Dinesh Khandelwal, Guwahati V. Assistant Cimmissioner of Income Tax, Circle-Silchar, Silchar

ITA 211/GTY/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6515 (ITAT-GUWAHATI)
• Duration Of Justice: 2 year(s) 1 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2016-2017
• Appeal Filed On: 06-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRIAMITAVA SEN
• Keywords: Income from undisclosed sources; Search and seizure
• Section: 153A; 143(2); 22; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL GAUHATI ECOURT, ATKOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.211/GAU/2018 ( [ [ / ASSESSMENT YEAR: 2016-17) DINESH KHANDELWAL C/O SILCHAR AUTOMOBILES, N.S AVENUE, SILCHAR-788005. VS. ACIT, CIRCLE-SILCHAR, SILCHAR ./ ./PAN/GIR NO.: ADIPK6226H (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI SOMNATH GHOSH, ADVOCATE RESPONDENT BY :SHRIAMITAVA SEN, JCIT, SR. DR / DATE OF HEARING : 09/09/2020 /DATE OF PRONOUNCEMENT : 16/09/2020 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAINING TO ASSESSMENT YEAR 2016- 17, IS DIRECTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX (APPEAL),SHILLONG IN APPEAL NO.CIT(A)/SHG/10089/2017-18, WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U/S 143(3)/153A OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 27/12/2017. 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. FOR THAT THE HONBLE COMMISSIONER OF INCOME TAX(APPEALS), SHILLONG IS NOT JUSTIFIED IN UPHOLDING THE VIEW OF THE LD. A.O (ACIT CIRCLE-SILCHAR) THAT AMOUNT WITHDRAWAL FROM PARTNERSHIP FIRM AMOUNTING TO RS.22,10,000/- IS THE INCOME FROM UNDISCLOSED SOURCES AND THE FINDING ON THAT ISSUE IS ABSOLUTELY PREJUDICE, ARBITRARY, UNWARRANTED AND PERVERSE. 2. FOR THAT THE DEMAND ISSUED U/S 156 BE STAYED TILL THE DISPOSAL OF THE APPEAL. ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 2 3. FOR THAT THE APPELLANT MAY KINDLY BE PERMITTED TO ADD, ALTER OR MODIFY THE GROUNDS OF APPEAL OR ANY OF THE SAME AT THE TIME OF HEARING OF THE APPEAL. 3. BRIEF FACTS QUA THE ISSUE ARE THAT IN THE ASSESSEE`S CASE THERE WAS A SEARCH AND SEIZURE OPERATION U/S 132 OF THE INCOME TAX ACT, 1961 ON 26.10.2015 AT TERMINAL T-3 IGI AIRPORT, NEW DELHI. DURING THE COURSE OF SEARCH RS.22,10,000/- WAS FOUND, IN THE POSSESSION OF THE ASSESSEE, SHRI DINESH KHANDELWAL, OUT OF WHICH RS.22,00,000/- WAS SEIZED. DURING THE COURSE OF SEARCH AND SEIZURE, STATEMENTS OF SHRI DINESHKHANDELWAL WERE RECORDED U/S 132(4) OF INCOME TAX ACT, 1961.DURING THE ASSESSMENT PROCEEDINGS, NOTICE U/S 153A WAS ISSUED AND SERVED ON THE ASSESSEE IN RESPECT OF PRECEDING SIX (6) YEARS, OF THE YEAR OF SEARCH. IN RESPECT OF YEAR OF SEARCH, (ASSESSMENT YEAR 2016-17)NOTICE U/S 143(2) WAS ISSUED AND DULY SERVED WITHIN THE DUE DATE AND ASSESSEE WAS ASKED TO EXPLAIN THE SOURCE OF CASH TO THE TUNE OF RS. 22,10,000/-. 4.IN RESPONSE TO THE NOTICE, THE ASSESSEE HIMSELF AND HIS AUTHORIZED REPRESENTATIVE APPEARED FROM TIME TO TIME BEFORE THE ASSESSING OFFICER AND FURNISHED DETAILS AND DOCUMENTS. THE ASSESSEE EXPLAINED THAT CASH TO THE TUNE OF RS. 22,10,000/- BELONGED TO PARTNERSHIP FIRM M/S SILCHAR AUTOMOBILES, FROM WHOM HE TOOK THE ADVANCE. THE ASSESSEE HAD ALSO FURNISHED COPIES OF STATEMENT OF SOME BANK ACCOUNTS BEFORE ASSESSING OFFICER. THE ASSESSEE, LATER ON, ALSO SUBMITTED WRITTEN SUBMISSIONS BEFORE THE ASSESSING OFFICER WHICH IS REPRODUCED BELOW: I REGULARLY GO TO DELHI & GURGAON FOR TREATMENT AND REGULAR HEALTH CHECKUP. SIR, THIS TIME ALSO ON 26TH OCT, 2015 I WAS ON THE WAY TO DELHI VIA KOLKATA FORM MY TREATMENT AS WAS FEELING UNWELL SINCE LAST FEW DAYS.THIS IS RELEVANT TO MENTION HERE THAT I AM AN EXECUTIVE PARTNER OF M/S SILCHAR AUTOMOBILES ENGAGED IN THE PETROL PUMP BUSINESS. AS I HAD SHORTAGE OF MONEY I HAD AN OPTION TO TAKE MONEY IN ADVANCE FROM THE FIRM FOR MY TREATMENT AND I DID SO.SIR, MY WIFE ACCOMPANIED ME TO DELHI AND NO OTHER FAMILY MEMBER WAS AT SILCHAR TO POSSESS SUCH MONEY PROPERLY IN MY ABSENCE.SO I SAW THAT THE FIRM HAD RS. 31,70,503/- LAC CASH ON THE DATE OF MY DEPARTURE TO DELHI TOWARDS THE SALES PROCEEDS OF 5 DAYS BECAUSE IT COULD NOT BE DEPOSITED IN BANK FROM 22 ND E TO 25 TH OCTOBER BEING BANK HOLIDAYS/ CLOSURE DAY.SO I HAD TAKEN 22.10 LACS FROM THE FIRM AND INSTRUCTED MY STAFF TO ACCOUNT FOR THE SAID AMOUNT ACCORDINGLY IN THE BOOKS...' ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 3 HOWEVER, THE ASSESSING OFFICER REJECTED THE CONTENTION OF THE ASSESSEE AND MADE ADDITION TO THE TUNE OF RS. 22,10,000/-. 5.AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. BEFORE US,LD COUNSEL SUBMITTED PARTNERS CAPITAL ACCOUNT WHICH IS PLACED ON PAPER BOOK IN PAGE NO.70, WHICH IS REPRODUCED BELOW: ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 4 THE LD COUNSEL CONTENDS THAT FROM THE PARTNERS` CAPITAL ACCOUNT, AS MENTIONED ABOVE, IT IS CRYSTAL CLEAR THAT TRANSACTIONS DURING THE YEAR IN ASSESSEE`S ACCOUNT WITH PARTNERSHIP FIRM HAVE BEEN REFLECTED TO THE TUNE OF RS.50,83,709/- WHICH INCLUDES RS, 22,10,000/-. THEREFORE, IT IS AN ADVANCE TAKEN BY THE ASSESSEE FROM THE PARTNERSHIP FIRM IN WHICH ASSESSEE WAS AN EXECUTIVE AND MANAGING PARTNER. 7. THE LD COUNSEL PRODUCED BEFORE US THE LEDGER ACCOUNT OF THE ASSESSEE IN THE PARTNERSHIP FIRM. THE DETAILS OF THE TRANSACTION OF RS.50,83,709/- IS GETTING REFLECTED IN THE SAID LEDGER ACCOUNT AND THE SAID LEDGER ACCOUNT EXPLAINS THAT CASH TO THE TUNE OF RS. 22,10,000/- WAS PAID TO THE ASSESSEE BY THE PARTNERSHIP FIRM ON 26.10.2015. THE SAID LEDGER ACCOUNT IS PLACED ON PAGE NO.74 OF THE PAPER BOOK WHICH IS REPRODUCED BELOW: ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 5 WITH HELP OF THE ABOVE LEDGER ACCOUNT, LD COUNSEL EXPLAINS THE BENCH THAT THE PARTNERSHIP FIRM HAD PAID CASH OF RS.22,10,000/- TO THE ASSESSEE ON 26.10.2015. THE PARTNERS` CAPITAL ACCOUNT AND LEDGER ACCOUNT WERE NOT DISPUTED AND DOUBTED BY THE ASSESSING OFFICER AND IN FACT THE ASSESSING OFFICER DID NOT FIND ANY MISTAKES IN THESE BOTH ACCOUNTS. 8. THE LD COUNSEL ALSO SUBMITS BEFORE THE BENCH THE CASH BOOK OF THE PARTNERSHIP FIRM, WHICH IS PLACED ON PAGE NO. 75 OF THE PAPER BOOK. IN THE SAID CASH BOOK,THE AMOUNT OF RS.22,10,000/- IS CLEARLY GETTING REFLECTED, WHICH IS REPRODUCED BELOW: THEREFORE, LD COUNSEL EXPLAINS THE BENCH THAT CASH TO THE TUNE OF RS. 22,10,000/- PERTAINS TO PARTNERSHIP FIRM AND ASSESSEE TOOK ADVANCE FROM THE PARTNERSHIP FIRM WHICH IS CLEARLY GETTING REFLECTED IN PARTNERS` CAPITAL ACCOUNT, LEDGER ACCOUNT OF THE ASSESSEE IN THE PARTNERSHIP FIRM, AND CASH BOOK OF THE PARTNERSHIP FIRM, AS MENTIONED ABOVE, AND THESE ACCOUNTS/DOCUMENTS WERE SUBMITTED BEFORE THE ASSESSING OFFICER WHO DID NOT EXAMINE THEM. ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 6 9.ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE ASSESSING OFFICER, WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 10. WE NOTE THAT THE ASSESSEE IS AN INDIVIDUAL AND WHILE GETTING DOWN FROM THE FLIGHT AT TERMINAL T-3, IGI AIRPORT, NEW DELHI, WAS SEARCHED BY THE INCOME TAX DEPARTMENT U/S 132 OF THE ACT AND FROM HIM RS.22,10,000/- WAS FOUND IN HIS POSSESSION OUT OF WHICH RS.22,00,000/- WAS SEIZED BY THE DEPARTMENT. AT THE TIME OF SEARCH AND SEIZURE ON 26.10.2015, THE REVENUE AUTHORITY RECORDED HIS STATEMENT AS UNDER: Q. AS PER YOUR STATEMENT RECORDED ON OATH U/S 131(1A), YOU HAVE STATED THAT YOU DO NOT HAVE ANY DOCUMENTARY EVIDENCE IN SUPPORT OF THE CASH BEING CARRIED BY YOU AT PRESENT AND HENCE YOU CANNOT SUPPORT YOUR CLAIM REGARDING SOURCE OF THIS CASH AMOUNTING TO RS.22,10,000/-. PLEASE STATE WHY IN THE ABSENCE OF SUPPORTIVE EVIDENCE, THE ENTIRE CASH OF RS. 22,10,000/- BE NOT BE TREATED AS YOUR INCOME FROM UNDISCLOSED SOURCES. ANS. THOUGH I HAVE EXPLAINED THAT THE CASH OF RS. 22,10,000/- IS CASH RECEIPT OF THE FIRM M/S SILCHAR AUTOMOBILES, SILCHAR IN WHICH I AM A PARTNER AND PERSONAL SAVING. I AM UNABLE TO PRODUCE ANY EVIDENCE IN SUPPORT OF MY CLAIM MADE BY ME IN MY STATEMENT U/S 131(1A).THE DEPARTMENTAL MAY TREAT THIS CASH AS PER LAW. Q. YOU HAVE BEEN PROVIDED SUFFICIENT OPPORTUNITIES TO PRODUCE DOCUMENTARY EVIDENCE IN SUPPORT OF YOUR CLAIM THAT THE CASH OF RS.22,10,000/- IS THE CASH RECEIPT OF YOUR FIRM AND ALSO IF REPRESENTS YOUR PERSONAL SAVINGS. HOWEVER, YOU HAVE FAILED TO PRODUCE ANY EVIDENCE IN THE SUPPORT OF SOURCE OF CASH AS EXPLAINED BY YOU. PLEASE STATE WHY IN THE ABSENCE OF ANY SUPPORTIVE /DOCUMENTARY EVIDENCE, THE ENTIRE CASH OF RS. 22,10,000/- BE NOT SEIZED U/S 132(1) OF THE INCOME TAX ACT? ANS. IT IS CORRECT THAT I AM UNABLE TO PRODUCE ANY EVIDENCE OF RS.22,10,000/- BEING CARRIED BY ME AND PRESENTLY OWNED BY ME. YOU MAY TAKE APPROPRIATE ACTION AS REGARDS SEIZURE OF THIS CASH AS PER INCOME TAX ACT/LAW. HOWEVER, IT IS REQUESTED THAT A SUM OF RS. 10,000/- MAY BE RELEASED TO MEET DAY TO DAY EXPENSES DURING THE PERIOD OF OUR STAY AT DELHI/GURGAON. WE NOTE THAT THE ASSESSING OFFICER, DURING THE ASSESSMENT HAS REPRODUCED THE AFORESAID STATEMENT RECORDED BY THE REVENUE AUTHORITIES FROM THE DATE OF SEARCH AND SEIZURE (ON 26.10.2015) AND WAS OF THE OPINION THAT THE ASSESSEE FAILED TO PRODUCE HIS ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 7 BOOKS OF ACCOUNTS IN ORIGINAL AND ALSO IN EVIDENCE IN SUPPORT OF THE SOURCE OF CASH FOUND WITH HIM AND ASSESSING OFFICER ALSO REJECTED THE CONTENTION OF THE ASSESSEE THAT THE SEIZED AMOUNT WAS TAKEN AS ADVANCE FROM PARTNERSHIP FIRM M/S SILCHAR AUTOMOBILES,IN WHICH THE ASSESSEE IS A PARTNER AND THEREAFTER ASSESSING OFFICER MADE THE ADDITION OF RS.22,10,000/-. ON APPEAL, THE LD. CIT(A) CONFIRMED THE SAME. WE NOTE THAT WHEN THE ASSESSEE WAS SEARCHED ON 26.10.2015, HE HAD CLEARLY SUBMITTED THAT HE IS A PARTNER OF M/S SILCHAR AUTOMOBILES AND SOURCE OF THE CASH OF RS.22,10,000/- WAS THE ADVANCE MONEY TAKEN FROM M/S SILCHAR AUTOMOBILES. THIS IS CLEARLY EVIDENT FROM THE QUESTION AND ANSWER OF THE ASSESSEE WHICH IS REPRODUCED (SUPRA). WE NOTE THAT THE ASSESSEE HAD PRODUCED DOCUMENTS/BOOKS OF THE FIRM (M/S SILCHAR AUTOMOBILES) TO SUBSTANTIATE THAT THE ASSESSEE HAD TRANSACTIONS WITH THE PARTNERSHIP FIRM AT RS.50,83,709/- IN THE ASSESSMENT YEAR UNDER CONSIDERATION (REFERRED TO PAGE 70 OF PAPER BOOK), WHICH INCLUDES RS. 22,10,000/-. THIS FACT IS CORROBORATED BY THE LEDGER ACCOUNT OF THE ASSESSEE IN THE BOOKS OF M/S SILCHAR AUTOMOBILES (PARTNERSHIP FRIM) FROM WHICH IT IS NOTED THAT THE ASSESSEE HAD AN OPENING BALANCE AMOUNT OF RS.87,09,893/- AND HAD VARIOUS DRAWINGS AND HAD RECEIVED CASH AS AN ADVANCE FROM THE PARTNERSHIP FIRM AT RS.22,10,000/- ( PAGE 75 OF PAPER BOOK).THE CASH BOOK OF THE PARTNERSHIP FIRM SHOWS CASH BALANCE FROM WHICH THE ASSESSEE TOOK RS.22,10,000/- AS AN ADVANCE AND IT IS EVIDENT THAT ASSESSEE HAD THIS AMOUNT IN HIS HAND WHEN HE WAS TRAVELLING AT IGI AIRPORT. EVEN THOUGH THESE DOCUMENTS WERE PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER DID NOT BOTHER TO EXAMINE THE VERACITY OF THE CLAIM OF THE ASSESSEE AND HAVE SIMPLY REJECTED THE PLEA OF THE ASSESSEE WHICH IS NOT TENABLE, THEREFORE, WE ARE OF THE VIEW THAT ADDITION MADE BY THE ASSESSING OFFICER SHOULD BE DELETED. 11.WHILE THE HEARING OF THIS CASE WAS GOING ON, WE ASKED A SPECIFIC QUESTION TO THE LD. DR FOR THE REVENUE, AS TO WHETHER THE DEPARTMENT TOOK ANY ACTION OF SURVEY ON THE DATE OF SEIZURE I.E 26.10.2015, AT THE PREMISE OF M/S SILCHAR AUTOMOBILES (PARTNERSHIP FIRM) AND CONFISCATED THE BOOKS OF ACCOUNTS AND IF THERE WAS ANY DOUBT ABOUT THE ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 8 SEIZED CASH OF RS. 22,10,000/-, WOULD HAVE BEEN DISPELLED. HOWEVER, THE LD. DR WAS ANSWERS THE BENCH SAYING THAT THE REVENUE DID NOT CONDUCT ANY SURVEY ON THE PREMISE OF M/S SILCHAR AUTOMOBILES ON 26.10.2015 WHEREAS THE ASSESSEE DURING THE STATEMENT RECORDED U/S 132(4) HAS CLEARLY SUBMITTED THAT THE SOURCE OF THE CASH OF RS.22,10,000/- WAS OF M/S SILCHAR AUTOMOBILES (PARTNERSHIP FIRM). CONSIDERING THE FACTUAL POSITION NARRATED ABOVE, AND TAKING INTO ACCOUNT THE FACT THAT PARTNERS` CAPITAL ACCOUNT, LEDGER ACCOUNT OF THE ASSESSEE IN THE PARTNERSHIP FIRM, CASH BOOK OF PARTNERSHIP FIRM AND STATEMENT OF THE ASSESSEE RECORDED U/S 132(4) OF THE ACT IT MAY BE CONCLUDED THAT MONEY OF RS.22,10,000/- PERTAINS TO M/S SILCHAR AUTOMOBILES (PARTNERSHIP FIRM), AS THESE BOOKS OF ACCOUNTS AND DOCUMENTS WERE NOT DOUBTED AND DISPUTED BY THE ASSESSING OFFICER, THEREFORE ADDITION CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION OF RS.22,10,000/-. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 16.09.2020 SD/- ( A. T. VARKEY ) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: /09/2020 RS COPY OF THE ORDER FORWARDED TO: 1. DINESH KHANDELWAL 2. ACIT, CIRCLE- SILCHAR, SILCHAR 3. C.I.T(A)- 4. C.I.T.- GUWAHATI. 5. CIT(DR), GAUHATIBENCH, GUWAHATI. 6. GUARD FILE. ITA NO.211/GAU/2018 ASSESSMENT YEAR: 2016-17 DINESH KHANDELWAL 9 TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY / DDO/ H.O.O ITAT, GAUHATI BENCH