Income-tax Officer, Jalandhar V. Sh. Ramesh Kumar Aggarwal, Jalandhar

ITA 178/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0544 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 08-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAWANI SHANKER
• Assessee Lawyers: DINESH SARNA
• Keywords: Unexplained cash credit; Salary income; Additional evidence; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.178(ASR)/2015 ASSESSMENT YEAR:2010-11 PAN: ACDPA2808F INCOME TAX OFFICER, VS. SH. RAMESH KUMAR AGGARWAL, WARD III(3), JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. BHAWANI SHANKER, DR RESPONDENT BY: SH. DINESH SARNA, ADVOCATE DATE OF HEARING: 21/06/2016 DATE OF PRONOUNCEMENT: 24/06/2016 ORDER PER A.D. JAIN, JM; THIS IS THE REVENUES APPEAL FOR THE ASSESSMENT YEA R 2010-11 AGAINST THE ORDER DATED 14.01.2015, PASSED BY TH E LD. CIT(A)-2, JALANDHAR. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APP EAL: 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE , LD. CIT(A) HAS ERRED IN LAW IN RESTRICTING THE ADDITION OF RS.48,7 0,000/- TO RS.7,63,328/- MADE ON ACCOUNT OF UNEXPLAINED CASH D EPOSITS. 2. WHETHER, THE LD. CIT(A) IS RIGHT IN LAW IN ACCEP TING ADDITIONAL EVIDENCE FILED UNDER RULE 46A OF THE INCOME TAX RUL E, 1962 IN THE SHAPE OF P & L ACCOUNT AND PURCHASE ACCOUNT DEPOSIT OF THE FACT THAT THE ASSESSEE HAS NOT SHOWN INCOME UNDER THE HE AD PROFIT AND 2 ITA NO.178(ASR)/2015 A.Y. 2010-11 GAINS FROM BUSINESS IN ITR-4 FILED BY HIM NOR PRODU CED SUCH DOCUMENTS DURING THE COURSE OF ASSESSMENT PROCEEDIN GS. 2. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) FAILED TO APPRECIATE THE FACTS THAT AMOUNT RECEIVED BY ASSESS EE ON SALE OF PROPERTIES DOES NOT CO-RELATE WITH AMOUNT DEPOSITE D IN SAVING BANK ACCOUNT ON VARIOUS DATES. 2. THE BRIEF FACTS OF THE CASES ARE THAT THE ASSESS EE DERIVED INCOME FROM SALARY, RENT AND OTHER SOURCES AND FILED HIS RETUR N OF INCOME FOR THE YEAR UNDER CONSIDERATION DECLARING THEREIN AN INCOME OF RS.2,08,560/-. THE AO HAD AIR INFORMATION WITH REGARD TO CASH DEPOSITS OF RS .48,70,000/- IN THE BANK ACCOUNT MAINTAINED BY THE ASSESSEE WITH HDFC BANK. THE AO ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITS IN HIS SAVINGS BANK ACCOUNT WITH HDFC. THE ASSESSEE STATED THAT THE CASH HAD BE EN DEPOSITED OUT OF SALE OF VARIOUS PROPERTIES WHICH HE HAD PURCHASED AND SOLD ON BEHALF OF OTHERS (GOLDEN ESTATE LAND DEVELOPER AND PROMOTER). HOWEVE R, THE EXPLANATION OFFERED BY THE ASSESSEE WAS NOT FOUND SATISFACTORY BY THE A O AND THEREFORE, HE MADE AN ADDITION OF RS.48,70,000/- TO THE RETURNED INCOM E OF THE ASSESSEE BY HOLDING THAT THE CASH DEPOSITS TO THIS EXTENT HAVE BEEN MADE BY THE ASSESSEE FROM UNDISCLOSED SOURCES AND HENCE REPRESENTED HIS UNDISCLOSED INCOME. 3. BY VIRTUE OF THE IMPUGNED ORDER, THE LD. CIT(A) RESTRICTED THE ADDITION FROM RS.48,70,000/-, AS MADE BY THE AO TO RS.7,63,3 28/-. 3 ITA NO.178(ASR)/2015 A.Y. 2010-11 4. BEFORE US, THE LD. DR HAS CONTENDED THAT THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDITION TO RS.7,63,328/- FROM THAT OF RS.48,70,000/-, AS MADE BY THE AO, ON ACCOUNT OF UNEXPLAINED CASH CREDIT; T HAT THE LD. CIT(A) HAS ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE FILED BY THE A SSESSEE IN THE SHAPE OF PROFIT & LOSS ACCOUNT, EVEN THOUGH THE ASSESSEE DID NOT SH OW INCOME UNDER THE HEAD PROFIT AND GAINS FROM BUSINESS IN ITR-4 FILED BY HI M, NOR DID HE PRODUCE SUCH DOCUMENTS BEFORE THE AO IN THE ASSESSMENT PROCEEDIN GS; THAT THE LD. CIT(A) ERRED IN NOT APPRECIATING THAT THE AMOUNT RECEIVED BY THE ASSESSEE ON SALE OF PROPERTY COULD BE CO-RELATED WITH THE AMOUNTS DEP OSITED IN THE SAVINGS BANK ACCOUNT. 5. THE LD. COUNSEL FOR THE ASSESSEE, ON THE OTHER H AND, STRONGLY RELIED ON THE ORDER OF THE LD. CIT(A). 6. IN THE IMPUGNED ORDER, THE LD. CIT(A) HAS OBSERV ED AS FOLLOWS: 6.5. I HAVE CONSIDERED THE OBSERVATIONS OF THE A.O. AS MADE BY HIM IN THE ASSESSMENT ORDER AS WELL AS REMAND REPOR T. I HAVE ALSO CONSIDERED WRITTEN SUBMISSIONS OF THE ASSESSEE FIL ED VIDE LETTER DATED 27.05.2014 AS WELL AS HIS COUNTER COMMENTS ON THE REPORT OF THE AO. I HAVE FURTHER CONSIDERED THE ADDITIONAL E VIDENCE PRODUCED BY THE ASSESSEE AT THE APPELLATE STAGE. IT HAS BEEN NOTICED THAT THE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE AT THE APPELLATE STAGE IS NOTHING BUT COPIES OF LEDGER ACCOUNTS WHICH REFL ECTS TRANSACTIONS OF SALE AND PURCHASE OF PROPERTIES BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION AND IN IMMEDIATELY PRECEDING YE AR. THE ASSESSEE IN FACT SUBMITTED DURING ASSESSMENT PROCEE DINGS THAT HE IS ENGAGED IN THE PURCHASE AND SALE OF PROPERTIES O N BEHALF OF OTHERS, WHICH HE FAILED TO SUBSTANTIATE. HOWEVER, T HE INDEPENDENT ENQUIRIES MADE BY THE AO FROM M/S. GOLDEN ESTATES L AND DEVELOPERS AND PROMOTERS REVEALED THAT THE ASSESSEE HAS HIMSELF PURCHASED LAND MEASURING 6 KANALS ON 29.06.2009 AND 16 KANALS ON 24.07.2009 FROM M/S. GOLDEN ESTATES LAND DEVELOP ERS AND PROMOTERS FOR A PURCHASE CONSIDERATION OF RS.42,75, 000/- AND RS.1,14,00,000/- RESPECTIVELY PART OF WHICH HAS ALS O BEEN SOLD 4 ITA NO.178(ASR)/2015 A.Y. 2010-11 DURING THE YEAR UNDER CONSIDERATION. THE BALANCE LA ND HAS BEEN STATED TO BE SOLD IN SUBSEQUENT ASSESSMENT YEARS WH ICH FACT HAS ALSO BEEN ACCEPTED BY THE SAME AO WHILE COMPLETING ASSESSMENT U/S 143930 OF THE ACT IN THE CASE OF THE ASSESSEE H IMSELF FOR THE AY 2011-12. IN FACT, THE ASSESSEE HIMSELF DISCLOSED P ROFITS FROM THE SALE OF PART OF THE LAND WHICH WAS PURCHASED IN F.Y . 2009-10 DURING ASSESSMENT PROCEEDINGS FOR THE AY 2011-12 WHICH WER E NOT ACCEPTED THE PROFITS AS DISCLOSED BY THE ASSESSEE B UT THE FACT THAT THE ASSESSEE IS ENGAGED IN THE PURCHASE AND SALES O F PROPERTIES HAS BEEN ACCEPTED BY HIM DURING ASSESSMENT PROCEEDINGS FOR THE A.Y.2011-12 AND TAKEN THE PROFITS FROM THE PURCHASE AND SALE OF PROPERTIES @ 8% OF THE SALE CONSIDERATION DISCLOSED BY THE ASSESSEE DURING ASSESSMENT PROCEEDINGS. IT HAS ALSO BEEN NOT ICED THAT THE ASSESSEE HAS ALSO OFFERED AN INCOME OF RS.3,00,000/ - DURING ASSESSMENT PROCEEDINGS FOR THE YEAR UNDER CONSIDERA TION BUT THE SAME HAS NOT BEEN ACCEPTED BY THE AO. IT HAS FURTHE R BEEN NOTICED THAT SIMILAR CASH DEPOSITS IN THE SAME BANK ACCOUNT WERE ALSO NOTICED DURING THE ASSESSMENT PROCEEDINGS FOR THE A Y 2009-10. ON THE BASIS OF CASH DEPOSITS, THE AO MADE AN ADDITION OF RS.5,00,000/- TO THE RETURNED INCOME OF THE ASSESSE E FOR THE AY 2009-10. IT MEANS THE FACT THAT THE ASSESSEE IS ENG AGED IN THE SALE AND PURCHASE OF PROPERTIES HAS NOT ONLY BEEN ACCEP TED IN AY 2011- 12 BUT ALSO IN AY 2009-10.IT MEANS THE FACT THAT T HE ASSESSEE IS ENGAGED IN THE SALE AND PURCHASE OF PROPERTIES HAS NOT ONLY BEEN ACCEPTED IN AY 2011-12 BUT ALSO IN AY 2009-10 AS TH E AO HAS ACCEPTED THE FACT THAT THE ASSESSEE IS HIMSELF ENG AGED IN THE BUSINESS OF PURCHASE AND SALE OF PROPERTIES(LAND DU RING ASSESSMENT PROCEEDINGS FOR SUBSEQUENT ASSESSMENT YEAR, I AM HA VING NO HESITATION IN ACCEPTING THE SAME THING DURING THE Y EAR UNDER CONSIDERATION MORE PARTICULARLY WHEN THE ASSESSEE H AS SOLD PART OF THE SAME LAND DURING SUBSEQUENT YEARS WHICH HAS BEE N SHOWN AS PURCHASED DURING THE YEAR UNDER CONSIDERATION. SO T HE ADDITIONAL EVIDENCE PRODUCED BY THE ASSESSEE IS ADMITTED AND I S BEING CONSIDERED WHILE DISPOSING OFF MAIN GROUND OF APPEA L TAKEN BY THE ASSESSEE. 6.6. ON CAREFUL CONSIDERATION OF THE MATERIAL ON RE CORD INCLUDING ASSESSMENT RECORDS, IT HAS BEEN NOTICED THAT THE A SSESSEE HAS RECEIVED ENTIRE SALE PROCEEDS DURING THE YEAR UNDER CONSIDERATION IN CASH. IN ALL THE SALE DEEDS AND AGREEMENT TO SELL I T HAS BEEN SPECIFICALLY MENTIONED THAT THE SALE PROCEEDS HAVE ALREADY BEEN RECEIVED ON EARLIER DATES IN ADVANCE. THE ASSESSEE HAS ALSO FIELD COPY OF CASH FLOW CHART DURING ASSESSMENT PROCEEDIN GS WHICH REFLECT RECEIPT OF CASH ON DIFFERENT DATES. THE CASH FLOW S TATEMENT HAS NOT BEEN ACCEPTED BY THE AO AS THE ASSESSEE FAILED TO P RODUCE THE 5 ITA NO.178(ASR)/2015 A.Y. 2010-11 PERSONS TO WHOM THE PROPERTY HAS BEEN SOLD. IN MY O PINION, AS THE PURCHASE AND SALE OF PROPERTIES BY ASSESSEE IS SUPP ORTED BY THE SALE/PURCHASE DEEDS WHICH ARE ALSO AVAILABLE ON ASS ESSMENT RECORDS, THE RECEIPT OF SALE CONSIDERATION IN CASH BY THE ASSESSEE ON SALE OF PROPERTIES BY THE ASSESSEE IS SUPPORTED BY THE SALE/PURCHASE DEEDS WHICH ARE ALSO AVAILABLE ON ASS ESSMENT RECORDS, THE RECEIPT OF SALE CONSIDERATION IN CASH BY THE ASSESSEE ON SALE OF PROPERTIES CANNOT BE DENIED. MOREOVER, THE FACT THAT THE ASSESSEE IS ENGAGED IN THE SALE AND PURCHASE OF LAN D HAS BEEN ACCEPTED IN AY 2011-12 BY THE AO AND TAKEN THE PROF ITS @ 8% ON SALES OF LAND DECLARED BY THE ASSESSEE. IT MEANS TH E CASH DEPOSITS IN THE BANK ARE FULLY EXPLAINED WITH THE HELP OF CA SH FLOW STATEMENT MORE PARTICULARLY WHEN THE AO HAS ACCEPTED THAT THE ASSESSEE IS ENGAGED IN THE PURCHASE AND SALE OF PROPERTIES IN S UBSEQUENT YEARS. IN THESE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE ADDITION MADE BY THE AO ON ACCOUNT OF EXPLAINED DEPOSITS WIL L NOT SURVIVE AND IS DIRECTED TO BE DELETED. HOWEVER, UNDISCLOSED PROFITS FROM PURCHASE AND SALE OF LAND ARE REQUIRED TO BE TAXED IN THE HANDS OF THE ASSESSEE AS DONE BY THE AO IN PRECEDING AND SUC CEEDING ASSESSMENT YEARS AS THE SAME HAS NOT BEEN DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME. AS THE FACTS AND CIRCUMSTANCES DURING THE YEAR UNDER CONSIDERATION ARE SIMILAR TO THAT OF SUBSEQUENT YEARS, I AM OF THE CONSIDERED OPINION TH AT IT WILL BE FARE AND REASONABLE IF THE PROFITS FROM THE SALE OF PRO PERTY DURING THE YEAR UNDER CONSIDERATION ARE ALSO TAKEN @ 8% ON THE SALES DECLARED BY THE ASSESSEE WHICH IS ALSO SUPPORTED BY SALE DEE DS. THE UNDISCLOSED PROFITS ON SALES OF RS.95,41,600/- @ 8% WILL THUS BE RS.7,63,328/- WHICH IS REQUIRED TO BE ADDED TO THE RETURNED INCOME OF THE ASSESSEE AS THE SAME HAS NOT BEEN DECLARED I N THE RETURN. 6.7. IN VIEW OF THE ABOVE STATED FACTS AND IN THE C IRCUMSTANCES OF THE CASE, THE ADDITION OF RS.48,70,500/- MADE BY TH E AO ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT IS REDUCED TO RS.7,63,328/- AND THE ASSESSEE WILL THUS GET A RELI EF OF RS.41,07,172/-. IN OTHER WORDS, THE ADDITION TO THE EXTENT OF RS.7,63,328/- MADE BY THE AO IS CONFIRMED AND THE B ALANCE ADDITION OF RS.41,07,172/- IS DIRECTED TO BE DELETE D. THE AO IS ALSO DIRECTED TO ADD INTEREST INCOME TO THE RETURNED INC OME OF THE ASSESSEE WHICH HAS ALSO BEEN DECLARED BY THE ASSESS EE AT RS.165/- . IN THE RESULT, GROUND NO.3 OF APPEAL TAKEN BY THE ASSESSEE IS CONSIDERED AS PARTLY ALLOWED. 6 ITA NO.178(ASR)/2015 A.Y. 2010-11 7. BEFORE US, THE DEPARTMENT HAS NOT BEEN ABLE TO S UCCESSFULLY DISLODGE THE WELL REASONED AND ELABORATE ORDER PASSED BY THE LD. CIT(A). THE ASSESSEES REQUEST FOR ADMISSION OF ADDITIONAL EVIDENCE WAS RE FERRED TO THE AO BY THE LD. CIT(A). THE AO, HOWEVER, DID NOT RAISE ANY OBJECTIO N TO THE ADDITIONAL EVIDENCE BEING ADMITTED. FURTHER, THIS ADDITIONAL EVIDENCE WAS IN THE SHAPE OF COPIES OF LEDGER ACCOUNT REFLECTING THE SALE AND PURCHASE TRA NSACTIONS ENTERED INTO BY THE ASSESSEE CONCERNING THE PROPERTY DURING THE YE AR UNDER CONSIDERATION AND THE IMMEDIATELY PRECEDING ASSESSMENT YEAR. THE ASSE SSEE HAD MAINTAINED BEFORE THE AO THAT HE WAS INTO REAL ESTATE BUSINESS ON BEHALF OF OTHERS. THOUGH THIS ASSERTION REMAINED UNSUBSTANTIATED, THE ASSESSEE WAS FOUND TO HAVE HIMSELF PURCHASED LAND, A PART OF WHICH WAS SO LD DURING THE YEAR. THAT THE BALANCE LAND WAS SOLD IN THE SUBSEQUENT YEARS, WAS ACCEPTED BY THE AO ALSO, WHILE FINALIZING THE SCRUTINY ASSESSMENT PRO CEEDINGS AND THE ASSESSEES CASE FOR THE A.Y. 2011-12, I.E., THE IMMEDIATELY S UCCEEDING ASSESSMENT YEAR. IT WAS DUE TO SUCH ACCEPTANCE BY THE AO IN THE ASSESS MENT PROCEEDINGS FOR THE A.Y. 2011-12, THAT THE LD.CIT(A) ACCEPTED THE POSIT ION AS BEING THE SAME ACCEPTED FOR THE YEAR UNDER CONSIDERATION AND, IN O UR CONSIDERED OPINION, CORRECTLY SO. THE ASSESSEE BEING IN THE REAL ESTA TE BUSINESS, WAS ALSO CLEAR FROM THE FACT THAT DURING THE YEAR UNDER CONSIDERAT ION, THE LAND WAS PURCHASED AND A PART THEREAFTER WAS SOLD OFF IN THE SUBSEQUEN T YEAR. THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE, WAS, AS SUCH, CORRE CTLY ADMITTED AND THE GRIEVANCE OF THE DEPARTMENT IN THIS REGARD HAS NO F ORCE. 7 ITA NO.178(ASR)/2015 A.Y. 2010-11 8. THE LD. CIT(A) HAS FOUND AS A FACT THAT THE ENTI RE SALE PROCEEDS CONCERNING THE LAND SOLD BY THE ASSESSEE WERE RECEI VED BY THE ASSESSEE IN THE YEAR UNDER CONSIDERATION, IN CASH. IT WAS OBSERVED THAT SUCH PAYMENT IN ADVANCE FOUND SPECIFIC MENTION IN THE SALE DEEDS A ND AGREEMENT TO SELL. THE PURCHASE AND SALE OF THE PROPERTY BY THE ASSESSEE H AS, THEREFORE, RIGHTLY BEEN HELD TO BE SUPPORTED BY SALE DEEDS AND PURCHASE DEE DS WHICH ALSO FORM PART OF THE ASSESSMENT RECORD. IT WAS ON THE BASIS OF THIS EVIDENCE THAT THE LD. CIT(A) ARRIVED AT THE CONCLUSION OF THE ASSESSEE HAVING RE CEIVED THE SALE CONSIDERATION IN CASH. THERE IS NO WORTHWHILE REBUTTAL TO THIS CO NCLUSION OF THE LD. CIT(A). THE CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT WERE F OUND TO BE EXPLAINED BY THE CASH FLOW STATEMENT FILED, IN THE LIGHT OF THE FACT THAT THE BUSINESS OF THE ASSESSEE BEING THAT OF PURCHASE AND SALE OF PROPERT Y, AS IN THE SUBSEQUENT YEAR, STOOD ACCEPTED BY THE AO, TAKING THE PROFITS ON THE SALE OF LAND DECLARED BY THE ASSESSEE @ 8%. 9. IT WAS ON THE ABOVE BASIS, THAT THE LD. CIT(A) RIGHTLY HELD THE ADDITION MADE BY THE AO TO BE UNSUSTAINABLE. THE LD. CIT(A) , IT IS SEEN HAS CONFIRMED THE UNDISCLOSED PROFITS FROM THE PURCHASE AND SALE OF LAND BY THE ASSESSEE TO BE TAXED IN THE HANDS OF THE ASSESSEE, SUCH PROFITS HAVING NOT BEEN DISCLOSED BY THE ASSESSEE IN HIS RETURN OF INCOME. IT WAS, TH EREFORE, THAT THE PROFITS OF THE ASSESSEE FROM THE SALE OF PROPERTY DURING THE YEAR WERE TAKEN @ 8% ON THE SALE DECLARED BY THE ASSESSEE, AS SUPPORTED BY SALE DEED. THIS CAME TO RS.7,63,328/-, WHICH AMOUNT WAS ADDED TO THE RETURN ED INCOME OF THE ASSESSEE. 8 ITA NO.178(ASR)/2015 A.Y. 2010-11 10. IN VIEW OF THE ABOVE DISCUSSION, FINDING NO ERR OR WHATSOEVER IN THE ORDER PASSED BY THE LD. CIT(A), THE SAME IS CONFIRMED. TH E GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT IS REJECTED, AS BEING WIT HOUT FORCE. 11. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24TH JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 24/06/2016. /SKR/ COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE:SH.RAMESH KUMAR AGGARWAL, JALANDHAR. (2) THE ITO WARD III(3), JALANDHAR. (3) THE CIT(A), JLR (4) THE CIT, JLR (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.