Mahaveer Ramawat (JAIN), UDAIPUR V. A.C.I.T., UDAIPUR

ITA 34/JODH/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7896 (ITAT-JODHPUR)
• Duration Of Justice: 1 year(s) 6 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2002-2003
• Appeal Filed On: 08-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUBHASH CHANDRA
• Assessee Lawyers: RAJESH DEVPURA
• Keywords: Unexplained investment; Gift; Depreciation
• Section: 153A; 68

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JODHPUR BENCH JODHPUR. ( BEFORE SHRI R.K. GUPTA AND SHRI N.K. SAINI ) ITA NOS. 34 TO 36 /JODH/2011 & 253/JU/2010 ASSTT. YEARS: 2002-03 TO 2004-05 & 1998-99 PAN: AAVPR 4459 F SHRI MAHAVEER RAMWAT (JAIN) VS. THE ACIT 9/13, GOVIND NAGAR, SECTOR-13 CENTRAL CIRCLE- 1 HIRANMARGI, UDAIPUR UDAIPUR (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAJESH DEVPURA DEPARTMENT BY : SHRI SUBHASH CHANDRA DATE OF HEARING : 26.07.2012. DATE OF PRONOUNCEMENT : 22.08.2012 ORDER DATED : 22 /08/2012. PER R.K. GUPTA, J.M. THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE AG AINST FOUR DIFFERENT ORDERS OF THE LD.CIT(A) CENTRAL, JAIPUR PASSED U/S 250(6) OF TH E ACT DATED 23-11-2010, 21-12-2010, 21-12-2010 AND 09-02-2010 FOR THE ASSESSMENT YEARS 2002-03 2003-04, 2004-05 AND 1998-99 RESPECTIVELY. ITA NO.34/JODH/2011 (A.Y. 2002-03) 2.1 IN THIS APPEAL, THE ASSESSEE IS OBJECTING AS TO CONFIRMING THE LEVY OF PENALTY OF RS. 17,409/- U/S 271(1)( C) OF THE ACT RELATING TO ASSE SSMENT YEAR 2002-03. 2 2.2 THE BRIEF FACTS OF THE CASE ARE THAT THE ADDITI ON OF RS.75,000/- WAS MADE ON ACCOUNT OF UNEXPLAINED GIFT WHICH WAS CONFIRMED BY THE LD. CIT(A). THEREAFTER THE AO IMPOSED THE PENALTY ON THIS AMOUNT AT RS. 17,400/-. 2.3 THE LD. CIT(A) HAS CONFIRMED THE SAME. 2.4 THE LD. COUNSEL FOR THE ASSESSEE FILED THE WRI TTEN SUBMISSION 2.5 ON THE OTHER HAND, THE LD. DR PLACED RELIANCE O N THE ORDER OF THE LD. CIT(A). 2.6 AFTER CONSIDERING THE SUBMISSIONS OF THE PARTIE S, WE FIND THAT THE ASSESSEE HAS FILED THE COPY OF THE GIFT DEED DATED 12-10-2006 DU LY EXECUTED BY THE DONOR. THE COPY OF THE BANK CERTIFICATE DATED 25-08-2006 SHOWING THE A MOUNT RECEIVED THROUGH PROPER BANKING CHANNEL AND THE COPY OF THE DONORS BANK AC COUNT WAS ALSO FILED. THE INSPECTOR WAS DEPUTED. HOWEVER, THE DONOR WAS NOT AVAILABLE A ND HE WAS OUT OF INDIA. THEREAFTER, THE STATEMENT OF WIFE OF THE DONOR WAS RECORDED WH O ACCEPTED THAT THE GIFT HAS BEEN GIVEN BY HER HUSBAND. IN VIEW OF THE FACTS AND CIRC UMSTANCES OF THE CASE, WE FEEL THAT THOUGH THE ADDITION HAS BEEN CONFIRMED UPTO THE STA GE OF THE TRIBUNAL YET IT IS NOT COMING OUT AS TO HOW THE ASSESSEE HAS CONCEALED THE PARTIC ULARS OF INCOME. THE DONORS CERTIFICATE AND BANK STATEMENT WERE FILED. THOUGH T HE ASSESSEE COULD NOT SUBSTANTIATE HIS CLAIM YET HE HAS FILED THE EXPLANATION, WHICH WAS N OT FOUND INCORRECT OR FALSE. THEREFORE, WE FEEL THAT AT LEAST PENALTY SHOULD NOT BE LEVIED. ACCORDINGLY, WE CANCEL THE LEVY OF PENALTY. ITA NO.35/JODH/2011 (A.Y. 2003-04) 3.1 IN THIS APPEAL, THE ASSESSEE IS OBJECTING AS TO UPHOLDING THE ADDITION OF RS. 1.00 LAC OUT OF TOTAL ADDITION OF RS. 15.00 LACS ON ACCO UNT OF CASH CREDIT. 3 3.2 THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS MENT IN THIS CASE WAS COMPLETED U/S 153A/143(3) OF THE ACT. CERTAIN ADDITIONS WERE MADE . OUT OF THE ADDITIONS MADE, CERTAIN ADDITIONS WERE DELETED BY THE LD. CIT(A). AN ADDITI ON OF RS. 1.50 LACS MADE U/S 68 OF THE ACT WAS DELETED BY THE LD. CIT(A). HOWEVER, THE TRI BUNAL SET ASIDE THE MATTER TO THE AO TO PRODUCE THE CASH CREDITORS AND TO PROVE THE GENU INENESS OF THE CASH CREDIT. IN VIEW OF THE AO, THE ASSESSEE COULD NOT PRODUCE THE GENUINEN ESS OF THE CASH CREDITS. THEREFORE, THE AO MADE THE ADDITION OF RS. 1.50 LACS. 3.3 THE LD. CIT(A) DELETED THE ADDITION OF RS. 50,0 00/- . HOWEVER, HE CONFIRMED THE ADDITION OF RS. 1.00 LAC SINCE THE ASSESSEE COULD N OT EXPLAIN THE CREDITWORTHINESS OF THE AMOUNT. 3.4 THE LD. COUNSEL FOR THE ASSESSEE FILED THE WRIT TEN SUBMISSION. 3.5 ON THE OTHER HAND, THE LD. DR PLACED RELIANCE O N THE ORDERS OF THE LOWER AUTHORITIES. 3.6 AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIAL ON RECORD, WE FOUND THAT THE ASSESSEE DESERVES TO SUCCEED IN THIS APPEA L ALSO. IT IS NOTED THAT THE AO MADE THE ADDITION FOR THE REASON THAT THE ASSESSEE COULD NOT PRODUCE THE PARTIES AND THEREFORE, COULD NOT EXPLAIN THE GENUINENESS OF THE TRANSACTIONS AND CREDITWORTHINESS OF THE CASH CREDITORS. THE LD. CIT(A) NOTED THAT THE CREDITORS HAVE WRITTE N DETAILED LETTER DIRECTLY TO THE AO WHICH WAS RECEIVED BY HIM IN WHICH EXEMPTION FOR P ERSONAL APPEARANCE WAS REQUESTED. THE LD. CIT(A) WAS SATISFIED THAT SINCE THE CREDITO RS HAVE WRITTEN THE DETAIL LETTERS DIRECTLY TO THE AO, THEREFORE, IT IS IMMATERIAL WHETHER THEY APPEARED IN PERSON OR NOT. HOWEVER, THE LD. CIT(A) CONFIRMED THE ADDITION AS HE NOTED T HAT THE AMOUNTS OF RS. 31,000/- AND 4 RS. 40,000/- WERE DEPOSITED IN THE BANK ACCOUNT OF THE CREDITOR IMMEDIATELY BEFORE MAKING DEMAND DRAFT IN FAVOUR OF THE ASSESSEE. THER EFORE, HE HELD THAT THERE WAS NO AVAILABILITY OF THE AMOUNT WITH THE CREDITOR. WE NO TED THAT THE MATTER WAS SENT BACK BY THE TRIBUNAL TO THE FILE OF THE AO FOR VERIFYING CE RTAIN DISCREPANCIES IN THE DATE OF PREPARING DEMAND DRAFT AS DRAFT CLEARING WAS SHOWN ON 29-09-2004 WHEREAS THE DRAFT WAS PREPARED ON 28-04-2002. THE LD. CIT(A) DELETED THE ADDITION IN FIRST ROUND THAT THE CREDIT WAS NOT FALSE IN THE YEAR UNDER CONSIDERATION, HOWE VER, AS STATED BY THE TRIBUNAL, RESTORED THE MATTER TO VERIFY THESE DATES. IT SHOWS THAT THE CREDITWORTHINESS WAS NOT THE ISSUE BEFORE THE TRIBUNAL OR THIS ARGUMENT WAS NOT TAKEN UP. THE COPY OF THE ORDER OF THE TRIBUNAL IS ALSO PLACED AT PAGES 28 AND 29, DECIDED IN ITA NO.387/JU/2007. THE FINDINGS OF THE TRIBUNAL ARE GIVEN IN PARA 9 AND 10 OF ITS ORDER. WE THEREFORE, FEEL THAT CREDITWORTHINESS HAS ALREADY BEEN ESTABLISHED EARLI ER. HOWEVER, SINCE THE MATTER WAS SENT BACK BY THE TRIBUNAL FOR PASSING AFRESH ORDER, THE AO MAY BE RIGHT IN CONSIDERING THE CREDITWORTHINESS AGAIN AND THE LD. CIT(A) HELD THAT THERE WAS NO CREDITWORTHINESS FOR GIVING LOAN OF RS. 1.00 LAC TO THE ASSESSEE. THE HO N'BLE RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. BHAWANI OIL MILLS (P) LTD. , 239 CT R 445 HAS HELD THAT ONCE THE CREDITOR HAS FILED AFFIDAVIT AND WHICH REMAINED UNCONTROVERT ED THEN THE SAME SHOULD NOT BE REJECTED OUT RIGHTLY. IN THIS CASE, SOME CREDITORS APPEARED. HOWEVER, REMAINING CREDITORS COULD NOT BE APPEARED BUT THEY HAVE FILED THE AFFID AVIT. IT WAS HELD THAT THE AFFIDAVIT FILED BY THEM SHOULD BE TREATED THAT THOSE PERSONS HAVE A PPEARED IN PERSON. IN THE PRESENT CASE, THE CREDITOR HAD FILED THE AFFIDAVIT AND THEREAFTER DETAILED LETTER TO THE AO EXPLAINING THE SOURCE OF MONEY KEPT BY HIM OUT OF HIS SEVERAL YEAR S SAVINGS OF PAST AS THE CREDITOR 5 RETIRED FROM THE GOVT.. OF RAJASTHAN. ONLY THE SUM OF RS. 30,000/- AND 40,000/- WERE DEPOSITED IN CASH BEFORE GETTING PREPARED THE DEMAN D DRAFT OTHERWISE ALL OTHER AMOUNTS WERE APPEARING IN THE CREDIT BALANCE OF THE PASS BO OK AND THE COPY OF WHICH IS PLACED ON RECORD. THEREFORE, IN OUR CONSIDERED VIEW, THE ASSE SSEE HAS DISCHARGED HIS ONUS AND THUS NO ADDITION SHOULD HAVE BEEN MADE IN THE HANDS OF T HE ASSESSEE AS IDENTITY IS PROVED, GENUINENESS IS PROVED, MONEY WAS RECEIVED THROUGH P ROPER BANKING CHANNEL AND THE AMOUNT HAS BEEN GIVEN THROUGH ACCOUNT OF THE CREDIT OR. THEREFORE, IN OUR CONSIDERED VIEW, THE CREDITWORTHINESS IS ALSO TO BE TAKEN AS P ROVED. THERE IS NO MATERIAL WITH THE DEPARTMENT THAT THE ASSESSEE HAS GIVEN THE CASH TO THE CREDITOR FOR PREPARING THE DRAFT. THEREFORE, IN VIEW OF THE DECISION OF HON'BLE SUPRE ME COURT OF INDIA IN THE CASE OF CIT VS. ORISSA CORPORATION (P) LTD. , 159 ITR 78, NO AD DITION SHOULD HAVE BEEN MADE IN THE HANDS OF THE ASSESSEE. THUS, WE DELETE THE ADDITIO N OF RS. 1.00 LAC. ITA NO.36/JODH/2011 (A.Y. 2004-05) 4.1 IN THIS APPEAL, THE ASSESSEE IS OBJECTING AS TO CONFIRMING THE LEVY OF PENALTY OF RS. 53,959/- ON ACCOUNT OF UNEXPLAINED INVESTMENT IN P URCHASE OF AGRICULTURAL LAND. 4.2 IN THIS CASE, TWO ADDITIONS WERE MADE BY THE AO I.E. ON ACCOUNT OF UNEXPLAINED CAR RECEIPT OF RS. 81,460/- AND UNEXPLAINED INVESTM ENT IN AGRICULTURAL LAND OF RS. 72,500/-. THESE ADDITIONS HAVE BEEN CONFIRMED BY TH E TRIBUNAL ALSO. THEREAFTER, THE AO LEVIED THE PENALTY OF RS. 53,959/- U/S 271(1) OF T HE ACT. 4.3 THE LD. CIT(A) DELETED THE PENALTY ON THE AMOUN T OF RS. 81,460/- ON ACCOUNT OF RECEIPT OF CAR AS THE DISALLOWANCE WAS MADE ON THE DEPRECIATION OF CAR AND INTEREST ON CAR. THEREFORE, IT WAS HELD THAT NO PENALTY WAS LEVIABLE ON THIS AMOUNT. HOWEVER, THE LD. 6 CIT(A) CONFIRMED THE LEVY OF PENALTY OF RS. 72,500/ - ON ACCOUNT OF UNDISCLOSED INVESTMENT IN PURCHASE OF AGRICULTURAL LAND. 4.4 THE LD. COUNSEL FOR THE ASSESSEE FILED THE WRIT TEN SUBMISSION. 4.5 ON THE OTHER HAND, THE LD. DR PLACED RELIANCE O N THE ORDER OF THE LD. CIT(A). 4.6 AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERIALS ON RECORD, WE FIND THAT THE ASSESSEE DESERVES TO SUCCEED IN THIS APPEA L ALSO. IT IS NOTICED THAT THE ASSESSEE HAS DEBITED WITHDRAWAL ON ACCOUNT OF PURCHASE OF AGRICU LTURAL LAND IN THE WITHDRAWAL ACCOUNT/ HOUSE HOLD EXPENSES. THEREFORE, THE SAME WAS NOT AP PEARING IN THE BALANCE SHEET AND ACCORDINGLY THE ADDITION WAS MADE WHICH IS CONFIRME D UPTO THE STAGE OF THE TRIBUNAL. HOWEVER, THE FACTS REMAINED THAT THE AVAILABILITY O F CASH WAS NOT EXAMINED PROPERLY. THE REGISTRY OF THE LAND WAS NOT AVAILABLE AT THE TIME OF SURVEY AS THE SAME WAS GIVEN TO THE BANK FOR AVAILING OF LOAN FACILITY. IT IS NOTED THA T ASSESSEE AND HIS WIFE HAS SHOWN WITHDRAWAL FOR THEIR FAMILY YEARLY AT RS. 8,500/-, RS. 12,500/-, 26,000/-, 29,500/-, 33,300/- AND RS. 36,500/- RESPECTIVELY FROM THE AS SESSMENT YEARS 1998-99 TO 2003-04. IT IS FURTHER SEEN THAT WITHDRAWAL FOR THE ASSESSMENT YEAR 2004-05 HAS BEEN SHOWN AT RS. 99,500/- AND FOR RS. 2005-06, WITHDRAWAL HAS BEEN S HOWN AT RS. 65,016/-. THIS FACT COULD NOT BE EXPLAINED AND THEREFORE, IT COULD NOT BE TAK EN INTO CONSIDERATION THAT THERE IS MUCH HIGHER WITHDRAWAL DURING THE ASSESSMENT YEAR UNDER CONSIDERATION WHICH WAS UTILIZED FOR PURCHASE OF THE AGRICULTURAL LAND. SINCE THE ADDITI ON HAS BEEN SUSTAINED, THEREFORE, THE PENALTY IS NOT AUTOMATIC. NOW LOOKING ALL THESE FAC TS OF THE CASE, IT IS SEEN THAT THERE WAS A HIGHER WITHDRAWAL DURING THE ASSESSMENT YEAR UNDE R CONSIDERATION AND IT IS LIKELY TO BE CONSUMED FOR PURCHASE OF AGRICULTURAL LAND. THE EXP LANATION OF THE ASSESSEE WAS NOT 7 FOUND WRONG. THEREFORE, IN OUR CONSIDERED VIEW, THE PENALTY SHOULD NOT HAVE BEEN LEVIED ON ACCOUNT OF PURCHASE OF AGRICULTURAL LAND STATING THAT THE ASSESSEE HAS MADE UNDISCLOSED INVESTMENT. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE CANCEL THE LEVY OF PENALTY IN THE PRESENT CASE. ITA NO. 253/JU/2010 (A.Y. 1998-99) 5.1 IN THIS APPEAL, THE ASSESSEE IS OBJECTING AS TO CONFIRMING THE LEVY OF PENALTY OF RS. 4,668/- U/S 271(1)( C) OF THE ACT RELATING TO ASSES SMENT YEAR 1998-99. 5.2 THE BRIEF FACTS OF THE CASE ARE THAT THE RETURN U/S 153A OF THE ACT WAS FILED ON 31- 03-2005 BY WHICH UNDISCLOSED INCOME OF RS. 33,340/- FROM SALARY AND OTHER SOURCES WAS SHOWN. THE ASSESSMENT WAS COMPLETED ON AN INCOME OF RS. 2,30,985/-. ALL THE ADDITIONS MADE BY THE AO WERE DELETED BY THE LD. CIT(A) AND T HE ORDER OF THE LD. CIT(A) HAS BEEN CONFIRMED BY THE TRIBUNAL. THE AO LEVIED THE PENALT Y ON RS. 33,340/- DISCLOSED U/S 153A OF THE ACT WHICH HAS BEEN CONFIRMED BY THE LD. CIT( A) ALSO. 5.3 AFTER CONSIDERING THE WRITTEN SUBMISSION AND OR DERS OF THE AUTHORITIES BELOW ON WHICH RELIANCE HAS BEEN PLACED BY THE LD. DR, WE F OUND THAT THE ASSESSEE DESERVES TO SUCCEED IN THIS CASE ALSO. IT IS SEEN THAT THE RETU RN U/S 153A OF THE ACT WAS FILED AND THE ASSESSEE HAS VOLUNTARILY DECLARED AN INCOME OF RS. 33,340/- WHICH WAS OTHERWISE NON- TAXABLE AS THIS INCOME WAS BELOW TAXABLE LIMIT. THI S INCOME WAS ON ACCOUNT OF SALARY AND INTEREST WHICH CANNOT BE TREATED AS UNDISCLOSED INCOME IN VIEW OF THE DECISION IN THE CASE OF CIT VS. JUGAL KISHORE GUPTA (2008) 16 DTR 8 5 (ALL.) WHEREIN IT IS HELD THAT INCOME OF THE ASSESSEE PARTNER IN THE RELEVANT ASSE SSMENT YEARS BEING BELOW THE TAXABLE LIMIT, IT CANNOT BE SAID THAT THE RETURNS WERE NOT FILED TO HIDE THE INCOME BY WAY OF 8 INTEREST AND SALARY AND, THEREFORE, INCOME BY WAY O F INTEREST AND SALARY FROM THE FIRM CANNOT BE SAID TO BE UNDISCLOSED INCOME UNDER THE P ROVISION OF SECTION 158BBB OF THE ACT. SIMILAR FACTS ARE IN THE PRESENT CASE AS SALAR Y AND INTEREST DECLARED BY THE ASSESSEE WAS BELOW TAXABLE LIMIT AND THEREFORE, IN OUR CONSI DERED VIEW THOUGH THE ASSESSEE HAS DECLARED THIS INCOME IN RESPONSE TO NOTICE U/S 153 A OF THE ACT BUT THE SAME WAS BELOW TAXABLE LIMIT. THEREFORE, NO PENALTY U/S 271(1)( C) OF THE ACT CAN BE LEVIED ON THIS AMOUNT. ACCORDINGLY, WE CANCEL THE LEVY OF PENALTY. 6. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOW ED. THE ORDER IS PRONOUNCED ON 22.08.2012. SD/- SD/- ( N.K. SAINI ) ( R.K. GUPTA ) ACCOUNTANT MEMBER JUDICIAL MEMBER JODHPUR, *MISHRA COPY FORWARDED TO :- 1. SHRI MAHAVEER RAMAWAT (JAIN). 2. THE ACIT, CENTRAL CIRCLE- 1, UDAIPUR BY OR DER 3. THE LD CIT (A) 4. THE LD. CIT 5. THE D/R 6. GUARD FILE (ITA NOS.34/JODH/2011) AR ITAT JODHPUR. 9