SHIR ARUNKUMAR BHAGCHAND HARWANI , AMRAVATI V. THE INCOME TAX OFFICER WARD-2, AMRAVATI

ITA 384/NAG/2017

• Counselvise Citation: [2014] 117 COUNSELVISE.COM (IT) 8895 (ITAT-NAGPUR)
• Appeal Type: Income Tax (Transfer Pricing) Appeal
• Pronouncement Date: 23-10-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 10-11-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K BARAL
• Assessee Lawyers: K P DEVANI
• Keywords: Unexplained investment; Set aside
• Section: 234B; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.384/NAG./2017 ( ASSESSMENT YEAR : 200809 ) SHRI ARUNKUMAR BHAGCHAND HARWANI C/O MONICA NOVELTY, SHYAM CHOWK NEAR SHANKAR NAGAR, AMRAVATI PAN AADPH7081F APPELLANT V/S INCOME TAX OFFICER WARD2, AMRAVATI . RESPONDENT ASSESSEE BY : SHRI K.P. DEVANI REVENUE BY : SHRI R.K. BARAL DATE OF HEARING 09.05.2017 DATE OF ORDER 11.05 .2018 O R D E R PER SHAMIM YAHYA, A.M. THIS APPEAL BY THE ASSESSEE IS AGAINST IMPUGNED ORD ER DATED 21ST NOVEMBER 2017, PASSED BY THE LEARNED COMMISSIO NER (APPEALS) 1, NAGPUR, FOR THE ASSESSMENT YEAR 200809. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE REPRODUCED B ELOW: 1. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION MADE BY A.O. U/S 69 AT RS.2,00,000/- AS UNEXPLAINED INVESTMENT I N RESPECT TO SUM RECEIVED FROM SHRI SANJAY KHOND. 2 SHRI ARUNKUMAR BHAGCHAND HARWANI 2. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION MADE BY A.O. U/S 69 AT RS.58,000/- AS UNEXPLAINED INVESTMENT IN RESPECT TO SUM RECEIVED FROM SHRI SUDHIR VARANDANI. 3. THE LEARNED CIT(A) ERRED IN CONFIRMING ADDITION MADE BY A.O. U/S 69 AT RS.1,70,500/- IN RESPECT TO AMOUNT GIVEN TO SHRI RAJKUMAR GULABANI. 4. THE ADDITION MADE BY A.O. U/S 69 OF I.T. ACT 196 1 AND CONFIRMED BY CIT(A) IS UNJUSTIFIED, UNSUSTAINABLE A ND BAD IN LAW. 5. THE LEARNED A.O. AND CIT(A) OUGHT TO HAVE ACCEPT ED THE EXPLANATION OF ASSESSEE IN RESPECT TO CHEQUE DEPOSI T AND WITHDRAWAL FROM BANK ACCOUNT OF ASSESSEE. 6. THE ASSESSEE DENIES LIABILITY TO BE ASSESSED TO INTEREST U/S 234A & 234B OF I.T. ACT 1961. WITHOUT PREJUDICE THE INTEREST LEVIED U/S 234A AND 234B IS UNJUSTIFIED AND UNWARRA NTED. 3. BRIEF FACTS ARE THAT THE ASSESSEE IS A SALARIED EMPL OYEE WORKING AT M/S. MONICA NOVELTY, AMRAVATI. RETURN OF INCOME WAS FILED ON3ST MARCH 2009, DECLARING TOTAL INCOME OF ` 1,53,881, CONSISTING OF SALARY ( ` 94,800), RENTAL INCOME ( ` 42,000) LONG TERM CAPITAL GAIN ( ` 53,798) AND INCOME FROM OTHER SOURCES ( ` 29,011). DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAS NOT DISCLOSED HIS SAVING BANK ACCOUNT NO.265010100059389 AS PER HIS BALANCE SHEET AND CAP ITAL ACCOUNT WHERE DEPOSITS OF ` 18,57,920 WAS FOUND WHICH WAS MADE DURING THE YEAR UNDER CONSIDERATION. ON BEING ASKED BY THE ASS ESSING OFFICER TO EXPLAIN THE SOURCE THEREOF, THE ASSESSEE HAS SUBMIT TED THAT TRANSACTIONS REGARDING DEPOSITS WITHDRAWALS OF CASH IN HAND IN BANK ACCOUNT ACCEPTING / PROVIDING TEMPORARY FINANCIAL A CCOMMODATIONS TO 3 SHRI ARUNKUMAR BHAGCHAND HARWANI FRIENDS AND RELATIVES, ETC., ARE RECORDED THEREIN. THE ASSESSEE HAS FURTHER SUBMITTED THAT IN ADDITION, TRANSACTIONS TO TALING TO ` 3,84,500 REGARDING PURCHASES AND SALE OF DEFECTIVE PRESSURE COOKERS AND MIXTURE ARE ALSO RECORDED IN THIS BANK ACCOUNT. ACC ORDING TO THE ASSESSEE, HE HAS SUFFERED A LOSS OF ` 18,550 ON THESE TRANSACTIONS WHICH HAS NOT BEEN CLAIMED IN THE RETURN OF INCOME / COMPUTATION OF INCOME FOR THE YEAR UNDER CONSIDERATION. THE ASSESS EE HAS FURTHER SUBMITTED THAT IN THE ABSENCE OF MAINTENANCE OF REG ULAR BOOKS OF ACCOUNT BY THE ASSESSEE, BALANCE SHEET AND CAPITAL A CCOUNT, AS FILED EARLIER, ARE ON ESTIMATED BASIS ONLY. THE ASSESSEE HAS ALSO SUBMITTED THE FACT OF HAVING ACCEPTED UNSECURED LOANS FROM SH RI SANJAY KHOND ( ` 2 LAKH). SHRI SUDHIR VARANDANI ( ` 64,000) AND SMT. SARITA KESWANI ( ` 3 LAKH) TO EXPLAIN DEPOSITS IN THE SAID AXIS BANK AC COUNT. FURTHER, DEPOSITS HAVE ALSO BEEN MADE WITH SHRI NILESH HIWAS E ( ` 3 LAKH) AND SHRI RAJKUMAR GULABANI ( ` 1,70,500). THE ASSESSING OFFICER HAS RECORDED STATEMENTS OF THESE CREDITORS / DEPOSITORS . ON THE BASIS OF THESE STATEMENTS AND APPELLANTS SUBMISSIONS, AS ME NTIONED IN PARA9 (PAGE4 TO 9) OF THE ASSESSMENT ORDER, THE ASSESSIN G OFFICER HAS MADE THE IMPUGNED ADDITION OF ` 7,28,500 BY TREATING LOAN FROM SHRI SANJAY KHOND ( ` 2 LAKH) AND SHRI SUDHIR VARANDANI ( ` 58,000) ALONG WITH DEPOSITS FROM SHRI NILESH HIWASE ( ` 3,50,000) AND SHRI RAJKUMAR GULABANI ( ` 1,70,500) AS UNEXPLAINED UNDER SECTION 69 OF THE A CT IN 4 SHRI ARUNKUMAR BHAGCHAND HARWANI THE ASSESSEES HANDS. AGAINST THE ABOVE ORDER, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AUTHORITY. 4. THE LEARNED CIT(A) GRANTED PART RELIEF BUT SUSTAINE D THE FOLLOWING ADDITIONS: I) SHRI SANJAY KHOND ` 2,00,000 II) SHRI SUDHIR VARANDANI ` 58,000 III) SHRI RAJKUMAR GULABANI ` 1,70,500 5. THE ASSESSEE BEING AGGRIEVED BY THE AFORESAID ORDER OF THE LEARNED CIT(A), IS IN FURTHER APPEAL BEFORE US. 6. THE LEARNED COUNSEL FOR ASSESSEE SUMMARIZED HIS SUB MISSIONS WHICH ARE AS FOLLOWS: A) ASSESSES IS EMPLOYEE WORKING WITH M/S MONIKA NO VELTY AND DERIVES INCOME FROM OTHER SOURCES AND CAPITAL GAIN. ASSESSEE ADVENTURED INTO TEMPORARY BUSINESS OF PRESSURE COOK ER AND MIXTURE HAVING TURNOVER OF RS.3,84,500/- AND SUFFER ED LOSS OF RS. 18,550/-. THE AFORESAID BUSINESS TRANSACTIONS WERE RECORDED IN BANK ACCOUNT WITH AXIS BANK. B) DEPOSIT IN THE AFORESAID BANK ACCOUNT WAS EXPLAI NED BY SUBMITTING INFLOW AND OUTFLOW STATEMENT (PAGE-1). A .O. HAS MADE ADDITION OF RS.7,28,500/- OUT OF WHICH RS.3,00,000/ - HAS BEEN DELETED BY CIT(A) AND SAME IS NOT CHALLENGED BY REV ENUE. THE ADDITION OF RS.4,28,500/- UPHELD BY CIT(A) IS UNDER CHALLENGE IN THE PRESENT APPEAL. C)(I) SHRI SUDHIR VARENDANI: (A) CONFIRMATION OF RS. 58,000/- WAS SUBMITTED BEFO RE A.O. (PAGE-12). THE BANK STATEMENT AT PAGE 5 ITSELF INDI CATES NAME OF SHRI SUDHIR VARANDANI IN RESPECT TO TRANSACTIONS MA DE IN THE BANK 5 SHRI ARUNKUMAR BHAGCHAND HARWANI ACCOUNT. THE DEPOSIT AND WITHDRAWAL FROM THE BANK S TANDS EXPLAINED AND CLARIFIED. (B) CONFIRMATION WAS FILED BY SHRI SUDHIR VARANDANI IN THE FORM OF LETTER BEFORE A.O. (PAGE-15). THE TRANSACTION OF DE POSIT AND WITHDRAWAL IN THE BANK ACCOUNT OF SHRI. SUDHIR VARA NDANI STANDS EXPLAINED AND CLARIFIED THUS THE ADDITION OF THE SA ME IS UNJUSTIFIED. C) INITIAL STATEMENT OBTAINED BY A.O. HAS BEEN EX PLAINED TO BE INCORRECT AND HAS ALSO NOT BEEN SUBJECTED TO CROSS EXAMINATION, EVEN THOUGH REQUESTED BEFORE A.O. THE AFORESAID STA TEMENT IS LIABLE TO BE EXCLUDED IN ASSESSING THE INCOME AT HA NDS OF ASSESSEE AND ADDITION MADE IS LIABLE TO BE DELETED IN TERMS OF RATIO LAID DOWN BY THE HON'BLE APEX COURT IN CASE OF M/S. ANDA MAN TIMBER INDUSTRIES IN CIVIL APPEAL NO.4628 OF 2006 VIDE JUD GMENT DATED 02/09/2015. (II) SHRI RAIKUMAR GULABANI (A) BANK ACCOUNT ITSELF INDICATES NAME OF SHRI RAJK UMAR GULABANI IN THE TRANSACTION OF BANK ACCOUNT. (B) ASSESSEE HAS SUBMITTED CONFIRMATION OF SHRI. RA JKUMAR GULABANI (PAGE- 13) WHICH INDICATES THAT THE AMOUNT GIVEN TO HIM HAS BEEN REFUNDED BY CHEQUE. THE AMOUNT GIVEN TO HI M IS APPEARING AS OUTGOING IN THE BANK ACCOUNT OF ASSESS EE. DEPOSIT IN BANK ACCOUNT IS OUT OF EARLIER WITHDRAWAL FROM BANK ACCOUNT AND CANNOT BE HELD TO BE UNEXPLAINED DEPOSIT OF ASSESSE E SO AS TO MAKE ADDITION OF THE SAME AT THE HANDS OF ASSESSEE. (C) EVIDENCE ON RECORD GOES TO EXPLAIN THE DEPOSIT AND THERE IS NOTHING ADVERSE ON RECORD FOR WHICH ADDITION CAN BE MADE AT THE HANDS OF ASSESSEE. ADDITION MADE BY A.O. AND UPHEL D BY CIT(A) IS UNJUSTIFIED AND UNSUSTAINABLE. (III) SHRI SANIAV KHOND (A) PERUSAL OF BANK STATEMENT CLEARLY INDICATES THE NAME OF SHRI SANJAY KHOND FOR REPAYMENT OF AMOUNT RECEIVED FROM HIM. (B) ASSESSEE HAS SUBMITTED CONFIRMATION OF RS.2,00, 0007-BEFORE A.O. CONFIRMATION SUBMITTED BY ASSESSEE CLEARLY EXP LAINS THE TRANSACTIONS OF BANK DEPOSIT AND ADDITION MADE BY A .O. IS UNJUSTIFIED. (C) INITIAL STATEMENT OBTAINED BY A.O. HAS NOT BE EN SUBJECTED TO CROSS EXAMINATION. EVEN THOUGH REQUESTED BEFORE A.O . THE AFORESAID STATEMENT IS LIABLE TO BE EXCLUDED IN ASS ESSING INCOME 6 SHRI ARUNKUMAR BHAGCHAND HARWANI AT HANDS OF ASSESSEE AND ADDITION MADE IS LIABLE TO BE DELETED IN TERMS OF RATIO LAID DOWN BY HON'BLE APEX COURT IN C ASE OF M/S. ANADAMAN TIMBER INDUSTRIES IN CIVIL APPEAL NO.4628 OF 2006 VIDE JUDGEMENT DATED 02/09/2015. D) PROVISIONS OF SECTION 69 ARE NOT MANDATORY AND A RE DISCRETIONARY. RELIANCE FOR THIS PROPOSITION IS PLA CED ON DECISION OF HON'BLE APEX COURT IN THE CASE OF P.K. NOORJAHAN RE PORTED AT 237 ITR 570 (SC). 7. PERCONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE WAS A DEPOS IT OF ` 18,57,920 IN THE AXIS BANK ACCOUNT OF THE ASSESSEE. ASSESSEES EX PLANATION FOR THE SOURCE OF DEPOSITS WAS ACCEPTED BY THE REVENUE AUTH ORITIES EXCEPT FOR THE FOLLOWING SUMS: I) SHRI SANJAY KHOND ` 2,00,000 II) SHRI SUDHIR VARANDANI ` 58,000 III) SHRI RAJKUMAR GULABANI ` 1,70,500 9. FROM THE PERUSAL OF RECORD AND SUBMISSIONS, WE NOTE THAT ASSESSEE HAS DULY SUBMITTED THE CONFIRMATIONS AND T HE BANK DETAILS OF THE ABOVE PERSONS. AS REGARDS SHRI SUDHIR VARANDANI AND SHRI SANJAY KHOND, THE ASSESSING OFFICER HAS RELIED UPON THE ST ATEMENT RECORDED BY HIM BY THESE PERSONS AGAINST THE ASSESSEE. HOWEV ER, IN THIS REGARD, IT IS NOTED THAT ASSESSEES REQUEST TO CROS SEXAMINE THESE PERSONS DID NOT MATERIALIZE AS THE SAID PERSONS DID NOT APPEAR ON THE 7 SHRI ARUNKUMAR BHAGCHAND HARWANI DATE SPECIFIED FOR THE SAME. IN THIS REGARD, THE LE ARNED COUNSEL FOR ASSESSEE PLACED RELIANCE UPON THE DECISION OF THE H ONBLE SUPREME COURT IN ANDAMAN TIMBER INDUSTRIES, CIVIL APPEAL NO .4628/2006, ORDER DATED 2 ND SEPTEMBER 2015. IN THIS CASE, THE HONBLE SUPREME COURT HAS EXPOUNDED THAT A STATEMENT OF ANOTHER PARTY CAN NOT BE RELIED UPON TO THE PREJUDICE OF THE AGGRIEVED PARTY UNLESS THE AGGRIEVED PARTY IS GIVEN AN OPPORTUNITY TO CROSSEXAMINE TO T HE SAID PERSONS. IN THIS CASE, WE FIND THAT WHEN CONFIRMATIONS AND BANK DETAILS WERE AVAILABLE, ASSESSEES PLEA TO CROSSEXAMINE THESE P ERSONS COULD NOT BE FULFILLED, THE ASSESSEE DESERVES TO SUCCEED ON T HIS ACCOUNT. HENCE, THE ADDITION MADE IN THIS REGARD IS DELETED. AS REG ARDS THE AMOUNT RECEIVED FROM SHRI RAJKUMAR GULABANI, WE NOTE THAT THE CONFIRMATION AND BANK DETAILS WERE ALREADY GIVEN, HENCE, ADVERSE INFERENCE DRAWN BY THE AUTHORITIES BELOW HAS NO JUSTIFICATION. ACCO RDINGLY, WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN THIS REGARD ALSO AND DELETE THE ADDITION. GROUNDS RAISED BY THE ASSESSEE ARE ALLOWE D. 10. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 11.05.2018 SD/ - RAM LAL NEGI JUDICIAL MEMBER SD/ - SHAMIM YAHYA ACCOUNTANT MEMBER NAGPUR, DATED: 11.05.2018 8 SHRI ARUNKUMAR BHAGCHAND HARWANI COPY OF THE ORDER FORWARDED TO : (1) THE ASSESSEE; (2) THE REVENUE; (3) THE CIT(A); (4) THE CIT, NAGPUR CITY CONCERNED; (5) THE DR, ITAT, NAGPUR; (6) GUARD FILE. TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY (SR. P.S./P.S.) ITAT, NAGPUR