Smt. Shakuntala Devi Chaplot, Ratlam V. The ITO Ward-2, Ratlam

ITA 399/IND/2013

• Counselvise Citation: 39922714 RSA 2013
• Duration Of Justice: 2 year(s) 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-08-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 05-06-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: R A VERMA
• Keywords: Unexplained investment; Income from undisclosed sources; Source of fund
• Section: 69

Judgement Text

SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 1 IN THE INCOME TAX APPELLATE TRIBUNA L INDORE BENCH, INDORE BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NO. 433/IND/2013 A.Y. 2007-08 INCOME TAX OFFICER WARD 2 RATLAM ::: APPELLANT VS SMT. SHAKUNTALA DEVI CHAPLOT RATLAM PAN ADNPC-0139Q ::: RESPONDENT ITA NO. 399/IND/2013 A.Y. 2007-08 SMT. SHAKUNTALA DEVI CHAPLOT RATLAM ::: APPELLANT VS INCOME TAX OFFICER WARD 2 RATLAM ::: RESPONDENT SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 2 ASSESSEE BY SHRI R.A. VERMA RESPONDENT BY SHRI SHARAD JAIN DATE OF HEARING 22 .7.2015 DATE OF PRONOUNCEMENT 1 0 . 8 .2015 O R D E R PER SHRI B.C. MEENA, AM THESE CROSS APPEALS FILED BY THE ASSESSEEE AND THE REVENUE EMANATE FROM THE ORDER OF THE LEARNED CIT(A), UJJAIN, DATED 26.3.2013. 2. THE ONLY ISSUE INVOLVED IN THESE APPEALS IS REGARDI NG SUSTAINING/DELETING THE PART ADDITION AS INVESTMENT IN THE PARTNERSHIP FIRM. 3. THE ASSESSEE WAS A PARTNER IN M/S JAIN WAREHOUSE, JAORA, HAVING 50% SHARE. THE ASSESSEE HAS SHOWN OPENING CAPITAL OF RS.26 LACS AS ON 1.4.2007. THE INVESTMENT OF RS.26 LACS IN THIS CAPITAL WAS MADE IN CASH. THE ASSESS ING OFFICER MADE AN ADDITION OF RS. 26 LACS TO THE INCOME O F THE ASSESSEE AS INCOME FROM UNDISCLOSED SOURCE IN THE ABSE NCE SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 3 OF ANY SATISFACTORY EXPLANATION. THE LEARNED CIT(A) HAS DEALT WITH THIS ISSUE IN HIS ORDER IN PARAS 3.1.1 TO 3 .1.11 WHICH ARE BEING REPRODUCED :- 3.1.1 I HAVE CONSIDERED THE FINDINGS OF THE AO AND WRITTEN SUBMISSION OF THE APPELLANT CAREFULLY. THE APPELLANT IS A 50% PARTNER IN M/S JAIN WAREHOUSE, JAORA. DURING THE YEAR UNDER CONSIDERATION SHE HAS MADE INVESTMENT OF RS. 26,00,000/- IN THE FIRM AS CAPITAL CONTRIBUTION WHICH WAS NOT SHOWN BY HER IN HER RETURN. THE AO HAS ASKED THE APPELLANT TO EXPLAIN THE SOURCE OF INVESTMENT ALONGWITH DOCUMENTARY EVIDENCES. IT IS SUBMITTED BY THE APPELLANT THAT SHE HAS MADE INVESTMENT OUT OF HER AGRICULTURAL INCOME OF PAST YEARS AND SHE HAS FILED THE INCOME TAX RETURN FIRST TIME IN THE YEAR SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 4 UNDER CONSIDERATION. IT IS ADMITTED BY HER THAT SHE HAS NOT PREPARED SYSTEMATIC CAPITAL ACCOUNT AND NOT MAINTAINED REGULAR BOOKS OF ACCOUNT. HE HAS EXPLAINED THAT SHE IS HAVING 6.99 BIGHAS AGRICULTURAL LAND IN HER OWN NAME AND 75 BIGHAS SHE HAS TAKEN ON LEASE. SHE IS DOING AGRICULTURAL ACTIVITIES ONLY ON 40 BIGHAS OF AGRICULTURAL LAND. THE APPELLANT HAS NOT FURNISHED BILLS/VOUCHERS IN SUPPORT OF AGRICULTURAL INCOME AND EXPENSES. DURING THE YEAR UNDER CONSIDERATION SHE HAS SHOWN AGRICULTURAL INCOME AT RS. 60,480/-, THEREFORE AO HAS ESTIMATED TOTAL AGRICULTURAL INCOME AT RS. 5,00,000/- UP TO THE YEAR UNDER CONSIDERATION AS SHE HAS DOING AGRICULTURAL ACTIVITIES FROM F.Y. 1999-2000. THE APPELLANT SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 5 HAS NOT FILED THE YEAR WISE DETAILS OF AGRICULTURAL INCOME BEFORE THE AO. 3.1.2 THE APPELLANT HAS SHOWN CAPITAL OF RS.6,57,126/-, FIXED ASSETS AT RS. 4,81,800/-, CASH-IN-HAND AT RS. 25,326/- AND DEPOSIT AT RS. 1,50,000/- IN HER RETURN. SINCE, APPELLANT HAS SHOWN CAPITAL OF RS. 6,57,126/- AND NOT HAVING ANY SECURED OR UNSECURED LOANS, AO HAS TREATED INVESTMENT IN THE FIRM FROM UNDISCLOSED SOURCES OF INCOME AS IN THE OPINION OF THE AO THAT INVESTMENT FROM AGRICULTURAL INCOME WAS NOT POSSIBLE. THE AO HAS ADDED RS. 26,00,000/- IN THE TAXABLE INCOME OF THE APPELLANT AS UNEXPLAINED INVESTMENT FROM UNDISCLOSED SOURCES. 3.1.3 DURING THE COURSE OF APPELLATE PROCEEDING APPELLANT HAS TAKEN A PLEA THAT SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 6 THIS WAS THE FIRST RETURN OF THE INCOME WHICH WAS FILED BY HER. BEFORE THAT SHE WAS HAVING INCOME ONLY FROM AGRICULTURAL ACTIVITIES. BEING FIRST YEAR AND SHE WAS NOT MAINTAINING BOOKS OF ACCOUNT, NO SYSTEMATIC CAPITAL ACCOUNT, BALANCE SHEET ETC. ARE PREPARED AND THEREFORE, INVESTMENT OF RS. 26,00,000/- WAS LEFT TO BE SHOWN AS HER INVESTMENT IN M/S JAIN WAREHOUSE, JAORA. THE APPELLANT HAS FILED THE DETAIL OF HER LAND HOLDING AND SHE IS HAVING LAND APPROXIMATELY 100 BIGHAS. THE APPELLANT HAS ALSO FILED BILLS OF AGRICULTURAL PRODUCE SOLD IN THE MARKET IN HER NAME AND YEAR WISE TOTAL OF AVAILABLE BILLS WAS RS. 34,91,967/-. THE APPELLANT HAS PLACED RELIANCE ON THE DECISIONS OF THE JUDICIAL AUTHORITIES IN WHICH IT IS HELD BY THEM THAT SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 7 WHERE ASSESSEE IS HAVING SUFFICIENT INCOME TO JUSTIFY THE INVESTMENT, NO ADDITION U/S 69 IS CALLED FOR. 3.1.4 REMAND REPORT UNDER RULE 46A IS CALLED FOR FROM THE AO. THE AO HAS NOT ACCEPTED THE CONTENTION OF THE APPELLANT AND PLACED RELIANCE ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ROSHAN DI HATTI VS. CIT 107 ITR 938 IN WHICH IT WAS HELD THAT: ONUS OF PROVING SOURCE OF AN ASSETS IS ON ASSESSEE-IF, ASSESSEE DISPUTES LIABLE TO TAX, HE HAS TO PROVE IT. HE HAS ALSO PLACED RELIANCE ON THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SURENDRA MOHAN SETH VS. CIT 221 ITR 239 THAT: SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 8 PARTNER MAKING DEPOSIT IN FIRM-NO EXPLANATION FOR SOURCE-TO ASSESS IN THE HANDS OF THE PARTNERS AS UNEXPLAINED INVESTMENT. 3.1.5 THE REPORT OF THE AO WAS WITHOUT MAKING NECESSARY ENQUIRIES AND WITHOUT ANY VERIFICATION ABOUT THE GENUINENESS OF THE BILLS SUBMITTED BY THE APPELLANT, THEREFORE THE AO WAS AGAIN ASKED TO SUBMIT HIS REPORT AFTER MAKING NECESSARY ENQUIRIES ABOUT THE GENUINENESS OF THE BILLS SUBMITTED BY THE APPELLANT. THE AO HAD CALLED FOR THE APPELLANT INCOME AND EXPENDITURE ACCOUNT OF AGRICULTURAL INCOME FOR THE A.Y. 2004-05 TO A.Y. 2009-10 ALONGWITH ALL THE PURCHASE BILLS, EXPENSES BILLS AND SALE BILLS IN ORIGINAL AND COPIES OF B-I AND P-II RELATED TO AGRICULTURAL LAND HOLDING AND SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 9 AGRICULTURAL PRODUCE GROWN THERE ON DULY CERTIFIED BY THE PATWARI CONCERN. 3.1.6 THE AO HAS OBTAINED THE REQUISITE INFORMATION FROM THE APPELLANT AND RECORDED STATEMENT AND FOUND THAT BILLS IN WHICH YEAR MENTIONED ARE OF RS. 9,55,375/- AND OTHER BILLS ON WHICH YEAR IS NOT MENTIONED OF RS. 19,93,986/-. TOTAL BILLS AVAILABLE WITH THE APPELLANT IS OF RS. 24,49,361/- NOT OF RS. 34,91,967/- AS CLAIMED BY THE APPELLANT. NO BILLS RELATING TO PURCHASES OF AGRICULTURAL SEEDS, FERTILIZERS, ETC. FOR THE PERIOD UNDER CONSIDERATION HAS BEEN FURNISHED BY THE APPELLANT. THE APPELLANT HAS ALSO NOT FILED ANY DOCUMENTARY EVIDENCE WITH REGARD TO QUANTITY OF DIFFERENT AGRICULTURAL PRODUCE GROWN ON THE AGRICULTURAL LANDS. THE AO HAS SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 10 ALSO RECORDED THE STATEMENT OF SHRI ANIL KUMAR CHAPLOT BROTHER OF SHRI GYANCHAND CHAPLOT PROP. M/S JAIN BANDHU DHARAMCHAND ANIL KUMAR AND SHRI DILIP KUMAR KATARIA PROP. M/S BABULAL DILIP KUMAR WHOM APPELLANT HAS MADE SALES. THE AO HAS ALSO CALLED FOR THE INFORMATION FROM THE SECRETARY KUMS, JAORA. 3.1.7 IN THE STATEMENT EMPHASIS WAS GIVEN ON THE SALE BILLS IN WHICH YEAR IS NOT MENTIONED. BOTH THE PURCHASERS HAVE CATEGORICALLY STATED THAT ANY FARMER/SELLER CAN SELL THEIR GOODS IN THE MANDI. NO QUESTION ABOUT THE IDENTITY OF THE SELLER OF THE GOODS SO SOLD WHETHER PRODUCED FROM HIS OWN LAND HOLDING OR OTHER WISE, HAS BEEN ASKED BY THE PURCHASER OR BY THE MANDI SAMITI. WITH SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 11 REGARD TO ACCOUNTING OF SUCH TRANSACTION, IT HAS BEEN STATED THAT INDIVIDUAL ACCOUNTS OF BUSINESS MAN FROM WHOM PURCHASES MADE, HAVE BEEN MAINTAINED. NO ACCOUNTS OF INDIVIDUAL FARMERS/SELLERS HAVE BEEN MAINTAINED. ONLY THE GROSS FIGURE OF THE DAY IS TAKEN FOR ACCOUNTING PURPOSES. WITH REGARD TO ISSUANCE OF PAYMENTS BILLS/SALES BILLS, HAND WRITING AND SIGNATURE PUT THERE ON IT HAS BEEN STATED THAT THESE ARE MAINLY PREPARED BY THE MUNIMS AND STAFF MEMBERS POSTED IN THE OFFICE. THEY WERE NOT PERMANENT, THEREFORE IT IS DIFFICULT AT THIS STAGE TO ESTABLISH THAT THESE SALE BILLS WERE EITHER ISSUED FROM THEIR CONCERN OR NOT. THEY HAVE ALSO SHOWN THEIR INABILITY TO PRODUCE SUCH BOOKS OF ACCOUNT FOR THE YEAR 1999- SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 12 2000 TO 2006-07 AND CO-RELATION OF SALE BILLS WITH BOOKS OF ACCOUNT. SECRETARY KUMS ALSO SHOWN HIS INABILITY TO PROVIDE THE DETAILS OF SERIES OF PAYMENT SLIPS BOOKS ISSUED AS RECORD IS NOT AVAILABLE WITH KUMS BEING OLD. 3.1.8 THE AO HAS SUBMITTED THAT NO GENUINENESS OF SUCH BILLS HAVE BEEN PROVED AS THE PURCHASERS WHO CLAIMED TO HAVE ISSUED SUCH SALE BILLS HAVE EVEN NOT IDENTIFIED A SINGLE SALE BILL WHICH HAVE BEEN ISSUED BY THEM. THEY COULD NOT CO-RELATE SUCH BILLS WITH THE BOOKS OF ACCOUNT. EVEN, THE SECRETARY KUMS COULD NOT GIVE ANY PLAUSIBLE EXPLANATION WITH REGARD TO ISSUANCE SERIES OF PAYMENT SLIP BOOKS ISSUED TO THE ABOVE CONCERNS FROM THE F.YRS. 1999-2000 TO 2006- 07. SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 13 3.1.9 I HAVE CONSIDERED THE FACTS OF THE CASE CAREFULLY. THIS IS THE FIRST YEAR WHEN THE APPELLANT HAS FILED THE RETURN OF INCOME. IT IS ADMITTED BY HER THAT SHE IS NOT MAINTAINING REGULAR BOOKS OF ACCOUNT AND CAPITAL ACCOUNT, THEREFORE INVESTMENT MADE IN THE FIRM M/S JAIN WAREHOUSE, JAORA IS NOT REPORTED IN THE BALANCE SHEET. SHE HAS EXPLAINED THE SOURCE OF DEPOSIT OUT OF HER AGRICULTURAL INCOME. SHE IS HAVING 100 BIGHAS OF AGRICULTURAL LAND AND IN SUPPORT OF HER CONTENTION SHE HAS FILED THE COPIES OF B-I AND P-II. IN SUPPORT OF AGRICULTURAL INCOME SHE HAS FILED ORIGINAL BILLS, DURING THE APPELLATE PROCEEDING WHICH WAS VERIFIED BY THE AO. THE BILLS IN WHICH YEAR IS MENTIONED ARE OF RS. 9,45,375/- RELATED TO F.YRS. 2003-04 TO 2006-07 AND THE SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 14 BILLS ON WHICH NO YEAR WAS MENTIONED ARE OF RS. 19,93,986/-. THE AO HAS ALSO RECORDED THE STATEMENT OF THE PURCHASERS OF THE AGRICULTURAL PRODUCE OF THE APPELLANT. IN THE STATEMENT THEY HAVE NOT DENIED THE TRANSACTION WITH THE APPELLANT, BUT THEY HAVE ADMITTED THAT THEY DID NOT KEEP THE ACCOUNTS OF THE FARMERS/SELLERS AND BILLS WERE NOT IDENTIFIED BY THEM DUE TO THE REASON AS THEY WERE NOT PREPARED BY THEM, BUT IT WAS PREPARED BY THEIR MUNIMS OR EMPLOYEES. SECRETARY KUMS ALSO COULD NOT PROVIDE THE INFORMATION ABOUT THE ISSUANCE OF PAYMENTS SLIPS BOOKS BEING VERY OLD. 3.1.10 THE PURCHASERS USED TO MAKE CONSOLIDATED ENTRY OF PURCHASES, THEREFORE THEY COULD NOT TALLY THE PURCHASES WITH THE SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 15 BOOKS OF ACCOUNT. AS PER RULE OF THE MANDI SAMITI PURCHASERS HAVE TO MAKE CASH PAYMENTS ON EVERY PURCHASES TO THE FARMERS AND THUS THEY MAINTAIN SINGLE PURCHASES ACCOUNT. THE AO HAS NOT DISPUTED THE LAND HOLDING OF THE APPELLANT, THEREFORE NOT ACCEPTING ANY INCOME BY THE AO FROM AGRICULTURE IS NOT JUSTIFIED. 3.1.11 THE APPELLANT HAS FURNISHED EVIDENCES IN SUPPORT OF AGRICULTURAL LAND HOLDING AS WELL AS, AGRICULTURAL INCOME. SHE HAS PRODUCED ORIGINAL BILLS IN SUPPORT OF SALE OF AGRICULTURAL PRODUCE AND IF, APPELLANT IS HAVING AGRICULTURAL LAND HOLDING AND SHE IS DOING AGRICULTURAL ACTIVITIES ALSO THERE MUST BE SOME INCOME FROM THE AGRICULTURAL OPERATION. THIS ACCUMULATED INCOME HAS BEEN CLAIMED SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 16 BY THE APPELLANT AS INVESTED IN THE FIRM IN WHICH SHE IS THE PARTNER OF 50%. HOWEVER, AFTER CONSIDERING THE ENTIRE FACTS, THE INVESTMENT OF THE APPELLANT AT RS. 26,00,000/- OUT OF AGRICULTURAL INCOME COULD NOT BE ACCEPTED IN ENTIRETY AS SHE HAS PRODUCED BILLS OF RS. 29,49,361/- IN SUPPORT OF HER CONTENTION ALTHOUGH ORIGINAL BUT BEAR SOME DEFECTS. FURTHER, OUT OF THESE SALE PROCEED SHE MUST HAVE INCURRED THE EXPENSES FOR EARNING THE AGRICULTURAL INCOME AND ALSO FOR HOUSEHOLD PURPOSES. MOREOVER, THE BILLS WHICH SHE HAS FURNISHED IN MOST OF THE BILLS YEAR WAS NOT MENTIONED. CONSIDERING THE ABOVE FACTS INVESTMENT IN THE PARTNERSHIP FIRM OUT OF RS. 26,00,000/- IS TREATED EXPLAINED TO THE EXTENT OF RS. 15,00,000/- SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 17 (I.E. ABOUT 50% OF THE BILLS PRODUCED) AND BALANCE INVESTMENT OF RS. 11,00,000/- IS TREATED FROM UNDISCLOSED SOURCES OF THE APPELLANT AND ADDITION MADE BY THE AO U/S 69 OF INCOME TAX ACT IS HEREBY CONFIRMED. 4. AFTER HEARING BOTH THE SIDES, NONE OF THE SIDE W AS ABLE TO CONTROVERT THE FINDINGS OF THE LEARNED CIT(A). WE , THEREFORE, CONFIRM THE ORDER OF THE LEARNED CIT(A) AND DISMISS BOTH THE APPEALS. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE AS WELL AS THE APPEAL OF THE REVENUE STAND DISMISSED. PRONOUNCED IN OPEN COURT ON 10 TH AUGUST, 2015 SD/- SD/- (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER 10 TH AUGUST, 2015 DN/- SHAKUNTALA DEVI CHAPLOT ITA NOS. 433 & 399/IND/2013 18