The ACIT, Sagar V. Shri Ram Sewak Sharma, Bhopal

ITA 347/JAB/2007

• Counselvise Citation: 34722714 RSA 2007
• Duration Of Justice: 3 year(s) 6 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 24-01-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 05-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KESHAVE SAXENA
• Assessee Lawyers: H P VERMA; GIRISH AGRAWAL
• Keywords: Principle of natural justice
• Section: 143(3); 153A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JM AND SHRI R.C. SHARMA, AM ITA NOS.346 & 347/JAB/2007 A.YS. 2002-03 & 2003-04 ACIT, CIRCLE, SAGAR APPELLANT VS. RAM SEWAK SHARMA, BHOPAL PAN AWGPS 2300 H RESPONDENT ITA NOS.350 & 351/JAB/2007 A.YS. 1999-00 & 2000-01 RAM SEWAK SHARMA, BHOPAL PAN AWGPS 2300 H APPELLANT VS. ACIT, CIRCLE, SAGAR RESPONDENT DEPARTMENT BY : SHRI KESHAVE SAXENA, CIT(DR) ASSESSEE BY : S/SHRI H.P. VERMA & GIRISH AGRAWAL ORDER PER R.C. SHARMA, A.M. THESE APPEALS ARE FILED BY THE REVENUE AND ASSESSEE AGAINST THE CONSOLIDATED ORDER OF LD. CIT( A)-I, BHOPAL, -: 2: - 2 DATED 27.9.2009 FOR THE AYS 2002-03, 2003-04, 1999 -00 & 2000-01 IN THE MATTER OF ORDER PASSED U/S 153A R.W .S. 143(3) OF THE I.T. ACT, 1961. 2. IN ITA NOS. 346 & 347/IND/2007 FILED BY THE REVENUE (AY: 2002-03 & 2003-04), THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN NOT APPRECIATING THE FACTS OF T HE CASE. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE BY THE AO AT RS.13,700/-, RS.16,800/-, RS.11,000/-, RS.16,800/-, RS.8,800/-, RS.3,000/- AND RS.3,000/- TREATING PART OF AGRICULTURAL INCOME AS INCOME FROM OTHER SOURCES FOR THE AYS 1998 TO 2004-05 RESPECTIVELY. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE ON PROTECTIVE BASIS BY THE AO AT RS.1,60,96,236/- AND RS.5,67,21,795/- FOR THE AY 2002-03 & 2003-04. -: 3: - 3 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, ORDE R OF THE LD. CIT(A) ON THE ABOVE ISSUES MAY BE SET ASIDE AND THAT OF THE AO BE RESTORED. 3. IN ITA NO.350/IND/2007 FILED BY THE ASSESSEE (AY: 1999-00), THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS NOT JUSTIFIED IN MAKING THE ENHANCEMENT OF INCOME WHICH WAS ILLEGAL, INVALID AND UNTENABLE-IN-LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT ACCEPTING T HE REFUND OF LOAN OF RS.71,000/- AND IN MAKING THE FRESH ADDITION TOWARDS THE SAME. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS. 1,50,000/-AS MADE BY THE ASSESSING OFFICER AFTER NOT ACCEPTING THE AMOUNT OF RS. 1,50,000/- RECEIVED BY THE ASSESSEE FROM BROTHERS -: 4: - 4 TOWARDS HIS SHARE IN THE ANCESTRAL AGRICULTURAL LAN D AS EXPLAINED. 4. IN ITA NO.351/IND/2007 FILED BY THE ASSESSEE (AY: 2000-01), THE FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESSEE: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF RS.2,30,000/- AS MADE BY THE ASSESSING OFFICER TOWARDS ADVANCING THE AMOUNT BY THE APPELLANT FOR PURCHASE OF HOUSE PROPERTY BY THE WIF E OF THE APPELLANT SMT. RAJSHREE SHARMA. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) WAS NOT JUSTIFIED IN CONFIRMING THE ADDITION OF RS.2,30,000/- ON THE SUBSTANTIVE BASIS PARTICULARLY WHEN THE ASSESSING OFFICER INITIATED T HE PROCEEDINGS U/S 153C AGAINST SMT. RAJSHREE SHARMA. -: 5: - 5 5. AS COMMON GROUNDS ARE INVOLVED IN ALL THE APPEALS, FILED BY THE ASSESSEE AND REVENUE, WE HAVE HEARD AL L THE APPEALS TOGETHER AND ARE NOW DISPOSING THE SAME BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 6. THE FACTS, IN BRIEF, ARE THAT THE ASSESSEE WAS SERV ING WITH SAHU GROUP OF LIQUOR CONTRACTORS. THERE WAS SE ARCH AT SAHU GROUP OF SAGAR ON 10 TH DECEMBER, 2003. THERE WAS ALSO SEARCH AT THE ASSESSEES PREMISES, WHO IS EMPLOYEE OF SAHU GROUP OF SAGAR. ASSESSMENT WAS FRAMED BY THE ASSESS ING OFFICER U/S 153A, WHEREIN ADDITIONS WERE MADE IN RE SPECT OF AGRICULTURAL INCOME SHOWN BY THE ASSESSEE. IN THE A SSESSMENT YEAR 2002-03, THE ASSESSEE HAD SHOWN INCOME OF RS. 5666/- PER ACRE OF LAND. THE FAMILY OF THE ASSESSEE WAS HA VING TOTAL 18 ACRES OF LAND CONSISTING OF THREE BROTHERS. THE ASSESSEES SHARE WORKS OUT TO BE 6 ACRES. AGRICULTURAL INCOME OF RS. 34,000/- SHOWN BY THE ASSESSEE WAS NOT ACCEPTED BY THE ASSESSING OFFICER AND HE MADE ADDITION OF RS. 8800/ -. SIMILARLY, IN THE ASSESSMENT YEAR 2003-04, THE AO M ADE THE -: 6: - 6 ADDITION OF RS. 3,000/-. BOTH THESE ADDITIONS WERE DELETED BY THE LD. CIT(A) AFTER OBSERVING THAT THE AO HAS NO B ASIS TO ADOPT THE RATE OF AGRICULTURAL INCOME FROM RS. 3,000/- TO RS. 4,000/- PER ACRE. IT WAS ALSO OBSERVED THAT IN THE CASE OF SHRI PURANCHAND CHOWKSE, THE SAME AO HAS ACCEPTED AGRICU LTURE INCOME PER ACRE BETWEEN RS. 8752/- TO RS. 12000/-. ACCORDINGLY, THE DECLARED INCOME WAS ACCEPTED BY TH E LD. CIT(A). WE DO NOT FIND ANY INFIRMITY IN THE ORDER O F THE CIT(A) FOR DELETING THE ADDITION OF RS. 8800/- AND RS. 300 0 MADE IN THE ASSESSMENT YEAR 2002-03 AND 2003-04 RESPECTIVEL Y. WHILE FRAMING THE ASSESSMENT, THE AO HAS ALSO PROTECTIVEL Y ADDED INCOME OF M/S. ANIL TRADERS IN THE INCOME OF THE AS SESSEE. BY THE IMPUGNED ORDER, THE LD. CIT(A) DELETED THE PROT ECTIVE ADDITION BY OBSERVING THAT PAPERS PERTAINING TO ANI L TRADERS, WERE FOUND FROM THE PREMISES OF THE ASSESSEE. ANIL TRADERS WAS A SEPARATE ASSESSEE AND THE ASSESSEE HAD DENIED ANY CONNECTION WITH THAT FIRM. SUBSTANTIVELY ADDITION W AS MADE IN THE HANDS OF THE FIRM. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND FOUND THAT LIQUOR BUSINESS WAS CARRIED ON BY M/S. ANIL -: 7: - 7 TRADERS, WHO WAS HAVING LIQUOR LICENCE FROM THE GOV ERNMENT. THE ASSESSEE WAS MERELY EMPLOYEE AND NEVER CARRIED OUT ANY LIQUOR BUSINESS. NEITHER THE AO HAS FOUND THAT THE ASSESSEE WAS HAVING LICENCE FOR LIQUOR TRADE IN ITS NAME NOR THE ASSESSEE HAS CONFRONTED WITH ANY DOCUMENTS ON THE B ASIS OF WHICH THE AMOUNT OF ADDITION WAS ASCERTAINED. UNDER THESE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) HAS CORRECT LY REACHED TO THE CONCLUSION THAT THE ADDITION SO MADE EVEN ON PROTECTIVE IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) FOR DELETI NG THE PROTECTIVE ADDITION MADE IN THE HANDS OF THE ASSESS EE. 8. IN THE ASSESSMENT YEAR 1999-2000 AND 2000-01, THE ASSESSEE HAS FILED AN APPEAL BEFORE US FOR THE ADDI TION SUSTAINED BY THE LD. CIT(A). FROM THE RECORD, WE FO UND THAT THE AO HAS MADE ADDITIONS FOR THESE YEARS ON THE BASIS OF FIGURES SHOWN BY THE ASSESSEE AS OPENING CAPITAL AS ON 1.4. 1997. WE FOUND THAT IN THE ASSESSMENT YEAR 1998-99, SUCH ADD ITION WAS DELETED BY THE LD. CIT(A) AND THE DEPARTMENT HAS NO T COME UP IN APPEAL BEFORE US. HOWEVER, THE LD. CIT(A) HAS DE LETED SUCH ADDITION BUT HAD ADDITION ON THE BASIS OF INVESTMEN T BY -: 8: - 8 HOLDING THAT RECEIPTS WERE BOGUS AND HENCE, INVESTM ENTS WERE ALSO BOGUS. BEFORE THE AO, THE ASSESSEE HAS FILED S TATEMENT OF AFFAIRS FOR THE ASSESSMENT YEAR 1998-99, THE AO ADD ED THE OPENING CAPITAL AS ON 1.4.1997 AMOUNTING TO RS. 3,3 8,510/- ON THE PLEA THAT IT IS NOT SUPPORTED BY ANY EVIDENC E. THE LD. CIT(A) HAS DELETED THE SAME. HOWEVER, TWO SOURCES W ERE HELD TO BE BOGUS BY CIT(A) IN RESPECT OF AMOUNT TAKEN AS A LOAN FROM BROTHERS AMOUNTING TO RS. 1,50,000/- AND IN RE SPECT OF RETURN OF LOAN TO SMT. LATA RS. 20,000/-, SHRI RAME SH RS. 20000/-, SHRI T.K.TAMASKAR RS. 25000/- AND MR. PARM AR RS. 30,000/-, WHICH WORKS OUT TO BE IN TOTAL RS. 1,05,0 00/-. THIS TOTAL ADDITION OF RS. 2,55,000/- WAS RESTRICTED BY THE LD. CIT(A) TO RS. 2.21 LAKHS , RS. 1,50,000/- IN RESPECT OF RE CEIPT FROM THE BROTHERS AND BALANCE OF RS. 71,000/- OUT OF LOA N REPAID TO THE PERSONS MENTIONED ABOVE. 9. WE HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD AND FOUND THAT FOLLOWING STATEMENT OF AFFAIRS AS ON 31.3.1997 WAS FILED BEFORE THE AO : -: 9: - 9 CAPITAL 3,38,503 A) ASSETS ACCEPTED BY THE DEPARTMENT: HOUSEHOLD ASSETS 1,02,000 BANK BALANCE IN PNB A/C NO.5072 A/C NO.27894 59,006 7,510 66,516 CASH IN HAND 14,088 LOAN ADVANCED BUILDERS & DEVELOPERS ASSOCIATION 26,800 BHARAT HOUSING SOCIETY, UJJAIN 24,105 50,905 2,19,421 1,55,905 B) ASSETS NOT ACCEPTED BY THE DEPARTMENT. ADVANCES TO OTHERS SMT. LATA, SISTER-IN-LAW, SUHALPUR 20,000 RAMESH SHARMA, BROTHER IN LAW 30,000 T.K. TAMASKAR. FRIEND 25,000 ________ PARMAR. FRIEND 30,000 1,05,000 3,38,503 3.38,503 10. HOWEVER, THE REVENUE AUTHORITIES HAVE NOT ACCEPTED THE REFUND OF LOAN OF RS. 1,05,000/-, WHICH WAS REF LECTED IN THE BALANCE SHEET AS ON 31.3.1997. -: 10: - 10 11. IN THE ASSETS SIDE, FOUR DEBTORS ARE CLEARLY INDICA TED TO WHOM RS. 1,05,000/- WAS ADVANCED. THE SEIZED PAPER ALSO REFLECTED THE FIGURE OF RS. 1,05,000/- IN THE NAME OF SMT. LATA, SUHAGPUR RS. 20,000/-, RAMESH SHARMA RS. 30,000/-, R. K. TAMASKAR RS. 25,000/-, PARMAR RS. 30,000/-, TOTALI NG RS. 1,05,000/-. THE ASSESSEE HAS ALSO SUPPLIED NAMES AN D ADDRESS OF THESE DEBTORS, BUT THEY WERE NOT EXAMINE D IN THE FINANCIAL YEAR 1998-99, WHEN THE ASSESSEE RECEIVED BACK RS. 1,05,000/- FROM THESE DEBTORS, THE SAME WERE DISBEL IEVED. WE DO NOT FIND ANY MERIT IN THE ACTION OF LOWER AUTHOR ITIES FOR NOT ACCEPTING THE RETURN OF RS. 1,05,000/- FROM THESE D EBTORS. THE AO IS DIRECTED TO DELETE THE SAME. 12. THE ASSESSEE HAD ALSO SHOWN ADVANCE FROM BROTHERS AMOUNTING TO RS. 1,05,000/- IN THE ASSESSMENT YEAR 1999- 2000 AND RS. 1,32,000/- IN ASSESSMENT YEAR 2000-01. IN THIS REGARD, WE FOUND THAT THE ASSESSEE HAS 18 ACRES OF LAND. THIS LAND WAS ANCESTRAL PROPERTY OF ASSESSEE AND HIS TWO BROTHERS. THE LAND WAS SITUATED AT DISTRICT GUNA AND THE ASSE SSEE WAS LIVING IN BHOPAL. HE PROPOSED TO PURCHASE AGRICULTU RAL LAND NEAR BHOPAL. THE ASSESSEE RECEIVED AMOUNT OF RS. 1. 50 LAKHS -: 11: - 11 FROM HIS TWO BROTHERS IN CONSIDERATION OF SURRENDER ING HIS RIGHT IN ANCESTRAL LAND ( HIS SHARE OF 6 ACRES OF LAND ). THE ASSESSEE HAS ALSO FURNISHED AFFIDAVIT OF BOTH THE B ROTHERS BEFORE THE CIT(A) AND ALSO COPY OF AGREEMENT ENTERE D INTO BY THE ASSESSEE WITH SHRI DAULAT SINGH FOR PURCHASE OF LAND AT BHOPAL. LPS-3 SEIZED DURING SEARCH HAS CERTAIN ROUG H NOTINGS TO THIS EFFECT. GENERAL POWER OF ATTORNEY FOR THE D EAL WITH SHRI DAULAT SINGH WAS ALSO EXECUTED ON 9.1.1997. THE SAM E WAS ALSO PLACED ON RECORD. AS THE DEAL WITH SHRI DAULAT SINGH WAS NOT MATERIALIZED, THE ASSESSEE RETURNED THE MONEY T O HIS BROTHER AND RETAINED HIS RIGHT ON THE ANCESTRAL LAN D. BUT DOCUMENTARY EVIDENCE PLACED ON RECORD CLEARLY SUGGE STED THAT THE ASSESSEE HAS GOT RS. 1.50 LAKHS FROM HIS BROTHE RS. SHRI BRIJ KISHORE AND MAHAVIR PRASAD. THERE IS NO COGENT REASON TO DISBELIEVE THE ADVANCE AND MORE PARTICULARLY WHEN A SSESSEE WAS NOT ASKED THE TO ARRANGE FOR THE CROSS EXAMINAT ION OF THESE TWO PERSONS. ACCORDINGLY, THE ADDITION MADE B Y THE ASSESSING OFFICER IS NOT JUSTIFIED FOR THE ADVANCE OF RS. 1.50 LAKHS IN THE ASSESSMENT YEAR 1999-2000 AND RS. 1.32 LAKHS IN THE ASSESSMENT YEAR 2000-01. IN THE ASSESSMENT YEAR 2000- -: 12: - 12 01, ADDITION OF RS. 2.30 LAKHS WAS MADE IN RESPECT OF LOAN ADVANCED BY THE ASSESSEE TO HIS WIFE SMT.RAJSHREE S HARMA. THIS ADVANCE WAS GIVEN TO WIFE FOR PURCHASE OF HOUS E. ADDITION WAS MADE BY THE ASSESSING OFFICER IN ASSESSEES HAN DS ON PROTECTIVE BASIS. THE LD. CIT(A) CONVERTED THE PROT ECTIVE ADDITION AS SUBSTANTIVE. 13. AS WE HAVE ALREADY ACCEPTED THE ADVANCE FROM THE BROTHERS, AMOUNTING TO RS. 2,82,000/- AS CORRECT, THE ADDITION MADE IN RESPECT OF AMOUNT OF RS. 2.30 LAKH S BY THE ASSESSEE TO HER WIFE IS COVERED OUT OF THIS ADVANCE . ACCORDINGLY, THE SAME IS ALSO DELETED. 14. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISS ED, WHEREAS THE APPEAL OF THE ASSESSEE IS ALLOWED IN PA RT. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 13 TH JUNE, 2011. SD/- SD/- (JOGINDER SINGH) ( R.C.SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 13 TH JUNE, 2011. CPU* 136