Surendra Singh Gehlot, MOUNT ABU V. ITO, MOUNT ABU

ITA 32/JODH/2014

• Counselvise Citation: 3223314 RSA 2014
• Duration Of Justice: 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 19-05-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: B D AGARWAL
• Keywords: Unexplained cash credit; Unexplained investment
• Section: 133(6); 147; 68; 148; 144

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL: JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO.32/JODH/2014 (A.Y. 2009-10) SURENDRA SINGH GEHLOT, VS. I TO, MOUNT ABU. C/O HONEY DEW GUEST HOUSE, BEHIND PO, MOUNT ABU. PAN NO. AGGPG 9038 G (APPELLANT) (RESPONDENT) ITA NO.01/JODH/2014 (A.Y. 2009-10) ITO, MOUNT ABU. VS. SURENDRA SINGH GEHLOT, C/O M/S. PAYAL DINING, MOUNT ABU. PAN NO. AGGPG 9038 G (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI B.D. AGARWAL. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 19/05/2014. DATE OF PRONOUNCEMENT : 10/06/2014. O R D E R PER BENCH :- THESE ARE CROSS APPEALS FILED AGAINST THE ORDER OF THE LD. CIT(A) DATED 28.10.2003 PASSED FOR A.Y. 2009-10. 2 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 1. THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING ADD ITION OF RS. 1 LAKH, IN REPAIRING & RENOVATION IN THE GUE ST HOUSE BUILDING WHICH WAS TAKEN ON RENT. 2. THAT LD. CIT(A) HAS ERRED IN CONFIRMING ADDITION OF RS. 4 LAKH, PAYMENT TO SHRI ASHOK KUMAR AGAINST REN T DEPOSIT. 3. ANY OTHER GROUNDS OF APPEALS MAY KINDLY BE PERMITTED ON OR BEFORE THE HEARING. 3. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN ITS APPEAL:- 1. THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITI ON OF RS. 8,36,500/- BEING UNEXPLAINED CREDITS IN THE ACC OUNT OF THE ASSESSEE TREATING THEM LOAN RECEIPTS AS THE ASS ESSEE COULD NOT ESTABLISH CREDITWORTHINESS OF THE CREDITO RS AND GENUINENESS OF THE TRANSACTION REQUIRED IN ACCORDAN CE TO THE PROVISION OF SECTION 68 OF THE I.T. ACT, 1961. 2. THE LD. CIT(A) HAS ERRED IN RESTRICTING THE ADDI TION BEING UNEXPLAINED INVESTMENT ON RENOVATION AND REFURBISHING OF BUILDING WITHOUT ANY BASIS TO RS. 1 ,00,000/- FROM RS. 4,00,000/- MADE BY THE ASSESSING OFFICER I N SPITE OF THE FACT THAT THE ASSESSEE COULD NOT SUBMIT ANY SOURCE OF THE EXPENDITURE MADE FOR RENOVATION. 3 4. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT F OR A.Y. 2009-10 THE ASSESSEE DID NOT FILE HIS RETURN OF INCOME [ROI]. THEREFORE, ACTION U/S 147 R.W.S. 148 OF THE INCOME-TAX ACT, 1961 ['THE AC T', FOR SHORT] WAS INITIATED ON 19.5.2010. THIS NOTICE ISSUED U/S 148 OF THE ACT WAS SERVED ON 26.5.2010 WHICH REQUIRED HIM TO FURNISH H IS ROI BY 20.6.2000. BUT THE ASSESSEE DID NOT COMPLY WITH TH IS NOTICE. SERVICES WAS TRIED TO BE EFFECTED THROUGH STATUTORY NOTICE B UT WHEN NO RESPONSE WAS RECEIVED, THE A.O. PROCEEDED WITH THE MATTER AND MADE ASSESSMENT EXPARTE U/S 144 OF THE ACT ON THE BASIS OF INFORMATION BROUGHT OUT FROM RECORD. THE ASSESSEE DERIVED INCO ME FROM RUNNING OF A RESTAURANT AND GUEST HOUSE. FOR A.Y. 2007-08, TH E ASSESSEE HAD RETURNED INCOME FROM RESTAURANT AND GUEST HOUSE AT RS. 98,217/. FOR THIS YEAR, KEEPING IN VIEW THE INFLUX OF TOURISTS, THE A.O. HAS ESTIMATED INCOME FROM RESTAURANT AND GUEST HOUSE AT RS. 1,50, 000/-. IT WAS FURTHER NOTICED THAT THE ASSESSEE HAD TRANSACTED BY MAKING CASH DEPOSITS ETC IN SBI BANK ACCOUNT TOTALING TO RS. 8, 36,500/-, THE DETAILS OF WHICH ARE AS UNDER: 5000.00 29/04/2008 CASH 30000.00 15/05/2008 CASH 8000.00 21/06/2008 CASH 54000.00 02/07/2008 CASH 100000.00 26/07/2008 CASH 100000.00 29/07/2008 TRANSFER 4 5500.00 04/08/2008 CASH 5000.00 12/08/2008 CASH 250000.00 12/08/2008 TRANSFER 55000.00 22/12/2008 CASH 25000.00 22/01/2009 CASH 22000.00 22/01/2009 CASH 22000.00 22/01/2009 CASH 60000.00 21/02/2009 CASH 12500.00 21/02/2009 CASH 836500.00 TOTAL THE ASSESSEE WAS GIVEN OPPORTUNITY THROUGH LETTER D ATED 3.11.2011 TO EXPLAIN THESE DEPOSITS BUT WHEN HE FAILED TO DO SO, THE A.O. TREATED THE ENTIRE AMOUNT OF RS. 8,36,500/- AS HIS UNDISCLO SED INCOME AND THEREFORE, HAS MADE THE ADDITION OF THE SAME AMOUNT . 4.1 IT WAS FURTHER OBSERVED THAT THE ASSESSEE HAD T AKEN IBRAHIM HALL ON LEASE AND HAS MADE HEAVY INVESTMENT ON RENOVATIO N, REFURBISHING AND FACT LIFTING OF THE BUILDING. ON THE BASIS OF I NFORMATION GATHERED U/S 133(6) OF THE ACT IT WAS FOUND THAT THE ASSESSE E HAD PURCHASED BUILDING MATERIALS FROM THE FOLLOWING BUYERS: 1. M/S. HARISHCHANDRA CHJAMPALAL, MOUNT ABU 71790.00 2 M/S. AMBICA HARDWARE STORES, MOUNT ABU 60567.00 3 M/S. KRISHNA TIMBER MAR, ABUROAD 86175.00 TOTAL 218532.00 5 4.2. APART FROM THIS, FURTHER INVESTMENT IN PURCHAS E OF BRICKS, CEMENT, CONCRETE, WAGES, MASON, CARPENTERS ETC WERE ALSO NOTED. ON ESTIMATION BASIS, THE A.O. HAS ADDED RS. 4 LAKHS TO WARDS THE TOTAL INVESTMENT IN THIS REGARD. IT WAS ALSO OBSERVED TH AT THE ASSESSEE HAS TAKEN THE BUILDING IBRAHIM HALL ON LEASE AND PAID C ONSIDERATION OF RS. 4 LAKHS AS ON 12.5.2008 AS SECURITY VIDE CHEQUE NO. 6 74665 OF SBI, KUBERNAGAR, AHMEDABAD. WHEN NO EXPLANATION WAS FIL ED, THIS AMOUNT WAS ALSO ADDED. ACCORDINGLY, THE A.O. HAS COMPUTED THE INCOME OF THE ASSESSEE AS UNDER: INCOME FROM RUNNING OF RESTAURANT AND PAYMENT GUEST HOUSE AS ESTIMATED 150000.00 ADDITION ON ACCOUNT OF UNEXPLAINED BANK TRANSACTIONS AS MADE IN SBI BANK ACCOUNT 836500.00 ADDITION ON ACCOUNT OF UNEXPLAI NED INVESTMENT ON RENOVATION AND REFURBISHING OF BUILDING 400000.00 ADDITION ON ACCOUNT OF UNEXPLAINED SECURITY PAID AGAINST LEASE OF BUILDING 400000.00 TOTAL 1786500.00 4.3 AGGRIEVED, THE ASSESSEE FILED APPEAL AND MADE A LL SORTS OF EXPLANATIONS THROUGH HIS WRITTEN SUBMISSIONS. THE WRITTEN SUBMISSIONS WERE SENT TO THE A.O. FOR CALLING HIS REMAND REPORT . REGARDING NON CO- OPERATION AT THE ASSESSMENT PROCEEDINGS, IT WAS EXP LAINED THAT THE ASSESSEE HAD APPOINTED HIS AUTHORIZED REPRESENTATIV E TO REPLY TO ALL NOTICES ISSUED TO HIM BUT HE COULD NOT CONFIRM FROM HIM BECAUSE HE 6 WAS LIVING AT A FAR OFF PLACE AND THE RESTAURANT WA S BEING MANAGED BY HIS BROTHER. REMAND REPORT WAS ALSO CONSIDERED BY T HE LD. CIT(A). IT WAS STATED BY THE ASSESSEE THAT FOR THIS YEAR THE A SSESSEE HAD ELECTRONICALLY FILED HIS RETURN OF INCOME [ROI] ON 23.3.20101 DECLARING TOTAL INCOME AT RS. 1,18,560/-. THE A.O. HAS ACCEP TED THIS FACT IN HIS REMAND REPORT. WHILE CONSIDERING THE ESTIMATED INCO ME FROM RESTAURANT, ETC., THE LD. CIT(A) HAS ACCEPTED THE R OI FROM THE GUEST HOUSE AT RS. 1,18,560/- WHICH WAS ALREADY DISCLOSED BY THE ASSESSEE IN HIS RETURN FILED FOR THE YEAR AND HAS DELETED THE R EMAINING AMOUNT. 4.4 REGARDING ADDITION OF RS. 8,36,500/- IT WAS STA TED THAT THIS DEPOSIT REPRESENTED LOAN OF RS. 2.05 LAKHS TAKEN FR OM SMT. RAJESHWARI DEVI AND RS. 2 LAKHS TAKEN SHRI ABHIMANYU SINGH. I T WAS FURTHER STATED THAT RS. 1 LAKHS DEPOSITED ON 29.7.2008 WAS LOAN GI VEN TO SMT. ASHA DEVI WHICH WAS REFUNDED BY HER SHORTLY THEREAFTER. REGARDING BALANCE DEPOSITS AND WITHDRAWALS, IT WAS STATED THAT THESE RELATED TO THE BUSINESS OF THE ASSESSEE. THE ASSESSEE SUPPORTED H IS CLAIM WITH DETAILS OF BANK STATEMENTS. AFTER CONSIDERING THIS SUBMISS ION OF THE ASSESSEE WHICH WAS TESTED DURING THE REMAND PROCEEDINGS, AND BECAUSE THE A.O. HAS NOT MADE ANY ADVERSE COMMENT ON THESE PIEC ES OF EVIDENCE, HE HAS DELETED THE ENTIRE AMOUNT. 7 4.5 REGARDING ADDITION OF RS. 4 LAKHS, IT WAS FOUND THAT THE ASSESSEE HAS PURCHASED BUILDING MATERIAL AND WOODEN MATERIAL FROM THREE PARTIES TOTALING TO RS. 2,18,532/-. THE ASSESSEE E XPLAINED THAT FOR DOING SOME REPAIR WORK, TOTAL INVESTMENT OF RS. 2,1 8,532/- WAS MADE. BUT IN THE ABSENCE OF PROPER BILLS AND VOUCHERS AND NECESSARY DETAILS, THE LD. CIT(A) HAS NOT AGREED FULLY AND HAS SUSTAIN ED THE ADDITION OF RS. 1 LAKH OUT OF RS. 4 LAKHS. 4.6 REGARDING ADDITION OF RS. 4 LAKHS ON ACCOUNT OF UNEXPLAINED SECURITY PAID AGAINST LEASE OF BUILDING BUT DESPITE VARIOUS ARGUMENTS AND EXPLANATIONS GIVEN, HE HAS CONFIRMED THIS ADDIT ION. AS A RESULT, BOTH THE PARTIES ARE AGGRIEVED AND HAVE RAISED THEI R RESPECTIVE GROUNDS. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE CAR EFULLY PERUSED THE ENTIRE MATERIAL ON RECORD. BOTH THE PARTIES HAV E REITERATED THEIR OLD STAND IN THIS REGARD. 5.1 AFTER CONSIDERING THE RIVAL SUBMISSIONS ON GROU ND NO. 1 OF ASSESSEES APPEAL AND GROUND NO. 2 OF REVENUES APP EAL, WE HAVE FOUND THAT GOODS WORTH RS. 2,18,532/- WERE PURCHASE D ON CREDIT FROM 8 THREE IDENTIFIABLE PARTIES. IN THE BALANCE SHEET T HE ASSESSEE HAS DEBITED AN EXPENDITURE OF RS. 1,17,000/- ON FURNITU RE AND RS. 2,36,000/- ON REPAIRS TO THE PROFIT AND LOSS ACCOUN T. AS THE ENQUIRIES HAVE REVEALED GOODS WORTH R S2,18,532/- WERE PURCHA SED ON CREDIT FROM THREE IDENTIFIABLE PARTIES, THEREFORE, IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, SUSTENANCE OF RS. 1 LAKH IN THIS ACCOUNT IS NOT JUSTIFIED. THEREFORE, WE ORDER TO DELETE AD DITION OF RS. 1 LAKHS FROM ASSESSEES HANDS IN THIS ACCOUNT. OUR THIS FI NDING RESULTS IN DISMISSAL OF GROUND NO. 2 OF REVENUES APPEAL AND A CCEPTANCE OF GROUND NO. 1 OF ASSESSEES APPEAL. 5.2. REGARDING GROUND NO. 2 OF ASSESSEES APPEAL WH ICH IS IN RELATION TO CONFIRMATION OF ADDITION OF RS. 4 LAKHS PAID TO SHRI ASHOK KUMAR AGAINST RENT DEPOSIT BY TREATING IT AS SECURITY DEP OSIT, WE HAVE FOUND THAT THE ASSESSEE HAS TAKEN THE BUILDING IBRAHIM HA LL ON LEASE AND PAID CONSIDERATION OF RS. 4 LAKHS AS ON 12.5.2008 AS SEC URITY VIDE CHEQUE NO. 674665 OF SBI, KUBERNAGAR, AHMEDABAD. THE SOUR CE OF THE DEPOSIT BEING THROUGH CHEQUE, DRAWN ON SBI, THE ASSESSEE HA S TRIED TO EXPLAIN THE SOURCE OF THIS SUM. THE LD. CIT(A) HAS DISALLOW ED THIS AMOUNT ON VERY MINUTE INTEGRITIES. HOWEVER, IN THE INTEREST OF JUSTICE, WE WOULD LIKE TO RESTORE THIS ISSUE TO THE FILE OF THE A.O. SO THAT THIS ISSUE CAN BE 9 SORTED OUT AFRESH AFTER SEEKING REQUISITE INFORMATI ON AS HAVE BEEN MENTIONED BY THE LD. CIT(A). AS A RESULT, GROUND NO. 2 OF ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 5.3 GROUND NO. 1 REGARDING DELETION OF ADDITION OF RS. 8,36,500/- WHICH ACCORDING TO THE LD. D.R. REMAINED UNEXPLAINE D BECAUSE THE CREDIT WORTHINESS OF THE CREDITORS AND GENUINENESS OF THE TRANSACTION AS REQUIRED U/S 68 OF THE ACT HAS NOT BEEN PROVED O N RECORD. ON THE OTHER HAND, THE LD. A.R. HAS RELIED ON THE ORDER OF THE LD. CIT(A). AFTER CONSIDERING THE RIVAL SUBMISSIONS WE HAVE NOTICED T HAT THE ASSESSEE EXPLAINED THE SOURCE OF THE DEPOSIT OUT OF LOANS TA KEN AND WITHDRAWALS FROM THE GUEST HOUSE EXPENSES AND PERSONAL WITHDRAW ALS. CONFIRMATIONS OF THE CREDITORS HAVE BEEN FILED ALON GWITH BANK STATEMENTS. THESE EVIDENCES WERE SENT TO THE A.O. DURING REMAND PROCEEDINGS. ADMITTEDLY, NO ADVERSE COMMENT HAS BE EN MADE ON THE EVIDENCE PRODUCED DURING THE APPELLATE STAGE, THERE FORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF THE REVENUE. THE ASSESSEE HAS EXPLAINED THE IDENTITY AND CREDIT WORTHINESS AND GE NUINITY OF THE TRANSACTIONS. ACCORDINGLY, WE DO NOT INTERFERE WIT H THIS FINDING OF THE LD. CIT(A) AND DISMISS GROUND NO. 1 OF THE REVENUE. 10 6. IN THE RESULT, APPEAL OF THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES AND THAT OF THE RE VENUE IS DISMISSED. (ORDER PRONOUNCED IN THE COURT ON 10 TH JUNE, 2014). SD/- SD/- (N.K.SAINI) (HARI OM MARATHA ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 10 TH JUNE, 2014. VL/ COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD.CIT 4. THE CIT(A) 5. THE D.R ASSISTANT REGISTRAR, ITAT, JODHPUR.