAS BEING DEPOSITED IN THE ACCOUNTS OF SUCH PROXY PARTNERS, CASH WITHDRAWALS WENT BACK TO THE FIRM ST OR TO THE PERSONS OF T GROUP-IT WAS ALSO FOUND THAT ALL THE BANK ACCOUNTS WERE OPENED ON THE INTRODUCTION OF T OR HIS ASSOCIATES, AND TWO EMPLOYEES OF T MADE THE DEPOSITS AND WITHDRAWALS-THUS, THE MONEY WAS GIVEN BY THE FIRM AND THE BENEFITS HAVE ALSO GONE T O THE FIRM WHICH IS CONTROLLED BY T AND HIS CLOSE ASSOCIATES-ALL BANK TRANSACTIONS WERE ALSO CONTROLLED BY THEM-THESE CIRCUMSTANCES SHOW THAT THE ASSESSEE IS BENAMIDAR OF T-THEREFORE, INCOME COMPUTED IN ASSESSEE'S CASE IS ASSESSABLE ONLY IN THE HANDS OF SAID T ON SUBSTANTIVE BASIS-AS REGARDS 7 ESTIMATION OF PROFIT FROM LIQUOR BUSINESS, APART FR OM OTHER DEFICIENCIES, ASSESSEE IS NOT ISSUING SALE BI LLS AND HENCE IT CANNOT BE INFERRED THAT PROPER BOOKS O F ACCOUNT ARE MAINTAINED-IN THE ABSENCE OF PROPER BOOKS OF ACCOUNT, ESTIMATION OF INCOME ON THE BASIS OF COMPARABLE CASES IS ONLY THE WAY OUT-HENCE, MATTER IS RESTORED TO THE AO TO ESTIMATE THE INCOME FROM LIQUOR BUSINESS IN THE HANDS OF T. 6. IN VIEW OF THE LEGAL AND FACTUAL DISCUSSIONS, TH E FINDINGS OF THE CIT(A) CANNOT BE UPHELD. THUS, THE APPELLANT SUCCEEDS IN HIS APPEAL. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH OCT.,2011. SD/- SD/- ( H.L.KARWA) (MEHAR SINGH) VICE PRESIDENT ACCOUNTANT MEMBER DATED: 24 TH OCT.,2011. POONAM COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT(A), THE CIT ,DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH