Dr. Narpat Raj Purohit, Patiala V. ITO, Patiala

ITA 355/CHANDI/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5359 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 16-06-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 06-04-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Keywords: Business expenditure
• Section: 143(3); 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI D.K.SRIVASTAVE, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 355/CHD/2011 ASSESSMENT YEAR: 2007-08 DR.NARPAT RAJ PUROHIT VS. THE INCOME-TAX OFFICER , PROP. M/S ANMOL HOSPITAL WARD-1 PATIALA. PATIALA. PAN NO. AGBPP2553N (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI RAJESH MALHOTRA RESPONDENT BY : SHRI N.K. SAINI, DR ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF CIT(A), PATIALA DATED 31.1.2011 RELATING TO ASSESSMENT YEAR 2007-08 AGAINST THE ORDER PASSED UNDER SECTION 143(3) OF THE I.T. A CT. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. C.I.T.(APPEALS) HAS ERRED IN SUSTAINING THE ADDITION OF RS.2,35,000/- MADE BY THE A.O. UNDER SECTION 68 IN RESPECT OF UNSECURED LOANS, BY HOLDING THAT THE STATEMENTS RECORDED BY THE A.O. SHOW THAT THE PERSONS HAVE NOT ADMITTED TO HAVE GIVEN THE LOANS. 2. THE LD. C.I.T.(APPEALS) HAS ALSO ERRED IN SUSTAINING THE ADDITION OF RS.78,278/- MADE BY 2 A.O. UNDER SECTION 38(2) BY DISALLOWING THE BUSINESS EXPENDITURE ON TELEPHONE AND RUNNING OF CAR. 3. THE ISSUE IN GROUND NO.1 RAISED BY THE ASSESSEE IS AGAINST THE ADDITION MADE UNDER SECTION 68 OF THE ACT TOTALING RS.2,35,000/-. THE ASSESSING OFFICER DURING THE COURSE OF ASSESSM ENT PROCEEDINGS NOTED THE ASSESSEE TO HAVE SHOWN AMOUNTS TOTALING R S.2,35,000/-, IN THE NAMES OF THE UNDER-MENTIONED PERSONS : SHRI R.K.BANSAL RS.50000/- MRS.GANGA BANSAL RS.50000/ SHRIJUGRAJ PUROHIT RS.35000/- SMT.LEELA DEVI RS.50000/- SHRI RISHI RAJ PUROHIT RS.50000/- 4. THE ASSESSEE WAS ASKED TO PROVE THE GENUINENESS OF THE LOANS BY FURNISHING THE EVIDENCE IN THE SHAPE OF RETURN O F INCOME, BANK PASSBOOK ETC. AND ALSO PRODUCING THE CREDITORS. SH RI R.K.BANSAL, CREDITOR ATTENDED THE PROCEEDINGS ON 30.7.2009 AND HIS STATEMENT WAS RECORDED. IN HIS STATEMENT SHRI R.K.BANSAL DEN IED THAT HE AND HIS WIFE SMT.GANGA BANSAL HAD ADVANCED ANY SUM OF T HE ASSESSEE. IN RESPECT OF THE CASH DEPOSIT OF RS.50,000/- IN HI S BANK ACCOUNT AND IN THE BANK ACCOUNT OF HIS WIFE, BEFORE ISSUING THE CHEQUES TO THE ASSESSEE, IT WAS EXPLAINED BY SHRI R.K.BANSAL THAT THE AFORESAID AMOUNT WAS HANDED OVER IN CASH BY THE ASSESSEE AND DEPOSITED IN THE RESPECTIVE BANK ACCOUNTS, FROM WHICH TWO CHEQUES OF RS.50,000/- EACH WERE ISSUED TO THE ASSESSEE. HOWEVER, HE STRE SSED THAT THE SAID AMOUNT DID NOT BELONG TO HIM AND HIS WIFE. IN VIEW THEREOF, THE 3 ASSESSING OFFICER ADDED A SUM OF RS.1 LAC AS INCOME OF THE ASSESSEE UNDER SECTION 68 OF THE ACT. 5. THE STATEMENT OF SHRI R.R.PUROHIT WAS RECORDED O N 13.10.2009 IN WHICH HE ADMITTED THAT HE AND HIS WIFE SMT.LEELA DEVI HAD ADVANCED THE SAID SUM OF RS.50,000/- EACH TO THE AS SESSEE OUT OF THEIR SAVINGS AND FROM AGRICULTURAL INCOME. BOTH T HE PARTIES WERE ASSESSED TO TAX AND ADMITTED TO HAVE ADVANCED THE S AID AMOUNT TO THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER HELD THAT THE FACTS IN THE CASE OF SHRI RISHI RAJ PUROHIT WERE SIMILAR TO THE FACTS OF THE OTHER CREDITORS AND ADDITION OF RS.1 LAC WAS MADE U NDER SECTION 68 OF THE ACT. FURTHER ADDITION OF RS.35,000/- WAS MA DE BEING THE AMOUNT RECEIVED FROM SHRI JUGRAJ PUROHIT WHO EXPLAI NED THAT HE HAD MADE THE SAID ADVANCE OUT OF HIS AGRICULTURAL INCOM E. BEFORE THE CIT(A) THE ASSESSEE EXPLAINED THAT THE SAID AMOUNTS OF RS.2,35,000/- WERE RECEIVED THROUGH BANKING CHANNEL S AND WERE LOANS RECEIVED FROM DIFFERENT PARTIES. THE CIT(A) UPHELD THE ORDER OF THE ASSESSING OFFICER HOLDING THE ASSESSEE NOT T O HAVE DISCHARGED THE ONUS OF PROVING THAT THE LOANS WERE GENUINE. T HE ASSESSEE IS IN APPEAL AGAINST THE SAME. 6. THE LEARNED A.R. FOR THE ASSESSEE POINTED OUT TH AT SHRI R.K.BANSAL HAD STRAINED RELATION WITH THE ASSESSEE AND HENCE THE STATEMENT IN RESPECT OF LOAN RECEIVED FROM THEM. THE LEARNED A.R. POINTED OUT THAT SHRI RISHI RAJ PUROHIT AND HIS WIF E HAD ACCEPTED TO HAVE ADVANCED THE SAID AMOUNT AND THERE WAS NO MERI T IN THE SAID ADDITION AND ALSO THE LOAN RAISED FROM SHRI JUGRAJ PUROHIT. THE 4 LEARNED D.R. FOR REVENUE PLACED RELIANCE ON THE ORD ERS OF THE AUTHORITIES BELOW. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. UNDER THE PROVISIONS OF SECTION 68 OF THE ACT THE O NUS IS UPON THE ASSESSEE TO ESTABLISH THE IDENTITY, CREDIT-WORTHINE SS AND GENUINENESS OF THE LOAN TRANSACTION. THE ASSESSEE HAD FURNISHE D INFORMATION IN RESPECT OF THE LOANS AGGREGATING TO RS.2,35,000/- R ECEIVED DURING THE YEAR. THE STATEMENTS OF THE LOAN CREDITORS WER E RECORDED BY THE ASSESSING OFFICER AND ONE SHRI R.K.BANSAL APPEARING ON HIS OWN BEHALF AND ON BEHALF OF HIS WIFE SMT.GANGA BANSAL, WHO HAD ADVANCED RS.1 LAC DENIED THE TRANSACTION AND EXPLAI NED THAT THE AMOUNT IN THE BANK BELONG TO THE ASSESSEE WHO HAD G IVEN THE SAME IN CASH TO THEM, WHICH WAS DEPOSITED IN THEIR RESPE CTIVE BANK ACCOUNTS, FROM WHICH CHEQUES OF RS.50,000/- EACH WE RE ISSUED TO THE ASSESSEE. THE ASSESSEE HAS FAILED FURNISH ANY EVIDENCE TO CONTRAVENE THE SAID AVERMENTS MADE BY THE LOAN CRED ITORS. IN THE ABSENCE OF THE SAME, WE UPHOLD THE ORDER OF THE CIT (A) REGARDING THE ADDITION OF RS.1 LAC UNDER SECTION 68 OF THE AC T. 9. THE ASSESSEE HAD FURTHER RECEIVED RS.50,000/- EA CH FROM SHRI RISHI RAJ PUROHIT AND SMT.LEELA DEVI AND RS.35,000/ - FROM SHRI JUGRAJ PUROHIT. SHRI RISHI RAJ PUROHIT IN HIS STAT EMENT HAD CATEGORICALLY ADMITTED TO HAVE ADVANCED THE SAID AM OUNT TO THE ASSESSEE AND HAD ALSO EXPLAINED THE SOURCE OF THE S AID ADVANCE, BOTH MADE BY HIM AND HIS WIFE. FURTHER SHRI JUGRAJ PURO HIT HAD ALSO FURNISHED EVIDENCE VIS--VIS SOURCE OF HIS AGRICULT URAL INCOME AND THE ADVANCE OF RS.35,000/- TO THE ASSESSEE FROM SAI D INCOME. IN THE 5 TOTALITY OF THE ABOVE-SAID EVIDENCE AND ADMISSION O F THE LOAN CREDITORS WE FIND NO MERIT IN THE ADDITION OF RS.1, 35,000/-. THE ASSESSING OFFICER IS DIRECTED TO DELETE THE SAME. GROUND NO.1 RAISED BY THE ASSESSEE IS THUS PARTLY ALLOWED. 10. THE ISSUE IN GROUND NO.2 IS AGAINST THE DISALLO WANCE MADE OUT OF TELEPHONE AND CAR RUNNING EXPENSES ON ACCOUNT OF PERSONAL USE BY THE ASSESSEE. THE ASSESSING OFFICER HAD DISALLOWED 20% OF THE SAID EXPENSES BY INVOKING THE PROVISIONS OF SECTION 38(2 ) OF THE ACT. WE HOLD THAT IN THE INTEREST OF JUSTICE, DISALLOWAN CE OUT OF TELEPHONE AND CAR RUNNING EXPENSES FOR PERSONAL USE BY THE ASSESSEE BE RESTRICTED TO 10% AS THE PERSONAL USE BY THE ASS ESSEE CANNOT BE RULED OUT. THE GROUND NO.2 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. 11. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF JUNE, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 29 TH JUNE , 2011 RATI COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6