Sh. Aashish Arora, Ludhiana V. ITO, Ludhiana

ITA 370/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5126 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 27-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Assessee Lawyers: B M MOGA SH ROHIT KAURA
• Keywords: Income from undisclosed sources; Onus to prove
• Section: 37; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 370/CHD/2017 ASSESSMENT YEAR: 2012-13 SH. AASHISH ARORA VS. THE ITO C/O SHANTI KNIT FAB WARD 3(2) 738/7A/2, BHAI MANNA LUDHIANA SINGH NAGAR, LUDHIANA PAN NO. ADKPA1111B (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. B.M. MOGA, SH. ROHIT KAURA DEPARTMENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 11/12/2017 DATE OF PRONOUNCEMENT : 07/03/2018 ORDER PER DR. B.R.R. KUMAR, A.M: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF THE LD. CIT(A)-1, LUDHIANA DT. 21/12/2016. 2. ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROU NDS OF APPEAL: 2. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF RS. 41,00,000/- U/S 68 BRUSHING ASIDE THE DOCUMENTARY EVIDENCE THAT ASSESSEE WAS HAVING SUFFICIENT CASH BALANCE. 3. THAT THE LD. CIT(A) IS NOT JUSTIFIED WHILE UPHOLDIN G THE ORDERS OF THE AO SIMPLY BY HOLDING THAT 'THE SAID CASH IN HAND IS THUS NOT ACCEPTABLE AS TH E SURROUNDING CIRCUMSTANCES DISAPPROVE THE APPELLANTS CLAIM' TOTALLY IGNORING THE FACTUAL MATRIX THAT CASH WAS WITHDRAWN FROM ANOTHER PARTNERSHIP FI RM OF THE ASSESSEE. 4. THAT THE LD. CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION OF DISALLOWING INTEREST PAID AT RS. 18,48,006/- AND WRONGLY CLAIME D UNDER SECTION 57 OF THE ACT, INSTEAD OF SECTION 37 OF THE ACT. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS DOING THE BUSINESS OF 'TRADING OF HOSIERY GOODS, CLOTH, DUPLEX BOARD ETC' . ASSESSEE SHOWN INCOME UNDER THE HEAD INCOME FROM BUSINESS AND PROFESSION' AND UNDER THE HEAD 2 'INCOME FROM HOUSE PROPERTY' DURING THE YEAR UNDER CONSIDERATION. ASSESSEE HAS ALSO CLAIMED LOSS UNDER THE HEAD 'INCOME FROM OTHER SOURCES' . 4. THE ASSESSING OFFICER MADE ADDITION OF RS. 41,00 ,000/- UNDER SECTION 68 OF THE INCOME TAX ACT, 1961 ON ACCOUNT OF ADDITION TO CAPITAL ACCOUNT IN CASH. BEFORE THE ASSESSING OFFICER THE ASSESSEE HAS SUBMI TTED THAT THE ADDITION IN CAPITAL ACCOUNT WAS MADE OUT OF CASH IN HAND IN ASS ESSES'S PERSONAL ACCOUNT . 4.1 THE ASSESSING OFFICER HELD THAT NO SUPPORTING D OCUMENTS WERE FURNISHED AND NO JUSTIFICATION OR SOURCE OF ADDITION WAS PROV IDED. DURING THE COURSE OF ASSESSMENT PROCEEDINGS A STATEMENT SHOWING INDIVIDU AL CASH IN HAND WAS FILED BY THE ASSESSEE. 4.3 THE ASSESSING OFFICER OBSERVED THAT AS PER DETA ILS OF PERSONAL CASH IN HAND, ASSESSEE WAS HAVING AN AMOUNT OF RS. 49,76,25 8/- AS ON 01-04-2011. ASSESSEE IS ALSO WITHDRAWING CASH FROM THE BANK DUR ING THE YEAR WHEN HE WAS HAVING HUGE CASH IN HAND IN INDIVIDUAL CAPACITY. T HE ASSESSING OFFICER PLACED RELIANCE ON THE CASE OF CIT VS DURGA PRASAD MORE (1 971) 82 ITR 540 IN WHICH THE HON'BLE SUPREME COURT HAS HELD THAT INCOME-TAX AUTHORITIES ARE ENTITLED TO LOOK INTO THE SURROUNDING CIRCUMSTANCES TO FI ND OUT THE REALITY. AND ALSO ON THE CASE OF HON'BLE SUPREME COURT IN SUMATI DAYAL V S CIT (1995) 214 ITR 801. IN THESE CASES HON'BLE SUPREME COURT HAS HELD THAT TO JUDGE ANY EVIDENCE TEST OF HUMAN PROBABILITIES SHOULD BE APPLIED. 4.4 THE ASSESSING OFFICER HELD THAT THE ASSESSEE CO ULD NOT JUSTIFY THE HUMAN PROBABILITIES ON THE FOLLOWING ISSUES : I) THE ASSESSEE HAS NOT GIVEN ANY REASON FOR MAINTAINI NG HUGE CASH IN HAND. II) THE ASSESSEE HAS BEEN PAYING INTEREST ON BORROWED F UNDS DESPITE THE AVAILABILITY OF HUGE FUNDS. III) THE ASSESSEE HAS NOT DEPOSITED CASH ALLEGEDLY IN HI S POSSESSION AT ONE GO AND INSTEAD HE HAS DEPOSITED CASH ON VARIOUS DAT ES DURING THE YEAR. IV) THE ASSESSEE HAS BEEN WITHDRAWING CASH FROM BANK DE SPITE THE AVAILABILITY OF CASH IN HAND AND V) THE ASSESSEE HAS NOT PRODUCED ANY INDEPENDENT INFOR MATION TO VERIFY HIS CLAIM. 3 4.5 THE ASSESSING OFFICER FURTHER HELD THAT THERE A RE SUFFICIENT REASONS TO SUSPECT THE ADDITION IN THE BOOKS OF ACCOUNTS AS CA PITAL ADDITIONS BY THE ASSESSEE. ONUS TO PROVE THAT THE CASH IN HAND WAS N OT BOGUS WAS WITH THE ASSESSEE AND THE ASSESSEE COULD NOT DISCHARGE HIS O NUS IN THIS REGARD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS COUNSEL OF THE ASS ESSEE WAS ALSO CONFRONTED AND ASKED TO FILE THE COPY OF HIS WEALTH TAX RETURN FOR THE A.Y. 2012-13 BECAUSE SUCH A HUGE CASH IN HAND IN INDIVIDUAL CAPACITY IS LIABLE TO BE TAXED UNDER WEALTH TAX ACT. IN RESPONSE TO THIS COUNSEL OF THE ASSESSEE SUBMITTED THAT NO WEALTH TAX RETURN WAS FILED BY THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR I.E FOR THE A.Y. 2012-13. 4.6 SUBSEQUENTLY THE ASSESSING OFFICER HELD THAT TH E AN AMOUNT OF RS. 41,00,000/- NEEDS TO BE TAXED IN THE HANDS OF THE A SSESSEE ON ACCOUNT OF INCOME FROM UNDISCLOSED SOURCES U/S 68 OF THE INCOM E TAX ACT 1961. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE THE LD. CIT(A). 5. THE LD. CIT(A) CONFIRMED THE ADDITION HOLDING AS UN DER: I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CASE, THE BASIS OF THE ADDITION MADE AND THE ARGUMENTS OF THE AR. A PERUSAL OF THE CAPIT AL ACCOUNT SHOWED THAT THE APPELLANT HAD INTRODUCED RS. 41 LACS IN HIS PROPRIE TORSHIP FIRM, M/S SHANTI KNIT FAB. WHEN ASKED TO SUPPLY THE SOURCE AND JUSTIFICATION T HEREOF, THE COUNSEL SUBMITTED BEFORE THE ASSESSING OFFICER THAT THE SAME WAS OUT OF CASH IN HAND IN ASSESSEE'S PERSONAL ACCOUNT. A STATEMENT SHOWING INDIVIDUAL CA SH IN HAND WAS FILED BY THE APPELLANT BEFORE THE ASSESSING OFFICER. HOWEVER, NO OTHER SUPPORTING DOCUMENT WAS FURNISHED AND NO JUSTIFICATION WAS GIVEN. THE A SSESSING OFFICER HAS OBSERVED THAT THE APPELLANT WAS WITHDRAWING CASH FROM THE BA NK DURING THE YEAR ALTHOUGH HE IS SHOWING CASH IN HAND IN INDIVIDUAL CAPACITY. SIMULTANEOUSLY, THE APPELLANT IS CLAIMING HUGE AMOUNT OF INTEREST PAID TO VARIOUS PA RTIES. THE APPELLANT COULD NOT EXPLAIN WHY THE SO STATED HUGE CASH HAND WAS KEPT W ITH HIM AND NOT DEPOSITED IN THE BANK AND ALSO WHY THERE WAS A NEED TO WITHDRAW FROM BANKS IF HE HAD SUFFICIENT CASH IN HAND AS SHOWN. THEREFORE, THE FA CTS AND CIRCUMSTANCES PROVE THE CONTRARY AND THE SAID CASH IN HAND IS THUS NOT ACCE PTABLE AS THE SURROUNDING CIRCUMSTANCES DISPROVE THE APPELLANT'S CLAIM REGARD ING THE SAME. NO JUSTIFICATION HAS BEEN GIVEN AS TO WHY SUCH HUGE CASH IN HAND IS MAINTAINED AND NO INDEPENDENT EVIDENCE IS PRODUCED TO SUPPORT THE PUR POSE OF MAINTAINING THE SO STATED CASH IN HAND, THUS THE ASSESSING OFFICER RIG HTLY HELD THAT THE CASH IN HAND DOES NOT APPEAR TO BE GENUINE AS THE APPELLANT HAS BEEN WITHDRAWING CASH FROM THE BANK AND HAS ALSO BEEN PAYING HUGE AMOUNT OF IN TEREST ON LOANS FROM PRIVATE LENDERS. IT MAY BE ADDED THAT NO WEALTH TAX RETURN HAS ALSO BEEN FILED THOUGH HUGE CASH IN HAND OF RS. 41 LACS HAS BEEN SHOWN TO BE AV AILABLE. THEREFORE, THE ASSESSING OFFICER WAS JUSTIFIED IN HOLDING THAT ACT UALLY THE APPELLANT HAS INTRODUCED HIS OWN UNACCOUNTED MONEY IN HIS BUSINESS. THEREFOR E, THE SAID AMOUNT WAS RIGHTLY ADDED BACK TO THE INCOME OF THE APPELLANT U/S 68 AS INCOME FROM UNDISCLOSED SOURCES. THIS GROUND OF APPEAL IS DISMISSED. 4 6 BEFORE US THE LD. AR ARGUED THAT THE ASSESSEE WAS HAVING OPENING AMOUNT OF CASH IN HAND OF RS. 49,76,258/- AS ON 01/ 04/2011 AND RELIED ON THE SUBMISSIONS MADE BEFORE THE LD. CIT(A) AND ALSO ON THE COPY OF ACCOUNTS OF THE ASSESSEE AND AUDIT REPORTS. 7. THE LD. DR RELIED ON THE ORDERS OF THE LOWER AUT HORITIES. 8. FROM THE PERUSAL OF THE ABOVE WE OBSERVED THAT T HE REASON FOR CONFIRMING IS THAT THE ASSESSEE COULD NOT FURNISH ANY SUPPORTI NG DOCUMENTS AND AT THE SAME TIME QUESTIONING WHY THE SUCH HUGE CASH IN HAN D WAS KEPT WITH HIM AND NOT DEPOSITED IN THE BANK. 9. THE LD. CIT(A) ALSO RELIED ON THE FACT THAT NO W EALTH TAX HAVE BEEN FILED BY THE ASSESSEE TO PROVE THE EXISTENCE OF CASH IN H AND. SIMILARLY WE ALSO FOUND THAT THE ASSESSEE COULD HAVE PROVED THE AVAILABILIT Y OF THE CASH BY SUBMITTING RELEVANT BANK STATEMENTS AND WITHDRAWALS. NOWHERE O N RECORDS THE RELEVANT BANK STATEMENT ARE AVAILABLE NOR IT APPEARS TO HAVE BEEN EXAMINED BY THE LOWER AUTHORITIES AT ANY GIVEN POINT OF TIME. THE A CCUMULATION OF FUNDS OF RS. 49,76,258/- HAS ALSO NOT BEEN EXAMINED BY THE REVEN UE AS WELL AS NOT PRODUCED BY THE ASSESSEE BEFORE THE LOWER AUTHORITI ES IN A COGENT MANNER SO AS TO PROVE THE AVAILABILITY OF THE CASH. THUS THE MOO T ISSUE OF AVAILABILITY OF THE CASH AS FOR THE OPENING BALANCE HAS NOT BEEN EXAMIN ED AND NO FINDING ON THIS FACT HAS BEEN GIVEN BY THE REVENUE OR THE ASSESSEE HAS NOT SUBMITTED THE RELEVANT DETAILS. UNDER THESE CIRCUMSTANCES WE DEEM IT FIT THAT THE I NTEREST OF JUSTICE WOULD BE MET BY REMANDING THE MATTER BACK TO THE ASSESSIN G OFFICER FOR THE LIMITED PURPOSE OF EXAMINING THE AVAILABILITY OF THE CASH A ND ALSO WITH THE DIRECTIONS TO THE ASSESSEE TO PROVE THE AVAILABILITY OF CASH BY P LACING RELEVANT BANK STATEMENTS AND SUBMITTING THE DETAILS OF THE CASH W ITHDRAWALS. 10. GROUND NO. 4 RELATES TO UPHOLDING THE ADDITION OF INTEREST PAID OF RS. 18,48,006/-. 11. THE BRIEF FACTS OF THE ISSUE ARE THAT THE ASSES SING OFFICER HAS HELD THAT THE DEDUCTION CLAIMED U/S 57 OF THE ACT IS NOT ADMISSIB LE IN VIEW OF THE FACTS THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE UNDER THE H EAD 'INCOME FROM OTHER 5 SOURCES' IS NOT WITHIN THE PURVIEW OF SECTION 57(III) OF THE ACT AND WAS NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF EARNING THE INCOME. 12. LD. CIT(A) UPHELD THE ADDITION BY HOLDING THAT THE ASSESSEE HAS RECEIVED INTEREST FROM M/S SHANTI SALES INDIA PVT. LTD. BESI DES INTEREST ON FIXED DEPOSITS AND SAVING BANK ACCOUNT. THE ASSESSEE COULD NOT EXP LAINED HOW THE EXPENDITURE WAS RELATABLE TO ACTIVITY OF EARNING IN COME AND THE DETAILS OF INTEREST PAID HAVE NOT BEEN SUBMITTED. 13. BEFORE US THE LD. AR REITERATED THE SUBMISSIONS FILED BEFORE THE LOWER AUTHORITIES. 14. THE LD. DR RELIED ON THE ORDER OF THE LD. CIT(A ). 15. WE FIND THAT THE ASSESSEE HAS NOT GIVEN THE COM PLETE DETAILS REGARDING THE INCURRING OF EXPENDITURE ON ACCOUNT OF THE INTE REST PAYMENTS. HENCE THE MATTER IS HEREBY REMANDED BACK TO THE FILE OF ASSES SING OFFICER WITH A DIRECTION TO THE ASSESSEE TO SUBMIT COMPLETE DETAILS OF THE E XPENDITURE AND TO FURNISH HOW THE EXPENDITURE INCURRED IS WHOLLY AND EXCLUSIVELY INCURRED FOR THE PURPOSE OF BUSINESS SO AS TO BE ELIGIBLE FOR DEDUCTION UNDER S ECTION 57(III). 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUM AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 07/03/2018 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR