SHRI IQBAL SINGH KHEDA, Khandwa V. THE DCIT CIRCLE 5(1), Indore

ITA 200/IND/2016

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5760 (ITAT-INDORE)
• Duration Of Justice: 4 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MOHD JAVED
• Assessee Lawyers: P D NAGAR
• Keywords: Unexplained investment

Judgement Text

IQBAL SINGH KHADA ITA NO. 200/IND/2016 1 IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NO. 200/IND/2016 A.Y.2009-10 IQBAL SINGH KHEDA OMKARESHWAR PAN AKGP 6861K ::: APPELLANT VS DY. COMMISSIONER OF INCOME TAX CIRCLE 5(1) INDORE ::: RESPONDENT APPELLANT BY SHRI P.D. NAGAR RESPONDENT BY SHRI MOHD.JAVED DATE OF HEARING 21.6.2016 DATE OF PRONOUNCEMENT 8 .7.2016 O R D E R THIS IS AN APPEAL PREFERRED BY THE ASSESSEE AGAINST THE ORDER DATED 19.2.2016 OF THE LEARNED CIT(A)-22, NEW DELHI, HOLDING CONCURRENT JURISDICTION OF CIT(A), INDORE-2 . IQBAL SINGH KHADA ITA NO. 200/IND/2016 2 2. THE ASSESSEE IS ENGAGED IN TRADING OF GRAINS AND KIRANA GOODS ON WHOLESALE AND SEMI-WHOLESALE BASIS. THE RETURN OF INCOME WAS FILED. DURING THE YEAR THE ASSES SEE HAS FILED THE RETURN OF INCOME DECLARING INCOME FROM KIRANA BUSINESS, RENTAL INCOME, INCOME FROM LIC, INCOME FRO M PURCHASE AND SALE OF HOUSE AT INDORE AND INCOME FROM INTEREST. DURING THE YEAR THE ASSESSEE HAS WITHDRAWN CASH WORTH RS. 18 LACS ON MATURITY OF VARIOUS FIXED DEPOSIT S ON 06.06.2007 & 08.08.2007 WITH THE INTENTION TO PURCH ASE PROPERTY AT INDORE. THE AMOUNT SO WITHDRAWN WAS ADVANCED FOR PURCHASE OF HOUSE PROPERTY BUT DURING THE SHORT PERIOD IT WAS TRANSFERRED IN FAVOUR OF ANOTHER PAR TY FOR CONSIDERATION OF RS.20 LACS. THEREBY THE ASSESSEE HAS EARNED DIFFERENTIAL AMOUNT OF RS.2 LACS DURING THE YEA R WHICH HAS BEEN OFFERED AS INCOME. OUT OF RS.20 LACS, THE ASSESSEE DEPOSITED A SUM OF RS.15 LACS AS ONE TIME PREMIUM ON 03.10.2008 WITH LIC ON 15 LIFE POLICIES OF IQBAL SINGH KHADA ITA NO. 200/IND/2016 3 RS.50,000/- EACH IN HIS NAME AND 15 LIFE POLICIES IN T HE NAME OF HIS SON. AS THE AMOUNT WAS DEPOSITED WITH LIC IN CASH THE AO TREATED THE SAME AS UNEXPLAINED INVESTMENT I N LIC POLICIES AT RS.15 LACS AND ADDED THE SAME TO THE TOT AL INCOME OF THE ASSESSEE. 3. FELT AGGRIEVED WITH THE ADDITION MADE BY THE ASSESS ING OFFICER, THE ASSESSEE PREFERRED APPEAL TO THE LEARNED CIT(A) AND THE LEARNED CIT(A) CONFIRMED THE ADDITION OF RS.13 LACS BY ALLOWING CREDIT OF INCOME OF RS.2 LACS EARNED ON PURCHASE/SALE TRANSACTION OF PROPERTY WHICH WAS OFFERED FOR TAX. NOW THE ASSESSEE IS IN APPEAL BEFORE THE TRI BUNAL. 4. BEFORE ME, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SAVINGS OF THE LIFE WERE BEING DEPOSIT ED BY THE ASSESSEE IN SMALL FIXED DEPOSIT RECEIPTS IN THE B ANK AND ON MATURITY OF FDRS, THEY WERE ENCASHED. HE SUBMITTED THAT FROM THE BANK CERTIFICATE ENCASHMENT OF FDRS ON 05.12.2006 AND ITS DEPOSIT IN SAVINGS BANK ACCOUNT WAS IQBAL SINGH KHADA ITA NO. 200/IND/2016 4 PROVED. THE OPENING BALANCE IN SAVINGS BANK ACCOUNT AS ON 01.04.2007 WAS RS.34.69 LACS. THE ASSESSEE WITHDREW C ASH FROM SAVINGS BANK ACCOUNT ON 06.06.2007 AND 08.08.2007 AT RS. 6 LACS AND RS.12 LACS RESPECTIVELY WITH AN INTE NTION TO INVEST IN IMMOVABLE PROPERTY AT INDORE TO EARN HIGH ER RETURN. AFORESAID AMOUNT OF RS. 18 LACS WAS ADVANCED AGAINST PURCHASE OF HOUSE PROPERTY AS BOOKING AMOUNT AND DURING SHORT PERIOD OF ONE AND HALF YEAR, THE ASSESSEE TRANSFERRED SUCH AGREEMENT IN FAVOUR ANOTHER PARTY AND EARNED SHORT TERM PROFIT OF RS. 2 LACS IN THAT DEAL WH ICH WAS OFFERED FOR TAX AS INCOME IN THE YEAR UNDER APPEAL. THE AMOUNT ADVANCED AGAINST HOUSE PROPERTY WAS RECEIVED BACK WITH SHORT TERM GAIN OUT OF WHICH HE DEPOSITED A SUM OF RS.15 LACS AS ONE TIME PREMIUM ON 03.10.2008 ON 15 LIFE POLICIES IN CASH OF RS.50,000/- EACH IN THE NAME OF THE ASSESSEE AND HIS SON. THE LEARNED COUNSEL FOR THE IQBAL SINGH KHADA ITA NO. 200/IND/2016 5 ASSESSEE ALSO SUBMITTED THAT THAT THE OBSERVATION OF THE LEARNED CIT(A) THAT FDRS WERE MATURED SEVERAL YEARS BACK IS INCORRECT BECAUSE ON MATURITY OF FDRS CASH WAS WITHDRAWN IN JUNE/AUGUST 2007 AND IT WAS REINVESTED I N LIC POLICIES ON 3.10.2008. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS SUCH THE ORDER OF THE LEARNE D CIT(A) DESERVES TO BE SET ASIDE. 5. ON THE OTHER HAND, THE LEARNED DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 6. I HAVE HEARD THE RIVAL CONTENTIONS. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, I AM OF THE VIEW THAT TH E ASSESSEE WAS DOING THE BUSINESS OF KIRANA GOODS AND THE ASSESSEES SAVINGS OF LIFE WERE BEING DEPOSITED IN SM ALL FIXED DEPOSIT RECEIPTS IN THE BANK AND ON MATURITY OF FEW FDRS, THEY WERE ENCASHED. AT PAGE 1 OF THE PAPER BOOK THE IQBAL SINGH KHADA ITA NO. 200/IND/2016 6 BANK HAS GIVEN CERTIFICATE REGARDING ENCASHMENT OF FDRS AND SUCH AMOUNTS WERE DEPOSITED IN THE SAME BANK, HENCE THE OPENING BALANCE IN THE SAVINGS BANK ACCOUNT AS ON 1.4.2007 WAS RS.34.69 LACS. THE ASSESSEE HAS BEEN ABLE TO SHOW THAT HE HAS WITHDRAWN CASH FROM THE SAVINGS BANK ACCOUNT OF RS. 6 LACS AND RS. 12 LACS WHICH IS APPARENT FROM PAGES 4 OF THE PAPER BOOK WHICH THE ASSESSEE HAS INVESTED FOR EARNING HIGHER RETURN. THE AFORESAID AMOU NT OF RS.18 LACS WAS ADVANCED AGAINST THE ADVANCE OF HOUSE PROPERTY AS BOOKING AMOUNT AND DURING THE SHORT PERIO D OF 1 YEAR, THE AGREEMENT TO PURCHASE HOUSE WAS TRANSFERRE D IN FAVOUR OF ANOTHER PARTY AND THE ASSESSEE EARNED RS. 2 LACS WHICH HE HAS OFFERED FOR TAXATION IN THE YEAR UNDE R CONSIDERATION. FROM THIS FACT IT IS EMERGED THAT THE ASSESSEE HAS ENTERED INTO AGREEMENT FOR PURCHASE OF HOU SE. THE ASSESSEE HAS RECEIVED THE AMOUNT OF RS.20 LACS OUT OF IQBAL SINGH KHADA ITA NO. 200/IND/2016 7 WHICH THE ASSESSEE HAS PAID ONE TIME LIFE TIME PREMIUM ON 15 POLICIES OF HIMSELF AND HIS SON. THE AMOUNT WAS DEPOSITED IN CASH WITH LIC IMMEDIATELY AFTER THE CANCELLATION OF AGREEMENT OF PURCHASE OF PROPERTY. THER E IS NO EVIDENCE WITH THE DEPARTMENT THAT THE AMOUNT SO RECEIVED AT RS. 20 LACS WAS SPENT OR INVESTED BY THE ASSESSEE IN ANY OTHER MANNER WITHIN A SHORT PERIOD OF O NE AND HALF YEAR. THE ASSESSEE ALSO FILED AN AFFIDAVIT THAT THE RE WAS NO MARRIAGE OR ANY OCCASION IN THE FAMILY HENCE REINVESTMENT OF THE AMOUNT IN LIC POLICIES CANNOT BE DOUBTED UPON SPECIALLY WHEN THE ASSESSEE EARNED RS. 2 LACS ON INVESTMENT OF RS.18 LACS WHICH WAS OFFERED FOR TAX AND CREDIT OF THE SAME HAS BEEN GIVEN BY CIT(A) AGAINST ADDITION MADE BY THE AO. IN THE WAKE OF THESE FACTS, T HE ADDITION CONFIRMED BY THE CIT(A) AT RS.13 LACS TOWARDS INVESTMENT IN LIC POLICIES IS HEREBY DELETED. IQBAL SINGH KHADA ITA NO. 200/IND/2016 8 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED. PRONOUNCED IN OPEN COURT ON 8 TH JULY, 2016 SD/- (D.T. GARASIA) JUDICIAL MEMBER 8 TH JULY, 2016 DN/-