SHRI KAILASH CHAND GARG, Indore V. THE DCIT, Ratlam

ITA 262/IND/2015

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2371 (ITAT-INDORE)
• Duration Of Justice: 2 year(s) 8 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 20-04-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K G GOYAL
• Assessee Lawyers: SUMIT NEMA SR ADVT
• Keywords: Unexplained investment; Onus to prove
• Section: 143(3); 147; 148; 69

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER ITA NO.262/IND/2015 ASSESSMENT YEAR: 2005-06 M/S. KAILASH CHANDRA GARG, 87 ASHOK NAGAR, BEHIND SAPNA SANGEET CINEMA, INDORE / VS. D CIT , RATLAM, RATLAM ( APPELLANT ) ( REVENUE ) P.A. NO. ABKPG9944N APPELLANT BY SHRI SUMIT NEMA SR. ADVT. & SHRI GAGAN TIWARI ADV. RESPONDENT BY SHRI K.G. GOYAL SR. DR DATE OF HEARING: 10.01.2018 DATE OF PRONOUNCEMENT: 16.01.2018 / O R D E R PER KUL BHARAT, J.M: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX(APPEALS)-I, INDORE, (IN SHORT CIT(A)), DATED 30.09.2014 PERTAINING TO A.Y. 2011-12. THE AS SESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND LAW, LEARNED CIT(A) ERRED IN UPHOLDING ISSUANCE OF NOTICE U/S 14 8 OF THE KAILA SH CHANDRA GARG 2 INCOME TAX BY ASSESSING OFFICER FOR REOPENING OF AS SESSMENT PROCEEDINGS OF APPELLANT AND CONSEQUENT ASSESSMENT ORDER PASSED BY ASSESSING OFFICER. 2. THE LEARNED RESPONDENT AND CIT(A) FAILED TO APPRECI ATE PROVISION OF SECTION 147 READ WITH SECTION 282 OF T HE INCOME TAX ACT, 1961FOR INITIATION OF REASSESSMENT PROCEED ING AND THEREBY MADE AN ERROR IN PASSING ORDER WITHOUT REFE RRING NECESSARY PROOF, EVIDENCES AND DOCUMENTS BY SAME TO APPELLANT; RELIEF CLAIMED: NOTICE U/S 148 DATED 28.03.2012 ISS UED BY ASSESSING OFFICER DESERVES TO BE ANNULLED AND ASSES SMENT FRAMED CONSEQUENT THERE TO DESERVES TO BE DECLARED ULTRA VIRUS AND ACCORDINGLY BY QUASHED. ALSO IT MAY KINDLY BE D ECLARED THAT NO FURTHER INCIDENTAL PROCEEDINGS INITIATED TH EREON BE CONTINUED AND ACCORDINGLY SAID PROCEEDINGS HAVE TO BE DROPPED THEN ORDER PASSED THERE ON ARE TO BE DECLARE AS ULT RA VIRUS AND INVALID. 2. AT THE TIME OF HEARING LD. COUNSEL FOR THE ASSES SEE SUBMITTED THAT HE DOES NOT WISH TO PRESS GROUND NO.1 & 2. HE FURTHER SUBMITTED THAT GROUND NO.7 IS CONSEQUENTIAL AND GRO UNDS NO.8 & 9 ARE GENERAL IN NATURE. HE, THEREFORE, URGED THAT ON LY EFFECTIVE GROUND IS GROUND NO.3, AND GROUND NO.4, 5, & 6 ARE RELATED TO THE SAME GROUND AND HENCE WE ADJUDICATE THE GROUND NO.3 THAT READS AS UNDER: ON THE FACT AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION OF RS.2 ,26,30,000/- CONTRARY TO THE STATUTORY RECORDS AND PUBLIC DOCUME NTS AND FILING WITH ROC OF AMBIKA SOLVEX LTD. AND WITHOUT A NY POSITIVE PROOF OF APPELLANT ACTUALLY HAVING INVESTED SUCH AM OUNT AS SHARE APPLICATION. KAILA SH CHANDRA GARG 3 3. FACTS GIVING RISE TO THE FILING OF PRESENT APPEA L ARE THAT THE CASE OF THE ASSESSEE WAS REOPENED FOR ASSESSMENT AND ASS ESSMENT U/S 143(3) R.W. SECTION 147 OF THE INCOME TAX ACT 1961( HEREINAFTER CALLED AS THE ACT) WAS FRAMED VIDE ORDER DATED 28 .03.2013. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER (IN S HORT AO) COMPUTED TOTAL INCOME AT RS.2,29,07,220/- AGAINST T HE RETURN OF INCOME AT RS.2,77,219/- THUS, MADE ADDITION OF RS.2 ,26,30,000/- U/S 69 IN RESPECT OF THE INVESTMENT MADE IN SHARE C APITAL OF M/S. AMBIKA SOLVEX LTD. AGGRIEVED BY THIS THE ASSESSEE FILED AN APPEAL BEFO RE THE LD. CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS IN PAR A 4.3 OF THE ORDER CONFIRMED THE ADDITION. 4. NOW THE ASSESSEE IS IN FURTHER APPEAL. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT THE AUTHORITIES BELOW FAILED TO APPRECIATE THE FACTS THAT THE ASSES SEE HAD NOT MADE INVESTMENT OF RS.3,34,00,000/- AS SAME APPEARED IN THE NOTES OF ACCOUNT WRONGLY. HE CONTENDED THAT THIS ISSUE CAN B E VERIFIED AT THE END OF THE AO AND ISSUE MAY BE RESTORED TO THE AO F OR THIS PURPOSE OF VERIFICATION OF THE CLAIM OF THE ASSESSEE. 6. LD. DR SUPPORTED THE ORDER OF THE AUTHORITIES BE LOW AND OPPOSED THE SUBMISSIONS OF LD. COUNSEL FOR THE ASSESSEE. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED MATERIAL ON RECORD. THE LD. CIT(A) HAS DECIDED THE ISSUE IN PAR A 4.3 AS UNDER: GROUND NO. 3.4 & 5:- THOUGH THESE GROUND OF APPEAL THE APPELLANT HAS CHALLENGED THE ADDITION OF RS.2,26, 30,000/- ON ACCOUNT OF UNEXPLAINED INVESTMENT U/S 69 OF THE I.T ACT. THE APPELLANT HAS FILED THE ORIGINAL RETURN OF INCOME D ECLARING TOTAL KAILA SH CHANDRA GARG 4 INCOME OF RS. 2,77,219/- ON 31-10-2005.AS PER THE B ALANCE SHEET FILED BY THE APPELLANT ALONG WITH THE RETURN OF INCOME THE APPELLANT HAD SHOWN ALONG WITH THE RETURN OF INCOME THE APPELLANT HAD SHOWN THE INVESTMENT OF RS. 1,07,70,0 00/- IN M/S AMBIKA SOLVEX LTD. SHARE APPLICATION MONEY OF R S. 3,34,00,000/- HAS BEEN SHOWN AS RECEIVED FROM SHRI KAILASH CHANDRA GRAG THUS, THERE WAS A DIFFERENCE OF RS.2,2 6,30,000/- AS SHOWN BY THE APPELLANT AND BY AMBIKA SOLVEX LTD. PERTAINING TO 2004-05 WAS SIGNED BY THE APPELLANT I N THE CAPACITY OF THE DIRECTOR OF THE COMPANY. SINCE THE APPELLANT IS THE SIGNATORY OF THE RETURN OF INCOME ALONG WITH OT HER ENCLOSURES, IT WAS WITHIN THE KNOWLEDGE OF THE APPE LLANT REGARDING THIS DIFFERENCE IN TWO SETS OF THE ACCOUN TS. THEREFORE THE APPELLANTS CONTENTION THAT IT IS A TYPOGRAPHIC AL ERROR IS NOT ACCEPTABLE. IT IS ALSO TO BE MENTIONED THAT THERE W AS A DIFFERENCE ON THE SAME ACCOUNT IN THE A.Y.2004-05 A LSO HAS BEEN SIGNED BY THE APPELLANT. SINCE BY THE APPELLANT. SINCE THE SAME PERSON I.E. THE APPELLANT IS SIGNATORY AT BOTH THE PLACES, THEREFORE, IT CANN OT BE CONSIDERED AS MERELY A TYPOGRAPHICAL ERROR. THE COM PANYS AUDIT REPORT SPECIFICALLY MENTIONS THE SHARE APPLIC ATION MONEY DEPOSITED BY THE APPELLANT AT RS. 3, 34,00,000/-. D URING THE COURSE OF APPELLATE PROCEEDINGS THE APPELLANT HAS P RODUCED HAS THE RETURN OF INCOME FILED BY THE COMPANY. IN THE N OTES OF ACCOUNT THE SAME FIGURE IS APPEARING AS FILED WITH THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLATE PROCEEDINGS THE APPELLANT FAILED TO RECON CILE THE DIFFERENCE IN RESPECT OF THE INVESTMENT SHOWN BY TH E APPELLANT IN HIS RETURN OF INCOME AND AS APPEARING IN THE AUD IT REPORT SUBMITTED BY M/S AMBIKA SOLVEX LTD. THE APPELLANT F AILED TO PRODUCE THE BOOKS OF ACCOUNT DURING THE COURSE OF A SSESSMENT PROCEEDINGS. BY NOT PRODUCING BOOKS OF ACCOUNT THE APPELLANT FAILED TO DISCHARGE THE ONUS CAST UPON HIM. THE APP ELLANT HAS MADE THE INVESTMENT OF RS.3,34,00,000/- IN M/S AMBI KA SOLVEX LTD. WHICH IS APPEARING IN THE BOOKS OF THE SAID CO MPANY. SINCE THE APPELLANT IS SIGNING THE RETURN OF INCOME OF M/ S. AMBIKA SOLVEX LTD. THEN HE CANNOT DENY NOW THAT THE NOTES TO THE ACCOUNTS WERE NOT CORRECT AND WAS AS RESULT OF CLER ICAL ERROR. IT KAILA SH CHANDRA GARG 5 IS TO BE MENTIONED THAT THERE CANNOT BE AN INCORREC T ENTRY IN THE NOTES ON ACCOUNTS OF THE COMPANY WHICH GOT ITS ACCO UNTS AUDITED UNDER STATUTORY PROVISION OF THE LAW. THE A PPELLANT HAS MADE THE INVESTMENT IN THE SAID COMPANY, THEREFORE, THE APPELLANTS NAME IS APPEARING IN THE NOTES OF THE A CCOUNTS. THE APPELLANT FAILED TO GIVE THE SOURCE OF INVESTMENT B Y PRODUCING BANK STATEMENT FROM WHERE THE INVESTMENT HAS BEEN M ADE. THE APPELLANT HAS BEEN GIVEN SUFFICIENT OPPORTUNITY DUR ING THE COURSE OF ASSESSMENT PROCEEDINGS AS WELL AS APPELLA TE PROCEEDING, BUT FAILED TO CLARIFY THE FIGURES APPEA RING IN THE NOTES TO THE ACCOUNT FOR THIS ASSESSMENT YEAR. SECT ION 69 PROVIDES THAT ANY INVESTMENT FOUND IN THE BOOKS REL ATING TO WHICH APPELLANT OFFERS NO EXPLANATION ABOUT THE NAT URE AND SOURCE THEREOF OR SUCH EXPLANATION IS UNSATISFACTOR Y, SUCH INVESTMENTS COULD BE CHARGED TO TAX AS INCOME OF TH E APPELLANT. THE PRINCIPLE EMBODIED IN SECTION 69 IS ONLY A STAT UTORY RECOGNITION OF WHAT WAS ALWAYS UNDERSTOOD TO BE THE LAW BASED UPON THE RULE THAT BURDEN OF PROOF IS ON THE TAXPAY ER TO PROVE THE GENUINENESS OF THE INVESTMENT IN HIS BOOKS, SIN CE THE RELEVANT FACTS ARE EXCLUSIVELY WITHIN HIS KNOWLEDGE . THE EXPRESSION NATURE AND SOURCE HAS TO BE UNDER STOOD TOGETHER AS A REQUIREMENT OF IDENTIFICATION OF THE SOURCE AND THE NATURE OF THE SOURCE, SO THAT THE GENUINENESS OR OT HERWISE COULD BE INFERRED. IT IS SETTLED LAW THAT WHILE CONSIDERING THE QUESTI ON WHETHER THE ALLEGED INVESTMENT MADE BY THE APPELLANT WAS A GENU INE TRANSACTION, THE INITIAL ONUS IS ALWAYS UPON THE AP PELLANT AND IF NO EXPLANATION IS GIVEN OR THE EXPLANATION GIVEN BY THE APPELLANT IS NOT SATISFACTORY, THE ASSESSING OFFICE R CAN DISBELIEVE THE ALLEGED TRANSACTION OF SUCH INVESTME NT. BUT THE LAW IS EQUALLY SETTLED THAT IF THE INITIAL BURDEN I S DISCHARGED BY THE APPELLANT BY PRODUCING SUFFICIENT MATERIALS IN SUPPORT OF THE INVESTMENT TRANSACTION, THE ONUS SHIFTS UPON THE AS SESSING OFFICER AND AFTER VERIFICATION, HE CAN CALL FOR FUR THER EXPLANATION FROM THE APPELLANT AND IN THE PROCESS, THE ONUS MAY AGAIN SHIFT FROM THE ASSESSING OFFICER TO THE APPELLANT. THEREFORE, THE APPELLANT FAILED TO DISCHARGE THE B URDEN OF PROOF BY NOT ESTABLISHING THE GENUINENESS OF INVESTMENT. THEREFORE, KAILA SH CHANDRA GARG 6 THE ADDITION MADE BY THE AO AMOUNTING TO RS.2,26,30 ,000/- IS CONFIRMED. THEREFORE, APPEAL ON THESE GROUNDS ARE D ISMISSED. 8. THE CONTENTIONS OF THE ASSESSEE IS THAT THE ASSE SSEE HAD NOT MADE AN INVESTMENT OF RS.2,26,30,000/-. IN FACTS, T HE ASSESSEE HAD MADE INVESTMENT OF RS.3,24,000/- THROUGH TWO CHEQUE S OF RS. 1,62,000/- EACH. IN OUR CONSIDERED VIEW, THE CONTEN TIONS OF THE ASSESSEE OUGHT TO HAVE BEEN VERIFIED AND REBUTTED B Y THE AUTHORITIES BELOW BY BRINGING ANY CONTRARY MATERIAL ON RECORD. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY THE ORDER OF THE AUTHORITIES BELOW IS SET ASIDE ON THIS ISSUE AND RESTORE TO THE FILE OF THE AO FOR DECISION AFRESH. THE AO IS DIRECTED TO VERIFY THE CLAIM OF T HE ASSESSEE BY MAKING INQUIRY. THE ASSESSEE IS DIRECTED TO FURNISH THE DETAILS AS CALLED UPON BY THE ASSESSEE. GROUND NO. 2 TO 6 ARE ALLOWED FOR STATISTICAL PURPOSES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTL Y ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 16 .01. 2018. SD/- (MANISH BORAD) SD/- (KUL BHARAT) A CCOUNTANT MEMBER JUDICIALMEMBER INDORE; DATED : 16/ 01/2018 CTX? P.S/. . . COPY TO: ASSESSEE/AO/PR. CIT/ CIT (A)/ITAT (DR)/GUA RD FILE. BY ORDER PRIVATE SECRETARY/DDO, INDORE