Sh. Shri Bhagwan, Delhi V. ITO, New Delhi

ITA 327/DEL/2010

• Counselvise Citation: [2010] 119 COUNSELVISE.COM (IT) 5474 (ITAT-DELHI)
• Duration Of Justice: 2 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 1998-1999
• Appeal Filed On: 22-01-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T VASANTHAN
• Keywords: Income from undisclosed sources; Opportunity of being heard; Documents seized
• Section: 143(3); 154

Judgement Text

ITA NO. 327/DEL/2010 A.Y. 1998-99 1 IN THE INCOMETAX APPELATE TRIBUNAL DELHI BENCH G: NEW DELHI BEFORE SHRI A.D. JAIN, JUDICIAL MEMBER & SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 327/DEL/2010 A.Y. : 1998-99 SH. SHRI BHAGWAN, VS. INCOME TAX OFFICER, WAR D-28(1), PROP: M/S SARDA RAM SHRI BHAGWAN, NEW DELHI 5188-A, NAYA BAZAR, DELHI 110 006 [PAN: AAIPB9518Q] (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. K. SAMPATH, ADV. DEPARTMENT BY : SHRI T. VASANTHAN, SR. DR O R D E R PER SHAMIM YAHYA : AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A) DATED 24.12.2009 PERTAINING TO ASSESSMENT YEAR 1998 -99. 2. THE ISSUE RAISED IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE ADDITION OF RS. 5 LACS. 3. EARLIER THE ASSESSMENT IN THIS CASE WAS COMPLETE D ON 24.3.2003 U/S 143(3) /148, DETERMINING TOTAL INCOME AT RS. 8,22,840/- W HEREIN ADDITION OF RS. 7 LAKHS WAS MADE ON ACCOUNT OF HUNDI AND RS. 57,000/- WAS A DDED AS INTEREST ON RS. 7 LAKHS. THE BACK GROUND TO THE ASSESSMENT WAS SEAR CH AND SEIZURE ACTION ON 15.12.1997 IN THE CASE OF KAMAL CHAND JAIN GROUP, WHERE A RECEIPT EXECUTED ON ITA NO. 327/DEL/2010 A.Y. 1998-99 2 THE LETTER HEAD OF THE APPELLANT SHOWING RECEIPT OF RS. 7 LAKHS AT SPECIFIED RATE OF INTEREST WAS FOUND. IN FIRST APPEAL, CIT(A) HELD T HAT WHILE ADDITION U/S 69D COULD NOT BE UPHELD, THE ASSESSEE HAD UTILIZED MONIES BO RROWED FROM KAMAL CHAND JAIN GROUP FOR GENERATING UNACCOUNTED INCOME WHICH WAS ESTIMATED AT RS. 70,000. SUBSEQUENTLY, THE APPEAL ORDER WAS RECTIFIE D U/S 154 STATING THAT THE CORRECT CASH LOAN BEING RS. 5 LAKHS, ONLY RS. 54,00 0/- WAS SUSTAINABLE. AGGRIEVED BY THE DECISION, REVENUE FILED APPEAL BEFORE ITAT. IN THEIR ORDER DATED 28/2/2007, THE BENCH NOTED: IN THIS CASE, IT IS NOT CLEAR WHETHER THE ASSESSEE HAD MADE ANY VDIS IN RESPECT OF SUM OF RS. 7 LAKHS OR WHETHER SHRI K AMAL CHAND JAIN HAD MADE ANY SURRENDER IN RESPECT OF THIS AMOUNT. THEREFORE, EVEN IF THE AMOUNT WAS NOT TREATED AS HUNDI THE SOURCE O F MONEY OF RS. 7 LAKHS WAS REQUIRED TO BE EXAMINED WHICH, IT APPEARS , HAS NOT BEEN DONE. WE THEREFORE, CONSIDER IT APPROPRIATE TO SET ASIDE THE MATTER AND RESTORE IT BACK TO THE ASSESSING OFFICER FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION REGARDING THE SOURCE OF CASH RECEIPT AND AFTER ALLOWING AN OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 4. IN THE SECOND ROUND AO NOTED THAT HE ASKED THE A SSESSEE TO EXPLAIN THE TYPE OF TRANSACTION MADE THROUGH KAMAL CHAND JAIN G ROUP AND ASSESSEE DID NOT MAKE ANY RESPONSE. THEREAFTER AO OBSERVED THAT E ITHER THE RECEIPT OF MONEY GIVEN BY THE ASSESSEE IS TO BE TREATED AS PROMISS ORY NOTE OR HUNDI, BUT IT CANNOT CHANGE THE FACT THAT ASSESSEE HAD TAKEN THE ABOVE A MOUNT LOAN IN CASH, THE RECEIPT AND REPAYMENT WAS NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. HENCE, THE AO HELD THAT THE ABOVE TRAN SACTION OF LOAN OR HUNDI RECEIPT AND REPAYMENT ALONGWITH THE INTEREST IS TRE ATED AS ASSESSEES UNEXPLAINED ITA NO. 327/DEL/2010 A.Y. 1998-99 3 MONEY FROM UNDISCLOSED SOURCE U/S 69A OF THE IT ACT . AO ALSO ADDED RS. 15000/- FOR INTEREST. 5. UPON ASSESSEES APPEAL LD. CIT(A) AFFIRMED THE A OS ACTION. 6. AGAINST THIS ORDER THE ASSESSEE IS IN APPEAL BEF ORE US. 7. WE HAVE HEARD BOTH THE COUNSELS AND PERUSED THE RECORDS. AS PER THE ADMITTED FACTS OF THE CASE INITIALLY AS PER THE SE ARCH CONDUCTED UPON KAMAL CHAND JAIN GROUP, THE DOCUMENTS FOUND SHOWED THAT T HE ASSESSEE HAS RECEIVED A SUM OF RS. 7 LACS AT SPECIFIED RATE OF INTEREST. THIS WAS ADDED AS ASSESSEES INCOME U/S 69D TREATING THE SAME AS HUNDI AND LD. CIT(A) DID NOT UPHOLD THE ADDITION U/S 69D. THE TRIBUNAL REMITTED THE ISSUE TO THE FILES OF THE AO FOR PASSING A FRESH ORDER AFTER NECESSARY EXAMINATION R EGARDING THE SOURCE OF CASH RECEIPTS. NOW IN FRESH PROCEEDINGS AOS CLAIM IS THAT ASSESSEE HAS NOT RESPONDED REGARDING THE NATURE OF TRANSACTION WITH KAMAL CHA ND JAIN GROUP AND THEREFORE AO PRESUMED THAT THE IMPUGNED AMOUNT TAKEN OF HUN DI MUST HAVE REPAID AND THEREFORE, THE SAME WAS ADDED U/S 69A OF THE IT AC T. 7.1 WE FIND THAT SECTION 69A OF THE ACT MANDATES TH AT IF ASSESSEE IS FOUND TO BE OWNER OF ANY MONEY, BULLION, JEWELLERY ETC. NOT R ECORDED IN THE BOOKS OF ACCOUNT AND THE ASSESSEE HAS NO EXPLANATION ABOUT T HE NATURE OF SOURCE OF ACQUISITION, THE SAME CAN BE DEEMED TO BE INCOME OF THE ASSESSEE FOR THAT FINANCIAL YEAR. NOW IN THE PRESENT CASE AS PER TH E DOCUMENTS SEIZED AT A THIRD PARTY PREMISES PERTAINED TO AMOUNT TAKEN BY THE ASS ESSEE ON THE SPECIFIED RATE OF INTEREST. NOW THE ADDITION OF THE SAME U/S 69D A S AMOUNT BORROWED ON HUNDI ITA NO. 327/DEL/2010 A.Y. 1998-99 4 WAS CANCELLED BY THE LD. CIT(A). THE MATTER WAS REMITTED BACK TO THE AO FOR FRESH EXAMINATION BY TRIBUNAL. NOW WITHOUT BRINGIN G ANY FURTHER MATERIAL ON RECORDS THE AO HAS MADE A PRESUMPTION THAT THE SAID AMOUNT MIGHT HAVE BEEN REPAID IN CASH ALONGWITH INTEREST. HENCE HE TRE ATED THE SAME AS ASSESSEES UNEXPLAINED MONEY U/S 69A OF THE IT ACT. FROM TH IS IT IS AMPLY CLEAR THAT THE ADDITION NOW BEING MADE IS CLEARLY ON SURMISES AND CONJECTURES. IT IS A SETTLED LAW THAT ADDITION MADE ON SURMISES AND CONJECTURES A RE NOT PERMISSIBLE IN LAW. UNDER THE CIRCUMSTANCES, WE SE ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE ADDITION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 23/03/2010 U PON CONCLUSION OF THE HEARING. SD/- SD/- [A.D. JAIN) [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 23/03/2010 SRB COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. D R, ITAT TRUE COPY BY ORDER, DEPUTY REGISTRAR, ITAT, DELHI BENCHES