ITO, New Delhi V. Dr. Om Prakash Sharma, Faridabad

ITA 2256/DEL/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 3945 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 11-05-2011
• Assessment Year: 2000-2001
• Appeal Filed On: 26-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K JHA
• Keywords: Unexplained cash credit; Income from undisclosed sources; Principle of natural justice; Assessment record
• Section: 142(1); 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH : F NEW DELHI) (DELHI BENCH : F NEW DELHI) (DELHI BENCH : F NEW DELHI) (DELHI BENCH : F NEW DELHI) BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND BEFORE SHRI G.E. VEERABHADRAPPA, HONBLE VICE PRES IDENT AND SHRI A.D. JAIN, JUDICIAL MEMBER SHRI A.D. JAIN, JUDICIAL MEMBER SHRI A.D. JAIN, JUDICIAL MEMBER SHRI A.D. JAIN, JUDICIAL MEMBER I.T.A. NO.2256/DEL./2009 I.T.A. NO.2256/DEL./2009 I.T.A. NO.2256/DEL./2009 I.T.A. NO.2256/DEL./2009 (ASSESSMENT YEAR : 2000 (ASSESSMENT YEAR : 2000 (ASSESSMENT YEAR : 2000 (ASSESSMENT YEAR : 2000- -- -01) 01) 01) 01) ITO, WARD 1(5), ITO, WARD 1(5), ITO, WARD 1(5), ITO, WARD 1(5), VS. VS. VS. VS. SHRI OM PARKASH SH SHRI OM PARKASH SH SHRI OM PARKASH SH SHRI OM PARKASH SHARMA, ARMA, ARMA, ARMA, FARIDABAD. FARIDABAD. FARIDABAD. FARIDABAD. H.NO.603, SECTOR 15A, H.NO.603, SECTOR 15A, H.NO.603, SECTOR 15A, H.NO.603, SECTOR 15A, FARIDABAD. FARIDABAD. FARIDABAD. FARIDABAD. (PAN/GIR NO. : BPQPS0425F) (PAN/GIR NO. : BPQPS0425F) (PAN/GIR NO. : BPQPS0425F) (PAN/GIR NO. : BPQPS0425F) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) ASSESSEE BY : SHRI A.K. JHA, FCA ASSESSEE BY : SHRI A.K. JHA, FCA ASSESSEE BY : SHRI A.K. JHA, FCA ASSESSEE BY : SHRI A.K. JHA, FCA REVENUE BY : SMT. ANUSHA KHURANA,SR.DR REVENUE BY : SMT. ANUSHA KHURANA,SR.DR REVENUE BY : SMT. ANUSHA KHURANA,SR.DR REVENUE BY : SMT. ANUSHA KHURANA,SR.DR ORDER ORDER ORDER ORDER PER A.D. JAIN, JM THIS IS DEPARTMENTS APPEAL FOR ASSESSMENT YEAR 2000-01, TAKING THE FOLLOWING GROUNDS. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE CIT(A) HAS ERRED ON FACTS AND IN LAW IN QUASHING THE ASSESSMENT ON THE GROUND OF PRINCIPLES OF NATURAL JUSTICE EVEN THOUGH THE ASSESSEE HAD FAILED TO FURNISH ANY EVIDENCE IN RESPECT OF UNEXPLAINED CASH CREDITS OF `91 3000 DESPITE OF NUMBER OF REASONABLE OPPORTUNITIES PROVIDED . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, C IT(A) HAS ERRED ON FACTS AND IN LAW IN DELETING THE ADDITIO N OF `913000 MADE BY THE AO ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES EVEN THOUGH THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY OF THE CREDITORS, THE CAPACI TY OF THE CREDITORS AND GENUINENESS OF THE AMOUNTS DEPOSITED IN BANK OF `913000. 2. A TAX EVASION PETITION AGAINST THE ASSESSEE WAS RECEIVE D BY THE AO FROM THE DDIT(INV.), FARIDABAD. AS PER THE DETAI LS OF THE INFORMATION CONTAINED HEREIN, CERTAIN DEPOSITS WERE F OUND TO HAVE I.T.A. NO.2256/DEL./09 (A.Y. : 2000-01) 2 BEEN MADE, AMOUNTING TO `913000, IN THE ASSESSEE BANK A CCOUNT. THE AO FORMED A BELIEF THAT THESE DEPOSITS AMOUNTED TO IN COME WHICH HAD ESCAPED FROM BEING CHARGED TO TAX FOR THE YEAR UNDER CONSIDERATION. IT WAS, THEREFORE, THAT THE COMPLETED ASSESSMENT OF THE ASSESSE E WAS REOPENED. IN RESPONSE TO THE NOTICE U/S 148 OF THE I. T. ACT, 1961, THE ASSESSEE DID NOT FURNISH ANY INCOME-TAX RETURN. THE NOT ICE U/S 142(1) OF THE ACT ALSO DID NOT ELICIT ANY RETURN OF INCOME FROM THE ASSESSEE. HOWEVER, ON 16.11.07, THE ASSESSEE FURNISHED A RETURN OF INCOME, DECLARING `48,111. AS PER THE COMPUTATION OF INCOME , THE ASSESSEE DECLARED THE SOURCE OF INCOME AS CONSULTANCY AT `48,00 0 AND BANK INTEREST OF `118. THE AO, IN THE RE-ASSESSMENT PROCEEDI NGS, ASKED THE ASSESSEE TO PRODUCE SHRI NARENDER CHADHA, SHRI SURINDER KUMAR SACHDEV, SHRI S.S. KHANDELWAL AND DIRECTOR OF M.V. FLORA HUT PVT. LTD. THE ASSESSEE EXPRESSED HIS INABILITY TO DO SO. THE AO CONC LUDED THAT THE ASSESSEE HAD ADOPTED A METHOD OF COLOURABLE DEVICE TO CHANNELISE HIS UNDISCLOSED INCOME AND THAT IT WAS THE DUTY OF THE ASSESSEE TO ESTABLISH THE IDENTITY AND CAPACITY OF THE PARTIES AND THE GENUINENESS OF THE AMOUNT OF `913000; AND THAT SISNCE THIS HAD NOT BEEN DONE, THE AMOUNT WAS LIABLE TO BE ADDED TO THE INCOME OF THE A SSESSEE. IN THIS MANNER, THE AO DETERMINED THE TOTAL INCOME OF THE A SSESSEE AT `961500, TREATING THE AMOUNT OF `913000 AS THE ASSESSEE S INCOME FROM UNDISCLOSED SOURCES. 3. THE CIT(A), VIDE THE IMPUGNED ORDER, DELETED THI S ADDITION, GRIEVANCING THE DEPARTMENT. 4. THE LD.DR. HAS FILED AN ADJOURNMENT APPLICATION W HICH HAS BEEN REJECTED. THE LD.DR, CHALLENGING THE IMPUGNED ORDE R, HAS CONTENDED THAT THE CIT(A) HAS ERRED IN QUASHING THE ASSESSMENT ON T HE GROUND OF PRINCIPLES OF NATURAL JUSTICE, EVEN THOUGH THE ASSESSEE H AD FAILED TO FURNISH ANY EVIDENCE IN RESPECT OF UNEXPLAINED CASH CR EDIT OF `913000, DESPITE THE FACT THAT A NUMBER OF OPPORTUNITIES HAD B EEN GRANTED BY THE AO TO THE ASSESSEE; AND THAT THE CIT(A) ERRED IN DE LETING THE I.T.A. NO.2256/DEL./09 (A.Y. : 2000-01) 3 ADDITION OF `913000 MADE BY THE AO ON ACCOUNT OF IN COME FROM UNDISCLOSED SOURCES, EVEN THOUGH THE ASSESSEE HAD FAILED TO ESTABLISH THE IDENTITY AND THE CAPACITY OF THE CREDITORS, AS WE LL AS THE GENUINENESS OF THE DEPOSITS. 5. ON BEHALF OF THE ASSESSEE, WRITTEN SUBMISSIONS HAVE BEEN FILED. 6. WE HAVE HARD THE LD.DR. AND HAVE PERUSED THE MATE RIAL ON RECORD. 7. APROPOS THE ACTION OF THE CIT(A) IN QUASHING THE A SSESSMENT ON THE GROUND OF PRINCIPLES OF NATURAL JUSTICE, IT IS SEEN , THAT THE CIT(A) DID SO WHILE MAKING THE FOLLOWING OBSERVATIONS: I HAVE CAREFULLY CONSIDERED THE SUBMISSION OF THE LD.A R AND PERUSED THE ASSESSMENT ORDER AND THE ASSESSMENT RECORDS. IT IS FOUND THAT THE CONTENTION OF THE LD.AR THAT HE ATTE NDED THE PROCEEDINGS ON 29.11.2007 IS CORRECT AS PER THE RECORD S, BECAUSE AS PER PAGE 13 OF THE PAPER BOOK, THE LETTER DATED 29.11.2007 FROM THE LD.ARS COUNSEL TO THE AO SHOWS THE COMPLIANCE TO THE QUERIES FORM POINTS 1 TO 6 SUBMITTED TO THE AO. THIS IS ALSO EVIDENT FROM PAGE 21 OF THE PAPER BO OK WHICH IS THE NOTICE U/S 142(1) DATED 30.11.2007 ENCLOSING THE LETTER DATED 30.11.2007 WHICH WAS SERVED UPON LD.AR OF THE A SSESSEE ON 30.11.2007 ITSELF. AS FAR AS THE CROSS- VERIFICATION/EXAMINATION, OF SHRI ASHOK LAKHAN PAL, THE COMPLAINANT, IS CONCERNED, THE ASSESSEE HAD REQUESTED TO CROSS EXAMINE HIM REGARDING THE FACTS AND ALLEGATIONS IN TH E COMPLAINT, WHICH FACT IS ALSO EVIDENT FROM THE ASSESSMENT ORDER AT PAGE 4 AS WELL AS THE ASSESSEES LETTER DATED 05.12.200 7 MAKING SUCH REQUEST VIDE POINT NO.9 AND WHICH IS ALSO REPRODUCED IN THE ASSESSMENT ORDER. THUS SINCE THE AO HA S BASED HIS ACTION ON THE THIRD PARTY EVIDENCE, IT WAS T HE DUTY OF THE AO TO ALLOW CROSS-EXAMINATION OF THE COMPLAINANT IN THE FACT OF ALL EXPLANATIONS/CLARIFICATIONS SUBMITTED BY THE ASSE SSEES COUNSEL IN HIS LETTER RECEIVED AND ACKNOWLEDGED IN TH E AOS OFFICE ON 05.12.2007. IN VIEW OF THE RATIO OF JUDG MENT IN THE CASE OF CIT VS. SMC SHARE BROKERS LTD. (2007) 288 I.T.R. 3 45)DELHI HIGH COURT), WHERE IT HAS BEEN HELD THAT THE AO FUNC TIONING AS A QUASI JUDICIAL AUTHORITY WAS UNDER AN OBLIGATION TO A DHERE TO THE PRINCIPLES OF NATURAL JUSTICE, THEREFORE, IN THE PRESE NT CASE, IN THE ABSENCE OF CROSS EXAMINATION OF THE WITNESS, THE EVIDENC E COLLECTED AT THE BACK OF THE ASSESSEE CANNOT BE RELIED UPON BY THE DEPARTMENT AND HENCE THE PROCEEDINGS U/S 148 STAND VITIATED . THUS, THE GROUND NO.3 IS ALLOWED. I.T.A. NO.2256/DEL./09 (A.Y. : 2000-01) 4 8. FROM THE ABOVE, IT IS SEEN THAT UNDENIABLY, THE WI TNESS, I.E., SHRI ASHOK LAKHANPAL, THE COMPLAINANT, WAS NOT ALLOWED TO BE CROSS- EXAMINED BY THE ASSESSEE, THOUGH THE ASSESSEE HAD REQUESTED SPECIFICALLY FOR SUCH CROSS-EXAMINATION BEING ALLOWED T O HIM. IN FACT, SUCH REQUEST HAS BEEN NOTED EVEN IN THE ASSESSMENT ORDER. THUS, THE ADDITION HAVING BEEN BASED ON THIRD PARTY EVIDENCE A T THE BACK OF THE ASSESSEE, THE SAME WAS CORRECTLY QUASHED BY THE CIT(A). 9. COMING TO THE MERITS OF THE CASE, UNDISPUTEDLY, THE ADDITION OF `913000 WAS BASED ONLY ON SOME ENTRIES IN THE BANK ACCO UNT OF THE ASSESSEE. THE ASSESSEE WAS FOUND NOT TO HAVE MAINTAINED ANY BOOKS OF ACCOUNT. NOW, AS CORRECTLY OBSERVED BY THE CIT(A) , THE PASSBOOK/BANK STATEMENT SUPPLIED BY THE BANK TO THE ASSESSE E DOES NOT AMOUNT TO A BOOK OF ACCOUNT OF THE ASSESSEE. IT BE ING ONLY A COPY OF CUSTOMERS ACCOUNT IN THE BOOKS MAINTAINED BY THE B ANK, A BANK DOES NOT ACT AS AN AGENT OF ITS CUSTOMER. IT ALSO CANNO T BE SAID THAT BANKER MAINTAINS A PASSBOOK UNDER THE INSTRUCTIONS OF TH E ACCOUNT HOLDER. THE PROVISIONS OF SECTION 68 OF THE ACT ARE, THEREFORE, NOT ATTRACTED WHERE THE ASSESSEE DOES NOT MAINTAIN BOOKS OF A CCOUNT. THE CIT(A), IN THIS REGARD, HAS RIGHTLY PLACED RELIANCE O N CIT VS. BHAICHAND H. GANDHI, 141 I.T.R. 67(BOM.), SAMPAT AUTOMOBILE VS. ITO, 96 TTJ(D)368, MS. MAYAWATI VS. DCIT, 113 TTJ 178(DEL.) AND SHERATON APPARELS VS. ACIT, 256 I.T.R. 20(BOM.). IT IS CORREC T THAT SINCE NO BOOKS OF ACCOUNT ARE MAINTAINED IN THE ORDINARY COUR SE OF THE BUSINESS OF THE ASSESSEE, IN THE ABSENCE OF ANY CORROBORATIVE EVI DENCE TO SUPPORT ACTION U/S 68 OF THE ACT, NO SUCH ADDITION IS T ENABLE. 10. FURTHER, IT HAS BEEN FOUND AS A FACT THAT IN THE ENQUIRIES BEFORE THE DDIT(INV.) FBD. AND BEFORE THE AO, THE ASSESSEE HAD PRODUCED ALL THE PARTICULARS OF THE DEPOSITS, SUPPORTED BY RELEVANT DOCUMENTS. THE DETAILS IN THIS REGARD, AS GIVEN BY THE ASSESSEE BEFORE TH E AUTHORITIES BELOW, ARE AS FOLLOWS: I.T.A. NO.2256/DEL./09 (A.Y. : 2000-01) 5 1. DEPOSIT OF `3 LACS THOUGH DD ON 16.08.99 THIS DD WAS GIVEN BY TSERING WANGDUS R/ON THE OTHER HAN D, LD.AR FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER UNDER APPEAL. SAHOO LEH-LADAKH(J&K) AS ADVANCE FOR PROJECT OF FLORICULTUE. COPY OR RECEIPT IS ENCLOSED. IT IS SELF EXPLANATORY EVIDENCE. SO THE CREDITORS IDENTITY IS CLEARED. 2. `100000 CASH DEPOSITED ON 25/09/09. IT WAS RECEIVED FROM SURINDER KR. SACHDEV. COPY OF CONFIRMATION AND COPY OF AFFIDAVIT WAS FILED. SO, HERE IDENTITY IS ALSO CLEARED. 3. `180000 CASH DEPOSITED ON 25/09/09. IT WAS RECEIVED FROM .V. FLORA HUT PVT. LTD. FAX CO NFIRMATION WAS FILED BEFORE AO.(COPY IF ENCLOSED). HERE IDENTITY O F CREDITOR IS ALSO CLEARED. 4. `60000 AND `40000 ON 21/10/99 AND 25/10/99 AND `200000 ON 26/10/99, `60000 AND `40000 WAS RECEIVED FROM SHRI NIGGAR AND `200000 WAS RECEIVED FROM N.J. PATEL THROUGH SH. NARENDER CHADHA COPY OF CONFIRMATION WAS ALSO FILED B EFORE AO. EVEN DURING THE COURSE OF ENQUIRY BY I.T.OP.(A.D.I.) , HE HAD TAKEN STATEMENT OF SH. NARENDER CHADHA WHO CONFIRMED THE A BOVE FACTS. DURING THE COURSE OF ASSESSMENT, COUNSEL OF THE ASSE SSEE REQUIRED AO FOR OBTAINING COPY OF STATEMENT FORM ADI OFFICE VIDE LETTER DATED 10.12.2007. PHOTOCOPY IS ENCLOSED FOR Y OUR REFERENCE. 11. IN VIEW OF THE ABOVE, FINDING NO MERIT THEREIN, THE GRIEVANCE SOUGHT TO BE RAISED BY THE DEPARTMENT BY WAY OF THE G ROUNDS TAKEN, THE SAME IS HEREBY REJECTED. 12. IN THE RESULT, THE APPEAL FILED BY THE DEPARTMEN T IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 13.05.2011. SD/- SD/- (G.E. VEERABHADRAPPA) (A.D. JAIN) VICE PRESIDENT JUDICIAL MEMBER DATED: MAY 13, 2011. *SKB* I.T.A. NO.2256/DEL./09 (A.Y. : 2000-01) 6 COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A), FARIDABAD. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DELHI. AR/ITAT