Deepak Raosaheb Dhanwate, Ahmednagar V. Income-tax Officer, Ward - 2, Ahmednagar

ITA 2270/PUN/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5810 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 28-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K VERMA
• Keywords: Additional evidence
• Section: 143(3); 148

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, AM . / ITA NO.2270/PUN/2017 / ASSESSMENT YEAR : 2010-11 DEEPAK RAOSAHEB DHANWATE, 1184/4, GOKUL NAGAR, DYANESHWAR PADUKA CHOWK, SHIVAJINAGAR, FERGUSSON COLLEGE ROAD, PUNE 411 005. PAN : APZPD5109F. . / APPELLANT V/S THE INCOME TAX OFFICER, WARD 2, AHEMDNAGAR. . / RESPONDENT ASSESSEE BY : SHRI SHARAD SHAH. REVENUE BY : SHRI M.K. VERMA. / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY THE ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (A) 2, PUNE DT.07.07.2017 FOR THE ASSESSMENT YEAR 2010-11. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS AN INDIVIDUAL WHO DID NOT FILE ANY RETURN OF INCOME FOR A.Y. 2010-11. AO RECEIVED INFORMATION THAT ASSESSEE HAD R ECEIVED CONTRACT FOR EXTRACTION OF SAND IN F.Y. 2009-10 AND ASSESSEE HAD D EPOSITED RS.24,51,000/- IN CASH FOR EXTRACTION OF LAND IN THE OFFICE OF C OLLECTOR. / DATE OF HEARING : 09.01.2019 / DATE OF PRONOUNCEMENT: 08.04.2019 2 ITA NO.2270/PUN/2017 SINCE NO RETURN WAS FILED BY THE ASSESSEE, AO ISSUED NOTIC E U/S 148 OF THE ACT WHICH WAS SERVED ON THE ASSESSEE. IN RESPONSE TO NOTICE U/S 148 OF THE ACT, ASSESSEE FILED RETURN OF INCOME ON 05.03.2015 DECLARING TOTAL INCOME AT RS.1,50,000/-. THEREAFTER, THE CASE WAS TAKEN UP FOR S CRUTINY AND ASSESSMENT WAS FRAMED U/S 143(3) R.W.S. 147 OF THE ACT V IDE ORDER DT.09.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.26 ,01,000/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO VIDE ORDER DT.07.07.2017 (IN APPEAL NO.PN/CIT(A)-2/ITO W D- 2/AN/47/2015-16) UPHELD THE ORDER OF AO BY OBSERVING AS UNDER : 5.3 I HAVE PERUSED THE FACTS OF THE CASE AS MENTIO NED IN THE ASSESSMENT ORDER AS WELL AS IN THE REMAND REPORT. I HAVE ALSO GONE THROUGH THE SUBMISSION MADE ON BEHALF OF THE APPELL ANT. THERE IS NO DISPUTE TO THE FACT THAT THAT AN AMOUNT OF RS. 24,5 1,000/- WAS DEPOSITED WITH THE COLLECTOR'S OFFICE IN CASH BY TH E APPELLANT FOR THE PURPOSE OF SAND EXTRACTION CONTRACT. THE ARGUMENT O F THE APPELLANT THAT THE CONTRACT WAS UNDERTAKEN BY THE PARTNERSHIP FIRM IN WHICH HE WAS ONE OF THE PARTNER IS NOTHING BUT AN AFTERTHOUGHT. THE AO IN THE REMAND REPORT HAS CLEARLY MENT I ONED THAT NO PARTNERSHIP DEED EXISTED FOR THE FOLLOWING REASONS:- XXXXX 5 . 4 THUS, THE ASSESSEE HAS NOT ENTERED INTO ANY PARTN ERSHIP AGREEMENT AND HE HAS MERELY SUBMITTED A COPY OF NOTARIZED DOC UMENT OF AGREEMENT. EVEN THE DOCUMENT IS NOT REGISTERED WITH THE REGISTRAR OF FIRM'S OFFICE. IT IS ALSO OBSERVED THAT THE CASH OF RS.24,51,000/- WAS DEPOSITED WITH THE COLLECTOR'S OFFICE BY THE AP PELLANT HIMSELF IN HIS INDIVIDUAL CAPACITY AND ALSO BY USIN G HIS OWN PAN. IN VIEW OF THESE FACTS, I AM UNABLE TO FIND ANY BA SIS IN THE ASSESSEE'S CLAIM THAT THE CONTRACT WAS TAKEN BY THE FIRM AND RIOT BY HIM IN THE INDIVIDUAL CAPACITY. THE ARGUMENTS TAKEN THEREFORE ARE DISMISSED IN THIS REGARD. 6. AS REGARDS THE SOURCE OF THE DEPOSIT OF RS. 24,5 1,000/- IT WAS SUBMITTED THAT THE SAME IS OUT OF AMOUNT RECEIVED F ROM FIVE OTHER PERSONS. ON THE BASIS OF ADDITIONAL EVIDENCES FILED , THE AO HAS EXAMINED THE CREDIT WORTHINESS OF ALLEGED CONTRIBUT ORS AND IT WAS FOUND OUT THAT NONE OF THEM WERE MAN OF MEANS AS TH ERE IS NO TRANSACTION IN THEIR BANK ACCOUNTS REGARDING DEPOSI T AND WITHDRAWAL. NOT ONLY THAT IN TWO CASES NO PROOF OF ANY LAND HOL DING WAS SUBMITTED. IN THE OTHER THREE CASES ALSO THE LAND HOLDING WAS NEGLIGIBLE WHICH IS LESS THAN AN ACRE IN EACH CASE AND THER E FORE C AN BAR E LY MEET THEIR REQU I REMENT . TH E S E PE O PL E CERTAINLY WERE NOT IN A POSITION TO ADVANCE SO MUCH OF CASH TO THE APPELLANT, NEITHER THE RE I S AN Y PROOF OF GENUINENESS OF 3 ITA NO.2270/PUN/2017 THE TRANSACTION. NON E OF THESE PERSONS A R E ASS E SSED TO TA X AND NEITHER T H E I R BANK STATEMENTS R E FL EC T TH E I R C RE D IT W O R T HI NESS . TH E S E PE O P LE A L SO F A IL ED TO F I LE ANY R ECE I PT ON ACCOUN T O F S AL E O F AGRICULTURAL PROD U CE . THEREAFTER, LD.CIT(A) REFERRED TO THE FOLLOWING DEC ISIONS : 1) ROSHAN DI HATTI VS. CIT (107 ITR 938) (SC). 2) SREELEKHA BANNERJI AND OTHERS VS. CIT (49 ITR 112). 3) CIT VS. UMADEVI BHUWALKA (181 ITR 547). 4) MIR BASHEERUDDIN ALI KHAN VS. ITO, WARD-6(3) (42 TA XMANN.COM 69) (HYDERABAD TRIB.). 5) K.V. MATHEW VS. ITO, WARD -2 (3), RANGE-2, ERNAKULA M (42 TAXMANN.COM 571) 6) IQBAL SINGH VS. CIT (328 ITR 301) 7) QAZI SHABIR AHMED VS. ITO (183 TAXMANN 200). 8) SMT. MAYA DEVI K. AGRAWAL VS. ACIT (208 TAXMANN 251 ). 6.9 IN THE LIGHT OF AFORESAID DISCUSSIONS ON FACTS AS WELL AS DECISIONS CITED, IT IS HELD THAT THE APPELLANT HAS FAILED TO DISCHARGE HIS ONUS WITH REGARD TO SOURCE OF CASH DEPOSIT WITH COLLECTOR'S O FFICE TO THE TUNE OF RS. 24,51,000/- FOR OBTAINING SAND EXTRACTION CONTRACT. THE AO WAS THEREFORE PERFECTLY JUSTIFIED IN TREATING THE ENTIRE AMOUNT O F RS. 24,51,000/- AS UNEXPLAINED DEPOSIT IN THE HANDS OF THE APPELLANT. I THEREFORE CONFIRM THE ORDER OF THE AO. THE GROUND NO. 2 INCLUDING THE ADD ITIONAL GROUND IS TREATED AS DISMISSED. 3. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LD.AO ERRED IN (CIT(A) ERRED IN CONFIRMING) TAXING RS.24,51,000/- AS UNDER SECTION 68. 2. THE LD. AO ERRED IN (CIT(A) ERRED IN CONFIRMING ) MAKING THE ASSESSMENT IN MY HANDS, INSTEAD OF MAKING IN THE HANDS OF EITHER THE PARTNERSHIP FIRM OR IN THE HANDS OF AOP. 3. THE LD.AO ERRED IN (CIT(A) ERRED IN CONFIRMING) TAXING THE ENTIRE AMOUNT INSTEAD OF MY SHARES IN MY HANDS. 4. BEFORE ME, LD.A.R. SUBMITTED THAT ASSESSEE IS AN AGRICULTU RIST AND WAS CARRYING OUT AGRICULTURAL ACTIVITIES. DURING THE YEAR U NDER CONSIDERATION, ASSESSEE ALONG WITH SHRI PUNJAHARI PARASARA M CHANDGHODE, VIJAY VITTHAL VAIRAGAR, BALASAHEB VITTHAL VAIRAGAR, KIRAN BHA USAHEB CHANDGHODE AND POPAT NANA KEDARI HAD ENTERED INTO PA RTNERSHIP FOR WHICH CONTRIBUTION OF THE RESPECTIVE SHARE WAS RECEIVED FO R UNDERTAKING THE 4 ITA NO.2270/PUN/2017 CONTRACT FOR EXTRACTION OF SAND. HE SUBMITTED THAT THE ASSESSEES CONTRIBUTION IN PARTNERSHIP WAS ONLY TO THE EXTENT OF RS .2 LAKHS. HE SUBMITTED THAT THE PARTNERSHIP DEED WAS EXECUTED AND DULY NOTARIZED MUCH BEFORE THE PROCEEDINGS INITIATED U/S 147 AND 148 OF THE ACT. HE POINTING TO THE COPY OF ALLEGED PARTNERSHIP DEED SUBMIT TED THAT IT WAS UNDERTAKEN TO BID FOR THE TENDER JOINTLY FOR THE AUCT ION OF SAND AND ALL THE PARTNERS HAD AGREED TO SHARE PROFITS AND TO INVEST TH E SUM IN THE RATIO STATED THEREIN. HE FURTHER POINTED OUT TO THE FACT ST ATED THEREIN THAT THE OTHER PARTNERS HAD NO OBJECTION IF THE TENDER WAS APPLIED IN THE NAME OF THE ASSESSEE OR ANY OF THE PARTNERS. HE THEREAFTER SUBMIT TED THAT ALL THE PARTNERS INCLUDING THE ASSESSEE HAD MADE THEIR CONTRIBUT ION AND THE SOURCE OF DEPOSITS WAS CLEARLY EXPLAINED. HE SUBMITTED TH AT THE FACT THAT ALL THE FIVE PERSONS ALONG WITH ASSESSEE HAD JOINTLY CAME TO UNDERTAKE A BUSINESS VENTURE HAS NOT BEEN FOUND TO BE INCORRECT AS THERE IS NO FINDING TO THE CONTRARY BY THE AO. HE THEREFORE SUBMITTED TH AT WHEN THE SOURCE OF DEPOSIT WAS EXPLAINED, THE AO WAS NOT JUSTIFIED IN MAKING T HE ADDITION OF THE ENTIRE AMOUNT IN THE HANDS OF ASSESSEE. HE ALTERN ATIVELY SUBMITTED THAT WHEN MORE THAN ONE PERSON COME JOINT TOGETHER T O CONTRIBUTE CAPITAL AND WHEN THE PROFITS AND GAINS ARE TO BE DIVIDED AS PER THE SHARE THEN THE COMING TOGETHER OF THE GROUP CONSTITUTES AN AOP AND TH EREFORE ASSESSMENT SHOULD HAVE BEEN FRAMED AS AN ASSOCIATION OF PERSONS AND NOT IN THE NAME OF INDIVIDUAL. HE THEREFORE SUBMITTED THAT THE ASSESS MENT MADE IN THE HAND OF ASSESSEE INSTEAD OF AOP WAS IN WRONG STATUS AND THEREFORE THE ASSESSMENT SHOULD BE ANNULLED AND IN SUPPORT OF WHICH HE RELIED ON THE DECISION OF FULL BENCH OF A.P. HIGH COURT IN THE CASE OF SMT. P ANNABAI VS. CIT (1985) 153 ITR 608 (FB). HE ALSO PLACED ON RECORD TH E COPY OF THE 5 ITA NO.2270/PUN/2017 AFORESAID DECISION. LD.D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 5. I HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE M ATERIAL ON RECORD. THE ISSUE IN THE PRESENT APPEAL IS WITH RESPECT TO ADDITION OF RS.24,51,000/- U/S 68 OF THE ACT. BEFORE ME, IT IS ASSESSE ES CONTENTION THAT THE SOURCE IS EXPLAINED AND THEREFORE NO ADDITION IS CALLED FOR. HIS ANOTHER ARGUMENT IS THAT IF AT ALL ANY ADDITION WAS WARRAN TED, IT SHOULD HAVE BEEN IN THE CASE OF AOP AND NOT IN THE HANDS OF ASSESSEE. 6. BEFORE ME, IT IS ASSESSEES CONTENTION THAT ASSESSEE HAD ENTERED INTO PARTNERSHIP WITH OTHER PARTNERS WHO ALL HAD CONTRIBUTED THE AGREED SUM AND HAD AGREED TO SHARE THE PROFITS IN THE RATIOS AGRE ED AMONG THEMSELVES AND FOR WHICH ASSESSEE HAD ALSO AGREED INTO PARTNERSHI P DEED. IT IS REVENUES CONTENTION THAT THE SO CALLED PARTNERSHIP DE ED CANNOT BE ACCEPTED INTER-ALIA FOR THE REASON THAT THE DOCUMENT HA S NOT BEEN REGISTERED WITH THE REGISTRAR OF FIRMS, THE DEED DOES NOT MENTION THAT IT IS A PARTNERSHIP DEED, THE ALLEGED DEED IS NOT AS PER THE REQUIREMENT OF THE PARTNERSHIP ACT AND IS EXECUTED ON A STAMP PAPER OF RS .100/- INSTEAD OF RS.500/-. 7. THE LD.A.R. BEFORE ME HAS FURNISHED THE COPY OF THE AGR EEMENT EXECUTED BETWEEN THE PARTNERS, WHICH IT CALLS AS A PARTN ERSHIP DEED. THE PERUSAL OF THE SAME REVEALS THAT IT HAS BEEN EXECUTED B Y THE SIX PERSONS (INCLUDING ASSESSEE) NAMED THEREIN, THE AMOUNTS CONTRIBUTE D BY EACH OF THEM AND THE SHARE OF EACH OF THEM IS ALSO INDICATED. IT ALSO INDICATES THE PURPOSE FOR WHICH THE AGREEMENT IS ENTERED INTO. I AGRE E WITH THE 6 ITA NO.2270/PUN/2017 CONTENTION OF REVENUE THAT IT CANNOT BE IN THE STRICT SE NSE CONSIDERED TO BE A PARTNERSHIP. BUT AT THE SAME TIME, THE COMING TOGETH ER OF THE PERSONS TOGETHER FOR A SPECIFIC OBJECT AND EARNING PROFITS IS ALSO NOT DISPUTED. I FIND THAT COURTS HAVE HELD THAT WHEN A GROUP OF PERSONS C OME TOGETHER AND ACT TOGETHER FOR DOING BUSINESS AND EARNING PROFITS THEN THEY CONSTITUTE AOP, FOR WHICH REFERENCE CAN BE MADE TO THE DECISIONS IN THE C ASE OF B.N. ELIAS & OTHERS (1935) ITR 408 (CAL), CIT VS. CHANDMAL GARTIA (1995) 2 13 ITR 789 (PAT) AND CIT VS. LAXMIDAS DEVIDAS & ANOTHER (1937) 5 ITR 584 (BOM). RELYING ON THE AFORESAID DECISIONS, I HOLD THAT THE AGREE MENT ENTERED INTO BY THE ASSESSEE ALONG WITH FIVE OTHER PERSONS WAS AN AO P. SINCE THE ASSESSMENT HAS BEEN FRAMED IN THE HANDS OF INDIVIDUAL AND NOT IN THE CASE OF AOP, I THEREFORE RELYING ON THE FULL BENCH DECISION OF THE HONBLE A.P. HIGH COURT IN THE CASE OF SMT. PANNABAI VS. CIT (SUPRA) HO LD THAT THE ASSESSMENT IN THE HAND OF ASSESSEE TO BE ANNULLED WITH LIBERTY TO THE AO TO ASSESS THE INCOME IN THE STATUS OF AOP IF PERMITTED BY LAW. THUS, THE GROUNDS OF ASSESSEE ARE ALLOWED. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 8 TH DAY OF APRIL, 2019. S SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 8 TH APRIL, 2019. YAMINI 7 ITA NO.2270/PUN/2017 #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-2, PUNE. PR. CIT-1, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &' , / ITAT, PUNE.