Biswanath Agarwal, Purulia V. ACIT, Circle - 1, Asansol, Asansol

ITA 238/KOL/2009

• Counselvise Citation: 23823514 RSA 2009
• Duration Of Justice: 6 year(s) 8 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 26-02-2010
• Assessment Year: 1991-1992
• Appeal Filed On: 23-02-2009
• Court: TRIBUNAL
• Department Lawyers: SANJIT KR DAS JCIT L
• Keywords: Unexplained investment; Loose papers; Document seized; Capital receipt; Documents seized
• Section: 68; 143(3)

Judgement Text

ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 1 IN THE INCOME TAX APPELLATE TRIBUNAL, C BENCH, K OLKATA BEFORE : SHRI M. BALAGANESH, ACCOUNTANT MEMBER, AND SHRI S.S. VISWANETHRA RAVI, JUDICIAL MEMBER I.T.A NOS. 238 & 239/KOL/09 A.YS 1991-92 & 1992-93 BISWANTH AGARWAL VS. A.C.I.T, CIR-1, ASANSOL PAN: AACH0837M (APPELLANT) (RE SPONDENT) FOR THE APPELLANT/ASSES SEE: SHRI SUBASH AGARWAL MS. VARSHA JALAN, ADVOCATE S, LD.ARS FOR THE RESPONDENT/ DEPARTMENT: SHRI SANJIT KR. DAS, JCIT, LD.DR DATE OF HEARING: 14-10-2015 DATE OF PRONOUNCEMENT: 28 -10-20 15 ORDER SHRI M.BALAGANESH, AM THESE APPEALS OF THE ASSESSEE ARISE OUT OF THE OR DERS OF LD. CIT(A), KOLKATA IN APPEAL NO.177/CIT(A)/ASL/CIR-1/2007-08 AND APP EAL NO.180/CIT(A)/ASL/CIR- 1/2007-08 BOTH DATED 18-12-2008 ARISING OUT OF TH E LD. AO ORDERS OF ASSESSMENT FRAMED U/S 144/254 OF THE INCOME TAX ACT, 1961 (HE REINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28-12-2007 FOR THE ASS ESSMENT YEARS 1991-92 & 1992- 93. 2. AS THE ISSUES INVOLVED ARE IDENTICAL IN NATURE, THEY ARE TAKEN TOGETHER AND THESE APPEALS ARE DISPOSED OFF BY THIS COMMON ORDE R FOR THE SAKE OF CONVENIENCE 3. SHRI SUBASH AGARWAL THE LEARNED AR ARGUED ON B EHALF ASSESSEE AND SHRI SANJIT KR. DAS, JCIT, THE LEARNED DR ARGUED ON BEHA LF OF THE REVENUE. ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 2 ITA NO.239/KOL/09 A.Y 1992-93 (BY THE ASSESSEE): 4. DURING THE COURSE OF HEARING BEFORE US THE LD.A R FOR THE ASSESSEE HAS STATED THAT HE WOULD LIKE TO WITHDRAW THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1992-93 IN ITA NO. 239/KOL/09. THE LD.DR HAS N OT RAISED ANY OBJECTION TO THIS PROPOSITION OF THE LD.AR OF FOR THE ASSESSEE. HEN CE, THE APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMENT YEAR 1992-93 IN ITA NO.239/KOL/0 9 IS DISMISSED AS WITHDRAWN. 4.1 THE APPEAL OF THE ASSESSEE IN ITA NO.239/KOL/0 9 FOR THE A.Y 1992-93 IS DISMISSED. ITA NO.238/KOL/09 A.Y 1991-92 (BY THE ASSESSEE) 5. IN THIS APPEAL THOUGH THE ASSESSEE HAS RAISED A S MANY AS TEN GROUNDS BEFORE US, DURING THE COURSE OF HEARING, THE LD.AR FOR TH E ASSESSEE HAS STATED THAT HE WOULD NOT LIKE TO PRESS ALL THE GROUNDS EXCEPT GROUND NO .6 REGARDING THE ADDITION MADE IN THE IN SUM OF RS. 8 LAKHS ON PROTECTIVE BASIS. TH E SAME IS TAKEN AS A STATEMENT FROM THE BAR AND ACCORDINGLY, THE OTHER GROUNDS RA ISED BY THE ASSESSEE ARE DISMISSED BEING NOT PRESSED BY THE LD.AR FOR THE AS SESSEE. 6. GROUND NO.6 RAISED BY THE ASSESSEE IS REPRODUCED HEREIN BELOW:- 6. FOR THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION, ON PROTECTIVE BASIS, OF RS.8,00,000/- MADE BY THE A.O ON ACCOUNT OF LOAN ADVANCED, WHEN SUCH ADDITION WAS ALTOGETHER LIABLE FOR DELETION. ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 3 7. BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSESSEE WAS IN RECEIPT OF RS. 8 LAKHS FROM HIS BROTHER, SHRI NANDALAL AGARWAL. THERE WAS A SEARCH IN THE PREMISES OF THE ASSESSEE AND HIS BROTHER ON 18-06-1992. DURING THE COURSE OF SEARCH SOME LOOSE SHEETS CONTAINING A LOAN TRANSACTION OF RS. 8 LAKHS WAS FOUND AND SEIZED BY THE SEARCH PARTY. IN THE SAID LOOSE SHEETS (SEIZED DOCU MENT REFERENCE BAN-6 ) IS KEPT IN PAGE 57 OF THE PAPER BOOK FILED BY THE ASSESSEE. T HE REPLICA OF THE SAID SEIZED DOCUMENTS CONTAINING THE SAME LOAN TRANSACTION WA S FOUND IN THE PREMISES OF ASSESSEES BROTHER, SHRI NANDALAL AGARWAL VIDE SEIZ ED DOCUMENT REFERENCE LF/17. THE SAID SEIZED DOCUMENT IN LF/17 IS KEPT IN PAG E 58 OF THE PAPER BOOK FILED BY THE ASSESSEE. BOTH THE ASSESSEE AS WELL AS ASSESSE ES BROTHER WERE ASSESSED BY THE SAME LD.AO. THE LD.AO WHILE COMPLETING THE ASSESSME NT OF SHRI NANDLAL AGARWAL (ASSESSEES BROTHER) U/S 143(3) OF THE ACT ON 25-02 -1994 MADE AN ADDITION OF RS. 8 LAKHS TOWARDS LOAN ADVANCED BY HIM ( THE ASSESSEE H EREIN) AS UNEXPLAINED INVESTMENT AMONG OTHER ADDITIONS. HENCE, THERE IS A CLEAR FINDING THAT ASSESSEE HAS ONLY RECEIVED A LOAN OF RS. 8 LAKHS FROM HIS BROT HER. ADMITTEDLY, THIS LOAN TRANSACTION OF RS. 8 LAKHS HAS BEEN KEPT OUTSIDE T HE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS BY HIS BROTHER. BUT WHILE FRAMING THE A SSESSMENT U/S. 143(3) OF THE ACT IN THE HANDS OF THE ASSESSEE FOR THE ASSESSMENT YEAR 1 991-92 THE SAME LD.AO AGAIN TREATED THE SAID LOAN TRANSACTION OF RS. 8 LAKHS A S IF THE ASSESSEE HAS ADVANCED THE LOAN AMOUNT TO HIS BROTHER AS AGAINST THE FACT OF A SSESSEE HAVING RECEIVED A LOAN FROM HIS BROTHER. ADMITTEDLY, THIS LOAN TRANSACTION WAS SUBJECTED TO INTEREST AND ASSESSEE HAS INDEED PAID INTEREST TO HIS BROTHER AND THE SAME INTEREST INCOME WAS ALSO TAXED IN THE HANDS OF THE ASSESSEES BROTHER B Y THE SAME LD.AO. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD.AR ARGUED THAT THE LD.AO HAD WRONGLY INVOKED SEC. 69, WHICH IS NOT AT ALL APPLICABLE IN THE FACTS OF THE INSTANT CASE. ON A SPECIFIC QUERY FROM THE BENCH TO THE LD.AR AS TO WHETHER THE ASSESSEE COULD GET AWAY FROM THE RIGOURS OF TAXATION ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 4 MERELY BECAUSE THE LD.AO HAS INVOKED WRONG SECTION. THE LD.AR REPLIED THAT THE PROVISIONS OF SECTION 68 PER SE WOULD NOT BE APP LICABLE IN THE INSTANT CASE AS THE SAME TRANSACTION OF RS. 8 LAKHS IS KEPT OUTSIDE THE BOOKS OF ACCOUNT BY THE ASSESSEE AND IT IS NOT FOUND CREDITED AT ALL IN THE BOOKS OF ACCOUNT, BUT ONLY FOUND IN THE LOOSE SHEETS SEIZED BY THE DEPARTMENT AT THE TIME OF SEAR CH, WHICH CANNOT BE CONSTRUED AS BOOKS OF ACCOUNT. THE LD.AR ALSO PLACED HIS RELIAN CE ON THE DECISION OF THE THIRD MEMBERS DECISION OF ITAT MUMBAI IN THE CASE OF S.P . GOEL VS. DCIT REPORTED IN (2002) 82 ITD 85 (MUM.)(TM) IN SUPPORT OF HIS CONTE NTION, WHEREIN IT WAS HELD AS UNDER:- DURING THE COURSE OF SEARCH OF THE PREMISES, CER TAIN DOCUMENTS WERE SEIZED, CONSISTING OF 10 LOOSE SHEETS. OUT OF THIS, ONE SHEET OF PAPER WAS MARKED WHICH CONTAINED CERTAIN HANDWRITIN GS BY THE ASSESSEE. THE SAID HANDWRITING WAS ON THE LOOSE DIA RY SHEET OF NOVEMBER 1992 AND A SUM OF RS. 6O LAKHS HAD BEEN E NTERED AS CASH AGAINST 26-9-1992. CERTAIN EXPENSES ALSO WERE NOTED IN THE FORM OF SILVER UTENSILS, GOLD ORNAMENTS AND MISCELLANEOUS EXPENSES, ETC. THE ASSESSING OFFICER CALLED FOR THE EXPLANATION AND IT WAS SUBMITTED THAT THE SAME WAS IN THE NATURE OF PLANNING FOR PURCH ASE OF GOLD ORNAMENTS AND SILVER UTENSILS, ETC. FOR THE MARRIAG E OF HIS DAUGHTER. THE AMOUNT WAS STATED TO BE IN ANTICIPATION OF CONSIGN MENT SALES TO BE MADE BY HIM OF THE GOODS OF C(PVT) LTD. THE ASSESS ING OFFICER DID NOT ACCEPT THE EXPLANATION AND TREATED THE ENTIRE AMOUN T OF RS. 60 LAKHS AS UNDISCLOSED INCOME OF THE ASSESSEE WHICH WAS CONFI RMED BY THE COMMISSIONER (APPEALS). THE FIRST POINT OF DIFFEREN CE WAS WHETHER THESE LOOSE SHEETS OF PAPER TORN OUT OF DIARY FOR 1992 COULD BE CONSTRUED AS BOOKS FOR THE PURPOSE OF SECTION 68. IF THE LOOSE PAPERS SEIZED IN THE PREMISES OF THE ASSESSEE WERE EXAMINED IN THE LIGHT OF THE RATIO OF THE SUPREME C OURT IN V.C SHUKLAS CASE (SUPRA), IT WAS QUITE CLEAR THAT THESE LOOSE P APERS COULD NOT BE TERMED AS BOOKS OF ACCOUNT AN ASESSEE MAINTAINED FO R ANY PREVIOUS YEAR. THE LOOSE PAPERS APPEARED TO BE PART OF A 199 2 DIARY. HOWEVER, THESE LOOSE PAPERS CONSISTED OF PAGES TORN OUT FROM MARCH, APRIL, NOVEMBER AND DECEMBER. THERE WERE NO CLOSING BALAN CES NOR OPENING BALANCES AND THERE WAS NO RECONCILIATION OF THESE ENTRIES. THEREFORE, THESE COULD NOT BE TERMED AS BOOKS MAINT AINED BY THE ASSESSEE DURING THE PREVIOUS YEAR. ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 5 SECONDLY, THE ASSESSEE HAD BEEN EXPLAINING THAT TH E ENTRIES WERE IN THE NATURE OF PLANNING. THE BOOKS OF ACCOU NT TALLIED WITH THE ITEMS FOUND AT THE TIME OF SEARCH ON 14-10-1993. IN SUCH A CASE, THE CONTENTION OF THE ASSESSEE THAT THE ENTRIES MADE O N 26-9-1992 WERE IN THE NATURE OF PLANNING WAS MORE PROBABLE. THE ASS ESSING OFFICER DID NOT GIVE ANY CONCRETE PROOF TO REJECT THE EXPLANATI ON OFFERED BY THE ASSESSEE. IN THE PRESENT CASE, IT WAS A MERE LOOSE IN WHICH T HE ASSESSEE CONFIRMED THAT THE ENTRY WAS IN HIS OWN HANDWRITING . THE LOOSE PAPER IN ITSELF HAS GOT NO INTRINSIC VALUE. IT DOES NOT REPRESENT NEGOTIABLE INSTRUMENT WHICH CAN BE EXCHANGED FOR A SUM OF R S.60 LAKHS. THEREFORE, THE ABOVE DECISION DID NOT HAVE DIRECT APPLICATION ON THE FACTS OF THE PRESENT CASE. WHEN IT WAS A MERE ENTRY ON A LOOSE SHEET OF PAPER AND IF THE ASSESSEE CLAIMED THAT IT WAS ONLY A PLANNING, NOT SUPPORTED BY ACTUAL CASH, THEN THERE HAD TO BE CIRC UMSTANTIAL EVIDENCES TO SUPPORT THAT THIS ENTRY REALLY REPRESENTED CASH OF RS.60 LAKHS. THERE WAS NO SUCH EVIDENCE FOUND BY THE REVENUE IN THE F ORM OF EXTRA CASH, JEWELLERY OR INVESTMENT OUTSIDE THE BOOKS. IN SUCH A CASE, THE EXPLANATION OFFERED BY THE ASSESSEE COULD NOT BE RE JECTED. IN THAT VIEW OF THE MATTER, THE VIEW TAKEN BY THE ACCOUNTANT MEM BER WAS JUSTIFIED . 8.1 IN RESPONSE TO THIS, THE LD. DR FAIRLY CONCEDE D THE MISTAKE COMMITTED BY THE LD.AO IN INVOKING WRONG PROVISIONS OF THE ACT, BUT VEHEMENTLY ARGUED THAT ADDITION U/S. 68 OF THE ACT WOULD STILL SURVIVE IN THE HANDS OF THE ASSESSEE AS THE LOAN TRANSACTION WAS KEPT OUT SIDE THE BOOKS. 8.2 WE HAVE PERUSED THE DETAILED PAPER BOOK FILED BY THE LD.AR NUMBERING PAGES 1-92 CONTAINING VARIOUS ASSESSMENT ORDERS AN D APPELLATE ORDERS PASSED IN THE HANDS OF THE ASSESSEES BROTHER, SHRI NANDALAL AGAR WAL, TOGETHER WITH COPIES OF THE RELEVANT SEIZED DOCUMENTS, WHICH ARE KEPT IN PAGES 41-58 , PAGES 72-77 AND PAGES 88-92 OF THE PAPER BOOK. WE FIND THAT THE FA CTUAL TRANSACTIONS HAVE NOT BEEN PROPERLY UNDERSTOOD BY THE LD.AO AND THE LD.CIT(A) . WE HOLD THAT THE ASSESSEE ONLY RECEIVED A SUM OF RS. 8 LAKHS AS LOAN FROM HIS BR OTHER AND HAD REPAID THE SAME TO ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 6 HIS BROTHER WITH INTEREST. HENCE, IN THESE FACTS A ND CIRCUMSTANCES THE RELEVANT SECTION, IF AT ALL, THAT COULD BE APPLIED WOULD BE SECTION 68 AND NOT SECTION 69. EVEN THOUGH THE LOAN TRANSACTION OF RS. 8 LAKHS HAS BEEN KEPT OUTSIDE THE BOOKS OF ACCOUNT BY THE ASSESSEE, IT CANNOT BE TAXED AS UNEX PLAINED CASH CREDIT U/S. 68 IN THE FACTS OF THE CASE AS ESSENTIAL THREE INGREDIENTS HA S BEEN DULY PROVED BY THE LD.AO HIMSELF AND CONTENTS OF THE SEIZED DOCUMENTS. THE T HREE ESSENTIAL INGREDIENTS OF SECTION 68 OF THE ACT ARE NAMELY:- A) IDENTITY OF THE CREDITOR IT IS PROVED BEYOND DOUBT AS THE LD.AO HIMSELF AGREES THAT THE MONEY HAS BEEN GIVEN BY T HE ASSESSEES BROTHER TO THE ASSESSEE IN THE ASSESSMENT ORDER OF THE ASSESSEES BROTHER. B) GENUINENESS OF THE TRANSACTION- IT IS PROVED B EYOND DOUBT FROM THE CONTENTS OF THE SEIZED DOCUMENTS AVAILABLE IN PAGES 57-58 OF THE ASSESSEES PAPER BOOK, WHICH ARE NOT DISPUTED B Y THE REVENUE. C) CREDITWORTHINESS OF THE CREDITOR- THIS IS PROVE D BEYOND DOUBT AS LD.AO HIMSELF HAD ASSESSED AN INCOME OF MORE THAN O F RS. 80 LAKHS IN THE HANDS OF THE ASSESSEES BROTHER IN HIS OWN ASSESSEMENT VIDE ASSESSMENT U/S. 143(3) DATED 25-0 2-1994. 8.3 WE HOLD THAT THOUGH THE LOAN TRANSACTION OF RS. 8 LAKHS HAS BEEN KEPT OUTSIDE THE BOOKS BY THE ASSESSEE. IT HAS BEEN PROVED BEYON D DOUBT BASED ON THE FINDINGS GIVEN HEREINABOVE, THAT THE ESSENTIAL THREE INGRE DIENTS OF SECTION 68 HAS BEEN DULY PROVED. HENCE, THE CHARACTER OF A RECEIPT WOULD NO T CHANGE AS ADMITTEDLY THE LOAN TRANSACTION IS ONLY CAPITAL RECEIPT IN THE HANDS O F THE ASSESSEE. 8.4 WE FIND FROM THE ASSESSMENT ORDER THAT THE ADD ITION OF RS. 8 LAKHS TOWARDS LOAN TRANSACTION HAS BEEN MADE IN THE HANDS OF THE ASSESSEE BY THE LD.AO ON PROTECTIVE BASIS, WHICH HAS BEEN UPHELD BY THE LD .CIT(A). IN THIS REGARD, WE WOULD LIKE TO STATE THAT THE CIRCUMSTANCES UNDER WHICH A PROTECTIVE ASSESSMENT COULD BE MADE HAS NOT BEEN PROPERLY CONSIDERED BY THE REVEN UE. THERE IS ABSOLUTELY NO DOUBT WITH REGARD TO THE FACT THAT THE SUM OF RS. 8 LAKHS HAS ALREADY BEEN ADDED IN ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 7 THE HANDS OF THE ASSESSEES BROTHER FOR THE ASSESSM ENT YEAR 1991-92 U/S. 143(3) VIDE ASSESSMENT ORDER DATED 25-02-1994 BY THE VERY SAME LD.AO. HENCE, WE HOLD THAT THERE IS NO DOUBT THAT COULD BE IN THE MINDS OF THE REVENUE IN WHOSE HANDS THE SAID SUM SHOULD BE TAXED AND THEREBY TO PROTECT THE INT ERESTS OF THE REVENUE, A PROTECTIVE ASSESSMENT COULD BE JUSTIFIED. WE HOLD THAT IF AN ADDITION HAS BEEN SUSTAINED FOR THE ASSESSMENT YEAR 1991-92 IN THE HANDS OF THE ASSESS EE, IT WILL AMOUNT TO DOUBLE ADDITION AS SUBSTANTIVELY IT HAS ALREADY BEEN TAXE D IN THE HANDS OF THE ASSESSEES BROTHER BY THE VERY SAME LD.AO BY GIVING COGENT REA SONS AND BASED ON THE SEIZED DOCUMENTS FOUND AND SEIZED BY THE SEARCH PARTY IN THE PREMISES OF THE ASSESSEES BROTHER. HENCE, THERE IS NO JUSTIFICATION TO MAK E ANY ADDITION IN THE HANDS OF THE ASSESSEE FOR THE VERY SUM OF RS. 8 LAKHS AS CASH CR EDIT EITHER ON SUBSTANTIVE OR PROTECTIVE BASIS IN THE FACTS AND CIRCUMSTANCES OF THE CASE. WE HOLD THAT THE LOAN RECEIPT OF RS. 8 LAKHS BY THE ASSESSEE FROM HIS B ROTHER IS ONLY A CAPITAL RECEIPT IN THE HANDS OF THE ASSESSEE ACCORDINGLY, THE GROUND NO.6 RAISED BY THE ASSESSEE IN ITA NO.238/KOL/09 FOR THE ASSESSMENT YEAR 1991-92 IS AL LOWED. THE APPEAL OF THE ASSESSEE IN ITA NO. 238/KOL/09 FOR THE ASSESSMENT Y EAR 1991-92 IS PARTLY ALLOWED. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN I TA NO.239/KOL/09 FOR THE ASSESSMENT YEAR 1992-93 IS DISMISSED AND THE APPEAL OF THE ASSESSEE IN ITA NO.238/KOL/09 FOR THE ASSESSMENT YEAR 1991-92 IS PA RTLY ALLOWED. THIS ORDER IS PRONOUNCED IN OPEN COURT ON 28/ 10/ 2015 SD/- ( S.S. VISWANETHRA RAVI, JUDICIAL MEMBER ) SD/- (M. BALAGANE SH, ACCOUNTANT MEMBER) DATE 28/10/2015 ITA NOS.238 & 239/KOL/09-C-AM BISWANATH AGARWAL 8 1.. THE APPELLANT/ASSESSEE: SHRI BISWANATH AGARWAL , COURT ROAD, PURULIA-723101. 2 THE RESPONDENT/DEPARTMENT: THE ASSTT. COMMISSION ER OF INCOME TAX, CIRCLE- SAHANA APARTMENT, LOWER CHELIDNAGA, ASANSOL-713304. 3 4.. /THE CIT, / THE CIT(A) 5. DR, KOLKATA BENCH 6. GUARD FILE. TRUE COPY, BY ORDER, ASSTT REGISTRAR ** PRADIP SPS COPY OF THE ORDER FORWARDED TO: