SHRI MOOL CHAND CHABLANI, Jaipur V. ITO, Ajmer

ITA 319/JPR/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 82788 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 03-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D C SHARMA
• Assessee Lawyers: DINESH KUMAR VIJAY
• Keywords: Unexplained investment
• Section: 131; 68; 69; 148

Judgement Text

ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH, JAIPUR (BEFORE SHRI R.P. TOLANI AND SHRI T.R. ME ENA) ITA NO. 319/JP/2012 ASSESSMENT YEAR : 2005-06 PAN : AHGPC 7192 L SHRI MOOL CHAND CHABLANI VS. THE ITO PREM PRAKASH MARG WARD- 1(1) INSIDE DELHI GATE, AJMER AJMER (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI DINESH KUMAR VIJAY DEPARTMENT BY: SHRI D.C. SHARMA DATE OF HEARING: 25-08-2014 DATE OF PRONOUNCEMENT: 17-10-2014 ORDER PER R.P. TOLANI, JM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF THE LD. CIT(A), AJMER DATED 23-01-2012 FOR THE ASSESSM ENT YEAR 2005-06 WHEREIN THE ASSESSEE HAS RAISED FOLLOWING GROUND:- UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, TH E LD. CIT(A) HAS ERRED IN FACTS AND IN LAW IN CONFIRMING THE ADDITION OF RS. 4,85,000/- MADE BY THE AO U/S 69 OF THE ACT, CONSIDERING THE CASH CREDITORS OF RS. 2.05 LACS OPENING CAPITAL AS AT 01-04- 2004 OF RS. 5,30,846/- AND SUNDER DEBTORS OF RS. 1. 30 LACS AS BOGUS AND THEREBY TREATING THE AFORESAID INVESTMENT TO HAVE BEEN MADE OUT OF UNDISCLOSED SOURCES. THE RELIEF MA Y KINDLY BE GRANTED BY DELETING THE SAID ADDITION. ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 2 2.1 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE WAS A PARTNER OF THE FIRM NAMELY M/S. FRIENDS TRAILOR TRANSPORT CORPORA TION. IN THE ASSESSMENT OF THIS FIRM LD. AO MADE ADDITION U/S 68 OF THE ACT OF RS. 21,78,940/- AS UNEXPLAINED CAPITAL OF THE PARTNERS. IN FIRMS APPE AL LD. CIT(A) DELETED THE ADDITION IN THE HANDS OF THE FIRM AND DIRECTED THE AO TO TAKE NECESSARY ACTION IN THE HANDS OF THE FOUR PARTNERS WHICH INCL UDED THE ASSESSEE. THE AO ISSUED NOTICE U/S 148 OF THE ACT AND DURING THE COU RSE OF RE-ASSESSMENT PROCEEDINGS ASKED THIS ASSESSEE TO EXPLAIN THE SOU RCES OF THE CAPITAL CONTRIBUTED IN THE SAID FIRM. THE ASSESSEE EXPLAINE D THAT HE IS 57 YEARS OLD AND HAS BEEN WORKING IN GAINFUL EMPLOYMENT SINCE 1978. IN 1983, THE ASSESSEE'S WIFE STARTED THE BUSINESS UNDER THE NAME AND STYLE OF M/S. RAMKRISHNA TRADERS WHICH WAS MANAGED BY HIM FOR WHI CH SALARY WAS PAID. IN ASSESSMENT YEAR 2005-06 I.E. IMPUGNED YEAR, THE ASSESSEE ENTERED AS A PARTNER INTO IMPUGNED PARTNERSHIP FIRM AND CONTRIBU TED THE CAPITAL. THIS CAPITAL WAS CONTRIBUTED OUT OF HIS LIFELONG ACCUMUL ATED SAVINGS AND BORROWINGS FROM THE RELATIVES AND FRIENDS FOR WHICH NECESSARY DETAILS AND STATEMENTS WERE FILED. THE ASSESSEE FILED HIS RETUR N OF INCOME FOR THE ASSESSMENT YEAR 2002-03 AND FOR SUBSEQUENT TWO YEAR S THE RETURNED WERE NOT FILED. A CHART OF ACCUMULATED SAVINGS OVER THE PERI OD, STATEMENTS FOR AY ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 3 2002-03 WERE FILED AND FOR AY 2003-04 ALSO REQUISIT E INCOME AND EXPENDITURE A/C, CAPITAL A/C AND BALANCE SHEET WAS ALSO FILED. THE AO HOWEVER, HELD THAT OPENING BALANCE IN THE ASSESSEE' S ACCOUNT AS ON 01-04- 2004 WAS NOT RELIABLE ASSUMING THAT HE COULD NOT HA VE SAVED EVEN A SINGLE RUPEE TILL HE BECAME PARTNER IN THE FIRM. BESIDES T HE ASSESSEE'S CONFIRMATIONS FROM VARIOUS CREDITORS OF SMALL AMOUNTS WHICH ARE L ISTED IN THE AOS ORDER WERE DISBELIEVED, THOUGH THEY WERE SUPPORTED WITH C OPIES OF RATION CARD, ELECTION CARD, DRIVING LICENSE ETC. THE AO SUMMONED THE CREDITORS U/S 131 WHO APPEARED AND CONFIRMED HAVING GIVEN THE AMOUNTS TO THE ASSESSEE. LD AO HOWEVER DISCARDED THE COPIOUS EVIDENCE AND ADDED THE CAPITAL CONTRIBUTED IN M/S. FRIENDS TRAILER TRANSPORT CORPO RATION AS UNEXPLAINED INVESTMENT OF THE ASSESSEE. 2.2 AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE THE LD. CIT(A) WHO PARTLY ALLOWED THE APPEAL BY FOLLOWING OBSERVAT ION. 4.7 IN VIEW OF THE ABOVE MENTIONED FACTS I HOLD T HAT AO HAS RIGHTLY CONCLUDED THAT SOURCE OF INVESTMENT IN THE FIRM M/S. FRIENDS TRAILOR TRANSPORT CORPORATION HAS NOT BEEN SATISFACTORILY EXPLAINED BY APPELLANT. ADDITION U/S 69 IS THEREFORE, JUSTIFIED. HOWEVER, IT IS POINTED OUT TH AT ON BEHALF OF APPELLANT THAT HE MADE INVESTMENT OF RS. 4,85,000/- ONLY IN THE FIRM AND THE ADDITION OF RS. 5,99,138/- MADE BY AO INCLUDES SUM OF RS. OF RS. 1,14,138/- CREDITED BY THE FIRM T OWARDS ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 4 INTEREST AND REMUNERATION. AO IS THEREFORE, DIRECTE D TO RESTRICT ADDITION U/S 69 TO RS. 4,85,000/- AS AGAINST RS. 5, 99,128/- MADE BY HIM. GROUND NO. 1 OF THE APPEAL IS THUS PARTLY A LLOWED. 2.3 NOW AGGRIEVED, THE ASSESSEE IS BEFORE US. 2.4 THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT THE PRESUMPTION DRAWN BY THE LOWER AUTHORITIES THAT 57 YEARS OF OLD ASSES SEE WORKING SINCE 1978 CANNOT SAVE A EVEN A PENNY OUT OF PAST SAVINGS IS B EREFT OF ANY BASIS OR REASONING AND IS PURELY A CONJECTURE. THE AO HAS NO T DISPUTED THE FACT THAT HIS RETURN FOR ASSESSMENT YEAR 2002-03 HAS BEEN ACC EPTED BY THE DEPARTMENT. THUS THE EARNING SOURCE, SAVINGS AND CA PITAL ARISING FROM THE SAME STANDS ACCEPTED BY THE DEPARTMENT. FOR ASSESSM ENT YEARS 2003-04 & 04-05 THE ASSESSEE GAVE HIS ACCOUNTING STATEMENTS I .E. P & L A/C, BALANCE SHEET AND CAPITAL ACCOUNT. THE CAPITAL ACCOUNT AND BALANCE SHEET FOR ASSESSMENT YEAR 2004-05 AS FILED BY THE ASSESSEE IS AS UNDER:- CAPITAL ACCOUNT DRAWINGS 48,000.00 BALANCE B/F 4,18,943.20 LIC 6,696.00 INCOME 1,66,600.00 C.L. 5,30,846.40 TOTAL 5,85,543.20 TOTAL 5,85,543.20 ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 5 BALANCE SHEET AS ON 31-03-2004 CAPITAL A/C 5,30,846.40 FURNITURE 8,000.00 DEBTORS 1,30,000.00 CASH 3,92,864.40 5,30,846.40 5,30,864.40 THUS THE CLOSING BALANCE OF AY 04-05 WHICH BECOMES OPENING BALANCE OF RS. 5,30,846.40 FOR ASSESSMENT YEAR 2005-06 STANDS EXPLAINED BY THE ASSESSEE'S STATEMENTS WHICH ARE PART OF THE RECORD. WHEN THE ASSESSEE GAVE PROPER AND REASONABLE EXPLANATION ALONG WITH IT RE CORD FOR ASSESSMENT YEAR 2002-03 AND SUBSEQUENT YEARS TOGETHER WITH ATTENDAN CE OF ALL THE SMALL CREDITORS; IN THAT CASE THE AO CANNOT COME TO AN OU TLANDISH ASSUMPTION THAT THE ASSESSEE COULD NOT HAVE SAVED SINGLE PENNY. THE ASSESSEE'S BONA FIDE IS FURTHER PROVED BY THE FACT THAT ALL THE CASH CREDI TORS WERE PRODUCED BEFORE THE AO WHO CONFIRMED ADVANCING THE SMALL AMOUNTS TO THE ASSESSEE. ASSESSEE WAS WELL VERSED WITH THE TRANSPORT BUSINES S, AS HE WAS MANAGING THE TRANSPORT BUSINESS OF HIS WIFE SINCE 1993. THE ASSESSEE HAD GOOD REPUTATION AND EXPERTISE IN TRANSPORT BUSINESS AND THE ACCUMULATED SAVINGS AND PLETHORA OF EVIDENCE CANNOT BE WISHED AWAY BY L OWER AUTHORITIES ON PRESUMPTIONS. THEREFORE, THERE IS NOT JUSTIFICATION IN THE ORDERS OF THE LOWER AUTHORITIES. 2.5 THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A ). ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 6 2.6 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN OUR CONSIDERED VIEW, THE PR ESUMPTION DRAWN BY THE LOWER AUTHORITIES THAT ASSESSEE COULD NOT HAVE SAVE D EVEN A PENNY AND CREDITORS WERE UNRELIABLE DESPITE THEIR PHYSICAL PR ESENCE BEFORE AO AND STATEMENTS; ARE BEREFT OF ANY COGENCY OF REASONING OR EFFECTIVE REBUTTAL OF THE ASSESSEE'S EXPLANATION, INCOME TAX RECORD, CONFIRMA TION OF THE CREDITORS, THEIR PERSONAL ATTENDANCE AND ACCOUNTING STATEMENTS. WE ARE UNABLE TO AGREE WITH THE VIEW ADOPTED BY THE LOWER AUTHORITIES THAT THE ASSESSEE WAS NOT IN A POSITION TO SAVE EVEN A SINGLE RUPEE TILL THE AGE O F 57. THE RETURN OF INCOME FOR ASSESSMENT YEAR 2002-03 HAS BEEN ACCEPTED BY TH E DEPARTMENT AND FOR SUBSEQUENT YEARS THE ASSESSEE HAS FILED THE RELEVAN T DOCUMENTS. ONCE THE ASSESSEE HAS FILED THE DOCUMENTARY EVIDENCES, PRODU CED WITNESSES I.E. CASH CREDITORS AND DEBTORS; IN THAT CASE THE REBUTTAL O F SUCH EVIDENCES HAS TO BE ON THE BASIS OF SOME COGENT REASONING AND NOT ON PRESU MPTION. THUS IN VIEW THEREOF, WE HOLD THAT THE ASSESSEE HAS MADE OUT A R EASONABLE CASE TO ESTABLISH DISCHARGE OF ONUS CAST ON HIM TO HAVE CONTRIBUTED THE CAPITAL IN PARTNERSHIP FIRM OUT OF PAST SAVINGS OUT OF EARNINGS AND CREDIT ORS. CONSIDERING ALL THESE FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE ADDITION. ITA NO.319//JP/2012 SHRI MOOL CHAND CHABLANI VS. ITO 7 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 1 7 -10-2014 SD/- SD/- (T.R. MEENA) (R.P. TOLANI) ACCOUNTANT MEMBER JUDICIAL MEMBER JAIPUR DATED: 17 TH OCT, 2014 *MISHRA COPY FORWARDED TO:- 1. SHRI MOOL CHAND CHABLANI, AJMER 2. , THE ITO, WARD- 1(1), AJMER 3. THE LD. CIT 4. THE LD. CIT(A), JAIPUR BY ORDER 5..THE LD. DR 6.THE GUARD FILE (IT NO. 319/JP/2012) AR ITAT, JAIPUR