Ram Pal Yadav, Bareilly V. ITO Ward-2 (2), Meerut

ITA 2555/DEL/2008

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 58730 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 07-02-2012
• Assessment Year: 2004-2005
• Appeal Filed On: 28-07-2008
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Assessment record; Reason to believe
• Section: 142(1); 133(6); 147; 68; 148; 12; 144

Judgement Text

ITA NO. 2538 & 2555/DEL/2008 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F NEW DELHI BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI S.V. MEHROTRA, ACCOUNTANT MEMBER ITA NO.2538/DEL/2008 ASSTT. YEAR: 2004-05 INCOME TAX OFFICER, VS SHRI RAM PAL SI NGH WARD 2(2), S/O HARCHAND SINGH, MEERUT. C/O S.P. JAIN & ASSOCIATES, F-83, GREEN PARK, NEW DELHI-110016 (PAN/GIR NO.AKAPS3497B) ITA NO.2555/DEL/2008 ASSTT. YEAR: 2004-05 SHRI RAM PAL SINGH, VS INCOME TAX OFFICER, S/O HARCHAND SINGH, MEERUT. C/O S.P. JAIN & ASSOCIATE, GREEN PARK, NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI ROHIT GARG, SR. DR RESPONDENT BY: SHRI ANIL JAIN O R D E R PER S.V. MEHROTRA, A.M. THIS APPEAL IS FILED BY THE DEPARTMENT AND ALSO BY THE ASSESSEE. BOTH ARE DIRECTED AGAINST THE ORDER PASSED BY CIT(A) DAT ED 6.5.2008. FOR ASSTT. YEAR 2004-05. ITA NO. 2538 & 2555/DEL/2008 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL, IN THE RELEVANT ASSESSMENT YEAR, WAS POSTED AS VICE CHANCE LLOR OF CHAUDHARY CHARAN SINGH UNIVERSITY, MEERUT. THE ASSESSEE HAD FILED HIS RETURN OF INCOME FOR A.Y. 2004-05 AT BAREILLY INCOME TAX OFFI CE ON 14.6.2004 DECLARING INCOME OF RS.3,80,404/-. THE ITO WARD 2( 2), MEERUT, TAKING NOTE OF THE FACT THAT THE ASSESSEE HAD ASSETS DISPROPORT IONATE TO HIS INCOME, ISSUED NOTICE U/S 148 ON 21.4.2005. AS THE ASSESSEE FAILE D TO COMPLY WITH THIS NOTICE, THE AO AGAIN ISSUED NOTICE U/S 142(1) ON 1. 6.2005. THE ASSESSEE FILED HIS REPLY ON 13.6.2005 AND REQUESTED THAT THE RETURN FILED AT ITO, BAREILLY, BE TREATED AS RETURN IN COMPLIANCE TO NOT ICE U/S 148. THEREAFTER, THE AO ISSUED NOTICE U/S 143(2) ON 16.6.2005 AND AFTER CONSIDERING THE ASSESSEES SUBMISSIONS, COMPLETED THE ASSESSMENT AT RS.61,64,657 AFTER MAKING THE FOLLOWING ADDITIONS:- 5. STAMP RELATED APPROPRIATION 4,09,000/- 6. UNSECURED LOANS 33,00,000/- 3. BEING AGGRIEVED WITH THE ORDER OF AO, THE ASSESS EE PREFERRED AN APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A ), THE ASSESSEE HAD, INTER ALIA, PLEADED THAT SINCE THE ASSESSEE WAS ONLY ON L EAVE FROM COLLEGE AT BAREILLY AND HAD BEEN MAINTAINING RESIDENTIAL HOUSE AT BAREILLY, THEREFORE, IN THE ABSENCE OF ANY ORDER U/S 127, THE ITO, MEERUT H AD NO JURISDICTION FOR ITA NO. 2538 & 2555/DEL/2008 3 ISSUING NOTICE U/S 148. THE ASSESSEE HAD ALSO QUES TIONED THE PROPRIETY OF REASONS RECORDED FOR THE ISSUANCE OF NOTICE U/S 148 ON THE GROUND THAT THE AO MERELY WANTED TO KNOW THE DETAILS WITH REGARD TO THE SOURCE OF INVESTMENT FOR PURCHASE OF AGRICULTURAL LAND AND DE POSIT IN SAVINGS BANK ACCOUNT. LD. CIT(A), AFTER CONSIDERING THE ASSESSE ES SUBMISSIONS, REFRAINED FROM PASSING ANY ORDER WITH REGARD TO QUESTION OF J URISDICTION IN TERMS OF THE REQUIREMENTS OF SECTION 127. HE ALSO UPHELD TH E ISSUANCE OF NOTICE U/S 148. FURTHER, HE SUSTAINED THE ADDITION OF RS.4,09 ,000/- MADE BY THE AO IN REGARD TO PURCHASE OF STAMPS. HOWEVER, HE DELETED THE ADDITION OF RS.33,00,000 ON ACCOUNT OF UNSECURED LOANS MADE BY THE AO. BEING AGGRIEVED WITH THE ORDER OF THE AO, BOTH THE ASSESS EE AND THE REVENUE ARE IN APPEAL BEFORE US. 4. WE FIRST TAKE UP THE ASSESSEES APPEAL VIDE ITA NO.2555/DEL/2008. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APP EAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FAC TS IN REJECTING THE ASSESSEES CLAIM REGARDING VALIDITY O F REASONS FOR ISSUE OF NOTICE U/S 148 OF IT ACT WHICH ARE EITHER UNFOUNDED OR ARE NOT SUSTAINABLE. 2. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN REJ ECTING ASSESSEES CLAIM THAT THE ASSESSMENT HAS BEEN COMPL ETED BEYOND JURISDICTION AS NO PROPER NORMS HAVE BEEN FOLLOWED U/S 127 TO GET THE CASE TRANSFERRED FROM T HE ANOTHER CHARGE OF CCIT TO THE CHARGE OF CCIT, MEERU T AND THE RECORDS HAVE BEEN CALLED BY THE LD. ASSESSI NG OFFICER ON HIS WHIMS. ITA NO. 2538 & 2555/DEL/2008 4 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS I N REJECTING THE ASSESSEES CLAIM IN RESPECT OF STAMP DUTY EXPENSES AT RS.4,09,000/- AND CONFIRMING THE ADDITI ON OF RS. 4,09,000/- MADE BY THE LD. AO WHICH OUGHT TO HA VE BEEN DELETED IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE. 5. BRIEF FACTS APROPOS GROUND NO. 1 ARE THAT THE AO HAD ISSUED NOTICE U/S 148 ON 21.4.2005 AND, THEREAFTER, HE ISSUED NOTICE U/S 143(2) ON 1.6.2005 CONTAINED AT PAGES 22-23 OF PAPER BOOK IN WHICH HE REFERRED TO THE INFORMATION RECEIVED BY HIM REGARDING VARIOUS INVES TMENTS MADE BY THE ASSESSEE AND OBSERVED THAT ON THAT BASIS, HE FORMED AN OPINION THAT INCOME CHARGEABLE TO TAX HAD ESCAPED ASSESSMENT. LD. COUN SEL FOR THE ASSESSEE SUBMITTED THAT THE AO HAD NOT APPLIED HIS MIND TO T HE INFORMATION AND ON THAT BASIS, HE ISSUED NOTICE. THEREFORE, THE NOTIC E LACKS SATISFACTION OF THE AO. 6. LD. DR RELIED ON THE REASONS RECORDED. 7. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND HAVE PERUSED THE RECORD. IT IS A WELL-SETTLED LAW THAT SUFFICIENCY OF REASONS IS NOT TO BE INQUIRED INTO BY THE COURT. IF THE AO HAD PR IMA FACIE REASON TO BELIEVE THAT INCOME CHARGEABLE TO TAX HAS BEEN UNDER-ASSESS ED, THEN IN VIEW OF EXPLANATION 2 (C) (I) 1 TO SECTION 147, THE ISSUANC E OF REASSESSMENT NOTICE CANNOT BE CALLED INTO QUESTION. IN THE PRESENT CAS E, AO ON RECEIVING ITA NO. 2538 & 2555/DEL/2008 5 INFORMATION APPLIED HIS MIND TO THE FACTS AND THEN ACQUIRED THE REQUISITE SATISFACTION AS CONTEMPLATED UNDER SECTION 147 REGA RDING ESCAPEMENT OF INCOME. WE, THEREFORE, DO NOT FIND ANY SUBSTANCE I N THIS GROUND OF APPEAL AND THE SAME IS REJECTED. 8. IN THE RESULT, THIS GROUND IS DISMISSED. 9. APROPOS GROUND NO. 2, LEARNED COUNSEL SUBMITTED THAT HE HAS ALSO TAKEN ADDITIONAL GROUND TO THIS EFFECT UNDER RULE 1 1, THOUGH IT WAS TAKEN IN THE REGULAR GROUND OF APPEAL ALSO, AS THE LD. CIT(A ) REFRAINED FROM ADJUDICATING THIS ISSUE. SINCE THE ASSESSEE HAS TAK EN THIS ISSUE VIDE REGULAR GROUND OF APPEAL, THEREFORE, ADMISSION OF ADDITIONA L GROUND NEEDS NO ADJUDICATION. 9.1. THE BRIEF FACTS APROPOS THIS ISSUE ARE THAT TH E ASSESSEE WAS PRINCIPAL OF BAREILLY COLLEGE, BAREILLY, AND HAD PERMANENT RESID ENCE IN BAREILLY. DURING THE RELEVANT ASSESSMENT YEAR, THE ASSESSEE WAS POST ED AS VICE CHANCELLOR OF CHAUDHARY CHARAN SINGH UNIVERSITY, MEERUT, AND, THE REFORE, ITO, MEERUT HAD ISSUED NOTICE TO ASSESSEE ON THE GROUND THAT HE HAD NOT FILED HIS RETURN OF INCOME IN MEERUT FOR AY 2004-05. LD. COUNSEL FOR T HE ASSESSEE REFERRED TO PAGE 26 OF PAPER BOOK WHEREIN LETTER DATED 2.9.2002 FROM SECRETARY, BAREILLY COLLEGE, BAREILLY IS CONTAINED, GRANTING E XTRAORDINARY LEAVE WITHOUT PAY FOR THREE YEARS. HE REFERRED TO PAGE 2 7 OF PAPER BOOK AND ITA NO. 2538 & 2555/DEL/2008 6 POINTED OUT THAT THE ASSESSEE WAS APPOINTED VICE CH ANCELLOR OF CHAUDHARY CHARAN SINGH UNIVERSITY, MEERUT VIDE LETTER DATED 1 .3.2003. HE FURTHER REFERRED TO PAGE 29 OF PAPER BOOK WHEREIN IS CONTAI NED A LETTER DATED 25.2.2006 OF DR. N.L. SHARMA, BAREILLY COLLEGE, CON FIRMING THAT ASSESSEE WAS ENTITLED FOR USING THE ACCOMMODATION IN BAREILL Y COLLEGE, BAREILLY DURING THE PERIOD OF EXTRA ORDINARY LEAVE. WITH RE FERENCE TO THESE DOCUMENTS, LD. COUNSEL SUBMITTED THAT ASSESSEE WAS MAINTAINING HIS HOUSE AT BAREILLY. LD. COUNSEL FURTHER REFERRED TO PAGE 4 O F PAPER BOOK WHEREIN THE COPY OF ACKNOWLEDGEMENT OF ASSESSEES RETURN FOR AY 2004-05 IS CONTAINED AND POINTED OUT THAT THE SAME WAS FILED IN JUNE 200 4 AT BAREILLY. SIMILARLY, HE REFERRED TO PAGE 5 OF PAPER BOOK TO DEMONSTRATE THAT THE RETURN FOR AY 2003-04 WAS ALSO FILED AT BAREILLY. FOR THE AY 200 2-03 ALSO, THE RETURN WAS FILED AT BAREILLY, A COPY OF WHICH IS CONTAINED AT PAGE 30 AND 31 OF PAPER BOOK. LD. COUNSEL REFERRED TO PAGE 2 OF THE PAPER BOOK WHEREIN A LETTER FROM ITO, WARD 2(2), MEERUT DATED 30.3.2005 IS CONT AINED WHICH IS REPRODUCED HEREUNDER:- F.NO.MISC./ITO/W-2(2)/MRT/2004-2005 OFFICE OF THE INCOME TAX OFFICER WARD 2(2), MEERUT. DATED: 30.3.2005 ITA NO. 2538 & 2555/DEL/2008 7 TO SHRI RAM PAL SINGH, VICE CHANCELLOR, C.C.S. UNIVERSITY, MEERUT. SIR, SUB: FILING OF INCOME TAX RETURNS FOR AY 2003-04 & 2004-05 REG. AS YOU ARE POSTED AT MEERUT STATION BECAUSE OF WHI CH THE ALPHABETICAL JURISDICTION OVER YOUR INCOME TAX MATT ERS IS VESTED WITH THE UNDERSIGNED. WHEN THE RECORDS OF THIS OFFICE W ERE CHECKED, IT WAS FOUND THAT YOU ARE NOT FILING YOUR INCOME TAX RETUR NS IN THIS OFFICE. PLEASE LET ME KNOW AS TO WHETHER YOU HAVE FILED THE INCOME TAX RETURNS IN RESPECT OF THE ABOVE-MENTIONED AYS AND I N CASE, IF YOU HAVE FILED YOUR INCOME TAX RETURNS IN ANY OTHER JUR ISDICTIONAL AREA, THEN THE COPIES OF THE SAID RETURNS MAY KINDLY BE F ILED IN THIS OFFICE BY 8.4.2005. IF AT ALL, IF YOU HAVE NOT FILED YOUR RE TURNS FOR AYS 03-04 AND 04-05, THEN, THE SAME MAY KINDLY BE FILED IN TH IS OFFICE BY 8.4.2005. YOURS SINCERELY, SD/- (N.C. TOMAR) INCOME TAX OFFICER, WARD 2(2), MEERUT. THE ASSESSEE REFERRED TO PAGE 3 WHEREIN THE REPLY T O THE ABOVE LETTER IS CONTAINED IN WHICH IT WAS POINTED OUT THAT THE RETU RN FOR AY 2003-04 AND 2004-05 HAD ALREADY BEEN FURNISHED WITH DY. COMMISS IONER OF INCOME TAX, CIRCLE 2, BAREILLY. LD. COUNSEL REFERRED TO PAGE 9 AND 10 OF PAPER BOOK WHEREIN THE ASSESSEES REPLY TO CIT(A) U/S 133(6) I S CONTAINED IN WHICH IT ITA NO. 2538 & 2555/DEL/2008 8 WAS POINTED OUT THAT SINCE THE ASSESSEE WAS ONLY ON DEPUTATION AS VICE CHANCELLOR OF CHAUDHARY CHARAN SINGH UNIVERSITY, ME ERUT, THEREFORE, HE HAD FILED HIS RETURN OF INCOME AT BAREILLY. IN THE BACKDROP OF THESE FACTS, LEARNED COUNSEL SUBMITTED THAT THE ASSESSEES JURIS DICTION, THOUGH VESTED WITH ITO, BAREILLY, WAS TRANSFERRED TO ITO, MEERUT, WITHOUT SHOW CAUSE NOTICE AS PER THE REQUIREMENTS OF SECTION 127 TO SU B-SECTION (2) CLAUSE (A). HE SUBMITTED THAT SPECIFIC PROCEDURE HAS BEEN PRESC RIBED IN THIS SECTION AND, THEREFORE, NON-ADHERENCE TO THE SAME RENDERS THE EN TIRE ASSESSMENT PROCEEDING BAD IN LAW. 9.2 LD. DR REFERRED TO SECTION 124 OF THE I.T. ACT AND POINTED OUT THAT AS PER SECTION 124(1)(B), THE ITO, MEERUT HAD JURISDIC TION OVER THE ASSESSEE AND, THEREFORE, NO ORDER U/S 127 WAS REQUIRED TO BE PASSED. HE FURTHER SUBMITTED THAT SINCE THE ASSESSEE HAD NOT FILED HIS RETURN OF INCOME, WITHIN THE PERIOD PRESCRIBED IN THE NOTICE, THEREFORE, IN VIEW OF SECTION 124(3)(B), THE ISSUE REGARDING JURISDICTION CANNOT BE CALLED I NTO QUESTION. HE FURTHER SUBMITTED THAT IN VIEW OF SECTION 124(4), THE ISSUE REGARDING JURISDICTION SHOULD HAVE BEEN TAKEN BEFORE THE AO. 9.3. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND WE HAVE PERUSED THE RECORD OF THE CASE. THE FACTS ARE NOT DISPUTED. THE ASSESSEE WAS ADMITTEDLY WORKING AS VICE CHANCELLOR OF CHAUDHARY CHARAN SINGH ITA NO. 2538 & 2555/DEL/2008 9 UNIVERSITY, MEERUT AND WAS RESIDING AT MEERUT. THE REFORE, HE WAS WITHIN THE TERRITORIAL JURISDICTION OF ITO, MEERUT AS PER SECTION 124(1)(B) WHICH READS AS UNDER:- [ JURISDICTION OF ASSESSING OFFICERS. 124. (1) WHERE BY VIRTUE OF ANY DIRECTION OR ORDER ISSUE D UNDER SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 120 , THE ASSESSING OFFICER HAS BEEN VESTED WITH JURISDICTION OVER ANY AREA, WITHIN THE LIMITS OF SUCH AREA, HE SHALL HAVE JURISDICTION (A) (B) IN RESPECT OF ANY OTHER PERSON RESIDING WITHIN THE AREA. THEREFORE, WHEN THE ITO, MEERUT ISSUED NOTICE U/S 1 48, IT CANNOT BE SAID THAT HE HAD NO JURISDICTION FOR ISSUING NOTICE U/S 148. IT IS NOT A CASE OF TRANSFER OF JURISDICTION REQUIRING ORDER TO BE PASSED U/S 12 7. SECTION 127 DOES NOT COME INTO PLAY AT ALL IN THIS CASE. THE ITO, MEERU T HAD JURISDICTION BY VIRTUE OF RESIDENCE OF ASSESSEE IN MEERUT AND NOT BY VIRTU E OF TRANSFER OF JURISDICTION BY THE AUTHORITIES PRESCRIBED U/S 127. WE, THEREFORE, DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE LD. COUNSEL ON T HIS COUNT. FURTHER, WE FIND CONSIDERABLE MERIT IN THE ARGUMENT OF LD. DR T HAT SINCE THE ASSESSEE HAD NOT FILED HIS RETURN U/S 148 WITHIN 30 DAYS PRESCRI BED IN THE NOTICE, THEREFORE, IN TERMS OF SECTION 124(3)(B) WHICH READS AS UNDER, THE ASSESSEE CANNOT CALL INTO QUESTION THE JURISDICTION OF THE AO:- (3) NO PERSON SHALL BE ENTITLED TO CALL IN QUESTI ON THE JURISDICTION OF AN ASSESSING OFFICER (A) ITA NO. 2538 & 2555/DEL/2008 10 (B) WHERE HE HAS MADE NO SUCH RETURN, AFTER THE EX PIRY OF THE TIME ALLOWED BY THE NOTICE UNDER 84 [SUB-SECTION (2) OF SECTION 115WD OR SUB-SECTION (1) OF SECTION 142 OR UNDER SUB-SECTION (1) OF SECTION 115WH OR UNDER SECTION 148 FOR THE MAKING OF THE RETURN OR BY THE NOTICE UNDE R THE FIRST PROVISO TO SECTION 115WF OR UNDER THE FIRST PROVISO TO SECTION 144 ] TO SHOW CAUSE WHY THE ASSESSMENT SHOULD NOT BE COMPLET ED TO THE BEST OF THE JUDGMENT OF THE ASSESSING OFFICER, WHICHEVER IS EARLIER. 10. IN THE RESULT, THIS GROUND IS DISMISSED. 11. APROPOS GROUND NO. 3, THE BRIEF FACTS ARE THAT THE AO NOTICED THAT THE ASSESSEE HAD PURCHASED STAMP PAPERS OF RS.4,09,000/ - ON 16.10.2003 WHEREAS THE AMOUNT WAS WITHDRAWN FROM BANK ON 17.10 .2003. THE AO MADE AN ADDITION OF RS.4,09,000 AFTER CONSIDERING T HE ASSESSEES SUBMISSIONS THAT STAMP PAPER WAS PURCHASED ON 17.10 .2003 BUT THE DATE HAD WRONGLY BEEN MENTIONED AS 16.10.2003. THE AO HAD R EQUIRED THE ASSESSEE TO PRODUCE A CERTIFICATE FROM TEHSILDAR BUT THE SAM E COULD NOT BE PRODUCED. LD. CIT(A) CONFIRMED THE ADDITION. BEFORE US, LD. COUNSEL HAS FILED AN APPLICATION UNDER RULE 29 FOR ADMISSION OF CERTAIN DOCUMENTS IN THE FORM OF PAPER BOOK II. THESE DOCUMENTS ARE IN THE FORM OF SALE DEED OF THE SALE OF ANCESTRAL LAND OF THE ASSESSEE AND HIS BROTHER IN D ECEMBER, 2003. IT IS STATED THAT THE ENTIRE SALE CONSIDERATION WAS RECEIVED IN ENTIRETY IN THE MIDDLE OF SEPTEMBER 2003 AND THE POSSESSION WAS GIVEN. 11.1 LD. DR SUBMITTED THAT THIS IS AN ENTIRELY NEW PLEA TAKEN BY THE ASSESSEE AND THESE DOCUMENTS CANNOT BE ADMITTED AS THEY ARE NOT RAISING ANY ITA NO. 2538 & 2555/DEL/2008 11 LEGAL ISSUE. LD. DR RELIED ON THE DECISION IN THE CASE OF KAMAL MOTORS VS CIT 131 TAXMAN 155 (RAJ) AND NITIN DEVELOPERS AND C ONST. VS CIT 284 ITR 605(DELHI). WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND ARE OF THE OPINION THAT SINCE THE SALE DEED HAD BEEN EXECUTED IN DECEMBER 2003, AND THE MAIN DISPUTE IS REGARDING PU RCHASE OF STAMP PAPER IN OCTOBER 2003, THEN MERELY ON THE BASIS OF A RECI TAL IN THE SALE DEED THAT THE CASH WAS RECEIVED EARLIER, IT CANNOT BE ADMITTE D, PARTICULARLY KEEPING IN VIEW THE FACT THAT THE ASSESSEE WAS A VICE CHANCELL OR OF A REPUTED UNIVERSITY AND, THEREFORE, IT CANNOT BE ACCEPTED THAT HE WAS N OT IN KNOWLEDGE OF THE CASH LYING WITH HIM AND THE SOURCE THEREOF. FURTHE R, THIS PLEA WAS NEVER TAKEN BEFORE THE AO OR CIT(A) AND, THEREFORE, THIS PLEA CANNOT BE ADMITTED AT THIS JUNCTURE TO ALLOW CHANGE IN COMPLETE COMPLE XION OF THE CASE AND, THEREFORE, WE REJECT THE PLEA OF THE ASSESSEE. CON SIDERING THE ENTIRETY OF FACTS, WE ARE IN AGREEMENT WITH THE FINDINGS OF THE LD. CIT(A) THAT THE ASSESSEE FAILED TO ESTABLISH THE SOURCE OF THE FUND FOR PURCHASE OF STAMP PAPER OF RS. 4,09,000/-. THEREFORE, THIS GROUND IS DISMISSED. 12. IN THE RESULT, THE ASSESSEES APPEAL IS DISMISS ED. 13. NOW, WE TAKE UP THE REVENUES APPEAL VIDE ITA N O. 2538/DEL/2008. THE GROUNDS PREFERRED BY THE REVENUE ARE AS UNDER:- ITA NO. 2538 & 2555/DEL/2008 12 1. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD. CIT(A) HAS ERRED IN LAW IN DELETING THE ADDITIO N OF RS.33 LAKH ON ACCOUNT OF UNPROVED UNSECURED LOANS. 2. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN IGNORING THE EVIDENCE GATHERED BY THE ITO TO PROVE THE FALSITY OF THE ALLEGED LOAN. 3. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN REPLACING THE SATISFACTION OF T HE ITO (AS ENVISAGED BY SECTION 68) BY HIS OWN SATISFACTIO N. 13.1 THE ONLY GROUND IS REGARDING DELETION OF ADDIT ION OF RS. 33 LAKH ON ACCOUNT OF UNPROVED UNSECURED LOANS. BRIEF FACTS A PROPOS THIS ISSUE ARE THAT THE AO NOTICED THAT THE ASSESSEE IN HIS SAVINGS BAN K ACCOUNT AT ALLAHABAD BANK, UNIVERSITY BRANCH, HAD THE FOLLOWING DEPOSITS :- DATED 4.9.2003 RS. 3,00,000/- 4.9.2003 4,00,000/- 4.9.2003 4,00,000/- 12.9.2003 4,00,000/- 12.9.2003 8,00,000/- 12.9.2003 10,00,000/- 12.9.2003 4,25,000/- --------------------- RS. 37,25,000 --------------------- 13.2 THE ASSESSEE EXPLAINED THAT HE HAD SOLD SOME A NCESTRAL LAND ON 9.12.2003 FOR RS.5,15,000. HALF THE SHARE BELONGED TO THE ASSESSEE AND BALANCE RS.33,00,000 WAS TAKEN AS LOAN FROM FRIENDS AND RELATIVES AS UNDER:- ITA NO. 2538 & 2555/DEL/2008 13 SL.NO. NAME & ADDRESS LOAN AMOUNT (RS.) 1. AJAY SINGH, DELHI 4,00,000 2. YAS PAL, DELHI 3,00,000 3. KIRAN KAPOOR, NEW DELHI 4,00,000 4. BAL RAJ JAIN, DELHI 4,00,000 5. CHETAN PRAKASH AGRAWAL, DELHI 4,00,000 6. PRAMOD KUMAR, DELHI 4,00,000 7. SATESH KUMAR DHINGRA, DELHI 3,00,000 8. ANIL KUMAR DHINGRA, DELHI 3,00,000 9. TRELOK CHAND BANSAL, DELHI 4,00,000 TOTAL 33,00,000 13.3 ON THE BASIS OF DETAILS FURNISHED BY THE ASSES SEE, THE AO ISSUED SUMMONS U/S 131(1) TO SHRI KIRAN KAPUR, SHRI CHETAN PRAKAH AGARWAL AND SHRI ANIL KUMAR DHINGRA WHICH REQUIRED THEM TO APPE AR ON 14.9.2005. HE OBSERVED THAT SUMMONS FROM SHRI KIRAN KAPUR WERE RE TURNED UNSERVED BUT THE OTHERS DID NOT COMPLY WITH THE TERMS OF THIS SU MMON. HE AGAIN ISSUED A LETTER DATED 19.9.2005 TO UNSECURED CREDITORS AND R EQUIRED THEM TO APPEAR ON 29.9.2005. ON 29.9.2005, THE ASSESSEES REPRESENTA TIVE POINTED OUT THAT ASSESSEE HAD TAKEN FRESH LOAN FROM M/S MADAN CONTRA CTORS & CO., MUZAFFARNAGAR IN AY 2004-05 AND RETURNED BACK THE O LD LOANS. THEREFORE, ITA NO. 2538 & 2555/DEL/2008 14 THE OLD LENDERS WERE NOT COOPERATING WITH THE ASSES SEE. HOWEVER, THE ASSESSEE WAS TRYING TO PRODUCE THE LENDERS. BUT SU BSEQUENTLY, ON 12.12.2005, THE ASSESSEE EXPRESSED HIS INABILITY TO PRODUCE THESE LENDERS. THE AO FURTHER MADE INQUIRIES FROM THE ALLAHABAD BA NK BY ISSUING LETTER U/S 133(B). FROM THIS, HE FOUND THAT SEVEN DRAFTS FOR RS. 25 LAKH WERE ISSUED FROM STATE BANK OF BIKANER & JAIPUR AS UNDER:- S.NO. DATE DRAFT NO. PARTY NAME AMOUNT (RS.) 1. 3.9.03 0799017 SH. RAMPAL SINGH 4,00,000/- 2. 3.9.03 0799018 SH. RAMPAL SINGH 3,00,000/- 3. 3.9.03 0799019 SH. RAMPAL SINGH 3,00,000/- 4. 3.9.03 0799015 SH. RAMPAL SINGH 4,00,000/- 5. 3.9.03 0799016 SH. RAMPAL SINGH 4,00,000/- 6. 1.9.03 0799012 SH. RAMPAL SINGH 4,00,000/- 7. 1.9.03 0799011 SH. RAMPAL SINGH 3,00,000/- 13.4 THE AO FURTHER REQUIRED THE BANK TO SEND THE C OPIES OF LEDGER ACCOUNT FROM WHICH HE NOTICED THE FOLLOWING FACTS:- S.NO. LENDERS NAME DATE OF DEPOSIT OF CHEQUE/CASH CASH/CHEQUE ISSUED FROM BANK BALANCE IN BANK 1. SHRI YASHPAL SHRI YASHPAL 1.9.03 BY CASH TMS. CHEQUE 1.9.03 3,00,500/- CR. 3,00,600/-DR. 2. SHRI TRILOK CHAND 1.9.03 BY CASH TMS.CHEQUE 1.9.03 4,01,000/- CR. ITA NO. 2538 & 2555/DEL/2008 15 SHRI TRILOK CHAND 4,00,800/- DR. 3. SH.CHETAN PRAKASH AGARWAL SH.CHETAN PRAKASH AG. 3.9.03 BY CHEQUE NO. 00784181 TRMS.CHEQUE3.9.03 4,00,000/- CR. 4,00,800/- DR. 4. SH. KIRAN KAPUR SH. KIRAN KAPUR 3.9.03 BY CASH TMS.CHEQUE 3.9.03 4,00,000/- CR. 4,00,080/- DR. 5. SHRI BALRAJ JAIN SHRI BALRAJ JAIN 3.9.03 BY CHEQUE NO. 00784183 TMS.CHEQUE 3.9.03 4,00,000/- CR. 4,00,800/- DR. 6. SATISH KUMAR DHINGRA SATISH KUMAR DHINGRA 3.9.03 BY CHEQUE NO. 00475576 TMS.CHEQUE 3.9.03 3,00,000/- CR. 3,00,060/- DR. 7. ANIL KUMAR DHINGRA ANIL KUMAR DHINGRA 3.9.03 BY CHEQUE NO. 00784182 TMS.CHEUQE 3.9.03 3,00,000/- CR. 3,00,600/- DR. 13.5 FROM THESE DETAILS, THE AO CONCLUDED THAT THE ASSESSEE HAD TAKEN ENTRIES FROM THESE PERSONS BECAUSE THE CASH WAS DEP OSITED ON THE SAME DAY ON WHICH THE CHEQUE WAS ISSUED. HE FURTHER OBSERVE D THAT SHRI CHETAN PRAKASH AGGARWAL, SHRI ANIL KUMAR DHINGRA AND SHRI BALRAJ JAIN RECEIVED ITA NO. 2538 & 2555/DEL/2008 16 THE CHEQUE IN SAME SEQUENCE BEFORE ISSUING THE CHEQ UE TO ASSESSEE. HE POINTED OUT THAT IT WAS IMPROBABLE THAT SUCH A SEQU ENCE COULD BE THERE. HE THEREFORE, HELD THAT THE SUM OF RS. 25 LAKH WAS TO BE TREATED AS ASSESSEES INCOME. AS REGARDS THE BALANCE SUM OF RS. 8 LAKH, HE NOTED THAT A DRAFT WAS ISSUED BY SHRI PRAMOD KUMAR BY DEPOSITING CASH OF R S.4,00,080 ON 1.9.2003. SIMILARLY, SHRI AJAY SINGH HAD ISSUED BA NK DRAFT OF RS. 4 LAKH FROM STANDARD CHARTERED BANK, DELHI ON 30.8.03. AL L THESE TRANSACTIONS WERE TREATED OF ENTRIES BEING TAKEN BY THE ASSESSEE . HE, THUS, MADE AN ADDITION OF RS. 33 LAKH. LD. CIT(A) DELETED THE AD DITION, INTER ALIA, FOR THE FOLLOWING REASONS:- A. ALL THE 9 RELEVANT LOANS WERE TAKEN BY ACCOUNT PAYEE DRAFTS AND THEIR REPAYMENTS WERE ALSO MADE BY ACCOUNT PAYEE' DRAFTS. B. NOT ONLY PAN OF ALL THE LENDERS HAVE BEEN FURNISHED; BUT ALSO THE COPIES OF THEIR RESPECTIVE INCOME-TAX RETU RNS HAVE ALSO BEEN PLACED ON RECORD. THE CONFIRMATIONS CONTA INING EXACT NAME AND FULL ADDRESSES HAVE ALSO BEEN SUBMIT TED. THESE DOCUMENTARY EVIDENCES CLEARLY ESTABLISH THAT THESE 9 PERSONS ARE IDENTIFIABLE. AND THERE WAS SUFFICIENT CREDITWORTHINESS OF THESE LENDERS. C. IT IS ON RECORD, AND HAS BEEN MENTIONED BY THE A O ALSO THAT THE AO COLLECTED COPIES 0F BANK ACCOUNTS OF THESE CREDITORS. THESE BANK ACCOUNTS CONTAIN UMPTEEN NUMB ER OF TRANSACTIONS, THE LOANS GIVEN BY THESE PERSONS TO T HE ASSESSEE ARE REFLECTED IN THESE BANK ACCOUNTS. THESE BANK A CCOUNTS RATHER SUPPORT THE APPELLANT'S CONTENTION THAT THE ASSESSEE HAD BEEN ABLE TO ESTABLISH THE IDENTITY AND CREDITWORTH INESS OF THE CREDITORS AND GENUINENESS OF THE LOAN TRANSACTIONS. ITA NO. 2538 & 2555/DEL/2008 17 D. A VITAL EVIDENCE, WHICH THE UNDERSIGNED FOUND FROM TH E PERUSAL OF ASSESSMENT RECORD, IS THAT ALL THESE 9 P ERSONS HAD GIVEN A LETTER NOT ONLY CONFIRMING THE LOAN, BUT ALSO THE FACT THAT THE SAID LOAN HAD BEEN RETURNED BACK BY THE AS SESSEE, CONSEQUENCES TO WHICH THERE WAS NIL BALANCE AS ON D ATE. (MOST OF THESE LETTERS ARE OF 7.6.2005). COPIES OF THESE LETTERS HAVE BEEN PLACED IN THE APPELLATE FOLDER AS WELL. THESE LETTERS ARE ACCOMPANIED BY OTHER DOCUMENTARY EVIDENCE WHICH ARE COPY OF PAN CARD, COPY OF INCOME -TAX AND WEALTH-TAX RETURN, COPY OF STATEMENT OF AFFAIRS ETC . THE BALANCE SHEET/STATEMENT OF AFFAIRS OF THESE PERSONS INDICATE A HIGH CAPITAL BALANCE. E. THE ASSESSEE HAD CLEARLY SUBMITTED BEFORE THE AO THAT THE LENDERS WERE HOSTILE AND IT WAS BECAUSE OF THIS THAT THEIR REPAYMENTS HAD ALREADY BEEN MADE, AFTER WHICH THE L ENDERS WERE NOT COOPERATING IN COMING FORWARD PERSONALLY B EFORE THE AO. F. THE EXACT SOURCE OF REPAYMENT OF LOAN WAS GIVEN, WHICH HAS BEEN ACCEPTED BY THE AO AFTER VERIFICATION. THE CONFIRMATION, COPY OF BANK ACCOUNT AND ALSO INCOME- TAX RETURN RECORD OF THE NEW LENDER M/S. MADAN CONTRACT ORS & CO., MUZAFFARNAGAR HAVE BEEN PLACED ON RECORD. 14. LD. DR REFERRED TO THE ASSESSMENT ORDER AND AF TER GOING THROUGH THE FACTS AS NOTED BY THE AO, POINTED OUT THAT GENUINEN ESS OF ADVANCES WAS NOT PROVED. HE SUBMITTED THAT LOANS WERE RECEIVED IN A VERY SHORT PERIOD OF TIME, LOAN LENDERS WERE NOT PRODUCED. DRAFT NOS. WE RE IN SERIATIM. HE SUBMITTED THAT CHEQUE NOS. WERE ALSO IN SEQUENCE. HE SUBMITTED THAT OUT OF 9 CASES, IN 4 CASES, CASH HAD BEEN DEPOSITED AND IN CASE OF THREE PERSONS, ITA NO. 2538 & 2555/DEL/2008 18 FUNDS HAD BEEN TAKEN FROM COMMON ACCOUNT. HE SUBMI TTED THAT IT IS QUITE IMPROBABLE THAT ON SAME DATE, LOANS HAVE BEEN TAKEN AND SERIAL NUMBERS OF CHEQUES DEPOSITED IN THESE ACCOUNTS WERE ALSO THE S AME. LD. DR REFERRED TO PAGE 37 OF THE CIT(A)S ORDER AND POINTED OUT THAT HE HAS NOT GIVEN ANY OPINION ON THE FINDINGS OF THE AO. HE SUBMITTED TH AT IT IS A CASE OF AN INDIVIDUAL. THEREFORE, THERE IS NO DOUBT AS TO THE ULTIMATE BENEFICIARY, VIZ. THE ASSESSEE. LD. DR SUBMITTED THAT ONUS IS ON THE ASSESSEE TO PROVE THE CAPACITY OF LENDERS. 14.1 HE FURTHER SUBMITTED THAT MERE FILING OF CONFI RMATION LETTER DOES NOT DISCHARGE THE BURDEN OF ASSESSEE AND FOR THIS PROPO SITION, HE RELIED ON THE DECISION IN THE CASE OF RAJSHREE SYNTHETICS (P) LTD . VS CIT, 131 TAXMAN 391(RAJ.). HE FURTHER RELIED ON HONBLE DELHI HIGH COURT DECISION IN 131 TAXMAN 1 THAT MERELY BECAUSE LOAN IS TAKEN THROUGH CHEQUE DOES NOT PROVE THE GENUINENESS OF LOAN. HE FURTHER REFERRED TO PA GE 39 OF PAPER BOOK WHEREIN THE COPY OF RETURN OF ASSESSEE IS CONTAINED AND POINTED OUT THAT INCOME OF YASH PAL WAS LESS THAN RS. 1 LAKH AND, TH EREFORE, HIS CREDITWORTHINESS FOR ADVANCING LOAN OF RS. 3 LAKH W AS IN DOUBT. 14.2 LD. DR FURTHER REFERRED TO PAGE 43 OF THE PAPE R BOOK WHEREIN A COPY OF RETURN OF SHRI KIRAN KAPUR IS CONTAINED WHOSE IN COME WAS ALSO ABOUT RS.1,14,000 AND, THEREFORE, HE SUBMITTED THAT CONSI DERING THE MEAGER INCOME ITA NO. 2538 & 2555/DEL/2008 19 DERIVED BY SHRI KIRAN KAPUR, THE ADVANCING OF RS. 4 LAKH WAS QUITE IMPROBABLE AND, THEREFORE, CANNOT BE ACCEPTED. 15. LD. COUNSEL SUBMITTED THAT CONFIRMATIONS WERE S UBMITTED FROM ALL THESE PARTIES WHICH ARE CONTAINED AT PAGES 34-67 OF THE PAPER BOOK. HE POINTED OUT THAT ALONG WITH CONFIRMATIONS, COPY OF PAN CARD AND COPY OF RETURN WAS ALSO FILED. THE BANK ACCOUNTS WERE ALSO SUBMITTED. THE AO HAD ISSUED SUMMONS ONLY TO THREE PARTIES AND ON THAT BA SIS HAD DRAWN ADVERSE CONCLUSIONS AGAINST THE ASSESSEE. HE REFERRED TO P AGE 11 AND 12 OF PAPER BOOK AND POINTED OUT THAT IN REPLY TO THE LETTER OF CIT(A) REGARDING NON- AVAILABILITY OF LENDERS AT THEIR ADDRESSES, THE ASS ESSEE HAD FURNISHED NEW ADDRESSES OF THE PERSONS AND, THEREFORE, HAD MADE F ULL COMPLIANCE IN REGARD TO QUERIES RAISED BY THE LD. CIT(A). LD. COUNSEL F URTHER REFERRED TO PAGE 33 AND 34 OF THE PAPER BOOK TO DEMONSTRATE THAT THE LO AN TAKEN HAD BEEN REPAID BY TAKING FRESH LOAN FROM MADAN CONTRACTORS & CO. IN THIS REGARD, LD. COUNSEL REFERRED TO PAGE 73 OF PAPER BOOK WHEREIN L ETTER DATED 29.9.2005 ADDRESSED TO ITO, WARD 2(2), MEERUT, IS CONTAINED, WHEREIN THIS FACT WAS CLEARLY STATED AND IT WAS POINTED OUT THAT SINCE TH E LOANS WERE REPAID, THEREFORE, THE LENDERS WERE HOSTILE AND WERE NOT CO OPERATING WITH THE ASSESSEE. LD. COUNSEL RELIED ON CIT(A)S ORDER AND REFERRED TO PAGE 39 OF HIS ORDER AND REFERRED TO THE FOLLOWING FINDINGS:- ITA NO. 2538 & 2555/DEL/2008 20 ALL THE ABOVE FACTS/EVIDENCES SUPPORT THE CASE OF THE APPELLANT. ON THE OTHER HAND, ONLY NEGATIVE ASPECT IS THAT THESE LENDERS HAVE NOT BEEN PRODUCED BEFORE THE AO. IN M Y VIEW, THE REQUIREMENTS OF SECTION 68 ARE TO BE SEEN IN THE EN TIRETY OF FACTS AND CIRCUMSTANCES. IT IS TRUE THAT THE ASSESSEE WA S NOT ABLE TO PRODUCE THESE LETTERS PHYSICALLY BEFORE THE AO; BUT THE ASSESSEE HAD GIVEN SATISFACTORY EXPLANATION FOR THE SAME. T HE LOANS HAD TO BE RETURNED BACK AS THESE LENDERS HAD TURNED HOS TILE. THE FACT OF RETURN OF THESE LOANS IS UNDISPUTED. AFTER RETURN OF THESE LOANS, THE LENDERS, AS THEY WERE ALREADY HOSTILE, D ID NOT COOPERATE WITH THE ASSESSEE AND DID NOT COME BEFORE THE AO.. 15.1 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND H AVE PERUSED THE RECORD OF THE CASE. ADMITTEDLY, THERE IS NO DISPUTE ABOUT THE IDENTITY OF THE LENDERS BECAUSE ALL THE NECESSARY DOCUMENTS TO ESTABLISH TH E IDENTITY, SUCH AS COPY OF CONFIRMATION ALONG WITH COPY OF PAN CARD, INCOME TA X RETURN WERE FILED BEFORE THE AO. THE COPIES OF BANK STATEMENTS WERE ALSO FILED ALONG WITH CONFIRMATION. THE ONLY DISPUTE IS REGARDING THE CR EDITWORTHINESS OF LENDERS AND GENUINENESS OF TRANSACTION. THE AO EXAMINED IN DETAIL THE MODE OF DEPOSITS IN THE BANK ACCOUNT OF LENDERS BEFORE ADVA NCING THE LOAN TO ASSESSEE AND CONSIDERING THE PROXIMITY OF EVENTS BETWEEN DEP OSIT IN THE BANK ACCOUNT AND ISSUANCE OF CHEQUE IN FAVOUR OF ASSESSEE, CONCL UDED THAT ASSESSEE HAD ONLY TAKEN ENTRIES FROM THESE LENDERS AND, THEREFOR E, THE TRANSACTIONS WERE NOT GENUINE. ADMITTEDLY, THERE IS CASH DEPOSIT IN THE ACCOUNT OF SHRI YASH PAL (RS. 3 LAKH), SHRI TRILOK CHAND (RS. 4 LAKH), S HRI KIRAN KAPUR (RS. 4 ITA NO. 2538 & 2555/DEL/2008 21 LAKH) IMMEDIATELY BEFORE ISSUING THE CHEQUE. SIMIL ARLY, IN THE ACCOUNTS OF SHRI CHETAN PRAKASH AGARWAL, SHRI BALRAJ JAIN AND S HRI ANIL KUMAR DHINGRA, CHEQUES IN SERIATIM (00784181 TO 00784183) HAVE BEEN DEPOSITED AND IMMEDIATELY THEREAFTER, THEY HAVE ISSUED THE CH EQUE IN FAVOUR OF ASSESSEE. IT CANNOT BE DISPUTED THAT FROM THESE EN TRIES, A STRONG SUSPICION DOES ARISE REGARDING THE GENUINENESS OF THESE ENTRI ES. HOWEVER, IT IS A WELL- SETTLED LAW THAT A SUSPICION, HOWSOEVER STRONG, CANNOT TAKE THE PLACE OF PROOF. THEREFORE, UNLESS ACCOUNT OF LENDERS WERE DU LY EXAMINED BY CARRYING OUT NECESSARY INVESTIGATION FOR FINDING OUT THE SOU RCE OF DEPOSITS IN THEIR RESPECTIVE ACCOUNTS, THE ADVERSE CONCLUSION COULD N OT BE DRAWN AGAINST THE ASSESSEE, PARTICULARLY WHEN ALL THE LOANS HAVE BEEN ADVANCED TO THE ASSESSEE BY ACCOUNT PAYEE CHEQUES AND ASSESSEE HAD ALSO RETU RNED THE LOANS THROUGH ACCOUNT PAYEE CHEQUES ONLY. LD. CIT(A) HAS VERY RI GHTLY OBSERVED THAT IF THE AO HAD ANY DOUBT ABOUT THE GENUINENESS OF THESE TRANSACTIONS, THEN HE SHOULD HAVE INFORMED HIS COUNTERPART VIZ. AOS OF RE SPECTIVE CREDITORS FOR VERIFYING THE EXACT NATURE AND SOURCE OF TRANSACTIO N BEING REFLECTED IN THEIR BANK ACCOUNTS. CONSIDERING THE ENTIRETY OF FACTS A ND CIRCUMSTANCES OF THE CASE, MERELY ON THE GROUND THAT ASSESSEE WAS NOT AB LE TO PRODUCE THE CREDITORS PHYSICALLY, ADVERSE INFERENCE COULD NOT B E DRAWN REGARDING CREDITWORTHINESS OF THE CREDITORS AND GENUINENESS O F THE TRANSACTION. WE, ITA NO. 2538 & 2555/DEL/2008 22 THEREFORE, DO NOT FIND ANY REASON TO INTERFERE IN T HE FINDINGS OF THE CIT(A). ACCORDINGLY, WE CONFIRM THE SAME. 16. IN THE RESULT, THE APPEALS OF THE ASSESSEE AND THE DEPARTMENT ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 24.02.2012. SD/- SD/- ( U.B.S. BEDI ) ( S.V. MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DT. 24TH FEBRUARY, 2012 GS COPY FORWARDED TO:- 1. ITO, WARD-2(2), MEERUT. 2. DR. RAM PAL SINGH, MEERUT. 3. CIT(A), MEERUT. 4. CIT 5. DR BY ORDER ASSTT.REGISTRAR