ACIT, UDAIPUR V. Shri Mohan Manwani, UDAIPUR

ITA 382/JODH/2013

• Counselvise Citation: 38223314 RSA 2013
• Duration Of Justice: 1 year(s) 1 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 21-05-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 10-06-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N A JOSHI
• Assessee Lawyers: SHRAVAN KUMAR GUPTA
• Keywords: Capital asset; Principle of natural justice; Source of fund; Additional evidence; Revenue expenditure; Capital expenditure
• Section: 68

Judgement Text

IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENCH : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. ITA NO. 382 /JODH/2013 (A.Y. 200 8 - 09 ) A CIT, CIRCLE - 1, VS. SHRI MO H AN MANWANI, UDAIPUR. C - 115, PRATAP NAGAR, UDAIPUR. PAN NO. ACLPM 9138 L (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI SHRAVAN KUMAR GUPTA. DEPARTMENT BY : SHRI N.A. JOSHI - D.R. DATE OF HEARING : 21 / 0 5 /201 4 . DATE OF PRONOUNCEMENT : 30 /0 7 /201 4 . O R D E R PER N.K. SAINI, A.M TH IS IS AN APPEAL BY THE DEPARTMENT AGAINST THE ORDER DATED 28 /03/2013 OF L D . CIT(A), UDAIPUR . THE FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: ON THE FACTS AND IN THE PRESENT CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN: - 1. DELETING THE ADDITION OF RS. 6,25,600/ - MADE ON ACCOUNT OF INCOME FROM BUSINESS OF PROPERTY DEALING IGNORING THE FACT THE ASSESSEE HAD NOT PRODUCED ANY DOCUMENTARY EVIDENCE IN RESPECT OF SALE AND 2 PURCHASE TRANSACTION BEFORE THE AO AND FURTHER ERRED IN ACCEPTING THE ADDITIONAL EVIDENCE WITHOUT GIVING OPPORTUNITY TO AO. 2. DELETING THE DISALLOWANCE OF RS. 2,34,085/ - MADE ON ACCOUNT OF INTEREST EXPENSES CLAIMED. 3. DELETING THE ADDITION OF RS. 2,00,000/ - MADE U/S 68 OF THE I.T. ACT IGNORING THE FACT THE C REDITWORTHINESS OF CREDITOR WAS NOT PROVED BY THE ASSESSEE AND IN FACT THE CREDITOR IS NOT HAVING ANY PAN AND OBVIOUSLY ALSO NOT ASSESSED TO TAX. THAT THE APPELLANT CRAVES TO ADD, AMEND, ALTER, DELETE OR MODIFY ANY OR ALL THE ABOVE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 2 FIRST ISSUE IN THIS APPEAL RELATES TO THE DELETION OF ADDITION OF RS. 6,25,600/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF INCOME FROM BUSINESS O F PROPERTY DEALING. 3. FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSEE FILE D THE RETURN OF INCOME ON 22/09/2008 DECLARING THE INCOME OF RS. 7,39,440/ - WHICH WAS PROCESSED U/S 143(1) OF THE I.T. ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT IN SHORT) . LATER ON , THE CASE WAS SELECTED FOR SCRUTINY . DURING THE COURSE OF ASSESSMENT PROCEEDINGS , THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE EVIDENCE IN SUPPORT OF INCOME AMOUNTING TO RS. 6,17,014/ - FROM PROPERTY DEALING , . THE ASSESSING OFFICER OBSERVED THAT THERE WERE SOME TRANSACTIONS RELATING TO LAND DEAL BY F AMILY MEMBERS OF THE MANWANI GROUP THROUGH SHRI UMESH MANWANI WITH M/S . DELHIWALA REAL ESTATE P. LTD. A GAINST SUCH DEAL, THE ASSESSEE 3 HAD DECLARED PROFIT FROM PROPERTY DEALING UNDER THE HEAD INCOME FROM OTHER SOURCES AT RS. 6,17,040/ - . THE ASSESSING OFFICER COMPUTED THE PROFIT WITHOUT ALLOWING DEDUCTION OF SHARE OF JOINT INVESTOR S FOR WANT OF DOCUMENTARY PROOF. HE DID NOT ALLOW DEDUCTION ON ACCOUNT OF PROFITS TRANSFERRED BY THE ASSESSEE TO THE JOINT INVESTORS TO THE TUNE OF RS. 4,17,040/ - TO SHRI JAGDISH MANWANI AND RS. 2,08,520/ - TO SHRI GIRISH MANWANI . ACCORDINGLY, T HE ASSESSING OFFICER MADE THE ADDITION OF RS. 6,25,600/ - . 4. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMIT TED THAT OUT OF TOTAL PROFIT IN THE TRANSACTION BY THE MANWANI FAMILY ( WHICH INCLUDED ASSESSEE , HIS BROTHER JAGDISH MANWANI AND HIS SON GIRISH MANWANI) WITH M/S. DELHIWALA REAL ESTATE P. LTD. WAS DISTRIBUTED AMONGST THE JOINT INVESTORS AND THE TOTAL PROFIT WAS DECLARED IN THE HANDS OF THE FOLLOWING ASSESSEES: - SHRI MOHAN MANWANI RS. 6,17,040/ - SHRI JAGDISH MANWANI RS. 4,17,040/ - SHRI GIRISH MANWANI RS. 2,08,520/ - IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD NOT APPRECIATED THE TRUE AND CORRECT FACTS BEFORE MAKING THIS ADDITION. IT WAS EXPLAINED THAT 4 THERE WERE CERTAIN INVESTMENT THROUGH SHRI UMESH MANWANI BY VARIOUS PERSONS IN JOINT VENTURE WITH M/S. DELHIWALA REAL ESTATE P. LTD. AND EACH PERSON INCLUDED IN THE UMESH MANWANI GROUP HAD ALREADY EXPLAINED IN RESPONSE TO THE SUMMON ISSUED BY ADI AT THE TIME OF POST SEARCH ENQUIRY AGAINST SHRI DHARMPAL DEMLA GROUP AND UNDISCLOSED INCOME ALONG WITH PROFIT DERIVED BY EACH PERSON IN THE GROUP HAD BEEN DULY DECLARED IN TH E RELATED ASSESSMENT YEAR BY EACH PERSON AND TH AT A CHART WAS SUBMITTED BEFORE THE ASSESSING OFFICER IN SUPPORT OF INCOME OF RS. 6,17,000/ - DECLARED BY THE ASSESSEE AS PROFIT I N PROPERTY DEAL ING . IT WAS STATED THAT THE CHART ALSO INCLUDED PAN OF EACH MEMBER OF FAMILY AND REFLECTED THE FINAL POSITION OF THE INCOME / INVESTMENT ETC. TO BE COVERED IN THE INCOME TAX RETURNS AS AGREED BEFORE THE ADI. 5. THE ASSESSEE SUBMITTED TO THE LD. CIT(A) AS UNDER: - MOST OF THE AOS HAVE ACCEPTED THE INCOME DECLARED BY VARIOUS FAMILY MEMBERS ON THE BASIS OF THIS CHART, AS THE INCOME WAS DECLARED VOLUNTARILY BY THE FAMILY MEMBERS OF UMESH MANWANI GROUP BECAUSE THERE WAS NO SEARCH AGAINST THIS GROUP. THE ASSESSE E SHRI MOHAN MANWANI IS FATHER OF SHRI UMESH MANWANI AND HE WAS ALSO INDULGED WITH SOME SHARES IN THIS DEAL. ACCORDING TO THE CHART THERE WERE TWO DEALS BY THE GROUP WITH M/S. DELHIWALA REAL ESTATE PVT. LTD. SHRI MOHAN MANWANI HAD INVESTED RS.3,43,100/ - AS HIS SHARE THROUGH CHEQUE N O . 750954 ON 26/8/2006 WHICH WAS HIS SHARE OF INVESTMENT THROUGH HIS DECLARED SOURCES OF INCOME HENCE NO FURTHER INCOME REQUIRED TO BE OFFERED AS UNDISCLOSED INCOME ON THIS ACCOUNT. AGAINST SUCH INVESTMENTS HE HAS RECEIVED RS. 3,43,100/ - ON 5 28/6/2007 AS RETU RN OF PRINCIPAL AMOUNT AND CHEQUE OF RS.2,00,000/ - ON 14/7/2007 AS WELL AS CHEQUE OF RS. 10,42.600/ - ON 1/12/2007 TOTAL RS. 12,42,600/ - AGAINST PROFIT ON SUCH JOINT TRANSACTION OF ASSESSEE AND PROFIT OF HIS BROTHER JAGDISH MANWANI AND SON SHRI GIRISH MANWA NI. IMMEDIATELY AFTER RECEIPT OF RS.12,42,600/ - THE ASSESSEE HAS TRANSFERRED THE SHARE OF JAGDISH MANWANI IN THE PROFIT AT RS.4,17,040 / - THROUGH CHEQUE NO. 721980 EN CASH ED ON 3/12/2007 AND RS.2,08,520/ - TO SHRI GIRISH MANWANI THROUGH CHEQUE NO. 721967 EN C ASHED ON 5/12/2007. THE BALANCE AMOUNT OF RS.6,17,040/ - DECLARED AS PROFIT ON PROPERTY DEALING IN HIS OWN HAND BY THE ASSESSEE. THE ABOVE TRANSACTIONS ARE DULY VERIFIABLE FROM THE RELEVANT BANK ACCOUNT AS WELL AS FROM COPY OF ACCOUNT OF DELHIWALA REAL ESTA TE PVT. LTD. IN THE BOOKS OF ASSESSEE SHRI MOHAN MANWANI. ALL THESE EVIDENCES WERE MADE AVAILABLE DURING THE ASSESSMENT PROCEEDINGS ALSO. T HE LEARNED AO HAS NOT APPRECIATED ALL THES E FA CTS IN THEIR TRUE PERSPECTIVE FROM THE RECORDS AND ARBITRARILY ASSUMED THAT AS THERE WAS NO EVIDENCE WITH REGARDS TO PURCHASE OR SALE ETC. OF LAND THE AMOUNT DISTRIBUTED BY THE ASSESSEE CANNOT BE REDUCED FROM THE AMOUNT OF PROFIT RECEIVED FROM DELHIWALA REAL ESTATE PVT. LTD. THE WHOLE ADDITION MA DE BY THE LEARNED AO IS BASED ON ASSUMPTION AND PRESUMPTIONS IGNORING THE MATERIAL EVIDENCES AVAILABLE ON RECORD, CONTRARY TO THE F ACTS OF TH E CASE,, HENCE NOT JUSTIFIED AND DESERVES TO BE DELETED IN THE INTEREST OF EQUITY AND JUSTICE. 6 . IN SUPPORT OF ABOVE CONTENTION , THE ASSESSEE FURNISHED COPY OF CHARTS / SUBMISSIONS BEFORE THE ADI & THE ASSESSING OFFICER , ALONG WITH SALE AGREEMENT DATED 25/08/2006 BETWEEN M/S. DELHIWALA REAL ESTATE P. LTD. AND MEMBER OF LIBERTY GROUP . THE ASSESSEE ALSO FURNISHED COPY OF LEDGER ACCOUNT OF M/S. DELHIWALA REAL ESTATE P. LTD. IN THE BOOKS OF JAGDISH MANWANI AND GIRISH MANWANI IN THE BOOKS OF MOHAN MANWANI AS WELL AS COPY OF LEDGER ACCOUNT OF PROPERTY DEAL. IT WAS CONTENDED THAT THE ASSESSING OFFICER HAD NOT CONSIDERED THE INCOME DECLARED BY SHRI 6 JAGDISH MANWANI AND SHRI GIRISH MANWANI IN THEIR RESPECTIVE RELEVANT RETURNS OF INCOME. THEREFORE, THE ADDITION MADE WAS WITHOUT PROPER BASE AND BY IGNORING THE EVIDENCE A VAILABLE ON THE RECORD. 7 . THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, DELETED THE ADDITION BY OBSERVING AT PAGE NOS. 5 TO 7 OF THE IMPUGNED ORDER WHICH READ AS UNDER: - I HAVE CONSIDERED THE OBSERVATIONS OF THE LD. AO, SUBMISSION OF THE LD. AR AND HAVE SEEN THE RELATED RECORDS. I FOUND THAT THE APPELLANT IS ONE OF THE FAMILY MEMBER OF LIBERTY GROUP (UMESH MANWANI GROUP) WHO HAD ENTERED IN JOINT VENTURE WITH DELHIWALA REAL ESTATE PVT. LTD. IN THE DEAL OF LAND SITUATED AT BHUWANA. THERE WERE TWO SEPARATE DEALS OF LIBERTY GROUP (UMESH MANWANI GROUP) AND THE POSITION OF INVESTMENT, SALES AND THE PROFIT DERIVED IN THE JOINT VENTURE WAS ENQUIRED IN DETAIL DURING THE POST SEARCH PROCEED INGS IN THE CASE OF DELHIWALA REAL ESTATE PVT. LTD AND THE STATEMENT OF UMESH MANWANI WAS ALSO RECORDED. THE UMESH MANWANI GROUP HAD PREPARED STATEMENTS WHICH REFLECTED INVESTMENT BY EACH MEMBER, AMOUNT RECEIVED BACK BY EACH MEMBER, AMOUNT OF PROFIT INVOLV ED IN SUCH TRANSACTIONS ALONGWITH THE RELEVANT YEAR OF ASSESSMENT. MOST OF THE MEMBERS OF LIBERTY GROUP INCLUDING THE APPELLANT HAVE DECLARED THE INCOME, IF ANY, FROM THE TRANSACTIONS RELATED TO JOINT VENTURE WITH DELHIWALA REAL ESTATE PVT. LTD IN THEIR RE SPECTIVE RETURN OF RELEVANT YEAR. ALL ARE REGULAR ASSESSEE OF INCOME TAX AND THEIR SHARE OF PROFIT AND UNDISCLOSED INVESTMENT IF ANY HAVE BEEN OFFERED FOR TAX PURPOSES BY ALL OF THEM IN THEIR INDIVIDUAL CAPACITY. IN THE CASE OF APPELLANT IT IS FOUND THAT T HE APPELLANT HAD MADE INVESTMENT OF RS.3,43,100/ - ON 26/8/2006 IN SUCH DEAL WHICH IS CROSS VERIFIABLE FROM AGREEMENT DATED 25/8/2006 BETWEEN M/S. DELHIWALA REAL ESTATE PVT. LTD. AND MEMBERS OF LIBERTY GROUP, IT IS SEEN THAT THE LIBERTY GROUP WAS OF RS.34,3 0,600/ - OUT OF WHICH THE SHARE OF APPELLANT HAS MADE PAYMENT OF RS.3,43,100/ - THROUGH CHEQUE NO.750954 OF ICICI BANK DATED 25/8/2006 ENCASHED FROM THE BANK ACCOUNT ON 26/8/2006. SIMILARLY 7 IT IS SEEN THAT AGAINST SUCH DEAL APPELLANT HAS FINALLY RECEIVED ON THIS ACCOUNT RS.9,60,140/ - . THE DIFFERENCE WAS DULY OFFERED FOR TAXATION UNDER THE HEAD INCOME FROM OTHER SOURCES UNDER THE SUB - HEAD INCOME FROM PROPERTY DEALING. I HAVE ALSO FOUND THAT THE APPELLANT HAS RECEIVED SHARE OF PROFIT OF HIS BROTHER SHRI JAGDISH MANWANI AND HIS SON SHRI GIRISH MANWANI ALONGWITH HIS OWN SHARE OF PROFIT FORM DELHIWALA REAL ESTATE PVT. LTD. THE APPELLANT HAD IMMEDIATELY TRANSFERRED THE SHARE OF HIS FAMILY MEMBERS THROUGH ACCOUNT PAYEE CHEQUES WITHIN A WEEK OF RECEIPT OF THE SAME. TH E FACTS ARE VERIFIED FROM THE COPY OF LEDGER ACCOUNT OF M/S DELHIWALA REAL ESTATE PVT. LTD IN THE BOOKS OF APPELLANT, COPY OF BANK STATEMENT, COPY OF ACCOUNT OF SH. JAGDISH MANWANI AS WELL AS COPY OF ACCOUNT OF SH. GIRISH MANWANI THE FACTS ARE ALSO VERIFIA BLE FROM THE STATEMENTS PLACED IN THE RECORDS OF ADI AT THE TIME OF OFFER OF INCOME BY THE GROUP DURING THE POST SEARCH PROCEEDINGS AGAINST M/S DELHIWALA REAL ESTATE PVT. LTD. I HAVE ALSO FOUND THAT SHRI JAGDISH MANWANI AND SH. GIRISH MANWANI HAVE ALREADY DECLARED THEIR SHARE OF INCOME IN THEIR RESPECTIVE RETURN OF INCOME OF THE RELEVANT YEAR. COPY IS PLACED ON APPELLATE RECORD. SEPARATE CONSIDERATION IN THE HANDS OF APPELLANT TANTAMOUNT TO DOUBLE TAXATION ON SAME INCOME. THE ADDITION MADE BY THE LD. AO WIT HOUT APPRECIATION THE REAL FACTS OF THE CASE AND THE OVERALL MATERIAL AVAILABLE ON RECORDS IS NOT JUSTIFIABLE. I ORDER ACCORDINGLY. THE ADDITION OF RS.6,25,600/ - MADE BY THE AO IS HEREBY DELETED. HENCE, THIS GROUND OF APPEAL IS ALLOW ED. NOW THE DEPARTME NT IS IN APPEAL. 8 . LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER . 9 . IN HIS RIVALS SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND FURTHER SUBMITTED THAT THE ASSESSEE DID NOT FURNISH ANY ADDITIONAL EVIDENCE BEFORE THE LD. CIT(A) AND EVERYTHING WAS AVAILABLE ON THE RECORD OF THE ASSESSING OFFICER 8 WHICH WAS RIGHTLY APPRECI ATED BY THE LD. CIT(A) , WHO DELETED THE IMPUGNED ADDITION. 10 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE PRESENT CASE , IT APPEARS THAT THE IMPUGNED ADDITION WAS MADE BY THE ASSESSING OFFICER BY IGNORING THIS FACT THAT THE ASSESSEE HAD TRANSFERRED THE PROFIT RELATING TO THE DEAL FROM M/S. DELHIWALA REAL ESTATE P. LTD. TO HIS BROTHER SHRI JAGDISH MANWANI AND HIS SON SHRI G IRISH MANWANI . THE SAID FACT WAS NOT CONSIDERED BY THE ASSESSING OFFICER WHILE DETERMINING THE INCOME OF THE ASSESSEE FROM PROPERTY DEALING. THE LD. CIT(A) VERIFIED THE FACT FROM THE COPY OF BANK STATEMENT, COPY OF ACCOUNT OF SHRI JAGDISH MANWANI & SHRI GIRISH MANWANI AND THE STATEMENTS GIVEN TO THE ADI AT THE TIME OF OFFER OF INCOME BY GROUP DURING THE POST SEARCH PROCEEDINGS. THE LD. CIT(A) CAME TO THE CONCLUSION THAT SEPARATE CONSIDERATION OF THE SAME INCOME IN THE HANDS OF THE ASSESSEE WAS DOUBLE TAXATION. THE SAID OBSERVATION OF THE LD. CIT(A) HAS NOT BEEN REBUTTED BY BRINGING CONTRARY MATERIAL ON RECORD. WE , THEREFORE, DO NOT SEE ANY VALID GROUND TO INTERFERE WITH THE FINDINGS OF THE LD. CIT(A) ON THIS ISSUE. 9 1 1 . THE NEXT ISSUE VIDE GROUND NO. 2 RELATES TO THE DELETION OF ADDITION OF RS. 2,34,08 5/ - MADE BY THE ASSESSING OFFICER BY DISALLOWING THE CLAIM OF INTEREST PAYMENT. 1 2 . FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER HAD CLAIMED INTEREST EXPENSES OF RS. 2,34,085/ - OUT OF INCOME FROM OTHER SOURCES OF RS. 6,44,231/ - . THE ASSESSING OFFICER REJECTED TH IS EXPLANATION OF T HE ASSESSEE THAT THE SOURCE OF INCOME FROM OTHER SOURCES WERE UTILIZATION OF LOANS ON WHICH INTEREST EXPENSES HAD BEEN CLAIMED . HE PRESUMED THAT THE LOANS WERE UTILIZED FOR CAPITAL EXPENDITURE , SO NO CLAIM OF INTEREST WAS ALLOWED. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD INVESTED RS. 3,43,000/ - DU RING THE YEAR UNDER CONSIDERATION IN THE PROPERTY DEAL AND MADE THE ADDITION OF RS. 2,34,085/ - . 1 3 . BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - IN THE ABOVE MATTER, DURING THE ASSESSMENT PROCEEDINGS THE LEARNED AO HAS OBSERVED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS.2,34,085/ - OUT OF INCOME FROM OTHER SOURCES OF RS.6,44,231/ - . ON ENQUIRY THE ASSESSEE SUBMITTED THE LOANS AGAINST WHIC H THE CLAIMED INTEREST EXPENDITURE WAS UTILIZED FOR EARNING INCOME WHICH WAS ALSO INCLUDED UNDER THE HEAD INCOME FROM OTHER SOURCES. NOT SATISFYING WITH THE EXPLANATION 10 FURNISHED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT THE LEARNED AO HAS NOT ALLOWE D CLAIMED INTEREST EXPENSES OF RS.2,34,085/ - AND HAS MADE ADDITION OF RS.2,34,085/ - IN THE DECLARED INCOME ON THIS ACCOUNT UNDER THE HEAD INCOME FROM OTHER SOURCES. IN THIS RESPECT WE HAVE TO SUBMIT ON BEHALF OF THE ASSESSEE THAT THE LEARNED AO HAS NOT APP RECIATED THE FACTS IN TOTO. THE ASSESSEE HAD PRODUCED HIS BOOKS OF ACCOUNTS AND RECORDS AND HAD ALSO PROVIDED COPY OF LEDGER ACCOUNT OF INTEREST PAYMENT. IN FACT THE ASSESSEE WAS ENGAGED SO MANY ACTIVITIES OF THE DIFFERENT NATURE SINCE PAST SO MANY YEARS A ND AT THE TIME OF ASSESSMENT PROCEEDINGS IT WAS CLEARLY SUBMITTED ON BEHALF OF THE ASSESSEE THAT HE IS EARNING FROM SALARY, PENSION, RENTAL INCOME, INTEREST INCOME FROM BANK, INTEREST FROM LIBERTY MARKING AND INTEREST FROM LIBERTY BUILDERS. FURTHER IN THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD ALSO DECLARED INCOME FROM PROPERTY BUSINESS. STATE OF AFFAIRS AS ON 31/3/2008 WAS ALSO SUBMITTED ON PERUSAL OF THE SAME IT APPEARS THAT THERE WERE FIXED ASSETS ABOUT 25 LACS AND THE CURRENT ASSETS ETC. WERE ABOUT 5 0 LACS. AGAINST THIS THERE WAS CAPITAL OF RS.43 LACS APPROX AND THE OTHER LIABILITIES ON ACCOUNT OF LOANS (SECURED AND UNSECURED) ABOUT RS.32 LACS. THE LEARNED AO HAS NOT APPRECIATED THE FACT THAT THERE WAS NO REGULAR ACTIVITY OF THE INDIVIDUAL IN THE YEAR UNDER CONSIDERATION SO THE TOTAL INTERESTS PAID EITHER TO BANK OR TO PERSONS INCLUDED IN CURRENT LIABILITIES HAVE BEEN DEBITED IN ONE SINGLE INTEREST ACCOUNT. THE SUMMARY OF PERSON WISE PAYMENT OF INTEREST WAS AS UNDER: (I) HDFC BANK LOAN (II) ICICI BANK LOAN (III) ICICI BANK LOAN (IV) GOPAL ACHARYA (V) GOKAL DAS KALRA (VI) VINITA (VII) KUSSBU (VIII) LIBERTY ASSOCIATED P.LTD. RS.30,702/ - RS.37,363/ - RS.24,901/ - RS.20,000/ - RS.66,000/ - RS,08,617/ - . RS.14,661/ - RS.31,841/ - 11 CORRECTLY SPEAKING THE PAYMENT OF INTEREST WAS NOTHING BUT REVENUE EXPENDITURE AS THE ASSESSEE HAS DECLARED INCOME FROM THE ASSETS IN WHICH SUCH LOANS HAVE BEEN INVESTED BY HIM IN THE PAST. IT IS NOT PRACTICABLE IN THE YEAR UNDER CONSIDERATION TO BIFURCATE THE UTILIZATION OF EACH LOAN AGAINST EVERY ASSET BECAUSE THERE WAS NO NECESSITY TO MAINTAIN REGULAR BOOKS OF ACCOUNTS IN THIS CASE. THOUGH FROM THE RECORDS STATEMENT OF AFFAIRS WERE PREPARED. MOST OF THE LOANS WERE OPENING AND MOST OF THE ASSETS WERE ALSO OPENING. THE INCOME HAS BEEN ASSESSED AS DECLARED BY THE ASSESSEE AND APPEARING IN THE SAME STATEMENT OF AFFAIRS WE ARE UNABLE TO UNDERSTAND NATURE WILL NOT BE ALLOWED AGAINST SUCH INCOME. IT IS A CLEAR FACT THAT INCOME FROM HOUSE PROPERTY TO THE TUNE OF RS. 1,20,000/ - , INCOME FROM OTHER SOURCES TO THE TUNE OF RS.6,44,23 1/ - WERE DECLARED BY THE ASSESSEE AND THE LOANS TAKEN BY THE ASSESSEE WERE INVESTED EITHER IN THE ASSETS FROM WHICH THERE WAS INCOME FROM HOUSE PROPERTY OR INCOME FROM THE OTHER SOURCE. AS THE COMMON LEDGER ACCOUNT OF INTEREST WAS MAINTAINED THE ASSESSEE H AS RIGHTLY CLAIMED THE EXPENDITURE AGAINST INCOME DECLARED UNDER THE HEAD INCOME FROM OTHER SOURCES. THE LEARNED AO HAS NOT BROUGHT ON RECORDS ANY MATERIAL EVIDENCE IN SUPPORT OF HIS CONTENTION ABOUT CAPITAL NATURE OF INVESTMENT MADE BY THE ASSESSEE AGAINS T SUCH LOAN. CONSIDERING THE ABOVE FACTS OF THE CASE WE REQUEST YOUR GOOD SELF TO PLEASE TREAT THE EXPENDITURE AS GENUINE EXPENDITURE OF REVENUE NATURE AND ALLOW THE SAME AGAINST THE INCOME UNDER THE HEAD INCOME FROM OTHER SOURCES AS CLAIMED BY THE ASSESSE E. THE ADDITION MADE BY THE LEARNED ASSESSING OFFICER IS JUST ON ASSUMPTIONS AND PRESUMPTION IGNORING THE MATERIAL EVIDENCE AVAILABLE ON RECORD. THE ADDITION SO MADE BY THE LEARNED AO IN THIS CASE ON THIS ACCOUNT IS CONTRARY TO THE FACTS OF THE CASE AND N OT IN CONFORMITY WITH THE LAW. WE REQUEST YOUR GOODSELF TO PLEASE ALLOW THE EXPENDITURE AGAINST THE INCOME AND DELETE THE ADDITION ON THIS ACCOUNT IN THE INTEREST OF EQUITY AND JUSTICE. 12 1 4 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE LOANS WERE TAKEN IN THE PRECEDING YEARS AGAINST THE OLD AND OPENING ASSETS AND INCOME FROM SUCH ASSETS WAS INCLUDED IN THE TOTAL INCOME OF THE ASSESSEE EITHER UNDER TH E HEAD INCOME FROM HOUSE PROPERTY OR INCOME FROM OTHER SOURCES. THE LD. CIT(A) OBSERVED THAT THE ASSESSEE WAS NOT REQUIRED TO MAINTAIN REGULAR BOOKS OF ACCOUNTS AS NO BUSINESS WAS THERE AGAINST WHICH BOOKS OF ACCOUNTS WERE MAINTAINED U/S 44AA OF THE ACT A ND THAT INTEREST PAYMENT HAD BEEN ENTERED IN ONE LEDGER ACCOUNT OF INTEREST PAYMENT ACCOUNT WHILE PREPARING STATEMENT OF AFFAIRS. THE LD. CIT(A) POINTED OUT THAT SEPARATE DETAIL OF INTEREST WAS AVAILABLE ON RECORDS AND THE ASSESSEE DECLARED INCOME UNDER T HE HEAD INCOME FROM OTHER SOURCES TO THE TUNE OF RS. 6,44,231/ - AND THE ASSESSING OFFICER HAD NOT POINTED OUT ON RECORDS THAT THE LOANS HAD BEEN UTILIZED BY THE ASSESSEE TO ACQUIRE ANY CAPITAL ASSETS . THE LD. CIT(A) ALSO POINTED OUT THAT THE ADDITION IN THE FIXED ASSETS WAS ONLY OF RS. 10,750/ - ON ACCOUNT OF PURCHASE OF COMPUTER DURING THE YEAR. THE OTHER ASSETS WERE CURRENTS ASSETS ONLY. THEREFORE, HOLDING OF ASSESSING OFFICER THAT THE LOANS ETC. HAD BEEN UTILIZED IN THE CAPITAL ASSETS WAS ON ASSUMPTI ONS AND PRESUMPTIONS ONLY IGNORING THE FACTS AVAILABLE ON RECORDS. LD. CIT(A) OBSERVED THAT THE ASSESSING OFFICER 13 HAD NOT BROUGHT ON RECORDS ANY EVIDENCE IN SUPPORT OF HIS CONTENTION THAT THE EXPENDITURE WAS CAPITAL IN NATURE AND THAT THE AMOUNT WAS UTILIZED FOR ACQUISITION OF CAPITAL ASSETS . THEREFORE, NO ADDITION COULD BE MADE SIMPLY ON THE BASIS OF PRESUMPTIONS , ASSUMPTIONS, CONJECTURES AND SURMISES WITHOUT BRINING ON RECORDS THE COGENT SUPPORTING MATERIAL AGAINST THE ACTION . ACCORDINGLY, THE DIS ALLOWANCE MADE BY THE ASSESSING OFFICER WAS DELETED. NOW THE DEPARTMENT IS IN APPEAL. 1 5 WE HAVE GIVEN CAREFUL CONSIDERATION TO THE SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE , IT IS NOTICED THAT THE ASSESSEE DID NOT ACQUIRE ANY FIXED ASSETS EXCEPT A COMPUTER WORTH RS. 10,750/ - DURING THE YEAR UNDER CONSIDERATION AND MOST OF THE ASSETS WERE CURRENT ASSETS. THE ASSESSEE ALSO DECLARED INTEREST INCOME UNDER THE HEAD INCOME FROM O THER SOURCES AMOUNTING TO RS. 6,44,231/ - AND THE ASSESSING OFFICER HAD NOT POINTED OUT ON RECORD THAT THE LOANS RAISED BY THE ASSESSEE WERE UTILIZED TO ACQUIRE THE CAPITAL ASSETS OR EXPENSES WERE CAPITAL IN NATURE. THEREFORE, DISALLOWANCE MADE BY THE ASSE SSING OFFICER WAS MERELY ON THE BASIS OF SURMISES AND CONJECTURES WHICH IS NOT TENABLE IN THE EYES OF LAW. 14 THEREFORE, WE ARE OF THE VIEW THAT THE LD. CIT(A) RIGHTLY DELETED THE ADDITION MADE BY THE ASSESSING OFFICER . 1 6 THE LAST ISSUE VIDE GROUND NO. 3 RELATES TO THE DELETION OF ADDITION OF RS. 2,00,000/ - MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CASH CREDIT. 17 FACTS RELATING TO THIS ISSUE, IN BRIEF, ARE THAT THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ASKED ABOUT DEPOSIT OF RS. 2,00,000/ - BY SHRI GOPAL ACHARYA WHICH WAS APPEARING IN THE STATEMENT OF AFFAIRS . THE ASSESSEE SUBMITTED THE CONFIRMATION & COPY OF LEDGER ACCOUNT IN HIS MEMORY BOOKS . THE ASSESSING OFFICER FOUND THAT THE ADDRESS AND PAN OF SHRI ACHARYA WAS NOT AVAILABLE IN THE CONFIRMATION, HE THEREFORE, CONSIDERED THE DEPOSIT AS NON - GENUINE AND MADE THE ADDITION OF RS. 2,00,000/ - . 1 8 BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) AND SUBMITTED AS UNDER: - 1. THAT SHRI GOPAL ACHARYA IS A RETIRED PERSON. HIS INCOME WAS BELOW TAXABLE LIMITS AFTER RETIREMENT. HE RETIRED ABOUT 10 YEARS BACK SO HE HAS NOT OBTAINED PAN NUMBER. 2 HE HAS DEPOSITED RS.2 LACS WITH THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUE NO.560401 DATED 31/5/2007 ON INTEREST WHICH IS PAYABLE @ 1% PER MONTH AT THE END OF EACH MONTH. 15 3 REGULAR MONTHLY INTEREST WAS COLLECTED BY HIM FROM THE ASSESSEE AND AS PER RECORDS OF ASSESSEE IT APPEARS CLEARLY IN THE COPY OF LEDGER ACCOUNT OF INTEREST IN THE BOOKS OF ASSESSEE. SUCH LEDGER ACCOUN T WAS EXAMINED BY THE LEARNED AO AT THE TIME OF MAKING ADDITION AGAINST DISALLOWANCE OF INTEREST. THE NAME OF GOPAL ACHARYA DULY APPEARING IN THE INTEREST ACCOUNT WHICH REFLECTS THAT PAYMENT OF INTEREST WAS MADE TO HIM REGULARLY THROUGH ACCOUNT PAYEE CHEQU ES. COPY OF SUCH LEDGER ACCOUNT ALSO REFLECTS THE DETAILS OF SUCH CHEQUE NUMBER AND DATE OF PAYMENT ETC. 4 THE CONFIRMATION SUBMITTED BEFORE THE LEARNED AO WAS ON COPY OF LEDGER ACCOUNT ITSELF WHICH CLEARLY SHOWS THAT THE AMOUNT HAS BEEN RECEIVED THROUGH CHEQUE AND ONLY ONE INTEREST PAYMENT REMAINS OUTSTANDING AT THE END OF THE YEAR AGAINST INTEREST FOR THE MONTH OF MARCH WHICH WAS PAID IN THE MONTH OF APRIL. THE LEARNED AO HAS NOT ASKED THE ASSESSEE TO PROVIDE THE ADDRESS OR TO PRESENT THE DEPOSITOR BEFORE TREATING THE DEPOSIT AS UNEXPLAINED. 5 THE BANK ACCOUNT OF THE ASSESSEE ALSO PROVES THAT THE PRINCIPLE DEPOSITS BY THE DEPOSITOR AND THE INTEREST PAYMENT TO HIM ARE DULY APPEARING IN BANK STATEMENTS WHICH WERE EXAMINED BY THE LEARNED AO. 6 REGULAR MONTHLY INTEREST PAYMENT WAS MADE TO THE DEPOSITORS UPTO THE DATE OF REPAYMENT OF PRINCIPAL AMOUNT TO HIM. THE DEPOSIT WAS REPAID THROUGH ACCOUNT PAYEE CHEQUE NO.903475 DATED 19/1/2012 CORPORATION BANK RELEVANT PORTION OF BANK STATEMENT ATTACHED IN SUPPOR T OF ABOVE FACTS. CONSIDERING THE AB O VE TRUE AND CORRECT FACTS OF THE CASE IT IS CRYSTAL CLEAR THAT THE DEPOSIT WAS A GENUINE DEPOSIT AND THE LEARNED AO HAS NOT CONFRONTED THE ISSUE WITH THE ASSESSEE BY ALLOWING OPPORTUNITY TO EXPLAIN THE SAME. THE ADDITIO N MADE BY TREATING THE GENUINE DEPOSIT AS U NEXPLAINED CASH CREDIT IS AGAINST THE PRINCIPLE OF NATURAL JUSTICE. FURTHER THE LEARNED AO HAS BASED HIS CASE IN SUPPORT OF THE DECISION BY RESORTING TO MISINTERPRETING THE RATIO OF VARIOUS JUDGMENT QUOTED BY HIM. THE FACTS OF THE CASE ARE TOTALLY DIFFERENTIABLE WITH THE FACTS OF THIS CASE AND HENCE NONE OF THE CASE REFERRED BY THE LEARNED AO IS RELEVANT IN THE PRESENT CASE. 16 RELIANCE WAS PLACED ON THE FOLLOWING CASE LAWS: - 1. ACIT VS. BAHRI BROTHERS (P) LTD. (1985) 154 ITR 244 (PATNA) 2. NEMICHAND KOTHARI VS. CIT (2003) 263 ITR 254 (GAU.) 3. S.K. BOTHRA & SONS (HUF) VS. ITO (2011) 203 TAXMAN 436 (KOL.) 19 THE LEARNED CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, OBSERVED THAT THE ASSESSING OFFICER HAD NOT APPRECIATED AND CONSIDERED THE FACTS OF THE CASE IN THEIR TRUE PERSPECTIVE AS THE DEPOSIT WAS ACCEPTED THROUGH CHEQUE , I NTEREST PAYMENT WAS THERE TH R OUGH CHEQUE AND THIS FACT WAS AVAILABLE IN THE RECORDS AT THE TIME OF ASSESS MENT. HE FURTHER OBSERVED THAT THE ASSESSEE HAD FURNISHED CONFIRMATION IN THE LEDGER ACCOUNT ITSELF AND THE ASSESSING OFFICER HAD NOT CONFRONTED THE ISSUE , NOT ALLOWED PROPER OPPORTUNITY TO THE ASSESSEE TO FURTHER EXPLANATION IN THIS REGARD AND ARRIVED AT A WRONG CONCLUSION BEFORE INVOKING THE PROVISIONS OF SECTION 68 OF THE ACT. THE LD. CIT(A) OBSERVED THAT THE ACCEPTANCE OF DEPOSIT AND PAYMENT OF MONTHLY INTEREST THROUGH CHEQUES COUPLED WITH THE FACT THAT THE REPAYMENT WAS MADE THROUGH CHEQUE ON 19/01 /2012 GOES TO PROVE THAT THE DEPOSIT WAS GENUINE . HE , THEREFORE, DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. NOW THE DEPARTMENT IS IN APPEAL. 17 20 LEARNED D.R. STRONGLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND REITERATED THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER . 21 IN HIS RIVAL SUBMISSIONS, LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND STRONGLY SUPPORTED THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE. 22 WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IN THE INSTANT CASE , IT IS AN ADMITTED FACT THAT THE ASSESSEE ACCEPTED THE DEPOSIT OF RS. 2,00,000/ - THR OUGH ACCOUNT PAYEE CHEQUE , REGULAR MONTHLY INTEREST WAS PAID THROUGH CHEQUE WHICH HAS NOT BEEN DOUBTED BY THE ASSESSING OFFICER. IN OUR OPINION, WHEN THE INTEREST ON DEPOSIT WAS CONSIDERED AS GENUINE, THERE WAS NO REASON TO DOUBT T HE DEPOSIT AND CONSIDER IT AS A NON - GENUINE . IN THE PRESENT CASE , THE DEPOSITOR FURNISHED CONFIRMATION BEFORE THE ASSESSING OFFICER ON THE COPY OF LEDGER ACCOUNT ITSELF, THEREFORE, THE AMOUNT OF DEPOSIT WAS GENUINE , THE ASSESSING OFFICER WAS NOT JUSTIFIED I N HOLDING THE SAME AS NON - GENUINE AND MAKING THE IMPUGNED ADDITION. WE THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION, ARE OF THE VIEW THAT THE LD. CIT(A) RIGHTLY DELETED THE IMPUGNED ADDITION 18 AND DO NOT SEE ANY INFIRMITY IN THE ORDER OF THE LD. CIT(A) . ACCORDINGLY, WE DO NOT SEE ANY MERIT I N THIS APPEAL OF THE DEPARTMENT ON THE ISSUE UNDER CONSIDERATION . 2 3 . IN THE RESULT, APPEAL OF THE DEPARTMENT IS DISMISSED . ( ORDER PRONOUNCED IN THE COURT ON 30 TH JULY , 201 4) . SD/ - SD/ - ( HARI OM MARATHA ) (N.K.SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 30 TH JULY , 201 4 . VR/ - COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE LD. CIT 4. THE CIT(A) 5. THE D.R SR. PRIVATE SECRETARY , ITAT, JODHPUR .