ITO, Narnaul V. Sh. Mohan Lal Mehta Prop., Haryana

ITA 3208/DEL/2011

• Counselvise Citation: 320820114 RSA 2011
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-03-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 08-02-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 14-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: ASHWANI TANEJA
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH E NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 3208/DEL/2011 ASSESSMENT YEAR: 2008-09 INCOME-TAX OFFICER, VS, SH.MOHAN LAL MEHTA, PROP. M/S. WARD 2, MEHTA MEDICAL HALL, NEAR NEW NARNAUL. SHOPPING COMPLEX, MAHENDER GARH (HARYANA) PIN: 123029 (PAN: ALLPM3788R) (APPELLANT) (RESPONDENT) DEPARTMENT BY: SHRI RS NEGI, SR.DR ASSESSEE BY: SHRI ASHWANI T ANEJA, ADV. DATE OF HEARING : 08.02.2012 DATE OF PRONOUNCEMENT : 30.03.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 11.04.2011 PASSED FOR ASSESSMENT YEAR 2008-09. THE GROUNDS OF APPEAL TAKEN BY THE REVENUE READ AS UNDE R: ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEARNED CIT(APPEALS) ERRED IN LAW AND FACTS IN DELETING: I) THE ADDITION OF RS.23,00,000 MADE BY THE A.O. ON AC COUNT OF UNEXPLAINED INTRODUCTION OF CASH IN HIS CASH BOOK. II) THE ADDITION OF RS.9,95,296 MADE BY THE A.O. ON ACC OUNT OF DIFFERENCE IN THE AMOUNT OF PURCHASES. (DIFFERENCE IN THE AMOUNT SHOWN IN THE LIST OF DEALERS FROM WHOM PURCH ASES HAVE BEEN MADE AND AS SHOWN IN THE PROFIT & LOSS ACCOUNT ) 2 2. THAT THE APPELLANT CRAVES FOR PERMISSION TO ADD, DELETE OR AMEND THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEAR ING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. HE IS RUNNING A PROPRIETARYSHIP CONCERN, NAMELY, M/S. MEH TA MEDICAL HALL. HE HAS FILED HIS RETURN OF INCOME ON 30 TH SEPTEMBER, 2008 DECLARING AN INCOME OF RS.2,70,167. THE CASE OF THE ASSESSEE WAS SELECT ED FOR SCRUTINY ASSESSMENT AND A NOTICE UNDER SEC. 143(2) OF THE AC T DATED 18 TH SEPTEMBER, 2009 WAS ISSUED AND SERVED UPON THE ASSESSEE. IN RE SPONSE TO THE NOTICE, SHRI BL GUPTA, ADVOCATE APPEARED FOR THE ASSESSEE AND SU BMITTED THE REQUISITE DETAILS. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED T O THE ASSESSING OFFICER THAT A SUM OF RS.23 LACS HAS BEEN CREDITED IN THE ACCOUN TS OF THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, RS.10 LACS WERE ALLEGED TO HAVE BEEN RECEIVED ON 2 ND OF APRIL, 2007 FROM SMT. MISRODEVI, SMT. SUMITRA D EVI, SMT. KAVITA AND SMT. INDRAVATI. SIMILARLY, RS. 2 LA CS WERE RECEIVED ON 4.4.2007 FROM SHRI JAGMAL SINGH. A SUM OF RS.8 LACS WAS RECEIVED ON 13 TH APRIL, 2007 FROM SHRI RAJ PAL S/O SHRI DHARAM PAL A ND A SUM OF RS. 3 LACS WAS RECEIVED ON 25.5.2007 FROM SHRI JAGMAL SINGH S/ O SHRI SINGH RAM. ACCORDING TO THE ASSESSING OFFICER, AS PER SECTION 68 OF THE ACT IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT OF AN ASS ESSEE MAINTAINED FOR ANY PREVIOUS YEAR THEN ASSESSEE IS REQUIRED TO EXPLAIN THE NATURE AND SOURCE OF 3 SUCH CREDITS AND IF THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THEN THE SUMS SO CRE DITED MAY BE CHARGED TO THE INCOME-TAX AS INCOME OF THE ASSESSEE OF THAT PR EVIOUS YEAR. HE CONFRONTED THE ASSESSEE TO EXPLAIN THE SOURCE OF SU CH SUM BY PROVING IDENTITY OF THE CREDITORS, THEIR CREDITWORTHINESS A ND GENUINENESS OF THE TRANSACTION. 3. IN RESPONSE TO THE QUERY OF THE ASSESSING OFFICE R, IT WAS CONTENDED BY THE ASSESSEE THAT HE WAS CO-OWNER OF 12 CANALS OF L AND. A FAMILY SETTLEMENT WAS AGREED ORALLY IN FEBRUARY 2007 BETWEEN THE ASSE SSEE, HIS WIFE AND THREE SONS. THEY WERE TO GET EQUAL SHARES OF LAND. ACCORD ING TO THIS FAMILY SETTLEMENT, ASSESSEE WAS TO OBTAIN 1210 SQ. YDS. OF LAND. IN ANTICIPATION OF THIS SHARE OF LAND, THE ASSESSEE HAD ENTERED INTO A N AGREEMENT WITH DIFFERENT PARTIES FOR SALE OF 1100 SQ.YDS. OF LAND. HE HAS R ECEIVED THE MONEY FROM THE PROSPECTIVE VENDEES TOWARDS SALE OF PLOTS ON DIFFER ENT DATES. THE FAMILY SETTLEMENT WAS REDUCED TO WRITING AND IT WAS REGIST ERED IN NOVEMBER 2007. AS PER THE SITE PLANE ATTACHED WITH THE FAMILY SET TLEMENT DEED, EACH OF THE FIVE PERSONS WERE GOT LAND MEASURING 209 X 49 FEET. IN VIEW OF THE PARTITION OF THE LAND IN SUCH MANNER, THREE FEET WAS LEFT BY EACH FAMILY MEMBER FOR THE PASSAGE. ACCORDING TO THE ASSESSEE, HE GOT LAND IN A RECTANGULAR SHAPE 4 MEASURING 209 X 49 FEET. THIS WAS TO BE DIVIDED AMO NGST THE FOUR VENDEES. CONSIDERING THE ODD SIZE OF THE PLOT, THEY BACK OUT AND THEY CANCELLED THE AGREEMENT. ASSESSEE HAS REPAID THEIR EARNEST MONEY. 4. ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXP LANATION OF THE ASSESSEE. FOR DISBELIEVING THE VERSION OF ASSESSEE WITH REGARD TO FOUR LADIES, HE HAS ASSIGNED FOLLOWING REASONS: (I) IF EQUAL AMOUNT IS CONSIDERED TO BE PAID BY TH E FOUR PURCHASERS, SH. MAHABIR PARSAD, HUSBAND OF SMT. MISRO DEVI PAID RS.4.00 LACS ON BEHALF OF HIS WIFE AND SMT. SUMITRA DEVI WIFE OF SH . SHEORAN SINGH. HE OWNS LESS THAN 4 ACRES OF AGRICULTURAL LAND AND CLAIMED TO HAVE SOLD CROP WORTH RS.6,10,310 WHEREAS THE AVERAGE INC OME FOR ONE ACRE OF LAND COULD BE ABOUT RS.15,000. (II) SMT. KAVITA OWNS LESS THAN ONE ACRE OF LAND WH EREAS SHE CLAIMED TO HAVE SOLD CROP WORTH RS.2,95,860 THROUGH HER HUSBAND SH. SATYAVIR SINGH. (III) SMT. INDRAWATI OWNS NO AGRICULTURAL LAND AND CLAIMED TO HAVE SOLD CROP WORTH RS.2,67,976 THROUGH HER HUSBAND SH. SATYAVIR SINGH. (IV) PERSONS OF DIFFERENT VILLAGES STORED THEIR CRO PS FOR MANY YEARS AND CLAIMED TO HAVE SOLD TO THE SAME DEALER M/S. SU RAJ BHAN DEVENDER KUMAR ON THE SAME DAY WITH RUNNING CASH ME MO NOS. 9192 TO 9195. (V) AGREEMENT MADE ON A PAPER WITH COURT FEE STAMP OF RS.10 HAS NOT BEEN REGISTERED WITH ANY AUTHORITY/NOTARY PUBLIC. A FTER THE EXPIRY OF A 5 LONG PERIOD OF ABOUT 2 YEARS WHEN IT WAS CANCELLED ON 26.3.2009 ALSO IT WAS NOT REGISTERED WITH ANY AUTHORITY/NOTARY PUB LIC. THUS, IT HAS NO AUTHENTICITY. 5. ASSESSING OFFICER SIMILARLY POINTED OUT DEFECTS IN THE EXPLANATION OF THE ASSESSEE QUA THE CREDITWORTHINESS OF THE OTHER VENDEES AND TREATED THE ALLEGED EARNEST MONEY AS INCOME OF THE ASSESSEE FRO M UNDISCLOSED SOURCES. HE MADE AN ADDITION OF RS.23 LACS. 6. DISSATISFIED WITH THE ACTION OF THE ASSESSING OF FICER, ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LEARNED FIRST APPEL LATE AUTHORITY. LEARNED FIRST APPELLATE AUTHORITY ON APPRECIATION OF THE FA CTS AND CIRCUMSTANCES, ARRIVED AT A CONCLUSION THAT ASSESSEE HAS EXPLAINED THE SOURCES OF CREDIT ENTRIES IN HIS BOOKS OF ACCOUNT. THE FINDINGS RECOR DED BY THE LEARNED FIRST APPELLATE AUTHORITY IN PARAGRAPH 4 TO 4.2 ARE WORTH TO NOTE, WHICH READ AS UNDER: 4. I HAVE CAREFULLY CONSIDERED THE ISSUE AND THE S UBMISSIONS MADE BY THE AR. FROM A BARE READING OF THE FACTS OF THE CASE, IT APPEARS THAT ENTERING INTO FOUR AGREEMENTS AND CANCELING ALL OF THEM MAY NOT BE BONA FIDE. HOWEVER, IF THE FACTS OF THE CASE ARE EX AMINED THOROUGHLY, IT IS APPARENT THAT THE AGREEMENTS WERE CANCELLED B ASICALLY DUE TO THE RECTANGULAR PIECE OF LAND OF 209 X 49 SQ. FEET COMI NG TO THE APPELLANT IN WHICH PARTITIONS FOR THE FOUR AGREEMENTS WILL HA VE TO BE MADE. AS 6 THIS SORT OF ALLOTMENT OF LAND TO THE PURCHASERS OF FOUR AGREEMENTS WAS NOT ENVISAGED AT THE TIME OF ENTERING INTO THE AGRE EMENTS, THE AGREEMENTS WERE CANCELLED BY THE PURCHASERS, AS ANY PRUDENT PERSON WOULD DO. 4.1 APART FROM THE ABOVE, THE APPELLANT HAS DISCHAR GED THE ONUS CAST ON HIM BY FURNISHING THE COPIES OF AGREEMENTS AND THE SOURCES OF PAYMENT BY THE PURCHASERS. IN FACT, IN THE CASE OF TWO PURCHASERS, AFFIDAVITS WERE ALSO FILED BEFORE THE A.O. IF THE A .O. HAD ANY DOUBT REGARDING THE GENUINENESS OF THE TRANSACTIONS AND T HE CREDITWORTHINESS OF THE PURCHASERS, HE SHOULD HAVE EXAMINED THEM AND COLLECTED FURTHER RELEVANT MATERIAL BEFORE COMING TO ANY ADVERSE VIEW . THE ONUS ON THE A.O. CANNOT BE SHIFTED TO THE APPELLANT AND TAKE AD VERSE VIEW ON THE MATTER. THE APPELLANT CANT BE EXPECTED TO PROVE TH E SOURCE OF THE SOURCE. 4.2 IN VIEW OF THE ABOVE AND THE RATIOS OF CASE LAW S CITED BY THE AR, THE ADDITIONS MADE BY THE A.O. TOTALLING RS.23. 00 LACS ON ACCOUNT OF THE ADVANCES RECEIVED FROM FOUR AGREEMENTS IS DE LETED AND THE GROUND OF APPEAL IS ALLOWED. 7. LEARNED DR WHILE IMPUGNING THE ORDER OF THE LEAR NED CIT(APPEALS) SUBMITTED THAT ON AN OVERALL APPRECIATION OF THE MA TERIAL AVAILABLE ON RECORD WOULD SUGGEST THAT ASSESSEE HAS COCKED UP A STORY O F SELLING THE PLOTS TO THE ALLEGED CREDITOR AND THEREAFTER THEY HAVE CANCELLED THE DEAL. ASSESSING OFFICER HAS POINTED OUT VARIOUS FACTORS WHICH CAN I NDICATE THAT THE VERSION PUT FORTH BY THE ASSESSEE IS NOT WORTHY OF CREDENCE . 7 8. ON THE OTHER HAND, LEARNED COUNSEL FOR THE ASSES SEE SUBMITTED THAT THOUGH THE AGREEMENTS TO SALE WERE NOT REGISTERED BUT THEY WERE EXECUTED ON STAMP PAPER, DULY SIGNED BY THE PARTIES IN THE PRES ENCE OF THE WITNESSES. THEY MENTIONED COMPLETE DETAILS OF THE LAND TO BE S OLD AS WELL AS THE CONSIDERATION, HENCE THE AGREEMENT FULFILL ALL THE CONDITIONS OF A VALID CONTRACT. THEIR AUTHENTICITY AND EXISTENCE CANNOT B E IGNORED SIMPLY FOR THE REASONS THAT THEY WERE NOT GOT REGISTERED WITH THE REGISTERING AUTHORITY. HAD THE ASSESSING OFFICER ANY DOUBT, HE COULD HAVE SUMM ONED THE WITNESSES OR THE PARTIES TO THE CONTRACT. ASSESSING OFFICER INST EAD OF CARRYING OUT THIS EXERCISE SIMPLY POINTED OUT INFERENTIAL DEFECTS IN THE AGREEMENTS. THE ASSESSEE HAS PRODUCED REVENUE RECORDS OF ALL THE VE NDEE, WHERE THEY HAVE SOLD THE CROP, THEREFORE, THEIR IDENTITY AS WELL AS CREDITWORTHINESS IS NOT IN DISPUTE. ALL OF THEM WERE HAVING AGRICULTURAL LAND AND THEY HAVE NOT DENIED EXECUTION OF AGREEMENT AS WELL AS PAYMENT OF ADVANC ES TO THE ASSESSEE FOR PURCHASE OF LAND. HE POINTED OUT THAT THESE EVIDENC ES ARE ON PAGE NOS. 47, 48, 84, 92, 29, 30, 14 AND 16 OF THE PAPER BOOK. 9. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. AS OBSERVED EARLIER, THAT SECTION 68 OF THE ACT PROVIDES IF ANY SUM IS FOUND CREDITED IN THE BOOKS OF ACCOUNT O F ASSESSEE MAINTAINED FOR 8 ANY PREVIOUS YEAR THEN ASSESSEE WOULD REQUIRE TO EX PLAIN THE NATURE AND SOURCE OF SUCH CREDITS AND IF THE EXPLANATION OFFER ED BY HIM IS NOT IN THE OPINION OF THE ASSESSING OFFICER SATISFACTORY THEN THE SUMS SO CREDITED MAY BE CHARGED TO THE INCOME-TAX AS INCOME OF THE ASSES SEE OF THAT PREVIOUS YEAR. THE ASSESSEE OFFERED AN EXPLANATION THAT THESE SUMS WERE RECEIVED BY HIM AS ADVANCES FOR SALE OF LAND. THE ASSESSEE HAS PRODUCE D COPIES OF THE AGREEMENT EXHIBITING THE SALE OF THE PLOTS. HE HAS PRODUCED THE EXACT DETAILS OF VENDEES. THE SALE AGREEMENTS COULD NOT BE ACTED UPON BECAUSE THE SHARE OF LAND FALLEN TO THE ASSESSEE, WHICH WAS AGREED TO BE SOLD IS OF SUCH AN ODD SIZE THAT NO BODY BE ABLE TO ENJOY THE PROPERTY. TH E LAND WHICH WAS TO BE SOLD BY THE ASSESSEE IS 209 X 49. THIS HAS TO BE DI VIDED IN FOUR PIECES. IT IS RECTANGULAR IN SHAPE. IN SUCH SITUATION, EACH VENDE E WOULD GET A VERY NOMINAL FRONT AND THE DEPTH OF THE PLOT WILL BE MOR E THAN 200 FEET. FACED WITH THIS SITUATION, ALL THE VENDEES HAVE CANCELLED THE PURCHASE AGREEMENT. ON THE OTHER HAND, LEARNED ASSESSING OFFICER HAS PO INTED OUT PERIPHERAL DEFECTS IN THE ALLEGED CREDITWORTHINESS OF THE VEND EES. TO OUR MIND, IF THE ASSESSING OFFICER HAS ANY DOUBT ABOUT THE VERY NATU RE OF THE TRANSACTION AND AUTHENTICITY OF THE AGREEMENT THEN HE AT LEAST EXAM INED THE INDEPENDENT WITNESSES MENTIONED ON THE AGREEMENTS. LEARNED FIRS T APPELLATE AUTHORITY HAS LOOKED INTO ALL THESE ASPECTS BEFORE ACCEPTING THE CLAIM OF ASSESSEE. ON 9 AN ANALYSIS OF ALL THE FACTS AND CIRCUMSTANCES, WE DO NOT FIND ANY FORCE IN THE GROUND OF APPEAL RAISED BY THE REVENUE. 10. THE BRIEF FACTS WITH REGARD TO THE NEXT DISPUTE ARE THAT ASSESSEE HAS FURNISHED A LIST OF SUNDRY CREDITORS IN WHICH OPENI NG BALANCE AND THE CREDITS DURING THE YEAR HAVE BEEN SHOWN. THE ASSESSEE HAS P OINTED OUT THAT CREDITS INDICATE PURCHASES DURING THE YEAR AND DEBIT DEMONS TRATE PAYMENTS MADE BY THE ASSESSEE. ON AN ANALYSIS OF THE COMPUTERIZED SH EETS SUBMITTED BY THE ASSESSEE, LEARNED ASSESSING OFFICER OBSERVED THAT A S PER COL. NO. 7 OF THE P & L ACCOUNT IN THE INCOME TAX RETURN, THE ASSESSEE HAS SHOWN PURCHASES TO THE TUNE OF RS.49,39,519 ONLY WHEREAS IN THE LIST, THE PURCHASES ARE SHOWN AT RS.59,34,815. IN THE OPINION OF THE ASSESSING OFFIC ER, THERE IS A DISCREPANCY OF RS.9,95,296 WHICH ASSESSEE HAS DELIBERATELY ENHA NCED IN THE PURCHASES IN ORDER TO REDUCE THE PROFIT. HE MADE ADDITION OF THI S AMOUNT. 11. BEFORE THE LEARNED FIRST APPELLATE AUTHORITY, A SSESSEE HAS DEMONSTRATED THAT LEARNED ASSESSING OFFICER FAILED TO APPRECIATE THE DETAILS IN RIGHT PERSPECTIVE. ACCORDING TO THE ASSESSEE, TH E LIST IS A COMPUTER GENERATED, WHICH INDICATE BOTH, CREDIT AND DEBIT TR ANSACTIONS, THEY ARE NOT ABOUT PURCHASES OF GOODS ALONE BUT RELATED TO SALES OF GOODS OTHERS ALSO. 10 ASSESSEE HAS PRODUCED A RECONCILIATION CHART WHICH HAS BEEN NOTED BY THE LEARNED CIT(APPEALS) ON PAGE 7 OF THE IMPUGNED ORDE R. ON AN ANALYSIS OF THESE DETAILS, LEARNED FIRST APPELLATE AUTHORITY HA S OBSERVED THAT THERE IS NO DISCREPANCY AND ASSESSING OFFICER HAS ERRONEOUSLY A DDED THIS AMOUNT. 12. WITH THE ASSISTANCE OF LEARNED REPRESENTATIVES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LEARNED COUNSEL FOR THE ASSESSEE DREW OUR ATTENTION TO PAGES 32 TO 34 OF THE PAPER BOOK WHERE COMPLETE LIST OF SUNDRY CREDITORS AND THE DEBTORS HAVE BEEN PLACED ON RECORD. HE ALSO DREW OUR ATTENTION TOWARDS THE SUMMARY OF CREDITS NOTICED BY THE LEARN ED FIRST APPELLATE AUTHORITY ON PAGE 7. IN ORDER TO GIVE AN EXAMPLE, H E MADE REFERENCE TO BACK SIDE OF PAGE NO.32 AND DREW OUR ATTENTION TOWARDS A PARTY, NAMELY, GANGA DEVI EYES HOSPITAL. THE ASSESSEE HAD MADE SALES TO THIS PARTY AND, THEREFORE, CREDIT APPEARS. THIS DOES NOT PERTAIN TO THE ALLEGE D PURCHASES CONSIDERED BY THE ASSESSING OFFICER. IN OTHER WORDS, FROM THE LIS T, ASSESSING OFFICER OBSERVED THAT CREDIT REPRESENT PURCHASES AND TOOK I NTO CONSIDERATION THE AMOUNT OF RS.4,64,514 APPEARING AGAINST THE NAME OF GANGA DEVI PANDEY EYES HOSPITAL. FROM THE DETAILS, ASSESSEE POINTED O UT THAT IT HAS MADE SALES TO THIS CONCERN AND CREDIT OF THE SALES IS APPEARING. THUS, THERE IS NO DISCREPANCY AS SUCH. ON DUE CONSIDERATION OF THE F ACTS AND CIRCUMSTANCES, 11 WE ARE OF THE VIEW THAT LEARNED CIT(APPEALS) HAS RI GHTLY DELETED THE ADDITION. WE DO NOT FIND ANY MERIT IN THE APPEAL OF REVENUE. IT IS DISMISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 30.03.20 12 SD/- SD/- ( K.G. BANSAL ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 30/03/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR