ACIT, BIKANER V. Sh. Narender Kumar Sharma, BIKANER

ITA 229/JODH/2011

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 4915 (ITAT-JODHPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2013
• Appeal Filed By: Department
• Bench Allotted: DB
• Next Hearing Date: 08-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 20-05-2011
• Court: TRIBUNAL
• Department Lawyers: G R KOKANI
• Keywords: Unexplained cash credit
• Section: 6; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 229/JODH/2012 (A.Y. 2005-06) ACIT, CIRCLE-1, VS SHRI NARENDER KUMAR SHARMA BIKANER. PROP. M/S. NARENDER & CO., STATION ROAD, BIKANER. PAN NO. AHVPS2769Q (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. RAJENDRA JAIN. DEPARTMENT BY : SH. G.R. KOKANI- DR. DATE OF HEARING : 08/08/2013. DATE OF PRONOUNCEMENT : 29/08/2013. O R D E R PER HARI OM MARATHA, J.M.: THIS APPEAL OF THE REVENUE FOR A.Y. 2005-06 IS DIR ECTED AGAINST THE ORDER OF LD. CIT(A), BIKANER, DATED 08/03/2011. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE, AS INDIVIDUAL, FILED HIS RETURN OF INCOME (ROI) FOR A. Y. 2005-06 ON 30/10/2005 DECLARING TOTAL INCOME OF RS. 5,89,200/- AND ALSO SHOWED 2 AGRICULTURAL INCOME OF RS. 60,000/-. THE ASSESSEE D ERIVED HIS INCOME AS A PROPRIETOR OF M/S. NARENDRA & COMPANY, WHICH TRAD ES IN CIGARETTES, ELECTRICAL GOODS, RELIANCE MOBILE PHONES ETC. FOR C OMPLETING ASSESSMENT AT A TOTAL INCOME OF RS. 42,98,930/- VID E ORDER DATED 24/12/2007, THE A.O. HAS ADDED A SUM OF RS. 68,600/ - ON ACCOUNT OF DISALLOWANCE OF EXPENSES (PARA 2 OF THE ORDER) OF R S. 34,28,000/- U/S 68 OF THE ACT (PARA 3 OF THE ORDER), AND OF RS. 60, 000/- ON ACCOUNT OF INCOME FROM OTHER SOURCES (PARA 4) AND OF RS. 1,57, 125/- ON ACCOUNT OF LOW HOUSEHOLD EXPENSES (PARA 5). 2.1 AGGRIEVED, THE ASSESSEE FIELD FIRST APPEAL AND WAS SUCCESSFUL IN GETTING SOME OF THE ABOVE ADDITIONS DELETED. THE LD . CIT(A) HAD EVEN DELETED ADDITION OF RS. 34,28,000/- ADDED U/S 68 OF THE ACT VIDE HIS ORDER DATED 20/10/2008 AGAINST THAT ORDER THE REVEN UE HAD FILED SECOND APPEAL AND THE APPELLATE TRIBUNAL HAD RESTOR ED THIS ISSUE TO THE FILE OF LD. CIT(A) WITH CERTAIN DIRECTIONS. THE FAC TS OF THIS ISSUE WOULD BECOME APPARENT IF WE EXTRACT PARA NO. 2 TO 4 OF TH E TRIBUNAL ORDER IN ITA NO. 663/JODH/2008 (A.Y. 2005-06) APPEAL BY THE REVENUE, ORDER DATED 24/07/2009. WE REPRODUCE THEM FROM THE COPY O F THIS ORDER ENCLOSED ON RECORD, AS UNDER :- 3 2. IN THE FIRST GROUND, BRIEFLY THE FACTS ARE THAT, DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASS ESSING OFFICER FOUND CASH CREDITS IN THE NAMES OF FOLLOW ING PERSONS: SHRI BHUPESH SHARMA RS. 2,50,000 SHRI SATYAWANT JHA RS. 2,50,000 SMT. PRAKASHWATI SHARMA RS. 3,00,000 SMT. RAMA DEVI RS. 2,00,000 IVA OVERSEASS PVT LTD RS. 9,50,000 SHRI BHANWAR LAI SANWASR MAI RS. 12,00,000 TOTAL RS. 34,28,000 ACCORDINGLY HE REQUIRED THE ASSESSEE TO SATISFY THE ESSENTIALS OF SEC 68 OF IT ACT. THE ASSESSEE' S EXP LANATION WAS DULY CONSIDERED OVER EACH AND EVERY CASH CREDIT AS AFORESAID THROUGH REASONS GIVEN IN THE ASSESSMENT O RDER FROM PAGE 2 TO 7 AND BEING NOT SATISFIED ABOUT THE CREDIT WORTHINESS AND GENUINENESS OF EACH OF THE AFORESAID CASH CREDITS, THE- ASSESSING AUTHORITY TREATED THE AGGRE GATE AMOUNT OF RS. 34,28,000 AS UNEXPLAINED CASH CREDIT IN TERMS OF PROVISIONS OF SECTION 68 OF IT ACT. 3. THE LD. CIT(A) CONSIDERING ASSESSEE S EXPLANATION, DELETED THE ADDITION BY GENERAL O RDER AS UNDER: 4 'I HAVE GONE THROUGH THE DETAILED RIVAL SUBMISSIONS OF THE COUNSEL FOR THE APPELLANT AS WELL AS THE DEPARTMENT AND IT IS FOUND THAT IN ALL THE CASES OF CASH CREDITS THE IDENTITY OF CASH CREDITORS,, GENUINENESS OF LOAN AND CREDIT-WOR THINESS OF THE CREDITORS STAND FULLY ESTABLISHED BEYOND A S HADE OF DOUBT. THE INFERENCE DRAWN BY THE ASSESSING OFFICER IS HYPOTHETICAL AND BASED ON SURMISES AND CONJECTURES RATHER THAN CONCLUSIVE AND CLINCHING EVIDENCES. THUS THE IMPUGNED ADDITION IS BASED ON WRONG SURMISES AND CONJECTURES. THEREFORE, I HEREBY DELETE THE ENTIRE ADDITION OF RS. 34,28,000/- MADE UNDER SECTION 68 OF IT ACT. THE APPELLANT SUCCEEDS ON THIS GROUND.' 4. NONE ATTENDS ON BEHALF OF THE ASSESSEE DESPITE SERVICE OF NOTICE THROUGH RPAD. LD. D.R HAS BEEN HE ARD EX PARTE QUA ASSESSEE WITH REFERENCE TO MATERIAL ON RE CORD. THE ASSESSING OFFICER CONSIDERING THE CASH CREDIT A ND BEING NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE MADE ADDITION UNDER SECTION 68 OF IT ACT IN RESPECT OF E ACH OF THE CASH CREDITS APPEARING IN THE NAMES OF THE FOLLOWIN G PERSONS IN ASSESSEE'S BOOKS OF ACCOUNT. SHRI BHUPESH SHARRNA RS. 2.50,000 SHRJ SATYAWANT JHA RS. 2,50,000 SMT. PRAKASHWATI SHARMA RS. 3,00,000 SMT. RAMA DEVI RS. 2,00,000 IVA OVERSEASS PVT LTD RS. 9,50,000 SHRI BHANWAR LAI SANWASR MAI RS. 1 2,00,000 TOTAL RS. 34,28,000 5 THE LD. CIT(A) HOWEVER, DID NOT APPLY HIS MIND TO E ACH AND EVERY INDIVIDUAL CREDIT BUT PASSED THE ORDER ON TOT ALITY OF THE CREDIT ENTRIES AND ALLOWED THE RELIEF. THE HON' BLE RAJASTHAN HIGH COURT IN CIT VS. R.3. RATHORE (1995) 212 ITR 390 (RAJ) HAS LAID A PRINCIPLE THAT 'IT IS EACH AND EVERY INDIVIDUAL ENTRY ON WHICH THE MIND HAS TO BE APPLIED BY THE TAXING AUTHORITY WHEN AN EXPLA NATION IS OFFERED BY THE ASSESSEE. IF NO EXPLANATION HAS B EEN OFFERED IN RESPECT OF A PARTICULAR ENTRY, THE TAXIN G AUTHORITY WILL BE JUSTIFIED IN COMING TO THE CONCLU SION THAT THE SAID INVESTMENT IS UNEXPLAINED. IT IS NOT THE T OTALITY OF THE CREDIT ENTRIES WHICH ARE TO BE ALLOWED OR TO BE DISALLOWED.' THE DECISION OF THE LD. CIT(A) BEING CONTRARY TO TH E; AFORESAID PRINCIPLE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE' MATTER BACK TO HIM FOR TAKING DECISION AFRESH IN THE LIGHT OF JUDGMENT IN R.S. RA THORE VS CIT (SUPRA). 2.2 IN COMPLIANCE OF THE ABOVE STATED DIRECTION OF APPELLATE TRIBUNAL, THE LD. CIT(A) HAS EXAMINED EACH AND EVER Y CASH CREDITORS AND HAS AGAIN DELETED THIS ADDITION. NOW THE REVENU E HAS AGAIN CAME IN SECOND APPEAL. 6 2.3 THE MAIN ARGUMENTS OF LD. D.R. IS THAT THE CRED ITWORTHINESS OF ALL THESE CASH CREDITORS HAVE NOT BEEN ESTABLISHED, THE REFORE, ONE OF THE IMPORTANT INGREDIENT, WHICH ARE REQUIRED U/S 68 TO BE PROVED BY A ASSESSEE, REMAINS UNPROVED SO THE CASH CREDITORS HA VE BEEN WRONGLY TREATED AS PROVED. ON THE OTHER HAND LD. A.R. HAS A RGUED THAT THE SOURCES OF CASH CREDITORS HAVE BEEN DULY PROVED AND THE ENTIRE ONUS CAST ON THE ASSESSEE STANDS DISCHARGED. HE HAS PLAC ED RELIANCE ON THE ORDER OF LD. CIT(A). 3 AFTER CONSIDERING RIVAL STANDS VIS--VIS THE EVID ENCE ON RECORD. WE WOULD DISCUSS AND FIND OUT IF THE CREDITWORTHINE SS OF ALL THE CASH CREDITORS HAVE BEEN ESTABLISHED ON RECORD OR NOT. W E MAY MAKE IT AMPLY CLEAR THAT WE HAVE ACCEPTED THE PROOF OF IDEN TITIES OF THE CASH CREDITORS AND ALSO THE MODE OF TRANSFER. BUT THE TH IRD IMPORTANT INGREDIENT I.E., CREDITWORTHINESS OF CREDITORS AL SO PLAYS AN IMPORTANT ROLE AND IN CASE THEIR CREDITWORTHINESS IS NOT F OUND TO BE ESTABLISHED THEN THE GENUINITY OF THE TRANSACTIONS WOULD ALSO BECOME DOUBTFUL. AFTER CONSIDERING ALL THE CASH CREDITORS IN RESPECT OF THEIR SOURCE(S) OF DEPOSITS, WE ARE CONVINCED THAT THEY HAVE PROVED TH EIR PRIMARY ONUS CAST ON THEM THROUGH THE ASSESSEE. ACCORDINGLY, WE DO NOT FIND ANY MERIT IN THIS APPEAL OF THE REVENUE AND DISMISS THE SAME. 7 4. IN THE RESULT THE APPEAL OF THE REVENUE STANDS D ISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH AUGUST, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH AUGUST, 2013. VL/ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT BY ORDER 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR ITAT, JODHPUR