Sh. Suresh Kumar Prop, Haryana V. TRO,

ITA 3809/DEL/2008

• Counselvise Citation: 380920114 RSA 2008
• Duration Of Justice: 3 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 30-11-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 30-12-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S MOHANTHY
• Assessee Lawyers: SSH K SAMPATH; RAJ KUMAR ADVS
• Keywords: Unexplained cash credit
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G NEW DELHI) BEFORE SHRI RAJPAL YADAV AND SHRI A.N. PAHUJA ITA NO. 3809/DEL/2008 ASSESSMENT YEAR: 2005-06 SURESH KUMAR, PROP. VS. INCOME-TAX OFFICER, M/S. MANGALCHAND MAHESH CHAND, WARD 2, C/O. RP RAJPAJ, ITP, FATEHABAD. RAILWAY ROAD, HISSAR (HR.) (APPELLANT) (RESPONDENT) APPELLANT BY: S/SH. K SAMPAT H & RAJ KUMAR, ADVS. RESPONDENT BY: SHRI S. MOHANTHY, DR DATE OF HEARING : 01.12.2011 DATE OF PRONOUNCEMENT : 13.01.2012 ORDER PER RAJPAL YADAV: JUDICIAL MEMBER THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE ORD ER OF LEARNED CIT(APPEALS) DATED 16.10.2008 PASSED FOR ASSESSMENT YEAR 2005-06. IN THE FIRST GROUND OF APPEAL, ASSESSEE HAS PLEADED THAT T HE LEARNED CIT(APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF RS.3,83,550 . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E AT THE RELEVANT TIME WAS RUNNING A PROPRIETARYSHIP CONCERN IN THE NAME O F M/S. MANGAL CHAND MAHESH KUMAR. HE HAS FILED HIS RETURN OF INCOME ON 04.10.2005 DECLARING AN INCOME OF RS.81,060. THE CASE OF THE ASSESSEE WA S SELECTED FOR SCRUTINY 2 ASSESSMENT AND A NOTICE UNDER SEC. 143(2) OF THE AC T DATED 11.8.2006 WAS ISSUED AND WAS DULY SERVED UPON THE ASSESSEE. ON SC RUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT A CREDIT BAL ANCE OF RS.3,83,565 IS APPEARING AGAINST THE NAME OF SHRI SATISH KUMAR S/O SHRI GOPI RAM IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. LEARNED ASSESSING OFFICER HAS DIRECTED THE ASSESSEE TO DISCHARGE THE ONUS AS CONTEMPLATED IN S ECTION 68 OF THE INCOME- TAX ACT, 1961. THE ASSESSEE HAS SUBMITTED THAT LOAN WAS TAKEN THROUGH ACCOUNT PAYEE CHEQUES FROM SHRI SATISH KUMAR. HE IS ASSESSED TO TAX. THE ASSESSEE HAS FILED A CONFIRMATION FROM SHRI SATISH KUMAR, HIS BANK STATEMENT, COPY OF HIS ITR AND THE COPY OF ACCOUNT AVAILABLE IN THE ASSESSEES BOOKS OF ACCOUNT. ASSESSING OFFICER ISSU ED SUMMONS TO SHRI SATISH KUAMR WHO APPEARED BEFORE HIM AND RECORDED H IS STATEMENT ON 3.10.2006. ASSESSING OFFICER HAS REPRODUCED THE STA TEMENT OF SHRI SATISH KUMAR IN THE ASSESSMENT ORDER ON PAGE NOS. 2 TO 5. ON AN ANALYSIS OF HIS STATEMENT, HE OBSERVED THAT A SUM OF RS.1 LAC WAS P AID BY SHRI SATISH KUMAR TO THE ASSESSEE ON 20.5.2004 VIDE CHEQUE NO.303308. AFTER 15 DAYS, HE AGAIN PAID A SUM OF RS. 5 LACS TO THE ASSESSEE ON 5 .6.2004 VIDE CHEQUE NO.3030309. IN THIS WAY, A TOTAL SUM OF RS.6 LACS W AS GIVEN TO THE ASSESSEE. THE ASSESSEE HAS REFUNDED A SUM OF RS.2,16,432 ON 1 5.4.2004 VIDE CHEQUE NO.817306. ASSESSING OFFICER HAS REPRODUCED THE COP Y OF ACCOUNT 3 MAINTAINED BY THE ASSESSEE. THE ASSESSEE HAS SHOWN CLOSING BALANCE AT RS.3,83,568. ASSESSING OFFICER FAILED TO CONSTRUE T HIS ACCOUNT PROPERLY. HE ARRIVED AT A CONCLUSION THAT RS. 6 LACS IS OUTSTAND ING AGAINST THE NAME OF SHRI SATISH KUMAR. IN FACT, THE TOTAL AMOUNT OUTSTANDING IS RS.3,83,568 AND RS.2,16,432 HAD BEEN REFUNDED OR PAID BY THE ASSESS EE TO THE CREDITORS. ASSESSING OFFICER WAS OF THE OPINION THAT SHRI SATI SH KUAMR HAS NO SOURCE OF INCOME AND, THEREFORE, HIS CREDITWORTHINESS IS DOUBTFUL. HE MADE AN ADDITION OF RS. 6 LACS. 3. ON APPEAL, LEARNED CIT(APPEALS) HAS OBSERVED THA T THE CREDIT BALANCE AT THE END OF THE YEAR IS RS.3,83,568. IF THE ASSES SEE FAILED TO PROVE THE IDENTITY OF THE CREDITORS, GENUINENESS OF THE TRANS ACTION AND CREDITWORTHINESS OF THE CREDITORS THEN THE AMOUNT APPEARING AGAINST THE NAME OF SUCH CREDITOR WOULD BE TREATED AS THE INCOME OF THE ASSESSEE UNDE R SEC. 68 OF THE ACT. LEARNED FIRST APPELLATE AUTHORITY ACCORDINGLY OBSER VED THAT THE AMOUNT APPEARING AT THE END OF THE YEAR CAN ONLY BE CONSID ERED AS UNEXPLAINED CREDIT. IN THIS WAY, LEARNED CIT(APPEALS) HAS CONFI RMED THE ADDITION TO THE EXTENT OF RS.3,83,568. 4. THE LEARNED COUNSEL FOR THE ASSESSEE WHILE IMPUG NING THE ORDER OF THE LEARNED CIT(APPEALS) SUBMITTED THAT SHRI SATISH KUM AR WAS RUNNING A 4 KIRYANA SHOP FROM THE LAST MORE THAN 10 20 YEARS. HE IS MAINTAINING S.B. ACCOUNT. HE IS HAVING FIVE ACRE OF AGRICULTURAL LAN D. HE IS ASSESSED TO TAX. HE HAS DEPOSED BEFORE THE ASSESSING OFFICER THAT HE WANTED TO PURCHASE A PIECE OF LAND, THEREFORE, HE SOLD OUT HIS TOTAL STO CK AND DEPOSITED THE MONEY IN THE BANK ACCOUNT, OUT OF THAT FUND HE MADE ADVA NCES TO THE ASSESSEE. ASSESSING OFFICER HAS REJECTED THE EXPLANATION OF T HE ASSESSEE ON THE GROUND THAT SHRI SATISH KUMAR WAS NOT HAVING SUFFICIENT IN COME WHICH CAN ENABLE TO SAVE A SUM OF RS.6 LACS EITHER IN THE SHAPE OF I NVESTMENT IN THE STOCK OF HIS KIRYANA SHOP. HE POINTED OUT THAT THIS IS JUST AN INFERENCE BY THE ASSESSING OFFICER WHICH RUNS CONTRARY TO THE SPECIF IC DEPOSITION MADE BY SHRI SATISH KUMAR. HE PRAYED THAT ASSESSEE HAS DISC HARGED THE ONUS PUT UPON HIM BY SEC. 68 OF THE INCOME-TAX ACT, 1961 AND , THEREFORE, NO ADDITION OUGHT TO BE MADE. ON THE OTHER HAND, LEARNED DR SUB MITTED THAT PERUSAL OF THE STATEMENT OF SHRI SATISH KUMAR, IT WOULD REVEAL THAT HE HAS AN INCOME OF RS.90,000 PER ANNUM. HE COULD HARDLY SAVE ANY AMOUN T IN MAKING ADVANCES TO THE ASSESSEE. 5. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. SECTION 68 OF THE ACT PROVIDES TH AT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAINED FOR THE PREVIOUS YEAR AND THE 5 ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, IN THE OPINION O F THE ASSESSING OFFICER, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGED TO INCOME-TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR. THUS, IN ORDER TO EXPLAIN THE CREDIT APPEARING IN THE BOOKS OF AN ASSESSEE, HE IS REQUIRED TO PROVE THE IDENTITY OF THE CREDITOR, CREDITWORTHINESS AND GENU INENESS OF THE TRANSACTION. IN THE PRESENT CASE, IDENTITY OF SHRI SATISH KUMAR IS NOT IN DOUBT. THE LOAN HAS BEEN GIVEN THROUGH ACCOUNT PAYEE CHEQUES, THUS, TO SOME EXTENT, GENUINENESS IS NOT IN DOUBT. ACCORDING TO THE ASSES SING OFFICER, IT IS THE MONEY OF THE ASSESSEE WHICH HAS BEEN ROUTED THROUGH ACCOUNT OF SHRI SATISH KUMAR, THUS, TRANSACTION IS NOT GENUINE. FOR HARBOR ING THIS PLEA, ASSESSING OFFICER IS HARPING UPON THE INFERENCE DRAWN FROM TH E STATEMENT OF SMT. SATISH KUMAR. WE HAVE GONE THROUGH THE STATEMENT AN D WE FIND THAT SHRI SATISH KUMAR WAS CATEGORICAL ON THE ISSUE THAT HE H AD ADVANCED THE MONEY TO THE ASSESSEE. WHILE EXPLAINING THE SOURCE, HE PO INTED OUT THAT HE HAS SOLD THE ENTIRE STOCK OF HIS SHOP BECAUSE HE WANTED TO P URCHASE THE LAND ALONG WITH HIS RELATIVE BANWARI LAL R/O KUKKARPUR , POLIC E STATOPM. SIRSA. HE IS AN INCOME TAX ASSESSEE. HE IS HAVING 5 ACRES OF LAN D AND RUN A KIRYANA SHOP. HE HAS GIVEN A SUM OF RS.6 LACS OUT OF THAT HE RECE IVED BACK RS.2,16,432 AND BALANCE IS OUTSTANDING WITH THE ASSESSEE. ON THE OT HER HAND, THE LEARNED 6 ASSESSING OFFICER HAS JUST DRAWN INFERENCE BASED ON HIS ANNUAL INCOME. CONSIDERING THIS EXPLANATION AND EVIDENCE, WE ARE O F THE VIEW THAT ASSESSEE HAS ESTABLISHED ALL THE INGREDIENTS OF SEC. 68 AND NO ADDITION ON ACCOUNT OF UNEXPLAINED CREDIT DESERVES TO BE MADE. WE ALLOW TH IS GROUND OF APPEAL AND DELETE THE ADDITION OF RS.3,83,550 CONFIRMED BY THE LEARNED CIT(APPEALS). 6. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE ASSESSEE IS THAT ASSESSING OFFICER HAS MADE AN ADDITION OF RS.80,000 ON ACCOUNT OF LOW HOUSEHOLD WITHDRAWALS. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS SHOWN RS.10,400 TOWARDS HOUSEHOLD EXPENSES. ASSESS ING OFFICER HAS MADE AN ESTIMATION ADDITION OF RS.80,000. ON APPEAL, LEA RNED CIT(APPEALS) HAS CONFIRMED THE ESTIMATION. 7. THE LEARNED COUNSEL FOR THE ASSESSEE POINTED OUT THAT APART FROM THE CONTRIBUTION MADE BY THE ASSESSEE, HIS WIFE IS CONT RIBUTING RS.10,000 AND ONE DAUGHTER IS CONTRIBUTING RS.45,870. THE TOTAL E XPENSES OF THE FAMILY IS RS.66,270. ASSESSING OFFICER FAILED TO CONSIDER ALL THESE ASPECTS WHILE ESTIMATING THE HOUSEHOLD EXPENSES. ON THE OTHER HAN D, LEARNED DR RELIED UPON THE ORDER OF THE LEARNED CIT(APPEALS). 7 8. WE HAVE DULY CONSIDERED THE RIVAL CONTENTIONS AN D GONE THROUGH THE RECORD CAREFULLY. THE ASSESSEE HAS FOUR CHILDREN, O UT OF THEM THREE ARE SCHOOL GOING. THEY ARE STUDYING IN PRIVATE SCHOOL. THEREFO RE, ESTIMATION OF EXPENSES TO THE EXTENT OF RS. 1 LAC PER ANNUM IS CO NCERNED, IT IS NOT ON THE HIGHER SIDE. WE CONFIRM THIS ESTIMATION. BUT WE REM IT THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER FOR A VERIFICATION THAT AMOUN TS CONTRIBUTED BY THE WIFE AND THE DAUGHTER IS TO BE LOOKED INTO. IF THEY HAVE CONTRIBUTED RS.55,000 THEN CREDIT OF THAT AMOUNT SHOULD BE GIVEN TO THE A SSESSEE. FOR THE CLARITY OF ISSUE, WE WOULD LIKE TO OBSERVE THAT TOTAL EXPENSES OF THE ASSESSEE TOWARDS HOUSEHOLD IS TO BE TAKEN RS.1 LAC. ASSESSING OFFICE R SHALL GRANT A SET OFF OF RS.10,400 ALREADY SHOWN BY THE ASSESSEE. HE SHALL F URTHER VERIFY WHETHER HIS WIFE HAS CONTRIBUTED RS.10,000 AND HIS DAUGHTER CON TRIBUTED RS.45,870. IF IT IS ESTABLISHED THAT THEY HAVE CONTRIBUTED THEN CRED IT OF THIS AMOUNT WOULD BE GIVEN TO THE ASSESSEE AND ONLY THE BALANCE WILL BE ADDED WHICH WOULD ROUGHLY COME TO RS.35,000. THIS GROUND IS PARTLY AL LOWED FOR STATISTICAL PURPOSES. 9. IN THE NEXT GROUND OF APPEAL, GRIEVANCE OF THE ASSESSEE IS THAT LEARNED CIT(APPEALS) HAS CONFIRMED THE TELEPHONE EXPENSES T O THE EXTENT OF RS.4700. ON DUE CONSIDERATION OF THE FACTS AND CIR CUMSTANCES, WE DO NOT 8 FIND ANY ERROR IN THE ORDER OF THE LEARNED CIT(APPE ALS), BECAUSE ASSESSEE HAS CLAIMED TELEPHONE EXPENSES OF RS.23,497. HE WAS UNABLE TO PRODUCE THE DETAILS IN RESPECT OF TELEPHONE EXPENSES EXCLUSIVEL Y FOR THE PURPOSE OF THE BUSINESS. THE POSSIBILITY OF PERSONAL USER OF THIS FACILITY BY THE ASSESSEE OR THE FAMILY MEMBER CANNOT BE RULED OUT. THEREFORE, A SSESSING OFFICER HAS RIGHTLY DISALLOWED 1/5 TH OF THE EXPENSES CLAIMED BY THE ASSESSEE. THIS GROU ND OF APPEAL IS REJECTED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 13 /01/2012 . SD/- SD/- ( A.N. PAHUJA ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 13 /01/2012 MOHAN LAL COPY FORWARDED TO: 1) APPELLANT 2) RESPONDENT 3) CIT 4) CIT(APPEALS) 5) DR:ITAT ASSISTANT REGISTRAR