HANUMAN MEEL, Jaipur V. ITO, Jaipur

ITA 294/JPR/2014

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 5127 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 21-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VARMA CIT DHK
• Assessee Lawyers: G M MEHTA
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE: SHRI R.P. TOLANI, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA-@ ITA NO. 294/JP/14 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SHRI HANUMAN MEEL, C/O SHRI G.M. MEHTA, &CO., PARAS, 127 HARI MARG, CIVIL LINES, JAIPUR CUKE VS. THE INCOME TAX OFFICER, WARD- 6(3), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AAUPM 4450 A VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.M. MEHTA (CA) JKTLO DH VKSJ LS@ REVENUE BY SHRI R.A. VARMA (ADDL. CIT ) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 01.07.2016 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 26/07/2016. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-II, JAIPUR DATED 18.02.201 FOR A.Y. 2009-10 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN SUSTAINING ADDITION OF RS. 25,50,000/- ON ACCOUNT OF DEPOSIT OF CASH IN BANK ACCOUNT, THE SOURCE OF WHICH WAS AMOUNT OVER-DRAWN FROM CAPITAL ACCOUNT OF THE ASSESSEE FROM THE AOP M/S RAJA RAM & PARTY (RS. 1 3,40,547/- ALREADY LYING AS CREDIT BALANCE IN CAPITAL OF THE ASSESSEE IN SAID AOP.) THE BOOKS OF ACCOUNTS OF WHICH WERE PRODUCED, EXAMINED AND TH E SOURCE OF AVAILABLE CASH WITH SAID AOP WAS EXPLAINED TO LD. AO IN REMAND PROCEEDINGS. ITA NO. 294/JP/14 SHRI HANUMAN MEEL, JAIPUR VS. ITO, WARD 6(3), JAIPU R 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE APPELLA NT HAD DEPOSITED RS 25,50,000 IN CASH IN HIS BANK ACCOUNT STATED TO HAVE BEEN RECEIVED FROM AOP M/S RAJA RAM & PARTY WHERE THE APPELLANT IS ONE OF THE MEMBERS. AS PER THE AO, THE SAID AOP IS NOT IN EXISTENCE AND DID NO T FILE RETURN OF INCOME SINCE ASSESSMENT YEAR 2001-02. IN THE ABSENCE OF ANY BUS INESS IN THE SAID AOP, THE SOURCE OF HUGE CASH IN THE AOP IS NOT EXPLAINED. DU RING THE ASSESSMENT PROCEEDING APPELLANT EXPRESSED HIS INABILITY TO PRO DUCE BOOKS OF ACCOUNTS OF AOP RAJA RAM & PARTY. IN THE APPELLATE PROCEEDINGS BEFORE LD CIT(A), APPELLANT WAS ALLOWED OPPORTUNITY TO PRODUCE BOOKS OF THE AOP BEFORE THE AO. THE AO ALLOWED OPPORTUNITY TO THE APPELLANT TO PRODUCE BOO KS OF ACCOUNTS OF THE AOP AND HE FOUND THAT THERE WAS NO SOURCE OF INCOME IN THE AOP FOR THE LAST SEVERAL YEARS AND THEREFORE CREDITWORTHINESS OF THE AOP IS NOT ESTABLISHED. THERE WAS NO TRANSACTION APART FROM CASH DEPOSITS A ND WITHDRAWALS MADE IN CASH BOOK OF THE AOP WHICH CANNOT BE VERIFIED IN TH E ABSENCE OF ANY INDEPENDENT EVIDENCE. THE APPELLANT SUBMITTED THAT IT HAD CREDIT BALANCE IN THE CAPITAL ACCOUNT WITH AOP AND DURING THE YEAR HE HAD WITHDRAWN RESULTING IN DEBIT BALANCE. HOWEVER, IN THE ABSENCE OF ANY I NCOME IN THE AOP AND IN THE ABSENCE OF ANY KNOWN SOURCE OF CASH RECEIPT, THE CA SH DEPOSIT SHOWN BY THE APPELLANT AS RECEIVED FROM AOP IS NOT EXPLAINED. A S PER LD CIT(A), EVEN DURING REMAND PROCEEDINGS, APPELLANT COULD NOT ESTABLISH GENUINENESS AND CREDITWORTHINESS OF SUCH CREDITS, THEREFORE HE HE LD THAT THE AO WAS JUSTIFIED IN REJECTING APPELLANTS EXPLANATION AND TREATING T HE CREDITS UNEXPLAINED. 2.1 THE LD CIT(A) FURTHER HELD THAT THE APPELLANT F URTHER ARGUED THAT SOURCE OF SOURCE CANNOT BE INVESTIGATED BY THE DEPARTMENT. IN THIS CASE, AO ONLY ENQUIRED THE SOURCE OF CASH DEPOSITS RECEIVED IN HI S BOOKS. SINCE AOP WAS NOT A TAXPAYER AND DID NOT HAVE ANY BUSINESS ACTIVITY S INCE LAST 7 YEARS AND DID NOT ITA NO. 294/JP/14 SHRI HANUMAN MEEL, JAIPUR VS. ITO, WARD 6(3), JAIPU R 3 FILE ITS TAX RETURN CLAIM OF SUBSTANTIAL CASH DEPOS IT FROM SUCH ENTITY CANNOT BE ACCEPTED WITHOUT EXAMINATION. ON EXAMINATION, IT I S FOUND THAT THE SOURCE CLAIMED IS AGAIN CASH DEPOSITS FROM OTHER MEMBERS. HOW CAN SUCH SOURCE BE TREATED AS EXPLAINED WITHOUT GOING INTO DETAILS OF THE SAME. THE DECISIONS RELIED UPON BY THE APPELLANT ARE RELATING TO TRANSA CTIONS BY CHEQUE BY TAX PAYING ENTITY WHICH ARE NOT APPLICABLE IN THE CASE OF APPELLANT. AO AFTER EXAMINATION OF BOOKS OF ACCOUNTS OF AOP SUBMITTED R EMAND REPORT IN WHICH IT WAS CATEGORICALLY STATED THAT THE SOURCE OF CASH DE POSIT FROM AOP WAS NOT VERIFIABLE FROM ANY INDEPENDENT EVIDENCE. THE ENTI TY IS NOT FILING RETURN OF INCOME AND IT DOES NOT HAVE ANY INCOME OR BUSINESS THEREFORE SOURCE OF CASH DEPOSIT CANNOT BE ATTRIBUTED TO SUCH ENTITY. ACCORD INGLY, ADDITION MADE BY THE AO U/S 68 WAS CONFIRMED. 2.2 THE LD. AR SUBMITTED THAT AS PER ASSESSEES BA LANCE SHEET AS ON 31.03.2008, A SUM OF RS. 13,40,547.05 WAS LYING DE POSITED WITH M/S RAJA RAM & PARTY, JAIPUR. AS PER BOOKS OF SAID M/S RAJA RAM & PARTY ASSESSEES CAPITAL ACCOUNT STOOD AS UNDER: DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT 01.04.2008 TO CASH 10,00,000/ - 01.04.2008 BY BALANCE B/F 13,40,547.05 28.04.2008 TO CASH 6,00,000/ - 31.03.2009 BYBALANCE C/F 12,09,542.95 31.05.2008 TO CASH 5,00,000/ - 30.08.2008 TO CASH 4,50,000/ - 25,50,000/ - 25,50,000/ - CORRESPONDING ENTRIES WERE ALSO APPEARING IN ASSESS EES OWN BOOKS OF ACCOUNTS. WITHOUT APPLYING PROVISIONS OF SECTION 145(3) OF IT ACT OR WITHOUT REJECTING THE BOOKS, LD. AO TREATED THE WITHDRAWAL OF CASH FROM M /S RAJA RAM & PARTY(WHO HAD NO BUSINESS OR OTHER INCOME & DID NOT FILE RETU RN OF INCOME) AS UNEXPLAINED. THE HONBLE SUPREME COURT OF INDIA I N THE CASE OF KALE KHAN MOHD. HANIF VS. CIT (963) 50 ITR 1 (SC) HAS POINTED OUT THAT THE ONUS ON ITA NO. 294/JP/14 SHRI HANUMAN MEEL, JAIPUR VS. ITO, WARD 6(3), JAIPU R 4 ASSESSEE HAS TO BE UNDERSTOOD WITH REFERENCE TO TH E FACTS OF EACH CASE AND PROPER INFERENCE DRAWN FROM THE FACTS. THE APPELLAN TS CAPITAL OF RS. 13,40,547.05 WAS ALREADY LYING DEPOSITED WITH M/S R AJA RAM & PARTY JAIPUR. AFTER DRAWING RS. 25,50,000/-, ASSESSEE CAPITAL ACC OUNT HAD CREDIT BALANCE OF RS. 12,09,453.95 AS EVIDENCED BY HIS BALANCE SHEET AS O N 31.03.2009 IN WHICH CREDIT BALANCE OF RS.12,09,452.95 WAS APPEARING IN NAME OF SAID M/SRAJA RAM & PARTY. LD AR FURTHER SUBMITTED THAT IN LIQUOR CONTRACTS, M AINLY THE FAMILY MEMBERS JOIN HANDS EITHER AS PARTNERS IN CASE OF FIRM OR AS MEMB ERS IN CASE OF AOP. AS PER BALANCE SHEET OF ASSESSEE, HE HAD OVERDRAWN A SUM O F RS 1,62,16,740 FROM HIS OWN CAPITAL ACCOUNTS, LYING WITH THREE FIRM/AOPS (I NCLUDING THAT OF M/S RAJA RAM & PARTY) APPEARING IN HIS BALANCE SHEET AS ON 3 1.03.2009 SUBMITTED TO LD. AO. THE BOOKS OF ACCOUNTS OF M/.S RAJA RAM & PARTY FOR THE RELEVANT PERIOD WAS PRODUCED IN REMAND PROCEEDINGS TO EXPLAIN THE SOUR CE OF CASH AVAILABLE BUT WAS NOT CONSIDERED BY THE LD. AO. AS HELD IN VARIO US JUDICIAL PRONOUNCEMENTS, THE ASSESSEE IS NOT REQUIRED TO EXPLAIN THE SOURCE OF SOURCE, EVEN THEN CONFIRMATION OF ACCOUNT OF THE ASSESSEE IN SAID M/S RAJA RAM & PARTY WAS SUBMITTED TO BOTH THE LOWER AUTHORITIES. 2.3 THE LD DR IS HEARD WHO HAS RELIED UPON THE ORDE R OF THE LOWER AUTHORITIES. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND MERIT IN THE CONTENTION OF THE LD AR THAT OUT OF TOTAL CASH DEPOSITS OF RS. 25,50,000/- IN THE BANK ACCOUNT OF THE ASSESSEE, A MAJOR PART OF WITHDRAWALS OF RS. 13,40,547 WERE OUT OF ASSESSEES OWN CAPITAL LYING DEPOSITED WITH AOP M/S RAJA RAM & PARTY WHERE THE ASSESSEE IS ONE OF THE MEMBERS. WHERE THE ASSESSEE HAS RECEIVED BACK HIS OWN CAPITA L ORIGINALLY INVESTED IN THE AOP, IT IS CASE OF LIQUIDATION OF INVESTMENT. WE F AIL TO UNDERSTAND HOW THE SAME CAN BE TREATED AS UNEXPLAINED CASH CREDIT AND BROUG HT TO TAX IN THE HANDS OF THE ITA NO. 294/JP/14 SHRI HANUMAN MEEL, JAIPUR VS. ITO, WARD 6(3), JAIPU R 5 ASSESSEE. THE LD AR HAS CLAIMED THAT THE SAID CRED IT BALANCE TOWARDS SHARE OF CAPITAL IN THE AOP AMOUNTING TO RS. 13,40,547 HAS B EEN REGULARLY DISCLOSED IN HIS BOOKS AS WELL AS BALANCE SHEETS. THE AO IS THEREFO RE DIRECTED TO VERIFY THE ASSEESSEES CLAIM AND ITS BOOKS OF ACCOUNTS AND WHE RE THE SAME IS FOUND TO BE IN ORDER, ALLOW THE RELIEF TO THE ASSESSEE. 2.5 REGARDING THE REMAINING CASH DEPOSIT OF RS. 12, 09,453 OUT OF TOTAL RS. 25,50,000/-, THE LD AR HAS SUBMITTED THAT THE S AID CASH HAS BEEN AGAIN RECEIVED FROM M/S RAJA RAM AND PARTY TOWARDS OVERDR AWN SHARE CAPITAL. THE AO AND LD CIT(A) HAVE HOWEVER NOT FOUND FAVOUR WITH THE EXPLANATION OF THE ASSESSEE IN THIS REGARD ON THE GROUND THAT AOP WAS NOT A TAXPAYER AND DID NOT HAVE ANY BUSINESS ACTIVITY SINCE LAST 7 YEARS AND D ID NOT FILE ITS TAX RETURN, CLAIM OF SUBSTANTIAL CASH DEPOSIT FROM SUCH ENTITY CANNOT BE ACCEPTED WITHOUT EXAMINATION. ON EXAMINATION, IT IS FOUND THAT THE SOURCE CLAIMED IS AGAIN CASH DEPOSITS FROM OTHER MEMBERS. HOW CAN SUCH SOURCE B E TREATED AS EXPLAINED AS THE SAME IS NOT VERIFIABLE FROM ANY INDEPENDENT EVI DENCE. IN RESPONSE, THE LD AR HAS SUBMITTED THAT ONCE THE IDENTITY, GENUINENES S AND CREDITWORTHINESS OF THE CREDITOR HAS BEEN ESTABLISHED, THE ASSESSEE IS NOT REQUIRED TO EXPLAIN THE SOURCE OF SOURCE AS HELD IN VARIOUS JUDICIAL PRONOU NCEMENTS. THE LD AR FURTHER SUBMITTED THAT IT IS CLEAR THAT THE AMOUNT HAS BEEN RECEIVED FROM M/S RAJA RAM & PARTY AND THE SAME HAS BEEN RECEIVED TOWARDS OVER DRAWN SHARE CAPITAL AND REGARDING CREDITWORTHINESS EVEN THOUGH THE AOP HAS NOT FILED ANY RETURN OF INCOME FOR LAST FEW YEARS, THE BOOKS OF ACCOUNTS HA VE BEEN PRODUCED TO PROVE THE CREDITWORTHINESS OF THE AOP. HENCE, THE ASSESS EE HAS DISCHARGED ITS NECESSARY ONUS. IN OUR VIEW, IN ABSENCE OF ANY BUS INESS BEING UNDERTAKEN BY THE AOP OVER THE YEARS, THE AUTHORITIES HAVE RIGHTL Y RAISED APPREHENSION IN TERMS OF CASH DEPOSITS IN THE BOOKS OF AOP. IN OUR VIEW, THE AUTHORITIES ARE ITA NO. 294/JP/14 SHRI HANUMAN MEEL, JAIPUR VS. ITO, WARD 6(3), JAIPU R 6 CLEARLY WITHIN THEIR JURISDICTION TO EXAMINE THE SA ME AS THE SAME HELPS ESTABLISH CREDITWORTHINESS OF THE AOP IN ABSENCE OF ANY BUSIN ESS DEALINGS AND TAX FILINGS. IN OUR VIEW, THE MATTER REQUIRE DEEPER EXAMINATION IN TERMS OF NATURE AND SOURCE OF CASH DEPOSITS IN THE BOOKS OF AOP AND SUB SEQUENT WITHDRAWAL AND DEPOSIT THEREOF IN THE BOOKS OF THE ASSESSEE. WE A CCORDINGLY SET ASIDE THE MATTER TO THE FILE OF THE AO TO EXAMINE THE SAME AF RESH AFTER PROVIDING REASONABLE OPPORTUNITY TO THE ASSESSEE. IN THE RESULT THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26/07 /2016. SD/- SD/- ( R.P. TOLANI ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 26/ 07/2016 PILLAI VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI HANUMAN MEEL, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD 6(3), JAIPUR 3. VK;DJ VK;QDR@ CIT II, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-II, JAIPUR 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.294/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR