ITO, DUNGARPUR V. Shri Chandraveer Singh Chouhan, DUNGARPUR

ITA 300/JODH/2013

• Counselvise Citation: 30023314 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 17-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Keywords: Unexplained investment; Income from undisclosed sources; Principle of natural justice; Peak credit
• Section: 133(6); 131; 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 300 /JODH/2013 (A.Y. 200 8 - 09 ) IT O , WARD , VS. SHRI CHANDRA VEER SINGH DUNGARPUR . CHOUHAN, VPO GAMADA BRAMNIA , SAGWARA, DUNGARPUR (RAJ.) PAN NO. AEVPC 9731 R (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAWAN KUMAR GUPTA DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 17 / 0 7 /201 4 . DATE OF PRONOUNCEMENT : 06 /0 8 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 01 /03/2013 OF L D . CIT(A), UDAIPUR . 2 THE ONLY GRIEVANCE OF THE DEPARTMENT IN THIS APPEAL REALTES TO THE RELIEF GRANTED TO THE ASSESSEE AMOUNTING TO RS. 21,59,361/ - BY APPLYING 2 PEAK CREDIT PRINCIPLE OUT OF THE ADDITION MADE BY THE ASSESSING OFFICER U/S 68 OF THE I.T. ACT, 1961 (HEREINAFTER REF ERRED TO AS THE ACT IN SHORT). 3. FACTS RELATING TO THIS CASE, IN BRIEF, ARE THAT THE ASSESSEE DERIVED INCOME FROM CONSTRUCTION JOB WORK (LABOUR CONTRACTOR) AND HIRING OF TRACTOR AS WELL AS AGRICULTURE INCOME . THE ASSESSEE FILED THE RETURN OF INCOME DECLARING AN INCOME OF RS. 1,08,261/ - ON 19/05/2009 WHICH WAS PROCESSED U/S. 143(1) OF THE ACT. LATER ON, THE CASE WAS SELECTED FOR SCRUTINY. IN THIS CASE, AS PER AIR INFORMATION GATHERED FROM THE SYSTEM, IT WAS NOTICED THAT THE ASSESSEE HAD DEPOSITED RS . 22,80,151/ - IN HIS SAVING BANK ACCOUNT , BUT WHILE FILING THE COPY OF BANK STATEMENT MAINTAINED WITH BARODA RAJASTHAN GRAMIN BANK, SAGWARA BEARING ID NO. 2003549 WHEREIN CLOSING BALANCE OF RS. 1,917/ - HAS BEEN SHOWN, NO SUCH TRANSACTION WAS FOUND . MEANWHILE, THE INFORMATION U/S. 133(6) OF THE ACT WAS CALLED FROM THE BARODA RAJASTHAN GRAMIN BANK, AJMER AND SAGWARA TO PROVIDE THE COPY OF BANK STATEMENT OF THE ASSESSEE THROUGH WHICH SUCH CASH TRANSACTIONS WERE MADE ON WHICH BASIS AIR INFORMATION WER E SUPPLIED TO THE DEPARTMENT. THE ASSESSING OFFICER FOUND TRANSACTION OF CASH DEPOSITS OF RS. 22,80, 1 51/ - . THE ASSESSEE EXPLAINED AS UNDER: - 3 IN REGARD TO TANSACTION DONE I N THE ABOVE SAVING A/C WOULD I I KE TO SUBMIT HERE THAT MR. NANURAM KALAL S/O MAKAN JI KALAL RESIDENT OF SEMIALIYA GHATA, TEHSIL - SAGWARA DISTRICT - DUNGARPUR HAVINGPAN NO. AZYPK7735K, FRIEND OF THE ASSESSEE HAD GOT LICENSE FROM RSBCL TO OPERATE LIQUOR SHOP AT SAGWARA IN ASSESSMENT YEAR 2008 - 09. DUE TO SOME PERSONAL REASON AND HEALTH PROBLEM MR. NANURAM KALAL APPROACHED THE ASSESSEE TO I OOK AFTER FINANCIAL ACTIVITY AND BANKING OF THE ABOVE BUSINESS. DUE TO SIGNATURE AND OPERATING PROBLEM THEY HAVE MUTUALLY AGREED AND ENTERED IN AN AGREEMENT TO USE SAVING ACCOUNT NO. 200158 FOR THE SAI D BUSINESS EXCLUSIVELY SO THAT THE ASSESSEE CAN EASILY HANDLE AND MANAGE THE BANKING FOR NANU RAM KALAL . ALL THE TRANSACTION DONE IN THE ABOVE SAVING ACCOUNT IS DONE FOR MR. NANURAM KALAL LIQUOR BUSINESS. PROFIT ARRIVED FROM THE SAID BUSINESS HAD ALSOS SH OWN BY MR. NANU RAM KALAL. 4. TO VERIFY THE CONTENTION OF THE ASSESSEE, THE ASSESSING OFFICER ISSUED NOTICE U/S. 131 OF THE ACT AND RECORDED THE STATEMENT OF NANURAM KALAL , WHO CATEGORICALLY DENIED ANY FINANCIAL TRANSACTION WITH THE ASSESSEE THOUGH HE IS A FRIEND OF THE ASSESSEE . THE ASSESSING OFFICER MADE THE ADDITION OF RS. 22,80,151/ - BY TREATING THE CASH DEPOSIT IN SAVING BANK ACCOUNT AS INCOME FROM UNDISCLOSED SOURCES. 5. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - I. THAT THE LEARNED ASSESSING OFFICER GROSSLY ERRED IN RELYING UPON THE AGUE, FACTUALLY INCORRECT STATEMENT OF SHRI NANRURAM KALAL WHICH IS RECORDED BEHIND THE BACK OF THE ASSESSEE AND ALSO UNSUPPORTED BY ANY OTHER MATERIAL OR CORROB ORATIVE EVIDENCE. FURTHER, THE LEARNED ASSESSING OFFICER ALSO GROSSLY ERRED IN FOLLOWING THE SAME WITHOUT ANY APPLICATION OF MIND AND WITHOUT PROVIDING A RIGHT TO CROSS EXAMINE THE PERSON WHO 4 SO STATED ADVERSELY AT THE BACK OF ASSESSEE. THE LEARNED AO ERRE D IN UTILIZING THE SAID VAGUE AND FACTUALLY INCORRECT STATEMENT AGAINST THE ASSESSEE IN MAKING THE ABOVE SAID ARBITRARY ADDITION WHICH IS BAD IN LAW AND AGAINST THE PRINCIPLE OF NATURAL JUSTICE. AS PER PRINCIPLE OF NAT URAL JUS TICE IT WAS OBLIGATORY ON THE PART OF THE AO TO PROVIDE ALL THE MATERIALS TO THE ASSESSEE WHICH WAS BEING USED AGAINST HIM AND ALSO AN OPPORTUNITY TO CROSS EXAMINE THE PERSON I.E. SHRI NANU RAM KALAL IN THIS CASE WHOSE STATEMENT WAS RELIED UPON BY THE AO. PRESUMPTION U/S 292C IS NOT AV AILABLE AGAINST THE ASSESSEE IN CASE AO WANTS TO PLACE RELIANCE ON STATEMENT RECORDED BEHIND THE BACK OF ASSESSEE THAT IS AGAINST THIRD PARTY. IN THE PRESENT CASE THE AO HAS NOT ALLOWED THE ASSESSEE TO CROSS EXAMINE SHRI NANU RAM KALAL DESPITE HIS REQUEST FOR THE SAME. THERE IS NO MATERIAL, WORTH CREDENCE AVAILABLE ON THE RECORDS IN CONNECTION WITH THE UNDISCLOSED INCOME SOURCES OF THE ASSESSEE. THE LEARNED AO HAS INDULGED IN SURMISES AND CONJECTURES IN HOLDING THAT THE DEPOSITS WERE FROM OF UNDISCLOSED INC OME WITHOUT BRINGING ON RECORDS ANY MATERIAL EVIDENCE OR SOURCE OF INCOME OF THE ASSESSEE. FURTHER THE MATERIAL EVIDENCES PLACED ON RECORD WERE ALSO NOT PROPERLY APPRECIATED AND RECONCILED WITH THE STATEMENT RELIED UPON BY THE AO. IT IS VERIFIABLE FROM THE MATERIAL ITSELF THAT THE AVERMENTS OF STATEMENT RECORDED WERE VAGUE AND CONTRARY TO THE FACTS OF THE CASE. AND AFFIDAVIT OF THE DEPONENT OF THE STATEMENT I.E. OF SHRI NANU RAM KALAL IS ALSO AVAILABLE ON RECORDS AND COPY OF THE SAME IS ENCLOSED HEREWITH IN SUPPORT OF THE CLAIM OF THE ASSESSEE. THUS, THE ASSESSMENT ORDER PASSED BY THE AO WAS IN VIOLATION OF PRINCIPLE OF NATURAL JUSTICE. THE ADDITION MADE BY THE AO IS NOT JUSTIFIED AND THEREFORE THE SAME CANNOT BE SUSTAINED HENCE DESERVES TO BE DELETED ON THI S GROUND ALONE. THE ABOVE PROPOSITION IS WELL SETTLED BY NOW. WE LIKE TO DRAW YOUR ATTENTION TOWARDS THE LATEST JUDGMENT OF THE HONBLE TRIBUNAL BASED ON VARIOUS JUDGMENTS CONSIDERED THEREIN IN RELATION TO THE ISSUE UNDER CONSIDERATION IN THE CASE OF SMT. SUNITA DHADDA V/S DCIT JAIPUR (A) REPORTED AT (2012) 71 DTR (JP) (TRIB). THAT THE LEARNED ASSESSING OFFICER IS ALSO NOT JUSTIFIED IN MAKING ARBITRARY ADDITION OF RS.22,80,151/ - JUST BASED ON ASSUMPTIONS, PRESUMPTIONS, AND ON THE BASIS OF STATEMENT RECORD ED BEHIND THE BACK OF ASSESSEE WITHOUT APPRECIATING THE FOLLOWING EXPLANATIONS FURNISHED BY THE ASS ESSEE IN THEIR TRUE PERSPECTIVE. 5 A) THE CORRECT FACTS OF THE CASE ARE THAT THE DEPOSITS AND WITHDRAWALS IN THE SAVING BANK ACCOUNT WERE NOTHING BUT SOME OF THE TRANSACTION RELATED TO LIQUOR BUSINESS OF SHRI NANURAM KALAL FRIEND OF THE ASSESSEE ROUTED THROUGH THIS SUBJECTED SAVING BANK ACCOUNT OF THE ASSESSEE. IN THIS RESPECT DETAILED EXPLANATIONS WERE FURNISHED ALONGWITH RELEVANT EVIDENCES. THE ASSESSEE HAD A LSO SUBMITTED THAT FOR THE REASON OF HEALTH PROBLEM OF SHRI NANURAM KALAL HIS BUSINESS WAS MANAGED BY THE ASSESSEE AND DUE TO REGULAR SIGNATURE AND OPERATION OF BANK ACCOUNT ETC. THE BANK ACCOUNT OF ASSESSEE WAS UTILIZED FOR BUSINESS OF SHRI NANURAM KALAL. THE ASSESSEE HAD PROVIDED COPY OF INCOME TAX RETURN, LIQUOR LICENSE IN THE NAME OF SHRI NANURAM KALALA AT THE TIME OF ASSESSMENT PROCEEDINGS TO THE AO. (B) IN FACT, THE CASH SALES OF LIQUOR BUSINESS OF SHRI NANRURAM KALAL WERE DEPOSITED IN THIS BANK ACC OUNT OF THE ASSESSEE AND WITHDRAWALS WERE FOR PURCHASES OF LIQUOR FOR THE BUSINESS OF SHRI NANURAM. THE RELEVANT COPY OF BANK DRAFTS AND COPY OF ACCOUNT OF LIQUOR BUSINESS WITH RSBCL AND CERTIFICATES OF THE BANK WERE PROVIDED AT THE TIME OF ASSESSMENT TO T HE ASSESSING OFFICER WHICH WAS NOT PROPERLY APPRECIATED IN THEIR TRUE PERSPECTIVE. FROM THE ABOVE EVIDENCES IT IS VERY CLEAR THAT ALL THE DRAFTS OBTAINED FROM THE WITHDRAWALS OUT OF SUBJECTED SAVING BANK ACCOUNT OF THE ASSESSEE ARE FULLY VERIFIABLE. SIMILA RLY THE DIRECT DEPOSITS IN SBBJ THROUGH CHALLAN IN RELATION TO PURCHASE FOR THE BUSINESS OF SHRI NANURAM ARE ALSO VERIFIABLE FROM SUCH EVIDENCES ITSELF. HENCE IT IS VERY CLEAR THAT THE DEPOSITS AS WELL AS THE WITHDRAWALS FROM THE BANK ACCOUNT UNDER CONSIDE RATION HAVE BEEN EXPLAINED BY THE ASSESSEE AND THE AO HAS NOT APPRECIATED THE EXPLANATIONS IN THEIR TRUE PERSPECTIVE. THE ASSESSEE HAS PLACED ON RECORD THE SWORN AFFIDAVIT DATED 10/8/2011 OF SHRI NANURAM IN SUPPORT OF HIS EXPLANATION IN THIS RESPECT. COPY OF AFFIDAVIT IS ENCLOSED HEREWITH FOR YOUR READY REFERENCE WHICH IS SELF EXPLANATORY WITH REGARDS TO THE TRANSACTIONS APPEARING IN THE BANK ACCOUNT OF THE ASSESSEE. IT APPEARS THAT THE STATEMENT OF SHRI NANURAM KALAL WAS RECORDED BEHIND THE BACK OF THE ASS ESSEE AND THE AVERMENT OF THE STATEMENT APPEARS TO VAGUE AND ACCORDINGLY CANNOT BE RELIED FOR MAKING SUCH A HIGH ARBITRARY ADDITION IN THE HANDS OF THE ASSESSEE. UNDER THE ABOVE FACTS AND CIRCUMSTANCES OF THE CASE THE SAID DEPOSITS CANNOT BE TREATED AS UNEXPLAINED DEPOSIT FROM UNDISCLOSED INCOME OF THE ASSESSEE. WE REQUEST YOUR GOOD SELF TO PLEASE APPRECIATE THE TRUE AND CORRECT FACT OF THE CASE AND TREAT THE DEPOS ITS AS FROM EXPLAINED SOURCES 6 AND ACCORDINGLY DELETE THE ADDITION MADE ON THIS ACCOUNT IN THE INTEREST OF EQUITY AND JUSTICE. I V ALTERNATIVELY WITHOUT PREJUDICE TO THE ABOVE GROUNDS WE HAVE TO FURTHER SUBMIT THAT THE LEARNED ASSESSING OFFICER HAS ERRED AT LAW AND IS NOT JUSTIFIED IN HOLDING ONLY PART OF DOCUMENT AS CORRECT AND OTHER PART INCORRECT OR UNTRUE. THAT THE LEARNED ASSESSING OFFICER IS ALSO NOT JUSTIFIED IN MAKING ADDITION WITHOUT CONSIDERING THE DEBIT AND CREDIT ENTRIES IN THE BANK ACCOUNT BEFORE HOLDING THE TOTAL DEPOSITS THROUGHOUT THE YEAR ON DIFFERENT DATES IN BANK AS OUT OF UNDISCLOSED SOURCES IGNORING THE REGULAR WITHDRAWALS FROM THE SAME BANK ACCOUNT. IN THIS RESPECT WE HAVE TO AGAIN SUBMIT THAT THE LEARNED ASSESSING OFFICER HAS NOT APPRECI ATED THE EXPLANATIONS FURNISHED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS IN THEIR TRUE PERSPECTIVES IN THIS RESPECT ALSO. WITHOUT DIRECT EVIDENCE THE ASSESSING OFFICER IS NOT EMPOWERED TO DRAW ANY PRESUMPTIONS AS TO THE EVIDENCE OF UNDISCLOSED INC OME. THE AO HAS NOT CONSIDERED THE SUBJECTED BANK ACCOUNT IN TOTO AND HAS ALSO NOT CONSIDERED THE PRINCIPLE OF PEAK DEPOSIT IN THE SAID ACCOUNT BEFORE COMPUTING THE UNDISCLOSED INCOME ON THIS ACCOUNT IN THE ASSESSMENT. THE POSITION OF PEAK AMOUNT BALANCE I N THE YEAR UNDER CONSIDERATION FROM THE SAVING BANK ACCOUNT APPEARS AT RS. 2,20,500/ - ONLY. AT THE WORST THE ASSESSING OFFICER COULD HAVE BEEN ESTIMATE THE UNDISCLOSED INCOME TO THIS EXTENT ONLY IF ALL DEPOSITS AS WELL AS WITHDRAWALS HAVE BEEN TREATED AS B ELONGING TO THE ASSESSEE FROM UNDISCLOSED SOURCES. CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE THE ADDITION SO MADE BY THE AO IS NOT JUSTIFIED AND DESERVES TO BE DELETED IN THE INTEREST OF EQUITY AND JUSTICE. 6 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSING OFFICER WAS JUSTIFIED IN TREATING THE C REDIT ENTRIES IN THE BANK ACCOUNT OF THE ASSESSEE AS UNEXPLAINED U/S. 68 OF THE ACT , BUT HE INCLINED TO AGREE WITH THE CONTENTION OF THE ASSESSEE THAT ONCE IT WAS A CASE OF THE LD. CIT(A) TH A T THE DEPOSITS BELONG TO THE 7 ASSESSEE , THEN THE BENEFIT OF PEAK CREDIT NEEDS TO BE ALLOWED. HE FURTHER OBSERVED THAT PEAK CREDIT PRINCIPLE IS APPLICABLE IN A CASE W HERE THERE ARE SEVERAL CREDIT AND DEBIT ENTRIES FOUND IN ONE ACCOUNT AND TO AVOID MULTIPLE COUNTING OF THE SAME SUMS, ONLY HIGHEST OR PEAK OF THE AMOUNTS IN THAT ACCOUNT SHOULD BE TAKEN AS UNEXPLAINED INVESTMENT. THE LD. CIT(A) ACCORDINGLY SUSTAINED THE ADDITION OF PEAK CREDIT AMOUNTING TO RS. 1,20,790/ - . NOW THE DEPARTMENT IS IN APPEAL . 7 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHILE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MA DE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A). 8 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITT ED FACT THAT UNEXPLAINED DEBIT AND CREDIT ENTRIES WERE FOUND IN THE BANK ACCOUNT OF THE ASSESSEE , THE ASSESSING OFFICER MADE THE ADDITION OF ALL DEPOSIT S . IN SUCH TYPE OF CASES, WHEN DEBIT AND CREDIT ENTRIES ARE UNEXPLAINED, THE PEAK CREDIT PRINCIPLE IS APPLICABLE PARTICULARLY WHEN NOTHING IS BROUGHT ON RECORD THAT THE DEPO S ITS AND WITHDRAWALS ARE SEPARATE ENTRIES WHICH ARE NOT CORRELATED TO EACH OTHER. 8 I N OUR OPINION, LD. CIT(A) WAS JUSTIFIED IN SUSTAINING THE ADDITION TO THE EXTENT OF PEAK CREDIT I.E. HIGHEST OR PEAK AMOUNT FOUND IN THE BANK ACCOUNT OF THE ASSESSEE CONSIDERING THE SAME AS UNEXPLAINED INVESTMENT TREATING THE SAME AS INCOME FROM UNDISCLOSE D SOURCES. WE THEREFORE, DO NOT SEE ANY MERIT IN THIS APPEAL OF THE DEPARTMENT. 9 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 06 TH AUGUST , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 06 TH AUGUST , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .