M/s Shri Hardayal Singh Educational Samiti, Firozabad V. I.T.O., Ward-5(1), Firozabad

ITA 306/AGR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9965 (ITAT-AGRA)
• Duration Of Justice: 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-02-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 07-07-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R K AGARWAL
• Keywords: Unexplained cash credit; Initiation of penalty proceedings
• Section: 143(3); 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, AGRA BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA MEHROTRA, ACCOUNTANT MEMBER ITA NO.306/AG/2015 ASSESSMENT YEAR:2011-12 M/S SHRI HARDAYAL SINGH EDUCATIONAL, VS. THE ITO, SAMITI, WARD-5(1) 318- SHAMBHU NAGAR FIROZABAD SHIKOHABAD, FIROZABAD NOW: THE ITO (EXEMPTION) AGRA PAN NO. AAAAH5528D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. R.K. AGARWAL RESPONDENT BY : SH. WASEEM ARSHAD DATE OF HEARING : 01/02/2016 DATE OF PRONOUNCEMENT : 09/02/2016 ORDER PER ANNAPURNA MEHROTRA A.M. THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- II AGRA DT. 16/03/2015. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. BECAUSE ON THE FACTS AND CIRCUMSTANCES THE LD. C OMMISSIONER OF INCOME TAX (APPEALS)-II, AGRA, HEREINAFTER REFERRED TO AS LD. CIT(A), WAS NOT LEGALLY JUSTIFIED IN SUSTAINING ADDITION OF RS. 93,703/- U/ S 68 OF THE I.T. ACT. THE REASON FOR SUSTAINING ADDITION BEING BASED ON INCORRECT FIGURE S ADOPTED BY LD. ASSESSING OFFICER IS WHOLLY ILLEGAL. 2 2. BECAUSE, ON THE FACTS AND CIRCUMSTANCES THE LD. CIT(A) WAS NOT JUSTIFIED IN MAINTAINING ESTIMATED DISALLOWANCE FROM AGRICULTURA L INCOME BUT RESTRICTING THE SAME AT RS. 3,92,238/- BEING 20% OF TOTAL AGRICULTU RAL INCOME. THE AUTHORITIES BELOW FAILED TO APPRECIATE THAT IN THE ABSENCE OF ANY MATERIAL TO THE CONTRARY, THE ESTIMATED DISALLOWANCE IS WHOLLY ILLEGAL AND BA D IN LAW. 3. BECAUSE ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER FOR AL LEGED VIOLATION OF PROVISION OF SECTION 269SS AND REFERRING THE MATTER TO JT. COMMI SSIONER OF INCOME TAX FOR INITIATING PENALTY PROCEEDING U/S 271D. 4. BECAUSE THE ORDER IS AGAINST THE LAW & FACTS. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE AS SESSEE IS A SOCIETY RUNNING EDUCATIONAL INSTITUTION. FOR THE IMPUGNED YEAR, ASS ESSMENT UNDER SECTION 143(3) WAS FRAMED ON 31/03/2014, MAKING ADDITION OF RS. 1, 49,00,000/- BEING UNSECURED LOANS, TREATING THE SAME AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES, SINCE THE ASSESSEE COULD NOT PROVE THE IDENTITY, CR EDITWORTHINESS AND GENUINENESS OF THE SAME. FURTHER DISALLOWANCE OF 60 % OF THE AGRICULTURAL INCOME SHOWN BY THE ASSESSEE WAS MADE WHICH CAME TO RS. 11 ,76,614/-, SINCE THE ASSESSEE COULD NOT JUSTIFY THE SAME NOR COULD IT ES TABLISH THE HIGH YIELD OF CROP SHOWN. 4. AGGRIEVED BY THE SAME THE ASSESSEE TOOK UP THE M ATTER IN APPEAL BEFORE THE LD. CIT(A) WHO VIDE HIS ORDER DT. 16/03/2015 DE LETED THE ADDITION MADE UNDER SECTION 68 OF UNSECURED LOAN TO THE EXTENT OF RS. 1,48,06,297/-, CONFIRMING THE BALANCE OF RS. 93,703/- AND RESTRICTED THE AGRI CULTURAL INCOME OF THE ASSESSEE TO THE EXTENT OF 80% OF THE AGRICULTURAL I NCOME SHOWN, THEREBY SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS. 3, 92,238/-. 5. AGGRIEVED BY THE SAME THE ASSESSEE FILED THE PRE SENT APPEAL BEFORE US. 3 6. GROUND NO. 1 RAISED BY THE ASSESSEE IS AGAINST T HE ADDITION OF RS. 93,703/- MADE UNDER SECTION 68 OF THE INCOME TAX ACT SUSTAIN ED BY THE LD. CIT(A). 7. BRIEF FACTS RELATING TO THE ISSUE ARE THAT DURIN G THE IMPUGNED AY THE ASSESSEE HAD TAKEN UNSECURED LOAN AMOUNTING TO RS. 1,49,00,000/- FROM AGRICULTURISTS. DURING ASSESSMENT PROCEEDINGS DETA ILED ENQUIRY WAS CONDUCTED AND AFTER TAKING INTO ACCOUNT THE FACTS AND CIRCUMS TANCES OF THE CASE AND THE REPLY OF THE ASSESSEE THE AO HELD THAT SINCE THE AS SESSEE COULD NOT PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE ALLEGED UNSECURED LOANS OF RS. 1,49,00,000/- THE SAME WAS TO BE TREATED AS INCOME OF THE ASSESSEE FROM UNDISCLOSED SOURCES AND ADDED TO THE INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 8. DURING APPELLATE PROCEEDINGS DETAILED SUBMISSION WAS FILED BY THE ASSESSEE ALONGWITH EVIDENCE TO PROVE THE IDENTITY, CREDIT WORTHINESS AND GENUINENESS OF THE UNSECURED LOANS. FURTHER REPORTS AT VARIOUS POINTS OF TIME WERE CALLED FOR BY THE LD. CIT(A) FROM THE AO FOR A DJUDICATING THE IMPUGNED ISSUE. AFTER CONSIDERING ALL THE EVIDENCES, SUBMISS IONS AND REPORTS AND REJOINDER OF THE ASSESSEE THE LD. CIT(A) HELD THAT THE ASSESS EE HAD BEEN ABLE TO SHOW THAT FOR THE AMOUNT OF RS. 1,48,06,297/- TAKEN AS L OAN FROM FARMERS, IDENTITY, CREDITWORTHINESS OF THESE FARMERS HAD BEEN ESTABLIS HED AS WELL AS SOURCE OF GIVING OF SUCH LOANS BY THEM HAD ALSO BEEN ESTABLIS HED. THEREFORE THE LD. CIT(A) DELETED THE ADDITION MADE UNDER SECTION 68 TO THE E XTENT OF RS. 1,48,06,297/- 4 AND UPHELD THE DIFFERENCE AMOUNT OF RS. 93,703/- HO LDING THE SAME TO BE UNEXPLAINED CASH CREDIT. 9. BEFORE US LD. AR PLEADED THAT THERE WAS NO CAUSE AT ALL FOR SUSTAINING THE DISALLOWANCE TO THE EXTENT OF RS. 93,703/- UNDER SE CTION 68 OF THE ACT. LD. AR PLEADED THAT THE ADDITION HAD BEEN UPHELD ON THE BA SIS OF INCORRECT FIGURE ADOPTED BY THE AO. LD. AR DREW OUR ATTENTION TO PAR A 5.12 OF THE CIT(A) ORDER WHEREIN THE DETAIL OF THE TOTAL AMOUNT OF UNSECURED LOANS OF RS. 1,49,00,000/- WAS GIVEN AS UNDER: (I) 34 PERSONS PRODUCED BEFORE THE AO ADMITTING GIVING OF LOAN TO THE ASSESSEE IN CASH MORE THAN RS. 20,000/- EACH. RS. 64,77,332/- (II) 56 PERSONS SHOWN TO HAVE GIVEN CASH LOAN TO THE ASSESSEE MORE THAN 20,000/- EACH WHO COULD NOT BE PRODUCED BEFORE THE AO. RS. 62,32,434/- (III) 114 PERSONS SHOWN TO HAVE GIVEN CASH LOAN LESS THAN RS. 20,000/- EACH. RS. 20,96,531/- TOTAL 1,48,06,297/- LD. AR POINTED OUT THAT THIS DETAIL HAD BEEN EXTRAC TED FROM THE ASSESSMENT ORDER AT PAGE NO. 16, 17, 18 & 19. LD. AR POINTED O UT THAT THE FIGURE OF 62,32,434/- BEING THE AMOUNT OF LOAN TAKEN FROM 56 PERSONS OF MORE THAN RS. 20,000/- EACH WAS INFACT RS. 63,26,139/-. THE LD. A R STATED THAT THERE WAS A TOTALING MISTAKE WHICH HAD RESULTED IN THE LESSER F IGURE BEING TAKEN. THE LD. AR POINTED OUT THAT THE DIFFERENCE BETWEEN THE TWO FIG URES WAS RS. 93,705/- WHICH RESULTED IN THE DIFFERENCE IN TOTAL OF UNSECURED LO AN SHOWN IN THE BOOKS OF 5 ACCOUNT OF THE ASSESSEE OF RS. 1,49,00,000/- AND TH E FIGURE AS PER THE LIST OF THE AO BEING RS. 1,48,06,297/-. THE LD. AR STATED THAT IN PRINCIPLE THE LD. CIT(A) HAD DELETED THE ENTIRE ADDITION MADE UNDER SECTION AND IT WAS ONLY ON ACCOUNT OF A CALCULATION MISTAKE THAT THE ADDITION TO THE EXTENT OF RS. 93,703/- HAD BEEN UPHELD. THE LD. AR THEREFORE PLEADED THAT THIS AD DITION MADE MAY ALSO BE DELETED. 10. WE HAVE GONE THROUGH THE DOCUMENTS FILED BEFORE US AND THE ORDER OF THE AUTHORITIES PLACED BEFORE US AND HAVE ALSO HEAR D THE SUBMISSION MADE BY THE RIVAL PARTIES. WE FIND THAT INDEED THERE WAS A TOTALING MISTAKE IN THE TOTAL OF UNSECURED LOAN TAKEN FROM 56 PERSONS IN EXCESS OF 2 0 THOUSAND EACH WHO COULD NOT BE PRODUCED BEFORE THE AO WHICH WAS INADVERTENT LY TAKEN AT RS. 62,32,434/- INSTEAD OF CORRECT TOTAL RS. 63,26,139/ -. CORRECTING THE IMPUGNED FIGURE IN THE LIST REPRODUCED AT PARA 5.12 OF THE C IT(A) ORDER, THE TOTAL OF THE UNSECURED LOANS DETAIL COMES TO RS. 1,49,00,000/- W HICH WAS THE FIGURE AS REFLECTED BY THE ASSESSEE IN HIS BOOKS OF ACCOUNT A ND CONSIDERING THE FACT THAT LD. CIT(A) HAS HELD THE ENTIRE UNSECURED LOANS DETA ILED IN THE LIST REPRODUCED IN THE ASSESSMENT ORDER AS BEING GENUINE AND WHOSE IDE NTITY AND CREDIT WORTHINESS HAS BEEN PROVED, WE FIND THAT ADDITION TO THE EXTEN T OF RS. 93,703/- DOES NOT REMAIN. WE FIND THAT ADDITION HAD RESULTED ON ACCOU NT OF A MERE CALCULATION MISTAKE MADE IN THE LIST AND THEREFORE THE SAME OUG HT TO BE DELETED. IN VIEW OF THE ABOVE THE GROUND OF APPEAL RAISED BY THE ASSESS EE IS ALLOWED AND ADDITION 6 OF RS. 93,703/- SUSTAINED UNDER SECTION 68 ON ACCOU NT OF UNSECURED LOAN IS DELETED. 11. GROUND NO. 2 RAISED BY THE ASSESSEE IS AGAINST RESTRICTING THE DISALLOWANCE FROM AGRICULTURAL INCOME TO 20% OF THE TOTAL AGRICU LTURAL INCOME BEING RS. 3,92,238/-. 12. BRIEF FACTS RELATING TO THE ISSUE ARE THAT THE ASSESSEE HAD SHOWN AGRICULTURAL INCOME OF RS. 19,61,190/-. THE ASSESSE E WAS REQUIRED TO JUSTIFY THE SAME DURING THE ASSESSMENT PROCEEDING SINCE AS PER THE AO THE ASSESSEE HAD CLAIMED YIELD OF CROP OF RS. 21,65,190/- AND CLAIME D EXPENSES TO THE EXTENT OF RS. 2,04,000/- ONLY. THE LD. AO HELD THAT THE YIELD SHOWN BY THE ASSESSEE WAS EXCESSIVE AND THEREFORE DISALLOWED 60% OF THE CLAIM ED AGRICULTURE INCOME I.E. RS. 11,76,714/- AND ADDED THE SAME TO THE INCOME OF THE ASSESSEE AS INCOME FROM OTHER SOURCES. LD. CIT(A) UPHELD THE DISALLOWA NCE TO THE EXTENT OF RS. 3,92,238/- BEING 20% OF THE AGRICULTURE INCOME SHO WN BY THE ASSESSEE OF RS. 19,61,190/- BY HOLDING THAT THE ASSESSEE HAD FAILED TO SUBSTANTIATE THE AMOUNT OF AGRICULTURE INCOME SHOWN AND THEREFORE AGRICULTU RE INCOME TO THE EXTENT OF 80% SHOWN BY THE ASSESSEE WAS ACCEPTED AND THE BALA NCE 20% DISALLOWED. 13. BEFORE US LD. AR ARGUED THAT THIS ISSUE HAS BEE N DEALT WITH BY HONBLE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR AY 2009-10 IN THEIR ORDER PASSED IN ITA NO. 180/AG/2013 DT. 18/10/2013, WHEREIN THE ADDITION MA DE WAS DELETED. 14. LD. DR ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD. CIT(A). 7 15. WE HAVE HEARD THE SUBMISSIONS MADE BY BOTH THE PARTIES AND ALSO THE DOCUMENTS AND ORDERS OF THE LOWER AUTHORITIES PLACE D BEFORE US. WE FIND THAT AN IDENTICAL ISSUE HAD COME UP FOR CONSIDERATION BE FORE THE HONBLE BENCH IN THE CASE OF THE ASSESSEE FOR AY 2009-10 WHERE IN T HE ENTIRE ADDITION MADE WAS DELETED. FOLLOWING THE SAME, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND DELETE THE DISALLOWANCE MADE OF AGRICULTURE INC OME OF RS. 3,92,238/-. 16. THIS GROUND OF APPEAL OF THE ASSESSEE IS THEREF ORE ALLOWED. 17. GROUND NO. 3 RAISED BY THE ASSESSEE IS AGAINST THE ORDER PASSED BY THE LD. CIT(A) UPHOLDING THE ACTION OF THE ASSESSING OFFICE R FOR INITIATING THE PENALTY PROCEEDING UNDER SECTION 271D FOR VIOLATION OF THE PROVISION OF SECTION 269SS. WE FIND THAT THE ONLY GROUND RAISED BY THE ASSESSEE IS AGAINST THE ACTION OF INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271 D WHICH IS A PREMATURE GROUND AND NEED NOT BE DEALT WITH IN APPEAL. THEREF ORE THIS GROUND OF APPEAL RAISED BY THE ASSESSEE IS DISMISSED. 18. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA MEHROTRA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED :09/02/2016 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, THE CIT( A), THE DR