The Income tax Officer, Jalandhar V. Sh. Manjinder Singh Chatha, Jalandhar

ITA 303/ASR/2010

• Counselvise Citation: 30320914 RSA 2010
• Duration Of Justice: 4 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-02-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 18-02-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 28-06-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: J S BHASIN
• Keywords: Additional evidence
• Section: 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.303(ASR)/2010 ASSESSMENT YEAR:2006-07 PAN :AFUPC0096H INCOME TAX OFFICER, VS. SH.MANJINDER SINGH CHATHA, WARD-II(3), VPO: CHOGITTEE, JALANDHAR. PATHANKOT ROAD, JALANDHAR. (APPELLANT) (RESPONDENT) I.T.A. NO.318(ASR)/2010 ASSESSMENT YEAR:2006-07 PAN :AFUPC0096H SH.MANJINDER SINGH CHATHA, VS. INCOME TAX OFFICE R, VPO: CHOGITTEE, WARD-II(3), PATHANKOT ROAD, JALANDHAR. JALANDHAR. (APPELLANT) (RESPONDENT) DEPARTMENT BY: SMT. NEERAJ SHARMA, DR RESPONDENT BY: SH.J.S.BHASIN, ADVOCATE DATE OF HEARING:18/02/2015 DATE OF PRONOUNCEMENT:20/02/2015 ORDER PER A.D.JAIN,JM: THESE ARE THE CROSS APPEALS ONE BY THE REVENUE AND ANOTHER BY THE ASSESSEE FOR THE ASSESSMENT YEAR 2006-07 AGAINST T HE ORDER DATED 18.03.2010 PASSED BY THE LD. CIT(A), JALANDHAR. ITA NO.303(ASR)/2010 ITA NO.318(ASR)/2010 2 2. THE DEPARTMENT IN ITA NO.303(ASR)/2010 HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: 1. THAT, ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW IN REDUCING THE ADDITION OF RS.50,00,000/- TO RS.37,00,000/- MADE ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS. 1.1 WHILE DOING SO THE LD. CIT(A) HAS FAILED TO APP RECIATE THE FACTS THAT: A) THE ASSESSEE ITSELF DURING THE COURSE OF ASSESS MENT PROCEEDINGS PRODUCED TWO IKRARNAMAS THE FULL VALUE OF AGREEMENT NAMELY RS.28 LACS AND RS. 22 LACS RESPECT IVELY, AS CASH PAID TO THE ASSESSEE IN THE PRESENCE OF WITNES S AND NO BALANCE PAYMENT WAS TO BE RECEIVED. THUS, THE ASSES SEE ITSELF CONTENDED THAT RS.50 LACS WAS RECEIVED BY HIM. B) THE LD. CIT(A) IGNORED THE DOCUMENTS PRODUCED B Y THE ASSESSEE ITSELF AND RELIED ONLY ON CASH DEPOSIT IN THE ACCOUNT OF THE ASSESSEE. C) THERE IS NO DISPUTE THAT SALE CONSIDERATION WAS RS.50 LACS. THIS IS EVIDENT FROM THE FIRST AGREEMENT SHOW ING PAYMENT OF RS. 37 LACS IN ADVANCE AND BALANCE TO BE PAID AN D SUBSEQUENT TWO IKRARNAMAS OF RS. 28 LACS AND RS.22 LACS CLAIM ED TO HAVE BEEN PAID IN CASH TO THE ASSESSEE. THUS, THE ENTIRE SALE CONSIDERATION OF RS. 50 LACS HAD TO BE BROUGHT INTO THE TAX NET AS THERE IS NO DISPUTE THAT THE TOTAL SALE CONSIDERATI ON WAS ANYTHING OTHER THAN RS.50 LACS. 2. THIS, IT IS PRAYED THAT THE ORDER OF THE LD. CIT (A) BE SET ASIDE AND THAT OF THE AO RESTORED. 3. THAT THE APPELLANT REQUESTS FOR LEAVE TO ADD OR AME ND OR ALTER THE GROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD AND DI SPOSED OFF. 3. IN ASSESSEES APPEAL, I.E., IN ITA NO.318(ASR)/2 010, THE FOLLOWING GROUNDS HAVE BEEN RAISED: ITA NO.303(ASR)/2010 ITA NO.318(ASR)/2010 3 1. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLD ING THE ADDITION OF RS. 37 LACS, OUT OF RS.50 LACS ADDED BY THE ITO, IS CONTRARY, INFERENCES DRAWN ARBITRARILY UNMINDFUL OF THE FACTS OF THE CASE, ARE WHOLLY UNTENABLE. 2. THAT THE ADDITIONAL EVIDENCE, AS FILED DURING A PPELLATE PROCEEDINGS, OUGHT TO HAVE BEEN ACCEPTED BY THE LD . CIT(A), MORE SO, WHEN NOT OBJECTED TO BY THE ITO AND ALSO W HEN CIT(A) HIMSELF RELIED ON THE SAME TO THE DISADVANT AGE OF ASSESSEE. 3. THAT THE LD. CIT(A) MISCONSTRUED THE FACTS TO HO LD THAT THERE WAS NO LAND SALE AGREEMENT EXECUTED WITH SH. RAJ KU MAR FOR RS. 50LACS, WHICH RESULTED IN ADVANCE PAYMENT OF RS . 37 LACS TO ASSESSEE, WITH BALANCE RECEIVED IN NEXT YEAR. 4. THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT SH.RAJ KUMAR WAS NOT A MAN OF MEANS, WITHOUT VERIFICATION OF HIS CREDENTIALS, ESPECIALLY HIS BANK ACCOUNTS FILED DUR ING APPELLATE PROCEEDINGS. 5. THAT THE CAPITAL GAIN ON SALE OF IMPUGNED LAND F OR RS. 50 LACS SHOWN IN THE RETURN FOR NEXT YEAR, HAVING DIRECT N EXUS WITH THE CONTROVERSY THIS YEAR, HAS BEEN WRONGLY HELD AS IRR ELEVANT BY THE CIT(A). 6. THAT THE IMPUGNED ADDITION, IF AT ALL SUSTAINED, OUGHT TO HAVE BEEN ASSESSED UNDER THE HEAD CAPITAL GAIN BESIDES ALLOWING ITS APPORTIONING AMONGST FIVE CO-OWNERS. 7. THAT THE CLAIM OF DEDUCTION U/S 54B, FOR SALE AN D PURCHASE OF AGRICULTURE LAND, HAS BEEN WRONGLY DISALLOWED. 4. THE AO MADE AN ADDITION OF RS.50 LACS ON ACCOUNT OF CASH DEPOSITS. THE LD. CIT(A) DELETED RS. 13 LACS AND SUSTAINED TH E ADDITION OF RS.37 LACS, RESULTING IN THESE CROSS APPEALS. ITA NO.303(ASR)/2010 ITA NO.318(ASR)/2010 4 5. AS PER GROUND NO.2 RAISED BY THE ASSESSEE, THE L D. CIT(A) SHOULD HAVE ADMITTED THE ADDITIONAL EVIDENCE FILED BY THE ASSES SEE, WHEN IT WAS NOT OBJECTED TO BY THE AO AND WHEN THE LD. CIT(A) HIMSE LF RELIED ON SUCH ADDITIONAL EVIDENCE TO THE DETRIMENT OF THE ASSESSE E. 6. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HAS CONTENDED THAT IN THE LAST SENTENCE OF THE RUNNING PARA AT PAGE 14 OF THE IMPUGNED ORDER, THE LD. CIT(A) HAS WRONGLY OBSERVED, WHILE REJECTING T HE ASSESSEES APPLICATION FOR ADDITIONAL EVIDENCE, THAT NO APPLICATION WAS MA DE BY THE ASSESSEE BEFORE THE AO FOR SUBMITTING ANY FURTHER INFORMATION. OUR ATTENTION HAS BEEN DRAWN TO THE ASSESSEES REPLY DATED 26.12.2008 ( COPY AT APB 46 47) BEFORE THE AO WHEREIN, ACCORDING TO THE LD. COUNSEL FOR THE AS SESSEE, THE ASSESSE HAD MADE A SPECIFIC REQUEST TO THE AO TO GRANT HIM TIME TO GIVE FURTHER EVIDENCE IN SUPPORT OF HIS CONTENTION. 7. THE LD. DR, ON THE OTHER HAND, HAS PLACED STRON G RELIANCE ON THE IMPUGNED ORDER CONTENDING THAT THE ASSESSEE DID NOT FILE ANY APPLICATION FOR ADDITIONAL EVIDENCE BEFORE THE AO AND SO THE LD. CI T(A) CORRECTLY REJECTED THE APPLICATION FOR ADDITIONAL EVIDENCE FILED BEFOR E HIM. 8. FROM THE ASSESSMENT ORDER, IT IS AVAILABLE THAT THE AO NOTICED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT WITH ONE SH . RAJ KUMAR TO SELL LAND MEASURING 7 KANALS 5 MARLAS FOR RS. 50 LACS, RECEIV ING AN ADVANCE OF RS.37 ITA NO.303(ASR)/2010 ITA NO.318(ASR)/2010 5 LACS IN CASH (ASSESSMENT ORDER, PAGE 1, PARA 2). ON 12.12.2008, THE AO RECORDED THE STATEMENT OF SH.RAJ KUMAR UNDER SECTIO N 131 OF THE I.T.ACT (ASSESSMENT ORDER, PAGES 2-3). THEREIN, INTERLIA, SH. RAJ KUMAR AGREED HAVING ENTERED INTO AN AGREEMENT TO PURCHASE LAND M EASURING 7 KANALS 5 MARLAS FROM THE ASSESSEE (ASSESSMENT ORDER, PAGE 2, REPLY TO THE THIRD QUESTION). VIDE STATEMENT DATED 23.12.2008 (ASSESSM ENT ORDER, PAGE 4 TO 6), AGAIN, RECORDED U/S 131 OF THE ACT, SH. RAJ KUMAR RETRACTED FROM HIS EARLIER STATEMENT AND DEPOSED THAT HE HAD NEVER ENTERED IN TO ANY AGREEMENT DATED 24.02.2006 WITH THE ASSESSEE., THAT THE SIGNATURE O N THE PHOTOCOPY OF THE AGREEMENT, AS SHOWN TO HIM BY THE AO WAS NOT HIS., AND THAT HE HAD GIVEN HIS EARLIER STATEMENT DATED 12.12.2008, SINCE HE WA S UNDER CONSTANT THREAT OF ASSESSEES MEN AND UNDUE INFLUENCE OF THE ASSESSEE ( ASSESSMENT ORDER, PAGES 4-5). THE AO WROTE A LETTER DATED 24.12.2008 (ASSESSMENT ORDER, PAGE- 6, PARA 4) TO THE ASSESSEE, INTIMATING TO HIM, RAJ KUMARS DENIAL HAVING ENTERED INTO ANY AGREEMENT WITH THE ASSESSEE. THE A SSESSEE WAS ASKED TO ATTEND PROCEEDINGS ON 26.12.2008. THE ASSESSEE FILE D REPLY DATED 26.12.2008 (APB, PAGES 46-47). THIS HAS BEEN TAKEN NOTE OF IN PARA 4 AT PAGE 6 OF ASSESSMENT ORDER. ON 26.12.2008, THE ASSESSEES STA TEMENT WAS RECORDED BY THE AO IN ASSESSMENT PROCEEDINGS FOR A.Y. 2006-07 ( ASSESSMENT ORDER, PAGES 7 TO 10). THE ASSESSMENT ORDER WAS PASSED ON 30.12.2008. ITA NO.303(ASR)/2010 ITA NO.318(ASR)/2010 6 9. NOW, IT IS SEEN THAT IN HIS REPLY DATED 26.12.20 08, FILED BEFORE THE AO, THE ASSESSEE HAS SPECIFICALLY REQUESTED AS FOLLOWS (APB-47, LAST SENTENCE PARA 4):- THE ASSESSEE REQUESTS THAT HE MAY BE GRANTED TIME TO GIVE FURTHER EVIDENCE IN SUPPORT OF HIS CONTENTION. HOWEVER, THIS REQUEST WAS NOT EVEN TAKEN NOTE OF I N THE ASSESSMENT ORDER WHILE DISCUSSING THE CONTENTS OF THE ASSESSEES AFO RESAID REPLY, IN PARA 4 & 5 AT PAGE 6 OF THE ASSESSMENT ORDER. 10. THE LD. CIT(A) HAD, THUS, WHILE OBSERVING THAT THE ASSESSEE DID NOT FILE ANY APPLICATION BEFORE THE AO, REMAINED OBLIVI OUS OF THE ABOVE MENTIONED SPECIFIC REQUEST MADE BEFORE THE AO BY TH E ASSESSEE TO GRANT HIM TIME TO GIVE FURTHER EVIDENCE IN SUPPORT OF HIS CON TENTION. TO REITERATE, THIS REQUEST WAS CONTAINED IN ASSESSEES REPLY DATED 26. 12.2008, FILED BEFORE THE A.O. IT WAS NOT EVEN COMMENTED ON AND THE ASSESSMEN T ORDER WAS PASSED ON 30.12.2008. 11. IN VIEW OF THE ABOVE, EVIDENTLY THE LD. CIT(A) HAS ERRED IN REJECTING THE APPLICATION FOR ADDITIONAL EVIDENCE FILED BY TH E ASSESSEE, THEREBY CAUSING PREJUDICE TO THE ASSESSEE. 12. THEREFORE, IN THE INTEREST OF JUSTICE, WE REMIT THIS MATTER TO THE FILE OF THE AO, TO DECIDE IT AFRESH IN ACCORDANCE WITH LAW, ON ENTERTAINING AND CONSIDERING THE ADDITIONAL EVIDENCE FILED BY THE AS SESSEE BEFORE THE LD. ITA NO.303(ASR)/2010 ITA NO.318(ASR)/2010 7 CIT(A). THE ASSESSEE, NO DOUBT, WILL BE PROVIDED AD EQUATE OPPORTUNITY BY THE AO, TO SUPPORT HIS CASE. THE ASSESSEE SHALL C O-OPERATE WITH THE AO IN THE REMAND PROCEEDINGS. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE AND THAT OF THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20TH FEBRUARY, 2015. SD/- SD/- (B.P. JAIN) (A.D.JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 20TH FEBRUARY, 2015 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:SH.MANJINDER SINGH CHATHA, JALANDHAR. 2. THE ITO WARD II(3), JALANDHAR. 3. THE CIT(A), JALANDHAR. 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.