Sh. Kapil Kumar Garg, Ghaziabad V. ITO, New Delhi

ITA 3144/DEL/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6763 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 2 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 18-07-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: F R MEENA
• Assessee Lawyers: DR RAKESH GUPTA
• Keywords: Opportunity of being heard; Additional evidence
• Section: 234B; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH D NEW DELHI BEFORE : S MT. DIVA SINGH, JUDICIAL MEMBER & SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 3144/DEL./2013 ASSTT. YEAR : 2008 - 09 SH. KAPIL KUMAR GARG, VS. INCOME TAX OFFICER, 12, NAYA GANJ, GHAZIABAD. WARD 1(3), GHAZIABAD. (PAN: ACGPG 5196F) (APPELLANT) (RESPONDENT) APPELLANT BY : DR. RAKESH GUPTA, ADVOCATE & SOMIL AGARWAL, ADVOCATE. RESPONDENT BY : SH. F.R. MEENA, SR. DR D ATE OF HEARING : 18.07.2016 DATE OF PRONOUNCEMENT : 25 .07.2016 ORDER PER L.P. SAHU, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), GHAZIABAD DATED 25.03.2013 FOR THE ASSESSMENT YEAR 2008 - 09 ON THE FOLLOWING GROUNDS : 1. (A) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.24,24,752/ - ON ACCOUNT OF SALE OF JEWELLERY, MORE SO WHEN ALL TH E DETAILS OF JEWELLERY WERE GIVEN TO LD. AO AND THE IMPUGNED ORDER HAS BEEN PASSED BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING AND WITHOUT CONSIDERING THE SUBMISSION/EVIDENCES OF THE ASSESSEE AND WITHOUT BRI NGING ANY ADVERSE MATERIAL ON THE RECORD. ITA NO. 3144/DEL./2013 2 1 (B) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE OBSERVATION MADE BY LD. AO THAT ASSESSEE HAS FORMED SIMILAR STORY IN AY 2007 - 08 AND HAS FURTHER ERRED IN PLACING RELIANCE ON THE SAME. 1 (C) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE VARIOUS ADVERSE OBSERVATIONS OF LD. AO MADE IN PARA 2 AND OTHER PARTS OF THE IMPUGNED ASSESSMENT ORDER. 2. (A)THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF LD. AO IN MAKING ADDITION OF RS.4,00,000 / - ON ACCOUNT OF AMOUNT DEPOSITS IN CAPITAL AC COUNT OF M/S K.K. INTERNATIONAL AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS AND WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING OF HEARING AND WITHOUT CONSIDERING THE SUBMISSIONS/EVIDENCES OF THE ASSESSEE AND WITHOUT BRINGING ANY ADVERSE MATERIAL ON RECORD. 2(B) THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD . CIT(A) HAS ERRED IN LAW AND ON FACTS IN PLACING RELIANCE ON AY 2007 - 08 WHILE CONFIRMING THE SAID ADDITION . 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CAS E, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD, AO IN MAKING DISALLOWANCE OF 52,500 / - (30% OF 1,75,000/ - ) ON ACCOUNT OF EXPENDITURE CLAIMED U/S 24 OF INCOME FROM HOUSE PROPERTY AND HAS FURTHER ERRED IN TAXING THE RENTAL INCOM E UNDER THE HEAD INCOME FROM OTHER SOURCES. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD, CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT DELETING THE ADDITION OF RS.8,00,000 / - FULLY AS MADE BY LD. AO ON ACCOUNT OF UNSECURED LOAN AND H AS FURTHER ERRED IN CONFIRMING THE SAME TO THE EXTENT OF RS.7,00,000 / - RECEIVED FROM M/S GARG & COMPANY AND THAT TOO BY RECORDING INCORRECT FACTS AND FINDINGS. 5. THAT IN ANY CASE AND ANY VIEW OF THE MATTER, ACTION OF LD. CIT(A) IN CONFIRMING THE ACTION O F LD. AO IN MAKING THE IMPUGNED ADDITION/DISALLOWANCE AND FRAMING THE IMPUGNED ASSESSMENT ORDER WHICH IS CONTRARY TO LAW AND FACTS, VOID AB INITIO, BEYOND JURISDICTION, AND ITA NO. 3144/DEL./2013 3 WITHOUT GIVING ADEQUATE OPPORTUNITY OF HEARING, BY RECORDING INCORRECT FACTS AND FI NDINGS AND THE SAME IS NOT SUSTAINABLE ON VARIOUS LEGAL AND FACTUAL GROUNDS. 6. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN NOT REVERSING THE ACTION OF LD. AO IN CHARGING INTEREST U/S 234A AND 234B OF INCOME TAX ACT, 1961. 2. DURING THE COURSE OF HEARING, THE LD. AR OF THE ASSESSEE SUBMITTED BEFORE THE BENCH THAT GROUNDS NOS. 1(A) TO 1(C) AND GROUND NO. 3 WILL NOT BE PRESSED. THE SAME ARE, ACCORDINGLY, DISMISSED AS NOT PRESSED. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING AN INCOME OF RS.3,27,810/ - FROM TRADING (WHOLESALER) ON 30.09.2018. THE CASE WAS SELECTED FOR SCRUTINY AND STATUTORY NOTICES WERE ISSUED. ON CONCLUSION OF THE SCRUTINY PROCEEDING S, THE AO ADDED A SUM OF RS.64,77,252/ - . IN THIS REGARD, THE ASSESSEE HAS CHALLENGED BEFORE US THE ADDITION OF RS.400000/ - AS DISCUSSED IN PARA NO. 3 OF THE ASSESSMENT ORDER FOR DEPOSIT AND WITHDRAWAL MADE BY THE PROPRIETOR AND THE NEX T ADDITION IS U/S. 68 OF THE ACT AS PER PARA 4 OF THE ASSESSMENT ORDER FOR RS.8 LACS TAKEN BY THE PROPRIETOR FROM GARG & CO. FOR A SUM OF RS.7,00,000/ - AND RS.1,00,000/ - FROM SUNIL KUMAR & SONS. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. CIT(A) WHO CONFIRMED THE ADDITION OF RS. 4,00,000/ - . IN RESPECT OF THE UNSECURED LOAN OF RS.8,00,000/ - AS AFORESAID, THE ASSESSEE FILED ADDITIONAL EVIDENCE BEFORE THE ITA NO. 3144/DEL./2013 4 LD. CIT(A) AND REMAND REPORT WAS CALLED F OR. THE ASSESSEE SUBMITTED OBJECTIONS AGAINST THE REMAND REPORT BEFORE THE CIT(A) WHICH IS AT PAGE 13 PARA 2 OF THE CIT(A) S ORDER AND THE LD. CIT(A) ACCEPTED THE UNSECURED LOAN OF RS.100000/ - AS EXPLAINED AND BY DELETING THE SAME SUSTAINED THE ADDITION OF RS.7,00,000/ - IN THIS HEAD. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. 4. THE LD. AR SUBMITTED IN RESPECT OF DEPOSIT AND WITHDRAWAL IN THE CAPITAL ACCOUNT FOR A SUM OF RS.4,00,000/ - THAT THE ASSESSEE HA D SUFFICIENT CASH BALANCE. IT WAS EXPLAINED THAT BEFORE THE ASSESSING OFFICER AND THE CIT( A ) , THE ASSESSEE SUBMITTED THE WRITTEN SUBMISSIONS AND CASH FLOW STATEMENT AND STATEMENT OF AFFAIRS FOR THE LAST TWO FINANCIAL YEARS, IN WHICH THERE IS CLOSING BALANCE AS CASH IN HAND MORE THAN RS.4,00,000/ - . IN SPITE OF THIS, THE LD. AUTHORITIES BELOW DID NOT ACCEPT THE DEPOSIT AND WITHDRAWAL OF RS.4,00,000/ - . 5. THE LD. DR RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. AFTER HEARING BOTH THE PARTIES AND PERUSIN G THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT THE APPELLANT HAD DEPOSITED ON 21.05.2007 A SUM OF RS. 4 ,00,000/ - IN HIS PERSONAL ACCOUNT (CAPITAL ACCOUNT). ON 14.07.2007, THE ITA NO. 3144/DEL./2013 5 SAME HAS BEEN WITHDRAWN WHICH IS CLEARLY SHOWN IN PERSONAL CAPITAL ACCOUNT PLACE D AT PAPER BOOK PAGE 26. ON PAGE NO. 28, THE AMOUNT HAS BEEN WITHDRAWN FROM THE CAPITAL ACCOUNT WHICH HAS BEEN INVESTED IN HARI STEEL & CRANE SERVICES. IT IS CLEAR FROM THE COPY OF EXTRACT OF CAPITAL ACCOUNT OF KAPIL GARG IN THE BOOKS OF ACCOUNT OF HARI ST EEL AND CRANE SERVICES. THE APPELLANT HAS SUBMITTED CASH FLOW CHART FOR F.Y. 2007 - 08 IN WHICH OPENING CASH IN HAND IS SHOWN AS SUM OF RS.4,23,932.92. ON 21.05.2007, A SUM OF RS. 4 LACS HAS BEEN PAID TO K.K. INTERNATIONAL IN CASH. IT IS REFLECTED IN THE CAP ITAL ACCOUNT OF THE PROPRIETOR OF K.K. INTERNATIONAL. THERE IS NO WITHDRAWAL BETWEEN 01.04.2007 TO 20.05.2007 MORE THAN THE CASH BALANCE AS REFLECTED AS ON 01.04.2007. THEREFORE, THE DEPOSIT AND WITHDRAWAL OF RS.4 LACS IS PROPERLY EXPLAINED BY THE ASSESSEE . THE AUTHORITIES BELOW HAVE NOWHERE DOUBTED THE AFORESAID PAPERS DISCUSSED BY US. THEREFORE, THIS GROUND OF APPEAL OF THE ASSESSEE DESERVES TO BE ALLOWED. 7. IN RESPECT OF ADDITION U/S. 68 OF RS.7,00,000/ - TAKEN FROM GARG & CO., THE LD. AR SUBMITTED THA T BEFORE THE ASSESSING OFFICER, IT WAS EXPLAINED THAT CONFIRMATION, COPY OF ITRS, BANK ACCOUNT OF THE DEPOSITORS WERE SUBMITTED. HE EXPLAINED THAT THE REQUIREMENTS OF SECTION 68 REGARDING IDENTITY, CREDITWORTHINESS OF CREDITOR AND GENUINENESS OF THE TRANSA CTION HAVE BEEN ITA NO. 3144/DEL./2013 6 DISCHARGED BY THE APPELLANT. IN SPITE OF THIS, THE LD. CIT(A) DID NOT ALLOW THE CLAIM OF ASSESSEE. DURING THE HEARING OF APPEAL BEFORE THE BENCH, THE LD.AR SUBMITTED A COPY OF LEDGER ACCOUNT OF GARG & CO., IN WHICH THE SAID LOAN HAS BEEN PA ID BY THE ASSESSEE ON 10.04.2008 BY CHEQUE NO. 860120 FROM CURRENT ACCOUNT NO. 0674002190406902 OF PUNJAB NATIONAL BANK. 8. THE LD. DR VEHEMENTLY OBJECTED THAT THE INCOME OF M/S. GARG & CO. IS ONLY RS.2349/ - WHICH IS A MEAGER AMOUNT. THEREFORE, THE CREDIT WORTHINESS OF THE LENDER HAS NOT BEEN PROVED BY ASSESSEE. MERE FILING OF ACKNOWLEDGEMENT OF RETURN DOES NOT SATISFY THE CREDITWORTHINESS OF THE LENDER. THEREFORE, THE ACTION OF THE LOWER AUTHORITIES IS CORRECT AND DOES NOT REQUIRE ANY INTERFERENCE. 9. AFTE R HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD, WE FIND THAT LENDER IS A PARTNERSHIP FIRM HAVING PAN AND IS FILING RETURN OF INCOME. COPY OF ITR OF GARG & CO. IS PLACED ON PAPER BOOK PAGE 34. THEREFORE, THE IDENTITY OF THE CREDITO R/LENDER , IN OUR OPINION, IS NOT DOUBTFUL. HOWEVER, AS TO THE OTHER IMPORTANT INGREDIENTS OF SECTION 68, WHICH NEED TO BE PROVED BY THE ASSESSEE INITIALLY , ARE THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. IN THIS RESPECT, THE LD. DR HAS OBJECTED THAT THE CREDITWORTHINESS OF THE LENDER DOES NOT STAND PROVED BY THE APPELLANT ITA NO. 3144/DEL./2013 7 IN THIS CASE, AS THE ALLEGED LENDER WAS HAVING A MEAGER IN COME, AS NOTED ABOVE , WHICH IS NOT SUFFICE TO ADVANCE SUCH A HUGE MONEY TO ASSESSEE . THE LD. CIT(A) HAS ALSO OBSERVED THAT THERE ARE FREQUENT CASH DEPOSITS IN BANK ACCOUNT OF M/S. GARG & COMPANY, I.E., IMPUGNED LENDER AND THAT THE INCOME - TAX RETURN OF THE LENDER DISPLAYS A VERY MEAGER INCOME, WHICH DOES NOT SUPPORT THE CREDITWORTHINESS OF THE CREDITOR. WE HAVE GONE THROUGH THE REMAND REPORT OF THE AO AND WE FIND THAT THE LD. ASSESSING OFFICER IN THE REMAND REPORT HAS ALSO NOWHERE MADE IT CLEAR AS TO WHAT ST EPS WERE TAKEN BY HIM FOR EXAMINING OR VERIFYING THE CREDITWORTHINESS OF THE LENDER, PARTICULARLY WHEN THE SAID LENDER HAD ADVANCED SUCH A HUGE MONEY TO THE ASSESSEE AND WAS SHOWING A MEAGER INCOME IN ITS RETURN OF INCOME. THE ASSESSEE HAD RAISED OBJECTION S ON THE REMAND REPORT BEFORE THE LD. CIT(A) THAT THE ASSESSEE HAD FILED DOCUMENTARY EVIDENCES SUCH AS ITR AND BANK STATEMENTS OF DEPOSITOR, BUT THE ASSESSING OFFICER HAS NEITHER CONSIDERED THESE EVIDENCES NOR MADE ANY COMMENTS THEREON BEFORE DOUBTING THE CREDITWORTHINESS OF THE CREDITOR. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THE ASSESSING OFFICER HAS CONCLUDED THE MATTER IN A VERY SLIP SHOD MANNER STATING THAT SINCE THE COPY OF ITR AND BANK STATEMENT OF THE LENDER HAS NOT BEEN FILED, THE ABOVE LOANS CANNOT BE ACCEPTED TO BE GENUINE. WHEREAS, THE ASSESSEE HAS OBJECTED THAT SUCH EVIDENCES WERE FILED BEFORE THE AO, BUT NOT CONSIDERED EVEN IN THE ITA NO. 3144/DEL./2013 8 REMAND REPORT. THE LD. CIT(A) HAS ALSO NOT PROPERLY ANALYSED THE BANK STATEMENT OF THE LENDER SUBMITTED WITH REFERENCE TO CREDITWORTHINESS OF CREDITOR WITHIN THE MEANING OF SECTION 68 OF THE ACT. WE, THEREFORE, FIND THAT IN THE ABOVE FACTS, THE MATTER REQUIRES PROPER ENQUIRY AT THE STAGE OF ASSESSING OFFICER ON THE CREDITWORTHINESS OF LENDER AND GENUINENESS OF TH E TRANSACTION WITH REFERENCE THE DOCUMENTARY EVIDENCES, ALLEGED TO HAVE BEEN SUBMITTED BY ASSESSEE BEFORE THE AO. THEREFORE, THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR DECIDING THE ISSUE AFRESH BY WAY OF SPEAKING ORDER, AFTER MAKING PROPE R ENQUIRY AS TO THE CREDITWORTHINESS OF THE CREDITOR AND GENUINENESS OF THE TRANSACTION. NEEDLESS TO SAY, THE ASSESSEE SHALL BE GIVEN REASONABLE OPPORTUNITY OF BEING HEARD. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PURPOSES. 10. THE GROUND REL ATING TO CHARGING OF INTEREST U/S. 234A AND 234B IS CONSEQUENTIAL IN NATURE AND NEEDS NO SPECIFIC ADJUDICATION. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN THE OPEN COURT ON 25.07.2016 . SD/ - SD/ - ( DIVA SINGH ) (L.P. SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 25.07.2016 *AKS/ -