MOOMAL MOTORS, Jaipur V. ITO, Kishangarh

ITA 328/JPR/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 5619 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 30-04-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Keywords: Unexplained investment; Unexplained expenditure; Peak credit
• Section: 143(3); 68

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YA DAV, AM VK;DJ VIHY LA- @ ITA NO. 328/JP/2014 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR : 2009-10 M/S MOOMAL MOTORS, NEAR RAM MANDIR, BEHIND BUS STAND, MADANGANJ, KISHANGARH. CUKE VS. INCOME TAX OFFICER, KISHANGARH. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAOFM 0830 C VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI MANISH AGRAWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/01/2017 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 08/02/2017 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF CIT(APPEALS), AJMER DATED 31/03/2014 FOR THE ASSESS MENT YEAR 2009-10, WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWI NG GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS GROSSLY ERRED IN CONFIRMING THE ADDITION OF RS. 65,46,664/- U/S 68 OF THE INCOME TAX ACT, 1961 ARBITRARILY, WITHOUT APPRE CIATING SUBMISSION MADE AND EVIDENCES ADDUCED MERELY ON ASSUMPTIONS AN D ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 2 PRESUMPTIONS, THUS THE ADDITION SUSTAINED DESERVES TO BE DELETED IN TOTO. 1.1 THAT THE LD. CIT(A) HAS FURTHER ERRED IN CONFIR MING THE ADDITION WITHOUT APPRECIATING THE FACT THAT THE APPELLANT MA DE SURRENDER OF RS.47,10,000/- ON ACCOUNT OF ADVANCES FROM CUSTOMER S IN CASE OF ASSESSMENT YEAR 2007-08 AND SAID AMOUNT WERE REPAID IN A.Y. 2008-09 IN THE BOOKS AVAILABLE WITH THE APPELLANT AND OUT O F WHICH DEPOSITS WERE MADE DURING THE YEAR UNDER APPEAL AND BALANCE OF RS .17,86,646/- HAS ALREADY BEEN SURRENDERED BY THE APPELLANT DURING TH E COURSE OF ASSESSMENT PROCEEDING TO BUY THE PEACE OF MIND AND TO AVOID PROLONGED LITIGATION WHICH IS DULY VERIFIABLE FROM THE CASH ACCOUNT OF SURRENDERED INCOME. THUS THE ADDITION SUSTAINED DES ERVES TO BE DELETED IN TOTO. 1.2 THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE TH E FACT THAT AMOUNT SURRENDERED IN ASSESSMENT YEAR 2007-08 WAS IN CIRCU LATION IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE UNDER THE HEAD ADVANCE FROM CUSTOMERS AND ASSESSEE IS ENTITLED FOR BENEFIT OF SET OFF OF SURRENDERED INCOME TOWARDS DEPOSITS MADE DURING THE YEAR AND THE SAID AMOUNT WAS FINALLY CREDITED IN THE BOOKS IN ASSESSMENT YEAR 2010-11 TH EREFORE BENEFIT OF SET OFF OF SURRENDERED INCOME BE ALLOWED TO THE APP ELLANT AND THE ADDITION SUSTAINED DESERVES TO BE DELETED. 2. THE FACTS OF THE CASE ARE THAT THE APPELLANT IS A PARTNERSHIP FIRM HAVING AUTHORIZED DEALERSHIP OF M/S EICHER TRACTOR AND OTHER VEHICLES AND ALSO RUNNING A SERVICE CENTRE FOR ALL TYPES OF AUTOMOBILE VEHICLES BESIDES HAVING SALE OF SPARE PARTS. THE RETURN OF I NCOME WAS FILED U/S ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 3 139(1) AND ASSESSMENT WAS COMPLETED BY AO BY PASSIN G ORDER U/S 143(3) DATED 27.12.2011 AT A TOTAL INCOME OF RS.65, 49,330/- AFTER MAKING ADDITION OF RS.65,46,664/- TREATING THE CASH DEPOSITS IN THE NAME OF VARIOUS PARTIES AS UNEXPLAINED. 3. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE LD. CIT(A), WHICH WAS DECIDED AGAINST THE ASSESSEE VIDE ORDER DATED 31.03.2014 AND HIS RELEVANT FINDINGS ARE REPRODUCED AS UNDER: I HAVE CONSIDERED THE CONTENTIONS OF THE APPELLANT AS WELL AS ASSESSMENT ORDER. IT IS SEEN THAT CONSEQUENT TO RES ULT OF ENQUIRIES BY THE AO, APPELLANT SURRENDERED THE CREDITORS TO THE EXTENT OF RS.65,46,664/- AND CLAIMED SET-OFF IN RESPECT OF SU RRENDER OF RS.47,10,000/- MADE FOR A.Y. 2007-08. THE ASSESSEE S CONTENTION IS THAT ASSESSEE MAY BE ALLOWED SET-OFF OF AMOUNT OF R S.47,10,000/- SURRENDERED IN A.Y. 2007-08 ON ACCOUNT OF BOGUS ADV ANCES FROM THE CUSTOMERS AGAINST THE ADDITION MADE BY THE AO ON AC COUNT OF CREDITORS/ADVANCES FROM THE CUSTOMERS OF RS.65,46,6 64/- IN THE YEAR UNDER CONSIDERATION. THE ASSESSEE CLAIMED THAT AMOU NTS SURRENDERED OF RS.47,10,000/- IN A.Y. 2007-08 WAS SHOWN AS ADVANCE FROM CUSTOMERS. THIS AMOUNT WAS REPAID IN A.Y. 2008-09 IN THE BOOKS MEANING THEREBY ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 4 THAT FUNDS WERE KEPT BY ASSESSEE IN CASH WITH HIM. THE SAME CASH BALANCE WAS USED FOR DEPOSITING THE FUND AS ADVANCE FROM CUSTOMERS IN A.Y. 2009-10. HOWEVER, THE ASSESSEES CONTENTION IS NOT ACCEPTABLE AS THERE IS NO CORRELATIONS BETWEEN THE AMOUNT SURREND ERED IN A.Y. 2007- 08 AND BOGUS CREDITS/DEPOSITS SHOWN IN A.Y. 2009-10 . THE AMOUNT SURRENDERED IN A.Y. 2007-08 OF RS.47,10,000/- IS RE PRESENTED BY THE VARIOUS ASSETS IN THE BALANCE SHEET FOR A.Y. 2007-0 8. IT HAS NOT BEEN SHOWN THAT CORRESPONDING ASSETS ARE BOGUS OR HAVE B EEN LIQUIDATED. FURTHER, AS PER THE ASSESSMENT ORDER FOR A.Y. 2007- 08, ASSESSEE HAS NOT GIVEN ANY ADDRESS OF THE PERSONS FROM WHOM THE ADVANCES WERE SHOWN AND REPAYMENTS WERE CLAIMED TO HAVE BEEN MADE IN NEXT YEAR AND ASSESSEE SURRENDERED THE ABOVE ADVANCE FROM CUS TOMERS OF RS.47,10,000/- INSTEAD OF GIVING THE ADDRESS OF THE SAID CLIENTS. THE AO HAS ALSO MENTIONED THAT ABOVE AMOUNT SURRENDERED OF RS.47.10 LACS WAS INTRODUCED IN THE CASH BOOK ON 21.12.2009. IN VIEW OF ABOVE DISCUSSIONS AND FINDINGS OF THE AO AS MENTIONED IN THE ASSESSMENT ORDER, SET-OFF OF RS.47,10,000/- AS CLAI MED BY THE ASSESSEE IS NOT ALLOWABLE AGAINST THE SURRENDERED INCOME OF RS.65,46,664/- IN THE YEAR UNDER CONSIDERATION AND ADDITION MADE BY T HE AO IS CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 5 4. DURING THE COURSE OF HEARING, THE LD. AR SUBMITT ED ALL THESE GROUNDS OF APPEAL ARE IN RELATION TO NON-ALLOWANCE OF BENEFIT OF TELESCOPING OF RS.47,10,000/- CLAIMED BY THE ASSESS EE BEING THE AMOUNT OF ADDITIONAL INCOME OFFERED FOR TAXATION IN AY 2007-08. 4.1. IT WAS SUBMITTED THAT DURING THE YEAR UNDER CO NSIDERATION, ASSESSEE HAD SHOWN CLOSING BALANCE OF ADVANCES RECE IVED FROM CUSTOMERS AT RS.34,62,272/- UNDER THE HEAD CURRENT LIABILITIES IN BALANCE SHEET AS ON 31.03.2009. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, ASSESSEE HAD SUBMITTED THE COMPLETE DE TAILS OF THE PARTIES FROM WHOM THE ADVANCES WERE RECEIVED. IN RESPECT OF CASH RECEIPTS OF MORE THAN RS.20,000/-, ENQUIRIES WERE MADE BY LD. A O U/S 133(6). IN SOME OF THE CASES, LETTERS WERE RETURNED BY PARTIES , WHEREAS IN SOME CASES, CONFIRMATIONS WERE NOT RECONCILED. ACCORDING LY, SHOW CAUSE NOTICE WAS ISSUED BY LD. AO, TO FURNISH CONFIRMATIO NS IN RESPECT OF PARTIES FROM WHOM DEPOSITS WERE RECEIVED. IN RESPON SE TO SHOW CAUSE, SINCE ASSESSEE WAS NOT ABLE TO FURNISH CONFIRMATION S, HOWEVER IT FURNISHED LIST OF CASH RECEIPTS AND PAYMENTS MADE I N A.Y. 2009-10 (REPRODUCED AT PAGE 8 PARA 5 OF ASSESSMENT ORDER), ACCORDING TO WHICH TOTAL RECEIPTS WERE OF RS.71,41,664/- AND DEDUCTING THE PAYMENTS OF ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 6 RS.37,55,000/-, CLOSING BALANCE REMAINED AT RS.33,8 6,664/-. SINCE THE ASSESSEE COULD NOT PROVE THE ADVANCES IN THE MANNER LD. AO DESIRED, MAXIMUM PEAK BALANCE OF RS.64,96,646/- WAS WORK OUT OF WHICH BENEFIT OF TELESCOPING OF RS.47,10,000/- WAS CLAIME D BEING THE AMOUNT SURRENDERED IN A.Y. 2007-08 AND BALANCE SUM OF RS.1 7,86,646/- (64,96,646 47,10,000) WAS OFFERED FOR TAXATION IN THE YEAR UNDER CONSIDERATION. 4.2. IT WAS FURTHER SUBMITTED THAT DURING A.Y. 2007 -08, ASSESSEE HAD RECEIVED CERTAIN ADVANCES OF RS.47,10,000/- TOWARDS THE BOOKING OF VEHICLES FROM CASUAL CUSTOMERS AND WHEN SUPPLIES FR OM COMPANY WAS NOT MADE AVAILABLE, ADVANCE MONEY WAS REFUNDED TO T HE CUSTOMERS IN SUBSEQUENT PERIOD. HOWEVER, DURING THE COURSE OF AS SESSMENT PROCEEDINGS FOR A.Y. 2007-08 WHEN THE ASSESSEE WAS NOT ABLE TO PRODUCE THE PARTIES, IN ORDER TO BUY PEACE AND AVOI D LITIGATION, AMOUNT OF RS.47,10,000/- WAS OFFERED FOR TAXATION THOUGH T HESE AMOUNTS COME CLAIMED TO HAVE BEEN REFUNDED MEANING THEREBY THAT REFUND WAS AVAILABLE WITH ASSESSEE. THE SAID CASH WAS AVAILABL E WITH IT WHICH WAS INTRODUCED IN THE GUISE OF CASH DEPOSITS RECEIVED F ROM VARIOUS CUSTOMERS IN THE YEAR UNDER APPEAL AND THUS TELESCO PING OF THE SAME ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 7 CLAIMED HOWEVER, LD. AO REJECTED THE PLEA OF THE AS SESSEE AND MADE THE ADDITION OF ENTIRE CASH DEPOSITS OF RS.65,46,66 4/- MADE DURING THE YEAR UNDER APPEAL. 4.3. WITH REGARD TO THE ALLEGATION OF THE LD. AO TH AT THE BENEFIT OF SURRENDER INCOME HAS BEEN ALLOWED IN F.Y. 2009-10 A ND THE SAME MAY NOT BE ALLOWED FOR F.Y. 2008-09, I.E. A.Y. 2009-10, IT WAS FURTHER SUBMITTED THAT ASSESSEE FURNISHED CASH BOOK DATED 2 1.12.2009, WHEREIN SURRENDER AMOUNT OF RS.47,10,000/- WAS INCL UDED. YOUR HONOURS WOULD APPRECIATE THAT ENTRY FOR BOOKING INC OME IN RESPECT OF INCOME SURRENDERED WOULD ALWAYS BE MADE ON THE DATE OF CONCLUSION OF PROCEEDINGS, IN WHICH INCOME WAS OFFERED. THE LD. C IT(A), REJECTED THE CLAIM OF THE ASSESSEE OBSERVING THAT AMOUNT SURREND ERED IN A.Y. 2007- 08 MUST HAVE BEEN REPRESENTED BY VARIOUS ASSETS AND IN THE ABSENCE OF LIQUIDATION OF THE SAME, NO CORRELATION COULD BE PR OVED IN RESPECT OF MONEY SURRENDERED AND CASH DEPOSITS MADE DURING THE YEAR BY GROSSLY IGNORING THE FACT THAT ALL SUCH ADVANCES OF RS.47,1 0,000/- WERE CLAIMED TO HAVE BEEN REFUNDED IN A.Y. 2007-08 RELEVANT TO A .Y. 2009-10. ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 8 4.4 IT WAS FURTHER SUBMITTED THAT IN THE INSTANT CA SE, ASSESSMENT FOR A.Y. 2007-08 WAS COMPLETED ON 21.11.2009, THEREFORE , INCOME ON ACCOUNT OF SURRENDER MADE WAS SHOWN IN CASH BOOK ON THE SAID DATE, HOWEVER, THAT DOES NOT IMPLY THAT BENEFIT OF SURREN DER INCOME HAS BEEN TAKEN IN A.Y. 2010-11. IN THE CASE OF ASSESSEE, AS IS EVIDENT FROM PAGE 2 PARA 2 OF ASSESSMENT ORDER FOR A.Y. 2007-08 (APB 8), THE ACCOUNTS OF PARTIES FROM WHOM ADVANCES WERE SHOWN TO BE RECEIVE D, WERE SETTLED BY CASH PAYMENTS IN F.Y. 2007-08 ITSELF. ACCORDINGL Y, WHEN SURRENDER WAS MADE OF THE ADVANCE RECEIPTS, THE SUBSEQUENT RE PAYMENT OF OF THE SAME IN CASH AT RS 47,10,000 STOOD AVAILABLE WITH T HE ASSESSEE WHICH WAS UTILIZED BY THE ASSESSEE IN THE MANNER HE DESIR ES. THEREFORE, ASSESSEES CONTENTION THAT THE CASH CIRCULATED IN A SSESSMENT YEAR UNDER APPEAL PERTAINS TO SURRENDER MADE DURING A.Y. 2007- 08 IS WELL WITHIN LAW. IN SUPPORT OF CONTENTION, ASSESSEE SUBMITTED E XTRACT OF CASH ACCOUNT INCORPORATING CASH AVAILABLE WITH ASSESSEE ON SURRENDER OF INCOME IN A.Y. 2007-08 AND ITS EFFECT IN A.Y. 2008- 09 AND FURTHER CIRCULATION IN A.Y. 2009-10. FURTHER, CONTENTION OF LD. CIT(A) THAT IN THE ABSENCE OF LIQUIDATION OF ANY ASSETS CORRESPONDING TO SURRENDER MADE, CORRELATION CANNOT BE PROVED ALSO DOES NOT HOLD GOO D AS IT IS CRYSTAL CLEAR THAT CASH IS THE ONLY ASSET GETTING AFFECTE D IN RESPECT OF THESE ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 9 TRANSACTIONS, WHICH CANNOT BE EARMARKED AS TO WHETH ER THE SAME IS MONEY SURRENDERED OR SOME OTHER UNACCOUNTED MONEY. FURTHER, OBSERVATION OF LD. CIT(A) THAT ASSESSEE HAS NOT GIV EN ADDRESS OF THE PERSONS FROM WHOM ADVANCES WERE SHOWN IN A.Y. 2007- 08 AND PAYMENTS WERE MADE IN A.Y. 2008-09 IS NOT RELEVANT AS FOR WHATEVER REASON SURRENDER WAS MADE, THE SAME BECOMES PART OF POOL OF FUNDS AVAILABLE WITH THE ASSESSEE AS SOON AS IT IS ADMITT ED AND THE SAME CAN BE ADJUSTED BY ASSESSEE WHEREVER HE DEEMS APPROPRIA TE. 4.5 IT WAS FURTHER SUBMITTED THAT WHENEVER ADDITION ON ACCOUNT OF CASH DEPOSIT IS MADE, THE MAXIMUM AMOUNT THAT CAN B E DISALLOWED IS THE PEAK BALANCE IN RESPECTIVE ACCOUNT. IN THE INST ANT CASE ALSO, ASSESSEE WAS IN POSSESSION OF SUFFICIENT CASH BALAN CE OUT OF INCOME OFFERED IN A.Y. 2007-08, WHICH IS NOT PROVED TO BE UTILIZED ELSEWHERE, THUS DEPOSITS TO THAT EXTENT MAY PLEASE BE TREATED AS EXPLAINED. 4.6 THE LD AR FURTHER PLACED RELIANCE ON THE FOLLOW ING RULINGS: A. SHRI FOODS V/S ACIT (ITAT, JPR) 22 TW 675: - PEAK CREDIT THEORY BECOMES APPLICABLE UNLESS ASSESS ING OFFICER PROVES DESTINATION OF WITHDRAWALS ELSEWHERE.- ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 10 B. RAMESHCHAND MODI VS. ACIT (JP), 21 TW 510: -WHILE MAKING ADDITION FOR UNRECORDED SALES, ADJUST MENT FOR ROTATION/RECYCLING/REINVESTMENT/TELESCOPING, CREDIT PURCHASES AND PEAK CREDIT SHOULD BE GIVEN. C. SANDEEP LOOMBA V/S ACIT (ITAT, JPR) 26 TW 288: - PEAK CREDIT THEORY BECOMES APPLICABLE UNLESS ASSE SSING OFFICER PROVES DESTINATION OF WITHDRAWALS ELSEWHERE. 5. ON THE OTHER HAND, LD. DR VEHEMENTLY ARGUED THE MATTER AND SUPPORTED THE ORDER OF THE LOWER AUTHORITIES AND FU RTHER REFERRED TO THE DECISIONS OF THE HONBLE SUPREME COURT IN CASE OF A NANTHARAM VEERSINGHAIAH REPORTED IN 123 ITR 57, HONBLE RAJAS THAN HIGH IN CASE OF TYARYAMAL BALCHAND REPORTED IN 165 ITR 453 AND I N CASE OF R.S RATHORE REPORTED IN 212 ITR 390. 6. IN CASE OF ANANTHARAM VEERSINGHAIAH, THE HONBLE SUPREME COURT HAS LAID DOWN THE FOLLOWING PROPOSITION IN LAW: WHEN AN INTANGIBLE ADDITION IS MADE TO THE BOOK PROFITS DURING AN ASSESSMENT PROCEEDING, IT IS ON THE BASIS THAT THE AMOUNT REPRESENTED BY THAT ADDITION CONSTITUTES THE UNDISCLOSED INCOME OF THE ASSESSEE. THAT INCOME, ALTHOUGH COMMONLY DESCRIBED AS INTANG IBLE, IS AS MUCH A PART OF HIS REAL INCOME AS THAT DISCLOSED BY HIS ACCOUNT BOOKS. IT HAS ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 11 THE SAME CONCRETE EXISTENCE. IT COULD BE AVAILABLE TO THE ASSESSEE AS THE BOOK PROFITS COULD BE. THE SECRET PROFITS OR UNDISCLOSED INCOME OF AN ASS ESSEE EARNED IN AN EARLIER ASSESSMENT YEAR MAY CONSTITUTE A FUND, EVEN THOUGH CONCEALED, FROM WHICH THE ASSESSEE MAY DRAW SUBSEQUENTLY FOR M EETING EXPENDITURE OR INTRODUCING AMOUNTS IN HIS ACCOUNT B OOKS. BUT IT IS QUITE ANOTHER THING TO SAY THAT ANY PART OF THAT FUND MUS T NECESSARILY BE REGARDED AS THE SOURCE OF UNEXPLAINED EXPENDITURE I NCURRED OR OF CASH CREDITS RECORDED DURING A SUBSEQUENT ASSESSMENT YEA R. IT IS A MATTER FOR CONSIDERATION IN EACH CASE WHETHER THE UNEXPLAINED CASH DEFICITS AND THE CASH CREDITS CAN BE REASONABLY ATTRIBUTED TO A PRE-EXISTING FUND OF CONCEALED PROFITS OR THEY ARE REASONABLY EXPLAINED BY REFERENCE TO CONCEALED INCOME EARNED IN THAT VERY YEAR. IN EACH CASE, THE TRUE NATURE OF THE CASH DEFICIT AND THE CASH CREDIT MUST BE ASCERTAINED FROM AN OVERALL CONSIDERATION OF THE PARTICULAR FACTS AN D CIRCUMSTANCES OF THE CASE. EVIDENCE MAY EXIST TO SHOW THAT RELIANCE CANN OT BE PLACED COMPLETELY ON THE AVAILABILITY OF A PREVIOUSLY EARN ED UNDISCLOSED INCOME. A NUMBER OF CIRCUMSTANCES OF VITAL SIGNIFIC ANCE MAY POINT TO THE CONCLUSION THAT THE CASH DEFICIT OR CASH CREDIT CANNOT REASONABLY BE RELATED TO THE AMOUNT COVERED BY THE INTANGIBLE ADD ITION BUT MUST BE ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 12 REGARDED AS POINTING TO THE RECEIPT OF UNDISCLOSED INCOME EARNED DURING THE ASSESSMENT YEAR UNDER CONSIDERATION. IT IS OPEN TO THE REVENUE TO RELY ON ALL THE CIRCUMSTANCES POINTING TO THAT CONC LUSION. THEY MUST BE SUCH AS CAN LEAD TO THE FIRM CONCLUSION THAT THE AS SESSEE HAS CONCEALED THE PARTICULARS OF HIS INCOME OR HAS DELIBERATELY F URNISHED INACCURATE PARTICULARS. THE BURDEN REMAINS ON THE REVENUE OF P ROVING THE EXISTENCE OF MATERIAL LEADING TO THAT CONCLUSION. 7. IN CASE OF TYARYAMAL BALCHAND (SUPRA), THE HONB LE RAJASTHAN HIGH COURT FOLLOWING THE DECISION OF HONBLE SUPREM E COURT IN CASE OF ANANTHARAM VEERSINGHAIAH (SUPRA) HAS HELD AS UNDER: IT IS CLEAR FROM THE LAW DISCUSSED ABOVE, THAT THE ITO WAS WITHIN HIS RIGHT TO TAX THE AMOUNT OF RS. 16,950 AS INCOME FRO M UNDISCLOSED SOURCES. EVEN THOUGH HE HAD ADDED THE AMOUNT OF RS. 18,117 IN ADDITION TO THE PROFIT SHOWN BY THE RESPONDENT-FIRM IN THEIR ACCOUNT BOOKS. HOWEVER, IN THE PRESENT CASE, THE RESPONDENT WAS WELL WITHIN HIS RIGHTS TO PLEAD THAT THIS AMOUNT OF RS. 16,950 IS C OVERED FROM THE INTANGIBLE INCOME ASSESSED AT RS. 18,117 AND ADDED IN THE INCOME OF THE FIRM AND APART FROM THIS, SINCE FOR THE LAST PR ECEDING 3 YEARS, SUBSTANTIAL ADDITIONS AMOUNTING TO RS. 32,797 HAVE BEEN ADDED, THE ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 13 AMOUNT OF RS. 16,950 COULD BE TAKEN AS HAVING COME OUT OF SUCH INTANGIBLE ADDITIONS. IN THE CASE OF ANANTHARAM VEE RASINGHAIAH & CO. (SUPRA), THEIR LORDSHIPS OF THE SUPREME COURT HAVE HELD THAT THE ADDITIONS MADE TO THE BOOK PROFITS IN EARLIER YEARS ARE THE REAL INCOME AND CAN BE TREATED AS AVAILABLE FOR USE IN SUBSEQUE NT YEARS OR EVEN IN THE SAME YEAR. .. 8. IN CASE OF R.S RATHORE (SUPRA), THE HONBLE RAJ ASTHAN HIGH COURT HAS HELD AS UNDER: SECTION 68 REFERS TO CASH CREDITS WHICH ARE FOUND IN THE BOOKS OF THE ASSESSEE. IF THE EXPLANATION OFFERED BY THE ASSESSE E IS NOT SATISFACTORY THEN THE SUM SO CREDITED MAY BE CHARGED TO INCOME-T AX AS INCOME OF THE ASSESSEE IN THE PREVIOUS YEAR. THE BURDEN, THER EFORE, IS ON THE ASSESSEE TO EXPLAIN SATISFACTORILY WITH REGARD TO T HE AMOUNTS WHICH HAVE BEEN CREDITED IN THE BOOKS OF ACCOUNT BY THE ASSESS EE. THE SOURCE AND THE NATURE OF THE RECEIPT HAS TO BE PROVED BY THE A SSESSEE AND IF HE FAILS TO PROVE SATISFACTORILY THE SOURCE AND NATURE OF THE AMOUNT RECEIVED, THE ASSESSING AUTHORITY IS ENTITLED TO DR AW AN INFERENCE THAT THE RECEIPT IS ASSESSABLE AS INCOME OF THE ASSESSEE . WHILE EXPLAINING THE VARIOUS CREDITS AND INVESTMEN TS, IT MAY BE POSSIBLE THAT THE ASSESSEE MAY BE SUCCESSFUL IN EXP LAINING SOME OF ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 14 THEM BUT THAT DOES NOT BY ITSELF MEAN THAT THE ENTI RE INVESTMENTS HAS TO BE CONSIDERED AS EXPLAINED. EVEN LAPSE OF TIME O R INABILITY OF THE ASSESSEE WOULD NOT MAKE THE UNEXPLAINED INVESTMENT AN EXPLAINED ONE. IT IS EACH AND EVERY INDIVIDUAL ENTRY ON WHICH THE MIND HAS TO BE APPLIED BY THE TAXING AUTHORITY WHEN AN EXPLANATION IS OFFERED BY THE ASSESSEE. IF NO EXPLANATION HAS BEEN OFFERED IN RES PECT OF A PARTICULAR ENTRY, THE TAXING AUTHORITY WILL BE JUSTIFIED IN CO MING TO THE CONCLUSION THAT THE SAID INVESTMENT IS UNEXPLAINED. IT IS NOT THE TOTALITY OF THE CREDIT ENTRIES WHICH ARE TO BE ALLOWED OR TO BE DIS ALLOWED. THIS WORK HAS TO BE DONE ON THE BASIS OF EXPLANATION OFFERED FOR DIFFERENT ENTRIES AND IF THE EXPLANATION OF THE ASSESSEE IS ACCEPTABL E ON THE BASIS OF THE EVIDENCE PRODUCED BEFORE THE TAXING AUTHORITY, THE TRIBUNAL CAN COME TO THE CONCLUSION THAT SUCH INVESTMENT IS FULLY EXP LAINED. 9. IN LIGHT OF ABOVE, IT IS CLEAR THAT THE ADDITION TO THE BOOK PROFITS IN THE EARLIER YEAR COULD CONSTITUTE A FUND FROM WHICH THE ASSESSEE MIGHT DRAW SUBSEQUENTLY FOR MEETING EXPENDITURE OR INTRODUCING AMOUNTS IN THE BOOKS OF ACCOUNT AND THE BENEFIT OF TELESCOPING IS AVAILABLE IN GENERAL. AT THE SAME TIME, BEFORE SUCH A BENEFIT IS GIVEN, W HAT NEEDS TO BE EXAMINED IN THE INSTANT CASE IS THAT WHETHER UNEXPL AINED CASH DEPOSITS ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 15 DURING THE YEAR UNDER CONSIDERATION COULD BE REASON ABLY ATTRIBUTED TO THE PRE-EXISTING FUND OF SURRENDERED INCOME IN AY 2 007-08 OR THEY WERE REASONABLY EXPLAINED BY REFERENCE TO CONCEALED INCO ME EARNED DURING THE YEAR, TAKING INTO CONSIDERATION ALL THE RELEVAN T FACTS AND CIRCUMSTANCES OF THE CASE. 10. IN THIS REGARD, FIRSTLY, WHAT NEEDS TO BE NOTED IS THAT THE AMOUNT SURRENDERED IN AY 2007-08 IS SHOWN AS CASH ADVANCES FROM CUSTOMERS WHICH REMAIN UNEXPLAINED. AS PER THE AOS FINDING I N ASSESSMENT ORDER FOR AY 2007-08 WHICH ARE FINAL AND BINDING, THESE W ERE ASSESSEES OWN MONEY TO THE TUNE OF RS 47,10,000 WHICH WERE SHOWN IN THE BOOKS AS ADVANCES AGAINST BOOKING OF VEHICLES IN NAME OF VAR IOUS UNKNOWN PERSONS. SO, THERE WERE CASH FUNDS TO THE TUNE OF R S 47,10,000 WHICH WERE SURRENDERED AND AVAILABLE WITH THE ASSESSEE. THOUGH THE SURRENDER WAS MADE DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR AY 2007-08 WHICH WAS CONCLUDED BY PASSING OF ASSESS MENT ORDER ON 21.12.2009 AND A CORRESPONDING ENTRY WAS MADE IN TH E BOOKS OF ACCOUNTS ON THE SAME DATE, THE SURRENDER WOULD BE C ONSIDERED EFFECTIVE AS ON THE LAST DATE OF THE FINANCIAL YEAR RELEVANT TO AY 2007-08. ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 16 11. NOW COMING TO THE AOS FINDINGS FOR THE YEAR UN DER CONSIDERATION WHEREIN THE AO HAS STATED THAT CASH DEPOSITED IN TH E CURRENT FINANCIAL YEAR RELEVANT TO AY 2009-10 IS DIFFERENT CASH OTHER THAN THE SURRENDERED AMOUNT IN AY 2007-08. THE AO ALSO STAT ED THAT THE ASSESSEE HAS TAKEN COMPLETE BENEFIT OF SURRENDER IN COME OF RS 47,10,000 IN AY 2010-11 GIVEN THAT THE ENTRY FOR SU CH SURRENDER INCOME WAS MADE IN THE CASH BOOK ON 21.12.2009. THE AO AL SO STATED THAT THE CONTENTION OF THE ASSESSEE CANNOT BE ACCEPTED AS AS SESSEE HAS DEPOSITED THE CASH IN DIFFERENT NAMES IN THE FINANC IAL YEAR RELEVANT TO AY 2007-08. IN OUR VIEW, NONE OF THE OBJECTIONS RA ISED BY THE AO ARE RELEVANT. WHAT IS RELEVANT TO DETERMINE IS WHETHER ASSESSEE WAS IN POSSESSION OF SUFFICIENT CASH OUT OF SURRENDERED IN COME AT THE BEGINNING OF THE CURRENT FINANCIAL YEAR OR NOT. IN THIS REGARD, THE ASSESSEE HAS CONTENDED THAT THE CASH CIRCULATED IN ASSESSMENT YEAR UNDER APPEAL PERTAINS TO SURRENDER MADE DURING A.Y. 2007-08 IS WELL WITHIN LAW AND IN SUPPORT OF ITS CONTENTION, THE AS SESSEE HAS SUBMITTED EXTRACT OF CASH ACCOUNT INCORPORATING CASH AVAILABL E WITH ASSESSEE ON SURRENDER OF INCOME IN A.Y. 2007-08 AND ITS EFFECT IN A.Y. 2008-09 AND FURTHER CIRCULATION IN A.Y. 2009-10. HOWEVER, WE D ONOT FIND ANY FINDING ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 17 GIVEN BY THE AO IN RESPONSE TO THE SAID CONTENTION RAISED BY THE LD AR AND THE SAME REMAIN UNCONTROVERTED. 12. NOW COMING TO THE FINDINGS OF THE LD CIT(A), HE HAS STATED THAT THERE IS NO CORRELATION BETWEEN THE AMOUNT SURREND ERED IN A.Y. 2007-08 AND BOGUS CREDITS/DEPOSITS SHOWN IN A. Y. 2009-10. THE AMOUNT SURRENDERED IN A.Y. 2007-08 OF RS.47,10,000/ - IS REPRESENTED BY THE VARIOUS ASSETS IN THE BALANCE SHEET FOR A.Y. 2007-08. IT HAS NOT BEEN SHOWN THAT CORRESPONDING ASSETS ARE BOGUS OR H AVE BEEN LIQUIDATED. FURTHER, AS PER THE ASSESSMENT ORDER FO R A.Y. 2007-08, ASSESSEE HAS NOT GIVEN ANY ADDRESS OF THE PERSONS F ROM WHOM THE ADVANCES WERE SHOWN AND REPAYMENTS WERE CLAIMED TO HAVE BEEN MADE IN NEXT YEAR AND ASSESSEE SURRENDERED THE ABOV E ADVANCE FROM CUSTOMERS OF RS.47,10,000/- INSTEAD OF GIVING THE A DDRESS OF THE SAID CLIENTS. IN RESPONSE, THE LD AR HAS CONTENDED THAT CASH IS THE ONLY ASSET GETTING AFFECTED IN RESPECT OF THESE TRANSACT IONS, WHICH CANNOT BE EARMARKED AS TO WHETHER THE SAME IS MONEY SURRENDER ED OR SOME OTHER UNACCOUNTED MONEY AND THE SAME BECOMES PART OF POOL OF FUNDS AVAILABLE WITH THE ASSESSEE AS SOON AS IT IS ADMITT ED AND THE SAME CAN BE ADJUSTED BY ASSESSEE WHEREVER HE DEEMS APPROPRIA TE. IN OUR VIEW, ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 18 THE AMOUNT SURRENDERED BY THE ASSESSEE IS REPRESENT ED IN THE FORM OF CASH DEPOSITS IN THE BOOKS OF ACCOUNTS AND NOT ANY OTHER TANGIBLE ASSETS. SO, IT IS THE CASH POOL WHICH IS AVAILABLE WITH THE ASSESSEE AND WHAT IS REQUIRED TO BE INVESTIGATED BY THE REVENUE IN ORDER TO HOLD ITS GROUND IS THAT THE ASSESSEE HAS EXHAUSTED THE CASH POOL AND WAS NOT IN POSSESSION THEREOF AT THE BEGINNING OF THE FINANCIA L YEAR UNDER CONSIDERATION. HOWEVER, WE DONOT SEE ANY FINDINGS G IVEN BY THE LD CIT(A) AND THE CONTENTION OF THE ASSESSEE THAT IT W AS IN POSSESSION OF SUFFICIENT CASH BALANCE OUT OF INCOME OFFERED IN AY 2007-08 AND WHICH WAS CIRCULATED IN AY 2009-10 REMAIN UNCONTROVERTED. 13. IN LIGHT OF ABOVE DISCUSSIONS AND RESPECTFULLY FOLLOWING THE DECISION OF HONBLE SUPREME COURT AND HONBLE RAJAS THAN HIGH COURT IN DECISIONS REFERRED SUPRA, WE HOLD THAT THE ASSESSEE SHALL BE ELIGIBLE TO CLAIM BENEFIT OF AMOUNT SURRENDERED IN AY 2007-08 A MOUNTING TO RS 47,10,000 AND TO THIS EXTENT, THE ADDITION STAND DELETED. THE REMAINING ADDITION OF RS 18,36,664 IS NOT DISPUTED AND THE SAME IS HEREBY SUSTAINED. THE APPEAL FILED BY THE ASSESSEE IS THUS PARTLY ALL OWED. ITA NO.328/JP/2014_ M/S MOOMAL MOTORS VS. ITO, KISHANGARH 19 ORDER PRONOUNCED IN THE OPEN COURT ON 08/02/2 017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 08/02/2017. * SANJEEV*. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- 2. IZR;FKHZ@ THE RESPONDENT- 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 328/JP/2014) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR