ITO, Ward-2(2), Bhubaneswar V. Sanjeev Kumar Agarwal, Bhubaneswar

ITA 40/CTK/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 2397 (ITAT-CUTTACK)
• Duration Of Justice: 1 year(s) 7 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 25-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: D K SHETH M SHETH
• Keywords: Gift; TDS
• Section: 201

Judgement Text

P A G E 1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG , JUDICIAL MEMBER AND LAXMI PRASAD SAHU, ACCOUNTANT MEMBER ITA NO . 40 /CTK/201 8 ASSESSMENT YEAR : 201 4 - 2015 INCOME TAX OFFICER, WARD 2(2), BHUBANESWAR. VS. SHRI SANJEEV KUMAR AGARWAL, PLOT NO.452, CUTTACK ROAD, OLD STATION BAZAR, BHUBANESWAR. PAN/GIR NO. AAXPA 8682 P (APPELLANT ) .. ( RESPONDENT ) ASSESSEE BY : SHRI D.K.SHETH/M.SHETH , AR REVENUE BY : SHRI SUBHENDU DUTTA, DR DATE OF HEARING : 1 2 / 0 6 / 201 9 DATE OF PRONOUNCEMENT : 04 / 0 9 / 201 9 O R D E R PER C.M.GARG,JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - 1, BHUBANESWAR DATED 4.10.2017 FOR THE ASSESSMENT YEAR 2014 - 15. 2. THE SOLE GROUND RAISED BY THE REVENUE IS THAT THE CIT(A) IS NOT JUSTIFIED IN DELETING THE ADDITION OF RS.70,59,000/ - MADE BY THE AO TOWARDS DISALLOWANCE OF UNEXPLAINED ADDITION OF CAPITAL. ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 2 | 8 3. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDI NGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SHOWN IN THE BALANCE SHEET INFUSION OF FRESH CAPITAL OF RS.70,59,000/ - AND DRAWINGS OF RS.48,55,000/ - DURING THE ASSESSMENT YEAR UNDER CONSIDERATION . THEREFORE, THE ASSESSING OFFICER REQUIRED THE AS SESSEE TO FURNISH DETAILS OF CAPITAL ACCOUNT ALONGWITH SOURCE OF FRESH INFUSION THEREOF. IN REPLY, THE ASSESSEE SUBMITTED THAT THE NET INFUSION OF CAPITAL IS ONLY TO THE TUNE OF RS.22,04,000/ - AND THE SOURCE OF NET ADDITION HAS BEEN EXPLAINED AS GIFT FROM HIS FATHER AND FROM TRANSFER FROM A PARTNERSHIP FIRM, IN WHICH HE IS A PARTNER. THE ASSESSEE ALSO EXPLAINED THE FRESH CAPITAL INFUSION WITH THE HELP OF DRAWINGS TO THE TUNE OF RS.48,55,000/ - . THE ABOVE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTABLE TO TH E ASSESSING OFFICER ON THE GROUND THAT THE ASSESSEE HAS NOT ESTABLISHED ANY LINKAGE WITH THE SOURCE OF CAPITAL AND THERE IS NO EVIDENCE THAT THE WITHDRAWALS ARE BROUGHT BACK TO HIS BUSINESS AS CAPITAL. THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WAS NO SUCH EXIGENCY/PURPOSE FOR INTRODUCTION OF CAPITAL IN THE BUSINESS OF THE ASSESSEE. THEREFORE, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD NO LEGITIMATE SOURCE OF INCOME TO INTRODUCE CAPITAL ACCOUNT TO THE TUNE OF RS.70,59,000/ - AND HENCE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 3 | 8 4. BEFORE THE CIT(A), THE ASSESSEE HAD FILED WRITTEN SUBMISSION, WHICH WAS FORWARDED TO THE AO FOR EXAMINATION AND VERIFICATION AND REPORT. THE ASSESSING OFFICER SUBMITTED HIS REPORT DATED 30.8.2017, WHICH RE ADS AS UNDER: 1. A LETTER DT.21.06.2017 WAS ISSUED TO THE ASSESSEE, FIXING FOR COMPLIANCE ON 30.06.2017. 2. ON 30.06.2017 SHRI SANJEEV KU. AGARWAL APPEARED AND SUBMITTED WRITTEN SUBMISSION STATED THAT HIS C.A. MR. R.C. LAI WAS OUT OF STATION FOR 20 DAYS AND REQUESTED TO ADJOURNED FOR ONE MONTH, 3. ON 18.07.2017 MR. R.C. LAI, CA AND AIR OF ASSESSEE APPEARED AND SUBMITTED WRITTEN SUBMISSION WHICH WERE VERIFIED. THE DETAILS ARE AS UNDER: - A. ON 23.09.2016 THE A/R OF ASSESSEE SUBMITTED WRITTEN SUBMISSION, THE DETAILS ARE AS UNDER: - PARA - 1&2 - AS REGARDS ADDITION TO CAPITAL & DRAWINGS, I WOULD LIKE TO STATE THAT, IN THE SCHEDULE OF CAPITAL A/C , THE ASSESSEE SHOWN ADDITION OF CAPITAL RS,70,59,000/ - AND DRAWINGS RS.48,55,000/ - . TH E ABOVE FIGURE OF ADDITION IS THE TOTAL OF CREDITS IN HIS PERSONAL LEDGER WHICH IS RS.2,01,30,760.79(0.B.)( - )RS.L,23,24,295.51( PROFIT )( - )RS.7,47,465 28= RS.70,59,000/ - . AND THE DRAWING IS RS.49,02,761.00 ( - )(TDS) RS.47,761.00=RS.48,55,000/ - THE ACTUAL ADDITION RS.70,59,000( - )RS.48,55,000=RS.22,04,000/ - IS THE NET INTRODUCTION. THE ADDITION OF RS.22,04,000/ - FROM : I) GIFT FROM FATHER SHRI RAMA CH, AGARWAL - RS. 18,00,000/ - II) BALANCE OF RS.4,04,000/ - IS FROM TRANSFER OF FUNDS FROM INVESTME NT IN M/S.SHREE ASTHA VINAYAK AGENCY, ANOTHER PARTNERSHIP FIRM AS A PARTNER OF THE FIRM. THE WRITTEN SUBMISSION DT. 23.09.2016 IS ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. B. ON 22.12.2016, THE A/R OF ASSESSEE SUBMITTED WRITTEN SUBMISSION, THE DETAILS AR E AS UNDER: - 1. GIFT FROM FATHER, SHRI RAM CH. AGARWAL OF RS. 28,00,000/ - 2. SHRI SANJEEV KUMAR AGARWAL INTRODUCED OF RS. 8,50,000/ - OUT OF SALE OF SHARE RS.7,90,000/ - AND OUT OF CREDIT BALANCE IN HDFC BANK DURING THE FEAR. 3. RS.33,50,000/ - TRANSFERRED FROM M/S. ASTHA VINAYAK AGENCY IN WHICH SHRI SANJEEV KU. AGARWAL IS A PARTNER. 4. RECEIVED FROM SHRI UTTAM BARIK A SUM OF RS,59,000/ - WHO HAS TAKEN AS H AND LOAN FROM SHRI SANJEEV KU. AGARWAL. THE W RITTEN SUBMISSION DT.22.12.20 16 IS ENCLOSED HEREWITH FOR YOUR KIND PERUSAL. C. AGAIN ON 23.12.2016, THE A/R OF ASSESSEE SUBMITTED WRITTEN SUBMISSION, THE DETAILS ARE AS UNDER IN P ARA - 1 A (1) INTRODUCTION BY THE PROPRIETOR : I) OUT OF SALE OF SHARE RS. 8,50,000/ - II) REFUND OF TEMPORARY LOAN BY MR. UTTAM BARIK RS. 59,000/ - LII)GIFT FROM FATHER RS.28,00,000/ - IV) TRANSFER OF FUND FROM M/S.ASTHA VINAYAK AGENCY RS.33,50,000/ - A PARTNERSHIP FIRM WHERE SH AGARWAL IS A PARTNER ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 4 | 8 TOTAL RS.70,59,000/ - THE OUT FLOW OR WITHDRAWAL FROM CAPITA! 1. FOR SELF BY CHEQUE RS.5,00,000 BY CASH RS.1,50,000 RS.6,50,000/ - 2. ADVANCE TAX F.Y.2013 - 14 RS. 85,000/ - 3. INCOME TAX F.Y.2012 - 13 RS. 35,000/ - 4. FDR IN PNB RS. 7 ,50,000/ - 5. TRANSFER BACK OF FUND TO M/S.SRI AASTHA VINAYAK AGENCY RS.33,35,000/ - ' 5. THE REMAND REPORT OF THE ASSESSING OFFICER WAS FORWARDED TO THE ASSESSEE FOR REJOINDER AND THE ASSESSEE FILED A WRITTEN SUBMISSION AS UNDER: 'ON GOING THROUGH THE REMAND REPORT I SAW A TYPOGRAPHICAL MISTAKE IN THE REPORT O ITO WHICH MAKES CONFUSION OF THE SUBMISSION. IN, THE DETAILS SUBMITTED BY ITO IN PARA - 3A, 3RD PARAGRAPH. THE I.T.O. HAS SUBMITTED THE FOLLOWING LINES. 'THE ABOVE FIGURE OF ADDITION IS THE TOTAL OF CREDITS IN HIS PERSONAL LEDGER WHICH IS, RS. 2,01,30,760.79 (OB) - RS. 1,23,24,295.51 (PROFIT) ( - ) RS. 7,47,465.25 = RS. 70,59,000/= IN STEAD OF RS. 2,01,30,760.79 (OB)L,23,24,295.51 (PROFIT) 7,47,465.25 - = 70,59,000/=(COPY OF LEDGER COPY OF SANJEEV KU. AGARWAL IN M/S SANJEEV AGENCY ATTACHED IN ANNEXURE - 1. THE WRONG PLACEMENT OF OB AND PROFIT MAKES THE SUBMISSION CONFUSED. HOWEVER AS REGARDS PART A OF POINT 3 OF THE REMAND REPORT I WOULD LIKE TO STATE THE FOLLOWING. DURING THE INITIAL DATES OF HEARING THE I.T.O. WANTED TO K NOW ABOUT THE INTRODUCTION OF CAPITAL AND THE SOURCE AND IN REPLY TO HIS QUERY I HAVE SUBMITTED MY REPLY ON 23/09/2016. I HAVE TRIED TO EXPLAIN THE NET' - ADDITION (I.E. INTRODUCTION WITHDRAWAL), INTRODUCTION 70 ,59,000/ - - WITHDRAWAL RS. 48,55,000/ - = NET INTRODUCTION OF RS. 22,04,000/ - . AND AS REGARDS THE SOURCE I HAVE STATED AS , , THIS MAY BE OUT OF GIFT FROM FATHER AND BALANCE RS. 4,04,000/= MAY BE OUT OF FUNDS TRANSFERRED FROM M/S SHREE ASTA VINAYAK AGENCY, A PARTNERSHIP FIRM IN WHICH SANJEEV KUMAR AGARWAL IS A PARTNER. AS REGARDS PART B AND PART C OF THE REMAND REPORT I WOULD LIKE TO SAY BOTH OF THEM ARE SAME ONLY IN PART C THE WITHDRAWAL PART IS EXPLAINED EXTRA. SUBSEQUENTLY THE I.T.O. WANTED THE DETAILS AND SOURCE OF THE INTRODUCTION OF RS. 70 ,5 9,000,00. I HAVE EXPLAINED THE I.T.O. THE DETAILS OF MY INTRODUCTION ITEM WISE WITH ALL THE SUPPORTING EVIDEN CES, IN MY LETTER DT. 22/12/2016 AND 23/12/2016 WHIC H AS FOLLOWS: - COPY OF LETTER DT. 22/12/2016 ATTACHED ANNEXURE - 2. (I) (A) GIFT FROM FATHER RAM CHANDRA AGARWAL RS. 28,00,000/ - . DOCUMENTS SUBMITTED. (I) GIFT DEED BY RAM CHANDRA AGARWAL MENTIONING DETAILS AS FOLLOWS: ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 5 | 8 CHEQUE NO. DATE AMOUNT NAME OF BANK & BRANCH . 1. 840092 5/7/2013 5,00,000/ - PNB, CTC . ROAD BRANCH,BBSR 2. 5923833/10/2013 5,00,000/ - ALLAHABAD BANK, CTC. ROAD BR., BBSR 3. RTGS VIDE UTR NO SD 1106792979 DT. 16/1/2014 RS.18,00,000/ - PNB, CTC ROAD BRANCH, BBSR. (B) THE BANK STATEMENT OF RAM CHANDRA AGARWAL (C)TWO GIFT DEED COPY FROM RAM CHANDRA AGARWAL. (D) COPY OFL.T.R. FOR AY 2014 - 2015 OF RAM CHANDRA AGARWAL. (II) SAN JEEV KUMAR AGARWAL INTRODUCED RS. 8,50,000/ - OUT OF SALE OF SHARES RS. 7,9000E:AND OUT OF CREDIT BALANCE IN HIS HDFC BANK DUR ING THE YEAR . THE BANK STATEMENT OF SANJEEV KUMAR AGARWAL I N THE H DFC BANK AND THE STATEMENT OF KOTAK SECURITIES LTD. CONFIRMING T OWARDS SALE OF SHARES. (III). RS. 33,50,000/ - TRANSFERRED FROM M/S SRI ASTHA VINAYAK AGENCY IN WHICH SRI SANJEEV KUMAR AGARWAL IS A PARTNER. (C) THE BANK STATEMENTS OF SRI ASTHA VINAYAK AGENCY II ) A/C NO. 6761002100001220 - PNB CTC. ROAD BRANCH, BBSR IN SUP PORT OF TRANSFER OF FUNDS. (IV) A/C NO. 6761009300000097 - PNB, CTC ROAD BRANCH, BBSR IN SUPPORT OF TRANSFER OF FUNDS, (D) THE I.T.R. COPY OF SRI ASTHA VINAYAK AGENCY . (IV) RS. 59,000/ - RECEIVED BY CHEQUE FROM MR. UTTAM BARIK, A FRIE ND OF SANJEEV KUMAR AGARWAL WHO HAD TAKEN A HAND LOAN DURING THE FINANCIAL YEAR 2012 - 2013, TOWARD REFUND OF THE SAME.] ALL THE ABOVE HAS BEEN EXPLAINED AND SUPPORTING ARE SUBMITTED ALONG WITH MY MEMORANDUM OF APPEAL IN FORM NO. 35. FURTHER FROM THE REMAND REPORT IT IS CLEAR THAT THE INCOME TAX OFFICER HAS NEITHER RAISED ANY OBJECTION NOR GIVEN ANY ADVERSE REPORT FOR THE INTRODUCTION OF CAPITAL TO THE TUNE OF RS.70,59,0 00/ - . HE HAS ONLY STATED THAT THE ASSESSEE HAS SUBMITTED 3 SETS OF CONFLICTING, FACTS/FIGURES. NOW IT IS CLEAR THAT THERE WAS NO CONFLICTING FACTS AND FIGURES AND THE ABOVE 4 POINTS CLEARLY ESTABLISHES THE EVIDENCE, CREDIT WORTHINESS AND GENUINENESS OF THE INTRODUCTION OF CAPITAL AMOUNTING TO RS.70,59,000.00' 6. AFTER CONSIDERING THE REMAND REPORT AND THE REJOINDER OF THE ASSESSEE, THE CIT(A) DELETED THE ADDITION BY OBSERVING AS UNDER: 5. I HAVE CONSIDERED THE MATTER AND PERUSED THE REPORT OF THE AO AND THE RESPONSE OF THE ASSESSEE THERETO. I HAVE ALSO CONSIDERED THE WRITTEN SUBMISSION FILED BY THE ASSESSEE WHICH WAS SENT TO THE AO FOR HIS COMMENTS. THE AO HAS NOT ACCEPTED THE LATEST EXP LANATION OF THE ASSESSEE DT.22.12.2016 FILED IN THE COURSE OF ASSESSMENT PROCEEDING WITH REGARD TO THE SOURCES OF CAPITAL INTRODUCTION OF RS.70,59,000/ - SINCE, ACCORDING TO HIM, THE EARLIER TWO EXPLANATIONS FILED BY THE ASSESSEE ARE CONFLICTING NOT ONLY WI TH EACH OTHER, BUT ALSO WITH THE EXPLANATION DT.22.12.2016. AFTER GOING THROUGH THE - EXPLANATIONS I FIND THAT THE EARLIER EXPLANATION DT.23.9.2016 IS SLIGHTLY CONFUSING BECAUSE AN ATTEMPT WAS MADE IN THAT EXPLANATION TO EXPLAIN THE SOURCES OF THE NET CAPITA L INTRODUCTION OF RS.22,04,000/ - INSTEAD OF THE ENTIRE CAPITAL ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 6 | 8 INTRODUCTION OF RS.70,59,000 / - . HOWEVER, THE LATTER TWO EXPLANATIONS ARE NOT FOUN D CONFLICTING WITH EACH OTHER AND BOTH OF THEM TRY TO EXPLAIN THE SOURCES CAPITAL INTRODUCTION IN THE FOLLOWING MANNER. I) GIFT FROM FATHER SRI RAM CHANDRA AGARWAL RS.28,00,000/ - BY CHEQUE. I I ) TRANSFERRED FROM M/S. ASTHA VINAYAK AGENCY WHEREIN THE ASSESSEE IS A PARTNER THROUGH CHEQUES RS.33,50,000/ - III) REFUND OF TEMPORARY LOAN BY FRIEND SRI UTTAM BARIK RS.59,000/ - IV) OUT OF SALE OF SHARES THROUGH KOTAK SECURITIES LTD. RS.7,90,000 V) OUT OF CREDIT BALANCE IN HDFC BANK RS.60,000/ - TOTAL: RS.70,59,000/ - THE ASSESSEE HAS FILED EVIDENCES OF ALL THE ABOVE SOURCES BEFORE THE AO AT THE TIME OF ASSESSMENT AS WELL AS REMAND PROCEEDING. HE HAS ALSO FILED THE DETAILS OF THE SAME AT THE TIME OF - APPEAL HEARING. THE SOURCES AS STATED ABOVE ARE PROPERLY AND SATISFACTORILY EXPLAINED. THIS BEING SO, THERE IS NO JUSTIFICATION TO REJECT THE EXPLANATION OF THE ASSESSEE WHICH IS SUPPORTED BY EVIDENCE ONLY BECAUSE SOME OTHER EXPLANATION WAS GIVEN AT THE INITIAL STAGE OF ASSESSMENT EXPLAINING THE NET CAPITAL INTRODUCTION. SINCE THE SOURCES OF THE CAPITAL INTRODUCTION 'B? RS.70,59,000/ - HAVE BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE THERE IS NO JUSTIFICATION FOR TREATING THE SAME AS UNEXPLAINED. HENCE, THE ADDITION OF RS.70,59,000/ - IS DELETED. 7. BEFORE US, LD D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER WHEREAS LD A.R. SUPPORTED THE ORDER OF THE CIT(A). 8. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THERE WAS NO FALLACY IN THE ORDER OF THE LD CIT(A) GRANTING RELIEF TO THE RESPONDENT - ASSESSEE. ON THE SUBMISSION OF THE ASSESS EE, A REMAND REPORT FROM THE ASSESSING OFFICER WAS CALLED FOR AND THE SAME WAS CONFRONTED TO THE ASSESSE E. THE ASSESSING OFFICER NEGATED THE CLAIM OF THE ASSESSEE SOLELY ON THE GROUND THAT EARLIER EXPLANATION S OFFERED BY ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 7 | 8 THE ASSESSEE ARE CONFLICTING. HOW EVER, THE CIT(A) ALTHOUGH ACCEPTED THAT THE EARLIER TWO EXPLANATIONS ARE SOMEHOW CONFLICTING BUT OBSERVED THAT THE LATEST EXPLANATIONS ARE EXPLAIN ING THE SOURCE OF CAPITAL INTRODUCTION, WHICH ACCORDING TO HIM, IS CORRECT. WE ALSO FIND THAT T HE ASSESSEE HA S ALREADY FURNISHED RELEVANT DOCUMENTARY EVIDENCE TO SUBSTANTIATE THE GENUINENESS OF THE TRANSACTIONS. IF THERE WAS ANY DOUBT, IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO CONTROVERT THE ABOVE EVIDENCES BY BRINGING CORROBORATIVE EVIDENCE. 9. BEFORE US, LD. D.R. COULD NOT POINT OUT ANY SPECIFIC ERROR IN THE ORDER OF THE LD. CIT(A). NO OTHER MATERIAL WAS BROUGHT ON RECORD TO SHOW THAT THE INITIAL EXPLANATION FURNISHED BY THE ASSESSEE AS REGARDS TO INTRODUCTION OF CAPITAL IS CORRECT AND. HENC E, WE FIND NO GOOD REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) WHICH IS HEREBY CONFIRMED . 10. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON 04 / 0 9 /201 9 . SD/ - SD/ - (LAXMI PRASAD SAHU) ( CHANDRA MOHAN GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER CUTTACK; DATED 04 / 0 9 /20 9 B.K.PARIDA, SPS ITA NO.40/CTK/2018 ASSESSMENT YEAR : 2014 - 2015 P A G E 8 | 8 COPY OF THE ORDER FORWARDED TO : BY ORDER SR . PVT. S ECRETARY ITAT, CUTTACK 1. THE APPELLANT : INCOME TAX OFFICER, WARD 2(2), BHUBANESWAR 2. THE RESPONDENT. SHRI SANJEEV KUMAR AGARWAL, PLOT NO.452, CUTTACK ROAD, OLD STATION BAZAR, BHUBANESWAR. 3. THE CIT(A) - 1 , BHUBANESWAR 4. PR.CIT - 1 , BHUBANESWAR 5. DR, ITAT, CUTTACK 6. GUARD FILE. //TRUE COPY//