Sh. Inderjeet Singh Arora, Bathinda V. The Income Tax Officer, Bathinda

ITA 310/ASR/2014

• Counselvise Citation: [2018] 118 COUNSELVISE.COM (IT) 8205 (ITAT-AMRITSAR)
• Duration Of Justice: 4 year(s) 7 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-12-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 22-10-2018
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Unexplained investment
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (SMC) BEFORE SH. SANJAY ARORA, ACCOUNTANT MEMBER I.T.A NO.310/ASR/2014 ASSESSMENT YEAR: 2008-09 INDERJEET SINGH ARORA, STANDARD SWEET CORNER, BIBIWALA ROAD, BATHINDA. [PAN: ADVPA 0985G] VS. ITO, WARD-1(1), BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY: SH. P.N. ARORA (C.A) RESPONDENT BY: SH. CHARAN DAS (D .R) DATE OF HEARING : 22.10.2018 DATE OF PRONOUNCEMENT: 31.12.2 018 ORDER PER SANJAY ARORA, A.M. THIS IS AN APPEAL BY THE ASSESSEE DIRECTED AGAINST THE ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS), BATHINDA (CI T(A) FOR SHORT) DATED 08.01.2014, DISMISSING THE ASSESSEES APPEAL CONTES TING HIS ASSESSMENT U/S. 143(3) OF THE INCOME TAX ACT, 1961 ('THE ACT' HEREINAFTER) FOR ASSESSMENT YEAR (A.Y.) 2008-09 VIDE ORDER DATED 20.12.2010. 2. THE APPEAL IS DELAYED BY A PERIOD OF 21 DAYS. TH E REASON STATED IN THE CONDONATION PETITION DATED 06/8/2016 BY THE ASSESSE E IS THE NON-COMMUNICATION OF THE IMPUGNED ORDER, SERVED ON HIS COUNSEL, SH.PANKA J ARORA, ON 17/2/2014, IN TIME. THE EXPLANATION APPEARS BONA FIDE , AND THE DELAY CANNOT BE SAID TO BE SUBSTANTIAL. THE DELAY WAS ACCORDINGLY CONDONED AND THE HEARING IN THE MATTER PROCEEDED WITH. ITA NO.310/ASR/2014 (A.Y.2008-09) INDERJEET SINGH ARORA V. ITO 2 3. THE APPEAL RAISES TWO INTER-RELATED ISSUES. THE FACTS OF THE CASE, WHICH ARE SIMPLE AND UNDISPUTED, ARE THAT THE ASSESSEE, A SWE ET MEAT MANUFACTURER (HALWAI), FILED HIS RETURN OF INCOME FOR THE RELEVANT YEAR AT RS.1,09,950/-, INCLUDING RS. 23,350/- AS INCOME FROM THE SOURCES. THE SAME WAS S ELECTED FOR BEING SUBJECT TO THE VERIFICATION PROCEDURE UNDER THE ACT AS THE ASS ESSEE HAD DEPOSITED RS.11,94,700 IN HIS AXIS BANK ACCOUNT DURING THE YE AR. THE SOURCE THEREOF WAS EXPLAINED AS UNDER: - OPENING CASH BALANCE: RS.3.00 LACS - SALE OF HOUSE: RS.5.50 LACS - CONTRIBUTION FROM WIFE: RS.2.00 LACS - TOTAL: RS.10.50 LACS THE ASSESSING OFFICER (AO) ACCEPTING THE ASSESSEES EXPLANATION FOR RS.5.50 LACS, I.E., THE SALE OF HIS RESIDENTIAL HOUSE, ADDED THE BALANCE RS.6.43 LACS (RS.11.93 LACS - RS.5.50 LACS) AS UNEXPLAINED CASH DEPOSIT IN BANK . THE PURCHASE OF THE RESIDENTIAL HOUSE SOLD (ON 17/12/2007), DULY EVIDENCED BY THE S ALE DEED, REFLECTED IT TO HAVE BEEN PURCHASED ON 31.12.2004 FOR RS. 2.90 LACS, SO THAT THE DIFFERENCE OF RS.2.60 LACS (I.E., RS.5.50 LACS - RS.2.90 LACS) WAS LIABLE TO BE ASSESSED AS SHORT-TERM CAPITAL GAIN (STCG). THE ASSESSEE EXPLAINED TO HAVE INCURRE D RS.2.89 LACS ON THE REPAIRS/ IMPROVEMENT, AND THAT THEREFORE NO INCOME ACCRUED A S STCG, WHICH PLEA, ON ACCOUNT OF IT BEING UNEVIDENCED, WAS NOT ACCEPTED. THE ASSESSMENT WAS CONFIRMED FOR THE SAME REASONS, I.E., THE ASSESSEES CASE BEI NG WHOLLY UNSUBSTANTIATED, EVEN AS THE LD. CIT(A) ALLOWED RELIEF IN RESPECT OF CONTRIB UTION BY WIFE, AT RS.50,000/-. AGGRIEVED, THE ASSESSEE IS IN SECOND APPEAL. 3. THE LD. COUNSEL FOR THE ASSESSEE, SHRI P. N. AR ORA, ADVOCATE, DURING HEARING FAIRLY CONCEDED TO THE ASSESSEES CASE BEING WHOLLY UNEVIDENCED, AND THAT THEREFORE ITA NO.310/ASR/2014 (A.Y.2008-09) INDERJEET SINGH ARORA V. ITO 3 A REASONABLE ESTIMATE IS REQUIRED TO BE MADE. ON TH E BASIS OF THE PURCHASE AND SALE DEEDS, HE WOULD FURTHER POINT OUT THAT SOME CONSTRU CTION ACTIVITY HAD TAKEN PLACE INASMUCH AS THERE WAS A DIFFERENCE BETWEEN WHAT WAS PURCHASED AND WHAT WAS SOLD. THE BENCH NOTICING THAT THE ASSESSEE BEFORE T HE LD. CIT(A) SUBMITTED THAT HE HAD OBTAINED A HOUSING LOAN FROM CITI BANK TOWARDS HOUSE CONSTRUCTION, FOR WHICH EVIDENCE, THOUGH PRODUCED, HAD NOT BEEN CONSIDERED BY THE AO (REFER PARAGRAPH 2.3/PG. 3 OF THE IMPUGNED ORDER), SHRI ARORA WOULD EXPLAIN THAT THE CONSTRUCTION ACTIVITY HAVING TAKEN PLACE DURING FINANCIAL YEARS 2004-05 TO 2005-06 AND, THUS, BEING OLD, COULD NOT BE PRODUCED. THE SAME, HE ADDE D, EVEN IF UNEXPLAINED AS TO ITS SOURCE, COULD NOT BE DEEMED AS THE INCOME FOR THE C URRENT YEAR. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) WOULD, ON THE OTHE R HAND, SUBMIT THAT THE ASSESSEES CASE IS WHOLLY UNSUBSTANTIATED, WITH HE IN FACT HAVING BEEN ALREADY ALLOWED REASONABLE RELIEF BY THE REVENUE AUTHORITIE S. 4. I HAVE HEARD THE PARTIES, AND PERUSED THE MATERI AL ON RECORD. THE ASSESSEE HAS TAKEN A PRELIMINARY OBJECTION THAT THE ASSESSMENT HAVING BEEN MADE BY INVOKING S. 69, WHICH IS QUA INVESTMENT, WHILE THE IMPUGNED ADDITION IS IN RESPECT OF CASH DEPOSIT/S IN BANK. M ENTION OF A WRONG SECTION; THE ADDITION BEING SQUARELY COVERED BY SEC. 69A, OR EVE N NON-MENTION OF A SECTION IS, UNDER THE CIRCUMSTANCES, AND EVEN AS OBSERVED BY TH E BENCH DURING HEARING, OF NO CONSEQUENCE IN TERMS OF THE TRITE LAW [REFER, INTER ALIA, L. HAZARI MAL KATHULIA V. ITO [1961] 41 ITR 12 (SC); ISHA BEEVI V. TRO [1975] 101 ITR 449 (SC); NAMDEV ARORA V. CIT [2016] 389 ITR 434 (P&H); AND CIT V. HARGOPAL BHALLA & SONS [1971] 82 ITR 243 (P&H)]. ON MERITS, THE AO IN THE REMAND REPORT (PB PGS. 29- 30) CLEARLY STATES THAT NO EVIDENCE AS TO THE HOUSING LOAN FROM CITI BANK (OR ANY OTHER INSTITUTION FOR THAT ITA NO.310/ASR/2014 (A.Y.2008-09) INDERJEET SINGH ARORA V. ITO 4 MATTER) HAD BEEN FURNISHED BEFORE HIM IN THE ASSESS MENT PROCEEDINGS. THE ASSESSEE IN ANY CASE HAS PREFERRED NOT TO RELY THEREON EVEN AS, WITHOUT DOUBT, IT COULD DIRECTLY EVIDENCE THE CONSTRUCTION AND, FURTHER, TH E INVESTMENT/EXPENDITURE THEREON MADE IN F.YS. 2004-05 AND 2005-06 DURING WHICH THE CONSTRUCTION IS STATED TO HAVE TAKEN PLACE, OR THE LOAN TAKEN FOR THE PURPOSE REPA ID DURING THE EARLIER YEARS, AND WHICH, AS SUBMITTED BY THE LD. COUNSEL, COULD NOT B E INCLUDED IN THE CURRENT YEARS INCOME EVEN IF UNEXPLAINED AS TO ITS SOURCE. PRESUM ABLY, SOME EXPENDITURE, OR REPAYMENT OF LOAN, STANDS INCURRED OR AS THE CASE M AY BE MADE DURING THE CURRENT YEAR, FOR THE ASSESSEE TO HAVE NOT PRODUCED HIS LOA N STATEMENT. IN FACT, THE LOAN, IF NOT ASSUMED (TAKEN OVER) BY THE PURCHASER OF THE HO USE, WOULD APPARENTLY BE LIQUIDATED BY THE ASSESSEE DURING THE CURRENT YEAR, I.E., PRIOR TO ITS SALE ON 17/12/2007. THERE IS, IN ANY CASE, NO BASIS TO DETE RMINE THE VOLUME OF THE EXPENDITURE, WHICH DEFINITELY APPEARS TO HAVE BEEN INCURRED BY THE ASSESSEE, EVEN ASSUMING THE ENTIRE OF IT TO BE IN THE NATURE OF IM PROVEMENT AND THUS DEDUCTIBLE IN COMPUTING STCG, AND NOT IN THE NATURE OF CURRENT REPAIRS. THE DESCRIPTION OF THE PROPERTY, TO THE VARIATION IN WHICH THE LD. COUNSEL ADVERTS, TO SHOW THAT SOME CONSTRUCTION HAD BEEN CARRIED OUT, DOES NOT DESCRIB E THE EXTENT OF THE CONSTRUCTION/ MODIFICATION. IN FACT, THE SAME IS INCOMPLETE. FOR EXAMPLE, AS NOTICED DURING HEARING, THE DESCRIPTION IN THE SALE DEED DOES NOT MENTION KITCHEN, WHICH IS INCOMPREHENSIBLE AS A RESIDENTIAL HOUSE IS NOT COMP LETE WITHOUT IT, AND IN FACT FINDS MENTION IN THE PURCHASE DEED. THEN, AGAIN, THERE IS NOTHING ON RECORD TO SHOW THE AREA CONSTRUCTED, MUCH LESS THE PERIOD OF CONSTRUCT ION, WHICH COULD HAVE TAKEN PLACE EVEN DURING THE CURRENT YEAR PRIOR TO THE SAL E. RATHER, AS AFORE-NOTED, IF NOT SO, OR NO PART OF THE LOAN REPAID DURING THE CURREN T YEAR, WHAT, ONE WONDERS, STOPPED THE ASSESSEE FROM FURNISHING EVIDENCE IN TH IS REGARD, PARTICULARLY THE BANK LOAN ACCOUNT. NON-PRODUCTION OF EVIDENCE AVAILABLE WITH THE ASSESSEE, OR WHICH HE ITA NO.310/ASR/2014 (A.Y.2008-09) INDERJEET SINGH ARORA V. ITO 5 OUGHT TO OR IS EXCEPTED TO POSSESS IN THE NORMAL CO URSE OF EVENTS, ENTITLES THE COURT TO DRAW AN ADVERSE INFERENCE (REFER: UNION OF INDIA V. RAI DEB SINGH BIST [1973] 88 ITR 200 (SC); KALAYANI MEDICAL STORE V. CIT [2016] 386 ITR 387 (CAL)). THIS NON-PRODUCTION IS INDEED SURPRISING AS IN THE INSTA NT CASE, AS IT APPEARS, AND EVEN AS AFORE-NOTED, THE CONSTRUCTION MAY HAVE STARTED BEFO RE THE COMMENCEMENT OF THE CURRENT YEAR, SO THAT TO THE EXTENT PAID FOR PRIOR TO THE CURRENT YEAR, COULD NOT POSSIBLY BE ASSESSED AS THE INCOME FOR THE CURRENT YEAR. SO, HOWEVER, THE LOAN COULD BE REPAID DURING THE CURRENT YEAR, SO THAT TO THE EXTENT IT IS, IT WOULD WARRANT BEING ASSESSED AS INCOME ON ACCOUNT OF UNEXPLAINED DEPOSIT. AGAIN, NEEDLESS TO ADD, IT IS ONLY THE IMPROVEMENT, AND NOT REPAIRS, THAT WOULD STAND TO BE DEDUCTIBLE, EVEN AS, EVEN ASSUMING IT TO BE THE FOR MER, THE SAME IS NOT SUBSTANTIATED EITHER AS TO ITS EXTENT OR THE EXPEN DITURE INCURRED THEREON. THE ASSESSEE, IN MY VIEW, HAS BEEN VERY FAIRLY ALLO WED A CREDIT OF RS.0.50 LACS BY THE LD. CIT(A) IN EXPLAINING THE CASH DEPOS IT IN HIS BANK ACCOUNT DURING THE YEAR. THE OTHER COMPONENT OF THE ASSESSEES EXPLANA TION TOWARD THE SAME, WHICH DID NOT FIND ACCEPTANCE BY THE REVENUE, IS THE OPEN ING CASH-IN-HAND, STATED TO BE AT RS.3 LACS. THE SAME, AGAIN, IS WITHOUT ANY SUPPORTI NG DATA, VIZ., THE ASSESSEES RETURN FOR THE PAST YEARS, CASH FLOW STATEMENT, ETC ., WHICH, TO HAVE CREDENCE, WOULD ITSELF HAVE TO HAVE ITS GENESIS IN SOME DISCLOSED B ASIS. UNDER THE CIRCUMSTANCES, I ONLY CONSIDER IT PROPER TO ALLOW THE ASSESSEE A FURTHER RELIEF OF RS.1 LAC. THIS IS FOR THE REASON THAT, AS IT APPEARS, SOME CONSTRUCTION ACTIVITY HAD TAKEN PLACE, SO THAT TO T HE EXTENT IT IS PRIOR TO THE CURRENT YEAR, IT WOULD STAND TO BE ALLOWED IN COMPUTING STC G, WHILE NO PART THEREOF COULD BE ADDED AS UNEXPLAINED INVESTMENT WHERE PAID FOR P RIOR TO THE CURRENT YEAR. THE STCG AS ASSESSED WOULD ACCORDINGLY STAND TO BE REDU CED BY RS. 1 LAC. I DECIDE ACCORDINGLY. ITA NO.310/ASR/2014 (A.Y.2008-09) INDERJEET SINGH ARORA V. ITO 6 5. IN THE RESULT, THE ASSESSEES APPEAL IS PARTLY A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 31, 2018 SD/- (SANJAY ARORA) ACCOUNTANT MEMBER DATE: 31.12.2018 PKK COPY OF THE ORDER FORWARDED TO: (1) THE APPELLANT: INDERJEET SINGH ARORA, PROP. M/S. ST ANDARD SWEET CORNER, BIBIWALA ROAD, BATHINDA. (2) THE RESPONDENT: ITO, WARD-1(1), BATHINDA. (3) THE CIT(APPEALS), BATHINDA (4) THE CIT CONCERNED (5) THE SR. D.R., I.T.A.T. TRUE COPY BY ORDER