Sh. Abnash Chander Parmod Kumar, V. The Dy. Commissioner of Income-tax, Phagwara

ITA 395/ASR/2012

• Counselvise Citation: 39520914 RSA 2012
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 01-08-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 25-10-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: Y K SUD
• Keywords: Unexplained cash credit; Additional evidence
• Section: 133A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.395(ASR)/2012 ASSESSMENT YEAR:2005-06 PAN :AAEFA1508M M/S. ABNASH CHANDER PARMOD KUMAR VS. DY.COMMR. OF I NCOME TAX, NURMAHAL, TEHSIL PHILLAUR. PHAGWARA. (APPELLANT) (RESPONDENT) APPELLANT BY:SH.Y.K.SUD, CA RESPONDENT BY:SH.MAHAVIR SINGH, DR DATE OF HEARING:01/08/2013 DATE OF PRONOUNCEMENT:12/08/2013 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), JALANDHAR, DATED 24.09.2012 FOR THE ASSESSMENT YEA R 2005-06. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT THE CIT(A) WAS NOT JUSTIFIED IN UPHOLDING THE ACTION OF THE AO IN REJECTION OF THE BOOKS OF ACCOUNTS AND WHIL E UPHOLDING THIS ACTION OF THE AO HE FAILED TO GIVE ANY FINDI NG ON THE COMPUTERIZED BOOKS OF ACCOUNTS PRODUCED BEFORE TH E AO AT THE TIME OF ASSESSMENT IN WHICH NO DISCREPANCY HAS BE EN POINTED OUT. ITA NO.395(ASR)/2012 2 2. THAT CIT(A) HAS EVEN FAILED TO GIVE A FINDING ON TH E GROUND NO.2 HAT ON ONE HAND THE BOOKS HAVE BEEN REJECTED BY THE AO AND ON THE OTHER HAND THE AO HAS MADE SPECIFIC ADDI TIONS ON THE BASIS OF THE REJECTED BOOKS OF ACCOUNT. 3. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDITION OF RS.4,58,163/- OUT OF THE ADDITION OF RS.7,52,651/- MADE BY THE AO ON THE BASIS OF ALLEGED DIFFERENCE ON THE BALANC ES OF BALANCE SHEET AND PROFIT & LOSS ACCOUNT COMPARED TO THE REJECTED BOOKS OF ACCOUNT. 4. THAT WHILE SUSTAINING THE ADDITION OF RS.4,58,163/- THE CIT(A) FAILED TO GIVE ANY FINDING ON THE ADDITION ON ACCOU NT OF ALLEGED DIFFERENCE IN THE CAPITAL ACCOUNT OF THE PARTNER IN THE ROUGH BOOKS AND THE BALANCE SHEET. HE COMPLETELY NOT ONLY IGNORED THE SUBMISSION OF THE APPELLANT BUT ALSO GAVE A CON TRADICTORY FINDING ON INTEREST CREDITED TO THE PARTNERS. 5. THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING THE ADDI TION OF RS.62000/- MADE BY THE AO ON ACCOUNT OF UNEXPLAINED CASH CREDIT. BOTH CIT(A) AND AO FAILED TO APPRECIATE THA T THE CASH CREDITS WERE DULY EXPLAINED. 6. THAT THE CIT(A) WAS NOT JUSTIFIED IN SUSTAINING TH E ADDITION OF RS.15,992/- AS 1/6 TH CAR EXPENSES ON ACCOUNT OF PERSONAL USE BY THE PARTNERS. AT ANY DATE THE DISALLOWANCE IS HIGHL Y EXCESSIVE. 7. THAT THE CIT(A) HAS WRONGLY SUSTAINED THE ADDITION OF RS.250000/- ON ACCOUNT OF SALE OF TOTAL LOSS ACCIDE NTAL CAR. BOTH THE CIT(A) AND AO MISERABLY FAILED TO UNDERSTAND TH E SURVEYORS REPORT AS WELL AS THE PROCEDURE OF THE I NSURANCE COMPANY IN SELLING THE SALVAGE. 8. THAT THE ORDER OF THE CIT(A) IS AGAINST THE LAW AND FACTS OF THE CASE. 2. THE LD. COUNSEL FOR THE ASSESSEE, MR. Y.K.SUD, C A AT THE OUTSET, DID NOT PRESS GROUNDS NO.1, 2, 3, 4 & 6. THE SAID GROUN DS ARE, THEREFORE, DISMISSED AS NOT PRESSED. 3. GROUND NO.8 IS GENERAL IN NATURE AND THEREFORE, DO NOT REQUIRE ANY ADJUDICATION. ITA NO.395(ASR)/2012 3 4. AS REGARDS GROUND NO.5, THE BRIEF FACTS ARE THAT SURVEY UNDER SECTION 133A WAS CONDUCTED ON THE ASSESSEE ON 28.09.2005. D URING THE COURSE OF SURVEY, ROUGH BOOKS WERE FOUND WHICH HAD A DIFFER ENCE WITH THE BOOKS OF ACCOUNT, TRADING, PROFIT & LOSS ACCOUNT AND BALANCE SHEET SUBMITTED ALONGWITH THE RETURN OF INCOME. AS PER THE CASH BOO K THE LOAN IN THEIR NAMES WERE SHOWN LESSER BY RS.29,500/- AND RS.32,500/- WH EREAS IN COPIES OF THEIR ACCOUNTS THE FIGURES WAS INFLATED BY INTRODUCING CA SH ENTRIES ON VARIOUS DATES. AS PER THE RETURN OF THE INCOME FILED BY THE SE EMPLOYEES THE SALARIES HAD BEEN SHOWN AT RS.42,000/- AND RS.48,000/- RESP ECTIVELY. THE DATES OF DEPOSITS AS MENTIONED IN THE ASSESSMENT ORDER AND T HE CASH AMOUNTS ADVANCED AS SHOWN IN THEIR RESPECTIVE COPIES OF ACC OUNTS ALSO SUGGEST THAT THE ULTIMATE SOURCES FOR THE INFLATED DEPOSITS ARE ELSEWHERE. THE POINT THAT THEY DID NOT FIND ANY MENTION IN THE CASH BOOK IMPO UNDED ALSO SUGGEST AND CONFIRMS THAT THESE CASH DEPOSITS ARE NOT EXPLAINED . THE AO ACCORDINGLY MADE AN ADDITION OF RS.62,000/- WHICH WAS CONFIRMED BY THE LD. CIT(A). 5. THE LD. COUNSEL FOR THE ASSESSEE, MR. Y.K.SUD, C A INVITED OUR ATTENTION TO PAGE 26 AND 27 OF THE PAPER BOOK BEIN G THE COPIES OF ACCOUNT OF MR. ASHOK KUMAR AND SH. LALIT KUMAR. HE ARGUED THAT SUCH DEPOSITS HAVE ALREADY BEEN DECLARED IN THE RETURN OF INCOME FILED BY SH. ASHOK KUMAR AND SH. LALIT KUMAR IN THEIR INDIVIDUAL ASSESSMENTS WH O ARE REGULAR ASSESSEES ITA NO.395(ASR)/2012 4 WITH THE INCOME TAX DEPARTMENT AS PER PROOF OF FILI NG THE INCOME TAX RETURNS FOR THE ASSESSMENT YEARS 2004-05 TO 2006-07 AVAILABLE AT PB 28 TO 33.THE IDENTITY, CREDITWORTHINESS AND GENUINENESS O F THE TRANSACTIONS HAVE BEEN ESTABLISHED, THE AO IS NOT JUSTIFIED IN MAKING SUCH ADDITION. 6. THE LD. DR, ON THE OTHER HAND, RELIED UPON THE O RDERS OF BOTH THE AUTHORITIES BELOW. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE DEPOSITORS ARE THE REGULAR ASSESSEES AND HAVE SUBMITTED THEIR RETURNS OF INCOME FOR THE ASSESSMENT YEARS 2004-05 TO 2006-07, WHICH IS ON RECORD AT PB 28 TO 33. THE IDENTITY, CREDITWORTHINESS OF THE TRANSACTIONS, THEREFORE, CANNOT BE DOUBTED. THEREFORE, IN THE FACTS AND CIRCUMSTANCES OF THE CASE, NO ADDITION ON THIS ACCO UNT CAN BE MADE. THEREFORE, THE AO IS DIRECTED TO DELETE THE ADDITIO N SO MADE. THUS, GROUND NO. 5 OF THE ASSESSEE IS ALLOWED. 9. AS REGARDS GROUND NO.7, THE BRIEF FACTS AS ARIS ING FROM THE ORDER OF THE LD. CIT(A) ARE REPRODUCED FOR THE SAKE OF CONVE NIENCE AS UNDER: GROUND NO.7 RELATES TO ADDITION OF RS.2,50,000/- ON ACCOUNT OF CREDIT FOR SALE OF A DAMAGED CAR. AS PER THE REPOR T OF THE INSURANCE SURVEYOR THE DAMAGE TO THE CAR WAS TO THE EXTENT O F RS.4,79,000/-. RS.2,29,000/- WAS PAID BY THE INSURANCE COMPANY TO THE ASSESSEE AND THE RESIDUAL VALUE WAS ESTIMATED AT RS.2,50,000. T HE ASSESSEE HAS CLAIMED TO HAVE SOLD THE CAR AT RS.2,50,000/- TO O NE SH. BAHADUR RAM OF AMBALA AND A VOUCHER ON THE LETTER HEAD OF ASSE SSEE IS PRODUCED AS EVIDENCE. NO OTHER EVIDENCE OF ANY SORT COULD BE P RODUCED BY THE ITA NO.395(ASR)/2012 5 ASSESSEE DESPITE BEING SPECIFICALLY ASKED BY THE A O AS WELL AS THE UNDERSIGNED. THE ASSESSEE EXPRESSED ITS INABILITY TO ADVANCE ANY OTHER EVIDENCE IN THIS REGARD. THE ISSUE AT HAND IS THE INTRODUCTION OF CASH ALLEGEDLY ON ACCOUNT OF SALE OF CAR. THE REPORT OF THE INSURANCE SURVEYOR THOUGH ADMITTED AS AN ADDITIONAL EVIDENCE VIDE ORDER ORDER DATED 02.07.2012 OF MY LD. PREDECESSOR IS NOT HELP FUL IN DECISION OF THIS ISSUE. THE REPORT OF SURVEYOR IS DATED 27.12. 04 AND THE BANK AFTER FINALIZING THE CLAIM ISSUED A CHEQUE OF RS.2,29,0 00/- ON 31.05.2005 AS SUGGESTED BY THE SURVEYOR. THE SELF MADE VOUCHE R FOR SALE OF CAR FOR RS.2,50,000/- IS DATED 29.01.2005. NO ADDRESS OF THE PURCHASER IS MENTIONED NOR ANY OTHER EVIDENCE OF ANY NATURE WAS SUBMITTED TO SHOW CAUSE AS TO UNDER WHICH CIRCUMSTANCES THE SAL ES TOOK PLACE? ALSO, IN THIS CASE THE SALE VALUE SHOWN AND THE SA LVAGE VALUE ARRIVED AT BY THE SURVEYOR IS EXACTLY THE SAME, WHICH DOE S NOT APPEAR TO BE A MERE COINCIDENCE. I FAILED TO CONVINCE MYSELF TO A CCEPT IT AS A CASE OF GENUINE SALE AND HOLD THAT THE ADDITION WAS RIGHTL Y MADE & DESERVED TO BE CONFIRMED. I HEREBY CONFIRM THE ADDITION OF RS.2,50,000/- SO MADE BY THE A.O. 10. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER, AS REPRODUCED HEREINABOVE.. 11. THE LD. COUNSEL FOR THE ASSESSEE, MR. Y.K.SUD, CA INVITED OUR ATTENTION AT PAGES 34 TO 40 BEING THE REPORT OF THE SURVEYOR, PARTICULARLY AT PAGE 39 WHERE THE LOSS WAS ASSESSED AT RS.4 LACS BY THE SURVEYOR ON THE DIRECTION OF THE INSURANCE COMPANY AND SALVAGE OF DAMAGED VEHICLE WAS VALUED AT RS.2,50,000/-. IT WAS MENTIONED BY THE SU RVEYOR AT PAGE 39 OF THE PAPER BOOK THAT INSURER MAY SETTLE THE LOSS ON NET OF SALVAGE LOSS AT RS.4,80,000/- LESS SALVAGE VALUE OF DAMAGED VEHICL E AT RS.2,30,000/-. IN THIS WAY, THE INSURERS SHALL AVOID FURTHER OVERHEAD EXP ENSES SUCH AS STORAGE OF ITA NO.395(ASR)/2012 6 VEHICLE, DETERIORATION OF SALVAGED VEHICLE AND ADVE RTISEMENT EXPENSES. THE SAID VEHICLE WAS HANDED OVER TO THE ASSESSEE WAS SO LD TO THE KABADI FOR RS.2,50,000/-. IT WAS ARGUED BY MR. Y.K.SUD, CA THA T IN THE REMAND PROCEEDINGS, THE KABADI TO WHOM THE VEHICLE SOLD CO ULD NOT BE SOLD SINCE IT WAS AN OLD MATTER OF AROUND 7 YEARS AND KABADI COUL D NOT BE TRACED. THE LD. COUNSEL FOR THE ASSESSEE, MR. Y.K.SUD, CA FURTHER A RGUED EVEN IF THE KABADI HAS NOT BEEN PRODUCED, DEFINITELY THERE HAS TO BE S OME SALVAGE VALUE OF THE DAMAGED CAR WHICH MUST HAVE BEEN SOLD BUT THE AUTHO RITIES BELOW HAVE IGNORED ALTOGETHER THE SALVAGE VALUE AND THE REPORT OF THE APPROVED SURVEYOR OF THE INSURANCE COMPANY . IT IS NOT A CASE OF CLAI M OF EXPENSES BY THE ASSESSEE, RATHER IT IS A SALE OF DAMAGE VEHICLE FOR WHICH THE APPROVED SURVEYORS REPORT IS ON RECORD WHICH HAS NOT BEEN R EJECTED BY EITHER OF THE AUTHORITIES BELOW. IN SUCH FACTS AND CIRCUMSTANCES, MR. Y.K.SUD, CA PRAYED TO ACCEPT THE CLAIM OF THE ASSESSEE. 12. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THER E WAS NO EVIDENCE WITH REGARD TO SALE OF THE DAMAGED VEHICLE AND IN T HE ABSENCE OF ANY ADDRESS OF THE KABADI , A VOUCHER OR RECEIPT OF THE KABADI CANNOT BE ACCEPTED. ACCORDINGLY, HE PRAYED TO REJECT THE CONTENTION OF THE LD. COUNSEL AND FURTHER PRAYED TO CONFIRM THE ORDER OF THE LD. CIT(A). ITA NO.395(ASR)/2012 7 13. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THERE IS NO DISPUTE TO THE FACT THAT THE VEHICLE WA S TOTALLY DAMAGED AND VEHICLE WAS INSURED WITH THE INSURANCE COMPANY. T HE CLAIM OF THE ASSESSEE WAS VALUED AGAINST DAMAGED VEHICLE AT RS.4,80,000/- IS ALSO NOT UNDER DISPUTE. THE ASSESSEE IS HAVING RECEIVED RS.2,30,00 0/- FROM INSURANCE COMPANY IS ALSO NOT UNDER DISPUTE. THE DISPUTE IS W ITH REGARD TO RS.2,50,000/-, WHICH IS A SALVAGE VALUE WHICH HAS BEEN ESTIMATED BY THE APPROVED SURVEYOR AT RS.2,50,000/-. THE DAMAGED VEH ICLE IN SUCH FACTS AND CIRCUMSTANCES EITHER COULD BE SOLD BY THE INSURANCE COMPANY OR BY THE ASSESSEE. AS ADVISED BY THE SURVEYOR THAT AN EXTRA COST OF OVERHEAD EXPENSES SUCH AS STORAGE OF VEHICLE, DETERIORATION OF SALVA GED VEHICLE & ADVERTISEMENT EXPENSES HAS TO BE INCURRED BY THE IN SURANCE COMPANY WHICH WILL GIVE A FURTHER LOSS TO THE INSURANCE COMPANY. IN SUCH FACTS AND CIRCUMSTANCES, A PRUDENT PERSON WILL DECIDE TO HAN D OVER SUCH DAMAGED VEHICLE TO THE OWNER TO SELL THE SAME. IN THE PRESE NT CASE, THE ASSESSEE SOLD THE VEHICLE BUT THE ASSESSEE COULD NOT PRODUCE EVID ENCE OF THE SALE OF THE DAMAGED VEHICLE OR HAS PLACED ON RECORD IMPROPER E VIDENCE WITH REGARD TO THE SALE OF THE SAID VEHICLE. BUT IN THE INCOME TAX PROCEEDINGS, EVIDENCE ACT, DOES NOT APPLY STRICTLY AND THE DECISION HAS T O BE MADE IN THE FACTS AND CIRCUMSTANCES OF THE CASE IN HAND. IN THE PRESENT C ASE, IN THE ABSENCE OF ANY ITA NO.395(ASR)/2012 8 ADVERSE MATERIAL BROUGHT BY ANY OF THE AUTHORITIES BELOW AND THE CIRCUMSTANCES OF THE PRESENT CASE SUGGEST THAT THE DAMAGED VEHICLE MUST HAVE BEEN SOLD AT RS.2,50,000/-. THEREFORE, THE LD . CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE ACTION OF THE A.O FOR DISALLOWING TH E CLAIM OF RS.2,50,000/- AND ACCORDINGLY THE ADDITION MADE FOR RS.2,50,000/ - IS DIRECTED TO BE DELETED. THUS, GROUND NO.7 OF THE ASSESSEE IS ALLOW ED. 14. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.395(ASR)/2012 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12TH AUGUST, 2013. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 12TH AUGUST, 2013 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. ABNASH CHANDER PARMOD KUMAR NURMA HAL, TEHSIL, PHILLAUR, JALANDHAR. 2. THE DCIT, PHAGWARA. 3. THE CIT(A), JLR 4. THE CIT,JLR 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR. ITA NO.395(ASR)/2012 9