ANIL KUCHHAL, Jaipur V. DCIT, Jaipur

ITA 208/JPR/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 99382 (ITAT-JAIPUR)
• Duration Of Justice: 4 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-12-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 09-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA JCIT DHK
• Keywords: Unexplained cash credit; Opportunity of being heard; Principle of natural justice; Peak credit; Additional evidence; Onus to prove
• Section: 131; 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 208/JP/2011 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2006-07 . SHRI ANIL KUCHHAL, C-17, PANCHSHEEL COLONY, AJMER ROAD, JAIPUR. CUKE VS. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-2, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AFBPK 5830 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI MANISH AGARWAL (C.A.) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 08.10.2015. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 16/10/2015. VKNS'K@ ORDER PER SHRI R.P. TOLANI, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A)-I, JAIPUR DATED 12.01.2011 FOR THE A.Y. 2006-07. THE G ROUNDS ARE RAISED IN THE APPEAL ARE AS UNDER :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 81,30,789/- MADE BY THE AO BY ALLEGING THE SAME AS UNEXPLAINED CASH DEPOSITS WITHOUT CONSIDERING THE SUBMISSIONS MADE AN D THE EVIDENCES ADDUCED THUS THE ADDITION MADE DESERVES T O BE DELETED. 1.1 THAT THE LD. CIT (A) HAS FURTHER ERRED IN NOT APPRECI ATING THE FACT THAT ASSESSEE IS A PROPERTY BROKER AND MADE DE POSIT OF THE AMOUNT RECEIVED FROM ITS CLIENTS WHICH WERE UTILI ZED IN MAKING PAYMENT ON BEHALF OF THE CLIENTS. 2 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. 1.2. IN THE ALTERNATIVE WITHOUT PREJUDICE TO GROUND NO. 1 & 1.1 ABOVE THAT THE LD. CIT (A) HAS FURTHER ERRED IN HOLD ING THE POSITIVE PEAK OF RS. 32,07,548/- BEING THE AMOUNT O F CASH DEPOSITED INTO BANK AS UNEXPLAINED INCOME OF THE AS SESSEE BY IGNORING THE FACT THAT THE SAME WAS MADE FROM CASH A VAILABLE WITH THE ASSESSEE OUT OF BANK WITHDRAWALS THUS THE ADD ITION OF RS. 81,30,789/- BE REDUCED TO RS. 49,23,241/- BEING THE NEGATIVE PEAK BALANCE BY CASH DEPOSIT INTO BANK. 1.3. THAT THE LD. CIT (A) HAS FURTHER ERRED IN NOT CONSIDE RING THE FACT THAT THE NEGATIVE PEAK OF RS. 49,23,241/- IS M ADE OUT OF FUNDS RECEIVED FROM CUSTOMER THUS THE SAME DESERVES TO BE DELETED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 58,00,000/- MADE BY THE AO BY ALLEGING THE SAME AS UNEXPLAINED CASH CREDITOR U/S 68 OF THE INCOME TAX A CT, 1961 WITHOUT PROVIDING ADEQUATE OPPORTUNITY TO THE ASSESS EE THUS THE ADDITION MADE DESERVES TO BE DELETED. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS GROSSLY ERRED IN SUSTAINING THE REJECTION O F THE BOOKS OF ACCOUNTS MADE BY THE AO BY APPLYING PROVISIONS O F SECTION 145(3) OF INCOME TAX ACT, 1961 WITHOUT APPRECIATING T HE FACTS OF THE CASE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS GROSSLY ERRED IN UPHOLDING THE ESTIMATION O F THE NET PROFIT RATE AT 50% INSTEAD OF 22.37% DECLARED BY TH E ASSESSEE AND THEREBY UPHOLDING THE ADDITION OF RS. 9,11,729/- MADE BY THE AO TO THE TOTAL INCOME DECLARED BY THE ASSESSEE. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E THE LD. CIT (A) HAS FURTHER ERRED IN NOT ALLOWING THE BENEFIT OF THE TELESCOPING AND SET OFF OF THE ADDITIONS MADE INTO EACH OTHER. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPERTY BROKER AND REGULARLY ASSESSED TO TAX SINCE LAST SEVERAL YEARS. THE LD. COUNSEL FOR THE 3 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. ASSESSEE AT THE TIME OF HEARING ADVERTED TO GROUND NO. 2 FOR THE PROPOSITION THAT ADEQUATE OPPORTUNITY OF HEARING WAS NOT GRANTED TO T HE ASSESSEE. IT IS PLEADED THAT THE MAIN REASON FOR THE ADDITION IS IN RESPECT OF CREDIT ENTRY OF RS. 50,00,000/- RECEIVED FROM ONE DEEPAK BUILDERS. REFE RENCE IS INVITED TO PARA 2 OF THE LD. CIT (A)S ORDER WHICH IS AS UNDER :- 2. THE SECOND GROUND OF APPEAL IS ON ADDITION OF R S. 58 LACS U/S 68 AS UNEXPLAINED CASH CREDITOR. IN THE BALANCE SHEET TWO UNSECURED LOANS ARE APPEARI NG RS.50 LAC IN THE NAME OF DEEPAK BUILDERS AND RS. 8 LAC IN THE NAME OF RADHEYSHYAM GUPTA. THE APPELLANT COULD NOT VERIFY TH E IDENTITY CREDITWORTHINESS OF THE CREDITORS AS WELL AS GENUINEN ESS OF THE TRANSACTIONS. CONFIRMATIONS COULD NOT BE FILED. NE ITHER THE CREDITORS FULL ADDRESS AND PAN WERE GIVEN. THE APPELLANT THUS FAILED TO DISCHARGE ONUS TO PROVE GENUINENESS OF CASH CREDITO RS AND THEREFORE, AO MADE ADDITION OF RS. 50 LACS AND RS. 8 LACS AS UNEXPLAINED CASH CREDITS IN THE NAME OF DEEPAK BUIL DERS AND RADHEYSHYAM GUPTA RESPECTIVELY. ADDITION OF RS. 58 LACS WAS THEREFORE MADE U/S 68 OF IT ACT. CONTENTION OF THE AR IS THAT THE NECESSARY DETAILS LIKE PAN AND ADDRESSES WERE FILED DURING THE ASSESSMENT PROCEEDIN GS. THE AMOUNTS WERE RECEIVED THROUGH A/C PAYEE CHEQUE AND T HE LOANS WERE SUBJECTED TO DUE DEDUCTION OF TDS. THE APPELLANT COULD NOT COMPEL THE LENDERS TO APPEAR BEFORE AO BUT THE AO C OULD HAVE ISSUED SUMMONS U/S 131 TO THOSE PARTIES. WITH THIS IT WAS SUBMITTED THAT THE CREDITS ARE GENUINE AND THEREFORE ADDITION MADE BY THE AO MAY BE DELETED. RELIANCE WAS PLACED ON VARIOUS CASE LAWS INCLUDING ARAVALI TRADING CO. VS. ITO 187 TAXMAN 338 (RAJ.). CONTENTION OF THE AR IS CONSIDERED. TO PROVE A CASH CREDIT THE APPELLANT WAS REQUIRED TO ESTABLISH IDENTITY AND CRE DITWORTHINESS OF THE CREDITORS BESIDES PROVING GENUINENESS OF THE TR ANSACTIONS. THE APPELLANT HAS GIVEN ONLY NAMES AND PAN. EVEN IF BY GIVING PAN IDENTITY IS ESTABLISHED NO EVIDENCE WAS FILED TO PRO VE THE CREDITWORTHINESS OF THE CREDITOR AND SOURCE OF MONEY IN THE HANDS OF THE CREDITORS. CONFIRMATIONS COULD NOT BE FILED AND THEREFORE THE 4 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. GENUINENESS OF THE TRANSACTIONS REMAINED DOUBTFUL. THE DATE OF TRANSACTION ALSO COULD NOT BE GIVEN. THUS THE APPELL ANT HAS MEASURABLY FAILED TO ESTABLISH GENUINENESS OF TRANS ACTIONS AND THEREFORE THE AO HAS RIGHTLY MADE ADDITION U/S 68 O F IT ACT. THE ADDITION MADE BY THE AO OF RS. 58 LAC IS HEREBY CON FIRMED. SECOND GROUND OF APPEAL IS DECIDED AGAINST THE APPELLANT. 3. THE LD. COUNSEL CONTENDS THAT A PERUSAL OF THE AB OVE OBSERVATION WOULD REVEAL THAT AT ONE PLACE LD. CIT (A) HAS OBSERVED TH AT FULL ADDRESS AND PAN OF THE CREDITOR WERE NOT GIVEN BY THE ASSESSEE. THIS OBSERV ATION IS FACTUALLY INCORRECT AS IN THE NEXT PARA LD. CIT (A) HAS OBSERVED THAT TH E ADDRESSES AND PAN WERE FILED WITH THE AO DURING THE COURSE OF ASSESSMENT PR OCEEDINGS. THUS THESE OBSERVATIONS ARE NOT BORNE OUT FROM THE RECORD. FUR THER, AS THE ASSESSEE HAD STRAINED RELATIONS WITH THE SAID CREDITOR M/S. DEEPA K BUILDERS SITUATED AT MUMBAI, A REQUEST WAS MADE TO THE AUTHORITIES TO ISSUE SUMMO N UNDER SECTION 131. BESIDES ASSESSEE FURTHER EXPLAINED THAT THIS AMOUNT WAS RECEIVED THROUGH ACCOUNT PAYEE CHEQUE ON WHICH INTEREST WAS PAYABLE A ND DUE TDS WAS DEDUCTED THEREON. WITH THESE FACTS ON RECORD, IN THE INTERES T OF NATURAL JUSTICE, THE AO AND LD. CIT (A) OUGHT TO HAVE ISSUED SUMMONS U/S 131 AS REQUESTED AND VERIFIED THE DEPARTMENTAL RECORD IN THIS BEHALF. ASSESSEE RELIED ON HONBLE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF ARAVALI TRADING CO. VS . ITO (SUPRA) IN THIS BEHALF WHICH HAS NOT BEEN REFERRED TO BY LD. CIT (A) AT ALL. LD. CIT (A) HAS FURTHER GIVEN A PATENTLY WRONG FINDING THAT THE DATE OF TRAN SACTION HAS NOT BEEN GIVEN BY ASSESSEE. ON ONE HAND LD. CIT (A) HAS NOT DISPUTED THE FACT THAT THE CREDIT WAS GIVEN THROUGH ACCOUNT PAYEE CHEQUE, INTEREST WAS PAI D AND TDS WAS DEDUCTED 5 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. ON THE OTHER HAND IT IS HELD THAT DATE OF TRANSACTI ON IS NOT GIVEN. THUS THE FACTUAL OBSERVATIONS OF THE AO AND LD. CIT (A) ARE WRONG AS WELL AS SELF CONTRADICTORY AND GO TO THE ROOT OF THE ISSUE, ADDITIONS BASED ON SUCH ERRONEOUS FINDINGS ARE UNTENABLE. 3.1. THE LD. COUNSEL FOR THE ASSESSEE THEN ADVERTED TO HIS APPLICATION FOR ADMISSION OF ADDITIONAL EVIDENCE UNDER RULE 29 OF I NCOME TAX APPELLATE TRIBUNAL RULES, 1963, REQUESTING THAT THE CONFIRMATION DATED 24.1.2012 ISSUED BY THE SAID M/S. DEEPAK BUILDERS DULY CONFIRMING THE ADVANCE OF THE LOAN OF RS. 50 LACS MAY BE ADMITTED. THE APPLICATION IS SUPPORTED BY AN AFFI DAVIT DEPOSING THE FACTS ABOUT THE DELAYED RECEIPT OF CONFIRMATION. IT IS P LEADED THAT THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE IN NOT PRODUCING THE SAME BEFORE THE LD. CIT (A) AS DUE TO STRAINED RELATIONS THE CREDITOR PARTY HAD NO T PROVIDED THE CONFIRMATION BESIDES ASSESSEES REQUEST FOR ISSUING SUMMON U/S 1 31 WAS NOT HEEDED BY AO OR LD. CIT (A). THE LD. CIT (A) PASSED THE ORDER ON 12. 01.2011 AND A PERUSAL OF THE CONFIRMATION WOULD REVEAL THAT THE SAME HAS BEEN ISS UED ON 24.01.2012. THUS THE CONFIRMATION COULD BE OBTAINED BY THE ASSESSEE AFTER PASSING OF THE ORDER BY LD. CIT (A). SINCE THE ADDITIONAL EVIDENCE WAS NOT I N THE POSSESSION OF THE ASSESSEE AT THE TIME OF APPEAL BEFORE THE LD. CIT (A ), THE SAME MAY KINDLY BE ADMITTED AS AN ADDITIONAL EVIDENCE. THE ASSESSEE WAS PREVENTED BY SUFFICIENT CAUSE BESIDES THE EVIDENCE IN QUESTION GOES TO THE ROOT OF THE MATTER AND IS NECESSARY FOR PROPER DISPOSAL OF THE APPEAL. IT IS PLEADED THAT THE SAME MAY BE 6 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. ADMITTED AND THE ASSESSMENT MAY BE SET ASIDE AND RE STORED BACK TO THE FILE OF THE AO TO DECIDE THE SAME AFRESH IN ACCORDANCE WITH LAW AFTER AFFORDING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. THE LD. D/R IS HEARD, WHO OPPOSED THE ADMISSION OF ADDITIONAL EVIDENCE. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, THE FINDING OF LD. CIT (A) AS MENTIONED ABOVE ARE SELF CONTRADICTORY IN AS MUCH AS IT EMERGES FRO M RECORD THAT THE ASSESSEE HAS MADE THE FOLLOWING PLEADINGS BEFORE LOWER AUTHORI TIES :- I) ADDRESS AND PAN OF THE CREDITOR M/S. DEEPAK BUILDER S WAS GIVEN BEFORE THE AO. II) THE ASSESSEE HAS REQUESTED FOR ISSUE OF SUMMON U/S 1 31 AS THE ASSESSEE WAS UNABLE TO PRODUCE THE CREDITOR BEFORE T HE AO AS REQUIRED. NEITHER SUMMON HAS BEEN ISSUED BY AO NOR THE INCOME TAX RECORD OF THE ASSESSEE BASED ON PAN HAS BEEN CR OSS VERIFIED. III) THE ASSESSEES RELIANCE ON HONBLE RAJASTHAN HIGH CO URT JUDGEMENT IN THE CASE OF ARAVALI TRADING CO. VS. ITO (SUPRA) HA S NOT BEEN RESPONDED TO BY LD. CIT (A). IV) THE FINDING OF LD. CIT (A) THAT THE DATE OF TRANSACTI ON WAS NOT GIVEN BY ASSESSEE IS NOT CORRECT IN AS MUCH AS THE ASSESS EES CONTENTION THAT THE ADVANCE WAS MADE BY ACCOUNT PAYEE CHEQUE, I T WAS DULY 7 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. INCORPORATED IN ACCOUNTS BOOK, INTEREST WAS PAID AND TDS THEREON WAS DEDUCTED HAS NOT BEEN DISPUTED. IN THESE CIRCUMSTANCES, THE FINDINGS OF LOWER AUTHOR ITIES IN THIS BEHALF BECOME SELF CONTRADICTORY, ERRONEOUS AND CANNOT BE SUSTAIN ED. 6. IN OUR VIEW, THE ASSESSEES APPLICATION FOR ADMIS SION OF ADDITIONAL EVIDENCE DESERVES TO BE ADMITTED AS THE FACT THAT M/S. DEEPA K BUILDERS COULD NOT BE PRODUCED BY THE ASSESSEE HAS BEEN RECORDED BY THE L OWER AUTHORITIES AND NO SUMMON U/S 131 HAS BEEN ISSUED DESPITE SPECIFIC REQ UEST BY ASSESSEE. THE LD. CIT (A) PASSED HIS ORDER ON 12.01.2011 WHEREAS THE CO NFIRMATION HAS BEEN RECEIVED ON 24.01.2012 WHICH IS AFTER PASSING OF TH E ORDER BY LD. CIT (A). THE ASSESSEES AFFIDAVIT DEPOSES THE FACTS ABOUT THE NO N PROCUREMENT OF CONFIRMATION IN THE EARLIER PERIOD AND ITS RECEIPT AFTER PASSING THE ORDER OF LD. CIT (A). THE AFFIDAVIT OF THE ASSESSEE HAS NOT BEEN CONTROVERTED BY LD. D/R. BESIDES, THE CONSIDERATION OF ADDITIONAL EVIDENCE IS NECESSARY F OR DISPOSAL OF APPEAL. IN VIEW OF ENTIRETY OF FACTS AND CIRCUMSTANCES, WE ARE INCLI NED TO ADMIT THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE. 7. AFTER ADMISSION OF ADDITIONAL EVIDENCE, THE PROP OSITION OF THE ASSESSEE THAT THE MATTER MAY BE SET ASIDE AND RESTORED BACK TO TH E FILE OF AO IN VIEW OF SEVERAL MISTAKEN AND SELF CONTRADICTORY FINDINGS OF FACTS GIVEN BY THE LOWER AUTHORITIES. THE LD. D/R IS HEARD ON THE ISSUE OF S ETTING ASIDE OF THE ASSESSMENT. 8 ITA NO. 208/JP/2011 A.Y. 2006-07 SHRI ANIL KUCHHAL VS. DCIT, JAIPUR. 8. AFTER HEARING BOTH THE PARTIES AND PERUSING MATE RIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE IMPUGNED ADDITIONS CANNOT BE SUSTAINED LOOKING TO THE ABOVE SELF CONTRADICTORY AND MISTAKEN FINDINGS OF FACTS, BESIDES WE HAVE ADMITTED THE ADDITIONAL EVIDENCE WHICH GOES TO THE R OOT OF THE MATTER AND IT IS NECESSARY TO BE CONSIDERED FOR FRAMING A PROPER ASS ESSMENT, WE SET ASIDE THE ASSESSMENT BACK TO THE FILE OF THE AO TO DECIDE THE ISSUE IN ACCORDANCE WITH LAW AFTER GIVING THE ASSESSEE ADEQUATE OPPORTUNITY OF B EING HEARD. SINCE WE HAVE SET ASIDE THE ASSESSMENT TO BE FRAMED DE NOVO, NO C OMMENT IS MADE ABOUT MERITS OF THE CASE. ASSESSEES APPEAL IS ALLOWED FO R STATISTICAL PURPOSES. 9. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED FOR S TATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16.10.20 15. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 16/10/ 2015 DAS/ VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ SHRI ANIL KUCHHAL, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT : THE DCIT, CIRCLE-2, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 208/JP/2011) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR