ACIT, Muzaffarnagar V. Late Shri Naresh Kumar Garg, Muzaffarnagar

ITA 2631/DEL/2011

• Counselvise Citation: 263120114 RSA 2011
• Duration Of Justice: 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 21-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 23-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: AMIT GOEL
• Keywords: Source of fund
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI B.C. MEENA ITA NO. 2631/DEL/2011 ASSESSMENT YEAR: 2003-04 ASSISTANT COMMISSIONER OF IT, VS. LATE SH. NARESH KUMAR GARG, CIRCLE 2, L/H SMT. SUNITA GARG, MUZAFFARNAGAR. M/S. HARDWARI LAL MANOHAR LAL, 59-A, NAVEEN MANDI STHAL MUZAFFARNAGAR. (PAN: ABJPG9790N) (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI RS NEGI, SR. DR RESPONDENT BY: SHRI AMIT GOEL, CA DATE OF HEARING : 21.12.2011 DATE OF PRONOUNCEMENT : 13.01.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 07.02.2011 PASSED FOR ASSESSMENT YEAR 2003-04. THE REVENUE HAS PLEADED THAT LEARNED CIT(APPEALS) HAS E RRED IN DELETING THE ADDITION OF RS.15,85,165 WHICH WAS ADDED BY THE ASS ESSING OFFICER WITH THE AID OF SECTION 68 OF THE INCOME-TAX ACT, 1961 AS UN EXPLAINED CASH CREDITS CREDITED IN THE BOOKS OF ACCOUNT. 2. THE BRIEF FACTS OF THE CASE ARE THAT LATE SHRI N ARESH KUMAR GARG WAS THE PROPRIETOR OF M/S. HARDWARI LAL MANOHAR LAL WH ICH IS ENGAGED IN THE 2 BUSINESS OF COMMISSION AGENT AND TRADING IN GOODS E TC. HE HAS FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2003-04 ON 30. 11.2003 DECLARING AN INCOME OF RS.8,36,110. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT AND A NOTICE UNDER SEC. 143(2) OF THE IN COME-TAX ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT CREDITS AMOUNTING TO RS.30,69,881 IS APPEARING AGAINST THE NAME OF 12 INDIVIDUALS. HE NOTICED THE DETAILS OF LOAN APPEARING AGAINST EACH INDIVIDUAL ON PAGE 1 OF THE ASSESSMENT ORDER. ASSESSING OFFICER HAS DIRECTED THE ASSESSEE TO DISCHARGE THE ONUS CON TEMPLATED UNDER SEC. 68 OF THE ACT. THE ASSESSEE HAS FILED CONFIRMATION FROM T HE CREDITORS, DETAILS OF THE TRANSACTION I.E. CHEQUE NUMBER AND BANK ACCOUNT NUM BER ETC. HE HAS ALSO FILED THE PAN OF ALL THE CREDITORS AND SUBMITTED BE FORE THE ASSESSING OFFICER THAT CREDITORS ARE ASSESSED TO TAX. HOWEVER, LEARNE D ASSESSING OFFICER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND MADE THE ADDITION. HE MADE THE ADDITION ON THE GROUND THAT CREDITORS FAILED TO APP EAR BEFORE HIM. ON APPEAL, LEARNED CIT(APPEALS) DELETED THE ADDITIONS. 3. DISSATISFIED WITH THE ORDER OF THE LEARNED CIT(A PPEALS) DATED 26.7.2006, REVENUE FILED AN APPEAL BEFORE THE ITAT BEARAING ITA NO.3291/DEL/2006. THIS APPEAL OF THE REVENUE WAS AL LOWED BY THE ITAT FOR 3 STATISTICAL PURPOSES AND THE ITAT REMITTED THE ISSU E TO THE FILE OF THE ASSESSING OFFICER FOR READJUDICATION. 4. IN THE SECOND ROUND OF LITIGATION, ASSESSEE HAS AGAIN SUBMITTED THE DETAILS OF EACH CREDITORS. LEARNED ASSESSING OFFICE R HAS ACCEPTED THE CLAIM WITH RESPECT TO SIX CREDITORS AND CONFIRMED THE ADD ITION FOR THE REMAINING ONE. ON APPEAL, LEARNED CIT(APPEALS) HAS DELETED TH E ADDITION. 5. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE FIRST ADDITION MADE BY T HE ASSESSING OFFICER IN THE SECOND ROUND IS IN RESPECT OF LOAN AMOUNTING TO RS. 6 LACS RECEIVED FROM SMT. SAROJ GARG. THIS ADDITION HAS BEEN MADE BY THE ASSE SSING OFFICER ON THE GROUND THAT HE DIRECTED THE ASSESSEE TO PRODUCE HER FOR EXAMINATION BUT ASSESSEE FAILED TO PRODUCE HER. CONTRARY TO THIS CO NCLUSION, ASSESSEE HAS ALLEGED AS UNDER BEFORE THE LEARNED FIRST APPELLATE AUTHORITY: (I) SMT. SAROJ GARG: THE APPELLANT INFORMED THE A. O. IN CONNECTION OF THE DEPOSITS MADE BY THE CREDITOR WIT H THE FIRM M/S. HARIDWARI LAL MANOHAR LAL IN HIS WRITTEN SUBMISSION S AS UNDER: (A) SMT. SAROJ GARG IS AN INCOME TAX ASSESSEE AND HER P AN IS AASPG7704H. (B) SHE HAD AN ACCOUNT WITH M/S. HARDWARI LAL MANOHAR L AL IN WHICH THE OPENING BALANCE AS ON 01.04.2002 WAS RS.5 ,35,000/-. 4 (C) SHE WITHDREW RS.4,22,298 (RS.4,15,000+7,298) FROM H ER ACCOUNT WITH M/S. HARDWARI LAL MANOHAR LAL ON 12.11 .2002 AND DEPOSITED THE SAME IN HER BANK ACCOUNT WITH BAN K OF BARODA ON THE SAME DAY ON 12.11.2002. (D) SHE WITHDREW RS.4,20,000 FROM HER BANK ACCOUNT WITH BANK OF BARODA ON 22.11.2002 FOR DEPOSITING THE SAME WITH M /S. HARDWARI LAL MANOHAR LAL. DURING THE PERIOD 12.11.2 002 TO 22.11.2002 THE DEPOSITOR HAD NOT WITHDRAWN ANY AMOU NT FROM HER BANK ACCOUNT WITH BANK OF BARODA. (E) THE APPELLANT HAD SUBMITTED HER EXPLANATION BEFORE THE A.O. REGARDING THE DEPOSIT OF SMT. SAROJ GARG AND MENTIO NED ALL THE FACTS ALONG WITH COPY OF ACCOUNT OF THE DEPOSITOR W ITH THE FIRM M/S. HARDWARI LAL MANOHAR LAL AND COPY OF BANK ACCO UNT WITH BANK OF BARODA. 6. ON AN ANALYSIS OF THE SUBMISSIONS MADE BY THE AS SESSEE AS WELL AS THE FINDINGS RECORDED BY THE LEARNED CIT(APPEALS), WE A RE OF THE VIEW THAT ASSESSING OFFICER FAILED TO PROCURE THE PRESENCE OF SMT.SAROJ GARG BY EXERCISING THE STATUTORY POWERS. THE NON-PRODUCTION OF SMT. SAROJ GARG FOR EXAMINATION IS ONE CORROBORATIVE FACTOR ONLY, MEREL Y ON THAT BASIS, IT CANNOT BE TERMED THAT LOAN OF RS. 6 LACS RECEIVED BY THE A SSESSEE WAS AN UNEXPLAINED LOAN. THE ASSESSEE HAS ALLEGED THAT SMT . SAROJ GARG IS AN INCOME-TAX ASSESSEE. SHE HAS AN ACCOUNT WITH THE FI RM AND SHE WAS AN OLD CREDITOR. THE ASSESSEE HAS EXPLAINED THE SOURCE OF FUND IN THE HANDS OF SMT. 5 SAROJ GARG. IT APPEARS THAT THE ITAT HAS PASSED THE ORDER ON 7.11.2008. THE AO TOOK THE PROCEEDINGS IN THE SECOND ROUND IN THE MONTH OF APRIL, 2009, THEREAFTER, HE DID NOT ISSUED ANY NOTICE AND TOOK U P THE PROCEEDINGS ON 4 TH JULY 2009. HE PASSED THE ASSESSING OFFICER ON 29.1 2.2009. HAD HE STARTED THE PROCEEDINGS WELL IN ADVANCE AND ISSUED SUMMONS UNDER SEC. 131, HE MIGHT BE IN A POSITION TO PROCURE THE PRESENCE OF S MT. SAROJ GARG. LEANED FIRST APPELLATE AUTHORITY HAS CONSIDERED THE EVIDE NCE PRODUCED BY THE ASSESSEE AND ARRIVED AT A CONCLUSION THAT IDENTITY OF THE CREDITORS IS NOT IN DISPUTE. SHE IS REGULAR INCOME-TAX ASSESSEE. THE LO AN WAS TAKEN THROUGH BANKING CHANNEL AND THE ASSESSEE HAS EXPLAINED THE SOURCE OF FUND IN HER ACCOUNT. CONSIDERING ALL THESE FACTORS, WE ARE OF T HE VIEW THAT LEARNED CIT(APPEALS) HAS RIGHTLY DELETED THE ADDITION. 7. THE NEXT MAJOR AMOUNT IS A LOAN OF RS. 4 LACS TA KEN FROM SHRI RAKESH KUMAR GARG. ASSESSING OFFICER HAS MADE THE ADDITION ON THE GROUND THAT ON PERUSAL OF HIS BANK ACCOUNT, IT WOULD REVEAL THAT A SUM OF RS.2 LACS WAS DEPOSITED IN HIS ACCOUNT BEFORE GIVING THE LOAN TO THE ASSESSEE. IT EMERGES OUT FROM THE RECORD THAT ASSESSEE RECEIVED A LOAN O F RS. 2 LACS ON 14.08.2002 A FURTHER A SUM OF RS. 2 LACS ON 26.3.2003. ON THE OTHER HAND, THE CASE OF THE ASSESSEE IS THAT SHRI RAKESH KUMAR GARG HAD AN OPENING BALANCE OF 6 RS. 80,000 WITH M/S. HARIDWARI LAL MANOHAR LAL AS ON IST OF APRIL 2002. HE WITHDREW RS. 2,90,525 FROM PROPRIETARY SHIP CONC ERN ON 14.08.2002 AND DEPOSITED THE SAME IN HIS BANK ACCOUNT WITH THE STA TE BANK OF BIKANER AND JAIPUR. HE HAD ISSUED A CHEQUE OF RS. 2 LACS IN FAV OUR OF THE PROPRIETORSHIP. THE OTHER AMOUNT OF RS. 2 LACS DEPOSITED ON 26.3.20 03 WAS ALSO AFTER WITHDRAWING A SUM OF RS.2,04,296 FROM HIS ACCOUNT W ITH M/S. HARIDWARI LAL MANOHAR LAL. LD ASSESSING OFFICER FAILED TO APPREC IATE ALL THESE FACTS. HE DID NOT LOOK INTO THE EVIDENCE SUBMITTED BY THE ASS ESSEE. ON THE OTHER HAND, LEARNED FIRST APPELLATE AUTHORITY HAS APPRECIATED T HE FACTS AND CIRCUMSTANCES IN THE RIGHT PERSPECTIVE. 8. THE NEXT CREDITOR IS SMT. NITU JAIN RS. 1 LAC, S HRI SANJIV KUMAR GARG RS.2,10,000 AND SHRI RAKESH KUMAR GARG & SONS RS. 1 LAC. THE ASSESSEE HAS FILED A PAPER BOOK CONTAINING 59 PAGES. HE HAS PLACED ON RECORD THE CONFIRMATION FROM ALL THE CREDITORS, THEIR BANK ACC OUNTS AND HOW THE FUNDS HAVE BEEN CREDITED IN THEIR BANK ACCOUNTS. SHRI RAK ESH KUMAR GARG, KARTA OF M/S. RAKESH KUMAR GARG & SONS HAD AN ACCOUNT WITH T HE PROPRIETORSHIP CONCERN WITH OPENING BALANCE OF RS 1 LAC AS ON 01.0 4.2002. HE HAS WITHDREW THE AMOUNT FROM THE CONCERN AND DEPOSITED IN THE BANK AND THEN AGAIN GIVEN A LOAN TO THE ASSESSEE . ALL THESE DETA ILS WERE DISCLOSED BY THE 7 ASSESSEE TO THE INCOME-TAX DEPARTMENT EVEN IN THE E ARLIER ASSESSMENT PROCEEDINGS. THE DETAILS OF THE AO WITH WHOM ALL C REDITORS ARE ASSESSED HAS BEEN PLACED ON PAGE 59 OF THE PB. THESE WERE PRODUC ED BEFORE THE A.O. LEARNED FIRST APPELLATE AUTHORITY HAS CONSIDERED TH E EVIDENCE IN RESPECT OF EACH CREDITORS IN DETAIL AND THEREAFTER DELETED THE ADDITIONS. ON DUE CONSIDERATION OF THE FINDINGS OF THE LEARNED CIT(AP PEALS), WE DO NOT FIND ANY REASON TO INTERFERE IN IT. IN VIEW OF THE ABOVE DISCUSSION, THE APPEAL OF THE REVENUE IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 13.01.2012 SD/- SD/- ( B.C. MEENA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 /01/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR