Sh. Davinder Singh, Sirhind V. ITO, Mandi Gobindgarh

ITA 381/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6629 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 7 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 15-02-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO. 381/CHD/2016 ASSESSMENT YEAR: 2010-11 SH. DAVINDER SINGH, VS. THE ITO, WARD SIRHIND SIRHIND, PUNJAB HQ. PATIALA PAN NO. ABWPS1695J (APPELLANT) (RESPONDENT) APPELLANT BY : SH. AJAY JAIN RESPONDENT BY : SMT. CHANDERKANTA DATE OF HEARING : 16.11.2017 DATE OF PRONOUNCEMENT : 20.11.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), [HEREINAFTER REFERRED TO AS CIT(A)] PATIALA DATED 26.06.2014. 2. THE ASSESSEE IN THIS APPEAL HAS TAKEN THE FOLLOW ING GROUNDS:- 1. THAT THE LEARNED C.I.T. (A) PATIALA HAS WRONGLY UPHELD THE ADDITION OF RS. 120,00,000/- ON ACCOUNT OF DEPOSITS IN BANK ACCOUNTS & ALSO WRONGLY UPHELD TH E ORDER OF ASSESSING OFFICER WHICH HAS BEEN PASSED WITHOUT AFFORDING REASONABLE OPPORTUNITY OF BEING H EARD 2 TO APPELLANT & WITHOUT MAKING ANY ENQUIRY THEREFORE IT IS PRAYED THAT THE ORDER OF ASSESSING OFFICER BE SET A SIDE & RESTORE THE MATTER TO THE FILE OF ASSESSING OFFICER FOR FRESH ADJUDICATION AFTER AFFORDING REASONABLE OPPORTUNITY TO APPELLANT TO EXPLAIN THE DEPOSITS IN BANK ACCOUNTS . 2. THAT THE LEARNED C.I.T. (A) PATIALA HAS WRON GLY DISMISSED THE APPEAL WITHOUT APPRECIATING THE FACT THAT NO OPPORTUNITY TO EXPLAIN THE DEPOSIT & TO PRODUCE THE MEMBERS OF AOP HAS BEEN GIVEN TO APPELLANT DURING THE COURSE OF ASSESSMENT PROCEEDINGS BY THE ASSESSING OFFICER . 3. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION OF R S. 1,42,106/- ON ACCOUNT OF INTEREST INCOME . 4. THAT THE LEARNED CIT(A) HAS WRONGLY UPHELD THE ADDITIONS ON ACCOUNT OF DEPOSITS IN BANK ACCOUNTS WITHOUT APPRECIATING THE FACTS THAT ASSESSEE HAS MA DE WITHDRAWAL FROM BANK ACCOUNTS & REDEPOSIT THE SAME IN BANK ACCOUNTS. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT A S PER AIR INFORMATION, THE ASSESSEE HAD MADE CASH DEPOSITS OF RS.21 LAKHS IN BANK OF INDIA, RS. 1,23,70,000/- IN OBC BANK & RS. 21,00,500/- IN HDFC BANK. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE COUNSEL OF TH E ASSESSEE FURNISHED A CASH FLOW STATEMENT SHOWING RECEIPT OF RS. ,1,13,00 ,000/- IN THE NAME OF DEVINDER SINGH & OTHERS AOP, OPENING BALANCE AT RS. 3,50,000/- AND AGRICULTURAL INCOME OF RS.3,50,000/-. THE ASSESSIN G OFFICER ASKED THE ASSESSEE TO PRODUCE THE MEMBERS OF THE SO CALLED AO P AND PROVE THE SOURCE OF THE DEPOSITS FROM THE MEMBERS OF THE AOP, SOURCE OF OPENING BALANCE AND EVIDENCE REGARDING AGRICULTURAL INCOME. THE ASS ESSEE EXPLAINED THAT 3 THE FUNDS ARE RECEIVED FROM DEVINDER & OTHERS AOP. THE DEED OF AOP WAS EXECUTED ON 21.03.2009 AND STAMP PAPER HAD BEEN PUR CHASED ON 21.01.2009. NO APPLICATION FOR PAN HAD BEEN FILED F OR THE AOP AND IT HAS NO INCOME. FURTHER, THAT THE ASSESSEE HAS TO DROP I TS BUSINESS PLAN AND THE MONEY WAS REFUNDED TO THE MEMBERS IN 2009-10 AND 20 10-11. IT WAS FURTHER CONTENDED THAT THE MEMBERS WERE OUT OF STAT ION, HENCE, COULD NOT BE PRODUCED AND REQUESTED FOR FURTHER ADJOURNMENT OF T HE CASE FOR THE SAID PURPOSE. THE A.O., HOWEVER, OBSERVED THAT THE PLEA TAKEN BY THE ASSESSEE NOW WAS AN AFTERTHOUGHT. THAT AOP DEED WAS PRODUCED IN THE EARLIER HEARINGS. THAT AS PER REPLY FILED, THE AOP WAS SHO WN TO HAVE BEEN CONSTITUTED ON 31.03.2009 FOR BUSINESS ACTIVITIES. HOWEVER, DURING THE ASSESSMENT PROCEEDINGS, IT WAS SAID THAT THE AOP WA S NOT DOING ANY BUSINESS ACTIVITY. THE ORIGINAL DEED OF AOP WAS NEV ER PRODUCED. THERE WAS NO PAN IN THE NAME OF AOP. NO BANK ACCOUNT WAS OPENED IN THE NAME OF AOP. AS PER CLAUSE FOR CONSTITUTION OF THE AOP, THE FUNDS WERE TO BE USED FOR THE BUSINESS OF THE A.O. HOWEVER, IT WA S SEEN THAT THE ASSESSEE HAS MADE FDRS OUT OF THIS FUND AND WAS ALSO ENJOYIN G INTEREST INCOME IN HIS INDIVIDUAL CAPACITY. THE MEMBERS OF AOP HAD SHO WN TO HAVE CONTRIBUTED THE MONEY IN CASH. THE FUNDS WERE ALSO SHOWN TO HAVE BEEN PAID BY THE MEMBERS IN PIECE MEALS AND NOT IN ONE G O. THOUGH, THE AOP WAS SAID TO HAVE BEEN FORMED TO CONSTRUCT, DEVELOP AND RUN A PG COMPLEX, NO EFFORTS WHATSOEVER HAD BEEN MADE IN THIS REGARD. NO EVIDENCE WAS FURNISHED IN SUPPORT OF THE CONTENTION WHILE IT WAS NOTED THAT SUCH PG COMPLEX HAVE BEEN CONSTRUCTED BY OTHER ASSESSEES OF THIS AREA. RATHER, IT WAS SIMPLY CONTENDED BY THE ASSESSEE HAD THE PLAN T O CONSTRUCT THE PG COMPLEX WAS DROPPED. THE ASSESSING OFFICER FURTHER NOTED THAT HUGE 4 TRANSACTIONS IN THE BANK ACCOUNT WERE MADE IN EARLI ER YEARS ALSO AND SUBSEQUENT YEARS ALSO. NO DETAILS LIKE THE IDENTITY , CREDITWORTHINESS OF MEMBERS OF THE AOP AND GENUINENESS OF TRANSACTIONS WAS SUBMITTED. THE REFUND OF THE MONEY TO THE SAID MEMBERS WAS ALSO AP PARENTLY SAID TO HAVE BEEN MADE IN CASH DEPENDING ON THE WITHDRAWALS MADE BY THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, ADDED THE ENTIRE DEPO SIT OF RS. 1,13,00,000/- INTO THE INCOME OF THE ASSESSEE AS UNEXPLAINED CASH DEPOSIT. THE ASSESSING OFFICER ALSO OBSERVED THAT THE ASSESSEE COULD NOT SUBSTANTIATE THAT HE HAD EARNED THE AGRICULTURAL IN COME WITH RELEVANT EVIDENCES. HE, THEREFORE, ADDED THE AMOUNT OF RS. 7 ,00,000/- AS UNEXPLAINED INCOME OF THE ASSESSEE. IT WAS FURTHER NOTED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAD EARNED INTEREST INCOM E OF RS.1,42,106/- FROM THE BANK A/C WHICH HAD NOT BEEN DECLARED, THEREFORE , THE SAME WAS ALSO ADDED TO THE INCOME OF THE ASSESSEE. 4. BEFORE THE LD. CIT(A), THE ASSESSEE SOUGHT TO PR OVE THE SOURCE OF CREDITS IN HIS BANK ACCOUNT BY PRODUCING THE MEMBER S OF THE AOP. HOWEVER, THE SAID REQUEST OF THE ASSESSEE WAS REJEC TED BY THE CIT (A). HE FURTHER RELYING UPON THE FINDINGS OF THE ASSESSING OFFICER HELD THAT IT WAS PROVED BEYOND DOUBT THAT THE SAID FUNDS WERE THE AS SESSEES FUNDS. HE ALSO HELD THAT ASSESSEE COULD NOT PRODUCE THE EVIDENCE O F AGRICULTURAL INCOME. HE ALSO CONFIRMED THE ADDITION IN RESPECT OF INTERE ST INCOME EARNED ON FDRS AND ACCORDINGLY DISMISSED THE APPEAL OF THE AS SESSEE. 5. BEFORE US, LD. AR OF THE ASSESSEE HAS INVITED OU R ATTENTION TO PARA (IV) OF THE ASSESSMENT ORDER WHEREIN ONE OF THE REA SON FOR REJECTING THE CONTENTION OF THE ASSESSEE REGARDING FORMATION OF A OP WAS THAT THE 5 ASSESSEE HAD NOT PRODUCED THE ORIGINAL DEED OF AOP BEFORE THE ASSESSING OFFICER. THE LD. COUNSEL FOR THE ASSESSEE HAS PRODU CED THE ORIGINAL DEED OF AOP BEFORE US AND HAS SUBMITTED THAT ASSESSING OFFI CER DID NOT ASK THE ASSESSEE TO PRODUCE THE SAME OR THERE MAY BE A COMM UNICATION GAP IN THIS RESPECT. HE HAS FURTHER INVITED OUR ATTENTION TO P ARA (X) OF THE ASSESSMENT ORDER WHEREIN THE ASSESSING OFFICER HAS OBSERVED TH AT THE ASSESSEE HAD FAILED TO PRODUCE THE MEMBERS OF THE AOP FOR VERIFI CATION OF THEIR IDENTITY, CREDITWORTHINESS SOURCES AND GENUINENESS OF THE TRA NSACTIONS ETC. HE HAS FURTHER INVITED OUR ATTENTION TO PARA (XIII) WHEREI N THE ASSESSING OFFICER HAD NOTED THAT THE ASSESSEE HAD SOUGHT A FEW DAYS T IME TO PRODUCE THE MEMBERS OF THE AOP VIDE LETTER DATED 15.2.2013, HOW EVER, THE SAID REQUEST OF THE ASSESSEE WAS REJECTED ON THE GROUND THAT THE ASSESSEE HAD ALREADY BEEN GIVEN SUFFICIENT TIME TO PRODUCE THE MEMBERS. THE LD. COUNSEL HAS FURTHER STATED THAT THE SIMILAR REQUEST WAS MADE BE FORE THE CIT(A) TO PRODUCE THE MEMBERS OF THE AOP SO THAT THE GENUINEN ESS AND CREDITWORTHINESS OF THE PAYERS CAN BE DETERMINED. H E HAS FURTHER SUBMITTED THAT DUE TO THE CERTAIN UNAVOIDABLE CIRCUMSTANCES, THE ASSESSEE COULD NOT FURNISH THE RELEVANT EVIDENCE BEFORE THE LOWER AUTH ORITIES ON EARLIER OCCASIONS. THE LD. COUNSEL FOR THE ASSESSEE, THEREF ORE, HAS REQUESTED THAT HE MAY BE GIVEN AN OPPORTUNITY TO PRODUCE THE RELEV ANT EVIDENCE BEFORE THE ASSESSING OFFICER SO THAT THE CASE MAY BE DECIDED I N JUST AND PROPER MANNER. 6. THE LD. DR, ON THE OTHER HAND, RELIED ON THE FIN DINGS OF THE LOWER AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS. WE FI ND THAT THE ADDITIONS IN THIS CASE HAVE BEEN CONFIRMED DUE TO NON-PRODUCT ION OF THE MEMBERS OF 6 AOP AND THE RELEVANT EVIDENCES REGARDING THE GENUIN ENESS OF THE TRANSACTIONS, CREDITWORTHINESS OF THE PAYERS ETC. EVEN ONE OF THE REASONS AS NOTED ABOVE IS NON-PRODUCTION OF ORIGINAL DEED O F THE AOP WHICH THE ASSESSEE HAS PRODUCED BEFORE US. THE LD. CIT(A) A LSO DID NOT ALLOW THE REQUEST OF THE ASSESSEE TO PRODUCE THE MEMBERS OF THE AOP. IN THE GIVEN CIRCUMSTANCES, IN OUR VIEW, INTEREST OF JUSTICE WIL L BE WELL SERVED IF THE ASSESSEE IS GIVEN AN OPPORTUNITY TO FURNISH THE NEC ESSARY EVIDENCES, INCLUDING THE PRODUCTION OF THE MEMBERS OF THE AOP FOR THEIR EXAMINATION. WE, THEREFORE, SET ASIDE THE ORDER OF THE LOWER AUT HORITIES AND RESTORE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR DEN OVO ASSESSMENT. ORIGINAL DEED OF AOP BE RETURNED TO THE ASSESSEE / COUNSEL O F THE ASSESSEE AGAINST ACKNOWLEDGMENT WITH A DIRECTION TO PRODUCE THE SAME BEFORE THE ASSESSING OFFICER, IF SO REQUIRED. NEEDLESS TO SAY THAT THE A SSESSING OFFICER WILL GIVE PROPER OPPORTUNITY TO THE ASSESSEE TO PRESENT HIS C ASE AND THEREAFTER TO FRAME THE ASSESSMENT AFRESH IN ACCORDANCE WITH LAW. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 20.11.2017 SD/- SD/- (DR. B.R.R. KUMAR) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 20.11.2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR 7