The Income Tax Officer, Kashmir V. Sh. Ashaq Hussain Wani, Kashmir

ITA 308/ASR/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5537 (ITAT-AMRITSAR)
• Duration Of Justice: 3 year(s) 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 27-04-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: RAHUL DHAWANLD
• Assessee Lawyers: UPENDRA BHAT LD
• Keywords: Unexplained investment; Assessment record
• Section: 133(6); 147; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.308/(ASR)/2014 ASSESSMENT YEAR: 2009-10 PAN: AAIPW1273D INCOME TAX OFFICER ANANTNAG, KASHMIR (J&K) VS. SH. ASHAQ HUSSAIN WANI S/O SH. SONAULLAH WANI C/O TRANS ASIA KESAR CO., DRANGBAL, PAMPORE, PULWANA, KASHMIR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAHUL DHAWAN (LD. D.R.) RESPONDENT BY: SH. UPENDRA BHAT (LD. C.A.) DATE OF HEARING : 27/04/2017 DATE OF PRONOUNCEMENT : 26/07/2017 ORDER PER N. K. CHOUDHRY: THE INSTANT APPEAL HAS BEEN FILED BY THE REVENUE DEP ARTMENT, FEELING AGGRIEVED AGAINST THE ORDER DATED 26.02.2013 PASSED B Y THE LD. CIT(A) JAMMU IN APPEAL NO. 421/11-12 FOR ASST. YEAR: 2009-10 . 2. THE REVENUE DEPARTMENT HAS RAISED THE FOLLOWING GROU NDS OF APPEAL: 1. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINE D/UNDISCLOSED INVESTMENTS. 2. ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. C IT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT DURING THE REMAND PR OCEEDINGS THE ASSESSEE HAS FAILED TO OFFER ANY EXPLANATION IN THE CASE OF PARTIES WHERE LETTER HAS BEEN RECEIVED BACK AS UNDELIVERED. 3. ON THE FACTS AND CIRCUMSTANCES WHETHER THE L D. CIT(A) WAS RIGHT IN NOT APPRECIATING THE FACT THAT THE ASSESSEE HAS NOT REFLECTED ANY OUTSTANDING LIABILITY ON ACCOUNT OF ALLEGED ADVANCE S AS PER THE BALANCE SHEET AS ON 31.03.2009. ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 2 3. THE BRIEF FACTS OF THE CASE ARE AS UNDER: THAT THE ASSESSEE IS AN INDIVIDUAL & A PARTNER IN M/S. T RANS ASIA KESAR CO. A COMPANY WITH A TURNOVER OF RS. 64242990/- FOR A SSESSMENT YEAR 2009-10, IN ADDITION THE ASSESSEE ALSO IS IN BUSINESS IN H IS INDIVIDUAL CAPACITY IN KESAR I.E. SAFFRON WHICH IS AN SPECIALIZED AG RICULTURE PRODUCE. THE ASSESSEE IS ALSO AN AGRICULTURALIST AND HAS INCOME FROM AGRICULTURE ALSO. THAT DURING THE ASSESSMENT, THE ASSESSEE FAILED TO PRODUCE THE PERSONS WHO ARE POSED AT PURCHASERS OF THE AGRICULTURE PRO DUCES AND 20 PERSONS HAVE SENT THEIR REPLIES TO THE OFFICE OF THE ASSE SSING OFFICER STATING THAT THEY HAVE GIVEN THE AMOUNT AS ADVANCE TO THE ASSESSEE, HOWEVER NONE OF THE PERSONS HAS FURNISHED INFORMATION B EYOND THIS TWO TO THREE LINE REPLY WITHOUT MAKING ANY REFERENCE TO THE INFORMATION CALLED FOR IN RESPECT OF ABOVE ISSUES AND EVEN OTHERWISE NONE OF THE PERSONS HAS INTIMATED IN HIS PAN AND NO DETAILS HAVE BEEN PROVIDE D WHETHER HE/SHE IS AN EXISTING ASSESSEE OR NOT, THE ASSESSEE ALTHOUGH CLASSIFIED ALL THE ALLEGED 33 PERSONS AS HIS POTENTIAL CUSTOMERS, BUT NONE HAS FURNISHED HIS PAN, ASSESSMENT PARTICULARS, COPY OF THE ACCOUNT OF THE A SSESSEE OR DETAILS OF HIS FINANCIAL CAPACITY FOR MAKING THE ALLEG ED ADVANCE, AND FURTHER IT REVEALED FROM THE ORDER SHEET THAT THE ASSE SSEE WAS ALWAYS REQUESTED TO PRODUCE THE CONCERNED PERSONS FOR EXAMINATI ON BUT FAILED TO PRODUCE EVEN A SINGLE PERSON TILL DATE. THEREFORE, THE ASSESSING OFFICER CONSIDERED THE FACTUAL POSITIONS ARE AS UNDER: (I) NO BOOKS OF ACCOUNT HAVE BEEN PRODUCED BY THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND EVEN TILL DATE IN SUPPOR T OF HIS CONTENTIONS. THE ASSESSEE WAS ALLOWED SUFFICIENT OPPORTUNITY OF BEIN G HEARD TO PRODUCE THE BOOKS OF ACCOUNT [AS DETAILED ABOVE] BUT HE HAS FAILED TO PRODUCE THE SAME OR ANY OTHER DOCUMENTARY EVIDENCE IN THIS REGARD (EXCEPT THE LIS T OF 33 PERSONS). (II) THE ASSESSEE WAS SPECIFICALLY ASKED TO PRODUCE THE CASH BOOK AND LEDGER MAINTAINED DURING THE PREVIOUS YEAR 2008-09 WHICH H E HAS FAILED TO PRODUCE TILL DATE. ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 3 (III) NO PERSON/PARTY FROM WHOM THE ALLEGED ADVANCE HAS BEEN CLAIMED AS RAISED/ACCEPTED WAS PRODUCED FOR EXAMINATION DURING THE ASSESSMENT PROCEEDINGS. (IV) THE ASSESSMENT PARTICULARS/PAN OF THE SAID PER SONS HAVE NOT BEEN FURNISHED. (V) THE ASSESSEE HAS FAILED TO PROVE THE CREDIT WOR THINESS OF THE PERSONS FROM WHOM THE ALLEGED ADVANCES WERE ACCEPTED. (VI) THE ASSESSEE HAS FAILED TO PROVE THE FINANCIAL CAPACITY OF THE PERSONS FOR MAKING THE ADVANCES FROM WHOM THE ALLEGED ADVANCES WERE CLAIMED ACCEPTED. (VII) THOUGH THE ASSESSEE HAS CLAIMED THAT THE CONC ERNED PERSONS HAPPEN TO BE HIS POTENTIAL CUSTOMERS, BUT HE HAS FAILED TO PR OVE THE SAME AS EVEN THE DETAILS OF PAN /ASSESSMENT PARTICULARS WERE NOT KNO WN TO HIM. EVEN IF FOR ARGUMENT SAKE, THE ASSESSEES CLAIM THAT THE ALLEGE D ADVANCES HAVE BEEN ACCEPTED/TAKEN FROM PERSONS WHO ARE POTENTIAL CUSTO MERS OF THE ASSESSEE, IS CONSIDERED THEN THESE PERSONS SHOULD HAVE BEEN CARR YING SAFFRON BUSINESS AT A GOOD LEVEL AND EXPECTED TO BE HAVING PAN AND INCOME TAX HISTORY WHICH HAS NOT BEEN THE CASE AS VERIFIED DURING LOCAL ENQUIRIES /P ERUSAL OF THE INADEQUATE REPLIES RECEIVED. THIS STATE OF AFFAIRS PERTAINING TO THE A LLEGED ADVANCERS CAST DOUBT ON THE CREDITWORTHINESS OF THE PERSONS INVOLVED AND AS SUCH THE EXPLANATION OFFERED BY THE ASSESSEE IS NOT SUSTAINABLE. (VIII) THE DETAILS OF GENERATION OF CASH LIKE DATE OF GENERATION, PERSON WHO COLLECTED THE CASH HAVE NOT BEEN FURNISHED BY THE A SSESSEE/COUNSEL TILL THIS DATE. (IX) REGARDING THE CLAIM OF THE ASSESSEE THAT THE CASH WAS GENERATED AT SRINAGAR KASHMIR, THE ASSESSEE WAS REQUESTED TO FURNISH THE DETAILS OF CARRYING OF CASH FROM SRINAGAR TO DELHI, DATE OF CARRYING THE CASH, MODE OF TRANSPORTATION USED FOR CARRYING THE CASH FROM SRINAGAR TO DELHI, PARTI CULARS OF PERSONS WHO CARRIED THE CASH FROM SRINAGAR TO DELHI WHICH HAS BEEN CLAI MED AS DEPOSITED IN THE ABOVE MENTIONED BANK ACCOUNTS AT DELHI DURING THE P REVIOUS YEAR 2008-09, BUT THE ASSESSEE HAS FAILED TO FURNISH/PRODUCE THE SAID DETAILS TILL DATE. FINALLY, THE ASSESSING OFFICER WHILE CONSIDERING THE AFOR ESAID FACTS DETERMINED THE LIABILITY I.E. ADDITION OF RS.76,00,0 00/- AND RS.26,00,000/- BY HOLDING AS UNDER : 6) KEEPING IN VIEW THE ABOVE FACTS AND CIRCUMSTANC ES OF THE CASE, I AM OF A CONSIDERED VIEW THAT THE AMOUNT OF ENTIRE CASH DEPO SITS MADE IN THE BANK ACCOUNTS OF THE ASSESSEE DURING THE PREVIOUS YEAR 2 008-09 REPRESENT UNEXPLAINED INVESTMENT MADE BY THE ASSESSEE BY INTR ODUCING UNACCOUNTED AND UNTAXED MONEY AS THE ALLEGED ADVANCES ARE HELD COMP LETELY UNPROVED. THEREFORE, THE ENTIRE AMOUNT OF CASH DEPOSITS MADE BY THE ASSE SSEE IN HIS BANK ACCOUNTS [CASH DEPOSITS OF RS.50,00,000/ MADE IN BANK ACCOUN T NO. 1970- OF JK BANK B/U SOUTH EXTENSION NEW DELHI AND CASH DEPOSITS OF RS.26,00,000/ MADE IN ACCOUNT NO.12314- OF J&K BANK B/U LAJPAT NAGAR DELH I] DURING THE PREVIOUS YEAR 2008-09 AMOUNTING TO RS.76,00,000/ IS TREATED AS UNEXPLAINED ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 4 INVESTMENT/UNDISCLOSED INVESTMENT MADE BY THE ASSES SEE FOR THE SAID YEAR. ACCORDINGLY AN ADDITION OF RS.76,00,000/ IS MADE TO THE INCOME OF THE ASSESSEE ON THIS ACCOUNT FOR THE ASSESSMENT YEAR UN DER REFERENCE. AS THE ASSESSEE HAS CONCEALED THE PARTICULARS/FURNISHED IN ACCURATE PARTICULARS OF THIS INCOME, NECESSARY PENALTY PROCEEDINGS U/S 271(L)/2 74 ARE INITIATED SEPARATELY FOR THE SAID DEFAULT. 7) REGARDING THE CASH DEPOSITS OF RS.26,00,000/ MAD E DURING THE PREVIOUS YEAR 2008-09 IN THE SAVING BANK ACCOUNT NO.2163- MAINTAI NED WITH J&K BANK, B/U SOUTH EXTENSION NEW DELHI JOINTLY BY SH. ASHIQ HUSS AIN WANI AND HIS WIFE SMT. AMAL ASHIQ WANI, THE ASSESSEE IN HIS REPLY FILED ON 18-11-2011 HAS STATED THAT THE ASSESSEE HAS NOT CARRIED OUT ANY DIRECT OR INDI RECT TRANSACTION IN THE SAID ACCOUNT OF HIS OWN AND ALL THE TRANSACTIONS OF THE SAVING ACCOUNT ARE ATTRIBUTABLE TO THE BUSINESS CARRIED ON BY AMAL ASHIQ WANI .IN S UPPORT OF HIS ARGUMENT THE ASSESSEE/ COUNSEL OF THE ASSESSEE HAS FILED A PHOTO COPY OF A SCANNED COPY OF LETTER OF CONFIRMATION FROM SMT.AMAL ASHIQ WANI B UT THE SAID LETTER WAS NOT BEARING ANY DATE. HOWEVER KEEPING IN VIEW THE FACT THE SAID BANK ACCOUNT HAPPENS A JOINT BANK ACCOUNT OF THE HUSBAND AND WIF E WITH SH.ASHIQ HUSSAIN AS FIRST NAME ACCOUNT HOLDER, AND EXAMINING THE PHOTOC OPY OF THE SCANNED DOCUMENT WITHOUT HAVING ANY DATE ON IT, AND CONSIDERING IT N OT AN AUTHENTIC DOCUMENT, THE ASSESSEE/AR WERE ASKED TO PRODUCE THE SECOND NAME A CCOUNT HOLDER IN PERSON FOR EXAMINATION TO ASCERTAIN THE FACTUAL POSITION O F THE OWNERSHIP OF THE SAID JOINT BANK ACCOUNT AND THE CASH DEPOSITS MADE THEREIN DUR ING THE PREVIOUS YEAR 2008- 09. SUBSEQUENTLY THE ASSESSEE/AR FILED A LETTER OF CONFIRMATION ON A NON JUDICIAL PAPER DATED 18/19-11-2011 SIGNED BY SMT. AMAL ASHIQ AND THE SAME IS PLACED RECORDS. HOWEVER THE SECOND NAME ACCOUNT HOLDER HAS NOT BEEN PRODUCED ON THE PLEA THAT SHE IS NOT FEELING WELL AND IS IN DELHI. AFTER CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND THE LETTER OF CONFIRM ATION RECEIVED FROM SMT. AMAL ASHIQ AS DISCUSSED ABOVE, THE AMOUNT OF CASH DEPOSI TS MADE DURING THE PREVIOUS YEAR 2008-09 AMOUNTING TO RS. 26,00,000/ [ +OTHER CREDITS/DEPOSITS LYING IN THE SAID ACCOUNT] ARE TREATED AS BELONGING TO SMT. AMAL ASHIQ IN HER INDIVIDUAL CAPACITY AND AS SUCH PROCEEDINGS U/S 147 HAVE ALREADY BEEN INITIATED IN HER CASE BY ISSUANCE OF NOTICE U/S 148 OF THE IT ACT,1961 ON 27-12-2011 FOR THE ASSESSMENT YEAR 2009-10 AS SH.TARIQ AHMAD WANI, (BROTHER OF SH. AISHIQ HUSSAIN WANI AND BROTHER IN LAW OF SMT. AMAL ASHIQ ]AFTER ENQUIRING FROM CA SHOWKAT AHMAD/COUNSEL HAS STATED[ VIDE ORDER SHEET ENTRY DATED 22-12-2011] THAT SMT. AMAL ASHIQ WANI HAS NOT FILED THE ROI FOR THE ASSESSMENT YEAR 2009-10 TILL DATE].HOWEVER IN ORDER TO SAFEGUARD THE INTERE STS OF THE REVENUE, THE SAID AMOUNT OF CASH DEPOSITS AMOUNTING TO RS.26,00,000/ IS TREATED AS UNEXPLAINED INVESTMENT/UNDISCLOSED MADE BY THE ASSESSEE AND IS BEING ASSESSED IN HIS HANDS ON PROTECTIVE BASIS AT THIS STAGE FOR THE A SSESSMENT YEAR UNDER REFERENCE. ACCORDINGLY AN ADDITION OF RS.26, 00,000/ IS MADE TO THE INCOME OF THE ASSESSEE ON PROTECTIVE BASIS FOR THE ASSESSMENT YEAR UNDER REFERENCE. AS THE ASSESSEE HAS CONCEALED THE PARTICULARS/FURNISHE D IN ACCURATE PARTICULARS OF THIS INCOME, NECESSARY PENALTY PROCEEDINGS U/S 271( L)/274 ARE INITIATED SEPARATELY FOR THE SAID DEFAULT. ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 5 4. FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD . CIT(A), THE ASSESSEE PREFERRED THE FIRST APPEAL BEFORE THE CIT(A) AN D EMPHASIZED AND RAISED THE SUBMISSIONS REGARDING AN ADDITION OF RS.76,0 0,000/- AS UNDER: THE LD. A.O HAS TREATED THE DEPOSIT OF RS.7600000/ - IN THE BANK ACCOUNTS AS UNEXPLAINED / UNDISCLOSED INVESTMENT IG NORING THE FOLLOWING VITAL POINTS EXPLAINED DURING SCRUTINY PROCEEDINGS: I) THE LIST OF PERSONS FROM WHOM ADVANCES WERE RECE IVED WAS DULY SUBMITTED TO THE LD. A.O. II) THAT THE LD. A.O CALLED FOR NECESSARY VERIFICAT ION OF THESE PERSONS U/S 133(6) AND ALMOST ALL THE PERSONS HAVE CONFIRME D THE AMOUNT DEPOSITED WITH THE ASSESSEE. III) THAT THE LD. A.O AT LAST PARA OF PAGE 26 OF HI S ORDER CONFIRMS RECEIPT OF THE CONFIRMATION FROM THE DEPOSITORS BUT REJECTS THE SAME ON THE PLEA THAT THE REPLY IS NOT OF MORE THAN TWO OR THRE E LINES & PAN NO'S HAVE NOT BEEN GIVEN. THE LD. A.O IS LOSING SIGHT OF THE FACT THAT CONFIR MATION IS OF TWO THREE LINES ONLY & IT IS NOT NECESSARY ESPECIALLY F OR PERSONS LIVING IN AGRICULTURE BELT & DEALING IN AGRICULTURE TO HAVE P AN NO. IT IS ALSO IMPORTANT TO NOTE THAT THE ASSESSEE CANNOT BE PENAL IZED FOR HIS DEPOSITOR DOES NOT HAVE/ DECLARE A PAN NO. IV) THE LD. A.O ON PAGE 27 PARA 1ST OF HIS ORDER CONFIR MS HAVING CONFIRMATIONS DONE THROUGH HIS INSPECTOR WHO HAS VE RIFIED THE SAME FROM THE DEPOSITORS' BUT REJECTS THE CONFIRMATION T HAT MOST OF THEM ARE IN RELATION TO THE ASSESSEE AND DO NOT HAVE A T AX HISTORY AND ARE NOT CONNECTED WITH SAFFRON BUSINESS. THE LD. A. O HAS IGNORED THE FACT A) THAT THERE IS NO BAR UNDER THE I.T. ACT, 1961 T O RAISE LOANS FROM RELATIVES. B) THE LOANS FROM REFERRED 33 PERSONS NORMALLY IS IN THE BRACKET OF 1.5 TO 4 LACS ONLY AND BEING PERSONS FROM AGRICULTU RE BELT IT IS NOT NECESSARY FOR DEPOSITORS' TO HAVE TAXATION HISTORY. V) THE DEPOSITS WERE GIVEN TO THE ASSESSEE ON PERSONAL FAITH OUT OF THE PERSONAL SAVINGS OF THESE DEPOSITORS. IN VILLAGES S MALL INVESTMENTS IN AGRICULTURE PRODUCE OF THEIR AREA IS GENERALLY C ARRIED OUT (SMALL TIME TRADERS) AND IT IS NOT NECESSARY FOR SUCH PERS ONS TO BE AN ESTABLISHED TRADER OF THAT PRODUCE/ COMMODITY VI) THAT THE LD. A.O HAS REJECTED THE PLEA OF THE ASSES SEE ON THE GROUND OF HAVING FAILED TO PROVE CREDIT WORTHINESS OF THE DEPOSITOR IGNORING THE FACT THAT THE ACCEPTOR OF SMALL AMOUNT S OF DEPOSITS CANNOT INSIST ON PROOF OF CREDIT WORTHINESS OF HIS DEPOSITOR. ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 6 VII) REGARDING THE DEPOSIT OF CASH AT DELHI IT IS STATED BY THE ASSESSEE THAT HE RESIDES AT PAMPORE THAT COMES UNDER DISTRIC T PULWAMA WHICH IS STILL NOT FREE FROM MILITANT ACTIVITY AND DEPOSITING CASH OF ABOUT 75 LACKS LOCALLY COULD HAVE CREATED PROBLEMS/ RISKS FOR THE ASSESSEE. VIII) IT IS ALSO CLARIFIED BY THE ASSESSEE THAT CASH WAS COLLECTED BY HIMSELF & TAKEN IN THE FAMILY VEHICLE TO DELHI. IX) FOR CLARIFICATION RS. 26 LACS WERE ADDED BY LD. A.O ON PROTECTIVE BASIS. HOWEVER THE/ LD. A.O HAS MADE THE SUSTENTATI VE ADDITION IN THE HANDS OF MRS. AMAL ASHAQ I.E. WIFE OF THE ASSES SEE & ACCORDINGLY DELETED THE PROTECTIVE ADDITION. AND WITH REGARD TO THE ADDITION OF RS.26,00,000/-SUB MITTED THAT THE SAID AMOUNT WAS DEPOSITED BY WAY OF CASH IN THE NAME OF APPELLANT WIFE IN THE BANK ACCOUNT AND THE SAME REFLECTS FROM THE BANK STAT EMENT. THE LD. CIT(A) SOUGHT THE REMAND REPORT DATED 18.02. 2014 AND WHILE CONSIDERING THE SAID REMAND REPORT AS WELL AS FACTUAL PO SITION OF THE CASE DELETED AN ADDITION MADE BY THE ASSESSING OFFICER BY HO LDING AS UNDER: 6. DETERMINATION 6.1. GROUND OF APPEAL NO 1 IS GENERAL IN NATURE, RE QUIRE NO ADJUDICATION AND ACCORDINGLY DISMISSED. 6.2. GROUND OF APPEAL NO 2 RELATES TO ADDITION OF R S.76,00,000/- ON ACCOUNT OF UNEXPLAINED CASH DEPOSITS IN THE BANK ACCOUNT. DURI NG THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS OBSERVED BY THE AO THAT TWO SAV ING BANK ACCOUNT IN WHICH CASH OF RS 76,00,000/- WAS DEPOSITED HAS NOT BEEN R EFLECTED IN THE BOOKS OF ACCOUNTS. THE APPELLANT DURING THE COURSE OF APPELL ATE PROCEEDINGS ARGUED THAT HE IS ALSO ENGAGED IN THE BUSINESS OF SAFFRON TRADI NG AND HAS RECEIVED ADVANCES FROM 33 PARTIES IN ORDER TO MAKE PURCHASES OF SAFFR ON AS THE PRICES OF SAFFRON WERE LIKELY TO FALL DOWN. THE NOTICE U/S 133(6) WER E ISSUED TO THESE PARITIES CALLING FOR CONFIRMATION OF PAYMENTS, THEIR PAN, DE TAILS OF INCOME TAX RETURNS AND DETAILS OF PAYMENTS AS TO THEIR NATURE AND SOURCE. HOWEVER, 20 OUT OF 33 PARTIES RESPONDED BUT FILED ONLY A CONFIRMATION OF PAYMENTS IN CASH BUT DID NOT PROVIDE THEIR PAN, INCOME TAX RETURN AND SOURCE OF PAYMENT TO PROVE THEIR CREDIT WORTHINESS AND GENUINENESS OF TRANSACTIONS. ACCORDI NGLY, THE AO MADE ADDITION OF THE CASH DEPOSITS IN UNACCOUNTED BANK ACCOUNTS T O THE INCOME OF THE APPELLANT. ON THE REQUEST OF THE APPELLANT, MATTER WAS REMANDE D BACK TO AO FOR VERIFICATION FROM THE PARTIES. THE AO ISSUED NOTICES TO THESE PA RTIES AND IN RESPONSE 21 PARTIES SUBMITTED THEIR REPLIES THROUGH POST, 6 PAR TIES ATTENDED THE OFFICE OF AO, ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 7 THE LETTERS TO THREE PARTIES WERE RECEIVED BACK AND BALANCE THREE PARTIES DID NOT RESPOND. HOWEVER NONE OF THESE PARTIES COULD PROVID E PAN AND INCOME TAX RETURN. I HAVE GONE THROUGH THE SUBMISSION OF THE APPELLANT , ASSESSMENT RECORD AND REMAND REPORT. IT IS OBSERVED THAT THE APPELLANT HA S CLAIMED TO HAVE RECEIVED THE ADVANCES FROM VARIOUS PARTIES IN SRINAGAR AND OUT O F 33 PARTIES, 27 PARTIES HAVE CONFIRMED TO HAVE MADE THESE DEPOSITS. REGARDING RE MAINING 6 PARTIES THE AR OF THE APPELLANT HAS SATISFACTORILY EXPLAINED THEIR RE SPONSES IN THE REJOINDER TO THE REMAND REPORT ABOVE. CONFIRMATION OF MAJORITY OF PA RTIES CLEARLY SHOWS THAT THE CASH DEPOSITED IN THE BANK ACCOUNT OF THE APPELLANT ARE OUT OF ADVANCES RECEIVED FROM THE 33 PARTIES DEALING IN SAFFRON TRADE AND CO ULD NOT BE TREATED AS UNEXPLAINED DEPOSITS. THE FACT THAT THESE PARTIES H AVE NOT OBTAINED THEIR PAN OR FILED INCOME TAX RETURNS COULD NOT JUSTIFY THE ADDI TION WHEN THE PARTIES THEMSELVES HAVE CONFIRMED TO HAVE MADE THE DEPOSITS . THE APPELLANT COULD NOT BE PENALIZED FOR THE DEFAULT OF THE PERSONS ADVANCING THE MONEY. FROM THE PERUSAL OF THE FACTS, I AM OF THE OPINION THAT THE ADDITION OF RS 76,00,000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED DEPOSITS IS NOT JUSTIFIED . THIS GROUND OF APPEAL IS ALLOWED AND A RELIEF OF RS 76,00,000/- IS ALLOWED. FURTHER, IT IS DIRECTED TO PASS THE INFORMATION WITHOUT DELAY TO THE TERRITORIAL ASSESSING OFFICER S FOR NECESSARY ACTION IN RESPECT OF 33 PARTIES WHO HAVE MADE CASH ADVANCES AND CLAIMED TO BE RETAILERS BUT HAVE NOT OBTAINED PAN OR FILED THEIR INCOME TAX RETURNS . 6.3. GROUNDS OF APPEAL NO 3 RELATES TO PROTECTIVE A DDITION OF RS 26,00,000/- ON ACCOUNT OF CASH DEPOSITED IN THE BANK ACCOUNT IN TH E JOINT NAME OF THE APPELLANT AND HIS WIFE. DURING THE COURSE OF ASSESSMENT, THRE E UNDISCLOSED BANK ACCOUNTS OF THE APPELLANT WERE FOUND. OUT OF THESE, ONE BANK ACCOUNT WAS IN THE JOINT NAME OF THE APPELLANT & HIS WIFE IN WHICH CASH DEPO SITS OF RS. 26,01,1000/- WERE FOUND. THE APPELLANT SUBMITTED THAT ALL CASH D EPOSITED IN THE SAID ACCOUNT PERTAINS TO HIS WIFE AND ALL EXPLANATIONS REGARDING ITS SOURCE COULD BE GIVEN BY HER. THE APPELLANT ALSO SUBMITTED A CONFIRMATION OF THE APPELLANT THAT ALL THE MONEY DEPOSITED IN THE SAID ACCOUNT PERTAINS TO HER AND NOT HER HUSBAND. ACCORDINGLY HER CASE WAS REOPENED U/S 147 OF THE AC T AND THE SAID AMOUNT WAS ASSESSED IN HER HANDS. THE APPEAL IS THE CASE OF HI S WIFE, SMT. AMAL WANI, IN RESPECT ADDITION OF THE CASH DEPOSITS OF RS 26 LAKH S WAS ALSO ADJUDICATED BY ME AND IT WAS FOUND THAT THE CASH DEPOSITS OF RS.26,01 ,000/- IN THE SAID BANK ACCOUNT WAS PARTLY OUT OF CASH BALANCES OF PREVIOUS YEARS AND PARTLY OUT OF SALE PROCEEDS OF HER RETAIL BUSINESS. SINCE, THE DEPOSIT S IN THE SAID BANK ACCOUNT HAVE BEEN EXAMINED AND ASSESSED IN THE HAND OF THE WIFE OF THE APPELLANT AND NO ADVERSE INFERENCE DRAWN IN THE FIRST APPEAL, THE PR OTECTIVE ADDITION IN THE HANDS OF THE APPELLANT NEEDS TO BE DELETED. THIS GROUND O F APPEAL IS ALLOWED AND PROTECTIVE ADDITION OF RS.26,01,000/- IS DELETED. 6.4. GROUND OF APPEAL NO 4 IS GENERAL IN NATURE, RE QUIRE NO ADJUDICATION AND ACCORDINGLY DISMISSED. 5. NOW FEELING AGGRIEVED AGAINST THE ORDER PASSED BY THE LD. CIT(A), THE REVENUE DEPARTMENT PREFERRED THE INSTANT APPEAL ON THE GROUNDS MENTIONED IN PARA NO. 2 AND LD. DR IN SUPPORT OF ITS CASE SUBMITTE D THAT ON THE FACTS ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 8 AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) WAS WRONG IN DELETING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED/UNDISCLOSED INV ESTMENTS, FURTHER THE LD. CIT(A) WAS WRONG IN NOT APPRECIATING THE FACT THAT DURING THE REMAND PROCEEDINGS, THE ASSESSEE HAS FAILED TO OFFER ANY E XPLANATION IN THE CASE OF PARTIES WHERE LETTERS HAS BEEN RECEIVED BACK AS UND ELIVERED. FURTHER THE LD. DR SUBMITTED THAT CIT WAS WRONG IN NOT APPRECI ATING THE FACT OF THE ASSESSEE HAS NOT REFLECTED IN OUTSTANDING LIABILITY ON ACCOU NT OF ALLEGED ADVANCES AS PER THE BALANCE SHEET AS ON 31.03.2009. THE LD. DR FURTHER RELIED UPON THE FOLLOWING JUDGME NTS: (I) COMMISSIONER OF INCOME TAX VS. N TARIKA PROPERTIES INVESTMENTS PVT. LTD. (2014) 264 CTR 0472 (DEL) : (II) COMMISSIONER OF INCOME TAX VS. NR PORTFOLIO PVT. LT D. (2013) 96 DTR 0281(DEL). (III) BLOWELL AUTO (P) LTD. VS. ASSISTANT COMMISSIONER OF INCOME TAX (2008) 219 CTR 0185. (IV) COMMISSIONER OF INCOME TAX VS. MEERA & CO. (1986) 5 2 CTR 0053. AND SUBMITTED THAT MERE ACCEPTANCE OF DECLARATION OF T HE CREDITORS DID NOT MEAN THAT ONUS U/S 68 HAS DISCHARGED BY THE ASSESSE E AND EVEN OTHERWISE, THE ASSESSEE FILED ONLY AFFIDAVITS OF CREDITOR S IN WHICH THE CREDITORS CONFIRMED THE LOAN TRANSACTIONS BUT DID NOT DISCL OSE THE SOURCE OF THEIR INCOME- THUS, THOUGH THE CREDITORS WERE IDENTIFIE D BUT THEIR CREDITWORTHINESS AND GENUINENESS OF TRANSACTIONS WERE NOT E STABLISHED, THEREFORE, THE A.O. WAS JUSTIFIED IN SUSTAINING THE AD DITION U/S 68 OF THE ACT. IT WAS FURTHER SUBMITTED BY THE LD. DR, THAT SIX PEOP LE HAD NOT GIVEN ANY CONFIRMATION AND THEIR CREDITWORTHINESS AND GENUINE NESS NOT VALID BECAUSE SUCH HUGE AMOUNT IS INVOLVED AND THE CREDITORS FAI LED TO SHOW THEIR ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 9 PAN NO., SOURCE OF INCOME AND EVEN OTHERWISE NOT FILING THE RETURNS, THEREFORE, THE ORDER PASSED BY THE CIT IS LIABLE TO BE SET ASIDE. 6. ON THE CONTRARY, THE LD. AR OF THE ASSESSEE SUBMITTED TH AT ASSESSEE IS AN INDIVIDUAL AND HAD TAKEN PERSONAL ADVANCES FROM HIS BUYERS AND THE CASE OF THE ASSESSEE IS NOT AUDITABLE AND 90% PERSONS CONFIRMED THE QUERIES AND EVEN OTHERWISE, THERE IS NO BAR TO TAKE ADVANCES FROM R ELATIVES. 7. IN REJOINDER THE LD. DR DRAWN OUR ATTENTION TO THE PAGE 24 AND PARA NO. 4 OF THE ASSESSMENT YEAR AND SUBMITTED THAT THE ASSESSIN G OFFICER CONSIDERED THE BALANCE SHEET OF THE ASSESSEE AS ON 31.03.20 09 WHEREAS THE ASSESSEE HAS DECLARED A LIABILITY OF RS.15,270/- ONLY ON A CCOUNT OF EXPENSES PAYABLE. NO LIABILITY ON ANY OTHER ACCOUNT HAS BEEN D ECLARED AS ON 31.03.2009 IN THE BALANCE SHEET FILED ALONG WITH THE RETURN OF INCOME, THEREFORE, ALL THE CREDITORS ARE FAKE AND THEIR CREDIT WORTHINESS ARE IN DOUBT AND CANNOT BE RELIED UPON, THEREFORE THE ORDER PASSED BY THE LD. CIT IS LIABLE TO BE SET ASIDE. 8. WE HAVE GONE THROUGH WITH THE FACTS AND CIRCUMSTANCES O F THE CASE AND ALSO RIVAL SUBMISSIONS OF THE PARTIES AS WELL AS CASES RELIED UPON THE BY THE LD. DR. IN THE INSTANT CASE, THE LD. CIT(A) WHILE RELYING UPON THE REMAND REPORT GIVEN RELIEF TO THE ASSESSEE BY HOLDING THAT ASSESSEE CLEARLY ESTABLISHED THAT THE CASH DEPOSITS IN THE BANK ACCOUNT OF THE APPELLANT ARE OUT OF ADVANCES RECEIVED FROM 33 PARTIES DEALING IN SA FFRON TRADE AND THEREFORE CAN NOT BE TREATED AS UNEXPLAINED DEPOSIT. HO WEVER, THE LD. CIT(A) DID NOT CONSIDER RELEVANT TO GET DETAILS OF PA N CARD AND I.T. RETURNS OF THE PARTIES. IN THE CASE OF BLOWELL AUTO (PVT.) LTD . VS. ACIT (2009)177 TAXMAN 0261 (P&H), THE GENUINENESS OF THE TRANSACTION WA S UNDER CONSIDERATION AND THE ASSESSEE FILED ONLY AFFIDAVITS OF TH E CREDITORS IN WHICH THE CREDITORS CONFIRMED THE LOAN TRANSACTIONS BUT DID N OT DISCLOSE THE SOURCE OF THEIR INCOME, THOUGH THE ASSESSEE HAS ESTABLISHED THE I DENTITY OF THE CREDITORS BY FILING THEIR AFFIDAVITS, BUT IN THE AFFI DAVITS THEY HAVE NOT ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 10 MENTIONED ANY SPECIFIC SOURCE OF MONEY WHICH WAS ADVANCED B Y THEM. IT IS WELL-SETTLED THAT IT IS FOR THE ASSESSEE TO PROVE NOT ONL Y THE IDENTITY OF THE CREDITOR, BUT THE CAPACITY OF THE CREDITOR TO ADVANCE TH E MONEY AND ALSO THE GENUINENESS OF THE TRANSACTION. FURTHER IN THE CASE OF COMMISSIONER OF INCOME TAX VS. ME ERA & CO. (1986)24 TAXMAN 0658 (P&H), WHILE DEALING WITH BURDE N OF PROOF U/S 68 WAS PLEASED TO HOLD THAT MERE ACCEPTANCE OF DECLARATION O F THE CREDITOR DID NOT MEAN THAT ONUS U/S 68 HAD BEEN DISCHARGED BY THE ASSE SSEE AND IT IS OPEN FOR THE REVENUE TO DISPUTE GENUINENESS THEREOF. NOW COMING TO THE INSTANT CASE, THE ASSESSEE ALTHOUGH PROD UCED THE CREDITORS IN THE ASSESSMENT PROCEEDINGS AS WELL AS REMAND P ROCEEDINGS, HOWEVER, THE CREDITORS DID NOT FILE THEIR PAN NO. AND /OR INCOME TAX RETURNS AND EVEN OTHERWISE IT REFLECTS FROM THE BALANCE SHEET TH AT THE LIABILITY OF THE CREDITORS AS ON YEAR ENDING 31 ST MARCH, 2009 HAD BEEN SHOWN AS RS.15,270/- ONLY BY THE ASSESSEE . IT IS RELEVANT TO NOTE HEREIN THAT LD CIT(A) DID NOT CONSIDER THE CREDITWORTHINESS OF THE CREDITORS AND BALANCE SHEET SPECI FICALLY WHICH ACCORDING TO OUT MIND IS RELEVANT TO DECIDE THE CONTROVE RSY IN ISSUE . BECAUSE IN THE INSTANT CASE, MAJORITY OF CREDITORS HAVE B EEN PRODUCED BY THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND CONFIRMED THE P AYMENT TO THE ASSESSEE, HOWEVER, FAILED TO PRODUCE ANY CORROBORATIVE MA TERIAL QUA CREDITWORTHINESS AND THEIR SOURCE OF INCOME, AND THE LD C IT(A) FAILED TO CONSIDER BALANCE SHEET AND MOST OF THE CREDITORS ARE VILL AGERS AND LIVING IN REMOTE AREA THEREFORE, CONSIDERING THE PECULIAR FACTS AN D CIRCUMSTANCES OF THE CASE AND IN THE INTEREST OF JUSTICE, WE FEEL IT APP ROPRIATE TO REMIT THE CASE TO THE FILE OF THE CIT(A) TO RE-VERIFY THE GENUI NENESS OF THE TRANSACTIONS BY CONSIDERING THE BALANCE SHEET AND CREDITWORTHINESS OF T HE CREDITORS . ITA NO.308/ASR/2014 ASS T. YEAR: 2009-10 11 HENCE THE CASE IS REMANDED BACK TO THE FILE OF THE CIT(A) FOR DECIDING AFRESH. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE DEPA RTMENT IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 26 .07.2017. SD/- SD/- (T. S. KAPOOR) (N.K.CHOUDHRY ) ACCOUNTANT MEMBER JUDIC IAL MEMBER DATED:26.07.2017. /GP/ SR.PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER