The Deputy Commissioner of Income tax, Jalandhar V. M/s. Subhash Chander, Jalandhar

ITA 293/ASR/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5746 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 25-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRIK CHAND
• Section: 143(3); 133A; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE SHRI H.L. KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER. I.T.A. NOS.292 & 293(ASR)/2010. (ASSESSMENT YEARS: 2003-04 & 2005-06) THE DY. C.I.T., SHRI SUBHASH CHANDER, RANGE I, JALANDHAR. C/O M/S.DHARAM CHAD & SONS, SABZI MANDI, JALANDHAR. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI AMRIK CHAND, D.R. RESPONDENT BY: SHRI ANIL MIGLANI, ADV. ORDER PER H.L. KARWA, VICE PRESIDENT. THESE TWO APPEALS CONCERN THE SAME ASSESSEE AND TH EY WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS COMMON O RDER FOR THE SAKE OF CONVENIENCE. 2. FIRSTLY WE WILL TAKE UP I.T.A. NO.292(ASR)/2010, RELATING TO THE ASSESSMENT YEAR 2003-04. THE ONLY EFFECTIVE GROUND RAISED BY THE REVENUE IN THIS APPEAL READS AS UNDER:- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW DELETING THE ADDITION OF RS .75 LACS MADE BY THE AO AS UNEXPLAINED INCOME OF THE ASSESSE E. 1.1 WHILE DOING SO, THE LD. CIT(A) FAILED TO APPREC IATE THE FACT THAT JUDGMENT IN THE CASE OF CIT VS. S. KHADAR KHAN & SO NS 300 ITR 157 (MAD) IS NOT SQUARELY APPLICABLE TO THE FAC TS OF THE ASSESSEES CASE AS THE INCOME WAS VOLUNTARILY SURRE NDERED BY 2 THE ASSESSE AND THERE WAS NO COERCION. MOREOVER, I T IS ALSO STATED THAT THE ASSESSEE DEPOSITED RS.75 LACS DURIN G THE FINANCIAL YEAR 2005-06. THE ASSESSEE HAS ADMITTED IN HIS STA TEMENT THE FACTS OF MAKING THE PAYMENT IN DECEMBER, 2002. IN THE CIRCUMSTANCES, THE CONSEQUENCES OF PROCEEDINGS IN T HE CASE OF THE BUYER HAS LITTLE IMPACT ON THE ASSESSMENT PROCE EDINGS OF THE ASSESSEE. RELIANCE IS PLACED IN FOLLOWING DECISION S:- AS THE PROCEEDINGS UNDER THE INCOME TAX ACT WERE N OT JUDICIAL PROCEEDINGS IN THE SENSE IN WHICH THE PHRA SE JUDICIAL PROCEEDINGS IS ORDINARILY USED, THE ASS ESSING OFFICER IS NOT FETTERED OR BOUND BY TECHNICAL RULES ABOUT EVIDENCE CONTAINED IN THE INDIAN EVIDENCE ACT AND H E IS ENTITLED TO ACT ON MATERIAL WHICH MAY NOT BE ACCEPT ED AS EVIDENCE IN A COURT OF LAW [DHAKESWARI COTTON MILLS LTD. VS. CIT (1954) 26 ITR 775, 782 (SC)]. J.S. PARKA VS. V.B. PALEKAR, (1974) 94 ITR 616 (BOM ); VS. DATCHINAMURTHY VS. ASSTT. DIRECTOR OF INSPECTIO N, (1984) 149 ITR 341 (MAD); MRIGANKA MOHAN SUR VS.CIT (1979) 120 ITR 529 (CAI); CIT VS. METAL PRODUCTS OF INDIA, (1984) 150 ITR 714 (PUN); CIT VS. CHANDRAVIL AS HOTEL, (1987) 164 ITR 102 (GUJ.). THE ARTIFICIAL RULES OF EVIDENCE ARE NOT RELEVANT F OR THE PURPOSE OF CONCLUSION OF TAXABLE MATTERS. THIS PRI NCIPLE IS VERY WELL SETTLED. THE ASSESSMENT OF INCOME CAN BE MADE ON THE BASIS OF INFERENCE ON EVIDENCE WHICH IN CRIMINAL OR CIVIL JUSTICE MAY BE INSUFFICIENT [DEBI BURMAN VS. CIT, (1994) TAX LR 452, 456-57 (CAL.) 3. IN THIS CASE, THE A.O. FRAMED THE ASSESSMENT UND ER SECTION 147 READ WITH SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) ON 20-12-2007. THE A.O. MADE AN ADDITION OF RS.75 LAC S TO THE ORIGINAL INCOME ON ACCOUNT OF PAYMENT ALLEGED TO HAVE BEEN MADE VID E UNDATED AGREEMENT EXECUTED WITH SHRI HARISH JAIN, WHICH DID NOT MATUR E AND WAS CANCELLED DUE 3 TO NON-PAYMENT. HOWEVER, THE A.O. ADDED THE AMOU NT OF RS.75 LACS FOR THE REASONS GIVEN IN THE ASSESSMENT ORDER. 4. ON APPEAL, THE CIT(A) DELETED THE ADDITION, OBSE RVING AS UNDER:- 3.2. SINCE THE LD. CIT(A)-1, LUDHIANA HAS HELD IN THE CASE OF HARISH JAIN (SUPRA) THAT THE IMPUGNED SUM OF RS.75 LACS P URSUANT TO THE SEIZED DOCUMENT HAD NOT PASSED FROM THE INTENDING B UYER TO SHRI HARISH JAIN, I ALSO HOLD THAT NO MONEY HAD BEEN PAI D BY THE ASSESSEE TO THE SAID AGREEMENT FOUND AND SEIZED DURING THE COURSE OF SEARCH IN THE CASE OF SH. HARISH JAIN. THE DEPARTMENTS APPE AL AGAINST THIS ORDER OF THE LD. CIT(A) HAS BEEN DISMISSED BY THE H ONBLE ITAT. SH. HARISH JAIN HAD DENIED HAVING RECEIVED ANY PAYMENT OF RS.75 LACS IN HIS STATEMENT RECORDED DURING THE COURSE OF SEARCH. IT IS TRUE THAT THE ASSESSEE DID STATE IN HIS STATEMENT DATED 22-2-2005 RECORDED DURING THE SURVEY THAT HE HAD PAID A SUM OF RS.75 LACS TO SH. HARISH JAIN IN DECEMBER 2002. HOWEVER, HE RETRACTED FROM THIS ADM ISSION SOON THEREAFTER. SINCE SECTION 133A DOES NOT EMPOWER AN Y I.T. AUTHORITY TO RECORD A STATEMENT UNDER OATH, THE STATEMENT REC ORDED U/S.133A DOES NOT HAVE THE SAME EVIDENTIARY VALUE AS A STATE MENT RECORDED UNDER OATH DURING THE COURSE OF SEARCH OF SECTION O R U/S.131 [REFER CIT VS. S. KHADER KHAN & SONS 300 ITR 157 (MAD)]. IT I S ALSO SEEN THAT THE AGREEMENT DATED 16-12-2002 HAS NEITHER BEEN WIT NESSED BY ANY INDEPENDENT WITNESS NOR IS IT DATED, WHICH SUPPORT THE CASE OF THE ASSESSEE THAT MONEY HAD NOT ACTUALLY PASSED ON 16-1 2-2002 AND THAT THIS WAS A PREPARATORY DOCUMENTARY WHICH WAS NOT AC TED UPON. MOREOVER, IT IS NOTEWORTHY THAT THIS AGREEMENT WAS FOUND WITH THE SELLER SH. HARISH JAIN, THOUGH IT SHOULD NORMALLY H AVE BEEN WITH THE PURCHASER IN ACKNOWLEDGMENT OF THE PAYMENT OF MONE Y. HENCE, FOLLOWING THE ORDER OF LD. CIT(A)-1, LUDHIANA IN TH E CASE OF HARISH JAIN (SUPRA) AND FOR THE REASONS DISCUSSED ABOVE, T HE ADDITION OF RS.75 LACS IN THE CASE OF APPELLANT IS DELETED. GROUND N OS.1 AND 2 OF APPEAL ARE, THEREFORE, ALLOWED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. IT IS SEE N THAT THE CIT(A)-I, LUDHIANA IN THE CASE OF SHRI HARISH JAIN DELETED TH E SUM OF RS.75 LACS HOLDING THAT THE IMPUGNED SUM OF RS.75 LACS PURSUAN T TO SEIZED DOCUMENT HAD NOT BEEN PASSED FROM THE INTENDING BUYER TO SHR I HARISH JAIN. THE SAID 4 ORDER OF THE CIT(A) WAS SUBJECT MATTER OF REVENUES APPEAL BEFORE THE TRIBUNAL AND THE TRIBUNAL VIDE ITS ORDER DATED 11- 9-2008 IN ITA NOS.83 TO 89(ASR)/2008 (ASSESSMENT YEARS 1999-2000 TO 2005-06 ) DISMISSED THE APPEALS OF THE REVENUE. IT IS STATED THAT THE REV ENUE HAS NOT CHALLENGED THE ABOVE ORDER OF THE TRIBUNAL PASSED IN THE CASE OF SHRI HARISH JAIN BEFORE THE HONBLE HIGH COURT. THE ORDER PASSD BY THE TRIBUN AL REFERRED TO ABOVE HAS BECOME FINAL. IN OUR VIEW, THE CIT(A) HAS CORRECT LY DELETED THE ADDITION OF RS.75 LACS IN THE CASE OF THE ASSESSEE FOLLOWING TH E ORDER OF THE CIT(A)-I LUDHIANA IN THE CASE OF SHRI HARISH JAIN (SUPRA). T HE CIT(A) HAS CORRECTLY OBSERVED THAT THE SUM OF RS.75 LACS HAD NEVER BEEN PAID BY THE ASSESSEE TO SHRI HARISH JAIN PURSUANT TO THE AGREEMENT FOUND AN D SEIZED DURING THE COURSE OF SEARCH IN THE CASE OF SHRI HARISH JAIN. IN VIEW OF THE ABOVE, WE DO NOT FIND ANY INFIRMITY IN THE FINDINGS OF THE CIT(A ) AND WE UPHOLD THE SAME. THE GROUND OF APPEAL NO.1 STANDS DISMISSED. 6. I.T.A. NO.293(ASR)/2010 (ASSESSMENT YEAR: 2005-06): - THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS:- 1. THAT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN ACCEPTING THE ASSESSEES CONTENTION THAT THE SUM OF RS.75 LACS SHOULD BE ASSESSED ON SU BSTANTIVE BASIS. 2. WHILE DOING SO, THE LD. CIT(A) HAS FAILED TO APP RECIATE THE FACTS THAT THERE WAS NO CORRELATION IN THE INCOME OF THE TWO YEARS NAMELY ASSESSMENT YEAR 2003-04 AND 2005-06 AND WRON GLY REFERRED TO THE DELETION OF ADDITION OF RS.75 LACS FOR THE ASSESSMENT YEAR 2003-04. 7. FOR THE ASSESSMENT YEAR 2005-06, THE A.O. ASSESS ED THE AMOUNT OF RS.75 LACS ON PROTECTIVE BASIS IN THE HANDS OF THE ASSESSEE AS THE ASSESSEE HAS 5 MADE DEPOSITS IN HIS BANK ACCOUNT AND SHOWED THE SA ME AS INCOME SURRENDERED IN HIS COMPUTATION OF INCOME. 8. ON APPEAL, THE CIT(A) HELD AS UNDER:- 2.2 I HAVE CONSIDERED THE SUBMISSIONS OF THE APPEL LANT CAREFULLY. I HAVE ADJUDICATED THE ASSESSEES APPEAL FOR ASSTT. Y EAR 2003-04 VIDE MY ORDER OF EVEN DATE IN APPEAL NO.317/07-08/CIT(A)/JA L AND I HAVE DELETED THE ADDITION OF RS.75 LACS MADE BY THE AO I N THE ASSESSMENT ORDER FOR ASSTT. YEAR 2003-04. SINCE THE ADDITION OF THE SAME AMOUNT HAS BEEN DELETED IN ASSTT. YEAR 2003-04, I AGREE WI TH THE APPELLANTS CONTENTION IN GROUND NO.2 OF APPEAL THAT THE SUM OF RS.75 LACS SHOULD BE ASSESSED ON SUBSTANTIVE BASIS IN ASSESSEES CASE IN ASSTT. YEAR 2005-06. GROUND NO.2 OF APPEAL IS ALLOWED. 9. SINCE WE HAVE CONFIRMED THE ORDER OF CIT(A) FOR THE ASSESSMENT YEAR 2003-04 IN ITA NO.292(ASR)/2010 IN DELETING THE ADD ITION OF RS.75 LACS MADE BY THE AO AND, THEREFORE, WE UPHOLD THE FINDIN GS OF THE CIT(A) ON THIS ISSUE FOR THE SUM OF RS.75 LACS SHOULD BE ASSESSED ON SUBSTANTIVE BASIS IN THE ASSESSMENT YEAR 2005-06. IN THAT VIEW OF THE MATTE R, WE DO NOT FIND ANY SUBSTANCE IN THE APPEAL OF THE REVENUE. 10. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2011. SD/- SD/- (MEHAR SINGH) (H.L. KARWA) ACCOUNTANT MEMBER. VICE PRESIDENT. DATED: 13 TH JUNE, 2011. KC/- COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: SHRI SUBHASH CHANDER C/O M/S.DHARAM C HAND & SONS, SABZI MANDI, JALANDHAR. (2) THE DCIT, RANG-I, JAL. (3)THE CIT, JAL.(4) THE CIT( A), JAL. (5) THE SR.D.R., ITAT, ASR. TRUE COPY BY ORDER ASSTT. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, 6