ACIT, Bulandshahr V. M/s Kiran Pal Singh, Bulandshahr

ITA 2831/DEL/2011

• Counselvise Citation: 283120114 RSA 2011
• Duration Of Justice: 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 09-12-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 01-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y KAKKAR
• Keywords: Unexplained cash credit; Question of law
• Section: 131; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH D DD D : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI A.D.JAIN SHRI A.D.JAIN SHRI A.D.JAIN SHRI A.D.JAIN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO.2831 2831 2831 2831/DEL/201 /DEL/201 /DEL/201 /DEL/2011 11 1 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2003 2003 2003 2003- -- -04 0404 04 ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF ASSISTANT COMMISSIONER OF INCOME TAX, INCOME TAX, INCOME TAX, INCOME TAX, CIRCLE, BULANDSHAHR. CIRCLE, BULANDSHAHR. CIRCLE, BULANDSHAHR. CIRCLE, BULANDSHAHR. VS VSVS VS. .. . M/S KIRAN PAL SINGH, M/S KIRAN PAL SINGH, M/S KIRAN PAL SINGH, M/S KIRAN PAL SINGH, LIQUOR SHOP, CHHATRI, LIQUOR SHOP, CHHATRI, LIQUOR SHOP, CHHATRI, LIQUOR SHOP, CHHATRI, DISTRICT BULANDSHAHR. DISTRICT BULANDSHAHR. DISTRICT BULANDSHAHR. DISTRICT BULANDSHAHR. PAN : PAN : PAN : PAN : AAGFK6470Q. AAGFK6470Q. AAGFK6470Q. AAGFK6470Q. (APPELLANT) (RESPONDENT) APPELLANT BY : MS.Y.KAKKAR, DR. RESPONDENT BY : NONE. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : IN THIS APPEAL FILED BY THE REVENUE, FOLLOWING GRO UNDS ARE RAISED:- 1. WHETHER THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN DELETING TH E ADDITION OF RS.12,03,000/- IN THE PARTNERS CAPITAL ACCOUNT U/S 68 OF THE I.T.ACT, 1961 IGNORING THE FACT THAT THE ASSESSEE HAD NO EVIDENCE TO PROVE THE IDENTITY, GENUINENESS OF TRANSACTION AND CREDIT WORTHINESS OF THE PARTNERS BEFORE THE ASSESSING OFFICER. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE SET ASIDE AND THAT OF THE A.O. RESTORED. 2. ON THE DATE OF HEARING, NONE APPEARED ON BEHALF OF THE ASSESSEE THOUGH THE NOTICE WAS SERVED UPON IT BY REGISTERED POST. THEREFORE, WE PROCEED TO DECIDE THE APPEAL OF THE REVENUE EX PARTE QUA THE ASSESSEE. ITA-2831/DEL/2011 2 3. THE ONLY GROUND RAISED IN THIS APPEAL BY THE REV ENUE IS AGAINST THE DELETION OF ADDITION OF ` 12,03,000/- MADE BY THE ASSESSING OFFICER FOR UNEXPLAINED CREDIT IN THE PARTNERS CAPITAL ACC OUNT. 4. WE HAVE HEARD THE LEARNED DR AND PERUSED THE MAT ERIAL PLACED BEFORE US. THE LEARNED CIT(A) DELETED THE ADDITION WITH THE FOLLOWING FINDING:- THE SIX PARTNERS INTRODUCED CAPITAL OF RS.12,30,00 0/- AS UNDER: I. KIRAN PAL SINGH 2,25,000/- II. RESHAM PAL SINGH 1,80,000/- III. DHARAM VIR SINGH 1,85,000/- IV. HARI SINGH 1,80,000/- V. RAM PRASAD SINGH 2,30,000/- VI. MANVEER SINGH 2,30,000/- THE AO WAS NOT SATISFIED ABOUT THE SOURCE OF THE MONEY INTRODUCED AS CAPITAL. HE, THEREFORE, ADDED THE SAME TO INCOME. DURING THE REMAND PROCEEDINGS, THE APPELLANT PRODUCED ALL THE FIVE PARTNERS BEFORE THE AO FOR EXAMINATION. ONE PARTNER HAD EXPIRED FOR WHICH A D EATH CERTIFICATE WAS FILED. THE AO RECORDED THEIR STATE MENTS WHEREIN THEY AFFIRMED HAVING INTRODUCED THEIR CAPIT AL AS ABOVE. THEY ARE ALL INCOME-TAX ASSESSEES AND THEY FILED ACKNOWLEDGEMENTS OF THEIR INCOME-TAX RETURNS FOR A. Y. 2003-04. ALL THE SIX PARTNERS ARE AGRICULTURISTS. THEY PRODUCED EVIDENCE OF OWNING AGRICULTURAL LAND, WHIC H HAS NOT BEEN DISPUTED. THE AO'S ONLY DOUBT IS ABOUT TH EIR CAPACITY TO HAVE THE MONEY INTRODUCED AS CAPITAL. IN VIEW OF PARTNERS AFFIRMATIONS BEFORE THE AO AN D THE FACT OF THEIR BEING ENGAGED IN AGRICULTURAL OPE RATIONS FOR YEARS, THEIR LIVING STANDARDS NOT WARRANTING SU BSTANTIAL EXPENDITURE, IN MY CONSIDERED VIEW, THE AMOUNTS VAR YING BETWEEN 1,80,000/- TO RS.2,30,000/- BY EACH ONE OF THEM CAN BE BELIEVED TO HAVE BEEN CONTRIBUTED FROM THEIR EARNINGS. IN ANY CASE IT IS SEEN THAT THE PARTNERS HIP WAS CONSTITUTED ON 12.3.2002 AND F.Y. 2002-03 WAS THE F IRST YEAR OF THE BUSINESS OF THE FIRM AND ALL THE PARTNE RS HAVE ITA-2831/DEL/2011 3 CONTRIBUTED THE INITIAL CAPITAL TO COMMENCE THE BUS INESS AND BY NO MEANS IT CAN BE ASSUMED THAT THE APPELLAN T FIRM COULD HAVE EARNED THAT AMOUNT EVEN BEFORE THE COMMENCEMENT OF BUSINESS SO AS TO WARRANT ASSESSMEN T IN ITS HAND U/S 68. THIS ALSO FINDS SUPPORT FROM T HE PRONOUNCEMENT OF THE HON'BLE SUPREME COURT IN THE C ASE OF NOORJAHAN (SMT.P.K.), 237 ITR 570. CONSIDERING THIS AND THE FACT THAT THE APPELLANT HAS DECLARED INCOME @5% (APPROX), NO FURTHER ADDITION IN THE HANDS OF THE A PPELLANT IS JUSTIFIABLY WARRANTED. THE ADDITION IS DELETED. GROUND IS ALLOWED. 5. AFTER CONSIDERING THE FACTS OF THE CASE AND THE ARGUMENTS OF THE LEARNED DR, WE DO NOT FIND ANY INFIRMITY IN THE ORD ER OF THE LEARNED CIT(A). THE PARTNERSHIP FIRM CAME INTO EXISTENCE V IDE DEED OF PARTNERSHIP DATED 12.03.2002 AND FINANCIAL YEAR 200 2-03 WAS EFFECTIVELY THE FIRST YEAR OF THE BUSINESS OF THE A SSESSEE FIRM. ALL THE PARTNERS HAVE CONTRIBUTED INITIAL CAPITAL TO COMMEN CE THE BUSINESS. ALL THE PARTNERS ARE ASSESSED TO INCOME TAX AND THEY HA VE FILED ACKNOWLEDGEMENTS OF FILING OF THEIR INCOME TAX RETU RNS FOR AY 2003-04. THEY HAVE FILED THE CONFIRMATION AFFIRMING THE AMOU NT ADVANCED TO THE ASSESSEE FIRM. ON THESE FACTS, IN OUR OPINION, THE DECISION OF HON'BLE APEX COURT IN THE CASE OF COMMISSIONER OF INCOME TAX, ORISSA VS. ORISSA CORPORATION P.LTD. 159 ITR 78 WOULD BE SQUARELY APPLICABLE WHEREIN THEIR LORDSHIPS HELD AS UNDER:- HELD, THAT IN THIS CASE THE RESPONDENT HAD GIVEN T HE NAMES AND ADDRESSES OF THE ALLEGED CREDITORS. IT W AS IN THE KNOWLEDGE OF THE REVENUE THAT THE SAID CREDITOR S WERE INCOME-TAX ASSESSEES. THEIR INDEX NUMBERS WERE IN THE FILE OF THE REVENUE. THE REVENUE, APART FROM ISSUI NG NOTICES UNDER SECTION 131 AT THE INSTANCE OF THE RESPONDENT, DID NOT PURSUE THE MATTER FURTHER. THE REVENUE DID NOT EXAMINE THE SOURCE OF INCOME OF THE SAID ALLEGED CREDITORS TO FIND OUT WHETHER THEY WERE CREDITWORTHY. THERE WAS NO EFFORT MADE TO PURSUE T HE SO- CALLED ALLEGED CREDITORS. IN THOSE CIRCUMSTANCES, THE RESPONDENT COULD NOT DO ANYTHING FURTHER. IN THE P REMISES, IF THE TRIBUNAL CAME TO THE CONCLUSION THAT THE RES PONDENT HAD DISCHARGED THE BURDEN THAT LAY ON IT, THEN IT C OULD NOT BE SAID THAT SUCH A CONCLUSION WAS UNREASONABLE OR ITA-2831/DEL/2011 4 PERVERSE OR BASED ON NO EVIDENCE. IF THE CONCLUSIO N WAS BASED ON SOME EVIDENCE ON WHICH A CONCLUSION COULD BE ARRIVED AT, NO QUESTION OF LAW AS SUCH AROSE. THE HIGH COURT WAS RIGHT IN REFUSING TO STATE A CASE. 6. IN THIS CASE ALSO BEFORE THE ASSESSING OFFICER, THE ASSESSEE HAD STATED THAT ALL THE PARTNERS ARE ASSESSED TO INCOME TAX AND THEY HAVE ALSO FURNISHED THE ACKNOWLEDGEMENT OF THE RETURNS F ILED BY ALL THE PARTNERS. THEREFORE, IF THE ASSESSING OFFICER HAD ANY DOUBT ABOUT THE CREDITWORTHINESS OF THE PARTNERS, HE COULD HAVE VER IFIED EITHER FROM THEIR INDIVIDUAL INCOME TAX FILES OR COULD HAVE ASK ED THOSE PARTNERS TO EXPLAIN THE SOURCE OF CREDIT. IN VIEW OF THE ABOVE , RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HONBLE APEX CO URT IN THE CASE OF ORISSA CORPORATION P.LTD. , WE UPHOLD THE ORDER OF THE LEARNED CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2011. SD/- SD/- ( (( (A.D.JAIN A.D.JAIN A.D.JAIN A.D.JAIN) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 20.12.2011 VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR