Appeal details
Counselvise Citation
20523314 RSA 2012
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 4 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
26-09-2013
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
24-09-2013
Assessment Year
2009-2010
Appeal Filed On
09-05-2012
Judgement Text
IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 204 & 205/JODH/2012 (A.YS. 2008-09 & 2009-10) DCIT, VS. SMT. KIRAN RATHORE, CENTRAL CIRCLE-1, 58, MAMAJI KI HAVELI, UDAIPUR. BHATIYANI CHOHHATA, UDAIPUR. PAN NO. ADYPR 0898 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI DEPARTMENT BY : DR. DEEPAK SEHGAL - D.R. DATE OF HEARING : 24/09/2013. DATE OF PRONOUNCEMENT : 26/09/2013. O R D E R PER N.K.SAINI, A.M THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTED A GAINST THE SEPARATE ORDERS EACH DATED 22/02/2012 OF LD. CIT (A ), CENTRAL, JAIPUR. SINCE, THE ISSUES INVOLVED ARE COMMON AND AS THE AP PEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OFF BY THIS CONS OLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2 FIRST WE WILL DEAL WITH I.T.A.NO. 204/JODH/2012 FO R THE A.Y. 2008- 09. THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A), (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 2260000/- MADE BY THE AO ON ACCOUNT OF UNDIS CLOSED CASH PAYMENT WHICH WAS OFFERED FOR TAXATION U/S. 132(4). 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A) (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN ACCEPTING THE CASH FLOW STATEMENT WHICH WAS PREPARED ON THE BASIS OF T HE BOOKS OF ACCOUNTS AND DOCUMENTS WERE NOT FOUND AND SEIZED DU RING THE COURSE OF SEARCH AND CONSEQUENTLY DELETING THE ADDITION MA DE ON THAT BASIS. 3. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SE THE CIT(A), (CENTRAL), JAIPUR HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS. 219976/- OUT TO TOTAL ADDITION RS. 294449/- MADE ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST PAID TO BANK U/S. 36(1 )(III). 4. THE APPELLANT CRAVES THE RIGHT TO AMEND, ALTER O R ADD TO ANY OF THE GROUNDS OF APPEAL GIVEN ABOVE. 2 VIDE GROUNDS NO.1 & 2, THE GRIEVANCE OF THE DEPART MENT RELATES TO THE DELETION OF ADDITION OF RS. 22,60,000/-. 3. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT DURI NG THE COURSE OF SEARCH PROCEEDINGS AT THE RESIDENTIAL PREMISES OF S HRI GANPAT SINGH RATHORE AT RISHABHDEV DISTRICT UDAIPUR ON 23/04/200 8, MANY INCRIMINATING DOCUMENTS IN THE FORM OF LOOSE PAPERS , DIARIES, REGISTERS ETC. WERE SEIZED AS PER SERIAL NO. 1 TO 6 OF ANNEXU RE-A OF PANCHANAMA DATED 23/04/2008. DURING THE COURSE OF SEARCH AS WE LL AS POST SEARCH PROCEEDINGS, IT WAS FOUND THAT SOME OF THESE ANNEXU RES/DOCUMENTS WERE 3 DIRECTLY RELATED TO SMT. KIRAN RATHORE (THE ASSESSE E), WHO WAS PROPRIETOR OF M/S RAJPUTANA EXPORTS AND ALSO HAVING THE POWER OF ATTORNEY OF TWO OF MARBLE MINING CONCERNS NAMELY M/S RATHORE MARBLE AN D M/S RANAWAT MARBLE. THE ASSESSING OFFICER OBSERVED THAT SHRI G ANPAT SINGH RATHORE IN HIS STATEMENT RECORDED UNDER SECTION 132 (4) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS ACT, FOR SHORT) HAD R EPLIED TO THE QUESTION NO. 21 THAT ON PAGE NO. 24, IT CONTAINS DETAILS OF PAYMENT OF RS. 1.41 CRORES MADE BY HIM ON DIFFERENT DATES AFTER TAKING LOANS. LATER ON, WHEN CONFRONTED AS REGARDS TO THE ENTRIES IN PAGE NO. 24 OF THIS DIARY, SHRI GANPAT SINGH RATHORE IN HIS STATEMENT RECORDED UNDE R SECTION 131 OF THE ACT DATED 15/05/2008 BEFORE DDIT(INV.) IN ANSWER TO QUESTION NO.4 DEPOSED THAT ACTUALLY THIS PAPER CONTAINS THE DETAI LS OF PAYMENT OF RS. 1.41 CRORES MADE IN CASH BY HIS WIFE SMT. KIRAN RAT HORE TO SOME PERSONS IN RESPECT OF PURCHASE OF SOME LAND/HOUSE ON DIFFER ENT DATES MENTIONED IN THIS PAPER AND ADMITTED THIS AMOUNT OF RS. 1.41 CRORES AS HIS WIFES UNDISCLOSED INCOME OF F.Y. 2007-08 AND PROMISED ON HER BEHALF TO PAY TAX ON IT. WHEN SMT. KIRAN RATHORE WAS CONFRONTED WITH THIS PAPER (PAGE NO. 24) AND THE STATEMENTS OF SHRI GANPAT SINGH RATHORE DATED 15/05/2008, SHE IN ANSWER TO QUESTION NO.3 OF HER STATEMENT REC ORDED ON OATH UNDER SECTION 131 OF THE ACT DATED 16/05/2008 BEFORE DDIT STATED THAT SHE WAS 4 IN AGREEMENT TO HER HUSBANDS STATEMENT DATED 15/05 /2008 IN TOTALITY. SHE ALSO ADMITTED THAT PAGE NO. 24 OF ANNEXURE A-5 HAD BEEN WRITTEN IN HER HANDWRITING AND IT PERTAINS TO CASH PAYMENT OF RS. 1.41 CRORES MADE BY HER FOR SOME LAND/HOUSE ON DIFFERENT DATES. ADM ITTING THIS CASH PAYMENT OF RS. 1.41 CRORES AS HER UNDISCLOSED INCOM E FOR F.Y. 2007-08, SHE OFFERED RS. 1.41 CRORES FOR TAXATION. LATER ON , ASSESSING OFFICER ISSUED NOTICE UNDER SECTION 153C R.W.S. 153A OF THE ACT, AFTER RECORDING SATISFACTION AND REQUIRING THE ASSESSEE TO PREPARE A TRUE AND CORRECT RETURN OF HER TOTAL INCOME INCLUDING UNDISCLOSED IN COME. IN RESPONSE TO THE SAID NOTICE, ASSESSEE FILED RETURN OF INCOME DE CLARING AN INCOME OF RS. 13,60,690/- ON 29/10/2010. THE SAID RETURNED IN COME ALSO COMPRISES UNDISCLOSED INCOME OF RS. 10,00,000/-. THE ASSESSI NG OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, REQUIRED THE ASSE SSEE TO SUBMIT WHETHER SHE HAD DECLARED THE UNDISCLOSED INCOME OF RS. 1.41 CRORES IN HER RETURN FILED UNDER SECTION 153C OF THE ACT OR N OT? IF NOT, SHE WAS REQUIRED TO EXPLAIN AS TO WHY THE SAME SHOULD NOT B E TAXED IN HER HANDS FOR RELEVANT ASSESSMENT YEAR. IN RESPONSE, ASSESSE E SUBMITTED AS UNDER:- 9.2 THAT DURING THE STATEMENT, SHE STATED THAT THE AMOUNT GIVEN AS ADVANCE FOR PURCHASE OF LAND ETC. AND ACCORDINGLY R S. 1.41 CRORES WAS OFFERED FOR TAXATION. ASSESSEE HAS PREPARED COMPLE TE CASH FLOW STATEMENT COVERING ABOVE ADVANCE OF RS. 1.41 CRORES AND JEWELLERY PURCHASE OF RS. 1200000/- AND SOURCES OF RS. 1.41 C RORES + RS. 12 LACS MAY BE EXAMINED FROM THE BALANCE SHEET OF SMT. KIRA N RATHORE 5 PREPARED FROM 01/04/2003 TO 31/03/2008. THEREFORE ON WORKING OUT UNDISCLOSED INCOME, THE SAME WAS WORKED OUT AS UNDE R:- A.Y. AMOUNT. 2004-05 1140000 2007-08 9700000 2008-09 1000000 AND ACCORDINGLY ASSESSEE HAS OFFERED ABOVE INCOMES FOR TAXATION IN RESPECTIVE YEARS. THEREFORE, ASSESSEE HAS FAIRLY A ND TRULY DISCLOSED ALL THE TRANSACTION AND NO ADVERSE INFERENCE MAY PLEASE BE DRAWN ON THIS ACCOUNT THE ASSESSEE FURTHER SUBMITTED AS UNDER:- 9.3 THAT ON THE BASIS OF LOOSE PAPER ASSESSEE HAS MADE SURRENDER OF RS. 1.41 CRORES AS UNDISCLOSED INCOME BUT ON VERIFICATI ON OF BOOKS OF ACCOUNT AND OTHER DOCUMENTS, IT WAS FOUND THAT THE TOTAL ADVANCES OF RS. 1.41 CORRES WAS THERE BUT ASSESSEE HAS MADE WITHDRAWALS FROM REGULAR BOOKS TO THE EXTENT OF RS. 47 LACS AND THAT IS THE PART OF RS. 140 LACS, THEREFORE, UNDISCLOSED INCOME WORKED OUT WAS ONLY TO THE EXTENT OF RS. 118.40 LACS. NO DOUBT THE ASSESSEE H AS MADE ADVANCE OF RS. 1.41 LACS FOR PURCHASE OF LAND FROM SHRI JIT ENDRA SINGH RATHORE AND SURYA ESTATE BUT OUT OF UNDISCLOSED PART COMES OF RS. 118.40 LACS. THEREFORE, ASSESSEE HAS OFFERED RS. 118.40 L ACS AS DEBITED ABOVE FOR TAXATION. 4. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMIS SIONS OF THE ASSESSEE, MADE THE ADDITION OF RS. 22,60,000/- BY O BSERVING IN PARA 9.4 TO 9.7 OF THE ASSESSMENT ORDER DATED 16/12/2010, WH ICH IS REPRODUCED VERBATIM AS UNDER:- 9.4 THE SUBMISSIONS FURNISHED BY THE ASSESSEE WAS CONSIDERED BUT FOUND TO BE NOT SATISFACTORY FOR THE REASONS THAT SHRI GA NPAT SINGH IN HIS STATEMENT RECORDED U/S 131 DATED 15/05/2008 BEFORE DDIT IN ANSWER TO QUESTION NO.4 DEPOSED THAT ACTUALLY THIS PAPER C ONTAINS THE DETAILS 6 OF PAYMENT OF RS. 1.41 CRORES MADE IN CASH BY HIS W IFE SMT. KIRAN RATHORE TO SOME PERSONS IN RESPECT OF PURCHASE OF S OME LAND/HOUSE ON DIFFERENT DATES MENTIONED IN THIS PAPER AND ADMI TTED THIS AMOUNT OF RS. 1.41 CRORES AS HIS WIFES UNDISCLOSED INCOME OF F.Y. 2007-08 AND PROMISED ON HER BEHALF TO PAY TAX ON IT. WHEN SMT. KIRAN RATHORE WAS CONFRONTED WITH THIS PAPER (PAGE NO. 24 ) AND THE STATEMENTS OF SHRI GANPAT SINGH RATHORE DATED 15/05 /2008, SMT. KIRAN RATHORE, IN ANSWER TO QUESTION NO.3 OF HER ST ATEMENT RECORDED ON OATH U/S. 131 DATED 16/05/2008 BEFORE DDIT, STAT ED THAT SHE WAS AGREE TO HER HUSBAND SHRI GANPAT SINGH RATHORES ST ATEMENT DATED 15/05/2008 IN TOTALITY. SHE ALSO ADMITTED THAT PAG E NO. 24 OF ANNEXURE A-5 HAS BEEN WRITTEN IN HER HAND WRITING A ND IT PERTAINS TO CASH PAYMENT OF RS. 1.41 CRORES MADE BY HER FOR SOM E LAND/HOUSE ON DIFFERENT DATES. ADMITTING THIS CASH PAYMENT OF RS . 1.41 CRORES AS HER UNDISCLOSED INCOME FOR F.Y. 2007-08, SHE OFFERED RS . 1.41 CRORES FOR TAXATION. 9.5 FURTHER, THE ASSESSEES CLAIM REGARDING WITHDRA WALS MADE FROM REGULAR BOOKS OF ACCOUNTS, IS NOT ALSO ACCEPTABLE B ECAUSE DURING THE COURSE OF SEARCH OPERATION AT THE PREMISES AT RISHE BHDEO, NO SUCH BOOKS OF ACCOUNT WERE FOUND AND SEIZED. SIMILARLY, NO SUCH BOOKS OF ACCOUNTS WERE FOUND AND SEIZED AT THE PREMISES NAME LY MAMAJI KI HAVELI FOR WHICH THE ASSESSEE CLAIMED. IT IS WORTH WHILE TO MENTION HERE THAT THE ALLEGED BOOKS OF ACCOUNTS ARE NOT PAR T OF SEIZED DOCUMENTS. ALSO THE ISSUE OF AVAILABILITY OF BOOKS IS AN AFTERTHOUGHT AS THE ASSESSEE HAS SPOKEN ABOUT THE BOOKS FIRST TI ME EVEN AFTER A LAPSE OF ALMOST 1 YEARS EVER SINCE THE PROCEEDING S INITIATED. 9.6 FURTHER, ONUS LIES UPON THE ASSESSEE, TO SUBSTA NTIATE HER CLAIM REGARDING NON-DISCLOSURE OF UNDISCLOSED INCOME AT A LL, HAS NOT BEEN DISCHARGED. 9.7 IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE C ASE, IT IS ESTABLISHED THAT THE ASSESSEE HAS FAILED TO EXPLAIN THE CASH PA YMENT OF RS. 1.41 CRORES. HOWEVER, THE ASSESSEE HAS DISCLOSED UNDISC LOSED CASH PAYMENT OF RS. 1184000/- IN HER RETURNS (RS. 11,40, 000 FOR A.Y. 2004- 05, RS. 97,00,000/- FOR A.Y. 2007-08 AND RS. 10,00, 000/- FOR A.Y. 2008-09), THEREFORE, DIFFERENCE OF RS. 22,60,000/- REMAINED UNEXPLAINED AND UNDECLARED. HENCE, THE SAME IS BRO UGHT TO TAX IN 7 THE HANDS OF THE ASSESSEE FOR A.Y. 2008-09 AS HER U NDISCLOSED INCOME FROM UNDISCLOSED SOURCES. 5. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER TO TH E LEARNED CIT(A) AND SUBMITTED THAT SURRENDER OF RS. 1.41 CRORES IN HER STATEMENT RECORDED DURING THE POST SEARCH PROCEEDINGS WAS MAD E ON THE BASIS OF PAGE NO. 24 ANNEXURE A-5 AND WHEN THE STATEMENT WAS RECORDED, ASSESSEES PERSONAL BOOKS OF ACCOUNTS WERE NOT COMP LETE AND LATER ON, WHEN THE BOOKS OF ACCOUNTS AND THE CASH FLOW STATEM ENTS WERE COMPLETED, WHATEVER SHORTFALL AROSE, THE SAME WAS O FFERED FOR TAXATION AS PER FOLLOWING DETAILS:- A.Y. AMOUNT. 2004-05 1140000/- 2007-08 9700000/- 2008-09 1000000/- --------------------- TOTAL 1,18,40,000/- ---------------------- 6. IT WAS STATED THAT THERE WAS NO DOUBT THAT THE A SSESSEE HAD MADE DISCLOSURE OF RS. 1.41 CRORES AT THE TIME OF SEARCH & POST SEARCH STATEMENTS AS PER PAGE NO. 24 OF ANNEXURE A-5, BUT RS. 1.41 CRORES INCLUDED THE AMOUNT WITHDRAWN FROM OUR REGULAR BOOK S AND APPLIED FOR 8 THE SAID INVESTMENT AND ACCORDINGLY ASSESSEE HAD OF FERED INCOME OF RS. 118.40 LACS AGAINST INVESTMENT MADE OF RS. 141 LACS DULY RECORDED IN BOOKS OF ACCOUNTS IN THE RETURN FILED U/S 153A OF T HE ACT, THE SAME COULD BE TERMED AS TELESCOPIC EFFECT AND JUSTIFIED. IT W AS FURTHER STATED THAT ALL THE CASH FLOWS WERE RELATED TO BANK TRANSACTION AND THOSE COULD NOT BE AFTERTHOUGHT OR ANY MANIPULATION. IT WAS CONTEN DED THAT WHATEVER TRANSACTION RECORDED TO WORK OUT, ADDITIONAL INCOME WERE TOTALLY SUPPORTED AND CONSEQUENTLY UNDISCLOSED INCOME DETER MINED WAS TRUE & CORRECT. IT WAS FURTHER CONTENDED THAT THE ASSESSI NG OFFICER HAD NOT POINTED OUT ANY OBSERVATION OUT OF CASH BOOKS AND B ALANCE SHEET, WHICH WAS NOT ACCEPTABLE AND THEREFORE, THE SAME COULD NO T BE UNEXPLAINED. IT WAS POINTED OUT THAT WHATEVER WAS FOUND AT THE TIME OF SEARCH HAD BEEN INCORPORATED AND ACCORDINGLY CASH FLOW WAS PREPARED AND EVERY ENTRY WAS DULY EXPLAINED. THEREFORE, A MERE SURRENDER AT THE TIME OF SEARCH COULD NOT BECOME A SOLE BASIS FOR MAKING ANY ADDITION PAR TICULARLY WHEN SAME WAS EXPLAINED. ACCORDINGLY, A REQUEST WAS MADE TO DELETE THE ADDITION OF RS. 22,60,000/- MADE BY THE ASSESSING OFFICER. LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIONS O F THE ASSESSEE DELETED THE ADDITION BY OBSERVING IN PARA 2.3 TO 2. 3.3 OF THE IMPUGNED ORDER, WHICH IS REPRODUCED VERBATIM AS UNDER:- 9 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R. AND HAV E PERUSED THE MATERIAL ON RECORD. THE LIMITED ISSUE FOR CONSIDERATION IS THAT DURING THE COURSE OF SEARCH, ADVANCES OF RS. 1.41 CRORE WERE NOTICED WHICH WERE ADMITTED TO BE N OT RECORDED IN THE BOOKS AND APPELLANT SURRENDERED THE SAME DURING THE COURSE OF STATEMENT RECORDED AT THE TIME OF SEARCH. HOWEVER, ON GOING THROUGH THE BOOKS, APPELL ANT NOTICED THAT SOURCE OF RS. 22.60 LAKHS IS EXPLAINED AND ACCORDINGLY SHE HAS OFFERED THE REMAINING AMOUNT OF RS.1,18,40,000/-FOR TAXATION IN HER RETURNS OF INCO ME ( RS. 11,40,000/- + RS. 97,00,000/- + RS. 10,00,000/- IN A.Y 2004-05, 2007-08 AND 2008- 09) . IN SUPPORT OF ITS EXPLANATION THE APPELLANT FURNISHED COPY OF BOOKS OF ACCOUNTS O F THE PROPRIETARY FIRM M/S RAJPUTANA EXPORTS AND ALSO PERSONAL CASH BOOK AND BALANCE SHE ET BEFORE THE A.O. A.O. HAS IGNORED AND REJECTED THESE BOOKS OF ACCOUNTS ON THE GROUND THAT THESE WERE NOT THE PART OF THE SEIZED DOCUMENTS. ON THE OTHER HAND, A.R. HAS ARGUE D THAT THE APPELLANT HAS TAKEN RS. 47 LAKHS AS WITHDRAWN DURING F.Y 2007-08 RELEVANT T O A.Y 2008-09 FROM PROPRIETARY FIRM M/S RAJPUTANA EXPORTS AS EVIDENT FROM COPY OF ACCOU NT OF M/S. RAJPUTANA EXPORTS IN THE PERSONAL BOOKS OF SMT. KIRAN RATHORE AND THE CONTRA ACCOUNT I.E. COPY OF ACCOUNT OF SMT. KIRAN RATHORE IN THE BOOKS OF M/S RAJPUTANA EX PORTS WHICH REFLECTS ENTRIES AS BELOW:- LEDGER ACCOUNT OF M/S RAJPUTANA EXPORTS DATE PARTICULAR VOUCHER TYPE DEBIT CREDIT 01/12/2007 DR. CASH (BEING CASH RECD). RECEIPT RS. 5 LAKHS 05/02/2008 DR. JITENDRA SINGH RATHORE (BEING AMOUNT PAID AGAINST ADVANCE ON BEHALF TO SURYA ESTATE AGAINST LAND) JOURNAL RS. 15 LAKHS 05/03/2008 DR. JEWELLERY A/C (BEING CASH WITHDRAWAL FOR PURCHASE JEWELLERY AND PAYMENT TO JSR ON ACCOUNT OF SURYA ESTATE) RS. 27 LAKHS RS. 47 LAKHS 2.3.1 THE A.R. HAS FURTHER SUPPORTED THESE DETAILS BY FURNISHING COPIES OF THE RELEVANT PAGES OF THE CASH BOOK OF M/S RAJPUTANA EXPORTS BEF ORE ME TO SUBSTANTIATE THAT ENOUGH CASH BALANCES WERE AVAILABLE IN THE FIRM. IN ANY CA SE, ALL THESE BOOKS WERE PRODUCED BEFORE THE A.O. ON PERUSAL OF DETAILS IT WAS NOTICE D BY THE UNDERSIGNED THAT THE ENOUGH CASH BALANCE WERE AVAILABLE ON RESPECTIVE DATE IN T HE BOOKS OF M/S RAJPUTANA EXPORTS. 10 A.O. IS NOT JUSTIFIED TO IGNORE THE BOOKS OF ACCOUN TS WITHOUT POINTING OUT ANY DEFECTS OR MISTAKES IN THESE BOOKS. IT IS NOT THE CASE OF RETR ACTION; RATHER IT IS CASE WHERE THE AMOUNT FOUND THROUGH EXPLAINABLE SOURCES HAS ONLY B EEN REDUCED FROM THE TOTAL SURRENDER. 2.3.2 IT IS A SETTLED LEGAL POSITION THAT STATEMENT GIVEN DURING THE COURSE OF SEARCH IS A VALID AND IMPORTANT PIECE OF EVIDENCE BUT SAME IS R EBUTTABLE. IN THE CASE OF SH. ASHOK KUMAR VS. ITO 201 CTR 178, (JNK), THE HON'BLE COURT HAD OBSERVED THAT IT IS TRUE THAT AN ADMISSION IS NO DOUBT IS RELEVANT PIECE OF EVIDENCE BUT IT IS NEVER CONCLUSIVE. IT IS OPEN TO ASSESSEE TO EXPLAIN OR CLARIFY, UNDER WHAT CIRCU MSTANCES IT WAS MADE OR TO PROVE THAT WHAT WAS STATED DID NOT REFLECTED TRUE STATE OF AFF AIRS. SIMILARLY, HON'BLE RAJ. HIGH COURT IN THE CASE OF CIT VS ASHOK KUMAR SONI 291 ITR 172 HAS HELD THAT ADMISSION ARE RELEVANT AND STRONG PIECE OF EVIDENCE THAT MAY BE USED AGAIN ST THE PERSON MAKING SUCH ADMISSION BUT THEY ARE NOT CONCLUSIVE PROOF OF STAT EMENT CONTAINED IN THE ADMISSION AND CAN ALWAYS BE REBUTTED AND EXPLAINED. FURTHER, THE VIEW EXPRESSED BY THE CHANDIGARH BENCH OF ITAT IN THE CASE OF SURIENDER PAL VERMA V. ASST. CIT [2004] 89 ITD 129 (CHD.) IS IMPORTANT, WHEREIN, IT IS OBSERVED:- IT IS WELL KNOWN FACT THAT THE CONFESSIONAL STATEM ENTS MADE DURING THE SEARCH ARE OFTEN VULNERABLE ON THE GROUND THAT THE PERSON GIVING SUCH STATEMENTS REMAIN UNDER GREAT MENTAL STRAIN AND STRESS. THEY A LSO DO NOT HAVE THE AVAILABILITY OF RELEVANT DETAILS, DOCUMENTS AND BOO KS OF ACCOUNT AT THE TIME OF GIVING SUCH STATEMENTS IN THE ABSENCE OF WHICH PREC ISE INFORMATION RELATING TO THE MODE OF UTILIZATION OF SUCH INCOME AND THE YEAR OF SUCH INVESTMENT CANNOT BE CORRECTLY FURNISHED. THE ASSESSEES ARE, THEREFORE, ENTITLED TO MODIFY/CLARIFY THE STATEMENTS AFTER VERIFYING THE NECESSARY DETAILS .F ROM THE RELEVANT RECORDS AT LATER POINT OF TIME.' 2.3.3 IN VIEW OF THE AFORESAID FACTUAL MATRIX AND T HE LEGAL POSITION ON THE ISSUE UNDER CONSIDERATION, THE ADDITION OF RS. 22,60,000/- SO M ADE BY THE A.O. IS HEREBY DELETED. NOW, THE DEPARTMENT IS IN APPEAL. 7. LEARNED D.R. SUPPORTED THE ORDER OF THE ASSESSIN G OFFICER, BUT COULD NOT REBUT THE FINDINGS GIVEN BY THE LEARNED C IT(A) IN THE IMPUGNED ORDER. 11 8. IN HIS RIVAL SUBMISSIONS LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW A ND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT DURING THE COURSE OF SEARCH, A STATEMENT OF ASSESSEES HUSBAND WAS RECORDED, WHEREIN A SUM O F RS. 1.41 CRORES WAS SURRENDERED IN THE HANDS OF THE ASSESSEE, WHO ALSO OFFERED THE SAME FOR TAXATION WHEN HER STATEMENT WAS RECORDED ON 16/05/2 008. HOWEVER, WHEN THE BOOKS OF ACCOUNT WERE COMPLETED AND CASH F LOW STATEMENT WAS DRAWN, IT WAS FOUND THAT SOURCE OF RS. 22,60,000/- WAS EXPLAINED AND ACCORDINGLY, THE ASSESSEE OFFERED THE REMAINING AMO UNT OF RS. 118.40 LACS FOR TAXATION IN HER RETURNS OF INCOME FOR THE A.Y. 2004-05, 2007-08 AND 2008-09. THE ASSESSEE ALSO FURNISHED THE BOOKS OF ACCOUNTS OF M/S. RAJPUTANA EXPORTS (PROPRIETORSHIP CONCERN OF THE AS SESSEE) BEFORE THE LEARNED CIT(A), WHO OBSERVED THAT IT WAS NOT JUSTIF IED ON THE PART OF THE ASSESSING OFFICER TO IGNORE THE BOOKS OF ACCOUNTS W ITHOUT POINTING OUT ANY DEFECT OR MISTAKE IN THOSE BOOKS OF ACCOUNTS. LEAR NED CIT(A) WAS ALSO JUSTIFIED IN OBSERVING THAT THE STATEMENT GIVEN DUR ING THE COURSE OF SEARCH IS VALID AND IMPORTANT PIECE OF EVIDENCE, BU T SAME IS REBUTTABLE. 12 THE ASSESSEE EXPLAINED SOURCE OF RS. 22,60,000/-, W HICH WAS ARISING OUT OF CASH BOOK OF M/S. RAJPUTANA EXPORTS, THEREFORE, THE ADDITION MADE BY THE ASSESSING OFFICER WAS RIGHTLY DELETED BY THE LE ARNED CIT(A). WE DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FIND INGS OF THE LEARNED CIT(A) ON THIS ISSUE. 7. THE NEXT ISSUE VIDE GROUND NO.3 RELATES TO THE D ELETION OF ADDITION OF RS. 2,19,976/- OUT OF TOTAL ADDITION OF RS. 2,94 ,449/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INTEREST PAID TO TH E BANKS UNDER SECTION 36(1)(III) OF THE ACT. 8. FACTS RELATED TO THIS ISSUE IN BRIEF ARE THAT TH E ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS, NOTICE D THAT THE ASSESSEE HAD OBTAINED SECURED LOANS FROM BANK OF BARODA OD A /C TO THE EXTENT OF RS. 2,01,83,627/- AND ON SUCH LOAN, SHE CLAIMED DED UCTION IN FORM OF INTEREST PAYMENT OF RS. 2,94,449/-. THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAD KEPT RS.47,00,000/- IN HER PERSONA L CAPACITY. HE THEREFORE, WAS OF THE VIEW THAT TO THAT EXTENT, THE LOAN HAD NOT BEEN UTILIZED FOR BUSINESS PURPOSES. THE ASSESSING OFFIC ER MADE THE DISALLOWANCE OF RS. 2,94,449/- AFTER CONSIDERING TH E SAME FOR NON- BUSINESS PURPOSE. 13 9. BEING AGGRIEVED, ASSESSEE CARRIED THE MATTER TO THE LEARNED CIT(A) AND SUBMISSIONS MADE AS INCORPORATED IN PARA 3.2.2. TO 3.2.8 IN THE IMPUGNED ORDER ARE REPRODUCED VERBATIM AS UNDER:- 3.2.2 THE CONTENTION OF A.O. IS MAINLY THAT 1. RS. 47,00,000/- KEPT BY THE ASSESSEE IN HER PERS ONAL CAPACITY; 2. RS. 42,35,656/- AS DEBTORS/ADVANCES TO RATHORE M ARBLE; ( BUT CREDIT BALANCE UPTO JANUARY 2008) 3. RS. 15,65,015/- AS DEBTORS/ADVANCES TO RANAWAT M ARBLE. (BUT CREDIT BALANCE UPTO JANUARY 2008) ARE ADVANCES ON WHICH IN TEREST U/S 36(1) (III) ARE NOT ALLOWABLE. 1. IN THIS REGARD IT IS SUBMITTED THAT ADVANCE OF RS. 47,00,000/- IS CONCERNED, IT IS SUBMITTED THAT ABOVE SUM WAS GIVEN AS ADVANCE AGAINST LAND AND SAME ARE ENTERED IN PERSONAL BALANCE SHEET . THE COPY OF ACCOUNT OF SMT. KIRAN RATHORE IN THE BOOKS OF M/S. RAJPUTAN A EXPORTS, BEING PROPRIETARY CONCERN OF SMT. KIRAN RATHORE IS ENCLOS ED. FROM THE COPY OF ACCOUNT YOUR HONOUR WILL PLEASE OBSERVE THAT ONLY R S. 47 LACS WERE TAKEN BY SMT. KIRAN RATHORE AGAINST TOTAL CASH CREDIT LIMIT AS AT 31/03/2008 OF RS. 2,01,83,627/-. FURTHER YOUR HONOUR WILL PLEASE OBS ERVE THAT OUT OF RS. 47 LACS WITHDRAWN BY THE ASSESSEE RS. 15 LACS WAS ON 0 510212008 AND RS. 27 LACS WAS ON 0510312008. SMT. KIRAN RATHORE HAS WITH DRAWN THE SAID AMOUNT FOR ADVANCE PAYMENT AGAINST LAND TO BE PURCH ASED FOR ITS BUSINESS PURPOSES. THEREFORE IT CANNOT BE SAID THAT TRANSFER OF CASH FROM BUSINESS FIRM TO INDIVIDUAL BALANCE SHEET IS THAT FOR NON BU SINESS PURPOSES. THEREFORE HOW TOTAL INTEREST PAID RS. 2,94,449/- TO BANK FOR WORKING CAPITAL OF RS. 201.83 LACS CAN BE DISALLOWED. 2. AS REGARD ADVANCE IN REGULAR COURSE OF BUSINESS TO RAW MATERIAL SUPPLIERS VIZ. RATHORE MARBLE & RANAWAT MARBLE IS C ONCERNED, FOLLOWING ARE SUBMITTED: 14 3.2.3 THE ASSESSEE IS ENGAGED IN MARBLE BUSINESS AN D FOR THE PURPOSE OF PURCHASES OF MARBLE BLOCKS WE HAVE TO GIVE ADVANCES TO THE MINE OWNERS VIZ. RATHORE MARBLE & RANAWAT MARBLE. FURTHER THIS IS THE TRADE PRACTICE THAT MAY BE ENQUIRED FROM ANY MINE OWNER OR MARKET THAT NO MINE OWNER GIVES MATERIAL WITHOUT ADVANCE AND YOU HAVE TO BE I N QUEUE FOR GETTING MATERIAL. THEREFORE THIS IS TRADE PRACTICE. WHATEVE R MONEY LYING DEBITED AND/OR CREDITED FROM TIME TO TIME ARE IN ROUTINE CO URSE OF BUSINESS AND CANNOT BE TERMED AS INTEREST FREE LOAN TO SISTER CO NCERN. THE RATHORE MARBLE AND RANAWAT MARBLE ARE SUPPLIERS OF BASIC RA W MATERIAL I.E. MARBLE BLOCKS AND DURING THE YEAR UNDER CONSIDERATION THER E WAS CREDIT BALANCES TILL JAN 2008 WHICH A.O. HAS NOT CONSIDERED. 3.2.4 THE COPY OF LEDGER ACCOUNT OF RATHORE MARBLE & RANAWAT MARBLE FOR THE F.Y. 2007-2008 IS ENCLOSED FOR KIND VERIFICATIO N. 3.2.5 FURTHER IF A PERSON IS CARRYING OUT ANY BUSIN ESS, THERE WILL BE LOT OF CREDITORS AND DEBTORS AND CHARGING OF ANY INTEREST ON DEBIT/CREDIT BALANCE IS NOT POSSIBLE AND CAN NEVER BE TRADE PRACTICE AND THIS WAY A.O. CANNOT DICTATE TO DO THE BUSINESS. FURTHER IF THERE ARE DE BTORS WHICH ARE CONSIDERED AS INTEREST FREE ADVANCES THAN YOUR HONO UR PLEASE ALSO CONSIDER THE CREDITORS & UNSECURED LONES, WHICH ARE ALSO INT EREST FREE. 3.2.6 THEREFORE CONSIDERING ABOVE AND TRADE PRACTIC E THE ADVANCES IN THE NAME OF RATHORE MARBLES & RANAWAT MARBLES CANNOT BE TERMED AS INTEREST FREE ADVANCES AND PROVISION OF SEC. 36(1) (III) ARE NOT ATTRACTED. THE ADVANCES ARE PURELY FOR BUSINESS PRUDENCE AND EXPED IENCY AND NO INTEREST HAS BEEN CHARGED ON ABOVE SUCH ACCOUNTS. THAT THE L EARNED A.O. HAS PLACED RELIANCE ON THE FOLLOWING CASES. 1. CIT VS. H.R. SUGAR FACTORY P. LTD. (ALL) 187 I TR 363 2. CIT VS. ABHISHEK INDUSTIRES (P & H) 286 ITR 1 3. K. SOMASUNDARAM & BROTHERS VS. CIT 283 ITR 939 (MAD.) 4. S.A. BUILDERS PVT. LTD. VS. CIT (SC) 288 ITR 1. (COPY OF ALL THE CASES LAWS ARE ENCLOSED.) 15 3.2.7 FROM THE ABOVE CASES IT TRANSPIRES THAT PROPO RTIONATE DISALLOWED OF INTEREST TO THE EXTENT THE FUNDS HAVE BEEN USED FOR NON-BUSINESS PURPOSES/INTEREST FREE LOANS. FROM THE ABOVE CASE LAWS, IT IS SUBMITTED THAT THE INTEREST IS TO BE DISALLOWED ON PROPORTIONATE BASIS FOR NON BUSINESS ACTIVITIES BUT IN OUR CASE IT IS NOT SO., THEREFORE THE ABOVE CASE LAWS ARE NO T ATTRACTED TO ASSESSEES CASE. IN OUR CASE WE HAVE MADE ADVANCES TO RATHORE MARBLE & RANAWANT MARBLE FOR THE PURPOSE OF BUSINESS AND NOT AS INTEREST FRE E ADVANCES. 3.2.8 THEREFORE UNDER THE FACTS AND CIRCUMSTANCES O F THE CASE THE ADDITION MADE BY A.O. IS UNJUSTIFIED, EXCESSIVE AND LIABLE T O BE DELETED. THE LEARNED CIT(A) AFTER CONSIDERING THE SUBMISSIO NS OF THE ASSESSEE ALLOWED THE RELIEF OF RS. 2,19,976/- BY OBSERVING I N PARA 3.3 OF THE IMPUGNED ORDER AS UNDER:- 3.3 I HAVE CONSIDERED THE SUBMISSION OF LD. A.R. A ND HAVE PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT THE A.O. HAS DI SALLOWED ENTIRE INTEREST OF RS. 2,94,449/- WITHOUT BRINGING OUT AS TO HOW THE W HOLE OF THE INTEREST IS DISALLOWABLE WHEN ONLY THREE CONCERNS HAVE BEEN DIS CUSSED BY A.O.. MOREOVER, IT IS SEEN THAT M/S RATHORE MARBLE AND M/ S RANAWAT MARBLES ARE BASICALLY THE TRADE DEBTORS FROM WHICH APPELLAN T HAD BEEN PURCHASING THE MARBLE BLOCK. ON PERUSAL OF THE COMPLETE COPY O F ACCOUNT OF M/S. RATHORE MARBLES AND M/S RANAWAT MARBLES AND ALSO GO ING THROUGH THE MONTHLY SUMMARY, IT IS SEEN THAT FROM APRIL TO JANU ARY, THERE ARE CREDIT BALANCES IN THEIR ACCOUNT. IT IS ONLY IN THE FEB. A ND MARCH, WHERE THE APPELLANT HAS PAID THE ADDITIONAL AMOUNT TO THEM FO R COMMERCIAL EXPEDIENCY, AS THE APPELLANT HAS BEEN REGULARLY PUR CHASING MARBLE BLOCKS FROM THEM. IT HAS BEEN SUBMITTED BY THE A.R. THAT F OR THE PURCHASE OF MARBLE BLOCKS, APPELLANT HAS TO GIVE ADVANCES TO TH E MINE OWNERS WHICH IS THE TRADE PRACTICE, OTHERWISE TO GET GOOD QUALITY O F MATERIAL WITHOUT ANY 16 ADVANCE; ONE HAS TO WAIT EFFECTIVELY IN THE QUEUE. A.R. ARGUED THAT BECAUSE THESE CONCERNS WERE SISTER CONCERNS, IN THE EARLIER PERIOD OF THIS YEAR THESE WERE PERSUADED FOR NOT TO INSIST FOR ADVANCES. IN T HE CASE OF M/S S.A. BUILDERS PVT. LTD VS. CIT 288 ITR L, HON'BLE SUPREM E COURT HAS HELD THAT IF THE INTEREST FREE ADVANCES HAVE BEEN GIVEN FOR COMM ERCIAL EXPEDIENCY, THE DISALLOWANCE OF INTEREST IS NOT REQUIRED TO BE MADE . OTHER DECISIONS REFERRED BY A.O. ARE PRIOR TO THIS SUPREME COURT DE CISION WHICH ARE EITHER NOW OVERRLUED OR DISTINGUISHED IN THIS SUPREME COUR T DECISION AND ARE THUS EITHER NOT GOOD OR GOOD WITH REFERENCE TO FACTS OF THAT SPECIFIC CASE SO DECIDED BY THE HIGH COURT. CONSIDERING THE FACTS OF THE INSTANT CASE OF THE APPELLANT AND THE LEGAL POSITION ON THE ISSUE UNDER CONSIDERATION, FIRSTLY WHOLE OF INTEREST CANNOT BE DISALLOWED AND FURTHER THE PROPORTIONATE INTEREST RELATED TO INTEREST FREE ADVANCE TO M/S RA THORE MARBLE AND M/S RANAWAT MARBLE IS ALSO NOT DISALLOWABLE BEING TRADE ADVANCES GIVEN FOR COMMERCIAL EXPEDIENCY. HOWEVER, AS FAR AS ADVANCE G IVEN TO SMT. KIRAN RATHORE FROM THE PROPRIETARY SHIP CONCERN M/S RAJPU TANA EXPORT IS CONCERNED, A.R. HAS FAILED TO PROVE THAT IT HAS BEE N GIVEN FOR ANY BUSINESS PURPOSE. ACCORDINGLY, PROPORTIONATE DISALLOWANCE OF INTEREST RELATABLE TO WITHDRAWALS MADE BY THE APPELLANT FROM PROPRIETARY FIRM IS UPHELD. CONSIDERING THE RATE OF INTEREST ON BANK LOAN AT 12 .75%, THE COPY OF WHICH WAS FURNISHED BY THE ASSESSEE, THE INTEREST ON DAY PRODUCT BASIS WORKS OUT TO RS. 74,473/-. ACCORDINGLY, DISALLOWANCE TO THE A FORESAID EXTENT IS CONFIRMED AND BALANCE RS. 2,19,976/- IS HEREBY DELE TED. NOW THE DEPARTMENT IS IN APPEAL. 10. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RE CORD. IN THE PRESENT CASE, LEARNED CIT(A) WAS OF THE VIEW THAT M/S RATHO RE MABLE AND M/S RANAWAT MARBLES WERE BASICALLY TRADE DEBTORS, FROM WHICH ASSESSEE HAD BEEN PURCHASING THE MARBLE BLOCK. HE ALSO OBSERVED THAT FROM APRIL TO 17 JANUARY THERE WERE CREDIT BALANCES IN THE ACCOUNTS OF THE AFORESAID FIRMS AND IT WAS ONLY IN FEBRUARY AND MARCH WHERE THE ASS ESSEE HAD ADVANCE AMOUNT TO THEM FOR COMMERCIAL EXPEDIENCY I.E. FOR T HE PURCHASE OF MARBLE BLOCKS. THEREFORE, DISALLOWANCE OF INTEREST WAS NOT REQUIRED TO BE MADE. LEARNED CIT(A) ALSO FOUND THAT THE ADVANC E GIVEN TO M/S RAJPUTNA EXPORT WAS NOT FOR BUSINESS PURPOSE. HE T HEREFORE, SUSTAINED THE DISALLOWANCE OF THE INTEREST ON PROPORTIONATE B ASIS. IN OUR OPINION, THE IMPUGNED ORDER PASSED BY THE LEARNED CIT(A) IS BASED ON THE FACTS OF THE PRESENT CASE, SO, IT DOES NOT REQUIRE ANY INTER FERENCE ON OUR PART PARTICULARLY WHEN THE ASSESSING OFFICER DISALLOWED THE ENTIRE INTEREST PAID BY THE ASSESSEE AND EVEN MADE THE DISALLOWANCE ON T HE AMOUNT, WHICH WAS UTILIZED FOR BUSINESS PURPOSE AND GIVEN TO THE PROPRIETORSHIP CONCERN M/S RAJPUTNA EXPORT AS AN ADVANCE. WE, THEREFORE, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 11. IN ITA NO. 205/JODH/2012, THE ONLY ISSUE AGITA TED BY THE DEPARTMENT RELATES TO THE DELETION OF ADDITION OF R S. 18,19,913/- OUT OF TOTAL ADDITION OF RS. 25,44,916/- MADE BY THE ASSES SING OFFICER ON ACCOUNT OF DISALLOWANCE OUT OF INTEREST PAID TO THE BANKS UNDER SECTION 36(1)(III) OF THE ACT. AS REGARDS THIS ISSUE, IT IS NOTICED THAT THE FACTS ARE IDENTICAL AS WERE INVOLVED IN THE PRECEDING A.Y. 20 07-08, WHICH WE HAVE 18 ADJUDICATED IN FORMER PART OF THIS ORDER, EVEN THE RIVAL CONTENTIONS FOR THIS YEAR WERE SIMILAR AS WERE IN EARLIER YEARS. TH EREFORE, OUR FINDINGS GIVEN IN FORMER PART OF THIS ORDER IN RESPECT OF SI MILAR ISSUE AGITATED IN A.Y. 2007-08, SHALL APPLY MUTATIS MUTANDIS FOR THIS YEAR ALSO. IN VIEW OF THAT, WE DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 12 . IN THE RESULT, BOTH THE APPEALS OF THE DEPARTMENT ARE DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 26 TH SEPTEMBER, 2013). (HARI OM MARATHA) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 26 TH SEPTEMBER, 2013. VR/- COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.
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